Exhibit 2.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated May 12, 2000, by and
among XXXXXXXX.XXX, INC., a Delaware corporation ("SoftLock"), CHILI PEPPER,
INC., a Massachusetts corporation ("Seller"), and MCGUIRE, WOODS, BATTLE &
XXXXXX LLP, as escrow agent ("Escrow Agent"). All capitalized terms used but not
defined herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement dated May 12, 2000 by and among SoftLock, Seller, Xxxxxxxx
Xxxxxx and Xxxx Xxxxxx (the "Purchase Agreement").
BACKGROUND
As contemplated by the parties to the Purchase Agreement, SoftLock will
acquire certain of the assets of Seller on the Closing Date. Seller will receive
Transaction Shares (shares of SoftLock common stock, par value $.01 per share)
pursuant to the terms and conditions of the Purchase Agreement.
On the Closing Date, as collateral security for any breach by Seller or
either of the Stockholders of any term, condition, representation, warranty,
covenant or indemnity under or provided by the Purchase Agreement, SoftLock will
deliver the Escrow Shares (defined below) to the Escrow Agent to be held by the
Escrow Agent and disposed of in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"Claims" means claims, liabilities, losses, actions, suits, or
proceedings at law or in equity, or any other expense, fees or charges of any
character or nature.
"Closing Date" has the meaning ascribed to it in Section 3.2 of the
Purchase Agreement.
"Demand of Delivery" has the meaning ascribed to it in Section 2.3
hereof.
"Escrow Agent" has the meaning ascribed to it in the forepart of this
Agreement.
"Escrow Shares" means 36,242 shares of SoftLock Common Stock.
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"Objection to Delivery" has the meaning ascribed to it in Section 2.3
hereof.
"Seller" has the meaning ascribed to it in the forepart of this
Agreement.
"Set Aside Shares" has the meaning ascribed to it in Section 2.3
hereof.
"SoftLock" has the meaning ascribed to it in the forepart of this
Agreement.
"Transaction Shares" has the meaning ascribed to it in Section 2.5 of
the Purchase Agreement.
SECTION 1.2 INTERPRETATION. As used in this Agreement, the word
"including" means without limitation; the word "or" is not exclusive; and the
words "herein", "hereof', "hereby", "hereto" and "hereunder" refer to this
Agreement as a whole. Any reference to any applicable law shall be deemed also
to refer to all rules and regulations promulgated thereunder unless the context
otherwise requires. Whenever required by the context, any gender shall include
any other gender, the singular shall include the plural and the plural shall
include the singular. Unless the context otherwise requires, references herein:
(i) to Articles and Sections mean the Articles and Sections of this Agreement;
and (ii) to an agreement, instrument or other document means such agreement,
instrument or other document as amended, supplemented and modified through the
date hereof unless the context otherwise requires and thereafter from time to
time to the extent permitted by this Agreement. The titles to Articles and
headings of Sections are inserted for convenience of reference only and shall
not be deemed a part of or to affect the meaning or interpretation of this
Agreement.
ARTICLE II
TREATMENT OF ESCROW SHARES
SECTION 2.1 DELIVERY OF ESCROW SHARES TO ESCROW. On the Closing Date,
SoftLock agrees to deliver share certificate(s) evidencing the Escrow Shares to
the Escrow Agent immediately upon delivery of the Transaction Shares at Closing.
SECTION 2.2 TREATMENT OF ESCROW SHARES. The Escrow Agent shall hold the
Escrow Shares in accordance with the terms hereof at its place of business
located at Seven St. Xxxx Street, Suite 1000, Xxxxxxxxx, Xxxxxxxx 00000 or any
other place of business of the Escrow Agent within the State of Maryland.
SECTION 2.3 RELEASE OF ESCROW SHARES.
(a) At any time prior to one (1) year after the Closing Date,
if SoftLock shall be of the opinion that it is entitled to make a claim to all
or any part of the Escrow Shares pursuant to the terms and conditions of the
Purchase Agreement, it shall deliver to the Escrow Agent a demand in writing to
deliver Escrow Shares (a "Demand for Delivery"), together with a concise written
explanation of the ground or grounds for such Demand for Delivery as well as the
amount in controversy with respect to such claim (the "Amount in Controversy"),
such demand to be made in good faith. Upon receipt of the Demand for Delivery,
the Escrow Agent
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shall reasonably promptly submit the certificates evidencing the Escrow Shares
to SoftLock's transfer agent and request that the transfer agent cancel such
certificates and issue in lieu thereof certificates in such denominations as the
Escrow Agent shall request. After receipt by the Escrow Agent from SoftLock's
transfer agent of such new certificates evidencing the Escrow Shares in the
requested denominations, the Escrow Agent shall set aside a number of Escrow
Shares that are equal in value to the Amount in Controversy (such Escrow Shares
being referred to herein as the "Set Aside Shares"). The Escrow Agent shall,
reasonably promptly after receipt of the Demand for Delivery, notify Seller that
it has received a Demand for Delivery and it shall deliver a copy of the Demand
for Delivery to Seller. If Seller is of the opinion that SoftLock is not
entitled to such Set Aside Shares under the terms and provisions of the Purchase
Agreement, Seller shall deliver to the Escrow Agent, within twenty (20) days of
receipt of the Demand for Delivery from the Escrow Agent, a written objection to
delivery (the "Objection to Delivery") together with a concise written
explanation of the ground or grounds for such Objection to Delivery, such
objection to be made in good faith. If Escrow Agent receives an Objection to
Delivery within the time prescribed herein, Escrow Agent shall continue to hold
the Set Aside Shares until delivery pursuant to Section 2.3(b). The Escrow Agent
shall reasonably promptly deliver a copy of any Objection to Delivery so
received to SoftLock. If the Escrow Agent does not receive an Objection to
Delivery from Seller within ten (10) days of delivery of the Demand for
Delivery, the Escrow Agent shall promptly thereafter deliver the Set Aside
Shares to SoftLock and thereupon the Escrow Agent shall be relieved of all
obligations and released from all liability with respect to such transactions.
