STOCK ESCROW AGREEMENT
STOCK ESCROW AGREEMENT, dated as of ___________ ___, 2005
("Agreement") by and among Argyle Security Acquisition Corporation, a Delaware
corporation ("Company"), the undersigned parties listed as Initial Stockholders
on the signature page hereto (collectively, the "Initial Stockholders") and
American Stock Transfer & Trust Company, a New York corporation ("Escrow
Agent").
WHEREAS, the Company has entered into an Underwriting Agreement,
dated _______ __, 2005 ("Underwriting Agreement") with Xxxxxx & Xxxxxxx, LLC
("Xxxxxx") pursuant to which, among other matters, Xxxxxx has agreed to purchase
12,500,000 units ("Units") of the Company. Each Unit consists of one share of
the Company's Common Stock, par value $.0001 per share, and one Warrant, each
Warrant to purchase one share of Common Stock, all as more fully described in
the Company's definitive Prospectus, dated ________ __, 2005 ("Prospectus")
comprising part of the Company's Registration Statement on Form S-1 (File No.
333-________) under the Securities Act of 1933, as amended ("Registration
Statement"), declared effective on ________ __, 2005 ("Effective Date").
WHEREAS, the Initial Stockholders have agreed as a condition of the
Xxxxxx'x 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
of the Company, as set forth opposite their respective names in Exhibit A
attached hereto (collectively "Escrow Shares"), in escrow as hereinafter
provided.
WHEREAS, the Company and the Initial Stockholders desire that the
Escrow Agent accept the Escrow Shares, in escrow, to be held and disbursed as
hereinafter provided.
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 Shares. On or before the Effective Date, each of the
Initial Stockholders shall deliver to the Escrow Agent certificates representing
his or her respective Escrow Shares, to be held and disbursed subject to the
terms and conditions of this Agreement. Each Initial Stockholder acknowledges
that the certificate representing his or her Escrow Shares is legended to
reflect the deposit of such Escrow Shares under this Agreement.
3. Disbursement of the Escrow Shares. The Escrow Agent shall hold the
Escrow Shares until the earlier of three years from the date of the Prospectus
or the first anniversary of the completion by the Company of a Business
Combination (as such term is defined in the Registration Statement) ("Escrow
Period"), on which date it shall, upon written instructions from each Initial
Stockholder, disburse each of the 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 of such entity
having the right to exchange their shares of Common Stock for cash, securities
or other property, then the Escrow Agent will, upon consummation of such
transaction, release the Escrow Shares to the Initial Stockholders so that they
can similarly participate. The Escrow Agent shall have no further duties
hereunder after the disbursement or destruction of the Escrow Shares in
accordance with this Section 3.
4. Rights of Initial Stockholders in Escrow Shares.
4.1. Voting Rights as a Stockholder. Subject to the terms of the
Insider Letter 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 Shares
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, (ii) by virtue of the laws
of descent and distribution upon death of any Initial Stockholder, or (iii)
pursuant to a qualified domestic relations order; provided, however, that such
permissive 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
Shares. During the Escrow Period, the Initial Stockholders shall not pledge or
grant a security interest in the Escrow Shares 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 and the Company, dated as indicated on Exhibit 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
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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 Shares 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 Shares or it may deposit the
Escrow Shares with the clerk of any appropriate court or it may retain the
Escrow Shares 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 Shares 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 B 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.
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, the Escrow Shares 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 Shares with
any court it deems appropriate.
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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 other parties hereto, 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, 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. 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.
6.3. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation thereof.
6.4. 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.
6.5. 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:
Argyle Security Acquisition Corporation.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxx
If to a Stockholder, to his address set forth in Exhibit A.
and if to the Escrow Agent, to:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: ___________
A copy of any notice sent hereunder shall be sent to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx
and:
Xxxxxx & Xxxxxxx, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
and:
Xxxxx Xxxxxxx Xxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx
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.
6.6. 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.
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WITNESS the execution of this Agreement as of the date first above
written.
ARGYLE SECURITY ACQUISITION CORPORATION
By:
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Xxxxxx Xxxxxx, Co-Chief Executive Officer
INITIAL STOCKHOLDERS:
ARGYLE JOINT VENTURES
By:
--------------------------------------
Name: Xxx Xxxxxx
Title:
------------------------------------------
Xxx Chaimovski
ARGYLE NEW VENTURES L.P.
By: Argyle Communications Inc., its general partner
By:
--------------------------------------
Name: Xxx Xxxxxx
Title:
------------------------------------------
Xxxx X. Xxxxx
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
--------------------------------------
Name:
Title:
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EXHIBIT A
Name and Address of Number Stock Date of
Initial Stockholder of Shares Certificate Number Insider Letter
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EXHIBIT B
Escrow Agent Fees
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