FUNDS ESCROW AGREEMENT
EXHIBIT
10.3
This
Agreement is dated as of the 5th day of December, 2007 among Rim
Semiconductor Company, a Utah corporation (the “Company”), the Subscribers
identified on Schedule A hereto (each a “Subscriber” and collectively
“Subscribers”), and Grushko & Xxxxxxx, P.C. (the “Escrow
Agent”):
W I T N E S S E T H:
WHEREAS,
the Company and Subscribers have entered into a Subscription Agreement calling
for the sale by the Company to the Subscriber of secured promissory notes
(“Notes”) and Warrants for an aggregate Purchase Price of up to $6,000,000 in
the amounts set forth on Schedule A hereto; and
WHEREAS,
the parties hereto require the Company to deliver the Notes and Warrants against
payment therefor, with such Notes, Warrants and the Escrowed Funds to be
delivered to the Escrow Agent, along with the other documents, instruments
and
payments hereinafter described, to be held in escrow and released by the Escrow
Agent in accordance with the terms and conditions of this Agreement;
and
WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and
conditions of this Agreement;
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
INTERPRETATION
1.1. Definitions. Capitalized
terms used and not otherwise defined herein that are defined in the Subscription
Agreement shall have the meanings given to such terms in the Subscription
Agreement. Whenever used in this Agreement, the following terms shall
have the following respective meanings:
§ “Agreement”
means this Agreement and all amendments made hereto and thereto by written
agreement between the parties;
§ “Closing
Date” shall have the meaning set forth in Section 1 of the Subscription
Agreement;
§ “Collateral
Agent Agreement” shall have the meaning set forth in Section 3 of the
Subscription Agreement;
§ “Escrowed
Payment” means an aggregate cash payment of up to $6,000,000 which is the
Purchase Price;
§ “Finder”
shall have the meaning set forth in Section 8(a) of the Subscription
Agreement;
§ “Finder’s
Fees” shall have the meaning set forth in Section 8(a) of the Subscription
Agreement;
1
§ “Finder’s
Warrants” shall have the meaning set forth in Section 8(a) to the Subscription
Agreement;
§ “Guaranty”
shall have the meaning set forth in Section 3 of the Subscription
Agreement;
§ “Legal
Fees” shall have the meaning set forth in Section 8(b) of the Subscription
Agreement;
§ “Legal
Opinion” means the original signed legal opinion referred to in Section 6 of the
Subscription Agreement;
§ “Notes”
shall have the meaning set forth in the Subscription Agreement;
§ “Principal
Amount” shall mean up to $6,666,666.67;
§ “Purchase
Price” shall mean up to $6,000,000;
§ “Security
Agreement” shall have the meaning set forth in Section 3 of the Subscription
Agreement;
§ “Subscription
Agreement” means the Subscription Agreement (and the exhibits and schedules
thereto) entered into or to be entered into by the Company and Subscribers
in
reference to the sale and purchase of the Notes and Warrants;
§ “Warrants”
shall have the meaning set forth in Section 3 of the Subscription
Agreement;
§ Collectively, Finder’s
Fee, Finder’s Warrants, Collateral Agent Agreement, Guaranty, Legal Opinion,
Notes, Security Agreement, the executed Subscription Agreement, and
Warrants are referred to as “Company Documents”; and
§ Collectively,
the Escrowed Payment and the Subscriber executed Subscription Agreement,
Security Agreement and Collateral Agent Agreement are referred to as
“Subscriber Documents”.
1.2. Entire
Agreement. This Agreement along with the Company Documents and
the Subscriber Documents constitute the entire agreement between the parties
hereto pertaining to the Company Documents and Subscriber Documents and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. There are
no warranties, representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set forth
in
this Agreement, the Company Documents and the Subscriber Documents.
