ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and
entered into as of December ___, 2005 ALFA INTERNATIONAL
HOLDINGS CORP., a Delaware corporation (the "Company"); the
Buyer(s) listed on the Securities Purchase Agreement, dated the
date hereof (also referred to as the "Investor(s)"), and XXXXX
XXXXXXXX, ESQ., as Escrow Agent hereunder (the "Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor(s) have entered into
a Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated as of the date hereof, pursuant to which the
Company proposes to sell secured convertible debentures (the
"Convertible Debentures") which shall be convertible into the
Company's Common Stock, par value $0.001 per share (the "Common
Stock"), for a total purchase price of up to Five Hundred
Thousand Dollars ($500,000). The Securities Purchase Agreement
provides that the Investor(s) shall deposit the purchase amount
in a segregated escrow account to be held by Escrow Agent in
order to effectuate a disbursement to the Company at a closing
to be held as set forth in the Securities Purchase Agreement
(the "Closing").
WHEREAS, the Company intends to sell Convertible
Securities (the "Offering").
WHEREAS, Escrow Agent has agreed to accept, hold, and
disburse the funds deposited with it in accordance with the
terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and
to effect the provisions of the Securities Purchase
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 funds deposited
with Escrow Agent pursuant to this Agreement.
b. "Joint Written Direction" shall mean a written
direction executed by the Investor(s) 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. "Escrow Period" shall begin with the
commencement of the Offering and shall terminate upon the
earlier to occur of the following dates:
(i) The date upon which Escrow Agent confirms
that it has received in the Escrow Account all of the proceeds
of the sale of the Convertible Debentures;
(ii) The expiration of twenty (20) days from the
date of commencement of the Offering (unless extended by mutual
written agreement between the Company and the Investor(s) with
a copy of such extension to Escrow Agent); or
(iii) The date upon which a determination is
made by the Company and the Investor(s) to terminate the
Offering prior to the sale of all the Convertible Debentures.
During the Escrow Period, the Company and the Investor(s)
are aware that they are not entitled to any funds received into
escrow and no amounts deposited in the Escrow Account shall
become the property of the Company or the Investor(s) or any
other entity, or be subject to the debts of the Company or the
Investor(s) or any other entity.
2. Appointment of and Acceptance by Escrow Agent. The
Investor(s) 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.
a. The Company hereby acknowledges that the Escrow
Agent is general counsel to the Investor(s), a partner in the
general partner of the Investor(s), and counsel to the
Investor(s) in connection with the transactions contemplated and
referred herein. The Company agrees that in the event of any
dispute arising in connection with this Escrow Agreement or
otherwise in connection with any transaction or agreement
contemplated and referred herein, the Escrow Agent shall be
permitted to continue to represent the Investor(s) and the
Company will not seek to disqualify such counsel.
3. Creation of Escrow Funds. On or prior to the date of
the commencement of the Offering, the parties shall establish an
escrow account with the Escrow Agent, which escrow account shall
be entitled as follows: Alfa International Holdings
Corp./Cornell Capital Partners, LP Escrow Account for the
deposit of the Escrow Funds. The Investor(s) will instruct
subscribers to wire funds to the account of the Escrow Agent as
follows:
Bank: Wachovia, N.A. of New Jersey
Routing #: 000000000
Account #: 2000014931134
Name on Account: Xxxxx Xxxxxxxx Attorney Trust Account
Name on Sub-Account: Alfa International Holdings Corp./Cornell
Capital Partners, LP Escrow Account
4. Deposits into the Escrow Account. The Investor(s)
agrees that they shall promptly deliver funds for the payment of
the Convertible Debentures to Escrow Agent for deposit in the
Escrow Account.
5. Disbursements from the Escrow Account.
a. The Escrow Agent will continue to hold such
funds until Cornell Capital Partners, LP on behalf of the
Investor(s) and Company execute a Joint Written Direction
directing the Escrow Agent to disburse the Escrow Funds
pursuant to Joint Written Direction signed by the Company and
the Investor(s). In disbursing such funds, Escrow Agent is
authorized to rely upon such Joint Written Direction from the
Company and the Investor(s) and may accept any signatory from
the Company listed on the signature page to this Agreement and
any signature from the Investor(s) that the Escrow Agent already
has on file.
b. In the event Escrow Agent does not receive the
amount of the Escrow Funds from the Investor(s), Escrow Agent
shall notify the Company and the Investor(s). Upon receipt of
payment instructions from the Company, Escrow Agent shall refund
to each subscriber without interest the amount received from
each Investor(s), without deduction, penalty, or expense to the
subscriber. The purchase money returned to each subscriber
shall be free and clear of any and all claims of the Company,
the Investor(s) or any of their creditors.
c. In the event Escrow Agent does receive the
amount of the Escrow Funds prior to expiration of the Escrow
Period, in no event will the Escrow Funds be released to the
Company until such amount is received by Escrow Agent in
collected funds. For purposes of this Agreement, the term
"collected funds" shall mean all funds received by Escrow Agent
which have cleared normal banking channels and are in the form
of cash.
