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ESCROW AGREEMENT
THIS AGREEMENT is made and entered into as of August 11th, 2000, by and
among THE BANK OF NEW YORK (the "Escrow Agent"), and J.P. CAREY SECURITIES,
INC. (the "Placement Agent"), 2-INFINITY.COM, INC., (the "Company").
RECITALS
The Company proposes to offer for sale to investors through the
Placement Agent up to $3,000,000 in the Company's Series A Convertible
Preferred Stock, no par value per share (the "Securities"), pursuant to Rule
4(2) under the Securities act of 1933, as amended (the "1933 Act") and or
Rule 506 of Regulation D promulgated under the 1933 Act, as amended, in an
initial minimum tranche of $1,000,000 (the "Minimum") and subsequent minimum
tranches of at least $250,000 per tranche (the "Subsequent Minimum")
resulting in gross proceeds to the Company of up to $3,000,000 (the
"Proceeds").
The Placement Agent intends to sell the Securities as the Company's
agent on a best efforts basis (the "Offering").
The Company and Placement Agent desire to establish an escrow account in
which funds received from subscribers will be deposited pending completion of
the Escrow Period. The Bank of New York agrees to serve as Escrow Agent in
accordance with the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT. On or prior to the date of the
commencement of the offering, the parties shall establish an escrow account
with the Escrow Agent, which escrow account shall be entitled,
2-Infinity.com Account (the "Escrow Account"). The Placement Agent will
instruct subscribers to wire funds to the account of the Escrow Agent as
follows:
Bank: The Bank of New York
ABA # 021000018
GLA # 111-565
Reference TAS # 052595, 2-Infinity & J.P. Carey Esc
Attn: Peggy McWhorter (770)698-5186
Only wire transfers shall be accepted.
2. ESCROW PERIOD. The Escrow period shall begin with the commencement of
the Offering and shall terminate upon the earlier to occur of the following
dates:
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A. The date upon which the Escrow Agent confirms that its has
received in the Escrow Account gross proceeds of $3,000,000 in
deposited, funds (the "Maximum");
B. The expiration of one hundred twenty (120) days from the date of
commencement of the Offering (unless extended by mutual written
agreement between the Company and the Placement Agent with a copy
of such extension to the Escrow Agent); or
C. The date upon which a determination is made by the Company and the
Placement Agent to terminate the offering prior to the sale of the
Maximum.
During the Escrow Period, the Company is aware and understands that it is not
entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or any other entity,
or be subject to the debts of the Company or any other entity.
3. DEPOSITS INTO THE ESCROW ACCOUNT. The Placement Agent agrees that
it shall promptly deliver all monies received from subscribers for the
payment of the Securities to the Escrow Agent for deposit in the Escrow
Account.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT. At such time as Escrow
Agent has collected and deposited instruments of payment in the total amount
of the Minimum and any amounts up to the Maximum, Escrow Agent shall notify
the Company and the Placement Agent. The Escrow Agent will continue to hold
such funds until Placement Agent and Company jointly notify Escrow Agent in
writing as to the disbursement of funds pursuant to a closing statement
signed by each of the Placement Agent and the Company (the "Closing
Statement"). In disbursing such funds, Escrow Agent is authorized to rely
upon such Closing Statement from Company and Placement Agent and may accept
any signatory from the Company listed on the signature page to this Agreement
and any signature from the Placement Agent that Escrow Agent already has on
file.
In the event the Escrow Agent does not receive the Minimum deposit
totaling $1,000,000 or Subsequent Minimum deposits totaling $250,000 prior
to the expiration of the Escrow Period (the "Minimum Deposits"), the Escrow
Agent shall notify the Company and the Placement Agent. Upon receipt of
payment instructions from the Company, the Escrow Agent shall refund to each
subscriber with interest the amount received from each subscriber, without
deduction, penalty, or expense to the subscriber. The purchase money returned
to each subscriber shall be free and clear of any and all claims of the
Company or any of its creditors.
In the event the Escrow Agent does receive deposits totaling the Minimum
prior to expiration of the Escrow Period, in no event will the Escrow Amount
be released to the Company until such amount is received by the Escrow Agent
in collected funds. 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.
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5. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to
forward each wire for collection and, upon collection of the proceeds of each
wire deposit the collected proceeds in the Escrow Account.
Any wires returned unpaid to the Escrow Agent shall be returned to the
Placement Agent. In such cases, the Escrow Agent will promptly notify the
Company for 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
or wire 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 wire for collection, the Escrow Agent shall promptly issue a
check or wire the amount of the subscriber's wire to the rejected subscriber
after the Escrow Agent has cleared such funds. If the Escrow Agent has not
yet submitted a rejected subscriber's wire for collection, the Escrow Agent
shall promptly remit the subscriber's wire directly to the subscriber. The
Company shall provide payment instructions to the Escrow Agent.
6. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in money market
instruments.
