EXHIBIT 99.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into as of this 14th
day of October 2005, by and among PARADIGM HOLDINGS CORPORATION, a Wyoming
corporation ("Parent"), PARADIGM SOLUTIONS INTERNATIONAL, INC., a Maryland
corporation and wholly-owned subsidiary of Parent ("Merger Sub"), XXXXX
MANAGEMENT SERVICES, INC. t/d/b/a XXXXX TECHNOLOGY GROUP, a Pennsylvania
corporation (the "Company"), the individuals listed on Schedule A attached
hereto (individually, a "Shareholder" and collectively, the "Shareholders"), and
XXXXXXXXXXX & XXXXXXXX XXXXXXXXX XXXXXX LLP, a Pennsylvania limited liability
partnership (the "Escrow Agent").
RECITALS:
WHEREAS, Parent, Merger Sub, the Company and the Shareholders are parties
to that certain Merger Agreement (the "Merger Agreement") of even date herewith,
wherein the Shareholders are exchanging one hundred percent (100%) of the issued
and outstanding capital stock of the Company in exchange for One Million Dollars
(US $1,000,000) and five hundred thousand (500,000) newly-issued shares of
common stock, par value $0.001 per share, of Parent (the "Parent Shares") and
the Company shall be merged with and into Merger Sub, which shall be the
surviving corporation and shall continue its corporate existence under the laws
of the State of Maryland as a wholly-owned subsidiary of Parent.
WHEREAS, the Merger Agreement provides, in part, that upon execution of
the Merger Agreement, Parent shall deposit with the Escrow Agent stock
certificates representing in the aggregate, sixty thousand (60,000) shares of
the Parent Shares (the "Escrowed Shares");
WHEREAS, pursuant to Section 1.3 of the Merger Agreement, the Escrowed
Shares are being held by the Escrow Agent subject to the satisfaction of the
terms and conditions of the Merger Agreement; and
WHEREAS, the Escrow Agent has agreed to hold the Escrowed Shares as Escrow
Agent pursuant to the terms of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, each intending to
be legally bound, hereby agree as follows:
1. Recitals. The above recitals are true and correct and are hereby
incorporated, in their entirety, by this reference.
2. Appointment. Parent, Merger Sub, the Company and the Shareholders
hereby appoint the Escrow Agent and the Escrow Agent hereby accepts appointment
as the Escrow Agent under the terms and subject to the conditions of this
Agreement.
3. Term. The term (the "Term") of this Agreement commences on the date of
its execution and continues until such time as the Escrow Agent disburses the
Escrowed Shares in accordance with Section 5 hereof or the earlier resignation
of Escrow Agent pursuant to Section 6(d) hereof.
4. The Escrowed Shares. On the date hereof, Parent shall deliver to the
Escrow Agent stock certificatesrepresenting the Escrowed Shares portion of the
Parent Shares.
5. Disbursements. The Escrow Agent shall release the Escrowed Shares to:
(a) Parent upon written notification received from Parent and proof
that the Company and/or the Shareholders have breached any of their respective
representations and/or warranties contained in the Merger Agreement and that
Parent is entitled to the Escrowed Shares specifying the number of Escrowed
Shares, and the calculation thereof, to which Parent is entitled.
(b) the Shareholders on the twelve (12) month anniversary of the
date hereof, provided that the Escrow Agent has not received prior written
notification from Parent or Merger Sub as set forth in subparagraph (a) above.
(c) within three (3) days of receipt of a written notification under
this Section 5 (an "Escrow Release Notice"), the Escrow Agent shall release the
Escrowed Shares in accordance with the instructions in the Escrow Release
Notice. The Escrow Agent shall have no responsibility for the release of the
Escrowed Shares until it has received an Escrow Release Notice.
6. Escrow Agent.
(a) Duties. The Escrow Agent's duties and obligations under this
Escrow Agreement are entirely nondiscretionary and ministerial in nature. The
Escrow Agent shall be required to act in respect of the Escrowed Shares only as
specifically provided hereunder. This Agreement sets forth all of the duties and
obligations of the Escrow Agent with respect to any and all matters relating to
the Escrowed Shares as contemplated hereunder, and no additional obligations of
the Escrow Agent shall be implied from the terms of this Agreement or any other
agreements, including, without limitation, the Merger Agreement. The Escrow
Agent, in its actions pursuant to this Agreement, shall be fully protected in
every reasonable exercise of its discretion.
