EXHIBIT 10.8
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT ("Agreement") is made as of April __, 2002, by and
between XXXX XXX XXXX, XXXXXX XXXXX and XXX XXXXXXX (cumulatively "Pledgor"),
Diversified Product Inspections, Inc. ("Borrower" or the "Company"), Sofcon
Limited ("Secured Party") and XXXXXX X. XXXXXXX, ESQ., ("Escrow Agent") (singly
a "Party" and cumulatively the "Parties").
W I T N E S S E T H:
WHEREAS, Secured Party is making a loan of up to $300,000 to Diversified
Product Inspections, Inc. pursuant to the terms of a subscription agreement
("Subscription Agreement"), convertible debentures ("Debentures") and security
agreement ("Security Agreement") dated April of, 2002, whereby 4,000,000 shares
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of Diversified Product Inspections, Inc. common stock (the "Shares") owned by
Pledgor are being pledged to secure said loan; and
WHEREAS, Pledgor, Borrower and Secured Party have requested that the Escrow
Agent hold the Shares in escrow pursuant to the terms of this Agreement until
either redemption in full of the Debentures or a default under the Subscription
Agreement, Debentures or Security Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE 1
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TERMS OF THE ESCROW
1.1 The Parties hereby agree to have Xxxxxx X. XxXxxxx, Esq. act as
Escrow Agent whereby the Escrow Agent shall hold the Shares as security.
1.2 Upon Escrow Agent's receipt of funds from Secured Party into the
attorney escrow account the Escrow Agent shall notify Pledgor, of the amount
received. Pledgor, Borrower and Secured Party, prior to or upon receipt of said
notice from the Escrow Agent, shall deliver to the Escrow Agent the following:
(a) original stock certificate(s) representing the Shares, with original
stock powers signed with the medallion guarantee, in an amount equal to
4,000,000 shares
(b) the original signed Debenture(s);
(c) the original signed Security Agreement whereby Pledgor is pledging said
Shares as security for the loan;
(d) the original signed opinion letter from Borrower's counsel acceptable to
Secured Party concerning this transaction;
(e) copy of an unsigned opinion letter from Borrower's counsel that would be
sent to the transfer agent to remove the legend from the Shares in the event of
a default under the Debentures or Security Agreement;
(f) copies of representation letters from Secured Party, Pledgor and
Borrower;
(g) copy of this Escrow Agreement fully executed by all Parties; and
(h) copies of signed documentation for an equity line of credit financing in
an amount of not less that $3,000,000;
(a) through (h) collectively being referred to as the "Escrow Securities and
Documents".
1.3 Upon Escrow Agent's receipt of the Escrow Securities and Documents
the Escrow Agent shall notify Secured Party, Pledgor and the Company in detail
as to the securities and documents received.
1.4 Upon Secured Party's review, via facsimile, and acceptance of the
Escrow Securities and Documents, Escrow Agent shall immediately wire transfer
the $100,000 of loan funds per the written instructions of Borrower. Once the
funds have been wire transferred per Borrower's written instructions, the Escrow
Agent shall deliver the debentures to the Secured Party and hold the balance of
the Escrow Securities and Documents at his office.
