EXHIBIT 10.4
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of July 6, 2004, by and
between Newport International Group, Inc., a Delaware corporation with its
principal place of business at 00000 Xx Xxxxx Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxx
00000 (the "Target Company"); Gottbetter & Partners, LLP with its principal
place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Escrow
Agent"): and Xxxxxxx Park Investments Plc, a corporation organized under the
laws of England and Wales with its offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X
0XX ("Xxxxxxx").
RECITALS
A. Simultaneously with the execution, of this Agreement,
Xxxxxxx and the Target Company entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of the date hereof and incorporated herein
by reference, pursuant to which the Target Company has agreed to issue and
Xxxxxxx has agreed that the Xxxxxxx Consideration Shares shall he deposited into
escrow pursuant to this Agreement, including fifty percent (50%) of the Xxxxxxx
Consideration Shares to be deposited into escrow as Downside Price Protection
(the "Xxxxxxx Escrow Shares").
B. The Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the purchase of the shares of
Consideration Stock.
C. All capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Stock Purchase Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEPOSIT INTO ESCROW. At Closing, the Target Company shall
(i) deposit the Xxxxxxx Consideration Shares with the Escrow Agent, (ii) deliver
blank stock powers (the "Stock Powers") for the Xxxxxxx Escrow Shares to the
Escrow Agent and (iii) deposit the Consideration Stock with the Escrow Agent.
The Escrow Agent shall hold the Xxxxxxx Consideration Shares, the Consideration
Stock and the Stock Powers in escrow when delivered.
2. TERMS OF ESCROW. (a) If the Market Value of the Common
Stock two years after Closing is less than the Closing Price, the Target Company
shall sell to Xxxxxxx the number of Xxxxxxx Escrow Shares (the "Xxxxxxx
Protection Shares") equal to (a) the Xxxxxxx Consideration Shares multiplied by
(b) the Percentage Decrease, at a purchase price of 1p per Xxxxxxx Consideration
Share (the "Escrow Purchase Price"). The "Percentage Decrease" shall be equal to
1 - Market Value/the Closing Price. "Market Value" shall be the average of the
ten (10) closing bid prices per share of the Common Stock during the ten (10)
trading days immediately preceding the two year anniversary of the Closing.
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Within three (3) Business Days of the two year anniversary of the
Closing, Xxxxxxx shall (i) send a notice ("Sale Notice") to the Target Company
and the Escrow Agent of the Xxxxxxx Protection Shares to be sold by the Target
Company to Xxxxxxx, if any, and (ii) deposit the Escrow Purchase Price with the
Escrow Agent, if necessary. Within fourteen (14) Business Days of the Target
Company's and the Escrow Agent's receipt of the Sale Notice and Escrow Agent's
receipt of the Escrow Purchase Price, the Escrow Agent is authorized and
directed (i) to pay the Escrow Purchase Price to the Target Company, if any,
(ii) to deliver the Xxxxxxx Protection Shares, if any, and the Stock Powers to
Xxxxxxx, (iii) to deliver the remaining Xxxxxxx Escrow Shares, if any, to the
Target Company, and (iv) to deliver the Stock Powers to the Target Company if
the total number of Xxxxxxx Protection Shares is zero.
(b) If at any time before September 30, 2001, the Xxxxxxx
Consideration Shares are admitted for trading on the London. Stock Exchange plc
(the "London Exchange"), the Escrow Agent is authorized and directed to
distribute, within fourteen (14) Business Days of such admittance, 0) the
Consideration Stock to Xxxxxxx and (ii) fifty percent (50%) of the Xxxxxxx
Consideration Shares to the Target Company.. If the Xxxxxxx Consideration Shares
are not admitted for trading on the London Exchange by September 30, 2004, the
Escrow Agent is authorized and directed to distribute, no later than October 5,
2004, (i) the Consideration Stock to the Target Company and (ii) the Xxxxxxx
Consideration Shares to Xxxxxxx.
3. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
(a) The parties hereto agree that the duties and obligations
of the Escrow Agent shall be only those obligations herein specifically provided
and no other. The Escrow Agent's duties are those of a depositary only, and the
Escrow Agent shall incur no liability whatsoever, except as a direct result of
its willful misconduct or gross negligence in the performance of its duties
hereunder:
(b) The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or omitted to be taken by
it in accordance with the advice of such counsel;
(c) The Escrow Agent shall not be bound in any way by the
terms of any other agreement to which Xxxxxxx and the Target Company arc panics,
whether or not the Escrow Agent has knowledge thereof, and the Escrow Agent
shall not in any way be required to determine whether or not any other agreement
has been complied with by Xxxxxxx and the Target Company, or any other party
thereto. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Agreement unless
the same shall be in writing and signed jointly by Xxxxxxx and the Target
Company and agreed to in writing by the Escrow Agent:
(d) If the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions. claims or demands which, in its
opinion, are in conflict with any of the provisions of this Agreement, the
Escrow Agent shall be entitled to refrain from taking any
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action other than keeping safely the Consideration (as defined below) or taking
certain action until the Escrow Agent is directed otherwise in writing jointly
by Xxxxxxx and the Target Company or by a final judgment of a court of competent
jurisdiction;
(e) The Escrow Agent shall be fully protected in relying upon
any written notice, demand, certificate or document which the Escrow Agent, in
good faith, believes to be genuine. The Escrow Agent shall not be responsible
for the sufficiency or accuracy of the form. execution, validity or genuineness
of documents or securities now or hereafter deposited hereunder or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document, security or
endorsement;
(f) The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration;
(g) If the Escrow Agent at any time, in its sole discretion,
deems it necessary or advisable to relinquish custody of any of the Securities
(to the extent delivered to the Escrow Agent pursuant hereto, the
"Consideration"), it may do so by delivering the same to another Person that
agrees to act as escrow agent hereunder and whose substitution for the Escrow
Agent is agreed upon in writing by Xxxxxxx and the Target Company; provided,
however, that such successor Escrow Agent must be resident in the United States.
