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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAS IT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.  NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON ITS CONVERSION MAY BE SOLD, TRANSFERRED, HYPOTHECATED, OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR AS OTHERWISE PERMITTED BY BORROWER, OR, IN THE OPINION OF COUNSEL SATISFACTORY TO BORROWER, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS.

CONVERTIBLE BRIDGE NOTE

(“Note”)

 

	
CPN-__

	  	  
	
Principal amount:

	  	
San Francisco, CA

	
$________

	  	
_______

 

For value received, the undersigned, Andover Games, LLC, a Delaware limited liability company (“Borrower”), promises to pay to the order of Ascend Acquisition Corp. (“Holder”) or its registered agent (collectively “Holder”), in lawful money of the United States of America, the principal sum of ___________ ($_____) (the “Principal”). Interest on the aggregate Principal of this Note shall accrue commencing on the date hereof until such amount is paid in full at the annual rate of the Prime Rate plus five percent (5%) (calculated on the basis of a 365 day year).  Unless paid, accelerated or converted in accordance herewith earlier pursuant to the terms hereof, said principal and accrued interest shall be due and payable on the earlier of (i) the closing (the “Merger Closing”) of the Merger transaction contemplated under and pursuant to that certain Merger Agreement and Plan of Reorganization by and among Holder, Ascend Merger Sub, Borrower and certain members of Borrower dated as of December 30, 2011 (the “Merger Agreement”), and (ii) ____________ [six months from the date of the note] (the “Maturity Date”).

 

1.           Payment.

 

1.1          Timing of Payment.

 

(a)    Mandatory Prepayment.  Upon the occurrence and during the continuance of an Acceleration Event (as described in Section 3 hereof) or pursuant to the terms of Section 2.1, an amount equal to the sum of the Principal and all accrued and unpaid interest on the Principal (collectively the “Prepayment Amount”) shall become due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.

 

(b)   Payment Upon Maturity.  If no Acceleration under Section 3 hereof, or conversion under Section 2 hereof, has occurred prior to the Maturity Date, then an amount equal to the Principal and all the then-accrued and unpaid interest on the Principal shall become immediately due and payable, upon written notice of demand for repayment by Holder to Borrower.

 

(c)    Subject to the conversion contemplated under Section 2, the unpaid principal and interest outstanding under this Note may be prepaid by Borrower.

 

1.2          Holiday Calculation.  If any payment on this Note shall become due on a Saturday, Sunday, or a public holiday under the laws of the State of Delaware, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment.

 

  

  

  

 

1.3          Prime Rate.  For purposes hereof, ““Prime Rate” as of a particular date shall mean the prime rate of interest as published on that date in the Wall Street Journal and generally defined therein as “the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.”  If the Wall Street Journal is not published on a date for which the Prime Rate must be determined, then the Prime Rate shall be the prime rate published in the Wall Street Journal on the nearest-preceding date on which the Wall Street Journal was published.  If the Wall Street Journal no longer publishes a prime rate, then the Board shall select a substitute index.

 

2.           Conversion.

 

2.1          Optional Conversion Right or Mandatory Prepayment of Holder in a Qualified Financing.

 

(a)           Optional Conversion or Prepayment Right of Holder.  In the event that the Company consummates, prior to the Maturity Date, an equity financing pursuant to which it sells units or, if converted to a corporation, shares of stock of the Company (the “Equity Securities”) with an aggregate sales price of not less than $2,000,000, excluding the indebtedness which is converted into Equity Securities under this Note, and with the principal purpose of raising capital, or such lesser amount as is agreed to in writing between the Company and Holder (a “Qualified Financing”), then Holder shall have the right, but not the obligation, either (i) to require that the outstanding principal amount of and all accrued interest under this Note (the “Indebtedness”) automatically convert into a number of units/shares of Equity Securities equal to the quotient obtained by dividing (x) the Indebtedness by (y) a price per unit/share equal to 80% of the price per unit/share price of the Equity Securities, rounded down to the nearest whole unit/share, or (ii) demand by written notice to Borrower that an amount equal to the Prepayment Amount be due and payable by Borrower to Holder.

