ESCROW AGREEMENT
Exhibit
99.1
This
Escrow Agreement (the "Agreement") is made and entered into this 12th day of
November, 2007, by and among Madison Enterprises Group, Inc., a Delaware
corporation (the "Issuer"); the Selling Stockholders of shares of common stock
of the Company ("Selling Stockholders"), who are identified on Schedule A which
is annexed hereto; and Continental Stock Transfer & Trust Company, a
Delaware corporation (the "Escrow Agent").
WHEREAS,
the Issuer has filed with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-1 ("Form S-1") pursuant to the Securities
Act
of 1933 as amended (the "Act") with respect to the prospective sale of shares
in
the Issuer by the Selling Stockholders (the "Offering");
WHEREAS,
the Offering is being conducted based upon the Issuer being deemed to be a
Blank
Check issuer as that term is defined by subsection (a)(2) of Rule 419 ("Rule
419") of Regulation C promulgated pursuant to the Act;
WHEREAS,
if any of the Selling Stockholders elect to sell shares of common stock of
the
Issuer pursuant to the Offering, the Issuer desires to utilize the Escrow
Agent's services pursuant to the terms and conditions herein provided to satisfy
the restrictions and requirements imposed upon the Offering by Rule
419;
WHEREAS,
if any Selling Stockholder elects to sell shares of common stock of the Issuer,
then each Selling Stockholder who elects to sell shares of common stock of
the
Issuer pursuant to the Offering shall agree to be bound by the terms and
conditions of this Agreement as a condition of any such sale and shall execute
the Selling Stockholder Signature Page, in the form which is annexed hereto
as
Schedule B.
NOW,
THEREFORE, in consideration of the mutual covenants which are hereinafter set
forth and for good and valuable consideration, receipt of which is hereby
acknowledged,
IT
IS
AGREED:
1. Recitals
Adopted.
The
parties hereto adopt as part of this Agreement each of the recitals which is
set
forth above in the WHEREAS clauses, and agree that such recitals shall be
binding upon the parties hereto by way of contract and not merely by way of
recital or inducement; and that such WHEREAS clauses are hereby confirmed and
ratified as being true and accurate by each party as to itself and
himself.
2. Appointment
of Escrow Agent.
A.
In
connection with Selling Stockholders' possible sale of shares of common stock
after such shares are registered, the Issuer hereby appoints the Escrow Agent
to
act as escrow agent in connection with the Offering pursuant to the terms and
conditions set forth in this Agreement.
B.
The
Escrow Agent shall receive compensation to be paid by the Issuer as set forth
on
Schedule C, annexed hereto and made a part hereof.
3. Duties
of Escrow Agent.
A.
Escrow
Agent shall establish an escrow account (the "Escrow Account") into which the
shares to be sold (the "Escrow Shares") and the funds to be received from
prospective purchasers of said shares (the "Prospective Purchasers") as well
as
any dividends earned by the Prospective Purchasers while the Escrow Shares
are
being held in escrow (the "Escrow Funds") in connection with any sale by the
Selling Stockholders pursuant to the Offering (collectively, the "Escrow Items")
shall be deposited and held until an acquisition meeting the criteria specified
in Rule 419 is completed. Escrow Funds shall only be invested in an obligation
that constitutes a "deposit", as that term is defined in section 3(l)
of the
Federal Deposit Insurance Act.
B.
Escrow
Agent shall receive and hold all shares of common stock sold pursuant to the
Offering (i.e., the Escrow Shares) pursuant to the terms set forth in this
Agreement and in accordance with Rule 419. All Escrow Shares are to remain
as
deposited and shall be held until (i) released by the Escrow Agent pursuant
to
Paragraphs "D", "E", "F" or "G" of this Article "3" of this Agreement or (ii)
the Escrow Agent shall have deposited the Escrow Items in court pursuant to
Paragraph "G" of Article "5" of this Agreement or the last sentence of Paragraph
"I" of Article "5" of this Agreement. The identity of (i) each Selling
Stockholder and (ii) the Prospective Purchaser shall be included with the stock
certificates or other documents evidencing such securities which are delivered
to the Escrow Agent.
C.
The
Escrow Shares shall remain as issued and deposited and shall be held for the
sole benefit of the Prospective Purchasers, who shall have voting rights with
respect to the Escrow Shares held in their names, as provided by applicable
state law.
