ESCROW AGREEMENT
Exhibit
10.2
This
ESCROW AGREEMENT (the “Agreement”) is dated as of July 10, 2007, by and
among 24/7 MARKETING, LLC, a Nevada limited liability company and its successors
and assigns (“Buyer”), OSM SUBSCRIBER MANAGEMENT INC., a duly registered
Philippine corporation (“OSM”) and XXXXXX TITLE & ESCROW, LLC, an
Arizona limited liability company (the “Escrow Agent”).
RECITALS
A. Buyer,
OSM and Xxxxxx Xxxx, of legal age, Filipino, and with a postal address at 00
Xxxxx Xxxxxx, Xxxxxx Xxxx (“Designated Shareholder”) are parties to that
certain Asset Purchase Agreement dated as of the date hereof (the “Purchase
Agreement”), pursuant to which Buyer will (i) purchase from OSM its Business
and the Acquired Assets and (ii) assume certain enumerated Liabilities that
are
directly related to the Business and the Acquired Assets. Capitalized
terms used herein, which are not otherwise defined herein, shall have the
meanings ascribed to them in the Purchase Agreement.
B. Pursuant
to Article VII of the Purchase Agreement, OSM and Designated Shareholder are
to
indemnify Buyer and its Affiliates against Losses if certain events
occur.
C. The
parties desire to establish an escrow account as collateral security for the
indemnification obligations under Article VII of the Purchase
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the sufficiency and receipt
of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Concurrently
with the execution hereof, and pursuant to Section 2.6 of the Purchase
Agreement, Buyer has withheld $450,000 (U.S. Dollars) as such amount may be
reduced by charges thereto and payments and setoffs therefrom to compensate
or
reimburse Escrow Agent for amounts owing to it pursuant hereto, the
“Deposit” from the Purchase Price and placed it in Escrow Agent’s escrow
account (the “Escrow Account”) to be administered by the Escrow Agent
under the terms and conditions of this Agreement.
(a) Subject
to and in accordance with the terms and conditions hereof, the Escrow Agent
hereby agrees to act as escrow agent and to hold, safeguard, invest and reinvest
and release or distribute the Deposit pursuant to the terms and conditions
hereof. It is hereby expressly stipulated and agreed that all
interest and other earnings on the Deposit shall become a part of the Deposit
for all purposes, and that losses resulting from the investment or reinvestment
thereof from time to time and all amounts charged thereto to compensate or
reimburse the Escrow Agent from time to time for amounts owing to it hereunder
shall from the time of such loss or charge no longer constitute part of the
Deposit. It is hereby further stipulated and agreed all interest and
other earnings on the Deposit shall be available for satisfaction of Indemnity
Claims (as defined below), however in the absence of an Indemnity Claim, shall
be distributed to OSM subject to and in accordance with the terms of Section
3 of this Agreement. It shall treat the Escrow Account as a trust
fund in accordance with the terms of this Agreement and not as the property
of
Buyer. Escrow Agent’s duties hereunder shall cease upon its
distribution of the entire Escrow Account in accordance with this
Agreement.
(b) Escrow
Agent shall invest the Deposit in a money-market interest bearing account at
a
depository institution insured by the Federal Deposit Insurance Corporation,
unless otherwise instructed in writing by Buyer. It is expressly
agreed and understood by the parties hereto that Escrow Agent shall not in
any
way whatsoever be liable for losses on any investments, including, but now
limited to, losses from market risks due to premature liquidation or resulting
from other actions taken pursuant to this Escrow Agreement. Receipt
and investment of the Deposit shall be confirmed by Escrow Agent as soon as
practicable by account statement, and any discrepancies in any such account
statement shall be noted by Buyer or OSM to Escrow Agent within 30 calendar
days
after receipt thereof. Failure to inform Escrow Agent in writing of
any discrepancies in any such account statement within said 30-day period shall
conclusively be deemed confirmation of such account statement in its entirety.
For purposes of this paragraph, each account statement shall be deemed to have
been received by the party to whom directed on the earlier to occur of actual
receipt thereof and three Business Days after the deposit thereof in the United
States Mail, postage prepaid.
