EXHIBIT 10.2
STOCK ESCROW AND SECURITY AGREEMENT
This "Stock Escrow and Security Agreement" (hereinafter, the "Agreement") is
made this 16th day of September, 2004, by and between Transferor Ron Allen,
Chief Executive Officer and Chairman of the Board of Directors of Integrated
Performance Systems, Inc. and Integrated Performance Systems, Inc.
(collectively, the "Transferors"), and Transferees Brad Jacoby, President
and Chairman of Best Circuit Boards, Inc. d/b/a Lone Star Circuits and Best
Circuit Boards, Inc. (collectively, the "Transferees"). Transferors and
transferees are collectively referred to herein as the "parties."
RECITALS
WHEREAS, the parties have entered into a Definitive Stock Purchase Agreement
originally dated April 7, 2004 (the "Definitive Agreement") under which Brad
Jacoby will become majority shareholder and chief executive officer of
Integrated Performance Systems, Inc. ("IPS").
WHEREAS, parties have executed a management consulting agreement, under
which Brad Jacoby assumed, at least until the closing of the Definitive
Agreement, the overall management responsibility for the operations of IPS
and its subsidiaries, having the authority customarily exercised by the
chief executive officer, saving those matters requiring the expenditure of
funds, which required approval of Transferor Ron Allen.
WHEREAS, Transferees have advanced funds on behalf of IPS to 3rd party
suppliers and expect to advance additional funds on behalf of IPS in the
near future in an effort to meet various business obligations.
WHEREAS, Transferees seek to secure the reimbursement of all such advances
whether or not the Definitive Agreement closes.
WHEREAS, the parties seek to ultimately terminate the factoring arrangement
currently in place between IPS and USA Funding.
THEREFORE, in consideration of the promises and agreements of the parties
and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I: Escrow Deposit
S1.01. Transferor Ron Allen, contemporaneous with the execution of
this Agreement, shall deposit all certificated securities he may have in
Integrated Performance Systems, Inc. (IPS) held as common stock with Escrow
Agent to secure Transferors' obligations as described in S1.03 below. The
amount or value of the certificates transferred shall constitute the "Escrow
Fund." By making such deposit, Transferor warrants that he has authority
to pledge such securities, that such deposit does not violate any known
agreements or covenants with any 3rd party, and that proper indorsement has
been made on such securities, if necessary.
Such securities are identified as follows:
Certificate Number: 0187
Held in the name of: Associates Funding Group, Inc.
Issue date: December 23, 1999
Number of shares: 1,249,244 shares
Certificate Number: 1261
Held in the name of: Associates Funding Group, Inc.
Issue date: February 28, 2003
Number of shares: 1,567,959 shares
Certificate Number: 0192
Held in the name of: BC&Q Corp.
Issue date: December 23, 1999
Number of shares: 849,485 shares
Certificate Number: 0189
Held in the name of: Winterstone Management, Inc.
Issue date: December 23, 1999
Number of shares: 905,244 shares
S1.02. For the duration of this Agreement, all voting rights represented by
stock transferred into the Escrow Fund pursuant to S1.01, as well as any
other rights appurtenant to the ownership of such stock, shall be exercised
by Transferee Brad Jacoby.
S1.03. The assets in the Escrow Fund are to be retained by Gregory W.
Mitchell, acting as Escrow Agent and Escrow Trustee pursuant to this Escrow
Agreement. The assets (and any income which might be earned on them) may be
disbursed from the Escrow Fund only in accordance with Article III, below.
S1.04. The assets in the Escrow Fund shall be held as security against any
and all past or future advances by Transferees in favor of Transferors.
Upon request, Transferee will provide Transferor an accounting of the unpaid
obligations secured by the collateral in the Escrow Fund. A reasonable
charge may be applied for such accounting.
S1.05. Transferor Ron Allen hereby acknowledges Transferees' security
interest in the stock deposited into the Escrow Fund and waives any failure
to perfect such security interest if later found by a court of law.
ARTICLE II: Duties of Escrow Agent
S2.01. The Escrow Agent shall receive and hold the Escrow Fund pursuant
to the terms of this Escrow Agreement and shall protect the Escrow Fund as
security for the obligations described in S1.04 above. Any interest or
other income earned by the assets held in the Escrow Fund shall also be
protected until the Escrow Fund is disbursed as provided below.
S2.02. The Escrow Agent shall disburse part or all of the Escrow Fund only
in accordance with Article III below. All interest and other income earned,
if any, on the Escrow Fund at the time of disbursement shall be distributed
in the same proportion as the distribution of the Escrow Fund. On
distribution of all the Escrow Fund, except as otherwise provided under
Article IV below, this Escrow Agreement shall terminate.
S2.03. Upon written request, the Escrow Agent shall provide Transferors
and/or Transferees with reports of the assets held and any amounts earned or
distributed in the Escrow Fund.
S2.04. The Escrow Agent shall be obligated only for the performance of the
duties that are specifically set forth in this Escrow Agreement. The Escrow
Agent shall be protected in acting or refraining from acting on any
instrument believed to be genuine and to have been signed or presented by
the proper party or parties. The Escrow Agent shall not be liable for any
action taken or omitted in good faith and believed to be authorized by this
Escrow Agreement nor for any action taken or omitted in accordance with the
advice of the Escrow Agent's counsel.
S2.05. The Escrow Agent shall have no liability under, or duty to inquire
into the terms and provisions of this Agreement or the Definitive Agreement.
