EXHIBIT 10.22
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 23 day of February, 2004 among each
of eLINEAR, INC., a Delaware corporation, (collectively, the "COMPANY") NetView
Technologies, Inc. ("NVT"), NetBridge Technologies, Inc. ("NBT") and Laurus
Master Fund, Ltd. (the "PURCHASER"), and Dechert LLP (the "ESCROW AGENT"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, NBT and NVT and the Purchaser have entered a Security
Agreement (the "Security Agreement") for the sale by the Company of a Minmum
Borrowing Note (Minimum Borrowing Note") and secured revolving note ("REVOLVING
NOTE") in the aggregate principal amounts and in the denominations set forth on
Schedule A hereto; and
WHEREAS, the parties hereto require the Company to deliver the notes
against payment therefor, with such notes and payment to be delivered to the
Escrow Agent to be held in escrow and released by the 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. Terms not otherwise defined herein
shall have the meaning set forth in the Purchase Agreement.
a) "Agreement" means this Agreement and all amendments made hereto
and thereto by written agreement between the parties.
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b) "Company Documents" means the Security Agreement, the Revolving
Note, the Minimum Borrowing Note, the Minimum Borrowing Note
Registration Rights Agreement, the Revolving Note Warrant, Payoff
Letters, the Charter Documents, the Legal Opinion and the Closing
Payment.
c) "Charter Documents" means the certified copy of the certificate
of incorporation of eLINEAR, INC. and its bylaws, and each of its
NVT and NBT.
d) "Closing Payment " means the fees to be paid to Laurus Capital
Management LLC set forth on Schedule A hereto.
e) "Disbursement Letter" means that certain letter delivered to the
Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.
f) "Escrowed Payment" means $3,000,000.
g) "Legal Opinion" means the original signed legal opinion of Xxxxxx
& Xxxxxxxxx, P.C
h) "Purchaser Documents" means the Escrowed Payment, the Security
Agreement, Revolving Note Registration Rights Agreement and the
Disbursement Letter.
i) "Revolving Note" means the secured revolving note of the Company
issued to the Purchaser in the amount of $5,000,000 in the form
of Exhibit A annexed to the Security Agreement.
j) " Minimum Borrowing Note" means the secured convertible minimum
borrowing note of the Company issued to the Purchaser in the
amount of $2,000,000 in the form of Exhibit A annexed to the
Security Agreement
k) "Minimum Borrowing Note Registration Rights Agreement" means that
certain registration rights agreement executed and delivered
pursuant to the Security Agreement.
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l) "Revolving Note Warrant" means the common stock purchase warrant
of the Company to purchase up to 290,000 shares of the Company's
common stock, issued to Purchaser in connection with the
Revolving Note.
m) "Payoff Letters" means those certain letters stating the amounts
to be paid out to each of Textron Financial, in connection with
the closing of this transaction.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto with respect to the matters contained herein and
pertaining to the Company Documents and Purchaser Documents 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, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party entitled to the benefit thereof 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. This Agreement shall be governed by
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and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by any party
against any other party concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Each of the parties hereto
and the individuals executing this Agreement and other agreements on behalf of
the Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be
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entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
1.7. Consent to Jurisdiction. Subject to Section 1.6 hereof, each of
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the Company, the Escrow Agent and the Purchaser hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
1.8. 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 any other.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Delivery of Company Documents to Escrow Agent. On or about the
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date hereof, the Company shall deliver to the Escrow Agent the Company Documents
executed by the Company to the extent it is a party thereto.
2.2 Delivery of Purchaser Documents to Escrow Agent. On or about the
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date hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser
Documents executed by the Purchaser.
2.3. Intention to Create Escrow Over Company Documents and Purchaser
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Documents. The Purchaser, the Company intend that the Company Documents and
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Purchaser Documents shall be held in escrow by the Escrow Agent pursuant to this
Agreement for their benefit as set forth herein.
2.4. Escrow Agent to Deliver Company Documents and Purchaser Documents.
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The Escrow Agent shall hold and release the Company Documents and Purchaser
Documents only in accordance with the terms and conditions of this Agreement.
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ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND PURCHASER DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
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Escrow Agent shall release the Company Documents and Purchaser Documents
pursuant to (a), (b) or (c) below, as follows:
(a) Upon receipt by the Escrow Agent of the Company Documents and the
corresponding Purchaser Documents, the Escrow Agent will simultaneously release
the Company Documents to the Purchaser and release the corresponding Purchaser
Documents to the Company except that (i) the Closing Payment will be delivered
to the fund managers; and (ii) the reasonable legal fees for counsel to the
Purchaser, which shall be paid pursuant to Section 2(c) of the Securities
Purchase Agreement, will be released to the Purchaser. At the request of the
Escrow Agent, the Company each will provide written facsimile or original
instructions to the Escrow Agent as to the disposition of all funds releasable
to the Company.
(b) Upon receipt by the Escrow Agent of joint written instructions
("JOINT INSTRUCTIONS") signed by the Company and the Purchaser, it shall deliver
the Company Documents and Purchaser Documents in accordance with the terms of
the Joint Instructions.
