Exhibit 7.1
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ESCROW AGREEMENT
September 15, 1999
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000,
as Escrow Agent
Reference is made to (a) that certain agreement, dated as of
October 29, 1998 by and between Xxxx Xxxxxxx Auctions, Inc. (the
"Company") and Afinsa Bienes Tangibles, S.A. ("Afinsa") pursuant
to which Afinsa purchased 200,000 shares of common stock of the
Company, (b) that certain agreement, dated as of October 29, 1998
by and between the Company and Xxxx X. Xxxxxxx ("Xxxxxxx")
pursuant to which Xxxxxxx purchased 200,000 shares of common
stock of the Company and (c) that certain agreement, dated as of
October 29, 1998 by and between the Company and Xxxx Xxxxxxx
("Xxxxxxx") pursuant to which Xxxxxxx purchased 200,000 shares of
common stock of the Company.
1. Establishment of Escrow Fund. The Company and Afinsa,
Xxxxxxx and Xxxxxxx (collectively, the "Purchasers") hereby
appoint Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP as the escrow agent
(the "Escrow Agent") to hold in escrow up to an aggregate of
600,000 shares of common stock of the Company (the "Initial
Escrowed Shares" and, together with (i) any dividends or
distributions made on such shares by the Company in shares of the
common stock, and (ii) any shares of common stock into which such
shares may be split, subdivided or reclassified, the "Escrowed
Shares"). The Initial Escrowed Shares, in the form of three
separate stock certificates each representing 200,000 shares of
common stock of the Company issued to each of the Purchasers,
have this day been deposited with the Escrow Agent, receipt of
which the Escrow Agent hereby acknowledges. Escrowed Shares
other than the Initial Escrowed Shares may from time to time
after the date hereof be deposited with the Escrow Agent and
shall, from and after such deposit, be subject to all of the
terms of this Agreement. Unless and until the Escrowed Shares
are returned to the Purchasers pursuant to the terms of this
Agreement, the Purchasers shall not be entitled to vote or sell,
pledge, convey or otherwise transfer the Escrowed Shares. The
Escrowed Shares shall be held in escrow hereunder until the
earlier to occur of (i) the date on which the shareholders of the
Company affirmatively approve and ratify, at a special meeting of
shareholders to be held on or about October 7, 1999 (the "Special
Meeting"), the private placement of 600,000 shares of the
Company's common stock to the Purchasers pursuant to the
investment agreements referred to above (the "Private Placement")
and (ii) the cancellation by the Company of the Escrowed Shares
and the issuance to the Purchasers of convertible preferred stock
of the Company (the "Expiration Date"), in each case as set forth
in Section 2 below.
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2. Release of Escrow Fund. The Escrow Agent shall hold
and deliver the Escrowed Shares as follows:
(a) Unless the Escrow Agrent shall have received the
notice referred to in Section 2(b) below by 5:00 pm, Eastern
time, on the date of the Special Meeting (in which case Section
2(b) shall govern), the Escrow Agent shall, without any further
action on the part of any party hereto, deliver to each of the
Purchasers his or its respective Escrowed Shares within 24 hours
thereafter.
(b) In the event the shareholders of the Company do
not approve and ratify the Private Placement at the Special
Meeting, (i) the Company shall, by the close of business on the
date of the Special Meeting deliver to the Escrow Agent written
notice (with a copy to each of the Purchasers) instructing the
Escrow Agent to deliver the Escrowed Shares to the Company and
(ii) upon receipt of the notice set forth in paragraph 2(b)(i)
above, the Escrow Agent shall deliver to the Company the Escrowed
Shares, in accordance with the instructions in such notice
(c) In the event that any dispute arises as to whether
the Company is required to execute and deliver a release notice
to the Escrow Agent pursuant to the terms of this Agreement, all
reasonable expenses incurred by the prevailing party in such
dispute, including reasonable attorneys' fees and disbursements,
shall be paid by the other party.
(d) The Company shall notify the Escrow Agent of the
date of the Special Meeting not less than 10 days prior thereto.
