ESCROW AGREEMENT
EXHIBIT
10.1
THIS
ESCROW AGREEMENT
(the
“Agreement”) is made and entered into as of the 27th day of April, 2006, by and
among Xxxxxxx X. Xxxxxxx (the “Stockholder”), friendlyway Corporation, a Nevada
corporation (“FDWY”), and Law Offices of Xxxxxxx X. Xxxxxxx, P.A., as escrow
agent (the “Escrow Agent”).
RECITALS
A. FDWY,
the
Stockholder and Pantel Systems, Inc. have entered into a Share Exchange
Agreement (the “Agreement") dated the 25th
day of
April, 2006, pursuant to which the Stockholder is exchanging his shares of
common stock, par value $.001 per share, of Pantel Systems, Inc. for
newly-issued shares of common stock, par value $.001 per share, of FDWY (the
“FDWY Common Stock”).
B. The
Agreement provides for the delivery to the Escrow Agent of a portion of the
consideration distributed by FDWY pursuant to the Agreement to be retained
in an
escrow fund pursuant to the terms and conditions hereof.
AGREEMENT
The
parties to this Agreement, intending to be legally bound, agree as
follows:
1. Defined
Terms.
Terms
defined in the Agreement shall have the same meaning when used herein unless
otherwise defined herein.
2. Agreement
to Indemnify.
Pursuant
to Section 8 of the Agreement, the Stockholder has agreed, subject to the terms
and conditions of the Agreement, to indemnify and hold harmless FDWY against
and
in respect of certain Losses as set forth in the Agreement.
3. Establishment
of Escrow Fund.
As of
the date hereof, FDWY shall deliver or cause to be delivered to the Escrow
Agent
an aggregate of 5,000,000 shares of FDWY Common Stock to be held in an account
(the “Escrow Fund”) by the Escrow Agent, representing 25% of the Acquisition
Consideration as set forth in the Agreement. All such shares of FDWY Common
Stock described above and so delivered to the Escrow Agent will be registered
in
the name of the Stockholder. Such shares shall be owned beneficially by the
Stockholder. Any shares of FDWY Common Stock or any other security of FDWY
issued with respect to shares or other securities of FDWY held in the Escrow
Fund, such as through a stock split, stock dividend, recapitalization or
otherwise, or any securities issued in substitution for securities in the Escrow
Fund, such as through a merger or share exchange or otherwise, shall be a part
of the Escrow Fund and subject to the terms and conditions hereof.
4. FDWY’s
Right to Escrow Fund.
Upon
receipt by the Escrow Agent of any one or more of the following, the Escrow
Agent shall distribute to FDWY, as promptly as practicable (but, as to
subparagraph (a), not sooner than the close of the fifteen-day period described
therein), from the Escrow Fund shares of FDWY Common Stock equal in value to
the
amount of any Loss, to the extent the Escrow Fund is sufficient
therefor:
(a) Delivery
to the Escrow Agent of a copy of a notice of Loss, along with an affidavit
of an
officer of FDWY to the effect that a copy of such notice has been delivered
to
the Stockholder and stating the number of shares to be delivered to FDWY and
the
date of such delivery; provided, that the Escrow Agent has not received from
the
Stockholder written notice of objection to the claim or payment set forth in
the
notice within fifteen days after the date such notice was delivered to the
Stockholder;
(b) Delivery
to the Escrow Agent of a statement signed by FDWY and the Stockholder specifying
the number of shares to be delivered to FDWY from the Escrow Fund pursuant
to a
notice of Loss or otherwise; or
(c) Delivery
to the Escrow Agent, with an affidavit of an officer of FDWY to the effect
that
a copy of the statement has been delivered to the Stockholder and stating the
date of such delivery, of a written statement of FDWY stating that an issue
as
to whether or to what extent FDWY was entitled to indemnification for a Loss
identified in a notice of Loss was submitted to litigation or an arbitrator
and
enclosing a copy of the final decision rendered judicially or by the arbitrator
determining that the amount requested by FDWY in the written statement is owed
to FDWY.
