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EXHIBIT 2.3
ESCROW AGREEMENT
This Escrow Agreement is made as of this 24th day of February, 1997
(the "Agreement"), by and among State Street Bank and Trust Company, a
Massachusetts trust company ("Escrow Agent"), Geoworks, a California
corporation ("Parent") and Xxxxx Xxxxxx Xxxx Xxxxx, as agent of certain of the
Company's shareholders ("Securityholders' Agent"). Terms not otherwise defined
herein shall have the meaning set forth in the Offer or the Warranty (each as
defined below), copies of which are attached hereto.
WITNESSETH
Parent desires to acquire all of the outstanding Ordinary and
Preference Shares of Eden Group Limited, a corporation organized under the laws
of England and Wales (the "Company"), pursuant to that certain Offer document
distributed to all shareholders and optionees of the Company (the "Offer"), and
pursuant to that certain Warranty and Covenant Agreement dated as of February
12, 1997 (the "Warranty Agreement") among Geoworks and certain shareholders and
officers of the Company set forth in schedules thereto, including the persons
listed in Annex A hereof (the persons listed in Annex A hereof referred to
collectively as, the "Indemnifying Shareholders"); and
WHEREAS, pursuant to Article 4.5 of the Warranty ("Article 4.5"), an
escrow fund (the "Escrow Fund") will be established to compensate Parent for
certain Losses it may incur by reason of any inaccuracy or breach of the
warranties contained in Schedule 3 of the Warranty Agreement or any failure by
the Company, the Warrantors or the Principal Sellers (as each such term is
defined in the Warranty Agreement) to perform or comply with any covenants
contained in the Warranty Agreement; and
WHEREAS, the Securityholders' Agent has been constituted as agent for
and on behalf of the Indemnifying Shareholders to undertake certain obligations
specified in this Agreement; and
WHEREAS, Article 4.5 provides for the establishment of an Escrow Fund
of 65,212 shares of the Parent Common Stock upon the Acquisition otherwise
payable to the Indemnifying Shareholders, such Escrow Fund to be held by the
Escrow Agent; and
WHEREAS, the parties hereto desire to set forth further terms and
conditions in addition to those set forth in the Offer relating to the
operation of the Escrow Fund.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants contained herein, and intending to be legally bound, hereby agree as
follows:
1. Escrow and Escrow Shares. Pursuant to the Offer, Parent shall
deposit in escrow with the Escrow Agent, as escrow agent, a stock certificate
or certificates representing 65,212 shares of Parent Common Stock (the "Escrow
Shares"), which shall be registered in the name of the Escrow Agent as nominee
for the beneficial owners of such shares. The Escrow Shares shall be held and
distributed by the Escrow Agent in accordance with the terms and conditions of
this Agreement. The number of Escrow Shares held on behalf of each
Indemnifying Shareholder is set forth in Annex A attached hereto. The
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Escrow Fund shall be available to compensate Parent and its affiliates for any
claims, losses, liabilities, damages, deficiencies, costs and expenses,
including reasonable attorneys' fees and expenses, and expenses of
investigation and defense (hereinafter individually a "Loss" and collectively
"Losses") incurred by Parent, its officers, directors, or affiliates directly
or indirectly as a result of any inaccuracy or breach of a warranty of the
Company, the Warrantors or the Principal Sellers made in the Warranty Agreement
(as modified by the Company Schedules), or any failure by the Company, the
Warrantors or the Principal Sellers to perform or comply with any covenant
contained therein. Parent and the Company each acknowledge that such Losses,
if any, would relate to unresolved contingencies existing at the Completion,
which if resolved at the Completion (as defined in the Offer) would have led to
a reduction in the Consideration Shares (as defined in the Offer).
2. Rights and Obligations of the Parties. The Escrow Agent shall
be entitled to such rights and shall perform such duties of the Escrow Agent as
set forth herein (collectively, the "Duties") in accordance with the terms and
conditions of this Agreement. Parent, Company and the Securityholders' Agent
shall be entitled to their respective rights and shall perform their respective
duties and obligations as set forth herein, in accordance with the terms
hereof. The duties and obligations of the Escrow Agent shall be determined
solely with reference to this Agreement. In the case of the other parties to
this Agreement, however, in the event that the terms of this Agreement conflict
in any way with the provisions of Article 4.5, Article 4.5 shall control.
