SECURITIES ESCROW AGREEMENT
Exhibit 10.3
SECURITIES ESCROW AGREEMENT, dated as of , 2007 (this “Agreement”) by and among Arcade Acquisition Corp., a Delaware corporation (the “Company”), the undersigned parties listed as Initial Stockholders on the signature page hereto (collectively, the “Initial Stockholders”) and Continental Stock Transfer & Trust Company, a New York corporation (the “Escrow Agent”).
WHEREAS, the Company has entered into an Underwriting Agreement, dated , 2007 (the “Underwriting Agreement”) with Xxxxxx Xxxxxx & Co. Inc. (“Xxxxxx Xxxxxx”), as representative of the underwriters named therein (collectively, the “Underwriters”), pursuant to which, among other matters, the Underwriters have agreed to purchase 6,250,000 units (the “Units”) of the Company. Each Unit consists of one share of the Company’s common stock, par value $.0001 per share (the “Common Stock”), and one warrant, each warrant to purchase one share of Common Stock, all as more fully described in the Company’s definitive Prospectus, dated , 2007 (the “Prospectus”) comprising part of the Company’s Registration Statement on Form S-1 (File No. 333- ) under the Securities Act of 1933, as amended (the “Registration Statement”), declared effective on , 2007 (the “Effective Date”); and
WHEREAS, the Initial Stockholders have agreed, as a condition of the Underwriters’ obligation to purchase the Units pursuant to the Underwriting Agreement and to offer them to the public, to deposit all of their shares of Common Stock as set forth opposite their respective names in Schedule A attached hereto (collectively the “Escrow Shares”), in escrow as hereinafter provided; and
WHEREAS, the Company has entered into a Warrant Purchase Agreement with one of the Initial Stockholders (the “Initial Warrantholder”), dated , 2007 (the “Warrant Purchase Agreement”), pursuant to which the Initial Warrantholder has agreed to purchase 2,000,000 warrants (the “Founding Director Warrants”) in a private placement transaction;
WHEREAS, the Initial Warrantholder has agreed as a condition of the sale of the Founding Director Warrants to deposit the Founding Director Warrants (together with the Escrow Shares, the “Escrow Securities”), with the Escrow Agent as hereinafter provided; and
WHEREAS, the Company and the Initial Stockholders (such term as used herein includes the Initial Warrantholder) desire that the Escrow Agent accept the Escrow Securities, in escrow, to be held and disbursed as hereinafter provided.
NOW, THEREFORE, IT IS AGREED:
1. Appointment of Escrow Agent. The Company and the Initial Stockholders hereby appoint the Escrow Agent to act in accordance with and subject to the terms of
this Agreement and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with and subject to such terms.
2. Deposit of Escrow Securities. On or prior to the Effective Date, the Initial Stockholders shall deliver to the Escrow Agent certificates representing their respective Escrow Securities to be held and disbursed subject to the terms and conditions of this Agreement. Each Initial Stockholder acknowledges and agrees that the certificates representing his or her Escrow Securities will bear a legend reflecting the deposit of such Escrow Securities under this Agreement.
3. Disbursement of the Escrow Securities.
3.1 Disbursement of the Escrow Shares. The Escrow Agent shall hold the Escrow Shares until one year from the closing date of a Business Combination (“Escrow Period”), on which date it shall, upon written instructions from each Initial Stockholder, disburse each Initial Stockholder’s Escrow Shares to such Initial Stockholder; provided, however, that if the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof that the Company is being liquidated at any time during the Escrow Period, then the Escrow Agent shall promptly destroy the certificates representing the Escrow Shares; provided further, that if, after the Company consummates a Business Combination, it (or the surviving entity) subsequently consummates a liquidation, merger, stock exchange or other similar transaction which results in all of its stockholders having the right to exchange their shares of Common Stock for cash, securities or other property, then the Escrow Agent will, upon receipt of a notice, executed by the Chairman, Chief Executive Officer or Chief Financial Officer of the Company, in form reasonably acceptable to the Escrow Agent, certifying that such transaction is then being consummated, release the Escrow Shares to the Initial Stockholders. The Escrow Agent shall have no further duties hereunder after the disbursement or destruction of the Escrow Shares in accordance with this Section 3.1.
