OPTION SHARES ESCROW AGREEMENT
THIS OPTION SHARES ESCROW AGREEMENT ("Agreement") is entered into
as of September 29, 1995, by and between Xxxxxx Xxxxxxxx, Xxxxxxxxx
Xxxxxx III, Xxxxxx Xxxxxxxx (collectively, the "Shareholders") and Core
Technologies (Pennsylvania), Inc., a Delaware corporation (the
"Company").
Recitals:
Whereas, each of the Shareholders have entered into a Stock
Purchase Agreement of even date herewith (the "SPA") for the purchase
of common stock of the Company from Safeguard Scientifics (Delaware),
Inc. ("Safeguard");
Whereas, Safeguard required, as a condition to entering into the
SPA, that the Shareholders and the Company enter into this Agreement and
the Shareholders deposit an aggregate of 700,000 shares of the Company's
Common Stock (the "Option Shares") into the escrow with the Company
created by this Agreement, subject to the Company's right to redeem said
shares upon exercise of vested Covered Options (as defined below);
NOW, THEREFORE, for adequate consideration the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Escrow.
1.1 The Company hereby acknowledges receipt from the Shareholders
of the certificate or certificates evidencing the following number of
Option Shares
Xxxxxx Xxxxxxxx 233,334 shares
Xxxxxxxxx Xxxxxx III 233,333 shares
Xxxxxx Xxxxxxxx 233,333 shares;
together with Assignments Separate From Certificate in the form attached
hereto as Attachment A, duly executed by the Shareholders in blank.
Unless redeemed by the Company in accordance herewith, the Option
Shares shall be held by the Company in escrow in accordance with the
terms and conditions of this Agreement.
1.2 During the term of this escrow, the Secretary of the Company,
or such substitute officer of the Company as may be designated by the
Company's board of directors, shall maintain custody of and hold the
Option Shares on behalf of the Company, in its capacity as escrow agent
under this Agreement. Each Shareholder irrevocably appoints the Company
as attorney-in-fact for the term of this escrow to execute all documents
necessary or appropriate to make negotiable any Option Shares redeemed
pursuant to Section 3 and to complete any such redemption transaction.
1.3 The Company shall act as escrow agent under this Agreement on
the following terms and conditions:
1.3.1 The escrow agent shall, and shall be obligated to,
perform only those duties specifically set forth herein. The escrow
agent's duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
1.3.2 The escrow agent may rely and shall be protected in
relying on any instrument reasonably believed to be genuine and to have
been signed or presented by the proper party or parties. The escrow
agent (as well as any officer of the Company appointed pursuant to
Section 1.2) shall not be liable for any act done or omitted reasonably
and in good faith (and any reliance on or act done or omitted pursuant
to the written advice of legal counsel to the Company shall be
conclusively presumed to be reasonable and in good faith).
1.3.3 It is understood and agreed that should any dispute
arise with respect to the redemption of or the delivery and/or ownership
or right of possession of the Option Shares held by the escrow agent
here-under, the escrow agent is authorized and directed to retain in the
escrow agent's possession, without liability to anyone, all or any part
of said securities until such disputes shall have been settled either by
mutual written agreement of the parties concerned or by a final order,
decree or judgment of a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected. However, the
escrow agent shall be under no duty whatsoever to institute any such
proceedings.
1.4 Unless and until redeemed by the Company pursuant to and in
accordance with Section 3, each Shareholder shall retain beneficial and
legal ownership of all the Option Shares deposited by him, and shall be
entitled to, and to exercise, all the privileges, rights and benefits of
such ownership, including without limitation the right to vote the same
and to receive dividends and other distributions thereon.
2. Grant of Covered Options. The Company has granted, or shall
reasonably promptly after the date of this Agreement grant, to employees
of the Company other than the Shareholders a total of at least 700,000
options under its existing option plan to purchase common stock of the
Company (the "). The Covered Options shall have an exercise price equal
to the fair market value of the common stock of the Company at the time
of grant (the "Option Price").