(c) Buyer
hereby agrees to pay the Escrow Agent for its services hereunder in accordance
with Escrow Agent’s fee schedule as attached as Schedule I hereto as in effect
from time to time and to pay all expenses incurred by the Escrow Agent in
connection with the performance of its rights hereunder and otherwise in
connection with the preparation, operation, administration and enforcement
of
this Agreement, including, without limitation, attorneys’ fees, brokerage costs
and related expenses, incurred by the Escrow Agent. Each of the
parties hereby grants to Escrow Agent a lien upon, and security interest in,
all
its right, title and interest in and to all of the Deposit as security for
the
payment and performance of its obligations owing to Escrow Agent hereunder
including without limitation, its obligations of payment, indemnity and
reimbursement provided for hereunder, which lien and security interest may
be
enforced by Escrow Agent without notice by charging and setting-off and paying
from, the Deposit any and all amounts then owing to it pursuant to this Escrow
Agreement or by appropriate foreclosure proceedings.
(d) If
requested by the Escrow Agent, each of the parties shall provide Escrow Agent
with its taxpayer identification number documented by an appropriate Form W-8
or
Form W-9 upon execution of this Escrow Agreement. Failure so to
provide such forms may prevent or delay disbursements from the Deposit and
may
also result in the assessment of a penalty and Escrow Agent’s being required to
withhold tax on any interest or other income earned on the
Deposit. Any payments of income shall be subject to applicable
withholding regulations then in force in the United States or any other
jurisdiction, as applicable.
2. Buyer
may make a claim for indemnification pursuant to Article VII of the Purchase
Agreement (an “Indemnity Claim”) against the Deposit by giving written
notice to OSM or Designated Shareholder, as applicable, with a copy to the
Escrow Agent, specifying in reasonable detail the amount and basis thereof,
which may be updated by written notice at a later time (a “Notice of
Claim”).
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(a) OSM
or Designated Shareholder may object to any Indemnity Claim (making such claim
a
“Disputed Claim”) by giving written notice of such objection (a
“Dispute Notice”) to Buyer, with a copy to the Escrow Agent, at any time
within 20 days after Buyer’s delivery of the Notice of Claim. If
neither of OSM or Designated Shareholder provides a Dispute Notice within that
period, Buyer’s Indemnity Claim will be deemed to have been approved as a valid
claim in the full amount thereof (an “Accepted Claim”).
(b) Promptly
after an Indemnity Claim becomes an Accepted Claim, Buyer shall deliver a notice
to the Escrow Agent certifying to Escrow Agent that the Indemnity Claim has
become an Accepted Claim and directing the Escrow Agent to pay to Buyer, and
the
Escrow Agent shall pay to Buyer, an amount equal to the full amount of the
Accepted Claim (or, if at such time there remains in the Escrow Account less
than the full amount so payable, the full amount remaining in the Escrow
Account). In the event funds transfer instructions are given (other than in
writing at the time of execution of the Escrow Agreement), whether in writing,
by facsimile, or otherwise, the Escrow Agent is authorized, but not required,
to
seek confirmation of such instructions by telephone call-back to the person
or
person designated on Schedule II hereto, and the Escrow Agent may rely upon
the
confirmations of anyone purporting to be the person or persons so
designated. If the Escrow Agent is unable to contact any of the
authorized representatives identified in Schedule II, the Escrow Agent is hereby
authorized to seek confirmation of such instructions by telephone call-back
to
any one or more of the respective party’s executive officers (“Executive
Officers”), as the Escrow Agent may select. Such “Executive Officer” shall
deliver to the Escrow Agent a fully executed Incumbency Certificate, and the
Escrow Agent may rely upon the confirmation of anyone purporting to be any
such
officer. The persons and telephone numbers for call-backs may be
changed only in writing actually received and acknowledged by the Escrow
Agent.
(c) In
the event that an Indemnity Claim becomes a Disputed Claim, the Escrow Agent
shall retain in the Escrow Account an amount equal to the full amount of the
Disputed Claim and not make any distribution with respect thereto until (i)
the
Escrow Agent receives written instructions from either OSM or Designated
Shareholder that the Disputed Claim has become an Accepted Claim and should
be
paid to Buyer, or (ii) a final award of the arbitrators rendered pursuant to
the
Purchase Agreement has been issued indicating the amount and recipient of such
award, in which case the Escrow Agent shall release from the Escrow Account
an
amount consistent with such award.
