AMENDED AND RESTATED ESCROW AGREEMENT
(FUNDS)
WHEREAS, SB Merger Corp. (the "Company") and Continental Stock Transfer &
Trust Company (the "Escrow Agent") entered into an Escrow Agreement ("Funds")
dated as of the 21st day of August, 2000 (the "Original Funds Escrow
Agreement"); and
WHEREAS, the Company has retained Merit Capital Associates, Inc. ("Merit")
as the Underwriter of its proposed offering and therefore wishes to add Merit as
a party to the Original Funds Escrow Agreement.
NOW, THEREFORE, the Original Funds Escrow Agreement by and between the
Company and the Transfer Agent is hereby revised in its entirety as follows:
This ESCROW AGREEMENT is made as of this 25th day of September, 2000 by and
between SB Merger Corp. with a place of business at 000 Xxxx Xxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 (the "Company"), Continental Stock Transfer & Trust
Company with a principal place of business at 0 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, in its capacity as escrow agent only (the "Escrow Agent") and
Merit Capital Associates, Inc. with a principal place of business at 0000 Xxxx
Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Company intends to consummate the initial public offering (the
"Offering") of an aggregate of 125,000 shares (the "Shares") of the Company's
common stock, par value $.001 per share (the "Common Stock") through the
Underwriter as more fully described in the Company's Registration Statement on
Form SB-2 under the Securities Act of 1933, as amended (File No. 333-39044), as
declared effective by the Securities and Exchange Commission on October __, 2000
(the "Registration Statement");
WHEREAS, in accordance with the terms of the Offering as set forth in the
Registration Statement, the gross proceeds from the sale of the Shares are
required to be placed directly in an escrow account; and
WHEREAS, the Company wishes to appoint the Escrow Agent as the escrow agent
for such account, on the terms and conditions set forth below in order to comply
with the requirements of Rule 419 of Regulation C of the Rules and Regulations
established by the Securities and Exchange Commission;
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth below, and for other valuable consideration the sufficiency and receipt of
which are hereby acknowledged, the parties hereto hereby agree as follows:
I. Appointment of Escrow Agent and Creation of Account. The Company hereby
appoints the Escrow Agent as escrow agent hereunder and directs it to hold those
funds received from subscribers for Shares which may be deposited with the
Escrow Agent from time to time to be held pursuant to this Agreement and any
income earned from investment of such assets (collectively, the "Escrow
Assets"), in a separate account in the name of "SB Merger Corp. - Escrow
Account" (the "Escrow Account"). The Escrow Account shall be invested,
administered and distributed in accordance with the terms set forth below.
1. Initial Funding of Escrow Account; Return of Funds if Offering Not
Completed. The Escrow Account shall be funded with the proceeds from the sale of
Shares by the Company. All funds received by the Company or the Underwriter from
the sale of Shares by the Company shall be deposited directly in the Escrow
Account by wire transfer, check or money order. In the event funds aggregating a
total of $125,000 are not deposited into the Escrow Account by the time
specified in the Registration Statement (the "Termination Date"), the Escrow
Agent will return the funds to subscribers, without interest. In the event an
aggregate of $125,000 is deposited in the Escrow Account on or before the
Termination Date, the Escrow Agent shall retain the Escrow Assets during the
ensuing period (the "Post-Offering Period") pending distribution in accordance
with Section 3 below.
2. Investment of Escrow Assets. The Escrow Assets shall be invested, if at
all, in accordance with the instructions set forth in Exhibit A attached hereto.
Such instructions may be modified only by a written certificate executed by an
authorized officer of the Company and delivered to the Escrow Agent; however,
this Escrow Agreement may not be altered by the Board of Directors of the
Company in terms of the investment instructions, except as may be required by
the Board of Directors to fulfill their fiduciary obligations. The Escrow Agent
shall make monthly accounting of any such investments, the income received
therefrom, and the then existing balance of the Escrow Account to the Company.
