Exhibit 10.28
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 30th day of June, 2005 among New Century
Energy Corp., a Colorado corporation (the "COMPANY"), Laurus Master Fund, Ltd.
(the "PURCHASER"), and Loeb & Loeb LLP (the "ESCROW AGENT"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser has advised Escrow Agent that (a) the Company and the
Purchaser have entered into a Securities Purchase Agreement ("PURCHASE
AGREEMENT") for the sale by the Company to the Purchaser of a convertible note
("NOTE"), (b) the Company has issued to the Purchaser a common stock purchase
warrant ("WARRANT"), (c) the Company has issued to the Purchaser an option (the
"OPTION") and (d) the Company and the Purchaser have entered into a Registration
Rights Agreement covering the registration of the Company's common stock
underlying the Note, the Warrant and the Option ("REGISTRATION RIGHTS
AGREEMENT"); and
WHEREAS, the Company and the Purchaser wish the Purchaser to deliver to the
Escrow Agent copies of the Documents (as hereafter defined) and the Escrowed
Payment (as hereafter defined) to be held and released by 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. Whenever used in this Agreement, the following terms
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shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified and
supplemented from time to time by written agreement among the parties
hereto.
(b) "Closing Payment" means the closing payment to be paid to Laurus
Capital Management, L.L.C., the fund manager, as set forth on Schedule A
hereto.
(c) "Documents" means copies of the Purchase Agreement, the Note, the
Registration Rights Agreement, the Option and the Warrant.
(d) "Escrowed Payment" means $15,000,000.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
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among the parties hereto with respect to the matters contained herein and
supersedes all prior agreements, understandings, negotiations and discussions of
the parties, whether oral or written. 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.
1.3. Extended Meanings. In this Agreement words importing the singular
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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.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, 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,
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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; Consent to Jurisdiction. This Agreement
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shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. With respect to any
suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby ("Proceedings"), each party hereto irrevocably submits to
the exclusive jurisdiction of the courts of the County of New York, State of New
York and the United States District court located in the County of New York in
the State of New York. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it may have at any
time to the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party. As between the Company and the
Purchaser, the prevailing party shall be entitled to recover from the other
party its reasonable attorneys' fees and costs. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.
1.7. Construction. Each party acknowledges that its legal counsel
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participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. Company and Purchaser hereby irrevocably designate and
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appoint the Escrow Agent as their escrow agent for the purposes set forth
herein, and the Escrow Agent by its execution and delivery of this Agreement
hereby accepts such appointment under the terms and conditions set forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
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Purchaser shall deliver to the Escrow Agent copies of the Documents executed by
the Company to the extent it is a party thereto.
2.3. Delivery of Escrowed Payment to Escrow Agent. On or about the date
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hereof, the Purchaser shall deliver to the Escrow Agent the Escrowed Payment.
2.4. Intention to Create Escrow Over the Escrowed Payment. The Purchaser
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and the Company intend that the Escrowed Payment shall be held in escrow by the
Escrow Agent and released from escrow by the Escrow Agent only in accordance
with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
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Escrow Agent shall release the Escrowed Payment from escrow as follows:
(a) Promptly following receipt by the Escrow Agent of (i) copies
of the fully executed Documents and this Agreement, (ii) the Escrowed
Payment in immediately available funds, (iii) joint written
instructions ("JOINT INSTRUCTIONS") executed by the Company and the
Purchaser setting forth the payment direction instructions with
respect to the Escrowed Payment and (iv) Escrow Agent's verbal
instructions from Xxxxx Grin and/or Xxxxxx Grin (each of whom is a
director of the Purchaser) indicating that all closing conditions
relating to the Documents have been satisfied and directing that the
Escrowed Payment be disbursed by the Escrow Agent in accordance with
the Joint Instructions, then the Escrowed Payment shall be deemed
released from escrow and shall be promptly disbursed in accordance
with the Joint Instructions. The Joint Instructions shall include,
without limitation, Escrow Agent's authorization to retain from the
Escrowed Payment Escrow Agent's fee for acting as Escrow Agent
hereunder and the Closing Payment for delivery to Laurus Capital
Management, L.L.C. in accordance with the Joint Instructions.
