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EXHIBIT 4.6
AMENDED AND RESTATED ESCROW AGREEMENT
AMENDED AND RESTATED ESCROW AGREEMENT, dated as of the 19th day of
August, 1997 and effective as of the Effective Date, as defined herein, amending
and restating the Escrow Agreement dated as of January 21, 1997, by and among
American Stock Transfer & Trust Company, a New York corporation (hereinafter
referred to as the "Escrow Agent"), On'Village Communications, Inc., a
California corporation (the "Company"), and the stockholders of the Company who
have executed this agreement (hereinafter collectively called the
"Stockholders"), is entered into by and among the Escrow Agent, the Company and
the Stockholders.
WHEREAS, the Company contemplates a public offering ("Public
Offering") of Units ("Units"), each Unit consisting of one share of its Class A
Common Stock (the "Class A Common Stock") and one redeemable Class A Warrant
(the "Class A Warrant") through X.X. Xxxxx Investment Banking Corp. as
underwriter (the "Underwriter") pursuant to a Registration Statement (the
"Registration Statement") on Form SB-2 to be filed with the Securities and
Exchange Commission ("SEC"); and
WHEREAS, the Stockholders have agreed to deposit in escrow an
aggregate of 800,000 shares of Class B Common Stock ("Class B Common Stock"
which, together with the Class A Common Stock, is referred to herein as the
"Common Stock"), upon the terms and conditions set forth herein.
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
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1. The Stockholders and the Company hereby appoint American Stock
Transfer & Trust Company as Escrow Agent and agree that the Stockholders will,
prior to the Effective Date (as defined herein), deliver to the Escrow Agent to
hold in accordance with the provisions hereof, certificates representing an
aggregate of 800,000 shares of Class B Common Stock owned of record by the
Stockholders in the respective amounts set forth on Exhibit A hereto (the
"Escrow Shares"), together with stock powers executed in blank. The Escrow
Agent, by its execution and delivery of this Agreement hereby acknowledges
receipt of the Escrow Shares and accepts its appointment as Escrow Agent to hold
the Escrow Shares in escrow, upon the terms, provisions and conditions hereof.
2. This Agreement shall become effective upon the date on which the
Securities and Exchange Commission declares effective the Registration Statement
("Effective Date") and shall continue in effect until the earlier of (i) the
date specified in paragraph 4(e) hereof or (ii) the distribution by the Escrow
Agent of all of the Escrow Shares in accordance with the terms hereof (the
"Termination Date"). The period of time from the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
3. During the Escrow Period, the Escrow Agent shall receive all of the
money, securities, rights or property distributed in respect of the Escrow
Shares then held in escrow, including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company, such property to be held and distributed
as herein provided and hereinafter referred to collectively as the "Escrow
Property."
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4. (a) The Escrow Shares are subject to release to the Stockholders
only in the event the conditions set forth herein are met. The Escrow Agent,
upon notice to such effect from the Company as provided in paragraph 5 hereof,
shall deliver the Escrow Shares, together with stock powers executed in blank,
and the Escrow Property deposited in escrow with respect to such Escrow Shares,
pro rata, to the respective Stockholders, if, and only if, one of the following
conditions is met:
(i) 400,000 of the Escrow Shares and Escrow Property related to
such Escrow Shares will be released in the event that:
(A) the Company's net income before provision for
income taxes (the "Minimum Pretax Income")
equals or exceeds $3,000,000 for the fiscal
year ending December 31, 1998; or
(B) the Minimum Pretax Income equals or exceeds
$4,500,000 for the fiscal year ending December
31, 1999; or
(C) the Minimum Pretax Income equals or exceeds
$6,000,000 for the fiscal year ending December
31, 2000; or
(D) the Minimum Pretax Income equals or exceeds
$7,500,000 for the fiscal year ending December
31, 2001; or
(E) the Closing Price (as defined herein) of the
Company's Class A Common Stock shall average in
excess of $11.00 per share for any 30
consecutive business days during the period
commencing on the Effective Date and ending 18
months from the Effective Date; or
(F) the Closing Price (as defined herein) of the
Company's Class A Common Stock shall average in
excess of $15.00 per share for any 30
consecutive business days during the period
commencing on the 18th month after the
Effective Date and ending 36 months from the
Effective Date; or
(G) the Company is acquired by or merged into
another entity in a transaction in which
stockholders of the Company receive per share
consideration at least equal to the levels set
forth in (E) and (F) above during the
applicable time periods set forth in (E) and
(F) above.