1.3. Extended
Meanings. In this Agreement words importing the singular number
include the plural and vice versa; words importing the masculine gender include
the feminine and neuter genders. The word “person” includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
2
1.4. Waivers
and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any right, power or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5. Headings. The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.6. Law
Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by
either party against the other concerning the transactions contemplated by
this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Both parties and the
individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial
by
jury. The prevailing party (which shall be the party which receives
an award most closely resembling the remedy or action sought) shall be entitled
to recover from the other party its reasonable attorney’s fees and
costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
1.7. Specific
Enforcement, Consent to Jurisdiction. The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injuction or injunctions to prevent
or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity. Subject
to Section 1.6 hereof, each of the Company and Subscriber hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that
it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue
of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1. Company
Deliveries. On or before the Closing Date, the Company shall
deliver the Company Documents to the Escrow Agent.
2.2. Subscriber
Deliveries. On or before the Closing Date, each Subscriber shall
deliver to the Escrow Agent such Subscriber’s portion of the Purchase Price, the
executed Subscription Agreement, Security Agreement and Collateral Agent
Agreement. The Escrowed Payment will be delivered pursuant to the
following wire transfer instructions:
3
Citibank,
N.A.
0000
0xx
Xxxxxx
Xxx
Xxxx,
XX 00000, XXX
ABA
Number: 0210-00089
For
Credit to: Grushko & Xxxxxxx, XXXX Trust Account
Account
Number: 00000000
2.3. Intention
to Create Escrow Over Company Documents and Subscriber
Documents. The Subscriber and Company intend that the Company
Documents and Subscriber Documents shall be held in escrow by the Escrow Agent
pursuant to this Agreement for their benefit as set forth herein.
2.4. Escrow
Agent to Deliver Company Documents and Subscriber Documents. The
Escrow Agent shall hold and release the Company Documents and Subscriber
Documents only in accordance with the terms and conditions of this
Agreement.
ARTICLE
III
RELEASE
OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1. Release
of Escrow. Subject to the provisions of Section 4.2, the Escrow
Agent shall release the Company Documents and Subscriber Documents as
follows:
(a) On
the Closing Date, the Escrow Agent will simultaneously release the Company
Documents to the Subscriber and release the Subscriber Documents to the Company
except that (i) the Finder’s Fee and Finder’s Warrants will be released to the
Finder; (ii) Legal Fees will be released to the Subscriber’s attorneys, and
(iii) the Security Agreement, Guaranty and Collateral Agent Agreement will
also
be released to the Collateral Agent.
(b) All
funds to be delivered to the Company shall be delivered pursuant to the wire
instructions to be provided in writing by the Company to the Escrow
Agent.
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
(“Joint Instructions”) signed by the Company and the Subscriber, it shall
deliver the Company Documents and Subscriber Documents in accordance with the
terms of the Joint Instructions.
(d) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a “Court
Order”), the Escrow Agent shall deliver the Company Documents and Subscriber
Documents in accordance with the Court Order. Any Court Order shall
be accompanied by an opinion of counsel for the party presenting the Court
Order
to the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent)
to
the effect that the court issuing the Court Order has competent jurisdiction
and
that the Court Order is final and non-appealable.
3.2. Acknowledgement
of Company and Subscriber; Disputes. The Company and the
Subscriber acknowledge that the only terms and conditions upon which the Company
Documents and Subscriber Documents are to be released are set forth in Sections
3 and 4 of this Agreement. The Company and the Subscriber reaffirm
their agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Company Documents and Subscriber
Documents. Any dispute with respect to the release of the Company
Documents and Subscriber Documents shall be resolved pursuant to Section 4.2
or
by agreement between the Company and Subscriber.
4
ARTICLE
IV
CONCERNING
THE ESCROW AGENT
4.1. Duties
and Responsibilities of the Escrow Agent. The Escrow Agent’s
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The
Subscriber and Company acknowledge and agree that the Escrow Agent (i) shall
not
be responsible for or bound by, and shall not be required to inquire into
whether either the Subscriber or Company is entitled to receipt of the Company
Documents and Subscriber Documents pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties
as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
may rely on and shall be protected in acting or refraining from acting upon
any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to
be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any
fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full
and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.
