EXHIBIT 10.22
ESCROW AGREEMENT (this "Agreement"), dated as of January 26, 2000,
among XXXX.XXX, Inc., a Delaware corporation (the "Company"), Xxxxxx X.
Xxxxxxxxx, Chief Executive Officer of the Company ("Xx. Xxxxxxxxx"), and City
National Bank, a national banking association.
RECITALS
WHEREAS, this Agreement is entered into in connection with the
Employment Agreement, dated as of January 26, 2000 (the "Employment Agreement"),
between the Company and Xx. Xxxxxxxxx, which provides for the issuance by the
Company to Xx. Xxxxxxxxx of an aggregate of 120 partly paid shares of Series B
Convertible Preferred Stock of the Company (the "Escrow Shares");
WHEREAS, in consideration for the Escrow Shares, Xx. Xxxxxxxxx has
issued a Promissory Note (the "Promissory Note") to the Company in the principal
amount of $7,124,880, the Promissory Note is non-recourse but is secured by a
pledge of the Escrow Shares of Xx. Xxxxxxxxx as collateral; and after the
Promissory Note is paid and after the Repurchase Right of the Company with
respect to the Escrow Shares (the "Repurchase Right") as provided for in the
Employment Agreement has expired, each of the Escrow Shares will be convertible
at the option of the holder into 10,000 shares of common stock of the Company
(i.e., the total of 120 Escrow Shares will be convertible into a total of
1,200,000 shares of common stock);
WHEREAS, the Employment Agreement provides for the Company to deliver
the Escrow Shares of Xx. Xxxxxxxxx to the Escrow Agent upon the execution of
this Agreement and the Employment Agreement of Xx. Xxxxxxxxx (each of such
dates, an "Employment Date"), such Escrow Shares to be held by the Escrow Agent
in escrow subject to the terms and conditions of this Agreement; and
WHEREAS, the Company and Xx. Xxxxxxxxx have agreed upon the conditions
upon which the Escrow Agent shall be instructed to deliver Escrow Shares and
Other Escrow Property out of escrow (the "Notice Procedures"), which are set
forth in Annex I attached hereto.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein and in
the Employment Agreement and the Promissory Note, the parties hereto hereby
agree as follows:
ARTICLE I
Definitions
1.1 Definitions. As used in this Agreement, the following terms
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shall have the following meanings:
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Certified Notice" shall mean written notice to the Escrow Agent
certified by the Company.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Dividend" has the meaning set forth in Section 2.1(b).
"Employment Agreement" has the meaning set forth in the recitals of
this Agreement.
"Employment Date" has the meaning set forth in the recitals of this
Agreement.
"Escrow Agent" has the meaning set forth in the first paragraph of
this Agreement.
"Escrow Shares" has the meaning set forth in the recitals of this
Agreement.
"Xx. Xxxxxxxxx" has the meaning set forth in the first paragraph of
this Agreement.
"Notice Procedures" has the meaning set forth in the third recital
hereto; the Notice Procedures are set forth in Annex I hereto.
"Other Escrow Property" has the meaning set forth in Section 2.1(b).
"Permitted Investments" means (i) U.S. Government Obligations with a
maturity of one year or less; or (ii) certificates of deposit or acceptances
with a maturity of one year or less of the Escrow Agent or any other financial
institution that is a member of the United States Federal Reserve System having
combined capital and surplus and undivided profits of not less than $500,000,000
or (iii) investment funds which invest primarily in U.S. Government Obligations
of which the Escrow Agent or any of its affiliates are a sponsor, investment
advisor, manager, custodian or agent and for which the Escrow Agent may be
separately compensated, provided that such investment or deposit is not
prohibited by Federal or state banking laws applicable to the Escrow Agent.
"Promissory Note" has the meaning set forth in the recitals of this
Agreement.
"Repurchase Right" has the meaning set forth in the recitals of this
Agreement.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligation) of the
United States of America.
1.2 Other Definitions. All capitalized terms used herein and not
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otherwise defined shall have the respective meanings set forth in the Employment
Agreement.
ARTICLE II
Escrow Arrangement
2.1 Delivery of Escrow Shares and Other Escrow Property to the Escrow
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Agent, Etc.
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(a) On the Employment Date, the Company will deliver the Escrow Shares
to the Escrow Agent pursuant to this Agreement and the Employment Agreement. The
Escrow Agent will hold the Escrow Shares in escrow and will not transfer any
interest in such Escrow Shares except pursuant to the terms of this Agreement.
