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ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of the
25th day of February, 1998, (the "Effective Date"), by and among SalesKit
Software Corporation, a Missouri corporation ("Seller"); Arch Acquisition
Corp., a Virginia corporation ("Buyer"); and Crestar Bank, a Virginia banking
corporation ("Escrow Agent").
RECITALS:
R-1. As of the date hereof Buyer and Seller have entered into an
Asset Purchase Agreement (the "Purchase Agreement") under the terms of which
Buyer has agreed to purchase from Seller and Seller has agreed to sell to Buyer
various assets described therein.
R-2. Under the terms of the Purchase Agreement Buyer is to deliver
in escrow to Escrow Agent the sum of Five Million Nine Hundred Fifty-Four
Thousand Dollars ($5,954,000.00) which is intended to be applied under the
terms of the Purchase Agreement to pay all of the "Cash Purchase Price" except
the "Exclusivity Fee" as those terms are used in the Purchase Agreement.
R-3. The capitalized terms used but not otherwise defined herein
shall have the meaning given such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of their respective promises and
undertakings hereunder, the parties hereto, each intending to be legally bound
hereby, do covenant and agree respectively as follows:
1. Delivery and Receipt of Funds. Simultaneously with the
execution of this Agreement and pursuant to the Purchase Agreement, Buyer has
delivered to the Escrow Agent the sum of Five Million Nine Hundred Fifty-Four
Thousand Dollars ($5,954,000.00) in immediately available funds to be held
under the terms and conditions set forth herein and in the Purchase Agreement.
Receipt of the funds so deposited (the "Escrow Fund") is hereby acknowledged by
the Escrow Agent.
2. Duties of the Escrow Agent.
(a) The Escrow Agent shall invest and reinvest the Escrow
Fund in Authorized Investments (as defined below). Interest or other income
and net gains, if any, realized on any assets held in the Escrow Fund shall be
deemed a portion of the Escrow Fund and shall from time to time be reinvested
by the Escrow Agent in Authorized Investments as promptly as practicable. The
Escrow Agent may refrain from investing the Escrow Fund until it receives such
written investment instructions as it may reasonably request.
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(b) For purposes of this Agreement, "Authorized
Investments" means investments in tax exempt municipal bonds having a rating of
"AA" (or equivalent) or better or in tax exempt money market accounts that
invest in tax exempt municipal bonds having a rating of "AA" (or equivalent) or
better. All Authorized Investments shall mature not more than one (1) year
after the date of purchase thereof.
3. Disbursement of Funds.
(a) Unless otherwise provided in Section 3(b) below the
Escrow Fund shall be disbursed by Escrow Agent as follows:
(i) At such time as the Escrow Agent receives
written notification and instructions from Buyer that the requirements of
Section 3.2.b of the Purchase Agreement have been satisfied, the Escrow Agent
shall disburse Four Hundred Thousand Dollars ($400,000.00) to Seller as payment
of the Advance Payment.
(ii) At such time as the Escrow Agent receives
written notice and instructions from Buyer that the Closing conditions of
Article IX of the Purchase Agreement have been satisfied and that the documents
required to be delivered by Seller under Article X of the Purchase Agreement
have been delivered, the Escrow Agent shall disburse Four Million Seven Hundred
Four Thousand and No/100 Dollars ($4,704,000.00) to Seller and will disburse to
Buyer any amount in the Escrow Fund in excess of the Holdback.
(iii) Escrow Agent shall disburse the balance of
the Escrow Fund (constituting the Holdback under the terms of the Purchase
Agreement) only upon receipt, and pursuant to the terms of (1) written
instructions signed by both Buyer and the Seller, (2) a copy of the final
decision of the arbitrators with respect to those Claims that have been
submitted to arbitration pursuant to Section 13.5 of the Purchase Agreement,
which copy shall be certified by such arbitrators or (3) a certified copy of
the final decree of any court in litigation involving a Third Party Claim in
which both Seller and the Claimant were parties and in which Seller's
indemnification obligation pursuant to Article XIII of the Purchase Agreement
was decided.
