ESCROW AGREEMENT
ESCROW AGREEMENT dated as of March 22, 2001 (the "Agreement") by and between
MONTANA ACQUISITION CORPORATION, a Delaware corporation (the "Company") and
CAPITAL BANK & TRUST COMPANY (the "Escrow Agent").
WHEREAS the Company proposes to sell up to 10,000 shares of common stock (the
"Shares" or "Securities") to raise a maximum of $40,000.00 in a limited public
offering, as more fully described in the Company's Registration Statement on
Form SB-2, (the "Registration Statement"); and
WHEREAS the Company desires that the Escrow Agent establish an escrow account in
accordance with Rule 419, a copy of which is appended hereto and made a part
hereof, to accept all offering proceeds derived by the Company from the sale of
the Shares (the "Offering Proceeds"), as well as the share certificates
representing the Shares issued in connection with the Company's offering, in
escrow, to be held and disbursed as hereinafter provided.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The Company hereby appoints 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. Establishment of Escrow Account. The Escrow Agent shall open an escrow
account (the "Escrow Account") for the deposit of the proceeds to be derived by
the Company from the sale of the Shares, being the Offering Proceeds, subject to
the terms and conditions of this Agreement.
2.1 Notice of Effective Date of Registration. On or before the date of the
initial deposit in the Escrow Account pursuant to this Agreement, the Company
shall notify the Escrow Agent in writing of the effective date of the
Registration Statement (the "Effective Date") and the Escrow Agent shall not be
required to accept any amount for deposit in the Escrow Account prior to its
receipt of such notification.
3. Deposit of Offering Proceeds and Share Certificates. Subject to Rule 419,
upon the Company's receipt and acceptance of subscriptions and Offering
Proceeds, the Company shall promptly deliver to the Escrow Agent such proceeds
in the form of checks or money orders drawn to the order of the Escrow Agent.
Simultaneously with each deposit into the Escrow Account, the Company shall
inform the Escrow Agent by confirmation slip, or other writing, of the name and
address of the prospective purchaser, the number of Securities subscribed for by
such person, and the aggregate dollar amount of such subscription.
All share certificates representing the Shares issued in connection with the
Company's offering shall also be deposited by the Company directly into the
Escrow Account promptly upon issuance. The identity of the purchasers of the
Securities shall be included on the stock certificates or other documents
evidencing such Securities. Securities held in the Escrow Account are to remain
as issued and deposited and shall be held for the sole benefit of the
purchasers, who shall have voting rights with respect to Securities held in
their names, as provided by applicable state law. No transfer or other
disposition of Securities held in the Escrow Account or any interest related to
such Securities 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 as amended [26 U.S.C. 1 et seq.], or Title 1
of the Employee Retirement Income Security Act [29 U.S.C. 1001 et seq.], or the
rules thereunder.
4. Disbursement of the Escrow Account. Upon the earlier of (i) receipt by the
Escrow Agent of a signed representation from the Company to the Escrow Agent,
that the requirements of Rule 419(e)(1) and (e)(2) have been met, and
consummation of an acquisition(s) meeting the requirements of Rule 419(e)(2) or
(ii) written notification from the Company to the Escrow Agent to deliver the
Offering Proceeds to another escrow agent in accordance with Paragraph 5.8 then,
in such event, the Escrow Agent shall disburse the Offering Proceeds (inclusive
of any interest thereon) to the Company and the Securities to the purchasers or
registered holders identified on the deposited Securities or deliver the
Offering Proceeds and Securities to such other escrow agent, as the case may be,
whereupon the Escrow Agent shall be released from further liability hereunder.
Notwithstanding the foregoing, Offering Proceeds and any dividends or interest
held for the benefit of a purchaser of Securities, shall be disbursed to such
purchaser upon the purchaser's failure to reconfirm his or her investment as
provided in Rule 419(e)(2)(ii).
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Notwithstanding the foregoing, if an acquisition meeting the requirements of
Rule 419(e)(1) has not occurred by 18 months after the Effective Date of the
Registration Statement, funds held in the Escrow Account shall be returned by
first class mail or equally prompt means to the purchasers within five business
days following that date.
5. Concerning the Escrow Agent.
5.1 The Escrow Agent shall not be liable for any actions taken or omitted by it,
or any action suffered by it to be 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 provision, 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
person. 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 The Escrow Agent shall not be responsible for the sufficiency or accuracy,
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 in any
respect on account of the identity, authority or rights of the person executing
or delivering or purporting to execute or deliver any document or property paid
or delivered by the Escrow Agent pursuant to the provisions hereof. The Escrow
Agent shall not be liable for any loss which may be incurred by reason of any
investment of any monies or properties which it holds hereunder.
