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EXHIBIT 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of ____________,
1999, by and among eSoft, Inc., a Delaware corporation ("Parent"), eSoft
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), Xxx Xxxxxxxxxxxxx (the "Representative") a representative
of the stockholders of Apexx Technology, Inc., an Idaho corporation (the
"Company"), and ____________ (the "Escrow Agent").
1. This Escrow Agreement is entered into pursuant to the terms of
that certain Amended and Restated Agreement and Plan of Merger dated as of
January 25, 1999 (the "Merger Agreement") executed by and among Parent, Merger
Sub, and the Company, pursuant to which Merger Sub shall be merged with and into
the Company with the Company surviving. This Escrow Agreement shall be without
force and effect until such time as Escrow Agent receives shares of common
stock, $.01 par value, of Parent (the "Parent Common Stock"), such Parent Common
Stock to be delivered by Parent from time to time pursuant to Section 9.1 of the
Merger Agreement (collectively, the "Stock Deposits"). The certificates
representing the Stock Deposits shall be issued in the name of the Escrow Agent
or its nominee. Upon receipt of the Stock Deposits, together with any dividends
or distributions with respect thereto relating to record dates for such
dividends or distributions after the date hereof (collectively, the
"Distribution Deposits"), the Escrow Agent shall hold the Stock Deposits and the
Distribution Deposits in trust (the Stock Deposits and the Distribution Deposits
are referred to hereinafter as the "Deferred Merger Consideration Fund"), to be
disbursed as set forth under this Escrow Agreement.
2. At any time on or before the expiration of twelve months after
the Closing Date (as defined in the Merger Agreement), Parent may give one or
more written notices to Escrow Agent and the Representative that Parent seeks
payment of a claim (pursuant to Section 9.5 of the Merger Agreement) from the
Deferred Merger Consideration Fund, which written notice shall state the nature
and basis of such Claim and Parent's estimate of the amount thereof. The failure
to so notify the Representative shall in no case prejudice the rights of Parent
under this Agreement unless the Stockholders (as defined in the Stockholders'
Agreement dated ____________, 1999 by and between Parent and the stockholders of
the Company listed therein (the "Stockholders' Agreement")) shall be materially
prejudiced by such failure, and then only to the extent of such prejudice. Upon
receipt of notice of any such Claim from Parent, Escrow Agent shall, on the
tenth day after receipt of such notice, deliver to Parent the amount of the
Claim stated in the notice, in securities valued at a price per share equal to
$4.75; provided, however, that if the Representative shall have delivered to the
Escrow Agent a notice of objection to the payment of a Claim, the Escrow Agent
shall not make any payment with respect to such Claim until the Escrow Agent
receives (i) a notice signed jointly by Parent and the Representative that
contains joint instructions to the Escrow Agent as to the delivery of all or any
portion of the Deferred Merger Consideration Fund with respect to such Claim, or
(ii) a final, non-appealable order of the arbitrators referred to in Sections
1.5 of the Stockholders' Agreement resolving the objection, after which the
Escrow Agent shall promptly deliver all or any portion of the Deferred Merger
Consideration Fund with respect to such Claim in accordance with the decision of
said arbitrators. Pending the receipt of such joint written instructions or
final order, Escrow Agent shall segregate from the Deferred Merger Consideration
Fund such amount in cash or securities, valued at a price per share at a price
per share equal to $4.75 per share, sufficient to discharge the Claim in full.
3. Upon the expiration of twelve months after the Closing Date, the
Escrow Agent shall give the Representative and Parent written notice of its
intent to distribute any Deferred Merger Consideration to the Company's
Stockholders (other than holders of Dissenting Shares (as defined in the Merger
Agreement). Such notice shall state the total amount in the Deferred Merger
Consideration Fund, the amount paid by the Escrow Agent on account of Claims
presented by Parent, the amount segregated from the Deferred Merger
Consideration Fund to pay Claims that are then in dispute or disputable, and the
initial number of shares of Parent Common Stock immediately available for
distribution (the "Initial Distribution Amount") to the Company's Stockholders
(other than holders of Dissenting Shares) on such date. The Escrow Agent shall,
on the tenth day after delivery of such notice, deliver to the Company's
Stockholders (other than holders of Dissenting Shares) at such Stockholders'
last known addresses each Stockholder's pro rata share of the Initial
Distribution Amount (such pro rata share to be determined pursuant to Section 4
hereof); provided, however, that if the Representative or Parent shall have
delivered to the Escrow Agent a notice of objection to the distribution of the
Initial Distribution Amount, the Escrow Agent shall not make any distribution
with respect to such Initial Distribution Amount until the Escrow Agent receives
joint written instructions from the Representative and Parent or a final order
from an arbitration conducted in accordance with Sections 1.5 of the
Stockholders' Agreement. Within ten days of the resolution of all disputes
involving any unpaid Claim for which
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Parent has delivered notice to the Escrow Agent in accordance with Section 2
hereof, the Escrow Agent shall calculate the remaining number of shares of
Parent Common Stock available for distribution (the "Final Distribution Amount")
to the Company's Stockholders (other than holders of Dissenting Shares) and
shall provide this information to the Representative. The Escrow Agent shall
deliver to the Company's Stockholders (other than holders of Dissenting Shares)
at such Stockholders' last known addresses each Stockholder's pro rata share of
the Final Distribution Amount (such pro rata share to be determined pursuant to
Section 4 hereof).