3. The Escrow Agent. Acceptance by the Escrow Agent of
its duties under this Agreement is subject to the following terms
and conditions, which the parties to this Agreement hereby agree
shall govern and control the rights, duties and immunities of the
Escrow Agent:
(a) The duties and obligations of the Escrow Agent
shall be determined solely by the express provisions of this
Agreement (except and to the extent otherwise expressly provided
herein) and the Escrow Agent shall not be bound by the provisions
of any agreement between the Company and any of the Purchasers or
any third party;
(b) Notwithstanding anything to the contrary contained
herein, the duties and obligations of the Escrow Agent hereunder
shall extend only to the delivery of the Escrowed Shares to the
Purchasers or the Company, as the case may be, pursuant to
Section 2 above and such duties and obligations will terminate
upon the Expiration Date;
(c) The Escrow Agent shall not be responsible for any
failure or inability of the parties to this Agreement, or of
anyone else, to deliver shares or other property to the Escrow
Agent or otherwise to honor any of the provisions of this
Agreement;
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(d) The out-of-pocket fees and expenses of the Escrow
Agent in administering this Agreement shall be borne by the
Company. The Company shall indemnify the Escrow Agent and each
of its partners, employees and agents for, and hold it harmless
against any loss, liability or expense, including but not limited
to reasonable attorneys' fees and expenses arising out of or in
connection with its acceptance of, or the performance of its
duties and obligations under this Agreement (including, but not
limited to, any action taken or omitted by the Escrow Agent in
connection with this Agreement or any action allegedly so taken
or omitted) or by reason of, or as a result of, the Escrow
Agent's compliance with the instructions by the Company, except
with respect to any loss, liability or expense which shall be
finally adjudicated to be the result of gross negligence or
willful misconduct on the party of the Escrow Agents, it
partners, employees or agents;
(e) The Escrow Agent shall be fully protected in
acting on and relying upon any written notice, direction,
request, waiver, consent, receipt or other paper or document
which the Escrow Agent in good faith believes to be genuine and
to have been signed or presented by the proper party or parties
from time to time;
(f) The Escrow Agent shall not be liable for any error
of judgment, or for any act done or step taken or omitted by it
in good faith or for any mistake in fact or law, or for anything
which it may do or refrain from doing in connection herewith,
except its own willful misconduct or gross negligence;
(g) The Escrow Agent may seek the advice of legal
counsel in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or its
duties hereunder, and it shall incur no liability and shall be
fully protected in respect of any action taken, omitted or
suffered by it in good faith in accordance with the written
opinion of such counsel; and
(h) In the event of ambiguity in the provisions
governing the Escrowed Shares or uncertainty on the part of the
Escrow Agent as to how to proceed, such that the Escrow Agent, in
its sole and absolute judgment, deems it necessary for its
protection so to do, the Escrow Agent may refrain from taking any
action other than to retain custody of the Escrowed Shares
deposited hereunder until it shall have received written
instructions signed by the Company in accordance with the
provisions of this Agreement.
4. Successor Agent. (a) The Escrow Agent may resign at
any time by giving thirty (30) days' written notice thereof to
the Company. Within thirty (30) days after receiving such
notice, the Company shall appoint a successor escrow agent, who
shall be reasonably acceptable to the Purchasers (the "Successor
Escrow Agent") at which time the Escrow Agent shall deliver the
Escrowed Shares to the Successor Escrow Agent. After appointment
of the Successor Escrow Agent and delivery of the Escrowed Shares
by the Escrow Agent, the Escrow Agent shall have no further
duties or responsibilities in connection herewith.
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(b) The Company may remove the Escrow Agent upon
written notice to the Escrow Agent stating such removal and
designating a Successor Escrow Agent, and, upon delivery of the
Escrowed Shares to the Successor Escrow Agent, the Escrow Agent
shall thereupon be discharged from all obligations under this
Agreement and shall have no further duties or responsibilities in
connection herewith.
(c) If after thirty (30) days from the date of
delivery of its written notice of intent to resign, or of the
Company's notice of removal, the Escrow Agent has not received a
written designation of a Successor Escrow Agent, the Escrow
Agent's sole responsibility shall be in its sole discretion
either to retain custody of the Escrowed Shares, or to apply to a
court of competent jurisdiction for appointment of a Successor
Escrow Agent and after such appointment to have no further duties
or responsibilities in connection herewith.
