EXHIBIT 99.5
ESCROW AGREEMENT
This Agreement (this "AGREEMENT") dated December 21, 2001, is by and among
TAG-IT PACIFIC, INC., a Delaware corporation ("BUYER"), TALON, INC., a Delaware
corporation ("Seller" and, together with Buyer, the "APA PARTIES"), and XXXXX
FARGO BANK, NATIONAL ASSOCIATION (the "ESCROW AGENT" and, together with the APA
Parties, the "PARTIES")).
RECITALS
A. The APA Parties and certain other persons have entered into an Asset
Purchase Agreement dated December 21, 2001 (the "ASSET PURCHASE AGREEMENT").
B. The Asset Purchase Agreement provides that Buyer place a portion of the
consideration paid by Buyer for the Assets thereunder in escrow.
C. The Asset Purchase Agreement provides that Buyer and Seller enter into
this Agreement with respect to the Escrow Amount.
D. Undefined capitalized terms herein are defined in the Asset Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants contained herein and in the Asset Purchase Agreement, each Party
agrees as follows:
1. ASSET PURCHASE AGREEMENT. The Escrow Agent hereby acknowledges receipt
of a copy of the Asset Purchase Agreement, but, except for referring to
definitions of certain undefined capitalized terms herein, the Escrow Agent is
not charged with any duties or responsibilities under the Asset Purchase
Agreement.
2. PURPOSE; EFFECTIVENESS. This Agreement has been executed and delivered,
and the deposit of the Escrow Amount will be made, for the purpose of
reimbursing and providing compensation for those Buyer Losses that any Buyer
Indemnified Party incurs or reasonably anticipates incurring because of any
claim for Buyer Losses arising under the Asset Purchase Agreement. Nothing
herein will limit any noncontractual remedy for fraud.
3. ESCROW CONSIDERATION.
3.1. Buyer has delivered to the Escrow Agent (i) $100,000 in cash (the
"ESCROW CASH") and (ii) 50,000 shares of Common Stock, par value $.001 per
share, of Buyer (the "ESCROW SHARES" and, together with the Escrow Cash, the
"ESCROW ASSETS"), representing the Escrow Consideration required to be placed in
escrow under SECTIONS 2.2 and 7.5 of the Asset Purchase Agreement. The "ESCROW
CONSIDERATION" means the Escrow Assets that, as of the date of determination,
remain subject to this Agreement. The Escrow Agent is not required to inquire as
to, or examine, the amount of Escrow Assets it receives under the Asset Purchase
Agreement. The Escrow Agent will hold the Escrow Consideration subject to this
Agreement.
3.2. The Escrow Cash shall be held and invested or reinvested by the Escrow
Agent at the written or oral request of the Seller, in any of the following
securities:
(a) obligations issued or guaranteed by the United States or any person
controlled or supervised by and acting as an instrumentality of the United
States pursuant to authority granted by Congress; and
(b) certificates of deposit of banks or trust companies, including those of
the Escrow Agent, organized under the laws of the United States of America.
Such investments shall be made subject to any orders of the Seller with
respect thereto, provided that investments of the Escrow Cash shall in any event
mature or be redeemable or be subject to liquidation by sale or otherwise at the
option of the Escrow Agent at such time as may be necessary to make timely
disbursements under this Agreement. Subject to any such orders with respect
thereto, or in the absence of any orders from the Seller, the Escrow Agent may
invest the Escrow Cash and the proceeds thereof in the Xxxxx Fargo Funds - 100
Percent Treasury, a money market mutual fund, and may from time to time sell
such investments and reinvest the proceeds therefrom in other investments of the
type described in this SECTION 3.2 maturing or redeemable as aforesaid. Any such
investments may be purchased from the Escrow Agent or any affiliate of the
Escrow Agent. The escrow shall be credited with all proceeds of sale and income
from such investment.
4. ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF ESCROW PERIOD. The
Escrow Consideration will remain in existence until the first anniversary of the
date hereof (the "ESCROW PERIOD"). At the close of business on the date the
Escrow Period terminates (the "TERMINATION DATE"), the Escrow Period will
terminate with respect to all of the Escrow Consideration; PROVIDED, HOWEVER,
that Buyer may, by written notice delivered to the Escrow Agent and Seller on or
before the Termination Date, direct the Escrow Agent to retain beyond the
Termination Date any portion of the Escrow Consideration that, in Buyer's
reasonable judgment, is necessary to satisfy any unsatisfied claim for Buyer
Losses arising under the Asset Purchase Agreement specified in any Officer's
Certificate (as defined) delivered to the Escrow Agent prior to the Termination
Date with respect to facts and circumstances existing prior to the termination
of such Escrow Period, until such claims have been resolved; PROVIDED FURTHER,
however, that Seller may dispute the amount which Buyer directs the Escrow Agent
to retain beyond the Termination Date in accordance with the dispute procedures
specified in Sections 5.3 and 6. The notice directing that a portion of the
Escrow Consideration be retained beyond the Termination Date will specify, for
each claim then unresolved, the amount that Buyer directs be retained in respect
thereof. As soon as any claim for which Escrow Assets have been retained beyond
the Termination Date has been finally resolved, the Escrow Agent will deliver to
the Seller that portion of the Escrow Assets retained in the Escrow
Consideration in respect of such claim and which is not required to satisfy such
claim.
5. ASSERTION OF CLAIMS.
5.1. If any Buyer Indemnified Party incurs Buyer Losses within the Escrow
Period, Buyer may deliver a certificate signed in good faith (an "OFFICER'S
CERTIFICATE") to the Escrow Agent stating that one or more of the Buyer
Indemnified Parties or any of their
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respective successors and assigns has paid, properly accrued, or reasonably
anticipates that it will have to pay or accrue Buyer Losses in an amount
specified in such Officer's Certificate, with the basis for such claim set forth
in reasonable detail, including the relevant section of the Asset Purchase
Agreement to which such item is related. To the extent a claim is made against
the Escrow Shares, the Officer's Certificate shall identify the number of Escrow
Shares necessary to satisfy payment of the Buyer Losses calculated pursuant to
SECTION 5.2 below. After receiving an Officer's Certificate, the Escrow Agent
shall promptly deliver a copy of such Officer's Certificate to Seller. Subject
to SECTIONS 5.3, 5.4 and 6 (as applicable), 45 calendar days after delivery to
Seller of a copy of such Officer's Certificate, the Escrow Agent will transfer,
deliver and assign to Buyer, on behalf of such Buyer Indemnified Party, Escrow
Assets having a value equal to the amount of such Buyer Losses.
5.2. In determining the Escrow Assets to be delivered to Buyer out of the
Escrow Consideration under SECTION 5.1, the following provisions will apply:
(a) Any amount owed to Buyer shall (i) first be paid to Buyer in cash from
the Escrow Assets, and (ii) after such cash has been depleted to zero, by
delivery to Buyer of a number of Escrow Shares determined by dividing (a) the
amount owed to Buyer by (b) the Value Per Share (as determined pursuant to
clause (b) below).
(b) "VALUE PER SHARE" shall mean, with respect to determining the number of
Escrow Shares to be delivered to Buyer to satisfy a claim for amounts due
hereunder, the average closing price per share for Buyer Common Stock as
reported on the American Stock Exchange (or, if not quoted by AMEX, on such
other primary securities exchange on which the Buyer's Common Stock is then
quoted) for the five trading days immediately preceding the date of any payment
made hereunder.
5.3. Unless, within 45 calendar days after delivery to Seller of a copy of
any Officer's Certificate, Seller gives written notice (a "DISPUTE NOTICE") to
Buyer and Escrow Agent, and the Dispute Notice is received by both Buyer and
Escrow Agent within said 45 calendar day period, that Seller disputes in good
faith the claim set forth in such Officer's Certificate, with the basis for such
dispute set forth in reasonable detail, such Officer's Certificate will
constitute full authority to Escrow Agent to take the action provided for by
SECTION 5.1 and will be conclusive on all Parties. If Seller gives such notice,
Escrow Agent will not transfer, deliver or assign to Buyer any Escrow Assets
under this SECTION 5 until either (a) it receives the written Consent of Seller
or (b) there is a final decision under SECTION 6 and Escrow Agent receives the
written notice of such decision under SECTION 6.2.
