EXHIBIT 2
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of July 31, 1996 (the "Escrow Agreement"), by
and among ALLEGRO NEW MEDIA, INC., a Delaware corporation ("Allegro"), SERIF
INC., a Delaware corporation ("Serif"), THE PERSONS WHOSE SIGNATURES APPEAR ON
THE SIGNATURE PAGE HEREOF (individually, a "Stockholder" and collectively, the
"Stockholders"), being the owners of all the issued and outstanding capital
stock of Serif, XXXX XXXXX (the "Stockholders' Representative), and BLAU,
KRAMER, WACTLAR & XXXXXXXXX, P.C., as escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Allegro, Serif and the Stockholders have entered into an Agreement
and Plan of Reorganization (the "Reorganization Agreement") dated as of July 31,
1996, providing for, among other things, the exchange by the Stockholders and
Allegro of all the outstanding capital stock of Serif for 245,403 shares of the
common stock, par value $.001 per share, of Allegro (the "Exchange Stock"); and
WHEREAS, Section 3.3 of the Reorganization Agreement requires that Allegro,
Serif and the Stockholders agree to enter into this Escrow Agreement with the
Escrow Agent for the purpose of securing the indemnity obligations of the
Stockholders under Section 11 of the Reorganization Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Allegro, Serif, the Stockholders and the Escrow Agent agree that
all capitalized terms used herein without definition shall have the meaning
ascribed to them in the Reorganization Agreement and further agree as follows:
ARTICLE I. ESCROWED PROPERTY
1.01 Each of the Stockholders has this day delivered to the Escrow Agent
that number of Exchange Shares set forth next to his signature on the signature
page hereof, which Exchange Shares aggregate 80,467 shares (hereinafter referred
to collectively as the "Escrowed Property").
1.02 The Escrow Agent acknowledges receipt of negotiable certificates for
the Escrowed Property issued in the names of each of the Stockholders with blank
stock powers attached properly executed by the Stockholders, and the Escrow
Agent agrees to hold or dispose of the Escrowed Property and any other
collateral in accordance with the terms of this Escrow Agreement.
1.03 All dividends and other distributions (whether of cash, securities or
other property) upon or in respect of any of the Escrowed Property and all
property receivable in substitution or exchange therefor shall be included with
and constitute part of the Escrowed Property.
ARTICLE II. APPLICATION OF ESCROWED PROPERTY
2.01 The Escrow Agent will hold the Escrowed Property in its possession
under the provisions of this Escrow Agreement until authorized hereunder to
deliver the Escrowed Property or any specified portion thereof as set forth in
Section 2.02 or Section 2.03.
2.02 The Escrow Agent shall distribute the amounts deposited as Escrowed
Property promptly upon delivery of and in accordance with (i) a joint written
notice of Allegro and the Stockholders' Representative providing instructions
therein or (ii) written notice of Allegro and the Stockholders' Representative
providing instructions therein and certifying that the dispute with respect to
any amount or amounts deposited in the escrow provided for herein has been
determined and resolved by entry of a final order, decree or judgment by a court
of competent jurisdiction in the State of New York (the time for appeal
therefrom having expired and no appeal having been perfected), or consent to
entry of any judgment concerning a claim, which notice shall be accompanied by a
copy of any such order, decree or judgment certified by the clerk of such court.
2.03 In the event that prior to May 1, 1998 (the "Termination Date"), the
Escrow Agent has not received notice of a claim for indemnification under
Section 11 of the Reorganization Agreement which remains unresolved on the
Termination Date, the Escrow Agent shall distribute the Escrowed Property to the
Stockholders in proportion to the Escrowed Property which such Stockholder has
delivered to the Escrow Agent. In the event that on the Termination Date there
exists an unresolved claim, then in such event the Escrow Agent shall reserve
from the Escrowed Property an amount equal to the amount of the claim, as
determined in accordance with the provisions of Article IV hereof, and shall
distribute any remaining balance.