3. Escrow Period; Escrow Fund.
a. The period of time during which the Escrow Fund shall
be in existence (the "Escrow Period") shall commence immediately following the
Completion, which shall be set forth in a certificate of Parent delivered to
the Escrow Agent, and shall terminate at 5:00 p.m., California time, on
December 31, 1997 (the "Release Date"); provided, however, that a portion of
the Escrow Shares and other assets held in the Escrow Fund, which is necessary
to satisfy any unsatisfied claims specified in any Officer's Certificate
theretofore delivered to the Escrow Agent prior to termination of the Escrow
Period with respect to facts and circumstances existing prior to expiration of
the Escrow Period shall remain in the Escrow Fund until such claims have been
resolved. As soon as practicable after all such claims have been finally
resolved, the Escrow Agent shall requisition from the transfer agent, if
necessary, and deliver to such Indemnifying Shareholders, at their addresses
set forth in a certificate of the Securityholders' Agent, all of the Escrow
Shares and other property remaining in the Escrow Fund and not required to
satisfy such claims and expenses. Each Indemnifying Shareholder shall receive
that number of Escrow Shares (and cash in lieu payments when appropriate), and
a portion of any other assets held in the Escrow Fund, which bears the same
relationship to the total number of Escrow Shares and other assets in the
Escrow Fund and available for distribution as the number of Escrow Shares set
forth opposite the name of each such Indemnifying Shareholder on Annex A hereto
bears to 65,212, as calculated by the Securityholders' Agent.
b. Upon receipt of written notice from the
Securityholders' Agent to the Escrow Agent (a) directing the Escrow Agent to
sell a number of shares of the Escrow Shares set forth in such notice, (b)
specifying how the proceeds of such sales are to be allocated for tax-reporting
purposes, setting forth, as appropriate, the names, addresses and social
security or tax identification numbers of
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each person to whom a sale is to be attributed, (c) certifying that the
restrictions on the transferability of such shares applicable to affiliates of
Subsidiary pursuant to pooling of interest rules, as set forth in the Affiliate
Agreement among such affiliates, Parent and Subsidiary have expired, (d)
further certifying that such sale may be effected pursuant to the terms of the
Declaration of Registration Rights made by Parent for the benefit of Company
shareholders, (e) identifying the name, address and telephone number of a
broker through whom such sale should be made, (f) setting forth such broker's
good faith estimate of the commissions and expenses that will be incurred to
make such sale and (g) accompanied by a check in the amount of 100% of the
amount of such estimated commissions and expenses, which such amount shall be
paid or forwarded to such broker by the Escrow Agent (a "Sales Notice"), the
Escrow Agent shall sell that number of Escrow Shares as is indicated in and in
accordance with the Sales Notice. Any such sales effectuated at the request of
the Indemnifying Shareholders shall be made on a pro rata basis for all
Indemnifying Shareholders from among the Escrow Shares then held in Escrow.
The Securityholders' Agent and the Indemnifying Shareholders agree that any
such sales shall be made in a single transaction or group of transactions
effected over not more than a three (3) day period, the aggregate gross sales
proceeds of which are expected as of the date of receipt by the Escrow Agent of
the Sales Notice to be not less than $250,000. The Escrow Agent may rely on
the Sales Notice without inquiry and shall have no liability to the
Securityholders' Agent, the Indemnifying Shareholders or any other party for
relying on the Sales Notice or effectuating a sale or sales of Escrow Shares in
accordance with the Sales Notice. The Securityholders' Agent and the
Indemnifying Shareholders, jointly and severally, agree to indemnify and hold
harmless the Escrow Agent from and against all liability and costs, other than
(a) the commissions and expenses of the broker set forth in the Sales Notice
and (b) any liabilities and costs caused by the gross negligence or willful
misconduct of the Escrow Agent, incurred in connection with making any sale of
Escrow Shares in accordance with a Sales Notice. To secure such indemnity
obligation, the Escrow Agent shall have a first lien on any Escrow Shares or
other property otherwise distributable to the Indemnifying Shareholders (but
not on any Escrow Shares or any other property distributable to Parent). If
the actual commissions and expenses of effecting a sale directed in a Sales
Notice are less than the amount of funds advanced by the Securityholders' Agent
with such Sales Notice, the Escrow Agent may keep the excess as a fee for
effecting the sale.
c. All proceeds from the sale of Escrow Shares shall be
held in escrow as part of the Escrow Fund on the same basis as Escrow Shares
are held.
