This Escrow Agreement (the "Escrow Agreement") dated as of April 18,
2005 is by and among Samdrew III, Inc., a Delaware corporation (the "Company"),
The First National Bank of Long Island, located at 000 Xxxxxxxx Xxxx, Xxxxxxxx,
XX 00000 (the "Escrow Agent").
RECITALS
WHEREAS, the Company is offering for sale to the public 25,000 Shares
(the "Shares") of Common Stock, par value $0.0001 per share, of the Company, at
a price of $1.00 per share;
WHEREAS, the Shares are being offered on a "best efforts, no minimum"
basis in accordance with the terms and conditions set forth in the prospectus
(the "Prospectus") included in the Company's Registration Statement on Form SB-2
(SEC File No. 333-120285), as amended (the "Registration Statement");
WHEREAS, the public offering of the Shares is subject to and is being
conducted in accordance with Rule 419 of the Securities Act of 1933, as amended
(the "Securities Act") pertaining to public offerings by companies commonly
referred to as "blank check companies";
WHEREAS, the public offering of the Shares commenced on the date of the
Prospectus and will end the earlier of the receipt and acceptance by the Company
of subscriptions for 25,000 Shares being offered or ninety (90) days after the
date of the Prospectus;
WHEREAS, subscribers for Shares shall deposit with the Escrow Agent, by
check or wire transfer payment, the aggregate subscription price for the Shares
subscribed for;
WHEREAS, all funds representing the subscription price of Shares
subscribed for shall be deposited and held in two accounts (each, an "Escrow
Account") established by and maintained with the Escrow Agent as an insured
depositary institution within the meaning of Rule 419(b)(1)(i)(A) of the
Securities Act;
WHEREAS, the Company desires to appoint the Escrow Agent as the escrow
agent for the Escrow Account, on the terms and conditions set forth herein in
order to comply with the requirements of Rule 419 of the Securities Act;
WHEREAS, if subscriptions for any or all of the 25,000 Shares have not
been received and accepted by the Company within ninety (90) days after the date
of the Prospectus, all funds shall be returned promptly to the subscribers;
WHEREAS, if subscriptions for Shares have been received and accepted by
the Company and funds therefor have been deposited into the Escrow Account
within ninety (90) days after the date of the Prospectus, the Company will
deposit into the Escrow Account stock certificates in the name of each
subscriber representing the number of Shares purchased from the Company;
WHEREAS, if subscriptions for any Shares have been received and
accepted by the Company within ninety (90) days after the date of the
Prospectus, the escrowed funds and the stock certificates deposited by the
Company shall be held in the Escrow Account for a period thereafter of up to 18
months after the date of the Prospectus (the "Post-Offering Period") until the
escrowed funds and the escrowed stock certificates are released and delivered in
accordance with the terms and conditions set forth herein;
WHEREAS, the escrowed Shares being held in the Escrow Account may not
be transferred except in accordance with the terms and conditions set forth
herein; and
WHEREAS, the Escrow Agent agrees to serve as escrow agent in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
below, the parties hereby agree as follows:
1. Appointment of Escrow Agent and Establishment of Escrow Account.
The Company hereby appoints the Escrow Agent as the escrow agent
hereunder in accordance with the terms and conditions set forth herein, and the
Escrow Agent hereby accepts such appointment. The Escrow Agent shall establish
and maintain the separate Escrow Account in the name of "Samdrew III, Inc.
Escrow Account" as an insured depositary institution within the meaning of Rule
419(b)(1)(i)(A) of the Securities Act. The initial Escrow Account shall not bear
interest until subscriptions for Shares have been received and accepted by the
Company. After such receipt and acceptance the Escrow Funds shall be transferred
to another Escrow Account that shall bear interest. Each Escrow Account shall be
maintained and administered and the escrowed funds and the escrowed securities
shall be released and delivered in accordance with the terms and conditions set
forth herein.
