EXHIBIT 10.7(c)
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is entered into as of December
16, 1998, by and among Netopia, Inc., a Delaware corporation ("Netopia"), Serus
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Netopia
("Purchaser"), Serus, LLC, a Utah limited liability company ("Seller"), and the
Escrow Agent named herein. Terms not defined in this Agreement shall have the
meaning given to them in the Asset Purchase Agreement (defined below).
A. Netopia, Purchaser, and Seller have entered into an Asset Purchase Agreement,
dated as of December 16, 1998 (the "Asset Purchase Agreement") pursuant to which
Purchaser will acquire substantially all of the assets, properties, and rights
of Seller for a cash sum of $3,000,000 (the "Cash") and Four Hundred Nine
Thousand Five Hundred Fifty Six shares of Netopia Common Stock (the "Shares"),
and other consideration. The Asset Purchase Agreement provides that One Hundred
Sixty Three Thousand Eight Hundred Twenty Three (163,823) Shares shall be placed
in an escrow (the "Escrow Amount") to secure contingent obligations to Purchaser
in respect of certain indemnification rights arising as a result of certain
breaches of the representations, warranties, covenants, or agreements under the
Asset Purchase Agreement on the terms and conditions set forth herein and
therein.
B. The parties hereto desire to establish the terms and conditions pursuant to
which the Escrow Amount will be deposited, held in, and disbursed from the
Escrow Fund.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Escrow.
(a) Escrow of Escrow Amount. The Escrow Amount will be held in escrow by Greater
Bay Trust Company (the "Escrow Agent"), located at 000 Xxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000, as collateral for obligations of the Seller under
Article 8 of the Asset Purchase Agreement, until such Escrow Amount is to be
released pursuant to the terms of this Agreement. The Escrow Agent agrees to
accept delivery of the Escrow Amount and to hold such Escrow Amount in escrow
subject to the terms and conditions of this Agreement.
(b) Claims Under Indemnity Obligations. The parties agree that the Escrow Amount
will be held as security for the obligations of Seller under Article 8 of the
Asset Purchase Agreement. Promptly after the receipt by Purchaser of notice or
discovery of any claim giving rise to rights of indemnification under Article
8 of the Asset Purchase Agreement, Purchaser will give the Escrow Agent prompt
written notice of such claim in accordance with Section 11 hereof and to Seller
in accordance with Section 6 hereof. Failure of Purchaser to furnish written
notice in a prompt manner to the Escrow Agent of a claim shall not release
Seller from its indemnification obligations, except to the extent that Seller
is prejudiced by such failure, provided that no claim shall be honored as to
which written notice is delivered after the Termination Date(as defined herein).
(c) Protection of Escrow Amount. The Escrow Agent shall hold and safeguard
the Escrow Amount during the Escrow Period, in accordance with the terms of this
Agreement and not as the property of Purchaser or Seller, and shall hold and
dispose of the Escrow Amount only in accordance with the terms hereof.
2. Deposit of Escrow Amount.
(a) Delivery of Escrow Amount. At the Effective Time, the Escrow Amount will be
delivered by Purchaser to the Escrow Agent by courier from the Company's
transfer agent.
(b) Distribution to Seller. Within five (5) business days following December
16, 1999, (the "Termination Date"), the Escrow Agent shall deliver to the Seller
all of the Escrow Amount in excess of the aggregate amount of all unresolved
claims for Purchaser Damages as specified in Officer's Certificates delivered
to the Escrow Agent on or before the Termination Date pursuant to Section 3.
After the Termination Date, as soon as any such claim is resolved, the Escrow
Agent shall promptly deliver to the Seller that portion of the Escrow Amount
that exceeds the amount of the remaining unresolved claims. After the
Termination Date, as soon as all such claims have been resolved, the Escrow
Agent shall promptly deliver to the Seller any portion of the Escrow Amount not
required to satisfy such claims.
(c) Ownership of Shares; Voting Rights. Seller shall have all indicia of owner-
ship of the Shares while they areheld in escrow, including, without limitation,
the right to vote the Shares and receive distributions thereon and the
obligations to pay all taxes, assessments, and charges with respect thereto, but
excluding the right to sell any of the Shares or transfer any rights or
interests in the Shares; provided that any distribution, other than cash and
taxable stock dividends (which dividends shall be paid to the Seller), on or
with respect to the Shares and any other shares or securities into which such
Shares may be changed or for which they may be exchanged pursuant to corporate
action of Netopia affecting holders of Netopia Common Stock generally shall be
delivered to and held by the Escrow Agent and treated as included within the
term Shares and shall be subject to the provisions of this Agreement.
