ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement"), dated as of December 15,
1999 is among QAD INC., a Delaware corporation ("QAD"), XXXXX X. XXXXXX
("Xxxxxx") and SANTA XXXXXXX BANK & TRUST as the Escrow Agent (the "Escrow
Agent").
WHEREAS:
A. Contemporaneous with the execution and delivery of this Escrow
Agreement, QAD is acquiring all of the outstanding Common Stock of ENTERPRISE
ENGINES, INC. ("EEI") in accordance with the Stock Purchase Agreement among QAD,
EEI and Xxxxxx dated December 15, 1999 (the "Purchase Agreement"). Capitalized
terms not defined herein shall have the meaning ascribed in the Purchase
Agreement; and
B. The Purchase Agreement provides for the delivery into escrow of One
Hundred Twenty Thousand (120,000) shares of QAD's Common Stock (the "Stock").
NOW, THEREFORE, QAD and the Escrow Agent hereby agree as follows:
1. APPOINTMENT OF ESCROW AGENT; DEPOSIT OF STOCK. QAD and Xxxxxx hereby
constitute and appoint the Escrow Agent as, and the Escrow Agent hereby agrees
to assume and perform the duties of, the escrow agent under and pursuant to this
Escrow Agreement. The Escrow Agent acknowledges receipt of the Stock as
evidenced by __ (__) certificates in the name of Xxxxxx representing the shares
of Stock.
2. STOCK. The Stock is to be held by the Escrow Agent in trust and
delivered to Xxxxxx or QAD depending upon whether the Milestones set forth in
Exhibit A hereto have or have not been met.
3. RELEASE OF STOCK. The Escrow Agent is authorized to release the Stock
when it has received from Xxxxxx a written statement that a specific Milestone
set forth in Exhibit A to the Purchase Agreement has been reached. Upon receipt
of the notice by Xxxxxx, in the form attached hereto as Exhibit B, the Escrow
Agent will forward to QAD such notice, as provided in Paragraph 8, and QAD shall
have ten (10) business days from receipt to accept or reject the notice by
written notice to the Escrow Agent. Unless QAD accepts or rejects the notice as
set forth in the immediately preceding sentence within such ten business (10)
day period, the Escrow Agent shall release to Xxxxxx the portion of the Stock
subject to the notice and such action shall be conclusive and binding on all
parties hereto. If the parties are unable to agree on the achievement of one or
more of the Milestones, then the parties will resolve the matter by arbitration
as provided in the Purchase Agreement. Except as set forth above, the Escrow
Agent can only deliver Stock to Xxxxxx if it has received the written approval
of QAD, unless the matter has been resolved by arbitration and a certified copy
of the arbitrator's decision has been tendered to the Escrow Agent. If all Stock
is not released by January 31, 2001, the Escrow Agent will return the Stock to
QAD and this Escrow will terminate.
4. DUTIES AND OBLIGATIONS OF ESCROW AGENT. The duties and obligations of
the Escrow Agent shall be limited to, and determined solely by, the provisions
of this Escrow Agreement, and the Escrow Agent is not charged with knowledge of
or any duties or responsibilities in respect of any other agreement or document.
In furtherance and not in limitation of the foregoing:
(i) the Escrow Agent shall be fully protected in relying in good
faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other document that the Escrow Agent
reasonably believes to be genuine and duly authorized, executed and
delivered;
(ii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection herewith in good faith and with such care, including
reasonable inquiry, as an ordinarily prudent person in like position
would use under similar circumstances; provided, however, that,
notwithstanding any other provision of this Escrow Agreement, the
Escrow Agent shall be liable for its breach of this Escrow Agreement;
(iii) the Escrow Agent may seek the advice of legal counsel,
selected with reasonable care and given full information as to the
context in which an issue arises, in the event of any dispute or
question as to the construction of any of the provisions of this
Escrow Agreement or its duties hereunder, and it shall incur no
liability and shall be fully protected in respect of any action taken,
omitted or suffered by it in good faith in accordance with the opinion
of such counsel;
(iv) in the event that the Escrow Agent shall in any instance,
after seeking the advice of legal counsel pursuant to the immediately
preceding clause, in good faith be uncertain as to its duties or
rights hereunder, it shall be entitled to refrain from taking any
action in that instance and its sole obligation, in addition to those
of its duties hereunder as to which there is no such uncertainty,
shall be to keep safely the Stock until it shall be directed otherwise
in writing by QAD and Xxxxxx in the event that the Escrow Agent has
not received such written direction or court order within sixty (60)
calendar days after requesting the same, it shall have the right to
interplead QAD and Xxxxxx in any court of competent jurisdiction and
request that such court determine its rights and duties hereunder;
(v) the Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through agents or attorneys selected with reasonable
care, nothing in this Escrow Agreement shall be deemed to impose upon
the Escrow Agent any duty to qualify to do business or to act as
fiduciary or otherwise in any jurisdiction other than the State of
California and the Escrow Agent shall not be responsible for and shall
not be under a duty to examine into or pass upon the validity, binding
effect, execution or sufficiency of this Escrow Agreement or of any
agreement amendatory or supplemental hereto; and
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(vi) the general provisions of the Escrow Agent are attached
hereto as Exhibit C.
5. COOPERATION. QAD and Xxxxxx shall provide to the Escrow Agent all
instruments and documents within their respective powers necessary for the
Escrow Agent to perform its duties and responsibilities hereunder.
6. INDEMNITY; EXPENSES. QAD and Xxxxxx shall jointly and severally
indemnify the Escrow Agent against and hold the Escrow Agent harmless from any
costs, damages, judgments, attorney's fees, expenses, obligations and
liabilities of any kind or nature that may be suffered or incurred by the Escrow
Agent as a result of, in connection with, or arising from or out of the acts or
omissions of the Escrow Agent in the operation, administration, enforcement or
performance of or pursuant to this Escrow Agreement in accordance with the
standards of care applicable under this Escrow Agreement; provided, however,
that neither QAD nor Xxxxxx shall be obligated to indemnify the Escrow Agent for
any costs, damages, judgments, attorney's fees, expenses, obligations or
liabilities caused by the negligence or willful misconduct of the Escrow Agent
or caused by the breach of this Escrow Agreement by the Escrow Agent. If any
controversy arises between QAD and Xxxxxx or with any third person with respect
to the subject matter of this Escrow Agreement or its terms or conditions, the
Escrow Agent shall not be required to determine the same or take any action
thereupon, but may await the settlement of any such controversy. In such event,
the Escrow Agent shall not be liable for interest or damages.
7. RESIGNATION AND REMOVAL OF ESCROW AGENT.
(a) The Escrow Agent may resign as escrow agent under this Escrow
Agreement by delivering written notice thereof to QAD and Xxxxxx at least
thirty (30) calendar days prior to the stated effective date thereof. In
addition, the Escrow Agent may be removed and replaced on a date designated
in a written instrument signed by QAD and Xxxxxx and delivered to the
Escrow Agent. Notwithstanding the foregoing, no such resignation or removal
shall be effective until a successor escrow agent has acknowledged its
appointment as such as provided in paragraph (c) below. In either event,
upon the effective date of such resignation or removal, the Escrow Agent
shall deliver the Stock (or any remaining portion thereof) to such
successor escrow agent, together with such records maintained by the Escrow
Agent in connection with its duties hereunder and other information with
respect to the Escrow Fund as such successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following
the date of a notice of resignation or, in the case of a removal, on the
date designated for the Escrow Agent's removal, as the case may be, because
QAD and Xxxxxx are unable to determine an appropriate successor escrow
agent, or for any other reason, the Escrow Agent may select a successor
escrow agent and any such resulting appointment shall be binding upon all
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of the parties to and beneficiaries of this Escrow Agreement, provided that
any such successor selected by the Escrow Agent shall be a Bank.