5. Miscellaneous. (a) This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts made and to be
entirely performed therein. Any controversy, claim, or dispute
arising out of or relating to this Agreement, or a breach hereof,
shall be finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association as supplemented herein, and judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. With respect to any such arbitration: (i)
there shall be one neutral arbitrator, who shall be a former
federal or state court judge; (ii) the arbitration shall take
place in New York County, New York; (iii) the Company and the
Escrow Agent each hereby irrevocably submits to the jurisdiction
of any federal or state court located therein solely for purposes
of compelling arbitration pursuant to this Section or to enforce
any interim or final award entered by the arbitrator; (iv) the
Company and the Escrow Agent each hereby irrevocably waives any
objection which it may now or hereafter have to be the venue of
such proceeding, as well as any claim that federal and state
courts located in New York County, New York are not a convenient
forum for such proceeding.
(b) This Agreement may not be assigned by any party
hereto without the written consent of the other parties. This
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors
and permitted assigns. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto
and their respective heirs, personal representatives, legatees,
successors and permitted assigns.
(c) Any notice or consent hereunder shall be in
writing and hand delivered or sent by registered or certified
mail, return receipt requested, or by Federal Express or other
similar courier service or by facsimile, as follows:
if to the Company:
Xxxx Xxxxxxx Auctions, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attn: President and Chief Executive Officer
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if to Afinsa:
Afinsa Bienes Tangibles, X.X.
Xxxxxxx 00
00000 Xxxxxx, Xxxxx
Fax: 000-00-00-000-0000
Attn: Deputy General Manager
if to Xxxxxxx:
Xxxx X. Xxxxxxx
x/x Xxx Xxxxxxx Xxxxxxx
Xxxxxx, XX00XX Xxxxxxx
Fax: 000-00-000-000-0000
if to Xxxxxxx:
Xxxx Xxxxxxx Auctions, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
if to the Escrow Agent:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
or at such other address (or to such other person's attention) as
shall be specified by like notice. Any notice delivered by hand,
by facsimile, by mail or by Federal Express or similar courier
service, shall be deemed received on the date such notice is
actually received by the recipient.
(d) For the convenience of the parties, any number of
counterparts hereof may be executed, each such executed
counterpart shall be deemed an original and all such counterparts
together shall constitute one and the same instrument.
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(e) This Agreement may be modified or amended only by
an instrument in writing, duly executed by the Company, the
Purchasers and the Escrow Agent. No such modification or
amendment shall be binding on the Escrow Agent unless the Escrow
Agent consents thereto in writing.
(f) No waiver by any party of any term, provision,
covenant, representation or warranty contained in this Agreement
(or any breach thereof) shall be effective unless it is in
writing executed by the party against which such waiver is to be
enforced; no waiver shall be deemed or construed as a further or
continuing waiver of any such term, provision, covenant,
representation or warranty (or breach) on any other occasion or
as a waiver of any other term, provisions covenant,
representation or warranty (or of the breach of any other
provision) contained this Agreement on the same or any other
occasion.
(g) In this Agreement (i) words denoting singular
include the plural and vice versa, (ii) "it" or "its" or words
denoting any gender include all genders, (iii) the word
"including" shall mean "including without limitation," whether or
not expressed, (iv) any reference herein to a Section refers to a
Section of this Agreement, unless otherwise stated, and (v) when
calculating the period of time within or following which any act
is to be done or steps taken, the date which is the reference day
in calculating such period shall be excluded and if the last day
of such period is not a business day, then the period shall end
on the next day which is a business day.
(h) Any provision of this Agreement which may be
determined by a court of competent jurisdiction to be prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. It is expressly understood,
however, that the parties hereto intend each and every provision
of this Agreement to be valid and enforceable and hereby
knowingly waive all rights to object to any provision of this
Agreement.
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XXXX XXXXXXX AUCTIONS, INC.
By:____________________________
Name:
Title:
AFINSA BIENES TANGIBLES, S.A.
By:____________________________
Name:
Title:
_______________________________
XXXX XXXXXXX
_______________________________
XXXX XXXXXXX
Accepted and Agreed to:
XXXXXX XXXXX XXXXXXXX & XXXXXXX LLP
as Escrow Agent
By:_______________________________
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