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Exhibit 10.7.1
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ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of
March 31, 1998, by and between FED Corporation, a Delaware corporation ("FED"),
Telxon Corporation, a Delaware corporation ("TELXON"), and First Union National
Bank (the "ESCROW AGENT"). FED and Telxon are sometimes referred to herein as
the "INTERESTED PARTIES".
WHEREAS, FED and Telxon have entered into a Stock Purchase
Agreement dated March 31, 1998 (the "STOCK PURCHASE AGREEMENT");
WHEREAS, the Stock Purchase Agreement provides that an escrow
account will be established to secure each parties' consideration prior to the
Initial Escrow Release Date (as defined in the Stock Purchase Agreement) and to
secure certain obligations of Telxon to FED (and the Indemnified Persons (as
defined in the Stock Purchase Agreement)) on the terms and conditions set forth
in the Stock Purchase Agreement and set forth herein; and
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow account will be established and
maintained.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and
not otherwise defined shall have the meanings given them in the Stock Purchase
Agreement.
2. APPOINTMENT FOR TELXON. Telxon hereby appoints Xxxxxx X.
Xxxxxx, Executive Vice President, and Xxxxxxx X. Xxxxx, Senior Vice President
and Chief Financial Officer, to act, either jointly or individually, on behalf
of Telxon for all purposes hereunder (each a "TELXON REPRESENTATIVE").
3. CONSENT OF TELXON. Pursuant to the Stock Purchase
Agreement, Telxon has consented to the establishment of this escrow to secure
certain obligations of Telxon under Article VII of the Stock Purchase Agreement
and certain post-Effective Date adjustment obligations in the manner set forth
herein.
4. ESCROW AND INDEMNIFICATION.
(a) ESCROW OF CASH. On the Effective Date, FED shall
deposit, on behalf of Telxon, with the Escrow Agent cash in the amount of Five
Hundred Thousand Dollars ($500,000) as specified in Section I of the Stock
Purchase Agreement (the "ESCROW FUNDS"). The Escrow Agent agrees to accept
delivery of the Escrow Funds and to hold the Escrow Funds in an escrow account
(the "ESCROW ACCOUNT"), subject to the terms and conditions of this Agreement.
The Escrow Account shall not be an interest bearing account and the cash, if
any, held in the Escrow Account shall be invested.
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(b) ESCROW OF ESCROW SHARES. On the Effective Date,
FED shall deposit, on behalf of Telxon, with the Escrow Agent one or more
certificates representing Four Million Five Hundred Thousand Dollars
($4,500,000) of FED's Series F Preferred Stock (the "ESCROW SHARES") as
specified in Section I of the Stock Purchase Agreement, issued in the name of
Telxon, the Escrow Agent or the Escrow Agent's nominee (in the respective
amounts set forth on SCHEDULE A hereto), together with an executed stock power
regarding the portion of the Escrow Shares issued in the name of Telxon. The
Escrow Agent agrees to accept delivery of the Escrow Shares and to hold the
Escrow Shares in the Escrow Account, subject to the terms and conditions of this
Agreement.
(c) ESCROW OF VIRTUAL SHARES. On the Effective Date,
Telxon shall deposit, on behalf of FED, with the Escrow Agent a certificate
representing One Million (1,000,000) shares (the "VIRTUAL SHARES") of the common
stock, $0.01 par value per share, of Virtual Vision, Inc., a Delaware
corporation ("VIRTUAL"), as specified in Section I of the Stock Purchase
Agreement, together with a stock power executed in blank. The Escrow Agent
agrees to accept delivery of the Virtual Shares and to hold the Virtual Shares
in the Escrow Account, subject to the terms and conditions of this Agreement.
