Exhibit 10.3
CONTINGENT SHARE ESCROW AGREEMENT
This Contingent Share Escrow Agreement (this "Agreement") is entered
into as of ____________ __, 2000 by and among Xxxxxxx.xxx Corporation, a
Washington corporation ("Sunhawk"), and certain former shareholders of Copyright
Control Services, Inc., a Delaware corporation ("CCS") whose names are set forth
on SCHEDULE A attached to this Agreement (together, the "Sellers" and
individually, a "Seller").
RECITALS
A. Sunhawk, CCS, the Sellers and @Visory LLC ("@Visory") are parties to
a Share Exchange Agreement dated August 1, 2000 (the "Share Exchange Agreement")
pursuant to which Sunhawk will acquire CCS through a share exchange with the
Sellers and @Visory (the "Share Exchange") in which shares of Sunhawk's common
stock (the "Sunhawk Shares") will be issued to the Sellers and @Visory in
exchange for all of the issued and outstanding capital stock of CCS as set forth
in the Share Exchange Agreement.
B. To induce Sunhawk to effect the Share Exchange, the Sellers and
@Visory have agreed that certain of the Sunhawk Shares will be pledged to and
held by Sunhawk in escrow pending the satisfaction or waiver of certain
contingencies, as set forth in (i) this Agreement, and (ii) a Contingent Share
Escrow Agreement entered into of even date with this Agreement between Sunhawk
and @Visory.
AGREEMENT
In consideration of the foregoing premises and the mutual and dependent
promises set forth in this Agreement, the parties agree as follows:
1. ESCROW
The Escrowed Shares to be issued to the Sellers ,I.E., 750,000 Class A
Common Shares (together with any stock dividends accrued or made thereon, and
any other securities or property which may be issued in exchange for such shares
in any merger, reorganization, share exchange, sale of all or substantially all
assets or stock, or similar transaction, the "Shares") are hereby pledged by the
Sellers to, and shall be held by, Sunhawk in escrow pursuant to this Agreement.
The Sellers shall deliver to Sunhawk at the time this Agreement is executed and
delivered appropriate stock powers endorsed in blank and such other
documentation as Sunhawk may prescribe to carry out the purposes of this
Agreement.
2. RELEASE OF SHARES
Sunhawk shall hold the Shares in accordance with this Agreement and
shall transfer the Shares only as set forth in this Section 2:
2.1 Certain terms are defined in the text of this Agreement
and/or the Share Exchange Agreement. In addition, the following terms used in
this Agreement shall have the meanings set forth below:
(a) "DEADLINE DATE" shall mean any of the following:
(i) "FIRST DEADLINE DATE" shall mean [12
months after date of Agreement] _____________, 2001.
(ii) "SECOND DEADLINE DATE" shall mean [18
months after date of Agreement] _____________, 2002.
(iii) "THIRD DEADLINE DATE" shall mean [24
months after date of Agreement] _____________, 2002.
(b) "MARKET CAPITALIZATION" shall mean (i) the
average daily sale price for one share of Sunhawk's common stock ("Common
Stock") during the applicable Measurement Period, multiplied by (ii) the average
number of shares (including the Shares only once they have been released
pursuant to Section 2) of Common Stock issued and outstanding during the
applicable Measurement Period.
(c) "MEASUREMENT PERIOD" shall mean any consecutive
30 business day period preceding a Deadline Date.
(d) "PERCENTAGE INTEREST" shall mean the percentage
for each Seller set forth on SCHEDULE A.
2.2 If Sunhawk's Market Capitalization is at least One Hundred
Million U.S. Dollars ($100,000,000) at any time prior to the First Deadline Date
(the "First Threshold"), 250,000 of the Shares (the "First Tranche Shares")
shall be released to the Sellers, pro rata in accordance with their respective
Percentage Interests, immediately after the date the First Threshold is met. If
Sunhawk's Market Capitalization does not meet the First Threshold prior to the
First Deadline Date, the First Tranche Shares shall be released from this
Agreement, cancelled and returned to Sunhawk as authorized and unissued Common
Stock immediately after the First Deadline Date.
