Exhibit "T"
Purchase Price Escrow Agreement
Parties: GLOBAL SPORTS, INC.,
a Delaware corporation ("Global")
1075 First Avenue
King of Prussia, PA 19406
GEN-X ACQUISITION (U.S.), INC.,
a Washington corporation ("U.S. Co.")
701 5th Avenue
Suite 3300
Seattle, Washington 98104-7082
BORDEN LADNER GERVAIS LLP ("Escrow Agent")
Scotia Plaza, 40 King Street West,
Toronto, Ontario M5H 3Y4, Canada
Date: March 13, 2000
Background: Global, U.S. Co. Canadian Acquisition Co. ("Canadian Co."), DMJ
Financial Inc. ("DMJ"), James J. Salter ("Salter") and Kenneth J. Finkelstein
("Finkelstein") are parties to an Acquisition Agreement (the "Acquisition
Agreement"), dated as of September 24, 1999, as amended by that certain
Amendment No. 1 to Acquisition Agreement (the "Amendment"), dated as of the date
hereof, pursuant to which (i) U.S. Co. shall acquire all of the issued and
outstanding shares of capital stock of Gen-X Holdings Inc. ("Gen-X Holdings") in
exchange for, among other things: (a) a cash payment on the date hereof in the
amount of Six Million Dollars ($6,000,000); (b) a cash payment at Closing in the
amount of Three Million Six Hundred Thousand Dollars ($3,600,000); and (c) the
assumption of Global's non-negotiable subordinated notes in the original
aggregate principal amount of Three Million Nine Hundred Sixty Thousand Dollars
($3,960,000) payable to Gen-X Holdings, dated as of the Closing Date, together
with all accrued and unpaid interest thereon, and (ii) Canadian Co. shall
acquire all of the issued and outstanding shares of capital stock of Gen-X
Equipment Inc. ("Gen-X Equipment") in exchange for, among other things, a cash
payment at Closing in the amount of Three Million Six Hundred Thousand Dollars
($3,600,000).
This is the Purchase Price Escrow Agreement referred to in the Amendment.
Capitalized terms used in this Agreement without definition shall have the
respective meanings given to them in the Amendment or the Acquisition Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Establishment of Escrow.
(a) Pursuant to the terms of the Acquisition Agreement, as amended by
the Amendment, U.S. Co. hereby delivers to Escrow Agent a cash payment in the
amount of SIX MILLION DOLLARS ($6,000,000) (which amount, as increased by any
earnings thereon and as reduced by any disbursements or losses on investments,
shall be referred to herein as the "Escrow Fund"), to be held by Escrow Agent
pursuant to the terms hereof until the Closing Date
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.
2. Investment of Funds. Except as Global and U.S. Co. may from time to time
jointly instruct Escrow Agent in writing, the Escrow Fund shall be invested from
time to time, to the extent possible, at the direction of U.S. Co. in a money
market deposit account with Escrow Agent, until disbursement of the entire
Escrow Fund. Escrow Agent is authorized to liquidate in accordance with its
customary procedures any portion of the Escrow Fund consisting of investments to
provide for payments required to be made under this Agreement.
3. Payment of Escrow Funds. On the Closing Date, Escrow Agent shall pay to
Global an amount equal to $6,000,000 and Escrow Agent shall pay to U.S. Co. the
remainder, if any, of the Escrow Funds. Notwithstanding the foregoing, if the
Closing has not yet occurred, Escrow Agent shall make payment with respect to
the Escrow Funds as follows: (i) in accordance with the joint written
instructions of Global and U.S. Co; (ii) in accordance with a final
non-appealable order of the court entering such final Judgment (any court order
shall be accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and
non-appealable); or (iii) to U.S. Co. upon termination of the Agreement, only if
(a) the Agreement is terminated because the Closing has not occurred on or
before May 31, 2000, and (b) none of Buyers, DMJ, Salter or Finkelstein is then
in breach of the Agreement.
4. Termination of Escrow. This escrow shall terminate upon the final
payment of the Escrow Funds by Escrow Agent in accordance with Section 3.
5. Duties of Escrow Agent.
(a) Escrow Agent shall not be under any duty to give the Escrow Fund
held by it hereunder any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Agreement. Uninvested funds held hereunder shall not earn or
accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses,
including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Agreement. Without limiting the foregoing, Escrow Agent
shall in no event be liable in connection with its investment or reinvestment of
any cash held by it hereunder in good faith, in accordance with the terms
hereof, including, without limitation, any liability for any delays (not
resulting from its gross negligence or willful misconduct) in the investment or
reinvestment of the Escrow Fund, or any loss of interest incident to any such
delays.
