ESCROW AGREEMENT by and between SHEFFIELD
ACQUISITIONS, INC. (the "Issuer" or "Sheffield") and COMPREHENSIVE
CAPITAL, INC., 1600 Stewart Avenue, Suite 704, Westbury, New York
11590 (the "Distribution Agent") relating the deposit with the Distribution
Agent of shares of common stock of Sheffield.
WHEREAS, Sheffield has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, file number 333-
17117 (the "Registration Statement") covering a proposed distribution of its
securities (collectively, the "Securities") consisting of 500,000 shares of its
common stock (the "Dividend Shares") to the shareholders of Thornbury
Capital Corporation ("Thornbury Shareholders"); and
WHEREAS, the Distribution is being conducted in accordance with
Rule 419 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"); and
WHEREAS, Sheffield proposes to establish an escrow account with the
Distribution Agent in connection with the Distribution and the Distribution
Agent is willing to establish such escrow account on the terms and subject to
the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Any terms not defined herein shall have
those meanings assigned to such terms in the Registration Statement.
2. DISTRIBUTION AGENT. Comprehensive Capital, Inc., 1600
Stewart Avenue, Suite 704, Westbury, New York 11590 is hereby appointed
to act as escrow and distribution agent (the "Distribution Agent") for the
purposes herein set forth.
3. DEPOSIT OF ITEMS IN ESCROW. All securities issued in
connection with the Distribution, including the Dividend Shares and any shares
issued with respect to stock splits, stock dividends or similar rights, shall be
deposited directly into the escrow account promptly upon issuance (the
"Escrowed Securities").
4. DEPOSIT AND INVESTMENT OF PROCEEDS.
A. All offering proceeds, after deduction of cash paid for
underwriting commissions, underwriting expenses and dealer allowances, and
amounts permitted to be released to the registrant pursuant to Rule 419 of the
General Rules and Regulations of the Securities and Exchange Commission
("Rule 419") shall be deposited promptly into the escrow or trust account;
provided, however that no deduction may be made for underwriting
commissions, underwriting expenses or dealer allowances payable to an
affiliate of the registrant.
B. Deposited proceeds shall be in the form of checks, drafts,
or money orders payable to the order of the escrow agent or trustee.
C. Deposited proceeds and interest or dividends thereon, if any,
shall be held for the sole benefit of the purchasers of the securities.
D. Deposited proceeds shall be invested in one of the
following:
(i) an obligation that constitutes a "deposit", as that
term is defined in section 3(l) of the Federal Deposit
Insurance Act [12 U.S.C. 1813(l)(1991)];
(ii) securities of any open-end investment company
registered under the Investment Company Act of 1940
that holds itself out as a money market fund meeting the
conditions of paragraphs (c)(2), (c)(3), and (c)(4) of
Rule 2a-7 under the Investment Company Act; or
(iii) securities that are direct obligations of, or
obligations guaranteed as to principal or interest by, the
United States.
E. Interest or dividends earned on the funds, if any, shall be
held in the escrow or trust account until the funds are released in accordance
with the provisions of Rule 419. If funds held in the escrow or trust account
are released to a purchaser of the securities, the purchasers shall receive
interest or dividends earned, if any, on such funds up to the date of release.
If funds held in the escrow or trust account are released to the registrant,
interest or dividends earned on such funds up to the date of release may be
released to the registrant.
F. The registrant may receive up to 10% of the 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 proceeds are deposited into the escrow or
trust account.
5. DEPOSIT OF SECURITIES.
A. All securities issued in connection with the offering, whether
or not for cash consideration, and any other securities issued with respect to
such securities, including securities issued with respect to stock splits, stock
dividends, or similar rights, shall be deposited directly into the escrow or
trust account promptly upon issuance. The identity of the purchaser of the
securities shall be included on the stock certificates or other documents
evidencing such securities.
B. Securities held in the escrow or trust account are to remain
as issued and deposited and shall be held for the sole benefit of the pur-
chasers, who shall have voting rights, if any, 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 or trust account or any interest
related to such securities shall be permitted other than by will or the laws
of descent and distribution, pursuant to a qualified domestic relations order
as defined by the Internal Revenue Code of 1986 as amended or pursuant to
Title 1 of the Employee Retirement Income Security Act or the rules thereunder.
C. Warrants, convertible securities or other derivative securities
relating to securities held in the escrow or trust account may be exercised or
converted in accordance with their terms; provided, however, that securities
received upon exercise or conversion, together with any cash or other
consideration paid in connection with the exercise or conversion, are promptly
deposited into the escrow or trust account.
6. CONDITIONS FOR RELEASE OF DEPOSITED SECURITIES
AND FUNDS. Funds held in the escrow or trust account may be released to
the registrant and securities may be delivered to the purchaser or other
registered holder identified on the deposited securities only at the same time
as or after:
A. the escrow agent or trustee has received a signed
representation from the registrant, together with other evidence acceptable to
the escrow agent or trustee, that the requirements of paragraphs (e)(1) and
(e)(2) of Rule 419 have been met; and
B. consummation of an acquisition(s) meeting the requirements
of paragraph (e)(2)(iii) of Rule 419.
