ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement"), made the 19th day of February, 2004, by and
between ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, on behalf of
▇▇▇▇▇ ▇▇▇▇▇▇ (collectively, the "Suttons"), Connectivcorp, a Delaware
corporation (the "Company") and American Stock Transfer and Trust Company as
Escrow Agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Suttons are the principal stockholders of the Company;
WHEREAS, in order to assist the Company in its financing efforts, the
Suttons desire to provide a fund of escrowed property for any possible claims
("Claims") that might arise against Majesco Sales Inc. ("Majesco") or the
Company in connection with any issuance of securities by the Company or Majesco
from October 1, 2003 through December 31, 2003, and any trading in the
securities of the Company from October 1, 2003 through December 31, 2003;
WHEREAS, the escrow fund shall consist of an aggregate of 1,000,000 shares
of common stock, par value $0.001 per share of the Company ("Common Stock") to
be contributed 250,000 shares each by each of the Suttons and together with any
dividends, distributions and other property issued and delivered in respect
thereof, and any income thereon or proceeds thereof (the "Escrowed Shares"),
such shares to be held by the Escrow Agent (the "Escrow Account") and delivered
to the Suttons or the Company in accordance with the terms and provisions of
this Agreement; and
WHEREAS, the Escrow Agent has consented to act as escrow agent upon the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein made and
intending to be legally bound, the Suttons, the Company and the Escrow Agent
hereby agree as follows:
1. Escrow
(a) Appointment. The Suttons and the Company hereby appoint Escrow
Agent, and Escrow Agent hereby agrees to serve as escrow agent pursuant to the
terms of this Agreement.
(b) Establishment of the Escrow Fund. Promptly after the execution of
this Agreement, the Suttons shall deliver to the Escrow Agent certificates,
representing the Escrowed Shares.
(c) Additional Shares. Any additional shares of Common Stock or other
securities of the Company acquired by any of the Suttons by reason of a stock
split, stock dividend or other recapitalization of the Escrowed Shares, or any
securities which are issued in exchange for or in replacement of the Escrowed
Shares, shall likewise be deposited in the applicable Escrow Account with
respect to which the additional shares were issued or the
dividend or distribution was made and become subject to this Agreement upon
delivery of such additional shares to the Escrow Agent. The Escrow Agent shall
have no duty to confirm whether or not any additional shares or other securities
have been issued or to collect the same. Any cash dividends or cash
distributions shall be paid to the Suttons promptly upon receipt by the Escrow
Agent as their interests appear.
2. Operation of Escrow
(a) Claim Period. To the extent provided herein, the Escrowed Shares
shall be applied to the payment of Claims asserted against the Company during
the five-year period commencing February 6, 2004 and ending on February 5, 2009
(the "Claim Period").
(b) Escrow Period. The Escrowed Shares shall be held in the Escrow
Account until the earlier of (i) the time at which such Escrowed Shares are
delivered to the Company pursuant to Section 4 of this Agreement, or (ii) the
expiration of the Claim Period (the shorter of such periods being the "Escrow
Period" as to any relevant Escrowed Shares); provided, however, that if a Claim
pursuant to Section 4(a) hereof is outstanding at the time when the Escrow
Period would otherwise expire as to any of the Escrowed Shares, the Escrow
Period shall be automatically extended as to such Escrowed Shares until such
claim is finally resolved in accordance with the provisions of this Agreement.
(c) Protection of Escrow Account. The Escrow Agent shall hold and
safeguard the Escrow Account during the Escrow Period, shall treat such account
as a trust account in accordance with the terms of this Agreement, and shall
hold and dispose of the Escrow Account only in accordance with the terms hereof.
3. Release from Escrow.
(a) Release of Escrow Liability Shares. Subject to the proviso to
Section 2(b), upon written notice from the Company, the Escrow Agent shall
return the Escrowed Shares to the Suttons, as their interests appear, on the
expiration of the Claim Period. All released Escrowed Shares shall thereupon
cease to be subject to this Agreement.
