EXHIBIT 10.2
ESCROW AGREEMENT
ESCROW AGREEMENT, dated May 7, 1998, between NUWAVE TECHNOLOGIES, INC.,
a Delaware corporation, with an address at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000 (the "Company"), XXXXXXX-XXXXXX ASSOCIATES, L.P., with an address
at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Placement Agent"), and
REPUBLIC NATIONAL BANK OF NEW YORK, as escrow agent (the "Escrow Agent").
WHEREAS, the Company is offering in a private placement under Section
4(2) of the Securities Act of 1933, as amended, a minimum of 25 units, up to a
maximum of 70 units (the "Units"), each Unit consisting of (i) a number of
shares of common stock, $.01 par value per share (the "Common Stock"),
determined by dividing the purchase price per Unit of $100,000 (the "Offering
Price") by $2.588, for the initial closing of the Offering; and the lesser of
(x) $3.20 and (y) eighty percent (80%) of the "Average Closing Bid Price" which
shall be the average closing bid price for the Common Stock for the eight (8)
consecutive trading days immediately preceding the date of a closing (a "Closing
Date") of the Offering, for each subsequent closing, and (ii) Class A Redeemable
Warrants (the "Warrants") to purchase seventy-five percent (75%) of such number
of shares of Common Stock of the Company (the "Warrant Shares"), to prospective
investors pursuant to the Company's Confidential Private Placement Memorandum,
dated on or about May 7, 1998 (the "Memorandum"), in connection with the
consummation of the Company's private placement (the "Private Placement");
WHEREAS, the Private Placement is being conducted on a "best efforts -
all or none" basis as to the minimum of 25 Units (the "Minimum Offering") and on
a "best efforts" basis as to an additional 45 Units.
WHEREAS, unless the Escrow Agent receives the letter attached hereto as
Exhibit A prior to June 7, 1998, (or July 7, 1998 if the Escrow Agent has been
advised in writing by the Company and the Placement Agent prior to June 7, 1998
that the offering has been extended to July 7, 1998) (the "Offering Period"),
and, for the purpose of the "Initial Closing" (as defined in the Memorandum)
there is a minimum of $2,500,000 in the Escrow Account, or, for purposes of an
"Interim Closing" (as defined in the Memorandum) there is a minimum of $100,000
in the Escrow Account, and, in each case, the subscriptions have been accepted
by the Company, all funds received by the Escrow Agent will be returned, without
interest, to the subscribers.
WHEREAS, the Memorandum provides that all funds received from investors
for subscriptions will be placed into a non-
interest bearing escrow account with the Escrow Agent (the "Escrow Account")
until such time as the release or return of such funds is required pursuant to
Section 5 hereof; and
WHEREAS, Republic National Bank of New York has consented to act as
escrow agent, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereby agree as follows:
1. The Company and the Placement Agent hereby appoint Republic National
Bank of New York as escrow agent and Republic National Bank of New York hereby
accepts such appointment in accordance with the terms and conditions herein set
forth
2. The Company and the Placement Agent shall each notify the Escrow
Agent of its acceptance or rejection of subscriptions respecting subscribers.
3. The Company and the Placement Agent shall each deliver to the Escrow
Agent all funds received from subscribers in payment of subscriptions for Units
from time to time as the Company or the Placement Agent receives such
subscriptions together with the name, mailing address and amount received from
each subscriber. The Escrow Agent shall accept all funds received by it from the
Company and/or the Placement Agent (or directly by wire from subscribers),
provided that the Escrow Agent shall not deposit funds received respecting any
subscription for Units which the Company or the Placement Agent has given notice
of its rejection, and the Company and/or Placement Agent shall promptly return
such funds to the subscriber. The Escrow Agent shall promptly deposit all funds
made payable to "Republic National Bank of New York, as Escrow Agent for NUWAVE
Technologies, Inc." for subscriptions for Units into the non-interest bearing
Escrow Account for collection (such funds, when collected, will be and are
hereinafter referred to as the "Proceeds"). The Escrow Agent shall have no duty
to solicit any funds with respect to any subscriber or to determine the
propriety of any Proceeds received by it. The Escrow Agent shall hold the funds
uninvested and Escrow Agent shall deposit the funds in an account to be entitled
"Republic National Bank of New York, as Escrow Agent for NUWAVE Technologies,
Inc." The Escrow Agent shall have no duty to enforce payment of any check
received and if a check is returned to the Escrow Agent unpaid, the sole duty of
the Escrow Agent shall be to forward the check to the Placement Agent.
4. If the Company or the Placement Agent rejects or has rejected the
subscription of any subscriber for which the Escrow Agent has collected Proceeds
and such Proceeds remain in the
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Escrow Account, then the Escrow Agent, upon receipt of written instructions from
the Company or the Placement Agent, shall promptly remit the amount of such
subscriber's funds as are held in the Escrow Account without interest to such
subscriber at the address supplied by the Company or Placement Agent.
