Document:

Exhibit 10.17

 

STOCK ESCROW
AGREEMENT

 

STOCK ESCROW AGREEMENT, dated as of                                       ,
2005 (“Agreement”), by and among FEDERAL SERVICES ACQUISITION CORPORATION, a
Delaware corporation (“Company”), JOEL R. JACKS, PETER M. SCHULTE, EDWARD H.
BERSOFF, ARTHUR L. MONEY and FSAC PARTNERS, LLC (collectively “Initial
Stockholders”) and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New
York corporation (“Escrow Agent”).

 

WHEREAS, the Company has entered into an Underwriting
Agreement, dated                 ,
2005 (“Underwriting Agreement”), with CRT Capital Group LLC (the “Underwriter”),
pursuant to which, among other matters, the Underwriter has agreed to purchase
21,000,000 units (“Units”) of the Company. 
Each Unit consists of one share of the Company’s Common Stock, par value
$.0001 per share, and two Warrants, each Warrant to purchase one share of
Common Stock, all as more fully described in the Company’s final Prospectus,
dated                               ,
2005 (“Prospectus”) comprising part of the Company’s Registration Statement on Form S-1
(File No. 333-124638) under the Securities Act of 1933, as amended (“Registration
Statement”), declared effective on                               ,
2005 (“Effective Date”).

 

WHEREAS, the Initial Stockholders have agreed as a
condition of the sale of the Units to deposit their shares of Common Stock of
the Company, as set forth opposite their respective names in Exhibit A
attached hereto (collectively “Escrow Shares”), in escrow as hereinafter provided.

 

WHEREAS, the Company and the Initial Stockholders
desire that the Escrow Agent accept the Escrow Shares, in escrow, to be held
and disbursed as hereinafter provided.

 

IT IS AGREED:

 

1.             Appointment
of Escrow Agent.  The Company and the
Initial Stockholders 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 Shares.  On or before the
Effective Date, each of the Initial Stockholders shall deliver to the Escrow
Agent certificates representing his respective Escrow Shares, to be held and
disbursed subject to the terms and conditions of this Agreement.  Each Initial Stockholder acknowledges that
the certificate representing his Escrow Shares is legended to reflect the
deposit of such Escrow Shares under this Agreement.

 

3.             Disbursement
of the Escrow Shares.  The Escrow
Agent shall hold the Escrow Shares until the third anniversary of the Effective
Date (“Escrow Period”), on which date it shall, upon written instructions from
each Initial Stockholder, disburse each of the Initial Stockholder’s Escrow
Shares to such Initial Stockholders; provided, however, that if the Escrow
Agent is notified by the Company pursuant to Section 6.7 hereof that the
Company is being liquidated at any time during the Escrow Period, then the
Escrow Agent shall promptly destroy the certificates

 

 

representing the Escrow Shares; provided further, however, that if,
after the Company consummates a Business Combination (as such term is defined
in the Registration Statement), it (or the surviving entity) subsequently
consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of the stockholder of such entity having the right to
exchange their shares of Common Stock for cash, securities or other property,
then the Escrow Agent will, upon receipt of a certificate, executed by the
Chief Executive Officer or Chief Financial Officer of the Company, in form
reasonably acceptable to the Escrow Agent, that such transaction is then being
consummated, and release the Escrow Shares to the Initial Stockholders upon
consummation of the transaction so that they can similarly participate.  The Escrow Agent shall have no further duties
hereunder after the disbursement or destruction of the Escrow Shares in
accordance with this Section 3.

 

4.             Rights
of Initial Stockholders in Escrow Shares.

 

4.1.          Voting
Rights as a Stockholder.  Subject to
the terms of the Insider Letter described in Section 4.4 hereof and except
as herein provided, the Initial Stockholders shall retain all of their rights
as stockholders of the Company during the Escrow Period, including, without
limitation, the right to vote such shares.

 

4.2.          Dividends
and Other Distributions in Respect of the Escrow Shares.  During the Escrow Period, all dividends
payable in cash with respect to the Escrow Shares shall be paid to the Initial
Stockholders, but all dividends payable in stock or other non-cash property (“Non-Cash
Dividends”) shall be delivered to the Escrow Agent to hold in accordance with
the terms hereof.  As used herein, the
term “Escrow Shares” shall be deemed to include the Non-Cash Dividends
distributed thereon, if any.

 

4.3.          Restrictions
on Transfer.  During the Escrow
Period, no sale, transfer or other disposition may be made of any or all of the
Escrow Shares except (i) by gift to a member of Initial Stockholder’s
immediate family or to a trust, the beneficiary of which is an Initial
Stockholder or a member of an Initial Stockholder’s immediate family, (ii) by
virtue of the laws of descent and distribution upon death of any Initial
Stockholder, or (iii) pursuant to a qualified domestic relations order; 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 and of the Insider Letter signed by the Initial
Stockholder transferring the Escrow Shares. 
During the Escrow Period, the Initial Stockholders shall not pledge or
grant a security interest in the Escrow Shares or grant a security interest in
their rights under this Agreement.