7. COMPENSATION OF ESCROW AGENT. The Company shall, pay the Escrow
Agent a fee for its escrow services as set forth on Exhibit "A" to this
Escrow Agreement. If it is necessary for the Escrow Agent to return funds to
the subscribers, the Company shall pay to the Escrow Agent an additional
amount sufficient to reimburse it for its fees and actual cost in disbursing
such funds. However, if funds are refunded to subscribers, no such fee,
reimbursement for costs and expenses, indemnification for any damages
incurred by the Escrow Agent, or any monies whatsoever shall be paid out of or
chargeable to the principal amount of funds on deposit in the Escrow Account.
8. GENERAL PROVISIONS.
(a) (i) Escrow Agent shall not be liable to anyone for any damages,
losses, or expense which they may incur as a result of any
act or omission of Escrow Agent, unless such damages,
losses, or expenses are caused by Escrow Agent's willful
misconduct or gross negligence. Accordingly, Escrow Agent
shall not incur any such liability with respect to (i) any
action taken or omitted in good faith upon the advice of
Escrow Agent's counsel or counsel for any other party
hereto, given with respect to any question relating to the
duties and responsibilities of Escrow Agent under this
Agreement or (ii) any action taken or omitted in reliance
upon any instrument, including execution, or the identity or
authority of any person executing such instrument, its
validity and effectiveness, but also as to the truth and
accuracy of any information contained therein which Escrow
Agent shall, in good faith, believe to be genuine, to have
been signed by a proper person or persons and to conform to
the provisions of this Escrow Agreement.
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(ii) Escrow Agent shall not be bound in any way by any contract
or agreement between other parties hereto, whether or not it
has knowledge of any such contract or agreement or of its
terms or conditions.
(iii) The parties hereto, jointly and severally, hereby agree to
indemnify and, hold harmless Escrow Agent against any and
all costs, losses, claims, damages, liabilities, expenses,
including reasonable costs of investigation, court costs,
and attorney's fees, and disbursements, which may be imposed
upon Escrow Agent in connection with its acceptance of
appointment as Escrow Agent hereunder, including any
litigation arising from this Escrow Agreement or involving
the subject matter hereof, and all such costs, expenses and
disbursements shall be deducted from the income (if
sufficient) or paid by the parties hereto, except for
matters arising from the gross negligence or willful
misconduct of Escrow Agent.
(iv) As security for such fees and expenses of Escrow Agent and
any and all losses, claims, damages, liabilities and expenses
incurred by Escrow Agent in connection with its acceptance
of appointment hereunder, and with performance of the
agreements herein contained, the Escrow Agent is hereby
given a lien upon all assets held by Escrow Agent hereunder,
which lien shall be prior to all other liens upon or claims
against such assets, except for claims of subscribers in the
event the Minimum is not raised.
(b) (i) In the event of any disagreement among any of the parties to
this Agreement, or among them or any other person resulting
in adverse claims and demands being made in connection with
or from any property involved herein or affected hereby,
Escrow Agent shall be entitled to refuse to comply with any
such claims or demands as long as such disagreement may
continue, and in so refusing, shall make no delivery or
other disposition of any property then held by it under this
Escrow Agreement, and in so doing the Escrow Agent shall be
entitled to continue to refrain from acting until (a) the
right of adverse claimants shall have been finally settled
by binding arbitration or finally adjudicated in a court
assuming and having jurisdiction of the property involved
herein or affected hereby or (b) all differences shall have
been adjusted by agreement and Escrow Agent shall have been
notified in writing of such agreement signed by the parties
hereto.
(ii) In the event of such disagreement (or resignation under the
terms of this Agreement), Escrow Agent may, but need not,
tender into the registry or custody of any court of
competent jurisdiction all, money or property in its hands
under the terms of this Agreement, together with such legal
proceedings as it deems appropriate and thereupon to be
discharged from all further duties under this Escrow
Agreement. The filing of any such legal
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proceeding shall not deprive Escrow Agent of its
compensation earned prior to such filing.
(iii) Escrow Agent shall have no obligation to take any legal,
action in connection with this Escrow Agreement or towards
its enforcement, or to appear in, prosecute or defend any
action or legal proceeding which would or might involve it
in any cost, expense, loss or liability unless security and
indemnity shall be furnished.
(c) This Agreement contains the entire understanding between and among
the parties hereto, and shall be binding upon and inure to the
benefit of such parties, and subject to its terms, their respective
successors, heirs, assigns and legal representatives. Any
corporation into which Escrow Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Escrow Agent
shall be a party, or any corporation to which substantially all the
corporate trust business of Escrow Agent may be transferred, shall,
subject to the terms of the Escrow Agreement, be Escrow Agent under
this Escrow Agreement without further act.
(d) This Escrow Agreement is being delivered in and shall be governed
by and construed and enforced in accordance with the laws of the
State of Georgia without giving effect to the principles or rules
governing conflicts of laws.
(e) Notices, requests, demands or other communications required or
permitted under this Escrow Agreement will be in writing and will
be deemed given when actually delivered, received via facsimile
notice for which a confirmation is received, or the third business
day after said notice has been sent by certified mail, postage
prepaid, return receipt requested to:
If to Escrow Agent: The Bank of New York
Suite 520
100 Ashford Center, North
Atlanta, Georgia 30338
If to Placement Agent: J.P. Carey Securities, Inc.