ARTICLE III. RELATED PROVISIONS
3.01 Upon the release and delivery of any amount of the Escrowed Property
to any party pursuant to this Escrow Agreement, the Escrow Agent shall also
release and deliver to such party the pro rata portion of the interest, other
income or property so released, up to the date of such release and delivery,
attributable to such amount of the Escrowed Property being so released and
delivered.
3.02 In connection with the delivery of written notices to the Escrow Agent
by Allegro, the Stockholders' Representative, or both such parties, each such
written notice shall be signed by an officer of Allegro or the Stockholders'
Representative, or both, as appropriate, and shall accurately set forth in each
case:
(a) the total amount that the Escrow Agent is thereby directed to
distribute out of the Escrowed Property;
(b) the party to whom, or the fund to which, the Escrow Agent is
thereby directed to distribute such amount; and
(c) the date upon which the Escrow Agent is directed to distribute
such amount; and such officer of Allegro or the Stockholders'
Representative, or both, as the case may be, shall certify as to the
compliance with such notice and the contents thereof.
The Escrow Agent may rely fully on the provisions set forth in any such written
notice which on its face complies with the provisions of Article II and this
Section 3.02.
ARTICLE IV. SETTLEMENT OF DISPUTES
4.01 Any dispute which may arise between Allegro and the Stockholders'
Representative under this Escrow Agreement with respect to (a) the delivery,
ownership and/or right to possession of the Escrowed Property or any portion
thereof, (b) the facts upon which the Escrow Agent's determinations hereunder
are based, (c) the duties of the Escrow Agent hereunder and (d) any other
questions arising under this Escrow Agreement, shall be settled either by (i) a
joint written notice of Allegro and the Stockholders' Representative providing
instructions to the Escrow Agent therein or (ii) by entry of a final order,
decree or judgment by a court of competent jurisdiction in the State of New York
(the time for appeal therefrom having expired and no appeal having been
perfected).
4.02 The Escrow Agent shall be under no duty to institute or defend any
such proceedings and none of the costs and expenses of any such proceeding shall
be borne by the Escrow Agent. In the event the terms of a settlement of a
dispute hereunder increase the duties or liabilities of the Escrow Agent
hereunder and the Escrow Agent has not participated in such settlement so as to
be bound thereby, then such settlement shall be effective as to the Escrow Agent
in respect of such increase in its duties or liabilities only upon the Escrow
Agent's written assent thereto. Prior to the settlement of any disputes as
provided in this Article IV, the Escrow Agent is authorized and directed to
retain in its possession, without liability to anyone, such portion of the
Escrowed Property which is the subject of or involved in the dispute.
ARTICLE V. CONCERNING THE ESCROW AGENT.
5.01 The Escrow Agent shall be entitled to reasonable compensation for its
services hereunder and shall be reimbursed for all reasonable expenses,
disbursements and advances (including reasonable attorneys' fees and expenses)
incurred or made by it in performance of its duties hereunder. Such reasonable
compensation, disbursement, expenses and advances shall be borne equally by
Allegro and the Stockholders' Representative and shall be paid promptly upon
request by the Escrow Agent.
5.02 The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to Allegro and
Stockholders' Representative specifying a date (not less than 30 days after the
giving of such notice) when such resignation shall take effect. Promptly after
such notice, Allegro and the Stockholders' Representative shall appoint a
mutually agreeable successor Escrow Agent, such successor Escrow Agent to become
Escrow Agent hereunder upon the resignation date specified in such notice. If
Allegro and the Stockholders' Representative are unable to agree upon a
successor Escrow Agent with 30 days after such notice, the Escrow Agent shall
have the right to petition a court of competent jurisdiction to appoint a
successor, and the Escrow Agent shall continue to serve until its successor
accepts the escrow and receives the Escrowed Property.
