ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of March __, 2005 by AMERICANA
PUBLISHING, INC., a Colorado corporation (the "Company"); CORNELL CAPITAL PARTNERS, LP, a Delaware limited
partnership (the "Investor"); and XXXXX XXXXXXXX, ESQ. (the "Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor have entered into a Standby Equity Distribution Agreement (the
"Standby Equity Distribution Agreement") dated as of the date hereof, pursuant to which the Investor will purchase
the Company's Common Stock, par value US$0.001 per share (the "Common Stock"), at a price per share equal to the
Purchase Price, as that term is defined in the Standby Equity Distribution Agreement, for an aggregate price of
up to Ten Million U.S. Dollars ($10,000,000). The Standby Equity Distribution Agreement provides that on each
Advance Date,, as that term is defined in the Standby Equity Distribution Agreement, the Investor shall deposit
the Advance pursuant to the Advance Notice in a segregated escrow account to be held by Escrow Agent and the
Company shall deposit shares of the Company's Common Stock, which shall be purchased by the Investor as set forth
in the Standby Equity Distribution Agreement, with the Escrow Agent, in order to effectuate a disbursement to the
Company of the Advance by the Escrow Agent and a disbursement to the Investor of the shares of the Company's
Common Stock by Escrow Agent at a closing to be held as set forth in the Standby Equity Distribution
Agreement (the "Closing").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the funds and the shares of the Company's
Common Stock deposited with it in accordance with the terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and shares to effect the provisions of the Standby
Equity Distribution Agreement, the parties hereto have entered into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as follows:
1. Definitions. The following terms shall have the following meanings when used herein:
a. "Escrow Funds" shall mean the Advance funds deposited with the Escrow Agent pursuant to this Agreement.
b. "Joint Written Direction" shall mean a written direction executed by the Investor and the Company
directing Escrow Agent to disburse all or a portion of the Escrow Funds or to take or refrain from taking any
action pursuant to this Agreement.
c. "Common Stock Joint Written Direction" shall mean a written direction executed by the Investor and the
Company directing Investor's Counsel to disburse all or a portion of the shares of the Company's Common Stock or
to refrain from taking any action pursuant to this Agreement.
2. Appointment of and Acceptance by Escrow Agent.
a. The Investor and the Company hereby appoint Escrow Agent to serve as Escrow Agent hereunder. Escrow
Agent hereby accepts such appointment and, upon receipt by wire transfer of the Escrow Funds in accordance with
Section 3 below, agrees to hold, invest and disburse the Escrow Funds in accordance with this Agreement.
b. The Investor and the Company hereby appoint the Escrow Agent to serve as the holder of the shares of the
Company's Common Stock which shall be purchased by the Investor. The Escrow Agent hereby accepts such
appointment and, upon receipt via D.W.A.C or the certificates representing of the shares of the Company's Common
Stock in accordance with Section 3 below, agrees to hold and disburse the shares of the Company's Common Stock in
accordance with this Agreement.
c. The Company hereby acknowledges that the Escrow Agent is general counsel to the Investor, a partner in
the general partner of the Investor and counsel to the Investor in connection with the transactions contemplated
and referenced herein and will be acting as the escrow agent for shares of the Company's Common Stock as outlined
herein. The Company agrees that in the event of any dispute arising in connection with this Escrow Agreement or
otherwise in connection with any transaction or agreement contemplated and referenced herein, the Escrow Agent
shall be permitted to continue to represent the Investor and the Company will not seek to disqualify such counsel.
3. Creation of Escrow Account/Common Stock Account.
a. On or prior to the date of this Agreement the Escrow Agent shall establish an escrow account for the
deposit of the Escrow Funds entitled as follows: Americana Publishing, Inc./Cornell Capital Partners, LP. The
Investor will wire funds to the account of the Escrow Agent as follows:
Bank: Wachovia Bank, N.A.