Nothing herein contained shall prevent SoftLock from making more than one claim
and/or Demand for Delivery within the period of time permitted therefore under
the Purchase Agreement. The Escrow Agent shall release to Seller all or such
part of the Escrow Shares as to which no Demand for Delivery shall have been
made within one (1) year after the Closing Date, reasonably promptly thereafter,
and thereupon the Escrow Agent shall be relieved of all obligations and released
from all liability with respect to such transactions.
(b) If the Escrow Agent shall receive an Objection to Delivery
in the manner and within the prescribed time provided in Section 2.3(a), then
the Escrow Agent shall continue to hold the Set Aside Shares set forth therein
in escrow under the terms and conditions hereof, until the earlier of: (i)
receipt by the Escrow Agent of a statement signed by all parties hereto,
directing the Escrow Agent to deliver such Set Aside Shares and instructing the
Escrow Agent how and to whom delivery should be made, in which event the Escrow
Agent shall deliver such Set Aside Shares in the manner and to the person or
party instructed by such parties, (ii) receipt by the Escrow Agent of a final
judgment, order or decree from a court of competent jurisdiction instructing the
Escrow Agent as to the manner and to whom such Set Aside Shares should be
delivered, and the lapse of any time for the taking of an appeal or petition to
a higher court for a writ of certiorari therefrom, in which event the Escrow
Agent shall deliver such Set Aside Shares in the manner and to the person or
party required by such final judgment, order or decree, or (iii) the filing by
the Escrow Agent of an action for interpleader in a court of competent
jurisdiction pursuant to applicable Delaware law or any interpleader provision
of any other state, and tender into such court of such Set Aside Shares by the
Escrow Agent. Upon disposition of the Set Aside Shares by the Escrow Agent
pursuant to clause (i), clause (ii), or clause (iii) of the preceding sentence,
the Escrow Agent shall be relieved and released of all liability and obligation
with respect to such Set Aside Shares.
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(c) Notwithstanding the foregoing, in lieu of the Escrow
Agent's delivery of the Set Aside Shares, Seller shall have the right to pay the
Escrow Agent the Amount in Controversy in immediately available funds. Upon
payment of the Amount in Controversy to the Escrow Agent, the Escrow Agent shall
release the Set Aside Shares. The Escrow Agent shall hold all remaining Escrow
Shares (the "Balance Escrow Shares") in accordance with the terms of the this
Agreement as security pending the final determination of all such claims,
Actions or Proceedings, and the Balance Escrow Shares shall be cancelled in
satisfaction of any amounts to which SoftLock becomes entitled in respect of any
such claim; provided, however, that Seller shall be entitled to pay the Escrow
Agent such amounts in excess of the Amount in Controversy in immediately
available funds and upon such payment the Escrow Agent shall release the Balance
Escrow Shares to Seller.
ARTICLE III
ESCROW AGENT
SECTION 3.1 ESCROW AGENT'S ACTIONS. The Escrow Agent may act in
reliance upon any writing or instrument or signature (including facsimile) which
it, in good faith, believes to be genuine, and may assume the validity and
accuracy of any statement or assertion contained in such a writing or instrument
and may assume that any person purporting to give any writing, notice, advice or
instruction in connection with the provisions hereof has been duly authorized so
to do.
SECTION 3.2 ESCROW AGENT'S DUTIES. The Escrow Agent's duties hereunder
shall be limited to the safekeeping of the Escrow Shares and the disposition of
the same in accordance with the terms of the Purchase Agreement and the terms
hereof. The Escrow Agent undertakes to perform only such duties as are expressly
set forth herein and no implied duties or obligations shall be read into this
Agreement against the Escrow Agent.
SECTION 3.3 INDEMNIFICATION OF ESCROW AGENT.
