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Exhibit 10.10
ESCROW AND SUBORDINATION AGREEMENT
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THIS AGREEMENT, dated as of December 29, 1999, is entered into by and
between AlphaCom, Inc. (the "Company"), National City Bank, Akron, Ohio (the
"Escrow Agent"), and Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxx
Xxxxxxxxx (the "Shareholders").
The Company has filed a registration statement on Form SB-2/A with the
Securities and Exchange Commission ("Commission") under the Securities Act of
1933 ("Registration Statement"), and a copy of such Registration Statement (File
No. _____________________) with the Ohio Division of Securities (the "Division")
pursuant to the Revised Code. As a condition for the approval of the
Registration Statement by the Division, Shareholders have agreed to escrow
certain shares subject to the terms of this Agreement. The terms of this
Agreement commence upon the effectiveness of the Registration Statement with the
Commission.
Therefore, Shareholders have deposited with the Escrow Agent
certificates evidencing 7,619,819 shares of common stock of the Company and the
Escrow Agent acknowledges receipt thereof. See Exhibit A, incorporated in and a
part of this Agreement, which details the Escrowed Shares.
Therefore, with respect to the Escrowed Shares the parties to this
Agreement agree as follows:
1. The Escrowed Share certificates shall bear the following legend:
These shares are subject to certain restrictions, including escrow and
subordination, and may not be transferred without compliance with the
Escrow and Subordination Agreement, dated December 29, 1999. This
legend may be removed only if the shares are released from escrow by
the terms of the Agreement.
2. The Escrowed Shares shall not be assigned, sold, hypothecated, pledged,
transferred, or otherwise disposed (except by will, descent, or
operation of law) until released from escrow.
3. Except as otherwise provided by this Agreement, any dividend, cash,
stock, or property paid or issued with respect to the Escrowed Shares
and any dividend, cash, stock or property paid or issued with respect
to the Escrowed Shares by reason of any exchange of shares, merger,
consolidation, recapitalization, reorganization or similar business
combination shall be subject to the terms of this Agreement.
4. In the event the Company makes a distribution to its shareholders in
connection with the liquidation, dissolution, bankruptcy, receivership,
or sale of all or substantially all of the Company assets, then before
any distribution is made to Escrowed Shares, the Company shall make a
ratable distribution to all non-escrowed shares in an amount up to
$5.00 (Public Offering Price) per share. Any remaining proceeds shall
be distributed ratably to all shares, including those held in escrow.
If the distribution consists of shares of other non-cash items,
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the fair market value of the shares or other non-cash items shall be
valued by an independent appraiser.
5. In the case of a tender offer to purchase all or substantially all of
the Company's outstanding shares, or a merger, consolidation, or
reorganization into an unaffiliated entity, the Escrowed Shares shall
be released from escrow and this Agreement shall be terminated if the
majority of the non-escrowed shares (excluding all shares owned or
controlled directly or indirectly by any officer, director, or person
subject to this Agreement) are voted in favor of such tender offer,
merger, consolidation, or reorganization.
6. Other than as specified by this Agreement, the Shareholder shall have
all beneficial rights of ownership of the Escrowed Shares, including
the right to vote the Escrowed Shares for all purposes.
7. All calculations used in this Agreement shall be adjusted should the
Company make a share dividend or distribution of shares, have a stock
split, have a reverse stock split, or otherwise reclassify its shares.
8. All Escrowed Shares shall be released by the Escrow Agent and this
Agreement shall be terminated when:
a. The Company has provided to the Escrow Agent and the
Commissioner of Securities audited financial statements (per
United States Generally Accepted Accounting Principles
consistently applied and signed by a Certified Public
Accountant) showing fully diluted net earnings, after taxes
and exclusive of extraordinary items, for a period of four
consecutive quarters of at least $.60 per share (12% of Public
Offering Price) or for each of two consecutive periods of four
consecutive quarters of at least $.30 per share (6% of Public
Offering Price); and
b. The Escrow Agent has not received written objection from the
Commissioner of Securities within thirty days of receipt of
such audited financial statements by the Commissioner of
Securities.
9. If the Escrowed Shares are not released pursuant to the terms of
paragraph 8 above, then twenty-five percent of the total amount of
shares originally escrowed shall be released automatically on each of
the fifth, sixth, seventh, and eighth anniversaries of the effective
date of the Registration Statement (File No._). Shares shall be
released ratably to all shareholders subject to this Agreement.
10. Any cash dividends paid on Escrowed Shares and held by the Escrow Agent
pursuant to paragraph (3) shall be released upon termination of this
Agreement.
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11. Other than as specified by this Agreement, the Escrow Shares shall be
released if the offering has been terminated and (i) no securities were
sold thereto, or (ii) all proceeds from the sale of any securities
thereto were returned to prospective investors.
12. In performing any of its duties, the Escrow Agent shall not incur any
liability for any damages, losses, or expenses, except for willful
default or negligence. It shall not incur any liability with respect to
any action taken or omitted in good faith upon advice of counsel or
counsel for the Company given with respect to the duties and
responsibilities of the Escrow Agent under this Escrow Agreement. The
Escrow Agent may in good faith rely on the truth and accuracy of any
information signed and submitted by proper persons which conforms with
the provisions of this Agreement.
13. The Company and the Shareholders jointly and severally agree to
indemnify and hold harmless the Escrow Agent against any and all
losses, claims, liabilities and expenses, including reasonable costs of
investigation, counsel fees and disbursements, which may be imposed
upon or incurred by the Escrow Agent in connection with its acceptance
of appointment as Escrow Agent.
14. The Escrow Agent's fees for serving as Escrow Agent under this
Agreement shall be paid by the Company.
15. This Escrow Agreement may be executed in any number of counterparts
with the same force and effect as if all parties had signed the same
document.
16. All notices, requests, instructions or other communications required or
permitted to be given under this Agreement shall be given in writing
and delivered by Certified Mail or hand-delivered to all parties to
this Agreement and to the Commissioner of the Ohio Division of
Securities.
17. If the Escrow Agent is unable or unwilling to perform its duties, a new
escrow agent shall be appointed, a new Escrow and Subordination
Agreement (identical in all respects to this Agreement) shall be
entered into, and notice shall be given to the Division. The Escrow
Agent must be satisfactory to the Division.
18. This Agreement sets forth the entire understanding of the parties
hereto with respect to the operations contemplated hereby and may not
be amended except by a written instrument executed by the parties
hereto and consented to by the Commissioner of the Ohio Division of
Securities.
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19. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Ohio.
/s/ Xxx Xxxxxx 12/29/99
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Shareholder Date
/s/ Xxxxxx Xxxxxx 12/29/99
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Shareholder Date
/s/ Xxxxx Xxxxxxxxx 12/29/99
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Shareholder Date
/s/ Xxx Xxxxxxxx 12/29/99
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Shareholder Date
/s/ Xxx Xxxxxxxx, CFO 12/29/99
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Company Date
National City Bank
Akron, Ohio
/s/ Xxxxxxx Xxxxxxxx,
Vice President 12/30/99
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Escrow Agent Date
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ESCROW AND SUBORDINATION AGREEMENT
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EXHIBIT A
Shareholder Name and Address Number of Shares Escrowed
Xxxxxx Xxxxxx 3,725,000
Xxxxxx Xxxxxx 3,700,000
Xxxxxx Xxxxxxxx 101,500
Xxxxx Xxxxxxxxx 93,319
Company Name and Address
AlphaCom, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
Escrow Agent Name and Address
National City Bank
0 Xxxxxxx Xxxxx
Xxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Vice President, Trust Department
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