(d) DISTRIBUTIONS AND DIVIDENDS. All cash dividends
and other distributions on Escrow Shares, when and if received by the Escrow
Agent, shall be remitted and paid by the Escrow Agent directly to Telxon and
shall not be subject to this Agreement or any indemnification claims of FED
under this Agreement. Notwithstanding the foregoing, additional shares of
capital stock issued on or with respect to the Escrow Shares as a result of
stock splits, stock dividends or other similar capital adjustments to, or
recapitalizations on, the Escrow Shares shall be delivered by FED to the Escrow
Agent and retained in the Escrow Account subject to the terms hereof and shall
constitute Escrow Shares. Additional shares of capital stock issued on or with
respect to the Virtual Shares as a result of stock splits, stock dividends or
other similar capital adjustments to, or recapitalizations on, the Virtual
Shares shall be retained in the Escrow Account subject to the terms hereof and
shall constitute Virtual Shares.
(e) VOTING OF SHARES. All voting rights with respect
to Escrow Shares may be exercised by Telxon in accordance with their
proportionate interests therein, and the Escrow Agent shall from time to time
execute and deliver to Telxon such proxies, consents, or other documents as may
be necessary to enable Telxon to exercise such rights. In the absence of any
exercise of such voting rights with respect to Escrow Shares by Telxon, the
Escrow Agent shall not vote any of the Escrow Shares. All voting rights with
respect to the Virtual Shares may be exercised by FED in accordance with their
proportionate interests therein, and the Escrow Agent shall from time to time
execute and deliver to FED such proxies, consents, or other documents as may be
necessary to enable FED to exercise such rights. Notwithstanding the foregoing,
FED covenants for the benefit of Telxon that it shall not declare any dividends
with respect to the Virtual Shares which are payable on or prior to the Initial
Escrow Release Date. In the absence of any exercise of such voting rights with
respect to Virtual Shares by FED, the Escrow Agent shall not vote any of the
Virtual Shares.
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(f) TRANSFERABILITY. The interest of (i) Telxon in
the Escrow Funds and the Escrow Shares, and (ii) FED in the Virtual Shares and
any other property comprising the Escrow Account (collectively, the "ESCROW
PROPERTY") shall not be assignable or transferable so long as such Escrow
Property is held by the Escrow Agent hereunder.
5. RELEASE OF ESCROW PROPERTY.
(a) On or prior to the Initial Escrow Release Date a
notice executed jointly by both the Telxon Representative and FED shall be
provided to the Escrow Agent and, promptly upon receipt of such notice, the
Escrow Agent shall simultaneously deliver and/or submit for transfer, delivery
and assignment: (i) to Telxon the Escrow Funds and shares representing Three
Million Four Hundred Thousand Dollars ($3,400,000) of the Escrow Shares; and
(ii) to FED the Virtual Shares. If the Escrow Agent does not receive the
aforementioned notice on or prior to the Initial Escrow Release Date (or a
notice extending the Initial Escrow Release Date) then this Agreement shall
immediately terminate (provided that the provisions of Sections 9 and 10 below
shall survive such termination) and the Escrow Agent shall promptly deliver
and/or submit for transfer, delivery and assignment: (i) the Escrow Funds and
the Escrow Shares to FED; and (ii) the Virtual Shares to Telxon.
(b) Promptly after May 31, 1998 (the "POST-EFFECTIVE
DATE ADJUSTMENT DATE"), a notice executed jointly by both the Telxon
Representative and FED shall be provided to the Escrow Agent and, promptly upon
receipt of such notice, the Escrow Agent shall deliver and/or submit for
transfer, delivery and assignment to each of FED and Telxon such portion of the
Escrow Shares as specified by such notice, which amount in the aggregate shall
not exceed shares representing One Hundred Thousand Dollars ($100,000) of the
Escrow Shares (the "POST-EFFECTIVE DATE ESCROW SHARES"). The number of Escrow
Shares to be released to FED on the Post-Closing Adjustment Date shall be the
LESSER of (i) the Post-Effective Date Adjustment (as hereinafter defined)
DIVIDED BY $6.50 or (ii) 15,385 Escrow Shares. The "POST-EFFECTIVE DATE
ADJUSTMENT" shall be defined as (a) the total assets set forth on the Projected
Balance Sheet provided to FED on the date hereof less the total liabilities set
forth on the Projected Balance Sheet, LESS (b) the total assets set forth on the
Audited Balance Sheet to be provided to FED on or prior to the Post-Effective
Date Adjustment Date less the total liabilities set forth on the Audited Balance
Sheet. Any Post-Effective Date Escrow Shares remaining in the Escrow Account
following the Post-Closing Adjustment shall be delivered by Escrow Agent to
Telxon.
