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EXHIBIT 4.5
ESCROW AGREEMENT
AGREEMENT, dated as of the 21st day of January, 1997 and
effective as of the Effective Date, as defined herein, by and among American
Stock Transfer & Trust Company, a New York corporation (hereinafter referred to
as the "Escrow Agent"), On'Village Communications, Inc., a California
corporation (the "Company"), and the stockholders of the Company who have
executed this agreement (hereinafter collectively called the "Stockholders").
WHEREAS, the Company contemplates a public offering ("Public
Offering") of Units ("Units"), each Unit consisting of one share of its Class A
Common Stock (the "Class A Common Stock") one redeemable Class A Warrant (the
"Class A Warrant") and one redeemable Class B Warrant ("Class B Warrant")
through X.X. Xxxxx Investment Banking Corp. as underwriter (the "Underwriter")
pursuant to a Registration Statement (the "Registration Statement") on Form
SB-2 to be filed with the Securities and Exchange Commission ("SEC"); and
WHEREAS, the Stockholders have agreed to deposit in escrow an
aggregate of 800,000 shares of Class B Common Stock ("Class B Common Stock"
which, together with the Class A Common Stock, is referred to herein as the
"Common Stock"), upon the terms and conditions set forth herein.
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint
American Stock Transfer & Trust Company as Escrow Agent and agree that the
Stockholders will, prior to the
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Effective Date (as defined herein), deliver to the Escrow Agent to hold in
accordance with the provisions hereof, certificates representing an aggregate
of 800,000 shares of Class B Common Stock owned of record by the Stockholders
in the respective amounts set forth on Exhibit A hereto (the "Escrow Shares"),
together with stock powers executed in blank. The Escrow Agent, by its
execution and delivery of this Agreement hereby acknowledges receipt of the
Escrow Shares and accepts its appointment as Escrow Agent to hold the Escrow
Shares in escrow, upon the terms, provisions and conditions hereof.
2. This Agreement shall become effective upon the date
on which the Securities and Exchange Commission declares effective the
Registration Statement ("Effective Date") and shall continue in effect until
the earlier of (i) the date specified in paragraph 4(e) hereof or (ii) the
distribution by the Escrow Agent of all of the Escrow Shares in accordance with
the terms hereof (the "Termination Date"). The period of time from the
Effective Date until the Termination Date is referred to herein as the "Escrow
Period."
3. During the Escrow Period, the Escrow Agent shall
receive all of the money, securities, rights or property distributed in respect
of the Escrow Shares then held in escrow, including any such property
distributed as dividends or pursuant to any stock split, merger,
recapitalization, dissolution, or total or partial liquidation of the Company,
such property to be held and distributed as herein provided and hereinafter
referred to collectively as the "Escrow Property."
4. (a) The Escrow Shares are subject to release to
the Stockholders only in the event the conditions set forth herein are met.
The Escrow Agent, upon notice to such
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effect from the Company as provided in paragraph 5 hereof, shall deliver the
Escrow Shares, together with stock powers executed in blank, and the Escrow
Property deposited in escrow with respect to such Escrow Shares, pro rata, to
the respective Stockholders, if, and only if, one of the following conditions
is met:
(i) 400,000 of the Escrow Shares and Escrow Property related to
such Escrow Shares will be released in the event that:
(A) the Company's net income before provision for
income taxes (the "Minimum Pretax Income")
equals or exceeds $3,000,000 for the fiscal
year ending December 31, 1998; or
(B) the Minimum Pretax Income equals or exceeds
$4,000,000 for the fiscal year ending
December 31, 1999; or
(C) the Minimum Pretax Income equals or exceeds
$5,000,000 for the fiscal year ending
December 31, 2000; or
(D) The Closing Price (as defined herein) of the
Company's Class A Common Stock shall average
in excess of $11.00 per share for any 30
consecutive business days during the period
commencing on the Effective Date and ending
18 months from the Effective Date; or
(E) The Closing Price (as defined herein) of the
Company's Class A Common Stock shall average
in excess of $15.00 per share for any 30
consecutive business days during the period
commencing on the 18th month after the
Effective Date and ending 36 months from the
Effective Date; or
(F) the Company is acquired by or merged into
another entity in a transaction in which
stockholders of the Company receive per share
consideration at least equal to the levels
set forth in (D) and (E) above during the
applicable time periods set forth in (D) and
(E) above.