3. Claims.
(a) Upon receipt by the Escrow Agent on or before the Termination Date of a
certificate signed by the chief financial or chief executive officer of
Purchaser (an "Officer's Certificate");
(i) stating that Purchaser has incurred Purchaser Damages (as defined in
the "Asset Purchase Agreement") with respect to which Purchaser is
entitled to indemnification pursuant to the Asset Purchase Agreement,
and stating the amount of Purchaser Damages with respect to which
Purchaser is entitled to indemnification; and
(ii) specifying in reasonable detail the individual items of Purchaser
Damages included in the amount so stated, the date each such item was
incurred, paid or properly accrued, and the specific nature of the
breach to which such item is related, the Escrow Agent shall, subject
to the provisions of Section 4, deliver to Purchaser the amount
necessary to indemnify Purchaser for the amount specified in the
Officer's Certificate. For purposes of this Section 3 and Section 2,
the value of the Shares on the date of any payment shall be the
average of the closing prices of Netopia's Common Stock on the Nasdaq
National Market over the 30 trading day period ending two trading days
prior to the date of payment.
0.Xxxxxx.
(a) Objections to Claims. At the time of delivery of any Officer's Certificate
to the Escrow Agent, a duplicate copy of such Officer's Certificate shall be
delivered to Seller, and for a period of thirty (30) days after such delivery
to the Escrow Agent, the Escrow Agent shall make no delivery of Shares or other
property pursuant to Section 3 unless the Escrow Agent shall have received
written authorization from the Seller to make such delivery. After the
expiration of such thirty (30) day period, the Escrow Agent shall make delivery
of the Shares or other property which constitute the Escrow Amount in accordance
with Section 3, provided that no such payment or delivery may be made if the
Seller shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to the Escrow Agent
and to Purchaser prior to the expiration of such thirty (30) day period.
(b) Resolution of Claims. All claims for indemnification by Purchaser shall be
resolved in accordance with the Asset Purchase Agreement. Upon the resolution
of any claim, a memorandum setting forth the resolution of the claim shall be
prepared and signed by both parties and shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such memorandum and shall
distribute all or a portion of the Escrow Amount in accordance with the terms
thereof and this Agreement.
5. No Encumbrance. No interest in the Escrow Amount or any beneficial interest
therein may be pledged, sold, assigned or transferred, other than by operation
of law, by any party hereto or be taken or reached by any legal or equitable
process in satisfaction of any debt or other liability of any party hereto,
prior to the delivery to the Seller of payments by the Escrow Agent.
6. Limitation of the Escrow Agent's Liability.
(a) The Escrow Agent shall be obligated only for the performance of such duties
as are specifically set forth in this Agreement and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable or responsible for any act done
or omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel knowledgeable as to such matters shall be conclusive
evidence of such good faith.
(b) The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person, excepting
the instructions specified herein and orders or process of courts of law, and is
hereby expressly authorized to comply with and obey orders, judgments or decrees
of any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree of any court, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(c) The Escrow Agent shall not be liable in any respect on account of any claim
made that the parties hereto (except with respect to the Escrow Agent) that this
Agreement was not properly executed and delivered by such party or that any
documents or papers required under this Agreement have not been properly
delivered.
(d) The Escrow Agent shall not be liable for the outlawing of any rights under
any statute of limitations with respect to this Agreement or any documents
deposited with the Escrow Agent.
(e) The Escrow Agent is hereby expressly authorized to engage legal counsel as
it may deem necessary or advisable.
(f) In the event conflicting demands are made or notices are served upon the
Escrow Agent with respect to the Escrow Amount, the Escrow Agent will have the
absolute right, at the Escrow Agent's election, to do any or all of the
following: (i) resign so a successor can be appointed pursuant to Section 8
hereof or (ii) file a suit in interpleader and obtain an order from a court of
competent jurisdiction requiring the parties to interplead and litigate in such
court their several claims and rights among themselves. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully released
and discharged from all further obligations imposed upon it under this
Agreement, and Purchaser will pay the Escrow Agent (subject to reimbursement
from the Seller pursuant to Section 9 hereof) all costs, expenses and reasonable
attorney's fees expended or incurred by the Escrow Agent pursuant to the
exercise of the Escrow Agent's rights under this Section 8 (such costs, fees and
expenses will be treated as extraordinary fees and expenses for the purposes of
Section 9 hereof).
