Exhibit 4.6
FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 30th day of June 2006
among XXXXXXXX TECHNOLOGIES, INC, a Delaware corporation (the "Company"), Laurus
Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP (the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the Company
and the Purchaser have entered into an Amended and Restated Security and
Purchase Agreement (the "Security Agreement") for the sale by the Company to the
Purchaser of a secured non-convertible term note (the "Secured Non-Convertible
Note") and a secured non-convertible revolving note (the "Secured
Non-Convertible Revolving Note"), (b) the Company has issued to the Purchaser a
common stock purchase warrant (the "Warrant") in connection with the issuance of
the Secured Non-Convertible Note and the Secured Non-Convertible Revolving Note,
and (c) the Company and the Purchaser have entered into a Registration Rights
Agreement covering the registration of the Company's common stock underlying the
Warrant (the "Registration Rights Agreement");
WHEREAS, the Company and the Purchaser wish to deliver to the Escrow Agent
copies of the Documents (as hereafter defined) and, following the satisfaction
of all closing conditions relating to the Documents, the Purchaser to deliver
the Escrowed Payment (as hereafter defined), in each case, to be held and
released by Escrow Agent in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified and/or
supplemented from time to time by written agreement among the parties
hereto.
(b) "Disbursement Letter" means that certain letter delivered to the
Escrow Agent by the Company, acceptable in form and substance to the
Purchaser, setting forth wire instructions and amounts to be funded at the
Closing.
(c) "Documents" means copies of the Disbursement Letter, the
Security Agreement, the Secured Non-Convertible Note, the Secured
Non-Convertible Revolving Note, the Warrant and the Registration Rights
Agreement.
(d) "Escrowed Payment" means $11,000,000.
(e) "Servicing Payment" means the servicing payment to be paid to
Laurus Capital Management, LLC, the fund manager, as set forth on Schedule
A hereto.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the arrangement with the Escrow Agent
and supersedes all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written with respect to the
arrangement with the Escrow Agent. There are no warranties, representations and
other agreements made by the parties in connection with the arrangement with the
Escrow Agent except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance. Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement; Consent to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. With respect to any
suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby ("Proceedings"), each party hereto irrevocably submits to
the exclusive jurisdiction of the courts of the County of New York, State of New
York and the United States District court located in the county of New York in
the State of New York. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it may have at any
time to the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party. As between the Company and the
Purchaser, the prevailing party shall be entitled to recover from the other
party its reasonable attorneys' fees and costs. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.
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1.7. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. The Company and the Purchaser hereby irrevocably
designate and appoint the Escrow Agent as their escrow agent for the purposes
set forth herein, and the Escrow Agent by its execution and delivery of this
Agreement hereby accepts such appointment under the terms and conditions set
forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
Purchaser and the Company shall deliver to the Escrow Agent copies of the
Documents executed by such parties.
2.3. Delivery of Escrowed Payment to Escrow Agent. Following the
satisfaction of all closing conditions relating to the Documents (other than the
funding of the Escrowed Payment), the Purchaser shall deliver to the Escrow
Agent the Escrowed Payment. At such time, the Escrow Agent shall hold the
Escrowed Payment as agent for the Company, subject to the terms and conditions
of this Agreement.
2.4. Intention to Create Escrow Over the Escrowed Payment. The Purchaser
and the Company intend that the Escrowed Payment shall be held in escrow by the
Escrow Agent and released from escrow by the Escrow Agent only in accordance
with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Escrowed Payment from escrow as follows:
(a) Upon receipt by the Escrow Agent of (i) oral instructions from
Xxxxx Grin and/or Xxxxxx Grin (each of whom is a director of the
Purchaser) consenting to the release of the Escrowed Payment from escrow
in accordance with the Disbursement Letter following the Escrow Agent's
receipt of the Escrowed Payment, (ii) the Disbursement Letter, and (iii)
the Escrowed Payment, the Escrowed Payment shall promptly be disbursed in
accordance with the Disbursement Letter. The Disbursement Letter shall
include, without limitation, Escrow Agent's authorization to retain from
the Escrowed Payment Escrow Agent's fee for acting as Escrow Agent
hereunder and the Closing Payment for delivery to Laurus Capital
Management, LLC in accordance with the Disbursement Letter.