5.4. In the event that the Escrow Agent is required to deliver a portion,
but less than all, of the Escrow Shares held in escrow by Escrow Agent to a
Buyer Indemnified Party pursuant to this SECTION 5, then:
(a) the Escrow Agent shall (i) deliver the stock certificate then held in
escrow accompanied by a letter (an "INSTRUCTION LETTER") instructing American
Stock Transfer & Stock Company (the "TRANSFER AGENT") to cancel the certificate
and issue two or more certificates to the Escrow Agent, one or more stock
certificates registered in the name of the Buyer Indemnified Party or Buyer
Indemnified Parties identified in the Officer's Certificate
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for the number of shares set forth in such Officer's Certificate and another
stock certificate registered in the name of the Seller for the remaining number
of shares which shall be determined by subtracting the number of shares issued
to the Buyer Indemnified Party or Buyer Indemnified Parties from the number of
shares represented by the cancelled certificate, and (2) any additional
materials requested by the Transfer Agent evidencing the authority of those
persons authorized to execute the Instruction Letter on behalf of the Escrow
Agent;
(b) Buyer shall instruct its counsel to issue and deliver to the Transfer
Agent, to the extent requested by the Transfer Agent, an opinion of counsel (an
"OPINION LETTER") as to the availability of an exemption from the registration
requirements of Section 5 of the Securities Act of 1933, as amended (the "ACT")
in connection with the transfer of the Escrow Shares as provided in this SECTION
5; and
(c) upon receipt of the new stock certificates from the Transfer Agent, the
Escrow Agent shall promptly deliver the stock certificate or certificates
registered in the name of the Buyer Indemnified Party or Buyer Indemnified
Parties to such persons and the Escrow Agent shall retain the remaining
certificate registered in the name of Seller in escrow pursuant to the terms of
this Agreement.
5.5. With respect to Escrow Shares deposited into escrow and held by the
Escrow Agent which are registered in the name of the Seller, the Seller hereby
transfers any such Shares in the manner and to the extent provided for in this
Agreement and authorizes the Escrow Agent to take any and all action, for and on
behalf of Seller, which the Escrow Agent deems necessary or desirable to
accomplish any such transfer. In furtherance of the foregoing, the Seller hereby
authorizes and empowers the Escrow Agent to execute instructions (including the
Instruction Letter), stock powers and any other documents for the purpose of
transferring the Escrow Shares as contemplated by this Agreement, and Seller
hereby constitutes and appoints the Escrow Agent as its attorney-in-fact and
agent, in its name, place and stead, in any and all capacities, for all such
purposes, and such power of attorney shall be irrevocable so long as this
Agreement is in effect.
6. DISPUTE RESOLUTION.
6.1. All disputes arising under this Agreement ("DISPUTES") will be
resolved as follows: first, within 20 days following the date on which a Dispute
Notice with respect to any assertion of Buyer Losses is delivered to the Buyer,
the APA Parties and Buyer will use their commercially reasonable efforts to
resolve such Dispute. If such Dispute cannot be resolved within such 20 day
period (or such longer period as may then be agreed by the APA Parties), any of
the APA Parties may, within the 10 day period following such 20 day period (or
longer, as applicable) make a written demand (a "DEMAND") to the other APA
Parties that the Dispute be submitted to binding arbitration in accordance with
this SECTION 6. Subject to this SECTION 6, Buyer and Seller will agree upon the
rules of the arbitration prior to the arbitration and based upon the nature of
the disagreement. To the extent that the Parties cannot agree on the rules of
the arbitration, then the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date hereof, except as the applicable
rules are modified by this Agreement, will apply. As a minimum set of rules in
the arbitration the Parties agree as follows:
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(a) The arbitration will be held before a panel of three arbitrators
consisting of one arbitrator selected by Buyer within 20 days after the date of
the Demand, the other selected by Seller within 20 days after the date of the
Demand, and the third then selected by those two arbitrators.