4. Duties of Escrow Agent. The Duties of the Escrow Agent shall
include the following:
a. The Escrow Agent shall hold and safeguard the Escrow
Shares and any other assets in the Escrow Fund during the Escrow Period, shall
treat such Escrow Fund in accordance with the terms of this Agreement and not
as the property of Parent or the Indemnifying Shareholders, and shall hold and
dispose of the Escrow Shares and any other assets in the Escrow Fund only in
accordance with the terms hereof.
b. Each Indemnifying Shareholder shall have voting
rights with respect to such Shareholder's proportionate interest in the shares
of Parent Common Stock remaining in the Escrow Fund (and on any voting
securities added to the Escrow Fund in respect of such shares of Parent Common
Stock). The Escrow Shares shall be voted by the Escrow Agent on behalf of the
Indemnifying
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Shareholders in accordance with the written instruction received by the Escrow
Agent from the Securityholders' Agent. The Securityholders' Agent agrees with
the Indemnifying Shareholders (but the Escrow Agent need not verify) that such
instructions shall be in conformance with the written instructions received by
the Securityholders' Agent from each Indemnifying Shareholder. In the absence
of such written instructions, received by the Escrow agent at least five
business days prior to the date on which such shares must be voted, the Escrow
Agent need not vote such shares. The Escrow Agent shall forward all proxy
information and other reports it receives with respect to Escrow Shares to the
Securityholders' Agent.
c. In making any distribution of Escrow Shares pursuant
to the terms of this Agreement, the Escrow Agent shall round down (if
necessary) to a whole number of shares and pay to each Indemnifying
Shareholder, as appropriate, from funds provided by Parent, cash in lieu of the
fractional interests not distributed. Any shares for which Parent has provided
cash in lieu payments shall be distributed to Parent, which shall be deemed to
have purchased them.
5. Claims Upon Escrow Fund.
a. Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of a certificate signed by the
President, any Vice President or General Counsel of Parent (an "Officer's
Certificate") (A) stating that Parent has paid or properly accrued or
reasonably anticipates that it will have to pay or accrue Losses (expressed in
U.S. Dollars at a conversion rate of 1.6113 U.S. Dollars to a British Pound
(the "Conversion Rate")), and (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was paid or properly accrued, or the basis for such anticipated liability,
and the nature of the misrepresentation, breach of warranty or covenant to
which such item is related, the Escrow Agent shall, subject to the provisions
of Section 6 hereof, deliver to Parent out of the Escrow Fund, as promptly as
practicable, Escrow Shares (or a combination of Escrow Shares and cash
determined in accordance with Section 4(c) hereof) having a value (determined
pursuant to Section 5(b)) equal to such Losses.
b. For the purposes of determining the number of Escrow
Shares to be delivered to Parent pursuant to Section 5(a) hereof, the shares of
Parent Common Stock shall be valued at the average of the closing prices of
Parent's Common Stock on the principal securities exchange on which Parent's
Common Stock is then traded, or if not so traded, the National Market System of
the National Association of Securities Dealers Automated Quotation system, in
either case as reported in The Wall Street Journal, for the thirty (30)
consecutive trading days ending on the date that is one (1) trading day prior
to the Completion. Parent and the Securityholders' Agent shall certify such
fair market value in a certificate signed by both Parent and the
Securityholders' Agent, and shall deliver such certificate to the Escrow Agent.
