ESCROW AGREEMENT
This
Escrow Agreement (hereinafter the "Escrow Agreement") is made and entered
into
as of this 30th
day of
June, 2005, by and among Dialog Group, Inc., a Delaware corporation (“DGI”),
AdValiant Acquisition Corp. ("Acquisition"), a Delaware corporation, AdValiant
Inc., an Ontario corporation (“AdValiant”), AdValiant USA, Inc. a Delaware
corporation (“AdValiant USA”), Empire Media, Inc., a Delaware corporation
(“Empire”), Xxxxxxx Xxxx, and Xxxxx Xxxxxx, (the last three are collectively
referred to as the “Shareholders”), and Xxxx Xxxx Xxxxxx, Esq., as the Escrow
Agent ("Escrow Agent").
WHEREAS,
on the date hereof, DGI, AdValiant, AdValiant USA, and the Shareholders,
among
others, entered into an Agreement for Merger ("Merger Agreement"), pursuant
to
which 300 shares of DGI Special Voting Stock and 252,514,188 shares of AdValiant
Exchangeable Shares are to be held in escrow until certain earnings goals
are
met; and
WHEREAS,
the parties desire that Xxxx Xxxx Xxxxxx, Esq. serve as Escrow Agent in
connection with this Escrow Agreement.
Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed
to
them in the Merger Agreement.
NOW
THEREFORE, in consideration of the foregoing recitals and the mutual covenants
and obligations herein contained, the parties agree hereto as
follows:
1. Escrow
of Shares.
(a)
Immediately upon consummation of the merger, the Shareholders shall cause
certificates evidencing 300 shares of DGI Special Voting Stock and 252,514,188
shares of AdValiant Exchangeable Shares (together referred to as the “Escrow
Stock”) to be delivered to the Escrow Agent together with appropriate
instruments of transfer endorsed in blank with medallion guarantees
attached.
(b)
The
Shareholders, by the delivery of the Escrow Stock to the Escrow Agent,
acknowledge and represent that the Escrow Stock is owned, beneficially and
of
record, by the Shareholders free and clear of any liens, claims, equities,
charges, options, rights of first refusal or encumbrances and, further,
acknowledges and represents that the Escrow Agent has the unrestricted right
and
power to transfer, convey and deliver full ownership of the Escrow Stock
without
the consent, agreement or joinder of any other person and without any
designation, declaration or filing with any governmental authority, in
accordance with the Merger Agreement.
2. Escrow
Conditions.
a. The
Escrow Agent is hereby instructed to receive and hold the Escrow Stock as
provided in the Merger Agreement.
-1-
b. Reference
is made to Sections 4.03, 4.04, 7.04, and 8.06 of the Merger Agreement (The
“Operative Sections”).
c. All
actions of the Escrow Agent shall be governed by the Operative
Sections.
3. Escrow
Period and Delivery.
The
escrow period shall commence on the date of the execution of this Escrow
Agreement, which shall be the same date as the date of the Closing of the
Merger
Agreement, and shall continue until the earlier of September 15, 2006 or
the
date on which a dispute is resolved pursuant to Section 8.06 of the Merger
Agreement.
4. The
Shareholders and the Escrow Agent hereby agree that, as long as the Escrow
Stock
is held in escrow pursuant to this Escrow Agreement, neither will not take
any
action to cancel, sell, pledge, assign, dispose of, or otherwise transfer
the
Escrow Stock, except as otherwise provided in the Operative Sections. If
DGI or
AdValiant declares a cash dividend or stock dividend or if either splits
or
subdivides its shares or issues any shares of its preferred or common stock
in a
reclassification, then any the cash dividend or stock dividend shall be issued
to, and held in escrow by, Escrow Agent in accordance with the terms and
conditions of this Escrow Agreement.
5. The
Escrow Agent is hereby authorized to exchange the share certificates delivered
to it for any number and any denomination of share certificates that the
Escrow
Agent, in its sole discretion, requires to enable it to satisfy its obligations
hereunder from time to time, as required pursuant to this Escrow Agreement.
The
Escrow Agent shall reregister the Escrow Stock in his name. The Escrow Agent
shall only vote the Escrow Stock pursuant to the joint written instructions
of
DGI and all the Shareholders.
