Exhibit 10.4
EXECUTION ORIGINAL
ESCROW
AGREEMENT
THIS ESCROW AGREEMENT
(“Agreement”) is made as of February 10, 2005 by and
among Computer Software Innovations, Inc., a South Carolina
corporation (“CSI”); Computer Software Innovations,
Inc., a Delaware corporation formerly known as VerticalBuyer, Inc.,
(“VBYR”); and Barron Partners LP, a Delaware limited
partnership (“Barron”); and Leatherwood Walker Todd
& Mann, P.C., as escrow agent (the “Escrow
Agent”).
WHEREAS, Barron is purchasing from
VBYR (i) 7,217,736 shares of Series A Preferred Stock and (ii) two
Warrants to purchase a total of 7,217,736 shares of common stock of
VBYR, for Five Million Forty-two Thousand Two Hundred Fifty Dollars
($5,042,250.00), and is lending to VBYR the sum of One Million
Eight Hundred Seventy-five Thousand Two Hundred Dollars
($1,875,200.00), with the total proceeds from the Preferred Stock
purchase and loan being Six Million Nine Hundred Seventeen Thousand
Four Hundred Fifty Dollars ($6,917,450.00) (collectively, the
“Funds”) to be utilized by VBYR as part of the money
needed by VBYR to repay notes payable by CSI to the Original
Shareholders relating to a dividend, to close upon the merger of
CSI with and into VBYR, to pay certain fees and commissions in
connection with the transactions contemplated by the Preferred
Stock Purchase Agreement, and for other corporate purposes;
and
WHEREAS, CSI, VBYR and Barron desire
to enter into this Agreement to provide that (i) CSI, VBYR and
Barron shall provide the executed Transaction Documents (as defined
below) to the Escrow Agent prior to the Closing Date (as such term
is defined in the Preferred Stock Purchase Agreement), (ii) Barron
shall provide the Funds to the Escrow Agent prior to the Closing
Date, (iii) the Escrow Agent shall thereafter hold the Funds and
the Transaction Documents until all the transactions contemplated
by the Transaction Documents (collectively, the “Contemplated
Transactions”) are consummated and the conditions set forth
in the Transaction Documents with respect thereto have been
fulfilled, (iv) the Escrow Agent shall either release the Funds to
the persons and entities authorized to receive a share of the Funds
under this Agreement (collectively, the “Authorized
Recipients”) upon the satisfaction of the items listed in the
foregoing clause (iii) or the Escrow Agent shall return the Funds
to Barron upon the termination without closing of the Contemplated
Transactions, and (v) the Escrow Agent shall either release to CSI,
VBYR and Barron the fully executed Transaction Documents in the
event the Escrow Agent releases the Funds to the Authorized
Recipients, or the Escrow Agent shall destroy the Transaction
Documents in the event the Escrow Agent returns the Funds to
Barron.
NOW, THEREFORE, in consideration of
the covenants and mutual promises contained herein and other good
and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1 The parties hereby agree to have
the law firm of Leatherwood Walker Todd & Mann, P.C.,
Greenville, South Carolina act as Escrow Agent whereby the Escrow
Agent shall receive the Funds and the Transaction Documents in
escrow and distribute the same as set forth in this Agreement. Any
capitalized terms not defined herein shall have the meaning
ascribed to them in the Preferred Stock Purchase Agreement, of even
date herewith between VBYR and Barron (the “Preferred Stock
Purchase Agreement”), the Agreement and Plan of Merger, of
even date herewith between CSI and VBYR (the “Merger
Agreement”), and any and all documents related thereto, with
this Agreement being an exhibit to such Preferred Stock Purchase
Agreement (collectively, the “Documents,” and all
Documents other than this Agreement, the Preferred Stock Purchase
Agreement and the Merger Agreement being collectively referred to
herein as the “Transaction Documents.”)
1.2 Upon the execution and delivery
of this Agreement by the parties hereto, the parties to the
Preferred Stock Purchase Agreement and the Merger Agreement shall
execute and deliver such agreements, and this Agreement, the
Preferred Stock Purchase Agreement and the Merger Agreement shall
not be escrowed under the terms of this Agreement. Prior to the
Closing Date, CSI, VBYR and Barron shall deliver the executed
Transaction Documents to the Escrow Agent and Barron shall deposit
the Funds with the Escrow Agent. The Escrow Agent shall thereafter
hold the Funds and the Transaction Documents until the earlier of:
(i) the date on which CSI, Barron and VBYR have consummated the
Contemplated Transactions; (ii) the termination of any of the
Contemplated Transactions prior to consummation; or (iii) February
28, 2005. In the event of the consummation of the Contemplated
Transactions, then the Escrow Agent shall promptly release the
Funds by wire transfer or check to the Authorized Recipients listed
on Exhibit “A” attached hereto in the amounts
designated for each of such Authorized Recipients for use by CSI
and VBYR to repay the Dividend Note of CSI to the Original
Shareholders, to repay the Merger Note portion of the Merger
Consideration to be paid by VBYR to the Original Shareholders and
to pay certain fees and commissions in connection with the
transactions contemplated by the Preferred Stock Purchase
Agreement, and the Escrow Agent shall also deliver the Transaction
Documents to each of CSI, VBYR and Barron. In the event the closing
of the Contemplated Transactions does not occur before February 28,
2005 or the Contemplated Transactions are terminated by CSI, VBYR
and Barron on or prior to such date, then the Escrow Agent shall
immediately return the Funds to Barron by wire transfer according
to instructions received in writing by the Escrow Agent from
Barron, and the Escrow Agent shall destroy the Transaction
Documents.
1.3 In connection with the
transactions described in Section 1.2, (i) the Escrow Agent shall
release the Funds to the Authorized Recipients and Transaction
Documents to CSI, VBYR and Barron upon receipt of a joint written
notice from CSI, Barron and VBYR that all the Contemplated
Transactions have been consummated and (ii) the Escrow Agent shall
return the Funds to Barron and destroy the Transaction Documents
either (a) upon the receipt of a joint written notice from CSI,
VBYR and Barron that the Contemplated Transactions have been
terminated or (b) on March 1, 2005, if the Escrow Agent has not
received the notice described in Section 1.3(i) above or the Escrow
Agent receives notice of termination of the Contemplated
Transactions solely from Barron.
2
1.4 Upon the completion by the
Escrow Agent of its obligations under Section 1.2, this Agreement
shall terminate and the Escrow Agent shall have no further
liability hereunder.
1.5 This Agreement may be altered or
amended only with the written consent of all of the parties hereto.
In the event CSI, VBYR or Barron attempts to change this Agreement
in a manner, which, in the Escrow Agent’s discretion, shall
be undesirable, the Escrow Agent may resign as Escrow Agent by
notifying CSI, VBYR and Barron in writing. In the case of the
Escrow A