 

(b)           Optional Conversion Procedure.  Before the Holder shall be entitled to convert this Note into Equity Securities pursuant Section 2.1(a), it shall surrender this Note, duly endorsed, at the office of the Company and shall give written notice to the Company at its principal corporate office, of the election to convert the same pursuant to Section 2.1, and shall state therein the name or names in which the certificate or certificates for units/shares of Equity Securities are to be issued, if such units are then certificated, as the case may be.  The Company shall, as soon as practicable thereafter, issue and deliver to the Holder a certificate or certificates for the number of units/shares of Equity Securities to which the Holder shall be entitled upon conversion, if in the case of units, such units are then certificated (bearing such legends as are required by the applicable Equity Securities purchase agreement, and applicable state and federal securities laws in the opinion of counsel to the Company), and any other securities and property to which Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described in Section 2.2.  The conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of this Note, and the person or persons entitled to receive the units/shares upon such conversion shall be treated for all purposes as the record holder or holders of such shares of units/stock as of such date.

 

2.2          Payment for Fractional Shares/Units.  No fractional units/shares shall be issued upon conversion of this Note.  In lieu of any fractional units/shares to which the holder would otherwise be entitled, the Borrower shall pay cash equal to the product of such fraction multiplied by the unit/share price (subject to adjustment for units splits, dividends, and recapitalizations).

 

3.           Acceleration Events.  Any of the following events are “Acceleration Events”:

 

3.1          Other than the Merger Closing or similar transaction effected pursuant to the Merger Agreement, a liquidation, dissolution, or winding up of Borrower, whether voluntary or involuntary and under this Section 3.1, the following events shall be not be considered a liquidation: (i) any consolidation or merger of Borrower with or into any other corporation or other entity or person, or any other corporate reorganization, in which the unit holders of Borrower immediately prior to such consolidation, merger or reorganization, own less than fifty percent (50%) of Borrower’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions to which Borrower is a party in which in excess of fifty percent (50%) of Borrower’s voting power is transferred, excluding any consolidation or merger effected exclusively to change the domicile of Borrower; or (ii)  any transaction or series of related transactions, other than the Offering, in which more than fifty percent (50%) of the voting power of the Borrower is disposed.

 

  

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3.2          Borrower's breach of the obligation to pay any material amount payable hereunder on the date that it is due and payable; or

 

3.3          Borrower's institution of proceedings against it, or Borrower's filing of a petition or answer or consent seeking reorganization or release, under the federal Bankruptcy Code, or any other applicable federal or state law relating to creditor rights and remedies, or Borrower's consent to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee or other similar official of Borrower or of any substantial part of its property, or Borrower's making of an assignment for the benefit of creditors, or the taking of corporate action in furtherance of such action.

 

4.           Representations of Holder.

4.1          Authority. Holder represents that it has full right, power and authority to enter into the transactions contemplated by this Note and to perform his obligations hereunder.  This Note, when executed and delivered by the Holder, will constitute a valid and binding obligation of the Holder, enforceable against the Holder in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws effecting the enforcement of creditor's rights and the availability of the remedy of specific performance.

                4.2         Purchase Entirely for Own Account.  This Note is issued in reliance upon Holder’s representation to the Borrower and Holder hereby confirms, that this Note is acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.  By countersigning this Note, Holder further represents and warrants that Holder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to this Note.

4.3          Disclosure of Information.  The Holder represents that it has had an opportunity to ask questions and receive answers from the Borrower regarding the terms and conditions of this Note, the properties, prospects and financial condition of the Borrower.

4.4          Accredited Investor.  The Holder represents and warrants that it is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D of the Securities and Exchange Commission.  The Holder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Borrower.  The Holder understands that an investment in the Borrower entails a very high degree of risk and there can be no assurance that the Borrower will be successful.

4.5          Economic Risk; Disclosure.  The Holder recognizes and understands that an investment in the securities acquired pursuant to this Agreement is highly speculative and involves substantial economic risk.  The Holder further acknowledges that it is able to fend for itself in the transactions contemplated by this Note and has the ability to bear the economic risks of its investment pursuant to this Agreement, including a complete loss of such investment.  The Holder acknowledges that it has had an opportunity to discuss the business, affairs and current prospects of the Borrower with its officers.

 

  

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4.6          Investment Experience.  The Holder has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in its Securities.  The Holder understands that an investment in the Borrower entails a very high degree of risk and there can be no assurance that the Borrower will be successful.  The Holder also represents and warrants it has not been organized for the purpose of acquiring this Note and the Equity Securities that may be issuable upon conversion thereof.