(b) If the Company shall declare and pay any dividend on the Escrow
Shares, whether in the form of cash, common stock, other capital stock of the
Company or any other property, including any rights or anything else of value
which may be sold and reduced to a cash value, or whether as a stock split or
stock combination, or other subdivision or combination or reclassification of
the Escrow Shares (collectively, a "Dividend"), during the term of this
Agreement, the Company shall deliver such Dividend payable with respect to the
Escrow Shares to the Escrow Agent (the foregoing being called, collectively,
the "Other Escrow Property", which term shall also include any Permitted
Investments, any proceeds of the Escrow Shares, and any proceeds of any other
item of the Other Escrow Property). The Escrow Agent will hold the Other Escrow
Property in escrow and will not transfer any interest in the Other Escrow
Property except pursuant to the terms of this Agreement.
(c) Notwithstanding any other provision in this Agreement, the escrow
of the Escrow Shares and other Escrow Property of Xx. Xxxxxxxxx will be held
separate and apart from any other escrow, and the Escrow Agent agrees that it
will not commingle the escrow of the Escrow Shares and other Escrow Property of
Xx. Xxxxxxxxx with any other escrow.
2.2 Pledge and Grant of Security Interest. Xx. Xxxxxxxxx hereby
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grants to the Escrow Agent, for the benefit of the Company, a security interest
in the Escrow Shares and the Other Escrow Property, and any proceeds thereof, of
Xx. Xxxxxxxxx hereunder, as collateral security for the prompt and complete
payment when due of principal, interest and any other amounts payable under the
Promissory Note of Xx. Xxxxxxxxx. It is understood and agreed, however, that
the pledge of collateral security by Xx. Xxxxxxxxx shall not secure the
promissory note of any other party, and any pledge of collateral security by any
other party shall not secure the Promissory Note of Xx. Xxxxxxxxx.
2.3 Delivery by Escrow Agent of Escrow Shares and Other Escrow
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Property. Upon receipt by the Escrow Agent of a Certified Notice in
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compliance with the Notice Procedures for the delivery of Escrow Shares out of
escrow from the Company, the Escrow Agent shall deliver the number of Escrow
Shares and the related Other Escrow Property specified in such Certified Notice
to or upon the order of the persons specified in such Certified Notice, and the
shares and property so delivered shall no longer be considered Escrow Shares or
Other Escrow Property for purposes of this Agreement.
2.4 Voting of Escrow Shares. Prior to the delivery by the Escrow
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Agent of the Escrow Shares out of escrow pursuant to Section 2.3 above, Xx.
Xxxxxxxxx shall have the sole power to exercise any voting rights attendant to
the Escrow Shares and to any other shares that constitute Other Escrow Property
of Xx. Xxxxxxxxx hereunder.
2.5 Term of Escrow. The term of this Escrow Agreement will
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commence upon receipt by the Escrow Agent of the Escrow Shares and will
terminate when the last of the Escrow Shares and any Other Escrow Property has
been delivered out of escrow pursuant to this Agreement, provided that Articles
III and IV shall survive any such termination.
2.6 Investment. The Escrow Agent agrees to invest all cash held by
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it pursuant to this Agreement in Permitted Investments according to Certified
Notice(s) delivered to the Escrow Agent by the Company, and agrees to hold such
investments until their maturity unless directed by Certified Notice to
liquidate such investments in order to make distributions of Other Escrow
Property pursuant to Section 2.3 above. The Escrow Agent shall not be liable
for any loss of principal or interest or for any penalty that may result from
following any investment instructions contained in any such Certified Notices.
Any investments will be made separately with respect to the Other Escrow
Property of Xx. Xxxxxxxxx hereunder.
2.7 Representations and Warranties.
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(a) Each of the Company and Xx. Xxxxxxxxx represents and warrants, with respect
to itself or himself, that (i) such person has the requisite power and
authority, corporate or otherwise, and has taken all actions necessary in order
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, (ii) this Agreement is a valid and binding agreement of
such person enforceable against such person in accordance with its terms, (iii)
the execution and delivery of this Agreement by such person does not, and the
consummation of the transactions contemplated hereby by such person will not,
constitute or result in (A) a breach or violation of, or a default under, its
charter documents, if applicable, or (B) a breach or violation of, a default
under, the acceleration of or the creation of a lien, pledge, security interest
or other encumbrance on assets (with or without the giving of notice or the
lapse of time) pursuant to, any provision of any contract, agreement or other
commitment of such person or any law, ordinance, rule or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which such person is subject, except, in the case of clause (B) above, for such
breaches, violations, defaults or accelerations that, alone or in the aggregate,
could not prevent, materially delay or materially burden the transactions
contemplated by this Agreement and such liens, pledges, security interests or
other encumbrances as may be created pursuant to this Agreement.