3. On
the first Business Day after the first anniversary of the Closing Date, upon
written instruction from Buyer, the Escrow Agent shall distribute and pay to
OSM
the amount remaining in the Escrow Account, unless at such time there are any
Indemnity Claims with respect to which Notices of Claims have been received
but
that have not been resolved pursuant to Section 2 hereof (“Pending
Claims”), and which, if resolved or finally determined in favor of Buyer,
would result in a payment to Buyer, in which case the Escrow Agent shall retain,
and the total amount of the distribution to OSM shall be reduced by, the
“Pending Claims Reserve” (as defined below). Thereafter, if
any Pending Claim becomes an Accepted Claim, the Escrow Agent shall promptly
pay
to Buyer an amount in respect thereof determined in accordance with paragraph
2(b) above, and to OSM the amount by which the remaining portion of the Escrow
Account exceeds the then Pending Claims Reserve (determined as set forth
below). If any Pending Claim is resolved against Buyer, the Escrow
Agent shall promptly pay to OSM the amount by which the remaining portion of
the
Escrow Account exceeds the then Pending Claims Reserve. Upon
resolution of all Pending Claims, the Escrow Agent shall pay to OSM the
remaining portion of the Escrow Account. As used herein, the
“Pending Claims Reserve” at any time shall mean an amount equal to the
sum of the aggregate dollar amounts claimed to be due with respect to all
Pending Claims (as shown in the Notices of Claims).
3
4. The
Escrow Agent shall cooperate in all respects with the parties hereto in the
calculation of any amounts determined to be payable to Buyer in accordance
with
this Agreement.
5. (a) The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein. It is understood that the Escrow Agent is not a trustee or
fiduciary and is acting hereunder merely in a ministerial capacity.
(b) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its
due
execution and the validity and effectiveness of its provisions, but also as
to
the truth and acceptability of any information therein contained) which is
believed by the Escrow Agent to be genuine and to be signed or presented by
the
proper person or persons. The Escrow Agent shall not be bound by any
notice or demand, or any waiver, modification, termination or rescission of
this
Agreement unless evidenced by a writing delivered to the Escrow Agent signed
by
the proper party or parties and, if the duties or rights of the Escrow Agent
are
affected, unless it shall have given its prior written consent
thereto.
(c) The
Escrow Agent’s sole responsibility upon receipt of any notice requiring any
payment to Buyer pursuant to the terms of this Agreement or, if such notice
is
disputed by OSM or Designated Shareholder, the settlement with respect to any
such dispute, whether by virtue of joint resolution, mediation, arbitration
or
determination of a court of competent jurisdiction, is to pay to Buyer the
amount specified in such notice, and the Escrow Agent shall have no duty to
determine the validity, authenticity or enforceability of any specification
or
certification made in such notice.
(d) The
Escrow Agent shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the rights or powers conferred upon
it
by this Agreement, and may consult with counsel of its own choice and shall
have
full and complete authorization and protection for any action taken or suffered
by it hereunder in good faith and in accordance with the opinion of such
counsel.
(e) Escrow
Agent may resign hereunder upon 10 days’ prior notice to the Buyer and
OSM. If the parties fail to designate a substitute escrow agent
within 30 days after the giving of such notice, Escrow Agent may institute
a
petition for interpleader. Escrow Agent’s sole responsibility after
such 30-day notice period expires shall be to hold the Deposit (without any
obligation to reinvest the same) and to deliver the same to a designated
substitute escrow agent, if any, or in accordance with the directions of a
final
order or judgment of a court of competent jurisdiction, at which time of
delivery Escrow Agent’s obligations hereunder shall cease and
terminate.
4
(f) In
the event of a dispute between the parties as to the proper disposition of
the
Deposit, the Escrow Agent shall be entitled (but not required) to deliver the
Escrow Account into the United States District Court for the District of Arizona
and, upon giving notice to the parties hereto of such action, shall thereupon
be
relieved of all further responsibility and liability.