3. Post-Offering Period Distribution from Escrow Account. The Escrow Agent
shall make distributions from the Escrow Account during the Post-Offering Period
in accordance with the requirements set forth in Exhibit B attached hereto. Such
instructions may be modified only by a written certificate executed by
authorized officers of the Company, and delivered to the Escrow Agent. In
addition, this Escrow Agreement may not be altered by the Board of Directors of
the Company in terms of its distribution instructions, except as may be required
by the Board of Directors to fulfill their fiduciary obligations. The Escrow
Agent is authorized to make distributions in reliance on the instructions it
receives. Written notice of each disbursement from the Escrow Agent shall be
provided to the Company within ten (10) days of each such disbursement. Upon the
final distribution of all of the Escrow Assets, this Agreement shall terminate
and the Escrow Agent shall have no further obligations or liabilities hereunder.
4. Compensation of Escrow Agent. The Escrow Agent shall receive fees
determined in accordance with, and payable as specified in, the Schedule of Fees
attached hereto as Exhibit C (the "Fee Schedule"). The Escrow Agent shall have
no duties or liabilities under this Agreement unless and until full payment of
the fee set forth in Exhibit C. The Escrow Agent shall be reimbursed by
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the Company for all expenses, disbursements and advances incurred or made by the
Escrow Agent in preparation, administration and enforcement of this Agreement,
including, but not limited to, reasonable legal fees and expenses. The Company
shall be liable for all payments due to the Escrow Agent under this Agreement.
5. Responsibilities and Rights of the Escrow Agent. To induce the Escrow
Agent to act hereunder, it is further agreed by the undersigned that:
(a) The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein. Without limiting the generality of the
foregoing, the Escrow Agent shall have no duty or responsibility as regards
any: (i) security as to which a default in the payment of principal or
interest has occurred, to give notice of default, make demand for payment
or take any other action with respect to such default; and (ii) loss
occasioned by delay in the actual receipt of notice of any payment,
redemption or other transaction regarding any item in the Escrow Assets as
to which it is authorized to take action hereunder. The Escrow Agent may
consult with counsel and shall be fully protected with respect to any
action taken in good faith in accordance with such advice. The Escrow Agent
shall have no liability or responsibility for any misstatement in, or
omission from, the Prospectus.
(b) The Escrow Agent shall not be under any duty to give the Escrow
Assets held by it hereunder any greater degree of care than it gives its
own similar property and shall not be required to invest any funds held
hereunder except as directed pursuant to this Escrow Agreement. In the
event that there is a change in the investment instructions resulting in
uninvested funds, such uninvested funds held hereunder shall not earn or
accrue interest.
(c) The Escrow Agent does not make any representation or warranty with
regard to the creation or perfection, hereunder or otherwise, of a security
interest in the Escrow Assets or regarding the negotiability or
transferability of, or existence of other interests in the Escrow Assets.
The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Escrow Assets or any
part thereof or to file any financing statement under the Uniform
Commercial Code of any state with respect to the Escrow Assets or any part
thereof.
(d) The Escrow Agent is hereby authorized to comply with any judicial
order or legal process which stays, enjoins, directs or otherwise affects
the transfer or delivery of the Escrow Assets or any party hereto and shall
incur no liability for any delay or loss which may occur as a result of
such compliance.
(e) The Escrow Agent shall have no duty or responsibility with regard
to any loss resulting from the investment, reinvestment, sale or
liquidation of the Escrow Assets in accordance with the terms of this
Agreement. The Escrow Agent need not maintain any insurance with respect to
the Escrow Assets.
(f) The Escrow Agent shall in no event be liable in connection with
its investment or reinvestment of any cash held by it hereunder in good
faith, in accordance with the terms hereof, including, without limitation,
any liability for any delays (not resulting from its gross
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negligence or willful misconduct) in the investment or reinvestment of the
Escrow Assets, or any loss of interest incident to any such delays.