5.           No Other Indebtedness.  While any part of the Indebtedness under this Note remains unpaid and outstanding, the Company shall not, without the prior written consent of the Holder, create, incur, or have outstanding any indebtedness for borrowed money.

6.            Miscellaneous Provisions.

6.1          Notices.  All notices which any party to this Note may be required or may desire to serve on any other party shall be in writing and may be delivered by personal service, sent by facsimile with confirmation of receipt or sent by registered or certified mail, return receipt requested, with postage thereon fully prepaid.  Service of any such notice made by mail shall be deemed complete on the date of actual delivery as shown by the addressee’s registry or certification receipt or at the expiration of the third (3rd) business day after the date of mailing, whichever is earlier in time.  Any such communications to the holder of record shall be sent to the address appearing on the books of the Borrower.

 

6.2          Entire Agreement.  This Note constitutes the entire agreement and understanding among the parties with regard to its subject matter, is a complete and exclusive statement of the terms and conditions thereof, and supersedes, merges, and renders void any and all prior agreements or understandings among them relating to the same subject matter.

 

6.3          Waiver; Investor’s Rights.  No waiver of any term, provision or condition of this Note, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Note, unless such waiver so provides expressly by its terms.  In any action on this Note, Holder need not produce or file the original of this Note, but need only file a photocopy of this Note certified by Holder to be a true and correct copy of this Note in all material respects.

 

6.4          Assignment; Binding on Successors and Assigns.  This Note shall not be assigned, transferred or otherwise conveyed by either party, except with the prior written consent of the non-transferring party.  This Note and all of its terms, conditions and covenants are intended to be fully effective and binding, to the extent permitted by law, on the successors and permitted assigns of the parties.

 

6.5          Survival.  The representations and warranties given herein shall survive the execution of this Note.

 

6.6          Headings; Governing Law.  The descriptive headings in this Note are inserted for convenience only and do not constitute a part of this Note. This Note shall be interpreted under the laws of the State of Delaware (without giving effect to the conflict of law principles thereof) as applied to agreements among Delaware residents entered into and to be performed entirely within Delaware

 

6.7          Severability.  Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision is prohibited by or invalid under applicable law, it shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of the provisions of this Note.

 

  

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6.8          Amendment Provisions.  This Note may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by Borrower and Holder.

 

6.9          Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the undersigned has duly caused this Note to be signed in its name and on its behalf by its duly authorized officer as of the date hereinabove written.

 

	  	
ANDOVER GAMES, LLC

	  	
a Delaware limited liability company

	  	  
	  	
By:

	  
	  	
Name:

	
Craig dos Santos

	  	
Title:

	
CEO

AGREED AND ACCEPTED:

ASCEND ACQUISITION CORP.

a Delaware corporation

	
By:

	  	  
	
Name:

	
Jonathan Ledecky

	  
	
Title:

	
Chief Executive Officer

	  

 

  

6ESCROW AGREEMENT

 

ESCROW AGREEMENT (“Agreement”) dated _________, 2011 by and among Ascend Acquisition Corp., a Delaware corporation (“Ascend”), Craig dos Santos as the representative (the “Representative”) of the former members (the “Members”) of Andover Games, LLC, a Delaware limited liability company (“Andover”), Jonathan J. Ledecky, acting as the committee (the “Committee”) representing the interests of Ascend, and Continental Stock Transfer & Trust Company, as escrow agent (the “Escrow Agent”).  Capitalized terms used herein that are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement (as defined below).

 

Ascend, Ascend Merger Sub, LLC (“Merger Sub”), Andover and certain of the Members are parties to Merger Agreement and Plan of Reorganization, dated as of December 30, 2011 (the “Merger Agreement”), pursuant to which Merger Sub has merged with and into Andover with Andover surviving the merger and becoming a wholly-owned subsidiary of Ascend.  Pursuant to the Merger Agreement, Ascend is to be indemnified in certain respects by the Members.  The parties desire to establish an escrow fund as collateral security for the foregoing indemnification obligations.  The Representative has been designated pursuant to the Merger Agreement to represent the Members and each Permitted Transferee (as hereinafter defined) of the Members (the Members and all such Permitted Transferees are hereinafter referred to collectively as the “Owners”), and to act on their behalf for purposes of this Agreement.