5. The Proceeds to be held in the Escrow Account shall be subject to,
and distributed in accordance with, the following provisions:
a. If, on or prior to the termination of the Offering Period, the
Escrow Agent has been provided with the letter attached hereto as Exhibit A,
and, for the purpose of the "Initial Closing" (as defined in the Memorandum)
there is a minimum of $2,500,000 in the Escrow Account, or, for purposes of an
"Interim Closing" (as defined in the Memorandum) there is a minimum of $100,000
in the Escrow Account, and, in each case, the subscriptions have been accepted
by the Company, then, on a Closing Date and at the time and place as shall be
stated in the letter, the Escrow Agent shall deliver to the Company and/or the
Placement Agent by wire transfer or other immediately available funds the
principal amount of the Proceeds held in the Escrow Account to the extent
directed in such letter.
b. If the Escrow Agent has received from the Company and the
Placement Agent a letter in the form attached hereto as Exhibit B then the
Escrow Agent shall promptly terminate the Escrow Account and return all Proceeds
held by it to the subscribers in the amounts received by the Escrow Agent from
such persons.
c. In the event the Escrow Agent has not received either Exhibit A
or Exhibit B prior to the termination of the Offering Period, then the Escrow
Account shall be closed and all funds returned to subscribers. All funds
received by the Escrow Agent after the termination of the Offering Period shall
not be collected or deposited by the Escrow Agent, but shall be forwarded
promptly to the subscriber. This Section 5.c shall survive the resignation of
the Escrow Agent or the termination of this Agreement.
d. All funds received by the Escrow Agent on or after a Closing Date
and on or before the termination of the Offering Period (the "Additional
Proceeds") shall be collected and deposited by the Escrow Agent. Thereafter, if
on or before the termination of the Offering Period, the Company and the
Placement Agent shall provide the Escrow Agent with a letter in the form
attached hereto as Exhibit A, setting forth the time and place of the next
Closing Date, and the respective amounts out of the Additional Proceeds to be
paid to the Company and/or the
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Placement Agent. At such Closing Date, the Escrow Agent shall deliver to the
Company and/or the Placement Agent such amounts as shall be stated in that
letter.
e. The Escrow Agent shall be entitled to rely upon any notice,
instrument or other writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity or the service thereof. The Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine. The
Escrow Agent shall not have any obligation to release any funds against
uncollected checks.
f. The Escrow Agent may act in reliance upon any signature believed
by it to be genuine and Escrow Agent shall have no duty to make inquiry as to
the genuineness of any signatures. The names and true signatures of each
individual authorized to act in behalf of the Company and Placement Agent are
attached hereto as Exhibit C.
g. The Company and the Placement Agent will provide written notice
to the Escrow Agent of any extension of the Offering Period beyond June 7, 1998.
6. a. The Company and the Placement Agent agree to hold the Escrow
Agent harmless and to indemnify the Escrow Agent against any losses,
liabilities, expenses (including attorney's fees and expenses), claims, demands,
suits, actions or damages arising out of or in connection with the performance
of its obligations in accordance with the provisions of this Agreement, except
for gross negligence or willful misconduct of the Escrow Agent. Further, the
Company shall indemnify the Escrow Agent for any loss the Escrow Agent may incur
as a result of releasing Proceeds to the Company or to the subscribers, which
Proceeds were credited to the Escrow Account as a result of a dishonored check.
b. The Escrow Agent's duties are only such as are specifically
provided herein. The Escrow Agent shall have no responsibility hereunder other
than to follow faithfully the instructions herein contained. The Escrow Agent
may consult with counsel and shall be fully protected in any actions taken in
good faith in accordance with such advice. The Escrow Agent shall be fully
protected in acting in accordance with any written instructions given to it
hereunder believed by it to have been executed by the proper parties.
c. The Company agrees to pay the Escrow Agent a fee of $1,500.00 in
advance, as compensation for the ordinary administrative services to be rendered
hereunder and agrees to
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pay all reasonable expenses of the Escrow Agent, including fees for refund
checks respecting the Proceeds not in excess of $9.00 per check and its
reasonable attorney's fees and expenses, which it may incur in connection with
the performance of its duties under this Agreement or under the indemnity
provided in Section 5.a. hereof.
d. It is agreed that, should any dispute arise between any of the
parties hereto or should the Escrow Agent be uncertain as to its duties
hereunder with respect to the disposition and/or ownership or right of
possession of the Escrow Account, the Escrow Agent is authorized and directed to
retain in its possession, without liability to anyone, all or any part of the
Escrow Account until directed to dispose of it pursuant to joint written
instruction of the Company and the Placement Agent or by the final order, decree
or judgment of a court or other tribunal of competent jurisdiction in the United
States of America.
e. The Escrow Agent may resign at any time by giving written notice
thereof to the Company, but such resignation shall not become effective until a
successor escrow agent shall have been appointed and shall have accepted such
appointment in writing. If any instrument of acceptance by a successor escrow
agent shall not have been delivered to the Escrow Agent within thirty days after
the giving of such notice of resignation, the resigning Escrow Agent may, at the
expense of the Company, petition any court of competent jurisdiction for the
appointment of a successor escrow agent.
f. The provisions of this Section 6 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
7. This Agreement shall be construed in accordance with the laws of the
State of New York. Any actions to enforce or interpret this Agreement must be
brought in any federal or state court located in the City of New York. The
parties consent to the exclusive in personam jurisdiction of any court of
competent subject matter jurisdiction located in the City of New York and
consent to service of process by mail in an action commenced in such court. This
Agreement may be executed in several counterparts, each one of which shall
constitute an original, and all collectively shall constitute but one
instrument.