(b) The Escrow Agent represents and warrants that (i) it has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and (ii) this Agreement is a valid and binding
agreement of the Escrow Agent enforceable against the Escrow Agent in accordance
with its terms.
ARTICLE III
The Escrow Agent
3.1 The Escrow Agent.
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(a) City National Bank, a national banking association, is hereby
appointed as Escrow Agent in accordance with the terms and conditions set forth
herein, and the Escrow Agent hereby accepts such appointment.
(b) Subject to the other terms and conditions hereof, the Escrow Agent
hereby irrevocably declares that it will hold all right, title and interest in
and to the Escrow Shares and any Other Escrow Property in escrow for the use and
benefit of the Company and Xx. Xxxxxxxxx upon the terms set forth herein.
(c) The Escrow Agent shall not be concerned with, nor shall it have
any duties or obligations under the Notice Procedures or the Employment
Agreement, but instead its sole duties shall be to comply with this Escrow
Agreement and any instructions given pursuant hereto. Further, the Escrow Agent
shall not be deemed to have knowledge of any matter set forth in such agreements
that has not been set forth in this Escrow Agreement.
(d) Xx. Xxxxxxxxx agrees to provide to the Escrow Agent such stock
powers, with signatures appropriately guaranteed, and other instruments of
transfer as the Escrow Agent may from time to time reasonably request for
purposes of administering the escrows created hereunder. To that end, Xx.
Xxxxxxxxx further grants to the Escrow Agent the following power of attorney:
POWER OF ATTORNEY
Know all persons by these presents, that the grantor of this power of
attorney constitutes and appoints City National Bank his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and xxxxx, in any and all
capacities, to sign any and all instruments of transfer for the purposes of
the Escrow Agreement, dated as of January 26, 2000, among XXXX.XXX, Inc.,
Xxxxxx X. Xxxxxxxxx and City National Bank, as Escrow Agent, with respect
to any of the Escrow Shares or Other Escrow Property (as defined in such
Escrow Agreement) of the grantor of this power of attorney, granting unto
said attorney-in-fact and agent, full power and authority to do and perform
to all intents and purposes as the grantor of this power of attorney might
do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or its substitute or substitutes, may lawfully do or cause
to be done by virtue thereof.
3.2 Compensation and Indemnification of Escrow Agent.
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(a) The Company agrees to pay the Escrow Agent such fees as the
Company and the Escrow Agent shall from time to time agree for all services
rendered by the Escrow Agent hereunder and, from time to time, on demand of the
Escrow Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration
and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Escrow Agent
and its officers, directors and agents for, and to hold each of them harmless
against, any loss, liability or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Escrow Agent, for anything done
or omitted by the Escrow Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
any claim of liability directly arising therefrom.
(b) The Escrow Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered, or omitted by it in connection
with its administration of this Agreement in reliance upon any Certified Notice
signed by the proper party or parties, and, at its discretion, may interplead
the property held in escrow with a court of competent jurisdiction.
3.3 Merger or Consolidation of Escrow Agent. Any corporation into
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which the Escrow Agent or any successor escrow agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Escrow Agent or any successor escrow agent shall be
party or any corporation succeeding to the corporate trust business of the
Escrow Agent or a successor escrow agent as a whole or substantially as a whole,
whether by sale or otherwise shall be the successor to the Escrow Agent under
this Agreement without any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
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escrow agent under the provisions of Section 3.5 hereof, and any Escrow Shares
or Other Escrow Property held by the Escrow Agent prior to such transaction
shall be deemed to be held by such successor thereafter.
3.4 Duties of Escrow Agent. The Escrow Agent undertakes the duties
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and obligations imposed by this Agreement upon the following terms and
conditions:
(a) The Escrow Agent may consult with legal counsel (who may be inside
legal counsel for the Escrow Agent or legal counsel for the Company or Xx.
Xxxxxxxxx), and the opinion of such counsel shall be full and complete
authorization and protection to the Escrow Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Escrow Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company or Xx. Xxxxxxxxx prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
is herein specifically prescribed) may be deemed to be provided conclusively by
Certified Notice delivered to the Escrow Agent. Any such certificate shall be
full authorization to the Escrow Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Escrow Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Escrow Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or the Notice
Procedures or be required to verify the same. All such statements and recitals
shall be deemed to have been made by the Company and Xx. Xxxxxxxxx only.
