MANAGEMENT SHARE ESCROW AGREEMENT

 

MANAGEMENT SHARE ESCROW AGREEMENT, dated as of April 10th, 2013 (“Agreement”) by
and among Selway Capital Acquisition Corporation, a Delaware corporation
(“Selway”), Healthcare Corporation of America, a New Jersey corporation (the
“Company”), each of the key personnel of the Company signatory hereto (the “Key
Personnel”), and American Stock Transfer & Trust Company, LLC, as escrow agent
(the “Escrow Agent”).

 

WHEREAS, Selway and the Company are parties to that certain Agreement and Plan
of Merger, dated January 25, 2013 (the “Merger Agreement”) by and among Selway,
Selway Merger Sub, Inc., a New Jersey corporation (“Merger Sub”), the Company,
Prescription Corporation of America, a New Jersey Corporation, Gary Sekulski as
representative of the common stockholders of the Company, and Edmundo Gonzalez
as representative of Selway, pursuant to which Merger Sub will merge with and
into the Company, with the Company being the surviving corporation following
such merger and, as such, a wholly-owned subsidiary of Selway; and

 

WHEREAS, in accordance with the terms of the Merger Agreement, Selway has issued
an aggregate of 1,500,000 shares of Selway’s common stock (the “Escrow
Securities”) to the Key Personnel in such amount as set forth opposite each Key
Personnel member’s name on Exhibit A;

 

WHEREAS, each Key Personnel member has agreed, as a condition to the issuance of
the Escrow Securities, to deposit all of the Escrow Securities in escrow as
hereinafter provided; and

 

WHEREAS, the Company, Selway, and the Key Personnel desire that the Escrow Agent
accept the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.

 

NOW, THEREFORE, IT IS AGREED:

 

1. Appointment of Escrow Agent. The Company, Selway, and the Key Personnel
hereby appoint the Escrow Agent to act in accordance with and subject to the
terms of this Agreement and the Escrow Agent hereby accepts such appointment and
agrees to act in accordance with and subject to such terms.

 

2. Deposit of Escrow Securities. In connection with the execution hereof, Selway
shall deliver to the Escrow Agent share certificates representing the Escrow
Securities to be held and disbursed subject to the terms and conditions of this
Agreement. Selway will deliver any dividends, interest payments, or
distributions of any kind made in respect of the Escrow Securities promptly to
the Escrow Agent, together with instructions indicating how any such amounts
shall be allocated among the Key Personnel, to be held in accordance with the
terms hereof.

 

2.1 Voting. The Key Personnel shall be entitled during each Escrow Period (as
defined below) to vote the Escrow Securities on any matters to come before the
stockholders of Buyer, with each Key Personnel being entitled to direct the
voting of the Escrow Securities allocated to such Key Personnel.

 

 

 

 

2.2 Transferability. During the applicable Escrow Period, no Escrow Securities
or any beneficial interest therein may be pledged, sold, assigned, or
transferred, including by operation of law, by any Key Personnel or be taken or
reached by any legal or equitable process in satisfaction of any debt or other
liability of any such Key Personnel, prior to delivery to such Key Personnel of
his, her, or its portion of the Escrow Securities held by the Escrow Agent as
provided herein, except (i) by gift to a member of the immediate family of the
Key Personnel member’s officers or directors or to a trust or other entity, the
beneficiary of which is such Key Personnel member or, if such Key Personnel
member is an entity, one of its officers, directors (or a member of their
respective immediate families), (ii) by virtue of the laws of descent and
distribution upon death of any Key Personnel, or (iii) pursuant to a qualified
domestic relations order (such transferees, the “Permitted Transferees”);
provided, however, that such permissive transfers may be implemented only upon
the respective transferee’s written agreement to be bound by the terms and
conditions of this Agreement.

