Exhibit 10.4
CONTINGENT SHARE ESCROW AGREEMENT
This Contingent Share Escrow Agreement (this "Agreement") is entered
into as of ____________ __, 2000 by and between Xxxxxxx.xxx Corporation, a
Washington corporation ("Sunhawk"), and @Visory, LLC ("@Visory"), a former
shareholder of Copyright Control Services, Inc., a Delaware corporation ("CCS").
RECITALS
A. Sunhawk, CCS, @Visory and certain other persons and entities (the
"Sellers") are parties to a Share Exchange Agreement dated August 1, 2000 (the
"Share Exchange Agreement") pursuant to which Sunhawk will acquire CCS through a
share exchange with @Visory and the Sellers (the "Share Exchange") in which
shares of Sunhawk's common stock (the "Sunhawk Shares") will be issued to
@Visory and the Sellers in exchange for all of the issued and outstanding
capital stock of CCS as set forth in the Share Exchange Agreement.
B. To induce Sunhawk to effect the Share Exchange, @Visory and the
Sellers have agreed that certain of the Sunhawk Shares will be pledged to and
held by Sunhawk in escrow pending the satisfaction or waiver of certain
contingencies, as set forth in (i) this Agreement, and (ii) a Contingent Share
Escrow Agreement entered into of even date with this Agreement between Sunhawk
and the Sellers.
AGREEMENT
In consideration of the foregoing premises and the mutual and dependent
promises set forth in this Agreement, the parties agree as follows:
1. ESCROW
The Escrowed Shares to be issued to @Visory, I.E., 375,938 Class A
Common Shares (together with any stock dividends accrued or made thereon, and
any other securities or property which may be issued in exchange for such shares
in any merger, reorganization, share exchange, sale of all or substantially all
assets or stock, or similar transaction, the "Shares") are hereby pledged by
@Visory to, and shall be held by, Sunhawk in escrow pursuant to this Agreement.
@Visory shall deliver to Sunhawk at the time this Agreement is executed and
delivered appropriate stock powers endorsed in blank and such other
documentation as Sunhawk may prescribe to carry out the purposes of this
Agreement.
2. RELEASE OF SHARES
Sunhawk shall hold the Shares in accordance with this Agreement and
shall transfer the Shares only as set forth in this Section 2:
2.1 Certain terms are defined in the text of this Agreement
and/or the Share Exchange Agreement. In addition, the following terms used in
this Agreement shall have the meanings set forth below:
(a) "DEADLINE DATE" shall mean any of the following:
(i) "FIRST DEADLINE DATE" shall mean [12
months after date of Agreement] _____________, 2001.
(ii) "SECOND DEADLINE DATE" shall mean [18
months after date of Agreement] _____________, 2002.
(iii) "THIRD DEADLINE DATE" shall mean [24
months after date of Agreement] _____________, 2002.
(b) "MARKET CAPITALIZATION" shall mean (i) the
average daily sale price for one share of Sunhawk's common stock ("Common
Stock") during the applicable Measurement Period, multiplied by (ii) the
average number of shares (including the Shares only once they have been
released pursuant to Section 2) of Common Stock issued and outstanding during
the applicable Measurement Period.
(c) "MEASUREMENT PERIOD" shall mean any consecutive
30 business day period preceding a Deadline Date.
2.2 If Sunhawk's Market Capitalization is at least One Hundred
Million U.S. Dollars ($100,000,000) at any time prior to the First Deadline Date
(the "First Threshold"), 124,060 of the Shares (the "First Tranche Shares")
shall be released to @Visory immediately after the date the First Threshold is
met. If Sunhawk's Market Capitalization does not meet the First Threshold prior
to the First Deadline Date, the First Tranche Shares shall be released from this
Agreement, cancelled and returned to Sunhawk as authorized and unissued Common
Stock immediately after the First Deadline Date.
2.3 If Sunhawk's Market Capitalization is at least One Hundred
Twenty-Five Million U.S. Dollars ($125,000,000) at any time prior to the Second
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Deadline Date (the "Second Threshold"), 124,059 of the Shares (the "Second
Tranche Shares") shall be released to @Visory immediately after the date the
Second Threshold is met. If Sunhawk's Market Capitalization does not meet the
Second Threshold prior to the Second Deadline Date, the Second Tranche Shares
shall be released from this Agreement, cancelled and returned to Sunhawk as
authorized and unissued Common Stock immediately after the Second Deadline Date.
