Exhibit 10.2
EXHIBIT B
ESCROW AGREEMENT
This ESCROW AGREEMENT is dated as of April ___, 2005, by and among
McGuireWoods LLP (the "Escrow Agent"), On2 Technologies, Inc., a Delaware
corporation ("Buyer"), and Wildform, Inc., a California corporation ("Seller").
W I T N E S S E T H
WHEREAS, Buyer and Seller are parties to an Asset Purchase and Software
License Agreement dated as of April, 2005 (the "Purchase Agreement") which
provides for a deposit of $200,000 by Buyer (the "Escrow Amount"), to be held by
the Escrow Agent on the terms and conditions set forth herein;
WHEREAS, Buyer and Seller each appoint the Escrow Agent to serve as an
escrow agent hereunder; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the sufficiency and receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
1. Definitions. Capitalized terms not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given in the Purchase
Agreement, a complete and correct copy of which has been delivered to the Escrow
Agent by Buyer and Seller.
2. Escrow Amount. The Escrow Agent acknowledges receipt of $200,000
tendered by Buyer in accordance with Section 4.2(b) of the Purchase Agreement.
The Buyer and the Seller hereby appoint the Escrow Agent as the escrow agent
hereunder, and the Escrow Agent hereby accepts said appointment and agrees to
hold the Escrow Amount and all interest and other income earned thereon (the
"Income" and, together with the Escrow Amount, the "Escrow Fund") in escrow and
to apply, invest, reinvest and disburse the Escrow Fund only in accordance with
the provisions of this Escrow Agreement.
3. Distribution of Escrow Fund; Disputes.
(a) The Escrow Amount is deposited by Buyer with the Escrow Agent subject
to any claims for Damages the Buyer may have pursuant to Section 13.1 of the
Purchase Agreement.
(b) Either party (the "Instructing Party ") may deliver signed
instructions to the Escrow Agent (the "Instructions") instructing the Escrow
Agent to release funds from the Escrow Fund, provided that Seller may not
deliver such Instructions to the Escrow Agent prior to the Termination Date (as
hereinafter defined). The Instructing Party shall deliver to the other party
(the "Receiving Party") a copy of the Instructions concurrently with its
delivery to the Escrow Agent. If the Receiving Party objects to the release of
any funds from the Escrow Fund as set forth in the Instructions, it shall
deliver written notice (a "Notice of Dispute") to the Instructing Party and the
Escrow Agent within a period of 20 business days after receipt of the
Instructions setting forth in reasonable detail the reasons why the Receiving
Party is disputing the Instructions. The Receiving Party shall deliver to the
Instructing Party a copy of the Notice of Dispute concurrently with its delivery
to the Escrow Agent. If the Receiving Party fails to deliver a Notice of Dispute
to the Instructing Party and the Escrow Agent within said period of 20 business
days, or if the Notice of Dispute does not dispute the payment of a portion of
the amount set forth in the Instructions (the "Undisputed Portion"), then the
Escrow Agent shall immediately pay to the Instructing Party the amount of the
payment set forth in the Instructions or the Undisputed Portion, as applicable.
If the Escrow Agent receives a Notice of Dispute, the Escrow Agent shall not pay
any amounts which are being disputed unless, until and only to the extent that
the Escrow Agent (i) receives joint written instructions signed by Buyer and
Seller regarding the payment of funds from the Escrow Fund, or (ii) is directed
to make such payment by a court or arbitrator adjudicating such dispute.
(c) On the Termination Date, all Income earned on the Escrow Amount, to
the extent not paid to Buyer or subject to a Notice of Dispute in accordance
with subparagraph 3(b), shall be paid to Seller. Any taxes incurred on account
of such Income or as a result thereof shall be the responsibility of, and be
paid by, Seller.
(d) On the first anniversary of the date hereof (the "Termination Date"),
all amounts in the Escrow Fund, to the extent not paid to Buyer or subject to a
Notice of Dispute in accordance with Section 3(b) above, shall be released by
the Escrow Agent and immediately paid to Seller. Any amounts remaining in the
Escrow Fund that are subject to a Notice of Dispute shall be released in
accordance with Section 3(b) above.
4. Investment. The Escrow Agent shall deposit the Escrow Fund in its IOLTA
account or other client trust fund. The Escrow Agent shall not be required to
hold the Escrow Fund in an interest bearing account nor will interest be payable
in connection therewith. In the event the Escrow Fund is deposited in an
interest bearing account, Seller shall be entitled to receive any accrued
interest thereon.
5. Expenses. Except as set forth in this Section 5, Escrow Agent shall be
paid no fee for performance of its duties hereunder. All reasonable costs,
expenses and fees of the Escrow Agent incurred in connection with the
performance of its duties and obligations hereunder, including any outside
counsel fees reasonably incurred by it after prior notice to the parties, shall
be borne by Buyer.
6. Concerning the Escrow Agent. The Escrow Agent's duties and
responsibilities shall be subject to the following terms and conditions:
(a) The parties acknowledge and agree that the Escrow Agent (i) shall not
be responsible for or bound by, and shall not be required to inquire into
whether the Buyer is entitled to receipt of the Escrow Fund pursuant to any
Instructions, where Escrow Agent has not received a Notice of Dispute within 20
business days after receipt of the Instructions; (ii) shall be obligated only
for the performance of such duties as are specifically assumed by the Escrow
Agent pursuant to this Escrow Agreement; (iii) may rely on and shall be
protected in acting or refraining from acting upon any written notice,
instruction, instrument, statement, request or document furnished to it
hereunder and believed by the Escrow Agent in good faith to be genuine and to
have been signed or presented by the proper person or party, without being
required to determine the authenticity or correctness of any fact stated therein
or the propriety or validity or the service thereof; (iv) may assume that any
person believed by the Escrow Agent in good faith to be authorized to give
notice or make any statement or execute any document in connection with the
provisions hereof is so authorized; (v) shall not be under any duty to give the
property held by Escrow Agent hereunder any greater degree of care than Escrow
Agent gives its own similar property, but in no event less than a reasonable
amount of care; and (vi) may consult counsel satisfactory to Escrow Agent, the
opinion of such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.