5.3 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
does not exist or has not occurred, without incurring liability for any action
taken or omitted, in good faith and in the exercise of its own best judgment, in
reliance upon such assumption.
5.4 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, or in connection with any
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claim or demand, which in any way directly or indirectly arises out of or
relates to this Agreement, the services of the Escrow Agent hereunder, the
monies or other property held by it hereunder or any such expense or loss.
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,
if a claim in respect thereof shall be made against the other parties hereto,
notify such parties thereof in writing; but the failure by the Escrow Agent to
give such notice shall not relieve any party form any liability which such party
may have to the Escrow Agent hereunder. 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 Account or it may deposit the Escrow Account with the
clerk of any appropriate court or it may retain the Escrow Account pending
receipt of a final, non-appeasable order of a court having jurisdiction over all
of the parties hereto directing to whom and under what circumstances the Escrow
Account is to be disbursed and delivered.
5.5 During the term hereof, the Escrow Agent shall invest the Offering Proceeds
pursuant to the requirements of Rule 419(b)(2)(iv). Interest or dividends earned
on the Offering Proceeds, if any, shall be held in the Escrow Account until the
funds are released in accordance with Rule 419(b)(2)(v) and (e)(3) and as
provided for in Paragraph 4 hereof. Offering Proceeds and interest or dividends
thereof, if any, shall be held for the sole benefit of the purchasers of the
Securities. If funds held in the Escrow Account are released to a purchaser of
the Securities, the purchaser shall receive interest or dividends earned, if
any, on such funds up to the date of release. If funds held in the Escrow
Account are released to the Company, interest or dividends earned or such funds
up to the date of the release may be released to the Company.
The Company may receive up to 10% of the Offering Proceeds remaining after
payment of underwriting commissions, underwriting expenses and dealer allowances
permitted by paragraph (b)(2)(i) of Rule 419, exclusive of interest or
dividends, as those Offering Proceeds are deposited into the Escrow Account.
5.6 The Escrow Agent shall be entitled to reasonable compensation from the
Company for all services rendered by it hereunder.
5.7 From time to time on and after the date hereof, the Company 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 (it being understood that the Escrow Agent shall have no
obligation to make such 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.
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5.8 The Escrow Agent may resign at any time and be discharged from its duties as
Escrow Agent hereunder by its giving the Company at least thirty (30) days'
prior written 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 the
giving of such notice of resignation, the Escrow Agent may deposit the Escrow
Account with any court it deems appropriate.
5.9 The Escrow Agent shall resign and be discharged from its duties as Escrow
Agent hereunder if so requested in writing at anytime by the Company, provided,
however, that such resignation shall become effective only upon acceptance of
appointment by a successor escrow agent as provided in Paragraph 5.8.
5.10 Notwithstanding anything herein to the contrary, the Escrow Agent shall not
be relieved from liability thereunder for its own gross negligence or its own
willful misconduct.
6. Miscellaneous.
6.1 Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York without giving
effect to choice of law or conflict or laws rules, and shall be binding upon the
Parties hereto and their respective successors and assigns.
6.2 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.
6.3 The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation thereof.
6.4 This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their legal representatives, successors and
assigns.
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6.5 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, return receipt requested, postage prepaid, and shall be
deemed given when so delivered personally or, if mailed, two (2) days after the
date of mailing, as follows:
If to the Company, to:
MONTANA ACQUISTION CORPORATION
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
and if to the Escrow Agent, to:
CAPITAL BANK & TRUST COMPANY
Attn: Xxxxxx X. Xxxxx
0 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
(000) 000-0000
7. Severability. If any provision of this Agreement or the application thereof
to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by applicable law.
8. Pronouns. All pronouns and any variations thereof shall be deemed to refer to
the masculine,
feminine, neuter singular, or plural as the context may require.
9. Captions. All captions are for convenience only and are without substantive
effect.
10. Execution in Counterparts. This Agreement may be executed in several
counterparts or by separate instruments and all of such counterparts and
instruments shall constitute on agreement, binding on all the parties herein.
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11. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understanding (written or oral) of the parties in
connection herewith.
WITNESS the execution of this Agreement as of the date first above written.
MONTANA ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Apple
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Xxxxxx X. Apple
President
CAPITAL BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Senior Vice President
