Exhibit 10.11
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is dated as of September 15, 1995
among SoftNet Systems, Inc. ("SoftNet"), R.C.W. Xxxxxx ("Xxxxxx"), A.J.R.
Oosthuizen ("Oosthuizen") and MELLON BANK, N.A., as escrow agent ("Mellon" or
the "Escrow Agent").
WHEREAS, a Micrographic Technology Corporation ("MTC"), SoftNet and MTC
Acquisition Corp., a wholly owned subsidiary of SoftNet ("MTC Acquisition"),
entered into an Agreement and Plan of Reorganization dated as of March 24, 1995,
pursuant to which MTC will be merged (the "Merger") with and into MTC
Acquisition.
WHEREAS, in connection with the Merger, SoftNet, Xxxxxx and Oosthuizen
entered into an Agreement dated as of March 24, 1995, as amended September 15,
1995 (the "Shareholders Agreement"), pursuant to which Xxxxxx and Oosthuizen
agreed that fifty percent (50%) of the shares of Common Stock of SoftNet (the
"Escrow Shares") will be held in escrow until the second anniversary of the
closing of the Merger as security for Xxxxxx and Oosthuizen's indemnity
obligations under the Shareholders Agreement.
WHEREAS, in connection with the Escrow Shares, SoftNet, Xxxxxx and
Oosthuizen desire to appoint Mellon as the escrow agent.
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Escrow Agent. SoftNet, Xxxxxx and Oosthuizen hereby
appoint Mellon as the Escrow Agent hereunder, and Mellon hereby accepts such
appointment.
2. Creation of Escrow Fund; Escrow Deposit. The Escrow Agent hereby
agrees to hold in a separate account or fund which shall be designated the
"SoftNet Escrow Fund" (the "Escrow Fund") the property hereinafter described.
The Escrow Fund shall be held and disbursed by the Escrow Agent under and
subject to the provisions of this Agreement. The Escrow Agent hereby
acknowledges its receipt of stock certificates representing 173,956 shares and
168,266 shares (the "Escrow Shares") of Common Stock of SoftNet from Xxxxxx and
Oosthuizen, respectively, which shares shall be deposited into the Escrow Fund.
3. Disbursement of Escrow Fund. The Escrow Fund shall be held by the
Escrow Agent and not disbursed until one of the following events has occurred,
in which event the Escrow Agent is authorized and directed to disburse the
Escrow Fund, or a portion thereof, in the manner indicated:
(a) In the event SoftNet believes that a set off against the Escrow
Shares for Indemnifiable Damages (as defined in the Shareholders Agreement) is
appropriate in accordance with the terms of the Shareholders Agreement and
neither Xxxxxx or Oosthuizen have disputed the setoff claim within twenty (20)
business days from receipt of the Notice of Contest (as defined in the
Shareholders Agreement), upon receipt of a written statement from SoftNet
indicating that SoftNet is exercising its right of setoff, that neither Xxxxxx
or Oosthuizen have disputed the setoff claim within the notice period specified
in the Shareholders Agreement and the number of Escrow Shares to be released,
the Escrow Agent is authorized and directed to disburse the Escrow Shares as
directed in the written statement from SoftNet.
(b) In the event either Xxxxxx or Oosthuizen timely disputes a setoff
claim and the dispute is submitted to arbitration in accordance with Section
6(iii) of the Shareholders Agreement, upon receipt of the arbitrator's written
decision, the Escrow Agent is authorized and directed to disburse the Escrow
Shares as directed in the arbitrator's written decision.
(c) Upon receipt of a written direction signed by SoftNet, Xxxxxx and
Oosthuizen, the Escrow Agent is authorized and directed to disburse the Escrow
Shares as directed in such joint direction.
(d) In the event there are Escrow Shares remaining in the Escrow Fund
on September 15, 1997 and the Escrow Agent has not been notified of any
outstanding setoff claims by SoftNet, the Escrow Agent is authorized and
directed to disburse the remaining Escrow Shares to Xxxxxx and Oosthuizen in
proportion to the number of shares placed in the Escrow Fund by Xxxxxx and
Oosthuizen, respectively, or as otherwise designated in writing by Xxxxxx and
Oosthuizen.