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(b) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a
"Court Order") relating to the Escrowed Payment, the Escrow Agent shall
remit the Escrowed Payment in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party
presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the
Court Order is a court of competent jurisdiction and that the Court Order
is final and non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and
the Purchaser acknowledge that the only terms and conditions upon which the
Escrowed Payment are to be released from escrow are as set forth in Sections 3
and 4 of this Agreement. The Company and the Purchaser reaffirm their agreement
to abide by the terms and conditions of this Agreement with respect to the
release of the Escrowed Payment. Any dispute with respect to the release of the
Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
agreement between the Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree that the
Escrow Agent (i) shall not be required to inquire into whether the
Purchaser, the Company or any other party is entitled to receipt of any
Document or all or any portion of the Escrowed Payment; (ii) shall not be
called upon to construe or review any Document or any other document,
instrument or agreement entered into in connection therewith; (iii) shall
be obligated only for the performance of such duties as are specifically
assumed by the Escrow Agent pursuant to this Agreement; (iv) may rely on
and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith
to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness
of any fact stated therein or the propriety or validity or the service
thereof; (v) may assume that any person purporting to give notice or make
any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so; (vi) shall not be responsible
for the identity, authority or rights of any person, firm or company
executing or delivering or purporting to execute or deliver this Agreement
or any Document or any funds deposited hereunder or any endorsement
thereon or assignment thereof; (vii) shall not be under any duty to give
the property held by Escrow Agent hereunder any greater degree of care
than Escrow Agent gives its own similar property; and (viii) may consult
counsel satisfactory to Escrow Agent (including, without limitation, Loeb
& Loeb, LLP or such other counsel of Escrow Agent's choosing), the opinion
of such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder
in good faith and in accordance with the opinion of such counsel.
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(b) The Purchaser and the Company acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good
faith and believed by Escrow Agent to be authorized or within the rights
or powers conferred upon Escrow Agent by this Agreement. The Purchaser and
the Company hereby, jointly and severally, indemnify and hold harmless the
Escrow Agent and any of Escrow Agent's partners, employees, agents and
representatives from and against any and all actions taken or omitted to
be taken by Escrow Agent or any of them hereunder and any and all claims,
losses, liabilities, costs, damages and expenses suffered and/or incurred
by the Escrow Agent arising in any manner whatsoever out of the
transactions contemplated by this Agreement and/or any transaction related
in any way hereto, including the fees of outside counsel and other costs
and expenses of defending itself against any claims, losses, liabilities,
costs, damages and expenses arising in any manner whatsoever out the
transactions contemplated by this Agreement and/or any transaction related
in any way hereto, except for such claims, losses, liabilities, costs,
damages and expenses incurred by reason of the Escrow Agent's gross
negligence or willful misconduct. The Escrow Agent shall owe a duty only
to the Purchaser and the Company under this Agreement and to no other
person.
(c) The Purchaser and the Company shall jointly and severally
reimburse the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees (which counsel may be Loeb & Loeb LLP or such
other counsel of the Escrow Agent's choosing) incurred in connection with
the performance of its duties and responsibilities hereunder, which shall
not (subject to Section 4.1(b)) exceed $3,000.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) business days prior written notice of
resignation to the Purchaser and the Company. Prior to the effective date
of resignation as specified in such notice, the Purchaser and Company will
issue to the Escrow Agent a joint instruction authorizing delivery of the
Documents and the Escrowed Payment to a substitute Escrow Agent selected
by the Purchaser and the Company. If no successor Escrow Agent is named by
the Purchaser and the Company, the Escrow Agent may apply to a court of
competent jurisdiction in the State of New York for appointment of a
successor Escrow Agent, and deposit the Documents and the Escrowed Payment
with the clerk of any such court, and/or otherwise commence an
interpleader or similar action for a determination of where to deposit the
same.
(e) The Escrow Agent does not have and will not have any interest in
the Documents and the Escrowed Payment, but is serving only as escrow
agent, having only possession thereof.
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(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordance with advice
of counsel (which counsel may be Loeb & Loeb, LLP or such other counsel of
the Escrow Agent's choosing), and shall not be liable for any mistake of
fact or error of judgment or for any acts or omissions of any kind except
to the extent any such liability arose from its own willful misconduct or
gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Documents and the Escrowed Payment, in any other
dispute between the Purchaser and the Company, whether or not the Escrow
Agent is then holding the Documents and/or the Escrowed Payment and
continues to act as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution; Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Documents and/or the
Escrowed Payment, or if the Escrow Agent shall in good faith be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be
authorized, without liability to anyone, to (i) refrain from taking any
action other than to continue to hold the Documents and the Escrowed
Payment pending receipt of a joint instruction from the Purchaser and the
Company, (ii) commence an interpleader or similar action, suit or
proceeding for the resolution of any such dispute; and/or (iii) deposit
the Documents and the Escrowed Payment with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent
shall give written notice thereof to the Purchaser and the Company and
shall thereupon be relieved and discharged from all further obligations
pursuant to this Agreement. The Escrow Agent may, but shall be under no
duty to, institute or defend any legal proceedings which relate to the
Documents and the Escrowed Payment. The Escrow Agent shall have the right
to retain counsel if it becomes involved in any disagreement, dispute or
litigation on account of this Agreement or otherwise determines that it is
necessary to consult counsel which such counsel may be Loeb & Loeb LLP or
such other counsel of the Escrow Agent's choosing.
(b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with
a Court Order, the Escrow Agent shall not be liable to the Purchaser and
the Company or to any other person, firm, company or entity by reason of
such compliance.
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ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the
Escrowed Payment in accordance with the terms of this Agreement or earlier upon
the agreement in writing of the Purchaser and the Company or resignation of the
Escrow Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
If to the Company, to: c/x XxxxxXxx Technologies of Minnesota, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx, President, XxxxxXxx
Technologies, Inc.
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxxx, Xxxxxx-Brown& Xxxxxxxxx
Reservoir Place, 0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
Telephone:
-----------------------------
Facsimile:
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(a) If to the Purchaser, to: Laurus Master Fund, Ltd.
M&C Corporate Services Limited,
X.X. Xxx 000 XX, Xxxxxx House
South Church Street, Xxxxxx Town
Grand Cayman, Cayman Islands
Fax: 000-000-0000
Attention: Xxxx Xxxxxx, Esq.
(b) If to the Escrow Agent, to: Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
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5.4. Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same agreement. This Agreement may
be executed by facsimile transmission.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
COMPANY:
XXXXXXXX TECHNOLOGIES, INC.
By:_______________________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:_______________________________________________
Name:
Title:
ESCROW AGENT:
LOEB & LOEB LLP
By:_______________________________________________
Name:
Title:
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., Secured Non-Convertible Note in an
M&C Corporate Services Limited, aggregate principal amount of $11,000,000;
X.X. Xxx 000 GT, and Secured Non-Convertible Revolving Note
Xxxxxx House, South Church Street, in an aggregate principal amount of
Xxxxxx Town, Grand Cayman, Cayman Islands $5,000,000
Fax: 000-000-0000
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TOTAL $16,000,000
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FUND MANAGER SERVICING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Servicing payment payable in connection
000 Xxxxx Xxxxxx, 00xx Xxxxx with investment by Laurus Master Fund,
Xxx Xxxx, Xxx Xxxx 00000 Ltd. for which Laurus Capital Management,
Fax: 000-000-0000 LLC is the Manager.
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TOTAL $20,000
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WARRANTS
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WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
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LAURUS MASTER FUND, LTD. Warrant exercisable into 3,586,429 shares
M&C Corporate Services Limited, of common stock of the Company issuable in
X.X. Xxx 000 GT, connection with the Secured
Xxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx, Xxx-Xxxxxxxxxxx Note and the Secured
Xxxxxx Town, Grand Cayman, Cayman Islands Non-Convertible Revolving Note.
Fax: 000-000-0000
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TOTAL Warrants exercisable into 3,586,429 shares
of common stock of the Company
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