Atlanta Financial Center, Suite 500
3343 Peachtree Rd., N.E.
Atlanta, Georgia 30326
Attention: Mr. Joseph Canouse
Facsimile Number: (404) 816-6268
If to Company: 2-Infinity.com, Inc.
4828 Loop Central Drive, Suite 150
Houston, Texas 77081
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Attention: Majed M. Jalali
Facsimile Number: (713) 838-8741
With a copy to: David B. Deaton, Esq.
Jackson Walker LLP
Suite 4200
1100 Louisiana
Houston, TX 77002
Facsimile Number: (713) 752-4221
or such other address as a party may specify in writing to other
parties pursuant hereto.
(f) This Escrow Agreement shall not be modified, revoked, released or
terminated except in writing and signed by the parties hereto.
(g) Should, at any time, any attempt be made to modify this Escrow
Agreement in a manner that would increase the duties and
responsibilities of Escrow Agent, or to modify this Escrow Agreement
in any matter which Escrow Agent shall deem undesirable, or at any
other time, Escrow Agent may resign by notifying the parties in
writing, by certified mail to their respective addresses here and
above set forth. Until (i) the acceptance by such successor Escrow
Agent as shall be appointment by such parties; or (ii) 60 days
following the date upon which notice was mailed, whichever occurs
sooner, Escrow Agent's only remaining obligation shall be to
perform its duties hereunder in accordance with the terms of this
Escrow Agreement. If said 60 days have passed without the
acceptance by such successor Escrow Agent as shall have been
appointed by such parties, then the Escrow Agent may exercise its
rights under item 8(b)(ii) of this Agreement.
(h) No Implied Duties. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no additional
duties or obligations shall be implied hereunder. The parties
hereby acknowledge that the Escrow Agent is serving as the Escrow
Agent of the offering for the limited purposes set forth herein,
and hereby agree that they will not represent or imply that the
Escrow Agent, by serving as the escrow agent hereunder or
otherwise, has investigated the desirability or advisability of
this investment, or has approved, endorsed or passed upon the
merits of this offering or any related, offering. It is further
agreed that no party shall in any way use the name "The Bank of New
York" in any sales presentation or literature except in, the
context of the duties of the Escrow Agent as escrow agent of the
Offering in the strictest sense. Any breach or violation of this
paragraph (i) shall be grounds for the immediate resignation by the
Escrow Agent. This Escrow Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year above set forth.
ESCROW AGENT: THE BANK OF NEW YORK
By: /s/ Peggy McWhorter
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Name: Peggy T. McWhorter
Title: As Agent
PLACEMENT AGENT: J.P. CAREY SECURITIES, INC.
By: /s/ Janet L. Muller
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Name: Janet L. Muller
Title: Chief Compliance Officer
COMPANY: 2-INFINITY.COM, INC.
By: /s/ Majed M. Jalali
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Name: Majed M. Jalali
Title: Chairman of the Board, Chief Executive
Officer and President
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EXHIBIT "A"
ESCROW AGREEMENT BY AND AMONG THE BANK OF NEW YORK,
J.P. CAREY SECURITIES, INC. AND 2-INFINITY.COM, INC.
I. ACCEPTANCE FEE $500.00
Includes review of all documents, attendance at document
conferences and closing (if necessary), establishment of accounts;
receipt and deposit assets. This one-time fee is payable at the
time of closing.
II. ANNUAL ADMINISTRATION FEE $750.00
Includes performance of all administrative duties under document
provisions, including receipt and **disbursement of funds,
periodic statement of account. Our annual administration fee is
billed and payable annually in advance.
III. **DISBURSEMENT FEE $25.00
Charge for each payment each in excess of up to three
disbursements of three payments each covered by the Annual
Administration Fee.
IV. REFUND OF SUBSCRIPTION DEPOSITS $50.00
Charge for each subscriber paid. Includes calculation of interest
earned and wire/check fees.
V. OUT-OF-POCKET EXPENSES At Cost
All out-of-pocket expenses such as, but not limited to, travel,
stationary, postage, insurance, courier charges, legal fees (if
required), wire transfers, retention of records, and supplies such
as check forms, will be billed at cost. In the event the
transaction terminates before closing, all out-of-pocket expenses
incurred, including our counsel fees, if applicable, will be
billed.
VI. EXTRAORDINARY SERVICES At Cost
Charges for the performance of any services not of a routine
administrative nature will be determined by appraisal at such time
in amounts commensurate with the service. These extraordinary
services may partially be classified as amendments and releases:
preparation of special or interim reports which the escrow agent or
agent must submit; unusual studies, considerations and actions taken
with respect to document provisions.
We reserve the right to adjust this schedule of fees from time to time
upon 60 days written notice.
OUR PROPOSAL IS SUBJECT TO OUR REVIEW AND ACCEPTANCE OF THE GOVERNING
DOCUMENTS WHICH SET FORTH OUR DUTIES AND RESPONSIBILITIES.
Dated: Aug 11th, 2000
