ESCROW AGREEMENT
AGREEMENT, dated as of the ___th day of ________, 1997 and effective as of
the Effective Date, as defined herein, by and among American Stock Transfer &
Trust Company, a New York corporation (hereinafter referred to as the "Escrow
Agent"), IAT Mutlimedia, Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company who have executed this agreement (hereinafter
collectively called the "Stockholders").
WHEREAS, the Company contemplates a public offering ("Public Offering") of
Units ("Units"), each Unit consisting of one share of its Common Stock, par
value $.01 per share (the "Common Stock") one redeemable Warrant (the "Warrant")
through Royce Investment Group, Inc. as underwriter (the "Underwriter") pursuant
to a Registration Statement (the "Registration Statement") on Form S-1 filed
with the Securities and Exchange Commission ("SEC"); and
WHEREAS, in connection with the Public Offering the Stockholders have
agreed to deposit in escrow an aggregate of 500,000 shares of Common Stock, upon
the terms and conditions set forth herein.
In consideration of the mutual covenants and promises herein contained, the
parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint American Stock Transfer
& Trust Company as Escrow Agent and agree that the Stockholders will, following
the filing of the Registration Statement relating to the Public Offering,
deliver to the Escrow Agent to hold in accordance with the provisions hereof,
certificates representing an aggregate of
500,000 shares of Common Stock owned of record by the Stockholders in the
respective amounts set forth on Exhibit A hereto (the "Escrow Shares"), together
with stock powers executed in blank. The Escrow Agent, by its execution and
delivery of this Agreement hereby acknowledges receipt of the Escrow Shares and
accepts its appointment as Escrow Agent to hold the Escrow Shares in escrow,
upon the terms, provisions and conditions hereof.
2. This Agreement shall become effective upon the date on which the
Securities and Exchange Commission declares effective the Registration Statement
("Effective Date") and shall continue in effect until the earlier of (i) the
date specified in paragraph 4(e) hereof or (ii) the distribution by the Escrow
Agent of all of the Escrow Shares in accordance with the terms hereof (the
"Termination Date"). The period of time from the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
3. During the Escrow Period, the Escrow Agent shall receive all of the
money, securities, rights or property distributed in respect of the Escrow
Shares then held in escrow, including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company, such property to be held and distributed
as herein provided and hereinafter referred to collectively as the "Escrow
Property."
4. (a) The Escrow Shares are subject to release to the Stockholders only in
the event the conditions set forth herein are met. The Escrow Agent, upon notice
to such effect from the Company as provided in paragraph 5 hereof, shall deliver
the Escrow Shares, together with stock powers executed in blank, and the Escrow
Property deposited in escrow with
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respect to such Escrow Shares, to the respective Stockholders, if, and only if,
one of the following conditions is met:
(i) 166,666 shall be released from escrow if, for the fiscal year ending
December 31, 1997, the Company's "Minimum Revenues" (as defined below)
equals or exceeds $5,500,000;
(ii) 166,666 Escrow Shares (or, if the condition set forth in (i) above was
not met, 333,332 Escrow Shares) shall be released from escrow, if, for
the fiscal year ending December 31, 1998, the Minimum Revenues equals
or exceeds $8,000,000;
(iii) 166,668 Escrow Shares (or, if the conditions set forth in either (i)
or (ii) were not met, the remaining Escrow Shares) shall be released
if, for the fiscal year ending December 31, 1999, the Minimum Revenues
equals or exceeds $12,000,000 and the Company's income before
provision for taxes, determined as set forth below (the "Minimum
Pretax Income") equals or exceeds $1,0000,000;
(iv) The Closing Price (as defined herein) of the Company's Common Stock
shall average in excess of $13.00 per share for any 30 consecutive
business days during the period commencing on the 24th month after the
Effective Date; or
(v) the Company is acquired by or merged into another entity in a
transaction in which stockholders of the Company receive per share
consideration (after taking into account any Escrow Shares released
from escrow in connection with such transaction) at least equal to the
level set forth in (iv) above.
(b) As used in this Section 4, the term "Closing Price" shall be subject to
adjustments in the event of any stock dividend, stock distribution, stock split
or other similar event and shall mean:
(i) If the principal market for the Common Stock is a national securities
exchange or the Nasdaq National Market, the closing sales price of the
Common Stock as reported by such exchange or market, or on a
consolidated tape reflecting transactions on such exchange or market;
or
(ii) if the principal market for the Common Stock is not a national
securities exchange or the Nasdaq National Market and the Common Stock
is quoted
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on the Nasdaq SmallCap Market, the closing bid price of the Common
Stock as quoted on the Nasdaq SmallCap Market; or
(iii) if the principal market for the Common Stock is not a national
securities exchange or the Nasdaq National Market and the Common Stock
is not quoted on the Nasdaq SmallCap Market, the closing bid for the
Common Stock as reported by the National Quotation Bureau, Inc.