4. Upon receipt of a notice from the Escrow Agent with respect to
any distribution to Stockholders, the Representative shall determine each
Stockholder's pro rata share of the Initial Distribution Amount and the Final
Distribution Amount by reference to the percentage interest indicated next to
each such Stockholder's name in the table of Stockholder interests attached
hereto as Exhibit A.
5. Upon the receipt by the Escrow Agent of any notice from Parent
that Parent is soliciting the vote or consent of any holder of Parent Common
Stock, the Escrow Agent shall promptly deliver to the Company's Stockholders
(other than holders of Dissenting Shares) at such Stockholders' last known
addresses a notice of such solicitation and shall request that each such
Stockholder deliver to the Escrow Agent instructions with respect to the voting
or consent of the shares of Parent Common Stock beneficially owned by such
Stockholder and held of record by the Escrow Agent. The Escrow Agent shall
timely vote the shares of Parent Common Stock held in the Deferred Merger
Consideration Fund, to the extent practicable, in accordance with instructions
received by the Escrow Agent from such Stockholders.
6. Any portion of the Deferred Merger Consideration Fund that
remains unclaimed by the former stockholders of the Company two years after the
Effective Time shall be delivered to the Company.
7. Upon delivery of the Deferred Merger Consideration Fund to Parent
or the Stockholders, as the case may be, this Escrow Agreement shall be deemed
to be terminated and the Escrow Agent shall be released and discharged from all
further obligations hereunder. Notwithstanding anything herein to the contrary,
all notices or instructions to the Escrow Agent hereunder shall be in writing,
and the Escrow Agent shall have no obligation to act on notice or instructions
that are not in writing.
8. In the event of the resignation of the Representative, the
resigning Representative shall appoint a successor either from among the
Stockholders or another person who shall otherwise be acceptable to Parent and
who shall agree in writing to accept such appointment, and the resigning
Representative's resignation shall not be effective until such a successor shall
have been appointed. If the Representative should die or become incapacitated,
his successor shall be appointed within 30 days of his death or incapacity by a
majority of the Stockholders, voting together as a class, and such successor
either shall be a Stockholder or another person otherwise acceptable to Parent.
The choice of a successor Representative appointed in any manner permitted above
shall be final and binding upon all of the Stockholders. The decisions and
actions of any successor Representative shall be, for all purposes, those of the
Representative as if originally named herein.
9. If at any time Escrow Agent shall receive a notice signed jointly
by Parent and the Representative containing instructions to Escrow Agent
regarding the disposition of the Deferred Merger Consideration Fund or any
portion thereof or any matter related thereto, Escrow Agent shall comply with
such instructions. Similarly, if at any time Escrow Agent shall receive a notice
signed jointly by Parent and the Representative that this Escrow Agreement has
been terminated, Escrow Agent shall deliver the Deferred Merger Consideration
Fund in accordance with the joint instructions contained in such notice and upon
such delivery this Escrow Agreement shall be deemed terminated and Escrow Agent
shall be released and discharged from all further obligations hereunder.
10. Escrow Agent shall not be responsible for the performance of any
agreement between the parties hereto except for those agreements and duties that
are explicitly set forth herein. It is understood and agreed that the duties of
Escrow Agent hereunder are purely ministerial in nature and that it shall not be
liable for any error or judgment regarding fact or law, or for any act done or
omitted to be done, except for its own negligence or willful misconduct. Escrow
Agent's determination as to whether an event or condition has occurred, or been
met or satisfied, or as to whether a provision of this Escrow Agreement has been
complied with, or as to whether sufficient evidence of
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the event or condition or compliance with the provision has been furnished to
it, shall not subject it to any claim, liability, or obligation whatsoever, even
if it shall be found that such determination was improper or incorrect, provided
only that Escrow Agent shall not have been guilty of negligence or willful
misconduct in making such determination. The Escrow Agent shall not be obligated
to take any legal or other action hereunder that might in its judgment involve
expense or liability unless it shall have been furnished with indemnity
acceptable to it. In addition, the Escrow Agent may consult counsel satisfactory
to it, and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered, or
omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
11. Escrow Agent shall not be responsible for the genuineness,
accuracy, or validity of any document or item deposited with it or any notice or
instruction given to it, and it is fully protected in acting in accordance with
any written instruction or instrument given to it hereunder and reasonably
believed by it to have been signed by the proper parties. Each party hereto
represents and warrants that this Escrow Agreement has been duly and validly
authorized, executed, and delivered by such party and constitutes a valid and
binding obligation of such party, enforceable against such party in accordance
with its terms.
12. If at any time Escrow Agent shall receive conflicting notices,
claims, demands, or instructions with respect to the Deferred Merger
Consideration Fund, or if for any other reason it shall be unable in good faith
to determine the party or parties entitled to receive any part of the Deferred
Merger Consideration Fund, Escrow Agent may refuse to make any payment and
retain the Deferred Merger Consideration Fund in its possession until Escrow
Agent shall have received instructions in writing signed jointly by Parent and
the Representative, or until directed by a final, non-appealable order of the
arbitrators referred to in Sections 1.5 of the Stockholders' Agreement,
whereupon Escrow Agent shall make such disposition in accordance with such joint
instructions or order.
13. (a) Neither the Escrow Agent nor any of its directors, officers,
or employees shall be liable to anyone for any action taken or omitted to be
taken by it or any of its directors, officers, or employees hereunder except in
the case of negligence, bad faith, or willful misconduct. Parent covenants and
agrees to indemnify the Escrow Agent and hold it harmless without limitation
from and against any loss, liability, or expense of any nature incurred by the
Escrow Agent arising out of or in connection with this Escrow Agreement or with
the administration of its duties hereunder, including, but not limited to, legal
fees and expenses and other costs and expenses of defending or preparing to
defend against any claim of liability in the premises, unless such loss,
liability, or expense shall be caused by the Escrow Agent's negligence, bad
faith or willful misconduct. In no event shall the Escrow Agent be liable for
indirect, punitive, special, or consequential damages.
(b) Parent agrees to assume any and all obligations imposed now
or hereafter by any applicable tax law with respect to the payment of funds or
other property under this Escrow Agreement, and to indemnify and hold the Escrow
Agent harmless from and against any taxes, additions for late payment, interest,
penalties, and other expenses, that may be assessed against the Escrow Agent on
any such payment or other activities under this Escrow Agreement. Parent
undertakes to instruct the Escrow Agent in writing with respect to the Escrow
Agent's responsibility for withholding and other taxes, assessments, or other
governmental charges, certifications, and governmental reporting in connection
with its acting as Escrow Agent under this Escrow Agreement. Parent agrees to
indemnify and hold the Escrow Agent harmless from any liability on account of
taxes, assessments, or other governmental charges, including without limitation
the withholding or deduction or the failure to withhold or deduct same, and any
liability for failure to obtain proper certifications or to properly report to
governmental authorities, to which the Escrow Agent may be or become subject in
connection with or which arises out of this Escrow Agreement, including costs,
expenses (including reasonable legal fees and expenses), interest, and
penalties.
14. Escrow Agent may resign at any time upon giving the parties
hereto ten days' prior written notice to that effect. In such event, the
successor escrow agent shall be such person, firm, or corporation as shall be
mutually selected by Parent and the Representative. It is understood and agreed
that such resignation shall not be effective until a successor agrees to act as
escrow agent hereunder; provided, however, if no successor is appointed and
acting hereunder within ten days after such notice is given, Escrow Agent may
pay and deliver the Deferred Merger Consideration Fund into any court of
competent jurisdiction and may apply to any court of competent jurisdiction for
the appointment of a successor escrow agent. The provisions of Section 14 hereof
shall survive the resignation or removal of the Escrow Agent or the termination
of this Escrow Agreement.