(g) The
Escrow Agent shall be indemnified and held harmless by Buyer from and against
any expenses, including counsel fees and disbursements, or loss suffered by
the
Escrow Agent in connection with any action, suit or other proceeding involving
any claim which in any way, directly or indirectly, arises out of or relates
to
this Agreement, the services of the Escrow Agent hereunder, or the Escrow
Account held by it hereunder, other than expenses or losses arising from the
gross negligence or willful misconduct of the Escrow Agent. Promptly
after the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall notify
the other parties hereto in writing. In the event of the receipt of
such notice, the Escrow Agent, in its sole discretion, may commence an action
in
the nature of interpleader in an appropriate court to determine ownership or
disposition of the Deposit or it may deposit the Deposit with the clerk of
any
appropriate court or it may retain the Deposit pending receipt of a final,
non-appealable order of a court having jurisdiction over all of the parties
hereto directing to whom and under what circumstances the Deposit is to be
disbursed and delivered.
(h) The
Escrow Agent shall be entitled to reasonable compensation from Buyer for all
services rendered by it hereunder. The Escrow Agent shall also be
entitled to reimbursement from Buyer for all expenses paid or incurred by it
in
the administration of its duties hereunder including, but not limited to, all
counsel, advisors’ and agents’ fees and disbursements and all taxes or other
governmental charges. The Escrow Agent may consult with its counsel
or other counsel satisfactory to it concerning any question relating to its
duties or responsibilities hereunder or otherwise in connection herewith and
shall not be liable for any action taken, suffered or omitted by it in good
faith upon the advice of such counsel.
(i) From
time to time on and after the date hereof, the parties hereto shall deliver
or
cause to be delivered to the Escrow Agent such further documents and instruments
and shall do or cause to be done such further acts as the Escrow Agent shall
reasonably request to carry out more effectively the provisions and purposes
of
this Agreement, to evidence compliance herewith or to assure itself that it
is
protected in acting hereunder.
(j) Notwithstanding
anything herein to the contrary, the Escrow Agent shall not be relieved from
liability hereunder for its own gross negligence or its own willful
misconduct.
(k) The
Escrow Agent shall not have any duties, responsibilities or
obligations except those expressly set forth in this Agreement, and no
implied covenants, responsibilities, duties, obligations or liabilities shall
be
interpreted into this Escrow Agreement. Without limiting the generality of
the foregoing, Escrow Agent: (i) shall not be subject to implied
covenants, including but not limited to the covenant of good faith and fair
dealing; and (ii) shall not have any duty to take any discretionary action
or
exercise any discretionary powers.
5
6. This
Agreement expressly sets forth all the duties of the Escrow Agent with respect
to any and all matters pertinent hereto. The Escrow Agent shall not
be bound by the provisions of any agreement among the parties hereto except
this
Agreement and shall have no duty to inquire into the terms and conditions of
any
agreement made or entered into in connection with this Agreement, including,
without limitation, the Purchase Agreement.
7. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective heirs, successors, assigns and legal representatives. This
Escrow Agreement shall not be assigned by any of the parties (other that to
an
Affiliate) without the prior written consent of Escrow Agent, which may not
be
unreasonably withheld. This Agreement and the transactions contemplated hereby,
and all disputes between the parties under or relating to this Agreement or
the
facts and circumstances leading to its execution, whether in contract, tort
or
otherwise, shall be governed by the laws of the State of Arizona, without
reference to conflict of laws principles that would require the application
of
any other law. This Agreement cannot be amended, modified or
terminated except by a writing signed by Buyer, OSM and the Escrow
Agent.
8. Buyer
and OSM each hereby consents to the exclusive jurisdiction of Arizona and
federal courts sitting in Maricopa County with respect to any claim or
controversy arising out of this Agreement, subject in all respects to the
dispute resolution provisions set forth in Section 2. Service of
process in any action or proceeding brought against Buyer or OSM in respect
of
any such claim or controversy may be made upon it by registered mail, postage
prepaid, return receipt requested, at the address for notice specified in the
Purchase Agreement.