D.
If
Escrow Agent shall receive written notice from the Issuer pursuant to Article
"9" of this Agreement that the Issuer has entered into an agreement for the
acquisition of a business pursuant to paragraphs (e)(1) and (e)(2) of Rule
419,
and said written notice includes a representation that the Issuer has provided
a
post-effective amendment to the Issuer's registration statement which has been
declared effective by the SEC to each Prospective Purchaser and has received
confirmation from Prospective Purchasers pursuant to Rule 419(e)(2)(ii) that
said Prospective Purchasers intend to continue to remain investors in the
Issuer, then Escrow Agent shall deliver the Escrow Shares to the applicable
Prospective Purchasers who have given said confirmation, and shall deliver
the
Escrow Funds to the corresponding Selling Stockholders.
E.
If
Escrow Agent shall receive written notice from the Issuer pursuant to Article
"9" of this Agreement that the Issuer has entered into an Acquisition Agreement
pursuant to paragraphs (e)(1) and (e)(2) of Rule 419, and said written notice
includes a representation that the Issuer has provided a post-effective
amendment to the Issuer's registration statement which has been declared
effective by the SEC to each Prospective Purchaser, and either (i) Issuer has
received confirmation from Prospective Purchasers pursuant to Rule 419(e)(2)(ii)
that said Prospective Purchasers do not intend to continue to remain investors
in the Issuer or (ii) more than forty-five (45) business days have elapsed
after
the effective date of the post-effective amendment, then Escrow Agent shall
return the Escrow Funds to the corresponding Prospective Purchasers, and shall
return the Escrow Shares to the corresponding Selling Stockholders.
F.
If
upon receiving written instructions from the Issuer that the Issuer has not
(i)
negotiated an acquisition transaction, (ii) filed a post-effective amendment
to
its registration statement, (iii) successfully completed a reconfirmation
offering meeting the requirements of Rule 419 and (iv) closed on the acquisition
agreement within eighteen (18) months after the effective date of its
registration statement, then Escrow Agent shall return the Escrow Funds to
the
corresponding Prospective Purchasers, and shall return the Escrow Shares to
the
corresponding Selling Stockholders pursuant to the written instructions from
the
Issuer.
G.
If the
Issuer elects to terminate the Offering prior to the occurrence of the events
specified in Paragraphs "D", "E" or "F" of this Article "3" of this Agreement,
then the Issuer shall notify Escrow Agent pursuant to Article"9" of this
Agreement that the Offering has been terminated and the registration statement
withdrawn, whereupon Escrow Agent shall return the Escrow Funds to the
Prospective Purchasers, and shall return the Escrow Shares to the Selling
Stockholders.
4. Representations,
Warrants and Covenants of Escrow Agent.
A.
Escrow
Agent shall deposit the gross proceeds, if any, from the Offering promptly
into
the Escrow Account. Dividends, if any, earned on said funds shall be held in
the
Escrow Account until the funds are released. If the Escrow Funds are released
to
a Prospective Purchaser, the Prospective Purchaser shall receive any dividends
earned on such funds until the date of release. If Escrow Funds are released
to
the Selling Stockholders, any dividends earned on such funds up to the date
of
release shall be released to the Selling Stockholders.
B.
Escrow
Agent shall maintain in good faith and in the regular course of business Escrow
Account records, providing that the funds in the Escrow Account are held for
the
benefit of the purchasers and showing the name and interest of each party to
the
account.
C.
No
transfer or other disposition of Escrow Shares shall be permitted 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 [26
U.S.C. 1 et seq.], or the rules thereunder.
5. Rights
and Immunities of Escrow Agent.
Acceptance by the Escrow Agent of its duties pursuant to this Agreement is
subject to the following terms and conditions, which all parties to this
Agreement hereby agree shall govern and control the rights, duties and
immunities of the Escrow Agent:
A.
The
duties and obligations of the Escrow Agent shall be determined solely by the
express provisions of this Agreement and the Escrow Agent shall not be liable
except for the performance of such duties and obligations as are specifically
set out in this Agreement. This Agreement shall not be deemed to create a
fiduciary relationship between the parties hereto under state or federal law
except as specifically provided in this Agreement.