(g) Except as otherwise expressly provided herein, the Escrow Agent is
authorized to execute instructions and take other actions pursuant to this
Agreement in accordance with its customary processing practices for similar
customers and, in accordance with such practices the Escrow Agent may
retain agents, including its own subsidiaries or affiliates, to perform
certain of such functions. The Escrow Agent shall have no liability under
this Agreement for any loss or expense other than those occasioned by the
Escrow Agent's gross negligence or willful misconduct and in any event its
liability shall be limited to direct damages and shall not include any
special or consequential damages. All collection and receipt of funds or
securities and all payment and delivery of funds or securities under this
Agreement shall be made by the Escrow Agent as agent, at the risk of the
other parties hereto with respect to their actions or omissions and those
of any person other than the Escrow Agent. In no event shall the Escrow
Agent be responsible or liable for any loss due to force beyond its
control, including, but not limited to, acts of God, flood, fire, nuclear
fusion, fission or radiation, war (declared or undeclared), terrorism,
insurrection, revolution, riot, strikes or work stoppages for any reason,
embargo, government action, including any laws, ordinances, regulations or
the like which restrict or prohibit the providing of the services
contemplated by this Agreement, inability to obtain equipment or
communications facilities, or the failure of equipment or interruption of
communications facilities, and other causes whether or not of the same
class or kind as specifically named above. In the event that the Escrow
Agent is unable substantially to perform for any of the reasons described
in the immediately preceding sentence, it shall so notify the other parties
hereto as soon as reasonably practicable following its actual knowledge of
the same.
(h) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this agreement against the
Escrow Agent. Notwithstanding any provisions of this Agreement to the
contrary, the Escrow Agent shall not be bound by, or have any
responsibility with respect to, any other agreement or contract among the
Company and the Representatives (whether or not the Escrow Agent has
knowledge thereof).
(i) It is understood and agreed that should any dispute arise with
respect to the payment and/or ownership or right of possession of the
Escrow Assets, or should the Escrow Agent in good faith be in doubt as to
what action it should take hereunder, the Escrow Agent is authorized and
directed to retain in its possession, without liability to anyone, all or
any part of the Escrow Assets until such dispute shall have been settled
either by mutual agreement by the parties concerned or by the final order,
decree or judgment of any court or other tribunal of competent jurisdiction
in the United States of America and time for appeal has expired and no
appeal has been perfected, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings. Any such court
order shall be accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Escrow Agent to the effect that said court order
is final and non-appealable.
(j) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety
or validity of the service thereof. Without limiting the foregoing, in the
event of any alteration of
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investment or distribution instructions, the Escrow Agent shall have no
responsibility to determine whether the requested alteration was required
by the Board of Directors of the Company to fulfill its fiduciary
obligations. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized
to do so.
(k) The Company shall hold the Escrow Agent and its agents harmless
from, and indemnify and reimburse the Escrow Agent and its agents for all
claims, liability, loss and expense (including reasonable out-of-pocket and
incidental expenses and legal fees), incurred by the Escrow Agent or them
in connection with the Escrow Agent or their acting under this Agreement,
provided that the Escrow Agent or they, as the case may be, have not acted
with gross negligence or willful misconduct with respect to the events
resulting in such claims, liability, loss, and expense.
(l) The Company acknowledges and agree that, except as otherwise
provided in this Section 5(l), the Escrow Agent shall not be responsible
for taking any steps, including without limitation, the filing of forms or
reports, or withholding of any amounts in connection with any tax
obligations of the Company or any other party in connection with the Escrow
Assets; provided, however, that the Escrow Agent shall be entitled to take
any action such as withholding, that it deems appropriate to ensure
compliance with its obligations under any applicable tax laws. In no event
shall the Escrow Agent be required to distribute funds from the Escrow
Account to either the shareholders or the Company unless the appropriate
Internal Revenue Service Form W-8 or Form W-9 are received, if necessary.
Notwithstanding the foregoing, the Escrow Agent shall supply any
information or documents as may be reasonably requested by the Company in
connection with the Company's preparation of its tax returns for the Escrow
Account. Upon any distribution of Escrow Assets in accordance with the
instructions set forth in Exhibit B attached hereto, the Escrow Agent shall
prepare and deliver to each person receiving a distribution a completed
Form 1099, if necessary, and shall supply any necessary information as may
reasonably be requested in writing by such persons.
(m) The Escrow Agent does not have any interest in the Escrow Assets
deposited hereunder but is serving as escrow holder only and having only
possession thereof. The Company shall pay or reimburse the Escrow Agent
upon request for any transfer taxes or other taxes relating to the Escrow
Assets incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent from any amounts that it is obligated to pay in
the way of such taxes. This paragraph shall survive notwithstanding any
termination of this Escrow Agreement or the resignation of the Escrow
Agent.
(n) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document
or instrument held by or delivered to it.
(o) The Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited
hereunder.
