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EXHIBIT 10.4
ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement"), dated as of the 4th day of
October, 1999, by and among CREATIVE PRODUCTS INTERNATIONAL, INC., a Delaware
corporation with an address at P. O. Xxx 0000, Xxxxxxx, Xxxxxxxxxx 00000 (the
"Company"), XXXXX X. XXXXXXXX, an individual with an address at 0000 Xxxxxxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000 ("Xxxxxxxx"), and XXXXX XXXX LLP, a law
firm with an address at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company and Xxxxxxxx have entered into an Employment
Agreement, dated September 24, 1999 (the "Employment Agreement"), a true and
correct copy of which has been delivered to the Escrow Agent, that provides,
among other things, for the sale by the Company to Xxxxxxxx of an aggregate of
384,000 shares (the "Shares") of the Company's common stock, par value $.01 per
share (the "Common Stock"), at a purchase price of $.05 per share, or an
aggregate of $19,200 (the "Aggregate Purchase Price"), subject to the parties
entering into this Agreement,
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms not defined herein shall have
the meaning ascribed thereto in the Employment Agreement.
2. DEPOSIT. (a) Simultaneously with the execution hereof, the Company,
on behalf Xxxxxxxx, is delivering to the Escrow Agent a stock certificate
evidencing the Shares registered in the name of Xxxxxxxx on the books and
records of the Company, duly endorsed in blank by Xxxxxxxx (such stock
certificate, as so endorsed is referred to herein, as the "Certificate"). The
Company will deliver to the Escrow Agent all dividends and other distributions
paid on or made with respect to the Shares during the term of this Agreement
(all such dividends and distributions received by the Escrow Agent are
hereinafter referred to as the "Distributions").
(b) The Escrow Agent by its execution and delivery of this Agreement
acknowledges receipt of the Certificate, and agrees to hold the Certificate and
all Distributions (collectively, the "Escrow Fund") in escrow and to act with
respect thereto and otherwise as hereinafter set forth.
3. DISPOSITION OF THE ESCROW. (a) Subject to the other provisions of
this Section 3, the Escrow Agent shall release the Escrow Fund from escrow and
deliver the same to Xxxxxxxx on the date of completion of the Spin-off (the
"Spin-off Date"). The Company and Xxxxxxxx will deliver to the Escrow Agent on,
or as soon as practicable after the Spin-off Date, written notice, signed by
each, of the completion of the Spin-off, which notice (the "Spin-off Notice")
will specify the Spin-off Date.
(b) Xxxxxxxx acknowledges that if the Spin-off is not completed and
the Escrow Agent does not receive the Spin-off Notice on or before March 31,
2000, the Company shall have the right, during the period commencing April 1,
2000 and terminating at 5:00 P.M. (New York Time) on April 30, 2000 (the
"Exercise Period"), to repurchase the Shares from Xxxxxxxx.. The Company shall
exercise such right by giving written notice thereof during the Exercise Period
to the Escrow Agent and Xxxxxxxx (the "Exercise Notice"), which in the case of
the Escrow Agent shall be accompanied by a bank cashier's or certified check
payable to the order of Xxxxxxxx in the amount of the Aggregate Purchase Price
(the "Payment"). Upon receipt by the Escrow Agent of the Exercise Notice and the
Payment, the Escrow shall promptly release from escrow and deliver to the
Company all of the Escrow Fund. If the Escrow Agent does not receive the
Spin-off Notice on or before March 30, 2000 and the Exercise Notice and
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Payment on or before the expiration of the Exercise Period, the Escrow Agent
shall promptly release from escrow and deliver to Xxxxxxxx all of the Escrow
Fund.
4. TERMINATION UPON FINAL DISPOSITION. This Agreement shall terminate
upon the final disposition of the Escrow Fund and may be terminated at any time
prior thereto by and upon receipt by the Escrow Agent of written notice of
termination signed by the Company and Xxxxxxxx directing the disposition of the
Escrow Fund.
5. RIGHTS IN RESPECT OF SHARES HELD IN ESCROW. All rights in connection
with or incident to the ownership of the Shares, including without limitation,
the right to exercise any and all voting rights associated with the Shares and
the right to receive any and all dividends or other distributions in respect of
the Shares, during the period such Shares are held in escrow pursuant hereto,
shall be vested solely in Xxxxxxxx, subject to such dividends or distributions
being held in escrow pursuant to this Agreement as provided herein.