6. The
Escrow Agent shall have no duties or obligations other than those specifically
set forth herein or required by law. The acceptance by the Escrow Agent of
its
duties under this Escrow Agreement is subject to the terms and conditions
hereof, which shall govern and control with respect to its rights, duties,
liabilities and immunities.
7. The
parties hereto understand and agree that the Escrow Agent is not a principal,
participant, or beneficiary of the underlying transactions which necessitate
this Escrow Agreement. The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and
shall be protected in acting or refraining from acting on any instrument
reasonably believed by it to be genuine and to have been signed or presented
by
the proper party or parties, their officers, representatives or agents. As
long
as the Escrow Agent has acted in good faith or on the advice of counsel or
has
not been guilty of willful misconduct, the Escrow Agent shall have no liability
under, or duty to inquire beyond the terms and provisions of this Escrow
Agreement, and it is agreed that its duties are purely ministerial in nature.
The Escrow Agent shall in no event be liable for any exemplary or consequential
damages, the parties understanding that this limitation is provided for in
view
of the fact that Escrow Agent will receive no compensation (other than
reimbursement for expenses by Guarantor) for its services
hereunder.
-2-
8. The
Escrow Agent shall not be obligated to take any legal actions hereunder against
any third party who is not a party to this Escrow Agreement which might,
in the
Escrow Agent's judgment, involve any expense or liability, unless the Escrow
Agent shall have been furnished with reasonable indemnity.
9. The
Escrow Agent is not bound in any way by any other contract or agreement between
or among the parties hereto whether or not the Escrow Agent has knowledge
thereof of its terms and conditions and the Escrow Agent's only duty, liability
and responsibility shall be to hold and deal with the Escrow Stock as herein
directed.
10. The
Escrow Agent shall not be bound by any modification, amendment, termination,
cancellation, rescission or supersession of this Escrow Agreement unless
the
same shall be in writing and signed by all of the other parties hereto and,
if
its duties as Escrow Agent hereunder are affected thereby, unless it shall
have
given prior written consent thereto.
11. DGI
and
the Shareholders agree to indemnify the Escrow Agent against, and hold the
Escrow Agent harmless from, anything which the Escrow Agent may do or refrain
from doing in connection with its performance or non-performance as Escrow
Agent
under this Escrow Agreement and any and all losses, costs, damages, expenses,
claims and reasonable attorneys' fees suffered or incurred by the Escrow
Agent
as a result of, in connection with or arising from or out of the acts of
omissions of the Escrow Agent in performance of or pursuant to this Escrow
Agreement, except such acts or omissions as may result from the Escrow Agent's
willful misconduct.
12. It
is
understood and agreed that should any dispute arise, Escrow Agent is authorized
and directed to retain the Escrow Stock or deposit it with a court of competent
jurisdiction until the dispute shall have been settled either by mutual written
agreement of the parties concerned or by a final order, decree or judgment
of a
court of competent jurisdiction after the time for appeal has expired and
no
appeal has been perfected, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings.
13. In
the
event of any disagreement between DGI and the Shareholders or any or either
of
them concerning this Escrow Agreement or between them, or demands being made
in
connection with the Escrow Stock, or in the event that the Escrow Agent is
in
doubt as to what action the Escrow Agent should take hereunder, the Escrow
Agent
may, at its option, refuse to comply with any claims or demands on it, or
refuse
to take any other action hereunder, as long as such disagreement continues
or
such doubt exists, and in any such event, the Escrow Agent shall not be or
become liable in any way or to any person for its failure or refusal to act,
and
the Escrow Agent shall be entitled to continue so to refrain from acting
until:
-3-
a. the
rights of DGI and the Shareholders shall have been fully and finally adjudicated
by a court of competent jurisdiction; or
b. all
differences shall have been adjusted and all doubt resolved by agreement
between
DGI and the Shareholders, and the Escrow Agent shall have been notified thereof
in writing signed by all parties.
14. The
terms
of these instructions are irrevocable by the undersigned unless such revocation
is consented to in writing by each of DGI and the Shareholders.
15. The
terms
herein shall be binding upon the Escrow Agent and its successors, and upon
DGI
and the Shareholders.