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(ii) the remaining 400,000 of the Escrow Shares and Escrow Property
related to such Escrow Shares will be released in the event
that:
(A) the Company's Minimum Pretax Income equals or
exceeds $3,400,000 for the fiscal year ending
December 31, 1998; or
(B) the Minimum Pretax Income equals or exceeds
$5,200,000 for the fiscal year ending December
31, 1999; or
(C) the Minimum Pretax Income equals or exceeds
$6,900,000 for the fiscal year ending December
31, 2000; or
(D) the Minimum Pretax Income equals or exceeds
$8,600,000 for the fiscal year ending December
31, 2001;
(E) the Closing Price (as defined herein) of the
Company's Class A Common Stock shall average in
excess of $12.50 per share for any 30
consecutive business days during the period
commencing on the Effective Date and ending 18
months from the Effective Date; or
(F) the Closing Price (as defined herein) of the
Company's Class A Common Stock shall average in
excess of $16.50 per share for any 30
consecutive business days during the period
commencing on the 18th month after the
Effective Date and ending 36 months from the
Effective Date; or
(G) the Company is acquired by or merged into
another entity in a transaction in which
stockholders of the Company receive per share
consideration at least equal to the levels set
forth in (E) and (F) above during the
applicable time periods set forth in (E) and
(F) above.
(b) As used in this Section 4, the term "Closing Price" shall be
subject to adjustments in the event of any stock dividend, stock distribution,
stock split or other similar event and shall mean:
(i) If the principal market for the Class A Common Stock is a
national securities exchange or the Nasdaq National Market, the
closing sales price of the Class A Common Stock as reported
by such exchange or market, or on a consolidated tape
reflecting transactions on such exchange or market; or
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(ii) if the principal market for the Class A Common Stock is not a
national securities exchange or the Nasdaq National Market
and the Class A Common Stock is quoted on the Nasdaq SmallCap
Market, the closing bid price of the Class A Common Stock as
quoted on the Nasdaq SmallCap Market; or
(iii) if the principal market for the Class A Common Stock is not a
national securities exchange or the Nasdaq National Market and
the Class A Common Stock is not quoted on the Nasdaq SmallCap
Market, the closing bid for the Class A Common Stock as
reported by the National Quotation Bureau, Inc. ("NQB") or at
least two market makers in the Class A Common Stock if
quotations are not available from NQB but are available from
market makers.
(c) The determination of Minimum Pretax Income shall be determined by
the Company's independent public accountants in accordance with U.S. generally
accepted accounting principles provided that such determination is calculated
exclusive of any extraordinary earnings or charges (including any charges
incurred by the Company in connection with the release from escrow of the Escrow
Shares and any Escrow Property in respect thereof pursuant to the provisions of
this paragraph 4).
(d) In the event of any issuance (such issuance being herein called a
"Change of Shares") of additional shares of Common Stock (or securities
convertible into or exchangeable for Common Stock without the payment of
additional consideration, referred to as "Convertible Securities") after the
Effective Date, then each of the Minimum Pretax Income amounts set forth in
subparagraph (a) above shall be increased to an amount (the "Adjusted Minimum
Pretax Income") calculated in accordance with the formula set forth in
subparagraph (ii) below.