(b) The
Subscriber and Company acknowledge that the Escrow Agent is acting solely as
a
stakeholder at their request and that the Escrow Agent shall not be liable
for
any action taken by Escrow Agent in good faith and believed by Escrow Agent
to
be authorized or within the rights or powers conferred upon Escrow Agent by
this
Agreement. The Subscriber and Company, jointly and severally, agree
to indemnify and hold harmless the Escrow Agent and any of Escrow Agent’s
partners, employees, agents and representatives for any action taken or omitted
to be taken by Escrow Agent or any of them hereunder, including the fees of
outside counsel and other costs and expenses of defending itself against any
claim or liability under this Agreement, except in the case of gross negligence
or willful misconduct on Escrow Agent’s part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to
the Subscriber and Company under this Agreement and to no other
person.
(c) The
Subscriber and Company jointly and severally agree to reimburse the Escrow
Agent
for outside counsel fees, to the extent authorized hereunder and incurred in
connection with the performance of its duties and responsibilities
hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Subscriber and the
Company. Prior to the effective date of the resignation as specified
in such notice, the Subscriber and Company will issue to the Escrow Agent a
Joint Instruction authorizing delivery of the Company Documents and Subscriber
Documents to a substitute Escrow Agent selected by the Subscriber and
Company. If no successor Escrow Agent is named by the Subscriber and
Company, the Escrow Agent may apply to a court of competent jurisdiction in
the
State of New York for appointment of a successor Escrow Agent, and to deposit
the Company Documents and Subscriber Documents with the clerk of any such
court.
5
(e) The
Escrow Agent does not have and will not have any interest in the Company
Documents and Subscriber Documents, but is serving only as escrow agent, having
only possession thereof. The Escrow Agent shall not be liable for any
loss resulting from the making or retention of any investment in accordance
with
this Escrow Agreement.
(f) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(g) The
Escrow Agent shall be permitted to act as counsel for the Subscriber in any
dispute as to the disposition of the Company Documents and Subscriber Documents,
in any other dispute between the Subscriber and Company, whether or not the
Escrow Agent is then holding the Company Documents and Subscriber Documents
and
continues to act as the Escrow Agent hereunder.
(h) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent
or the termination of this Agreement.
4.2. Dispute
Resolution: Judgments. Resolution of disputes arising under this
Agreement shall be subject to the following terms and conditions:
(a) If
any dispute shall arise with respect to the delivery, ownership, right of
possession or disposition of the Company Documents and Subscriber Documents,
or
if the Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone,
to
(i) refrain from taking any action other than to continue to hold the Company
Documents and Subscriber Documents pending receipt of a Joint Instruction from
the Subscriber and Company, or (ii) deposit the Company Documents and Subscriber
Documents with any court of competent jurisdiction in the State of New York,
in
which event the Escrow Agent shall give written notice thereof to the Subscriber
and the Company and shall thereupon be relieved and discharged from all further
obligations pursuant to this Agreement. The Escrow Agent may, but
shall be under no duty to, institute or defend any legal proceedings which
relate to the Company Documents and Subscriber Documents. The Escrow
Agent shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order,
the Escrow Agent shall not be liable to the Subscriber and Company or to any
other person, firm, corporation or entity by reason of such
compliance.
ARTICLE
V
GENERAL
MATTERS
5.1. Termination. This
escrow shall terminate upon the release of all of the Company Documents and
Subscriber Documents or at any time upon the agreement in writing of the
Subscriber and Company.
6
5.2. Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
(a) If
to the Company, to:
Rim
Semiconductor Company
000
XX
000xx Xxxxxx,
Xxxxx 000
Xxxxxxxx,
Xxxxxx 00000
Attn:Xxxx
Xxxxx, CEO
Fax:
(000) 000-0000
With
a
copy, which shall not constitute notice, by telecopier only to:
Xxxxxxxx
X. Xxxxxxx, Esq.
Munck
Xxxxxx Xxxxxx, P.C.