It is agreed that the Escrow Agent's duties are purely ministerial in nature
and that the Escrow Agent shall incur no liability whatsoever except for
willful misconduct or gross negligence so long as the Escrow Agent has acted
in good faith. The Escrow Agent shall not be bound by any modification,
amendment, termination, cancellation, rescission, or supersession of this
Escrow Agreement and, if the Escrow Agent's duties are affected in any way,
unless the Escrow Agent has given prior written consent to any such
agreement.
S2.06. The Escrow Agent may at any time resign from the duties under this
Escrow Agreement by giving written notice of resignation to the parties at
their addresses set forth in Article V, below, at least 10 days prior to the
date specified for the resignation to take effect. On the effective date of
the resignation, the Escrow Fund shall be delivered by the Escrow Agent to
the successor Escrow Agent, or to the national banking association that may
be designated in writing jointly by Transferors and Transferees. All of the
obligations of Escrow Agent shall cease and terminate on delivery of the
Escrow Fund.
ARTICLE III: Disbursements of Escrow Fund
S3.01. No disbursements shall be made from the Escrow Fund except as
provided in this
Article III.
S3.02. No disbursements shall be made from the Escrow Fund prior to either
the closing of or the termination of the Definitive Agreement (no matter
which party is responsible for the termination).
S3.03. Upon the closing or termination of the Definitive Agreement, Escrow
Agent shall disburse to Transferees an amount representing the amount of
funds advanced in favor of Transferors prior to the closing or termination.
Transferees shall present documentation sufficient to substantiate that
amount. Prior to disbursement, Transferors shall be given the opportunity
to object to the amount as well as the opportunity to satisfy such amount in
cash or other payment acceptable to Transferee. In the event of a disputed
amount, Escrow Agent shall disburse the undisputed amount and continue to
retain the balance of the Escrow Fund pending resolution between the
parties, either by agreement or by decision of a court of law.
S3.04. Escrow Agent shall give notice to both Transferors and Transferees
prior to making partial or complete disbursement of any amounts from the
Escrow Fund pursuant to this
Article III.
S3.05. Unless otherwise agreed, any stock deposited into the Escrow Fund
shall, upon disbursement, be valued at market price on the day of
disbursement for purposes of satisfying advances made.
S3.06. Prior to liquidation of any stock held in the Escrow Fund to be
disbursed in accordance with this Article, Transferors shall be allowed to
fund the disbursement in an equivalent amount of cash or other form of
payment acceptable to Transferees.
S3.07. Transferors shall pay Escrow Agent his customary fee for the
performance of Escrow Agent's services for such time that any Escrow Funds
remain in escrow and shall reimburse Escrow Agent for reasonable costs and
expenses incurred in connection with the performance of the services.
Escrow Agent shall have the authority to disburse an amount from the Escrow
Fund to satisfy any unpaid amounts under this section at the time of
termination of the Escrow Fund.
S3.08. Upon satisfaction of all amounts advanced by Transferees to
Transferors, the Escrow Fund shall be terminated and the remaining balance,
if any, in such fund shall be returned to Transferor, with an accounting of
amounts disbursed. At such time, this Agreement shall terminate with
respect to the creation and maintenance of the Escrow Fund.
ARTICLE IV: 2nd Lien on Receivables
S4.01. As additional security for advances by Transferees to Transferors,
and in an effort to decrease the costs of doing business, Transferees hereby
obtain a 2nd lien on all assets of IPS which are currently pledged as
collateral for the factoring agreement with USA Funding.
S4.02. Transferors and Transferees will jointly work to eliminate the
factoring arrangement currently in existence between IPS and USA Funding.
Transferees' 2nd lien shall endure until such time as this factoring
arrangement is terminated. At that time, Transferee's 2nd lien shall
automatically become a 1st lien, and Transferee shall immediately assume
the role of the factoring company under the same terms as currently in place
with USA Funding.
S4.03. Transferees' lien as described in this section shall survive until
such time as it is terminated in a writing signed by Transferors and
Transferees, notwithstanding the termination of the Escrow Fund pursuant
to Article III above.
ARTICLE V: Miscellaneous
S5.01. This Escrow Agreement shall be binding on and inure to the benefit
of the parties to this Escrow Agreement and their respective successors and
permitted assigns. No other persons shall have any rights under this Escrow
Agreement.
S5.02. A successor Escrow Agent may be appointed at any time by the mutual
written agreement of both Transferors and Transferees.
S5.03. The Escrow Agent agrees to hold the assets of the Escrow Fund as a
trustee in a segregated and separate account, outside of the reach of its
general creditors.
S5.04. Any notice, statement, or other communication that is required or
that may be given under the terms of this Escrow Agreement shall be in
writing and shall be sufficient in all respects if properly addressed and
delivered personally or by United States certified mail, postage prepaid, as
follows:
If to Transferor: Mr. Ron Allen
Integrated Performance Systems, Inc.
17300 N. Dallas Pkwy.
Dallas, Texas 75248
If to Transferee: Mr. Brad Jacoby
Lone Star Circuits
901 Hensley Lane
Wylie, Texas 75098
If to Escrow Agent: Mr. Gregory W. Mitchell
Attorney at Law
4201 Shadybrook Lane
Rowlett, Texas 75088
or to any other address that any party shall designate in writing to the
other parties in accordance with this provision.
S5.05. This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
The parties to this Escrow Agreement have duly executed this Agreement on
this the 16th day of September, 2004.
/s/ RON ALLEN /s/ BRAD JACOBY
----------------------------------- ---------------------------------
Ron Allen Brad Jacoby
On behalf of Transferors On behalf of Transferees
/s/ GREGORY W. MITCHELL
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Gregory W. Mitchell
Escrow Agent and Trustee