(b) The Demand will contain a statement setting forth in reasonable detail
the nature of the claim made by the APA Party initiating the arbitration (the
"CLAIMANT"), the names and addresses of all other Parties, the amount involved,
if any, and the remedy sought. The APA Party against whom such claim is made
(the "RESPONDENT") will file an answering statement (the "ANSWER") within 15
days of the Demand. The Answer will contain a statement setting forth in
reasonable detail the Respondent's responses and defenses to the claim. If a
counterclaim is asserted, it will be sent with the Answer and will contain a
statement setting forth in reasonable detail the nature of the counterclaim, the
amount involved, if any, and the remedy sought. The Claimant will file a reply
statement (the "REPLY") within 10 days of the counterclaim. The Reply will
contain a statement setting forth in reasonable detail the Claimant's responses
and defenses to the counterclaim. If no Answer or Reply is given within the
stated time, the claim or the counterclaim will be assumed to be denied. Failure
to file an Answer or Reply will not operate to delay the arbitration.
(c) Unless the Parties to the arbitration agree otherwise, no discovery
will take place except as provided in this subsection. Not less than 60 days
before the date of the hearing, each Party will provide to each other Party,
copies of all exhibits, affidavits and other evidence they intend to submit at
the hearing, along with the identification of any witnesses to be called and a
summary of anticipated testimony. Based on a review of the information provided,
and not less than 30 days before the date of the hearing, each Party will
provide to each other Party, copies of any additional exhibits, affidavits and
other evidence they intend to submit at the hearing, along with the
identification of any additional witnesses to be called and a summary of
anticipated testimony. The arbitrators will be authorized to resolve any
disputes concerning the exchange of information.
(d) The arbitration hearing will take place over no more than 7 days
beginning 120 days after the date of the Demand, if any.
(e) The arbitrators will deliver their decision in writing within 15 days
after the termination of the arbitration hearings.
(f) The APA Parties will equally bear the costs and fees of the
arbitration. The Parties agree that a court reporter will record the arbitration
proceedings and that the reporter's record will be the agreed to transcript of
the proceedings. The APA Parties will share the expenses of this recorder
equally.
(g) The arbitrators will specify the basis for their decision, the basis
for the Buyer Losses award and a breakdown of the Buyer Losses awarded, and the
basis of any other remedy. The arbitrators' decision will be considered as a
final and binding resolution of the Dispute, will not be subject to appeal and
may be entered as an order in any court of competent jurisdiction in the United
States; provided that this Agreement confers no power or authority upon the
arbitrators to render any decision that is based on clearly erroneously findings
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of fact, that manifestly disregards the law, or exceeds of the powers of the
arbitrator, and no such decision will be eligible for confirmation. Each Party
agrees to submit to the jurisdiction of any such court for purposes of the
enforcement of any such order. No Party will xxx the other except for
enforcement of the arbitrator's decision if the other Party is not performing in
accordance with the arbitrator's decision. The provisions of this Agreement will
be binding on the arbitrators.
(h) Any arbitration proceeding will be conducted on a confidential basis.
(i) The arbitrators' discretion to fashion remedies hereunder will be no
broader or narrower than the legal and equitable remedies available to a court,
unless the Parties expressly state elsewhere in this Agreement that the Parties
will be subject to broader or narrower legal and equitable remedies than would
be available under the law governing this Agreement.
6.2. Upon resolution of a Dispute under this SECTION 6, the APA Parties
will cause the written determination of Buyer Losses contemplated by this
SECTION 6 to be delivered to the Escrow Agent promptly.
7. ADJUSTMENTS TO ESCROW ASSETS; DIVIDENDS; VOTING.
7.1. If the Escrow Agent receives any securities in respect of or in
exchange for any of the Escrow Assets it holds, whether by way of dividends,
share splits, recapitalizations, liquidations, mergers, consolidations,
split-ups, spin-offs, redemptions, exchanges or conversions of shares and the
like, the Escrow Agent will hold in escrow such securities as Escrow Assets.
7.2. The Sellers will retain the right to receive any interest, cash
dividends, or distributions payable with respect to the Escrow Assets, and such
cash dividends or distributions will be held in the Escrow Account and used to
satisfy claims hereunder. The Escrow Agent will invest any interest, cash
dividends, or distributions only in Permitted Investments (as defined).