(b) Resolution of Doubt. If the Escrow Agent is in doubt as to its
duties and liabilities under this Agreement, then the Escrow Agent may, in its
sole discretion, continue to hold the Escrowed Shares until all parties
concerned mutually agree to the release thereof, or until a judgment of a court
of competent jurisdiction determines the rights of the parties with respect to
the Escrowed Shares, or may deposit the Escrowed Shares then held under this
Agreement with the Clerk of the Court having jurisdiction over any disputes and,
upon notifying all parties concerned of such action, all liability on the part
of the Escrow Agent shall fully cease and terminate.
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(c) Reliance on Documents. The Escrow Agent may act in good faith
reasonable reliance upon (a) any document, instrument or signature, including
any statement or assertion made in any such document or instrument and (b) any
notice or instructions that the Escrow Agent reasonably believes to be
authorized under this Agreement. In the event that the Escrow Agent acts in good
faith reasonable reliance upon any document, instrument, signature, statement or
assertion made in any such document or instrument, or any notice or instructions
that it reasonably believes to be authorized under this Agreement, the Escrow
Agent shall not be liable for the sufficiency, accuracy or authenticity of such
document or instrument and its duties shall be limited to those set forth in
this Agreement.
(d) Resignation. The Escrow Agent may resign at any time upon giving
Parent, Merger Sub, and the Shareholders ten (10) days' prior written notice. In
such event, the Escrow Agent shall deliver the Escrowed Shares in its possession
to a successor escrow agent which shall be selected by Parent, Merger Sub, and
the Shareholders. If no successor is appointed and acting hereunder within ten
(10) days after such resignation notice is given, the Escrow Agent may pay and
deliver the Escrowed Shares to a court of competent jurisdiction. Upon its
resignation and delivery of the Escrowed Shares as set forth in this Section
6(d), the Escrow Agent shall be discharged of and from any and all further
obligations or liabilities arising in connection with or under this Agreement.
(e) Fees and Expenses. Notwithstanding anything to the contrary
contained herein, and without limiting the generality of any other provision
contained herein, Parent, Merger Sub, and the Shareholders shall be liable for
the payment of all reasonable fees and expenses of the Escrow Agent (including,
without limitation, reasonable attorneys' fees and expenses) for its actions
hereunder.
(f) Liabilities and Indemnification. Notwithstanding anything to the
contrary contained herein, and without limiting the generality of any other
provision contained herein, the Escrow Agent shall not be liable for any
damages, or have any obligations other than the duties prescribed herein in
carrying out or executing the purposes and intent of this Agreement. The Escrow
Agent shall not be liable to any party hereto or to any third party as a result
of any action or omission taken or made by the Escrow Agent in good faith.
Parent, Merger Sub, and the Shareholders jointly and severally covenant and
agree that they shall reimburse the Escrow Agent upon receipt of written demand
for, and shall indemnify and hold the Escrow Agent harmless from, against and
with respect to, any and all loss, liability, damage, or expense (including,
without limitation, attorneys' fees and costs) that the Escrow Agent may suffer
or incur in connection with this Agreement and the performance of the Escrow
Agent's obligations hereunder or otherwise in connection herewith, except where
any such loss, liability, damage or expense is the result of the Escrow Agent's
gross negligence or willful misconduct.
(g) Caps on Fees and Expenses, Liabilities and Indemnification. The
Shareholders shall not be responsible for any amount of fees, expenses and/or
liabilities and indemnity in excess of the amount available pursuant to the
limitations expressed in Section 9.5.2 of the Merger Agreement, after giving
effect to payments, if any, thereunder.
7. No Warranties. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner and execution, or validity of
any instrument deposited with the Escrow Agent, nor as to the identity,
authority, or right of any person executing the same.
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8. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof, and
supersedes and revokes any and all prior or existing agreements, written or
oral, relating to the subject matter hereof, and this Agreement shall be solely
determinative of the subject matter hereof.
