Exhibit 10.1
PRIVATE EQUITY LINE FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 19th day of December, 2001 among
Cyber Digital, Inc., a New York corporation (the "Company"), Grenville
Finance Ltd. ("Investor"), and Grushko & Xxxxxxx, P.C. (the "Escrow Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Investor have entered into a Private Equity Line
of Credit Agreement dated July 2, 2001 ("Credit Line Agreement") calling for the
sale by the Company to the Investor of shares of Common Stock; and
WHEREAS, the parties hereto wish to arrange for the Company to deliver to
the Escrow Agent the Put Shares issued in connection with each Put and wish to
arrange for the Investor to deliver to the Escrow Agent the Investment Amount
specified in each Optional Purchase Notice; 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 following respective meanings:
(a) "Agreement" means this Agreement and all amendments made
hereto and thereto by written agreement between the parties;
(b) "Compliance Certificate" shall mean a completed signed
Compliance Certificate, a form of which is annexed to the Credit Line Agreement
as Exhibit C.
(c) "Finder's Fee" means the fee to be paid to Ladenburg
Xxxxxxxx & Co., Inc. (the "Finder") as described in Section 13.4 of the
Credit Line Agreement which is equal to 5% of the Investment Amount.
(d) "Company Documents" means, with respect to any Closing, the
Compliance Certificate, Put Shares, Optional Purchase Notice, and Finder's Fee
relating to that Closing.
Terms employed in this Agreement shall have the same definitions employed
in the Credit Line Agreement, unless modified herein.
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1.2. Entire Agreement. This Agreement and the Credit Line Agreement
constitute the entire agreement between the parties hereto pertaining to the
Company Documents and Investment Amounts and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations and other agreements made by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement and Credit Line 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, only by a written instrument signed by all parties, 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. 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. Subject to Section 4.2, any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. All parties and the individuals
executing this Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party (which shall be the party which receives an award most closely
resembling the remedy or action sought) shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement.
1.7. Fees. The Company shall pay the Escrow Agent a fee of $800 in
connection with each Optional Purchase Notice. This fee shall be payable by
proportionate deduction from each Investment Amount, but only if the balance of
the Investment Amount is to be released to or on behalf of the Company pursuant
to this Agreement.
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ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Delivery of Company Documents to Escrow Agent. Prior to each Closing,
the Company shall deliver to the Escrow Agent the Company Documents relative to
such Closing. The Purchase Price and amount of Put Shares for each Closing will
be determined jointly by the Company and Escrow Agent consistant with Section
1.32 of the Credit Line Agreement.
2.2 Delivery of Investment Amount to Escrow Agent. Subsequent to the
receipt of an Optional Purchase Notice, the Investor shall deliver to the bank
account of Escrow Agent identified below the Investment Amount stated in that
Optional Purchase Notice.
Citibank, N.A.
ABA Number: 0210-00089
For Credit to: Grushko & Xxxxxxx
XXXX Trust Account
Account Number: 00000000
2.3. Intention to Create Escrow Over Company Documents and Investment
Amounts. The Investor and Company intend that any Company Documents and any
Investment Amounts shall be held in escrow by the Escrow Agent pursuant to this
Agreement for their benefit as set forth herein.
2.4. Escrow Agent to Deliver Company Documents and Investment
Amounts. The Escrow Agent shall hold and release any Company Documents and
any Investment Amounts only in accordance with the terms and conditions of
this Agreement.
2.5. Delivery of Certificate. Not later than two days after the date of
the Optional Purchase Notice, the Company must provide a certificate of service
("Delivery Certificate") to the Escrow Agent regarding the service of the
Optional Purchase Notice on the Investor in the manner required pursuant to
Section 12.1 of the Credit Line Agreement. The Delivery Certificate must be
accompanied by a copy of the Optional Purchase Notice and a schedule setting
forth: (i) the manner in which the Investment Amount was determined; (ii) the
remaining amount of Common Stock included in the Registration Statement for the
Investor; and (iii) the amount of Common Stock available for issuance to the
Investor subject to the limitation set forth in Section 7.2(j) of the Credit
Line Agreement, stating the amount of Common Stock outstanding on the last day
prior to the date of the relevant Optional Purchase Notice.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND INVESTMENT AMOUNTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2, in
connection with any Closing, the Escrow Agent shall release the Company
Documents and Investment Amount relating to the Closing as follows:
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(a) Upon receipt by the Escrow Agent of the Company Documents and
the Investment Amount, the Escrow Agent will simultaneously release the Company
Documents to the Investor and release the Investment Amount to the Company
except that (i) the Finder's Fee will be delivered to the finders in proportion
to the funds released from escrow; and (ii) the fee described in Section 1.8
above will be released to the Escrow Agent. All funds to be delivered to the
Company will be delivered by wire transfer to:
The Bank of New York
0000 Xxxxxxxx Xxxxxxxx Xxx
Xxxxxxx, Xxx Xxxx
ABA Number: 000000000
For Credit to: Cyber Digital, Inc.
Account Number: 0144339620
All funds to be delivered to the Finder will be delivered by wire
transfer as per instructrions to be given to the Escrow Agent in writing by the
Finder.
The Escrow Agent is instructed to deduct actual bank wire transfer
fees from funds to be delivered to each recipient.
