Exhibit 4.25
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this 12th
day of August, 1999, by and among POLLUTION RESEARCH AND CONTROL CORP., a
California corporation (the "Company"), 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, FIDELITY FUNDING, INC., a Texas corporation ("Fidelity"), 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and AMERICAN ESCROW COMPANY, a Texas
corporation, as escrow agent (the "Escrow Agent").
WHEREAS, the Company and Fidelity have entered into that certain
Compromise, Settlement and Release Agreement (the "Settlement Agreement") of
even date herewith, a copy of which is attached hereto and incorporated herein
by this reference, which provides, among other things, for the Company to issue
100,000 shares of common stock of the Company, no par value per share, to
Fidelity; which shares are referred to hereinafter and in the Settlement
Agreement as the "Settlement Consideration Shares"; and
WHEREAS, Paragraph 2 of the Settlement Agreement further provides for the
Settlement Consideration Shares to be sold; provided, however, that proceeds
from such sale shall be applied to the Company's obligation to pay to Fidelity
the aggregate sum of Four Hundred Fifty Thousand Dollars ($450,000.00), which
sum is referred to hereinafter and in the Settlement Agreement as the
"Settlement Payment", together with any accrued but unpaid interest thereon; and
WHEREAS, the parties desire to enter into this Agreement pursuant to which
the Settlement Consideration Shares shall be delivered in escrow and released
only in accordance with instructions received from the Company to a licensed
broker-dealer for purposes of the sale thereof (including short sale, on margin
or otherwise) in the over-the-counter stock market or to a purchaser, assignee,
transferee or pledgee thereof in a purchaser transaction in consideration for
cash, as provided in Section 4.2.B. below, within the time period set forth
herein and, otherwise, the Settlement Consideration Shares are to be returned to
the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, IT IS HEREBY AGREED as follows:
ARTICLE I
APPOINTMENT AND AGREEMENT OF ESCROW AGENT
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American Escrow Company is hereby appointed as, and hereby agrees to
perform the duties of, the Escrow Agent in accordance with the terms and
conditions of this Agreement. This Agreement shall be administered, and the
certificates representing the Settlement Consideration Shares shall be held, by
the Escrow Agent at its office located at 000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000.
ARTICLE II
DEPOSIT OF SETTLEMENT CONSIDERATION SHARES
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Fidelity hereby delivers to the Escrow Agent, and the Escrow Agent
hereby acknowledges receipt of, ten (10) original stock certificates in the name
of Fidelity, each evidencing 10,000 shares of common stock, no par value per
share, of the Company, duly executed, endorsed and/or authenticated for
transfer, to be held in escrow by the Escrow Agent pursuant to the terms and
conditions of this Agreement and the Settlement Agreement.
ARTICLE III
NATURE OF ESCROW ACCOUNT
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During the Escrow Period (as hereinafter defined), none of the Settlement
Consideration Shares shall become the property of the Company, Fidelity or any
other person, or be subject to the debts of the Company, Fidelity or any other
person, and except as expressly provided herein with respect to disbursement and
delivery of the Settlement Consideration Shares by the Escrow Agent, pursuant to
one or more written instructions provided herein, Escrow Agent shall make or
permit no disbursement from the Escrow Account. Neither Fidelity nor the Company
(nor Escrow Agent) shall have any voting or investment rights with respect to
the Settlement Consideration Shares during the Escrow Period.
ARTICLE IV
TERM OF ESCROW PERIOD; DISBURSEMENT OF SETTLEMENT
CONSIDERATION SHARES AND/OR PAYMENT
OF CASH FROM PRIVATE DISPOSITION
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4.1 Termination Date. The Escrow Period shall begin on the date of the
deposit of the Settlement Consideration Shares with the Escrow Agent and shall
terminate on the first to occur on the following dates:
A. The one hundred eightieth (180th) day following the date of
this Agreement or February 1, 2000, whichever comes first. The
termination date in the preceding sentence may be extended upon mutual
agreement of Fidelity and the Company, with a copy of such notice of
extension provided to the Escrow Agent.