2. Deposit of Funds.
(a) All funds received by the Escrow Agent from subscribers for the
Shares shall be deposited and held in the initial Escrow Account. The Escrow
Agent is hereby empowered on behalf of the Company to endorse and collect all
checks, drafts, or other instruments received on account of subscriptions for
Shares. Any check returned unpaid to the Escrow Agent shall be returned by the
Escrow Agent to the subscriber. In such cases, the Escrow Agent shall promptly
notify the Company of such return. The Escrow Agent shall provide information to
the Company as to the funds deposited into the initial Escrow Account and the
collection status of such funds.
As used herein, "collection" means the normal process by which a bank
clears checks and collects funds thereon. The Company shall provide information
to the Escrow Agent as to each subscriber's name, address, number of Shares
subscribed for and the subscription price paid therefor, and such other
information concerning the subscribers as the Escrow Agent may reasonably
request.
2
(b) If the Company rejects any subscription for which the Escrow Agent
has collected funds from the subscriber, the Escrow Agent upon notice, shall
promptly issue a refund check to the rejected subscriber. If the Company rejects
any subscription for which the Escrow Agent has not collected funds but has
submitted the subscriber's check for collection, the Escrow Agent shall, upon
receipt of written instructions from the Company, promptly issue a check for the
amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the Escrow Agent has not submitted a rejected
subscriber's check for collection, the Escrow Agent shall, upon receipt of
written instructions from the Company, promptly remit the subscriber's check
directly to the subscriber.
(c) All funds received by the Escrow Agent pursuant to this Escrow
Agreement and deposited and held in the Escrow Account after the subscriptions
have been accepted by the Company may be invested in short-term United States
government securities, including treasury bills, U.S. Government money market
funds, cash and cash equivalents.
3. Status of Funds.
Until all funds in the Escrow Account are disbursed in accordance with
the terms and conditions of this Escrow Agreement, all funds deposited into each
Escrow Account shall be considered the property of the subscribers. The funds
deposited and held in each Escrow Account shall not become the property of the
Company or subject to its debts or obligations, unless and until such funds have
been disbursed to the Company in accordance with the terms and conditions of
this Escrow Agreement. The Escrow Agent shall not make any disbursements of
funds from the Escrow Accounts except as expressly provided herein.
4. Return of Funds if there is no Closing.
If subscriptions for any of 25,000 Shares have not been received and
accepted by the Company within ninety (90) days after the date of the
Prospectus, all funds shall be returned promptly to the subscribers without
deduction, penalty, or expense.
5. Deposit of Certificates if a Closing occurs.
If subscriptions for all or a part of the 25,000 Shares have been
received and accepted by the Company within ninety (90) days after the date of
the Prospectus, the Company shall deposit into the Escrow Account share
certificates issued in the names of each subscriber for the number of Shares
sold by the Company to each subscriber and the Escrow Agent shall transfer the
escrowed funds to an interest bearing account. The share certificates shall be
held in the Escrow Account during the Post-Offering Period and shall not be
released or delivered by the Escrow Agent except as expressly provided herein.
6. Retention of Funds in the Escrow Account if a Closing occurs.
If subscriptions for any or all 25,000 Shares have been received and
accepted by the Company within ninety (90) days after the date of the
Prospectus, the funds shall be held in the Escrow Account during the
3
Post-Offering Period and shall not be disbursed by the Escrow Agent except as
expressly provided herein.
7. Transfer of Securities Held in the Escrow Account.
The shares held in the Escrow Account shall not be transferred other
than by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986 as
amended or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. In no event, however, shall any shares held in the Escrow Account be
released or delivered by the Escrow Agent except as expressly provided elsewhere
herein.
8. Distributions from the Escrow Account.
(a) The Escrow Agent shall make distributions of the funds held in the
Escrow Account during the Post-Offering Period in accordance with the
instructions set forth in Schedule A attached hereto.
(b) The Escrow Agent shall make distributions of the share certificates
held in the Escrow Account during the Post-Offering Period in accordance with
the instructions set forth in Schedule B attached hereto.
(c) The parties agree that all records relating to transactions made
pursuant to the Escrow Agreement and the Escrow Accounts shall be available, at
all reasonable times, for inspection, examination and reproduction by any party
hereto, or any representative of any of the parties hereto, and such persons are
authorized to examine and audit the Escrow Accounts pursuant hereto and the
Escrow Agent is expressly authorized and directed to permit such examination and
audit.