Routing #: 000000000
Account #: 2000014931134
Name on Account: Xxxxx Xxxxxxxx PC Attorney Escrow Account
Name on Sub-Account: Americana Publishing, Inc./Cornell Capital Partners, LP
Escrow account
b. On or prior to the date of this Agreement the Escrow Agent shall establish an account for the D.W.A.C.
of the shares of Common Stock. The Company will D.W.A.C. shares of the Company's Common Stock to the account of
the Escrow Agent as follows:
Brokerage Firm: Xxxxx Securities Corp.
Clearing House: Fiserv
Account #: 56887298
DTC #: 0632
Name on Account: Xxxxx Xxxxxxxx Escrow Account
4. Deposits into the Escrow Account. The Investor agrees that it shall promptly deliver all monies for the
payment of the Common Stock to the Escrow Agent for deposit in the Escrow Account.
5. Disbursements from the Escrow Account.
a. At such time as Escrow Agent has collected and deposited instruments of payment in the total amount of
the Advance and has received such Common Stock via D.W.A.C from the Company which are to be issued to the
Investor pursuant to the Standby Equity Distribution Agreement, the Escrow Agent shall notify the Company and the
Investor. The Escrow Agent will continue to hold such funds until the Investor and Company execute and deliver a
Joint Written Direction directing the Escrow Agent to disburse the Escrow Funds pursuant to Joint Written
Direction at which time the Escrow Agent shall wire the Escrow Funds to the Company. In disbursing such funds,
Escrow Agent is authorized to rely upon such Joint Written Direction from Company and may accept any signatory
from the Company listed on the signature page to this Agreement and any signature from the Investor that Escrow
Agent already has on file. Simultaneous with delivery of the executed Joint Written Direction to the Escrow
Agent the Investor and Company shall execute and deliver a Common Stock Joint Written Direction to the Escrow
Agent directing the Escrow Agent to release via D.W.A.C to the Investor the shares of the Company's Common
Stock. In releasing such shares of Common Stock the Escrow Agent is authorized to rely upon such Joint Written
Direction from Company and may accept any signatory from the Company listed on the signature page to this
Agreement and any signature from the Escrow Agent has on file.
In the event the Escrow Agent does not receive the amount of the Advance from the Investor or the shares
of Common Stock to be purchased by the Investor from the Company, the Escrow Agent shall notify the Company and
the Investor.
In the event that the Escrow Agent has not received the Common Stock to be purchased by the Investor
from the Company, in no event will the Escrow Funds be released to the Company until such shares are received by
the Escrow Agreement. For purposes of this Agreement, the term "Common Stock certificates" shall mean Common
Stock certificates to be purchased pursuant to the respective Advance Notice pursuant to the Standby Equity
Distribution Agreement.
6. Deposit of Funds. The Escrow Agent is hereby authorized to deposit the wire transfer proceeds in the
Escrow Account.
7. Suspension of Performance: Disbursement Into Court.
a. Escrow Agent. If at any time, there shall exist any dispute between the Company and the Investor with
respect to holding or disposition of any portion of the Escrow Funds or the Common Stock or any other obligations
of Escrow Agent hereunder, or if at any time Escrow Agent is unable to determine, to Escrow Agent's sole
satisfaction, the proper disposition of any portion of the Escrow Funds or Escrow Agent's proper actions with
respect to its obligations hereunder, or if the parties have not within thirty (30) days of the furnishing by
Escrow Agent of a notice of resignation pursuant to Section 9 hereof, appointed a successor Escrow Agent to act
hereunder, then Escrow Agent may, in its sole discretion, take either or both of the following actions:
i. Suspend the performance of any of its obligations (including without limitation any disbursement
obligations) under this Escrow Agreement until such dispute or uncertainty shall be resolved to the sole
satisfaction of Escrow Agent or until a successor Escrow Agent shall be appointed (as the case may be); provided
however, Escrow Agent shall continue to invest the Escrow Funds in accordance with Section 8 hereof; and/or
ii. Petition (by means of an interpleader action or any other appropriate method) any court of competent
jurisdiction in any venue convenient to Escrow Agent, for instructions with respect to such dispute or
uncertainty, and to the extent required by law, pay into such court, for holding and disposition in accordance
with the instructions of such court, all funds held by it in the Escrow Funds, after deduction and payment to
Escrow Agent of all fees and expenses (including court costs and attorneys' fees) payable to, incurred by, or
expected to be incurred by Escrow Agent in connection with performance of its duties and the exercise of its
rights hereunder.
iii. Escrow Agent shall have no liability to the Company, the Investor, or any person with respect to any
such suspension of performance or disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of
funds held in the Escrow Funds or any delay in with respect to any other action required or requested of Escrow
Agent.
