EXHIBIT 10.10
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ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
March 19, 2001, by NEXLAND, INC., a Delaware corporation (the "Company");
CORNELL CAPITAL PARTNERS, L.P., a limited liability partnership (the
"INVESTOR"); XXXXXX XXXXXXXX LLP (the "INVESTOR'S COUNSEL"); and FIRST UNION
NATIONAL BANK, a national banking association, as Escrow Agent hereunder (the
"ESCROW AGENT").
BACKGROUND
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WHEREAS, the Company and the Investor have entered into an Equity
Line of (the "EQUITY LINE OF CREDIT AGREEMENT"), dated as of the date hereof,
pursuant to which the Company proposes to sell the Company's Common Stock, $0.01
par value per share (the "COMMON STOCK"), at a price per share equal to the
Purchase Price, as that term is defined in the Equity Line of Credit Agreement,
for an aggregate price of up to $5,000,000. The Equity Line of Credit Agreement
provides that on each Advance Date the Investor shall deposit the Advance
pursuant to the Advance Notice in a segregated escrow account to be held by
Escrow Agent and the Company shall deposit shares of the Company's Common Stock,
which shall be purchased by the Investor as set forth in the Equity Line of
Credit Agreement, with the Investor's Counsel, in order to effectuate a
disbursement to the Company of the Advance by the Escrow Agent and a
disbursement to the Investor of the shares of the Company's Common Stock by
Investor's Counsel at a closing to be held as set forth in the Equity Line of
Credit Agreement (the "CLOSING").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the
funds deposited with it in accordance with the terms of this Agreement.
WHEREAS, Investor's Counsel has agreed to accept, hold, and disburse
the shares of the Company's Common Stock which have been deposited with it in
accordance with the terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and shares to
effect the provisions of the Equity Line of Credit Agreement, the parties hereto
have entered into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:
1. DEFINITIONS. The following terms shall have the following meanings when
used herein:
a. "ESCROW FUNDS" shall mean the Advance funds deposited with the
Escrow Agent pursuant to this Agreement.
b. "Joint Written Direction" shall mean a written direction executed by
the Investor and the Company directing Escrow Agent to disburse all or a portion
of the Escrow Funds or to take or refrain from taking any action pursuant to
this Agreement.
c. "COMMON STOCK JOINT WRITTEN DIRECTION" shall mean a written direction
executed by the Investor and the Company directing Investor's Counsel to
disburse all or a portion of the shares of the Company's Common Stock or to
refrain from taking any action pursuant to this Agreement.
2. APPOINTMENT OF AND ACCEPTANCE BY ESCROW AGENT AND INVESTOR'S COUNSEL.
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A. The Investor and the Company hereby appoint Escrow Agent to serve
as Escrow Agent hereunder. Escrow Agent hereby accepts such appointment and,
upon receipt by wire transfer of the Escrow Funds in accordance with Section 3
below, agrees to hold, invest and disburse the Escrow Funds in accordance with
this Agreement.
B. The Investor and the Company hereby appoint Investor's Counsel to
serve as the holder of the shares of the Company's Common Stock which shall be
purchased by the Investor. Investor's Counsel hereby accepts such appointment
and, upon receipt via D.W.A.C of the shares of the Company's Common Stock in
accordance with Section 3 below, agrees to hold and disburse the shares of the
Company's Common Stock in accordance with this Agreement.
3. CREATION OF ESCROW ACCOUNT/COMMON STOCK ACCOUNT.
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A. On or prior to the date of this Agreement the Escrow Agent shall
establish an escrow account for the deposit of the Escrow Funds entitled as
follows: Nexland, Inc./Cornell Capital Partners L.P. The Investor will wire
funds to the account of the Escrow Agent as follows:
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BANK: First Union National Bank of New Jersey
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ROUTING #: 000000000
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ACCOUNT #: 2020000659170
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NAME ON ACCOUNT: Xxxxxx Xxxxxxxx LLP/First Union as
Escrow Agent
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NAME ON SUB-ACCOUNT: Nexland, Inc./Cornell Capital
Partners, L.P. Escrow account
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REFERENCE SUB-ACCOUNT #: 1360-00
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ATTN: Xxxxxx Xxxxxxx (000) 000-0000
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Xxxxxxx Xxxxxxxxx (000) 000-0000
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NOTE: Only wire transfers shall be accepted.