6. ESCROW PROVISIONS. (a) The obligations and duties of the Escrow
Agent in connection herewith are confined to those specifically enumerated
herein and the Escrow Agent shall not be liable or responsible for any act or
failure to act on its part except for its own willful misconduct or gross
negligence.
(b) The duties of the Escrow Agent hereunder shall be limited to the
safekeeping of the Escrow Fund and the disposition of the same solely in
accordance with the terms and conditions hereof and no implied duties or
obligations shall be read herein against the Escrow Agent.
(c) The Escrow Agent may act or refrain from acting with respect to
any matter referred to herein in full reliance upon the advice of counsel of its
choice, and shall be fully protected and released as to any matter with respect
to which it shall have acted or refrained from acting upon the advice of such
counsel.
(d) The Escrow Agent may rely or act upon orders or directions,
instruments or signatures believed by it to be genuine and may assume that any
person purporting to give any written notice, advice or instruction in
connection therewith has been fully authorized to do so.
(e) The Escrow Agent shall not be bound by any modification,
amendment, termination, cancellation, rescission or supercedence of the terms
and conditions contained herein unless the same shall be in writing and signed
by the other parties hereto. However, the Escrow Agent's duties as Escrow Agent
hereunder shall not be affected, unless the Escrow Agent shall have given its
prior written consent thereto.
(f) If the Escrow Agent shall be uncertain as to its duties or
rights hereunder, then Escrow Agent shall refrain from taking any action other
than to keep safely the Escrow Fund, until it shall be directed otherwise in
writing jointly by the Company and Xxxxxxxx or by a final judgment or order of a
court of competent jurisdiction. Any such judgment shall be delivered to the
Escrow Agent with a written opinion of counsel setting forth that such judgment
is final and that such court is a court of competent jurisdiction and that
Escrow Agent shall be fully protected in relying thereon.
(g) The Escrow Agent shall not be required to institute or defend
any action or legal proceeding involving the terms and conditions contained
herein. For all payments and deliveries made by the Escrow Agent in accordance
with the provisions hereof, the Escrow Agent shall have full release, discharge
and acquittance and shall not be subject to any claim on the part of any persons
beneficially interested hereunder. The Company and Xxxxxxxx hereby agree,
jointly and severally, to indemnify and hold harmless the Escrow Agent and its
successors and assigns from and against any and all claims, disputes or defenses
which may arise between the Company and Xxxxxxxx.
(h) The Company shall reimburse and indemnify the Escrow Agent for,
and hold it harmless against, any and all loss, liability, costs or expenses in
connection herewith including reasonable attorneys' fees, incurred on the part
of the Escrow Agent or arising out of or in connection with its acceptance of,
or the performance of its duties and obligations under, this Agreement, as well
as the reasonable costs and expenses of defending against
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any claim or liability arising out of or relating to this Agreement, except for
such loss, liability, costs or expenses resulting from Escrow Agent's own gross
negligence or willful misconduct.
(i) The Escrow Agent may at any time resign hereunder by giving
written notice of resignation to the other parties hereto at least ten days
prior to the date specified for such resignation to take effect, and upon the
effective date of such resignation, the Escrow Fund then held by the Escrow
Agent hereunder shall be turned over to a new escrow agent designated in writing
by the Escrow Agent who shall be reasonably acceptable to the Company and
Xxxxxxxx and who shall have accepted all of the terms hereof, whereupon all of
the Escrow Agent's obligations hereunder shall cease and terminate. If no such
person shall have been approved by the Company and Xxxxxxxx by such date, the
Escrow Agent shall be entitled to deposit the Escrow Fund with a court of
competent jurisdiction whereupon all of the Escrow Agent's obligations hereunder
shall cease and terminate.
7. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address set forth above or to such other address as any of the
parties shall give notice to the other parties hereto in the manner provided (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.
8. WAIVER. No waiver by any party of any breach of any term contained
in this Escrow Agreement, in any one or more instances, shall be deemed to be or
construed as a further continuing waiver of any such breach or a waiver of any
breach of any other term contained in this Agreement.
9. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed as original and which counterparts together shall
constitute one and the same instrument.
10. APPLICABLE LAW. This Agreement is intended to be construed solely
in accordance with and governed solely by the laws of the State of New York
pertaining to contracts made and fully performed therein (without giving effect
to choice of law principles).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
XXXXX XXXX LLP /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Partner
CREATIVE PRODUCTS INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board
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