2.4 If Sunhawk's Market Capitalization is at least One Hundred
Fifty Million U.S. Dollars ($150,000,000) at any time prior to the Third
Deadline Date (the "Third Threshold"), all remaining Shares (the "Remaining
Shares") shall be released to @Visory immediately after the date the Third
Threshold is met. If Sunhawk's Market Capitalization does not meet the Third
Threshold prior to the Third Deadline Date, the Remaining Shares shall be
released from this Agreement, cancelled and returned to Sunhawk as authorized
and unissued Common Stock immediately after the Third Deadline Date.
3. VOTING
The Shares shall be held of record by @Visory, which shall have full
right to vote the Shares on all matters coming before the shareholders of
Sunhawk as if the Shares were not subject to this Agreement.
4. NOTICES
All notices, requests, demands, claims, consents and other
communications required or permitted under this Agreement shall be in writing.
Any notice, request, demand, claim , communication or consent under this
Agreement shall be deemed duly given if (and shall be effective two business
days after) it is sent by certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Sunhawk: Xxxxxxx.xxx Corporation
000 Xxxxxx Xxxxxx X.
Xxxxx 000
Xxxxxxx, XX 00000-0000
With a copy (which shall not The Xxxx Law Group
constitute notice) to: 000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
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If to @Visory: 0000 Xxxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
5. ENTIRE AGREEMENT; HEADINGS
This Agreement, together with the Share Exchange Agreement, contains
the entire understanding and agreement of the parties with respect to the
transactions contemplated by this Agreement and supersedes and may not be
supplemented or varied by any prior oral or written understandings or
agreements. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
this Agreement.
6. ASSIGNS AND ASSIGNMENT
This Agreement shall extend to, inure to the benefit of and be binding
upon all of the parties and their respective permitted successors and assigns;
PROVIDED, HOWEVER, that this Agreement may not be assigned or transferred, in
whole or in part, by Sunhawk except with the prior written consent of @Visory.
7. DIVIDEND INCOME
@Visory hereby acknowledges that, for federal and state income tax
purposes, any cash dividends earned or other distributions made with respect to
the Shares during the term of this Agreement shall be income of and attributed
to @Visory and paid to @Visory as earned, regardless of the ultimate disposition
of the Shares to which they are attributable.
8. AMENDMENT AND WAIVER
This Agreement may be amended, modified, supplemented or altered only
by a writing duly executed by Sunhawk and @Visory. No failure or delay by a
party in exercising any right, power or privilege under this Agreement shall
operate as a waiver, and no single or partial exercise shall preclude any right
of further exercise or the exercise of any other right, power or privilege. No
waiver of any right, power or privilege under this Agreement shall be effective
unless set forth in writing, executed by the party against whom the waiver is
sought to be enforced.
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9. SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
10. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Washington, as applied to contracts
executed and to be fully performed in Washington.
11. COUNTERPARTS
This Agreement may be executed by the parties individually or in any
combination, in one or more counterparts, each of which shall be an original and
all of which shall together constitute one and the same agreement.
12. ARBITRATION
Any controversies or claims arising out of or relating to this
Agreement shall be fully and finally settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA Rules"), conducted by a single arbitrator either mutually agreed upon by
Sunhawk and @Visory or chosen in accordance with the AAA Rules, except that the
parties shall have any right to discovery as would be permitted by the Federal
Rules of Civil Procedure for a period of 90 days following the commencement of
such arbitration, and the arbitrator shall resolve any dispute which arises in
connection with such discovery. The prevailing party or parties shall be
entitled to costs, expenses and attorneys' fees from the non-prevailing party or
parties, and judgment upon the award rendered by the arbitrator may be entered
in any court of competent jurisdiction.
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13. NO RIGHT TO OFFSET.
Sunhawk shall have no right to offset and claim any of the Escrowed
Shares to satisfy claims made by Sunhawk for breach of any of the
representations, warranties or covenants under the Share Exchange Agreement or
any other agreements entered into in connection with the Share Exchange.
[signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
@VISORY LLC
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By:
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Its:
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SUNHAWK:
XXXXXXX.XXX CORPORATION
By:
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Its:
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