 

3. Disbursement of the Escrow Securities.

 

3.1 The Escrow Securities.

 

(a) The Escrow Agent shall hold the Escrow Securities until it receives a
certificate (an “Officer’s Certificate”) signed by the Chief Executive Officer
or Chief Financial Officer of Selway: (i) on or after September 30, 2013 (the
“First Escrow Period”), instructing the release of one-third of the Escrow
Securities to the Key Personnel; (ii) on or after September 30, 2014 (the
“Second Escrow Period”), instructing the release of an additional one-third of
the Escrow Securities to the Key Personnel; or (iii) on or after June 30, 2015
(the “Third Escrow Period”; the First Escrow Period, Second Escrow Period, and
Third Escrow Period, each, an “Escrow Period”), instructing the release of the
final one third of the Escrow Securities to the Key Personnel. The Escrow Agent
shall, upon receipt of an Officer’s Certificate, disburse the applicable Escrow
Securities to the Key Personnel in such amounts as set forth opposite each Key
Personnel member’s name on Exhibit A. If, after the date hereof and prior to
June 30, 2015, the Escrow Agent receives an Officer’s Certificate stating (i)
that Selway will consolidate or merge with or into, or transfer or lease all or
substantially all its assets to, any person at a valuation of at least $15.00
per share of Selway common stock on a fully diluted basis, and (ii) specifying
the date and time of the consummation of such transaction, then the Escrow Agent
shall release any previously unreleased Escrow Securities from escrow to the Key
Personnel immediately before, and subject to, the consummation of such
transaction.

 

3.2 Selway Covenants. Selway hereby covenants and agrees to (i) cause its
officers to act in good faith regarding the release of the Escrow Securities
pursuant to Section 3.1, and (ii) to promptly release the Escrow Securities
after the end of each Escrow Period, as applicable.

 

3.3 Duties. The Escrow Agent shall have no further duties hereunder after the
disbursement or destruction of the Escrow Securities in accordance with this
Section 3.

 

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4. Concerning the Escrow Agent.

 

4.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and in the exercise of its own best
judgment, and may rely conclusively and shall be protected in acting upon any
order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Escrow Agent), statement, instrument, report or other
paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is believed by the Escrow Agent to be
genuine and to be signed or presented by the proper person or persons. The
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are affected, unless it shall have
given its prior written consent thereto.

 

4.2 Indemnification. The Escrow Agent shall be indemnified and held harmless by
Selway from and against any expenses, including counsel fees and disbursements,
or loss suffered by the Escrow Agent in connection with any action, suit or
other proceeding involving any claim which in any way, directly or indirectly,
arises out of or relates to this Agreement, the services of the Escrow Agent
hereunder, or the Escrow Securities held by it hereunder, other than expenses or
losses arising from the gross negligence or willful misconduct of the Escrow
Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or
claim or the commencement of any action, suit or proceeding, the Escrow Agent
shall notify the other parties hereto in writing. In the event of the receipt of
such notice, the Escrow Agent, in its sole discretion, may commence an action in
the nature of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Securities or it may deposit the Escrow Securities
with the clerk of any appropriate court or it may retain the Escrow Securities
pending receipt of a final, non-appealable order of a court having jurisdiction
over all of the parties hereto directing to whom and under what circumstances
the Escrow Securities are to be disbursed and delivered. The provisions of this
Section 4.2 shall survive in the event the Escrow Agent resigns or is discharged
pursuant to Sections 4.5 or 4.6 below.

 

4.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation
from Selway for all services rendered by it hereunder, as set forth on Exhibit B
hereto. The Escrow Agent shall also be entitled to reimbursement from Selway for
all expenses paid or incurred by it in the administration of its duties
hereunder including, but not limited to, all counsel, advisors’ and agents’ fees
and disbursements and all taxes or other governmental charges.

 

4.4 Further Assurances. From time to time on and after the date hereof, Selway,
the Company, and the Key Personnel shall deliver or cause to be delivered to the
Escrow Agent such further documents and instruments and shall do or cause to be
done such further acts as the Escrow Agent shall reasonably request to carry out
more effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected in acting
hereunder.

 

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4.5 Resignation. The Escrow Agent may resign at any time and be discharged from
its duties as escrow agent hereunder by its giving the other parties hereto
written notice and such resignation shall become effective as hereinafter
provided. Such resignation shall become effective at such time that the Escrow
Agent shall turn over to a successor escrow agent appointed by Selway and
approved by each of the Key Personnel. If no new escrow agent is so appointed
within the 60 day period following the giving of such notice of resignation, the
Escrow Agent may deposit the Escrow Securities with any court it deems
appropriate.

