SECURITIES ESCROW AGREEMENT
SECURITIES
ESCROW AGREEMENT, dated as of
[
], 2008 (the “Agreement”) by and among Xxxxxxx’x Cove Acquisition
Corporation, a Delaware corporation (the “Company”), the undersigned party
listed as the Initial Unitholder on the signature page hereto (collectively,
the
“Initial Unitholder”) and Continental Stock Transfer & Trust Company, a New
York corporation (the “Escrow Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated
[
], 2008 (“Underwriting Agreement”), with UBS
Securities LLC (“UBS”) and Xxxxxx
Xxxxxx & Co. Inc. (“MJ”
and,
together with UBS, the “Representatives”)
acting
as representatives
of the
several underwriters (collectively, the “Underwriters”), pursuant to which,
among other matters, the Underwriters have agreed to purchase 10,000,000 units
(not including the underwriters’ over-allotment option) (“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 (“Warrant”) each
Warrant to purchase one share of Common Stock, all as more fully described
in
the Company’s definitive Prospectus, dated
[
], 2008 (“Prospectus”) comprising part of the Company’s Registration Statement
on Form S-1 (File No. 333-149812) under the Securities Act of 1933, as amended
(the “Registration Statement”), declared effective on
[
], 2008 (the “Effective Date”);
WHEREAS,
the Initial Unitholder has 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 its units of the Company, as set forth
opposite its name in Exhibit A attached hereto (the “Escrow Units”), in escrow
as hereinafter provided; each Escrow Unit consists of one share of Common Stock
(each an “Escrow Share”) and one warrant (each an “Escrow Warrant”), each Escrow
Warrant to purchase one share of Common Stock;
WHEREAS,
the Company has entered into a Subscription Agreement with the Initial
Unitholder (the “Initial Warrantholder,” and together with status as Initial
Unitholder, the “Initial Holder”), dated March 11, 2008 (the “Subscription
Agreement”), pursuant to which the Initial Warrantholder has agreed to purchase
3,050,000 of the Company’s warrants (the “Private Warrants”) in a private
placement transaction;
WHEREAS,
the Initial Warrantholder has agreed as a condition of the sale of the Private
Warrants to deposit the Private Warrants with the Escrow Agent as hereinafter
provided;
WHEREAS,
the Escrow Units, the Escrow Shares, the Escrow Warrants and the Private
Warrants, as well as the shares of Common Stock issuable upon exercise of the
Escrow Warrants and/or the Private Warrants, are collectively referred to herein
as the “Escrow Securities;” and
WHEREAS,
the Company and the Initial Holder desire that the Escrow Agent accept the
Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.
IT
IS
AGREED:
1. Appointment
of Escrow Agent.
The
Company and the Initial Holder hereby appoints 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
before the Effective Date, the Initial Holder shall deliver to the Escrow Agent
certificates representing its Escrow Securities to be held and disbursed subject
to the terms and conditions of this Agreement. The Initial Holder acknowledges
and agrees that the certificates representing the Escrow Securities will bear
a
legend to reflect the deposit of such Escrow Securities under this
Agreement.
3.
Disbursement
of the Escrow Securities.
3.1.
The
Escrow Agent shall hold the Escrow Securities until the termination of their
respective Escrow Periods (as defined below). The “Escrow Period” for the Escrow
Units, Escrow Shares and Escrow Warrants (and the shares of Common Stock
issuable upon exercise of the Escrow Warrants) shall be the period beginning
on
the date the certificates representing the Escrow Units, Escrow Shares and
Escrow Warrants are deposited with the Escrow Agent and ending on the date
that
is twelve (12) months following the consummation by the Company of its initial
Business Combination (as such term is defined in the Registration Statement),
except that if
the
Underwriters’ over-allotment option is not exercised in full or in part, up to
375,000 Escrow Units, including the underlying Escrow Shares and Escrow
Warrants, may be released from escrow for cancellation.
The
“Escrow Period” for the Private Warrants (and the shares of Common Stock
issuable upon exercise of the Private Warrants) shall be the period beginning
on
the date the certificates representing the Private Warrants are deposited with
the Escrow Agent and ending on the date that is thirty (30) days following
the
consummation by the Company of its initial Business Combination (as such term
is
defined in the Registration Statement). On the termination date of the
applicable Escrow Period (the “Release Date”), the Escrow Agent shall, upon
written instructions from the Initial Holder, disburse the Initial Holder’s
Escrow Securities to such Initial Holder; 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 applicable Escrow Period, then the
Escrow Agent shall promptly destroy the certificates representing the Escrow
Securities; provided further, that if, after the Company consummates its initial
Business Combination (as such term is defined in the Registration Statement),
it
(or the surviving entity) subsequently consummates a liquidation, merger, stock
exchange or other similar transaction which results in all of the 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 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
Securities to the Initial Holder so that it can similarly participate. The
Escrow Agent shall have no further duties hereunder after the disbursement
or
destruction of the Escrow Securities in accordance with this Section
3.
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4.
Rights
of Initial Holder in Escrow Securities.
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 Unitholder shall retain all of its rights as a
stockholder of the Company during the Escrow Period, including, without
limitation, the right to vote the Escrow Shares underlying the Escrow
Units.
4.2. Dividends
and Other Distributions in Respect of the Escrow Securities.