(b) In the event the Escrow Agent does not receive any Company
Documents or the Investment Amount prior to the Closing, then the Escrow Agent
will promptly return the Company Documents to the Company, and promptly return
the Investment Amount to the Investor.
(c) Upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Investor, it shall deliver
the Company Documents and the Investment Amount in accordance with the terms of
the Joint Instructions.
(d) 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"), the Escrow Agent shall deliver the Company Documents and the Investment
Amount 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 has competent jurisdiction and that the
Court Order is final and non-appealable.
(e) The Escrow Agent is authorized to rely on any uncontradicted
calculation, notice or information provided by the Company or Investor or from
any source when determining the amount of Common Shares to be released on a
Closing Date.
3.2. Acknowledgement of Company and Investor; Disputes. The Company and
the Investor acknowledge that the only terms and conditions upon which any
Company Documents and any Investment Amounts are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Investor reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect to
the release of any Company Documents and any Investment Amounts. Any dispute
with respect to the release of any Company Documents and any Investment Amounts
shall be resolved pursuant to Section 4.2 or by agreement between the Company
and the Investor.
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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 Investor and Company acknowledge and agree that the Escrow
Agent (i) shall not be responsible for or bound by, and shall not be required to
inquire into whether either the Investor or Company is entitled to receipt of
the Company Documents and Investment Amount pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
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; (iv) 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; (v) 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 (vi) may consult counsel satisfactory to Escrow Agent,
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.
(b) The Investor and 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, except in the case of gross negligence or
willful misconduct. The Investor and Company, jointly and severally, agree to
indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the
Investor and Company under this Agreement and to no other person.
(c) Intentionally Omitted.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Investor and the Company. Prior to the effective date of the resignation as
specified in such notice, the Investor and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of all Company Documents and all
Investment Amounts to a substitute Escrow Agent selected by the Investor and
Company. If no successor Escrow Agent is named by the Investor and Company, the
Escrow Agent may apply to a court of competent jurisdiction in
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the State of New York for appointment of a successor Escrow Agent, and to
deposit any Company Documents and any Investment Amounts with the clerk of any
such court.
(e) The Escrow Agent does not have and will not have any interest in
any Company Documents and any Investment Amounts, but is serving only as escrow
agent, having only possession thereof.
(f) 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.
(g) The Escrow Agent shall be permitted to act as counsel for the
Investor or the Company, as the case may be, in any dispute as to the
disposition of any Company Documents and or any Investment Amounts, in any other
dispute between the Investor and Company, whether or not the Escrow Agent is
then holding any Company Documents or any Investment Amounts and continues to
act as the Escrow Agent hereunder.
(h) 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 any Company Documents or any
Investment Amounts, 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 all Company Documents and Investment Amounts pending receipt of
a Joint Instruction from the Investor and Company, or (ii) deposit all Company
Documents and Investment Amounts 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 Investor 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 Company Documents or Investment Amounts. 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.
(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 Investor and Company or
to any other person, firm, corporation or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
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5.1. Termination. This escrow shall terminate upon termination of the
Credit Line Agreement and the release of all Company Documents and Investment
Amounts then being held in escrow by the Escrow Agent or at any time upon the
agreement in writing of the Investor and Company.
5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be sent by
telecopy (with the sender's facsimile machine confirming transmission and a copy
of the notice delivered by overnight courier, regular or certified mail) and
shall be deemed to have been duly given (a) one (1) day after being sent, if
sent by 5:00 P.M., New York time on a business day, or (b) the next business day
if sent at any other time
(a) If to the Company, to:
Cyber Digital, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
With a copy to (which communication shall not constitute notice):
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq. and Xxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to the Investor, to:
Grenville Finance Ltd.
Trident Xxxxxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx, B.V.I.
Telecopier: 000-000-000-0000
(c) If to the Finder, to:
Ladenburg Xxxxxxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (212)
(d) If to the Escrow Agent, to:
Grushko & Xxxxxxx, P.C.
Attorneys at Law
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
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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 Investment Amounts shall not be held in an
interest bearing account nor will interest be payable in connection therewith.
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 enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Resale/Issuance. Each Investor hereby notifies the Company that
unless the Company is otherwise advised prior to a Closing Date, each Investor
will have sold, pledged or otherwise transferred or agreed to sell, pledge or
otherwise transfer all Put Shares in a bona fide transaction to a third party
that is not an affiliate of the Company, and that the Investor will have caused
the prospectus delivery requirements to have been satisfied. Accordingly, the
Company agrees to deliver all Put Shares to the Escrow Agent without restrictive
legend pursuant to the requirements of Article IX of the Credit Line Agreement.
5.6. 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.
5.7. 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 instrument. This Agreement
may be executed by facsimile transmission.
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5.8. Agreement. Each of the undersigned states that he has read the
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foregoing Credit Line Funds Escrow Agreement and understands and agrees to it.
CYBER DIGITAL, INC. - the "Company"
By: /s/ X.X. Xxxxxxx
--------------------------------------
By: Grenville Finance Ltd.
--------------------------------------
Investor - GRENVILLE FINANCE LTD.
ESCROW AGENT:
By: /s/ Grushko & Xxxxxxx, P.C.
--------------------------------------
GRUSHKO & XXXXXXX, P.C.
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