EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of July 22,
2004, by and among Xxxxx Technologies, Inc., a Utah corporation (the
"Company"), the purchasers signatory hereto (each a "Purchaser" and together
the "Purchasers"), and Xxxxxxx Xxxxxxxxx LLP, with an address at 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (the "Escrow Agent"). Capitalized terms
used but not defined herein shall have the meanings set forth in the
Securities Purchase Agreement referred to in the first recital.
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing from the Company,
severally and not jointly with the other Purchasers, in the aggregate, up to
$7,000,000 in the aggregate, of the Principal Amount of the Preferred Stock
(the "Preferred Stock") and the Warrants on the Closing Date as set forth in
the Securities Purchase Agreement (the "Purchase Agreement") dated the date
hereof between the Purchasers and the Company, which securities will be issued
under the terms contained herein and in the Purchase Agreement; and
WHEREAS, it is intended that the purchase of the securities be
consummated in accordance with the requirements set forth in Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Purchasers have requested that the
Escrow Agent hold the Subscription Amounts in escrow until the Escrow Agent
has received the Release Notice in the form attached hereto from the Company
and each Purchaser;
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
up to $7,000,000, in the aggregate, of the Preferred Stock and the Warrants as
contemplated by the Purchase Agreement.
1.2. Upon the Escrow Agent's receipt of the aggregate Subscription
Amounts for the Closing into its master escrow account, together with executed
counterparts of this Agreement, the Purchase Agreement and the Registration
Rights Agreement, it shall telephonically advise the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
master escrow account.
1.3. Wire transfers to the Escrow Agent shall be made as follows:
STERLING NATIONAL BANK
000 0XX XXXXXX
XXX XXXX, XX 00000
ACCOUNT NAME: XXXXXXX XXXXXXXXX LLP
ABA ROUTING NO: 000000000
ACCT NO: 0000000000
REMARK: RSTG/[FUND NAME]
1.4 The Company, promptly following being advised by the Escrow Agent
that the Escrow Agent has received the Subscription Amounts for the Closing
along with facsimile copies of counterpart signature pages of the Purchase
Agreement, Registration Rights Agreement and this Agreement from each
Purchaser, shall deliver to the Escrow Agent the following:
(a) certificates evidencing the Principal Amount of the Preferred
Stock equal to each Purchaser's Subscription Amount, registered in the name of
such Purchaser;
(b) certificates representing the Warrants;
(c) the Company's executed counterpart of the Purchase Agreement;
(d) the Company's executed counterpart of the Registration Rights
Agreement;
(e) the executed opinion of Company Counsel, in the form of Exhibit
D to the Purchase Agreement;
(f) warrant(s) identical to the form of the Warrant registered in
the name of vFinance Investments, Inc. (the "vFinance Warrant") and/or its
designees, provided, however, the term shall be 60 months, the number of
shares issuable thereunder shall be 10% of the aggregate number of Underlying
Shares issuable pursuant to the Preferred Stock if converted in full ignoring
for such purposes any limitations therein, the exercise price shall equal the
exercise price of the Warrants and shall contain piggy-back registration
rights on the Registration Statement; and
(g) the Company's original executed counterpart of this Escrow
Agreement.
1.5 In the event that the foregoing items are not in the Escrow Agent's
possession within five (5) Trading Days of the Escrow Agent notifying the
Company that the Escrow Agent has custody of the Subscription Amount for the
Closing, then each Purchaser shall have the right to demand the return of
their portion of the Subscription Amount.
1.6 Once the Escrow Agent receives a Release Notice in the form attached
hereto as Exhibit X (the "Release Notice") executed by the Company and each
Purchaser (i) it shall wire 90% of the aggregate Subscription Amounts of the
first $2,000,000 received to the Company's account listed in Section 1.7
below, net of $15,000 per the instructions of vFinance Investments, Inc.
("vFinance") and the remaining 10% of the aggregate Subscription Amounts of
the first $2,000,000 received per the written instruction of vFinance as in
connection with the transaction described herein and (ii) it shall wire 93% of
the aggregate Subscription Amounts of the balance of any Subscription Amounts
received over $2,000,000 to the Company's account listed in Section 1.7 below
and the remaining 7% of such Subscription Amounts per the written instruction
of vFinance.
1.7 Wire transfers to Company Counsel shall be made pursuant to written
instructions from Company Counsel provided to the Escrow Agent on the Closing
Date.
1.8 Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Purchase
Agreement, the Preferred Stock, the Registration Rights Agreement, the Escrow
Agreement, the vFinance Warrant and the opinion of counsel delivered to the
appropriate parties.
ARTICLE II
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
2.2 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement.