B. The date on which the Escrow Agent receives written
instructions from the Company directing the disbursement and delivery
of the last of the Settlement Consideration Shares held by Escrow Agent
to a licensed broker-dealer for purposes of the sale thereof (including
short sale, on margin or otherwise) in the over-the-counter stock
market or to a purchaser, assignee, transferee or pledgee thereof in a
private transaction in consideration for cash.
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4.2 Disbursement and Delivery of Settlement Consideration Shares.
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A. In the event that the Escrow Period terminates pursuant to Section
4.1.A. hereinabove, the Escrow Agent, as promptly as possible, but in no event
later than thirty (30) days after such termination, shall disburse and deliver
the remaining Settlement Consideration Shares and any proceeds from the sale of
a portion of the Settlement Consideration Shares to Fidelity.
B. In the event that the Escrow Period terminates pursuant to Section
4.1.B. hereinabove, the Escrow Agent as promptly as possible, but in no event
later than thirty (30) days after such termination, shall disburse and deliver
the last of the Settlement Consideration Shares in accordance with the final
written instructions received from the Company, which shall specify the name and
address of the person to be the recipient of the Settlement Consideration
Shares. If said instructions are to disburse and deliver the Settlement
Consideration Shares to a broker-dealer, and in that event, the Company agrees
that the proceeds of the sale thereof in the event the over-the-counter stock
market shall be paid to Fidelity, and Fidelity agrees to pay the amount of sale
proceeds in excess of the Settlement Consideration Payment to the Company. If
said instructions are to disburse and deliver the last of the Settlement
Consideration Shares to a purchaser, assignee, transferee or pledgee thereof in
a private transaction in consideration for cash, then, and in that event, the
Escrow Agent shall pay the amount of cash received in consideration for said
sale, assignment, transfer or pledge (together with any proceeds from prior
disbursements, if any), as promptly as possible, but in no event later than
thirty (30) days thereafter, as follows:
(i) In the event that the amount of cash received is less than
or equal to the Settlement Consideration Payment, then, and in that
event, the Escrow Agent shall pay said cash sum to Fidelity.
(ii) In the event that the amount of cash received is in
excess of the Settlement Consideration Payment, then, and in that
event, the Escrow Agent shall pay said cash sum in the amount of the
Settlement Consideration Payment to Fidelity and the amount of cash in
excess thereof to the Company.
The parties contemplate that the Company may deliver written instructions
to disburse a portion of the Settlement Consideration Shares on more than one
(1) occasion during the Escrow Period. If the written instructions to disburse a
portion of the Settlement Consideration Shares will not result in the
disbursement of all of the remaining Settlement Consideration Shares, then all
proceeds from such disbursement shall be held by Escrow Agent until the
termination of the Escrow Period. Escrow Agent shall deposit any such cash
proceeds in an interest-bearing account, but Escrow Agent shall have no
investment liability for any level of return on such proceeds whatsoever or for
failure of the institution maintaining such account.
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At such time as the Escrow Agent shall have made the disbursement and/or
payment(s) provided for in the above paragraphs 4.2.B.(i) and (ii), the Escrow
Agent shall be completely discharged and released of any and all further
liabilities and responsibilities hereunder. The Escrow Agent shall be required
to make disbursement and delivery of the Settlement Consideration Shares only to
the person(s) named in the written instructions to be furnished by the Company
pursuant to Section 4.2.B. hereinabove at the address given in such written
instructions. With regard to any Settlement Consideration Shares or funds which
the Escrow Agent cannot, for any reason, disburse or pay, the Escrow Agent
shall, at its option and sole discretion, deposit said Settlement Consideration
Shares or funds with the Clerk of the District Court, Dallas County, State of
Texas and interplead the parties hereto. Upon so filing its complaint in
interpleader or upon making disbursement and/or payment(s) under this Article
IV, the Escrow Agent shall be completely discharged and released from all
further liability under the terms hereof. If the Escrow Agent elects to file a
complaint in interpleader, the parties hereto, for themselves and their
successors and assigns, do hereby summit themselves to the jurisdiction of said
Court and do hereby appoint the Clerk of said Court as their agent for service
of all process in connection with the proceeding described in this paragraph.