 

4.4.          Insider
Letters.  Each of the Initial
Stockholders has executed a letter agreement with the Company, dated as
indicated on Exhibit A hereto, and which is filed as an exhibit to the
Registration Statement (“Insider Letter”), respecting the rights and
obligations of such Initial Stockholder in certain events, including but not
limited to the liquidation of the Company.

 

2

 

5.             Concerning
the Escrow Agent.

 

5.1.          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.

 

5.2.          Indemnification.  The Escrow Agent shall be indemnified and
held harmless by the Company 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 Shares 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 Shares or it may deposit the Escrow Shares with the clerk of any
appropriate court or it may retain the Escrow Shares 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 Shares
are to be disbursed and delivered.  The
provisions of the Sections 5.2 and 5.7 shall survive in the event the Escrow
Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.

 

5.3.          Compensation.  The Escrow Agent shall be entitled to
reasonable compensation from the Company for all services rendered by it
hereunder.  The Escrow Agent shall also
be entitled to reimbursement from the Company 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.

 

5.4.          Further
Assurances.  From time to time on and
after the date hereof, the Company and the Initial Stockholders 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.

 

5.5.          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

 

3

 

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 the Company, the Escrow Share held hereunder.  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 Shares with any court it reasonably deems
appropriate.

 

5.6.          Discharge
of Escrow Agent.  The Escrow Agent
shall resign and be discharged form its duties as escrow agent hereunder if so
requested in writing at any time by the Company and a majority of the Initial
Shareholders, jointly, provided, however, that such resignation shall become
effective only upon acceptance of appointment by a successor escrow agent as
provided in Section 5.5.

 

5.7.          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.

 

5.8.          Trust
Fund Waiver.  The Escrow Agent has no
right, title, interest, or claim of any kind (“Claim”) in or to any monies in
the Trust Account (as defined in that certain Investment Management Trust
Agreement, dated as of the date hereof, by and between the Company and
Continental Stock Transfer & Trust Company, as trustee of the Trust
Account), and hereby waives any Claim it may have in the future in or to any
monies in the Trust Account, and hereby agrees not to seek recourse,
reimbursement, payment or satisfaction for any Claim against the Trust Account
for any reason whatsoever.

 

6.             Miscellaneous.

 

6.1.          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.

 

6.2.          Third
Party Beneficiaries.  Each of the
Initial Stockholders hereby acknowledges that the Underwriter is a third party
beneficiary of this Agreement and this Agreement may not be modified or changed
without the prior written consent of CRT.

 

6.3.          Entire
Agreement.  This Agreement contains
the entire agreement of the parties hereto with respect to the subject matter
hereof and, except as expressly provided herein, may not be changed or modified
except by an instrument in writing signed by the party to be charged.

 

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

 

6.5.          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.

 

6.6.          Notices.  Any notice or other communication required or
which may be given hereunder shall be in writing and either be delivered
personally or be mailed, certified or registered mail, or by private national
courier service, return receipt requested, postage prepaid,

 

4

 

and shall be deemed given when so delivered personally or, if mailed,
two days after the date of mailing, as follows:

 

If to the Company, to

 

Federal
Services Acquisition Corporation

900
Third Avenue, 33rd Floor

New
York, NY  10022-4775

Attn:  Chairman

 

If to a Stockholder, to his address set forth in Exhibit A.

 

and if to the Escrow Agent, to:

 

Continental
Stock Transfer & Trust Company

17
Battery Place

New
York, NY  10004

Attn:  Chairman

 

A copy of any notice sent hereunder shall be sent to:

 

Gusrae,
Kaplan & Bruno, PLLC

120
Wall Street

11th
Floor

New
York, NY  10005

Attn:  Scott M. Miller, Esq.

 

and:

 

CRT
Capital Group LLC

262
Harbor Drive

Stanford,
CT 06902

Attn:  Christopher Chase, Managing Director

 

and:

 

Bingham
McCutchen LLP

399
Park Avenue

New
York, NY 10022

Attn:  Floyd Wittlin, Esq.

 

and:

Dechert
LLP

30
Rockefeller Plaza

New
York, NY  10112

Attn:  Gerald Adler, Esq.

 

5

 

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.

 

6.7.          Liquidation
of Company.  The Company shall give
the Escrow Agent written notification of the liquidation and dissolution of the
Company in the event that the Company fails to consummate a Business
Combination within the time period(s) specified in the Prospectus.

