ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement"), made as of this ___ th day of
May, 1997, is by and between Tech Squared Inc., f/k/a Jaguar Group, Limited,
successor in interest through merger to MacUSA, Inc. ("Tech Squared"), ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), and First Trust National Association, Minneapolis,
Minnesota ("Escrow Agent").
WHEREAS, Tech Squared and ▇▇▇▇▇▇▇ have entered into that certain
Settlement Agreement ("Settlement Agreement") dated May 23, 1997, pursuant to
which Tech Squared has agreed to pay $205,000, plus interest, to ▇▇▇▇▇▇▇ in
settlement of disputed claims; and
WHEREAS, in accordance with the terms of paragraph 3 of the Settlement
Agreement, and as a condition precedent thereof, the parties have agreed to
enter into this Agreement, pursuant to which certificates for 60,000 shares of
capital stock in CAM Designs, Inc. is to be placed in escrow to secure the
payment obligations of Tech Squared under the Settlement Agreement; and
WHEREAS, the Escrow Agent is willing to act as escrow agent on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and in the Settlement Agreement, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby
appointed escrow agent to hold and dispose of the Escrow Shares (as hereinafter
defined) in accordance with the terms and conditions set forth in this
Agreement, and the Escrow Agent accepts such designation and agrees to hold and
dispose of the Escrow Shares in accordance with the terms and conditions set
forth in this Agreement.
DELIVERY OF THE ESCROW SHARES.
(a) Simultaneously with the execution of this Agreement, Tech
Squared has caused to be deposited with the Escrow Agent a certificate
representing 200,000 shares of capital stock in CAM Designs, Inc. The Escrow
Agent shall, within 20 business days of the date of this Agreement, cause the
Transfer Agent of CAM Designs, Inc. to issue certificates representing 60,000
shares and 140,000 shares, respectively, of capital stock in CAM Designs, Inc.,
in exchange for the certificate representing 200,000 shares of capital stock in
CAM Designs, Inc. The Escrow Agent shall promptly tender to Tech Squared the
certificate representing
140,000 shares of capital stock in CAM Designs, Inc., and retain the
certificate representing 60,000 shares of capital stock in CAM Designs, Inc.,
which shares shall constitute the Escrow Shares.
(b) Together with the certificate representing 200,000 shares of
capital stock in CAM Designs, Inc., Tech Squared has delivered to the Escrow
Agent three duly executed stock powers (endorsed in blank) with respect thereto,
with a Medallion signature guarantee.
(c) The Escrow Shares shall be held and used only for the
purposes of securing the payment obligations of Tech Squared as set forth in
paragraph 3 of the Settlement Agreement.
3. DISTRIBUTION AND LIQUIDATION OF ESCROW SHARES.
(a) Upon the request of ▇▇▇▇▇▇▇, following 10 days' prior
written notice to Tech Squared, and the presentation by ▇▇▇▇▇▇▇ of an order of
the Hennepin County District Court (the "Court") entering judgment against Tech
Squared pursuant to a confession of judgment executed pursuant to Paragraph 2 of
the Settlement Agreement and pursuant to paragraphs 3 and 4 of said confession
of judgment,the Escrow Agent shall sell on the open market a sufficient number
of the Escrow Shares to satisfy the judgment entered by the Court, and shall
promptly pay the amount of the judgment to ▇▇▇▇▇▇▇. The open market sales shall
be conducted in a prudent manner, and no more than 15,000 shares may be sold by
the Escrow Agent per week.
(b) Upon the request of Tech Squared, following 10 days' prior
written notice to ▇▇▇▇▇▇▇, the Escrow Agent shall promptly caused to be tendered
to Tech Squared such number of the Escrow Shares, endorsed to Tech Squared Inc.,
as requested by Tech Squared, which number shall not exceed the number of Excess
Escrow Shares in existence as of the date of Tech Squared's request. Excess
Escrow Shares shall be calculated by (1) dividing 2.5 into the total dollars,
including interest, payable to ▇▇▇▇▇▇▇ pursuant to paragraph 1 of the Settlement
Agreement that have not been paid as of the date of Tech Squared's request
pursuant to this subparagraph 3(b); (2) subtracting the resulting number from
the total number of Escrow Shares remaining in the escrow account as of the date
of Tech Squared's request; and (3) rounding the resulting number to the nearest
whole share.
(c) Should ▇▇▇▇▇▇▇ finally be adjudged, after exhaustion of any
appeals taken, by a court of competent jurisdiction to have breached the
Settlement Agreement, the Escrow Agent shall, within 10 business days after
written notice to ▇▇▇▇▇▇▇ and presentation of such judgment to the Escrow Agent,
cause all of the Escrow Shares held in escrow as of the date of such
adjudication to be endorsed to Tech Squared Inc. and tendered to Tech Squared.
(d) Except as otherwise specifically provided in this paragraph
3, Tech Squared shall have all indicia of ownership of the Escrow Shares while
they
are held in escrow, including, without limitation, the right to vote the
Escrow Shares and receive distributions thereon and the obligations to pay all
taxes, assessments and charges with respect thereto, but excluding the right to
sell any Escrow Shares.
(e) Any distributions, other than cash and taxable stock
dividends (which dividends shall be paid to Tech Squared), on or with respect to
the Escrow Shares and any other shares or securities into which such Escrow
Shares may be changed or for which they may be exchanged pursuant to corporate
action of CAM Designs, Inc. affecting holders of CAM Designs, Inc. capital stock
generally (a "Distribution") shall be delivered to and held by the Escrow Agent
in escrow. The 15,000 share weekly maximum on open market sales in subparagraph
(a) of this Paragraph 3 shall be adjusted to reflect and in direct proportion to
any Distribution occurring prior to the date of any sale pursuant to said
subparagraph (a). In addition, the divisor (2.5) in subparagraph 3(b), which
reflects 150,000 divided by the number of original Escrow Shares, shall be
adjusted to reflect and in direct proportion to any Distribution occurring prior
to the date of any request made by Tech Squared pursuant to subparagraph 3(b).
If any Distribution consists of cash, the Escrow Agent shall invest such cash in
the fund(s) identified in Exhibit A attached hereto.
(f) Any Escrow Shares and Distributions held by the Escrow Agent
after all payments set forth in Paragraph 1 of the Settlement Agreement have
been paid to ▇▇▇▇▇▇▇ by Tech Squared shall be endorsed to Tech Squared Inc. and
tendered to Tech Squared within 10 business days of notice of the final payment
made pursuant to Paragraph 1 of the Settlement Agreement. Tech Squared shall
concurrently provide the Escrow Agent and ▇▇▇▇▇▇▇ with notice of such final
payment. In any event, Tech Squared shall provide the Escrow Agent with such
notice no later than May 31, 1999, after which the obligations of the Escrow
Agent hereunder shall cease.
4. ESCROW AGENT; RIGHTS AND OBLIGATIONS.
(a) FEES AND EXPENSES. The Escrow Agent shall be paid fees for
its services hereunder determined pursuant to Exhibit B attached hereto, and
shall be reimbursed for all reasonable expenses, disbursements, and advances
incurred or made by the Escrow Agent in performance of its duties hereunder
including, without limitation, those set forth on Exhibit B. All such fees and
expenses shall be paid one-half by ▇▇▇▇▇▇▇ and one-half by Tech Squared.
(b) RESIGNATION. The Escrow Agent may resign and be discharged
from its duties hereunder at any time by giving notice of such resignation to
Tech Squared and ▇▇▇▇▇▇▇ specifying a date (not less than thirty (30) days after
the date of such notice) when such resignation shall take effect. Upon such
notice, a successor Escrow Agent shall be appointed with the mutual consent of
Tech Squared and ▇▇▇▇▇▇▇, with such successor escrow agent to become Escrow
Agent hereunder upon the resignation date specified in such notice. If Tech
Squared and ▇▇▇▇▇▇▇ are unable to agree upon a successor escrow agent within
thirty
(30) days after such notice, the Escrow Agent shall be entitled to
appoint its successor or to petition any court of competent jurisdiction to name
a successor. The Escrow Agent shall continue to serve until its successor
accepts the escrow and receives the Escrow Shares. Tech Squared and ▇▇▇▇▇▇▇
shall have the right at any time upon their mutual consent to substitute a new
escrow agent by giving notice thereof to the Escrow Agent then acting.
(c) LIMITATION ON DUTIES. The Escrow Agent undertakes to
perform only such duties as are expressly set forth herein and no other
obligations shall be read into this Agreement against the Escrow Agent.
(d) RELIANCE. The Escrow Agent may act in reliance upon any
writing or instrument or signature which it, in good faith, believes to be
genuine, may assume the validity and accuracy of any statement or assertion
contained in such writing or instrument and may assume that any person
purporting to give any writing, or notice, advice or instructions in connection
with the provisions hereof has been duly authorized to do so. The Escrow Agent
shall not be liable in any manner for the sufficiency or correctness as to form,
manner and execution, or validity of any instrument deposited in the Escrow Fund
(which shall be comprised of all Escrow Shares and Distributions held by the
Escrow Agent), nor as to the identity, authority or right of any person
executing the same, absent its own gross negligence or wilful misconduct or
malfeasance; and its duties hereunder shall be limited to the safekeeping of
such funds, moneys, certificates, instruments or other documents received by it
as such escrow holder, and for the investment and disposition of the same in
accordance with the terms of this Agreement.
(e) INDEMNIFICATION. The Escrow Agent acts hereunder as a
depository only and is not responsible for or liable in any manner whatsoever
for the sufficiency, correctness, genuineness or validity of any Escrow Shares
deposited with it. Tech Squared and ▇▇▇▇▇▇▇ hereby agree to indemnify and hold
harmless the Escrow Agent from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature, which the Escrow Agent may incur or with
which the Escrow Agent may be threatened by reason of its acting as Escrow Agent
under this Agreement and in connection therewith to indemnify the Escrow Agent
against any and all expenses, including reasonable attorneys' fees and the cost
of defending any action, suit or proceeding or resisting any claim.
Notwithstanding the foregoing, it is specifically understood and agreed that in
the event the Escrow Agent is found guilty of gross negligence or willful
misconduct or malfeasance in the exercise of its responsibilities hereunder, the
indemnification provisions of this Agreement shall not apply.
(f) INTERPLEADER. If any two parties shall be in disagreement
about the interpretation of this Agreement, or rights or obligations hereunder
or the propriety of any action contemplated by the Escrow Agent hereunder, the
Escrow Agent may file an action in interpleader to resolve said disagreement.
The Escrow
Agent shall be indemnified for all costs, including reasonable
attorney's fees, in connection with such interpleader action, and shall be fully
protected in suspending all or a part of its activities under this Agreement
until a final judgment in the interpleader action is received.
(g) COUNSEL. The Escrow Agent may consult with counsel of its
own choice, and shall have full and complete authorization and protection for
any action taken or suffered by it hereunder in good faith in accordance with
the opinion of such counsel. The Escrow Agent shall otherwise not be liable for
any mistakes of fact or error of judgment or for any acts or omissions of any
kind unless caused by its gross negligence or willful misconduct or malfeasance.
(h) BOOKS AND RECORDS. The Escrow Agent shall maintain books
and records regarding its administration of the Escrow Shares, and the deposit,
investment, collections and disbursements or transfer thereof, shall retain
copies of all written notices and directions sent or received by it in the
performance of its duties hereunder and shall afford each party reasonable
access during regular business hours, to review and make photocopies (at such
party's cost) of the same. The Escrow Agent shall provide each of the parties
with accounting statements on a quarterly basis, and shall be responsible for
all income tax reporting acquired in connection with the Escrow Shares.
5. MISCELLANEOUS.
(a) AMENDMENT AND WAIVER. This Agreement may not be amended or
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
(b) NOTICES. All notices, demands and other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered (by messenger, courier or other similar means), or, if mailed by first
class mail, return receipt requested, on the fifth day after the date of such
mailing, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Tech Squared, ▇▇▇▇▇▇▇ and/or the Escrow Agent will, unless another address is
specified in writing, be sent to the address indicated below:
Notices to Tech Squared: Tech Squared, Inc.
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
- with a copy to -
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to the Escrow Agent: First Trust National Association
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to ▇▇▇▇▇▇▇: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- with a copy to -
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Best & ▇▇▇▇▇▇▇▇
4000 First Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) ASSIGNMENT. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto without the prior written consent of the other party hereto.
(d) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
(e) COMPLETE AGREEMENT. This Agreement and the Settlement
Agreement (including the exhibits hereto and thereto) contain the complete
agreement between the parties and supersede any prior understandings, agreements
or representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
(g) GOVERNING LAW. The internal law, without regard to
conflicts of laws principles, of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
(h) JURISDICTION. All parties consent to the jurisdiction of
the courts of the State of Minnesota with respect to any controversy or claim
arising between the parties in connection with this Agreement.
(i) INTERPRETATION. The article and section headings contained
in this Agreement are for reference purposes only and shall not affect the
interpretation of this Agreement. All references to Article or Section numbers
refer to the Articles or Sections of this Agreement, unless otherwise indicated.
The parties hereto acknowledge and agree that this Agreement was drafted jointly
by the parties and its provisions shall be given their fair meaning.
(j) TAX REPORTING. For federal and state income tax purposes,
all interest earned on the Escrow Funds shall be considered the currently
reportable income of the party who receives the distribution with respect
thereto. The Escrow Agent annually shall file all information returns with the
Internal Revenue Service and other governmental authorities documenting such
interest income. The tax identification numbers of the parties are as follows:
Tech Squared: ▇▇-▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇: ###-##-####
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TECH SQUARED, INC.
-------------------
By ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its Chief Financial Officer
------------------- ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- FIRST TRUST NATIONAL ASSOCIATION
By
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Its
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