ARTICLE V
LIABILITY: REMEDIES AND EXCULPATION OF ESCROW AGENT
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5.1 Liability.
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A. The Escrow Agent, in its actions pursuant to this Agreement, shall be
fully protected in every reasonable exercise of its discretion and shall have no
obligations hereunder to the Company or Fidelity, except as expressly set forth
herein. Fidelity and/or the Company, as the case may be, shall provide to the
Escrow Agent all information necessary to facilitate the administration of this
Agreement, and the Escrow Agent shall not incur any liability for any claims,
damages, losses, costs or expenses, except for willful misconduct or gross
negligence, and it shall, accordingly, not incur any such liability with respect
to (i) any action taken or omitted in good faith upon advice of its counsel
given with respect any questions relating to the duties and responsibilities of
the Escrow Agent under this Agreement, or (ii) any action taken or omitted in
reliance upon any instrument, including the written advises provided for herein,
not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and accuracy of any information contained
herein, which the Escrow Agent shall in good faith believe to be genuine, to
have been signed or presented by a proper person or persons and to conform with
the provisions of this Agreement. The Escrow Agent shall not be responsible for
fees in conjunction with the issuance or transfer of the Settlement
Consideration Shares.
B. The Escrow Agent is hereby expressly authorized and directed to
disregard any and all notices or warnings given by either of the other parties
hereto, other than those notices and warnings specifically called for in this
Agreement or the Settlement Agreement, or by any other person, excepting only
orders or process of court, and is hereby expressly authorized to comply with
and obey any and all orders, judgments or decrees of any court, and in case the
Escrow Agent obeys or complies with any such order, judgment or decree of any
court, it shall not be liable to either of the other parties hereto or to any
other person, firm or corporation by reason of such compliance, notwithstanding
that any such order, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated or found to have been entered without
jurisdiction.
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5.2 Remedies.
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A. If the Escrow Agent is unable to disburse the Settlement Consideration
Shares in accordance with the provisions of Section 4.2.B. hereinabove or pay
the cash in accordance with the provisions of Section 4.2.B.(i) or (ii)
hereinabove for any reason, the Escrow Agent shall, at its election and sole
discretion, deposit the Settlement Consideration Shares or funds with the Clerk
of the District Court, County of Dallas, State of Texas, and interplead the
parties hereto. Upon so depositing said Settlement Consideration Shares or funds
and filing its complaint in interpleader under this Section 5.2, the Escrow
Agent shall be completely discharged and released from all further liability
under the terms hereof. If the Escrow Agent elects to invoke this Section 5.2,
the parties hereto, for themselves and their successors and assigns, do hereby
submit themselves to the jurisdiction of said Court and do hereby appoint the
Clerk of said Court as their agent for service of all process in connection with
the proceeding described in this paragraph.
B. If at any time a dispute shall exist as to the duties of the Escrow
Agent or the terms hereof or if the Escrow Agent fails to receive the
instructions from the Company required in Article IV within fifteen days after
the termination of the Escrow Period under Section 4.1, the Escrow Agent may, in
its sole discretion, deposit said Settlement Consideration Shares with the Clerk
of the District Court, County of Dallas, State of Texas, and may interplead the
parties hereto. The parties hereto, for themselves and their successors and
assigns, do hereby submit themselves to the jurisdiction, of said Court and do
hereby appoint the Clerk of said Court as their agent for service of all process
in connection with the proceeding described in this paragraph.
5.3 Exculpation of Escrow Agent.
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A. Escrow Agent is not a party to, or bound by any instrument, agreement or
document which may be deposited under, evidenced by or which arises out of this
Agreement.
B. Escrow Agent acts hereunder as a depository only and is not responsible
or liable in any manner whatsoever for the sufficiency, correctness, genuineness
or validity of any instrument deposited with Escrow Agent hereunder, or with
respect to the form or execution of the same, or the identity, authority or
rights of any person executing or depositing the same.