 

The parties agree as follows:

 

1.           (a)            Concurrently with the execution hereof, an aggregate of ______ shares of Ascend Common Stock [five percent (5%) of the shares of Ascend Common Stock to be issued to the Members at Closing] issued to the Members and delivered to them at the Closing pursuant to the Merger Agreement, which shall be allocated among the Members in accordance with the allocation set forth on Schedule 1(a) attached hereto, together with five (5) stock powers signature medallion guaranteed from each Member separate from the share certificates executed in blank by each such Member to be held in escrow pursuant to the terms of this Agreement and Section 1.10 of the Merger Agreement.  The shares of Ascend Common Stock represented by the stock certificates so delivered to the Escrow Agent are herein referred to in the aggregate as the “Escrow Fund.”  The Escrow Agent shall maintain a separate account for each Member, and, subsequent to any transfer permitted pursuant to Paragraph 1(e) hereof, each Owner’s, portion of the Escrow Fund.

 

(b)           The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the Escrow Fund solely pursuant to the terms and conditions hereof.  The Escrow Agent shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and not as the property of Ascend. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.

 

(c)           Except as herein provided, the Owners shall retain all of their rights as stockholders of Ascend with respect to the shares of Ascend Common Stock constituting the Escrow Fund during the period the Escrow Fund is held by the Escrow Agent (the “Escrow Period”), including, without limitation, the right to vote their shares of Ascend Common Stock included in the Escrow Fund.

  

  

  

 

(d)           During the Escrow Period, all dividends payable in cash with respect to the shares of Ascend Common Stock then contained in the Escrow Fund shall be paid to the Owners, but all dividends payable in shares or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof.  As used herein, the term “Escrow Fund” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.

 

(e)           During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the shares of Ascend Common Stock in the Escrow Fund except (i) to a “Permitted Transferee” (as hereinafter defined), (ii) by virtue of the laws of descent and distribution upon death of any Owner, or (iii) pursuant to a qualified domestic relations order; provided, however, that such permitted transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of this Agreement.  As used in this Agreement, the term “Permitted Transferee” shall include: (x) members of a Member’s “Immediate Family” (as hereinafter defined); (y) an entity in which (A) a Member and/or members of a Member’s Immediate Family beneficially own 100% of such entity’s voting and non-voting equity securities, or (B) a Member and/or a member of such Member’s Immediate Family is a general partner and in which such Member and/or members of such Member’s Immediate Family beneficially own 100% of all capital accounts of such entity; and (z) a revocable trust established by a Member during his lifetime for the benefit of such Member or for the exclusive benefit of all or any of such Member’s Immediate Family.  As used in this Agreement, the term “Immediate Family” means, with respect to any Member, a spouse, lineal descendants, the spouse of any lineal descendant, and brothers and sisters (or a trust, all of whose current beneficiaries are members of an Immediate Family of the Member).  In connection with and as a condition to each permitted transfer, the Permitted Transferee shall deliver to the Escrow Agent a stock power signature medallion guaranteed separate from the stock certificate executed by the transferring Member or where applicable, an order of a court of competent jurisdiction, evidencing the transfer of shares to the Permitted Transferee, together with five (5) stock powers signature medallion guaranteed separate from the stock certificate executed in blank by the Permitted Transferee with respect to the shares transferred to the Permitted Transferee.  Upon receipt of such documents, the Escrow Agent shall deliver to Ascend’s transfer agent the original share certificate out of which the assigned shares are to be transferred, together with the executed stock power signature medallion guaranteed separate from the share certificate executed by the transferring stockholder, or a copy of the applicable court order, and shall request that Ascend issue new certificates representing (m) the number of shares, if any, that continue to be owned by the transferring Member, and (n) the number of shares owned by the Permitted Transferee as the result of such transfer.  Ascend, the transferring Member and the Permitted Transferee shall cooperate in all respects with the Escrow Agent in documenting each such transfer and in effectuating the result intended to be accomplished thereby.  During the Escrow Period, no Owner shall pledge or grant a security interest in such Owner’s shares of Ascend Common Stock included in the Escrow Fund or grant a security interest in such Owner’s rights under this Agreement.

  

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2.           (a)           Ascend, acting through the Committee, which has been appointed by Ascend to take all necessary actions and make all decisions on behalf of Ascend with respect to its rights to indemnification under Article VII of the Merger Agreement, may make a claim for indemnification pursuant to the Merger Agreement (“Indemnification Claim”) against the Escrow Fund by giving notice (a “Notice”) to the Representative (with a copy to the Escrow Agent) specifying (i) a brief description of the nature of the Third Party Claim, (ii) the total amount of the actual out-of-pocket Loss or the anticipated potential Loss (including any costs or expenses which have been or may be reasonably incurred in connection therewith), and (iii) whether such Loss may be covered (in whole or in part) under any insurance and the estimated amount of such Loss which may be covered under such insurance.  The Committee also shall deliver to the Escrow Agent (with a copy to the Representative), concurrently with its delivery to the Escrow Agent of the Notice, a certification as to the date on which the Notice was delivered to the Representative.