(c) Upon written acknowledgment by a successor escrow agent appointed
in accordance with the foregoing provisions of this Section 7 of its
agreement to serve as escrow agent hereunder and the receipt of the
property then comprising the Escrow Fund, the Escrow Agent shall be fully
released and relieved of all duties, responsibilities and obligations under
this Escrow Agreement, subject to the proviso contained in clause (ii) of
Section 4 hereof, and such successor escrow agent shall for all purposes
hereof be the Escrow Agent.
8. NOTICES. All notices permitted or required by this Escrow Agreement
shall be in writing and shall be deemed to be delivered and received (a)
when personally delivered, (b) on the third (3rd) business day after the
date on which deposited in the United States Mail, postage prepaid,
certified or registered mail, return receipt requested, (c) on the date on
which transmitted by facsimile or other electronic means generating a
receipt evidencing a successful transmission or (d) on the next business
day after the date on which deposited with a regulated public carrier of
recognized national standing (e.g., Federal Express), carriage prepaid, for
overnight delivery, addressed to the party for whom intended at the address
or facsimile set forth below, or such other address, facsimile or
electronic transmission address, notice of which is provided in a manner
permitted by this Section 10 (provided, however, that, notwithstanding the
foregoing, a copy each such notice shall be provided to each party by
facsimile concurrently with delivery by any other means):
If to QAD, to: QAD Inc.
0000 Xxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
If to Xxxxxx, to: Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: none
with a copy to: Xxxxxx Xxxxxx White and XxXxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. X'Xxxx
Facsimile: (000) 000-0000
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If to the Escrow
Agent, to: Santa Xxxxxxx Bank & Trust
_______________________
_______________________
Attn:___________________
Facsimile:_______________
Any notice or communication directed to Subscribers shall be made in the manner
provided for communications to the Holders hereunder.
9. AMENDMENTS, ETC. This Escrow Agreement may only be amended or modified
by a written agreement signed by the parties hereto. No waiver by any party of
any term or condition contained of this Escrow Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Escrow Agreement on any future occasion.
10. GOVERNING LAW. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
11. MISCELLANEOUS. This Escrow Agreement is binding upon and will inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. The headings used in this Escrow Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
This Escrow Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the date first above written.
QAD:
QAD Inc.,
a Delaware corporation
By:/s/ X.X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
XXXXXX:
/s/ Xxxxx X. Xxxxxx
------------------------------
XXXXX X. XXXXXX
ESCROW AGENT:
SANTA XXXXXXX BANK & TRUST
By:
---------------------------
Name:
Title:
Exhibit A
to
Escrow Agreement
MILESTONES
Upon achieving each of the following six objectives (the completion of
which shall be to the reasonable satisfaction of QAD), Xxxxx Xxxxxx will receive
20,000 shares of QAD stock as consideration for his Enterprise Engines shares.
Where sub-objectives are specified, the indicated number of shares will be
awarded as each sub-objective is achieved.
1. Shipping AT&T
* Delivery of AT&T Wireless functionality by 12/15/99 (20,000)
Delivery requires sign-off from AT&T that eQ was delivered with
promised functionality, as described in the attachment, and that eQ
works to specification at AT&T Wireless, except, however, that the
functionality described as "Send production order to MFG/PRO" will not
be considered in determining whether this objective has been met.
2. eQ Marketing
* eQ Vision presentation (3,000)
Completion by January 31, 2000 of a PowerPoint vision presentation
with a presenter's script for the eQ product line for collaborative
applications.
* eQ Product presentation (2,000 ea.)
Completion by January 31, 2000 of a PowerPoint product presentation
along with a presenter's script of eQ v2.
Completion by Q4 2000 (or per development schedule for eQ v3 Beta) of
a PowerPoint product presentation along with a presenter's script of
eQ v3.
* eQ Product Demonstration (1,800 ea.)
Completion by January 31, 2000 of a Demonstration script for eQ v2.