B. (i) The
Escrow Agent is hereby released and exculpated from all liability, costs, and
expenses whatsoever which arise out of or in connection with the Escrow Agent’s
activities as escrow agent hereunder. The Escrow Agent shall not be liable
for
negligence or gross negligence. The Escrow Agent shall be liable only to the
extent of any loss or damage which is caused by its willful misconduct.
(ii) The
Escrow Agent shall not be obligated to verify (i) the authenticity of any
documents submitted to it as originals, (ii) the genuineness of the signatures
on any documents submitted to it; (iii) the legal capacity of any persons who
executed any document submitted to it; (iv) the due authorization and valid
execution of any agreement submitted to it by all parties thereto; (v) that
any
agreement submitted to it constitutes a valid and legally binding agreement
and
obligation of the parties; and (vi) the conformity to the originals of any
documents submitted to it (a) as photostatic copies or (b) via facsimile.
C.
The
Escrow Agent may act or refrain from acting with respect to any matter which
is
referred to herein in reliance upon either: (i) the advice of any counsel who
may be selected by the Escrow Agent from time to time or (ii) a good faith
determination by the Escrow Agent. The Escrow Agent is hereby released and
exculpated from all liability or claimed liability by the parties or any other
person which may arise or be alleged to have arisen, out of or as a result
of,
in connection with acting as Escrow Agent or in refraining from acting upon
either: (i) the advice of any counsel or (ii) a good faith determination by
the
Escrow Agent.
D.
The
Escrow Agent may rely upon any paper or other document which may be submitted
to
the Escrow Agent in connection with its duties hereunder which is believed
by
the Escrow Agent to be genuine and to have been signed by the proper party
or
parties and is hereby released and exculpated from all liability, including,
but
not limited to, losses, costs, consequential damages and expenses whatsoever
which arises out of or in connection with its actions based upon any such paper
or other document, and the Escrow Agent shall have no liability or
responsibility with respect to the form, execution or validity thereof.
E.
The
Escrow Agent may institute or defend any action or legal process which involves
any matter which is referred to herein which in any manner affects the Escrow
Agent or its duties or liabilities hereunder, but the Escrow Agent shall not
be
required to institute or defend such action or process unless or until requested
to do so, and then only upon receiving full indemnity, against any and all
claims, liabilities, judgments, reasonable attorneys fees and other expenses
of
every kind in relation thereto. Such indemnification shall be in a form and
amount satisfactory to the Escrow Agent, in its sole and absolute discretion,
and from such parties determined by the Escrow Agent in its sole and absolute
discretion.
F.
The
parties agree to and shall indemnify and save the Escrow Agent harmless from
and
against any losses, claims, liabilities, judgments, reasonable attorneys’ fees
and other expenses of every kind and nature which may be suffered, sustained
or
incurred by the Escrow Agent by reason of its acceptance of, and its performance
under, this Agreement except for the Escrow Agent’s willful misconduct. In
addition, the Escrow Agent shall be entitled to the fair value of the legal
services incurred to outside counsel with respect to the Escrow Agent’s
acceptance of, and its performance pursuant to this Agreement.
G.
The
Escrow Agent may at any time, in its sole and absolute discretion, deposit
the
Escrow Items with a court of competent jurisdiction in New York County, New
York
pursuant to an action of interpleader, and upon such deposit the Escrow Agent
shall be released from any further liability or obligation as the Escrow Agent.
H.
In the
event of any dispute which is referred to herein, the Escrow Agent shall be
entitled to consult with counsel and commence or defend any legal proceeding
if
the Escrow Agent, in its good faith determination, determines to do so, and
shall be reimbursed by both parties for all legal fees and expenses in
connection with such consultation and legal proceeding.
I.
The
Escrow Agent may resign at any time from its duties as Escrow Agent by giving
at
least thirty (30) days prior written notice ("Resignation Notice") pursuant
to
Article "9" of this Agreement to the Issuer and to all Selling Shareholders
and
Prospective Purchasers who have Escrow Items being held by the Escrow Agent.
The
Escrow Agent shall upon the (i) acceptance of the new escrow agent by the Issuer
and (ii) presentation of an executed agreement appointing said new escrow agent,
turn over to said escrow agent the Escrow Items. If no such escrow agent is
appointed within thirty (30) days after the giving of Resignation Notice, the
Escrow Agent may deposit the Escrow Items with a court of competent jurisdiction
in New York County, New York.
J.
The
Escrow Agent is not a party to or bound by any agreement pertaining to the
Offering or any other agreement between the Parties, except this Agreement.