(c) At any time prior to March 31, 1999 (the
"TERMINATION DATE"), upon any notice executed jointly by both the Telxon
Representative and FED and provided to the Escrow Agent, the Escrow Agent shall,
promptly upon receipt of such notice(s), deliver and/or submit for transfer,
delivery and assignment to FED such portion of the Escrow Shares as required by
this Section 5(c). The number of Escrow Shares to be released to FED under this
Section 5(c) shall be as payment for any Key Employee of Virtual who leaves the
employ of Virtual without cause on or prior to the Termination Date. For each
Key Employee who leaves the employ of either Telxon, Virtual or FED without
cause on or prior to September 30, 1998, the number of Escrow Shares to be
released to FED shall equal Sixty Thousand Dollars ($60,000) divided by the Fair
Market Value of the Escrow Shares. For each Key Employee who leaves the employ
of either Virtual or FED without cause after September
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30, 1998 and before March 31, 1999, the number of Escrow Shares to be released
to FED shall equal Thirty Thousand Dollars ($30,000) divided by the Fair Market
Value of the Escrow Shares; provided, however, that in no circumstances shall
the amounts released to FED pursuant to this Section 5(c) exceed an aggregate of
Five Hundred Thousand Dollars ($500,000) of the Escrow Shares.
(d) For purposes of this Agreement, a Key Employee
shall be deemed to have left the employ of Virtual "for cause" by reason of: (i)
FED's failure to extend an offer of employment to such employee for his or her
current position and salary as of the Effective Date, (ii) the involuntary
termination of such Key Employee by Virtual or FED; (iii) a requirement by
Virtual or FED that such Key Employee relocate his or her principal place of
employment more than 25 miles from Virtual's current location at 0000 000xx
Xxxxx, X.X., Xxxxxxx, Xxxxxxxxxx; (iv) a significant or material change in such
Key Employee's responsibilities or working environment which materially
interferes with such Key Employee's responsibilities; (v) disability for medical
reason; (vi) a change of control of FED or Virtual ("change of control" to mean
any change in the beneficial ownership of 50% of the voting securities of either
FED or Virtual); (vii) any violation by FED or Virtual of any Federal, state or
local law, ordinance, regulation or rule relating to employment, equal
employment opportunity, nondiscrimination, immigration, family leave, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing, except for
such violations which would not have a material adverse effect on the standing
of such employee; or (viii) if such Key Employee leaves the employ of Virtual
and within 30 days and thereafter becomes an employee or contractor for FED or
any of its affiliates.
(e) Promptly after March 31, 1999 (the "TERMINATION
DATE"), a notice executed jointly by both the Telxon Representative and FED
shall be provided notice to the Escrow Agent and, promptly upon receipt of such
notice (subject to the matters provided for in Section 5(f) below), the Escrow
Agent shall deliver and/or submit for transfer, delivery and assignment to each
of FED and Telxon such portion of the Escrow Shares as specified by such notice.
(f) Notwithstanding the foregoing, if on the
Termination Date an Indemnified Person has previously given any Claim Notices
that have not then been resolved in accordance with Section 6 below, the Escrow
Agent shall retain in the Escrow Account an amount of the Escrow Shares (if any)
having a Fair Market Value equal to the aggregate Claimed Amount covered by all
such Claim Notices that have not then been resolved. Any Escrow Property
retained in escrow pursuant to this Section 5(f) shall be disbursed in
accordance with the terms of the resolution of the claims relating to any of the
Escrow Property retained hereunder.
