ESCROW AGREEMENT
Exhibit
10.3
ESCROW
AGREEMENT (this “Agreement”) made as of March 24, 2006 by and among Xxxxxxxx
Technologies, Inc., a Florida corporation (“Xxxxxxxx”), Xxxxx LLC, Southridge
Partners LP, Southshore Capital Fund Ltd. and Brittany Capital Management,
Ltd.
(collectively, the “Investors”), Greenfield Capital Partners, LLC
(“Greenfield”), Southridge Capital Management LLC, as representative of the
Investors and Greenfield (the “Representative”), and Xxxxxxxxx Xxxxxxx, LLP, as
escrow agent (the “Escrow Agent”).
WHEREAS,
Xxxxxxxx and the Investors are parties to that certain Redemption and Securities
Purchase Agreement, dated as of the date hereof (the “Redemption Agreement”),
pursuant to which the Investors will acquire shares of Xxxxxxxx’x Series E
Preferred Stock, par value $.0001 per share (the “Series E Preferred
Stock”);
WHEREAS,
Xxxxxxxx and Greenfield are parties to that certain Termination Agreement,
dated
as of the date hereof, pursuant to which Greenfield will acquire shares of
Series E Preferred Stock;
WHEREAS,
pursuant to its terms, the Series E Preferred Stock is convertible into
outstanding shares of common stock, par value $.001 per share (the “Technest
Common Stock”), of Technest Holdings, Inc., a Nevada corporation (“Technest”),
which shares are currently held by Xxxxxxxx;
WHEREAS,
Xxxxxxxx and the Investors are also party to that certain Registration Rights
Agreement, dated as of the date hereof (the “Registration Rights
Agreement”);
WHEREAS,
in connection with certain “Events” outlined in the Registration Rights
Agreement, Xxxxxxxx may be required to pay, as partial liquidated damages,
additional shares of Technest Common Stock to the Investors; and
WHEREAS,
in order to secure the conversion rights associated with the Series E Preferred
Stock and the potential payment of liquidated damages under the Registration
Rights Agreement, Section 5 of the Redemption Agreement provides for Xxxxxxxx
to
deposit an aggregate 3,804,000 shares of Technest Common Stock with the Escrow
Agent to hold and distribute pursuant to this Agreement (an additional 500,000
shares of Technest Common Stock will be deposited hereunder to help secure
the
conversion rights of Greenfield’s shares of Series E Preferred
Stock).
NOW,
THEREFORE, in consideration of these premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto hereby agree as follows.
1. Appointment
of the Escrow Agent and Representative.
1.1 Escrow
Agent. The Escrow Agent is hereby appointed as escrow agent for the purposes
set
forth herein, and the Escrow Agent hereby accepts such appointment on the terms
set forth herein.
1.2 Representative.
The Representative is hereby appointed as agent and representative of the
Investors and Greenfield for the purposes set forth herein, and the
Representative accepts such appointment on the terms set forth
herein.
2. Escrow
Shares.
2.1 Deposit.
In
accordance with Section 5 of the Redemption Agreement, on the date of the
Initial Closing (as defined in the Redemption Agreement), Xxxxxxxx shall deposit
with the Escrow Agent one or more certificates representing an aggregate of
3,804,000 shares of Technest Common Stock. In addition, on the date of the
Initial Closing, Xxxxxxxx shall deposit with the Escrow Agent an additional
500,000 shares of Technest Common Stock to help secure the conversion rights
of
Greenfield’s shares of Series E Preferred Stock. The aggregate 4,304,000 shares
of Technest Common Stock being deposited hereunder are referred to herein as
the
“Escrow Shares.” Although the Escrow Shares shall be issued in the name of the
Escrow Agent or its nominee, as Escrow Agent, all Escrow Shares shall be held
by
the Escrow Agent for the benefit of Xxxxxxxx until such shares become the
property of the Investors and/or Greenfield in accordance with this Agreement.
