EXHIBIT 10.2
AGREEMENT WITH CONTROLLING SHAREHOLDERS
THIS AGREEMENT WITH CONTROLLING SHAREHOLDERS (this "Agreement") dated as of
August 12, 2003, among iSecureTrac Corp., a Delaware corporation ("Buyer"), and
the undersigned shareholders (the "Controlling Shareholders") of Tracking
Systems Corporation, a Pennsylvania corporation ("TSC"). Buyer and Controlling
Shareholders are referred to collectively herein as the "Parties." WHEREAS,
Buyer and TSC have entered into a Share Exchange Agreement, dated as of 12, 2003
(the "Exchange Agreement"). Certain terms used herein without definition are
used herein as defined in the Exchange Agreement.
WHEREAS, Buyer and TSC make certain representations, warranties, and covenants
in the Exchange Agreement which will survive the Closing for purposes of
potential indemnification. Controlling Shareholders, however, will cease to have
any direct ownership interest in TSC immediately after the Closing. Buyer and
Controlling Shareholders therefore wish to provide for post-Closing
indemnification against breaches of these representations, warranties, and
covenants and to make certain other covenants among themselves.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, Buyer and Controlling Shareholders agree as
follows. 1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Annex" has the meaning set forth in ss.2 below.
"Buyer" has the meaning set forth in the preface above.
"Confidential Information" means any information concerning the businesses and
affairs of TSC that is not already generally available to the public.
"Controlling Shareholders" has the meaning set forth in the preface above.
"Escrow Agreement" has the meaning set forth in ss.4.6 below.
"Exchange Agreement" has the meaning set forth in the preface above.
"Indemnified Party" has the meaning set forth in ss.4.4.1 below.
"Indemnifying Party" has the meaning set forth in ss.4.4.1 below.
"Liability" means, with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"Party" has the meaning set forth in the preface above.
"Requisite Controlling Shareholders" means Controlling Shareholders holding a
majority in interest of the total number of Shares that all of Controlling
Shareholders hold in the aggregate as set forth in the Annex.
"TSC" has the meaning set forth in the preface above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning set forth in ss.4.4.1 below.
2. Controlling Shareholders' Representations and Warranties. Each of Controlling
Shareholders represents and warrants to Buyer that the statements contained in
this ss.2 are materially correct and complete as of the date of this Agreement
and will be materially correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this ss.2) with respect to such Controlling Shareholder,
except as set forth in the Annex attached hereto (the "Annex").
(a) Authorization. Controlling Shareholder has full power and authority
(including full corporate or other entity power and authority) to execute and
deliver this Agreement and to perform his, her, or its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
Controlling Shareholder, enforceable in accordance with its terms and
conditions.
(b) Noncontravention. Except as previously disclosed in the Disclosure Letter,
to the knowledge of each Controlling Shareholder, neither the execution and the
delivery of this Agreement by Controlling Shareholder, nor the performance by
Controlling Shareholder of his, her, or its obligations hereunder, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, stipulation, ruling, charge, or other restriction of any
government, governmental agency, or court to which Controlling Shareholder is
subject or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Controlling Shareholder is a party or by which he or it is bound or to which any
of his or its assets is subject.
(c) TSC Shares. Controlling Shareholder holds of record the number of Shares set
forth next to his or her name on the Annex.
3. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
3.1. General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of the Exchange
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments
and documents) as any other Party may request, all the sole cost and
expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under ss.4 below). Controlling
Shareholders acknowledge and agree that from and after the Closing
Buyer will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of
any sort relating to TSC .
3.2. Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any
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transaction contemplated under the Exchange Agreement or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving TSC, each
of the other Parties will cooperate with the contesting or defending
Party and his, her, or its counsel in the contest or defense, make
available his, her, or its personnel, and provide such testimony and
access to his, her, or its books and records as shall be necessary
in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting
or defending Party is entitled to indemnification therefor underss.4
below).
3.3. Transition. None of Controlling Shareholders will take any action
that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of
TSC from maintaining the same business relationships with Buyer
after the Closing as it maintained with TSC prior to the Closing.
Each Controlling Shareholder will refer all customer inquiries
relating to the businesses of TSC to Buyer from and after the
Closing.