16. The
Escrow Agent may resign as escrow agent in respect of the Escrow Stock by
giving
written notice to DGI and the Shareholders. The resignation of the Escrow
Agent
shall be effective, and the Escrow Agent shall cease to be bound by this
Escrow
Agreement, thirty (30) days following the date on which the notice of
resignation is given.
DGI
and
the Shareholders shall, before the effective date of the resignation of the
Escrow Agent, appoint another escrow holder who shall be acceptable to them
and
that such an appointment, when made, shall be binding on them. Upon appointment
by the new escrow holder, the Escrow Agent shall deliver the Escrow Stock
to the
new escrow holder whereupon the Escrow Agent shall not be liable for the
completion of any further acts pursuant to this Escrow Agreement. In the
event
that DGI and the Shareholders do not appoint a new escrow holder prior to
the
expiration of the thirty (30) day period, the Escrow Agent shall be entitled
to
make application to a court of competent jurisdiction in the State of New
York
to be relieved of the obligations upon it and/or to interplead Escrow Stock
into
such court and for directions with respect to the delivery of the Escrow
Stock.
The Escrow Agent shall be entitled to act in accordance with the direction
of
the court without any further liability whatsoever to any other
party.
17. The
Escrow Agent will not receive any compensation for the performance of its
services in connection with this Escrow Agreement except for the reimbursement
by DGI of any and all out-of-pocket expenses incurred by the Escrow Agent
in
connection with the performance of its services hereunder.
18. Escrow
Agent is providing escrow services pursuant to this Escrow Agreement solely
as
an accommodation to the DGI and the Shareholders. DGI and shareholders
acknowledge and agree that Escrow Agent may act as corporate secretary and
legal
counsel on behalf of DGI and that in acting in its capacity as Escrow Agent
hereunder, Escrow Agent shall in no way be disqualified from acting as legal
counsel on behalf of DGI as a result of (i) Escrow Agent entering into this
Escrow Agreement, (ii) Escrow Agent performing any of its duties as escrow
agent
hereunder, or (iii) any dispute that may arise between any person with respect
to the Escrowed Stock (and any withdrawal by Escrow Agent as the escrow agent
hereunder in connection with such dispute).
-4-
19. All
notices and other communications provided for herein shall be in writing
and
shall be delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid, or overnight air courier guaranteeing
next
day delivery:
| (a) |
If
to DGI:
|
| Dialog Group, Inc. |
| Attn: Xxxxx XxXxxxxxxxx |
| Twelfth Floor, 000 Xxxx Xxxxxx Xxxxx |
| Xxx Xxxx, XX 00000 |
| (b) |
If
to the Shareholders:
|
Empire
Media, Inc.
Xxxxx
Xxxxxx
00
Xxxxx
Xxxxxx, Xxxxx 0X
Xxx
Xxxx,
XX 00000
Xxxx
Xxxx
0
Xx.
Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Xxxxx
Xxxxxx
0
Xx.
Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
| (c) |
If
to Escrow Agent to:
|
Xxxx
Xxxx
Xxxxxx, Esq.
Suite
400
E, 0000 Xxxxxxxxx Xxxxxxxxx
Xxxx
Xxxxx, Xxxxxxx 00000
All
notices and communications shall be deemed to have been duly given: at the
time
delivered by hand, if personally delivered; at the time received if sent
by
facsimile or electronic mail; three days after being deposited in the mail,
postage prepaid, sent certified mail, return receipt requested, if mailed;
and
the next day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. If a notice or communication is mailed
in the manner provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
-5-
20. This
Escrow Agreement shall be construed according to the laws of the State of
New
York.
21. This
Escrow Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same.
IN
WITNESS WHEREOF, the Parties hereto have executed this Escrow Agreement
effective as of the day and year first above written.
|
DIALOG
GROUP, INC.
By:
/s/
Xxxxx X. XxXxxxxxxxx
Xxxxx
X. XxXxxxxxxxx. President
|
|
|
THE
SHAREHOLDERS
Empire
Media, Inc.
By:
/s/
Xxxxx Xxxxxx
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
/s/
Xxxx Xxxx
Xxxx
Xxxx
|
|
|
ESCROW
AGENT
/s/
Xxxx Xxxx Xxxxxx
Xxxx
Xxxx Xxxxxx
|
|
-6-