6. ADMINISTRATION OF ESCROW ACCOUNT FOR INDEMNIFICATION
CLAIMS. The Escrow Agent shall administer the Escrow Account as follows:
(a) If an Indemnified Person has incurred or suffered
Damages for which it is entitled to indemnification under Section VII of the
Stock Purchase Agreement, the Indemnified Person shall, prior to the Termination
Date with respect to a particular claim, give written notice of such claim (a
"CLAIM NOTICE") to the Telxon Representative, FED and the Escrow Agent. Each
Claim
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Notice shall state the amount of Claimed Damages (the "CLAIMED AMOUNT") and the
basis for such claim.
(b) Claims for indemnification involving a claim or
legal proceeding by a third party shall be made in accordance with the
procedures set forth in Article VII of the Stock Purchase Agreement and the
provisions of this Section 6. For indemnification claims not involving any claim
or legal proceeding by a third party, the procedures herein shall apply. Within
thirty business days of receipt by the Telxon Representative of a Claim Notice,
the Telxon Representative shall provide to the Indemnified Person, with a copy
to the Escrow Agent and FED, a written response (the "RESPONSE NOTICE") in which
the Telxon Representative shall: (i) agree that Escrow Property having a Fair
Market Value (as computed pursuant to Section 7 below) equal to the full Claimed
Amount may be released from the Escrow Account to the Indemnified Person on the
Termination Date, (ii) agree that Escrow Property having a Fair Market Value
equal to part, but not all, of the Claimed Amount may be released from the
Escrow Account to the Indemnified Person on the Termination Date, or (iii)
contest that any of the Escrow Property may be released from the Escrow Account
to the Indemnified Person on the Termination Date. The Telxon Representative may
contest the release of Escrow Property having a Fair Market Value equal to all
or a portion of the Claimed Amount only, if Telxon asserts in good faith that it
requires more information to evaluate the merits of the claim, based upon a good
faith belief that all or such portion of the Claimed Amount does not constitute
Damages for which the Indemnified Person is entitled to indemnification under
Article VII of the Stock Purchase Agreement. If no Response Notice is delivered
by, and received by the Escrow Agent and FED from, the Telxon Representative
prior to thirty business days of receipt of the Claim Notice, the Telxon
Representative shall be deemed to have agreed that Escrow Property having a Fair
Market Value equal to all of the Claimed Amount may be released to the
Indemnified Person from the Escrow Account on the Termination Date.
Notwithstanding any terms of this Agreement to the contrary, no Claim Notice or
Response Notice shall be deemed to have been delivered to the Escrow Agent until
it is actually received by the Escrow Agent and FED at the address set forth in
Section 12 hereof.
(c) If the Telxon Representative in the Response
Notice agrees (or is deemed to have agreed) that Escrow Property having a Fair
Market Value equal to all of the Claimed Amount may be released from the Escrow
Account to the Indemnified Person, the Escrow Agent shall, upon the Termination
Date transfer, deliver and assign to the Indemnified Person the Escrow Property
having a Fair Market Value equal to the Claimed Amount (or such lesser amount of
Escrow Property as is then held in the Escrow Account).
(d) If the Telxon Representative in the Response
Notice agrees that Escrow Property having a Fair Market Value equal to part, but
not all, of the Claimed Amount may be released from the Escrow Account to the
Indemnified Person, the Escrow Agent shall upon the Termination Date transfer,
deliver and assign to the Indemnified Person Escrow Property having a Fair
Market Value equal to the sum of all Partial Agreed Amounts (or such lesser
amount of Escrow Property as is then held in the Escrow Account).