3.4. Confidentiality. Each Controlling Shareholder will treat and hold as
such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this
Agreement or except as required by law, and deliver promptly to
Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which
are in his, her, or its possession. In the event that any
Controlling Shareholder is requested or required (by oral question
or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Controlling
Shareholder will notify Buyer promptly of the request or requirement
so that Buyer may seek an appropriate protective order or waive
compliance with the provisions of thisss.3.4. If, in the absence of
a protective order or the receipt of a waiver hereunder, any
Controlling Shareholder is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand
liable for contempt, that Controlling Shareholder may disclose the
Confidential Information to the tribunal; provided, however, that
the disclosing Controlling Shareholder shall use his, her, or its
Best Efforts to obtain, at the request of Buyer, an order or other
assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as
Buyer shall designate.
3.5. Covenant Not to Compete. For a period of three (3) years from and
after the Closing Date, no Controlling Shareholder will engage
directly or indirectly in any business that TSC conducts as of the
Closing Date in any geographic area in which TSC conducts that
business as of the Closing Date; provided, however, that no owner of
less than 1% of the outstanding stock of any publicly traded
corporation shall be deemed to engage solely by reason thereof in
any of its businesses. Nothwithstanding this provision, this
Covenant Not to Compete shall not supersede any contrary Covenant
Not to Compete time and scope provision contained in any Controlling
Shareholder employment or consulting agreement. If the final
judgment of a court of competent jurisdiction declares that any term
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or provision of this ss. 3.5 is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity
or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
4. Remedies for Breaches of this Agreement and the Exchange Agreement.
4.1. Survival of Representations, Warranties and Covenants. All of the
representations and warranties of TSC contained in Sections 3.1
through 3.26, inclusive, of the Exchange Agreement and in Sections
6.0 and 7.0 of the Plan of Exchange shall survive the Closing and
continue in full force and effect for a period of one year
thereafter. All of the representations and warranties of Buyer and
Controlling Shareholders in this Agreement, shall survive the
Closing and continue in full force and effect for a period of one
year thereafter.
4.2. Indemnification Provisions for Buyer's Benefit.
4.2.1. In the event TSC breaches any of its representations,
warranties, and covenants contained in the Exchange Agreement,
and provided that Buyer makes a written claim for
indemnification against any Controlling Shareholder pursuant
toss.6.8 below within the survival period (if there is an
applicable survival period pursuant toss.4.1 above), then each
Controlling Shareholder shall be obligated jointly and
severally to indemnify Buyer from and against the entirety of
any Adverse Consequences Buyer may suffer (including any
Adverse Consequences Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach;
provided, however, that Controlling Shareholders shall not
have any obligation to indemnify Buyer from and against any
Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by the breach of any
representation or warranty of TSC contained in the Exchange
Agreement (A) until Buyer has suffered Adverse Consequences by
reason of all such breaches in excess of a $25,000 aggregate
threshold (at which point Controlling Shareholders will be
obligated to indemnify Buyer from and against all such Adverse
Consequences relating back to the first dollar) or thereafter
(B) to the extent the Adverse Consequences Buyer has suffered
by reason of all such breaches exceeds a $230,000 aggregate
ceiling (after which point Controlling Shareholders will have
no obligation to indemnify Buyer from and against further such
Adverse Consequences).
4.2.2. In the event any Controlling Shareholder breaches any of his,
her, or its representations, warranties, or covenants
contained in this Agreement and, provided that Buyer makes a
written claim for indemnification against such Controlling
Shareholder pursuant toss.6.8 below within the survival period
(if there is an applicable survival period pursuant toss.4.1
above), then such Controlling Shareholder shall indemnify
Buyer from and against the entirety of any Adverse
Consequences Buyer may suffer (including any Adverse
Consequences Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach; provided, however,
that Controlling Shareholders shall
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not have any obligation to indemnify Buyer from and against
any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any
representation or warranty of TSC or a Controlling Shareholder
contained in the Exchange Agreement (A) until Buyer has
suffered Adverse Consequences by reason of all such breaches
in excess of a $25,000 aggregate threshold (at which point
Controlling Shareholders will be obligated to indemnify Buyer
from and against all such Adverse Consequences relating back
to the first dollar) or thereafter (B) to the extent the
Adverse Consequences Buyer has suffered by reason of all such
breaches exceeds a $230,000 aggregate ceiling (after which
point Controlling Shareholders will have no obligation to
indemnify Buyer from and against further such Adverse
Consequences).
