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EXHIBIT 99.1
ESCROW AGREEMENT
ESCROW AGREEMENT, made this ____ day of _________, 2000, by
among Xxxxxx Xxxxxxxx (the "Shareholder"), Castle Securities Corp.
("Castle"), Exhaust Technologies, Inc. ("Exhaust"), and Xxxxxx X.
Xxxxxx (the "Escrow Agent").
PRELIMINARY STATEMENT. The Shareholder, Castle, Exhaust, and
the Escrow Agent have agreed that 550,000 shares of common stock of
Exhaust owned by the Shareholder should be held by the Escrow Agent
pursuant to the terms and conditions hereof. This Agreement is for
the benefit of Castle and cannot be modified during the period
hereof.
A public offering is to be made by Exhaust and Castle pursuant
to a registration statement on Form SB-2 and the related prospectus
filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and pursuant to
appropriate filings made or to be made with the applicable
authorities of the several states in which the public offering may
be made.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, terms and conditions hereinafter set forth, the
parties hereto hereby agree as follows:
Section 1. Designation and Deposit of Shareholder's Shares.
(a) The common shares of Exhaust to be deposited in escrow
pursuant to this Agreement consist of 550,000 common shares of
Exhaust and are owned by the Shareholder.
(b) Upon closing of the public offering, the Shareholder
shall deliver to the Escrow Agent any and all certificates
representing the 550,000 shares. Immediately upon receipt said
certificates, the Escrow Agent shall deliver a receipt therefore to
the Shareholder.
Section 2. Title of Escrow Account.
Title to the escrowed shares will remain in the name of Xxxxxx
Xxxxxxxx.
Section 3. Duration of Escrow Period.
The Escrow Period shall commence on the closing date of the
public offering and shall terminate on April 30, 2004 or sooner,
if the conditions set forth in Section 4 are met.
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Section 4. Release of the Shares.
In the event that Exhaust does not achieve sales of
$19,250,000 and pre-tax income in excess of $4,125,000 (the pre-tax
income shall be computed before any effect created by the shares),
in any one fiscal year commencing with the fiscal year beginning on
February 1, 2001 through the fiscal year ending on January 31, 2004
(the "Criteria"), the shares shall be delivered by the Escrow Agent
to Exhaust and canceled by Exhaust. In the event the Criteria is
achieved by Exhaust, the 550,000 shares will be delivered by the
Escrow Agent to the Shareholder. The 550,000 shares as well as
the dollar amount of sales and pretax income set forth above will
be prorated downward if less than $2,805,000 (gross proceeds) is
raised in the offering contemplated herein. Exhaust's independent
auditors will determine if the Criteria has been met as part of its
annual certified audit..
Section 5. Limitation of Liability of Escrow Agent.
In acting pursuant to this Agreement, the Escrow Agent shall
be protected fully in the exercise of his discretion and shall have
no obligation or liability to Shareholder, Castle, or Exhaust,
except for wilfull or gross negligence acts. In performing any of
his duties hereunder, the Escrow Agent shall not incur any
liability to any person for any damages, losses or expenses
including attorney's fees.
Section 6. Indemnification.
The Shareholder, Castle, and Exhaust, jointly and severally,
shall indemnify and hold harmless the Escrow Agent against any and
all losses, claims, damages, liabilities and expenses, including
reasonable costs of investigation and counsel fees and
disbursements, which may be imposed upon the Escrow Agent or
incurred by the Escrow Agent in connection with its acceptance of
appointment as Escrow Agent or the performance of his duties
hereunder, including any litigation arising from the Agreement or
involving the subject matter hereof.
Section 7. Payment of Fees.
The Shareholder shall be responsible for all reasonable fees
and expenses of the Escrow Agent incurred by it in the course of
performing hereunder.
Section 8. Governing Law.
The validity, interpretation and construction of this
Agreement and of each part hereof shall be governed by the laws of
the State of Washington.
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IN WITNESS WHEREOF, the Shareholder, Castle, Exhaust., and
the Escrow Agent have executed this Escrow Agreement on the day
and year first above written.
SHAREHOLDER
__________________________________
Xxxxxx Xxxxxxxx
CASTLE SECURITIES CORP.
BY: _____________________________
Xxxxxxx Xxxxxx, President
EXHAUST TECHNOLOGIES, INC.
BY: _____________________________
Xxxxxx Xxxxxxxx, President
ESCROW AGENT
__________________________________
Xxxxxx X. Xxxxxx
