EXHIBIT 10.14
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is entered into as of May 11,
2000, by and among Red Xxxxx International, Inc., a Nevada corporation
("Buyer"), Red Xxxxx Holding Co., Inc., a direct wholly owned subsidiary of
Buyer incorporated under the laws of Nevada ("Merger Sub"), the stockholders of
The Xxxxxx Group Company, a Delaware corporation (the "Company") listed on the
attached Schedule I (the "Stockholders") and Xxxxxx Trust Company of California
as Escrow Agent (the "Escrow Agent").
BACKGROUND
A. The respective Boards of Directors of Buyer and the Company and the
Stockholders have approved the merger of the Company with and into Merger Sub
(the "Merger"), upon the terms and subject to the conditions set forth in an
Agreement and Plan of Merger (the "Merger Agreement").
B. Concurrently with the execution of the Merger Agreement and as an
inducement to Buyer to enter into the Merger Agreement, Buyer, Merger Sub, and
the Stockholders desire to enter into this Agreement as security for the
accurateness and completeness of the representations, warranties, covenants,
agreements and indemnities made by the Company and the Stockholders in the
Merger Agreement and to satisfy any adjustments to the Stock Merger
Consideration pursuant to Section 2.9 of the Merger Agreement. Unless otherwise
defined in this Agreement, capitalized words will have the meanings ascribed to
them in the Merger Agreement.
AGREEMENT
In consideration of the mutual promises contained herein and for other
good and valuable consideration, receipt of which is hereby acknowledged, and
intending to be legally bound, the parties agree as follows:
1. Appointment of Escrow Agent. The Escrow Agent is hereby appointed to act
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as escrow agent in accordance with the terms hereof, and the Escrow Agent
hereby accepts such appointment. The Escrow Agent shall have all the
rights, powers, duties and obligations provided herein.
2. Deposit of Escrow Assets. On the date of the closing of the transactions
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contemplated by the Merger Agreement (written notification of said date to
be delivered to the Escrow Agent by Buyer) (the "Closing Date"), each
Stockholder will be deemed to have received and then deposited with the
Escrow Agent 2,500,000 shares in the aggregate of Buyer Common Stock issued
to the Stockholders pursuant to Section 2.8 of the Merger Agreement,
without any act of the Stockholders; provided, however, that each
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Stockholder shall have the option, upon notice to Buyer 3 days prior to the
Closing, to deposit cash with the Escrow Agent in lieu of the deposit of
Buyer Common Stock (for an amount in cash equal to such Buyer Common Stock,
at a value of $2.00 per share of Buyer Common Stock). Such shares will be
registered in the name of the Stockholders with attached stock powers
executed in blank, and will be deposited with the Escrow Agent. Such total
deposit and any cash deposited with the Escrow
Agent by any of the Stockholders in exchange for the release of Buyer
Common Stock shall constitute the escrow assets (the "Escrow Assets"). At
any time during which the Escrow Agent holds any Buyer Common Stock of any
of the Stockholders, each such Stockholder shall have the option, upon
notice to the Escrow Agent and Buyer 3 days prior to the delivery of cash
to the Escrow Agent, to deposit cash with the Escrow Agent in exchange for
all or a part of such Stockholder's Buyer Common Stock, at which time the
Escrow Agent shall release Buyer Common Stock to such Stockholder. For
purposes of determining the number of shares of Buyer Common Stock to be
released to any Stockholder that deposits cash with the Escrow Agent in
exchange for the release of all or a part of such Stockholder's Buyer
Common Stock, the value of each share of Buyer Common Stock shall be $2.00,
subject to adjustment pursuant to Section 7. Any cash received by the
Escrow Agent for release of all or a part of such Stockholder's Buyer
Common Stock shall become a part of the Escrow Assets.
3. Purposes of the Escrow Assets. The purposes of the Escrow Assets shall
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be to satisfy (i) any adjustments to the Merger Consideration required
under Section 2.9 of the Merger Agreement and (ii) any claims by any Buyer
Indemnified Party for indemnification pursuant to Article IX of the Merger
Agreement.
4. Disbursement of Escrow Assets for Adjustments to the Merger
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Consideration. To satisfy any reduction in the Merger Consideration
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pursuant to Section 2.9 of the Merger Agreement, the Escrow Agent shall
disburse all or part of the Escrow Assets as follows:
(a) If the Escrow Agent receives written instructions from the
Stockholder Agent to release Escrow Assets to Buyer with a value equal
to a portion or all of the amount of any reduction in the Merger
Consideration determined in accordance with Section 2.9 of the Merger
Agreement, the Escrow Agent shall immediately disburse Escrow Assets
to Buyer in the amount specified in the Stockholder Agent's written
instructions.
(b) If the Escrow Agent receives written instructions from Buyer (i)
setting forth the amount of any reduction in the Merger Consideration
finally determined in accordance with Section 2.9 of the Merger
Agreement, (ii) stating that Buyer has not received payment from the
Stockholders of the amount of such reduction within three days of the
date of final determination and (iii) instructing the Escrow Agent to
disburse Escrow Assets to Buyer with a value equal to any portion or
all of the amount of such reduction, the Escrow Agent shall
immediately disburse Escrow Assets to Buyer in the amount specified in
Buyer's written instructions.
(c) If at the time of any disbursement pursuant to this Section 4, the
Escrow Assets are comprised of both cash and Buyer Common Stock, Buyer
shall instruct the Escrow Agent to make such disbursement from either
the cash, Buyer Common Stock, or any combination of cash and Buyer
Common Stock.
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(d) The Escrow Agent shall have no duty or obligation to verify that
the amount specified in any written instructions delivered to the
Escrow Agent pursuant to Section 4(a) or 4(b) was determined in
accordance with Section 2.9 of the Merger Agreement.
5. Disbursement of the Stockholders' Escrow Assets. The Escrow Agent shall
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disburse all or part of the Escrow Assets that are owned by the
Stockholders as follows:
(a) On the earlier of (i) eighteen months following the Closing Date
or (ii) a date certified to the Escrow Agent by Buyer that is 60 days
after Buyer's auditors have delivered a signed audit report with
respect to the Company's fiscal year 2000 (the "First Stockholder
Release Date"), the Escrow Agent shall disburse to each Stockholder
40% of the balance of the Escrow Assets that are owned by each such
Stockholder as of the First Stockholder Release Date, unless the
Escrow Agent and the Stockholder Agent have received one or more Claim
Notices from any Buyer Indemnified Party setting forth, in reasonable
detail, (i) the amount of any Covered Liabilities due to such Buyer
Indemnified Party from the Stockholders under Section 9.2(a) of the
Merger Agreement, and (ii) a description of the factual basis therefor
(a "Company Indemnity Claim"). With respect to each Stockholder, if
the Pro Rata Percentage (as defined below) obligation of such
Stockholder for the aggregate amount of any Company Indemnity Claim(s)
set forth in Claim Notice(s) as of the First Stockholder Release Date
is less than 40% of the balance of the Escrow Assets owned by such
Stockholder as of such date, the Escrow Agent shall pay to such
Stockholder the amount of the difference between such Stockholder's
Pro Rata Percentage obligation for the aggregate amount of such
Company Indemnity Claim(s) and 40% of the balance of the Escrow Assets
owned by such Stockholder as of the First Stockholder Release Date,
and the Escrow Agent shall retain the amount of such Company Indemnity
Claim(s) as part of the Escrow Assets to be held by the Escrow Agent
pursuant to this Escrow Agreement. The amount retained by the Escrow
Agent in connection with such Company Indemnity Claim(s), if any,
shall be the "Retained Amount". Notwithstanding the foregoing, if the
Escrow Agent and any of the Stockholders have received one or more
Claim Notices from any Buyer Indemnified Party setting forth, in
reasonable detail, (i) the amount of any Covered Liabilities due to
such Buyer Indemnified Party from such Stockholder under Section
9.2(b) of the Merger Agreement, and (ii) a description of the factual
basis therefor (a "Stockholder Indemnity Claim"), then any
disbursement by the Escrow Agent to such Stockholder pursuant to this
Section 5(a) shall be reduced by the aggregate amount of such
Stockholder Indemnity Claim(s) and such amount shall be retained by
the Escrow Agent as part of the Retained Amount.
(b) On the second anniversary of the Closing Date, the Escrow Agent
shall disburse to each Stockholder 50% of the balance of the Escrow
Assets that are owned by each such Stockholder as of such date, unless
the Escrow Agent and the Stockholder Agent have received one or more
Claim Notices from any Buyer Indemnified Party setting forth, in
reasonable detail, a Company Indemnity Claim. With respect to each
Stockholder, if the Pro Rata Percentage obligation of
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such Stockholder for the aggregate amount of any Company Indemnity
Claim(s) set forth in Claim Notice(s) at the second anniversary of the
Closing Date is less than 50% of the balance of the Escrow Assets
owned by such Stockholder as of such date, the Escrow Agent shall pay
to such Stockholder the amount of the difference between such
Stockholder's Pro Rata Percentage obligation for the aggregate amount
of such Company Indemnity Claim(s) and 50% of the balance of the
Escrow Assets owned by such Stockholder as of such date, and the
Escrow Agent shall retain the amount of such Company Indemnity
Claim(s) as part of the Escrow Assets to be held by the Escrow Agent
pursuant to this Escrow Agreement. The amount retained by the Escrow
Agent in connection with such Company Indemnity Claim(s), if any,
shall be the "Retained Amount". Notwithstanding the foregoing, if the
Escrow Agent and any of the Stockholders have received one or more
Claim Notices from any Buyer Indemnified Party setting forth, in
reasonable detail, a Stockholder Indemnity Claim, then any
disbursement by the Escrow Agent to such Stockholder pursuant to this
Section 5(b) shall be reduced by the aggregate amount of such
Stockholder Indemnity Claim(s) and such amount shall be retained by
the Escrow Agent as part of the Retained Amount.
(c) On the earlier of (i) the third anniversary of the Closing Date or
(ii) the closing of an initial public offering of Buyer's capital
stock or the sale of 100% of Buyer's capital stock or substantially
all of the assets of Buyer (written notification of the date of any
such closing to be delivered to the Escrow Agent by Buyer) (the "Final
Stockholder Release Date"), the Escrow Agent shall disburse to each
Stockholder the remaining balance of the Escrow Assets that are owned
by each such Stockholder as of the Final Release Date, unless the
Escrow Agent and the Stockholder Agent have received one or more Claim
Notices from any Buyer Indemnified Party setting forth a Company
Indemnity Claim. With respect to each Stockholder, if the Pro Rata
Percentage obligation of such Stockholder for the aggregate amount of
any Company Indemnity Claim(s) set forth in such Claim Notice(s) as of
the Final Stockholder Release Date is less than the balance of the
Escrow Assets owned by such Stockholder as of the Final Stockholder
Release Date, the Escrow Agent shall pay to such Stockholder the
amount of the difference between such Stockholder's Pro Rata
Percentage obligation for the aggregate amount of such Company
Indemnity Claim(s) and the balance of the Escrow Assets owned by such
Stockholder as of the Final Stockholder Release Date, and the Escrow
Agent shall retain the amount of such Company Indemnity Claim(s) as
part of the Escrow Assets to be held by the Escrow Agent pursuant to
this Escrow Agreement. The amount retained by the Escrow Agent in
connection with such Company Indemnity Claim(s), if any, shall be the
"Retained Amount". Notwithstanding the foregoing, if the Escrow Agent
and any of the Stockholders have received one or more Claim Notices
from any Buyer Indemnified Party setting forth, in reasonable detail,
a Stockholder Indemnity Claim, then any disbursement by the Escrow
Agent to such Stockholder pursuant to this Section 5(c) shall be
reduced by the aggregate amount of such Stockholder Indemnity Claim
and such amount shall be retained by the Escrow Agent as part of the
Retained Amount.
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(d) To settle any Company Indemnity Claim by any Buyer Indemnified
Party against the Stockholders or any Stockholder Indemnity Claim by
any Buyer Indemnified Party against any Stockholder, the Escrow Agent
may disburse to such Buyer Indemnified Party any portion of the Escrow
Assets (including any Retained Amount) owned by the Stockholders (on a
Pro Rata Percentage basis) or such Stockholder, respectively:
(i) at any time upon receipt by the Escrow Agent of a written
instruction executed by such Buyer Indemnified Party and the
Stockholder Agent in the case of a Company Indemnity Claim
or such Stockholder in the case of a Stockholder Indemnity
Claim setting forth the amount of the Escrow Assets to be so
disbursed;
(ii) within 30 days following receipt by the Escrow Agent of a
Claim Notice, provided that, during such 30-day period, the
Escrow Agent shall not have received: (A) a written
objection to the disbursement from the Stockholder Agent in
connection with any Company Indemnity Claim (a "Company
Objection") or a written objection to the disbursement from
such Stockholder in connection with any Stockholder
Indemnity Claim (a "Stockholder Objection), which such
Company Objection or Stockholder Objection shall describe in
reasonable detail the factual basis therefor and shall be
delivered to such Buyer Indemnified Party and the Escrow
Agent; or (B) a written instruction from such Buyer
Indemnified Party that such Buyer Indemnified Party has
received an amount in cash to settle such claims by Buyer
Indemnified Party; or
(iii) unless the Escrow Agent has received a written instruction
from such Buyer Indemnified Party that such Buyer
Indemnified Party has received an amount in cash to settle
such claim prior to receipt by the Escrow Agent of the items
set forth below, within three days following receipt by the
Escrow Agent of:
(a) a judgment of any court determining the validity of a
disputed claim by such Buyer Indemnified Party, and
certification by Buyer that no appeal is pending from such
judgment or that the time to appeal therefrom has elapsed;
(b) an award of any arbitrator or arbitration panel
determining the validity of a disputed claim by such Buyer
Indemnified Party, and certification by Buyer that there is
not pending any motion to set aside such award or that the
time within which to move to set such award aside has
elapsed;
(c) a written termination of any Company Objection in
connection with any Company Indemnity Claim or any
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Stockholder Objection in connection with any Stockholder
Indemnity Claim signed by all of the parties thereto or
their attorneys; or
(d) a written acknowledgement by the Stockholder Agent with
respect to any Company Indemnity Claim or such Stockholder
with respect to any Stockholder Indemnity Claim that the
validity of any claim by such Buyer Indemnified Party is no
longer disputed.
(e) The Escrow Agent shall disburse to each Stockholder (on a Pro Rata
Percentage basis) any part or all of the Retained Amount owned by such
Stockholder that has been retained by the Escrow Agent in connection
with any Company Indemnity Claim made by any Buyer Indemnified Party
and, to each Stockholder, any part or all of the Retained Amount owned
by each such Stockholder that has been retained by the Escrow Agent in
connection with any Stockholder Indemnity Claim:
(i) at any time upon receipt by the Escrow Agent of a written
instruction executed by such Buyer Indemnified Party and the
Stockholder Agent in connection with any Company Indemnity
Claim or such Stockholder in connection with any Stockholder
Indemnity Claim setting forth the amount of the Retained
Amount to be so disbursed; or
(ii) within three days following receipt by the Escrow Agent of:
(a) a judgment of any court determining that such Buyer
Indemnified Party is not entitled to any or all of the
disputed claim by such Buyer Indemnified Party, and
certification by the Stockholder Agent in connection with
any Company Indemnity Claim or such Stockholder in
connection with any Stockholder Indemnity Claim that no
appeal is pending from such judgment or that the time to
appeal therefrom has elapsed;
(b) an award of any arbitrator or arbitration panel
determining that such Buyer Indemnified Party is not
entitled to any or all of the disputed claim by such Buyer
Indemnified Party, and certification by the Stockholder
Agent in connection with any Company Indemnity Claim or such
Stockholder in connection with any Stockholder Indemnity
Claim that there is not pending any motion to set aside such
award or that the time within which to move to set such
award aside has elapsed; or
(c) a written withdrawal by such Buyer Indemnified Party of
any Company Indemnity Claim or Stockholder Indemnity Claim
by such Buyer Indemnified Party.
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(f) Upon receipt by the Escrow Agent of written instructions from
Buyer stating that any Stockholder has paid its Pro Rata Percentage
obligation of any Company Indemnity Claim in immediately available
funds, the Escrow Agent shall disburse Buyer Common Stock to such
Stockholder from such Stockholder's Escrow Assets in the amount of the
Company Indemnity Claim paid by such Stockholder as set forth in
Buyer's written instructions. Upon receipt by the Escrow Agent of
written instructions from Buyer stating that any Stockholder has paid
any Buyer Indemnified Party the amount of any Stockholder Indemnity
Claim in immediately available funds, the Escrow Agent shall disburse
to such Stockholder Buyer Common Stock from the Escrow Assets owned by
such Stockholder in the amount of such claim.
(g) If at the time of any disbursement pursuant to this Section 5, the
Escrow Assets owned by the Stockholder(s) are comprised of both cash
and Buyer Common Stock, Buyer shall instruct the Escrow Agent to make
such disbursement from either the cash, Buyer Common Stock, or any
combination of cash and Buyer Common Stock.
6. Pro Rata Percentage Disbursements. Any disbursements from the Escrow
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Assets (i) to the Stockholders pursuant to Section 5 and (ii) to Buyer (A)
pursuant to Section 4 and (B) to satisfy any Company Indemnity Claim, shall
be made from the Escrow Assets owned by each Stockholder on a pro rata
basis based on each Stockholder's percentage ownership of the Company
immediately prior to the Effective Time (the "Pro Rata Percentage"), as set
forth below:
Xxxxxxx X. Xxxxxx 41.0003087373%
Xxxxxxx X. Xxxxxx, trustee 20.5001543686%
Xxxxxx X. Xxxxxx, trustee 20.5001543686%
Xxxxxxx X. Xxxxx 3.9993350274%
Xxxxxx Xxxxxxx 3.9993350274%
Shamrock Investment Co. 7.9333602489%
Xxxxxx X. Xxxxxx 0.5046666825%
Xxxxxxx Xxxxxx 0.4939796233%
Xxxxxxx X. Xxxxx 0.0000000000%
X.X. Xxxxx, Xx. 0.0000000000%
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7. Valuation of Escrow Common Stock. For purposes of disbursing the Escrow
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Assets to any Stockholder or to settle any reduction of Merger
Consideration, Company Indemnity Claim or any Stockholder Indemnity Claim
by any Buyer Indemnified Party, the value of the shares of Buyer Common
Stock which constitute the Escrow Assets hereunder shall be $2.00 per
share, as proportionately adjusted from time to time to give effect to any
stock dividends, stock splits, reverse stock splits, reclassifications or
events of a similar nature affecting the shares of Buyer Common Stock after
the Effective Time. Buyer shall deliver written notification to the Escrow
Agent of any such adjustments to Buyer Common Stock. The number of shares
of Buyer Common Stock disbursed to any Stockholder or to settle any
reduction of the Merger Consideration, Company Indemnity Claim or any
Stockholder Indemnity Claim by such Buyer Indemnified Party shall be
rounded up to the next whole share, if necessary.
8. Voting Rights and Dividends
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(a) The Stockholders shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Escrow Assets or any
part thereof for any purpose not inconsistent with the terms of this
Agreement, the Merger Agreement and the Shareholders Agreement.
(b) Any and all distributions of stock or any securities of Buyer
Common Stock issued in respect thereof (including, without limitation,
any shares issued pursuant to any stock dividend, stock split, reverse
stock split, combination or reclassification thereof) shall be the
property of the Stockholders and shall be deposited with the Escrow
Agent and shall be treated as Escrow Assets pursuant to the terms of
this Agreement. Cash dividends or other property distributed in
respect of Buyer Common Stock and interest paid in respect of cash
held in the Escrow Assets shall be delivered to the Stockholders and
shall not be deposited with or retained by the Escrow Agent.
9. Investment of Escrow Assets. The Escrow Agent agrees to invest and
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reinvest any cash deposited with the Escrow Agent at the written direction
of the Stockholder Agent and risk of the Stockholders during the term of
this Agreement. The Escrow Agent shall invest and reinvest any cash
deposited with the Escrow Agent in X.X. Xxxxxx Institutional Service Prime
Money Market Fund or any money market fund rated in the highest rating
category by Standard and Poor's Ratings Services or Xxxxx'x Investor
Service. The parties acknowledge that the Escrow Agent shall not be
responsible for any diminution in value of the cash deposited with the
Escrow Agent due to losses resulting from investments.
10. Termination.
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(a) Three Year Anniversary. After all Company Indemnity Claims and
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Stockholder Indemnity Claims by any of the Buyer Indemnified Parties
made within three years of the Closing Date of the transactions
contemplated by the Merger Agreement have been settled or resolved and
the Escrow Agent has disbursed any or all of the Retained Amount to
such Buyer Indemnified Parties,
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the Escrow Agent shall disburse to each Stockholder the remaining
Escrow Assets owned by each such Stockholder and the escrow shall
terminate; provided, however, that if the Escrow Assets are depleted
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at any earlier time, then the escrow shall terminate at such earlier
time.
(b) Initial Public Offering or Sale of Buyer. Notwithstanding the
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foregoing, following the closing of an initial public offering of
Buyer's capital stock or a sale of 100% of the capital stock of Buyer
or substantially all of the assets of Buyer, the escrow shall
terminate after (i) all Company Indemnity Claims and Stockholder
Indemnity Claims by any of the Buyer Indemnified Parties made prior to
the closing of any such public offering or sale have been settled or
resolved, (ii) the Escrow Agent has disbursed any or all of the
Retained Amount to such Buyer Indemnified Parties and (iii) the Escrow
Agent has disbursed to each Stockholder the remaining Escrow Assets
owned by each such Stockholder; provided, however, that if the Escrow
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Assets are depleted at any earlier time, then the escrow shall
terminate at such earlier time.
11. Recovery of Attorneys' Fees and Court Costs. In the event of any Action
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between any Buyer Indemnified Party and any of the Stockholders arising out
of the subject matter of this Agreement, the prevailing party in such
Action shall be entitled to recover its reasonable attorneys' fees, and
other costs and expenses, including all amounts paid to or on behalf of the
Escrow Agent, incurred in connection with such Action. If such Buyer
Indemnified Party is entitled to reimbursement of such fees, costs and
expenses, it may recover them from the Escrow Assets, but its rights and
remedies shall not be limited to the Escrow Assets. To recover such amount
from the Escrow Assets, such Buyer Indemnified Party shall deliver to the
Escrow Agent a copy of the adjudication resulting from such Action that
sets forth the amount of fees, costs and expenses awarded to it, and the
Escrow Agent shall be authorized to disburse to such Buyer Indemnified
Party the total amount thereof in reliance on such adjudication from the
Escrow Assets owned by the Stockholder(s) named on such adjudication.
12. Limitations on Liability of Escrow Agent.
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(a) The Escrow Agent may act upon any written notice, certificate,
instrument, request, waiver, consent, paper, or other document that
the Escrow Agent in good faith reasonably believes to be genuine and
to have been made, sent, signed, prescribed, or presented by the
proper person or persons. The Escrow Agent shall not be liable for any
action taken or omitted by it in connection with the performance of
its duties and obligations hereunder, except for its own gross
negligence or willful misconduct. The Escrow Agent shall be under no
obligation to institute or defend any action, suit or legal proceeding
in connection with this escrow or this Agreement unless it is
indemnified to its satisfaction by the party or parties who desire
that it undertake such action.
(b) The Escrow Agent shall be under no obligation or liability for
failure to inform any Buyer Indemnified Party or any of the
Stockholders regarding any transaction or facts within the Escrow
Agent's knowledge, even though the same
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may concern the matters described herein, provided they do not prevent
or interfere with the Escrow Agent's compliance with this Agreement,
nor shall the Escrow Agent be liable for the sufficiency, correctness
or genuineness as to form, manner of execution or validity of any
instrument deposited, nor as to identity, authority, or rights of any
person executing the same, except as above provided.
(c) Should the Escrow Agent during or after the term of the escrow
receive or become aware of any conflicting demands or claims with
respect to the Escrow Assets or the rights of any of the parties
hereto, or any money or property deposited herein or affected hereby,
the Escrow Agent shall have the right to discontinue any or all
further acts on its part until such conflict is resolved to its and
the parties' satisfaction, and the Escrow Agent shall have the further
right to commence or defend any action or proceeding for the
determination of such conflict. In the event the Escrow Agent should
file suit in interpleader, it shall be fully released and discharged
from all further obligations under this Agreement.
(d) The Escrow Agent may consult with legal counsel satisfactory to it
in connection with any dispute, the construction of any provision of
this Agreement or the duties and obligations of the Escrow Agent under
this Agreement and shall be fully protected in taking or omitting to
take any other action in reliance on the advice of such counsel.
(e) Buyer and the Stockholders agree jointly and severally, and as to
each of the Stockholders, severally and not jointly, to indemnify the
Escrow Agent and hold it harmless from and against any loss,
liability, expenses (including, without limitation, reasonable
attorneys' fees and expenses), claim or demand arising out of or in
connection with the performance of its obligations in accordance with
the provisions of this Escrow Agreement, except for the gross
negligence or willful misconduct of the Escrow Agent. The costs and
expenses of enforcing this right of indemnification shall be paid by
Buyer and the Stockholders, jointly and severally, and as to each of
the Stockholders, severally and not jointly. These indemnities shall
survive the resignation of the Escrow Agent or the termination of this
Escrow Agreement.
(f) The Escrow Agent shall have no duties except those specifically
set forth in this Agreement and shall not be subject to, nor have any
liability or responsibility under, any other agreement or document the
parties hereto may be responsible for, even if same is referenced
herein.
13. Release of Escrow Agent. The retention and distribution of the Escrow
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Assets in accordance with the terms and provisions of this Agreement shall
fully and completely release the Escrow Agent from any obligations or
liabilities assumed under this Agreement with respect to the Escrow Assets.
14. Compensation of Escrow Agent. The Escrow Agent shall be entitled to its
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fees as set forth in Schedule II, and reimbursement of fees, costs and
expenses, including reasonable attorneys' fees, suffered or incurred by the
Escrow Agent in connection with
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the performance of its duties and obligations hereunder, including, but not
limited to, any suit in interpleader brought by the Escrow Agent. The
compensation, fees, costs and expenses of the Escrow Agent shall be paid by
Buyer (except as may otherwise be determined in any Action).
