THESE SECURITIES SUBJECT TO THIS ESCROW AGREEMENT HAVE NOT BEEN REGISTERED
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WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
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COMMISSION OF ANY STATE. THE SECURITIES HAVE BEEN OFFERED PURSUANT TO A SAFE
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HARBOR FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT
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OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE
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OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED
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IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED
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UNDER THE ACT, PURSUANT TO REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM
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THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY IS PROVIDED WITH
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OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
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CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER, HEDGING TRANSACTIONS
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INVOLVING THE SECURITIES MAY BE MADE ONLY IN COMPLIANCE WITH THE ACT.
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ESCROW AGREEMENT
This Escrow Agreement is effective the 2nd day of February, 2000 by and
among EFINANCIAL XXXXX.XXX, INC. (the "Company") and OXFORD CAPITAL CORP. (the
"Escrow Agent").
1. Escrow
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The Company will be filing a registration statement under the United States
Securities Act of 1933, as amended (the "Act") relating to the Company shares of
Common Stock issuable in accordance with a Debenture Purchase Agreement (the
"Agreement") dated February 2, 2000 between the Company and the Escrow Agent.
As security for the $2,500,000 debenture (the "Debenture"), the shares
underlying the Warrant to purchase 250,000 common shares in the capital stock of
the Company (the "Warrant") issuable by the Company and the shares underlying
the Placement Agents Warrant to purchase 50,000 common shares in the capital
stock of the Company (the "Agents Warrant") pursuant to the Agreement, the
Company hereby agrees to place with the Escrow Agent 500,000 shares in the
Capital Stock of the Company.
For convenience one total share certificate in the amount of 500,000 shares in
the Common Stock of Company have been issued to the Escrow Agent in the name of
the Escrow Agent (the "Security Shares").
2. Release of the Security Shares
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The Escrow Agent shall release the Security Shares from Escrow as follows:
(a) Upon any conversion of the Debenture, a copy of the Conversion
Notice attached hereto shall be promptly faxed to the Company by the Escrow
Agent simultaneously as it is sent by overnight courier service to the Company.
Unless the Escrow Agent receives a written objection sent by facsimile within 5
business days of sending the fax to the Company provided for in the immediately
preceding sentence and the Company takes the action provided for in Section 6
hereof within five business days, that number of Security Shares equivalent to
the number of shares issuable upon conversion of the Debenture as set forth in
the Conversion Notice shall be released by the Escrow Agent.
(b) Upon any exercise of the Warrants or the Agents Warrant, a copy of
the Exercise Form attached hereto and evidence of payment for the Warrants or
Agents Warrant being exercised shall be promptly faxed by the Escrow Agent
simultaneously as such Exercise Form and payment is sent by overnight courier
service to the Company. Unless the Escrow Agent receives a written objection
sent by facsimile within forty-eight hours of sending the fax to the Company
provided for in the immediately preceding sentence and the Company takes the
action provided for in Section 6 hereof within 5 business days, that number of
Security Shares equivalent to the number of shares issuable upon exercise of the
Warrant as set forth in the Exercise Form shall be released by the Escrow Agent.
(c) upon any event of default under the terms of the Agreement or the
Debenture then a notice of default shall be sent to the Escrow Agent and the
Company. Unless the Escrow Agent receives a written objection sent by facsimile
within forty-eight hours of sending the fax to the Company provided for in the
immediately preceding sentence and the Company takes the action provided for in
Section 6 hereof within 5 business days then all the Security Shares shall be
released by the Escrow Agent.
(d) If prior to the conversion of a Debenture or the exercise of the
Warrants, such securities have been transferred, then:
(i) the transferee shall become a party to this Escrow Agreement by
executing an amended thereto reasonably acceptable to the Company and the Escrow
Agent;
(ii) the transfer must comply with the terms of the respective security and
with the terms and conditions of the Agreement between the Company and the
Escrow Agent, dated February 2, 2000 and further, any exercise of the Warrants
must be in strict compliance with their respective terms; and
(iii) upon conversion of the Debenture, the Conversion Notice and upon
exercise of the Warrants, the Exercise Form and the payment shall be delivered
to the Escrow Agent and the Escrow Agent shall then promptly comply with
Section 2(a), (b), (c) or (d) as is applicable.
3. Dividends and Other Distributions
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As long as any Security Shares are held in Escrow pursuant to this
Agreement, then no dividends or other distributions shall be payable with
respect to such Security Shares. However, any shares of Common Stock resulting
from a stock split, reverse stock split or stock dividend which would be
receivable upon conversion of the Debenture or exercise of the Warrants or
Agents Warrants shall be placed in Escrow.
4. Voting Rights
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During the term of this Agreement, and so long as any of the Security
Shares are in Escrow, no one may vote the Security Shares on any matter.
5. Payment of the Debenture and Expiration of the Warrants
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Upon the payment in full or conversion of all of the Debenture as evidenced
in writing signed by the Company and the then holder of the Debenture, and upon
the expiration or exercise in full of the Warrants or Agents Warrants, the
Escrow Agent shall release all the remaining Security Shares relating to such
Debenture and have the Security Shares transferred into the name of the Company.