9. All
notices and other communications under this Agreement shall be in writing and
shall be deemed given if given by hand or delivered by nationally recognized
overnight carrier, or if given by telecopier and confirmed by mail (registered
or certified mail, postage prepaid, return receipt requested), to the respective
parties as follows:
(a) If
to Buyer, to it at:
24/7
Marketing, LLC
0000
Xxxx
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx,
Xxxxxxx 00000
FAX: (000)
000-0000
Attn.: Xxxxxx
X. Xxxxx, Xx.
with
a
copy to:
Xxxxx
& Xxxxxx L.L.P.
Xxx
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
FAX: (000)
000-0000
Attn.: Xxxxxx
X. Xxxxxxx
6
(b) If
to OSM, to it at:
Oncall
Subscriber Management Inc.
00
Xxxxx
Xxxxxx Xxxxx 00000
Xxxxxx
Xxxx, Xxxxx Xxxxxx Xxxxxxxxxxx
FAX: (000)
000-0000
eMail:
xxxxxxxxxx00@xxxxx.xxx
Attn.: Xxxxxx
Xxxx
with
a
copy to:
Attorney
Xxxxxx X. Xxxxxxx
Philippine
Stock Exchange Center U-2701
Xxxx
Xxxxx, Xxxxxxxx Xxxx, Xxxxxxx Xxxxxx
Xxxxx
Xxxx Xxxxxxxxxxx
FAX: (000)
000-0000
(c) If
to the Escrow Agent, to it at:
Xxxxxx
Title & Escrow, LLC
00000
Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxx 00000
Attn: Escrow
Department
Facsimile
No.: (000) 000-0000
Telephone
No.: (000) 000-0000
or
to
such other person or address as any of the parties hereto shall specify by
notice in writing to all the other parties hereto.
10. (a) If
this Agreement requires a party to deliver any notice or other document, and
such party refuses to do so, the matter shall be resolved in the same manner
as
provided in Section 8.5 of the Purchase Agreement.
(b) All
notices delivered to the Escrow Agent shall refer to the provision of this
Agreement under which such notice is being delivered and, if applicable, shall
clearly specify the aggregate dollar amount due and payable to
Buyer.
(c) This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original instrument and all of which together shall constitute
a
single agreement, and this Agreement may be executed by facsimile provided
that
the parties deliver the original signature pages within 48 hours of
execution.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed
as
of the date above first written.
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BUYER:
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||
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24/7
MARKETING, LLC, a Nevada limited liability company
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By:
YP CORP., a Nevada corporation, its manager
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By:
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/s/Xxxxxx
X. Xxxxx, Xx.
|
|
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Name:
Xxxxxx X. Xxxxx, Xx.
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Title: Chief
Executive Officer
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OSM:
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ONCALL
SUBSCRIBER MANAGEMENT INC., a Philippine corporation
|
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/s/Xxxxxx
Xxxx
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By:
Xxxxxx Xxxx
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Title:
President
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ESCROW
AGENT:
|
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XXXXXX
TITLE & ESCROW, LLC, an Arizona limited liability
company
|
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/s/
Xxxxx X. Xxxxx III
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By: Xxxxx
X. Xxxxx III
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Title:
President
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[Signature
Page - Escrow Agreement]
Schedule
I
Escrow
Agent Fees
|
Description
of Service
|
Fee
|
|
Base
fee for escrow up to $500,000
|
$1,500,
payable upon execution of Escrow Agreement
|
|
Interest
Bearing Account set up
|
$100
|
|
Disbursements
of Deposit pursuant to Section 2(b) and 2(c)
|
$25.00
per disbursement
|
|
Disbursements
of Deposit pursuant to Section 3
|
Initial
Disbursement is included in base escrow fee; $25.00 per disbursement
thereafter
|
|
Additional
Work Requested (requires consent of OSM)
|
$100
per hour
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Schedule
II
Telephone
Number(s) for Call-backs and Person(s)
Designated
to Confirm Funds Transfer Instructions
If
to
24/7 Marketing, LLC:
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Name
|
Telephone
Number
|
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1.
Xxxx Xxxxx
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000-000-0000
|
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2.
Xxxx Xxxxxxxxxxxx
|
000-000-0000
|
If
to
Oncall Subscriber Management Inc.:
|
Name
|
Telephone
Number
|
|
1.
Xxxxxx Xxxx
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(00)
000-000-0000
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Telephone
call-backs shall be made to either party if joint instructions are required
pursuant to the Escrow Agreement.