c. Parent may not receive any shares from the Escrow
Fund unless and until Officer's Certificates (as defined in Section 5(a) above)
identifying Losses, the aggregate amount of which exceed $241,695, which
Parent, the Securityholders' Agent and the Indemnifying Shareholders agree is
the equivalent of L.150,000, converted to U.S. Dollars at the Conversion Rate,
have been delivered to the
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Escrow Agent as provided in Section 6. In such case, Parent may recover from
the Escrow Fund the total of its Losses, including the first $241,695.
d. To the extent that the aggregate amount of Losses for
which Parent is entitled to receive indemnification exceeds the value of Escrow
Shares then held in the Escrow Fund, Parent shall be entitled to receive, in
addition to all Escrow Shares then held in the Escrow Fund, other assets held
in the Escrow Fund equal to the lesser of (i) all other assets held in the
Escrow Fund or (ii) the amount by which the Losses for which the Parent is
entitled to indemnification exceeds the value of the Escrow Shares then held in
the Escrow Fund.
6. Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Securityholders' Agent, and for a period of thirty
(30) days after receipt by the Escrow Agent of an Officer's Certificate, the
Escrow Agent shall make no delivery to Parent of any Escrow Amounts pursuant to
Section 5 hereof unless the Escrow Agent shall have received written
authorization from the Securityholders' Agent to make such delivery. After the
expiration of such thirty (30) day period, the Escrow Agent shall make delivery
of shares of Parent Common Stock (and, if applicable under Section 4(c) or
Section 5(d), other assets in the Escrow Fund) from the Escrow Fund in
accordance with Section 5 hereof, provided that no such payment or delivery may
be made if the Securityholders' Agent shall object in a written statement to
the claim made in the Officer's Certificate, and such statement shall have been
delivered to the Escrow Agent prior to the expiration of such thirty (30) day
period.
7. Resolution of Conflicts; Arbitration.
a. In case the Securityholders' Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholders' Agent and Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholders' Agent and Parent should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and shall be
furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum and distribute shares of Parent Common Stock (and, if
applicable, other assets) from the Escrow Fund in accordance with the terms
thereof.
b. If no such agreement can be reached after good faith
negotiation, either Parent or the Securityholders' Agent may demand arbitration
of the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by three arbitrators. Parent and the Securityholders'
Agent shall each select one arbitrator, and the two arbitrators so selected
shall select a third arbitrator. The arbitrators shall set a limited time
period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrators shall rule
upon motions to compel or limit discovery and shall have the authority to
impose sanctions, including attorneys' fees and costs, to the same extent as a
court of competent law or equity, should the arbitrators determine that
discovery was sought without substantial justification or that discovery was
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refused or objected to without substantial justification. The decision of a
majority of the three arbitrators as to the validity and amount of any claim in
such Officer's Certificate shall be binding and conclusive upon the parties to
this Agreement, and notwithstanding anything in Section 6 hereof, the Escrow
Agent shall be entitled to act in accordance with such decision and make or
withhold payments out of the Escrow Fund in accordance therewith. Such
decision, which shall be furnished to the Escrow Agent, shall be written and
shall be supported by written findings of fact and conclusions which shall set
forth the award, judgment, decree or order awarded by the arbitrators.
c. Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held in Alameda County, California under the rules then in effect of the
American Arbitration Association. For purposes of this Section 7, in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Parent shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators award Parent one-half
(1/2) or less of the disputed amount; otherwise, the shareholders of the
Company as represented by the Securityholders' Agent shall be deemed to be the
Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall pay its
own expenses, the fees of each arbitrator, the administrative costs of the
arbitration and the expenses, including without limitation, reasonable
attorneys' fees and costs, incurred by the other party to the arbitration.
8. Securityholders' Agent; Power of Attorney.
a. In the event that the Offer is accepted, effective
upon Completion (as set forth in a certificate delivered to the Escrow Agent
pursuant to Section 3(a)), and without further act of any Indemnifying
Shareholder, Xxxxx Xxxxxx Xxxx Xxxxx shall be appointed Securityholders' Agent,
as agent and attorney-in-fact for each Indemnifying Shareholder, for and on
behalf of Indemnifying Shareholders, to give and receive notices and
communications, to authorize delivery to Parent of shares of Parent Common
Stock from the Escrow Fund in satisfaction of claims by Parent, to object to
such deliveries, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, to authorize the sale of Escrow Shares
from the Escrow Fund, and to take all actions necessary or appropriate in the
judgment of Securityholders' Agent for the accomplishment of the foregoing.
