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EXHIBIT 10.9
EXHIBIT "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into this 15th day of August, 2000 by and
among Compass Knowledge Holdings, Inc., a Florida corporation (hereinafter
referred to as "Buyer"), Xxxxxx, Inc., an Ohio corporation ("Xxxxxx"), the
shareholders of Xxxxxx listed on the signature page of this Escrow Agreement
(hereinafter jointly and severally called the "Shareholder") and Firstar Bank,
Cincinnati, Ohio (the "Escrow Agent").
BACKGROUND
Xxxxxx, and the Shareholders have simultaneously with the execution of
this Escrow Agreement entered into an Agreement and Plan of Stock Purchase (the
"Agreement") with Buyer and its wholly owned subsidiary, Compass Acquisition
Corp. (the "Acquisition Corp."). Among the terms of the Agreement, the parties
have agreed to establish an Escrow for $1,125,000 in common shares of Buyer that
may be issued and delivered to Shareholder subject to certain terms and
conditions as set forth in the Agreement and herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. ESTABLISHMENT OF ESCROW FUND. Simultaneous with the signing of this Escrow
Agreement, Buyer will cause its Stock Transfer Agent to deposit with the Escrow
Agent, 562,500 shares of Buyer's common shares, $.001 par value (the "Escrowed
Shares" or "Escrowed Payment").
2. PURPOSE OF ESTABLISHMENT OF ESCROW FUND. The Escrow Fund is being established
to hold the Escrowed Payment in support of (i) Sections 2.2.1(b), (c) and (d),
(ii) Article 4 and (iii) the indemnity obligations of the Shareholder as set
forth in Section 9.3.
3. RELEASE OF ESCROWED PAYMENT. The Escrow Agent shall follow the instructions
set forth herein in determining to whom and when the Escrowed Payments will be
released.
3.1 RELEASE OF ESCROWED SHARES. Provided Buyer has not advised the
Escrow Agent in writing of an Indemnity Claim prior to the payment due date for
the Escrowed Stock as provided for in Section 2.2.3 of the Agreement, the Escrow
Agent shall release to the Buyer and/or the Shareholder that number of Escrowed
Shares as calculated in accordance with the terms and conditions of the
Agreement and as represented by the Buyer and the Shareholder in writing to the
Escrow Agent. In the event Buyer makes an Indemnity Claim at anytime during said
period, then Escrow Agent shall release that number of Escrowed Shares as the
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Buyer and the affected Shareholder shall mutually agree and advise the Escrow
Agent in writing. In the event the Buyer and the affected Shareholder do not
mutually agree as to the number of Escrowed Shares to be released either as a
result of the inability to agree as to the amount of the Acquisition
Consideration that is due Buyer or as a result of a contested Indemnity Claim,
then the Escrow Agent shall continue to hold said Escrowed Shares in escrow
until such time as the matter can be resolved through settlement or appropriate
legal remedies.
3.2 JOINT INSTRUCTION. Notwithstanding anything contained in Section
3.1 of this Escrow Agreement, in the event that the Escrow Agent receives
written instruction from both the Shareholder and the Buyer directing the Escrow
Agent as to the manner in which the Escrowed Payments, or any portion thereof,
are to be disbursed, the Escrow Agent shall act in accordance with such
instruction.
4. ESCROW PROVISIONS. Escrow Agent acknowledges receipt of the stock
certificates representing the Escrowed Shares, and agrees to hold such Escrowed
Payment in escrow to be delivered in accordance with the terms of this Escrow
Agreement subject to the following:
4.1 The parties acknowledge that Escrow Agent is acting solely as an
escrow agent and shall not, solely by reason of this Escrow Agreement, be
responsible or liable in any manner whatsoever for the sufficiency, correctness
or validity of any instrument or signature thereon deposited with or delivered
to Escrow Agent, with respect to the form or execution of any such instrument
thereof or the identity, authority or rights of any person executing, depositing
or delivering the same. Escrow Agent may act in reliance on any instrument or
signature believed to be genuine and may assume that any person purporting to
give notice or receipt or make any statements of advice or instruction in
connection with the provisions hereof has been duly authorized to do so.
4.2 Upon the final delivery of the entire Escrowed Payment by Escrow
Agent or mutual agreement of the parties in accordance with the terms of this
Escrow Agreement, Escrow Agent shall be discharged from all further obligations
or responsibilities hereunder, except in the case of Escrow Agent's own bad
faith or gross negligence.