1.5 Upon a default, as defined anywhere in the Subscription
Agreement, Debentures or Security Agreement, Secured Party shall send a notice
of default to Pledgor with a copy to the Escrow Agent via facsimile. In the
event Pledgor or Diversified Product Inspections, Inc. is unable to cure any
default within seven (7) business days, then Escrow Agent shall release that
number of the Shares being held in escrow, equal to 130% of the principal
balance owed on the Debentures, plus accrued but unpaid interest and liquidated
damages, if any, based on the 5-day average closing bid price of the common
stock for the five (5) trading days immediately preceding the third (3rd)
business day after the Pledgor receives written notice of default from the
Secured Party. Pledgor agrees to forward an additional 200,000 shares of common
stock to Secured Party each calendar week until Secured Party is able to recover
130% of the principal balance owed on the Debentures, plus accrued but unpaid
interest and liquidated damages, if any, net of reasonable and customary
broker's commissions and brokerage costs. After the shares delivered to Secured
Party have been sold, the Secured Party shall show written documentation of the
net amount recovered and if such amount was insufficient to cover 130% of the
principal balance owed on the Debentures, plus accrued but unpaid interest and
liquidated damages, if any, the Escrow Agent shall release additional shares to
the Secured Party until the Secured Party is able to recover such amount, net
of customary brokerage commissions. Secured Party shall provide a weekly
accounting to Escrow Agent and Pledgor of the sales, amounts and brokerage
commissions. Once Secured Party has recovered 130% of the principal balance
owed on the Debentures, plus accrued but unpaid interest and liquidated damages,
if any, the Secured Party shall return the balance of any Shares to the Escrow
Agent and the Escrow Agent shall return to the Pledgor the balance of any of the
Shares he is holding in escrow.
1.6 This Agreement may be altered or amended only with the consent of
all of the Parties hereto. Should any of the Parties attempt to change this
Agreement in a manner which, in the Escrow Agent's discretion, shall be
undesirable, the Escrow Agent may resign as Escrow Agent by notifying the
Parties in writing. In the case of the Escrow Agent's resignation or removal
pursuant to the foregoing, his only duty, until receipt of notice from the
Parties that a successor escrow agent has been appointed, shall be to hold and
preserve the Escrow Securities and Documents and funds that are in his
possession. Upon receipt by the Escrow Agent of said notice from the Parties of
the appointment of a successor escrow agent, the name of a successor escrow
account and a direction to transfer the Escrow Securities and Documents and
funds, the Escrow Agent shall promptly thereafter transfer all of the Escrow
Securities and Documents and funds held in escrow to said successor escrow
agent. Immediately after said transfer of Escrow Securities and Documents and
funds, the Escrow Agent shall furnish the Parties with proof of such transfer.
The Escrow Agent is authorized to disregard any notices, requests, instructions
or demands received by it from the Parties after notice of resignation or
removal shall have been given, unless the same shall be the aforementioned
notice from the Parties to transfer the Escrow Securities and Documents and
funds to a successor escrow agent or to return same to the respective Parties.
1.7 The Escrow Agent shall be reimbursed by the Parties for any
reasonable expenses incurred in the event there is a conflict between the
Parties and the Escrow Agent shall deem it necessary to retain counsel. The
Escrow Agent shall not be liable for any action taken or omitted by him in good
faith in accordance with the advice of the Escrow Agent's counsel; and in no
event shall the Escrow Agent be liable or responsible except for the Escrow
Agent's own gross negligence or willful misconduct. The Escrow Agent shall be
obligated only for the performance of such duties as are specifically set forth
herein and may rely and shall be protected in relying or refraining from acting
on any instrument reasonably believed by the Escrow Agent to be genuine and to
have been signed or presented by the proper Party or Parties. The Escrow Agent
shall not be personally liable for any act the Escrow Agent may do or omit to do
hereunder as the Escrow Agent while acting in good faith, and any act done or
omitted by the Escrow Agent pursuant to the advice of the Escrow Agent's
attorney-at-law shall be conclusive evidence of such good faith.