If no such escrow agent is selected within three (3) days after the Escrow Agent
gives notice to Xxxxxxx and the Target Company of the Escrow Agent's desire to
so relinquish custody of the Consideration and resign as Escrow Agent, then the
Escrow Agent may do so by delivering the Consideration to the clerk or other
proper officer of a state or federal court of competent jurisdiction situate in
the state and county of New York. The fee of any court officer shall be borne by
the Target Company. Upon such delivery, the Escrow Agent shall be discharged
from any and all responsibility or liability with respect to the Consideration
and this Agreement and each of the Target Company and Xxxxxxx shall promptly pay
all monies it may owe to the Escrow Agent for its services hereunder. including,
but not limited to, reimbursement of its out-of-pocket expenses pursuant to
paragraph (i) below;
(h) This Agreement shall not create any fiduciary duty on then
Escrow Agent's part to Xxxxxxx or the Target Company, nor disqualify the Escrow
Agent from representing either party hereto in any dispute with the other,
including any dispute with respect to the Purchase Agreement or Debenture;
provided, however, that in the event of such dispute. the Escrow Agent shall
have the right to commence an interpleader action in any court of competent
jurisdiction of the state of New York or of the United States located in the
county and state of New York, deposit the Consideration with such court;
(i) The parties acknowledge and agree that the Escrow Agent is
counsel to Xxxxxxx. The parties agree to, and agree not to object to, the Escrow
Agent's engagement as Escrow Agent hereunder;
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(j) Upon the full performance of this Agreement, the Escrow
Agent shall be deemed released and discharged of any further obligations
hereunder.
4. INDEMNIFICATION.
(a) Xxxxxxx hereby indemnifies and holds free and harmless the
Escrow Agent from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amounts paid in
settlement) resulting from claims asserted by the Target Company against the
Escrow Agent with respect to the performance of any of the provisions of this
Agreement;
(b) The Target Company hereby indemnifies and holds free and
harmless the Escrow Agent from any and all losses, expenses, liabilities and
damages (including but not limited to reasonable attorney's fees, and amount
paid in settlement) resulting from claims asserted by Lanky against the Escrow
Agent with respect to the performance of any of the provisions of this
Agreement;
(c) Xxxxxxx and the Target Company, jointly and severally,
hereby indemnify and hold the Escrow Agent harmless from and against any and all
losses, damages, taxes, liabilities and expenses that may be incurred by the
Escrow Agents arising out of or in connection with its acceptance of appointment
as the Escrow Agent hereunder and/or the performance of its duties pursuant to
this Agreement, the Purchase Agreement and the Securities. including, but not
limited to, all legal costs and expenses of the Escrow Agent incurred defending
itself against any claim or liability in connection with its performance
hereunder, provided that the Escrow Agent shall not be entitled to any indemnity
for any losses, damages, taxes, liabilities or expenses that directly result
from its willful misconduct or gross negligence in its performance as Escrow
Agent hereunder;
(d) In the event of any legal action or proceeding involving
any of the parties to this Agreement which is brought to enforce or otherwise
adjudicate any of the rights or obligations of the parties hereunder, the
non-prevailing party or parties shall pay the legal fees of the prevailing party
or parties and the legal fees, if any, of the Escrow Agent.
5. Miscellaneous.
(a) All notices, including Notices of Conversion and Notices
of Exercise, objections, requests, demands and other communications sent to any
party hereunder shall be deemed duly given if (x) in writing and sent by
facsimile transmission to the Person for whom intended if addressed to such
Person at its facsimile number set forth below or such other facsimile number as
such Person may designate by notice given pursuant to the terms of this Section
5 and (y) the sender has confirmation of transmission:
(i) If to the Target Company: Newport International Group, Inc
00000 XX Xxxxx Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: President and CEO
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Tel: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Xxxxxxx: Xxxxxxx Park Investments PLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attn: Xxxxx Xxxxx
Tel: 00.000.000.0000
Fax: 00.000.000.0000
(iii) If to the Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) This Agreement has been prepared, negotiated and delivered
in the state of New York and shall be governed by and construed and enforced in
accordance with the laws of the state of New York applicable to contracts
entered into and performed entirely within New York, without giving effect to
the principles of New York law relating to the conflict of laws.
(c) This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
sane agreement end shall become effective when counterparts have been sighed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The
assignment by a party of this Agreement or any rights hereunder shall not affect
the obligations of such party under this Agreement.
6. TERMINATION OF ESCROW. The term of this Escrow Agreement shall begin
upon the date hereof and shall continue until terminated upon the earlier to
occur of (i) the Xxxxxxx Escrow Shares are fully distributed or (ii) the written
agreement of the parties to terminate this Agreement. Upon, the termination of
this Escrow Agreement pursuant to subsection (ii), the Escrow Agent shall
distribute any of the Xxxxxxx Escrow Shares then held by it pursuant to the
terms of the written agreement of the parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
The Target Company;
Newport International Group, Inc.
By: /s/ Cery Perl
-------------
Name: Cery Perl
Title: CEO
Xxxxxxx:
Dungarvon Associates, Inc. on behalf of
Xxxxxxx Park Investments Plc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
Escrow Agent:
Gottbetter & Partners, LLP
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Partner
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