Escrow Agreement

EXHIBIT 10.1


ESCROW AGREEMENT
(FUNDS)


This ESCROW AGREEMENT is made as of this __th day of March, 1997 by and between 1997 Corp. with a place of business at 315 West 106th Street, Fourth Floor, New York, New York 10025 (the "Company"), and Continental Stock Transfer & Trust Company with a principal place of business at 2 Broadway, 19th Floor, New York, New York 10004, in its capacity as escrow agent only (the "Escrow Agent").


W I T N E S S E T H:


WHEREAS, the Company intends to consummate the initial public offering (the "Offering") of up to an aggregate of 30,000 shares of the Company's common stock, par value $.001 per share (the "Common Stock") as more fully described in the Company's Registration Statement on Form SB-2 under the Securities Act of 1933, as amended (File No. ________), as declared effective by the Securities and Exchange Commission on _______, 1997 (the "Registration Statement");


WHEREAS, in accordance with the terms of the offering as set forth in the Registration Statement, the gross proceeds from the sale of the Shares are required to be placed directly in an escrow account; and


WHEREAS, the Company wishes to appoint the Escrow Agent as the escrow agent for such account, on the terms and conditions set forth below in order to comply with the requirements of Rule 419 of Regulation C of the Rules and Regulations established by the Securities and Exchange Commission;


NOW, THEREFORE, in consideration of the mutual promises and obligations set forth below, and for other valuable consideration the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:


I. Appointment of Escrow Agent and Creation of Account. The Company hereby appoints the Escrow Agent as escrow agent hereunder and directs it to hold those assets described in Exhibit A attached hereto, together with any additional assets


which may be deposited with the Escrow Agent from time to time to be held pursuant to this Agreement and all income earned from investment of the assets described in Exhibit A and any additions thereto (collectively, the "Escrow Assets") , in a separate account in the name of "1997 Corp. - Escrow Account" (the "Escrow Account"). The Escrow Account shall be invested, administered and distributed in accordance with the terms set forth below. Contemporaneously with the closing of the Offering, the Company shall deposit with the Escrow Agent those assets listed on Exhibit A.


1. Initial Funding of Escrow Account. The Escrow Account shall be initially funded with the proceeds from the sale of Shares by the Company. All funds from the initial sale of Shares by the Company shall be deposited directly in the Escrow Account by wire transfer, check or money order.


2. Investment of Escrow Assets. The Escrow Assets shall be invested in accordance with the instructions set forth in Exhibit C attached hereto. Such instructions may be modified only by a written certificate executed by an authorized officer of the Company and delivered to the Escrow Agent; however, this Escrow Agreement may not be altered by the Board of Directors of the Company in terms of the investment instructions, except as may be required by the Board of Directors to fulfill their fiduciary obligations. Escrow Agent shall make monthly accounting of such investments, the income received therefrom, and the then existing balance of the Escrow Account to the Company.


3. Distribution from Escrow Account. The Escrow Agent shall make distributions from the Escrow Account in accordance with the requirements set forth in Exhibit D attached hereto. Such instructions may be modified only by a written certificate executed by authorized officers of the Company, and delivered to the Escrow Agent. In addition, this Escrow Agreement may not be altered by the Board of Directors of the Company in terms of its distribution instructions, except as may be required by the Board of Directors to fulfill their fiduciary obligations. The Escrow Agent is authorized to make distributions in reliance on the instructions it receives. Written notice of each disbursement from the Escrow Agent shall be provided to the Company within ten (10) days of each such disbursement. Upon the final distribution of all of the Escrow Assets, this Agreement shall terminate and the Escrow Agent shall have no further obligations or liabilities hereunder.


4. Compensation of Escrow Agent. The Escrow Agent shall receive fees determined in accordance with, and payable as specified in, the Schedule of Fees attached hereto as Exhibit E (the "Fee Schedule"). The Escrow Agent shall have no duties or


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liabilities under this Agreement unless and until full payment of the fee set forth in Exhibit E. The Escrow Agent shall be reimbursed by the Company for all expenses, disbursements and advances incurred or made by the Escrow Agent in preparation, administration and enforcement of this Agreement, including, but not limited to, reasonable legal fees and expenses. The Company shall be liable for all payments due to the Escrow Agent under this Agreement.