1.8 The Escrow Agent has made no representations or warranties to the
Company in connection with this transaction. The Escrow Agent has no liability
hereunder to any Party other than to hold the Shares and funds received by the
Secured Party and to deliver them under the terms hereof. The Escrow Agent shall
have no responsibility at any time to ascertain whether or not any security
interest exists in the Shares or any part thereof or to file any financing
statement under the Uniform Commercial Code with respect to the Shares or any
part thereof. Each Party hereto agrees to indemnify and hold harmless the
Escrow Agent from and with respect to any suits, claims, actions or liabilities
arising in any way out of this transaction including the obligation to defend
any legal action brought which in any way arises out of or is related to this
Agreement or the investment being made by Secured Party. The Company
acknowledges and represents that it is not being represented in a legal capacity
by Xxxxxx X. XxXxxxx, and has had the opportunity to consult with its own legal
advisors prior to the signing of this Agreement. The Company acknowledges that
the Escrow Agent is not rendering securities advice to the Company with respect
to this proposed transaction. The Escrow Agent has acted as legal counsel for
the Secured Party and may continue to act as legal counsel for the Secured
Party, from time to time, notwithstanding its duties as the Escrow Agent
hereunder. The Company consents to the Escrow Agent acting in such capacity as
legal counsel for the Secured Party and waives any claim that such
representation represents a conflict of interest on the part of the Escrow
Agent. The Company understands that the Secured Party and Escrow Agent are
relying explicitly on the foregoing provisions contained in this Section in
entering into this Agreement.
1.9 The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the Parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the Parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
1.10 The Escrow Agent shall not be liable in any respect on account of
the identity, authorities or rights of the Parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
1.11 If the Escrow Agent reasonably requires other or further documents
in connection with this Agreement, the necessary Parties hereto shall join in
furnishing such documents.
1.12 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the funds held by the Escrow Agent hereunder, the Escrow Agent is authorized
and directed in the Escrow Agent's sole discretion (a) to retain in the Escrow
Agent's possession without liability to anyone all or any part of said documents
or the funds until such disputes shall have been settled either by mutual
written agreement of the Parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings or (b) to deliver
the funds and any other property and documents held by the Escrow Agent
hereunder to a state or federal court having competent subject matter
jurisdiction and located in the State of Connecticut in accordance with the
applicable procedure therefor.
ARTICLE 2
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MISCELLANEOUS
2.1 No waiver of any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligation or act.
2.2 Notices. Any notices or other communications required or
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permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending Party); or (iii) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the Party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company or Pledgor:
Diversified Product Inspections, Inc.
0 Xxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxx Xxxx, CEO
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxx Xxxxxx, Esq.
Xxxx, XxxXxxxxx & Xxxxxxx
0000 Xxxxx Xxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Investor:
At the address listed in the Questionnaire.
With a copy to:
Xxxxxx X. XxXxxxx, Esq.
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.
2.3 This Escrow Agreement is the final expression of, and contains
the entire agreement between, the Parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Escrow Agreement may not be modified, changed, supplemented or terminated, nor
may any obligations hereunder be waived, except by written instrument signed by
the Parties to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
2.4. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine.
This Escrow Agreement shall not be construed as if it had been prepared by one
of the Parties, but rather as if all the Parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Escrow Agreement.
2.5 Pledgor and Borrower acknowledge and confirm that they are not
being represented in a legal capacity by Xxxxxx X. XxXxxxx, and they have had
the opportunity to consult with their own legal advisors prior to the signing of
this agreement.
2.6 The Parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under, and construed and enforced in
accordance of the laws of the State of Connecticut. Any action to enforce,
arising out of, or relating in any way to, any provisions of this Escrow
Agreement shall be brought through the American Arbitration Association at the
designated locale of Stamford, Connecticut.
2.7 This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Escrow Agreement, once executed by
a Party, may be delivered to the other Parties hereto by telephone line
facsimile transmission bearing the signature of the Party so delivering this
Escrow Agreement and such copy shall be deemed and original.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
PLEDGOR: XXXX XXX XXXX
By:__________________________________________
PLEDGOR: XXXXXX XXXXX
By:__________________________________________
PLEDGOR: XXX XXXXXXX
By:__________________________________________
DIVERSIFIED PRODUCT INSPECTIONS, INC.
By: __________________________________
Xxxx Xxx Xxxx, its CEO
SECURED PARTY:
By:_________________________________
XXXXXX X. XXXXXXX, ESCROW AGENT
By:__________________________________________
Xxxxxx X. XxXxxxx, Esq.