000
Xxxxxx Xxxxx
00000
Xxxx Xxxx
Xxxxxx,
XX 00000
Fax:
(000) 000-0000
(b) If
to the Subscribers, to: the addresses and fax numbers listed on Schedule A
hereto
(c) If
to the Finder, to: the address and fax number listed on Schedule 8 to the
Subscription Agreement
(d) If
to the Escrow Agent, to:
Grushko
& Xxxxxxx, P.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
000-000-0000
or
to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
7
5.3. Interest. The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith. In the event the
Escrowed Payment is deposited in an interest bearing account, each Subscriber
shall be entitled to receive its pro rata portion of any
accrued interest thereon, but only if the Escrow Agent receives from such
Subscriber the Subscriber’s United States taxpayer identification number and
other requested information and forms.
5.4. Assignment;
Binding Agreement. Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall enure to
the benefit of and be binding upon the parties hereto and their respective
legal
representatives, successors and assigns.
5.5. Invalidity. In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall
be
enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
8
5.7. Agreement. Each
of the undersigned states that he has read the foregoing Funds Escrow Agreement
and understands and agrees to it.
|
RIM
SEMICONDUCTOR COMPANY
the
“Company”
By:_______________________________________
Name
of Subscriber (Print):
_________________________________________
By:_______________________________________
Print
Name of Signator:________________________
ESCROW
AGENT:
__________________________________________
GRUSHKO
& XXXXXXX, P.C.
|
9
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
|
SUBSCRIBERS
|
NOTE
PRINCIPAL
|
PURCHASE
PRICE
|
CLASS
A
WARRANTS
|
|
XXXXXX
XXXXX FAMILY PARTNERSHIP LP
00000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxx
Xx Xxxxxxx, XX 00000
Fax:
(000) 000-0000
|
$277,777.77
|
$250,000.00
|
|
|
BURSTEINE
& LINDSAY SECURITY XXXX.
000
Xxxxxxxxxxxxx Xxx
XX
0000 Xxxxxx, Xxxxxxxxxxx
Fax:
0000 000-0000
|
$111,111.11
|
$100,000.00
|
|
|
CMS
CAPITAL
0000
Xxx Xxxx Xxxx. #000
Xxxxxxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
$333,333.33
|
$300,000.00
|
|
|
CONGREGATION
XXXXXX XXXXX
000
Xxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
$194,444.44
|
$175,000.00
|
|
|
BRIO
CAPITAL L.P.
000
Xxxx 00xx
Xxxxxx, Xxxxx 00X
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
$166,666.67
|
$150,000.00
|
|
|
XXXX
X. XXXX
000
Xxxx Xxxxxx Xxxxx #000
Xxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
$277,777.77
|
$250,000.00
|
|
|
ALPHA
CAPITAL ANSTALT
Pradafant
7 Furstentums
Vaduz,
Lichtenstein
Fax:
000 000 000-0000
|
$333,333.33
|
$300,000.00
|
|
|
BRISTOL
INVESTMENT FUND, LTD.
c/o
Caledonian Fund Services Limited
69
Xx. Xxx’x Drive
Xxxxxx
Town, Grand Cayman
Cayman
Islands
Fax:
(000) 000-0000
|
$333,333.33
|
$300,000.00
|
|
|
DOUBLE
U MASTER FUND, L.P.
Xxxxxxx
Xxxxx,
Xxxxxxxxxx
Xxxxx, Xxxx Xxxx
Xxxxxxx,
BVI
Fax:
(000) 000-0000
|
$611,111.11
|
$550,000.00
(surrender
of bridge note)
|
|
|
WHALEHAVEN
CAPITAL FUND LIMITED
c/o
FWS Capital Ltd.
0xx
Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx,
Xxxxxxx XX00
Fax:
(000) 000-0000
|
$333,333.33
|
$300,000.00
|
|
|
HARBORVIEW
MASTER FUND LP
2nd
Floor,
Harbour House, Waterfront Drive
Road
Town, Tortola, British Virgin Islands
Fax:
000-000-0000
|
$277,777.77
|
$250,000.00
|
|
|
MONARCH
CAPITAL FUND LTD.
0xx
Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxxxxx Drive
Road
Town, Tortola, British Virgin Islands
Fax:
000-000-0000
|
$277,777.77
|
$250,000.00
|
|
|
TOTALS
|
$3,527,777.73
|
$3,175,000.00
|
10