4.3 Escrow Agent shall not be bound by any waiver, amendment,
supplement or modification of this Escrow Agreement which affects its duties
hereunder, unless it shall have given its prior written consent thereto.
4.4 Nothing in this Escrow Agreement shall be deemed to impose a duty
on Escrow Agent to take any action under this Escrow Agreement if it shall have
been advised by counsel that such action is likely to result in liability to it,
nor shall it be required to take any action that is contrary to the terms of
this Escrow Agreement or is contrary to law. Any action to be taken by the
Escrow Agent hereunder may be taken by it by or through any attorney at law who
is a partner, associate, or employee of Escrow Agent.
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4.5 Escrow Agent shall be required to institute or defend any action or
legal process involving any matter referred to herein which in any manner
affects it or its duties or liabilities as long as Buyer and Shareholder meet
the obligations of Sections 4.6 and 4.10 below. This provision is intended only
for the protection of Escrow Agent, and shall not affect its right to exercise
any discretionary power given by any provision hereof to take action, or to
refrain from taking action, in its discretion without such request, or without
such security or indemnity.
4.6 Buyer and Shareholder hereby each agree, jointly and severally, to
indemnify and hold Escrow Agent harmless from all suits, claims, actions,
judgments, losses, liabilities, fees (including reasonable attorney's fees),
costs, expenses, damages or other charges which may be imposed upon or incurred
by Escrow Agent arising out of or related to the operation of this Escrow
Agreement, except to the extent of Escrow Agent's gross negligence or willful
misconduct. Such indemnification shall survive the termination of the escrow.
4.7 The duties and obligations of Escrow Agent shall be determined
solely by the express provisions of this Escrow Agreement and Escrow Agent shall
not be liable, except for the performance of such duties and obligations as are
specifically set forth in this Escrow Agreement.
4.8 Escrow Agent may resign at any time by giving at least twenty (20)
days notice of such resignation to the parties hereto. Upon providing such
notice, Escrow Agent shall have no further obligation hereunder except to
deliver any items being held by Escrow Agent to a successor escrow agent jointly
designated BY the parties hereto, or, if no such successor is so designated
within ten (10) days of request therefor by Escrow Agent, then to a clerk of a
court of competent jurisdiction located in Xxxxxxxx County, Ohio pending the
appointment of a successor escrow agent.
4.9 The parties together may terminate the appointment of Escrow Agent
hereunder upon written notice signed by an authorized signatory of each of the
foregoing specifying the date upon which such termination shall take effect. In
the event of such termination, the parties shall, within thirty (30) days of
such notice, jointly appoint a successor escrow agent and Escrow Agent shall,
upon receipt of written instructions signed by an authorized signatory of the
parties, turn over to such successor escrow agent all items then being held by
Escrow Agent hereunder, whereupon Escrow Agent shall be relieved of all further
obligations and released from all liability thereafter arising hereunder;
provided, however, that if the parties fail to agree upon a successor escrow
agent within such thirty (30) day period, such termination notice shall be null
and void and Escrow Agent shall continue to be bound by all of the provisions
hereof.
4.10 Except as otherwise provided herein, the parties shall be equally
responsible for all reasonable fees, out-of-pocket expenses, charges and other
disbursements and payments of Escrow Agent.
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4.11 If at any time a dispute shall exist as to the duties of the
Escrow Agent and the terms hereof, the Escrow Agent may deposit the Escrowed
Payment with either (a) a court of competent jurisdiction and interplead the
parties hereto or (b) a successor escrow agent designated by the arbitrators in
accordance with Section 6.9 hereof. Upon so depositing and/or filing its
complaint in interpleader, the Escrow Agent shall be completely discharged and
released from all further liability or responsibility.
4.12 The Escrow Agent is hereby expressly authorized and directed to
disregard any and all notices and warnings, other than those notices and
warnings specifically called for in this Escrow Agreement, or by any other
person or corporation, 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 the case of the Escrow Agent obeys or complies with
any such order, judgment or decree of any court, it shall not be liable to any
of the parties hereto or to any other person, firm or corporation by reason of
such compliance, notwithstanding that any such other judgment or decree may be
subsequently revised, modified, annulled, set aside or vacated, or found to have
entered without jurisdiction.