(i) For purposes of the foregoing paragraph, a Change of Shares
shall exclude (a) shares of Common Stock sold in the Public
Offering or (b) Common Stock or Convertible Securities issued
in connection with a stock split or stock dividend or
distribution or (c) shares of Class A Common Stock issued in
exchange for shares of Class B Common Stock but shall include
any shares of Class A Common Stock or Convertible Securities
that are
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issued upon the exercise of the Class A Warrants, the Class B
Warrants or any other options or warrants outstanding as of
the Effective Date or granted after the Effective Date by the
Company.
(ii) Each Adjusted Minimum Pretax Income amount shall be calculated
by multiplying the applicable Minimum Pretax Income amount
prior to the Change of Shares by a fraction, the numerator of
which shall be the weighted average number of shares of Common
Stock outstanding during the fiscal year for which the
determination is being made (including the Escrow Shares and
any shares of Common Stock issuable upon conversion of any
Convertible Securities, but excluding treasury stock), and the
denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding on the Effective Date
(including the Escrow Shares and any shares of Common Stock
issuable upon conversion of Convertible Securities outstanding
immediately prior to the Effective Date) plus (y) the number
of shares of Class A Common Stock sold by the Company pursuant
to the Prospectus included in the Registration Statement,
after adjustment for any stock dividends, stock splits or
similar events. The Adjusted Minimum Pretax Income amounts
shall be calculated successively whenever such a Change of
Shares occurs.
(e) If the Escrow Agent has not received the notice provided for in
Paragraph 5 hereof on or prior to the earlier of (i) the date of the closing of
a transaction referred to in Subparagraph 4(a)(i)(G) or 4(a)(ii)(G) or (ii)
April 15, 2002, the Escrow Agent shall deliver the certificates representing all
or the remaining Escrow Shares, together with stock powers executed in blank,
and any related Escrow Property to the Company to be placed in the Company's
treasury for cancellation thereof as a contribution to capital. After such date,
the Stockholders shall have no further rights as a stockholder of the Company
with respect to any of the cancelled Escrow Shares.
5. Upon the occurrence or satisfaction of any of the events or conditions
specified in Paragraph 4 hereof, the Company shall promptly give appropriate
notice to the Escrow Agent, the Underwriter (and if the transfer agent of the
Company's Common Stock is
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different from the Escrow Agent, such transfer agent) and present such
documentation as is reasonably required by the Escrow Agent to evidence the
satisfaction of such conditions.
6. It is understood and agreed by the parties to this Agreement as
follows:
(a) The Escrow Agent is not and shall not be deemed to be a trustee
for any party for any purpose and is merely acting as a depository and in a
ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have any
responsibility in respect of any instruction, certificate or notice delivered to
it or of the Escrow Shares or any related Escrow Property other than faithfully
to carry out the obligations undertaken in this Agreement and to follow the
directions in such instruction or notice provided in accordance with the terms
hereof.
(c) The Escrow Agent is not and shall not be deemed to be liable for
any action taken or omitted by it in good faith and may rely upon, and act in
accordance with, the advice of its counsel without liability on its part for any
action taken or omitted in accordance with such advice. In any event, its
liability hereunder shall be limited to liability for gross negligence, willful
misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon and act in accordance
with any certificate, instruction, notice, letter, telegram, cablegram or other
written instrument believed by it to be genuine and to have been signed by the
proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent's reasonable fees
and to reimburse it for its reasonable expenses including reasonable attorney's
fees incurred in connection with duties hereunder and (ii) to save harmless,
indemnify and defend the Escrow
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Agent for, from and against any loss, damage, liability, judgment, cost and
expense whatsoever, including reasonable counsel fees, suffered or incurred by
it by reason of, or on account of, any misrepresentation made to it or its
status or activities as Escrow Agent under this Agreement except for any loss,
damage, liability, judgment, cost or expense resulting from gross negligence,
willful misconduct or bad faith on the part of the Escrow Agent. The obligation
of the Escrow Agent to deliver the Escrow Shares to either the Stockholders or
the Company shall be subject to the prior satisfaction upon demand from the
Escrow Agent, of the Company's obligations to so save harmless, indemnify and
defend the Escrow Agent and to reimburse the Escrow Agent or otherwise pay its
fees and expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholders and indemnified
to the Escrow Agent's satisfaction against the cost and expense of such defense
by the party requesting such defense. If any such legal proceeding is instituted
against it, the Escrow Agent agrees promptly to given notice of such proceeding
to the Stockholders and the Company. The Escrow Agent shall not be required to
institute legal proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or otherwise,
be deemed to have waived any right or remedy it may have either under this
Agreement or generally, unless such waiver be in writing, and no waiver shall be
valid unless it is in writing, signed by the Escrow Agent, and only to the
extent expressly therein set forth. A waiver by the Escrow Agent under the term
of this Agreement shall not be construed as a bar to, or waiver of, the same or
any other such right or remedy which it would otherwise have on any other
occasion.
