ESCROW AGREEMENT
Exhibit
10.14
THIS
ESCROW AGREEMENT (this “Agreement”)
is
made as of September __, 2006, by and among CyberDefender Corporation, a
corporation incorporated under the laws of California (the “Company”),
the
purchasers signatory hereto (each a “Purchaser”
and
together the “Purchasers”),
and
Xxxxxxxxxx & Xxxxx LLP, with an address at 000 Xxxxxxxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (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.
WITNESSETH:
WHEREAS,
the Purchasers will be purchasing from the Company 10% Secured Convertible
Debentures (the “Debentures”)
and
Warrants as set forth in the Securities Purchase Agreement dated the date hereof
among the Purchasers and the Company (the “Purchase
Agreement”),
which
will be issued as per the terms contained herein and in the Purchase Agreement;
and
WHEREAS,
it is intended that the purchase and sale of the Debentures and Warrants be
consummated in accordance with the requirements set forth by Section 4(2) of
or
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 with respect to the Closing 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 the Debentures
and the Warrants as contemplated by the Purchase Agreement.
1.2. Closing.
(a) Upon
the
Escrow Agent’s receipt of the Subscription Amounts into its escrow account,
together with the Purchasers’ executed counterparts of this Agreement, the
Purchase Agreement, the Registration Rights Agreement and the Security
Agreement, it shall telephonically advise the Company of the amount of funds
it
has received into its escrow account.
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(b) Wire
transfers to the Escrow Agent shall be made in accordance with the instructions
set forth on Annex A of the Purchase Agreement.
(c)
The
Company, upon receipt of said notice, shall deliver to the Escrow Agent the
certificates representing the Debentures and the Warrants to be issued to each
Purchaser at the Closing together with:
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(i)
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the
executed counterpart of the Registration Rights
Agreement;
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(ii)
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the
executed counterpart of the Security
Agreement;
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(iii)
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the
executed counterpart of the Note Conversion and Warrant Lock-Up
Agreement;
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(iv)
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the
executed counterpart of the lock-up agreement attached as Exhibit
G to the
Purchase Agreement;
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(v)
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the
executed counterpart of the Purchase Agreement;
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(vi)
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a
Unit Purchase Option Agreement in form and substance reasonably
satisfactory to the Company and Oceana Parnters LLC (“Oceana”) entitling
Oceana to purchase units of the Company at an exercise price of $1.00
per
unit, with each unit consisting of one share of Common Stock and
a warrant
to purchase one share of Common Stock for $1.00 per share, provided
that
the aggregate exercise price of the units purchased by Oceana shall
not
exceed 7% of the total of all Subscription Amounts;
and
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(vii)
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the
executed counterpart of this
Agreement.
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(d) In
the
event that the foregoing items are not in the Escrow Agent’s possession within
five (5) Trading Days of the Escrow Agent receiving the Subscription Amounts,
then each Purchaser shall have the right to demand the return of such
Purchaser’s Subscription Amount.
(e) Once
the
Escrow Agent receives a notice in the form attached hereto as Exhibit
X
(the
“Release
Notice”)
executed by the Company and each Purchaser, it shall wire 93% of the aggregate
of all Subscription Amounts per the written instructions of the Company, net
of
legal fees payable to the Escrow Agent and the amount withheld by the Purchasers
pursuant to Section 5.2 of the Purchase Agreement, and the remaining 7% per
the
written instruction of Oceana Partners LLC as its fee in connection with the
transaction described herein.
(f) Once
the
funds (as set forth above) have been sent per the Company’s instructions, the
Escrow Agent shall then arrange to have the executed Transaction Documents
delivered to the appropriate parties.
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ARTICLE
2
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
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
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 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 all parties
had prepared the same. Unless otherwise indicated, all references to Articles
or
Sections 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 New York. Any action to enforce, arising out of, or relating in any way
to, any provisions of this Agreement shall only be brought in a state or Federal
court sitting in the Borough of Manhattan, City of New York, State of New
York.
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 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.
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.
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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.
2.11. The
Escrow Agent shall be entitled to employ such legal counsel and other experts
as
the Escrow Agent may deem necessary to 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 therefor which
shall be paid by the Company unless otherwise provided for in Section 2.15.
The
Escrow Agent has acted as legal counsel for the Company, and may continue to
act
as legal counsel for the Company from time to time, notwithstanding its duties
as the Escrow Agent hereunder. The Company and the Purchasers consent to the
Escrow Agent in such capacity as legal counsel for the Company and waive any
claim that such representation represents a conflict of interest on the part
of
the Escrow Agent. The Company and the Purchasers understand that the Company
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 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.
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 therefor.
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 or willful
misconduct of the Escrow Agent.
[SIGNATURE
PAGES FOLLOW]
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[SIGNATURE
PAGE TO ESCROW AGREEMENT]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
__
day of September, 2006.
| CYBERDEFENDER CORPORATION | ||
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| By: | ||
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Name: Xxxxx Xxxxxxxxxx |
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| Title: President | ||
| XXXXXXXXXX & XXXXX LLP | ||
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| By: | ||
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Name: Xxxxx Xxxxxxxxx |
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| Title: Partner | ||
[PURCHASER
SIGNATURE PAGES FOLLOW]
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[PURCHASER
SIGNATURE PAGE TO ESCROW AGREEMENT]
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| By: | ||
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Name: |
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| Title: | ||
6
Exhibit
X to
RELEASE
NOTICE
The
UNDERSIGNED, pursuant to the Escrow Agreement, dated as of September __, 2006
among CyberDefender Corporation, the Purchasers signatory thereto and Xxxxxxxxxx
& Xxxxx 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 Debentures set forth
in
the 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
set forth below.
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 September, 2006.
| CYBERDEFENDER CORPORATION | ||
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| By: | ||
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Name: Xxxx Xxxxxxxx |
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| Title: Chief Executive Officer | ||
[PURCHASER
SIGNATURE PAGES FOLLOW]
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[PURCHASER
SIGNATURE PAGE TO RELEASE NOTICE OF ESCROW AGREEMENT]
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PURCHASER:
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| By: | ||
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Name: |
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| Title: | ||
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