7. RELEASE OF ESCROWED SECURITIES.
The Distribution Agent will release the Escrow Securities to the
Thornbury Shareholders after the Distribution Agent has received a signed
representation from Sheffield and any other evidence acceptable to the
Distribution Agent that:
A. Sheffield has executed an agreement for a Business
Combination;
B. A Post-Effective Amendment describing the Target Business
as provided by Rule 419 has been declared effective and has been delivered,
within five business days of its effective date, to each Thornbury Shareholder;
and
C. The Business Combination has been completed as provided
by Rule 419 and the Thornbury Shareholders who elect to remain as
stockholders of Sheffield have returned to Sheffield the Subscription Form
indicating such election within the Subscription Period allowed therefore.
If a Business Combination is not consummated within 18 months from the
effective date of the initial Registration Statement, the Escrowed Securities
shall be returned to Sheffield and all rights accruing to the Thornbury
Shareholders in regard to the Escrowed Securities will cease.
Upon disbursement of the Escrowed Securities pursuant to the terms
hereof, the Distribution Agent shall be relieved of all further obligations and
released from all liability under this Agreement.
8. CONCERNING THE DISTRIBUTION AGENT.
A. The Distribution Agent represents that (i) it is a broker or
dealer registered under the Securities Exchange Act of 1934 (the "Exchange
Act") maintaining net capital equal to or exceeding $25,000 (as calculated
pursuant to Exchange Act Rule 15c3-1), (ii) that it will hold in an escrow
account in which it acts as trustee for persons having beneficial interests in
the account all securities issued in connection with the Registration Statement,
and (iii) if it receives any amounts in cash as part of the offering proceeds
or otherwise it will establish a separate bank escrow account maintained by an
"insured depository institution" as that term is defined in Section 3(c)(2) of
the Federal Deposit Insurance Act.
B. The Distribution Agent shall not be under any duty to give
the Escrowed Securities held by it hereunder any greater degree of care than
it gives its own similar property and shall not be required to invest any funds
held hereunder, if any, except as directed in this Escrow Agreement.
C. This Escrow Agreement expressly sets forth all the duties
of the Distribution Agent with respect to any and all matters pertinent hereto.
No implied duties or obligations shall be read into this Escrow Agreement
against the Distribution Agent. The Distribution Agent shall not be bound by
the provisions of any agreement among the other parties hereto except this
Escrow Agreement.
D. The Distribution Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service thereof. The Distribution Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine and may
assume, if in good faith, that any person purporting to give notice or receipt
or advice or make any statement or execute any document in connection with
the provisions hereof has been duly authorized to do so.
E. The Distribution Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in good faith and in accordance
with such advice. The Distribution Agent shall be entitled to consult with
counsel of its own choosing and shall not be liable for any action taken,
suffered or omitted by it in accordance with the advice of such counsel.
F. The Distribution Agent makes no representation as to the
validity, value, genuineness or the collectability of any security or other
documents or instrument held by or delivered to it. The Distribution Agent
shall have no responsibility at any time to ascertain whether or not any
security interest exists in the Escrowed Securities or any part thereof or to
file any financing statement under the Uniform Commercial Code with respect to
the Escrowed Securities or any part thereof.
G. The Distribution Agent shall have no responsibility for the
contents of any writing of any third party contemplated herein as a means to
resolve disputes and may rely without any liability upon the contents thereof.
H. In the event of any disagreement among or between the
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Securities or in the event that the Distribution Agent in
good faith is in doubt as to what action it should take hereunder, the
Distribution Agent shall be entitled to retain the Escrowed Securities until the
Distribution Agent shall have received (i) a final and non-appealable order
from the American Arbitration Association or from a court of competent
jurisdiction directing delivery of the Escrowed Securities and (ii) a written
agreement executed by the other parties hereto directing delivery of the
Escrowed Securities in which event the Distribution Agent shall disburse the
Escrowed Securities in accordance with such order or agreement. Any order
referred to hereinabove shall be accompanied by a legal opinion by counsel for
the presenting party satisfactory to the Distribution Agent to the effect that
such order is final and non-appealable. The Distribution Agent shall act on
such order and legal opinions without further question.
I. The Distribution Agent will be reimbursed by Sheffield for
all reasonable expenses, disbursements and advances incurred or made by it in
performance of its duties hereunder.
J. The Distribution Agent and its partners, employees, attorneys
and agents, shall not incur any liability whatsoever for the holding or delivery
of documents or the taking of any other action in accordance with the terms
and provisions of this Escrow Agreement, for any mistake or error in
judgment, for compliance with any applicable law or any attachment, order or
other directive of any court or other authority (irrespective of any conflicting
term or provision of this Escrow Agreement), or for any act or omission of
any other person engaged by Distribution Agent in connection with this Escrow
Agreement other than for its gross negligence or willful misconduct.