8. Investment of Escrow Funds. The Escrow Agent shall deposit the Escrow Funds in a non-interest bearing
money market account.
If Escrow Agent has not received a Joint Written Direction at any time that an investment decision must
be made, Escrow Agent may retain the Escrow Fund, or such portion thereof, as to which no Joint Written Direction
has been received, in a non-interest bearing money market account.
9. Resignation and Removal of Escrow Agent. Escrow Agent may resign from the performance of its duties
hereunder at any time by giving thirty (30) days' prior written notice to the parties or may be removed, with or
without cause, by the parties, acting jointly, by furnishing a Joint Written Direction to Escrow Agent, at any
time by the giving of ten (10) days' prior written notice to Escrow Agent as provided herein below. Upon any
such notice of resignation or removal, the representatives of the Investor and the Company identified in Sections
13a.(iv) and 13b.(iv), below, jointly shall appoint a successor Escrow Agent hereunder, which shall be a
commercial bank, trust company or other financial institution with a combined capital and surplus in excess of
US$10,000,000.00. Upon the acceptance in writing of any appointment of Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be discharged
from its duties and obligations under this Escrow Agreement, but shall not be discharged from any liability for
actions taken as Escrow Agent hereunder prior to such succession. After any retiring Escrow Agent's resignation
or removal, the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held by it in the Escrow Funds to the
successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisable and
after deduction and payment to the retiring Escrow Agent of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be incurred by the retiring Escrow Agent in connection
with the performance of its duties and the exercise of its rights hereunder.
10. Liability of Escrow Agent.
a. Escrow Agent shall have no liability or obligation with respect to the Escrow Funds except for Escrow
Agent's willful misconduct or gross negligence. Escrow Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of this Agreement. Escrow Agent
shall have no implied duties or obligations and shall not be charged with knowledge or notice or any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any instrument, not only as to its
due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained
therein, which Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by the
person or parties purporting to sign the same and conform to the provisions of this Agreement. In no event shall
Escrow Agent be liable for incidental, indirect, special, and consequential or punitive damages. Escrow Agent
shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Agreement or the Standby Equity Distribution Agreement, or
to appear in, prosecute or defend any such legal action or proceeding. Escrow Agent may consult legal counsel
selected by it in the event of any dispute or question as to construction of any of the provisions hereof or of
any other agreement or its duties hereunder, or relating to any dispute involving any party hereto, and shall
incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the
opinion or instructions of such counsel. The Company and the Investor jointly and severally shall promptly pay,
upon demand, the reasonable fees and expenses of any such counsel and Escrow Agent is hereby authorized to pay
such fees and expenses from funds held in escrow.
b. The Escrow Agent is hereby authorized, in its sole discretion, to comply with orders issued or process
entered by any court with respect to the Escrow Funds, without determination by the Escrow Agent of such court's
jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon
under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property
shall be stayed or enjoined by any court order, or in any case any order judgment or decree shall be made or
entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is
authorized, in its sole discretion, to rely upon and comply with any such order, writ judgment or decree which it
is advised by legal counsel selected by it, binding upon it, without the need for appeal or other action; and if
the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance even though such order, writ
judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.
11. Indemnification of Escrow Agent. From and at all times after the date of this Agreement, the parties
jointly and severally, shall, to the fullest extent permitted by law and to the extent provided herein, indemnify
and hold harmless Escrow Agent and each director, officer, employee, attorney, agent and affiliate of Escrow
Agent (collectively, the "Indemnified Parties") against any and all actions, claims (whether or not valid),
losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation
reasonable attorney's fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties
from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action, or proceeding (including any inquiry or investigation) by
any person, including without limitation the parties to this Agreement, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any person under any statute or regulation,
including, but not limited to, any federal or state securities laws, or under any common law or equitable cause
or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether or not any such Indemnified
Party is a party to any such action or proceeding, suit or the target of any such inquiry or investigation;
provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for liability
finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted solely
from the gross negligence or willful misconduct of such Indemnified Party. If any such action or claim shall be
brought or asserted against any Indemnified Party, such Indemnified Party shall promptly notify the Company and
the Investor hereunder in writing, and the Investor(s) and the Company shall assume the defense thereof,
including the employment of counsel and the payment of all expenses. Such Indemnified Party shall, in its sole
discretion, have the right to employ separate counsel (who may be selected by such Indemnified Party in its sole
discretion) in any such action and to participate in the defense thereof, and the fees and expenses of such
counsel shall be paid by such Indemnified Party, except that the Investor and/or the Company shall be required to
pay such fees and expense if (a) the Investor or the Company agree to pay such fees and expenses, or (b) the
Investor and/or the Company shall fail to assume the defense of such action or proceeding or shall fail, in the
sole discretion of such Indemnified Party, to employ counsel reasonably satisfactory to the Indemnified Party in
any such action or proceeding, (c) the Investor and the Company are the plaintiff in any such action or
proceeding or (d) the named or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both Indemnified Party the Company and/or the Investor and Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses available to it which are different
from or additional to those available to the Company or the Investor. The Investor and the Company shall be
jointly and severally liable to pay fees and expenses of counsel pursuant to the preceding sentence, except that
any obligation to pay under clause (a) shall apply only to the party so agreeing. All such fees and expenses
payable by the Company and/or the Investor pursuant to the foregoing sentence shall be paid from time to time as
incurred, both in advance of and after the final disposition of such action or claim. The obligations of the
parties under this section shall survive any termination of this Agreement, and resignation or removal of the
Escrow Agent shall be independent of any obligation of Escrow Agent.
12. Expenses of Escrow Agent. Except as set forth in Section 11 the Company shall reimburse Escrow Agent
for all of its reasonable out-of-pocket expenses, including attorneys' fees, travel expenses, telephone and
facsimile transmission costs, postage (including express mail and overnight delivery charges), copying charges
and the like as outlined in Section 12.4 of the Standby Equity Distribution Agreement dated the date hereof. All
of the compensation and reimbursement obligations set forth in this Section shall be payable by the Company, upon
demand by Escrow Agent. The obligations of the Company under this Section shall survive any termination of this
Agreement and the resignation or removal of Escrow Agent.
13. Warranties.
a. The Investor makes the following representations and warranties to the Escrow Agent:
i. The Investor has full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
ii. This Agreement has been duly approved by all necessary action of the Investor, including any necessary
approval of the limited partner of the Investor, has been executed by duly authorized officers of the Investor's
general partner, enforceable in accordance with its terms.
iii. The execution, delivery, and performance of the Investor of this Agreement will not violate, conflict
with, or cause a default under the agreement of limited partnership of the Investor, any applicable law or
regulation, any court order or administrative ruling or degree to which the Investor is a party or any of its
property is subject, or any agreement, contract, indenture, or other binding arrangement.
iv. Xxxx X. Xxxxxx has been duly appointed to act as the representative of Investor hereunder and has full
power and authority to execute, deliver, and perform this Agreement, to execute and deliver any Joint Written
Direction, to amend, modify, or waive any provision of this Agreement, and to take any and all other actions as
the Investor's representative under this Agreement, all without further consent or direction form, or notice to,
the Investor or any other party.
v. No party other than the parties hereto have, or shall have, any lien, claim or security interest in the
Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds
or any part thereof.
vi. All of the representations and warranties of the Investor contained herein are true and complete as of
the date hereof and will be true and complete at the time of any disbursement from the Escrow Funds.