4. Payment of Claims. (a) If the Company has agreed to settle a Claim(s) or
is required to pay damages with respect to such Claim(s) or has incurred
expenses in defending such Claim(s) and, in the Company's reasonable discretion,
the amount thereof is in excess of the Company's financial ability to pay such
Claim(s) (taking into account any insurance proceeds or other sources available
to the Company) at the time, then upon receipt of notice from the Company, which
such notice shall contain a valuation of the Escrowed Shares determined in
accordance with Section 4(b) below, the Escrow Agent shall deliver to the
Company Escrowed Shares, pro rata from each of the Suttons, with a then value as
determined in accordance with 4(b) below (as stated in the Company's notice),
necessary to make such payment.
(b) Valuation of Stock Held in Escrow Account. For purposes of valuing
any Escrowed Shares held in the Escrow Account, such Escrowed Shares shall be
valued as follows:
2
The value per share on any date shall be deemed to be the average of the daily
closing prices for the five (5) consecutive trading days immediately preceding
the date in question. The closing price for each day shall be (i) if the
principal market for the Common Stock is a national securities exchange or the
NASDAQ Stock Market, the closing sales price of the Common Stock as reported by
such exchange or market system, or (ii) if the principal market for the Common
Stock is not a national securities exchange or the NASDAQ Stock Market, the
highest closing bid price of the Common Stock as quoted in the OTC Bulletin
Board Service or other trading or reporting service as reported by a commercial
vendor of market data or the highest closing bid price as determined by
reviewing the bids of individual market makers displaying interest for the
Common Stock through such service, or (iii) if on any such date, the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange and is not quoted by the NASDAQ Stock market or any similar
organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used.
(c) If Escrow Account Insufficient. In the event that at any time
during the Escrow Period, the value of the Escrowed Shares held in the Escrow
Account are valued, as set forth in 4(b) above at less than $250,000, in the
aggregate, for 30 consecutive trading days, then upon receipt of notice from the
Company, the Suttons shall deliver into escrow, pro-rata, an aggregate of
another 1,000,000 shares of the Company's Common Stock (as adjusted for stock
splits, stock dividends, and similar events occurring after the date hereof),
which such additional shares shall be held by the Escrow Agent pursuant to the
terms and conditions of this Agreement.
(d) Fractional Shares. No fractional shares shall be issued or
delivered pursuant to any provision of this Agreement. In making delivery of
Escrowed Shares from the Escrow Account, the Escrow Agent shall round any
fractional share resulting from any calculation hereunder to the nearest whole
share.
5. Voting Rights; Distributions. The Suttons shall retain all voting rights
with respect to the Escrowed Shares in accordance with their respective
interests until and unless the Company agrees to settle any claim pursuant to
Section 4. The Escrow Agent shall promptly forward to the Suttons copies of all
materials delivered to the Escrow Agent with respect to the Escrowed Shares.
Except as provided in this paragraph, the Suttons shall not pledge, hypothecate
or otherwise use any Escrowed Shares as collateral in any transaction or write
any puts, calls, options or other derivative securities using any Escrowed
Shares during the Escrow Period.
6. Agreements With the Escrow Agent.
(a) No Liability. Under no circumstances shall the Escrow Agent, its
partners, stockholders, or employees, be liable to anyone for any act of the
Escrow Agent, its directors, officers and employees may take in its capacity as
Escrow Agent, or for the failure to take any action, or for any damage, loss or
expenses suffered or incurred resulting therefrom or in acting hereunder.
3
(b) Reimbursement. The Company and each of the Suttons jointly and
severally agree to reimburse and indemnify the Escrow Agent for, and hold it
harmless against, any loss, liability or expense, including, without limitation,
reasonable attorneys' fees, arising out of, or in connection with the acceptance
of, or the performance of, its duties and obligations under this Agreement.