6. Collection Procedure. Escrow Agent is hereby
authorized to deposit the proceeds of each wire in the Escrow
Account.
7. Suspension of Performance: Disbursement Into Court.
If at any time, there shall exist any dispute between the
Company and the Investor(s) 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:
a. 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, Escrow Agent shall continue to invest
the Escrow Funds in accordance with Section 8 hereof; and/or
b. 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.
c. Escrow Agent shall have no liability to the
Company, the Investor(s), 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.
8. Investment of Escrow Funds. Escrow Agent shall
deposit the Escrow Funds in a non-interest bearing account.
If Escrow Agent has not received a Joint Written
Direction at any time that an investment decision must be made,
Escrow Agent shall maintain the Escrow Funds, or such portion
thereof, as to which no Joint Written Direction has been
received, in a non-interest bearing account.
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(s) 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.
10. Liability of Escrow Agent.
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 herein,
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 Purchase 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(s)
jointly and severally shall promptly pay, upon demand, the
reasonable fees and expenses of any such counsel.
b. 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 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, 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 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
or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
11. 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
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 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(s) hereunder in writing, and the
Investor(s) 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(s)
and/or the Company shall be required to pay such fees and
expense if (a) the Investor(s) or the Company agree to pay such
fees and expenses, or (b) the Investor(s) 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(s) and the
Company are 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 the Indemnified Party, the Company and/or the Investor(s)
and the 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(s). The Investor(s) 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(s) 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.
The parties agree that neither payment by the Company or
the Investor(s) of any claim by Escrow Agent for indemnification
hereunder shall impair, limit, modify, or affect, as between the
Investor(s) and the Company, the respective rights and
obligations of Investor(s), on the one hand, and the Company, on
the other hand.
12. 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 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.
13. Warranties.
a. The Investor(s) makes the following representations
and warranties to Escrow Agent:
(i) The Investor(s) has full power and authority to
execute and deliver this Agreement and to perform its
obligations hereunder.
(ii) This Agreement has been duly approved by all
necessary action of the Investor(s), including any necessary
approval of the limited partner of the Investor(s) or necessary
corporate approval, as applicable, has been executed by duly
authorized officers of the Investor(s), enforceable in
accordance with its terms.
(iii) The execution, delivery, and performance of
the Investor(s) of this Agreement will not violate, conflict
with, or cause a default under any agreement of limited
partnership of Investor(s) or the articles of incorporation or
bylaws of the Investor(s) (as applicable), any applicable law or
regulation, any court order or administrative ruling or degree
to which the Investor(s) is a party or any of its property is
subject, or any agreement, contract, indenture, or other binding
arrangement.
(iv) Xxxx Xxxxxx has been duly appointed to act as
the representative of the Investor(s) 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)'s
representative under this Agreement, all without further consent
or direction form, or notice to, the Investor(s) or any other
party.
(v) No party other than the parties hereto and the
Investor(s)s 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(s) contained herein are true and complete as of the
date hereof and 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 the Escrow Agent:
(i) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of New Jersey and has full power and authority to execute
and deliver this Agreement and to perform its obligations
hereunder.
(ii) This 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 Agreement is in accordance with the
Securities Purchase 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,
including without limitation to the Securities Purchase
Agreement, to which the Company is a party.
(iv) Xxxxx 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
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 and
the Investor(s)s 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 Company contained herein are true and complete as of the
date hereof 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 Xxxxxx 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 upon confirmation
of receipt and addressed to the party to be notified as follows:
If to Investor(s), to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent, to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: Alfa International Holdings Corp.
Empire State Building - Suite 1103
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx-00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
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 hereto. 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 Investor(s), 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]
IN WITNESS WHEREOF the parties have hereunto set their
hands and seals the day and year above set forth.
Alfa International Holdings Corp.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President & CEO
Cornell Capital Partners, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
-------------------------
Name: Xxxx Xxxxxx
Title: Portfolio Manager
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxx, Esq.