7. Expenses of Escrow Agent. All fees and expenses of Escrow Agent
incurred in the ordinary course of performing its responsibilities hereunder
shall be paid by Purchaser upon receipt of a written invoice by the Escrow
Agent. Any extraordinary fees and expenses, including without limitation any
reasonable fees or expenses incurred by the Escrow Agent in connection with a
dispute over the distribution of the Escrow Amount or the validity of a claim or
claims by Purchaser made in an Officer's Certificate, shall be paid 50% by
Purchaser and 50% by the Seller . The Escrow Agent shall deliver a written
invoice of such fees to Purchaser and the Seller.
10. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder (except to
the extent of actions, if any, of the Escrow Agent not taken in good faith or in
the exercise of reasonable judgment) by delivering its written resignation to
the parties to this Agreement, specifying not less than sixty (60) days prior
written notice of such a date when such resignation will take effect. Purchaser
will designate a successor Escrow Agent prior to the expiration of such sixty
(60) day period by giving written notice to the Escrow Agent and the Seller.
Purchaser may appoint a successor Escrow Agent without the consent of the Seller
so long as such successor is a bank with assets of at least $50 million and two
(2) days notice of such appointment is provided to the Seller, and Purchaser may
appoint any other successor Escrow Agent with the consent of the Seller, which
will not be unreasonably withheld. The Escrow Agent will promptly transfer the
Escrow Amount to such designated successor. In the event no successor Escrow
Agent is appointed as described in this Section 10, the Escrow Agent may apply
to a court of competent jurisdiction for the appointment of a successor Escrow
Agent. Any Successor Escrow Agent shall be bound and abide by the terms and
conditions of this Escrow Agreement.
11. Notices. Any notice provided for or permitted under this Agreement
will be treated as having been given when (i) delivered personally with written
verification of receipt, (ii) sent by confirmed telecopy, (iii) sent by
commercial overnight courier with written verification of receipt, or (iv)
mailed postage prepaid by certified or registered mail, return receipt
requested, to the party to be notified, at the address set forth below, or at
such other place of which the other party has been notified in accordance with
the provisions of this Section 11. Such notice will be treated as having been
received upon actual receipt
If to Purchaser, to:
Netopia, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Seller or the Members:
Serus, LLC
c/o Xxxxxxxxx Xxxxxxxxx Law Office
000 Xxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with copies (which shall not constitute notice) to:
Studeo Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 801-373-0502
If to Escrow Agent:
Greater Bay Trust Company
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
12. Seller Covenant to Perpetuate During the Term of this Escrow
Agreement. Seller agrees not to dissolve or otherwise cease to exist as a legal
entity during the pendency of this Escrow Agreement.
13. General.
(a) Governing Law. It is the intention of the parties hereto that the internal
laws of the State of California (without regard to its choice of law principles)
shall govern the validity of this Agreement, the construction of its terms and
the interpretation and enforcement of the rights and duties of the parties
hereto.
(b) Binding upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Agreement, each and all of the covenants, terms, provisions,
and agreements contained herein shall be binding upon, and inure to the benefit
of, the permitted successors, executors, heirs, representatives, administrators
and assigns of the parties hereto.
(c) Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original as against any party whose signature appears
thereon and all of which together shall constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as signatories.
(d) Entire Agreement. Except as set forth in the Asset Purchase Agreement, this
Agreement, the documents referenced in this Agreement and the exhibits to such
documents constitute the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto and thereto. The express terms hereof control and supersede an
course of performance or usage of the trade inconsistent with any of the terms
hereof.
(e) Conflicts. In the event of any conflict or inconsistency between the
terms of this Agreement and the terms of the Asset Purchase Agreement, the terms
of this Agreement shall control.
(f) Waivers. No waiver by any party hereto of any condition or of any breach of
any provision of this Agreement will be effective unless in writing. No waiver
by any party of any such condition or breach, in any one instance, will be
deemed to be a further or continuing waiver of any such condition or breach or a
waiver of any other condition or breach of any other provision contained
herein.
(g) Amendment. This Agreement may be amended with the written consent of
Purchaser, the Escrow Agent and the Seller, provided that if the Escrow Agent
does not agree to an amendment agreed upon by Purchaser and the Seller,
Purchaser will appoint a successor Escrow Agent in accordance with Section
10 above.
(h)
Additional Agreements; Reasonable Efforts. Each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
ESCROW AGENT:
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Escrow Agent
PURCHASER:
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: V.P. and CFO
SELLER:
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Managing Director