(c) Interest. Any interest earned on the Escrow Account shall be
considered the currently reportable income of the Suttons for federal income tax
purposes. The Escrow Agent annually shall file information returns with the
United States Internal Revenue Service and furnish payee statements to the
Suttons, documenting such interest payments, if any. The parties hereby agree to
provide the Escrow Agent with a certified tax identification number by signing
and returning a Form W-9 to the Escrow Agent prior to the date on which any cash
is credited to such Escrow Account.
(d) Legal Counsel. The Escrow Agent shall be entitled to employ such
legal counsel (including counsel to the Company) and other experts as the Escrow
Agent may deem necessary to properly advise the Escrow Agent in connection with
the Escrow Agent's obligations hereunder. The Escrow Agent shall be protected in
any action taken or omitted in connection with the advice or opinion of such
counsel and may pay such counsel reasonable fees and expenses therefor. Such
fees and expenses shall be reimbursed to the Escrow Agent pursuant to Section
6(b) hereof.
(e) Responsibilities. The Escrow Agent (i) shall have no duties or
responsibilities except as expressly provided in this Agreement and shall
neither be obligated to recognize nor have any liability or responsibility
arising out of any other agreement to which the Escrow Agent is not a party even
though reference thereto may be made in this Agreement; (ii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve any expense or liability unless it shall have been furnished
with acceptable indemnification; and (iii) may consult counsel satisfactory to
it (including counsel to the Company), and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
opinion of such counsel.
(f) Identity. The Escrow Agent shall not be responsible for the
identity, authority or rights of any person, firm or corporation executing or
delivering or purporting to execute or deliver this Agreement or any document or
security deposited hereunder or any endorsement thereon or assignment thereof.
(g) Validity. The Escrow Agent shall not be responsible for the
sufficiency, genuineness or validity of or title to any document or security
deposited or to be deposited with it pursuant to this Agreement.
(h) Reliance. The Escrow Agent may rely upon any instrument or writing
believed by it to be genuine and sufficient and properly presented and shall not
be liable or responsible for any action taken or omitted in accordance with the
provisions thereof and shall
4
have no responsibility for determining the accuracy thereof.
(i) No Agency. The Suttons and the Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and for their
convenience. The Escrow Agent is not and shall not be deemed to be the agent of
the Suttons or the Company.
7. Fees and Expenses. The Escrow Agent shall be entitled to a fee of
$5,000.00 for the Escrow Agent services described herein, payable by the
Company. In addition, the Company agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including, but
not limited to, reasonable counsel fees. The Escrow Agent confirms that no
additional expenses shall be incurred absent extraordinary conditions.
8. Resignation of Escrow Agent. The Escrow Agent shall have the right at
any time to resign hereunder by giving written notice of its resignation to the
parties hereto at least thirty (30) days prior to the date specified for such
resignation to take effect. Prior to the effective date of the resignation as
specified in such notice, the Suttons and the Company will jointly issue to the
Escrow Agent a written instruction authorizing redelivery of the Escrow Account
to a bank or trust company that the Suttons and the Company select as successor
to the Escrow Agent hereunder. Upon the effective date of such resignation, the
Escrow Account and all other property then held by the Escrow Agent hereunder
shall be delivered by it to a successor escrow agent as shall be designated in
writing by the other parties hereto. If no successor is appointed, the Escrow
Agent may apply to a court of competent jurisdiction for such appointment.
9. Interpleader. In the event that the Escrow Agent shall at any time be
confronted with the inconsistent claims or demands by the parties hereto, the
Escrow Agent shall have the right to interplead said parties in any court of
competent jurisdiction and request that such court determine such respective
rights of the parties with respect to the Escrow Agreement, and upon doing so,
the Escrow Agent automatically shall be released from any obligations or
liability as a consequence of any such claims or demands, except that the Escrow
Agent shall not be released from any liability for its gross negligence, bad
faith or willful misconduct occurring during the time that it served as Escrow
Agent hereunder. 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 Account, or should any claim be made upon such Escrow Account by a
third party, the Escrow Agent upon receipt of written notice of such 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 Escrow
Account until such dispute shall have been settled either by the mutual written
agreement of the parties involved or by a final order, decree or judgment of a
court in the United States of America, the time for perfection of an appeal of
such order, decree or judgment having expired. The Escrow Agent may, but shall
be under no duty whatsoever to, institute or defend any legal proceedings which
relate to the Escrow Account.