4.13 The Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provision of any agreement between the
other parties hereto, and the original, or a copy of any such agreement
deposited with the Escrow Agent shall not bind said agent in any manner. The
Escrow Agent assumes no responsibility for the validity or sufficiency of any
documents or papers or payments deposited or called for hereunder except as may
be expressly and specifically set forth in this Escrow Agreement in clear and
unambiguous language, and the duties and responsibilities of the Escrow Agent
are limited to those expressly and specifically stated in this Escrow Agreement
in such language.
4.14 The Escrow Agent will not, without the prior written consent of
both the Buyer and the Shareholder, transfer, assign, dispose of its right,
title or interest in the Escrowed Payment, or any part thereof, or create
directly or indirectly any security interest or otherwise encumber any of the
Escrowed Payment, or permit any of the Escrowed Payment to ever be or become
subject to any warrant, put, option or other rights of third persons or any
attachment, execution, sequestration or other legal or equitable process, or any
security interest or encumbrance of any kind, except which may arise from,
through or out of unauthorized actions or omissions of the Shareholder or Buyer.
4.15 The Escrow Agent shall allow Buyer and Shareholder upon reasonable
written request within reasonable time parameters to inspect all records of the
Escrow Agent relating to the Escrowed Payment, and to make and take away copies
of such records during normal business hours.
4.16 The Escrow Agent shall promptly notify the Buyer and Shareholder
of any material change in any fact or circumstance in connection with the
Escrowed Payment.
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4.17 The Escrow Agent shall promptly notify the Buyer and Shareholder
of any claim, action or proceeding affecting title to the Escrowed Payment, or
any part thereof.
5. Capital Adjustments.
5.1 Subject to Section 2.2.5 of the Agreement, the existence of the
right to receive the Escrowed Stock set forth herein shall not affect in any way
the right or power of Buyer to make or authorize any or all adjustments,
subdivisions, combinations, recapitalizations, reorganizations or other changes
in its capital structure or its business, or any merger or consolidation of
Buyer or to issue any securities, bonds, debentures, or preferred or prior
preference stock ahead of or affecting the common stock of Buyer, the rights
thereof or to effect the dissolution or liquidation of Buyer, or any sale or
transfer of all or part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
5.2 In the event of a stock split, stock dividend, recapitalization, or
merger in which Buyer is subject to a split-up, combination, exchange of shares
or the like and which results in a change in the number or kind of shares of
common stock of Buyer which is outstanding immediately prior to such event, the
rights of the Shareholder to receive Escrowed Stock in respect of this Escrow
Agreement, shall be appropriately adjusted in the same manner as the number and
kind of shares a shareholder of Buyer who owned the same number and kind of
shares immediately prior to such event. Such adjustments shall be made in good
faith by the Board of Directors of Buyer, whose determination shall be
conclusive and binding on all parties, subject to manifest error.
5.3 In case of any consolidation or merger of Buyer with or into
another corporation or the conveyance of all or substantially all of the assets
of Buyer to another corporation or a share exchange transaction involving more
than 50% of the issued and outstanding common stock of Buyer, the Shareholder's
right to receive the Escrowed Stock shall thereafter be convertible into the
number of shares of stock, options or other securities or property to which a
holder of the number of shares of common stock deliverable upon entitlement to
the Escrowed Stock would have been entitled upon such consolidation, merger,
conveyance, conversion or exchange; and, in any such case, appropriate
adjustment shall be made in the application of the provisions herein set forth
with respect to the rights and interest thereafter of the Shareholder's rights
to receive Escrowed Stock, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as reasonably possible, in relation to any
shares of stock, options or other property thereafter deliverable upon
entitlement thereof.
6. Miscellaneous Provisions
6.1 NOTICES. All notices and other communications under or in
connection with this Escrow Agreement shall be in writing and shall be deemed
given (a) if delivered personally (including by overnight express or messenger),
upon delivery, (b) if delivered by registered or certified mail (return receipt
requested), upon the earlier of actual delivery or three (3) days after being
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mailed, or (c) if given electronically, upon confirmation of transmission, in
each case to the parties at the following addresses:
(a) If to the Buyer, addressed to:
Compass Knowledge Holdings, Inc.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Telecopy: (000)000-0000
(b) If to the Shareholder, to:
c/o Xxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
With a copy to:
Xxxxxxx Head &Ritchey LLP
0000 Xxxxx Xxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(c) If to the Escrow Agent:
Firstar Bank, N.A.
Corporate Trust Dept.
