EXHIBIT 10.5
EXHIBIT E
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FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT
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THIS AGREEMENT is made as of October 27, 2006 by and among Mems USA, Inc.,
with its principal office at 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 0-000, Xxxxxxxx
Xxxxxxx, XX 00000 (hereinafter the Company"), GCA Strategic Investment Fund
Limited, with its principal office at Mechanics Building, 12 Church St.,
Xxxxxxxx, Bermuda (hereinafter the "Purchaser"), and The Law Offices of Xxx X.
Xxxxxxxx, X.X. Xxx 0000, Xxxxxx, Xxxxxxx 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Purchaser will be purchasing Warrants and Convertible Notes
(the "Securities") from the Company at a purchase price as set forth in the
Securities Purchase Agreement (the "Securities Purchase Agreement") signed by
the Company and the Purchaser; and
WHEREAS, it is intended that the purchase of Securities be consummated in
accordance with the requirements set forth by Regulation D, promulgated under
the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold the funds of
the Purchaser ($3,530,000) in escrow until the Escrow Agent has received the
Securities or had the opportunity to speak with the Company to confirm their
issuance. The Escrow Agent will then immediately wire transfer or otherwise
deliver at the Company's direction immediately available funds to the Company or
the Company's account and arrange for delivery of the Securities to the
Purchaser per the Purchaser's written instructions.
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.
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TERMS OF THE ESCROW
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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
the Securities.
1.2. Upon the Escrow Agent's receipt of funds from the Purchaser into his
attorney trustee account, he shall notify the Company, or the Company's
designated attorney or agent, of the amount of funds he has received into his
account.
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1.3. The Company, upon receipt of said notice and acceptance of the
Purchaser's Securities Purchase Agreement, as evidenced by the Company's
execution thereof, shall deliver to the Escrow Agent the Securities being
purchased.
1.4. Upon receipt of the Securities, the Escrow Agent shall immediately
wire to the Company that amount of funds necessary to purchase the Securities,
per the written instructions of the Company. Contemporaneously therewith, the
Escrow Agent shall arrange to have the Securities delivered as per instructions
from the Purchaser.
1.5. If, for any reason, the Escrow Agent does not receive the Securities
within five (5) days of the date hereof, the Escrow Agent will promptly return
any funds received by it from the Purchaser to the Purchaser, without any
further instructions from either the Company or Purchaser.
1.6. This Agreement may be altered or amended only with the consent of all
of the parties hereto. The Escrow Agent may resign by following the procedures
hereafter set forth. In the case of the Escrow Agent's resignation, his only
duty, until receipt of notice from the Company and the Purchaser or their agents
that a successor escrow agent shall have been appointed, shall be to hold and
preserve the Securities and/or funds. Upon receipt by the Escrow Agent of said
notice from the Company and the Purchaser of the appointment of a successor
escrow agent, the name of a successor escrow account and a direction to transfer
the Securities and/or funds, the Escrow Agent shall promptly thereafter transfer
all of the Securities and/or funds held in escrow to said successor escrow
agent. Immediately after said transfer of Securities, the Escrow Agent shall
furnish the Company and the Purchaser with proof of such transfer. The Escrow
Agent is authorized to disregard any notices, request, instructions or demands
received by it from the Company or the Purchaser after notice of resignation or
removal shall have been given, unless the same shall be the aforementioned
notice from the Company and the Purchaser to transfer the Securities and funds
to a successor escrow agent or to return same to the respective parties.
1.7. The Company shall pay the Escrow Agent a fee of $1,000.00 and shall
reimburse the Escrow Agent for its reasonable expenses in the event there is a
conflict between the parties and the Escrow Agent shall deem it necessary to
retain counsel.
1.8. The Escrow Agent has no liability hereunder to either party other than
to hold the Securities and funds, and to deliver them in accordance with the
terms hereof. The Escrow Agent shall not be liable for any action taken or
omitted by him in good faith; and in no event shall the Escrow Agent be liable
or responsible except for the Escrow Agent's own gross negligence or willful
misconduct.
1.9. Each party hereto agrees, jointly, to indemnify and hold harmless the
Escrow Agent from and with respect to any and all suits, claims, damages,
demands, actions, liabilities or losses arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Agreement, except any such suit,
claim, damage, demand, action, liability or loss arising out of the Escrow
Agent's gross negligence or willful misconduct.
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1.10. Escrow Agent shall not be responsible for: (i) the sufficiency or
correctness as to the form, execution or the validity of this Agreement; or (ii)
the identity, authority or right of any person executing any notice or document
given to Escrow Agent.
ARTICLE 2.
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MISCELLANEOUS
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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 any extension of the time
for performance of any other obligation or act.
2.2. The Securities shall be delivered to the Purchaser at the address set
forth below. All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent by fax, overnight courier, registered or
certified mail, postage prepaid, return receipt requested, and shall be deemed
received upon receipt thereof, as follows:
(i) To the Company:
Mems USA, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxx 0-000
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) To the Purchaser:
GCA Strategic Investment Fund Limited
c/o Prime Management Limited
Mechanics Building
00 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx, XX00
Xxxx: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) To the Escrow Agent:
The Law Offices of Xxx X. Xxxxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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2.3. This Agreement shall be binding upon and shall inure to the benefit of
the permitted successors and assigns of the parties hereto.
2.4. This Agreement is the final expression of, and contains the entire
Agreement between, the parties with respect to the subject matter hereof and
supercedes all prior understandings with respect thereto. This 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 Agreement, the singular shall
include the plural and masculine shall include the feminine. This Agreement
shall not be construed as if it had been prepared by one of the parties, but
rather as if both parties had prepared the same. Unless otherwise indicated, all
references to Articles are to this Agreement.
2.6. The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of Delaware. Any action to enforce, existing out of, or
relating in any way to, any provisions of this Agreement shall be brought
through the American Arbitration Association at the designated locale of
Delaware.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
October 27, 2006.
MEMS USA, INC.
By: /S/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: CEO and President
GCA STRATEGIC INVESTMENT FUND LIMITED.
By: /S/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Director
THE LAW OFFICES OF XXX X. XXXXXXXX
By: /S/ Xxx X. Xxxxxxxx
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Name: Xxx X. Xxxxxxxx, Esq.
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