b. The Company makes the following representations and warranties to Escrow Agent and the Investor:
i. The Company is a corporation duly organized, validly existing, and in good standing under the laws of
the State of Colorado, and has full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
ii. This Agreement has been duly approved by all necessary corporate action of the Company, including any
necessary shareholder approval, has been executed by duly authorized officers of the Company, enforceable in
accordance with its terms.
iii. The execution, delivery, and performance by the Company of this Escrow Agreement is in accordance with
the Standby Equity Distribution Agreement and will not violate, conflict with, or cause a default under the
articles of incorporation or bylaws of the Company, any applicable law or regulation, any court order or
administrative ruling or decree to which the Company is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement.
iv. Xxxxxx Xxxxxx, Xx. has been duly appointed to act as the representative of the Company hereunder and has
full power and authority to execute, deliver, and perform this Agreement, to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this Agreement and to take all other actions as the
Company's Representative under this Agreement, all without further consent or direction from, or notice to, the
Company or any other party.
v. No party other than the parties hereto shall have, any lien, claim or security interest in the Escrow
Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds
or any part thereof.
vi. All of the representations and warranties of the Company contained herein are true and complete as of
the date hereof and will be true and complete at the time of any disbursement from the Escrow Funds.
14. Consent to Jurisdiction and Venue. In the event that any party hereto commences a lawsuit or other
proceeding relating to or arising from this Agreement, the parties hereto agree that the United States District
Court for the District of New Jersey shall have the sole and exclusive jurisdiction over any such proceeding. If
all such courts lack federal subject matter jurisdiction, the parties agree that the Superior Court Division of
New Jersey, Chancery Division of Xxxxxx County shall have sole and exclusive jurisdiction. Any of these courts
shall be proper venue for any such lawsuit or judicial proceeding and the parties hereto waive any objection to
such venue. The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified
herein and agree to accept the service of process to vest personal jurisdiction over them in any of these courts.
15. Notice. All notices and other communications hereunder shall be in writing and shall be deemed to have
been validly served, given or delivered five (5) days after deposit in the United States mail, by certified mail
with return receipt requested and postage prepaid, when delivered personally, one (1) day delivery to any
overnight courier, or when transmitted by facsimile transmission and addressed to the party to be notified as
follows:
If to Investor, to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
If to Escrow Agent, to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Company, to: Americana Publishing, Inc.
000 Xxx Xxxxx XX - Xxxxx 000X
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or to such other address as each party may designate for itself by like notice.
16. Amendments or Waiver. This Agreement may be changed, waived, discharged or terminated only by a writing
signed by the parties and the Escrow Agent. No delay or omission by any party in exercising any right with
respect hereto shall operate as waiver. A waiver on any one occasion shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion.
17. Severability. To the extent any provision of this Agreement is prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement.
18. Governing Law. This Agreement shall be construed and interpreted in accordance with the internal laws
of the State of New Jersey without giving effect to the conflict of laws principles thereof.
19. Entire Agreement. This Agreement constitutes the entire Agreement between the parties relating to the
holding, investment, and disbursement of the Escrow Funds and sets forth in their entirety the obligations and
duties of the Escrow Agent with respect to the Escrow Funds.
20. Binding Effect. All of the terms of this Agreement, as amended from time to time, shall be binding
upon, inure to the benefit of and be enforceable by the respective heirs, successors and assigns of the Investor,
the Company, or the Escrow Agent.
21. Execution of Counterparts. This Agreement and any Joint Written Direction may be executed in counter
parts, which when so executed shall constitute one and same agreement or direction.
22. Termination. Upon the first to occur of the termination of the Standby Equity Distribution Agreement
dated the date hereof or the disbursement of all amounts in the Escrow Funds and Common Stock into court pursuant
to Section 7 hereof, this Agreement shall terminate and Escrow Agent shall have no further obligation or
liability whatsoever with respect to this Agreement or the Escrow Funds or Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties have hereunto set their hands and seals the day and year above set forth.
AMERICANA PUBLISHING, INC.
By:
Name: Xxxxxx Xxxxxx, Xx.
Title: CEO
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
By:
Name: Xxxxx Xxxxxxxx, Esq.