(ii) the remaining 400,000 of the Escrow Shares and Escrow Property
related to such Escrow Shares will be released in the event
that:
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(A) the Company's Minimum Pretax Income equals or
exceeds $4,000,000 for the fiscal year ending
December 31, 1998; or
(B) the Minimum Pretax Income equals or exceeds
$5,300,000 for the fiscal year ending
December 31, 1999; or
(C) the Minimum Pretax Income equals or exceeds
$6,600,000 for the fiscal year ending
December 31, 2000; or
(D) The Closing Price (as defined herein) of the
Company's Class A Common Stock shall average
in excess of $12.50 per share for any 30
consecutive business days during the period
commencing on the Effective Date and ending
18 months from the Effective Date; or
(E) The Closing Price (as defined herein) of the
Company's Class A Common Stock shall average
in excess of $16.50 per share for any 30
consecutive business days during the period
commencing on the 18th month after the
Effective Date and ending 36 months from the
Effective Date; or
(F) the Company is acquired by or merged into
another entity in a transaction in which
stockholders of the Company receive per share
consideration at least equal to the levels
set forth in (D) and (E) above during the
applicable time periods set forth in (D) and
(E) above.
(b) As used in this Section 4, the term "Closing Price"
shall be subject to adjustments in the event of any stock dividend, stock
distribution, stock split or other similar event and shall mean:
(i) If the principal market for the Class A Common Stock
is a national securities exchange or the Nasdaq
National Market, the closing sales price of the Class
A Common Stock as reported by such exchange or
market, or on a consolidated tape reflecting
transactions on such exchange or market; or
(ii) if the principal market for the Class A Common Stock
is not a national securities exchange or the Nasdaq
National Market and the Class A Common Stock is
quoted on the Nasdaq SmallCap Market, the closing bid
price of the Class A Common Stock as quoted on the
Nasdaq SmallCap Market; or
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(iii) if the principal market for the Class A Common Stock
is not a national securities exchange or the Nasdaq
National Market and the Class A Common Stock is not
quoted on the Nasdaq SmallCap Market, the closing bid
for the Class A Common Stock as reported by the
National Quotation Bureau, Inc. ("NQB") or at least
two market makers in the Class A Common Stock if
quotations are not available from NQB but are
available from market makers.
(c) The determination of Minimum Pretax Income shall be determined
by the Company's independent public accountants in accordance with U.S.
generally accepted accounting principles provided that such determination is
calculated exclusive of any extraordinary earnings or charges (including any
charges incurred by the Company in connection with the release from escrow of
the Escrow Shares and any Escrow Property in respect thereof pursuant to the
provisions of this paragraph 4).
(d) In the event of any issuance (such issuance being herein
called a "Change of Shares") of additional shares of Common Stock (or
securities convertible into or exchangeable for Common Stock without the
payment of additional consideration, referred to as "Convertible Securities")
after the Effective Date, then each of the Minimum Pretax Income amounts set
forth in subparagraph (a) above shall be increased to an amount (the "Adjusted
Minimum Pretax Income") calculated in accordance with the formula set forth in
subparagraph (ii) below.
(i) For purposes of the foregoing paragraph, a Change of
Shares shall exclude (a) shares of Common Stock sold
in the Public Offering or (b) Common Stock or
Convertible Securities issued in connection with a
stock split or stock dividend or distribution or (c)
shares of Class A Common Stock issued in exchange for
shares of Class B Common Stock but shall include any
shares of Class A Common Stock or Convertible
Securities that are issued upon the exercise of the
Class A Warrants, the Class B Warrants or any other
options or warrants outstanding as of the Effective
Date or granted after the Effective Date by the
Company.
