Sample Promotional Shares Escrow Agreement-Class B Issuer {PSEA-Model B}

SAMPLE PROMOTIONAL SHARES ESCROW AGREEMENT Class B Issuer This Promotional Shares Escrow Agreement (Agreement), which was entered into on the ______ day of _______________, 20___, by and between __________________________ (Issuer), whose principal place of business is located in ___________ ____________, and ______________, ______________, _______________, _______________, (the Depositors); and __________________________, (the Escrow Agent), whose principal place of business is located in______________________,and which is domiciled in _____________ _______; (all of whom are herein collectively referred to as Signatories), witnesses that: A. The Issuer has filed an application with the Securities Administrator of the State of ________________ (Administrator) to register certain of its Equity Securities for sale to public investors who are residents of that state; B. The Depositors are the owners of the shares of common stock or similar securities and/or possess convertible securities, warrants, options or rights which may be converted into, or exercised to purchase shares of common stock or similar securities (Equity Securities) listed opposite their names on Exhibit A; C. As a condition to registering the Issuers Equity Securities, the Depositors, who are security holders of the Issuer and who, for the purposes of this Agreement, are deemed to be Promoters of the Issuer, have agreed to deposit the Equity Securities listed opposite their names on Exhibit A ("Promotional Shares"), which is attached hereto and made a part hereof, with the Escrow Agent; and D. The Signatories have agreed to be bound by the terms of this Agreement. THEREFORE, the Signatories agree as follows: 1. DEPOSIT OF PROMOTIONAL SHARES. The Depositors Promotional Shares have been deposited into an Escrow Account ("Escrow") with the Escrow Agent, and the Escrow Agent hereby acknowledges the receipt thereof. 2. EXERCISE OR CONVERSION OF PROMOTIONAL SHARES. If the Promotional Shares have exercise rights or conversion rights, the Escrow Agent shall, upon receipt of the Issuers written request, provide the documents that evidence and/or which are necessary to execute the exercise rights or conversion rights. The exercised or converted Promotional Shares shall remain in escrow subject to the terms of this Agreement. 3. TERM. The Term of this Agreement and the escrow shall begin on the date that the public securities offering relating thereto ("public offering") is declared effective by the Administrator. The Promotional Shares shall be held by the SAMPLE PROMOTIONAL SHARES ESCROW AGREEMENT - Class B Issuer April 27, 1997 Page - 1 American LegalNet, Inc. www.USCourtForms.com<<<<<<<<<********>>>>>>>>>>>>> 2 Escrow Agent until they are released in accordance with paragraph 4., below. 4. RELEASE OF PROMOTIONAL SHARES. a. Subject to the documentation requirements in paragraph 5., below, the Escrow Agent shall release the Promotional Shares in the following manner. (1) Beginning two years from the completion date of the public offering, two and one-half percent (2 1/2%) of Promotional Shares held in escrow may be released each quarter pro rata among the Depositors. All remaining Promotional Shares shall be released from escrow on the anniversary of the fourth year from the completion date of the public offering. (2) One hundred percent (100%) of the Promotional Shares shall be released from escrow if: (a) The public offering has been terminated, and no securities were sold pursuant thereto; or (b) The public offering has been terminated, and all of the gross proceeds that were derived therefrom have been returned to the public investors. b. In the event of a dissolution, liquidation, merger, consolidation, reorganization, sale or exchange of the Issuers assets or securities (including by way of tender offer), or any other transaction or proceeding with a person who is not a Promoter, which results in the distribution o f the Issuers assets or securities ("Distribution"), while this Agreement remains in effect, the Depositors agree that: (1) All holders of the Issuers Equity Securities will initially share on a pro rata, per share basis in the Distribution, in proportion to the amount of cash or other consideration that they paid per share for their Equity Securities (provided that the Administrator has accepted the value of the other consideration), until the shareholders who purchased the Issuers Equity Securities pursuant to the public offering ("Public Shareholders") have received, or have had irrevocably set aside for them, an amount that is equal to one hundred percent (100%) of the public offerings price per share times the number of shares of Equity Securities that they purchased pursuant to the public offering and which they still hold at the time of the Distribution, adjusted for stock splits, stock dividends recapitalizations and the like; and SAMPLE PROMOTIONAL SHARES ESCROW AGREEMENT - Class B Issuer April 27, 1997 Page - 2 American LegalNet, Inc. www.USCourtForms.com<<<<<<<<<********>>>>>>>>>>>>> 3 (2) All holders of the Issuers Equity Securities shall thereafter participate on an equal, per share basis times the number of shares of Equity Securities they hold at the time of the Distribution, adjusted for stock splits, stock dividends, recapitalizations and the like. c. The Distribution may proceed on lesser terms and conditions than the terms and conditions stated in paragraph 4.b., above, if a majority of the Equity Securities that are not held by Depositors, officers, directors, or Promoters of the Issuer, or their associates or affiliates vote, or consent by consent procedure, to approve the lesser terms and conditions. d. In the event of a dissolution, liquidation, merger, consolidation, reorganization, sale or exchange of the Issuers assets or securities (including by way of tender offer), or any other transaction or proceeding with a person who is a Promoter, which results in a Distribution while this Agreement remains in effect, the Depositors Promotional Shares shall remain in escrow subject to the terms of this Agreement. e. In the event securities in the escrow become Covered Securities, as defined by the National Securities Markets Improvement Act of 1996, all securities held in escrow shall be released 5. DOCUMENTATION REGARDING THE RELEASE OF PROMOTIONAL SHARES. a. A written request for release of the Promotional Shares ("request for release"), based upon paragraph 4., above, shall be fo