Such agency may be changed by the Indemnifying Shareholders from time to time
upon not less than thirty (30) days' prior written notice to Parent and the
Escrow Agent; provided that the Securityholders' Agent may not be removed
unless holders of a two-thirds interest of the Escrow Fund agree to such
removal and to the identity of the substituted agent. Any vacancy in the
position of Securityholders' Agent may be filled by approval of the holders of
a majority in interest of the Escrow Fund. No bond shall be required of the
Securityholders' Agent, and the Securityholders' Agent shall not receive
compensation for his or her services. Notices or communications to or from the
Securityholders' Agent shall constitute notice to or from each of the
Indemnifying Shareholders. Unless and until the Escrow Agent has notice of a
new Securityholders' Agent, it may assume that any such notice constitutes
valid notice under this provision.
b. The Securityholders' Agent shall not be liable for
any act done or omitted hereunder as Securityholders' Agent while acting in
good faith and in the exercise of reasonable judgment. The Indemnifying
Shareholders on whose behalf the Escrow Amount was contributed to the Escrow
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Fund shall severally indemnify the Securityholders' Agent and hold the
Securityholders' Agent harmless against any loss, liability or expense incurred
without negligence or bad faith on the part of the Securityholders' Agent and
arising out of or in connection with the acceptance or administration of the
Securityholders' Agent's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Securityholders' Agent.
c. A decision, act, consent or instruction of the
Securityholders' Agent, in each case in a writing signed by the
Securityholders' Agent, shall constitute a decision of all the Indemnifying
Shareholders for whom a portion of the Escrow Amount otherwise issuable to them
are deposited in the Escrow Fund and shall be final, binding and conclusive
upon each of such Indemnifying Shareholders, and the Escrow Agent and Parent
may rely upon any such decision, act, consent or instruction of the
Securityholders' Agent as being the decision, act, consent or instruction of
each every such Indemnifying Shareholder. The Escrow Agent and Parent are
hereby relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the
Securityholders' Agent.
d. In the event Parent becomes aware of a third-party
claim which Parent believes may result in a demand against the Escrow Fund,
Parent shall notify the Securityholders' Agent of such claim, and the
Securityholders' Agent, as representative for the Indemnifying Shareholders,
shall be entitled, at their expense, to participate in any defense of such
claim. Parent shall have the right in its sole discretion to settle any such
claim; provided, however, that except with the consent of the Securityholders'
Agent, no settlement of any such claim with third-party claimants shall alone
be determinative of the amount of any claim against the Escrow Fund. In the
event that the Securityholders' Agent has consented in writing to any such
settlement, the Securityholders' Agent shall have no power or authority to
object under any provision of this Agreement to the amount of any claim by
Parent against the Escrow Fund with respect to such settlement.
9. Stock Splits, Investments and Tax Allocations.
a. Any cash dividends, dividends payable in securities
or other distributions of any kind, including any shares of Parent capital
stock received upon a stock split, shall be retained in the Escrow Fund and
become a part thereof. Any provision hereof or of Article 4.5 shall be adjusted
to appropriately reflect any stock split or reverse stock split.
b. Upon receipt by the Escrow Agent of specific written
investment instructions from the Securityholders' Agent, available uninvested
cash in the Escrow Fund shall be invested (and reinvested, as the case may be)
from time to time by the Escrow Agent in any of the following investments, as
specified in such instruction:
(i) obligations issued or guaranteed by The United
States of America or any agency or instrumentality thereof;
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(ii) certificates of deposit of or interest
bearing accounts with national banks or corporations endowed with trust powers,
including the Escrow Agent, having capital and surplus in excess of
$100,000,000;
(iii) commercial paper that at the time of
investment is rated A-1 by Standard & Poors Corporation or Prime-1 by Xxxxx'x
Investors Service, Inc.;
(iv) repurchase agreements with any bank or
corporation described in clause (ii) fully secured by obligations described in
clause (i);
(v) State Street Bank Insured Money Market
Deposit Account ("IMMA").