5.03 The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. The Escrow Agent acting or refraining from acting
in good faith shall not be liable for any mistake of fact or error of judgment
by it or for any acts or omissions by it of any kind unless caused by negligence
or willful misconduct, and shall be entitled to rely, and shall be protected in
doing so, upon (a) any written notice, instrument or signature believed by it to
be genuine and to have been signed or presented by the proper party or parties
duly authorized to do so, and (b) the advice of counsel (which may be of the
Escrow Agent's own choosing, so long as such counsel is not counsel to Allegro
or the Stockholders' Representative). The Escrow Agent shall have no
responsibility for the contents of any writing submitted to it hereunder and
shall be entitled in good faith to rely without any liability upon the contents
thereof. The Escrow Agent has no responsibilities under, and shall be deemed to
have no knowledge of, the provisions of the Reorganization Agreement.
5.04 Allegro and the Stockholders agree to indemnify the Escrow Agent and
hold it harmless against any and all liabilities incurred by it hereunder as a
consequence of such indemnifying party's action and the Allegro and the
Stockholders further agree to indemnify the Escrow Agent and hold it harmless
against any and all losses, costs, fees and expenses incurred by the Escrow
Agent which are not a consequence of its actions or failure to act, except, in
either case for liabilities incurred by the Escrow Agent resulting from its own
gross negligence or willful misconduct. One-half of the amount of any such
payment or indemnification shall be paid to the Escrow Agent by Allegro and the
other half of the amount of any such payment or indemnification shall be paid by
the Stockholders. The indemnification provided pursuant to this section shall
survive the resignation of the Escrow Agent or the termination of this Escrow
Agreement.
5.05 In the event the Escrow Agent becomes involved in any litigation or
dispute by reason hereof, it is hereby authorized to deposit with the clerk of a
court of competent jurisdiction the Escrowed Property held by it pursuant hereto
and, thereupon, shall stand fully relieved and discharged of any further duties
hereunder. Also, in the event the Escrow Agent is threatened with litigation by
reason hereof, it is hereby authorized to interplead all interested parties in
any court of competent jurisdiction and to deposit with the clerk of such court
the Escrowed Property held by it pursuant hereto and, thereupon, shall stand
fully relieved and discharged of any further duties hereunder.
5.06 In the event of any claim, dispute or litigation concerning the
Reorganization Agreement or this Escrow Agreement, Blau, Kramer, Wactlar &
Xxxxxxxxx, P.C. shall nevertheless have the unqualified right to represent
Allegro, its officers and directors in respect of any such claim, dispute or
litigation, notwithstanding that it is acting as Escrow Agent hereunder.
ARTICLE VI. STOCKHOLDERS' REPRESENTATIVE
6.01 The Stockholders, and each of them, hereby appoint Xxxx Xxxxx (the
"Stockholders' Representative") as their agent to (i) execute and deliver this
Escrow Agreement on behalf of the Stockholders and to represent, act for and on
behalf of, and bind each of the Stockholders in the performance of all of their
obligations arising from or relating to this Escrow Agreement, including,
without limitation (a) the execution and delivery of any document, certificate
or agreement required under this Escrow Agreement to be delivered by the
Stockholders; (b) the negotiation and settlement of claims of Allegro in respect
of the Escrowed Property and for indemnification pursuant to Section 11 of the
Reorganization Agreement and the making of any objection to such claims; and (c)
the representation of the Stockholders at any arbitration or litigation in
respect of the foregoing; (ii) give and receive notices and receive service of
process under or pursuant to this Escrow Agreement; and (iii) to represent, act
for, and bind each of the Stockholders in the performance of all of their
obligations arising from or related to this Escrow Agreement and the
indemnification provisions of Section 11 of the Reorganization Agreement. The
Stockholders' Representative hereby accepts such appointment.
