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Exhibit 10.21
ESCROW AGREEMENT
AGREEMENT, dated as of the ___ day of January, 1997, by and among
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation (hereinafter
referred to as the "Escrow Agent"), BIRMAN MANAGED CARE, INC., a Delaware
corporation (the "Company"), and XXXXX X. XXXXXX, M.D. (the "Stockholder").
WHEREAS, the Company contemplates a public offering ("Public Offering")
of shares of its Common Stock, par value $.001 per share (the "Common Stock")
through Royce Investment Group, Inc. as underwriter (the "Underwriter") pursuant
to a Registration Statement on Form SB-2 as filed with the Securities and
Exchange Commission (the "Registration Statement"); and
WHEREAS, in connection with the Public Offering, the Stockholder has
agreed to deposit in escrow an aggregate of 1,000,000 shares of Common Stock,
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:
1. The Stockholder and the Company hereby appoint Continental Stock
Transfer & Trust Company as Escrow Agent. Concurrently with the execution and
delivery of this Agreement, the Stockholder has delivered to the Escrow Agent to
hold in accordance with the provisions hereof a certificate or certificates
representing an aggregate of 1,000,000 shares of Common Stock owned of record by
the Stockholder, together with stock powers executed in blank. The Escrow Agent,
by its execution and delivery of this Agreement, hereby acknowledges receipt of
the Escrow Shares and its appointment as Escrow Agent to hold the Escrow Shares
in escrow, upon the terms, provisions and conditions hereof.
2. This Agreement shall become effective upon the date on which the
Securities and Exchange Commission declares effective the Registration Statement
(the "Effective Date") and shall continue in effect until the earlier of (i) the
date specified in Section 4(d) hereof, or (ii) the distribution by the Escrow
Agent of all of the Escrow Shares in accordance with the terms hereof (the
"Termination Date"). The period of time from the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
3. During the Escrow Period, the Escrow Agent shall receive all of the
money, securities, rights or property distributed in respect of the Escrow
Shares then held in escrow, including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company, such property to be held and distributed
as herein provided and hereinafter referred to collectively as the "Escrow
Property."
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4. (a) The Escrow Shares are subject to release to the Stockholder to
the extent and only in the event the conditions set forth herein are met. The
Escrow Agent, upon notice to such effect from the Company as provided in Section
5 hereof, shall deliver the Escrow Shares, together with stock powers executed
in blank, and the Escrow Property deposited in escrow with respect to such
Escrow Shares, to the Stockholder, only if, and to the extent that, one or more
of the following conditions is met:
(i) 333,333 Escrow Shares shall be released if the Company's net
after-tax income per share (the "Minimum After-Tax Income")
for the fiscal year ending June 30, 1997, equals or exceeds
$.017 per share of then issued and outstanding shares of the
Company's Common Stock; or
(ii) 333,333 Escrow Shares (or, if the conditions set forth in (i)
above were not met, 666,666 Escrow Shares) shall be released
if the Minimum After-Tax Income for the fiscal year ending
June 30, 1998, equals or exceeds $.026 per share of then
issued and outstanding shares of the Company's Common Stock;
or
(iii) 333,334 Escrow Shares (or, if the conditions set forth in
either (i) or (ii) were not met, the remaining Escrow Shares)
shall be released if the Minimum After-Tax Income for the
fiscal year ending June 30, 1999, equals or exceeds $.039 per
share of then issued and outstanding shares of the Company's
Common Stock.
(b) The determination of Minimum After-Tax Income shall be (i)
calculated exclusive of any extraordinary earnings or charges (including any
charges incurred in connection with the release from escrow the Escrow Shares
and any Escrow Property in respect thereof pursuant to the provisions of this
Section 4); and (ii) audited by the Company's independent public accountants.
(c) The Minimum After-Tax Income amounts set forth in Section
4(a) shall be proportionately adjusted for any stock splits, stock dividends,
stock distributions, reverse stock splits, combinations, recapitalizations, or
other similar events.
