STOCK ESCROW AGREEMENT
THIS STOCK ESCROW AGREEMENT (the "Agreement") dated December 31, 1997 by
and among SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
("Sento"), XXX XXXXX, an individual (the "Shareholder"), and PARR, WADDOUPS,
XXXXX, GEE & XXXXXXXX, a Utah professional corporation (the "Escrow Agent").
RECITALS
WHEREAS, contemporaneously with the execution of this Agreement, Sento and
the Shareholder are entering into an Acquisition Agreement dated November 19,
1997, as amended by Amendment No.1 to Acquisition Agreement dated December 31,
1997 (as so amended, the "Acquisition Agreement"), pursuant to which, among
other things, Sento has agreed to issue to the Shareholder an aggregate of
180,000 shares of the Common Stock, $.25 par value, of Sento (the "Common
Stock");
WHEREAS, as a condition to the obligations of Sento under the Acquisition
Agreement, the Shareholder has agreed to deposit in escrow 36,000 shares of
Common Stock to be issued to him by Sento under the terms of the Acquisition
Agreement, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Escrow Agent has agreed to undertake and perform its duties
and obligations as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, upon these premises and in consideration of the covenants
and obligations set forth below and other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "Astron" shall mean and refer to Astron Incorporated, a Utah
corporation.
(b) "Claims" shall mean and refer collectively to all claims,
liabilities, rights of offset, lawsuits, demands, actions, damages and
expenses payable to Sento by Astron and the Shareholder pursuant to the
provisions of the Acquisition Agreement; without limiting the foregoing,
the failure of Astron or the Shareholder to perform any Obligation shall
constitute a Claim for purposes of this Agreement.
(c) "Closing" and "Closing Date" shall mean and refer to the Closing
and Closing Date, respectively, set forth in the Acquisition Agreement.
(d) "Default" shall have the meaning set forth in Section 4 below.
(e) "Escrow Documents" shall mean and refer to the certificates
evidencing the Escrowed Shares, accompanied by stock powers or other
instruments of assignment duly executed by the Shareholder.
(f) "Escrowed Shares" shall mean and refer to 36,000 shares of
Common Stock to be acquired by the Shareholder pursuant to the terms of
the Acquisition Agreement and to be deposited with the Escrow Agent under
the terms of this Agreement.
(g) "Notice of Default" shall have the meaning set forth in Section
4 below.
(h) "Obligations" shall mean and refer collectively to the
obligations of the Shareholder and Astron under the Acquisition Agreement,
and each such obligation may be referred to individually as an
"Obligation."
2. ESCROW. On the Closing Date, the Shareholder agrees to deposit in
escrow with the Escrow Agent the Escrow Documents. The Escrow Agent shall hold
and maintain the Escrow Documents in a safe and secure manner until it is
authorized to release the Escrow Documents in accordance with the provisions
set forth herein. The Shareholder hereby agrees to pay all charges and fees
reasonably required by the Escrow Agent and any related costs or expenses
thereof.
3. SECURITY FOR PERFORMANCE. This Agreement is executed in connection
with the Acquisition Agreement and is made by the Shareholder as security for
the performance of each of the Obligations. The parties acknowledge and agree
that Astron and the Shareholder have multiple and separate Obligations and that
the transfer to Sento of all or any part of the Escrowed Shares or the
satisfaction of any Claim(s) shall not diminish or alter the liability of
Astron or the Shareholder to satisfy any other Claim relating to any other
breach with respect to the same or any other Obligation.
4. DEFAULT; NOTICE OF DEFAULT. The failure of Astron or the Shareholder
to timely perform any Obligation shall constitute a default under this
Agreement (a "Default"). In the event of any Default, Sento shall have the
right to pursue its remedies pursuant to the terms set forth herein so as to be
compensated for any Claim. Upon the occurrence of any Default, Sento may, in
its discretion, give written notice to the Shareholder (the "Notice of
Default"), stating that a Default has occurred and setting forth a brief
description of the Default.
5. NOTICE TO THE ESCROW AGENT. If Astron and the Shareholder fail to
cure the Default within ten (10) days of receipt of the Notice of y authorized
representative of Sento (the "Default Certificate"), which shall (i) include a
copy of the Notice of Default; (ii) certify that the Notice of Default was
delivered to the Shareholder at least ten (10) days prior to delivery of the
Default Certificate to the Escrow Agent; (iii) certify that Astron and the
Shareholder have failed to cure the Default within such ten (10) days; (iv)
certify that, in light of the foregoing, Sento is entitled to exercise its
right to have transferred to it all or a portion of the Escrowed Shares
pursuant to the terms of this Agreement; and (v) set forth the number of
Escrowed Shares to be transferred in accordance with the provisions of Section
6 below.
6. REMEDIES AND PROCEDURES.
(a) Upon delivery of the Default Certificate to the Escrow Agent,
Sento may require that all or a portion of the Escrowed Shares necessary
to satisfy the aggregate amount of all Claim(s) with respect to each
Default hereunder be transferred to Sento. In such event, the Escrow
Agent shall cause a certificate or certificates representing such Escrowed
Shares to be transferred into the name of Sento and delivered to Sento,
whereupon Sento shall have all of the rights, privileges and powers
appurtenant to and arising from ownership of such Escrowed Shares.
(b) Upon receipt of a Default Certificate, the Escrow Agent, without
independent verification, shall release and deliver to Sento the Escrow
Documents necessary to facilitate Sento's exercise of its remedies under
this Agreement, and shall execute and deliver all such instruments or
certificates and take all such actions as may be requested by Sento to
accomplish Sento's exercise of such remedies.
(c) For purposes of determining the number of Escrowed Shares to be
transferred to Sento pursuant to subsection (a) above, Sento shall divide
the aggregate amount of all Claim(s) described in the applicable Default
Certificate (expressed in dollars) by the closing sale price of the Common
Stock, as reported by the National Association of Securities Dealers or
such other established quotation service as Sento shall reasonably select,
as of the Closing Date.
(d) If any or all of the Escrowed Shares are transferred to Sento
pursuant to the provisions of this Section 6, the Shareholder shall pay
any and all costs and expenses reasonably incurred by the Escrow Agent in
connection with the delivery and transfer of the Escrowed Shares.
7. VOTING RIGHTS AND DIVIDENDS. During the period that any Escrowed
Shares are held by the Escrow Agent pursuant to the provisions hereof, the
Shareholder shall remain the record owner of such Escrowed Shares and shall
possess all voting rights with respect thereto. During such period, all cash
dividends declared with respect to such Escrowed Shares shall be paid or
distributed to the Shareholder. The number of Escrowed Shares held by the
Escrow Agent pursuant to the terms of this Agreement shall be adjusted
proportionately for any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by Sento. Similarly, if Sento is the surviving corporation in
any merger or consolidation, the number of Escrowed Shares held by the Escrow
Agent pursuant to the terms of this Agreement shall be adjusted to reflect the
number of securities to which a holder of the number of Escrowed Shares would
have been entitled as a result of such merger or consolidation.
8. TERMINATION. This Agreement shall expire on the second anniversary
of the Closing Date, provided no uncured Default exists on the second
anniversary of the Closing Date and all Obligations arising during the period
between the Closing Date and the second anniversary of the Closing Date have
been performed or otherwise satisfied. If, on the first anniversary of the
Closing Date, all Obligations arising during the period between the Closing
Date and such first anniversary have been performed shall deliver to the
Shareholder the Escrow Documents relating to 18,000 Escrowed Shares, less the
total number of Escrowed Shares transferred to Sento, as of the first
anniversary of the Closing Date, pursuant to the provisions of Section 6 above.
If, on the second anniversary of the Closing Date, all Obligations arising
during the period between the Closing Date and such second anniversary have
been performed and all Defaults hereunder have been resolved, the Escrow Agent
shall deliver to the Shareholder any Escrow Documents then remaining in escrow.
Otherwise, this Agreement shall continue beyond the applicable expiration date
until all such Defaults have been resolved and all Obligations have been
performed or otherwise satisfied. Expiration of this Agreement and/or release
by the Escrow Agent of all or any part of the Escrowed Shares shall not
otherwise diminish or alter in any way the remaining duties and obligations of
Astron and the Shareholder under the Acquisition Agreement.
