ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as of the 1st day of June 1997 by
and among RENAISSANCE GOLF PRODUCTS, INC., a Delaware corporation (the
"Company"), the principal optionholders of the Company listed on Attachment
"A" (collectively referred to as the "Optionholders"), and Xxxxx X. Xxxxxxx
as Escrow Agent (the "Escrow Agent"), with reference to the following facts:
A. The Company's Board of Directors is recommending a 4:1 reverse
stock split (the "Reverse Split") for approval by the stockholders whereby
each four shares of Common Stock of the Company would be combined into one
share of Common Stock. If approved, all of the issued and outstanding shares
of Common Stock would be subject to the Reverse Split, including the shares
of Common Stock issued through the 1996 Confidential Offering Memorandum (
the "Financing"). Debenture conversion right prices, conversion prices for
options granted pursuant to options granted in 1996 ("1996 Options"), and
shares of Common Stock issuable upon conversion of the Debentures and 1996
Options are not subject to adjustment in the event of the Reverse Split.
B. In conjunction with 1996 Options grants to the new Directors,
executives, and any parties including the Optionholders, the Optionholders
agreed to enter into this Escrow Agreement effective in the event of approval
of the Reverse Split. Pursuant to this Escrow Agreement, each Optionholder
will place his 1996 Options granted in conjunction with the Financing, but
excluding-performance based options (the "Escrow Options") into an escrow
(the "Escrow") with Xxxxx X. Xxxxxxx, the Secretary of the Company, to hold
the Escrow Options during the terms of the Optionholder Agreement, subject to
certain restrictions.
C. The Optionholders and the Company are willing to enter into this
Escrow Agreement and have agreed to be bound by the terms and conditions
contained herein, and Escrow Agent is willing to enter into this Escrow
Agreement and to serve as Escrow Agent in accordance with the terms contained
herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. ESTABLISHMENT OF ESCROW.
1.1 Simultaneously with the execution of this Escrow Agreement,
each of the Optionholders shall deposit with Escrow Agent documentation
evidencing the number of Escrow Options set forth opposite such
Optionholder's name on Attachment "A" hereto, such documentation to evidence
in the aggregate 4,660,000 Escrow Options. Such documentation shall be
registered in the name of each Optionholder and shall have stock powers
attached thereto duly executed by the respective Optionholders in blank.
1.2 The Optionholders and the Company hereby undertake to deliver
or cause to be delivered directly to Escrow Agent certificates representing
such number of additional securities of the Company as the Optionholders
shall be entitled to receive with respect to those Escrow Options held in
escrow hereby by virtue of any stock split, stock dividend, recapitalization,
reclassification, merger, consolidation, option exercise or similar
transaction. Certificates representing such additional options or shares
shall be directly deposited with Escrow Agent, together with stock powers
pertaining thereto duly executed by each of the Optionholders in black, and
shall be subject to the Escrow Agreement, and all calculations made hereunder
shall be adjusted accordingly. The Escrow Options and shares identified
pursuant to Sections 1(a) and (b) shall hereinafter collectively be referred
to and constitute the "Escrow Options."
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1.3 Escrow Agent is hereby authorized to instruct the Company's
transfer agent to deliver any Escrow Options to Escrow Agent.
2. SATISFACTION OF ESCROW.
2.1 As soon as practicable after each quarter, Escrow Agent shall
request a report from the stock transfer agent concerning the sales prices
reported on the Nasdaq over-the-counter Bulletin Board of the Company's
common stock during the preceding quarter.
2.2 Upon receipt of the report from the stock transfer agent,
Escrow Agent shall furnish copies thereof to each of the Optionholders and
the Company.
2.3 Escrow Agent shall be bound by the following with respect to
its duty to release the Escrow Options:
2.3.1 Escrow Options shall be released from the Escrow
only after the post-reverse-stock split closing price exceeds $1.50 per share
for 60 consecutive trading days (the "Initial Release Date").
2.3.2 After the initial Release Date, the aggregate number
of shares issued upon the exercise of the Escrow Options released from the
Escrow in any month shall not exceed the greater of 5% of the total Escrow
Options issued upon the exercise of Escrow Options or 25% of the previous
month's total trading volume of the Company's shares of Common Stock.
2.3.3 All Escrow Options shall be subject to release from
the Escrow after the earlier of the 60th consecutive trading day that the
post-stock split closing price exceeds $5.00 per share or December 31, 2000
(the "Final Release Date").
2.3.4 In the event the Initial Release Date has not
occurred within two years of the establishment of the Escrow, the Company by
a majority vote of the directors may permit modification of this Escrow
Agreement.
3. RIGHTS REGARDING ESCROW OPTIONS.
During the pendency of this Escrow Agreement, the Optionholders
shall retain full voting rights and full dividend rights with respect to the
Escrow Options, but shall possess no right to tender or otherwise transfer
the Escrow Options and if instructions on tender or other transfer thereof
are received by Escrow Agent, Escrow Agent shall promptly notify the Company
but shall not take any other action with respect thereto.
4. ADDITIONAL PROVISIONS RELATING TO ESCROW AGENT.
4.1 Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by all of the parties hereto.
4.2 Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are
hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case Escrow Agent obeys or complies with any such
order, judgment or decree, Escrow Agent shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.
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4.3 Escrow Agent shall not be liable in any respect on account of
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
4.4 Escrow Agent shall have no duties or responsibilities except
as expressly provided in this Escrow Agreement and shall neither be obligated
to recognize nor have any liability or responsibility arising under any other
agreement to which Escrow Agent is not a party, even through reference
thereto may be made herein.
4.5 Escrow Agent shall be entitled to employ such legal counsel
and other experts as it may deem necessary properly to advise Escrow Agent in
connection with its obligations hereunder, may rely upon the advice of such
counsel and may pay such counsel reasonable compensation therefor.
4.6 If Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in
respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
4.7 It is understood and agreed that should any dispute arise with
respect to the instructions given Escrow Agent hereunder, Escrow Agent is
authorized and directed to retain in its possession, without liability to
anyone, all or any part of the Escrow Options until such 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
Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings.
4.8 All reasonable costs, fees and disbursements incurred by
Escrow Agent in connection with the performance of its duties hereunder shall
be borne by the Company.
4.9 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 relying or refraining from acting on any instrument reasonably
believed by Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties.
4.10 Escrow Agent shall not be liable or responsible for any act he
may do or omit to do in the exercise of reasonable care, and the Company
shall indemnify Escrow Agent for, and hold him harmless against, any loss,
liability, or expense incurred without negligence or bad faith on the part of
Escrow Agent arising out of or in connection with his acceptance of, or the
performance of his obligations under, this Escrow Agreement.
4.11 Upon Escrow Agent's release of all Escrow Options herein, in
accordance with the provisions of this Escrow Agreement, Escrow Agent shall be
discharged from all further obligations hereunder.
4.12 Optionholders, each on its or his own behalf (i) waives any
conflict of interest which Xxxxx X. Xxxxxxx may have as a result of his acting
as Escrow Agent hereunder; (ii) acknowledges hereby that they have been urged to
review this Escrow Agreement with independent counsel; (iii) waives its or his
rights to independent counsel in connection with the actions to be taken
hereunder by Xxxxx X. Xxxxxxx as Escrow Agent; and (iv) approves the appointment
of Xxxxx X. Xxxxxxx as Escrow Agent hereunder.
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5. NON-TRANSFERABILITY.
This Agreement shall not be transferable or assignable by any party, nor
shall any party's interest herein be transferred or assigned by operation of
law, and any assignment or attempted assignment, transfer, mortgage,
hypothecation, or pledge of this Agreement or its interest herein by any
party, shall be null and void.
6. NOTICES.
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and (unless otherwise specifically
provided herein) shall be deemed to have been given at the time when mailed
in any general or branch United States Post Office, enclosed in a registered
or certified postpaid envelope, addressed to the Optionholders in care of the
Company at its then current business address.
7. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable the remaining provisions
shall nevertheless continue in full force and effect without being impaired
or invalidated in any way.
8. ATTORNEY'S FEES.
If any action in law or equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees and
costs, which may be set by the court in the same action or in a separate
action brought for that purpose, in addition to any other relief to which
that party may be entitled.
9. APPLICABLE LAW AND FORUM.
This Agreement and any matter connected with the performance thereof
shall be construed, interpreted, applied and governed in all respects in
accordance with the laws of the State of California, and California shall be
the exclusive jurisdiction for any dispute, claim or action arising hereunder
or related hereto.
10. BINDING NATURE.
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective predecessors, representatives, successors,
related or affiliated business entities, heirs, and assigns.
11. WAIVER.
No waiver of any of the provision of this Agreement shall be deemed, or
shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
June 1, 1997.
RENAISSANCE GOLF PRODUCTS, INC.
By:
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Xxxxxxx X. Xxxxx
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XXXX X. XXXXXXX, INDIVIDUALLY AND FOR
GRANITE HOLLOW INSURANCE AGENCY AND PINE VALLEY LLC.
-----------------------------------------
XXXXXXX X. XXXXX
-----------------------------------------
XXXXXX X. XXXXX
-----------------------------------------
MILES X. XXXXX
-----------------------------------------
XXXXX X. XXXXXXX
-----------------------------------------
XXXX X. XXXXXXXX
-----------------------------------------
XXXXXX X. XXXXXXXX
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ATTACHMENT "A"
NUMBER VESTING EXERCISE
NAME OF OPTIONHOLDER OF OPTIONS DATE PRICE
-------------------- ---------- ---- -----
Xxxx X. Xxxxxxx 1,000,000 12/31/96 $1.00
Granite Hollow 1,000,000 12/31/96 $0.50
Pine Valley, Ltd. 400,000 12/31/96 $0.50
Xxxxxx X. Xxxxxxxx 100,000 12/31/96 $0.50
Xxxxxx X. Xxxxx 400,000 12/31/96 $0.50
Miles X. Xxxxx 360,000 12/31/96 $0.50
Xxxxxxx X. Xxxxx 300,000 12/31/96 $0.50
Xxxxx X. Xxxxxxx 750,000 12/31/96 $0.50
Xxxx X. Xxxxxxxx 200,000 12/31/96 $0.50
150,000 12/31/96 $1.00
Total Options 4,660,000
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