Determination
of the number of shares of FDWY Common Stock distributable to FDWY in respect
of
any Loss shall be determined by FDWY using a price per share of FDWY Common
Stock equal to the greater of (i) $0.40 or (ii) the average closing price per
share of FDWY Common Stock on the OTC Bulletin Board or other applicable
automated quotation system or securities exchange during the 20 trading days
preceding the date of delivery by FDWY to the Escrow Agent of the written notice
or statement with respect to such Loss as described above. All references in
this Agreement to any notice of Loss shall mean any such notice filed on or
before the Termination Date defined in Section 5, and any such notice not timely
filed shall be null and void.
5. Reduction
of Escrow Fund.
The
Escrow Fund shall continue to be held by the Escrow Agent subject to the claims
of FDWY for recovery of Losses and otherwise as provided in the Agreement and
this Agreement until the first anniversary of the Closing Date (the "Termination
Date"). On the Termination Date, all shares of FDWY Common Stock shall be
distributed by the Escrow Agent to the Stockholder, as instructed in writing
by
the Stockholder. As used herein, the term "Unresolved Payment Request" means
any
notice filed with the Escrow Agent for a potential Loss which FDWY, in its
reasonable judgment, believes could occur, other than a notice in which the
claim specified has been resolved (and, if applicable, paid) through (a)
litigation or arbitration; (b) written instructions delivered to the Escrow
Agent jointly by FDWY and the Stockholder; or (c) payment in full to FDWY
without any objection by the Stockholder. Any Loss that is the subject of an
“Unresolved Payment Request” must actually occur within ninety (90) days after
the Termination Date. If such Loss does not actually occur within such period,
the Escrow Fund shall terminate in accordance with Section 7 (b) below. Neither
the Stockholder nor any of his successors in interest, shall have any rights
or
other claims against the Escrow Agent or any other person on account of or
arising from payments or distributions from the Escrow Fund as provided herein.
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6. Voting
Rights; Dividends.
Until
such time as the Escrow Fund shall terminate as provided in Section 7, the
Stockholder shall be entitled to exercise any and all beneficial ownership
rights pertaining to the shares of FDWY Common Stock (or any other securities)
constituting the Escrow Fund for any purpose not inconsistent with the terms
of
this Agreement, including but not limited to, the right to vote and the right
to
receive any dividends. The Escrow Agent shall deliver (or cause to be delivered)
to the Stockholder all proxies and other instruments delivered by FDWY (or
other
issuer of securities) to its stockholders generally for the purpose of enabling
the Stockholder to exercise the voting and other beneficial ownership rights
that he is entitled to exercise pursuant to this Section 6. The Stockholder
shall direct the Escrow Agent as to any distribution of dividends or any other
distributions hereunder, and with respect to any other beneficial ownership
rights of the Stockholder pursuant to this Section 6. The rights herein of
the
Stockholder shall continue with respect to the shares constituting the Escrow
Fund, as the number of such shares may increase or decrease during the term
of
this Agreement pursuant to the Agreement and this Agreement.
7. Termination
of Escrow Fund.
The
Escrow Fund shall terminate:
(a) On
the
date, whether before or after the Termination Date, on which the entire Escrow
Fund shall have been distributed to FDWY hereunder; or
(b) On
the
date, whether on or after the Termination Date when there shall be no Unresolved
Payment Requests and the remaining Escrow Fund shall have been distributed
to
the Stockholder as instructed in writing by the Stockholder.
8. Provisions
Relating to Escrow Agent.