K.
The
duties of the Escrow Agent hereunder are entirely ministerial, being limited
to
receiving, holding, and disbursing the amount in escrow as provided herein.
The
Escrow Agent may rely upon and will be protected in acting upon any paper or
other document which may be submitted to it in connection with its duties
hereunder and which is believed by it to be genuine and to have been signed
by
the proper party or parties or their representatives, and shall have no
liability or responsibility with respect to the form, execution, or validity
thereof.
L.
The
Escrow Agent’s obligation to act as Escrow Agent pursuant to this Agreement
shall terminate at such time as (i) the Escrow Agent shall deliver the Escrow
Items pursuant to Paragraphs "D", "E", "F" or "G" of Article "3" of this
Agreement or (ii) the Escrow Agent shall have deposited the Escrow Items in
court pursuant to Paragraph "G" of this Article "5" of this Agreement or the
last sentence of Paragraph "I" of this Article "5" of this Agreement.
6. Duties
of Issuer.
Upon
request of the Escrow Agent, Issuer shall timely execute and deliver any and
all
documents, and perform any and all acts, as may be reasonably and customarily
required to be executed or performed by an issuer in connection with the
parties' fulfillment of their respective obligations under an escrow agreement
such as this Agreement.
7. Authority.
The
persons executing this Agreement hereby represent that each is duly authorized
to enter into this Agreement in the capacity specified, and upon request, will
provide documentation to the Escrow Agent and the other party which supports
his
or her authority to enter into this Agreement.
8.
Miscellaneous.
A.
Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
B.
Enforceability.
If any
provision which is contained in this Agreement should, for any reason, be held
to be invalid or unenforceable in any respect under the laws of any State of
the
United States, such invalidity or unenforceability shall not affect any other
provision of this Agreement. Instead, this Agreement shall be construed as
if
such invalid or unenforceable provisions had not been contained
herein.
C. Amendment.
This
Agreement may not be changed, modified, extended, terminated or discharged
orally but only by an agreement in writing, signed by all of the parties to
this
Agreement.
9. Notices.
Any
notice or other communication required or permitted hereunder must be in writing
and sent by either (i) certified mail, postage prepaid, return receipt
requested, (ii) overnight delivery with confirmation of delivery or (iii)
facsimile transmission with an original mailed by first class mail, postage
prepaid, addressed as follows:
|
If
to the Issuer
|
||
|
000
Xxxxxxx Xxxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||
|
Attention:
Xxxxxxxxx X. Xxxxx
|
||
|
Facsimile
No.: (000) 000-0000
|
||
|
If
to the Escrow Agent:
|
|
Continental
Stock Transfer & Trust Co.
|
|
00
Xxxxxxx Xxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||
|
Attention:
Xxxxx Xxxxxx, Chairman
|
||
|
Facsimile
No.: (000) 000-0000
|
or
in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If mailing is impossible due to an absence of postal
service, and the other methods of sending notice set forth in this Article
“9”
of this Agreement are not otherwise available, notice shall be hand delivered
to
the aforesaid addresses. Each notice or communication shall be deemed to have
been given as of the date so mailed or delivered, as the case may be; provided,
however, that any notice sent by facsimile shall be deemed to have been given
as
of the date sent by facsimile if a copy of such notice is also mailed by first
class mail on the date sent by facsimile; if the date of mailing is not the
same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
10. Governing
Law.
This
Agreement shall, in accordance with Section 5-1401 of the General Obligations
Law of New York, in all respects be construed, governed, applied and enforced
in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein, without giving effect to the principles of
conflicts of law that would call for the application of the laws of any other
jurisdiction. Furthermore, the parties hereby agree:
A. That
any
proceeding to enforce the provisions of this Agreement may be commenced in
the
Courts of the State of New York and federal courts in the State of New York
having subject matter jurisdiction;
B. To
hereby
irrevocably and unconditionally consent to and submit to personal jurisdiction
over each of them by the Courts of the State of New York and federal courts
in
the State of New York, and appellate courts thereof, in any action or
proceeding, or for recognition and enforcement of any judgment in respect
thereof;
C. To
hereby
waive personal service of any and all process and specifically consent that
in
any such action or proceeding, any service of process may be effectuated upon
any of them by certified mail, return receipt requested, to the addresses which
are set forth in Article “9” of this Agreement or in each case to such other
addresses as shall have last been furnished by the like notice; and
D. To
hereby
waive any objection that they may now or hereafter have to the venue of any
such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agree not to plead or claim the
same.