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(h) The Escrow Agent may resign as such hereunder by giving 30 days
written notice thereof to the Stockholders and the Company. Within 20 days after
receipt of such notice, the Stockholders and the Company shall furnish to the
Escrow Agent written instructions for the release of the Escrow Shares and any
related Escrow Property (if such shares and property, if any, have not yet been
released pursuant to Paragraph 4 hereof) to a substitute Escrow Agent which
(whether designated by written instructions from the Stockholders and the
Company jointly or in the absence thereof by instructions from a court of
competent jurisdiction to the Escrow Agent) shall be a bank or trust company
organized and doing business under the laws of the United States or any state
thereof. Such substitute Escrow Agent shall thereafter hold any Escrow Shares
and any related Escrow Property received by it pursuant to the terms of this
Agreement and otherwise act hereunder as if it were the Escrow Agent originally
named herein. The Escrow Agent's duties and responsibilities hereunder shall
terminate upon the release of all shares then held in escrow according to such
written instruction or upon such delivery as herein provided. This Agreement
shall not otherwise be assignable by the Escrow Agent without the prior written
consent of the Company.
7. The Stockholders shall have the sole power to vote the Escrow Shares
and any securities deposited in escrow under this Agreement while they are being
held pursuant to this Agreement.
8. (a) Each of the Stockholders agrees that during the term of this
Agreement he will not sell, transfer, hypothecate, negotiate, pledge, assign,
encumber or otherwise dispose of any or all of the Escrow Shares set forth
opposite his name on Exhibit A hereto, unless and until the Company shall have
given the notice as provided in Paragraph 5.
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This restriction shall not be applicable to transfers upon death, by operation
of law, to family members of the Stockholders or to any trust for the benefit of
the Stockholders, provided that such transferees agree to be bound by the
provisions of this Agreement.
(b) The Stockholders will take any action necessary or appropriate,
including the execution of any further documents or agreements, in order to
effectuate the transfer of the Escrow Shares to the Company if required pursuant
to the provisions of this Agreement.
9. Each of the certificates representing the Escrow Shares will bear
legends to the following effect, as well as any other legends required by
applicable law:
(a) "The sale, transfer, hypothecation, negotiation,
pledge, assignment, encumbrance or other disposition
of the shares evidenced by this certificate are
restricted by and are subject to all of the terms,
conditions and provisions of a certain Amended and
Restated Escrow Agreement entered into among X.X.
Xxxxx Investment Banking Corp., On'Village
Communications, Inc. and its Stockholders, dated as
of August 19, 1997, a copy of which may be obtained
from On'Village Communications, Inc. No transfer,
sale or other disposition of these shares may be made
unless specific conditions of such agreement are
satisfied.