9. Exculpation and Indemnification of Escrow Agent.
9.1. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein. The Escrow Agent shall have no duty to
enforce any obligation of any person to make any payment or delivery, or to
direct or cause any payment or delivery to be made, or to enforce any obligation
of any person to perform any other act. The Escrow Agent shall be under no
liability to the other parties hereto or to anyone else by reason of any failure
on the part of any party hereto or any maker, guarantor, endorser or other
signatory of any document or any other person to perform such person's
obligations under such document.
Except for amendments to this Agreement referred to below, and except
for instructions given to the Escrow Agent by the Company and the subscribers
relating to the Escrow Account, the Escrow Agent, as applicable, shall not be
obligated to recognize any agreement between any and all of the persons referred
to herein, notwithstanding that references thereto may be made herein and
whether or not it has knowledge thereof.
4
9.2. The Escrow Agent shall not be liable to the Company or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment.
The Escrow Agent 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, as
applicable, 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 Escrow Agreement or any
of the terms thereof, unless evidenced by a writing delivered to the Escrow
Agent, as applicable, signed by the proper party or parties and, if the duties
or rights of the Escrow Agent, as applicable, are affected, unless it shall give
its prior written consent thereto.
9.3. The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein, nor shall the Escrow Agent be responsible or liable to
the other parties hereto or to anyone else in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any document or property pursuant to the
provisions of this Agreement. Except as specifically provided for herein, the
Escrow Agent shall have no responsibility with respect to the use or application
of any funds or other property paid or delivered by the Escrow Agent pursuant to
the provisions hereof. The Escrow Agent shall not be liable to the Company or to
anyone else for any loss which may be incurred by reason of any investment of
any monies which it holds hereunder provided the Escrow Agent, as applicable,
has complied with the provisions of Section 2 hereunder.
9.4. The Escrow Agent shall have the right to assume in the absence of
written notice to the contrary from the proper person or persons that a fact or
an event by reason of which an action would or might be taken by the Escrow
Agent, as applicable, does not exist or has not occurred, without incurring
liability to the other parties hereto or to anyone else for any action taken or
omitted, or any action suffered by it to be taken or omitted, in good faith and
in the exercise of its own best judgment, in reliance upon such assumption.
9.5. To the extent that the Escrow Agent becomes liable for the payment
of taxes, including withholding taxes, in respect of income derived from the
investment of funds held hereunder or any payment made hereunder, the Escrow
Agent, as applicable, may pay such taxes. The Escrow Agent, as applicable, may
withhold from any payment of monies held by it hereunder such amount as the
Escrow Agent, as applicable, estimates to be sufficient to provide for the
payment of such taxes not yet paid, and may use the sum withheld for that
purpose. The Escrow Agent shall be indemnified and held harmless against any
liability for taxes and for any penalties or interest in respect of taxes, on
such investment income or payments in the manner provided in Section 9.6.
5
9.6. The Escrow Agent will be indemnified and held harmless by the
Company from and against any and all expenses, including reasonable counsel fees
and disbursements, or loss suffered by the Escrow Agent, as applicable, in
connection with any action, suit or other proceeding involving any claim, or in
connection with any claim or demand, which in any way, directly or indirectly,
arises out of or relates to this Escrow Agreement, the services of the Escrow
Agent, as applicable, hereunder, the monies or other property held by it
hereunder or any income earned from investment of such monies; provided, that
such expenses or loss are not as a result of the Escrow Agent, as applicable,
acting, or omitting to take action, in bad faith or with willful misconduct or
gross negligence promptly after the receipt by the Escrow Agent, as applicable,
of notice of any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent, as applicable, shall, if a claim in respect
thereof is to be made against the Company, notify the Company thereof in
writing, but the failure by the Escrow Agent, as applicable, to give such notice
shall not relieve the Company from any liability which the Company may have to
the Escrow Agent hereunder. For the purposes hereof, the term "expense or loss"
shall include all amounts paid or payable to satisfy any claim, demand or
liability, or in settlement of any claim, demand, action, suit or proceeding
settled with the express written consent of the Escrow Agent, and all costs and
expenses, including, but not limited to, reasonable counsel fees and
disbursements, paid or incurred in investigating or defending against any such
claims, demand, action, suit or proceeding.
10. Termination of Escrow Agreement and Resignation of Escrow Agent.
10.1. This Escrow Agreement shall terminate on the final disposition of
the monies and property held in the Escrow Account hereunder, provided that the
rights of the Escrow Agent and the obligations of the other parties hereto under
Sections 9 and 11 shall survive the termination hereof.
10.2. The Escrow Agent may resign at any time and be discharged from
its duties as Escrow Agent hereunder by giving the Company and the subscribers
at least thirty (30) days' notice thereof. As soon as practicable after its
resignation, the Escrow Agent shall turn over to a successor escrow agent
appointed by the Company all monies and property held hereunder upon
presentation of the document appointing the new escrow agent and its acceptance
thereof. If no new Escrow Agent is so appointed within the sixty (60) day period
following such notice of resignation, the Escrow Agent may deposit the aforesaid
monies and property with any court it deems appropriate.
11. Form of Payments by Escrow Agent.
11.1. Any payments by the Escrow Agent to subscribers or to the persons
other than the Company pursuant to the terms of this Escrow Agreement shall be
made by check, payable to the order of each respective subscriber or other
person.
11.2. All amounts referred to herein are expressed in United States
Dollars and all payments by the Escrow Agent shall be made in such dollars.
12. Compensation.
6
12.1. For services rendered, the Escrow Agent shall receive a fee of
$2,800 as compensation. 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 reasonable taxes or other
governmental charges. No such fee, reimbursement for costs and expenses,
indemnification or any damages incurred by the Escrow Agent or any monies
whatsoever shall be paid out of or chargeable to the subscription funds held in
the Escrow Account.
13. Notices.
Unless expressly provided herein to the contrary, notices hereunder
shall be in writing, and delivered by telecopier, overnight express mail,
first-class postage prepaid, delivered personally or by receipted courier
service. All such notices which are mailed shall be deemed delivered upon
receipt and all such notices shall be addressed as follows (or to such other
address as any party hereto may from time to time designate by notice duly given
in accordance with this paragraph):
If to the Company, to:
Xxxxx X. Xxxxxxx, Esq.
000 Xxxxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
If to the Escrow Agent, to:
Xxxxx X. Xxxxxx, EVP
The First National Bank of Long Island
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
14. Miscellaneous.
(a) Choice of Law and Jurisdiction. This Escrow Agreement shall be
governed by and construed in accordance with the law of the State of New York as
applied to agreements made and to be performed entirely in New York. The parties
agree that delivery or mailing of any process or other papers in the manner
provided herein, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
(b) Benefits and Assignment. Nothing in this Agreement, expressed or
implied, shall give or be construed to give any person, firm or corporation,
other than the parties hereto and their successors and assigns, any legal claim
under any covenant, condition or provision hereof, all the covenants,
conditions, and provisions contained in this Agreement being for the sole
benefit of the parties hereto and their successors and assigns. No party may
assign any of its rights or obligations under this Escrow Agreement without (i)
the written consent of all the other parties, which consent may be withheld in
the sole discretion of the party whose consent is sought and (ii) the written
agreement of the transferee that it will be bound by the provisions of this
Agreement.
7
(c) Counterparts. This Agreement may be executed in several
counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument.
(d) Amendment and Waiver. This Agreement may be modified only by a
written amendment signed by all the parties hereto, and no waiver of any
provision hereof shall be effective unless expressed in a writing signed by the
party to be charged.
(e) Headings. The headings of the sections hereof are included for
convenience of reference only and do not form part of this Agreement.
(f) Entire Agreement. This Agreement contains the complete agreement of
the parties with respect to its subject matter and supersedes and replaces any
previously made proposals, representation, warranties or agreements with respect
thereto by any of the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the date first written above.