(b) Amendments. This Agreement may not be amended, modified,
superseded, canceled, or terminated, except by a written instrument executed by
the parties hereto.
(c) Counterparts. This Agreement may be executed in one or more
counterparts, and any such counterpart shall, for all purposes, be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. All parties acknowledge that a facsimile copy of this Agreement
may be executed and shall have the same binding force and effect, and in such
case each party agrees to execute the appropriate original agreement thereafter
if requested.
(d) Severability. The invalidity or unenforceability of any
provision hereunder (or any portion of such a provision) shall not affect the
validity or enforceability of the remaining provisions (or remaining portions of
such provisions) of this Agreement.
(e) Waiver. Neither party may, at any time or times, waive (in whole
or in part) any rights or privileges to which he or it may be entitled
hereunder. However, no waiver by any party of any condition or of the breach of
any term contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further continuing waiver of any other condition
or of any breach of any other terms contained in this Agreement, and no waiver
shall be effective unless it is in writing and signed by the waiving party and
to the extent required, any other prerequisites to a waiver under this Agreement
are satisfied.
(f) Binding Effect and Agreement. This Agreement shall be binding
upon the parties hereto and their respective heirs, personal or other legal
representatives, successors, and permitted assigns.
(g) Governing Law; Jurisdiction; Venue; Consent to Service. The
validity and effect of this Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland, without regard to
principles of conflicts of laws thereof. Any dispute, controversy or question of
interpretation arising under, out of, in connection with or in relation to this
Agreement or any amendments hereof, or any breach or default hereunder, shall be
litigated in the state or federal courts in ______ County, Maryland, U.S.A. Each
of the parties hereby irrevocably submits to the jurisdiction of any state or
federal court sitting in ______ County, Maryland. Each party hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of any such action in ______ County,
Maryland
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(h) Enforcement Costs. If any legal action or other proceedings is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, court costs and all expenses incurred in that action or
proceeding, in addition to any other relief to which such party may be entitled.
(i) Independent Representation. Each party hereto acknowledges and
agrees that Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP is representing itself
with respect to this Escrow Agreement. Each party hereto further acknowledges
and agrees that Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP has represented The
Parent and the Merger Sub in the Merger Agreement, as well as other unrelated
matters, and each party specifically waives any conflict as a result of such
other representation and the transactions contemplated herein. The Shareholders
specifically acknowledge and agree that each has had the opportunity to seek
independent counsel of its own choice in connection with this Agreement.
(j) Notice. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing and shall be (as
elected by the person giving such notice) hand delivered by messenger or
nationally recognized courier service, addressed to the address set forth below:
If to Parent of Merger Sub: Paradigm Holdings Corporation
0000 Xxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxx
With a copy to: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to a Shareholder: The name and address as listed on the
Schedule A attached hereto.
With a copy to: Xxxxxxxx Xxxxxxxxx PC
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
If to Escrow Agent Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
or to such other address as may be designated by notice complying with the terms
of this Section. Each such notice shall be deemed delivered: (a) on the date
delivered if by personal delivery; or (b) two (2) days after delivery, if
delivered by a nationally recognized courier (i.e., Federal Express, United
Parcel Service, DHL).
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9. Waiver of Jury Trial. AS AN INDUCEMENT FOR EACH PARTY TO ENTER INTO
THIS AGREEMENT, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES THE RIGHT EACH MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY
LITIGATION OR ACTION BASED HEREON, ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY TO THIS AGREEMENT OR ANY AGREEMENTS
EXECUTED IN CONNECTION HEREWITH.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow
Agreement as of the date first above written.
PARADIGM HOLDINGS CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: President and Chief Operating
Officer
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PARADIGM SOLUTIONS INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: President and Chief Operating
Officer
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XXXXX MANAGEMENT SERVICES, INC.
t/d/b/a XXXXX TECHNOLOGY GROUP
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
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Title: President
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SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxx
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/s/ Xxxxxxx X. Xxxxxxx
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/s/ Xxxxxx X. Xxxxx
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XXXXXXXXXXX & XXXXXXXX
XXXXXXXXX XXXXXX LLP
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Partner
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