If during the term of this Agreement there is declared a stock dividend or
stock
split, all securities thereby issuable with respect to the Escrow Shares shall
be deposited hereunder and shall be deemed “Escrow Shares” for the purposes of
this Agreement and if, in connection therewith, the Escrow Agent is required
by
the terms of such stock dividend or stock split to exchange the certificates
then held by it for a different number of shares or certificates it is hereby
irrevocably authorized to do so. If during the term of this Agreement, and
prior
to the Escrow Shares becoming property of the Investors and/or Greenfield,
there
is paid to the Escrow Agent any dividends in cash or other property (other
than
securities) in respect of the Escrow Shares, such dividends shall be paid
promptly by the Escrow Agent to Xxxxxxxx. If during the term of this Agreement,
and following the Escrow Shares becoming property of the Investors and/or
Greenfield, but prior to the distribution of such Escrow Shares to the Investors
and/or Greenfield, there is paid to the Escrow Agent any dividends in cash
or
other property (other than securities) in respect of the Escrow Shares, such
dividends shall be paid promptly by the Escrow Agent to the Representative,
who
shall then disburse such dividends to the proper Investors and/or Greenfield.
The Escrow Shares shall be disbursed by the Escrow Agent in accordance with
the
terms of this Agreement.
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2.2 Voting
of
Escrow Shares. The Escrow Shares held by the Escrow Agent pursuant to this
Agreement shall be deemed issued and outstanding, shall appear as issued and
outstanding in Technest’s stock records, and shall be legally outstanding under
applicable state law. With respect to any matter on which stockholders of
Technest have a right to vote, the Escrow Agent, upon receipt of written notices
to such effect, on behalf of Xxxxxxxx, acting at the written direction of
Xxxxxxxx received not less than three (3) business days prior to such vote,
shall exercise the right to vote, or not vote, all Escrow Shares (or any portion
thereof); provided, however, that the Escrow Agent shall at the expense of
Xxxxxxxx promptly forward, or cause to be forwarded, copies of any proxies,
proxy statements or other materials which it receives to Xxxxxxxx, and shall
vote the applicable portion of the Escrow Shares in accordance with any written
instructions timely received by the Escrow Agent from Xxxxxxxx. Absent any
such
written instructions, the Escrow Agent shall not vote any Escrow
Shares.
3. Distribution
of Escrow Shares. The Escrow Agent shall not distribute all or any portion
of
the Escrow Shares to any party, except in accordance with this Section
3.
3.1 Distribution
Upon Conversion of Series E Preferred Stock.
a. Notice
of Conversion.
Upon
the Escrow Agent’s receipt of a duly executed Notice of Conversion (as defined
in the Articles of Amendment to the Articles of Incorporation of Xxxxxxxx
creating the Series E Preferred Stock (the “Series E Articles”)) from a holder
of Series E Preferred Stock in accordance with the Series E Articles, the Escrow
Agent shall deliver (or cause to be delivered) certificates representing the
shares of Technest Common Stock issuable upon conversion of the shares of Series
E Preferred Stock being converted (the “Conversion Shares”) out of the Escrow
Shares to the holder of the Series E Preferred Stock being converted (a
“Converting Holder”) at the address specified in the Notice of Conversion, via
express courier, by electronic transfer or otherwise. The number of Conversion
Shares shall be based on the most recent existing Conversion Ratio (as defined
in the Series E Articles) as to which the Escrow Agent has then been notified
by
Xxxxxxxx.
b. Dispute
Notices.
The
Escrow Agent will use commercially reasonable efforts to cause the Conversion
Shares to be issued to the Converting Holders as soon as practicable, but no
earlier than three (3) Business Days following receipt by the Escrow Agent
of
the Notice of Conversion; provided, however, that if within the period of two
(2) Business Days following receipt by the Escrow Agent of the Notice of
Conversion, the Escrow Agent shall have received from Xxxxxxxx a written notice
(a “Conversion Dispute Notice”) stating that Xxxxxxxx disputes in good faith the
validity of or the number of Conversion Shares specified in such Notice of
Conversion or any portion thereof (a “Conversion Disputed Amount”) and providing
in reasonable detail the reasons therefor, the Escrow Agent shall transfer
any
Conversion Shares to the Converting Holder that are not the subject of a
dispute, but shall not transfer any such Conversion Disputed Amount, with
respect to such disputed conversion, to the Converting Holder other than
pursuant to Section 4.1 of this Agreement. Xxxxxxxx shall send a copy of each
Conversion Dispute Notice to the Converting Holder at the same time that such
Conversion Dispute Notice is sent to the Escrow Agent. For purposes of this
Agreement, the term “Business Day” means any day (other than a Saturday or
Sunday) on which (A) the New York Stock Exchange is open and (B) banks are
not
authorized or required to close in Boston, Massachusetts or Wilmington,
Delaware.
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c. If
the
Escrow Agent shall not have received a Conversion Dispute Notice with respect
to
the number of Conversion Shares specified in a Notice of Conversion, or any
portion thereof, within the period of two (2) Business Days following its
receipt of such Notice of Conversion, Xxxxxxxx shall be forever barred and
precluded from contesting in any manner or forum whatsoever the distribution
of
Escrow Shares not so disputed.
d. If
at any
time the number of Conversion Shares exceeds the number of Escrow Shares then
held by the Escrow Agent, the Escrow Agent shall have no liability or
responsibility for any deficiency.
3.2 Distributions
to Holders as Payment of Liquidated Damages Under the Registration Rights
Agreement.
a. If
the
Holders (as defined in the Registration Rights Agreement) are entitled to
liquidated damages under Section 2(b) of the Registration Rights Agreement,
the
Representative shall deliver to the Escrow Agent (with a copy to Xxxxxxxx)
a
written notice (a “Liquidated Damages Notice”) setting forth in reasonable
detail the nature of the claim and an estimate of the number of Escrow Shares
(the “Liquidated Damages Shares”) which the Representative believes the Holders
are entitled to be paid pursuant to the Registration Rights Agreement. The
Liquidated Damages Notice shall specify the exact number of Escrow Shares that
the Representative believes that each Holder is entitled to under the
Registration Rights Agreement, as well as delivery instructions for each
Holder.
b. Dispute
Notices.
The
Escrow Agent will use commercially reasonable efforts to cause the Liquidated
Damages Shares to be issued to the Holders as soon as practicable, but no
earlier than six (6) Business Days following receipt by the Escrow Agent of
the
Liquidated Damages Notice; provided, however, that if within the period of
five
(5) Business Days following receipt by the Escrow Agent of the Liquidated
Damages Notice, the Escrow Agent shall have received from Xxxxxxxx a written
notice (a “Liquidated Damages Dispute Notice”) stating that Xxxxxxxx disputes in
good faith the validity of or the number of Liquidated Damages Shares specified
in such Liquidated Damages Notice or any portion thereof (a “Liquidated Damages
Disputed Amount”) and providing in reasonable detail the reasons therefor, the
Escrow Agent shall transfer any Liquidated Damages Shares to the Holders that
are not the subject of a dispute, but shall not transfer any such Liquidated
Damages Disputed Amount, with respect to such disputed amount, to the Holders
other than pursuant to Section 4.2 of this Agreement. Xxxxxxxx shall send a
copy
of each Liquidated Damages Dispute Notice to the Representative at the same
time
that such Liquidated Damages Notice Dispute Notice is sent to the Escrow
Agent.
c. If
the
Escrow Agent shall not have received a Liquidated Damages Dispute Notice with
respect to the number of Liquidated Damages Shares specified in a Liquidated
Damages Notice, or any portion thereof, within the period of five (5) Business
Days following its receipt of such Liquidated Damages Notice, Xxxxxxxx shall
be
forever barred and precluded from contesting in any manner or forum whatsoever
the distribution of Escrow Shares not so disputed.
