EXHIBIT 4.12
PROMOTIONAL SHARES ESCROW AGREEMENT
THIS PROMOTIONAL SHARES ESCROW AGREEMENT (this "Agreement") made and
entered into this 19th day of November, 1996, by and between Applied
Intelligence Group, Inc., an Oklahoma corporation (the "Issuer"), whose
principal place of business is located at 00000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxx
00000-0000 and Xxxxxx X. Xxxxxx ("Barcum"), Xxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx
X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxx X. North ("North"), Xxxx Xxxxxxxxx
("Xxxxxxxxx") and Xxxxx X. Xxxxxx ("Xxxxxx") (Xxxxxx, Baker, Reinhardt, North,
Xxxxxxxxx and Xxxxxx are collectively referred to as the "Depositors") and
Liberty Bank and Trust Company of Oklahoma City, N.A. (the "Escrow Agent"),
whose principal place of business is located at 000 Xxxxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxx 00000 (all of whom are collectively referred to as "Signatories").
RECITALS
WHEREAS, the Issuer has filed an application with the Securities
Administrator of Oklahoma Department of Securities (the "Administrator") to
register 1,150,000 shares of Common Stock, $.001 par value, and 920,000
Redeemable Common Stock Purchase Warrants (the "Warrants") and the 920,000
shares of Common Stock underlying the Warrants (the "Equity Securities") for
sale to public investors some of whom may be residents of the State of Oklahoma;
WHEREAS, Barcum is the owner of 554,529 shares of Common Stock, Xxxxx is
the owner of 554,529 shares of Common Stock, Xxxxxxxxx is the owner of 316,081
shares of Common Stock, North is the owner of 74,861 shares of Common Stock,
Xxxxxxxxx is the holder of stock options exercisable for the purchase of 180,000
shares of Common Stock, and Xxxxxx is the holder of stock options exercisable
for the purchase of 180,000 shares of Common Stock (the "Promotional
Securities");
WHEREAS, as a condition to registering the Issuer's Equity Securities, the
Depositors, who are security holders of the Issuer and who, for the purposes of
this Agreement, are deemed to be Promoters of the Issuer, have agreed to deposit
the Promotional Securities with the Escrow Agent; and
WHEREAS, the Signatories have agreed to be bound by the terms of this
Agreement.
NOW, THEREFORE, the Signatories agree as follows:
1. DEPOSIT OF PROMOTIONAL SHARES. The Depositors' Promotional Securities have
been deposited into an escrow account (the "escrow") with the Escrow Agent, and
the Escrow Agent hereby acknowledges the receipt thereof.
2. EXERCISE OR CONVERSION OF PROMOTIONAL SHARES. To the extent the Promotional
Shares have or represent exercise rights or conversion rights, the Escrow Agent
shall, upon receipt of the Issuer's written request, provide the documents that
evidence and/or which are necessary to cause exercise of the rights or
conversion rights. The shares of Common Stock or other securities of the Issuer
issued upon exercise or conversion of the Promotional Securities shall become
and remain in escrow subject to the terms of this Agreement.
3. TERM. The term of this Agreement and the escrow shall begin on the date
that the public securities offering relating thereto (the "public offering") is
declared effective by the Administrator and shall continue for a period of 36
months thereafter; provided, however, this Agreement shall not terminate until
the Escrow Agent shall have notify the Administrator of termination of this
Agreement in accordance with paragraph 5 of this Agreement. The Promotional
Securities shall be held by the Escrow Agent pursuant to this Agreement until
they are released in accordance with paragraphs 4 and 5 of this Agreement.
4. RELEASE OF PROMOTIONAL SECURITIES.
(a) In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities
(including by way of tender offer), or any other transaction or proceeding
with a person who is not a Promoter, which results in the distribution of
the Issuer's assets or securities ("Distribution"), while this Agreement
remains in effect, the Depositors agree that:
(i) All holders of the Issuer's Equity Securities will initially
share on a pro rata, per share basis in the Distribution, in
proportion to the amount of cash or other consideration that they paid
per share for their Equity Securities (provided that the Administrator
has accepted the value of the other consideration), until the
shareholders who purchased the Issuer's Equity Securities pursuant to
the public offering (the "Public Shareholders") have received, or have
had irrevocably set aside for them, an amount that is equal to 100
percent of the public offering's price per share times the number of
shares of Equity Securities that they purchased pursuant to the public
offering and which they still hold at the time of the Distribution,
adjusted for stock splits, stock dividends, recapitalization and the
like; and
(ii) All holders of the Issuer's Equity Securities shall thereafter
participate on an equal, per share basis times the number of shares of
Equity Securities they hold at the time of the Distribution, adjusted
for stock splits, stock dividends, recapitalization and the like.
(b) The Distribution may proceed on lesser terms and conditions than the
terms and conditions in paragraph 4(a) of this Agreement if a majority
of the Equity Securities that are not held by Depositors, officers,
directors, or Promoters of the Issuer, or their associates or
affiliates vote, or consent by consent procedure, to approve the
lesser terms and conditions.
(c) In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities
(including by way of tender offer), or any other transaction or proceeding
with a person who is a Promoter, which results in a Distribution while this
Agreement remains in effect, the Depositors' Promotional Securities shall
remain in escrow subject to the terms of this Agreement.
(d) Upon expiration of the term of this Agreement and notification of the
Administrator of the expiration in accordance with and pursuant to
paragraph 3 of this Agreement, the Promotional Securities shall be released
to the Depositors and this Agreement shall terminate.
5. DOCUMENTATION REGARDING THE RELEASE OF PROMOTIONAL SECURITIES.
(a) The Administrator may in his or her discretion require such
documentation regarding the release of Promotional Securities.
(b) The Escrow Agent shall terminate this Agreement and/or release the
Promotional Securities from Escrow if its has forwarded the proper
documentation as required by paragraph 5(a) of this Agreement ("proper
documentation") reflecting compliance with the release provisions of
paragraph 4 of this Agreement, to the Administrator, and either it has
received the Administrator's consent to do so or the Administrator has not
disallowed the termination of this Agreement and/or release of the
Promotional Securities from escrow within 10 days after the Administrator's
receipt of the proper documentation, whichever occurs first.
6. RESTRICTIONS ON TRANSFER, SALE OR DISPOSAL OF PROMOTIONAL SECURITIES. While
this Agreement is in effect, no Promotional Securities, any interest therein or
any right or title thereto, may be sold, transferred, pledged, assigned,
hypothecated or otherwise disposed of ("transfer" or "transferred"), except
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as provided below, and the Escrow Agent shall not recognize any transfer that
violates the terms of this Agreement. The Promotional Securities may not be
transferred until the Administrator has received a written statement, signed by
the proposed transferee ("transferee"), which states that the transferee has
full knowledge of the terms of this Agreement, the transferee accepts the
Promotional Securities subject to the terms of this Agreement, and the
transferee realizes that the Promotional Securities shall remain subject to the
terms of the Agreement until they are released pursuant to paragraphs 4 and 5 of
this Agreement. Notwithstanding the foregoing, (a) Promotional Securities may be
transferred by will, the laws of decent and distribution, operation of law, or
by order of any court of competent jurisdiction and having proper venue and (b)
Promotional Securities of a deceased Depositor may be hypothecated to pay the
expenses of the deceased Depositor's estate. The hypothecated Promotional
Securities shall remain subject to the terms of this Agreement. Promotional
Securities may not be pledged to secure any other debt.
7. VOTING POWER. The Promotional Securities shall have the same voting rights
as similar, non-escrowed Equity Securities. If the Promotional Securities are
registered in the Escrow Agent's name, the Escrow Agent shall vote those
Promotional Securities in accordance with the Depositors' written instructions.
8. DIVIDENDS. Cash dividends and stock dividends, that are granted to the
Depositors, shall be promptly deposited with the Escrow Agent subject to the
terms of this Agreement. The Escrow Agent shall place the cash dividends in an
interest bearing account. The Escrow Agent shall treat the stock dividends,
cash dividends and the interest earned thereon as assets of the Issuer which are
available for distribution pursuant to paragraphs 4(a) and (b) of this
Agreement, or as assets of the Issuer available for distribution to the
Depositors, upon release of their Promotional Securities pursuant to paragraphs
4 and 5 of this Agreement, unless they are to be used as compensation to the
Escrow Agent, pursuant to paragraph 10 of this Agreement.
9. STOCK SPLITS AND ADDITIONAL SHARES. Equity Securities received by the
Depositors as a result of stock splits, recapitalization of the Issuer, or the
conversion of the Depositors' convertible securities while their Promotional
Securities are held in escrow, shall be promptly deposited with the Escrow Agent
as Promotional Securities subject to the terms of this Agreement. These
Promotional Securities shall be distributed to the Depositors when their
Promotional Securities are released from escrow pursuant to paragraphs 4 and 5
of this Agreement.