("NQB") or at least two market makers in the Common Stock if
quotations are not available from NQB but are available from market
makers.
(c) The determination of Minimum Revenues and Minimum Pretax Income shall
be (i) calculated exclusive of any extraordinary earnings or charges (including
any charges incurred in connection with the release from escrow of the Escrow
Shares and any Escrow Property in respect thereof pursuant to the provisions of
this paragraph 4); (ii) derived solely from the businesses owned and operated by
the Company as of the closing date of the Public Offering and shall not give
effect to any operations relating to businesses or assets acquired after such
date; and (iii) audited by the Company's independent public accountants.
(d) If the Escrow Agent has not received the notice provided for in
Paragraph 5 hereof and delivered all of the Escrow Shares and related Escrow
Property in accordance with the provisions of this Paragraph 4 on or prior to
the earlier of (i) the date of the closing of a transaction referred to in
subparagraph 4(a)(v) or (ii) March 31, 2002, the Escrow Agent shall deliver the
certificates representing the remaining Escrow Shares, together with stock
powers executed in blank, and any related Escrow Property to the Company to be
placed in the Company's treasury for cancellation thereof as a contribution to
capital. After such date, the Stockholders shall have no further rights as a
stockholder of the Company with respect to any of the cancelled Escrow Shares.
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5. Upon the occurrence or satisfaction of any of the events or conditions
specified in Paragraph 4 hereof, the Company shall promptly give appropriate
notice to the Escrow Agent, the Underwriter (and if the transfer agent of the
Company's Common Stock is different from the Escrow Agent, such transfer agent)
and present such documentation as is reasonably required by the Escrow Agent to
evidence the satisfaction of such conditions.
6. It is understood and agreed by the parties to this Agreement as follows:
(a) The Escrow Agent is not and shall not be deemed to be a trustee
for any party for any purpose and is merely acting as a depository and in a
ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have any
responsibility in respect of any instruction, certificate or notice
delivered to it or of the Escrow Shares or any related Escrow Property
other than faithfully to carry out the obligations undertaken in this
Agreement and to follow the directions in such instruction or notice
provided in accordance with the terms hereof.
(c) The Escrow Agent is not and shall not be deemed to be liable for
any action taken or omitted by it in good faith and may rely upon, and act
in accordance with, the advice of its counsel without liability on its part
for any action taken or omitted in accordance with such advice. In any
event, its liability hereunder shall be limited to liability for gross
negligence, willful misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon and act in accordance
with any certificate, instruction, notice, letter, telegram, cablegram or
other written instrument believed by it to be genuine and to have been
signed by the proper party or parties.
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(e) The Company agrees (i) to pay the Escrow Agent's reasonable fees
and to reimburse it for its reasonable expenses including attorney's fees
incurred in connection with duties hereunder and (ii) to save harmless,
indemnify and defend the Escrow Agent for, from and against any loss,
damage, liability, judgment, cost and expense whatsoever, including counsel
fees, suffered or incurred by it by reason of, or on account of, any
misrepresentation made to it or its status or activities as Escrow Agent
under this Agreement except for any loss, damage, liability, judgment, cost
or expense resulting from gross negligence, willful misconduct or bad faith
on the part of the Escrow Agent. The obligation of the Escrow Agent to
deliver the Escrow Shares to either the Stockholders or the Company shall
be subject to the prior satisfaction upon demand from the Escrow Agent, of
the Company's obligations to so save harmless, indemnify and defend the
Escrow Agent and to reimburse the Escrow Agent or otherwise pay its fees
and expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject
matter of this Agreement unless requested to do so by the Stockholders and
indemnified to the Escrow Agent's satisfaction against the cost and expense
of such defense by the party requesting such defense. If any such legal
proceeding is instituted against it, the Escrow Agent agrees promptly to
given notice of such proceeding to the Stockholders and the Company. The
Escrow Agent shall not be required to institute legal proceedings of any
kind.
(g) The Escrow Agent shall not, by act, delay, omission or otherwise,
be deemed to have waived any right or remedy it may have either under this
Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing,
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signed by the Escrow Agent, and only to the extent expressly therein set
forth. A waiver by the Escrow Agent under the term of this Agreement shall
not be construed as a bar to, or waiver of, the same or any other such
right or remedy which it would otherwise have on any other occasion.
(h) The Escrow Agent may resign as such hereunder by giving 30 days
written notice thereof to the Stockholders and the Company. Within 20 days
after receipt of such notice, the Stockholders and the Company shall
furnish to the Escrow Agent written instructions for the release of the
Escrow Shares and any related Escrow Property (if such shares and property,
if any, have not yet been released pursuant to Paragraph 4 hereof) to a
substitute Escrow Agent which (whether designated by written instructions
from the Stockholders and the Company jointly or in the absence thereof by
instructions from a court of competent jurisdiction to the Escrow Agent)
shall be a bank or trust company organized and doing business under the
laws of the United States or any state thereof. Such substitute Escrow
Agent shall thereafter hold any Escrow Shares and any related Escrow
Property received by it pursuant to the terms of this Agreement and
otherwise act hereunder as if it were the Escrow Agent originally named
herein. The Escrow Agent's duties and responsibilities hereunder shall
terminate upon the release of all shares then held in escrow according to
such written instruction or upon such delivery as herein provided. This
Agreement shall not otherwise be assignable by the Escrow Agent without the
prior written consent of the Company.