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d. If
at any
time the number of Liquidated Damages Shares exceeds the number of Escrow Shares
then held by the Escrow Agent, the Escrow Agent shall have no liability or
responsibility for any deficiency.
3.3 Release
of Escrow Shares to Xxxxxxxx.
a. Upon
the
effectiveness of the first Registration Statement contemplated by Section 2(a)
of the Registration Rights Agreement, Xxxxxxxx and the Representative shall
negotiate in good faith to determine an equitable number of Escrow Shares (the
“Equitable Number”) to be released to Xxxxxxxx. Xxxxxxxx and the Representative
shall use their best efforts to determine the Equitable Number within 30 days
of
the effective date of such Registration Statement. As soon as practicable
following the Escrow Agent’s receipt of a fully executed written agreement
between Xxxxxxxx and the Representative with respect to the Equitable Number,
a
number of Escrow Shares equal to the Equitable Number shall be released to
Xxxxxxxx.
b. Upon
the
termination of the Effectiveness Period (as defined in the Registration Rights
Agreement), a number of shares equal to (i) 465,000 minus
(ii) the
number of Escrow Shares released pursuant to Section 3.3(a) minus
(iii)
the number of Liquidated Damages Shares transferred pursuant to this Agreement,
shall be released to Xxxxxxxx.
c. Upon
termination of this Agreement pursuant to Section 5 below, any remaining Escrow
Shares shall be released to Xxxxxxxx.
4. Disputed
Amounts.
4.1 Conversion
Disputes. Upon receipt by the Escrow Agent of a written notice from Xxxxxxxx
and/or a Converting Holder with respect to a Conversion Disputed Amount
specifying the number of Conversion Shares to which such Converting Holder
is
entitled, accompanied by (i) a fully executed written agreement between Xxxxxxxx
and such Converting Holder with respect to such Conversion Disputed Amount
or
(ii) a certified copy of a final, nonappealable order of a court or arbitrator
or tribunal of arbitrators of competent jurisdiction determining the number
of
Conversion Shares to which the Converting Holder is entitled, the Escrow Agent
shall transfer to such Converting Holder from the Escrow Shares such number
of
Conversion Shares (to the extent not previously transferred).
4.2 Liquidated
Damages Disputes. Upon receipt by the Escrow Agent of a written notice from
Xxxxxxxx and/or the Representative with respect to a Liquidated Damages Disputed
Amount specifying the number of Liquidated Damages Shares to which the Holders
are entitled, accompanied by (i) a fully executed written agreement between
Xxxxxxxx and the Representative with respect to such Liquidated Damages Disputed
Amount or (ii) a certified copy of a final, nonappealable order of a court
or
arbitrator or tribunal of arbitrators of competent jurisdiction determining
the
number of Liquidated Damages Shares to which the Holders are entitled, the
Escrow Agent shall transfer to the Holders from the Escrow Shares such number
of
Liquidated Damages Shares (to the extent not previously
transferred).
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5. Termination.
5.1 This
Agreement shall terminate on the later to occur of (i) the termination of the
Effectiveness Period and (ii) the date on which all shares of Series E Preferred
Stock have been converted (such later date, the “Termination Date”), if and to
the extent that there are no outstanding disputes relating to Conversion Shares
or Liquidated Damages Shares which remain unresolved on the Termination Date.
If
that is the case, then on the Termination Date, the Escrow Agent shall release
any remaining Escrow Shares to Xxxxxxxx.
5.2 If,
however, on the Termination Date there are outstanding disputes relating to
Conversion Shares or Liquidated Damages Shares which remain unresolved, then
this Agreement shall continue in effect until all such disputes have been
resolved. At such time as all remaining disputes hereunder have been resolved
pursuant to and in accordance with Sections 4.1 and/or 4.2, as the case may
be,
the Escrow Agent shall release any remaining Escrow Shares to
Xxxxxxxx.
5.3 Anything
contained herein to the contrary notwithstanding, the provisions of Section
8
and Section 10 shall remain in full force and effect and shall survive the
termination of this Agreement for so long as the Escrow Agent may have any
liability.
