3 AAC 08.182. Release of escrowed promotional shares

(a) If each of the applicable provisions of the escrow agreement required under 3 AAC 08.180 has been satisfied, and if

(1) the issuer's aggregate revenues are at least $500,000 and the auditor's report or the issuer's latest audited financial statements do not contain an opinion or statement regarding the ability of the issuer to continue as a going concern, the escrow agent shall release two and one-half percent of the promotional shares from escrow each quarter, beginning one year after the date of completion of the offering, shall distribute those shares pro rata among the depositors, and shall release all remaining promotional shares from escrow two years after the date of completion of the offering;

(2) the issuer's aggregate revenues are less than $500,000, the escrow agent shall release two and one-half percent of the promotional shares from escrow each quarter, beginning two years after the date of completion of the offering, shall distribute those shares pro rata among the depositors, and shall release all remaining promotional shares from escrow four years after the date of completion of the offering; or

(3) the public offering is terminated without a sale of securities under the offering or all of the gross proceeds that were derived from the offering have been returned to the public investors, the escrow agent shall release all of the promotional shares from escrow.

(b) The escrow agent shall release promotional shares

(1) in the event of a dissolution, liquidation, merger, consolidation, reorganization, sale or exchange of the issuer's assets or securities, including by way of tender offer, or any other transaction or proceeding with a person who is not a promoter that results in the distribution of the issuer's assets or securities; and

(2) if, while the escrow agreement remains in effect, the depositors agree that

(A) all holders of the issuer's 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 of equity securities, until the public shareholders receive, or have irrevocably set aside for them, an amount that is equal to 100 percent of the public offering's price per share times the number of shares of equity securities that the public shareholders purchased under the public offering and still hold at the time of the distribution, adjusted for stock splits, stock dividends, recapitalizations, or other activities or events that change the number of shares or affect the initial sale of escrowed shares;

(B) for purposes of (A) of this paragraph, the value of consideration other than cash is subject to acceptance by the administrator; and

(C) after the initial distribution provided in (A) of this paragraph, all holders of the issuer's equity securities shall 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, or other activities or events that change the number of shares or affect the initial sale of escrowed shares.

(c) A distribution may proceed on lesser terms and conditions than those provided in (b) of this section if a majority of the equity securities that are not held by promoters or the associates or affiliates of promoters vote, or consent by consent procedure, to approve the lesser terms and conditions at a special meeting of the shareholders called for that specific purpose.

(d) In the event of a dissolution, liquidation, merger, consolidation, reorganization, or sale or exchange of the issuer's assets or securities, including by way of tender offer, or any other transaction or proceeding with a person who is a promoter that results in a distribution while the escrow agreement remains in effect, the depositors' promotional shares must remain in escrow subject to the terms of the escrow agreement.

(e) If securities held in escrow become federal covered securities of the type described in 15 U.S.C. 77r(b)(1) (sec. 18(b)(1) of the Securities Act of 1933), all securities in escrow must be released.

(f) An escrow agreement required under 3 AAC 08.180 terminates when all of the promotional shares have been released or the issuer's equity securities or the issuer's assets have been distributed under the agreement. However, the provisions in that escrow agreement for compensation and indemnification of the escrow agent survive until they are satisfied.

History: Eff. 4/19/2000, Register 154

Authority: AS 45.55.110

AS 45.55.950

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