 

(b)           If the Representative shall give a notice to the Committee (with a copy to the Escrow Agent) (a “Counter Notice”), within 30 days following the date of receipt (as specified in the Committee’s certification) by the Representative of a copy of the Notice, disputing whether the Indemnification Claim is indemnifiable under the Merger Agreement, the Committee and the Representative shall attempt to resolve such dispute by voluntary settlement as provided in paragraph 2(c) below. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Representative within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.

 

(c)           If the Representative delivers a Counter Notice to the Escrow Agent, the Committee and the Representative shall, during the period of 60 days following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which the Counter Notice was given.  If the Committee and the Representative shall reach a settlement with respect to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof.  If the Committee and the Representative shall be unable to reach a settlement with respect to a dispute, such dispute shall be resolved by arbitration pursuant to paragraph 2(d) below.

 

(d)           If the Committee and the Representative cannot resolve a dispute prior to expiration of the 60-day period referred to in paragraph 2(c) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be submitted (and either party may submit such dispute) to a single arbitrator for arbitration before the American Arbitration Association (“AAA”) in accordance with its rules.. The Committee and the Representative shall attempt to agree upon an arbitrator; if they shall be unable to agree upon an arbitrator within 10 days after the dispute is submitted for arbitration, then either the Committee or the Representative, upon written notice to the other, may apply for appointment of such single arbitrator by the AAA in accordance with its rules.  Each party shall pay its own fees and expenses for the arbitration, except that any costs and charges by the AAA and any fees of the arbitrator for his services shall be assessed against the losing party by the arbitrator.  The arbitrator shall render his decision within 90 days after his appointment.  Such decision and award shall be in writing and shall be final and conclusive on the parties, and counterpart copies thereof shall be delivered to each of the parties.  Judgment may be obtained on the decision of the arbitrator so rendered in any court having jurisdiction, and may be enforced in any such court.  If the arbitrator shall fail to render his decision or award within such 90-day period, either the Committee or the Representative may apply to any Delaware state court sitting in New Castle County, Delaware, or any federal court sitting in such county then having jurisdiction, by action, proceeding or otherwise, as may be proper to determine the matter in dispute consistently with the provisions of this Agreement.  The parties consent to the exclusive jurisdiction of the Delaware state courts sitting in New Castle County or any federal court having jurisdiction and sitting in such county for this purpose. The prevailing party (or either party, in the case of a decision or award rendered in part for each party) shall send a copy of the arbitration decision or of any judgment of the court to the Escrow Agent.

 

  

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(e)           As used in this Agreement, “Established Claim” means any (i) Indemnification Claim deemed established pursuant to the last sentence of paragraph 2(b) above, (ii) Indemnification Claim resolved in favor of Ascend by settlement pursuant to paragraph 2(c) above, resulting in a dollar award to Ascend, (iii) Indemnification Claim established by the decision of an arbitrator pursuant to paragraph 2(d) above, resulting in a dollar award to Ascend, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Committee and the Representative have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement; provided that, subject to the terms of the Merger Agreement, notwithstanding anything herein, no Indemnification Claim shall become an Established Claim unless and until the aggregate amount of indemnification Losses (as defined in the Merger Agreement), as set forth in Section 7.4(c) of the Merger Agreement, exceeds $500,000 (the “Deductable”), in which event the amount of such Established Claim(s) in excess of $500,000 shall be payable.

 

(f)           (i)           Promptly after an Indemnification Claim becomes an Established Claim, the Committee and the Representative shall jointly deliver a notice to the Escrow Agent (a “Joint Notice”) directing the Escrow Agent to pay to Ascend, and the Escrow Agent promptly shall pay to Ascend, an amount of Escrow Shares, subject to the provisions of Sections 2(f)(ii) and (iii), equal to (subject to the Deductable described in Section 2(e) above and Section 7.4(c) of the Merger Agreement) the aggregate dollar amount of the Established Claim (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund).