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15. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
two days after deposit in the mail if mailed by certified mail, return receipt
requested, or when received if delivered via Federal Express or similar
overnight courier service, or by facsimile. Such notices or other communications
shall be sent to the following addresses, unless other addresses are
subsequently specified in writing:
If to Parent:
eSoft, Inc.
0000-X Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
and: Xxxxx, Xxxxxx & Xxxxxx LLP
000 - 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
If to the Representative:
Xxx Xxxxxxxxxxxxx
Apexx Technology, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
If to Escrow Agent:
16. Parent agrees to pay the Escrow Agent's reasonable compensation
for its normal services hereunder in accordance with Exhibit B attached hereto,
which may be subject to change on an annual basis. The Escrow Agent shall be
entitled to reimbursement on demand for all expenses incurred in connection with
the administration of the escrow created hereby which are in excess of its
compensation for normal services hereunder, including without limitation,
payment of any legal fees and expenses incurred by the Escrow Agent in
connection with the resolution of any claim by any party hereunder.
17. Parent and Representative hereby absolutely and irrevocably
consent and submit to the jurisdiction of the courts of the State of Colorado,
and of any federal court located in said the State of Colorado having
jurisdiction over such matters, in connection with any actions or proceedings
brought against Parent and/or Representative by the Escrow Agent arising out of
or relating to this Escrow Agreement. In any such action or proceeding, Parent
and Representative hereby absolutely and irrevocably waive personal service of
any summons, complaint, declaration, or other process and hereby absolutely and
irrevocably agree that service thereof may be made by certified or registered
first class mail directed to Parent and Representative, as the case may be, at
their respective addresses in accordance with Section 15 hereof.
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18. The Escrow Agent shall not be responsible for delays or failures
in performance resulting from acts beyond its control. Subject to the
limitations set forth in Section 14 above, such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
19. This Escrow Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers, and modifications which
may hereafter be executed, and (b) certificates and other information previously
or hereafter furnished may be reproduced by any photographic, photostatic,
microfilm, optical disk, micro-card, miniature photographic, or other similar
process. The parties hereto agree that any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not such reproduction
was made by a party in the regular course of business, and that any enlargement,
facsimile, or further reproduction shall likewise to be admissible in evidence.
20. This Escrow Agreement, the Merger Agreement and the
Stockholders' Agreement contain the entire agreement among the parties with
respect to the subject matter hereof. This Escrow Agreement may not be amended,
supplemented, or discharged, and no provision hereof may be modified or waived
except by an instrument in writing signed by all of the parties hereto. No
waiver of any provision hereof by any party shall be deemed a continuing waiver
of any matter by such party.
21. This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
22. This Escrow Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Executed counterparts transmitted by fax shall be
effective as originals.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the undersigned have executed this Escrow
Agreement as of the date first set forth above, to be effective as set forth in
Section 1 hereof.
ESCROW AGENT:
By:
-----------------------------
Name:
Title:
PARENT:
eSOFT, INC.
By:
-----------------------------
Name: Xxxxxxx Xxxx
Title: President
THE REPRESENTATIVE:
--------------------------------
Name: Xxx Xxxxxxxxxxxxx
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EXHIBIT A
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STOCKHOLDER PERCENTAGE
NAME INTEREST
Xxxxx Xxxxx
Xxxxx Learned Xxxxxx
Camelot Investments, Inc.
Xxxxx Xxxxx
Xxxxxxxxx X. Xxxxx
Xxxxx Xxxxx
Xxxxxxx Luggage Profit Sharing Plan
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx Xx Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxx Xxxxxxxx
Xxxx X. Xxxxx
Xxxxxx Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxx
Xxxxxxx X. Xxxxxx
Xxxx Just
Xxx Just
Xxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
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STOCKHOLDER PERCENTAGE
NAME INTEREST
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Learned
Xxxxx X. Xxxxxxxxxxxxx, Xx.
Xxxxxxxxx Xxxxxxxxxxxxx
Xxx Xxxxxxxxxxxxx
Xxxx Xxxxxxxxxxxxx
Ty Xxxxx Xxxxxxxxxxxxx
Xxxxxx Xxxxx
Xxxxxxxx X. Xxxxx
Xxxxx X. XxXxxxxx
Xxxx Investments LP
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Xxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Oracle Investments, XX
Xxxx Xxxxxxxxxx
Xxxxxxx Xxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Steukle
Xxxxxx X. Xxxxxxx
10
STOCKHOLDER PERCENTAGE
NAME INTEREST
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
H. Xxxxx Xxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxx
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EXHIBIT B