15. Resignation of Escrow Agent; Successor Escrow Agent.
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(a) The Escrow Agent may resign at any time upon giving at least
thirty days written notice to Buyer and the Stockholder Agent;
provided, however, that no such resignation will become effective
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until the appointment of a successor Escrow Agent which will be
accomplished as follows: Buyer shall appoint a successor Escrow Agent
within thirty days after receiving such notice, which appointment will
be subject to the approval of the Stockholder Agent. If Buyer and the
Stockholder Agent fail to agree upon a successor Escrow Agent within
such time, the Escrow Agent will have the right to appoint a successor
Escrow Agent. The successor Escrow Agent will execute and deliver an
instrument accepting such appointment and it will, without further
acts, be vested with all the estates, properties, rights, powers and
duties of the predecessor Escrow Agent as if originally named as the
Escrow Agent. Thereafter, the predecessor Escrow Agent will be
discharged from any further duties under this Agreement.
(b) Any corporation or association into which the Escrow Agent may be
converted or merged, or with which it may be consolidated, or to which
it may sell or transfer its corporate trust business and assets as a
whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or
transfer to which the Escrow Agent is a party shall be and become the
successor Escrow Agent under this Escrow Agreement, vested with title
to the Escrow Assets and having all the powers, discretions, rights,
duties, immunities and privileges as its predecessor, without the
execution or filing of any instrument or any further act, deed or
conveyance.
16. Stockholder Agent.
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(a) Xxxxxxx X. Xxxxxx is hereby appointed by the Stockholders to act
as the Stockholders' agent (the "Stockholder Agent") with respect to
the escrow provisions set forth in this Agreement. The Stockholder
Agent will be constituted and appointed as agent and attorney-in-fact
for each Stockholder to give and receive notices and communications,
to authorize delivery to any Buyer Indemnified Party of Buyer Common
Stock or cash from the Escrow Assets in satisfaction of Company
Indemnity Claims or Stockholder Indemnity Claims by such Buyer
Indemnified Party, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and comply with
orders of courts and awards of arbitrators with respect to such
Company Indemnity Claims or Stockholder Indemnity Claims, to authorize
delivery to any Buyer Indemnified Party of Buyer Common Stock or cash
from the Escrow Assets in satisfaction of any reduction in the Merger
Consideration, and to take all actions necessary or appropriate in the
judgment of the Stockholder Agent for the accomplishment of
11
the foregoing. Notices or communications to or from the Stockholder
Agent will constitute notice to or from each of the Stockholders. A
decision, act, consent or instruction of the Stockholder Agent will
constitute a decision of all the Stockholders, and will be final,
binding and conclusive upon each of the Stockholders, and the Escrow
Agent and any Buyer Indemnified Party may rely upon any decision, act,
consent or instruction of the Stockholder Agent as being the decision,
act, consent or instruction of each and all of the Stockholders.
(b) Xxxxxxx X. Xxxxxx may, in his sole discretion, resign as the
Stockholder Agent, provided that Xxxxxxx X. Xxxxxx shall give Buyer 20
days' prior written notice of his inability or unwillingness to serve
as the Stockholder Agent hereunder. If Xxxxxxx X. Xxxxxx is unable to
or unwilling to act as the Stockholder Agent, a majority in interest
of the Stockholders shall be entitled to appoint a substitute agent(s)
for such purpose. Xxxxxxx X. Xxxxxx shall have no liability whatsoever
to any of the Stockholders, Merger Sub, any Buyer Indemnified Party or
the Escrow Agent in acting as the Stockholder Agent except for actions
taken in manifest bad faith. Any Buyer Indemnified Party and the
Escrow Agent shall be entitled to rely on the authority of the
Stockholder Agent for all purposes provided for herein, and any Buyer
Indemnified Party and the Escrow Agent shall have no liability to the
Stockholders for the failure of the Stockholder Agent to perform any
action or satisfy any obligation provided for herein. The Escrow Agent
and any Buyer Indemnified Party are hereby relieved from any liability
to any Person for acts done by them in accordance with any decision,
act, consent or instruction of the Stockholder Agent.
(c) Each Stockholder agrees to pay all costs and expenses, including
those of any legal counsel or other professional retained by the
Stockholder Agent, in connection with the acceptance or administration
of the Stockholder Agent's duties hereunder.
17. Parties in Interest. This Agreement shall be binding upon and inure to
-------------------
the benefit of each party, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever by, under or by reason of this Agreement. Nothing
in this Agreement is intended to relieve or discharge the obligation of any
third person to, or to confer any right of subrogation or action over
against, any party to this Agreement.