3. Redemption.
3.1 If and for so long as they are held in escrow hereunder, the
Option Shares shall be subject to redemption by the Company from time-
to-time on a one-for-one basis as the Covered Options are exercised as
set forth herein. In this regard:
3.1.1 If and as those Covered Options which are or become
vested are exercised from time-to-time, the Company shall have the right
to, and the parties intend that the Company shall, redeem from the
Shareholders, pro rata in accordance with the respective number of
Option Shares deposited by the Shareholders, an aggregate number of
Option Shares equal to the number of shares of Common Stock being
purchased by such Covered Option exercise. The Redemption Price of a
given Option Share (i.e., the amount payable upon its redemption
hereunder), which will be payable by the Company upon exercise of a
Covered Option and redemption of a corresponding number of Option
Shares, shall be equal to the exercise price per share under the Covered
Option whose exercise gives rise to the redemption in question.
3.1.2 The Company shall give to the Shareholders a written
notice (a "Redemption Notice") in connection with each redemption of
Option Shares pursuant hereto. Each Redemption Notice shall, as to each
Covered Option then being exercised, (i) certify that said Covered
Option was fully vested, had not lapsed or expired, and was validly and
properly exercised, except for any such requirements which are waived
with respect to such option by the Company's board of directors or its
option committee; (ii) identify the person exercising the same, the
number of shares of stock being purchased pursuant thereto and the
option exercise price per share thereunder; and (iii) state the number
of Option Shares being redeemed and the applicable Redemption Price (in
total and per share).
3.1.3 Each redemption shall occur as described in its
respective Redemption Notice, unless the Shareholders object in good
faith in writing stating the basis for such objection, at the principal
office of the Company on the tenth (10th) business day after the date
the Shareholders are given the Redemption Notice. If the Shareholders
so object to a redemption, then the Company shall neither effect the
closing of the redemption in question nor release the affected Option
Shares to the Shareholders until the dispute is resolved by the mutual
written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected.
3.1.4 At each redemption closing hereunder, the Company
shall (i) transfer to the Company's order (including, if applicable,
appropriately filling in and dating the necessary Assignments Separate
From Certificate) and/or cancel the correct number of shares and (ii)
pay to the Shareholders the aggregate Redemption Price for the shares so
transferred and/or canceled either by personal delivery of a check to
Shareholders or by wire transfer in accordance with the Shareholders'
instructions, the payment method to be at the election of the
Shareholders.
3.1.5 The parties intend that the Company shall exercise
the corresponding redemption right set forth in this Section 3
reasonably promptly after each valid exercise of a vested Covered
Option. However, the failure of the Company to timely exercise a
redemption right hereunder following the valid exercise of a vested
Covered Option shall not result in a waiver by the Company of such
redemption right or bar a later exercise of such redemption right except
as provided in Section 7.1.
3.1.6 The Company shall redeem all Option Shares which it
has the right to redeem under this Section 3 unless otherwise expressly
approved by the Company's board of directors.
4. Stock Splits, etc. If, from time to time during the term of
this Agreement, there is any stock dividend, stock split or other change
in the character or amount of any of the outstanding securities of the
Company or if there is any consolidation, merger or sale of all, or
substantially all, of the assets of the Company, then in such event any
and all adjustments or new, substituted or additional securities to
which the Shareholder is entitled by reason of its ownership of Option
Shares shall be immediately subject to this escrow and the redemption
right set forth in Section 3 and shall be "Option Shares" for all
purposes of this Agreement with the same force and effect as the shares
of stock presently subject to this Agreement, if and provided that the
shares of stock under the Covered Options are similarly adjusted or
entitled to such new, substituted or additional securities and such
adjustments or new, substituted or additional securities are subject to
the terms and conditions of the Covered Options agreements between the
Company and the optionees thereunder. After each such event, the Option
Price per Option Share payable upon exercise of the Covered Option in
question shall be appropriately adjusted as well. The Shareholders
authorize the Company to deposit into escrow under this Agreement any
certificates evidencing any such new, substituted or additional
securities subject to this Agreement.