4.2.3 The obligations of each Controlling Shareholder under this
ss.4 shall be joint and several.
4.3 Indemnification Provisions for Controlling Shareholders' Benefit. In
the event Buyer breaches any of its representations, warranties, and
covenants contained in the Exchange Agreement or in this Agreement,
and provided that any Controlling Shareholder makes a written claim
for indemnification against Buyer pursuant to ss.6.8 below within
the survival period (if there is an applicable survival period
pursuant to ss.4.1 above), then Buyer shall indemnify each
Controlling Shareholder from and against the entirety of any Adverse
Consequences suffered (including any Adverse Consequences suffered
after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the
breach; provided, however, that Buyer shall not have any obligation
to indemnify any Controlling Shareholder from and against any
Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach of any representation or
warranty of Buyer contained in the Exchange Agreement (A) until such
claiming Controlling Shareholder has suffered Adverse Consequences
by reason of all such breaches in excess of a $25,000 aggregate
threshold (at which point Buyer will be obligated to indemnify such
Controlling Shareholder from and against all such Adverse
Consequences relating back to the first dollar) or thereafter (B) to
the extent the Adverse Consequences Controlling Shareholders have
suffered by reason of all such breaches exceeds a $230,000 aggregate
ceiling (after which point Buyer will have no obligation to
indemnify any Controlling Shareholder from and against further such
Adverse Consequences).
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4.4 Matters Involving Third Parties.
4.4.1 If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this ss.4, then
the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
4.4.2 Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party
so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party,
likely to establish a precedent-setting custom or practice
adverse to the continuing business interests or the reputation
of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and
diligently.
4.4.3 So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with ss.4.4.2 above, (A)
the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the
Third Party Claim, (B) the Indemnified Party will not consent
to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably).
4.4.4 In the event any of the conditions inss.4.4.2 above is or
becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem
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appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for
the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C)
the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent
provided in thisss.4.
4.5 Determination of Adverse Consequences. The Parties shall take into
account the time cost of money in determining Adverse Consequences
for purposes of thisss.4.
4.6 Recoupment Against Escrow Agreement. Any indemnification to which
Buyer is entitled under this ss.4 as a result of any Adverse
Consequences it may suffer shall first be made from the utilization
of any insurance benefit or proceeds and second as a payment to
Buyer from the escrow account in accordance with the terms of the
escrow agreement in substantially the form of Exhibit "4.6" hereto
(the "Escrow Agreement").
4.7 Other Indemnification Provisions. Not withstanding any other
provisions, the foregoing indemnification provisions relating to the
Controlling Shareholders shall be limited in time and scope as
follows: Controlling Shareholders shall not have any personal
obligation to indemnify Buyer from and against any Adverse
Consequences resulting from, arising out of, relating to, in the
nature of, or caused by the breach of any representation or warranty
of TSC contained in the Exchange Agreement or this Agreement (A)
until Buyer has suffered Adverse Consequences by reason of all such
breaches in excess of a $25,000 aggregate threshold (at which point
Controlling Shareholders will be obligated to indemnify Buyer from
and against all such Adverse Consequences relating back to the first
dollar) or thereafter (B) to the extent the Adverse Consequences
Buyer has suffered by reason of all such breaches exceeds a $230,000
aggregate ceiling (after which point Controlling Shareholders will
have no obligation to indemnify Buyer from and against further such
Adverse Consequences); provided however, that any insurance benefits
in effect shall first be utilized and the amount of funds deposited
into the Escrow Account as contemplated in ss.4.6 shall be reduced
dollar for dollar after any insurance benefits are exhausted; and
Controlling Shareholders' obligations for indemnification under this
Agreement shall be limited solely to amounts held in escrow.
Controlling Shareholders shall have no further liability under this
Agreement or otherwise and all Controlling Shareholder
indemnification liability shall cease one year following the Closing
Date.
Exceptions to Controlling Shareholders' Liability for Indemnification.