Investments pursuant to such investment instructions described above
shall in all instances be subject to availability (including any time-of-day
requirements). In no instance shall the Escrow Agent have any obligation to
provide investment advice of any kind. In the absence of such written
investment instructions, Parent, the Securityholders' Agent and the
Indemnifying Shareholders agree that any available, uninvested cash in the
Escrow Fund at the end of a business day shall be invested by the Escrow Agent
overnight in IMMA.
c. The Escrow Agent shall be authorized at all times and
from time to time to liquidate any investment of cash in the Escrow Fund as may
be necessary to provide available cash to make any release, disbursement or
payment called for under the terms of this Agreement. The Escrow Agent shall
have no responsibility or liability for any losses resulting from liquidation
of any investment (such as liquidation prior to maturity).
d. Investment earnings and other income from investment
of cash in the Escrow Fund (net of transaction costs) shall be deposited in the
Escrow Fund and shall become part of the Escrow Fund (and may be reinvested
pursuant to the terms of Section 9(b) above), and all losses incurred on any
investment shall be debited to the Escrow Fund. In no event shall the Escrow
Agent have any liability under this Agreement for investment losses incurred on
any investment or reinvestment.
e. The parties hereto agree that, for tax reporting
purposes, all dividends on Parent Capital Stock or on Parent capital stock
received upon a stock split, and all interest or other income earned from the
investment of any monies in the Escrow Fund shall be allocable to the
Indemnifying Shareholders in accordance with their percentage interests in the
Escrow Fund as set forth in Annex A hereof.
f. Each of Parent and the Shareholders' Agent agrees, on
or before April 1, 1997, to execute and deliver to the Escrow Agent a Form W-9
(or Form W-8, in the case of non-U.S. persons) which certifies such person's
social security or taxpayer identification number. The parties hereto
understand that, in the event their social security or tax identification
numbers are not so certified to the Escrow Agent, the Internal Revenue Code of
1986, as it may be amended from time to time, may require withholding of a
portion of any interest or other income earned on the investments of monies in
the Escrow Fund.
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10. Exculpatory Provisions; Indemnification.
a. The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and as set
forth in any additional written escrow instructions (which instructions shall
not expose Escrow Agent to any liability additional to that assumed by Escrow
Agent hereunder) which the Escrow Agent may receive after the date of this
Agreement which are signed by an officer of Parent and the Securityholders'
Agent, and may rely and shall be protected in relying or refraining from acting
on any instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties.
b. The Escrow Agent is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any party or
any other person to the contrary. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, the Escrow Agent shall
not be liable to any of the parties hereto or to any other person by reason of
such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
c. In performing any duties under or in connection with
this Agreement, the Escrow Agent shall not be liable to any party for damages,
losses, or expenses, except for gross negligence or willful misconduct on the
part of the Escrow Agent. The Escrow Agent shall not incur any such liability
for (A) any act or failure to act made or omitted in good faith, or (B) any
action taken or omitted in reliance upon any instrument, including any written
statement or affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine, nor will the Escrow Agent be liable
or responsible for forgeries, fraud, impersonations, or determining the scope
of any representative authority. In addition, the Escrow Agent may consult
with the legal counsel in connection with Escrow Agent's duties under or in
connection with this Agreement and shall be fully protected in any act taken,
suffered, or permitted by him/her in good faith in accordance with the advice
of counsel. The Escrow Agent is not responsible for determining and verifying
the authority of any person acting or purporting to act on behalf of any party
to this Agreement.
d. If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold the Escrow Shares and all documents relating thereto and may wait for
settlement of any such controversy by final appropriate legal proceedings or
other means. In such event, the Escrow Agent will not be liable for damage.