(c) 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.
(d) Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund deposited
hereunder but is serving as escrow holder only and having only possession
thereof. Any payments of income from this Escrow Fund shall be subject to
withholding regulations then in force with respect to United States taxes. The
parties hereto will provide Escrow Agent with appropriate Internal Revenue
Service Forms W-9 for tax identification number certification, or non-resident
alien certifications. This Section 5(e) and Section 5(b) hereof shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
(f) Escrow Agent 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.
(g) 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.
(h) Escrow Agent (and any successor Escrow Agent) may at any time resign
as such by delivering the Escrow Fund to any successor Escrow Agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Agreement. The resignation
of Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent jurisdiction) or (b) the day which is
30 days after the date of delivery of its written notice of resignation to the
other parties hereto. If
at that time Escrow Agent has not received a designation of a successor Escrow
Agent, Escrow Agent's sole responsibility after that time shall be to retain and
safeguard the Escrow Fund until receipt of a designation of successor Escrow
Agent or a joint written disposition instruction by the other parties hereto or
a final non-appealable order of a court of competent jurisdiction.
6. Limited Responsibility. This Agreement expressly sets forth all the
duties of Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this agreement against Escrow
Agent. Escrow Agent shall not be bound by the provisions of any agreement among
the other parties hereto except this Agreement.
7. Ownership for Tax Purposes. Global and U.S. Co. agree that, for purposes
of federal and other taxes based on income, U.S. Co. will be treated as the
owner of the Escrow Fund, and that U.S. Co. will report all income, if any, that
is earned on, or derived from, the Escrow Fund as its income in the taxable year
or years in which such income is properly includible and pay any taxes
attributable thereto.
8. Notices. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three business
days after being mailed by first class certified mail, return receipt requested,
postage prepaid, or (c) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, to the parties
at their respective addresses stated on the first page or the signature pages of
this Agreement. Notices may also be given by prepaid telegram or facsimile and
shall be effective on the date transmitted if confirmed within 24 hours
thereafter by a signed original sent in the manner provided in the preceding
sentence. A copy of each notice to U.S. Co. shall be simultaneously sent to
Borden Ladner Gervais LLP, Scotia Plaza, 40 King Street West, Toronto, Ontario
M5H 3Y4, Canada, Attn: Daniel F. Hirsh. A copy of each notice to Global shall be
simultaneously sent to: Blank Rome Comisky & McCauley LLP, One Logan Square,
Philadelphia, Pennsylvania 19103, Attn: Francis E. Dehel, Esquire. Any party may
change its address for notice and the address to which copies must be sent by
giving notice of the new addresses to the other parties in accordance with this
Section 8, except that any such change of address notice shall not be effective
unless and until received.
9. Entire Understanding. This Agreement states the entire understanding
among the parties with respect to the subject matter hereof, and supersedes all
prior oral and written communications and agreements, and all contemporaneous
oral communications and agreements, with respect to the subject matter hereof.
10. Parties in Interest. This Agreement shall bind, benefit, and be
enforceable by and against each party hereto and its successors and assigns.
Global shall not in any manner assign any of its rights or obligations under
this Agreement without the express prior written consent of U.S. Co. and U.S.
Co. shall not in any manner assign any of its rights or obligations under this
Agreement without the express prior written consent of Global.
11. Counterparts. This Agreement may be executed in any number of
counterparts,
each of which when so executed and delivered shall constitute an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one original counterpart hereof.
12. CONTROLLING LAW. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
13. Jurisdiction and Process. Each of the parties (a) irrevocably consents
to the exclusive jurisdiction of the Courts of Common Pleas of Montgomery
County, Pennsylvania, or the United States District Court for the Eastern
District of Pennsylvania, in any and all actions between or among any of the
parties, whether arising hereunder or otherwise, (b) irrevocably waives its
right to trial by jury in any such action, and (c) irrevocably consents to
service of process by first class certified mail, return receipt requested,
postage prepaid, to the address at which such party is to receive notice in
accordance with Section 8 hereof. In any and all actions between or among any of
the parties, whether arising hereunder or otherwise, the prevailing party or
parties shall be entitled to recover their reasonable attorneys' fees and legal
expenses from the other party or parties.
IN WITNESS WHEREOF, the parties have executed, or have caused this Escrow
Agreement to be executed on their behalf by their duly authorized officers, as
of the date first stated above.
GLOBAL SPORTS, INC. GEN-X ACQUISITION (U.S.), INC.
By: By:
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Name: Michael G. Rubin Name:
Title: Chairman and CEO Title:
BORDEN LADNER GERVAIS LLP
By:
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Name:
Title: