EXHIBIT 99.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement"), dated as of the 19 day of June
2007 by and among Xxxxxxx Xxxxxx ("Xx. Xxxxxx"), Rye 68, LLC a Delaware limited
liability company ("Rye 68") and Xxxx Xxxxxxxxx ("Escrow Agent"). Capitalized
terms used but undefined herein shall have the meanings set forth in the Note
and Pledge (as defined herein).
WHEREAS, Xx. Xxxxxx and Rye 68 are parties to that certain Stock Purchase
Agreement dated on or about the date hereof (the "Stock Purchase Agreement"), a
copy of which is attached hereto, providing for the sale by Xx. Xxxxxx to Rye 68
of 500,000 shares of Class A Common Stock of Numerex Corp.
WHEREAS, pursuant to the Stock Purchase Agreement, Rye 68 is required to
deposit 250,000 shares of Numerex Corp. Class A Common Stock (together with any
Additional Shares, the "Numerex Stock") as security for payment of the balance
of the purchase price for the Purchased Shares (as defined in the Stock Purchase
Agreement);
WHEREAS, the Numerex Stock is to be delivered to the Escrow Agent to be
held and released by the Escrow Agent in accordance with the terms and
conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement.
NOW THEREFORE, the parties agree as follows:
ARTICLE I: DELIVERIES TO THE ESCROW AGENT
1.1 Delivery of Numerex Stock to Escrow Agent. On the date hereof, Rye 68 shall
deliver to the Escrow Agent for Xx. Xxxxxx certificates representing the Numerex
Stock together with stock powers or other instruments of transfer with
appropriate signature guarantees relating thereto, executed in blank. In
addition, after the date hereof, Rye 68 shall deliver to the Escrow Agent for
Xx. Xxxxxx certificates representing any Additional Shares together with stock
powers or other instruments of transfer with appropriate signature guarantees
relating thereto, executed in blank.
1.2 Intention to Create Escrow Over Numerex Stock. Xx. Xxxxxx and Rye 68 intend
that the Numerex Stock be held in escrow by the Escrow Agent for Xx. Xxxxxx
pursuant to this Agreement as set forth herein.
1.3 Escrow Agent to Deliver Numerex Stock. The Escrow Agent shall hold and
release the Numerex Stock only in accordance with the terms and conditions of
this Agreement.
1.4 Voting Rights and Distributions. The Numerex Stock held by the Escrow Agent
shall remain registered in the name of Rye 68 and Rye 68 shall be entitled to
vote the Numerex Stock. As long as any shares of Numerex Stock continue to be
held by the Escrow Agent pursuant to this Agreement, Rye 68 shall deposit with
the Escrow Agent, to be held pursuant to the terms hereof, any additional shares
that Rye 68 may be entitled to receive in respect of such escrowed Numerex Stock
by way of conversion, stock dividend, stock split, reclassification,
recapitalization or corporate reorganization. The term "Numerex Stock," as used
in this Agreement, shall include any additional securities delivered to the
Escrow Agent pursuant to the preceding sentence of this Section 1.4.
1.5 Stock Pledge. The parties acknowledge and agree that the Numerex Stock held
by the Escrow Agent represents shares pledged pursuant to a Promissory Note and
Stock Pledge Agreement executed by Rye 68 in favor of Xx. Xxxxxx of even date
herewith (the "Note and Pledge").
ARTICLE II: RELEASE OF NUMEREX STOCK
2.1 Release of Escrow. The Escrow Agent shall release the Numerex Stock as
follows:
(a) Upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by Xx. Xxxxxx and Rye 68, Escrow Agent shall
deliver the Numerex Stock in accordance with the Joint Instructions.
Upon receipt by the Escrow Agent of written instructor from Rye 68
to release Numerex Stock to Rye 68 whereby Rye 68 confirms to Escrow Agent
and Xx. Xxxxxx that (x) the released Numerex Stock will be sold pursuant
to Rule 144 and/or applicable registration requirements and (y) that the
proceeds of such sale will be applied to prepay or to pay the principal of
and accrued but unpaid interest on the Note and Pledge in part or in
whole, as applicable.
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(b) Upon receipt by the Escrow Agent of written instruction from Xx.
Xxxxxx to the effect that Rye 68 is in default of its payment obligations
under the Note and Pledge, Escrow Agent will release the Numerex Stock to
Xx. Xxxxxx.
(c) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court or arbitable body of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Numerex
Stock in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court
Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order has
competent jurisdiction and that the Court Order is final and
non-appealable.
2.2 Acknowledgement of Xx. Xxxxxx and Rye 68. Xx. Xxxxxx and Rye 68 acknowledge
that the only terms and conditions upon which the Numerex Stock is to be
released are set forth in Article II of this Agreement. Xx. Xxxxxx and Rye 68
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Numerex Stock, and each shall take all proper
steps in connection with any such release, including delivery of any necessary
stock powers. Any dispute with respect to the release of the Numerex Stock shall
be resolved pursuant to Section 3.2 or by agreement among Xx. Xxxxxx and Rye 68.