The
Escrow Agent agrees to hold the Escrow Fund under the terms and conditions
of
this Agreement and to perform the acts and duties imposed upon it hereby. Escrow
Agent shall have no implied duties or obligations and shall not be charged
with
knowledge or notice of any fact or circumstance not specifically set forth
herein. In no event shall Escrow Agent be liable for incidental, indirect,
special, consequential or punitive damages. Escrow Agent shall not be obligated
to take any legal action or commence any proceeding in connection with the
Escrow Fund, this Agreement or the Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. If, at any time in the performance
of its duties hereunder it is necessary for the Escrow Agent to receive, accept
or act upon any notice or writing purported to have been issued or executed
by
or on behalf of FDWY or the Stockholder, it shall not be necessary for the
Escrow Agent (i) to ascertain that the person or persons who have executed,
signed or otherwise issued or authenticated the said writing are authorized
to
do so or are the persons named therein, or (ii) otherwise to pass upon any
requirements of such instruments that may be essential for their validity.
The
Escrow Agent may act in reliance upon the advice of counsel in reference to
any
matter relating hereto and shall not be liable for any acts or omissions of
any
kind unless occasioned by its own gross negligence or willful misconduct and
shall be fully indemnified from any liability in acting in accordance with
the
opinion or instruction of such counsel.
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9. Compensation
of Escrow Agent.
The
Escrow Agent shall be paid by FDWY such amount as shall be agreed by the Escrow
Agent and FDWY for services rendered as Escrow Agent hereunder. Any reasonable
legal fees and expenses incurred by the Escrow Agent because of a dispute
between FDWY and the Stockholder respecting the Escrow Fund shall be reimbursed
by FDWY. The obligations of FDWY under this Section 9 shall survive termination
of this Agreement and the resignation of the Escrow Agent.
10. Notices.
All
notices, demands and other communications which may or are required to be given
hereunder shall be in writing, and shall be given either by personal delivery,
nationally recognized overnight courier or telecopy, and shall be deemed to
have
been given when personally delivered and deemed effective only upon actual
receipt thereof, or when deposited with charges prepaid with such courier,
or
when transmitted on telecopy machine, addressed to the party or parties entitled
thereto as follows:
If
to the
Stockholder:
Xxxxxxx
X. Xxxxxxx
0000
Xxxxx Xxxx Xxx
Xxxxxxxx
Xxxxxx, XX 00000
If
to
FDWY:
friendlyway
Corporation
0000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Attn:
Chief Financial Officer
Facsimile:
(000) 000-0000
If
to
Escrow Agent:
Law
Offices of Xxxxxxx X. Xxxxxxx, P.A.
000
Xxxxxxxx Xxxxxx, Xx. 0
Xxxxx
Xxxxx, XX 00000
Facsimile:
(000) 000-0000
or
such
other address as a party may specify in writing to the others.
11. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
or
delegated by any of the parties hereto without the prior written consent of
all
other parties hereto, and any purported assignment or delegation without such
consent shall be void; provided, however, that FDWY may assign its rights,
interests and obligations hereunder to any subsidiary that is wholly owned
by
FDWY.
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12. Indemnity.
The
Stockholder and FDWY hereby jointly and severally agree to indemnify and hold
harmless the Escrow Agent and each director, officer, employee, attorney, agent
and affiliate of Escrow Agent (collectively, the “Indemnified Parties”) against
any actions, claims (whether or not valid), damages, liabilities, costs, losses
and expenses (including reasonable attorneys' fees and expenses) incurred by
or
asserted against any of the Indemnified Parties resulting from any and all
claims, actions, demands, suits, proceedings, settlements or liabilities for
any
act or failure to act in connection with this Escrow Agreement, excepting,
however, any such loss or expense caused by the Escrow Agent's gross negligence
or its willful misconduct. The Stockholder and FDWY shall pay all fees and
expenses of the Indemnified Parties from time to time as incurred, both in
advance of and after the final disposition of any action, suit, proceeding
or
claim. The obligations of the Stockholder and FDWY under this Section 12 shall
survive termination of this Agreement and the resignation of the Escrow
Agent.
13. Resignation
of Escrow Agent.