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(ii) Each Adjusted Minimum Pretax Income amount shall be
calculated by multiplying the applicable Minimum
Pretax Income amount prior to the Change of Shares by
a fraction, the numerator of which shall be the
weighted average number of shares of Common Stock
outstanding during the fiscal year for which the
determination is being made (including the Escrow
Shares and any shares of Common Stock issuable upon
conversion of any Convertible Securities, but
excluding treasury stock), and the denominator of
which shall be the sum of (x) the number of shares of
Common Stock outstanding on the Effective Date
(including the Escrow Shares and any shares of Common
Stock issuable upon conversion of Convertible
Securities outstanding immediately prior to the
Effective Date) plus (y) the number of shares of
Class A Common Stock sold by the Company pursuant to
the Prospectus included in the Registration
Statement, after adjustment for any stock dividends,
stock splits or similar events. The Adjusted Minimum
Pretax Income amounts shall be calculated
successively whenever such a Change of Shares occurs.
(e) If the Escrow Agent has not received the notice provided for
in Paragraph 5 hereof on or prior to the earlier of (i) the date of the closing
of a transaction referred to in Subparagraph 4(a)(i)(F) or 4(a)(ii)(F) or (ii)
April 15, 2001, the Escrow Agent shall deliver the certificates representing
all or the remaining Escrow Shares, together with stock powers executed in
blank, and any related Escrow Property to the Company to be placed in the
Company's treasury for cancellation thereof as a contribution to capital.
After such date, the Stockholders shall have no further rights as a stockholder
of the Company with respect to any of the cancelled Escrow Shares.
5. Upon the occurrence or satisfaction of any of the
events or conditions specified in Paragraph 4 hereof, the Company shall
promptly give appropriate notice to the Escrow Agent, the Underwriter (and if
the transfer agent of the Company's Common Stock is different from the Escrow
Agent, such transfer agent) and present such documentation as is reasonably
required by the Escrow Agent to evidence the satisfaction of such conditions.
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6. It is understood and agreed by the parties to this
Agreement as follows:
(a) The Escrow Agent is not and shall not be
deemed to be a trustee for any party for any purpose and is merely acting as a
depository and in a ministerial capacity hereunder with the limited duties
herein prescribed.
(b) The Escrow Agent does not have and shall not
be deemed to have any responsibility in respect of any instruction, certificate
or notice delivered to it or of the Escrow Shares or any related Escrow
Property other than faithfully to carry out the obligations undertaken in this
Agreement and to follow the directions in such instruction or notice provided
in accordance with the terms hereof.
(c) The Escrow Agent is not and shall not be
deemed to be liable for any action taken or omitted by it in good faith and may
rely upon, and act in accordance with, the advice of its counsel without
liability on its part for any action taken or omitted in accordance with such
advice. In any event, its liability hereunder shall be limited to liability
for gross negligence, willful misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon
and act in accordance with any certificate, instruction, notice, letter,
telegram, cablegram or other written instrument believed by it to be genuine
and to have been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow
Agent's reasonable fees and to reimburse it for its reasonable expenses
including reasonable attorney's fees incurred in connection with duties
hereunder and (ii) to save harmless, indemnify and defend the Escrow Agent for,
from and against any loss, damage, liability, judgment, cost and expense
whatsoever,
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including reasonable counsel fees, suffered or incurred by it by reason of, or
on account of, any misrepresentation made to it or its status or activities as
Escrow Agent under this Agreement except for any loss, damage, liability,
judgment, cost or expense resulting from gross negligence, willful misconduct
or bad faith on the part of the Escrow Agent. The obligation of the Escrow
Agent to deliver the Escrow Shares to either the Stockholders or the Company
shall be subject to the prior satisfaction upon demand from the Escrow Agent,
of the Company's obligations to so save harmless, indemnify and defend the
Escrow Agent and to reimburse the Escrow Agent or otherwise pay its fees and
expenses hereunder.