5. Restriction on Transfer.
5.1 The Shareholders agree not to sell, transfer, pledge,
hypothecate or otherwise dispose of any Option Shares which remain
subject to the right of redemption set forth in Section 3, except as set
forth in Section 5.2 below.
5.2 Notwithstanding anything to the contrary in this Agreement,
nothing in this Agreement shall prevent the Shareholders from making a
distribution or transfer of beneficial and legal ownership of any or all
the Option Shares, provided that any such distribution or transfer is
otherwise in compliance with applicable securities laws and that the
transferee(s) agree in writing to be bound by the provisions of this
Agreement and delivers to the Escrow Agent such number of Assignments
Separate From Certificate in the form of Attachment A, duly executed in
blank as the Company may reasonably require. The Shareholders agree to
give Company written notice of any distribution or transfer made
pursuant to this Section 5.2.
5.3 The Company shall not be required (i) to transfer on its
books any Option Shares which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or (ii)
to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall
have been so transferred.
5.4 In no event may the Company assign its rights and delegate
its duties under this Agreement, including but not limited to the
redemption right set forth in Section 3, without the prior written
consent of the Shareholders.
6. Stock Legends. The certificates representing the Option
Shares, if and while subject to the provisions of this Agreement, may be
endorsed with the following stock legend (in addition to any other stock
legend endorsed thereon):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS OF REDEMPTION AND RESTRICTIONS UPON AND OBLIGATIONS WITH RESPECT
TO TRANSFER AS SET FORTH IN AN "OPTION SHARES ESCROW AGREEMENT" BETWEEN
THE CORPORATION AND THE ORIGINAL REGISTERED HOLDER OF SAID SHARES, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.
7. Termination Provisions.
7.1 If a Covered Option does not fully vest in the option holder,
or if a vested Covered Option lapses in whole or part without exercise,
then a corresponding number of Option Shares immediately shall cease to
be subject to such right of redemption and shall be free of any and all
obligation to sell the same to the Company and the certificate(s) for
such share(s) promptly shall be delivered to the Shareholders (or as the
Shareholders then direct), pro rata in proportion to the respective
number of Option Shares deposited by each Shareholder, with any legend
endorsed thereon pursuant to Section 6 removed.
7.2 This Agreement and the escrow created hereby will
automatically terminate upon the date all Option Shares have been either
redeemed or released from escrow pursuant to Section 3 or 7; provided,
however, (i) if there is then pending an unresolved objection to a
redemption hereunder or any other applicable dispute (see Sections 1.3.3
and 3.1.3), then this Agreement shall not terminate until thirty (30)
days after such objection or dispute is resolved and (ii) the Company's
obligation to pay in full the Option Price for all Option Shares
redeemed hereunder shall survive such termination. If, at the time of
such termination, the Company has possession of any documents,
securities or other property belonging to Shareholders, it shall
promptly deliver all of same to Shareholders.
8. Miscellaneous.
8.1 The parties agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the
intent of this Agreement.
8.2 Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery,
deposit with a guaranteed overnight courier, or upon deposit in the
United States Post Office, by registered or certified mail with postage
and fees prepaid, addressed to the Shareholders at their addresses set
forth in the Company's records, or to the Company as follows:
Core Technologies, Inc.
000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Corporate Secretary
or, in each case, at such other address as such party may designate by
written notice to the other party hereto.
8.3 This Agreement shall inure to the benefit of the successors
and assigns of the Company and, subject to the restrictions on transfer
herein set forth, be binding upon Shareholders, their heirs, executors,
administrators, successors and assigns. Safeguard Scientifics
(Delaware), Inc. shall be a third party beneficiary of this Agreement,
and the parties shall not amend or waive compliance with this Agreement
without the consent of Safeguard.
8.4 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
CORE TECHNOLOGIES (PENNSYLVANIA),
INC. SHAREHOLDERS:
By: Xxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, President XXXXXX XXXXXXXX
Xxxxxx Xxxxxxxx Xxxxxxxxx Xxxxxx
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XXXXXX XXXXXXXX XXXXXXXXX XXXXXX III