(e) The Escrow Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Escrow Agent) or in respect of the
validity or execution of any stock certificate representing Escrow Shares; nor
shall it be responsible for any breach by the Company or Xx. Xxxxxxxxx of any
covenant or condition contained in this Agreement; nor shall it by any act
hereunder be deemed to make any representation or warranty as to whether any
Escrow Shares (or any Other Escrow Property) will be validly authorized and
issued, fully paid and nonassessable.
(f) Each of the Company and Xx. Xxxxxxxxx agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Escrow Agent for the carrying
out or performing by the Escrow Agent of the provisions of this Agreement.
(g) The Escrow Agent is hereby authorized and directed to accept
Certified Notices, as provided for herein, with respect to the performance of
its duties hereunder and to apply to any officer of the Escrow Agent for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
the instructions of any such officer.
(h) The Escrow Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.
3.5 Change of Escrow Agent. The Escrow Agent may resign and be
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discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company by registered or certified mail, and to Xx. Xxxxxxxxx by
first-class mail. The Company may remove the Escrow Agent or any successor
escrow agent upon 30 days' notice in writing, mailed to the Escrow Agent or
successor escrow agent, as the case may be, by registered or certified mail, and
to Xx. Xxxxxxxxx by first class mail. If the Escrow Agent resigns or is removed
or otherwise becomes incapable of acting, the Company shall appoint a successor
to the Escrow Agent. If the Company fails to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Escrow Agent or
by Xx. Xxxxxxxxx, then Xx. Xxxxxxxxx may apply to any court of competent
jurisdiction for the appointment of a new Escrow Agent. Any successor escrow
agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
the laws of any state, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
a federal or state authority and which has at the time of its appointment as
escrow agent a combined capital and surplus of at least $25,000,000. After
appointment, the successor escrow agent shall, without further action, be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Escrow Agent; but the predecessor Escrow Agent shall deliver
and transfer to the successor escrow agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for this purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Escrow Agent and mail a notice thereof in writing to Xx. Xxxxxxxxx.
Failure to give any notice provided for in this Section 3.5, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Escrow Agent or the appointment of the successor escrow agent, as
the case may be.
ARTICLE IV
Miscellaneous and General
4.1 Amendment; Waiver. This Agreement may not be modified or
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amended except by a written instrument signed by Xx. Xxxxxxxxx and authorized
representatives of the Company and the Escrow Agent and referring specifically
to this Agreement.
4.2 Successors. All the covenants and provisions of this Agreement
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by or for the benefit of the Company, Xx. Xxxxxxxxx or the Escrow Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder, subject to Sections 4.3 and 4.7 hereof.
4.3 Binding Effect, Etc. The agreements herein set forth shall be
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mutually binding upon, and inure to the mutual benefit of, the Company, Xx.
Xxxxxxxxx and the Escrow Agent, and their permitted successors, provided that
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the Escrow Agent shall have no obligations under the Notice Procedures. The
parties do not intend that any third party shall enjoy any rights under this
Agreement and no such third party shall be entitled to make any claim, or bring
any action to enforce this Agreement against any party to this Agreement even if
the third party receives some benefit from this Agreement.
4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO CHOICE OF LAW PRINCIPLES THEREOF.
4.5 Notices. Any notice, request, instruction or other document to
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be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, next-day
air courier or facsimile to the following respective addresses (or to any
substitute address(es) which the parties shall establish by like notice):
(a) if to the Company, at
XXXX.XXX, Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx and Xxxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Xx. Xxxxxxxxx, at
Xxxxxx X. Xxxxxxxxx
X.X. Xxx 000
00000 Xxx xx Xxxxxxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(c) if to the Escrow Agent, at
City National Bank
000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(d) if to the Transfer Agent, at
American Securities Transfer & Trust, Inc.
00000 X. Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx Xxxxxxxx
4.6 Counterparts. For the convenience of the parties hereto, this
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Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute one and the same agreement.
4.7 Entire Agreement, Etc. This Agreement (including any Annexes
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or Schedules hereto and the other agreements referred to herein) (a) constitutes
the entire agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and (b) shall not be transferable or
assignable by operation of law or otherwise (except as the other parties agree
in writing, except as provided in Sections 3.3 and 3.5, and except as provided
in the following sentence). The Company may assign this Agreement, with the
consent of the Escrow Agent, but without the consent of Xx. Xxxxxxxxx being
required, to any corporation, person or other entity which may acquire all or
substantially all of the assets, shares of business of the Company or any
corporation into which it may be consolidated or merged.
4.8 Captions. The Article, Section and paragraph captions herein
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are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
XXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
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CITY NATIONAL BANK, as Escrow Agent
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Vice President