(e) If the Telxon Representative in the Response
Notice contests the release of Escrow Property having a Fair Market Value equal
to all or part of the Claimed Amount (the
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"CONTESTED AMOUNT"), the Telxon Representative and the Indemnified Person shall
attempt promptly and in good faith to agree upon the rights of the parties with
respect to the Contested Amount. If the Telxon Representative and the
Indemnified Person should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and delivered to the Escrow Agent
and FED and, if such agreement provides that all or a portion of the Contested
Amount is to be paid to the Indemnified Person, the Escrow Agent shall upon the
Termination Date transfer, assign and deliver to the Indemnified Person from the
Escrow Account an amount of Escrow Property having a Fair Market Value equal to
the amount so agreed. If no such agreement can be reached after good faith
negotiation over a period of 45 days (or such longer period as the Indemnified
Person and the Telxon Representative may mutually agree), the matter shall be
settled by binding arbitration in New York. All claims shall be settled by a
single arbitrator mutually agreeable to the Indemnified Person and the Telxon
Representative, or if they cannot agree on a single arbitrator in 45 days, by
three arbitrators, in accordance with the Commercial Arbitration Rules then in
effect of the American Arbitration Association (the "AAA RULES"), as follows: If
a single arbitrator has not been mutually agreed upon, the Telxon Representative
and the Indemnified Person shall each designate one arbitrator within 45 days of
the delivery of the Telxon Representative's Response Notice contesting the
Claimed Amount. The Telxon Representative and the Indemnified Person shall cause
such designated arbitrators mutually to agree upon and designate a third
arbitrator; provided, however, that (i) failing such agreement within 75 days of
delivery of the Telxon Representative's Response Notice, the third arbitrator
shall be appointed in accordance with the AAA Rules, and (ii) if either the
Telxon Representative or the Indemnified Person fail to timely designate an
arbitrator, the dispute shall be resolved by the one arbitrator timely
designated. The Telxon Representative on the one hand, and the Indemnified
Person, on the other hand, shall pay the fees and expenses of their respectively
designated arbitrators and shall bear equally the fees and expenses of the third
arbitrator (or of the sole arbitrator, in the event a single arbitrator decides
the matter). The Telxon Representative and the Indemnified Person shall cause
the arbitrators to decide the matter to be arbitrated pursuant hereto within 60
days after the appointment of the last arbitrator. The arbitrators' decision
shall relate solely to whether the Indemnified Person is entitled to receive the
Contested Amount (or a portion thereof) pursuant to the applicable terms of the
Stock Purchase Agreement and this Agreement. The final decision of the
arbitrator, or a majority of the arbitrators in the case of three arbitrators,
shall be furnished to the Telxon Representative and the Indemnified Person in
writing and shall constitute a conclusive determination of the issue in
question, binding upon Telxon and the Indemnified Person, and shall not be
contested by any of them. Such decision may be used in a court of law only for
the purpose of seeking enforcement of the arbitrators' award. The Telxon
Representative and the Indemnified Person shall deliver a memorandum to the
Escrow Agent and FED setting forth such arbitrators decision in accordance with
the second sentence of this paragraph.
(f) After delivery of a Response Notice that the
Claimed Amount is contested by the Telxon Representative, the Escrow Agent shall
continue to hold in the Escrow Account an amount of Escrow Property having a
Fair Market Value sufficient to cover the Contested Amount (up to the amount of
Escrow Property then available in the Escrow Account), notwithstanding the
occurrence of the Termination Date, until (i) delivery of a copy of a settlement
agreement executed by the Indemnified Person and the Telxon Representative
setting forth instructions to the Escrow Agent as to the release of Escrow
Property, if any, that shall be made with respect to the Contested Amount
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or (ii) delivery of a copy of the final award of the arbitrator, or a majority
of the arbitrators in the case of three arbitrators, and the memo referenced in
the last sentence of the preceding paragraph setting forth instructions to the
Escrow Agent as to the release of Escrow Property, if any, that shall be made
with respect to the Contested Amount. The Escrow Agent shall thereupon release
Escrow Property from the Escrow Account (up the amount of Escrow Property then
available in the Escrow Account) in accordance with such agreement or
instructions.
7. VALUATION OF ESCROW PROPERTY. For purposes of this
Agreement, the Fair Market Value of the Escrow Shares shall be $6.50 per share
or such other amount as the shares of Series F Preferred shall be initially
issued to purchasers at, with appropriate adjustment to take into account any
stock split, reverse stock split, stock dividend, recapitalization or other
similar capital adjustments with respect to Escrow Shares. The Escrow Funds
shall be valued at their face value.
