Exhibit 10.5
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RESTRICTED STOCK ESCROW AGREEMENT
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RESTRICTED STOCK ESCROW AGREEMENT dated as of March 1, 2003, by and among
GEM GLOBAL YIELD FUND, a Nevis, West Indies entity ("GEM"), HERITAGE WORLDWIDE,
INC., a Delaware corporation ("HWWI"), MILO FINANCE, S.A., a Luxembourg limited
liability entity ("MILO"), and XXXXXX XXXXXXXXXX & XXXXXXXX, LLP (the "Escrow
Agent").
WHEREAS, GEM, HWWI and MILO are parties to an Acquisition Agreement dated
as of February 28, 2003 (the "Acquisition Agreement"), pursuant to which, among
other things, HWWI has issued warrants to purchase common stock of HWWI (the
"Warrants"), par value $0.001 per share ("Common Stock"), to GEM on the terms
and subject to the conditions set forth in Section 12 of the Acquisition
Agreement;
WHEREAS, the Warrants provide that GEM and any other holder of the Warrants
may not sell or transfer the Common Stock issuable on exercise of the Warrants
prior to March 1, 2005 without the prior written consent of the Board of
Directors of HWWI;
WHEREAS, GEM, HWWI and MILO are parties to a Stockholders' Agreement dated
as of March 1, 2003 (the " Stockholders' Agreement"), pursuant to which GEM and
certain other stockholders of HWWI (the "Restricted Stockholders") have agreed
to certain restrictions on the sale or transfer of their HWWI Common Stock; and
WHEREAS, GEM and the Restricted Stockholders have agreed to place in escrow
their HWWI Common Stock in order to permit the enforcement of the restrictions
on sale or transfer of their HWWI Common Stock.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. Defined Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the Acquisition
Agreement or the Stockholders' Agreement, but the Acquisition Agreement and
Stockholders Agreement shall not be or be deemed to be part of this Agreement.
2. Deposits of Shares.
(a) Concurrently with the execution and delivery of this Agreement,
GEM and the Restricted Stockholders have deposited with the Escrow Agent
certificates representing the aggregate of 1,998,000 shares of HWWI Common
Stock, in the amounts per stockholder set forth in Schedule A attached hereto
(the "Deposited Shares"). The Escrow Agent hereby acknowledges receipt of the
Deposited Shares.
(b) GEM and the other holders of the Warrants consent and agree that
any certificates for HWWI Common Stock issued upon the exercise of the Warrants
(the "Warrant Shares") at any time prior to March 1, 2005 shall be delivered to
the Escrow Agent to be held by the Escrow Agent subject to the terms and
conditions of this Agreement. The transfer agent of HWWI shall be instructed by
GEM and HWWI to deliver the Warrant Shares to the Escrow Agent in the event of
any exercise of the Warrants prior to March 1, 2005.
3. Delivery of Deposited Shares and Warrant Shares.
(a) (i) During the one hundred twenty (120) days after the effective
date of this Agreement (the "First Restricted Period"), GEM may request upon
notice given hereunder that the Escrow Agent deliver to GEM and the Restricted
Stockholders certificates for an aggregate of up to one million (1,000,000)
Deposited Shares. Promptly after receipt of such notice, the Escrow Agent shall
deliver certificates for the Deposited Shares so requested to GEM or the
Restricted Stockholders, in the amounts requested by GEM. The Deposited Shares
delivered to GEM and the Restricted Stockholders may be sold or transferred free
of all restrictions set forth in the Stockholders' Agreement. The balance of the
Deposited Shares shall remain in escrow subject to the terms and conditions of
the Stockholders' Agreement and this Agreement.
(ii) During the one hundred twenty (120) days following the First
Restricted Period (the "Second Restricted Period"), GEM may request upon notice
given hereunder that the Escrow Agent deliver to GEM and the Restricted
Stockholders certificates for an aggregate of up to one million five hundred
thousand (1,500,000) Deposited Shares, including any Deposited Shares delivered
pursuant to section 3(a)(i) above during the First Restricted Period. Promptly
after receipt of such notice, the Escrow Agent shall deliver certificates for
the Deposited Shares so requested to GEM or the Restricted Stockholders, in the
amounts requested by GEM. The Deposited Shares delivered to GEM and the
Restricted Stockholders may be sold or transferred free of all restrictions set
forth in the Stockholders' Agreement. The balance of the Deposited Shares shall
remain in escrow subject to the terms and conditions of the Stockholders'
Agreement and this Agreement. At the expiration of the Second Restricted Period,
the Escrow Agent shall deliver the balance of the Deposited Shares held by
Escrow Agent to the registered owners of the Deposited Shares.
