ESCROW AGREEMENT
ESCROW AGREEMENT (this "Escrow Agreement"), dated as of April 28, 2003, by
and among Dutchess Private Equities Fund, LP, a Fund (the "Investor"), Xxxxx
Xxxxxxx Xxxxxxx Israels LLP (the "Escrow Agent") and Cal Bay International, Inc.
(the "Company").
RECITALS
A. Simultaneously with the execution of this Escrow Agreement, the
Company and Investor have entered into a Equity Line of Credit Agreement, dated
as of the date hereof (the "Agreement"), pursuant to which the Investor has
agreed to purchase securities (the "Securities") of the Company.
B. The Escrow Agent is willing to act as escrow agent pursuant to the
terms of this Agreement with respect to the Purchase Price (as such term is
defined in the Agreement) to be paid in connection with the purchase of the
Securities.
C. Upon the closing of the transactions contemplated by the Agreement
(the "Closing(s)"), the Escrow Agent shall cause the distribution of the
Purchase Price (as adjusted) in accordance with the terms of this Agreement.
D. All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEPOSIT OF FUNDS. (a) The Investor shall deposit with the Escrow
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Agent (i) copies of each of the Agreement, the Registration Rights Agreement of
even date and this Escrow Agreement, or counterparts thereof, each executed by
the Investor, and (ii) the Purchase Price, for each purchase of Securities. The
Company shall deliver to the Escrow Agent copies of each of the Agreement, the
Registration Rights Agreement of even date and this Escrow Agreement, or
counterparts thereof, each executed by the Company.
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(i) The Purchase Price shall be delivered by the Company to the Escrow
Agent by (A) check payable to the order of the Escrow Agent, or (B) wire
transfer to the following account:
BANK: EASTERN BANK
ABA: 000000000
CITY: XXXX
STATE: MASSACHUSETTS
ACCOUNT #: 600242556
ACCOUNT NAME: XXXXX XXXXXXX XXXXXXX ISRAELS LLP, CLIENT
TRUST FUND
BRBI ATTORNEY NAME: Attn: XXXX X. XXXXXXX, XX. Re: [Dutchess Private Equity
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Fund, LP]
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(ii) All of the other items listed above in paragraph (a) of Section 1
to be delivered by the Company or the Investor to the Escrow Agent shall be
delivered to the Escrow Agent at its address for notice indicated in Section
6(a).
(b) The Company and the Investor understand that the funds delivered to the
Escrow Agent pursuant to Section 1(a) shall be held in escrow in a non-interest
bearing client trust fund account until each Closing.
2. TERMS OF ESCROW.
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(a) The Escrow Agent shall hold the Purchase Price in escrow until the
receipt by the Escrow Agent of a notice, executed by each of the Investor and
the Company, stating that the Closing has occurred, or otherwise directing the
disposition of the Purchase Price.
(b) If the Escrow Agent, prior to delivering or causing to be delivered
the Purchase Price in accordance herewith, receives notice of objection,
dispute, or other assertion in accordance with any of the provisions of this
Agreement, the Escrow Agent shall continue to hold the Purchase Price until such
time as the Escrow Agent shall receive (i) written instructions jointly executed
by the Company and the Investor, directing distribution of the Purchase Price,
or (ii) a certified copy of a judgment, order or decree of a court of competent
jurisdiction, final beyond the right of appeal, directing the Escrow Agent to
distribute said Purchase Price to any party hereto or as such judgment, order or
decree shall otherwise specify (including any such order directing the Escrow
Agent to deposit the Purchase Price into the court rendering such order, pending
determination of any dispute between any of the parties). In addition, the
Escrow Agent shall have the right to deposit any of the Purchase Price with a
court of competent jurisdiction without liability to any party if said dispute
is not resolved within thirty (30) days of receipt of any such notice of
objection, dispute or otherwise.
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(c) This Escrow Agreement shall terminate upon termination of the
Agreement.
3. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
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(a) The parties hereto agree that the duties and obligations of the
Escrow Agent are only such as are herein specifically provided and no other.
The Escrow Agent's duties are as a depositary only, and the Escrow Agent shall
incur no liability whatsoever, except as a direct result of its willful
misconduct or gross negligence.
