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EXHIBIT 20.11
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is made and entered into as of this
17th day of October, 2000, by and among EZConnect, Inc., a Nevada corporation
(the "Company"), Kevin S. Hamilton and Claudia K. Hamilton, as Trustees of the
Hamilton Family 1998 Trust dated July 10, 1998, (the "Trust"), SSMB Holdings,
LLC, a Nevada limited liability company ("SSMB"), and Taylor & Associates,
Inc., a Utah corporation (the "Escrow Holder").
RECITALS
A. The Company is acquiring all of the outstanding shares of Encore
Wireless, Inc. that the Company does not own for cash and shares of the
Company's Series A preferred stock pursuant to that certain Agreement and Plan
of Merger (the "Merger Agreement"), dated as of July 8, 2000, as amended,
among the Company, EZConnect Merger Co., and Encore Wireless, Inc.
B. The Merger Agreement provides that upon its closing, the Company shall
deliver nine hundred thirty-seven thousand five hundred (937,500) shares of
the Company's Series A preferred registered in the name of the Trust, and nine
hundred thirty-seven thousand five hundred (937,500) shares of the Company's
Series A preferred registered in the name of SSMB (all of such shares are
collectively, the "Shares"), to an escrow holder to release pursuant to the
terms of certain earn-out provisions contained in the Merger Agreement.
C. The Company, the Trust, and SSMB desire that the Escrow Holder act as
the escrow holder to hold and release the Shares pursuant to the terms and
conditions as set forth herein, and the Escrow Holder consents to act as such
escrow holder.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
AGREEMENT
1. DEPOSIT INTO ESCROW. On the closing of the Merger Agreement, the Company
will deposit one or more certificates representing the Shares with the Escrow
Holder. The Escrow Holder shall hold such stock certificates as an escrow
holder
and disburse them as set forth in this Agreement. The Company, the Trust, and
SSMB acknowledge that in performing services pursuant to this Agreement, the
Escrow Holder is acting as legal counsel to the Company and not as a fiduciary
to the Company, the Trust, or SSMB.
2. RELEASE OF THE SHARES.
2.1 Release of the Subscriber Base Shares.
(a) Release. The Merger Agreement provides that four hundred sixty-eight
thousand seven hundred fifty (468,750) Shares in the name of the Trust and four
hundred sixty-eight thousand seven hundred fifty (468,750) Shares in the name of
SSMB are considered as the "Subscriber Base Shares," and all or a portion of
such
Shares are to be released from escrow upon the Company achieving certain
subscriber base growth by July 17, 2001, all as more fully described in the
Merger Agreement. The Escrow Holder shall release four hundred sixty-eight
thousand seven hundred fifty (468,750) Shares to the Trust and four hundred
sixty-eight thousand seven hundred fifty (468,750) Shares to SSMB on July 24,
2001, unless the Escrow Holder receives on or before such date, a certificate in
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substantially the form as set forth in Exhibit A attached hereto and
incorporated
herein by this reference, signed by two officers of the Company (the "Subscriber
Base Shares Objection").
(b) Objection. If the Company determines that the Trust and SSMB are not
entitled to all of the Subscriber Base Shares as set forth in Section 2.1(a) of
this Agreement, then the Company shall deliver the Subscriber Base Shares
Objection, signed by two officers of the Company, to the Escrow Holder such that
the Escrow Holder actually receives such Subscriber Base Shares Objection on or
before July 24, 2001, and shall deliver the Subscriber Base Shares Objection,
together with the calculations supporting the number of Subscriber Base Shares
to be delivered to each of the Trust and SSMB and the number of Subscriber Base
Shares to be delivered to the Company, to the Trust and SSMB as provided in
Section 5.3 of this Agreement. If the Escrow Holder timely receives the
Subscriber Base Shares Objection, then the Escrow Holder shall release such
portion of the Subscriber Base Shares to the Trust and to SSMB as set forth in
the Subscriber Base Shares Objection and shall release the remaining Subscriber
Base Shares to the Company or its transfer agent on August 3, 2001, unless the
Escrow Holder receives on or before such date, a written notice from either the
Trust or SSMB, or both, disputing the Subscriber Base Shares Objection (the
"Subscriber Base Shares Response").