6. Scope
of
Undertaking. The Escrow Agent shall have no responsibility or obligation of
any
kind in connection with this Agreement and the Escrow Shares, and shall not
be
required to deliver the same or any part thereof or take any action with respect
to any matters that might arise in connection therewith, other than (i) to
receive, hold, and make delivery of the Escrow Shares as herein expressly
provided or by reason of a judgment or order of a court of competent
jurisdiction and (ii) as contemplated by Sections 2.1 and 2.2.
7. Knowledge
and Sufficiency of Documents. The Escrow Agent shall not be bound by or have
any
responsibility with respect to compliance with any agreement between any of
the
other parties hereto, irrespective of whether the Escrow Agent has knowledge
of
the existence of any such agreement or terms and provisions thereof, the Escrow
Agent’s only duty, liability, and responsibility being to receive, hold and
deliver the Escrow Shares as herein provided. The Escrow Agent shall not be
required in any way to determine the validity or sufficiency, whether in form
or
in substance, of the Escrow Shares or the validity, sufficiency, genuineness
or
accuracy of any instrument, document, certificate, statement or notice referred
to in this Agreement or contemplated hereby; or the identity or authority of
the
persons executing the same, and it shall be sufficient if any writing purporting
to be such instrument, document, certificate, statement or notice is delivered
to the Escrow Agent and purports on its face to be correct in form and signed
or
otherwise executed by the party or parties required to sign or execute the
same
under this Agreement.
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8. Right
of
Interpleader. Should any controversy arise between Xxxxxxxx, on one hand, and
the Representative, the Investors, Greenfield and/or any Holders, on the other,
or any other person, firm or entity, with respect to this Agreement, the Escrow
Shares, or any part thereof, or the right of any party or other person to
receive the Escrow Shares, or should such parties fail to designate another
Escrow Agent as provided in Section 15 hereof, or if the Escrow Agent should
be
in doubt as to what action to take, the Escrow Agent shall have the right (but
not the obligation) to (i) withhold delivery of the Escrow Shares until the
controversy is resolved as provided in Section 4 hereof, the conflicting demands
are withdrawn or its doubt is resolved as provided in Section 4 hereof, or
(ii)
institute a xxxx of interpleader in any court of competent jurisdiction to
determine the rights of the parties hereto (the right of the Escrow Agent to
institute such xxxx of interpleader, however, shall not be deemed to modify
the
manner in which the Escrow Agent is entitled to make disbursements of the Escrow
Shares as hereinabove set forth, other than to tender the Escrow Shares into
the
registry of such court). Should a xxxx of interpleader be instituted, or should
the Escrow Agent be threatened with litigation or become involved in litigation
in any manner whatsoever on account of this Agreement or the Escrow Shares,
then
as between themselves and the Escrow Agent, Xxxxxxxx, the Investors and
Greenfield, jointly and severally, hereby bind and obligate themselves, their
successors, heirs, executors and assigns to pay the Escrow Agent its reasonable
attorneys’ fees and any and all other disbursements, expenses, losses, costs and
damages of the Escrow Agent in connection with or resulting from such threatened
or actual litigation. Notwithstanding the foregoing, as between themselves,
Xxxxxxxx, on the one hand, and the Investors and Greenfield, on the other hand,
shall each pay one-half of all amounts payable to the Escrow Agent pursuant
to
this paragraph.
9. Scope
of
Duties and Errors in Judgment. It is expressly understood and agreed that the
Escrow Agent shall be under no duty or obligation to give any notice, or to
do
or to omit the doing of any action or anything with respect to the Escrow
Shares, except to hold the same in the Escrow Account and to make disbursements
in accordance with the terms of this Agreement. Without limiting the generality
of the foregoing, it is acknowledged and
agreed
that (i) no implied duties shall be read into this Agreement on the part
of
the
Escrow Agent, and (ii) the Escrow Agent shall not be obligated to take any
legal
or remedial action which might in its judgment involve it in any expense or
liability for which it has not been furnished acceptable indemnification. The
Escrow Agent, its shareholders, associates and employees shall not be liable
for
any error in judgment or any
act
or
steps taken or permitted to be taken in good faith, or for any mistake of law
or
fact, or for anything it may do or refrain from doing in connection herewith,
except for its own willful misconduct or gross negligence.