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(p) No printed or other matter in any language (including without
limitation prospectuses, notices, reports and promotional material) which
mentions the Bank's name or the rights, powers, or duties of the Escrow
Agent shall be issued by the other parties hereto or on such parties,
behalf unless the Escrow Agent shall first have given its specific written
consent thereto. Notwithstanding the foregoing sentence, the Escrow Agent
hereby specifically consents to the use of its name as Escrow Agent as
necessary to effectuate the Company's public offering and a business
combination of the Company.
(q) The Company authorizes the Escrow Agent, for any securities held
hereunder, to use the services of any United States central securities
depository it deems appropriate, including, but not limited to, the
Depositary Trust Company and the Federal Reserve Book Entry System.
6. Instructions: Fund Transfers.
(a) The Escrow Agent is authorized to rely and act upon all
instructions given or purported to be given by one or more officers,
employees or agents of the Company (i) authorized by or in accordance with
a corporate resolution delivered to the Escrow Agent or (ii) described as
authorized in a certificate delivered to the Escrow Agent by the
appropriate Secretary or Assistant Secretary or similar officer (each such
officer, employee or agent or combination of officers, employees and agents
authorized pursuant to clause (i) or described pursuant to clause (ii) of
this Section 6(a) is hereinafter referred to as an "Authorized Officer").
(The term "instructions" includes, without limitation, instructions to
sell, assign, transfer, deliver, purchase or receive for the Escrow Account
any and all stocks, bonds and other securities or to transfer all or any
portion of the Escrow Assets.) The Escrow Agent may also rely and act upon
instructions when bearing or purporting to bear the signature or facsimile
signature of any of the individuals designated by an Authorized Officer
regardless of by whom or by what means the actual or purported facsimile
signature or signatures thereon may have been affixed thereto if such
facsimile signature or signatures resemble the facsimile specimen or
specimens from time to time furnished to the Escrow Agent by any of such
Authorized Officers, Secretary or an Assistant Secretary or similar
officer). In addition, and subject to subsection 6(b) hereof, the Escrow
Agent may rely and act upon instructions received by telephone, telex, TXW
facsimile transmission, bank wire or other teleprocess acceptable to it
which the Escrow Agent believes in good faith to have been given by an
Authorized Officer or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Escrow Agent may
specify. The Escrow Agent shall incur no liability to the Company or
otherwise for having acted in accordance with instructions on which it is
authorized to rely pursuant to the provisions hereof. Any instructions
delivered to the Escrow Agent by telephone shall promptly thereafter be
confirmed in writing by an Authorized Officer but the Escrow Agent shall
incur no liability for a failure to send such confirmation in writing, the
failure of any such written confirmation to conform to the telephone
instruction which it received, the failure of any such written confirmation
to be signed or properly signed, or its failure to produce such
confirmation at any subsequent time. The Escrow Agent shall incur no
liability for refraining from acting upon any instructions, which for any
reason it, in good faith, is unable to verify to its own satisfaction.
Unless otherwise expressly provided, all authorizations and instructions
shall continue in full force and effect until canceled or superseded by
subsequent authorizations or instructions received by the Escrow Agent's
safekeeping account administrator. The Escrow Agent's authorization to rely
and
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act upon instructions pursuant to this paragraph shall be in addition to,
and shall not limit, any other authorization, which the Company may give to
it hereunder.
(b) With respect to written or telephonic instructions or instructions
sent by facsimile transmission to transfer funds from the Escrow Account in
accordance herewith (such instructions hereinafter referred to as "Transfer
Instructions"), the security procedure agreed upon for verifying the
authenticity of Transfer Instructions is a callback by the Escrow Agent to
any of the persons designated below, whether or not any such person has
issued such Transfer Instruction. (It is recommended that the persons
designated below not be persons who generally issue Transfer Instructions;
whenever possible, the Escrow Agent will endeavor to call someone other
than the issuer of the Transfer Instructions).
With respect to Transfer Instructions given by the Company pursuant to its
authority under this Agreement:
Name/Title Telephone No.
---------- -------------
Xxxxxx Xxxxxxxx, President (000) 000-0000
Xxxxxxx X. Xxxxxxxx, Secretary (000) 000-0000
Alternatively, at the Escrow Agent's option, the callback may be made to
any person designated in the certified resolutions or other certificates or
documentation furnished to it by a party in connection with the Escrow Account
as authorized to issue Transfer Instructions or otherwise transact business with
respect to the Escrow Account for that party. The Company shall implement any
other authentication method or procedure or security device required by the
Escrow Agent at any time or from time to time.
