STOCK ESCROW AGREEMENT
Exhibit
10.9
STOCK
ESCROW AGREEMENT, dated as of September [__], 2005 (“Agreement”), by and among
Highbury Financial Inc., a Delaware corporation, with offices at 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 (“Company”), R. Xxxxx Xxxxxxx,
Xxxxxxx X. Xxxxx, X. Xxxxxxx Forth, Broad Hollow LLC, the Xxxxxxx Xxxxx Trust
and the Xxxxx Xxxxxx Xxxxx Trust (collectively “Initial Stockholders”) and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation (“Escrow
Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated September [__],
2005 (“Underwriting Agreement”), with ThinkEquity Partners LLC and
EarlyBirdCapital, Inc. (the “Underwriters”), pursuant to which, among other
matters, the Underwriters have agreed to purchase 6,000,000 units (“Units”) of
the Company. Each Unit consists of one share of the Company’s Common Stock, par
value $.0001 per share, and two Warrants, each Warrant to purchase one share
of
Common Stock, all as more fully described in the Company’s final Prospectus,
dated [_______________], 2005 (“Prospectus”) comprising part of the Company’s
Registration Statement on Form S-1 (File No. 333-127272) 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 sale of the Units
to
deposit the shares of Common Stock of the Company that they purchased prior
to
the filing of the Registration Statement, 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 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 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 third anniversary of
the
Effective Date (“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 Stockholders; 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, however, that if, after
the
Company consummates a 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 stockholder 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 certificate, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, in form reasonably acceptable
to the Escrow Agent, that such transaction is then being consummated, release
the Escrow Shares to the Initial Stockholders upon consummation of the
transaction 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, 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, (iii) pursuant to a qualified domestic relations order, or (iv)
pursuant to either the Stockholder Call Agreement, dated as of August 1,
2005,
by and among Broad Hollow LLC and each of the Initial Stockholders or the
Put-Call Agreement, dated as of August 1, 2005 by and between Broad Hollow
LLC
and X. Xxxxxxx Forth; 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 the Underwriters
and the Company, dated as indicated on Exhibit A hereto, the form
of 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.
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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.
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. 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 it 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, the Escrow Share 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 reasonably deems appropriate.
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5.6. Discharge
of Escrow Agent.
The
Escrow Agent shall resign and be discharged form its duties as escrow agent
hereunder if so requested in writing at any time by the Company and a majority
of the Initial Shareholders, 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.
6.2. Third
Party Beneficiaries.
Each of
the Initial Stockholders hereby acknowledges that the Underwriters are third
party beneficiaries of this Agreement and this Agreement may not be modified
or
changed without the prior written consent of ThinkEquity Partners LLC and
EarlyBirdCapital, Inc.
6.3. 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 be
charged.
6.4. Headings.
The
headings contained in this Agreement are for reference purposes only and
shall
not affect in any 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.
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 be mailed, certified or
registered mail, or by private national courier service, return receipt
requested, postage prepaid, and shall be deemed given when so delivered
personally or, if mailed, two days after the date of mailing, as
follows:
If
to the
Company, to:
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000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx,
XX 00000
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If
to a
Stockholder, to his address set forth on Exhibit A.
and
if to
the Escrow Agent, to:
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Continental
Stock Transfer & Trust Company
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00
Xxxxxxx Xxxxx
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Xxx
Xxxx, XX 00000
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Attn:
Chairman
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A
copy of
any notice sent hereunder shall be sent to:
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Gusrae,
Xxxxxx & Xxxxx, PLLC
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000
Xxxx Xxxxxx
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00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Attn:
Xxxxx X. Xxxxxx, Esq.
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and:
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ThinkEquity
Partners LLC
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00
Xxxx 00xx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, XX 00000
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Attn:
Xxxx Xxxxx
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and:
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EarlyBirdCapital,
Inc.
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000
Xxxxxxx Xxxxxx, Xxxxx 0000
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Xxx
Xxxx, XX 00000
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and:
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Xxxxxx
Godward LLP
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Xxx
Xxxxxxxx Xxxxx, 00xx
Xxxxx
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Xxx
Xxxxxxxxx, XX 00000-0000
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Attn:
Xxxx-Xxxxxxx a Marca
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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.
5
WITNESS
the execution of this Agreement as of the date first above written:
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| By: | /s/ | |
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Xxxxxxx
X. Xxxxx,
Chief
Executive Officer and President
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INITIAL
STOCKHOLDERS:
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R. XXXXX XXXXXXX |
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XXXXXXX
X. XXXXX
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X.
XXXXXXX FORTH
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BROAD
HOLLOW LLC
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| By: | /s/ | |
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Name:
Title:
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THE
XXXXXXX XXXXX TRUST
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| By: | /s/ | |
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Name:
Title:
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THE
XXXXX XXXXXX XXXXX TRUST
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| By: | /s/ | |
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Name:
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6
EXHIBIT
A
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Name
and Address of
Initial
Stockholder(1)
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Number
of Shares |
Stock
Certificate
Number |
Date
of
Insider
Letter
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R.
Xxxxx Xxxxxxx
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150,000
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1
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____________,
2005
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Xxxxxxx
X. Xxxxx
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450,000
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2
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____________,
2005
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The
Xxxxxxx Xxxxx Trust
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75,000
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3
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____________,
2005
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The
Xxxxx Xxxxxx Xxxxx Trust
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75,000
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4
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____________,
2005
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X.
Xxxxxxx Forth
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75,000
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5
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____________,
2005
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Broad
Hollow LLC
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675,000
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6
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____________,
2005
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| (1) |
Each
stockholder's address is c/o Berkshire Capital Securities LLC,
000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000
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