(b) On March 1, 2005, the Escrow Agent shall deliver to the registered
owners thereof any and all certificates for Warrant Shares held by the Escrow
Agent on such date.
4. Terms and Conditions of the Escrow Agent's Duties.
(a) The duties and obligations of the Escrow Agent shall be determined
solely by the provisions of this Agreement and the Escrow Agent shall not be
liable except for the willfully wrongful or grossly negligent performance or
nonperformance of its duties as such are specifically set forth herein.
(b) HWWI and GEM, jointly and severally, shall (a) indemnify the
Escrow Agent for, and hold the Escrow Agent harmless against, any loss,
liability, cost or expense, including, but not limited to, reasonable attorney's
fees and disbursements except for the willfully wrongful or grossly negligent
acts or omissions on the part of the Escrow Agent in connection with such
performance; and (b) reimburse the Escrow Agent for all expenses incurred by the
Escrow Agent in the performance of its duties hereunder. Except for such
indemnity and reimbursement of costs and expenses, the Escrow Agent shall serve
without compensation.
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(c) The duties and obligations of the Escrow Agent shall be only such
as are herein specifically provided and are purely ministerial in nature. The
Escrow Agent shall be under no responsibility in respect of any of the Deposited
Shares or the Warrant Shares deposited with it other than to follow the express
provisions of this Restricted Stock Escrow Agreement with respect thereto or as
otherwise provided in subparagraph (h) hereof. The Escrow Agent shall not be
required to institute legal proceedings of any kind.
(d) The Escrow Agent may rely on any notice, instruction, certificate,
request or other instrument which it believes to be genuine and to have been
signed or presented by a proper person or persons, and shall be fully protected
in acting in accordance therewith.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties, or rights or obligations hereunder, or shall receive instructions from
any other party hereto with respect to the subject matter hereof, which, in its
opinion, are ambiguous or in conflict with any of the provisions of this
Agreement, the Escrow Agent shall be entitled to refrain from taking any action
(i) until it shall be directed otherwise in a writing jointly executed by MILO,
HWWI and GEM or (ii) until the Escrow Agent shall be directed otherwise by a
judgment or order of a court of competent jurisdiction.
(f) The Escrow Agent may seek the advice of legal counsel in the event
of any dispute or question as to (i) the construction of any of the provisions
of this Restricted Stock Escrow Agreement or (ii) the Escrow Agent's duties
hereunder and shall incur no liability and shall be fully protected and
indemnified in respect of any action taken or omitted by the Escrow Agent in
accordance with the opinion of such counsel. For the sake of clarity, the fees
and disbursements of such counsel shall constitute a reimbursable expense under
subparagraph 4(b) hereof.
(g) The parties acknowledge that the Escrow Agent in its capacity as a
law firm has acted as attorney for HWWI, GEM and the Restricted Shareholders and
their shareholders, officers and directors, in connection with the Acquisition
Agreement and the transactions contemplated thereby, and may act as counsel to
HWWI, GEM and the Restricted Shareholders after the deposit of the Deposited
Shares in escrow with the Escrow Agent. The appointment of the Escrow Agent as
such has been made notwithstanding such knowledge. The Escrow Agent, in its
capacity as a law firm, may continue to represent any or all of the foregoing
persons and entities for any and all purposes notwithstanding its position as
the Escrow Agent, including, without limitation, any disputes between or among
them, subject, in all cases to the Disciplinary Rules to which it and the
attorneys therein are subject, as attorneys, and to such other laws as may (be)
applicable.
(h) The Escrow Agent in its sole discretion may (a) resign as escrow
agent hereunder upon not less than thirty (30) days notice to the other parties
hereto, in which event the Escrow Agent's sole duty shall be to deliver the
Deposited Shares and Warrant Shares then held by it to a substitute escrow agent
jointly appointed by MILO, HWWI and GEM, provided that such resignation shall
not take effect until such a substitute escrow agent has been so appointed; or
(b) institute an interpleader action in a court of competent jurisdiction and,
in connection therewith, deliver the Deposited Shares and Warrant Shares then
held by it to such court in accordance with the procedures applicable therein.
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5. Termination. This Agreement shall terminate when the Escrow Agent
shall have delivered all the Deposited Shares and Warrant Shares in accordance
with the terms hereof, but such termination shall not affect the Escrow Agent's
right to indemnification as provided herein.