7. Stockholder Redemption. In the event a stockholder exercises his or her
redemption right upon a business combination of the Company, the funds to repay
said stockholder shall be distributed directly from the Escrow Account. As soon
as practicable after the Company receives notice from a stockholder that the
stockholder is exercising its redemption rights, the Company shall instruct the
Escrow Agent to transfer, and (so long as the Escrow Agent has received any
necessary Internal Revenue Service Form W-8 or Form W-9) the Escrow Agent shall
so transfer the funds owed to the stockholder; such instructions to include the
amount to be transferred and delivery instructions. These instructions shall
comply with Section 6 of this Escrow Agreement.
8. Resignation or Removal of Escrow Agent.
(a) The Escrow Agent may resign at any time by giving written notice
to the Company. The Company may remove the Escrow Agent upon written notice
to the Escrow Agent. Such resignation or removal shall take effect upon
delivery of the Escrow Assets to a successor escrow agent designated in
writing by the Company, and the Escrow Agent shall thereupon be discharged
from all obligations under this Agreement, and shall have no further duties
or responsibilities in connection herewith. The obligations of the Company
to the Escrow Agent and the rights of the Escrow Agent under Sections 4 and
5(k) hereof shall survive termination of this Agreement or the resignation
or removal of the Escrow Agent.
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(b) In the event that the Escrow Agent submits a notice of
resignation, its only duty, until a successor Escrow Agent shall have been
appointed and shall have accepted such appointment, shall be to safekeep
the Escrow Assets, and hold, invest and dispose of the Escrow Assets in
accordance with this Agreement, until receipt of a designation of successor
Escrow Agent or a joint written disposition instrument by the other parties
hereto or a Final Order of a court of competent jurisdiction, but without
regard to any notices, requests, instructions, demands or the like received
by it from the other parties hereto after such notice shall have been
given, unless the same is a direction that the Escrow Assets be paid or
delivered in its entirety out of the Escrow Account. The Escrow Agent, upon
submission of its resignation in accordance with this subparagraph (b) may
deposit the Escrow Assets with a court of competent jurisdiction if the
Escrow Agent deems such action advisable. The resignation of the Escrow
Agent will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day which is 30
days after the date of delivery of its written notice of resignation to the
other parties hereto. If, at the time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole
responsibility after that time shall be to safe-keep the Escrow Assets
until receipt of a designation of a successor Escrow Agent or a joint
written disposition instrument by the other parties hereto or a final order
of a court of competent jurisdiction.
9. Notices. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipted courier
service. All such notices which are mailed shall be deemed delivered upon
receipt if the addressee is the Escrow Agent, but shall be deemed delivered upon
mailing if otherwise, all such notices shall be addressed as follows (or to such
other address as any party hereto may from time to time designate by notice duly
given in accordance with this paragraph):
If to the Company, to:
SB Merger Corp.
000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, President
If to the Escrow Agent, to:
Continental Stock Transfer & Trust Co.
0 Xxxxxxxx 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
If to the Underwriter, to:
Merit Capital Associates, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, President
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10. Miscellaneous.
(a) Choice of Law and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the law of the State of New York
applicable to agreements made and to be performed in New York. The parties
to this Agreement hereby agree that jurisdiction over such parties and over
the subject matter of any action or proceeding arising under this Agreement
may be exercised by a competent Court of the State of New York sitting in
New York City or by a United States Court sitting in the Southern District
of New York, exclusively. The parties agree that delivery or mailing of any
process or other papers in the manner provided herein, or in such other
manner as may be permitted by law, shall be valid and sufficient service
thereof.
(b) Benefits and Assignment. Nothing in this Agreement, expressed or
implied, shall give or be construed to give any person, firm or
corporation, other than the parties hereto and their successors and
assigns, any legal claim under any covenant, condition or provision hereof;
all the covenants, conditions, and provisions contained in this Agreement
being for the sole benefit of the parties hereto and their successors and
assigns. No party may assign any of its rights or obligations under this
Agreement without (i) the written consent of all the other parties, which
consent may be withheld in the sole discretion of the party whose consent
is sought and (ii) the written agreement of the transferee that it will be
bound by the provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in several
counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument.