(a) SoftLock and Seller, jointly and severally, hereby agree
to indemnify the Escrow Agent and hold it harmless from any and all Claims,
which it may incur or with which it may be threatened by reason of its acting as
the Escrow Agent under this Agreement, and in connection therewith, to indemnify
the Escrow Agent against any and all expenses including attorneys' fees and the
cost of bringing or defending any action, suit or proceeding including, but not
limited to, an action for interpleader or advancing or resisting any claim,
provided, that no such indemnification shall be applicable with regard to Claims
resulting from the Escrow Agent's bad faith, gross negligence or willful
misconduct. All expenses, fees or charges, including reasonable attorneys' fees,
so incurred, shall at the Escrow Agent's option, constitute a lien on the Escrow
Shares to the extent such expenses, fees or charges are incurred.
Notwithstanding the foregoing, the Escrow Agent confirms that no charges will be
applicable regarding its service as the Escrow Agent unless a dispute, whether
or not resulting in litigation, arbitration or otherwise, arises between the
parties, in which case Escrow Agent shall xxxx both parties at its standard
rates for legal services.
(b) If the parties hereto shall be in disagreement about the
interpretation of this Agreement, or about their rights and obligations
hereunder, or the propriety of any action
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contemplated by the Escrow Agent hereunder, any party hereto may, at its
discretion, file an action in a court of competent jurisdiction to resolve such
disagreement. In the event of an action culminating in the entry of a final
judgment, order or decree, the party prevailing in such action shall be entitled
to recover its costs from the other party. The Escrow Agent, however, shall be
indemnified, jointly and severally, by SoftLock and Seller for all costs,
including reasonable attorneys' fees, in connection with any such action, in
accordance with the provisions of this Section 3.3 hereof, and shall be fully
protected in suspending all or a part of its actions under this Agreement until
a final judgment, order or decree in the action is received.
SECTION 3.4 LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be
liable for any mistakes of fact, or errors of judgment, or for any acts or
omission of any kind unless caused by the bad faith, willful misconduct or gross
negligence of the Escrow Agent. Without limiting the foregoing, Escrow Agent
shall not be liable for taking any action which is dependent or conditioned upon
the taking of any action by any person or entity other than the Escrow Agent
including, without limitation, SoftLock's transfer agent.
SECTION 3.5 RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign
upon ten (10) days written notice to the parties to this Escrow Agreement and
shall appoint a successor escrow agent, who shall be reasonably acceptable to
SoftLock and Seller, during such notice period. If a successor escrow agent is
not appointed within such period, the Escrow Agent may petition a court of
competent jurisdiction to name a successor. The costs of such action shall be
paid by SoftLock and Seller, on an equal basis, and shall be subject to the
indemnification provisions of Section 3.3 hereof.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt requested, or
delivered by a nationally recognized overnight courier service prepaid, to the
parties at the following addresses or facsimile numbers:
If to SoftLock, to:
XxxxXxxx.xxx, Inc.
Xxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President & Chief Executive Officer
Telecopier: 000-000-0000
If to Escrow Agent, to:
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Xxxxxxx X. Xxxxxxxx, Esquire
McGuire, Woods, Battle & Xxxxxx LLP
0 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
If to Seller, to:
Chili Pepper, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, President
and Xxxxxxxx Xxxxxx
Telecopier: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxxx, Esquire
000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: 000-000-0000
SECTION 4.2 BINDING NATURE. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective personal
representatives, successors and assigns.
SECTION 4.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
SECTION 4.4 TERMINATION. This Agreement shall terminate and the Escrow
Agent shall be discharged of all responsibility hereunder at such time as the
Escrow Agent shall have completed its duties hereunder or resigned in accordance
herewith.
SECTION 4.5 ARBITRATION.
(a) Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association by an arbitration panel consisting of three (3) persons, one (1)
selected by SoftLock, one (1) selected by Seller and the third selected by
mutual agreement of the first two (2) arbitrators selected, and judgement upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
(b) The arbitration shall be held in Boston, Massachusetts.
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(c) All fees, costs and expenses (including reasonable
attorneys' fees and expenses) incurred by a party that prevails on any issue in
any arbitration commenced hereunder or in any judicial proceeding seeking to
enforce this Agreement to arbitrate disputes or seeking to enforce any order or
award of any arbitration hereunder shall be assessed against the party or
parties that do not prevail on such issue or issues.
SECTION 4.6 GENDER. As used herein, the plural shall include the
singular, the singular the plural, and the use of any gender shall be applicable
to all genders.
SECTION 4.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement may be
executed and delivered by facsimile transmission.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
WITNESS/ATTEST: XXXXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXX [SEAL]
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Xxxxx X. Xxxxxxxx
President & Chief Executive Officer
CHILI PEPPER, INC.,
a Massachusetts corporation
By: /s/ XXXX XXXXXX [SEAL]
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Xxxx Xxxxxx
President
MCGUIRE, WOODS, BATTLE & XXXXXX LLP
By:
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