6. Objections
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(a) If the Company shall notify by fax the Escrow Agent that it has any
objections to releasing any of the Security Shares pursuant to Section 2 hereof,
the Company shall also within the 5 business days provided for in Sections 2(a),
(b) or (c), as the case may be also deliver to the Escrow Agent (i) a
Certificate signed by an Officer of the Company setting forth the reasons for
the objection, (ii) an opinion from the counsel to the Company, Clark, Wilson,
Barristers & Solicitors, that the conversion or the exercise, as the case may
be, would violate either the United States Securities Act of 1933, as amended,
or the United States Securities Exchange Act of 1934, as amended or some other
law applicable to the objection, and an indemnity bond from a person licensed to
issue such bonds in the State of Delaware, in an amount equal to the number of
Security Shares being objected to being released from Escrow time Two Hundred
Percent of the average closing bid price of the Common Stock of the Company on
the principal market for such Common Stock for the three (3) trading days
immediately preceding the date of the Conversion Notice or the Exercise Form, as
the case may, with such bond lasting until the dispute is settled by agreement
of the parties thereto or a final action of a court of competent jurisdiction
without the right to appeal or the expiration of the right to appeal.
(b) If the Escrow Agent does NOT receive within 5 business days all of
the originally signed documents and bond provided for in Section 6(a) hereof, it
shall at the end of 5 business days, release the Security Shares in question as
requested in the respective Conversion Notice or Exercise Form.
(c) If the Escrow Agent does receive within 5 business days all of
the original signed documents and bond provided for in Section 6(a) hereof, it
shall at the end of such 5 business days, if the objection has not be withdrawn
or the parties to the Debenture and the Warrants otherwise agree, surrender the
Security Shares in question to an appropriate court in the State of Delaware and
submit the issue to the court to resolve in the nature of an interpleader
action.
7. Escrow Agent
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The Escrow Agent, when acting as the Escrow Agent, shall not be liable for
any action taken or omitted by it in good faith, and believed by it to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement, and may rely and shall be protected in acting or refraining from
acting in reliance upon any notice or certificate, instrument, request, paper or
other documents believed by it to be genuine and made, sent, signed or presented
by the proper party or parties. The Escrow Agent, when acting as Escrow Agent,
shall not be liable for anything it does or may not do as Escrow Agent under
this Agreement, except for its own gross negligence, willful misconduct.
The Escrow Agent shall not be responsible for the validity or sufficiency
of any stock certificate or other instru-ment evidencing any security delivered
to it pursuant hereto, or for the identity or authority of any person delivering
any such certificate or other instrument to it.
Until the Escrow Agent shall receive from some person interested in this
Agreement written notice of any event upon which the right to receive any
release, distribution or payment may depend, it shall incur no liability for
actions taken in good faith.
The Escrow Agent shall not be obligated to take any action to enforce this
Agreement, or to appear in, prose-cute or defend any action or legal proceeding
or to file any income or other tax return if any such action, in its opinion,
would or might involve cost, expense, loss or liability unless, and as often as
required by it, it shall be furnished with security and an indemnity
satisfactory to it from the Company against all such cost, expense, loss or
liability.
The Escrow Agent shall not be responsible for the validity of any provision
of this Agreement or for the execution thereof by any other party, or for the
truth of any recitals or other statements of fact herein contained. The Escrow
Agent shall be considered as a fiduciary under this Agreement and is not
required or entitled to act in any capacity hereunder other than as a Escrow
Agent.
8. Notices
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Except as otherwise provided herein, all notices, instructions or other
communications required or permitted hereunder shall be in writing and sent by
registered mail, postage prepaid, addressed as follows:
If to the Company:
Efinancial Xxxxx.Xxx, Inc. If to the Purchaser:
150-1875 Century Park East; Oxford Capital Corp.
Century City California X/x 0000-00xx Xxxxxx X.X.
00000 Xxxxxxx, Xxxxxxx
T2T 0A7
Attention: Xxxx Xxxxxx Ph: (000) 000-0000
Fax: (000) 000-0000
With a copy that does not With a copy that does not
constitute notice to: constitute notice to:
Clark,Wilson, Barristers & Solicitors Xxx X. Xxxxxxx
000-000 X.Xxxxxxx Xx. Xxxxxxxxx & Solicitor
Vancouver,Canada 0000 - 00xx Xxxxxx X.X.
X0X 0X0 Xxxxxxx, Xxxxxxx
Attention: Xxxxx Xxxxx T2T OA7
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
or such other address, telephone numbers or contact persons as shall be
furnished in writing by such party to the other parties hereto. Any such
notice, instruction or communication shall be deemed to have been given three
(3) business days after the date mailed by registered mail or if sent by fax,
upon electronic confirmation or receipt.
9. Deliveries
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The Escrow Agent shall make the deliveries of the Security Shares pursuant
to this Agreement at the addresses set forth herein, by overnight deliver
service with the ability to trace the delivery or through the Depository Trust
Company accounts.
10. Successors and Assigns
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This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
11. Choice of Law and Venue.
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This Agreement shall be governed by and construed under the laws of the
State of Delaware, without regard to choice of laws in force from time to time.
Any proceeding arising out of this Agreement shall be brought in the State of
Delaware, U.S.A.
12. Counterparts
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original.
13. Attorneys' Fees
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If an action is brought to enforce the terms and provisions of this
Agreement, the prevailing party in said action shall be entitled to reasonable
attorneys' fees and costs of suit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
The Company: EFINANCIAL XXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxx
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President and CEO
Escrow Agent: OXFORD CAPITAL CORP.
By: /s/ Xxxx Xxxxxxx
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