8. FEES AND EXPENSES OF THE ESCROW AGENT. Telxon and FED
hereby agree, jointly and severally, to pay to the Escrow Agent its reasonable
fees and expenses, including attorneys fees, travel expenses, postal and
delivery charges, and all other out-of-pocket expenses, in accepting and
performing its appointment as escrow agent hereunder (collectively, the "ESCROW
AGENT EXPENSES"). Each of FED, on the one hand, and Telxon, on the other hand,
shall pay one-half of the Escrow Agent Expenses.
9. GENERAL TERMS AND STANDARDS REGARDING THE ESCROW AGENT.
Notwithstanding any terms of this Agreement to the contrary, each term of this
Agreement, including without limitation each of the stated duties and
responsibilities of the Escrow Agent set forth herein, shall be subject to the
following terms and conditions:
(a) The duties, responsibilities and obligations of
the Escrow Agent shall be limited to those expressly set forth in this Agreement
(and the duty to exercise reasonable care in the physical safekeeping of any
property held in escrow hereunder), and no implied duties, responsibilities or
obligations shall be read into this Agreement against the Escrow Agent. Without
limiting the generality of the foregoing, the Escrow Agent shall have no duty to
take action to preserve or exercise rights in any property held by it hereunder
(including, without limitation, against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound
by, charged with notice of or be required to comply with or interpret any
agreement or document (including without limitation the Stock Purchase
Agreement) between or among the Interested Parties (whether or not reference to
any such other agreement or documents expressed herein) other than this
Agreement.
(c) The Escrow Agent shall in no instance be under
any duty to give any property held by it hereunder any greater degree of care
than it gives its own similar property. The Escrow Agent shall not be required
to invest any funds held hereunder, and shall not be obligated to pay interest
on uninvested funds. All amounts received by the Escrow Agent (and any credits
to the Escrow Account) shall be conditional upon collection (and actual receipt
by the Escrow Agent of final payment). In no event shall the Escrow Agent have
any obligation to advance funds.
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(d) The Escrow Agent may rely upon, and shall be
protected in acting or refraining from acting upon, any written notice,
instruction, statement, request, waiver, order, judgment, certification,
consent, receipt or other paper or document furnished to it (not only as to
genuineness, but also as to its due execution and validity, the genuineness of
signatures appearing thereon and as to the truth and accuracy of any information
therein contained), which it in good faith believes to be genuine and signed or
presented by the proper person.
(e) Neither the Escrow Agent nor any of its
directors, officers or employees shall be liable to anyone for any error of
judgment, or for any act done or step taken or omitted to be taken by it or any
of its directors, officers or employees, or for any mistake of fact or law, or
for anything which it, or any of its directors, officers or employees, may do or
refrain from doing in connection with or in the administration of this
Agreement, unless and except to the extent the same constitutes gross
negligence, bad faith or wilful misconduct on the part of the Escrow Agent. In
no event shall the Escrow Agent be liable for any indirect, punitive, special or
consequential damages, or any amount in excess of the value of the Escrow
Property (as of the date of the action or omission giving rise to liability).
(f) The Escrow Agent may consult with, and obtain
advice from, legal counsel (including, without limitation, in-house counsel)
with respect to any question as to any of the provisions hereof or its duties
hereunder, or any matter relating hereto, and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action
reasonably taken, suffered or omitted by the Escrow Agent in good faith in
accordance with the opinion and directions of such counsel.
(g) The Escrow Agent shall not be deemed to have
notice of any fact, claim or demand with respect hereto unless actually known by
an officer charged with responsibility for administering this Agreement or
unless in writing received by the Escrow Agent and making specific reference to
this Agreement.
(h) No provision of this Agreement shall require the
Escrow Agent to expend or risk its own funds, or to take any legal or other
action hereunder which might in its judgment involve it in, or require it to
incur in connection with the performance of its duties hereunder, any expense or
any financial liability unless it shall be furnished with indemnification
acceptable to it.
(i) Any permissive right of the Escrow Agent to take
any action hereunder shall not be construed as duty.