 

6

 

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

 

	
   

  	
  FEDERAL SERVICES
  ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Joel R. Jacks,

  
	
   

  	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  INITIAL
  STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PETER M. SCHULTE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JOEL R. JACKS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDWARD M.
  BERSOFF

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARTHUR L. MONEY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FSAC PARTNERS,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL
  STOCK TRANSFER & TRUST

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

7

 

EXHIBIT A

 

	
  Name and Address of

  Initial Stockholder

  	
   

  	
  Number

  of Shares

  	
   

  	
  Stock Certificate Number

  	
   

  	
  Date of

  Insider Letter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joel R. Jacks

  	
   

  	
  1,732,500

  	
   

  	
  1

  	
   

  	
                    ,
  2005

  	
   

  
	
  Peter M. Schulte

  	
   

  	
  1,732,500

  	
   

  	
  2

  	
   

  	
                    ,
  2005

  	
   

  
	
  Dr. Edward
  H. Bersoff

  	
   

  	
  525,000

  	
   

  	
  3

  	
   

  	
                    ,
  2005

  	
   

  
	
  Arthur L. Money

  	
   

  	
  52,500

  	
   

  	
  4

  	
   

  	
                    ,
  2005

  	
   

  
	
  FSAC Partners,
  LLC

  	
   

  	
  1,207,500

  	
   

  	
  5

  	
   

  	
                    ,
  2005

  	
   

  

 

A-1EXHIBIT 4.1

Vertraulich / Confidential                                Postanschrift:
Korona-Haushaltswaren GmbH & Co. KG                       1531
- Geschaftsleitung-                                       37005 Gottingen
Auf d. Huttenberge 1-3

35428 Langgoens

                                                  Date: 30 August 2004

Credit Agreement
Account nos. 4300422 and 4343133 with our Northeim branch

Dear Sirs,

Referring to our credit agreement from 8 January 2004 and to the talks conducted
with you, we are pleased to confirm our willingness supplementing to our
prementioned credit agreement to grant you an operating credit amounting to

                                            (euro)2,000,000.00
                                            (in words: (euro) two million).

This credit will be valid until 30 July 2005. Notwithstanding the rights of
termination resulting from the "General Terms and Conditions", either the Bank
or the Customer shall be entitled to terminate the credit at any time without
prior notice and without stating any reasons. When exercising the right of
termination, the Bank will duly consider the legitimate interests of the
Customer and grant him a reasonable settlement period.

The credit may be used via the accounts nos. 4343133 and 4300422.

At present and pending further notice, we charge you an interest rate of 5.0 %
p.a. for drawn credit amounts. Interest is due for payment at the end of each
quarter for the corresponding current quarter.

Additionally, we charge you a credit commission of 0.2 % p.a. for the granted
credit line.

Pending further notice. this credit can be used at choice via special credit
schemes, such as money market operations, eligible commercial bills with bill
debtors of our consent and of excellent credit standing, USD credits (max. 30%
of the line), forward exchange dealings and the provision of guarantees and
documentary credits. Within the scope of the credit line, we will also buy
promissory notes issued by you for Commerzbank AG as payee, or notes showing
another company or self-employed person with registered office in Germany as
party to the bill and which you have endorsed to us. The individual features of
the special credit schemes, such as amount / utilization, term, conditions, must
be agreed with us individually before concluding a deal.

The credit line will still unchanged also be available for the conclusion of OTC
foreign exchange transactions (spot, futures, options on foreign exchange
transactions) with a maximum term at 7 months. Foreign exchange transactions
with a term exceeding the above stated credit time limit of 30 July 2005 are to
be agreed individually; they must also be covered by collateral. In this
respect, we would like to refer to our provisions: on page 3 of our letter from
8 January 2004.

<PAGE>

The following collateral shall serve to cover the granted credit line:

EUR 2,000,000.00 Standby Letter of Credit of Hang Seng Bank Ltd., Hong Kong,
applicant Bonso Electronics Ltd., dated 13 August 2004, time limit now 1
September 2005.

For details and conditions, please refer to the Letter of Credit. Other assets
serve as collateral as stipulated under item 14 of our "General Terms and
Conditions".

We would like to be informed no later than 10 July 2005 about any extension of
the letter of credit (and its future amount) by a timely and binding extension,
letter of the credit-opening bank, so that we can initiate the necessary steps
within our bank for extending the credit in due time before it expires.

Our General Terms and Conditions" shall apply additionally; they are on integral
part of our Credit Confirmation.

To cover our expenses occurred by the credit examination and by entering into
contact with Hong Kong in connection with granting this credit, we will charge
you with an amount of (euro)750,00 which we will debit to your account no.
4343133.00.

The Bank is allowed to transfer the data entry and structuring of all positions
of the respective annual balances and group balances to an external Service
Enterprise. Bank and Service Enterprise have stipulated an agreement of
confidentiality. The data entry and structuring base on the guideline of the
Bank.

All other terms and conditions of our credit agreement from 8 January 2004 are
further on valid.

Please confirm by duly signing and returning the enclosed copy that you consent
to the stipulations of this Agreement and that you have received our enclosed
"General Terms and Conditions".

<PAGE>

We are looking forward to continuing our pleasant business relationship.

Your sincerely,

COMMERRZBANK
Aktiengesellschaft
Filliate Gottingen

/s/_________________________________________

We consent to all stipulations of the above document.

Langgoens, (Date) 200904                   /s/______________________________
                                           (Seal and Signatures
                                           Korona - Haushaltswaren GmbH & Co. KG

We consent to the content of the above letter as well as to the credit agreement
from 8 January 2004 and confirm our acceptance of the stipulation referring to
us.

Hong Kong, (Date) 8th Nov. 2004            /s/______________________________
                                           (Seal and Signature
                                           Bonso Electronics International Inc.)

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