(c) Response. If the Trust and/or SSMB determine that the Subscriber Base
Shares Objection is not correct, then the Trust or SSMB, or both, shall deliver
the Subscriber Base Shares Response to the Escrow Holder such that the Escrow
Holder actually receives such Subscriber Base Shares Response on
or before August
3, 2001, and shall deliver the Subscriber Base Shares Response to the Company as
provided in Section 5.3 of this Agreement. If the Escrow Holder timely receives
the Subscriber Base Shares Response, then the Escrow Holder shall (i) release to
the Trust and SSMB the lesser of the number of the Subscriber Base Shares to be
released to the Trust and SSMB as set forth in either the Subscriber Base Shares
Objection or the Subscriber Base Shares Response, (ii) release to the
Company the
lesser of the number of the Subscriber Base Shares to be released to the Company
as set forth in either the Subscriber Base Shares Objection or the Subscriber
Base Shares Response, and (iii) take no action with respect to the remaining
Subscriber Base Shares until the Escrow Holder receives written instructions
signed by the Company, the Trust, and SSMB with respect to the Subscriber Base
Shares, or until the matter is finally resolved by settlement or judgment,
including any post-judgment motion or appeal, and then
comply with the provisions
of the settlement or judgment. Alternatively, the Escrow Holder may institute
an action in interpleader to determine its obligations hereunder.
2.2 Release of the Continued Growth Shares.
(a) Release. The Merger Agreement provides that four hundred sixty-eight
thousand seven hundred fifty (468,750) Shares in the name of the Trust and four
hundred sixty-eight thousand seven hundred fifty (468,750) Shares in the name of
SSMB are considered as the "Continued Growth Shares," and such Shares are to be
released from escrow on dates indicated below as long as Kevin S. Hamilton and
Tod M. Turley remain in the employ of the Company, all as more fully described
in the Merger Agreement. The Escrow Holder shall release the following number
of Shares to each of the Trust and SSMB on the following dates,
unless the Escrow
Holder receives on or before such date, a certificate in substantially the form
as set forth in Exhibit B attached hereto and incorporated herein by this
reference, signed by two officers of the Company (the "Continued Growth Shares
Objection"):
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October 17, 2001 two hundred thirty-four thousand three hundred seventy-five
(234,375) Shares November 30, 2001 nineteen thousand five hundred thirty-one
(19,531) Shares December 31, 2001 nineteen thousand five hundred thirty-one
(19,531) Shares January 31, 2002 nineteen thousand five hundred thirty-one
(19,531) Shares February 28, 2002 nineteen thousand five hundred thirty-two
(19,532) Shares March 31, 2002 nineteen thousand five hundred
thirty-one (19,531)
Shares April 30, 2002 nineteen thousand five hundred thirty-one (19,531) Shares
May 31, 2002 nineteen thousand five hundred thirty-one (19,531) Shares
June 30, 2002 nineteen thousand five hundred thirty-two (19,532) Shares
July 31, 2002 nineteen thousand five hundred thirty-one (19,531) Shares
August 31, 2002 nineteen thousand five hundred thirty-one (19,531) Shares
September 30, 2002 nineteen thousand five hundred thirty-one (19,531) Shares
October 31, 2002 nineteen thousand five hundred thirty-two (19,532) Shares
(b) Objection. If the Company determines that either the Trust or SSMB is not
entitled to any unreleased Continued Growth Shares as set
forth in Section 2.2(a)
of this Agreement (a "Defaulting Party"), then the Company shall deliver the
Continued Growth Shares Objection with respect to such Defaulting Party, signed
by two officers of the Company, to the Escrow Holder such that the Escrow Holder
actually receives such Continued Growth Shares Objection on or before the
indicated date of release, and shall deliver the Continued Growth Shares
Objection to the Trust and SSMB as provided in Section 5.3 of this Agreement.
If the Continued Growth Shares Objection names only one of the Trust or SSMB as
the Defaulting Party, then the Escrow Holder shall continue to release the
Continued Growth Shares as set forth in Section 2.2(a) of this Agreement to the
party that is not the Defaulting Party. If the Escrow Holder
timely receives the
Continued Growth Shares Objection, then the Escrow Holder shall release the
remaining Continued Growth Shares of the Defaulting Party to the Company or its
transfer agent on the tenth (10th) day of the calendar month following the
indicated date of release (or on the next succeeding business day if the tenth
day of the month is a Saturday, Sunday, or holiday), unless the Escrow Holder
receives on or before such date, a written notice from the Defaulting Party
disputing the Continued Growth Shares Objection (the "Continued Growth Shares
Response").
(c) Response. If the Defaulting Party determines that the Continued Growth
Shares Objection is not correct, then the Defaulting Party shall deliver the
Continued Growth Shares Response to the Escrow Holder
such that the Escrow Holder
actually receives such Continued Growth Shares Response on or before the tenth
(10th) day of the calendar month following the indicated date of release, and
shall deliver the Continued Growth Shares Response to the Company as provided in
Section 5.3 of this Agreement. If the Escrow Holder timely receives the
Continued Growth Shares Response, then the Escrow Holder shall take no action
with respect to the remaining Continued Growth Shares of the Defaulting Party
until the Escrow Holder receives written instructions signed by the Company and
the Defaulting Party with respect to the Defaulting Party's Continued Growth
Shares, or until the matter is finally resolved by settlement or judgment,
including any post-judgment motion or appeal, and then
comply with the provisions
of the settlement or judgment. Alternatively, the Escrow Holder may institute
an action in interpleader to determine its obligations hereunder.
2.3 Termination of Escrow. The escrow under this Agreement shall terminate
when all of the Shares have been released from the escrow.
3. ESCROW INSTRUCTIONS.
3.1 Right to Rely. Except as set forth in Section 2 of this Agreement, the
Escrow Holder need not take any action unless it receives written instructions
submitted by the Company, the Trust, and SSMB. The Escrow Holder shall have the
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right to rely upon written instructions submitted to it by the Company, the
Trust, and SSMB. The Escrow Holder shall have the right to assume the
genuineness of all signatures on all documents submitted to it. The Escrow
Holder shall have no duty to investigate the contents of any Subscriber Base
Shares Objection, Subscriber Base Shares Response, Continued Growth Shares
Objection, or Continued Growth Shares Response submitted to it. In the event
that the Escrow Holder receives conflicting instructions,
the Escrow Holder shall
notify the parties and shall have the right to take no action until it receives
written instructions from the Company, the Trust, and SSMB that resolve the
conflict. Alternatively, the Escrow Holder may institute an action in
interpleader to determine its obligations hereunder.
3.2 Costs. All costs, fees, and expenses of the Escrow Holder shall be paid
by the Company, including any attorney fees and other costs
and expenses incurred
in any action in interpleader.
3.3 Indemnification and Release. The Company shall indemnify, save, defend,
and hold the Escrow Holder and its principals, shareholders,
officers, directors,
employees, and agents harmless from and against any and all losses, actions,
claims, damages, demands, expenses, and liabilities, including but not limited
to interest, penalties, court costs, and attorneys' fees, resulting from or in
connection with this Agreement, including but not limited
to any action in inter-
pleader. The Company, the Trust, and SSMB hereby fully release, discharge, and
covenant not to sue the Escrow Holder and its principals,
shareholders, officers,
directors, employees, and agents from and against any and all losses, actions,
claims, damages, demands, expenses, and liabilities, including but not limited
to interest, penalties, court costs, and attorneys' fees, whether known or
unknown, foreseen or unforeseen, suspected or unsuspected, based on or related
to any negligent or grossly negligent matter, cause, fact, act, or omission in
connection with, directly or indirectly, their actions pursuant to this
Agreement.
3.4 Resignation and Removal. If the Escrow Holder shall become incapable of
acting, shall become insolvent, shall petition for or be the subject of an
involuntary petition for bankruptcy, or shall have a receiver appointed over
substantially all of its assets, then the Company, the Trust, and SSMB may
jointly remove the Escrow Holder by giving written notice to the Escrow Holder
and appointing a successor escrow holder. The Escrow Holder may resign at any
time upon sixty (60) days prior written notice to the Company, the Trust, and
SSMB. Upon any such resignation or removal,
the Escrow Holder shall transfer all
Shares remaining in escrow to the successor escrow holder on or prior to the
effective date of such resignation or removal, or if such
successor escrow holder
has not yet been appointed, to a court of competent jurisdiction pending
appointment of such successor escrow holder.
3.5 Attorney-in-Fact. The Trust and SSMB each hereby irrevocably constitutes
and appoints the Escrow Holder as its true and lawful
attorney-in-fact, with full
power and authority to act in such party's name and on such party's behalf to
execute and deliver stock assignments separate from certificate to transfer any
Shares delivered by the Escrow Holder pursuant to the terms of this Agreement.
This special power of attorney is irrevocable, is coupled with an interest, and
shall survive such party's death, incapacity, or dissolution.
4. CONFLICT OF INTEREST. The Escrow Holder is the legal counsel to the Com-
pany. The Company, the Trust, and SSMB hereby waive any conflict of interest
that may arise by the Escrow Holder acting as escrow holder pursuant to this
Agreement. The Trust and SSMB hereby consent to the Escrow Holder's
representation of the Company and any of its subsidiary or affiliated entities
in any present or future matter, including but not limited to any litigation or
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proceeding adverse to the Trust or SSMB, except for any
litigation or proceeding
arising out of or based upon this Agreement.
The Trust and SSMB acknowledge that
they have been advised to obtain separate, independent legal
counsel to represent
them in the negotiation and execution of this Agreement, and that they have had
the opportunity to consult such independent counsel.
5. GENERAL PROVISIONS.
5.1 Amendment. All amendments or modifications of this Agreement shall be in
writing and shall be signed by each of the parties hereto.
5.2 Waiver. Any waiver of any right, power, or privilege hereunder must be in
writing and signed by the party being charged with the waiver. No delay on the
part of any party hereto in exercising any right, power, or privilege hereunder
shall operate as a waiver of any other right, power, or privilege hereunder, nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
5.3 Notices. All notices or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and shall be delivered
personally or sent by overnight courier, by telecopy with confirmation by
first-class mail, or by certified mail, return receipt requested. Notices
delivered personally or sent by overnight courier or by telecopy with
confirmation by first-class mail shall be effective on the date first received,
while notices sent by certified mail, return receipt requested, shall be deemed
to have been received and to be effective four (4) business days after deposit
into the mails. Notices shall be given to the parties at the following
respective addresses, or to such other addresses as any party shall designate in
writing:
If to the Company: EZ Connect, Inc.
Attn: President
c/o Taylor & Associates, Inc.
2681 Parleys Way
Suite 203
Salt Lake City, Utah 84109
Telephone: (801) 463-6080
Telecopier: (801) 463-6085
If to the Trust: Mr. Kevin S. Hamilton
The Hamilton Family 1998 Trust
c/o Encore Wireless, Inc.
2900 Townsgate Road
Suite 200
Westlake Village, California 91361-3001
Telephone: (805) 557-9936
Telecopier: (805) 230-1318
If to SSMB: Mr. Tod M. Turley
SSMB, LLC
c/o Encore Wireless, Inc.
2900 Townsgate Road
Suite 200
Westlake Village, California 91361-3001
Telephone: (805) 557-9926
Telecopier: (805) 230-1318
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If to the Escrow Holder: Elliott N. Taylor, Esq.
Taylor & Associates, Inc.
2681 Parleys Way
Suite 203
Salt Lake City, Utah 84109
Telephone: (801) 463-6080
Telecopier: (801) 463-6085
5.4 Successors and Assigns. This Agreement and each of its provisions shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, and assigns.
5.5 Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Utah,
without regard for its
conflict of laws rules.
5.6 Attorneys' Fees. In any suit to interpret or enforce the terms and
provisions of this Agreement, the prevailing party shall be entitled to recover
court costs and attorneys' fees, in addition to any other remedy or recovery to
which such party may be entitled, provided that no party may recover court costs
or attorneys' fees from the Escrow Holder.
5.7 Counterparts. This Agreement may be executed in two or more counterparts,
including by facsimile transmission, all of which together shall constitute a
single instrument.
5.8 Severability of Provisions. In the event any one or more of the provisions
of this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
5.9 Construction. The headings in the sections and paragraphs of this
Agreement are for convenience only and shall not constitute a part hereof.
Whenever the context so requires, the masculine shall include the feminine and
the neuter, the singular shall include the plural, and conversely.
The terms and
all parts of this Agreement shall in all cases be interpreted simply and
according to their plain meaning and neither for nor against any party hereto.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the date first written above.
EZConnect, Inc.
/S/ Its Duly Authorized Officer
The Hamilton Family 1998 Trust
/S/ Kevin S. Hamilton, Trustee
/S/ Claudia K. Hamilton
SSMB Holdings, LLC
/S/ Tod M. Turley, Manager
Taylor & Associates, Inc.
/S/ Elliott N. Taylor, President
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EXHIBIT A
SUBSCRIBER BASE SHARES OBJECTION
To Taylor & Associates, Inc.
Pursuant to that certain Escrow Agreement (the "Agreement"), dated as of October
17, 2000, by and among EZConnect, Inc. (the "Company"), Kevin S. Hamilton and
Claudia K. Hamilton, as Trustees of the Hamilton Family 1998
Trust dated July 10,
1998, (the "Trust"), SSMB Holdings, LLC ("SSMB"), and Taylor & Associates, Inc.
(the "Escrow Holder"), the Company hereby certifies that the Trust and SSMB are
each entitled to ___________________________________ (_______) of the Subscriber
Base Shares. The Escrow Holder is hereby instructed to deliver or to cause to
be delivered certificates for the foregoing number of Subscriber Base Shares to
each of the Trust and SSMB, and to deliver certificates for the remaining
Subscriber Base Shares to the Company/the Company's transfer agent for
cancellation. The Company further certifies that the Company has given a copy
of this Subscriber Base Shares Objection, together with the calculations
supporting the number of Subscriber Base Shares to be delivered to each of the
Trust and SSMB and the number of Subscriber Base Shares to be delivered to the
Company for cancellation, to each of the Trust and SSMB in the manner set forth
in the Agreement. Unless otherwise defined herein, all terms used with initial
capital letters shall have the same meanings as assigned in the Agreement.
The undersigned hereby certify under the penalty of perjury that the foregoing
information is true and correct of the undersigned's own knowledge.
EZConnect, Inc.
By:
(Print Name and Title)
By:
(Print Name and Title)
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EXHIBIT B
CONTINUED GROWTH SHARES OBJECTION
To Taylor & Associates, Inc.
Pursuant to that certain Escrow Agreement (the "Agreement"), dated as of October
17, 2000, by and among EZConnect, Inc. (the "Company"), Kevin S. Hamilton and
Claudia K. Hamilton, as Trustees of the Hamilton Family 1998
Trust dated July 10,
1998, (the "Trust"), SSMB Holdings, LLC ("SSMB"), and Taylor & Associates, Inc.
(the "Escrow Holder"), the Company hereby certifies that the Trust/SSMB is a
Defaulting Party and is no longer entitled to receive any Continued Growth
Shares. The Escrow Holder is hereby instructed to deliver certificates for the
Defaulting Party's remaining Continued Growth Shares
to the Company/the Company's
transfer agent for cancellation. The Company further certifies that the Company
has given a copy of this Continued Growth Shares Objection to both the Trust and
SSMB in the manner set forth in the Agreement. Unless otherwise defined herein,
all terms used with initial capital letters shall have the same meanings as
assigned in the Agreement.
The undersigned hereby certify under the penalty of perjury that the foregoing
information is true and correct of the undersigned's own knowledge.
EZConnect, Inc.
By:
(Print Name and Title)
By:
(Print Name and Title)