(f) The Escrow Agent shall not be required to
defend any legal proceeding which may be instituted against it in respect of
the subject matter of this Agreement unless requested to do so by the
Stockholders and indemnified to the Escrow Agent's satisfaction against the
cost and expense of such defense by the party requesting such defense. If any
such legal proceeding is instituted against it, the Escrow Agent agrees
promptly to given notice of such proceeding to the Stockholders and the
Company. The Escrow Agent shall not be required to institute legal proceedings
of any kind.
(g) The Escrow Agent shall not, by act, delay,
omission or otherwise, be deemed to have waived any right or remedy it may have
either under this Agreement or generally, unless such waiver be in writing, and
no waiver shall be valid unless it is in writing, signed by the Escrow Agent,
and only to the extent expressly therein set forth. A waiver by the Escrow
Agent under the term of this Agreement shall not be construed as a bar to, or
waiver of, the same or any other such right or remedy which it would otherwise
have on any other occasion.
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(h) The Escrow Agent may resign as such hereunder
by giving 30 days written notice thereof to the Stockholders and the Company.
Within 20 days after receipt of such notice, the Stockholders and the Company
shall furnish to the Escrow Agent written instructions for the release of the
Escrow Shares and any related Escrow Property (if such shares and property, if
any, have not yet been released pursuant to Paragraph 4 hereof) to a substitute
Escrow Agent which (whether designated by written instructions from the
Stockholders and the Company jointly or in the absence thereof by instructions
from a court of competent jurisdiction to the Escrow Agent) shall be a bank or
trust company organized and doing business under the laws of the United States
or any state thereof. Such substitute Escrow Agent shall thereafter hold any
Escrow Shares and any related Escrow Property received by it pursuant to the
terms of this Agreement and otherwise act hereunder as if it were the Escrow
Agent originally named herein. The Escrow Agent's duties and responsibilities
hereunder shall terminate upon the release of all shares then held in escrow
according to such written instruction or upon such delivery as herein provided.
This Agreement shall not otherwise be assignable by the Escrow Agent without
the prior written consent of the Company.
7. The Stockholders shall have the sole power to vote
the Escrow Shares and any securities deposited in escrow under this Agreement
while they are being held pursuant to this Agreement.
8. (a) Each of the Stockholders agrees that during
the term of this Agreement he will not sell, transfer, hypothecate, negotiate,
pledge, assign, encumber or otherwise dispose of any or all of the Escrow
Shares set forth opposite his name on Exhibit A
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hereto, unless and until the Company shall have given the notice as provided in
Paragraph 5. This restriction shall not be applicable to transfers upon death,
by operation of law, to family members of the Stockholders or to any trust for
the benefit of the Stockholders, provided that such transferees agree to be
bound by the provisions of this Agreement.
(b) The Stockholders will take any action
necessary or appropriate, including the execution of any further documents or
agreements, in order to effectuate the transfer of the Escrow Shares to the
Company if required pursuant to the provisions of this Agreement.
9. Each of the certificates representing the Escrow
Shares will bear legends to the following effect, as well as any other legends
required by applicable law:
(a) "The sale, transfer, hypothecation, negotiation,
pledge, assignment, encumbrance or other disposition
of the shares evidenced by this certificate are
restricted by and are subject to all of the terms,
conditions and provisions of a certain Escrow
Agreement entered into among X.X. Xxxxx Investment
Banking Corp., On'Village Communications, Inc. and
its Stockholders, dated as of January 22, 1997, a
copy of which may be obtained from On'Village
Communications, Inc. No transfer, sale or other
disposition of these shares may be made unless
specific conditions of such agreement are satisfied.
(b) "The shares evidenced by this certificate have not
been registered under the Securities Act of 1933, as
amended. No transfer, sale or other disposition of
these shares may be made unless a registration
statement with respect to these shares has become
effective under said act, or the Company is furnished
with an opinion of counsel satisfactory in form and
substance to it that such registration is not
required."