(b) 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") relating to the Escrowed
Payment, the Escrow Agent shall remit the Escrowed Payment 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 is a court
of competent jurisdiction and that the Court Order is final and
non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and
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the Purchaser acknowledge that the only terms and conditions upon which the
Escrowed Payment are to be released from escrow are as set forth in Sections 3
and 4 of this Agreement. The Company and the Purchaser reaffirm their agreement
to abide by the terms and conditions of this Agreement with respect to the
release of the Escrowed Payment. Any dispute with respect to the release of the
Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
agreement between the Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
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duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree that the
Escrow Agent (i) shall not be required to inquire into whether the
Purchaser, the Company or any other party is entitled to receipt of
any Document or all or any portion of the Escrowed Payment; (ii) shall
not be called upon to construe or review any Document or any other
document, instrument or agreement entered into in connection
therewith; (iii) shall be obligated only for the performance of such
duties as are specifically assumed by the Escrow Agent pursuant to
this Agreement; (iv) 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; (v) may assume that any person purporting to give notice or
make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so; (vi) shall not be
responsible for the identity, authority or rights of any person, firm
or company executing or delivering or purporting to execute or deliver
this Agreement or any Document or any funds deposited hereunder or any
endorsement thereon or assignment thereof; (vii) 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 (viii) may consult counsel satisfactory to Escrow Agent
(including, without limitation, Loeb & Loeb, LLP or such other counsel
of Escrow Agent's choosing), 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 Purchaser and the 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 Purchaser and the Company hereby, jointly and severally, indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives from and against any and all
actions taken or omitted to be taken by Escrow Agent or any of them
hereunder and any and all claims,
losses, liabilities, costs, damages and expenses suffered and/or
incurred by the Escrow Agent arising in any manner whatsoever out of
the transactions contemplated by this Agreement and/or any transaction
related in any way hereto, including the fees of outside counsel and
other costs and expenses of defending itself against any claims,
losses, liabilities, costs, damages and expenses arising in any manner
whatsoever out the transactions contemplated by this Agreement and/or
any transaction related in any way hereto, except for such claims,
losses, liabilities, costs, damages and expenses incurred by reason of
the Escrow Agent's gross negligence or willful misconduct. The Escrow
Agent shall owe a duty only to the Purchaser and Company under this
Agreement and to no other person.
(c) The Purchaser and the Company shall jointly and severally
reimburse the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees (which counsel may be Loeb & Loeb LLP or such
other counsel of the Escrow Agent's choosing) incurred in connection
with the performance of its duties and responsibilities hereunder,
which shall not (subject to Section 4.1(b)) exceed $2500.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) business days prior written notice of
resignation to the Purchaser and the Company. Prior to the effective
date of resignation as specified in such notice, the Purchaser and
Company will issue to the Escrow Agent a Joint Instruction authorizing
delivery of the Documents and the Escrowed Payment to a substitute
Escrow Agent selected by the Purchaser and the Company. If no
successor Escrow Agent is named by the Purchaser and the 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
deposit the Documents and the Escrowed Payment with the clerk of any
such court and/or otherwise commence an interpleader or similar action
for a determination of where to deposit the same.
(e) The Escrow Agent does not have and will not have any interest
in the Documents and the Escrowed Payment, but is serving only as
escrow agent, having only possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be
authorized hereby or within the rights or powers conferred upon it
hereunder, nor for action taken or omitted by it in good faith, and in
accordance with advice of counsel (which counsel may be Loeb & Loeb,
LLP or such other counsel of the Escrow Agent's choosing), and shall
not be liable for any mistake of fact or error of judgment or for any
acts or omissions of any kind except to the extent any such liability
arose from its own willful misconduct or gross negligence.
(g) 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.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Documents and the Escrowed Payment, in any other
dispute between the Purchaser and the Company, whether or not the
Escrow Agent is then holding the Documents and/or the Escrowed Payment
and continues to act as the Escrow Agent hereunder.
(i) 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
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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 Documents and/or
the Escrowed Payment, 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 Documents and the
Escrowed Payment pending receipt of a Joint Instruction from the
Purchaser and Company, (ii) commence an interpleader or similar
action, suit or proceeding for the resolution of any such dispute;
and/or (iii) deposit the Documents and the Escrowed Payment 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
Purchaser 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 Documents and the
Escrowed Payment. 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 which such counsel may be Loeb &
Loeb LLP or such other counsel of the Escrow Agent's choosing.
(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 Purchaser and Company or to any other person, firm, company or
entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the
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Escrowed Payment in accordance with the terms of this Agreement or earlier upon
the agreement in writing of the Purchaser and Company or resignation of the
Escrow Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
If to the Company, to:
New Century Energy Corp.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Purchaser, to:
Laurus Master Funds, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
With a copy to:
Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
If to the Escrow Agent, to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
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bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or
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obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall inure 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
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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
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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 agreement. This Agreement may
be executed by facsimile transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
COMPANY:
NEW CENTURY ENERGY CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: President
PURCHASER:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxx Grin
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Name: Xxxxxx Grin
Title: Director
ESCROW AGENT:
LOEB & LOEB LLP
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Partner
SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD. $ 15,000,000
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
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TOTAL $ 15,000,000
FUND MANAGER CLOSING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in
000 Xxxxx Xxxxxx, 00xx Xxxxx connection with investment
Xxx Xxxx, Xxx Xxxx 00000 by Laurus Master Fund,
Fax: 000-000-0000 Ltd. for which Laurus
Capital Management,
L.L.C. is the Manager.
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TOTAL $ 525,000
WARRANTS
WARRANT RECIPIENT WARRANTS IN CONNECTION
WITH OFFERING
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LAURUS MASTER FUND, LTD. 7,258,065 Warrants issuable in
c/o M&C Corporate Services Limited connection with investment by
X.X. Xxx 000 GT Laurus Master Fund, Ltd.
Xxxxxx House
Xxxxxx Town
South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
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TOTAL 7,258,065 WARRANTS