3.2 The Escrow Agent shall hold the Founding Director Warrants until such time that the Company consummates a Business Combination (as such term is defined in the Registration Statement); provided, however, that if the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof that the Company is being liquidated at any time during the Escrow Period, then immediately prior to the effectiveness of such liquidation, the Escrow Agent shall promptly destroy the certificates representing the Founding Director Warrants and the Founding Director Warrants shall no longer be considered issued and outstanding securities of the Company. The Escrow Agent shall have no further duties hereunder after the disbursement or destruction of the Founding Director Warrants in accordance with this Section 3.2.
4. Rights of Initial Stockholders in Escrow Shares.
4.1 Voting Rights as a Stockholder. Subject to the terms of the Insider Letters described in Section 4.4 hereof and except as herein provided, the Initial Stockholders shall retain all of their rights as stockholders of the Company during the Escrow Period, including, without limitation, the right to vote such shares.
4.2 Dividends and Other Distributions in Respect of the Escrow Shares. During the Escrow Period, all dividends payable in cash with respect to the Escrow Shares shall be paid to the Initial Stockholders, but all dividends payable in stock or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “Escrow Shares” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.
4.3 Restrictions on Transfer. During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the Escrow Securities except (i) by gift to a member of Initial Stockholder’s immediate family or to a trust or other entity, the beneficiary of which is an Initial Stockholder or a member of an Initial Stockholder’s immediate family, or (ii) by virtue of the laws of descent and distribution upon death of any Initial Stockholder, (iii) pursuant to a qualified domestic relations order; provided, however, that such permitted transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of this Agreement and of the Insider Letter signed by the Initial Stockholder transferring the Escrow Securities. During the Escrow Period, the Initial Stockholders shall not pledge or grant a security interest in the Escrow Securities or grant a security interest in their rights under this Agreement.
4.4 Insider Letters. Each of the Initial Stockholders has executed a letter agreement with Xxxxxx Xxxxxx and the Company, dated as indicated on Schedule A hereto, and which is filed as an exhibit to the Registration Statement (“Insider Letter”), respecting the rights and obligations of such Initial Stockholder in certain events, including but not limited to the liquidation of the Company.
5. Concerning the Escrow Agent.
5.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and 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 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 Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.
5.2 Indemnification. The Escrow Agent shall be indemnified and held harmless by the Company from and against any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the
Escrow Securities held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in an appropriate court to determine ownership or disposition of the Escrow Securities or it may deposit the Escrow Securities with the clerk of any appropriate court or it may retain the Escrow Securities pending receipt of a final, non appealable order of a court having jurisdiction over all of the parties hereto directing to whom and under what circumstances the Escrow Securities are to be disbursed and delivered. The provisions of this Section 5.2 shall survive in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.
5.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation from the Company for all services rendered by it hereunder, as set forth on Exhibit A hereto. The Escrow Agent shall also be entitled to reimbursement from the Company for all expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges. The Escrow Agent shall xxxx the Company on a monthly basis for services rendered.
5.4 Further Assurances. From time to time on and after the date hereof, the Company and the Initial Stockholders shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.
5.5 Resignation. The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over to a successor escrow agent appointed by the Company and approved by Xxxxxx Xxxxxx, the Escrow Securities held hereunder. If no new escrow agent is so appointed within the 60 day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Securities with any court it deems appropriate.
5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from its duties as escrow agent hereunder if so requested in writing at any time by the Company and a majority of the Initial Stockholders, jointly, provided, however, that such resignation shall become effective only upon acceptance of appointment by a successor escrow agent as provided in Section 5.5.
5.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence or its own willful misconduct.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall for all purposes be deemed to be made under and shall be construed in accordance with the laws of the State of New York. Each of the parties hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York (each, a “New York court”), and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
6.2 Third-Party Beneficiaries. Each of the Initial Shareholders hereby acknowledges that Xxxxxx Xxxxxx is a third-party beneficiary of this Agreement and this Agreement may not be modified or changed without the prior written consent of Xxxxxx Xxxxxx.