Notwithstanding any other provisions, the foregoing indemnification
provisions relating to the Controlling Shareholders shall be subject to
the following exceptions and limitations: Controlling Shareholders shall
not have any personal obligation to indemnify Buyer from and against any
Adverse Consequences regarding the following: any TSC customer contracts
without
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an assignment clause or any issues related to any claims by ElmoTech Ltd.
of Tel Aviv, Israel related to the ownership of the trademark "MEMS" or
any derivative thereof.
5 Termination. This Agreement shall terminate (i) on the date the Exchange
Agreement is terminated if the Exchange Agreement is terminated prior to
the Closing in accordance with and pursuant to the terms thereof, or (ii)
one (1) year from the date of Closing, provided that no claims for
indemnification pursuant to Section 4 above are then outstanding in which
case this Agreement shall continue until all such claims are fully
settled.
6 Miscellaneous.
6.4 Exclusivity. No Controlling Shareholder will (i) solicit, initiate,
or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of TSC
(including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing.
Each Controlling Shareholder will notify Buyer immediately if he,
she, or it becomes aware that any Person has made any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
6.5 Press Releases and Public Announcements. No Controlling Shareholder
shall issue any press release or make any public announcement
relating to the subject matter of the Exchange Agreement without the
prior written approval of Buyer; provided, however, that any
Controlling Shareholder may make any public disclosure it believes
in good faith is required by applicable law (in which case the
disclosing Party will use its reasonable Best Efforts to advise the
other Parties prior to making the disclosure).
6.6 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
6.7 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they related
in any way to the subject matter hereof.
6.8 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign
either this Agreement or any of his, her, or its rights, interests,
or obligations hereunder without the prior written approval of Buyer
and Requisite Controlling Shareholders; provided, however, that
Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or
more of its Affiliates to perform its obligations hereunder (in any
or all of which cases Buyer nonetheless shall remain liable and
responsible for the performance of all of its obligations
hereunder).
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6.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
6.10 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.11 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given (i) when delivered personally to the recipient, (ii) one
business day after being sent to the recipient by reputable
overnight courier service (charges prepaid), (iii) one business day
after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four business days after being mailed to
the recipient by certified or registered mail, return receipt
requested and postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Controlling Shareholders, at their respective addresses
and facsimile numbers set forth at the Annex, with a copy to:
Xxxxxxxx Xxxxxxxx, P.C.
Attention: Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
If to Buyer,
iSecureTrac Corp.
Attention: Xxxx Xxxxx
0000 Xx. 000xx Xxxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxxxx, P.C.
Attention: Xxxxxx Xxxxxxx
00000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Process Agent:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
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Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein
set forth.
6.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nebraska without
giving effect to any choice or conflict of law provision or rule
(whether of the State of Nebraska or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Nebraska.
6.13 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by Buyer and Requisite Controlling Shareholders. No waiver by
any Party of any provision of this Agreement or any default,
misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be valid unless the same shall be
in writing and signed by the Party making such waiver nor shall such
waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such default, misrepresentation, or breach of warranty or
covenant.
6.14 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other
jurisdiction.
6.15 Expenses. Each of the Parties will bear his, her, or its own costs
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby (except as otherwise provided herein).
6.16 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including
without limitation.
6.17 Incorporation of Annex and Exhibits. The Annex and Exhibits hereto
are incorporated herein by reference and made a part hereof.
6.18 Specific Performance. Each Party acknowledges and agrees that the
other Parties would be damaged irreparably in the event any
provision of this Agreement is not performed in accordance with its
specific terms or otherwise is breached, so that a Party shall be
entitled to injunctive relief to prevent breaches of this Agreement
and to enforce specifically this Agreement and the terms and
provisions hereof, in addition to any other remedy to which such
Party may be entitled, at law or in equity. In particular, the
Parties acknowledge that the business of TSC is unique and recognize
and affirm that in the event Controlling Shareholders breach
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this Agreement, money damages would be inadequate and Buyer would
have no adequate remedy at law, so that Buyer shall have the right,
in addition to any other rights and remedies existing in its favor,
to enforce its rights and the other Parties' obligations hereunder
not only by action for damages but also by action for specific
performance, injunctive, and/or other equitable relief.