8. Any notice, consent or request to be given in connection with any of
the terms or provisions of this Agreement shall be in writing and shall be sent
by registered mail, postage prepaid, or delivered:
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a. if to the Escrow Agent, to:
Republic National Bank of New York
Fifth Avenue at 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
b. if to the Company to:
NUWAVE Technologies, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxx X. X'Xxxxx
c. if to the Placement Agent to:
Xxxxxxx-Xxxxxx Associates, L.P.
00 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
9. This Agreement shall terminate upon the termination of the Offering
Period, unless previously terminated by fully disbursing the Escrow Account,
except as provided otherwise herein.
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the date first above written.
REPUBLIC NATIONAL BANK NUWAVE TECHNOLOGIES, INC.
OF NEW YORK
By:/s/ Xxxxxx Xxxxxxx By:/s/ Xxxxxxxx X. X'Xxxxx
--------------------------- --------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxxxx X. X'Xxxxx
Title: First Vice President Title: Chief Financial Officer
XXXXXXX-XXXXXX ASSOCIATES, L.P.
By: Xxxxxx-Xxxxxxx Securities Corp.
General Partner
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: General Partner
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EXHIBIT A
_________________, 0000
Xxxxxxxx Xxxxxxxx Xxxx xx Xxx Xxxx
Fifth Avenue at 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Escrow Agreement dated May 7, 1998 between
NUWAVE Technologies, Inc.
and Republic National Bank of New York
Dear Sirs:
The conditions to the consummation of the Private Placement have been
satisfied due to one of the following events:
_____1. At least 25 Units have been subscribed for and
accepted by the Company and therefore the Initial
Closing will be consummated on ___________, 1998.
OR
_____2. The Initial Closing already took place and at least 5
additional Units ($500,000 of Units), up to the
maximum of 70 Units, have been subscribed for and
accepted by the Company, and therefore an Interim
Closing will be consummated on __________, 1998.
OR
_____3. The Initial Closing already took place and the
Offering Period has expired. Therefore, a Final
Closing will be held on ___________, 1998 for
whatever amount of Units have been subscribed for and
accepted by the Company at the date of the expiration
of the Offering Period.
Please distribute the Escrow Account established under the Escrow
Agreement and pay the Proceeds in the amount of $______ thereof by [wire
transfer][immediately available funds] on the Closing Date as follows:
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a.
b.
c.
d.
All terms defined herein shall have the definitions ascribed to them
in the Escrow Agreement referred to above.
Very truly yours,
NUWAVE TECHNOLOGIES, INC.
By:
------------------------------
Name:
Title:
XXXXXXX-XXXXXX ASSOCIATES, L.P.
By: Xxxxxx Xxxxxxx Securities Corp.
General Partner
By:
--------------------------------
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EXHIBIT B
_________________, 0000
Xxxxxxxx Xxxxxxxx Xxxx xx Xxx Xxxx
Fifth Avenue at 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Escrow Agreement dated May 7, 1998 between
NUWAVE Technologies, Inc.
and Republic National Bank of New York
Dear Sirs:
The conditions to the consummation of the Private Placement have not
been consummated.
Please terminate the Escrow Account established under the Escrow
Agreement and pay the full balance and Proceeds thereof by immediately available
funds to the subscribers in the amounts received from each subscriber. Attached
hereto is a list setting forth the name and address of all subscribers and the
amount to be returned thereto.
All terms defined herein shall have the definitions ascribed to them in
the Escrow Agreement referred to above.
Very truly yours,
NUWAVE TECHNOLOGIES, INC.
By:
--------------------------------
XXXXXXX-XXXXXX ASSOCIATES, L.P.
By: Xxxxx Xxxxxxx Securities Corp.
General Partner
By:
--------------------------------
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EXHIBIT C
The Escrow Agent is authorized to accept instructions signed or
believed by the Escrow Agent to be signed by any one of the following on behalf
of the Company and the Placement Agent.
COMPANY
Name True Signature
Xxxxxxxx X. X'Xxxxx, Vice President ----------------------------
Xx Xxxx, Director ----------------------------
PLACEMENT AGENT
Name True Signature
Xxxxx Xxxxxx ----------------------------
Xxxxxxx Xxxx ----------------------------
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