Upon execution of this Agreement, the Company shall direct the
transfer agent for the Company to place stop transfer orders with respect to
the Escrow Shares and to maintain such
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orders in effect until the transfer agent and the Underwriter shall have
received written notice from the Company as provided in Paragraph 5.
10. Each notice, instruction or other certificate
required or permitted by the terms hereof shall be in writing and shall be
communicated by personal delivery, fax or registered or certified mail, return
receipt requested, to the parties hereto at the addresses set forth below, or
at such other address as any of them may designate by notice to each of the
others:
(i) If to the Company, to:
On'Village Communications, Inc.
000 X. XxXxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
(ii) If to the Stockholders to their respective addresses
as set forth on Exhibit A hereto.
(iii) If to the Escrow Agent, to:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(iv) If to the Underwriter, to:
X.X. Xxxxx Investment Banking Corp.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx X. Xxxx, Esq.
Fax: 000-000-0000
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by fax or, if mailed, five (5) calendar days
after mailing by the Escrow Agent.
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A copy of all communications sent to the Company, the
Stockholders or the Escrow Agent shall be sent by ordinary mail to Xxxx &
Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxx Xxxxxxx, Esq. A copy of all communications sent to the
Underwriter shall be sent by ordinary mail to Bachner, Tally, Xxxxxxx & Xxxxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx, Esq.
11. Except as set forth in paragraph 12 hereof, this
Agreement may not be modified, altered or amended in any material respect or
cancelled or terminated except with the prior consent of the holders of all of
the outstanding shares of Common Stock of the Company.
12. In the event that (i) the Registration Statement is
not declared effective by the SEC within one year from the date of the filing
of the Registration Statement with the SEC or (ii) the Public Offering is not
consummated within twenty-five (25) days of the Effective Date of the
Registration Statement, this Agreement shall terminate and be of no further
force and effect and the Escrow Agent, upon written notice from both the
Company and the Underwriter in accordance with paragraph 10 hereof of such
termination, will return the Escrow Shares and any Escrow Property in respect
thereof to the Stockholders.
13. This Agreement shall be governed by and construed in
accordance with the laws of New York and shall be binding upon and inure to the
benefit of all parties hereto and their respective successors in interest and
assigns.
14. This Agreement may be executed in several
counterparts, which taken together shall constitute a single instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the day and year
first above written.
ON'VILLAGE COMMUNICATIONS, INC.
By: _____________________________________
Xxxx Xxxxxx, Chief Executive Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: _____________________________________
STOCKHOLDERS:
_____________________________
Xxxx X. Xxxxxx
_____________________________
Xxxxxx X. Xxxxxx
_____________________________
Xxxx X. Xxxxxx
_____________________________
Xxxxx X. Xxxxxx
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_____________________________
Xxxxxx Xxxxx
_____________________________
Xxxxx X. Xxxx
_____________________________
Ki X. Xxx
_____________________________
Xxxxx Xxxxxxxx
EXHIBIT A
STOCKHOLDERS' LIST
Name and Address Stock
of Stockholder Certificate No. Number of Escrow Shares
---------------- --------------- -----------------------
Xxxxxx X. Xxxxxx 10 176,061
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Xxxx X. Xxxxxx 12 176,061
00 X. Xxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxx 00000
Xxxx X. Xxxxxx 14 176,061
00000 Xxxxx Xxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Xxxxx X. Xxxxxx 16 176,061
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxx 18 37,066
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00000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxx X. Xxxx 20 18,533
000 Xxxxxxxxxx Xxxx 00 9,267
Xxxxxxxx, Xxxxxxxxxx 00000
Ki X. Xxx 24 18,895
00000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxxxx 26 11,995
Novato, California
____________________
* All stock numbers reflect a 6.94975-for-1 stock split effected in
October 1996.
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