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B. On or prior to the date of this Agreement Investor's Counsel
shall establish an account for the D.W.A.C. of the shares of Common Stock
entitled as follows: Nexland, Inc. The Company will D.W.A.C. shares of the
Company's Common Stock to the account of Investor's Counsel as follows:
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BROKERAGE FIRM: The May Xxxxx Group, Inc.
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CLEARING FIRM: Xxxx Xxxxxxxx
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ACCOUNT #: 12H7-16679688
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DTC #: 0235
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NAME ON ACCOUNT: Xxxxxx Xxxxxxxx LLP
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4. DEPOSITS INTO THE ESCROW ACCOUNT. The Investor agrees that it shall
promptly deliver all monies for the payment of the Common Stock to the Escrow
Agent for deposit in the Escrow Account.
5. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
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(a) At such time as Escrow Agent has collected and deposited instruments
of payment in the total amount of the Advance and the Investor's counsel,
Investor's Counsel, has received such Common Stock via D.W.A.C from the Company
which are to be issued to the Investor pursuant to the Equity Line of Credit
Agreement, Investor's Counsel shall notify the Company and the Investor. The
Escrow Agent will continue to hold such funds until the Investor and Company
execute and deliver a Joint Written Direction directing the Escrow Agent to
disburse the Escrow Funds pursuant to Joint Written Direction at which time the
Escrow Agent shall wire the Escrow Funds to the Company. In disbursing such
funds, Escrow Agent is authorized to rely upon such Joint Written Direction from
Company and may accept any signatory from the Company listed on the signature
page to this Agreement and any signature from the Investor that Escrow Agent
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already has on file. Simultaneous with delivery of the executed Joint Written
Direction to the Escrow Agent the Investor and Company shall execute and deliver
a Common Stock Joint Written Direction to Investor's Counsel directing
Investor's Counsel to release via D.W.A.C to the Investor the shares of the
Company's Common Stock. In releasing such shares of Common Stock Investor's
Counsel is authorized to rely upon such Common Stock Joint Written Direction
from Company and may accept any signatory from the Company listed on the
signature page to this Agreement and any signature from the Investor Investor's
Counsel has on file.
In the event the Escrow Agent does not receive the amount of the Advance from
the Investor, the Escrow Agent shall notify the Company and the Investor. In the
event Investor's Counsel does not receive the shares of Common Stock to be
purchased by the Investor Investor's Counsel shall notify the Company and the
Investor.
In the event that the Escrow Agent is advised by the Investor's Counsel
Investor's Counsel that the Common Stock has not been received from the Company,
in no event will the Escrow Funds be released to the Company until such shares
are received by the Investor 's Counsel. For purposes of this Agreement, the
term "COMMON STOCK CERTIFICATES" shall mean Common Stock certificates to be
purchased pursuant to the respective Advance Notice pursuant to the Equity Line
of Credit Agreement executed on March 19, 2001.
6. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to forward
each wire for collection and, upon collection of the proceeds of each wire
deposit the collected proceeds in the Escrow Account.
Any wires returned unpaid to the Escrow Agent shall be returned to the
Investor. In such cases, the Escrow Agent will promptly notify the Company of
such return.
7. SUSPENSION OF PERFORMANCE: DISBURSEMENT INTO COURT.
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A. ESCROW AGENT. If at any time, there shall exist any dispute
between the Company and the Investor with respect to holding or disposition of
any portion of the Escrow Funds or any other obligations of Escrow Agent
hereunder, or if at any time Escrow Agent is unable to determine, to Escrow
Agent's sole satisfaction, the proper disposition of any portion of the Escrow
Funds or Escrow Agent's proper actions with respect to its obligations
hereunder, or if the parties have not within thirty (30) days of the furnishing
by Escrow Agent of a notice of resignation pursuant to Section 9 hereof,
appointed a successor Escrow Agent to act hereunder, then Escrow Agent may, in
its sole discretion, take either or both of the following actions:
i. suspend the performance of any of its obligations (including
without limitation any disbursement obligations) under this Escrow
Agreement until such dispute or uncertainty shall be resolved to
the sole satisfaction of Escrow Agent or until a successor Escrow
Agent shall be appointed (as the case may be); provided however,
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Escrow Agent shall continue to invest the Escrow Funds in
accordance with Section 8 hereof; and/or ii. petition (by means of
an interpleader action or any other appropriate method) any court
of competent jurisdiction in any venue convenient to Escrow Agent,
for instructions with respect to such dispute or uncertainty, and
to the extent required by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all
funds held by it in the Escrow Funds, after deduction and payment
to Escrow Agent of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with performance of its
duties and the exercise of its rights hereunder.
iii. Escrow Agent shall have no liability to the Company, the
Investor, or any person with respect to any such suspension of
performance or disbursement into court, specifically including any
liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement
of funds held in the Escrow Funds or any delay in with respect to
any other action required or requested of Escrow Agent.