10. Indemnity.
As between themselves and the Escrow Agent, Xxxxxxxx, the Investors and
Greenfield, jointly and
severally,
agree to indemnify the Escrow Agent against and hold the Escrow Agent harmless
from any and all losses, costs, damages, expenses, claims, and attorney’s fees
and expenses suffered or incurred by the Escrow Agent as a result of,
in
connection with or arising from or out of the acts or omissions of the Escrow
Agent in performance of or pursuant to this Agreement, except such acts or
omissions as may result from the Escrow Agent’s willful misconduct or gross
negligence. In no event shall the Escrow Agent be liable for indirect, punitive,
special or consequential damages.
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Xxxxxxxx,
the Investors and Greenfield, jointly and severally, agree to assume any and
all
obligations imposed now or hereafter by any applicable tax
law
with
respect to the distribution of Escrow Shares under this Agreement, and to
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses, that may
be
assessed against the Escrow Agent in any such payment or other activities under
this Agreement. Xxxxxxxx and the Representative undertake to instruct the Escrow
Agent in writing with respect to the Escrow Agent’s responsibility for
withholding and other taxes, assessments, or other governmental charges,
certifications and
governmental
reporting in connection with its acting as Escrow Agent under this Agreement.
Xxxxxxxx, the Investors and Greenfield, jointly and severally, agree to
indemnify and
hold
the
Escrow Agent harmless from any
liability
on account of taxes, assessments or other governmental charges, including,
without limitation, the withholding or deduction or the failure to withhold
or
deduct the same, and any liability for failure to obtain proper certifications
or to properly report to governmental authorities, to which the Escrow Agent
may
be or become subject in connection with or which arises out of this Agreement,
including costs and expenses (including reasonable legal fees and expenses),
interest and penalties.
Notwithstanding
the foregoing, as between themselves, Xxxxxxxx, on the one hand, and the
Investors and Greenfield, on the other, shall each pay one-half of all amounts
payable to the Escrow Agent pursuant to this paragraph.
11. Responsibilities
of the Representative.
11.1 General.
The Representative has been designated by the Investors and Greenfield to
represent the Investors and Greenfield with respect to the Escrow Shares
pursuant to the terms of this Agreement. The duties of the Representative
hereunder shall be limited to the observance of the express provisions of this
Agreement. The Representative shall not be subject to, or be obliged to
recognize, any other agreement between the parties hereto or directions or
instructions not specifically set forth or provided for herein or in the
Redemption Agreement.
11.2 Reimbursement
of Expenses of the Representative. The Investors and Greenfield shall reimburse
the Representative for reasonable out-of-pocket expenses incurred by the
Representative in the performance of his duties hereunder.
11.3 Duties.
The Investors and Greenfield hereby authorize and direct the Representative
to
take all action necessary in connection with the implementation of this
Agreement on behalf of the Investors, including, without limitation, giving
and
receiving all notices required to be given under this Agreement, settling any
dispute arising hereunder and executing all such documents as the Representative
shall deem necessary or appropriate in connection with the transactions
contemplated by this Agreement. All decisions and actions by the Representative
shall be binding upon all of the Investors and Greenfield, and the Investors
and
Greenfield shall have no right to object, dissent, protest or otherwise contest
the same.
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11.4 Reliance.