(b) "The shares evidenced by this certificate have not
been registered under the Securities Act of 1933, as
amended. No transfer, sale or other disposition of
these shares may be made unless a registration
statement with respect to these shares has become
effective under said act, or the Company is furnished
with an opinion of counsel satisfactory in form and
substance to it that such registration is not
required."
Upon execution of this Agreement, the Company shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent and the
Underwriter shall have received written notice from the Company as provided in
Paragraph 5.
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10. Each notice, instruction or other certificate required or permitted by
the terms hereof shall be in writing and shall be communicated by personal
delivery, fax or registered or certified mail, return receipt requested, to the
parties hereto at the addresses set forth below, or at such other address as any
of them may designate by notice to each of the others:
(i) If to the Company, to:
On'Village Communications, Inc.
00000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
(ii) If to the Stockholders to their respective addresses as set
forth on Exhibit A hereto.
(iii) If to the Escrow Agent, to:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(iv) If to the Underwriter, to:
X.X. Xxxxx Investment Banking Corp.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx X. Xxxx, Esq.
Fax: 000-000-0000
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given hereunder
by the Escrow Agent shall be effective and deemed received upon personal
delivery or transmission by fax or, if mailed, five (5) calendar days after
mailing by the Escrow Agent.
A copy of all communications sent to the Company, the Stockholders or
the Escrow Agent shall be sent by ordinary mail to Xxxx & Xxxxx, 0000 Xxxxxxx
Xxxx Xxxx, Xxxxx
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1600, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxx Xxxxxxx, Esq. A copy of
all communications sent to the Underwriter shall be sent by ordinary mail to
Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxx X.
Xxxxxx, Esq.
11. Except as set forth in paragraph 12 hereof, this Agreement may not be
modified, altered or amended in any material respect or cancelled or terminated
except with the prior consent of the holders of all of the outstanding shares of
Common Stock of the Company.
12. In the event that (i) the Registration Statement is not declared
effective by the SEC within one year from the date of the filing of the
Registration Statement with the SEC or (ii) the Public Offering is not
consummated within twenty-five (25) days of the Effective Date of the
Registration Statement, this Agreement shall terminate and be of no further
force and effect and the Escrow Agent, upon written notice from both the Company
and the Underwriter in accordance with paragraph 10 hereof of such termination,
will return the Escrow Shares and any Escrow Property in respect thereof to the
Stockholders.
13. This Agreement shall be governed by and construed in accordance with
the laws of New York and shall be binding upon and inure to the benefit of all
parties hereto and their respective successors in interest and assigns.
14. This Agreement may be executed in several counterparts, which taken
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the day and year first above
written.
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ON'VILLAGE COMMUNICATIONS, INC.
By: ______________________________
Xxxx Xxxxxx, Chief Executive Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: ______________________
STOCKHOLDERS:
---------------
Xxxx X. Xxxxxx
---------------
Xxxxxx X. Xxxxxx
---------------
Xxxx X. Xxxxxx
---------------
Xxxxx X. Xxxxxx
---------------
Xxxxxx Xxxxx
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---------------
Xxxxx X. Xxxx
---------------
Ki X. Xxx
---------------
Xxxxx Xxxxxxxx
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EXHIBIT A
STOCKHOLDERS' LIST
Name and Address Stock
of Stockholder Certificate No. Number of Escrow Shares
---------------- --------------- -----------------------
Xxxxxx X. Xxxxxx 10 176,061
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Xxxx X. Xxxxxx 12 176,061
00 X. Xxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxx 00000
Xxxx X. Xxxxxx 14 176,061
00000 Xxxxx Xxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Xxxxx X. Xxxxxx 16 176,061
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxx 18 37,066
00000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxx X. Xxxx 20 18,533
000 Xxxxxxxxxx Xxxx 00 9,267
Xxxxxxxx, Xxxxxxxxxx 00000
Ki X. Xxx 24 18,895
00000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxxxx 26 11,995
Novato, California
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* All stock numbers reflect a 6.94975-for-1 stock split effected in
October 1996.
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