B. INVESTOR'S COUNSEL. If at any time, there shall exist any
dispute between the Company and the Investor with respect to holding or
disposition of any portion of the shares of Common Stock or any other
obligations of Investor's Counsel hereunder, or if at any time Investor's
Counsel is unable to determine, to Investor's Counsel's sole satisfaction, the
proper disposition of any portion of the shares of Common Stock or Investor's
Counsel's proper actions with respect to its obligations hereunder, then
Investor's Counsel may, in its sole discretion, take either or both of the
following actions:
i. suspend the performance of any of its obligations (including
without limitation any disbursement obligations) under this Escrow
Agreement until such dispute or uncertainty shall be resolved to
the sole satisfaction of Investor's Counsel or until a successor
shall be appointed (as the case may be); and/or ii. petition (by
means of an interpleader action or any other appropriate method)
any court of competent jurisdiction in any venue convenient to
Investor's Counsel, for instructions with respect to such dispute
or uncertainty, and to the extent required by law, pay into such
court, for holding and disposition in accordance with the
instructions of such court, all shares of the Company's Common
Stock funds held by it, after deduction and payment to Investor's
Counsel of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be
incurred by Investor's Counsel in connection with performance of
its duties and the exercise of its rights hereunder.
iii. Investor's Counsel shall have no liability to the Company, the
Investor, or any person with respect to any such suspension of
performance or disbursement into court, specifically including any
liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the release of
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shares of the Company's Common Stock or any delay in with respect
to any other action required or requested of Xxxxxx Xxxxxxxx, LLP.
8. INVESTMENT OF ESCROW FUNDS. The Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing money market account.
If Escrow Agent has not received a Joint Written Direction at any time
that an investment decision must be made, Escrow Agent shall invest the Escrow
Fund, or such portion thereof, as to which no Joint Written Direction has been
received, in investments described above. The foregoing investments shall be
made by the Escrow Agent. Notwithstanding anything to the contrary contained,
Escrow Agent may, without notice to the parties, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
release of funds permitted or required hereunder, and Escrow Agent shall not be
liable or responsible for any loss, cost or penalty resulting from any such sale
or liquidation. With respect to any funds received by Escrow Agent for deposit
into the Escrow Funds after ten o'clock, a.m., New Jersey time, Escrow Agent
shall not be required to invest such funds or to effect such investment
instruction until the next day upon which banks in New Jersey are open for
business.
9. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may resign from
the performance of its duties hereunder at any time by giving thirty (30) days'
prior written notice to the parties or may be removed, with or without cause, by
the parties, acting jointly, by furnishing a Joint Written Direction to Escrow
Agent, at any time by the giving of ten (10) days' prior written notice to
Escrow Agent as provided herein below. Upon any such notice of resignation or
removal, the representatives of the Investor and the Company identified in
Sections 13a.(iv) and 13b.(iv), below, jointly shall appoint a successor Escrow
Agent hereunder, which shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$10,000,000.00. Upon the acceptance in writing of any appointment of Escrow
Agent hereunder by a successor Escrow Agent, such successor Escrow Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be
discharged from its duties and obligations under this Escrow Agreement, but
shall not be discharged from any liability for actions taken as Escrow Agent
hereunder prior to such succession. After any retiring Escrow Agent's
resignation or removal, the provisions of this Escrow Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent, after making copies of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.
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10. LIABILITY OF ESCROW AGENT.
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a. Escrow Agent shall have no liability or obligation with respect to the
Escrow Funds except for Escrow Agent's willful misconduct or gross negligence.
Escrow Agent's sole responsibility shall be for the safekeeping, investment, and
disbursement of the Escrow Funds in accordance with the terms of this Agreement.