6.19 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Omaha,
Nebraska, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each
Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with
respect thereto. Each Party appoints the Process Agent as his or its
agent to receive on his or its behalf service of copies of the
summons and complaint and any other process that might be served in
the action or proceeding. Any Party may make service on any other
Party by sending or delivering a copy of the process (i) to the
Party to be served at the address and in the manner provided for the
giving of notices in ss.6.8 above or (ii) to the Party to be served
in care of the Process Agent at the address and in the manner
provided for the giving of notices in ss.6.8 above. Nothing in this
ss.6.16, however, shall affect the right of any Party to bring any
action or proceeding arising out of or relating to this Agreement in
any other court or to serve legal process in any other manner
permitted by law or in equity. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
BUYER: CONTROLLING SHAREHOLDERS:
ISECURETRAC CORP.
/s/ Xxxx X. Xxxxxxxxx
By: /s/ Xxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx Xxxxxxxxx
/s/ Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
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ANNEX
NO. OF TSC SHARES
-----------------------------------------
CLASS A CLASS B CLASS C
NAME AND ADDRESS OF SELLER FACSIMILE NO. COMMON STOCK PREFERRED PREFERRED PREFERRED
--------------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx
000 Xxxxx Xxxx
Xxxxx Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx
000 Xxxx Xxxx
Xxxxxx, XX 00000
EXCEPTIONS TO SS.2:
-------------------
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EXHIBIT 4.6
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement"), dated as of ____________, 2003
(the "Closing Date"), among iSecureTrac Corp., a Delaware corporation
("Buyer"), each of the undersigned persons (collectively, the "Controlling
Shareholders"), and the law firm of Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC,
000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 as escrow agent ("Escrow Agent").
Buyer and Controlling Shareholders are parties to that certain Agreement
with Controlling Shareholders, dated August 12, 2003 (the "Indemnification
Agreement") providing for the establishment of an escrow account.
Capitalized terms used in this Escrow Agreement without definition shall
have the respective meanings given to them in the Indemnification
Agreement. The parties, intending to be legally bound, hereby agree as
follows:
1.0 DEFINITIONS
1.1 "Collateral" shall mean stock certificates for the Buyer's
Shares listed opposite each Controlling Shareholder's name on Exhibit "A"
hereto.
2.0 DEPOSIT
2.1 Upon Closing, Buyer shall deposit Collateral with Escrow Agent.
2.2 Escrow Agent, as a safekeeping (escrow) agent, agrees to accept
Collateral from Buyer upon Closing and hold the same in safekeeping at its
offices herein indicated pursuant to the terms and conditions of this
Escrow Agreement.
2.3 Escrow Agent shall have no obligation to inspect or pass on the
adequacy, accuracy or legality of Collateral.
2.4 Buyer hereby represents that Collateral is not subject to any
lien or other encumbrance.
2.5 Escrow Agent shall act as Process Agent for purposes of
receiving notices and process as described in the Indemnification
Agreement.
2.6 Buyer shall pay Escrow Agent all fees for Escrow Agent's
services hereunder as mutually determined to be appropriate between Buyer
and Escrow Agent.
3.0 CLAIMS
3.1 At any time during the term of this Agreement, Buyer may give
notice to Controlling Shareholders and Escrow Agent specifying in
reasonable detail the nature
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and dollar amount of any claim it may have under the Indemnification
Agreement ("Claim"). Buyer may assert more than one Claim with respect to
the same facts.
3.2 Controlling Shareholders may dispute any Claim by giving notice
thereof to Buyer and Escrow Agent specifying in reasonable detail the
reasons such Claim is disputed ("Claim Dispute") within thirty (30)
calendar days following their receipt of notice of the Claim ("Counter
Notice Period).
3.3 If a Claim Dispute is not received by Escrow Agent or Buyer
within the Counter Notice Period, then the dollar amount of damages
claimed by Buyer as set forth in its Claim notice shall be deemed
established.
3.4 If a Claim Dispute is received by Escrow Agent or Buyer within
the Counter Notice Period, then such claim shall be resolved as provided
in Section 4.7 of the Indemnification Agreement in order to establish the
dollar amount of damages, if any.