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2.3 If Sunhawk's Market Capitalization is at least One Hundred
Twenty-Five Million U.S. Dollars ($125,000,000) at any time prior to the Second
Deadline Date (the "Second Threshold"), 250,000 of the Shares (the "Second
Tranche Shares") shall be released to the Sellers, pro rata in accordance with
their respective Percentage Interests, immediately after the date the Second
Threshold is met. If Sunhawk's Market Capitalization does not meet the Second
Threshold prior to the Second Deadline Date, the Second Tranche Shares shall be
released from this Agreement, cancelled and returned to Sunhawk as authorized
and unissued Common Stock immediately after the Second Deadline Date.
2.4 If Sunhawk's Market Capitalization is at least One Hundred
Fifty Million U.S. Dollars ($150,000,000) at any time prior to the Third
Deadline Date (the "Third Threshold"), all remaining Shares (the "Remaining
Shares") shall be released to the Sellers, pro rata in accordance with their
respective Percentage Interests, immediately after the date the Third Threshold
is met. If Sunhawk's Market Capitalization does not meet the Third Threshold
prior to the Third Deadline Date, the Remaining Shares shall be released from
this Agreement, cancelled and returned to Sunhawk as authorized and unissued
Common Stock immediately after the Third Deadline Date.
3. VOTING
The Shares shall be held of record by the Sellers, who shall have full
right to vote the Shares on all matters coming before the shareholders of
Sunhawk as if the Shares were not subject to this Agreement.
4. NOTICES
All notices, requests, demands, claims, consents and other
communications required or permitted under this Agreement shall be in writing.
Any notice, request, demand, claim , communication or consent under this
Agreement shall be deemed duly given if (and shall be effective two business
days after) it is sent by certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Sunhawk: Xxxxxxx.xxx Corporation
000 Xxxxxx Xxxxxx X.
Xxxxx 000
Xxxxxxx, XX 00000-0000
With a copy (which shall not The Xxxx Law Group
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constitute notice) to: 000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
If to the Sellers: as set forth on SCHEDULE A
5. ENTIRE AGREEMENT; HEADINGS
This Agreement, together with the Share Exchange Agreement, contains
the entire understanding and agreement of the parties with respect to the
transactions contemplated by this Agreement and supersedes and may not be
supplemented or varied by any prior oral or written understandings or
agreements. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
this Agreement.
6. ASSIGNS AND ASSIGNMENT
This Agreement shall extend to, inure to the benefit of and be binding
upon all of the parties and their respective permitted successors and assigns;
PROVIDED, HOWEVER, that this Agreement may not be assigned or transferred, in
whole or in part, by Sunhawk except with the prior written consents of all of
the Sellers.
7. DIVIDEND INCOME
Each Seller hereby acknowledges that, for federal and state income tax
purposes, any cash dividends earned or other distributions made with respect to
the Shares during the term of this Agreement shall be income of and attributed
to the Sellers and paid to the Sellers as earned, regardless of the ultimate
disposition of the Shares to which they are attributable.
8. AMENDMENT AND WAIVER
This Agreement may be amended, modified, supplemented or altered only
by a writing duly executed by Sunhawk and, on behalf of all the Sellers, by
Sellers holding a majority in interest of the Shares (a "Majority"). No failure
or delay by a party in exercising any right, power or privilege under this
Agreement shall operate as a waiver, and no single or partial exercise shall
preclude any right of further exercise or the exercise of any other right, power
or privilege. No waiver of any right, power or privilege under this Agreement
shall be effective unless set forth in writing, executed by the party against
whom the waiver is sought to be enforced.
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9. SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
10. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Washington, as applied to contracts
executed and to be fully performed in Washington.
11. COUNTERPARTS
This Agreement may be executed by the parties individually or in any
combination, in one or more counterparts, each of which shall be an original and
all of which shall together constitute one and the same agreement.