(b) The parties acknowledges that the Escrow Agent is acting solely as a
stakeholder at their request and that the Escrow Agent shall not be liable for
any action taken by Escrow Agent in good faith and believed by Escrow Agent to
be authorized or within the rights or powers conferred upon Escrow Agent by this
Escrow Agreement. Buyer agrees to indemnify and hold harmless the Escrow Agent
and any of Escrow Agent's partners, employees, agents and representatives for
any action taken or omitted to be taken by Escrow Agent or any of them
hereunder, including the fees of outside counsel and other costs and expenses of
defending itself against any claim or liability under this Escrow Agreement,
except in the case of gross negligence or willful misconduct on Escrow Agent's
part committed in its capacity as Escrow Agent under this Escrow Agreement.
(c) The Escrow Agent may at any time resign as Escrow Agent hereunder by
giving five (5) days prior written notice of resignation to Buyer and Seller.
Prior to the effective date of the resignation as specified in such notice, the
parties will issue to the Escrow Agent a Joint Instruction authorizing delivery
of the Escrow Fund to a substitute Escrow Agent jointly selected by the parties.
If no successor Escrow Agent is named by the parties, the Escrow Agent may apply
to a court of competent jurisdiction in the State of New York for appointment of
a successor Escrow Agent, and to deposit the Escrow Fund with the clerk of any
such court.
(d) The Escrow Agent does not have and will not have any interest in the
Escrow Fund, but is serving only as escrow agent, having only possession
thereof.
(e) This Escrow Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Escrow Agreement.
(f) The provisions of this Section 6 shall survive the resignation of the
Escrow Agent or the termination of this Escrow Agreement.
7. Option to Interplead. If any two parties to this Escrow Agreement shall
be in disagreement over the interpretation of this Escrow Agreement, or over
their respective rights and obligations, or if any other dispute shall arise
hereunder, or if the Escrow Agent otherwise has any doubts as to the proper
disposition of the funds or the execution of any of its duties hereunder, the
Escrow Agent may, at its sole discretion, file an action in interpleader to
resolve such disagreement in any New York State or Federal court sitting in the
Borough of Manhattan. The Escrow Agent shall be indemnified by Buyer for all
costs, including reasonable attorney's fees and expenses, and shall be fully
protected in suspending all or part of its activities under this Escrow
Agreement until a final judgment in the interpleader action is resolved.
8. Termination of Escrow Agreement. This Escrow Agreement shall terminate
when the entire Escrow Fund shall have been disbursed as provided in Section 3
herein.
9. Notices. All notices and other communications required or permitted
under this Escrow Agreement shall be in writing and shall be deemed to have been
duly given, made and received only when delivered (personally, by courier
service such as Federal Express, or by other messenger), when sent by electronic
facsimile or four days following the day when deposited in the United States
mail, registered or certified air mail, postage prepaid, return receipt
requested, addressed as set forth below:
(i) If to the Escrow Agent:
McGuireWoods, LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Fax: (000) 000-00000
(ii) If to Buyer:
On2 Technologies, Inc.
00 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Fax No. 000.000.0000
(iii) If to Seller:
Wildform, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx and Xxxxx Xxxxxx
Fax No.: 000.000.0000
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.
10. Successors and Assigns. This Escrow Agreement shall be binding upon
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but in no event shall any person not a party hereto have any
rights to the monies or investments in the Escrow Fund as a third party
beneficiary or otherwise. No party hereto may assign or transfer its rights or
obligations hereunder without the prior written consent of the other parties
hereto, provided, however, that Seller may assign its rights and obligations
hereunder to its stockholders upon the liquidation and dissolution of the
Company, or in contemplation thereof, without the prior written consent of
Buyer.
11. Governing Law. This Escrow Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by the
laws of the State of New York, without regard to its conflicts of law doctrine.
12. Waiver. Waiver of any term or condition of this Escrow Agreement by
any party shall not be construed as a waiver of a subsequent breach or failure
of the same term or condition, or waiver of any other term or condition of this
Escrow Agreement.
13. Headings. The section headings contained in this Escrow Agreement are
convenient references only and shall not in any way affect the meaning or
interpretation of this Escrow Agreement.
14. Counterparts. This Escrow Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
taken together shall constitute one and the same instrument. This Escrow
Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
15. Entire Agreement. This Escrow Agreement, embody the entire
understanding of the parties hereto which pertain to the subject matter hereof
and supersede all prior or contemporaneous agreements, representations,
conditions or undertakings not included herein and therein which pertain to the
subject matter hereof. This Escrow Agreement may be amended only in writing,
signed by all parties hereto, and no purported oral waiver or amendment of any
provision hereof shall be effective.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed on the date first above written.
ON2 TECHNOLOGIES, INC.
By:
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Name:
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Title:
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WILDFORM, INC.
By:
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Name:
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Title:
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McGUIREWOODS LLP
By:
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Name:
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Title:
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