 

4.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged
from its duties as escrow agent hereunder if so requested in writing at any time
by the Selway and approved by each of the Key Personnel; provided, however, that
such resignation shall become effective only upon acceptance of appointment by a
successor escrow agent as provided in Section 4.5.

 

4.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent
shall not be relieved from liability hereunder for its own gross negligence or
its own willful misconduct.

 

5. Miscellaneous.

 

5.1 Governing Law. This Agreement shall for all purposes be deemed to be made
under and shall be construed in accordance with the laws of the State of New
York, without giving effect to any choice-of-law provisions thereof that would
compel the application of the substantive laws of any other jurisdiction (other
than sections 5-1401 and 5-1402 of the New York General Obligations law, which
shall apply to this Agreement). Each of the parties hereby agrees that any
action, proceeding or claim against it arising out of or relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York or the United States District Court for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. Each of the parties hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.

 

5.2 Amendment. This Agreement contains the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof. This Agreement or
any provision hereof may only be changed, amended or modified by a writing
signed by each of the parties hereto.

 

5.3 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
thereof.

 

5.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives,
successors and assigns.

 

5.5 Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and either be delivered personally or by private
national courier service, or be mailed, certified or registered mail, return
receipt requested, postage prepaid, and shall be deemed given when so delivered
personally or, if sent by private national courier service, on the next business
day after delivery to the courier, or, if mailed, two business days after the
date of mailing, as follows:

 

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If to a member of the Key Personnel, to the address of such person or entity set
forth on Exhibit A attached hereto.

 

If to the Company, to:

 

Healthcare Corporation of America
66 Ford Road - Suite 230
Denville, NJ 07834
Attention: Chief Executive Officer
Telecopy: (973) 983-6304

 

if to Selway, to:

 

Selway Capital Acquisition Corporation
900 Third Avenue, 19th Fl.
New York, NY 10022
Attention: Chief Executive Officer
Telecopy: (212) 308-6623

 

and if to the Escrow Agent, to:

 

American Stock Transfer & Trust Company, LLC
59 Maiden Lane
New York, New York 10038
Attn: Compliance Department

 

A copy of any notice sent hereunder shall be sent to (but which shall not
constitute notice):

 

Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn: Mitchell S. Nussbaum, Esq.

Fax: (212) 504-3013

 

and:

 

Zysman Aharoni Gayer and

Sullivan & Worcester LLP

One Post Office Square

Boston, MA 02109
Attn: Edwin L. Miller Jr.
Fax : (617) 338-2880

 

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The parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in the
manner provided herein for giving notice.

 

[Remainder of page intentionally left blank; signature pages follow]

 

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WITNESS the execution of this Agreement as of the date first above written.

 

  SELWAY CAPITAL ACQUISITION CORPORATION       By: /s/ Edmundo Gonzalez   Name:
Edmundo Gonzalez   Title: Chief Financial Officer

 

[Signature pages to Management Share Escrow Agreement]

 

 

 

 

  HEALTHCARE CORPORATION OF AMERICA       By: /s/ Gary Sekulski   Name: Gary
Sekulski   Title: Chief Executive Officer

 

[Signature pages to Management Share Escrow Agreement]

 

 

 

 

  AMERICAN STOCK TRANSFER
& TRUST COMPANY, LLC, as escrow agent       By: /s Michael A. Nespoli   Name:
Michael A. Nespoli   Title: Senior Vice President

 

[Signature pages to Management Share Escrow Agreement]

 

 

 

 

  KEY PERSONNEL:       /s/ Gary J. Sekulski   Gary J. Sekulski       /s/ Ann F.
Saskowitz   Ann F. Saskowitz       /s/ John M. Phelps   John M. Phelps      
/s/Thomas Durkin   Thomas Durkin       /s/ Ruth Ackerman   Ruth Ackerman      
/s/ Adam DeMarzo   Adam DeMarzo       /s/ Scott Weeber   Scott Weeber       /s/
Danny Matthew   Danny Matthew       OTIS FUND       By: /s/ Vic Wexler     Name:
Vic Wexler     Title:   Partner       RLJ PARTNERS   By: /s/ J.T. Wecke    
Name: J.T. Wecke     Title:   Partner

 

[Signature pages to Management Share Escrow Agreement]