During
the Escrow Period, all dividends payable in cash with respect to the Escrow
Securities shall be paid to the Initial Unitholder, but all dividends payable
in
stock or other non-cash property (the “Non-Cash Dividends”) shall be delivered
to the Escrow Agent to hold in accordance with the terms hereof. As used herein,
the term “Escrow Securities” shall be deemed to include the Non-Cash Dividends
distributed thereon, if any.
4.3. Restrictions
on Transfer.
During
the applicable Escrow Period, no sale, transfer or other disposition may be
made
of any or all of the Escrow Securities except for transfers (i) with respect
to
an Initial Holder who is an entity, to such Initial Holder’s members upon
liquidation, (ii) by gift to a member of the Initial Holder’s immediate family
or to a trust or other entity, the beneficiary of which is an Initial Holder
or
a member of an Initial Holder’s immediate family, (iii) by virtue of the laws of
descent and distribution upon the death of any Initial Holder, (iv) pursuant
to
a qualified domestic relations order, (v) to an entity that is an Initial
Holder, (vi) to any person or entity controlling, controlled by, or under common
control with, an Initial Holder or (vii) with respect to an Initial Holder
who
is an individual, to an entity controlled by such Initial Holder; 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 (as described in Section
4.4 hereof) signed by the Initial Holder transferring the Escrow Securities.
During the Escrow Period, the Initial Holder shall not pledge or grant a
security interest in the Escrow Securities or grant a security interest in
its
rights under this Agreement.
4.4. Insider
Letters.
The
Initial Holder has executed a letter agreement with the
Representatives
and the
Company, dated as of the Effective Date, and which is filed as an exhibit to
the
Registration Statement (“Insider Letter”), respecting the rights and obligations
of such Initial Holder 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.
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5.2. Indemnification.
The
Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including reasonable 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 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 Holder
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 the
Representatives,
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 reasonably 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 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.
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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.
5.8. Standard
of Care.
The
Escrow Agent shall be obligated to perform only the duties, responsibilities
or
obligations as Escrow Agent expressly set forth in this Escrow Agreement, which
shall be deemed purely ministerial in nature, and the Escrow Agent shall under
no circumstances be deemed to be a fiduciary to any party hereto or any other
person.
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. Third
Party Beneficiaries.
The
Initial Holder hereby acknowledges that the Underwriters, including, without
limitation, the
Representatives,
are
third party beneficiaries of this Agreement and this Agreement may not be
modified or changed without the prior written consent of the
Representatives.
6.3. Entire
Agreement.
This
Agreement, together with the Insider Letters and Subscription Agreement as
referenced herein, 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.
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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:
If
to the
Company, to:
Xxxxxxx’x
Cove Acquisition Corporation
000
Xxxx
Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxx, Chief Executive Officer
If
to an
Initial Unitholder, to:
Xxxxxxx’x
Cove Holdings, LLC
000
Xxxx
Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxx, Co-Managing Member
and
if to
the Escrow Agent, to:
Continental
Stock Transfer & Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
[
]
Fax
No.:
(000) 000-0000
A
copy of
any notice sent hereunder shall be sent to:
UBS
Securities LLC
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attn:
[
]
Fax:
[ ]
and
Xxxxxx
Xxxxxx & Co. Inc.
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Tel:(000)
000-0000
Fax:
(000) 000-0000
and
Ellenoff,
Xxxxxxxx & Schole LLP
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
Fax
No.:
(000) 000-0000
and
Xxxxxxxx
Chance LLP
00
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxxxx X. Xxxxxxx
Fax:
(000) 000-0000
6
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 (as defined in that certain Investment
Management Trust Agreement, dated as of the date hereof, by and between the
Company and the Escrow Agent, as trustee thereunder), and hereby agrees not
to
seek recourse, reimbursement, payment or satisfaction for any Claim against
the
Trust Account for any reason whatsoever.
6.9. Counterparts.
This
Agreement may be executed in several counterparts each one of which shall
constitute an original and may be delivered by facsimile transmission and
together shall constitute one instrument.
[remainder
of page intentionally left blank]
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WITNESS
the execution of this Agreement as of the date first above written.
XXXXXXX’X
COVE ACQUISITION CORPORATION
By:
_________________________________
Name:
Xxxxxxx X. Xxxx
Title:
Chief Executive Officer
CONTINENTAL
STOCK TRANSER & TRUST COMPANY
By:
_________________________________
Name:
Title:
|
INITIAL
UNITHOLDER
XXXXXXX’X COVE HOLDINGS, LLC
|
||
| |
|
|
| By: | ||
|
Name:
Xxxxxxx X. Xxxx
Title:
Co-Managing Member
|
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EXHIBIT
A
|
|
|
|
|
Investor
|
|
Investor’s
Address
and
Facsimile Number
|
|
Name:
XXXXXXX’X COVE HOLDINGS, LLC
Number
of Escrow Units: 2,875,000
Number
of Underlying Escrow Shares: 2,875,000
Number
of Underlying Escrow Warrants: 2,875,000
Number
of Private Warrants: 3,050,000
|
|
000
Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Facsimile
( )
|
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EXHIBIT
B
Escrow
Agent Fees
$[1,800
annually] for acting agent escrow fee.
[First
year escrow agent fee to be paid at closing.]
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