  

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(ii)         Payment of an Established Claim shall be made from Escrow Shares pro rata from the accounts maintained on behalf of each Owner.  For purposes of each payment, such shares shall be valued at the “Fair Market Value” (as defined below).  However, in no event shall the Escrow Agent be required to calculate Fair Market Value or make a determination of the number of shares to be delivered to Ascend in satisfaction of any Established Claim; rather, such calculation shall be included in and made part of the Joint Notice.  The Escrow Agent shall transfer to Ascend out of the Escrow Fund that number of shares of Ascend Common Stock necessary to satisfy each Established Claim, as set out in the Joint Notice.  Any dispute between the Committee and the Representative concerning the calculation of Fair Market Value or the number of shares necessary to satisfy any Established Claim, or any other dispute regarding a Joint Notice, shall be resolved between the Committee and the Representative in accordance with the procedures specified in paragraph 2(d) above, and shall not involve the Escrow Agent.   Each transfer of shares in satisfaction of an Established Claim shall be made by the Escrow Agent delivering to Ascend one or more stock certificates held in each Owner’s account evidencing not less than such Owner’s pro rata portion of the aggregate number of shares specified in the Joint Notice, together with stock powers signature medallion guaranteed separate from the stock certificate executed in blank by such Owner and completed by the Escrow Agent in accordance with instructions included in the Joint Notice.  Upon receipt of the stock certificates and stock powers, Ascend shall deliver to the Escrow Agent new certificates representing the number of shares owned by each Owner after such payment.  The parties hereto (other than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in shares of Ascend Common Stock may be made notwithstanding any other agreements restricting or limiting the ability of any Owner to sell any shares of Ascend Common Stock or otherwise.  The Committee and the Representative shall be required to exercise utmost good faith in all matters relating to the preparation and delivery of each Joint Notice.  As used in this Section 2, “Fair Market Value” means the average reported closing price for the shares of Ascend Common Stock for the ten trading days ending on the last trading day prior to (x) the day the Established Claim is paid with respect to Indemnification Claims paid on or before the fifth Business Day after Ascend files its Annual Report on Form 10-K for the fiscal year ending December 31, 2011 (the “Escrow Termination Date”), and (y) the Escrow Termination Date with respect to shares constituting the Pending Claims Reserve (as hereinafter defined) on the Escrow Termination Date.

 

(iii)        Notwithstanding anything herein to the contrary, at such time as an Indemnification Claim has become an Established Claim, each Owner shall have the right to substitute for his, her or its Escrow Shares that otherwise would be paid in satisfaction of such claim (the “Claim Shares”) with cash in an amount equal to the Fair Market Value of the Claim Shares (“Substituted Cash”).  In such event (i) the Joint Notice shall include a statement describing the substitution of Substituted Cash for the Claim Shares, and (ii) substantially contemporaneously with the delivery of such Joint Notice, the Representative shall cause currently available funds to be delivered to the Escrow Agent in an amount equal to the Substituted Cash.  Upon receipt of such Joint Notice and Substituted Cash, the Escrow Agent shall (y) in payment of the Established Claim described in the Joint Notice, deliver the Substituted Cash to Ascend in lieu of the Claim Shares, and (z) cause the Claim Shares to be returned to the Representative on behalf of the applicable Owner.

  

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3.           On the first Business Day after the Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver to each Owner share certificates representing the shares of Ascend Common Stock then in such Owner’s account in the Escrow Fund, unless at such time there are any Indemnification Claims with respect to which Notices have been received but which have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in either case, “Pending Claims”), and which, if resolved or finally determined in favor of Ascend, would result in a payment to Ascend, in which case the Escrow Agent shall retain, and the total amount of such distributions to such Owner shall be reduced by, the “Pending Claims Reserve” (as hereafter defined).  The Committee shall certify to the Escrow Agent the number of shares of Ascend Common Stock to be retained therefor.  Thereafter, if any Pending Claim becomes an Established Claim, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to Ascend an amount in respect thereof determined in accordance with Section 2(f) above, and to deliver to each Owner shares of Ascend Common Stock then in such owner’s account in the Escrow Fund, all as specified in a Joint Notice. If any Pending Claim is resolved against Ascend, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to each Owner the amount by which the remaining portion of his account in the Escrow Fund exceeds the then Pending Claims Reserve.  Upon resolution of all Pending Claims, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to such Owner the remaining portion of his or her account in the Escrow Fund.  As used in this Section 3, the “Pending Claims Reserve” shall mean, at the time any such determination is made, that number of shares of Ascend Common Stock in the Escrow Fund having a Fair Market Value equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims (as shown in the Notices of such Claims) and “Fair Market Value” means the average reported closing price for the shares of Ascend Common Stock for the ten trading days ending on the last trading day prior to the day of such determination.