SAMDREW III, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
THE FIRST NATIONAL BANK OF LONG ISLAND
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
8
SCHEDULE A
1. Release of Escrow Assets to the Company. Funds and interest, if any,
held in the Escrow Account (the "Escrow Assets") shall be released to the
Company in accordance with the following:
(a) The Escrow Agent shall not release the Escrow Assets to the Company
prior to:
(i) receipt by the Escrow Agent of a signed representation from the
Company, together with other evidence reasonably acceptable to the Escrow Agent,
that the Company has completed a transaction or series of transactions in which
the Company has entered into a specific line of business, and a written
confirmation that the fair market value (as determined by the Company, based
upon standards generally accepted by the financial community, including
revenues, earnings, cash flow and book value) of the business(es) or net assets
to be acquired exceeds eighty percent of the maximum offering proceeds described
in the Registration Statement, as required by the Registration Statement; and
(ii) the satisfaction of all other conditions required to be satisfied
by the Company for the release of the Escrow Assets, including all those set
forth in (A) Rule 419(e) of the Securities Act and (B) the provisions of NY law.
The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document received in connection with this Section 1(a) of this Schedule A,
or of any signature or endorsement thereon, or for any lack of endorsement
thereon, or for any description therein, nor shall the Escrow Agent be
responsible or liable to the other parties to this Agreement or to anyone else
in any respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any such document.
(b) Subject to Section 1(a) above, the Escrow Agent shall release to
the Company the balance of the funds held in the Escrow Account and interest, if
any (after deducting therefrom the amount of funds and interest, if any,
disbursed to the subscribers in accordance with the provisions of paragraph 2
below), promptly upon receipt by the Escrow Agent of a certificate of an
authorized officer of the Company representing and warranting that:
(i) The Company has filed a post-effective amendment to its
Registration Statement (the "Post-Effective Amendment") with the Securities and
Exchange Commission ("SEC"); the Post-Effective Amendment has been declared
effective by the SEC; and within five (5) business days after the effective date
of the Post-Effective Amendment, the Company has sent a copy of the prospectus
contained therein to the subscribers by first class mail or equally prompt
means; and
(ii) The Company has consummated a business combination with an
operating business in compliance with the requirements of Rule 419 of the
Securities Act within 18 months after the date of the Prospectus.
9
2. Disbursement of Funds to the Subscribers. Funds and interest, if
any, held in the Escrow Account shall be disbursed to the subscribers in
accordance with the following:
(a) If the Company has not received written notification from any
subscriber by the 45th business day following the effective date of the
Post-Effective Amendment to the Company's Registration Statement that such
subscriber has elected to remain an investor, the Escrow Agent shall send to
such subscriber, within five (5) business days, such subscriber's pro rata share
of the funds and interest, if any, held in the Escrow Account.
(b) If the Company has not consummated a business combination meeting
the requirements of Rule 419 of the Securities Act within 18 months after the
date of the Prospectus, the Escrow Agent shall send to each subscriber, within
five (5) business days after such date, each subscriber's pro rata share of the
funds and interest, if any, held in the Escrow Account.
10
SCHEDULE B
1. Delivery of Certificates to the Subscribers. Share certificates held
in the Escrow Account shall be delivered to the subscribers in accordance with
the following:
(a) The Escrow Agent shall deliver to each subscriber identified by the
Company as having timely elected to remain an investor, promptly after receipt
by the Escrow Agent of the officer's certificate described in paragraph 1(b) of
Schedule A to the Escrow Agreement, the share certificates registered in the
name of each such subscriber.
2. Return of Certificates to the Company. Share certificates held in
the Escrow Account shall be returned to the Company in accordance with the
following:
(a) The Escrow Agent shall return all of the share certificates to the
Company if the Company has not consummated a business combination with an
operating business in compliance with the requirements of Rule 419 of the
Securities Act within eighteen (18) months after the date of the Prospectus.
(b) The Escrow Agent shall return to the Company all share certificates
registered in the name of any subscriber identified in a notice from an
authorized officer of the Company as not having timely elected to remain an
investor, provided that such subscriber's pro rata share of the funds, and
interest, if any, held in the Escrow Account on account of the purchase of the
Shares has been returned to such subscriber in accordance with paragraph 2(a) of
Schedule A to the Escrow Agreement.
11