10. RELIANCE BY ESCROW AGENT. The Escrow Agent shall be protected if it acts in
good faith upon any statement, certificate, notice, request, consent, order or
other document which it believes to be genuine, conforms with the provisions of
this Agreement and is signed by the proper party. The Escrow Agent's sole
responsibility shall be to act in accordance with the terms expressly set forth
in this Agreement. The Escrow Agent shall be under no obligation to institute or
defend any action, suit or proceeding in connection with this Agreement unless
it receives reasonable indemnification and advancement of fees and costs. The
Escrow Agent may consult counsel with respect to any question arising under this
Agreement. The Escrow Agent shall not be liable for any action taken or omitted,
in good faith, upon the advice of counsel. In performing its duties hereunder,
the Escrow Agent shall not be liable to anyone for any damage, loss, expense or
liability other than for that which arises from the Escrow Agent's failure to
abide by the terms of this Agreement.
11. ESCROW AGENTS COMPENSATION. The Escrow Agent shall be entitled to receive
reasonable compensation from the Issuer for its services. If the Escrow Agent is
required to render additional services that are not expressly set forth therein,
or if its is made a party to or intervenes in any action, suit or proceeding
pertaining to this Agreement ("Additional Services"), it shall be entitled to
receive reasonable compensation from the Issuer and the Depositors. If
Additional Services are provided, the Escrow Agent may deduct reasonable
compensation from the cash dividends, interest and proceeds being held for
distribution pursuant to this Agreement.
12. ESCROW AGENTS INDEMNIFICATION. The Issuer and the Depositors agree to hold
the Escrow Agent harmless from, and indemnify the Escrow Agent for, any cost or
liability regarding any
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administrative proceeding, investigation, litigation, interpretation or
implementation relating to this Agreement, including release of Promotional
Securities, the Distribution, and the disbursement of dividends, interest or
proceeds, unless the cost or liability arises from the Escrow Agent's failure to
abide by the terms of this Agreement.
13. INDEPENDENCE OF THE ESCROW AGENT. The Issuer hereby represents that all of
its officers, directors and Promoters are listed on Exhibit A attached hereto
and made a part hereof. The Escrow Agent hereby represents that it is not
affiliated with the Issuer, the Depositors, or the Issuer's officers, directors
or Promoters who are named in Exhibit A. For purposes of this Agreement, the
Escrow Agent is not disqualified to act as Escrow Agent merely because the
Issuer, its officers, directors and Promoters are customers of the Escrow Agent.
14. SCOPE. This Agreement shall inure to the benefit of and be binding upon
the Depositors, their heirs and assignees, and upon the Issuer, Escrow Agent,
and their successors.
15. SUBSTITUTE ESCROW AGENT. The Escrow Agent may, upon not less than 60 days
prior written notice to the Issuer, Depositors, and the Administrator, resign as
the Escrow Agent. The Issuer and the Depositors shall, before the effective
date of the Escrow Agent's resignation, enter into a new identical Escrow
Agreement with a substitute Escrow Agent. The successor Escrow Agent must be
satisfactory to the Administrator. If the Issuer and the Depositors fail to
enter into a new Escrow Agreement and appoint a successor Escrow Agent within 60
days after the Escrow Agent has given notice of its resignation, the Escrow
Agent then serving under this Agreement shall retain the Promotional Securities
in escrow until a new, identical Escrow Agreement has been executed and a
successor Escrow Agent has been appointed. The Escrow Agent shall not be liable
for retaining the Promotional Securities in escrow.
16. TERMINATION. Except for the compensation and indemnification provisions of
paragraphs 11 and 12, above, which shall survive until they are satisfied, this
Agreement shall terminate in its entirety when all of the Promotional Securities
have been released, or the Issuer's Equity Securities and/or assets have been
distributed pursuant to paragraphs 4 and 5 of this Agreement.
17. MISCELLANEOUS PROVISIONS. Pursuant to the requirements of this Agreement,
the Signatories have entered into this Agreement, which may be executed and
written in multiple counterparts and each of which shall be considered an
original.
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IN WITNESS WHEREOF, the Signatories have executed this Agreement in the
capacities set for and effective as of the date first above written.
"Issuer" APPLIED INTELLIGENCE GROUP, INC.
By: /S/XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, President
Attest:
/S/ XXXXXX X. XXXXX
--------------------------
Xxxxxx X. Xxxxx, Secretary
"Depositors"
/S/ XXXXXX X. XXXXXX
---------------------------------
Xxxxxx X. Xxxxxx
/S/ XXXXXXX X. XXXXXXXXX
---------------------------------
Xxxxxxx X. Xxxxxxxxx
/S/ XXXXX X. NORTH
---------------------------------
Xxxxx X. North
/S/ XXXX XXXXXXXXX
---------------------------------
Xxxx Xxxxxxxxx
/S/ XXXXX X. XXXXXX
---------------------------------
Xxxxx X. Xxxxxx
"Escrow Agent" LIBERTY BANK AND TRUST COMPANY OF
OKLAHOMA CITY, N.A.
By: /S/XXXX XXXXX
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Name: Xxxx Xxxxx
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Title: Vice President
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