 

4.           The Escrow Agent, the Committee and the Representative shall cooperate in all respects with one another in the calculation of any amounts determined to be payable to Ascend and the Owners in accordance with this Agreement and in implementing the procedures necessary to effect such payments.

 

5.           (a)           The Escrow Agent undertakes to perform only such duties as are expressly set forth herein.  It is understood that the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.

 

(b)           The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons.  The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

 

(c)           The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Ascend pursuant to the terms of this Agreement or, if such notice is disputed by the Committee or the Representative, the settlement with respect to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to Ascend the amount specified in such notice, if any, and the Escrow Agent shall have no duty to determine the validity, authenticity or enforceability of any specification or certification made in such notice.

  

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(d)           The Escrow Agent shall not be liable for any action taken by it in good faith, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification under Section 5(f), below, for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

(e)           The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by giving the other parties hereto written notice of such resignation.  Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Fund to a successor escrow agent appointed jointly by the Committee and the Representative.  If no new escrow agent is so appointed within the sixty (60) day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Fund with any court it reasonably deems appropriate.

 

(f)           Indemnification of Escrow Agent.

 

(i)           From and at all times after the date of this Agreement, Ascend shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless the Escrow Agent and each director, officer, employee, attorney, agent and affiliate of the Escrow Agent (collectively, the “Indemnified Parties”) against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable fees, costs and expenses of one outside counsel (but not internal counsel)) (collectively, “Losses”) actually incurred by any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including, without limitation, Ascend, Andover or the Members, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for (i) any Losses to the extent they are finally determined by a court of competent jurisdiction, subject to no further appeal, to be attributable to the gross negligence or willful misconduct of such Indemnified Party or (ii) any settlements entered into by an Indemnified Party without Ascend’s written consent which shall not be unreasonably withheld.

  

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(ii)           If any such action or claim shall be brought or asserted against any Indemnified Party, such Indemnified Party shall promptly notify the Representative, Ascend and the Committee in writing, and Ascend shall assume the defense thereof, including the employment of counsel and the payment of all reasonable expenses.  Such Indemnified Party shall, in its sole discretion, have the right to employ separate counsel (who may be selected by such Indemnified Party in its sole discretion) in any such action and to participate in the defense thereof, and the reasonable fees and expenses of such counsel shall be paid by such Indemnified Party, except that Ascend shall be required to pay such reasonable fees and expenses if (i) Ascend agrees to pay such reasonable fees and expenses, (ii) Ascend shall fail to assume the defense of such action or proceeding or shall fail, in the reasonable determination of such Indemnified Party, to employ counsel satisfactory to the Indemnified Party in any such action or proceeding, (iii) Ascend, Andover, or the Members are the plaintiff in any such action or proceeding or (iv) the named or potential parties to any such action or proceeding (including any potentially impleaded parties) include both the Indemnified Party and any of Ascend, Andover and/or the Members, and the Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to Ascend, the Members or Andover.  All such reasonable fees and expenses payable by Ascend pursuant to the immediately preceding sentence shall be paid from time to time as incurred, both in advance of and after the final disposition of such action or claim.  The Losses of the Indemnified Parties shall be payable by Ascend.  The obligations of Ascend under this Section 5(f) shall survive any termination of this Agreement and the resignation or removal of the Escrow Agent and shall be independent of any obligation of the Escrow Agent.

 

(g)           The Escrow Agent shall be entitled to reasonable compensation from Ascend for all services rendered by it hereunder as set forth on Schedule 5(g) hereto.  The Escrow Agent shall also be entitled to reimbursement from Ascend for all reasonable expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all reasonable counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

 

(h)           From time to time on and after the date hereof, the Committee and the Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

6.           This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.

 

7.           This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, assigns and legal representatives and shall be governed by and construed in accordance with the law of New York applicable to contracts made and to be performed therein.  This Agreement cannot be changed or terminated except by a writing signed by the Committee, the Representative and the Escrow Agent.