7.3. Seller will have all voting rights with respect to the Escrow Assets
in the Escrow Consideration. Escrow Agent shall have no authority to, and shall
not, vote any of the Escrow Assets.
8. ESCROW AGENT'S PROVISIONS.
8.1. The Escrow Agent shall neither be responsible for or under, or
chargeable with knowledge of, the terms and conditions of any other agreement,
instrument or document executed between/among the parties hereto, except for
this Agreement and the Agreement. This Agreement sets forth all of the
obligations of the Escrow Agent, and no additional obligations shall be implied
from the terms of this Agreement or any other agreement, instrument or document.
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8.2. Each of the parties, jointly and severally, agrees to reimburse the
Escrow Agent on demand for, and to indemnify and hold the Escrow Agent harmless
against and with respect to, any and all loss, liability, damage or expense
(including, but without limitation, attorneys' fees, costs and disbursements)
that the Escrow Agent may suffer or incur in connection with this Agreement and
its performance hereunder or in connection herewith, except to the extent such
loss, liability, damage or expense arises from its willful misconduct of gross
negligence as adjudicated by a court of competent jurisdiction. The Escrow Agent
shall have the further right at any time and from time to time to charge, and
reimburse itself from, the property held in escrow hereunder.
8.3. The Escrow Agent shall be entitled to rely and shall be protected in
acting in reliance upon any instructions or directions furnished to it in
writing by Buyer or Seller (or by both Buyer and Seller) or pursuant to any
provisions of this Agreement and shall be entitled to treat as genuine, and as
the document it purports to be, any letter, paper or other document furnished to
it by Buyer or Seller and believed by it to be genuine and to have been signed
and presented by the proper party or parties.
8.4. The Escrow Agent may consult with legal counsel of its selection in
the event of any dispute or question as to the meaning or construction of any of
the provisions hereof or its duties hereunder, and it shall incur no liability
and shall be fully protected in acting in accordance with the opinion and
instructions of such counsel. Each of the parties, jointly and severally, agrees
to reimburse the Escrow Agent on demand for such legal fees, disbursements and
expenses and in addition, the Escrow Agent shall have the right to reimburse
itself for such fees, disbursements and expenses from the property held in
escrow hereunder.
8.5. The Escrow Agent shall be under no duty to give the property held in
escrow by it hereunder any greater degree of care than it gives its own similar
property.
8.6. The Escrow Agent shall receive the fees provided in EXHIBIT A to this
Agreement. Such fees shall be paid 50% by Buyer and 50% by Seller. In the event
that such fees are not paid to the Escrow Agent within 60 days of presentment to
Buyer and Seller, then the Escrow Agent may pay itself such fees from the
property held in escrow hereunder.
8.7. In the event of any disagreement between any of the parties of this
Agreement, or between them or either or any of them and any other person,
resulting in adverse claims or demands being made in connection with the subject
matter of the escrow, or in the event that the Escrow Agent, in good faith, be
in doubt as to what action it should take hereunder, the Escrow Agent may, at
its option, refuse to comply with any claims or demands on it, or refuse to take
any other action hereunder, so long as such disagreement continues or such doubt
exists, and in any such event, the Escrow Agent shall not become liable in any
way or to any person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue so to refrain from acting until:
(a) the rights of all parties shall have been fully and finally adjudicated
by a court of competent jurisdiction; or
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(b) all differences shall have been adjusted and all doubt resolved by
agreement among all of the interested persons, and the Escrow Agent shall have
been notified thereof in writing signed by all such persons.
The Escrow Agent shall have the option, after thirty (30) days notice to
the other parties of its intention to do so, to file an action in interpleader
requiring the parties to answer and litigate any claims and rights among
themselves. The rights of the Escrow Agent under this paragraph are cumulative
of all other rights which it may have by law or otherwise.
8.8. The Escrow Agent may, in its sole discretion, resign and terminate its
position hereunder at any time following thirty (30) days written notice to the
APA Parties. Any such resignation shall terminate all obligations and duties of
the Escrow Agent hereunder. On the effective date of such resignation, the
Escrow Agent shall deliver this Agreement together with the Escrow Consideration
and any and all related instruments or documents to any successor Escrow Agent
agreeable to the parties, subject to this Agreement herein. If a successor
Escrow Agent has not been appointed prior to the expiration of thirty (30) days
following the date of the notice of such resignation, the then acting Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent, or other appropriate relief. Any such resulting
appointment shall be binding upon all of the parties to this Agreement.