(j) All indemnifications contained in this Agreement
shall survive the resignation or removal of the Escrow Agent, and shall survive
the termination of this Agreement.
(k) The Escrow Agent is not responsible for the
recitals appearing in this Agreement. The recitals shall be deemed to be
statements of the Interested Parties to this Agreement.
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(l) The Escrow Agent has no responsibility for the
sufficiency of this Agreement for any purpose. Without limiting the foregoing,
if any security interest is referred to herein, the Escrow Agent shall have no
responsibility for, and makes no representation or warranty as to, the creation,
attachment or perfection of any such security interest or the sufficiency of
this Agreement therefor.
(m) Nothing in this Agreement shall obligate the
Escrow Agent to qualify to do business or act in any jurisdiction in which it is
not presently qualified to do business, or be deemed to impose upon the Escrow
Agent the duties of a trustee. The duties of the Escrow Agent under this
Agreement are strictly ministerial in nature.
(n) In no event shall the Escrow Agent have any
liability for any failure or inability of any of the Interested Parties to
perform or observe his or its duties under the Agreement, or by reason of a
breach of this Agreement by either of the Interested Parties. In no event shall
the Escrow Agent be obligated to take any action against any of the Interested
Parties to compel performance hereunder.
(o) The Escrow Agent shall in no instance be
obligated to commence, prosecute or defend any legal proceedings in connection
herewith. The Escrow Agent shall be authorized and entitled, however, in any
instance to commence, prosecute or defend any legal proceedings in connection
herewith, including without limitation any proceeding it may deem necessary to
resolve any matter or dispute, to obtain a necessary declaration of rights, or
to appoint a successor upon resignation (and after failure by the Interested
Parties to appoint a successor, as provided in Section 13).
(p) Whenever the terms hereof call for any notice,
payment or other action on a day which is not a business day, such payment or
action may be taken, or such notice given, as the case may be, on the next
succeeding business day. As used herein, "business day" shall mean any day other
than a Saturday or Sunday, or any other day on which the Escrow Agent is closed
for business.
(q) In the event of any ambiguity or uncertainty
under this Agreement, or in any notice, instruction, or other communication
received by the Escrow Agent hereunder, the Escrow Agent may, in its reasonable
discretion, refrain from taking action, and may retain the Escrow Property,
until and unless it receives written instruction signed by all Interested
Parties, or a decision by a court of competent jurisdiction which eliminates
such uncertainty or ambiguity.
(r) If at any time Escrow Agent is served with any
judicial or administrative order, judgement, decree, writ or other form of
judicial administrative process which in any way relates to or affects the
Escrow Property (including but not limited to orders of attachment or
garnishment or other forms of levies or injunctions or stays relating to the
Escrow Property), Escrow Agent is authorized to comply therewith in any manner
as it or its legal counsel reasonably deems appropriate; and if the Escrow Agent
complies with any such judicial or administrative order, judgement, decree, writ
or other form of judicial or administrative process, Escrow Agent shall not be
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liable to any of the parties hereto or to any other person or entity
notwithstanding that though such order, judgment, decree, writ or process may be
subsequently modified, annulled, set aside, vacated, found to have been without
proper jurisdiction, or otherwise determined to have been without legal force or
effect.
(s) The Escrow Agent shall have no liability for the
actions or omissions of any transfer agent, book-entry depository, nominee,
correspondent, subagent or subcustodian, except to the extent that such action
or omission of any transfer agent, book-entry depository, nominee,
correspondent, subagent or subcustodian was caused by the Escrow Agent's own
gross negligence, bad faith or willful misconduct.
10. INDEMNIFICATION.
(a) GENERAL. Each of FED and Telxon, jointly and
severally, hereby covenants and agrees to indemnify the Escrow Agent for, and to
defend and hold harmless the Escrow Agent from and against, any and every loss,
liability, damage, claim, cost and expense of any nature incurred or suffered by
the Escrow Agent and arising out of or in connection with this Agreement or the
administration of this Agreement or the performance or observance by the Escrow
Agent of its responsibilities or services under this Agreement (including but
not limited to reasonable attorneys fees and other costs and expenses of
defending or preparing to defend against any claim or liability), unless and
except to the extent such loss, liability, damage, cost or expense shall be
caused by the Escrow Agent's own willful misconduct, bad faith or gross
negligence.