(d) Amendment and Waiver. This Agreement may be modified only by a
written amendment signed by all the parties hereto, and no waiver of any
provision hereof shall be effective unless expressed in a writing signed by
the party to be charged.
(e) Headings. The headings of the sections hereof are included for
convenience of reference only and do not form part of this Agreement.
(f) Entire Agreement. This Agreement contains the complete agreement
of the parties with respect to its subject matter and supersedes and
replaces any previously made proposals, representations, warranties or
agreements with respect thereto by any of the parties hereto.
(g) Separability. Any provisions of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or enforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
11. Additional Documentation. This Agreement shall not become effective
(and the Escrow Agent shall have not responsibility hereunder except to return
the Escrow Assets to the Company) until the Escrow Agent shall have received
from the Company the following:
(a) Certified resolutions of its board of directors authorizing the
making and performance of this Agreement; and
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(b) A certificate as to the names and specimen signatures of its
officers or representatives authorized to sign the Agreement and notices,
instructions and other communications hereunder.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
SB MERGER CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Secretary
Agreed and Accepted:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx
President
MERIT CAPITAL ASSOCIATES, INC., as Underwriter
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx
President
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EXHIBIT A to ESCROW AGREEMENT
Investment Instructions
The Escrow Agreement shall not be required to invest the Escrow Assets. Any
investments made shall be in short-term United States government securities,
including treasury bills, cash and cash equivalents. The Escrow Agent shall not
invest the Escrow Assets in the securities of any registered investment Company,
irrespective of the nature of the underlying assets of such investment company.
EXHIBIT B to ESCROW AGREEMENT
Post-Offering Period Distribution Instructions
1. Release of Escrow Assets to the Company. During the Post-Offering Period,
the Escrow Agent shall release the Escrow Assets to the Company upon
receipt by the Escrow Agent of:
(a) Written notice from the Company that the Company has complied with the
requirements of Rule 419 under the Securities Act of 1933, as amended
(the "Act"); and
(b) An opinion of counsel of the Company, reasonably acceptable to the
Escrow Agent, that:
(i) A business combination of the Company with or into another
entity was approved by a vote of a majority of the shares of
Common Stock of the Company, as required by the Company's
Registration Statement on Form SB-2 (the "Registration
Statement"), as filed pursuant to the Act;
(ii) Not more than twenty percent of the stockholders of the Company
have elected to redeem their Common Stock, as required by the
Registration Statement; and
(iii) All other actions required to be performed by the Company for
the release of the Escrow Assets have been met.
2. Distribution of Escrow Assets to Stockholders. The Escrow Agent shall
disburse the Escrow Assets to holders of record of the Company's Common
Stock if:
(a) The Company delivers written notice to the Escrow Agent that all of
the Escrow Assets should be distributed to the holders of record of
the Company's Common Stock sold in the Offering in connection with the
liquidation of the Company; or
(b) The Company delivers written notice to the Escrow Agent that part of
the Escrow Assets should be distributed to those holders of record of
the Company's Common Stock sold in the Offering electing to have their
Shares redeemed in accordance with the terms set forth in the
Registration Statement.
3. Method of Release of Escrow Assets to the Company. Upon receipt by the
Escrow Agent of the written documents required by paragraph 1 above, the
Escrow Agent shall wire transfer the Escrow Assets to the Company in
accordance with the wire transfer instructions of the Company set forth in
such notice.
4. Method of Distribution of Escrow Assets to Stockholders. Upon the
occurrence of either of the events specified in Section 2(a) or 2(b) above,
the Escrow Agent shall distribute Escrow Assets to holders of record of the
Company's Common Stock sold in the Offering by mail in accordance with and
to the address specified in the books and records of the Company. The
written notice required by Section 2(a) or 2(b), as the case may be, shall
include the name and address of each such holder, together with the
percentage of the Escrow Assets to be distributed thereto.
EXHIBIT C to ESCROW AGREEMENT
Fee Schedule
One Thousand ($1,000.00) Dollars Escrow Agent fee to CONTINENTAL STOCK
TRANSFER & TRUST COMPANY to be paid at Closing.