(e) In the event there are Escrow Shares remaining in the Escrow Fund
on September 15, 1997 and the Escrow Agent has been notified of outstanding
setoff claims by SoftNet, the Escrow Agent will retain sufficient Escrow Shares
to cover the outstanding setoff claims, and is authorized and directed to
disburse the remaining Escrow Shares to Xxxxxx and Oosthuizen in proportion to
the number of shares placed in the Escrow Fund by Xxxxxx and Oosthuizen,
respectively, or as otherwise designated in writing by Xxxxxx and Oosthuizen.
The Escrow Agent is authorized and directed to disburse the retained Escrow
Shares in accordance with (i) written directions signed by SoftNet, Xxxxxx and
Oosthuizen or (ii) the arbitrator's written decision.
4. Termination. This Agreement shall terminate and be of no further force
and effect on the date when all Escrow Shares comprising the Escrow Fund have
been disbursed in accordance with the terms hereof. If this Agreement is still
in effect on June 30, 1998 and there are Escrow Shares remaining in the Escrow
Fund, regardless if there are any outstanding Indemnifiable Damages claims by
SoftNet, the Escrow Agent shall promptly disburse the remaining Escrow Shares to
Xxxxxx and Oosthuizen in proportion to the number of shares placed in the Escrow
Fund by Xxxxxx and Oosthuizen, respectively, or as otherwise designated in
writing by Xxxxxx and Oosthuizen, but such disbursement shall have no effect on
SoftNet's outstanding Indemnifiable Damages of which written notice has been
received by Xxxxxx and Oosthuizen on or before September 15, 1997.
5. Escrow Agent's Duties and Fees.
(a) Duties Limited. The Escrow Agent undertakes to perform only such
duties as are expressly set forth herein and shall not be subject to, nor have
any liability or responsibility under, nor be obligated to recognize the
Shareholders Agreement or any other agreement between, or directions or
instructions of, any of the parties hereto or any other person in carrying out
its duties hereunder, except for written directions or notices delivered to the
Escrow Agent in accordance with Section 3 of this Agreement.
(b) Reliance. SoftNet, Xxxxxx and Oosthuizen shall furnish the
Escrow Agent with a list of persons authorized to act on behalf of SoftNet,
Xxxxxx and Oosthuizen, as applicable, together with specimen signatures of such
persons. The Escrow Agent may rely upon, and shall be protected in acting or
refraining from acting upon, any written notice, instruction or request
furnished to it hereunder and reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties. The Escrow Agent
may act in reliance upon the reasonable advice of counsel satisfactory to it in
reference to any matter connected with its obligations hereunder and shall not
incur any liability for any action taken in accordance with such advice.
(c) Standard of Care: Indemnification. The Escrow Agent shall not
be responsible for any act or failure to act hereunder except in the case of its
willful misconduct or gross negligence. The parties hereto (other than the
Escrow Agent) shall jointly and severally indemnify the Escrow Agent and hold it
harmless against any claims, losses, liabilities, judgments, attorneys' fees and
other costs or expenses of any kind incurred by the Escrow Agent without willful
misconduct or gross negligence on its part, arising out of or in connection with
its entering into this Agreement and the performance of its duties hereunder,
including, without limitation, any litigation arising from this Agreement or
involving the subject matter hereof. Under no circumstances shall the Escrow
Agent be liable for any incidental, consequential or special damages.
(d) Disputes. In case of any dispute regarding this Escrow
Agreement, the Escrow Agent shall not be required to institute legal proceedings
of any kind and shall be entitled to deposit the Escrow Fund with any court of
competent jurisdiction and thenceforth be relieved of any further duty or
responsibility hereunder.
(e) Successor Escrow Agent. The Escrow Agent may resign and be
discharged from its duties or obligations hereunder by giving notice in writing
of such resignation to SoftNet, Xxxxxx and Oosthuizen, specifying the date upon
which such resignation shall take effect. Upon any such resignation of the
Escrow Agent, SoftNet, Xxxxxx and Oosthuizen shall mutually appoint a successor
Escrow Agent who shall have all rights of an Escrow Agent hereunder and be bound
by all of the provisions hereof
(f) Fees and Expenses. The Escrow Agent shall receive a fee for its
services hereunder as set forth on Schedule 1 hereto, and shall be reimbursed
for its reasonable out-of-pocket expenses incurred in performing its duties
hereunder. SoftNet shall pay the Escrow Agent's fees for its services hereunder
and any costs and expenses (including attorney's fees and expenses) incurred by
it hereunder.