18. Notices. Any notice or other communication hereunder must be given in
-------
writing and either (a) delivered in person, (b) transmitted by telefax or
other telecopy mechanism provided that any notice so given is also mailed
as provided in clause (c) or (c) mailed by certified or registered mail,
postage prepaid, receipt requested, to the addresses set forth on the
signature pages attached hereto or to such other address or to such other
person as either party shall have last designated by such notice to the
other party. Each such notice or other communication shall be effective
when actually received. The names, titles and specimen signatures of each
of the persons who are authorized to execute and deliver written notices
and directions to the Escrow Agent pursuant to this Agreement are attached
hereto as Schedule III.
12
19. Amendments; Waivers. This Agreement may be amended only by an agreement
-------------------
in writing of all parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement shall be effective unless in
writing and signed by the party to be bound, and then only to the specific
purpose, extent and instance so provided.
20. Counterparts. This Agreement and any other agreement (or document)
------------
delivered pursuant hereto may be executed in one or more counterparts and
by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement and shall become effective when
one or more counterparts of this Agreement have been signed by each party
and delivered to the other parties. Facsimile signatures shall constitute
original signatures for all purposes of this Agreement.
21. Assignment; Successors and Assigns. Neither this Agreement nor any
----------------------------------
rights or obligations under it are assignable without the prior written
consent of all parties. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the successors and permitted assigns of
the respective parties.
22. Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of California without regard to any laws or regulations
relating to choice of laws (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any other
jurisdiction other than the State of California.
23. Integration. This Agreement, and the agreements referred to herein,
-----------
constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement and supersede all prior
agreements and understandings with respect thereto.
24. Severability. If any provision of this Agreement is held invalid by any
------------
court, arbitrator, governmental agency or regulatory body, the other
provisions shall remain in full force and effect. To the extent permitted
by applicable law, the parties hereby waive any provision of law that
renders any provision hereof unenforceable in any respect.
25. Headings. The descriptive headings of the Sections of this Agreement
--------
are for convenience only and do not constitute a part of this Agreement.
[Remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on the day and year first above written.
RED XXXXX INTERNATIONAL, INC.
a Nevada corporation
By:/s/ Xxxxx X. XxXxxxxxx
-----------------------------------
Xxxxx X. XxXxxxxxx
Chief Financial Officer
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: 000-000-0000
RED XXXXX HOLDING CO.,
a Nevada corporation
By:/s/ Xxxxx X. XxXxxxxxx
-----------------------------------
Xxxxx X. XxXxxxxxx
Chief Financial Officer
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: 000-000-0000
THE STOCKHOLDERS
--------------------------------------
Xxxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-1
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on the day and year first above written.
RED XXXXX INTERNATIONAL, INC.
a Nevada corporation
By:
-----------------------------------
Xxxxx X. XxXxxxxxx
Chief Financial Officer
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: 000-000-0000
RED XXXXX HOLDING CO.,
a Nevada corporation
By:
-----------------------------------
Xxxxx X. XxXxxxxxx
Chief Financial Officer
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: 000-000-0000
THE STOCKHOLDERS
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-1
/s/ Xxxxxxx Xxxxxx
--------------------------------------------------
Xxxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxxx X. Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxx Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-2
--------------------------------------------------
Xxxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxxx X. Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxx Xxxxxx
--------------------------------------------------
Xxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxx Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-2
--------------------------------------------------
Xxxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxxx X. Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxx Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-2
--------------------------------------------------
Xxxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxxx X. Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxx Xxxxxx, individually and as the Trustee of
the Xxxxxx Xxxxxx Intervivos Trust
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxx Xxxxxxx
--------------------------------------------------
Xxxxxx Xxxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-2
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------
Title: C.O.O.
------------------------------
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-3
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-3
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-3
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
------------------------------------
Xxxxxxx Xxxxxx
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
S-3
/s/ X.X. Xxxxx, Xx.
----------------------------------------
X.X. Xxxxx, Xx.
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
XXXXXX TRUST COMPANY
OF CALIFORNIA, as Escrow Agent
By:
------------------------------------
Xxxxxx Xxxxxxxxx
Xxxxxx: Vice President
Address: 000 Xxxxx Xxxxxxxx Xxxxxx #0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Escrow Division
Facsimile No.: (000) 000-0000
S-4
----------------------------------------
X.X. Xxxxx, Xx.
Address: 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
c/o Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
XXXXXX TRUST COMPANY
OF CALIFORNIA, as Escrow Agent
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxx
Xxxxxx: Vice President
Address: 000 Xxxxx Xxxxxxxx Xxxxxx #0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Escrow Division
Facsimile No.: (000) 000-0000
S-4