2.3 This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties
hereto.
2.4 This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Escrow Agreement may not be modified, changed, supplemented or terminated, nor
may any obligations hereunder be waived, except by written instrument signed
by the parties to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
2.5 Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine.
This Escrow Agreement shall not be construed as if it had been prepared by one
of the parties, but rather as if all parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Escrow Agreement.
2.6 The parties hereto expressly agree that this Escrow Agreement shall
be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, arising out
of, or relating in any way to, any provisions of this Escrow Agreement shall
only be brought in a state or Federal court sitting in New York City.
2.7 The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the Company, each Purchaser and the
Escrow Agent.
2.8 The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder
as the Escrow Agent while acting in good faith and in the absence of gross
negligence, fraud and willful misconduct, and any act done or omitted by the
Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law
shall be conclusive evidence of such good faith, in the absence of gross
negligence, fraud and willful misconduct.
2.9 The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree, the Escrow Agent shall not be liable to any of the parties
hereto or to any other person, firm or corporation by reason of such decree
being subsequently reversed, modified, annulled, set aside, vacated or found
to have been entered without jurisdiction.
2.10 The Escrow Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.
2.11 The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation; provided that the costs of such compensation shall be borne by
the Escrow Agent. The Escrow Agent has acted as legal counsel for vFinance
Investments, Inc. ("vFinance"), and may continue to act as legal counsel for
vFinance from time to time, notwithstanding its duties as the Escrow Agent
hereunder. The Company and the other Investors consent to the Escrow Agent in
such capacity as legal counsel for vFinance and waives any claim that such
representation represents a conflict of interest on the part of the Escrow
Agent. The Company and the Purchasers understand that vFinance and the Escrow
Agent are relying explicitly on the foregoing provision in entering into this
Escrow Agreement.
2.12 The Escrow Agent's responsibilities as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by giving written notice to the
Company and the Purchasers. In the event of any such resignation, the
Purchasers and the Company shall appoint a successor Escrow Agent and the
Escrow Agent shall deliver to such successor Escrow Agent any escrow funds and
other documents held by the Escrow Agent.
2.13 If the Escrow Agent reasonably requires other or further instruments
in connection with this Escrow Agreement or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
2.14 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
documents or the escrow funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (1) to
retain in the Escrow Agent's possession without liability to anyone all or any
part of said documents or the escrow funds until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a final
order, decree or judgment or a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings
or (2) to deliver the escrow funds and any other property and documents held
by the Escrow Agent hereunder to a state or Federal court having competent
subject matter jurisdiction and located in the City of New York in accordance
with the applicable procedure therefore
2.15 The Company and each Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees,
agents and representatives from any and all claims, liabilities, costs or
expenses in any way arising from or relating to the duties or performance of
the Escrow Agent hereunder or the transactions contemplated hereby or by the
Purchase Agreement other than any such claim, liability, cost or expense to
the extent the same shall have been determined by final, unappealable judgment
of a court of competent jurisdiction to have resulted from the gross
negligence, fraud or willful misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as
of date first written above.
XXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: CEO
With a copy to (which shall not constitute notice):
ESCROW AGENT:
XXXXXXX XXXXXXXXX LLP
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Authorized Signatory
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
[SIGNATURE PAGE OF PURCHASERS TO RSTG ESCROW]
Name of Investing Entity:
Signature of Authorized Signatory of Investing entity:
Name of Authorized Signatory:
Title of Authorized Signatory:
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
Exhibit X to
Escrow Agreement
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of July
, 2004, among Xxxxx Technologies, Inc., the Purchasers signatory thereto and
Xxxxxxx Xxxxxxxxx LLP, as Escrow Agent (the "Escrow Agreement"; capitalized
terms used herein and not defined shall have the meaning ascribed to such
terms in the Escrow Agreement), hereby notify the Escrow Agent that each of
the conditions precedent to the purchase and sale of the Securities set forth
in the Securities Purchase Agreement have been satisfied. The Company and the
undersigned Purchaser hereby confirm that all of their respective
representations and warranties contained in the Purchase Agreement remain true
and correct and authorize the release by the Escrow Agent of the funds and
documents to be released at the Closing as described in the Escrow Agreement.
This Release Notice shall not be effective until executed by the Company and
the Purchaser.
This Release Notice may be signed in one or more counterparts, each
of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release Notice
to be duly executed and delivered as of this day of June, 2004.
XXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: CEO
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
[SIGNATURE PAGE OF PURCHASERS TO RSTG RELEASE]
Name of Investing Entity:
Signature of Authorized Signatory of Investing entity:
Name of Authorized Signatory:
Title of Authorized Signatory:
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