12. ARBITRATION
Any controversies or claims arising out of or relating to this
Agreement shall be fully and finally settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA Rules"), conducted by a single arbitrator either mutually agreed upon by
Sunhawk and Sellers holding a Majority or chosen in accordance with the AAA
Rules, except that the parties shall have any right to discovery as would be
permitted by the Federal Rules of Civil Procedure for a period of 90 days
following the commencement of such arbitration, and the arbitrator shall resolve
any dispute which arises in connection with such discovery. The prevailing party
or parties shall be entitled to costs, expenses and attorneys' fees from the
non-prevailing party or parties, and judgment upon the award rendered by the
arbitrator may be entered in any court of competent jurisdiction.
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13. NO RIGHT TO OFFSET.
Sunhawk shall have no right to offset and claim any of the Escrowed
Shares to satisfy claims made by Sunhawk for breach of any of the
representations, warranties or covenants under the Share Exchange Agreement or
any other agreements entered into in connection with the Share Exchange.
[signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SELLERS:
----------------------------------
XXXXX XXXXXX
----------------------------------
XXXXXX XXXXXX
----------------------------------
XXXXXXX X. XXXXX
ACTIVE RIGHTS MANAGEMENT
By:
------------------------------
Its:
-----------------------------
----------------------------------
XXXX XXXXXXX
TWB INVESTMENTS
By:
------------------------------
Its:
-----------------------------
COPYRIGHT VENTURES, LLC
By:
------------------------------
Its:
-----------------------------
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SUNHAWK:
XXXXXXX.XXX CORPORATION
By:
------------------------------
Its:
-----------------------------
SRS VENTURES LLC
By:
------------------------------
Its:
-----------------------------
INTERACTIVE HOLDINGS, LLC
By:
------------------------------
Its:
-----------------------------
CHELSEA VENTURES LLC
By:
------------------------------
Its:
-----------------------------
----------------------------------
XXXXXXX XXXXXX
----------------------------------
[OPTIONHOLDERS AND WARRANT HOLDERS
WHO ACQUIRE SUNHAWK SHARES AT
CLOSING]
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SCHEDULE A
SELLERS
SELLER NAME, ADDRESS AND
TAXPAYER I.D. NO. PERCENTAGE INTEREST
------------------------ -------------------
Xxxxx Xxxxxx ___%
00 Xxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx
X.X. XX0 0XX
Tax I.D. #: N/A
Xxxxxx Xxxxxx ___%
0 Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, X.X. XX00 0XX
Tax I.D. #: N/A
Xxxxxxx X. Xxxxx ___%
00 Xxxxx Xxxx, Xxxxx
Xxxxxx, X.X. XX00 0XX
Tax I.D. #: N/A
Active Rights Management ___%
000-000, Xxxx Xxxx
Xxxxxx, X.X. XX0X 0XXXxx I.D. #: N/A
Xxxx Xxxxxxx ___%
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Tax I.D. #: N/A
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SELLER NAME, ADDRESS AND
TAXPAYER I.D. NO. PERCENTAGE INTEREST
------------------------ -------------------
TWB Investments ___%
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Tax I.D. #: _________________
SRS Ventures, LLC ___%
000 Xxxxxxx Xxx., Xxxxx 000
Xxx Xxxx, XX 00000
Tax I.D. #: N/A
Copyright Ventures, LLC ___%
c/o Xxxxxx Xxxxx
Xxxxx Xxxxxx Brizdle & Xxxxxxxxxx PC
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Tax I.D. #: N/A
Interactive Holdings, LLC ___%
c/o Xxxxx Xxxxx
000 Xxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Tax I.D. #: N/A
Chelsea Ventures LLC ___%
c/o Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax I.D. #: N/A
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SELLER NAME, ADDRESS AND
TAXPAYER I.D. NO. PERCENTAGE INTEREST
------------------------ -------------------
Xxxxxxx Xxxxxx ___%
00 Xxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx
X.X. XX0 0XX
Tax I.D. #: N/A
[Option and Warrant Holders]
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