(c) 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"), the Escrow Agent shall deliver the Company Documents and Purchaser
Documents 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 has competent jurisdiction and
that the Court Order is final and non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company
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and the Purchaser acknowledge that the only terms and conditions upon which the
Company Documents and Purchaser Documents are to be released are set forth in
Articles 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 Company Documents and Purchaser Documents. Any
dispute with respect to the release of the Company Documents and Purchaser
Documents shall be resolved pursuant to Section 4.2 or by agreement among the
Company and Purchaser.
ARTICLE IV
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CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow
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Agent's 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 responsible for or bound by, and shall not be
required to inquire into whether either the Purchaser or the Company is entitled
to receipt of the Company Documents and Purchaser Documents pursuant to any
other agreement or otherwise; (ii) shall be obligated only for the performance
of such duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) 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;
(iv) 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; (v) shall not be responsible for the identity, authority or
rights of any person, firm or corporation executing or delivering or purporting
to execute or deliver this Escrow Agreement or any document deposited hereunder
or any endorsement thereon or assignment thereof; (vi) 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 (vii) may consult
counsel satisfactory to Escrow Agent, 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, jointly and
severally, agree to indemnify and hold harmless the Escrow Agent and any of
Escrow Agent's partners, employees, agents and representatives for any action
taken or omitted to be taken by Escrow Agent or any of them hereunder, including
the fees of outside counsel and other costs and expenses of defending itself
against any claim or liability under this Agreement, except in the case of gross
negligence or willful misconduct on Escrow Agent's part committed in its
capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a
duty only to the Purchaser and Company under this Agreement and to no other
person.
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(c) The Purchaser and the Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees) incurred in connection with the performance of its duties and
responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving five (5) days prior written notice of resignation to the Purchaser and
the Company. Prior to the effective date of the resignation as specified in
such notice, the Purchaser and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Company Documents and Purchaser
Documents to a substitute Escrow Agent selected by the Purchaser and the
Company. If no successor Escrow Agent is named by the Purchaser and 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 to deposit the Company
Documents and Purchaser Documents with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any interest
in the Company Documents and Purchaser Documents, 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 accordnace with advice of
counsel (which counsel may be of the Escrow Agent's own choosing), and shall not
be liable for any mistake of fact or error of judgement or for any acts or
omissions of any kind except for 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 Company Documents and Purchaser Documents, in any other
dispute among the Purchaser and the Company, whether or not the Escrow Agent is
then holding the Company Documents and Purchaser Documents 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
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under this Agreement shall be subject to the following terms and conditions:
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(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Company Documents and
Purchaser Documents, 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 Company Documents and Purchaser Documents pending receipt
of a Joint Instruction from the Purchaser and Company, or (ii) deposit the
Company Documents and Purchaser Documents 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 Company Documents and Purchaser
Documents. 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.
(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, corporation or entity by reason of such
compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release of all
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of the Company Documents and Purchaser Documents or at any time upon the
agreement in writing of the Purchaser and Company.
5.2. Notices. All notices, request, 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):
(a) If to the Company, to:
eLINEAR, INC
______________________________
______________________________
Attn: Chief Financial Officer
Fax:
With a copy to:
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Fax:
(b) If to the Purchaser, to:
LAURUS MASTER FUND, LTD.
c/o Ironshore Corporate Services Ltd.
X.X. Xxx 0000 G.T., Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
(c) If to the Escrow Agent, to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
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
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right or 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
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number 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 instrument. This
Agreement may be executed by facsimile transmission.
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5.7. Agreement. Each of the undersigned states that he has read the
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foregoing Funds Escrow Agreement and understands and agrees to it.
eLINEAR, INC. the "Company"
By:___________________________________
Name:
Title:
NETVIEW TECHNOLOGIES, INC.
By:___________________________________
Name:
Title:
NETBRIDGE TECHNOLOGIES, INC.
By:___________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:___________________________________
Name:
Title:
ESCROW AGENT:
DECHERT LLP
By:___________________________________
Name:
Title:
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., $2,000,000 Minimum Borrowing Note
c/o Ironshore Corporate Services Ltd., P.O. Box $5,000,000 Secured Revolving Note
1234 G.T., Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Fax: 000-000-0000
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TOTAL $5,000,000
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FUND MANAGER CLOSING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection with
000 Xxxxx Xxxxxx, 00xx Floor investment by Laurus Master Fund, Ltd. for
Xxx Xxxx, Xxx Xxxx 00000 which Laurus Capital Management, L.L.C.
Fax: 000-000-0000 is the Manager.
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TOTAL $195,000
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WARRANTS
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WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
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LAURUS MASTER FUND, LTD. 290,000 Revolving Note Warrants issuable
A Cayman Island corporation in connection with investment by Laurus
c/o Ironshore Corporate Services Ltd. Master Fund, Ltd.
X.X. Xxx 0000 G.T.
Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Fax: 000-000-0000
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TOTAL 290,000 WARRANTS
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