(g) Compliance with Court Order. If all or part of the Escrow Fund
held by the Escrow Agent hereunder shall be attached, garnished or levied upon
under any order of court, or if the delivery thereof shall be stayed or enjoined
by any order of court, or if any other order, judgment or decree shall be made
or entered by any court affecting the Escrow Fund or any part thereof, the
Escrow Agent is expressly authorized in its sole reasonable discretion to obey
and comply with all writs, orders, judgments, or decrees so entered or issued,
whether with or without jurisdiction, and in case it obeys and complies with any
such writ, order, judgment, or decree, it shall not be liable to SoftNet, Xxxxxx
or Oosthuizen, their successors or assigns, any of their clients or to any other
person or entity, by reason of such compliance, notwithstanding that such writ,
order, judgment or decree be subsequently reversed, modified, annulled, set
aside or vacated.
6. Notices. Unless otherwise specifically provided herein all notices and
other communications required or permitted hereunder:
(a) shall be in writing;
(b) shall be sent by messenger, certified or registered U.S. mail, a
reliable express delivery service or telecopier (with a copy sent by one of the
foregoing means), charges prepaid as applicable, to the appropriate address(es)
or number(s) set forth below; and
(c) shall be deemed to have been given on the date of receipt by the
addressee (or, if the date of receipt is not a business day on the first
business day after the date of receipt), as evidenced by (i) a receipt executed
by the addressee (or a responsible person in his or her office), the records of
the person delivering such communication or a notice to the effect that such
addressee refused to claim or accept such communication, if sent by messenger,
U.S. mail or express delivery service, or (ii) a receipt generated by the
sender's telecopier showing that such communication was sent to the appropriate
number on a specified date, if sent by telecopier, provided that hard copy is
mailed on the same day.
All such communications shall be sent to the following addresses or
numbers, or to such other addresses or telecopy numbers as any party may inform
the others by giving five business days' prior notice:
If to: SoftNet Systems, Inc.
Address: 000 Xxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: President
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copy to: Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to: R.C.W. Xxxxxx
Address: c/o Bedford Capital Corporation
Scotia Plaza
00 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to: A.J.R. Oosthuizen
Address: 19244 Bountiful Acres
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to Escrow Agent:
Mellon Bank, N.A.
Two Mellon Bank Center
Attn: Corporate Trust Group,
Xxxxxx Xxxxxxx
Room 325
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
7. Miscellaneous.
(a) Benefit of Parties. This Agreement shall inure to the benefit of
and be binding upon each of the parties and their respective successors and
permitted assigns. Nothing herein, expressed or implied, is intended or shall
be construed to confer upon or give to any person other than the parties hereto,
any right, remedy or claim hereunder.
(b) Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned, pledged or otherwise transferred by any
party, whether by operation of law or otherwise, without the prior consent of
the other parties.
(c) Amendments. This Agreement may be amended, modified or
supplemented only by a writing signed by each of the parties, and any such
amendment shall be effective only to the extent specifically set forth in such
writing.
(d) Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts, and by each of the parties on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all of which shall constitute but one and the same instrument. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by facsimile also
shall deliver a manually executed counterpart of this Agreement, but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
(e) Entire Agreement. This Agreement contains the entire agreement
of the parties with respect to the transactions contemplated hereby and
supersedes all prior written and oral agreements, and all contemporaneous oral
agreements, relating to such transactions.
(f) Governing Law. This Agreement shall be a contract under the laws
of the Commonwealth of Pennsylvania and for all purposes shall be governed by
and construed and enforced in accordance with the laws of said Commonwealth.
(g) Headings. All titles and headings in this Agreement are intended
solely for convenience of reference and shall in no way limit or otherwise
affect the interpretation of any of the provisions hereof.
(h) Severability. If any clause, provision or section of this
Agreement is held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any other clause, provision or
section hereof and this Agreement shall be construed as if such illegal or
invalid clause, provision or section had not been contained herein.
IN WITNESS WHEREOF, this Escrow Agreement has been executed by the
undersigned as of the date first written above,
By: /s/ R.C.W. Xxxxxx
R.C.W. Xxxxxx
By: /s/ A.J.R. Oosthuizen
A.J.R. Oosthuizen
SOFTNET SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxxx
Title:
MELLON BANK, N.A., as Escrow Agent
By: /s/
Title: Vice President
SCHEDULE 1
ESCROW AGENT'S COMPENSATION SCHEDULE
Escrow Agent's initial fee $ 500.00
Escrow Agents annual fee $ 1,500.00
per year or any part thereof