(d) If the Escrow Agent has not received the notice provided
for in Section 5 hereof and delivered all of the Escrow Shares and related
Escrow Property in accordance with the provisions of Section 4 on or prior to
July 1, 1999, the Escrow Agent shall deliver the certificates representing all
or the remaining Escrow Shares, together with stock powers executed in blank,
and any related Escrow Property to the Company to be placed in the Company's
treasury for cancellation thereof as a contribution to capital. After such date,
the Stockholder shall have no further rights as a stockholder of the Company
with respect to any of the cancelled Shares.
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5. Upon the occurrence or satisfaction of any of the events or
conditions specified in Section 4 hereof, the Company shall promptly give
appropriate notice to the Escrow Agent, the Underwriter (and if the transfer
agent of the Company's Common Stock is different from the Escrow Agent, such
transfer agent) and present such documentation as is reasonably required by the
Escrow Agent to evidence the satisfaction of such conditions.
6. It is understood and agreed by the parties to this Agreement as
follows:
(a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depository and
in a ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to
have any responsibility in respect of any instruction, certificate or notice
delivered to it or of the Escrow Shares or any related Escrow Property other
than faithfully to carry out the obligations undertaken in this Agreement and to
follow the directions in such instruction or notice provided in accordance with
the terms hereof.
(c) The Escrow Agent is not and shall not be deemed to be
liable for any action taken or omitted by it in good faith and may rely upon,
and act in accordance with, the advice of its counsel without liability on its
part for any action taken or omitted in accordance with such advice. In any
event, its liability hereunder shall be limited to liability for gross
negligence, willful misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent's
reasonable fees and to reimburse it for its reasonable expense including
attorneys' fees incurred in connection with its duties hereunder and (ii) to
save harmless, indemnify and defend the Escrow Agent for, from and against any
loss, damage, liability, judgment, cost and expense whatsoever, including
counsel fees, suffered or incurred by it by reason of, or on account of, any
misrepresentation made to it or its status or activities as Escrow Agent under
this Agreement except for any loss, damage, liability, judgment, cost or expense
resulting from gross negligence, willful misconduct or bad faith on the part of
the Escrow Agent. The obligation of the Escrow Agent to deliver the Escrow
Shares to either the Stockholder or the Company shall be subject to the prior
satisfaction upon demand from the Escrow Agent of the Company's obligations to
so save harmless, indemnify and defend the Escrow Agent and to reimburse the
Escrow Agent or otherwise pay its fees and expenses hereunder.
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(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholder and indemnified
to the Escrow Agent's satisfaction against the cost and expense of such defense
by the party requesting such defense. If any such legal proceeding is instituted
against it, the Escrow Agent agrees promptly to give notice of such proceeding
to the Stockholder and the Company. The Escrow Agent shall not be required to
institute legal proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either under
this Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing, signed by the Escrow Agent, and only to
the extent expressly therein set forth. A waiver by the Escrow Agent under any
term of this Agreement shall not be construed as a bar to, or waiver of, the
same or any other such right or remedy which it would otherwise have on any
other occasion.
(h) The Escrow Agent may resign as such hereunder by giving 30
days' written notice thereof to the Stockholder and the Company. Within 20 days
after receipt of such notice, the Stockholder and the Company shall furnish to
the Escrow Agent written instructions for the release of the Escrow Shares (if
such shares and property, if any, have not yet been released pursuant to Section
4 hereof) to a substitute Escrow Agent which (whether designated by written
instruction from the Stockholder and the Company jointly or in the absence
thereof by instructions from a court of competent jurisdiction to the Escrow
Agent) shall be a bank or trust company organized and doing business under the
laws of the United States or any state thereof. Such substitute Escrow Agent
shall thereafter hold any Escrow Shares and any related Escrow Property received
by it pursuant to the terms of this Agreement and otherwise act hereunder as if
it were the Escrow Agent originally named herein. The Escrow Agent's duties and
responsibilities hereunder shall terminate upon the release of all shares then
held in escrow according to such written instruction or upon such delivery as
herein provided. This Agreement shall not otherwise be assignable by the Escrow
Agent without the prior written consent of the Company.