Escrow Agent shall have no implied duties or obligations and shall not be
charged with knowledge or notice or any fact or circumstance not specifically
set forth herein. Escrow Agent may rely upon any instrument, not only as to its
due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained therein, which Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by the person or parties
purporting to sign the same and conform to the provisions of this Agreement. In
no event shall Escrow Agent be liable for incidental, indirect, special, and
consequential or punitive damages. Escrow Agent shall not be obligated to take
any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Agreement or the Equity
Line of Credit Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
any event of any dispute or question as to construction of any of the provisions
hereof or of any other agreement or its duties hereunder, or relating to any
dispute involving any party hereto, and shall incur no liability and shall be
fully indemnified from any liability whatsoever in acting in accordance with the
opinion or instructions of such counsel. The Company and the Investor jointly
and severally shall promptly pay, upon demand, the reasonable fees and expenses
of any such counsel.
b. The Escrow Agent is hereby authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrow Funds, without determination by the Escrow Agent of such court's
jurisdiction in the matter. If any portion of the Escrow Funds is at any time
attached, garnished or levied upon under any court order, or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order, or in any case any order judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel selected by it, binding upon it, without
the need for appeal or other action; and if the Escrow Agent complies with any
such order, writ, judgment or decree, it shall not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance
even though such order, writ judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
10. LIABILITY OF INVESTOR'S COUNSEL.
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a. Notwithstanding any liability attributable to Investor's Counsel as
counsel to the Investor, Investor's Counsel shall have no liability or
obligation with respect to the shares of the Company's Common Stock except for
Investor's Counsel's willful misconduct or gross negligence. Investor's
Counsel's sole responsibility shall be for the safekeeping and release of the
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shares of the Company's Common Stock in accordance with the terms of this
Agreement. Investor's Counsel shall have no implied duties or obligations and
shall not be charged with knowledge or notice or any fact or circumstance not
specifically set forth herein. Investor's Counsel may rely upon any instrument,
not only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which Investor's
Counsel shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and conform to
the provisions of this Agreement. In no event shall Investor's Counsel be liable
for incidental, indirect, special, and consequential or punitive damages.
Investor's Counsel shall not be obligated to take any legal action or commence
any proceeding in connection with the shares of the Company's Common Stock, any
account in which shares of Common Stock are deposited and this Agreement, or to
appear in, prosecute or defend any such legal action or proceeding. Investor's
Counsel may consult legal counsel selected by it in any event of any dispute or
question as to construction of any of the provisions hereof or of any other
agreement or its duties hereunder, or relating to any dispute involving any
party hereto, and shall incur no liability and shall be fully indemnified from
any liability whatsoever in acting in accordance with the opinion or
instructions of such counsel. The Company and the Investor jointly and severally
shall promptly pay, upon demand, the reasonable fees and expenses of any such
counsel.
b. Investor's Counsel is hereby authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
shares of the Company's Common Stock, without determination by Investor's
Counsel of such court's jurisdiction in the matter. If any portion of the shares
of the Company's Common Stock are at any time attached, garnished or levied upon
under any court order, or in case the payment, assignment, transfer, conveyance
or delivery of any such property shall be stayed or enjoined by any court order,
or in any case any order judgment or decree shall be made or entered by any
court affecting such property or any part thereof, then and in any such event,
the Investor's Counsel is authorized, in its sole discretion, to rely upon and
comply with any such order, writ judgment or decree which it is advised by legal
counsel selected by it, binding upon it, without the need for appeal or other
action; and if Investor's Counsel complies with any such order, writ, judgment
or decree, it shall not be liable to any of the parties hereto or to any other
person or entity by reason of such compliance even though such order, writ
judgment or decree may be subsequently reversed, modified, annulled, set aside
or vacated.
12. INDEMNIFICATION OF ESCROW AGENT. From and at all times after the date
of this Agreement, the parties jointly and severally, shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and hold
harmless Escrow Agent and each director, officer, employee, attorney, agent and
affiliate of Escrow Agent (collectively, the "INDEMNIFIED PARTIES") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorney's fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action, or proceeding (including
any inquiry or
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investigation) by any person, including without limitation the parties to this
Agreement, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Indemnified Party under any statute or regulation,
including, but not limited to, any federal or state securities laws, or under
any common law or equitable cause or otherwise, arising from or in connection
with the negotiation, preparation, execution, performance or failure of
performance of this Agreement or any transaction contemplated herein, whether or
not any such Indemnified Party is a party to any such action or proceeding, suit
or the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for liability
finally determined by a court of competent jurisdiction, subject to no further
appeal, to have resulted from the gross negligence or willful misconduct of such
Indemnified Party. If any such action or claim shall be brought or asserted
against any Indemnified Party, such Indemnified Party shall promptly notify the
Company and the Investor hereunder in writing, and the and the Company shall
assume the defense thereof, including the employment of counsel and the payment
of all expenses. Such Indemnified Party shall, in its sole discretion, have the
right to employ separate counsel (who may be selected by such Indemnified Party
in its sole discretion) in any such action and to participate and to participate
in the defense thereof, and the fees and expenses of such counsel shall be paid
by such Indemnified Party, except that the Investor and/or the Company shall be
required to pay such fees and expense if (a) the Investor or the Company agree
to pay such fees and expenses, or (b) the Investor and/or the Company shall fail
to assume the defense of such action or proceeding or shall fail, in the sole
discretion of such Indemnified Party, to employ counsel reasonably satisfactory
to the Indemnified Party in any such action or proceeding, (c) the Investor and
the Company is the plaintiff in any such action or proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both Indemnified Party the Company and/or the
Investor Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company or the Investor. The Investor and
the Company shall be jointly and severally liable to pay fees and expenses of
counsel pursuant to the preceding sentence, except that any obligation to pay
under clause (a) shall apply only to the party so agreeing. All such fees and
expenses payable by the Company and/or the Investor pursuant to the foregoing
sentence shall be paid from time to time as incurred, both in advance of and
after the final disposition of such action or claim. The obligations of the
parties under this section shall survive any termination of this Agreement, and
resignation or removal of the Escrow Agent shall be independent of any
obligation of Escrow Agent.
