ESCROW AGREEMENT
THIS AGREEMENT is made as of the 8th day of February, 1999 by and between
WORDCRUNCHER INTERNET TECHNOLOGIES, Inc., with its principal office at 00000
Xxxxx 000 Xxxx, Xxxxx X, Xxxxxx, Xxxx 00000, (hereinafter the "Company"), the
entities listed on Schedule A (hereinafter collectively referred to as the
"Investors"), Cardinal Capital Management, Inc. ("Cardinal") with its
principal office at 0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx,
and THE XXXXXXXXX LAW GROUP, P.C., located at 00 Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Series A Preferred Stock Purchase Agreement
dated as of February 8, 1999 (the "Purchase Agreement"), the Investors will be
purchasing Preferred Stock and Warrants of the Company (the "Securities") in
two separate tranches at purchase prices as set forth in the Purchase
Agreement and the Company shall be issuing Warrants to Cardinal; and
WHEREAS, the Company has requested that the Escrow Agent hold the funds
of the Investors in escrow until the Escrow Agent has received the original
Securities. The Escrow Agent will then immediately wire transfer or otherwise
deliver at the Company's direction immediately available funds to the Company
or the Company's account and arrange for delivery of the Securities to each
Investor per each Investor's written instructions, and delivery of the
Warrants, and payment of fees, to Cardinal.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
TERMS OF THE ESCROW FOR THE PURCHASE
OF THE INITIAL SHARES AND WARRANTS
1.1 Upon Escrow Agent's receipt of the First Tranche Purchase Price from
the Investors, into its attorney escrow account, it shall notify the Company,
or the Company's designated attorney or agent, of the amount of funds it has
received into its account.
1.2 The Company, upon receipt of said notice and acceptance of the
Purchase Agreement (including all Exhibits annexed thereto) by all parties, as
evidenced by the Company, and all of the Investor's execution thereof, shall
deliver to the Escrow Agent the original Securities being purchased by the
Investors in connection with each applicable Closing for the First Tranche,
and the original Warrants issued to Cardinal. Escrow Agent shall then
communicate with the Company to confirm such receipt.
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1.3 Once Escrow Agent confirms receipt of the Securities and Warrants,
and receives all other documentation precedent to the applicable Closing of
the First Tranche, he shall immediately wire that amount of funds necessary to
purchase the Securities in connection with the such First Tranche Closing Date
per the written instructions of the Company net of all fees. The Company will
furnish Escrow Agent with a "Net Letter" directing payment of (i) fees per the
terms of the Purchase Agreement to Cardinal; and (ii) legal, administrative,
and escrow costs as per the terms of the Purchase Agreement to the Escrow
Agent. Such fees are to be remitted in accordance with wire instructions that
will be sent to Escrow Agent from the Company, with the net balance payable to
the Company. Once the funds (as set forth above) have been received per the
Company's instructions, the Escrow Agent shall then arrange to have (i) the
Securities delivered as per instructions from the Investors, and (ii) the
Warrants and cash fee delivered as per the instructions of Cardinal.
ARTICLE 2
TERMS OF THE ESCROW FOR THE PURCHASE
OF THE SECONDARY SHARES AND WARRANTS
2.1 The Company shall certify in writing to the Escrow Agent and each of
the Investors that it has satisfied all of the terms and conditions precedent
to the Closing Date for the Second Tranche contained in the Purchase Agreement
and the Registration Rights Agreement, and that the Registration Statement
including the shares of Common Stock underlying the Securities has been
effective for thirty days. The Company shall then deliver to the Escrow Agent
the Securities being purchased by the Investors in the Second Tranche and the
original Warrants being issued to Cardinal. Upon receipt of such notice the
Investors shall wire the Second Tranche Purchase Price to the Escrow Agent's
attorney trustee account. The Escrow Agent shall notify the Company, or the
Company's designated attorney or agent, of the amount of funds it has received
into its attorney escrow account in connection with the Closing Date for the
Second Tranche, and the Company shall thereafter confirm the receipt of the
issuance of the Securities and Warrants.
2.2 Once Escrow Agent confirms receipt of the Securities, he shall
immediately wire that amount of funds necessary to purchase the Securities per
the written instructions of the Company net of all fees. The Company will
furnish Escrow Agent with a "Net Letter" directing payment of (i) fees per the
terms of the Purchase Agreement to Cardinal; and (ii) legal, administrative,
and escrow costs as per the terms of the Purchase Agreement to the Escrow
Agent. Such fees are to be remitted in accordance with wire instructions that
will be sent to Escrow Agent from the Company, with the net balance payable to
the Company. Once the funds (as set forth above) have been received per the
Company's instructions, the Escrow Agent shall then arrange to have (i) the
Securities delivered as per instructions from the Investors, and (ii) the
Warrants and fees delivered as per the instructions of Cardinal.