8.9. The provisions of this SECTION 8 shall survive the termination of the
escrow arrangement contemplated hereby.
9. TAXES.
9.1. The APA Parties agree that, for tax reporting purposes, all interest
or other taxable income earned in any tax year from the investment of the Escrow
Consideration shall be taxable to the Seller. The parties hereto shall, within
30 days after the date hereof, provide the Escrow Agent with certified tax
identification numbers by furnishing appropriate forms W-9 or W-8 and other
forms and documents that the Escrow Agent may reasonably request. The parties
hereto understand that if such tax reporting documentation is not so certified
to the Escrow Agent, the Escrow Agent may be required by the Internal Revenue
Code of 1986, as amended, to withhold a portion of any interest or other income
earned on the investment of monies or other property held by the Escrow Agent
pursuant to this Agreement.
9.2. To the extent that the Escrow Agent becomes liable for the payment of
any taxes in respect of income derived from the investment of funds held or
payments made hereunder, the Escrow Agent shall satisfy such liability to the
extent possible from the Escrow Cash. The APA Parties agree to indemnify and
hold the Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses that may be assessed against the
Escrow Agent on or with respect to any payment or other activities under this
Agreement unless any such tax, addition for late payment, interest, penalties
and other expenses shall arise out of or be caused by the actions of, or failure
to act by, the Escrow Agent.
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10. MISCELLANEOUS.
10.1. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the Parties in respect of its subject matters and supersedes
all prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they relate in any way to the subject
matter hereof. Except as expressly contemplated hereby, there are no third party
beneficiaries having rights under or with respect to this Agreement.
10.2. SUCCESSORS. All of the terms, agreements, covenants, representations,
warranties, and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the Parties and their respective successors.
If an APA Party is an entity and if the principal business, operations or a
majority or substantial portion of the assets of such APA Party are assigned,
conveyed, allocated or otherwise transferred, including by sale, merger,
consolidation, amalgamation, conversion or similar transactions, such receiving
Person or Persons will automatically become bound by and subject to the
provisions of this Agreement, and such APA Party will cause the receiving Person
or Persons to expressly assume its obligations hereunder.
10.3. ASSIGNMENTS. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the APA Parties.
10.4. NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder will be deemed duly given if (and then three
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
(a) if to Buyer, to:
Tag-It Pacific, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxx
with a copy to:
Akin, Gump Xxxxxxx, Xxxxx & Xxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx, Esq.
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(b) if to Seller, to its parent:
Grupo Industrial Cierres Ideal, S.A. de C.V.
Paseo de la Reforma Num. 2608 XX
Xxx. Xxxxx Xxxxx
Xxxxxx X.X., 00000
Facsimile: 525 5 261 88 93
Attention: Chief Executive Officer
(c) If to the Escrow Agent, to:
Xxxxx Fargo Bank, National Association
Corporate Trust Services
000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx, Trust Officer
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication will be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
10.5. SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that the
other Parties would be damaged irreparably if any provision of this Agreement is
not performed in accordance with its specific terms or is otherwise Breached.
Accordingly, each Party agrees that the other Parties will be entitled to an
injunction or injunctions to prevent Breaches of the provisions of this
Agreement and to enforce specifically this Agreement and its terms and
provisions in any Action instituted in [any court of the United States or any
state thereof] having jurisdiction over the Parties and the matter, in addition
to any other remedy to which they may be entitled, at Law or in equity.
10.6. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS; WAIVER.
(a) SUBMISSION TO JURISDICTION AND VENUE IN LOS ANGELES COUNTY, CALIFORNIA.
Solely for purposes of this Agreement and the transactions contemplated hereby,
the parties to this Agreement each hereby agrees that any and all disputes,
legal actions, suits, or proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby, whether legal or equitable in
nature, or arising out of contract or tort claims, may be brought in any
California or federal court located in Xxx Xxxxxxx Xxxxxx, Xxxxx xx Xxxxxxxxxx,
Xxxxxx Xxxxxx of America. By their signature to this Agreement, each party,
regardless of their residence, irrevocably submits to the jurisdiction of the
courts located in Los Angeles County, State of California, United States of
America, in any dispute, legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. Each party
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hereto acknowledges that it has freely agreed to so submit to jurisdiction and
venue, and that without such agreement the courts located in Xxx Xxxxxxx Xxxxxx,
Xxxxx xx Xxxxxxxxxx, Xxxxxx Xxxxxx of America might not otherwise have
jurisdiction over such party.
(b) SERVICE OF PROCESS. Each party hereto agrees that service of any
process, summons, notice or document by U.S. registered mail or the foreign
equivalent of U.S. registered mail to such party's respective addresses set
forth in this Agreement shall be effective service of process for any action,
suit or proceeding in California with respect to any matters to which it has
submitted to jurisdiction in SECTION 10.6(A) or if otherwise made in accordance
with applicable law.
(c) WAIVER OF CLAIM OF INDEMNITY AND INCONVENIENT FORUM. Each party hereto
irrevocably waives all claim of immunity from jurisdiction, attachment and
execution to which he or it might otherwise be entitled in any legal action or
proceeding brought in any California or federal court located in Xxx Xxxxxxx
Xxxxxx, Xxxxx xx Xxxxxxxxxx, Xxxxxx Xxxxxx of America, and further irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to any dispute, legal action, suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby being
brought in any federal or California court located in Xxx Xxxxxxx Xxxxxx, Xxxxx
xx Xxxxxxxxxx, Xxxxxx Xxxxxx of America, and further hereby irrevocably waives
any claim that any such dispute, legal action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
10.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
10.8. HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.
10.9. GOVERNING LAW. This Agreement and the performance of the obligations
of the Parties hereunder will be governed by and construed in accordance with
the laws of the State of California, without giving effect to any choice of law
principles.
10.10. AMENDMENTS AND WAIVERS. No amendment, modification, replacement,
termination, or cancellation of any provision of this Agreement will be valid,
unless the same will be in writing and signed by the each Party. No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising because of any prior or
subsequent such occurrence.
10.11. SEVERABILITY. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof.
Page 11
10.12. EXPENSES. Except as otherwise expressly provided in this Agreement,
each Party will bear its own costs and expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby including all fees and expenses of agents, representatives,
financial advisors, legal counsel, and accountants.
10.13. CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Parties and no presumption or burden of proof will arise favoring
or disfavoring any Party because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local, or foreign Law will be
deemed also to refer to Law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words "include,"
"includes," and "including" will be deemed to be followed by "without
limitation." Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will be
construed to include the plural and vice versa, unless the context otherwise
requires. The words "this Agreement," "herein," "hereof," "hereby," "hereunder,"
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The Parties intend that each
representation, warranty, and covenant contained herein will have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached will not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
10.14. INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, Schedules and other attachments identified in this Agreement are
incorporated herein by reference and made a part hereof.
10.15. REMEDIES. Except as expressly provided herein, the rights,
obligations and remedies created by this Agreement are cumulative and in
addition to any other rights, obligations, or remedies otherwise available at
law or in equity. Except as expressly provided herein, nothing herein will be
considered an election of remedies.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
TAG-IT PACIFIC, INC.
By: /S/ XXXXX XXXX
--------------------------------------
Xxxxx X. Xxxx
Chief Executive Officer
TALON, INC.
By: /S/ XXXX XXXXXXXXXXX XXXXX
--------------------------------------
Xxxx Xxxxxxxxxxx Xxxxx
Chief Executive Officer
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /S/ XXXXXXXX XXXX
--------------------------------------
Name: XXXXXXXX XXXX
------------------------------------
Title: TRUST OFFICER
-----------------------------------
Page 13
EXHIBIT A
ESCROW AGENT'S FEE SCHEDULE
XXXXX FARGO XXXXX FARGO BANK
CORPORATE TRUST SERVICES
000 XXXXXXXX XXXX., 00XX XXXXX
XXX XXXXXXX, XX 00000
TEL: (000) 000-0000
FAX: (000) 000-0000
