This Escrow Agreement (the "Escrow Agreement") dated as of _______, 2005
is by and among Samdrew III, Inc., a Delaware corporation (the "Company"), First
National Bank of Long Island, located at 00 Xxxx Xxxx Xxxx, Xxxx Xxxx, 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" basis in
accordance with the terms and conditions set forth in the prospectus dated
__________, 2005 (the "Prospectus") included in the Company's Registration
Statement on Form SB-2 (SEC File No. _____________), 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 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 an escrow account (the "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 25,000 Shares have not been received and
accepted by the Company within ninety (90) days after the date of the
Prospectus, all funds and interest, if any, shall be returned promptly to the
subscribers;
WHEREAS, if subscriptions for _________ Shares have been received and
accepted by the Company and ______ of funds have been deposited into the Escrow
Account within ____ 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 _______ Shares have been received and
accepted by the Company and $_______________ of funds have been deposited into
the Escrow Account within ____ 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 Escrow Account shall not bear
interest until subscriptions for 25,000 Shares have been received and accepted
by the Company. After such receipt and acceptance the Escrow Account shall bear
interest. The 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 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 Escrow Account and the collection status of such funds.
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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.
(b) If the Company rejects any subscription for which the Escrow Agent has
collected funds from the subscriber, the Escrow Agent 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.
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 the
Escrow Account shall be considered the property of the subscribers. The funds
deposited and held in the 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 no make any disbursements of funds
from the Escrow Account except as expressly provided herein.
4. Return of Funds if the Offering is not Fully Subscribed.
If subscriptions for all 25,000 Shares have not been received and accepted
by the Company within ninety (90) days after the date of the Prospectus, all
funds and interest thereon, if any, shall be returned promptly to the
subscribers without deduction, penalty, or expense.
5. Deposit of Certificates if the Offering is Fully Subscribed.
If subscriptions for all 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. 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 the Offering is Subscribed.
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If subscriptions for 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 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 Account 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 Account 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.
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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.
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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.
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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.
12.1. For services rendered, the Escrow Agent shall receive an annual fee
of $500 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:
First National Bank of Long Island
00 Xxxx Xxxx Xxxx
Xxxx Xxxx, 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.
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(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.
(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:
-------------------------------------
Name:
Title:
FIRST NATIONAL BANK OF LONG ISLAND
By:
-------------------------------------
Name:
Title:
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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 in
which at least 50% of the gross offering proceeds is committed to a specific
line of business (as defined in Section 11-51-302(6) and Rule 51-3.4 promulgated
thereunder); 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
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(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.
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.
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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.
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