3.5 Upon the establishment of the dollar amount of damages
("Damages"), and after applying any insurance benefits or proceeds, and
provided that such damages do not exceed the value of the Collateral,
Escrow Agent shall deduct Damages from the then-current market value of
Collateral and exchange such Collateral with Buyer for new certificates of
Buyer's Shares reflecting such a diminished value of Collateral on a
pro-rata by Controlling Shareholder basis and such newly issued Buyer's
Shares shall then be Collateral.
3.6 In the event Damages, after application of any insurance
benefits or proceeds, equal or exceed the value of Collateral, Escrow
Agent shall release all remaining Collateral to Buyer and this Escrow
Agreement shall be terminated as provided herein.
3.7 Escrow Agent shall not be required to consider the merits of any
Claim or determine whether a Claim complies with the requirements of the
Indemnification Agreement.
4.0 RELEASE OF DEPOSIT
4.1 The term of this Escrow Agreement shall be one (1) calendar year
from the date of Closing ("Escrow Term"). In the event a Claim is
outstanding upon the expiration of the Escrow Term, the Escrow Term shall
be extended until such Claim is fully settled as provided herein.
4.2 Upon expiration of the Escrow Term, Escrow Agent shall pay and
distribute the balance of the Collateral to the former Tracking Systems
Corporation shareholders as provided on Annex A hereto.
5.0 ESCROW AGENT'S RESPONSIBILITIES
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5.1 Buyer and each Controlling Shareholder agree to indemnify,
defend and hold Escrow Agent harmless from any and all claims, actions,
damages, arbitration fees and expenses, costs and other liabilities
("Liabilities") incurred by Escrow Agent related to this escrow
arrangement unless such Liabilities were caused solely by the negligence
or willful misconduct of Escrow Agent.
5.2 Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized
to do so. Escrow Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity other than a natural
person has full power and authority to instruct Escrow Agent on behalf of
that party unless written notice to the contrary is delivered to Escrow
Agent.
5.3 Escrow Agent shall not be required to make and makes no
representation as to the validity, value, genuineness or the
collectability of any security or other document or instrument held by or
delivered to it.
5.4 Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
5.5 In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection
with the Collateral or in the event that Escrow Agent is in doubt as to
what action it should take hereunder, Escrow Agent shall be entitled to
retain the Collateral until Escrow Agent shall have received (i) a final
non-appealable order of a court of competent jurisdiction directing
delivery of the Collateral or (ii) a written agreement executed by the
other parties hereto directing delivery of the Collateral, in which event
Escrow Agent shall disburse the Collateral in accordance with such order
or agreement.
6.0 MISCELANEOUS
6.1 All notices and other communications under this Escrow Agreement
must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt) provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers as set forth at Schedule "A" to the Indemnification
Agreement (or to such other addresses and telecopier numbers as a party
may designate by notice to the other parties).
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6.2 Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Escrow Agreement may be brought
against any of the parties in the courts of the State of Nebraska, County
of Xxxxxxx, or, if it has or can acquire jurisdiction, in the United
States District Court for the District of Nebraska, and each of the
parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere
in the world.
6.3 This Escrow Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of
which, when taken together, will be deemed to constitute one and the same.
6.4 The headings of sections in this Escrow Agreement are provided
for convenience only and will not affect its construction or
interpretation.
6.5 The rights and remedies of the parties to this Escrow Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Escrow
Agreement or the documents referred to in this Escrow Agreement will
operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any
other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Escrow Agreement or the documents referred to in this Escrow Agreement can
be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice
to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to
take further action without notice or demand as provided in this Escrow
Agreement or the documents referred to in this Escrow Agreement.
6.6 This Escrow Agreement supersedes all prior agreements among the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Escrow Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect
to its subject matter. This Escrow Agreement may not be amended except by
a written agreement executed by the Buyer, the Controlling Shareholders
and the Escrow Agent.
6.7 This Escrow Agreement shall be governed by the laws of the State
of Nebraska, without regard to conflicts of law principles.
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IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement as of the date first written above.
BUYER: CONTROLLING SHAREHOLDERS:
ISECURETRAC CORP.
By: ________________________________ ________________________________
ESCROW AGENT: ________________________________
By: ________________________________ ________________________________
________________________________
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