 

  

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8.           All disputes arising under this Agreement between the Committee and the Members, including a dispute arising from a party’s failure or refusal to sign a Joint Notice or to deliver any notice or other document required hereunder, shall be submitted to arbitration in the same manner as disputes under the Merger Agreement are to be arbitrated pursuant to Section 10.8 thereof. The Committee and the Members each hereby consent to the exclusive jurisdiction of the federal and state courts sitting in New York County, New York, with respect to any claim or controversy arising out of this Agreement. Service of process in any action or proceeding brought against the Committee or the Members in respect of any such claim or controversy may be made upon it by registered mail, postage prepaid, return receipt requested, at the address specified in Section 9, with copies delivered by nationally recognized overnight carrier to Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New York, N.Y. 10174-1901, Attention:  David Alan Miller, Esq., and to Greenberg Traurig LLP, 1900 University Ave., 5th Floor, East Palo Alto, CA 94303, Attention:   Todd Rumberger, Esq.

 

9.           All notices and other communications under this Agreement shall be in writing and shall be deemed given if given by hand or delivered by nationally recognized overnight carrier, or if given by telecopier and confirmed by mail (registered or certified mail, postage prepaid, return receipt requested), to the respective parties as follows:

	  	
A.

	
If to the Committee, to it at:

	  	  	  
	  	  	
Jonathan Ledecky

	  	  	
970 West Broadway, PMB 402

	  	  	
Jackson, Wyoming 83001

	  	  	
Telecopier No.: __________

	  	  	  
	  	  	
with a copy to:

	  	  	  
	  	  	
Graubard Miller

	  	  	
The Chrysler Building

	  	  	
405 Lexington Avenue

	  	  	
New York, New York  10174-1901

	  	  	
Attention:  David Alan Miller, Esq.

	  	  	
Telecopier No.: 212-818-8881

	  	  	  
	  	
B.

	
If to the Representative, to it at:

	  	  	  
	  	  	
Craig dos Santos

	  	  	  
	  	  	
Telecopier: _________

	  	  	  
	  	  	
with a copy to:

	  	  	  
	  	  	
Greenberg Traurig LLP

	  	  	
1900 University Ave., 5th Floor

	  	  	
East Palo Alto, CA 94303

	  	  	
Attention:   Todd Rumberger, Esq.

	  	  	
Telephone: 650-814-9367

	 	 	 
Telecopy: 650-328-8508

 

  

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C.

	
If to the Escrow Agent, to it at:

	  	  	  
	  	  	
Continental Stock Transfer & Trust Company

	  	  	
17 Battery Place

	  	  	
New York, New York 10004

	  	  	
Attention: Mark Zimkind

	  	  	
Telecopier No.: 212-509-5150

	  	  	  
	  	
D.

	
If to Ascend, to it at:

	  	  	  
	  	  	
Ascend Acquisition Corp.

	  	  	
970 West Broadway, PMB 402

	  	  	
Jackson, Wyoming 83001

	  	  	
Telecopier No.: ______________

	  	  	  
	  	  	
with a copy to:

	  	  	  
	  	  	
Graubard Miller

	  	  	
The Chrysler Building

	  	  	
405 Lexington Avenue

	  	  	
New York, New York  10174-1901

	  	  	
Attention:  David Alan Miller, Esq.

	  	  	
Telecopier No.: 212-818-8881

 

or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.

 

10.         (a)           All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being delivered and, if applicable, shall clearly specify the aggregate dollar amount due and payable to Ascend.

 

(b)           This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.

 

(c)           When reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise specified.

  

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[Signatures are on following page]

  

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.

 

	  	
ASCEND ACQUISITION CORP.

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  
	  	
THE REPRESENTATIVE:

	 	 
	  	  
	  	
Craig Dos Santos

	  	  
	  	
COMMITTEE:

	 	 
	  	  
	  	
Jonathan J. Ledecky

	  	  
	  	  
	  	
ESCROW AGENT:

	 	 
	  	
CONTINENTAL STOCK TRANSFER &

	  	
TRUST COMPANY

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  

  

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Schedule 1(a)

ESCROW SHARES ALLOCATION

	
Name

	  	
Address

	  	
Escrow

	  	  	  	  	  
	  	  	  	  	  
	 	 	 	 	 
	
Total

	  	  	  	  

  

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Schedule 5(g)

	
Amount

	  	
Description

	
$___ per month

	  	
From the date hereof until the termination of the Escrow Agent’s duties pursuant to Section 1(b).

  

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