C. Escrow Agent shall not be required to take or be bound by any notice of
any default of any person or to take any action with respect to such default
involving any expense or liability, unless notice in writing is given to an
officer of Escrow Agent of such default and unless Escrow Agent is indemnified
in a manner satisfactory to Escrow Agent against any such expense or liability.
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D. Escrow Agent shall be protected in acting upon any notice, request,
waiver, consent, receipt or other instrument or document believed by Escrow
Agent to be genuine and to be signed by the proper party or parties. Escrow
Agent shall not be liable for any error of judgment or for any act done or step
taken or omitted by it in good faith, or for any mistake in fact or law, or for
anything which it may do or refrain from doing in connection herewith, except
its own gross negligence or willful misconduct, and Escrow Agent shall have no
duties to any party except those parties to this Agreement.
E. Escrow Agent may consult with legal counsel in the event of any dispute
of or questions asked to the construction of this Agreement, or Escrow Agent's
duties hereunder, and Escrow Agent shall incur no liability and shall be fully
protected in acting in accordance with the opinion and instructions of such
counsel.
F. For its services hereunder, Escrow Agent shall be entitled to an initial
fee of $400.00, payable concurrently with its acceptance hereof, plus a fee of
$200.00 for every sale of a portion of the Settlement Consideration Shares after
the first such sale, and to additional compensation of $400.00 for each year
thereafter the Settlement Consideration Shares shall remain on deposit with the
Escrow Agent. All fees to Escrow Agent hereunder shall be paid by the Company.
G. In the event Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this Agreement or the subject matter hereof, including,
without limitation, an interpleader pursuant to Section 5.2 hereof, Escrow Agent
shall be reimbursed for all costs and expenses occasioned thereby, including,
without limitation, attorney's fees and costs and expenses, and the parties
hereto agree that the Settlement Consideration Shares, or the proceeds thereof,
shall be utilized to satisfy any such costs or expenses.
ARTICLE VI
[Intentionally left blank]
ARTICLE VII
MISCELLANEOUS PROVISIONS
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7.1 Parties in Interest. This Agreement shall be binding upon and insure to
the benefit of the parties hereto, and the successors and assigns of each of
them, but shall not confer, expressly or by implication, any rights or remedies
upon any other party.
7.2 Governing Law. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of California.
7.3 Notices. All notices, requests or demands and other communications
hereunder shall be deemed given sufficiently if in writing and sent by
registered or certified mail, return receipt requested and postage prepaid, or
sent telex, telegram or cable to:
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A. If to the Company, to: Pollution Research and Control Corp.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
With a copy to: Xxxx X. Xxxxxxxx, Esq.
Xxxxx, Xxxxx & Aiken, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
B. If to Fidelity, to: Fidelity Funding, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx Xxxxxx
With a copy to: Xxxxx Xxxxxx, Esq.
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
C. If to the Escrow Agent, to: American Escrow Company
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Any party hereto may change its address by written notice to the other
party given in accordance with this Section 7.3.
7.4 Entire Agreement. This Agreement contains the entire agreement between
and among the parties and supersedes all prior agreements, understandings and
writings between and among the parties with respect to the subject matter
hereof. Each party hereto acknowledges that no representations, inducements,
promises or agreements, verbal or otherwise, have been made by any party, or
anyone acting with authority on behalf of any party, which are not embodied
herein, and that no other agreement, statement or promise may be relied upon or
shall be valid or binding. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated verbally. This Agreement may be
amended or any term hereof my be changed, waived, discharged or terminated by an
agreement in writing signed by each of the parties hereto.
7.5 Captions and Headings. The article and section headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit or add to the meaning of any provision of this Agreement.
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7.6 Attorneys' Fees. In the event of any litigation between or among
the parties hereto, the non-prevailing party(s) shall pay the reasonable
expenses, including the attorneys' fees, of the prevailing party(s) in
connection therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
COMPANY:
POLLUTION RESEARCH AND CONTROL
CORP.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx., President
FIDELITY:
FIDELITY FUNDING, INC.
By: /s/ Xxxxxx Xxxxxx
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(Authorized Officer)
ESCROW AGENT:
AMERICAN ESCROW COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
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Chairman (Authorized Officer)
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