7. The Stockholders shall have the sole power to vote the Escrow Shares and
any securities deposited in escrow under this Agreement while they are being
held pursuant to this Agreement.
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8. (a) Each of the Stockholders agrees that during the term of this
Agreement he will not sell, transfer, hypothecate, negotiate, pledge, assign,
encumber or otherwise dispose of any or all of the Escrow Shares set forth
opposite his name on Exhibit A hereto, unless and until the Company shall have
given the notice as provided in Paragraph 5. This restriction shall not be
applicable to transfers upon death, by operation of law, to family members of
the Stockholders or to any trust for the benefit of the Stockholders, provided
that such transferees agree to be bound by the provisions of this Agreement.
(b) The Stockholders will take any action necessary or appropriate,
including the execution of any further documents or agreements, in order to
effectuate the transfer of the Escrow Shares to the Company if required pursuant
to the provisions of this Agreement.
9. Each of the certificates representing the Escrow Shares will bear
legends to the following effect, as well as any other legends required by
applicable law:
(a) "The sale, transfer, hypothecation, negotiation, pledge, assignment,
encumbrance or other disposition of the shares evidenced by this
certificate are restricted by and are subject to all of the terms,
conditions and provisions of a certain Escrow Agreement entered into
among American Stock Transfer & Trust Company, IAT Multimedia, Inc.
and its Stockholders, dated as of _________, 1997, a copy of which may
be obtained from IAT Multimedia, Inc.. No transfer, sale or other
disposition of these shares may be made unless specific conditions of
such agreement are satisfied.
(b) "The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended. No transfer, sale or
other disposition of these shares may be made unless a registration
statement with respect to these shares has become effective under said
act, or the Company is furnished with an opinion of counsel
satisfactory in form and substance to it that such registration is not
required."
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Upon execution of this Agreement, the Company shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent and the
Underwriter shall have received written notice from the Company as provided in
Paragraph 5.
10. Each notice, instruction or other certificate required or permitted by
the terms hereof shall be in writing and shall be communicated by personal
delivery, fax or registered or certified mail, return receipt requested, to the
parties hereto at the addresses set forth below, or at such other address as any
of them may designate by notice to each of the others:
(i) If to the Company, to:
IAT Multimedia, Inc.
Geschaftshaus Wasserschloss Xxxxxxxxxxx 00
XX-0000 Xxxxxxxxx-Xxxxx, Xxxxxxxxxxx
Attn: Xx. Xxxxxx Xxxx
(ii) If to the Stockholders to their respective
addresses as set forth on Exhibit A hereto.
(iii) If to the Escrow Agent, to:
American Stock Transfer & Trust Company
Xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(iv) If to the Underwriter, to:
Royce Investment Group, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Att:
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given hereunder
by the Escrow Agent shall be
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effective and deemed received upon personal delivery or transmission by fax or,
if mailed, five (5) calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the Stockholders or the
Escrow Agent shall be sent by ordinary mail to Xxxxx & XxXxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ________________. A copy of all
communications sent to the Underwriter shall be sent by ordinary mail to
Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxx Xxxxxxx, Esq.
11. Except as set forth in paragraph 12 hereof, this Agreement may not be
modified, altered or amended in any material respect or cancelled or terminated
except with the prior consent of the holders of all of the outstanding shares of
Common Stock of the Company.
12. In the event that (i) the Registration Statement is not declared
effective by the SEC within one year from the date of the filing of the
Registration Statement with the SEC or (ii) the Public Offering is not
consummated within twenty-five (25) days of the Effective Date of the
Registration Statement, this Agreement shall terminate and be of no further
force and effect and the Escrow Agent, upon written notice from both the Company
and the Underwriter in accordance with paragraph 10 hereof of such termination,
will return the Escrow Shares and any Escrow Property in respect thereof to the
Stockholders.
13. This Agreement shall be governed by and construed in accordance with
the laws of New York and shall be binding upon and inure to the benefit of all
parties hereto and their respective successors in interest and assigns.
14. This Agreement may be executed in several counterparts, which taken
together shall constitute a single instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the day and year first above
written.
IAT MULTIMEDIA, INC.
By:
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AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:
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STOCKHOLDERS:
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EXHIBIT A
STOCKHOLDERS' LIST
Name and Address Stock
of Stockholder Certificate No. Number of Escrow Shares
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