7. The Stockholder shall have the sole power to vote the Escrow Shares
and any securities deposited in escrow under this Agreement while they are being
held pursuant to this Agreement.
8. (a) The Stockholder agrees that during the term of this Agreement he
will not sell, transfer, hypothecate, negotiate, pledge, assign, encumber or
otherwise dispose of any or all of the Escrow Shares, unless and until the
Company shall have given the notice as provided in Section 5. This restriction
shall not be applicable to transfers upon death, by operation of law, to family
members of the Stockholder or to any trust for the benefit of the Stockholder,
provided that such transferees agree to be bound by the provisions of this
Agreement.
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(b) The Stockholder will take any action necessary or
appropriate, including the execution of any further documents or agreements, in
order to effectuate the transfer of the Escrow Shares to the Company if required
pursuant to the provisions of this Agreement.
9. Each of the certificates representing the Escrow Shares will bear
legends to the following effect, as well as any other legends required by
applicable law:
(a) "The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of the shares
evidenced by this certificate are restricted by and are
subject to all of the terms, conditions and provisions of a
certain Escrow Agreement entered into among Continental Stock
Transfer & Trust Company, Birman Managed Care, Inc. and Xxxxx
X. Xxxxxx, M.D., dated as of January ___, 1997, a copy of
which may be obtained from the Secretary of Birman Managed
Care, Inc. No transfer, sale or other disposition of these
shares may be made unless specific conditions of such
agreement are satisfied."
(b) "The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended. No
transfer, sale or other disposition of these shares may be
made unless a registration statement with respect to these
shares has become effective under said Act, or the Company is
furnished with an opinion of counsel satisfactory in form and
substance to it that such registration is not required."
Upon execution of this Agreement, the Company shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent and the
Underwriter shall have received written notice from the Company as provided in
Section 5.
10. Each notice, instruction or other certificate required or permitted
by the terms hereof shall be in writing and shall be communicated by personal
delivery, fax or registered or certified mail, return receipt requested, to the
parties hereto at the addresses set forth below, or at such other address as any
of them may designated by notice to each of the others:
(i) If to the Company, to:
Birman Managed Care, Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
(ii) If to the Stockholder, to:
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Xxxxx X. Xxxxxx, M.D.
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(iii) If to the Escrow Agent, to:
Continental Stock Transfer & Trust Company
Two Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ______________________________
(iv) If to Royce, to:
Royce Investment Group, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given hereunder
by the Escrow Agent shall be effective and deemed received upon personal
delivery or transmission by fax or, if mailed, five (5) calendar days after
mailing by the Escrow Agent.
A copy of the communications sent to the Company, the Stockholder or
the Escrow Agent, shall be sent by ordinary mail to ________________. A copy of
all communications sent to the Underwriter shall be sent by ordinary mail to
Bachner, Tally, Polevcy & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxx Xxxxx, Esq.
11. Except as set forth in Section 12 hereof, this Agreement may not be
modified, altered or amended in any material respect or cancelled or terminated
except by an agreement in writing.
12. In the event that the Public Offering is not consummated within
twenty-five (25) days of the Effective Date of the Registration Statement, this
Agreement shall terminate and be of no further force and effect and the Escrow
Agent, upon written notice from both the termination, will return the Escrow
Shares and any Escrow Property in respect thereof to the Stockholder.
13. This Agreement shall be governed by and construed in accordance
with the laws of New York and shall be binding upon and inure to the benefit of
all parties hereto and their respective successors in interest and assigns.
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14. This Agreement may be executed in several counterparts, which taken
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
BIRMAN MANAGED CARE, INC.
By:______________________________________
Xxxxx X. Xxxxxx, M.D.
President and Chief Executive Officer
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:______________________________________
Its:_____________________________________
STOCKHOLDER
_________________________________________
Xxxxx X. Xxxxxx, M.D.
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