K. The Distribution Agent shall not be responsible for the
performance by Sheffield of its obligations under this Agreement.
9. AMENDMENT; RESIGNATION. The Distribution Agent may resign for any
reason upon seven (7) business days written notice to Sheffield. Should the
Distribution Agent resign as herein provided, it shall not be
required to accept any deposit, make any disbursement or otherwise dispose
of the Escrowed Securities, but its only duty shall be to hold the Escrowed
Securities unless if a successor distribution agent shall have been appointed
and written notice thereof (including the name and address of such successor
distribution agent) shall have been given to the resigning Distribution Agent
by Sheffield and the successor distribution agent, at which time the resigning
Distribution Agent shall pay over to the successor distribution agent the
Escrowed Securities. Upon the resignation, dissolution, disqualification or
refusal of Distribution Agent (or any successor distribution agent) to serve, or
continue to serve under this Escrow Agreement, and should the parties hereto
fail to agree upon a successor distribution agent, Sheffield shall have the
right to designate a qualified distribution agent who shall enter into and be
bound by the terms of this Agreement.
10. REPRESENTATIONS AND WARRANTIES. Sheffield hereby
represents and warrants to the Distribution Agent that no party other than
Sheffield and the Thornbury Shareholders, as the case may be, have, or shall
have any lien, claim or security interest in the Escrowed Securities or any part
thereof.
11. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be (a) delivered
by hand or (b) sent by mail, registered or certified, with proper postage
prepaid, and addressed as follows:
If to Sheffield:
Sheffield Acquisitions, Inc.
1504 R Street, N.W.
Washington, D.C. 20009
If to the Distribution Agent:
Comprehensive Capital, Inc.
1600 Stewart Avenue
Suite 704
Westbury, New York 11590
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All notices
and communications, if mailed, shall be effective when deposited in the mails,
except that notices and communications to the Distribution Agent and notices
of changes of address shall not be effective until received.
12. ARBITRATION.
A. Scope. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief) whether
existing now, in the past or in the future as to which the parties or any
affiliates may be adverse parties, and whether arising out of this agreement or
from any other cause, will be resolved by arbitration before the American
Arbitration Association.
B. Situs. The situs of arbitration shall be chosen by the party
against whom arbitration is sought, provided only that arbitration shall be held
at a place in the reasonable vicinity of such party's place of business or
primary residence and shall be within the United States. The situs of
counterclaims will be the same as the situs of the original arbitration. Any
disputes concerning situs will be decided by the American Arbitration
Association.
C. Applicable Law. The law applicable to the arbitration and
this agreement shall be that of the State of Delaware, determined without
regard to its provisions which would otherwise apply to a question of conflict
of laws. Any dispute as to the applicable law shall be decided by the
arbitrator.
D. Disclosure and Discovery. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and discovery in
regard to any matters which are the subject of the arbitration and to compel
compliance with such disclosure and discovery order. The arbitrator may
order the parties to comply with all or any of the disclosure and discovery
provisions of the Federal Rules of Civil Procedure, as they then exist, as may
be modified by the arbitrator consistent with the desire to simplify the conduct
and minimize the expense of the arbitration.
E. Finality and Fees. Any award or decision by the American
Arbitration Association shall be final, binding and non-appealable except as to
errors of law. Each party to the arbitration shall pay its own costs and
counsel fees.
F. Measure of Damages. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and no claims
shall be made by any party or affiliate for lost profits, punitive or multiple
damages.
G. Covenant not to Sue. The parties covenant that under no
conditions will any party or any affiliate file any action against the other
(except only requests for injunctive or other equitable relief) in any forum
other than before the American Arbitration Association, and the parties agree
that any such action, if filed, shall be dismissed upon application and shall be
referred for arbitration hereunder with costs and attorney's fees to the
prevailing party.
H. Intention. It is the intention of the parties and their
affiliates that all disputes of any nature between them, whenever arising, from
whatever cause, based on whatever law, rule or regulation, whether statutory or
common law, and however characterized, be decided by arbitration as provided
herein and that no party or affiliate be required to litigate in any other
forum any disputes or other matters except for requests for injunctive or
equitable relief. This agreement shall be interpreted in conformance with this
stated intent of the parties and their affiliates.
10. MISCELLANEOUS.
A. No party may assign any of its rights or obligations under
this Escrow Agreement without the written consent of the other party.
B. This Escrow Agreement shall be governed by the laws of the
State of Delaware.
C. This Escrow Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and the
same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Escrow Agreement which shall constitute an original. Evidence
of execution of this Escrow Agreement may be made by facsimile transmission
thereof.
11. EFFECTIVE DATE.
The effective date of this Escrow Agreement is
______________________, 1997.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed.
SHEFFIELD ACQUISITIONS, INC.
ATTEST:
____________________________ By:_________________________________
COMPREHENSIVE CAPITAL, INC.
ATTEST:
_____________________________ By:_________________________________