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ARTICLE 3
MISCELLANEOUS
3.1 This Agreement may be altered or amended only with the consent of all
of the parties hereto. Should any party attempt to change this Agreement in a
manner which, in the Escrow Agent's discretion, shall be undesirable, the
Escrow Agent may resign as Escrow Agent by notifying the Company and the
Investors in writing. The parties may remove the Escrow Agent as escrow agent
in writing signed by each of the parties, which writing must be delivered to
the Escrow Agent via reputable overnight courier and shall be effective upon
receipt by the Escrow Agent. In the case of the Escrow Agent's resignation or
removal pursuant to the foregoing, his only duty, until receipt of notice from
the Company and the Investors or their agent that a successor escrow agent
shall have been appointed, shall be to hold and preserve the Securities and/or
funds. Upon receipt by the Escrow Agent of said notice from the parties of
the appointment of a successor escrow agent, the name of a successor escrow
account and a direction to transfer the Securities and/or funds, the Escrow
Agent shall promptly thereafter transfer all of the Securities and/or funds
held in escrow to said successor escrow agent. Immediately after said
transfer of Securities, the Escrow Agent shall furnish the Company and the
Investors with proof of such transfer. The Escrow Agent is authorized to
disregard any notices, requests, instructions or demands received by it from
the Company or the Investors after notice of resignation or removal shall have
been given, unless the same shall be the aforementioned notice from the
Company and the Investors to transfer the Securities and funds to a successor
escrow agent or to return same to the respective parties.
3.2 The Escrow Agent shall be reimbursed by the Company and the Investors
for any reasonable expenses incurred in the event there is a conflict between
the parties and the Escrow Agent shall deem it necessary to retain counsel.
3.3 The Escrow Agent shall not be liable for any action taken or omitted
by him in good faith in accordance with the advice of the Escrow Agent's
counsel; and in no event shall the Escrow Agent be liable or responsible
except for the Escrow Agent's own gross negligence or willful misconduct.
3.4 The Company and each of the Investors warrant to and agree with the
Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities or any part
thereof;
(ii) no financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest or in describing
(whether specifically or generally) the Securities or any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Securities or any
part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the Securities or any part thereof.
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3.5 The Escrow Agent has no liability hereunder to either party other
than to hold the Securities and funds and to deliver them under the terms
hereof. Each party hereto agrees to indemnify and hold harmless the Escrow
Agent from and with respect to any suits, claims, actions or liabilities
arising in any way out of this transaction including the obligation to defend
any legal action brought which in any way arises out of or is related to this
Escrow.
3.6 No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed any extension of the time
for performance of any other obligation or act.
3.7 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent by fax, overnight courier, registered
or certified mail, postage prepaid, return receipt requested, and shall be
deemed received upon receipt thereof, as follows, or as set forth on Schedule
A (with a copy of all notice that are sent to the Investors to go to Cardinal:
(i) WordCruncher Internet Technologies, Inc.
00000 Xxxxx 000 Xxxx, Xxxxx X
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) The Xxxxxxxxx Law Group, P.C.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) Cardinal Capital Management, Inc.
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
3.8 This Agreement shall be binding upon and shall inure to the benefit
of the permitted successors and assigns of the parties hereto.
3.9 This Agreement is the final expression of, and contains the entire
Agreement between, the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect thereto. This Agreement may
not be modified, changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed
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by the parties to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
3.10 Whenever required by the context of this Agreement, the singular
shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Agreement.
3.11 The Company acknowledges and confirms that it is not being
represented in a legal capacity by The Xxxxxxxxx Law Group, P.C. and it has
had the opportunity to consult with its own legal advisors prior to the
signing of this Agreement.
3.12 The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under and construed and enforced in accordance with
the laws of the State of New York. Each of the parties consents to the
exclusive jurisdiction of the federal courts for the Southern District of the
State of New York, in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. Each party hereby agrees that if
another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any state or country having jurisdiction over the
party against whom such judgment was obtained, and each party hereby waives
any defenses available to it under local law and agrees to the enforcement of
such a judgment. Each party to this Agreement irrevocably consents to the
service of process in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address
set forth herein. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
beduly executed, on the day and year first above written.
WORDCRUNCHER INTERNET TECHNOLOGIES, Inc.
By: /s/ Xxxxxxx X. Xxxx
----------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
CARDINAL CAPITAL MANAGEMENT, INC.
By /s/ Xxxxx Xxxx
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THE XXXXXXXXX LAW GROUP, P.C.
By /s/ Xxxxx Xxxxxxxxx
------------------------------
/s/ Tajunnisah Owesh
--------------------------------
MS. TAJUNNISAH OWESH
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
XXXXX X. XXXXXXXXX
/s/ Xxxxxx X. XxXxxxxxx
--------------------------------
XXXXXX X. XXXXXXXXX
/s/ Xxxxxxxx X. Xx-Xxxxx
--------------------------------
XXXXXXXX X. XX-XXXXX
/s/ Xxxxxxxxx X. Xxxxx
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URBAN DEVELOPMENT ESTABLISHMENT
/s/ Xxxxxx X. Xxxxxx
--------------------------------
XXXXXX X. XXXXXX
/s/ signature illegible
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GIBRALTAR WORLDWIDE INC.