By their execution of this Agreement, the Investors and Greenfield agree that
(i) Xxxxxxxx and the Escrow Agent shall be able to rely conclusively on the
instructions and decisions of the Representative as to any actions required
or
permitted to be taken by the Investors, Greenfield or the Representative
hereunder, and no party hereto shall have any cause of action against any other
for any action taken in reliance upon the instructions or decisions of the
Representative, (ii) all actions, decisions and instructions of the
Representative shall be conclusive and binding upon all of the Investors and
Greenfield, and the Investors and Greenfield shall have no cause of action
against the Representative or any other person for any action taken, decision
made or instruction given by the Representative under this Agreement, except
for
gross negligence, breach of fiduciary duties owed to the Investors and
Greenfield, fraud or willful breach of this Agreement by the Representative
and
(iii) the provisions of this Section 11 are independent and severable, shall
constitute an irrevocable power of attorney, coupled with an interest and
surviving death, granted by the Investors and Greenfield to the Representative
and shall be binding upon the executors, heirs, legal representatives and
successors of each Investor and Greenfield.
12. Notices.
Any notice, request, demand or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given if
delivered or sent by facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the date on which receipt
is
acknowledged or the expiration of three days after deposit in United States
post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address
or
person as such party may designate by notice to each other party
hereunder:
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TO
XXXXXXXX:
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Xxxxxxxx
Technologies, Inc.
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00
Xxxxx Xxxxxx Xxxxx
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Xxxxxxxxxx,
XX 00000
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Attn:
Xxxxxx Xxxxxx
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Fax:000-000-0000
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With
a copy to:
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Xxxxxxxxx
Xxxxxxx, LLP
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Xxx
Xxxxxxxxxxxxx Xxxxx
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Xxxxxx,
XX 00000
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Attn:
Xxxxxxxx Xxxx, Esq.
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Fax:
(000) 000-0000
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TO
REPRESENTATIVE:
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Southridge
Capital Management LLC
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00
Xxxxx Xxxxxx, Xxxxx 000
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Xxxxxxxxxx,
XX 00000
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Attn:
Xxxxxxx Xxxxx
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Fax:
(000) 000-0000
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TO
ESCROW AGENT:
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Xxxxxxxxx
Traurig, LLP
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Xxx
Xxxxxxxxxxxxx Xxxxx
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Xxxxxx,
XX 00000
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Attn:
Xxxxxxxx Xxxx, Esq.
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Fax:
(000) 000-0000
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13. Consultation
with Legal Counsel. The Escrow Agent may consult with its in--house counsel
or
other counsel satisfactory to it in respect to questions relating to its duties
or responsibilities hereunder or otherwise in connection herewith and shall
not
be liable for any action taken, suffered, or omitted by the Escrow Agent in
good
faith upon the advice of such counsel. The Escrow Agent may act through its
shareholders, associates, employees, agents and attorneys.
14. Reimbursement
of Expenses. The Escrow Agent shall be entitled to reimbursement from Xxxxxxxx
of all its reasonable costs and expenses, including reasonable fees and expenses
of legal counsel incurred by it in connection with the preparation, operating,
administration and enforcement of this Agreement. The Escrow Agent shall be
entitled to reimbursement on demand for all expenses incurred in connection
with
the administration of this Agreement or the escrow created hereby which are
in
excess of its compensation for normal services hereunder, including, without
limitation, payment of any legal fees and expenses incurred by the Escrow Agent
in connection with resolution of any dispute by any party hereunder.
Notwithstanding the foregoing, with respect to any such costs and expenses
incurred in connection with a dispute, Xxxxxxxx, on the one hand, and the
Investors and Greenfield, on the other, shall each pay one-half of all amounts
payable to the Escrow Agent pursuant to this paragraph.
15. Resignation.
The Escrow Agent may resign upon 10 days’ prior written notice to Xxxxxxxx and
the Representative, and upon the written instruction of Xxxxxxxx and the
Representative, the Escrow Agent shall deliver the Escrow Shares to any
designated substitute Escrow Agent mutually agreeable to such parties. If
Xxxxxxxx and the Representative fail to designate a substitute Escrow Agent
within 10 days, the Escrow Agent, in its sole discretion and its sole option,
either may (i) continue to hold the Escrow Shares, or (ii) institute a xxxx
of
interpleader as contemplated by Section 8 hereof.