6.02 In the event that the Stockholders' Representative shall die, become
incapacitated, resign or otherwise by unable to fulfill his duties hereunder, a
successor Stockholders' Representative shall be selected by the Stockholders
receiving a majority of the Escrowed Property as soon as reasonably practicable
thereafter. If the Stockholders desire to remove or replace the Stockholders'
Representative for any reason, any such Stockholders' Representative may be so
removed or replaced by the Stockholders entitled to receive a majority of the
Escrowed Property. Any decision, act, consent or instruction of the
Stockholders' Representative shall constitute a decision of the Stockholders and
shall be conclusive and binding upon the Stockholders, and Allegro and the
Escrow Agent may rely upon any such decision, act, consent or instruction of the
Stockholders' Representative as being the decision, act, consent or instruction
of the Stockholders.
ARTICLE VII. MISCELLANEOUS
7.01 This Escrow Agreement will be binding upon, inure to the benefit of,
and be enforceable by the respective successors and assigns of the parties
hereto, but neither this Escrow Agreement, nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, except with respect to the Escrow
Agent as provided in Article V hereof.
7.02 This Escrow Agreement contains the entire understanding of the parties
with respect to this subject matter, and may be amended only by a written
instrument duly executed by Allegro, Serif and the Stockholders' Representative.
7.03 All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally or sent
by registered or certified mail (return receipt requested), postage prepaid,
recognized national or international air courier or by facsimile transmission
electronically confirmed:
if to Allegro:
Allegro New Media, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attn.: Xxxxx X. Cinnamon
Chairman of the Board
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx ll753
Fax: (000) 000-0000
if to Serif, the Stockholders, or the Stockholders'
Representative, to the Stockholder's Representative:
Xxxx Xxxxx
Serif Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxx Xxxxxxxxx 00000
with a copy to:
Xxxx Xxxxxxx, Esq.
Deutsch Xxxxxxxx Xxxxxx XxXxxxxx Xxxxxxx
& Drachman, P.C.
00 Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
if to the Escrow Agent:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx ll753
Fax: (000) 000-0000
Attn.: Xxxx X. Xxxxxxx, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties.
7.04 This Escrow Agreement shall be governed by, and construed and enforced
in accordance with the laws of the State of New York, without regard to its
conflicts of law rules.
7.05 This Escrow Agreement may be executed simultaneously in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
7.06 This Escrow Agreement shall remain in full force and effect until the
later of the Termination Date or the date the Escrow Agent shall have delivered
all of the Escrowed Property in its possession in accordance with the terms
hereof.
7.07 Article headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Escrow
Agreement.
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and
delivered by Allegro, Serif, the Stockholders and the Escrow Agent on the date
first above written.
ALLEGRO NEW MEDIA, INC.
By: /s/Xxxxx X. Cinnamon
Xxxxx X. Cinnamon
Chairman of the Board
SERIF INC.
By: /s/Xxxx Xxxxx
Xxxx Xxxxx, President
STOCKHOLDERS:
Number of
Exchanged Shares Name
67,377 /s/Xxxx Xxxxx
Xxxx Xxxxx
4,090 /s/Xxxxxx X. Xxxxx
Xxxxxx Xxxxx
2,000 /s/Xxxxxx Xxxxxxxxx-Attorney-in-Fact
Xxxxxx Xxxxxxxxx
2,000 /s/Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
2,000 /s/Xxxxxx Xxxxx
Xxxxxx Xxxxx
1,000 /s/Xxx Xxxxxxxx
Xxx Xxxxxxxx
1,000 /s/Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx
1,334 /s/Xxxxx Xxxxxxx Xxxx-Attorney-in-Fact
Xxxxx Xxxxxxx Xxxx
1,000 /s/Xxxx X. Xxxxxxx, Xx.
Xxxx X. Xxxxxxx, Xx.
STOCKHOLDERS'
REPRESENTATIVE:
/s/Xxxx Xxxxx
Xxxx Xxxxx
ESCROW AGENT:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
By:/s/Xxxx X. Xxxxxxx