M/L CN WN 06 CT
000 Xxxxxx Xxxxxx
XX Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
6.2 SEVERABILITY. If any immaterial term or provision of this Escrow
Agreement or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such term or
provision shall be ineffective as to such jurisdiction to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
such term or provision in any other jurisdiction, the remaining terms and
provisions of this Escrow Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
enforceable.
6.3 ENTIRE AGREEMENT. This Escrow Agreement contains the entire
understanding of the parties hereto in respect of its subject matter and
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supersedes all prior and contemporaneous agreements and understandings, oral and
written, between the parties with respect to such subject matter.
6.4 SUCCESSORS AND ASSIGNS. This Escrow Agreement shall be binding upon
and inure to the benefit of Buyer and the Shareholder and their respective
successors, heirs and assigns. This Escrow Agreement is not intended to benefit,
and shall not run to the benefit of or be enforceable by, any other person or
entity other than the parties hereto and their permitted successors and assigns.
6.5 COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same Escrow Agreement.
6.6 RECITALS AND BACKGROUND. The recitals and background to this Escrow
Agreement are incorporated herein and, by this reference, made a part hereof as
if fully set forth at length herein.
6.7 CONSTRUCTION.
(a) The article, section and subsection headings used herein
are inserted for reference purposes only and shall not in any way affect the
meaning or interpretation of this Escrow Agreement.
(b) As used in this Escrow Agreement, the masculine, feminine
or neuter gender, and the singular or plural, shall be deemed to include the
others whenever and wherever the context so requires.
(c) For the purposes of this Escrow Agreement, unless the
context clearly requires, "or" is not exclusive.
(d) Unless otherwise specified herein, all defined terms in
the Escrow Agreement shall have the same meaning as set forth in the Agreement.
6.8 GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Florida.
6.9 RESOLUTION OF DISPUTES. In the event there is a dispute between the
parties, the parties will, in good faith, attempt to resolve any such disputes
and if such disputes can not be resolved within 30 days of such dispute
including, without limitation the requested release of the Escrowed Payment, or
any portion thereof, such dispute shall be finally settled by binding
arbitration heard by three (3) arbitrators in Cincinnati, Ohio, pursuant to the
rules then pertaining of the American Arbitration Association.
7. OWNERSHIP. All Escrowed Shares shall be titled in the name of Shareholder (as
indicated in Exhibit "A" attached hereto) as the contingent owner of record.
Until such time as the Shareholder is entitled to unconditional ownership of
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same as provided for herein and the Agreement, all rights and privileges which
accrue to the Escrowed Shares including but not limited to voting rights,
dividends, distributions, or other such rights shall belong to Buyer and not the
Shareholder or the Escrow Agent, except as otherwise specifically provided
herein.
8. SHAREHOLDER ELECTIONS, CONSENTS OR APPROVALS. For purposes of determining any
election, consent, approval and/or disapproval of the Shareholder as may be
required by this Escrow Agreement, the election, consent, approval and/or
disapproval, as the case may be, of Xxxxx X. Xxxxxxxx and Xxxxxxx Xxxxxxxxxx
shall be deemed for these purposes the election, consent, approval and/or
disapproval, as the case may be, of the Shareholder, except as otherwise
specifically stated herein.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Stock
Escrow Agreement, or has caused this Escrow Agreement to be executed on its
behalf by a representative duly authorized, all as of the date first above
set forth.
ATTEST: BUYER
Compass Knowledge Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
ATTEST: XXXXXX
Xxxxxx, Inc
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
WITNESS: XXXXXXX XXXXXXXXXX
/s/ Xxxxxxx Xxxxxxxxxx
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WITNESS: XXXXX X. XXXXXXXX
/s/ Xxxxx X. Xxxxxxxx
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WITNESS: XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
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WITNESS: XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
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WITNESS: XXXX XXXXXXXX
/s/ Xxxx Xxxxxxxx
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WITNESS: XXXX XXXXXXXX
/s/ Xxxx Xxxxxxxx
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WITNESS: XXXXXXXXX XXXXXXXX
/s/ Xxxxxxxxx Xxxxxxxx
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WITNESS: XXXXX X. XXXXXXXX AS CUSTODIAN FOR
XXXXXXX XXXXXXXXX UNDER
THE OHIO TRANSFERS TO MINORS ACT
/s/ Xxxxx X. Xxxxxxxx
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WITNESS: ESCROW AGENT
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