16. Compensation.
Xxxxxxxx covenants and agrees to pay to the Escrow Agent the fee determined
by
the Escrow Agent, from time to time, to be applicable to this escrow and bear
all costs and expenses incurred by the Escrow Agent in connection therewith;
provided that the Investors and Greenfield agree to collectively pay one-half
of
such costs and expenses to the extent they are incurred in connection with
a
dispute.
17. Governing
Law. This Agreement shall be construed under and governed by the internal laws
of the State of New York without regard to its conflict of laws provisions.
The
parties hereto hereby submit themselves to the jurisdiction of the state and
federal courts of the State of New York for the resolution of any disputes
hereunder and agree that New York shall constitute a convenient forum for the
resolution of any such disputes.
18. Force
Majeure. Neither Xxxxxxxx, the Representative nor the Escrow Agent shall be
responsible for delays or failures in performance resulting from acts beyond
their control. Such acts shall include but not be limited to acts of God,
strikes, lockouts, riots, acts of war or terrorism, epidemics, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
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19. Entire
Agreement. This Agreement evidences the entire agreement among Xxxxxxxx, the
Investors, Greenfield, the Representative and the Escrow Agent in connection
with the Escrow Shares and no other agreement entered into between the parties
or any of them shall be considered or adopted or binding, in whole or in part,
by or upon the Escrow Agent, notwithstanding that any other such agreement
may
be deposited herewith or the Escrow Agent may have knowledge
thereof.
20. Binding
Effect. This Agreement shall be binding upon the respective parties hereto
and
their heirs, executors, successors and assigns.
21. Amendments
and Waivers. This Agreement may be amended, modified and supplemented, and
compliance with any provision hereof may be waived, only by a writing signed
by
Xxxxxxxx, the Escrow Agent and the Representative.
22. Severability.
If one or more of the provisions contained herein for any reason shall be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof,
and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
23. Reproduction
of Documents. This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, and (b) certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
optical disk, micro-card, miniature photographic or other similar process.
The
parties agree that any such reproduction shall be admissible in evidence as
the
original itself in any judicial or administrative proceeding, whether or not
the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile
or
further reproduction of such reproduction shall likewise be admissible in
evidence.
24. Captions.
Section headings and captions have been inserted for convenience only and do
not
in anyway limit the provisions set out in the various sections
hereof.
25. Execution
in Counterparts. For the convenience of the parties and to facilitate execution,
this Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
document and such counterparts may be delivered by facsimile.
[End
of
Text]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
|
XXXXXXXX
TECHNOLOGIES, INC.
|
|
|
By:
/s/
Xxxxxx
Xxxxxx
|
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Name:
Xxxxxx Xxxxxx
|
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Title:
Chief Executive Officer
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XXXXXXXXX
XXXXXXX, LLP, as Escrow Agent
|
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By:
/s/
Xxxx
Xxxxxxxx
|
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Name:
Xxxx Xxxxxxxx, Esq.
|
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SOUTHRIDGE
CAPITAL MANAGEMENT LLC, as Representative
|
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By:
/s/
Xxxxxxx
Xxxxx
|
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Name:
Xxxxxxx Xxxxx
|
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XXXXX
LLC
|
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By:
Illegible
|
|
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Name:
Navigator Management Ltd. - Director
|
|
|
SOUTHRIDGE
PARTNERS LP
|
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By:
/s/
Xxxxxxx
Xxxxx
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Name:
Xxxxxxx Xxxxx
|
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SOUTHSHORE
CAPITAL FUND LTD.
|
|
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By:Illegible
|
|
|
Name:
Navigator Management Ltd. - Director
|
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BRITTANY
CAPITAL MANAGEMENT, LTD.
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By:/s/
Xxxxx X.
Xxxxxx
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Name:
Xxxxx X. Xxxxxx, President
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GREENFIELD
CAPITAL PARTNERS, LLC
|
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By:/s/
Xxxxxxx
Xxx
|
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Name:
Xxxxxxx Xxx
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