9. LIABILITY OF ESCROW AGENT. The following provisions shall control
with respect to the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
(a) The Escrow Agent shall not be responsible for the genuineness of
any certificate or signature and may rely conclusively upon and shall be
protected when acting upon any notice, affidavit, request, consent,
instruction, check or other instrument believed by it in good faith to be
genuine or to be signed or presented by the proper person, or duly
authorized, or properly made. The Escrow Agent shall have no
responsibility except for the performance of its express duties hereunder
and no additional duties shall be inferred herefrom or implied hereby.
(b) No amendment or modification of this Agreement or waiver of its
terms shall affect the rights and duties of the Escrow Agent unless its
written consent thereto has been obtained.
(c) The Escrow Agent shall not be responsible or liable for any act
or omission on its part in performing its duties as Escrow Agent under
this Agreement unless such act or omission constitutes bad faith, gross
negligence or fraud.
(d) The Escrow Agent shall not be required to institute or defend
any action involving matters referred to herein or which affect it or its
duties or liabilities hereunder unless or until requested to do so by any
party to this Agreement and then only upon receiving full indemnity, in
character satisfactory to the Escrow Agent, against all claims,
liabilities and expenses in relation thereto. In the event of any dispute
among the parties with respect to the Escrow Agent or its duties, (i) the
Escrow Agent may act or refrain from acting in respect of any matter
referred to herein in full reliance upon any by and with the advice of
counsel and shall be fully protected in so acting or in refraining from
acting upon the advice of such counsel, or (ii) the Escrow Agent may
refrain from acting until required to do so by an order of a court of
competent jurisdiction.
10. NOTICES. All notices and other communications given hereunder shall
be deemed to have been given or made when personally delivered or three (3)
days after being sent by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses or at
such other addresses as the parties may hereafter designate in writing:
To Sento: Sento Technical Innovations Corporation
Attn: Xxxxxx X. Bench
000 Xxxxx Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxx, Xxxx 00000
To the Shareholder: Xxx Xxxxx
000 Xxxxx 000 Xxxx
Xxxx, Xxxx 00000
To the Escrow Agent: Parr, Waddoups, Xxxxx, Xxx & Xxxxxxxx
Attn: Xxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
11. COSTS AND ATTORNEY'S FEES. In the event there is a breach of this
Agreement, the party in breach shall pay all costs, expenses and attorney's
fees incurred by the other party in enforcing its rights hereunder.
12. SEVERABILITY. In the event that any condition, covenant or other
provision contained herein is held by a court of competent jurisdiction to be
invalid or void, the same shall be deemed severable from the remainder of this
Agreement and shall in no way affect any other covenant, condition or provision
contained herein. If such condition, covenant or other provision shall be
deemed invalid due to its scope or breadth, such shall be deemed valid to the
extent of the scope or breadth permitted by law.
13. ENTIRE AGREEMENT. This Agreement and the Acquisition Agreement
constitute the entire agreement among the parties pertaining to the Escrowed
Shares, and supersede all prior agreements and understandings pertaining
thereto; provided, however, that nothing herein shall in any way limit the
Acquisition Agreement or any agreement or transaction described therein.
14. WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach hereof shall
constitute a waiver of any such breach or of such or any other covenant,
agreement, term or condition.
15. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah without reference to choice of law
rules.
16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
heirs, representatives, successors and assigns of the parties hereto.
17. INTERPRETATION. The captions which precede the sections of this
Agreement are for convenience only and shall in no way affect the manner in
which any provision hereof is construed. Whenever the context requires, the
singular shall include the plural, the plural shall include the singular, the
whole shall include any part thereof, and any gender shall include both genders.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
"SENTO"
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: \S\ Xxxxxx X. Bench
Its: Chief Financial Officer
"SHAREHOLDER"
\S\ Xxx Xxxxx
Xxx Xxxxx, an individual
"ESCROW AGENT"
PARR, WADDOUPS, XXXXX, GEE & XXXXXXXX,
a Utah professional corporation
By: \S\ Xxxxx X. Xxxxx
Its: Escrow Agent