ARTICLE III: CONCERNING THE ESCROW AGENT
3.1 Duties and Responsibilities of the Escrow Agent. The Escrow Agent's duties
and responsibilities shall be subject to the following terms and conditions:
(a) Xx. Xxxxxx and Rye 68 acknowledge and agree that the Escrow
Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either Xx. Xxxxxx and Rye 68 is entitled
to receipt of the Numerex Stock pursuant to any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties
as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by
the Escrow Agent in good faith to be genuine and to have been signed or
presented by the proper person or party, without being required to
determine the authenticity or correctness of any fact stated therein or
the propriety or validity or the service thereof; (iv) may assume that any
person purporting to give notice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized
to do so; (v) shall not be responsible for the identity, authority or
rights of any person, firm or corporation executing or delivering or
purporting to execute or deliver this Agreement or any document deposited
hereunder or any endorsement thereon or assignment thereof; (vi) shall not
be under any duty to give the property held by Escrow Agent hereunder any
greater degree of care than Escrow Agent gives its own similar property;
and (vii) may consult counsel satisfactory to Escrow Agent, the opinion of
such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder
in good faith and in accordance with the opinion of such counsel.
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(b) Xx. Xxxxxx and Rye 68 acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and that the Escrow Agent
shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. Xx. Xxxxxx and Rye 68,
jointly but not severally, agree to indemnify and hold harmless the Escrow
Agent and any of Escrow Agent's partners, employees, agents and
representatives for any action taken or omitted to be taken by Escrow
Agent or any of them hereunder, including the fees of outside counsel and
other costs and expenses of defending itself against any claim or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as
Escrow Agent under this Agreement. The Escrow Agent shall owe a duty only
to Xx. Xxxxxx and Rye 68 under this Agreement and to no other person.
(c) Xx. Xxxxxx and Rye 68 agree to reimburse the Escrow Agent for
its reasonable out-of-pocket expenses incurred in connection with the
performance of its duties and responsibilities hereunder per annum not to
exceed $1,000.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving thirty (30) days prior written notice of resignation
to Xx. Xxxxxx and Rye 68. Prior to the effective date of the resignation
as specified in such notice, Xx. Xxxxxx and Rye 68 will issue to the
Escrow Agent a Joint Instruction authorizing delivery of the Numerex Stock
to a substitute Escrow Agent selected by Xx. Xxxxxx and Rye 68. If no
successor Escrow Agent is named by Xx. Xxxxxx and Rye 68, the Escrow Agent
may apply to a court of competent jurisdiction in the State of New York
for appointment of a successor Escrow Agent, and to deposit the Numerex
Stock with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any interest in
the Numerex Stock, but is serving only as escrow agent, having only
possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordance with advice
of counsel (which counsel may be of the Escrow Agent's own choosing), and
shall not be liable for any mistake of fact or error of judgment or for
any acts or omissions of any kind except for its own willful misconduct or
gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The provisions of this Section 3.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
3.2 Dispute Resolution: Judgments. Resolution of disputes arising under this
Agreement shall be subject to the following terms and conditions:
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(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Numerex Stock, or if
the Escrow Agent shall in good faith be uncertain as to its duties or
rights hereunder, the Escrow Agent shall be authorized, without liability
to anyone, to (i) refrain from taking any action other than to continue to
hold the Numerex Stock pending receipt of a Joint Instruction from Xx.
Xxxxxx and Rye 68, or (ii) deposit the Numerex Stock with any court of
competent jurisdiction in the State of New York, in which event the Escrow
Agent shall give written notice thereof to Xx. Xxxxxx and Rye 68and shall
thereupon be relieved and discharged from all further obligations pursuant
to this Agreement. The Escrow Agent may, but shall be under no duty to,
institute or defend any legal proceedings which relate to the Numerex
Stock. The Escrow Agent shall have the right to retain counsel if it
becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult
counsel.
(b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with
a Court Order, the Escrow Agent shall not be liable to either Xx. Xxxxxx
or Rye 68 or to any other person, firm, corporation or entity by reason of
such compliance.
ARTICLE IV: MISCELLANEOUS
4.1 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the matters contained herein and pertaining
to the escrow of the Numerex Stock and supersedes all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written. There are no warranties, representations and other agreements made by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement.
4.2 Extended Meanings. In this Agreement words importing the singular number
include the plural and vice versa; words importing the masculine gender include
the feminine and neuter genders. The word "person" includes an individual, body
corporate, partnership, trustee or trust or unincorporated association,
executor, administrator or legal representative.
4.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party entitled to the benefit thereof waiving
compliance. Except as expressly stated herein, no delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
4.4 Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
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4.5 Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by any party against any
other party concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Each of the parties hereto and the individuals executing
this Agreement and other agreements on behalf of each party agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
4.6 Consent to Jurisdiction. Subject to Section 5.5 hereof, each of Xx. Xxxxxx,
Rye 68 and Escrow Agent hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
4.7 Construction. Each party acknowledges that its legal counsel participated in
the preparation of this Agreement and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Agreement to favor any party
against any other.
4.8 Termination. This escrow shall terminate upon the release of all Numerex
Stock or at any time upon the agreement in writing of Xx. Xxxxxx and Rye 68.
4.9 Notices. All notices, request, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given one (1) day after being sent by telecopy (with copy delivered by overnight
courier, regular or certified mail):
TO ESCROW AGENT: Xx. Xxxx Xxxxxxxxx
Numerex Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000
TO XX. XXXXXX: 00 Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx
XX0 0XX Xxxxxx Xxxxxxx
TEL: 000 00 0000 000000
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TO RYE 68: c/o Salisbury & Xxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
TEL: (000) 000-0000
FAX: (000) 000-0000
or to such other address as any of them shall give to the others by notice made
pursuant to this Section.
4.10 Assignment; Binding Agreement. Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
4.11 Invalidity. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal, or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
4.12 Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by different signatories hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile transmission.
4.13 Agreement. Each of the undersigned states that he has read the foregoing
Escrow Agreement and understands and agrees to it.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their fully authorized representatives effective as of the day and year first
above written.
/s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX
RYE 68, LLC
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Manager
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
Escrow Agent
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