11. Construction.
Each of
the parties hereto hereby further acknowledges and agrees that (i) each has
been
advised by counsel during the course of negotiations and (ii) each counsel
has
had significant input in the development of this Agreement and (iii) this
Agreement shall not, therefore, be construed more strictly against any party
responsible for its drafting regardless of any presumption or rule requiring
construction against the party whose attorney drafted this Agreement.
12. Entire
Agreement.
This
Agreement and all documents and instruments referred to herein (i) constitute
the entire agreement and supersede all prior agreements and understandings,
both
written and oral, among the parties with respect to the subject matter hereof
and thereof, and (ii) are not intended to confer upon any person other than
the
parties hereto any rights or remedies hereunder.
13. Further
Assurances.
The
parties agree to execute any and all such other further instruments and
documents, and to take any and all such further actions which are reasonably
required to effectuate this Agreement and the intents and purposes hereof.
14. Binding
Agreement.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, executors, administrators, personal representatives, successors
and assigns.
15. Non-Waiver.
Except
as otherwise expressly provided herein, no waiver of any covenant, condition,
or
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by the party against whom such waiver is charged; and
(i)
the failure of any party to insist in any one or more cases upon the performance
of any of the provisions, covenants or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants or conditions,
(ii) the acceptance of performance of anything required by this Agreement to
be
performed with knowledge of the breach or failure of a covenant, condition
or
provision hereof shall not be deemed a waiver of such breach or failure, and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver of any other or subsequent breach.
16. Modifications.
This
Agreement may not be changed, modified, extended, terminated or discharged
orally, but only by an agreement in writing, signed by all of the parties to
this Agreement.
17. Exhibits.
All
Exhibits annexed or attached to this Agreement are incorporated into this
Agreement by reference thereto and constitute an integral part of this
Agreement.
18. Severability.
The
provisions of this Agreement shall be deemed separable. Therefore, if any part
of this Agreement is rendered void, invalid or unenforceable, such rendering
shall not affect the validity or enforceability of the remainder of this
Agreement; provided, however, that if the part or parts which are void, invalid
or unenforceable as aforesaid shall substantially impair the value of this
whole
Agreement to any party, that party may cancel, and terminate the Agreement
by
giving written notice to the other party.
19. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and this
same
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and the year first above written.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
By:
/s/
Xxxx X. Xxxxxx
Continental
Stock Transfer & Trust Co.
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
As
Escrow
Agent
By:
/s/
Xxxxxx X. Xxxxxx
EXHIBIT
B
SELLING
STOCKHOLDER SIGNATURE PAGE
The
undersigned Selling Stockholder of Madison Enterprises Group, Inc. (the
“Company”), intends to sell the shares of the Company pursuant to the Form S-1
Registration in compliance with Rule 419 of Regulation C promulgated pursuant
to
the Securities Act of 1933, as amended, and hereby agrees to be bound by the
terms of the Escrow Agreement to which this Signature Page is attached.
Name
of
Selling Stockholder: ______________________________
Selling
Stockholder’s Signature: ______________________________
| Number of Shares Owned: ____________ | ______________________________________ | ||
| Street Address | |||
| Number of Shares Being Sold: ____________ | ______________________________________ | ||
| City and State Zip | |||
|
Amount
of Sale: $____________
|
______________________________________ | ||
|
Telephone
Number
|
|||
| ______________________________________ | |||
| Facsimile Number | |||
| ______________________________________ | |||
| Social Security Number | |||
| Name and contact information of Purchaser (if known): | If a broker is utilized with respect to this sale, name and contact information: | ||
| ______________________________________ | ______________________________________ | ||
| Name | Name | ||
| ______________________________________ | ______________________________________ | ||
| Xxxxxx Xxxxxxx | Xxxxxx Xxxxxxx | ||
| ______________________________________ | ______________________________________ | ||
| City and State Zip | City and State Zip | ||
| ______________________________________ | ______________________________________ | ||
| Telephone Number | Telephone Number | ||
| ______________________________________ | ______________________________________ | ||
| Facsimile | Facsimile | ||
| ______________________________________ | ______________________________________ | ||
| Social Security Number | Social Security Number |