6. Notices. All notices, requests, demands, consents, approvals and
other communications required or permitted to be given hereunder shall be in
writing and shall be given personally, sent by facsimile transmission or sent by
prepaid air courier to the party at its address or fax number given below its
signature to this Agreement. Any notice so given shall be deemed to have been
given when received. Any notice required to be given hereunder to GEM may also
be given to the designated representative of GEM. A copy of any notice given
hereunder shall be simultaneously sent to counsel for the respective parties, as
follows:
If to counsel for HWWI and MILO:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx/Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
If to counsel for GEM:
Xxxxxx Gottbetter & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
Any party hereto, or counsel for any party hereto, may change the address and/or
fax number for notices intended for it by giving a notice complying with this
paragraph to the parties hereto and to the other counsel, but such notice shall
not be effective until actually received.
7. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the escrow of the Deposited Shares and Warrant
Shares, the terms and conditions of the delivery thereof and the terms and
conditions under which the Escrow Agent shall act as escrow agent. No provision
hereof may be amended, modified or waived except in writing, executed by all
parties hereto (including Escrow Agent). This Agreement supercedes all prior
negotiations, representations and agreements made by and among the parties with
respect to the subject matter referred to above. The illegality of any
provision of this Agreement shall not render any other provision hereof illegal
or otherwise effect the enforceability of this Agreement.
8. Binding Effect; Benefits. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
administrators, executors, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the parties hereto or their respective heirs, administrators, executors,
successors and permitted assigns, any rights, remedies, obligations or
liabilities.
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9. Governing Law and Jurisdiction. This Agreement shall be deemed to
be a contract made under the laws of the State of New York, and for all purposes
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts to be made and performed entirely
within the state and no defense given or allowed by the laws of any other state
or country shall be interposed in any action or proceeding herein, unless such
defense is also given or allowed by the laws of the State of New York and not
waived hereby. The courts of the State of New York shall have exclusive
jurisdiction over all controversies or disputes relating to or arising out of
this Agreement, including without limitation, with respect to the
interpretation, performance or breach of this Agreement. The parties consent to
personal jurisdiction in the courts of such State and agree that process may be
served upon them in any such action by prepaid air courier with simultaneous
notice to such parties' counsel herein named, at the address set forth herein or
on the signature page hereto, or in any other manner permitted by New York law.
10. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO, HAVING FULLY
CONSIDERED THE CONSEQUENCES THEREOF, DO HEREBY WAIVE TRIAL BY JURY IN ANY
PROCEEDING, CONTROVERSY OR DISPUTE RELATING TO OR ARISING OUT OF THIS AGREEMENT.
11. Assignment. Except as provided in paragraph 4(h) hereof, with
respect to the Escrow Agent, neither this Agreement nor any right hereunder or
derived herefrom, may be assigned by any party hereto without the prior written
consent of the other parties hereto (including, without limitation, the Escrow
Agent).
12. No Delegation. Except as provided in paragraph 4(h) hereof with
respect to the Escrow Agent, no party hereto may delegate any duty or obligation
arising hereunder without the prior written consent of the other parties hereto.
13. Headings. Headings in this Agreement are for reference purposes
only and shall not be deemed to have any substantive effect.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same instrument.
15. Facsimile Signatures. This Agreement may be signed by facsimile
copy and shall be valid and binding upon delivery by facsimile of a signed copy.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
HERITAGE WORLDWIDE, INC.
By:
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Name:
Title:
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Company Fax Number:
MILO FINANCE, S.A.
By:
--------------------------------
Name:
Title:
0 xxx Xxxx Xxxxxxx
XX 0000 Xxxxxxxxxx
Xxxxxxxxxx
Company Fax Number:
GEM GLOBAL YIELD FUND
By:
--------------------------------
Name:
Title:
00 Xxxxxxxx Xx.
Xxxxxx X0X0XX
Company Fax Number:
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Accepted and Agreed:
GEM SINGAPORE LTD.
By:
--------------------------------
00 Xxxxxxxx Xx.
Xxxxxx X0X0XX
Company Fax Number:
GLOBAL STRATEGIC HOLDINGS LTD.
By:
--------------------------------
00 Xxxxxxxx Xx.
Xxxxxx X0X0XX
Company Fax Number:
OCEAN STRATEGIC HOLDINGS LTD.
By:
--------------------------------
00 Xxxxxxxx Xx.
Xxxxxx X0X0XX
Company Fax Number:
XXXXXX GOTTBETTER & XXXXXXXX, LLP
By:
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Name:
Firm Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Firm Fax Number: 0-000-000-0000
[SIGNATURE PAGE TO RESTRICTED STOCK ESCROW AGREEMENT]
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