13. INDEMNIFICATION OF INVESTOR'S COUNSEL. From and at all times after
the date of this Agreement, the parties jointly and severally, shall, to the
fullest extent permitted by law and to the extent provided herein, indemnify and
hold harmless Investor's Counsel and each partner, director, officer, employee,
attorney, agent and affiliate of Investor's Counsel (collectively, the
"Indemnified Parties") against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorney's fees, costs and
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expenses) incurred by or asserted against any of the Indemnified Parties from
and after the date hereof, whether direct, indirect or consequential, as a
result of or arising from or in any way relating to any claim, demand, suit,
action, or proceeding (including any inquiry or investigation) by any person,
including without limitation the parties to this Agreement, whether threatened
or initiated, asserting a claim for any legal or equitable remedy against any
person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Agreement or any
transaction contemplated herein, whether or not any such Indemnified Party is a
party to any such action or proceeding, suit or the target of any such inquiry
or investigation; provided, however, that no Indemnified Party shall have the
right to be indemnified hereunder for liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted solely
from the gross negligence or willful misconduct of such Indemnified Party. If
any such action or claim shall be brought or asserted against any Indemnified
Party, such Indemnified Party shall promptly notify the Company and the Investor
hereunder in writing, and the Investor and the Company shall assume the defense
thereof, including the employment of counsel and the payment of all expenses.
Such Indemnified Party shall, in its sole discretion, have the right to employ
separate counsel (who may be selected by such Indemnified Party in its sole
discretion) in any such action and to participate and to participate in the
defense thereof, and the fees and expenses of such counsel shall be paid by such
Indemnified Party, except that the Investor and/or the Company shall be required
to pay such fees and expense if (a) the Investor or the Company agree to pay
such fees and expenses, or (b) the Investor and/or the Company shall fail to
assume the defense of such action or proceeding or shall fail, in the sole
discretion of such Indemnified Party, to employ counsel reasonably satisfactory
to the Indemnified Party in any such action or proceeding, (c) the Investor and
the Company is the plaintiff in any such action or proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both Indemnified Party the Company and/or the
Investor Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company or the Investor. The Investor and
the Company shall be jointly and severally liable to pay fees and expenses of
counsel pursuant to the preceding sentence, except that any obligation to pay
under clause (a) shall apply only to the party so agreeing. All such fees and
expenses payable by the Company and/or the Investor pursuant to the foregoing
sentence shall be paid from time to time as incurred, both in advance of and
after the final disposition of such action or claim. The obligations of the
parties under this section shall survive any termination of this Agreement, and
resignation or removal of the Escrow Agent shall be independent of any
obligation of Escrow Agent.
14. EXPENSES OF ESCROW AGENT. Except as set forth in Section 11 the
Company shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including attorneys' fees, travel expenses, telephone and facsimile
transmission costs, postage (including express mail and overnight delivery
charges), copying charges and the like. All of the compensation and
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reimbursement obligations set forth in this Section shall be payable by the
Company, upon demand by Escrow Agent. The obligations of the Company under this
Section shall survive any termination of this Agreement and the resignation or
removal of Escrow Agent.
15. WARRANTIES.
a. Investor makes the following representations and warranties to
Escrow Agent and the Investor's Counsel :
(i) Investor has full power and authority to execute and
deliver this Escrow Agreement and to perform its obligations
hereunder.