(iv) On December 15, 1998, the Escrow Agent shall
release to Seller from the Escrow Fund the remaining balance of the Escrow
Fund, unless, prior to said date, Buyer provides to the Escrow Agent (with a
copy to Seller) a "written statement of pending claims" as defined in Section
13.7 of the Purchase Agreement, which sets forth pending or threatened Claims
or other matters which may result in Claims for which Buyer believes Seller is
obligated to provide indemnification pursuant to Section 13.1 of the Purchase
Agreement and an estimate of the amount of such possible damages. Following
receipt of such a written statement, the Escrow Agent shall continue to hold a
sufficient amount of the Escrow Fund to reimburse the Buyer Group for such
estimated Claims and shall disburse such amount only upon receipt, and pursuant
to the terms, of (1) written instructions signed by both Buyer and the Seller,
(2) a copy
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of the final decision of the arbitrators with respect to those Claims that have
been submitted to arbitration pursuant to Section 13.5 of the Purchase
Agreement, which copy shall be certified by such arbitrators or (3) a certified
copy of the final decree of any court in litigation involving a Third Party
Claim in which both Seller and the Claimant were parties and in which Seller's
indemnification obligation pursuant to Article XIII of the Purchase Agreement
was decided.
(b) Notwithstanding anything to the contrary contained in
Section 3(a) above to the contrary, Escrow Agent shall release the entire
Escrow Fund to Buyer, if either (i) Escrow Agent receives notice from Buyer
that Seller has terminated the Purchase Agreement pursuant to Section 15.2 of
the Purchase Agreement (with a copy of Seller's Termination Notice attached
thereto), or (ii) Escrow Agent receives notice from Buyer that Buyer has
terminated the Purchase Agreement pursuant to Section 15.3.a or Section 15.3.b
of the Purchase Agreement (with copy of Buyer's Termination Notice attached
thereto). Upon disbursement of the Escrow Fund to Buyer pursuant to this
Section 3(b), Escrow Agent shall thereupon and thereafter be freed and
discharged of all obligations and liabilities under this Agreement.
4. Fees. Buyer and Seller shall share equally and shall pay to
Escrow Agent, in advance, all fees of the Escrow Agent at its prescribed rate.
5. Limitation Upon Obligation of Escrow Agent.
(a) Escrow Agent shall not be required to inquire into
the truth of any statements or representations contained in any notices,
certificates, or other documents required or permitted hereunder, and it may
assume that the signatures on any such documents are genuine, that the persons
signing on behalf of any party thereto are duly authorized to issue such
document, and that all actions necessary to render any such documents binding
on any party thereto have been duly undertaken. Without limiting the foregoing,
Escrow Agent may in its discretion require from Seller or Buyer additional
documents which it deems to be necessary or appropriate to aid it in the course
of performing its obligations hereunder.
(b) Notwithstanding any other provision of this
Agreement, in the event Escrow Agent receives conflicting demands from Seller
and Buyer respecting the Escrow Fund to Buyer hereunder, Escrow Agent may, in
its sole discretion, file an interpleader action with respect thereto in any
court of competent jurisdiction and deposit the Escrow Fund with the clerk of
the court or withhold release of the Escrow Fund until instructed otherwise by
court order.
(c) Seller and Buyer do hereby jointly and severally (i)
release, and agree to indemnify and hold harmless, Escrow Agent from and
against any and all liability for losses, damages, and expenses (including
attorneys' fees) that may be incurred by it on account of any action taken by
Escrow Agent in good faith pursuant to this Agreement, and (ii) agree to defend
and indemnify Escrow Agent from and against any and all claims, demands, or
actions arising
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out of or resulting from any action taken by Escrow Agent in good faith
pursuant to this Agreement.
(d) Escrow Agent undertakes to perform only such duties
as are expressly set forth herein. The Escrow Agent (i) shall not be under any
duty to give the Escrow Fund any greater degree of care than it gives its own
similar property and (ii) does not have and will not have any interest in the
Escrow Fund but is a mere holder thereof. The Escrow Agent shall be under no
obligation to institute or defend any actions, suit or legal proceeding in
connection herewith or to take any other action likely to involve it in expense
unless first indemnified to its satisfaction.