Escrow
Agent may resign from the performance of its duties hereunder at any time by
giving ten (10) days’ prior written notice to the Stockholder and FDWY. Such
resignation shall take effect upon the appointment of a successor Escrow Agent
as provided hereinbelow. Upon any such notice of resignation, the Stockholder
and FDWY jointly shall appoint a successor Escrow Agent hereunder, which shall
be a commercial bank, trust company or other financial institution with a
combined capital and surplus in excess of $10,000,000. Upon the acceptance
in
writing of any appointment as Escrow Agent hereunder by a successor Escrow
Agent, such successor Escrow Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow Agent,
and the retiring Escrow Agent shall be discharged from its duties and
obligations under this Agreement, but shall not be discharged from any liability
for actions taken as Escrow Agent hereunder prior to such succession. After
any
retiring Escrow Agent’s resignation, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Escrow Agent under this Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Fund and shall pay all funds
held
by it in the Escrow Fund to the successor Escrow Agent, after making copies
of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys’ fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of
its
duties and the exercise of its rights hereunder.
14. Suspension
of Performance; Disbursement Into Court. If,
at
any time, there shall exist any dispute between FDWY and the Stockholder with
respect to the holding or disposition of any portion of the Escrow Fund or
any
other obligations of Escrow Agent hereunder, or if at any time Escrow Agent
is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of any portion of the Escrow Fund or Escrow Agent's proper actions with respect
to its obligations hereunder, or if the Stockholder and FDWY have not within
30
days of the furnishing by Escrow Agent of a notice of resignation pursuant
to
Section 13 hereof, appointed a successor Escrow Agent to act hereunder, then
Escrow Agent may, in its sole discretion, take either or both of the following
actions:
(a) suspend
the performance of any of its obligations including without limitation any
disbursement obligations) under this Escrow Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
a successor Escrow Agent shall have been appointed (as the case may
be).
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(b) petition
(by means of an interpleader action or any other appropriate method) any court
of competent jurisdiction in any venue convenient to Escrow Agent, for
instructions with respect to such dispute or uncertainty, and to the extent
required by law, pay into such court, for holding and disposition in accordance
with the instructions of such court, all funds held by it in the Escrow Funds,
after deduction and payment to Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with the performance of its duties and
the exercise of its rights hereunder. The parties hereby waive any right to
a
jury trial in connection with any such proceeding.
Escrow
Agent shall have no liability to FDWY, the Stockholder or any other person
with
respect to any such suspension of performance or disbursement into court,
specifically including any liability or claimed liability that may arise, or
be
alleged to have arisen, out of or as a result of any delay in the disbursement
of funds held in the Escrow Funds or any delay in or with respect to any other
action required or requested of Escrow Agent.
15. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, and it shall not be necessary in making
proof
of this Agreement to produce or account for more than one such counterpart.
16. Governing
Law.
This
Agreement shall be governed in all respects by the internal laws of the State
of
Nevada, without regard to principles of conflicts of law.
17. Jurisdiction;
Venue.
With
respect to any disputes arising out of or related to this Agreement, the parties
consent to the exclusive jurisdiction of, and venue in, the state courts in
San
Francisco County in the State of California (or in the event of exclusive
federal jurisdiction, the courts of the Northern District of
California).
18. NO
JURY TRIAL.
THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF
THIS AGREEMENT.
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be executed as of the date first
above written.
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ESCROW
AGENT:
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LAW
OFFICES OF XXXXXXX X. XXXXXXX, P.A.
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By:/s/
Xxxxxxx X.
Xxxxxxx
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Xxxxxxx
X. Xxxxxxx, Esq., President
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STOCKHOLDER:
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/s/
Xxxxxxx X.
Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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friendlyway
CORPORATION
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By:
/s/
Xxxxxxxxx xxx
Xxxxxxxx
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Xxxxxxxxx
xxx Xxxxxxxx
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President
and Chief Executive Officer
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