(ii) This Escrow Agreement has been duly approved by all
necessary corporate action of Investor, including any necessary
shareholder approval, has been executed by duly authorized
officers of the Investor, enforceable in accordance with its
terms.
(iii) The execution, delivery, and performance of the Investor
of this Agreement will not violate, conflict with, or cause a
default under the certificate of incorporation or bylaws of
Investor, any applicable law or regulation, any court order or
administrative ruling or degree to which the Investor is a
party or any of its property is subject, or any agreement,
contract, indenture, or other binding arrangement.
(iv) Xxxx X. Xxxxxx has been duly appointed to act as the
representative of Investor hereunder and has full power and
authority to execute, deliver, and perform this Escrow
Agreement, to execute and deliver any Joint Written Direction,
to amend, modify, or waive any provision of this Agreement, and
to take any and all other actions as the Investor's
representative under this Agreement, all without further
consent or direction form, or notice to, the Investor or any
other party.
(v) No party other than the parties hereto and the Investors
have, or shall have, any lien, claim or security interest in
the Escrow Funds or any part thereof. No financing statement
under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Funds or any
part thereof.
(vi) All of the representations and warranties of the Investor
contained herein are true and complete as of the date hereof
and
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will be true and complete at the time of any disbursement from
the Escrow Funds.
b. The Company makes the following representations and warranties
to Escrow Agent and Investor's Counsel:
(i) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware , and has full power and authority to execute and
deliver this Escrow Agreement and to perform its obligations
hereunder.
(ii) This Escrow Agreement has been duly approved by all
necessary corporate action of the Company, including any
necessary shareholder approval, has been executed by duly
authorized officers of the Company, enforceable in accordance
with its terms.
(iii) The execution, delivery, and performance by the Company
of this Escrow Agreement is in accordance with the Equity Line
of Credit Agreement and will not violate, conflict with, or
cause a default under the certificate of incorporation or
bylaws of the Company, any applicable law or regulation, any
court order or administrative ruling or decree to which the
Company is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement.
(iv) Xxxxxxx X. Xxxxxx , has been duly appointed to act as the
representative of the Company hereunder and has full power and
authority to execute, deliver, and perform this Escrow
Agreement, to execute and deliver any Joint Written Direction,
to amend, modify or waive any provision of this Agreement and
to take all other actions as the Company's Representative under
this Agreement, all without further consent or direction from,
or notice to, the Company or any other party.
(v) No party other than the parties hereto shall have, any
lien, claim or security interest in the Escrow Funds or any
part thereof. No financing statement under the Uniform
Commercial Code is on file in any jurisdiction claiming a
security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
(vi) All of the representations and warranties of the Company
contained herein are true and complete as of the date hereof
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and will be true and complete at the time of any disbursement
from the Escrow Funds.
14. CONSENT TO JURISDICTION AND VENUE. In the event that any party hereto
commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the District of New Jersey shall have the sole and exclusive jurisdiction over
any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of New Jersey,
Chancery Division of Essex County shall have sole and exclusive jurisdiction.
Any of these courts shall be proper venue for any such lawsuit or judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept the service of process to vest personal
jurisdiction over them in any of these courts.
15. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
delivered to any overnight courier, or when transmitted by facsimile
transmission and addressed to the party to be notified as follows:
If to Investment Adviser, to: Cornell Capital Partners, L.P.
C/O Yorkville Advisors LLC
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
With a Copy to: Xxxxxx Xxxxxxxx, LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxxx #0
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Company, to: Nexland, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
With copy to: Xxxxxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Escrow Agent, to: First Union National Bank,
000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Or to such other address as each party may designate for itself by like
notice.
16. AMENDMENTS OR WAIVER. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties of the Escrow
Agent. No delay or omission by any party in exercising any right with respect
hereto shall operate as waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
17. SEVERABILITY. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
18. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the obligations and duties of the
Escrow Agent with respect to the Escrow Funds.
20. BINDING EFFECT. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Placement Agent, the
Company, or the Escrow Agent.
21. EXECUTION OF COUNTERPARTS. This Agreement and any Joint Written
Direction may be executed in counter parts, which when so executed shall
constitute one and same agreement or direction.
22. TERMINATION. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Joint Written Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof, this Agreement shall terminate and Escrow Agent shall have no further
obligation or liability whatsoever with respect to this Agreement or the Escrow
Funds.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals the
day and year above set forth.
NEXLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: As Escrow Agent
CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors Management
Its: General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Fund Manager
XXXXXX XXXXXXXX LLP
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Partner
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