(b) The Escrow Agent may consult with counsel of its choice, and shall
not be liable for any action taken, suffered or omitted 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 the Company and the Investor are parties, whether or
not it 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 the Company and the Investor, 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 each of the Company and the Investor, 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, it shall
be entitled to refrain from taking any action, other than to keep safely all
property held in escrow, until it shall jointly be directed otherwise in writing
by the Company and the Investor or by a final judgment (non-appealable) 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 it, 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 Purchase
Price.
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(g) If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of the Purchase Price, it may do so
by delivering the same to any other escrow agent mutually agreeable to the
Company and the Investor and, if no such escrow agent shall be selected within
three days of the Escrow Agent's notification to the Company and the Investor of
its desire to so relinquish custody of the Purchase Price, then the Escrow Agent
may do so by delivering the Purchase Price (a) to any bank or trust company in
the County of Suffolk, Commonwealth of Massachusetts, which is willing to act as
escrow agent thereunder in place and instead of the Escrow Agent, or (b) to the
clerk or other proper officer of a court of competent jurisdiction as may be
permitted by law. The fee of any such bank or trust company or court officer
shall be shared equally by the parties hereto (other than Escrow Agent). Upon
such delivery, the Escrow Agent shall be discharged from any and all
responsibility or liability with respect to the Purchase Price.
(h) This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to the Company or the Investor, nor disqualify the Escrow Agent
from representing Investor in any dispute with Company, including any dispute
with respect to the Purchase Price. The parties understand that the Escrow
Agent has acted, and will continue to act, as counsel to the Investor.
(i) The Escrow Agent represents that it is counsel to the Investor.
The parties agree that the Escrow Agent's engagement as provided for herein is
not and shall not be objectionable for any reason.
(j) Upon the Escrow Agent's performance of this Agreement in accordance
with its terms, the Escrow Agent shall be deemed released and discharged of any
further obligations hereunder.
4. FEES. The Escrow Agent shall be paid a fee of $750 in connection
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with each closing. Such fee and any legal fees owing by the Company to Escrow
Agent pursuant to Section 2(d) of that certain Registration Rights Agreement of
even date between the Company and the Investor shall be deducted by Escrow Agent
from the Purchase Price prior to distribution to the Company.
5. INDEMNIFICATION.
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(a) The Company hereby indemnifies and holds free and harmless 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 Investor against Escrow Agent with respect
to the performance of any of the provisions of this Agreement.
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(b) The Investor hereby indemnifies and holds free and harmless 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 Company against Escrow Agent with respect
to the performance of any of the provisions of this Agreement.
(c) The Company and the Investor, 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 Agent,
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,
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.
6. MISCELLANEOUS.
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(a) All notices, requests, demands and other communications hereunder
shall be in writing, with copies to all the other parties hereto, and shall be
deemed to have been duly given when (i) if delivered by hand, upon receipt, (ii)
if sent by telecopier, upon receipt of proof of sending thereof, (iii) if sent
by Express Mail, Federal Express or other express delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, upon receipt, in each
case if delivered to the following addresses:
(i) If to the Investor:
Dutchess Private Equities Fund, LP
000 Xxxxxx Xx
Xxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxxxx, Managing Member
Tel: 000-000-0000
Fax: 000-000-0000
With Copy to:
Xxxx X. Xxxxxxx, Xx.
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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(ii) If to the Company:
Cal Bay International, Inc.
0000 Xxxxxxx Xxxx
Xxxxx X
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Copy to:
Xxxxxx Xxxxxxxxx, Attorney at Law
0 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(iii) If to the Escrow Agent:
Xxxx X. Xxxxxxx, Xx.
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or at such other address as any of the parties to this Agreement may hereafter
designate in the manner set forth above to the others.
(b) This Agreement shall be construed and enforced in accordance with
the law of the Commonwealth of Massachusetts applicable to contracts entered
into and performed entirely within Massachusetts.
(c) This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed 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.
[ 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.
COMPANY:
By: /s/Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President & CEO
INVESTOR:
Dutchess Private Equities Fund, LP
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Member:
Dutchess Capital Management, LLC
General Partner to:
Dutchess Private Equities Fund, LP
ESCROW AGENT:
XXXXX XXXXXXX BERLACK ISRAELS LLP
By: /s/Xxxx X. Xxxxxx, Xx.
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Xxxx X. Xxxxxx, Xx.
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