Furthermore, the Escrow Agent may at its option, and at the expense of the
Escrow Fund, file an action of interpleader requiring the parties to answer and
litigate any claims and rights among themselves. The Escrow Agent is
authorized to deposit with the clerk of the court all documents and Escrow
Shares, except all cost, expenses, charges and reasonable attorney fees
incurred by the Escrow Agent due to the interpleader action (and which the
parties jointly and severally agree to pay). Upon initiating such action, the
Escrow Agent shall be fully released and discharged of and from all obligations
and liability imposed by the terms of this Agreement.
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e. Parent and the Securityholders' Agent and their
respective successors and assigns agree jointly and severally to indemnify and
hold Escrow Agent harmless against any and all losses, claims, damages,
liabilities, and expenses, including reasonable costs of investigation, counsel
fees, and disbursements that may be imposed on Escrow Agent or incurred by
Escrow Agent in connection with the performance of his/her duties under or in
connection with this Agreement, including but not limited to any litigation
arising from or in connection with this Agreement or involving its subject
matter.
f. Parent and the Securityholders' Agent 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. Parent and the
Securityholders' Agent, jointly and severally, agree 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. Notwithstanding the
foregoing, no distributions will be made unless the Escrow Agent is supplied
with an original, signed W-8 form, W-9 form or their equivalent prior to
distribution.
11. Alteration of Duties. The provisions of this Agreement, and
the duties arising hereunder may only be altered, amended, modified or revoked
by a writing signed by all of the parties hereto. The Securityholders' Agent
may sign such a writing only if Indemnifying Shareholders representing at least
two-thirds interest of the Escrow Fund agree to such alteration, amendment,
modification or revocation.
12. Resignation and Removal of the Escrow Agent. The Escrow Agent
may resign at any time upon giving at least thirty (30) days' written notice to
the parties; provided, however, that no such resignation shall become effective
until the appointment of a successor escrow agent which shall be accomplished
as follows: the parties shall use their best efforts to mutually agree on a
successor escrow agent within thirty (30) days after receiving such notice. If
the parties fail to agree upon a successor escrow agent within such time, the
Escrow Agent shall have the right to appoint a successor escrow agent
authorized to do business in the States of California or Massachusetts. The
successor escrow agent shall execute and deliver an instrument accepting such
appointment and it shall, without further acts, be vested with all the estates,
properties, rights, powers, and duties of the predecessor escrow agent as if
originally named as escrow agent. The Escrow Agent shall be discharged from
any further duties and liability under this Agreement.
13. Further Instruments. If the Escrow Agent reasonably requires
other or further instruments in connection with performance of the Duties, the
necessary parties hereto shall join in furnishing such instruments.
14. Disputes. It is understood and agreed that should any dispute
arise with respect to the delivery, ownership, right of possession, and/or
disposition of the Escrow Shares, or should any claim be made upon such shares
by a third party, the Escrow Agent upon receipt of written notice of such
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dispute or claim by the parties hereto or by a third party, is authorized and
directed to retain in its possession without liability to anyone, all or any of
said shares until such dispute shall have been settled in accordance with the
procedures set forth in this Agreement. The Escrow Agent may, but shall be
under no duty whatsoever to, institute or defend any legal proceedings which
relate to the Escrow Shares.
15. Escrow Fees and Expenses.
a. All reasonable fees of the Escrow Agent for
performance of its duties hereunder shall be paid by Parent. It is understood
that the fees and usual charges agreed upon for services of the Escrow Agent
shall be considered compensation for ordinary services as contemplated by this
Agreement. In the event that the conditions of this Agreement are not promptly
fulfilled, or if the Escrow Agent renders any service not provided for in this
Agreement, or if the parties request a substantial modification of its terms,
or if any controversy arises, or if the Escrow Agent is made a party to, or
intervenes in, any litigation pertaining to this escrow or its subject matter,
the Escrow Agent shall be reasonably compensated for such extraordinary
services and reimbursed for all costs, attorney's fees, and expenses occasioned
by such default, delay, controversy or litigation. Parent agrees to pay any
such reasonable sums promptly upon demand.
b. Any out-of-pocket fees and expenses described in a
certificate of the Securityholders' Agent delivered to the Escrow Agent as
having been incurred by the Securityholders' Agent shall be paid by the Escrow
Agent out of the proceeds of sales of Escrow Shares otherwise distributable to
the Indemnifying Shareholders, but shall not reduce any payment or distribution
to Parent. Accordingly, the Escrow Agent need not make any distribution to the
Securityholders' Agent until (i) it has first set aside or paid any amounts set
forth in an Officer's Certificate of Parent delivered to the Escrow Agent
pursuant to Section 5 of the this Agreement and (ii) it would otherwise make a
distribution to the Indemnifying Shareholders.