6.3 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and, except as expressly provided herein, may not be changed or modified except by an instrument in writing signed by the party to the charged.
6.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation thereof.
6.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns.
6.6 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and either be delivered personally or by private national courier service, or be mailed, certified or registered mail, return receipt requested, postage prepaid, and shall be deemed given when so delivered personally or, if sent by private national courier service, on the next business day after delivery to the courier, or, if mailed, two business days after the date of mailing, as follows:
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If to the Company, to: |
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c/o Arcade Partners, LLC |
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00 Xx Xxxxx Xxxx, Xxxxx 000 |
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Xxxx Xxxxxxxx, XX 00000 |
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Phone: 000-000-0000 |
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Fax: 000-000-0000 |
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Attn: Xxxx Xxxxxxx |
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If to a Stockholder, to his address set forth in Exhibit A. |
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and if to the Escrow Agent, to: |
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Continental Stock Transfer & Trust Company |
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00 Xxxxxxx Xxxxx |
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Xxx Xxxx, Xxx Xxxx 00000 |
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Attn: Xxxxx Xxxxxxxx, Vice President and Senior Account Executive |
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A copy of any notice sent hereunder shall be sent to: |
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Loeb & Loeb LLP |
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000 Xxxx Xxxxxx |
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Xxx Xxxx, Xxx Xxxx 00000 |
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Attn: Xxxx Xxxxxxx, Esq. |
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and: |
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Xxxxxx Xxxxxx & Co. Inc. |
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000 Xxxxx Xxxxxx |
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00xx Xxxxx |
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Xxx Xxxx, Xxx Xxxx 00000 |
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Attn: Xxxx Xxxxxx |
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and: |
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Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP |
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0000 Xxxxxx xx xxx Xxxxxxxx |
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Xxx Xxxx, Xxx Xxxx 00000 |
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Attn: Xxxxxxxxxxx Xxxxxxx, Esq. |
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The parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice to any such change in the manner provided herein for giving notice.
6.7 Liquidation of Company. The Company shall give the Escrow Agent written notification of the liquidation and dissolution of the Company in the event that the Company fails to consummate a Business Combination within the time period(s) specified in the Prospectus.
6.8 Waiver. Notwithstanding anything herein to the contrary, the Escrow Agent hereby waives any and all right, title, interest or claim of any kind (“Claim”) in or to any distribution of the Trust Account, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever.
WITNESS the execution of this Agreement as of the date first above written.
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By: |
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Name: Xxxxxxxx Xxxxx |
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Title: Chief Executive Officer |
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CONTINENTAL STOCK TRANSFER |
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& TRUST COMPANY |
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By: |
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Name: |
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Title: |
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INITIAL STOCKHOLDERS: |
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Xxxxxxxx Xxxxx |
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Xxxx Xxxxxxx |
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XXXX XXXXXX TR0UST |
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By: Xxxxx Xxxxxx, Trustee |
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XXXXX XXXXXX TRUST |
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By: Xxxxx Xxxxxx, Trustee |
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RAHMAN FAMILY TRUST |
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By: Xxxxx Xxxxxx, Trustee |
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ARCADE ACQUISITION INVESTORS, LLC |
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By: Xxxxx Xxxxxx, Managing Member |
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SCHEDULE A
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Name and Address of |
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Number of |
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Number of |
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Xxxxxxxx Xxxxx |
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420,833 |
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0 |
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Xxxx Xxxxxxx |
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420,833 |
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0 |
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Xxxx Xxxxxx Trust |
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150,000 |
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0 |
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Xxxxx Xxxxxx Trust |
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150,000 |
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0 |
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Rahman Family Trust |
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120,833 |
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0 |
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Arcade Acquisition Investors, LLC |
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300,001 |
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2,000,000 |
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TOTAL |
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1,562,500 |
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2,000,000 |
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EXHIBIT A
Escrow Agent Fees