(b) TAX-RELATED MATTERS. Each of FED and Telxon,
jointly and severally, agree to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of Escrow
Property under this Agreement, and, without limiting the generality of Section
10(a) above, hereby 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 any such payment or
other activities under this Agreement. FED and Telxon undertake to instruct the
Escrow Agent in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. Each of FED and Telxon, jointly and
severally, agrees to indemnify and hold the Escrow Agent harmless from any
liability on account of taxes, assessments or other governmental charges,
including without limitation the withholding or deduction or the failure to
withhold or deduct same, and any liability for failure to obtain proper
certifications or to properly report to governmental authorities, to which the
Escrow Agent may be or become subject in connection with or which arises out of
this Agreement, including costs and expenses (including reasonable legal fees),
interest and penalties. The Interested Parties shall each promptly provide to
Escrow Agent with appropriate IRS Forms W-9 for taxpayer identification number
certifications, or Forms W-8 for nonresident alien certifications in connection
with any payments to be made to them.
11. TERMINATION. If this Agreement is not terminated pursuant
to Section 5(a) above, this Agreement shall terminate upon the later of the
Termination Date or the distribution by the
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Escrow Agent of all of the Escrow Account in accordance with this Agreement,
provided that the provisions of Sections 9 and 10 above shall survive such
termination.
12. NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, on the date of transmittal of services via telecopy
to the party to whom notice is to be given, or on the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as follows (or
at such other address for a party as shall be specified by like notice):
To FED at: FED Corporation
0000 Xxxxx 00
Xxxxxxxx Xxxxxxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxx
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
To Telxon at: Telxon Corporation
0000 X. Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Duplicate: Xx. Xxxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
To Escrow Agent at: First Union National Bank
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx
Attention: Corporate Trust Administrator
Notwithstanding anything herein to the contrary, any party may
give any notice, request, demand, claim or other Communication hereunder by
personal delivery or telecopy, but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the
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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. Copies of any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy given to the Escrow
Agent by either party, shall be delivered to the other party as soon thereafter
as practicable.
13. 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 by delivering a resignation to the parties to this Agreement, not less
than 60 days prior to the date when such resignation shall take effect. FED may
appoint a successor Escrow Agent with the consent of Telxon, which shall not be
unreasonably withheld. If, within such notice period, FED provides to the Escrow
Agent written instructions with respect to the appointment of a successor Escrow
Agent and directions for the transfer of any Escrow Property then held by the
Escrow Agent to such successor, the Escrow Agent shall act in accordance with
such instructions and promptly transfer such Escrow Property to such designated
successor. If no successor is so appointed, the Escrow Agent may apply to a
court of competent jurisdiction for such appointment.
14. GENERAL.
(a) GOVERNING LAW, ASSIGNS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Delaware
without regard to conflict-of-law and choice of law principles and shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
(b) 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.
(c) ENTIRE AGREEMENT. Except for the provisions of the Stock
Purchase Agreement referenced herein, this Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
(d) WAIVERS. No waiver by any party hereto of any condition or
of any breach of any provision of this Escrow Agreement shall be effective
unless in writing. No waiver by any party of any such condition or breach, in
any one instance, shall 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.
(e) AMENDMENT. This Agreement may be amended only with the
written consent of FED, the Escrow Agent and the Telxon Representative.
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IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the day and year first above written.
FED CORPORATION
By: /s/ Xxxx Xxxxx
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Mr. Xxxx Xxxxx, President
TELXON CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Xx. Xxxxxx Xxxxxx, Executive Vice President
FIRST UNION NATIONAL BANK,
AS ESCROW AGENT:
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: XXXXX X. XXXXXXXXX
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Title: CORPORATE TRUST OFFICER
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