5. Responsibilities and Rights of the Escrow Agent. To induce the Escrow Agent to act hereunder, it is further agreed by the undersigned that:


(a) The Escrow Agent undertakes to perform only such duties as are expressly set forth herein. Without limiting the generality of the foregoing, the Escrow Agent shall have no duty or responsibility as regards any: (i) security as to which a default in the payment of principal or interest has occurred, to give notice of default, make demand for payment or take any other action with respect to such default; and (ii) loss occasioned by delay in the actual receipt of notice of any payment, redemption or other transaction regarding any item in the Escrow Assets as to which it is authorized to take action hereunder. The Escrow Agent may consult with counsel and shall be fully protected with respect to any action taken in good faith in accordance with such advice. The Escrow Agent shall have no liability or responsibility for any misstatement in, or omission from, the Prospectus.


(b) The Escrow Agent shall not be under any duty to give the Escrowed Assets 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 except as directed pursuant to this Escrow Agreement. In the event that there is a change in the investment instructions resulting in uninvested funds, such uninvested funds held hereunder shall not earn or accrue interest.


(c) The Escrow Agent does not make any representation or warranty with regard to the creation or perfection, hereunder or otherwise, of a security interest in the Escrow Assets or regarding the negotiability or transferability of, or existence of other interests in the Escrow Assets. The Escrow Agent shall have no responsibility at any time to ascertain whether or not any security interest exists in the Escrow Assets or any part thereof or to file any financing statement under the Uniform Commercial Code of any state with respect to the Escrow Assets or any part thereof.


(d) The Escrow Agent is hereby authorized to comply with any judicial order or legal process which stays,


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enjoins, directs or otherwise affects the transfer or delivery of the Escrow Assets or any party hereto and shall incur no liability for any delay or loss which may occur as a result of such compliance.


(e) The Escrow Agent shall have no duty or responsibility with regard to any loss resulting from the investment, reinvestment, sale or liquidation of the Escrow Assets in accordance with the terms of this Agreement. The Escrow Agent need not maintain any insurance with respect to the Escrow Assets.


(f) The Escrow Agent shall in no event be liable in connection with its investment or reinvestment of any cash held by it hereunder in good faith, in accordance with the terms hereof, including, without limitation, any liability for any delays (not resulting from its gross negligence or willful misconduct) in the investment or reinvestment of the Escrowed Assets, or any loss of interest incident to any such delays.


(g) Except as otherwise expressly provided herein, the Escrow Agent is authorized to execute instructions and take other actions pursuant to this Agreement in accordance with its customary processing practices for similar customers and, in accordance with such practices the Escrow Agent may retain agents, including its own subsidiaries or affiliates, to perform certain of such functions. The Escrow Agent shall have no liability under this Agreement for any loss or expense other than those occasioned by the Escrow Agent's gross negligence or willful misconduct and in any event its liability shall be limited to direct damages and shall not include any special or consequential damages. All collection and receipt of funds or securities and all payment and delivery of funds or securities under this Agreement shall be made by the Escrow Agent as agent, at the risk of the other parties hereto with respect to their actions or omissions and those of any person other than the Escrow Agent. In no event shall the Escrow Agent be responsible or liable for any loss due to force beyond its control, including, but not limited to, acts of God, flood, fire, nuclear fusion, fission or radiation, war (declared or undeclared), terrorism, insurrection, revolution, riot, strikes or work stoppages for any reason, embargo, government action, including any laws, ordinances, regulations or the like which restrict or prohibit the providing of the services contemplated by this Agreement, inability to obtain equipment or communications facilities, or the failure of equipment or interruption of communications facilities, and other causes whether or not of the same class or kind as specifically named above. In the event that the Escrow Agent is unable substantially to perform for any of the reasons described in the immediately preceding sentence,


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it shall so notify the other parties hereto as soon as reasonably practicable following its actual knowledge of the same.


(h) This Escrow Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this agreement against the Escrow Agent. Notwithstanding any provisions of this Agreement to the contrary, the Escrow Agent shall not be bound by, or have any responsibility with respect to, any other agreement or contract among the Company and the Representatives (whether or not the Escrow Agent has knowledge thereof).


(i) It is understood and agreed that should any dispute arise with respect to the payment and/or ownership or right of possession of the Escrow Assets, or should the Escrow Agent in good faith be in doubt as to what action it should take hereunder, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, all or any part of the Escrow Assets until such dispute shall have been settled either by mutual agreement by the parties concerned or by the final order, decree or judgment of any court or other tribunal of competent jurisdiction in the United States of America and time for appeal has expired and no appeal has been perfected, but the Escrow ...