6. Independent Contractor Status. The parties hereto are and
shall be independent contractors under this Agreement, and nothing herein shall
be construed to create a partnership, joint venture, or agency relationship
between or among the parties hereto. Without limiting the generality of the
foregoing, Escrow Agent shall be regarded as an independent custodian of the
Licensed Work and not as an agent or trustee of Seller.
7. Term of Agreement. The term of this Agreement shall
commence on the effective date hereof and shall continue until the entire
Escrow Fund is disbursed to either Buyer or Seller pursuant to Section 3 above.
8. Miscellaneous.
(a) The parties hereto agree that they shall comply with
all applicable laws and regulations of governmental bodies or agencies in their
respective performance of their obligations under this Agreement.
(b) Each party represents that it is acting on its own
behalf and is not acting as an agent for or on behalf of any third party; and
further agrees that it may not assign its rights or obligations under this
Agreement without the prior written consent of the other parties hereto (except
that an assignment by Buyer of such rights requires only the consent of Seller,
and an assignment by Seller requires only the consent of Buyer).
(c) All notices, consents, waivers, and other
communications under this 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 set forth below (or to such other addresses
and telecopier numbers as a party may designate by notice to the other
parties):
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if to Seller to:
SalesKit Software Corporation
10845 Olive Boulevard
Suite 190
St. Louis, MO 63141
Attention: Anthony P. Mitchell
Telephone No. (314) 432-7205
Facsimile No. (314) 567-0439
with a copy to:
Armstrong, Teasdale, Schafly & Davis
One Metropolitan Square
St. Louis, MO 63102-2740
Attention: Jeffrey D. Fisher, Esquire
Telephone No. (314) 621-5070
Facsimile No. (314) 621-5065
if to Buyer to:
Arch Acquisition Corp.
8280 Greensboro Drive
Suite 300
McLean, Virginia 22102
Attention: Kenneth E. deLaski
Telephone No. (703) 734-8606 Ext. 4410
Facsimile No. (703) 734-1146
with a copy to:
Hazel & Thomas, P.C.
3110 Fairview Park Drive
Suite 1400
Falls Church, Virginia 22042
Attention: Robert E. Gregg, Esquire
Telephone No. (703) 641-4234
Facsimile No. (703) 641-4340
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if to Escrow Agent to:
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Corporate Trust - Escrow Administration
Telephone No. (804) 782-5170
Facsimile No. (804) 782-7855
(d) This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Virginia without regard to its
conflicts of laws principles.
(e) No amendment or modification of this Agreement shall
be effective unless set forth in a writing executed by authorized
representatives of the parties hereto. No waiver of any provision of this
Agreement shall be effective unless it is set forth in a writing which refers
to the provisions so waived and the instrument in which such provision is
contained and is executed by an authorized representative of the party waiving
its rights. No failure or delay by any party in exercising any right, power, or
remedy will operate as a waiver of any such right, power, or remedy.
(f) Unless otherwise specified in this Agreement, time
shall be of the essence with respect to the duties, obligations, and
performance of Seller under this Agreement.
(g) No party shall be held responsible for any act,
failure, event, or circumstance addressed herein if such act, failure, event,
or circumstance is caused by conditions beyond such party's reasonable control.
(h) If any provision of this Agreement is held illegal,
unenforceable, or in conflict with any law of any federal, state, or local
government having jurisdiction over this Agreement, the validity of the
remaining provisions hereof shall not be affected thereby.
(i) The provisions of this Agreement and its Attachments,
by their terms, constitute the entire agreement between the parties and
supersede all prior agreements, oral or written, and all other communications
relating to the subject matter hereof.
(j) This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as set forth below.
BUYER:
ARCH ACQUISITION CORP.
By: /s/
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Kenneth E. deLaski, President
SELLER:
SALESKIT SOFTWARE CORPORATION
By: /s/
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Anthony P. Mitchell, President
ESCROW AGENT:
CRESTAR BANK
By: /s/
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Name:
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Title:
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