Completion by Q4 2000 (or per development schedule for eQ v3 Beta) of
a demonstration script for eQ v3.
* eQ Product Brochure (1,800 ea.)
Completion by April 30, 2000 of an updated eQ Product Brochure for eQ
v2 for conceptual images and text.
Completion by Q4 2000 (or per development schedule for eQ v3 Beta) of
an updated eQ Product Brochure for eQ v3 for conceptual images and
text.
* eQ Documentation (4,000 or 2,000 ea.)
Completion in accordance with development schedule for eQ Beta and GA
deliverables of high-level product documentation for a manager's guide
to eQ consisting of 30 to 40 pages. This can be used for training
materials as well as excerpts for product brochures. This high level
documentation or managers guide is for eQ v2 and eQ v3. Documentation
is for eQ's functionality and technology.
* eQ General Sales Presentations and review of QAD Marketing Materials (1800
total with 150 Per month)
Completion of general sales presentations as required as well as
review of QAD marketing materials for improvement.
3. IBM Partnership
* Benefits article (4,000 upon completion of article, 2,000 upon acceptance
for publication of article)
Completion by September 30, 2000, and acceptance for publication, by
December 31, 2000, of an article on the benefits of Internet order
management using eQ and SF as an example.
* Collateral review (6,000)
Completion by June 30, 2000 of a promotional paper and review, with
proposals for, other collateral materials produced by QAD for the
promotion of eQ through IBM's channels.
* IBM Presentations (4,000)
Completion in accordance with Q1 through Q3 2000 launch plan roll-out
of six presentations (which may be at IBM facilities duration and may
be 1 to 2 days each) on the benefits of eQ and eQ developed on IBM's
middle-xxxx products to IBM personnel, customers and business
partners.
* IBM Road Show (4,000)
Completion in accordance with Q1 through Q3 2000 launch plan roll-out
schedule of a 6 to 8 city international road show to promote eQ to IBM
personnel, customers and business partners.
4. Industry and Security Analysts
* Analyst strategy (5,000)
Completion by April 30, 2000 of a strategic plan and supporting
presentation for selling the vision and the reality of eQ to such
industry analysts as AMR, Gartner, Forrester, Metagroup, and Yankee
Group.
* Analysts white paper (5,000)
Completion by April 30, 2000 of an illustrated white paper of
approximately 10-15 pages that communicates the key advantages of eQ
to analysts.
* Positive Press (2,500 per write-up)
Publication by December 31, 2000 of two one-page write-ups of eQ by
the industry analysts (2500 shares per write-up).
* Promotional Road Show (5,000)
Completion in accordance with Q1 through Q3 launch plan roll-out
schedule of a 6 to 8 city promotional road show for Industry and
Security Analysts.
5. Convergent Engineering Class
* Course update (8,000)
Completion by May 30, 2000 of an update to the CE 3 day course for eQ
v2 and v3) to reflect current industry trends and to incorporate the
advanced concepts used in eQ (roles, relationships, etc.) as well as
any concepts from IBM SF.
* Train the Trainer (7,000)
Completion by September 30, 2000 of training of designated QAD
personnel (4 to 5 personnel) on CE to be a certified CE trainer.
* Course presentations (5,000)
Completion between Q2 and Q4 2000 of teaching along with or providing
assistance to QAD's trainer in connection with the updated course at
five sessions (1000 shares per session).
6. Gartner
Placement by Gartner of QAD in the "4th" quadrant of either its
large-company ERP matrix or its new collaborative matrix. (20,000)
Exhibit B
to
Escrow Agreement
The undersigned hereby declares, under penalty of perjury, that the
following Milestone has been achieved:
Date Achieved Milestone Description Number of Shares Basis for Achievement
------------- --------------------- ---------------- ---------------------
Executed at San Mateo, California.
Date:_____________ ______________________________
XXXXX X. XXXXXX
Exhibit C to Escrow Agreement
General Provisions