16. General.
a. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given if delivered personally or
if mail certified or registered mail, postage prepaid, to the parties at their
address set forth below or to such other address as they may hereafter
designate:
To Parent:
Geoworks
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Jordan X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: 415/000-0000
Facsimile No.: 415/496-4006
To Securityholders' Agent:
Xxxxx Xxxxxx Xxxx Xxxxx
Xxx Xxxxxxxxx
Xxxx Xxxx
Xxxxxxxxxx
Xxxxxxxx XX00 0XX
With a copy to:
Dibb Xxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxxxx X0 XXX
Xxxxxx Xxxxxxx
Attention: Xxxx Xxxxxxx, Esq.
Telephone No.: 000-00-000-000-0000
Facsimile No.: 11-44-121-212-2730
To the Escrow Agent:
(i) if by Courier, to:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department (1997 Geoworks Escrow)
Telephone No.: 617/000-0000
Facsimile No.: 617/664-5371
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(ii) or if by mail, to:
State Street Bank and Trust Company
P. O. Xxx 000
Xxxxxx, XX 00000
Attention: Corporate Trust Department (1997 Geoworks Escrow)
or to such other address as any party may have furnished in writing to the
other parties in the manner provided above.
b. Neither Parent nor the Securityholders' Agent nor the
Escrow Agent shall be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
c. The captions in this Escrow Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Escrow Agreement.
d. This Escrow Agreement may be executed in any number
of counterparts, each of which when so executed shall constitute an original
copy hereof, but all of which together shall constitute one agreement.
e. No party may, without the prior express written
consent of each other party, assign this Escrow Agreement in whole or in part.
This Escrow Agreement shall be binding upon the respective parties hereto and
their heirs, executors, successors and assigns.
f. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts made and to be performed entirely within the State of California;
provided, however, that issues arising out of, or relating to, the warranties
and indemnities set forth in the Warranty Agreement shall be construed under
the laws of the United Kingdom, as indicated in the Warranty Agreement. The
parties to this Escrow Agreement hereby agree to submit to personal
jurisdiction in the State of California.
g. This Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers and modifications which
may hereafter be executed, and (b) certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, optical disk, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
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14
h. This Agreement may not be altered or modified except
in writing, nor shall the conduct of the parties constitute a waiver of any of
the terms and conditions of this Escrow Agreement, unless such waiver is
specified in writing, and then only to the extent so specified. A waiver of
any of the terms and conditions of this Escrow Agreement on one occasion shall
not constitute a waiver of the other terms of this Escrow Agreement, or of such
terms and conditions on any other occasion.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first above written.
STATE STREET BANK AND TRUST COMPANY
By /s/ XXXXXX X. XXXXX
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
GEOWORKS
By /s/ XXXXXX XXXXXXX
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Secretary
SECURITYHOLDERS' AGENT
On his own behalf and on behalf of all
Indemnifying Shareholders
/s/ XXXXX X. X. XXXXX
------------------------------------
Name: Xxxxx X. X. Xxxxx
* * * ESCROW AGREEMENT * * *
16
ANNEX A
Indemnifying Shareholder's Name and Address Number of Shares in Escrow
Xxxxx Xxxxxx Xxxx Xxxxx 28,222
Xxx Xxxxxxxxx
Xxxx Xxxx
Xxxxxxxxxx
Xxxxxxxx XX00 0XX
Xxxxxxxx Xxxxxxx 21,380
000 Xxxx Xxxxxx
Xxxxxx
Xxxx XX00 0XX
Xxxxx Xxx Xxxxxxx 15,610
0 Xxxxxxxxx Xxxx
Xxxx Xxxx
Xxxxxxxxxx
Xxxxxxx XX00 0XX
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