10. Successor Escrow Agent. Upon receipt of the Escrow Account and any
other amounts or property held by the Escrow Agent pursuant to this Agreement,
the successor Escrow Agent shall thereupon be bound by all of the provisions
hereof and the term "Escrow Agent" as used herein shall mean such a successor
Escrow Agent.
5
11. Accounting. In the event of the resignation or removal of the Escrow
Agent, upon the termination of this Agreement or upon demand under reasonable
circumstances, the Escrow Agent shall render the Suttons, the Company and the
successor Escrow Agent, if any, an account in writing of the property
constituting the Escrow Account and all distributions therefrom.
12. Miscellaneous.
(a) Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties herein and their respective heirs, legatees, personal
representatives, executors, successors and assigns.
(b) Integration, etc. This Agreement contains all of the terms agreed
upon by the parties with respect to the subject matter hereof, and there are no
representations or understandings between the parties except as provided herein
and therein.
(c) Amendments, Modifications. This Agreement may not be amended or
modified without the prior written consent of the Suttons, the Company and the
Escrow Agent.
(d) Notices. All notices, consents, waivers, directions, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (i) delivered by hand (with written confirmation of
receipt); (ii) sent by facsimile (if sent during normal business hours,
otherwise the next business day) (with written confirmation of receipt),
provided that a copy is mailed by certified mail, return receipt requested; or
(iii) when received by the addressee, if sent by certified mail or a nationally
recognized courier service, postage prepaid, in each case to the appropriate
addresses and facsimile numbers set forth below (or to such other addresses and
facsimile numbers as a party may designate by notice to the other parties):
If to the Suttons: ConnectivCorp
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax number: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
If to the Company:
ConnectivCorp
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax number: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary, General
Counsel and Senior Vice President-Business and
Legal Affairs
6
If to the Escrow Agent: American Stock Transfer and Trust Company
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, General Counsel
(e) Severability. In the event any covenant, condition or other
provision of this Agreement is held to be invalid or unenforceable by a final
judgment of a court of competent jurisdiction, then such covenant, condition or
other provision shall be automatically terminated and performance thereof
waived, and such invalidity or unenforceability shall in no way affect any of
the other covenants, conditions or provisions hereof, and the parties hereto
shall negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.
(f) No Waiver. No waiver of a breach of, or default under, any
provision of this Agreement shall be deemed a waiver of such provision or of any
subsequent breach or default of the same or similar nature or of any other
provision or condition of this Agreement.
(g) Applicable Law. This Agreement shall be governed by the laws of the
State of New York, without regard to principles of conflicts of law.
(h) Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(i) Reproduction of Documents. 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.
(j) Termination. This Agreement shall terminate and the Escrow Agent
shall cease to have any obligations hereunder on the date following the end of
the Escrow Period or on such date on which the Escrow Agent is holding no assets
to be distributed hereunder. The indemnity in Section 6(b) shall survive the
termination of this Agreement.
(k) Escrow Agent Conduct of Business. Nothing in this Agreement shall
be deemed to impose upon the Escrow Agent any duty to qualify to do business or
to act as fiduciary or otherwise in any jurisdiction other than the State of New
York.
7
[Signature page follows]
8
IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement as of the date first set forth above.
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, on behalf of ▇▇▇▇▇ ▇▇▇▇▇▇
CONNECTIVCORP
By:
---------------------------------
Name:
Title:
American Stock Transfer & Trust Company
By:
---------------------------------
Name:
Title:
