ESCROW AGREEMENT
Exhibit
10.6
ESCROW
AGREEMENT dated as of this 26th
day of
April, 2004 by and among Magnetech Integrated Services Corp., an Indiana
corporation (the “Company”), Wilmington Trust Company, a financial institution
chartered under the laws of the State of Delaware (the “Agent”),
and
Strasbourger Xxxxxxx Tulcin Xxxxx Inc., a New York corporation (“Strasbourger”).
W
I T
N E S S E T H:
WHEREAS,
the Company is offering 16,000,000 shares of Common Stock (“MISC
Shares”)
at
$0.20 per MISC Share (inclusive of the $750,000 of Series A Convertible
Redeemable Preferred Stock sold in the pre-bridge financing by the Company’s
subsidiary Magnetech Industrial Services, Inc., which closed on February
26,
2004, and which automatically convert into 4,750,000 MISC Shares of this
Offering (as such term is defined below), (the “Offering”)
through Strasbourger; and
WHEREAS:
(a) The
Offering will commence immediately and will continue until the earlier to
occur
of (i) the sale of the maximum number of MISC Shares that comprise the Offering
and (ii) August ___, 2004, unless extended by up to 45 days by the Company
and
Strasbourger (the “Offering
Period”);
(b) Once
the
Offering has been sold, the Company and Strasbourger may conduct one or more
closings (each a “Closing”)
on the
sale of such MISC Shares;
(c) Tendered
subscriptions for all MISC Shares shall be subject to acceptance by the Company,
which subscriptions may be reduced in the sole discretion of the Company
or
rejected for any reason in the sole discretion of the Company;
(d) Proceeds
received upon the subscription of the MISC Shares shall be held in escrow
by the
Agent pending the Closing on the MISC Shares, and disbursed upon the Closing;
and
(e) If
the
Offering is not sold prior to the end of the Offering Period and there is
no
Closing, the Offering will be terminated and all funds received from Purchasers
will be returned, without accrued interest and without any deduction. The
day
that the Offering Period terminates is hereinafter referred to as the
“Termination
Date.”
NOW,
THEREFORE, in consideration of the mutual promises herein contained and
intending to be legally bound, the parties hereby agree as follows:
1. Appointment
of Agent.
The
Company hereby appoints Wilmington Trust Company as escrow agent in accordance
with the terms and conditions set forth herein, and Wilmington Trust Company
hereby accepts such appointment.
2. Delivery
of Subscription Proceeds.
All
checks, drafts, or other instruments received from subscribers as payment
for
the Units will be delivered by the Company to the Agent, made payable to
“Wilmington Trust Company, as Escrow Agent for Magnetech Integrated Services
Corp.” Prior to Closing or earlier termination of the Offering, the Company will
provide the Agent with a chart setting forth, as to each subscriber, his
name,
address, social security number or employer identification number, number
of
MISC Shares subscribed for, and the amount paid in connection with such
subscription. The Agent is hereby empowered on behalf of the Company to endorse
and collect all checks, drafts, wire funds transfers, promissory notes or
other
instruments received on account of subscriptions for MISC Shares.
3. Agent
to Hold and Disburse Funds.
The
Agent will hold in a special account established for the benefit of the Company
and disburse all funds received by it pursuant to the terms of this Escrow
Agreement, as follows:
3.1 All
funds
received by the Agent pursuant to the terms of this Escrow Agreement shall
be
held in a non-interest bearing account with the Agent and may be invested
in The
Wilmington U.S. Government Portfolio fund. It is understood that all checks
received by the Agent are subject to clearance time, and the funds represented
thereby cannot be drawn until such time as the same constitutes good and
collected funds.
3.2 In
the
event that prior to the Termination Date the Agent has received funds (and
such
funds are cleared within three days after the Termination Date) or other
instruments in payment for subscriptions from the sale of the Offering, the
Agent will, on the date of each Closing (the “Closing
Date”),
pursuant to (a) written instructions signed by the Company and Strasbourger
and
(b) written confirmation from counsel to either the Company or Strasbourger
that
all conditions for the release of the funds have been met, pay to the Company,
Strasbourger and/or to any other person designated in such instructions,
the
proceeds received by the Agent from the sale of such Units (less the funds
the
Company is obligated to pay as a fee to the Agent pursuant to Section 7
hereof, unless otherwise paid by the Company).
3.3 In
the
event that a Closing does not occur prior to the end of the Offering Period
or
if no written instructions are received by the Agent from the Company and
Strasbourger relative to funds received by the Agent from one or more
subscribers to the Offering within three business days after the Termination
Date, the Agent will return the escrowed funds to each Subscriber without
deduction and without interest by check mailed to the address set forth in
the
chart delivered pursuant to Section 2. The Agent shall assume the Offering
Period terminates on August ___, 2004 unless notified otherwise in writing
by
the Company or Strasbourger.
4. Exculpation
and Indemnification of Agent.
4.1 The
Agent
shall have no duties or responsibilities other than those expressly set forth
herein. The Agent shall have no duty to enforce any obligation of any person
to
make any payment or delivery, or to direct or cause any payment or delivery
to
be made, or to enforce any obligation of any person to perform any other
act.
The Agent shall be under no liability to the other parties hereto or to anyone
else by reason of any failure on the part of any party hereto or any maker,
guarantor, endorser or other signatory of any document or any other person
to
perform such person's obligations under any such document. Except for amendments
to this Agreement referred to below, and except for instructions given to
the
Agent by the Company and Strasbourger relating
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to
the
escrow deposit under this Agreement, the Agent shall not be obligated to
recognize any agreement between any and all of the persons referred to herein,
notwithstanding that references thereto may be made herein and whether or
not it
has knowledge thereof.
4.2 The
Agent
shall not be liable to the Company or to anyone else for any action taken
or
omitted by it, or any action suffered by it to be taken or omitted, in good
faith and in the exercise of its own best judgment. The Agent may rely
conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the
Agent), statement, instrument, report or other paper or document (not only
as to
its due execution and the validity and effectiveness of its provisions, but
also
as to the truth and acceptability of any information therein contained),
which
is believed by the Agent to be genuine and to be signed or presented by the
proper person or persons. The Agent shall not be bound by any notice or demand,
or any waiver, modification, termination or rescission of this Agreement
or any
of the terms thereof, unless evidenced by a writing delivered to the Agent
signed by the proper party or parties and, if the duties or rights of the
Agent
are affected, unless it shall give its prior written consent thereto. In
the
event the Agent receives conflicting instructions hereunder, the Agent shall
be
fully protected in refraining from acting until such conflict is resolved
to the
satisfaction of the Agent.
4.3 The
Agent
shall not be responsible for the sufficiency or accuracy of the form of,
or the
execution, validity, value or genuineness of, any document or property received,
held or delivered by it hereunder, or of any signature or endorsement thereon,
or for any lack of endorsement thereon, or for any description therein; nor
shall the Agent be responsible or liable to the other parties hereto or to
anyone else in any respect on account of the identity, authority or rights
of
the persons executing or delivering or purporting to execute or deliver any
document or property of this Agreement. The Agent shall have no responsibility
with respect to the use or application of any funds or other property paid
or
delivered by the Agent pursuant to the provisions hereof. The Agent shall
not be
liable to the Company or to anyone else for any loss which may be incurred
by
reason of any investment of any monies which it holds hereunder provided
the
Agent has complied with the provisions of Section 3.1 hereunder.
4.4 The
Agent
shall have the right to assume in the absence of written notice to the contrary
from the proper person or persons that a fact or an event by reason of which
an
action would or might be taken by the Agent does not exist or has not occurred,
without incurring liability to the other parties hereto or to anyone else
for
any action taken or omitted, or any action suffered by it to be taken or
omitted, in good faith and in the exercise of its own best judgment, in reliance
upon such assumption. Agent shall be entitled to consult with legal counsel
in
the event that a question or dispute arises with regard to the construction
of
any of the provisions hereof, and shall incur no liability and shall be fully
protected in acting in accordance with the advice or opinion of such
counsel.
Agent
shall not be required to take any action which, in the Agent’s sole and absolute
judgment, could involve it in expense or liability in excess of its fees
and
reimbursable expenses hereunder unless furnished with security and indemnity
which it deems, in its sole and absolute discretion, to be
satisfactory.
4.5 To
the
extent that the Agent becomes liable for the payment of taxes, including
withholding taxes, in respect of income derived from the investment of funds
held hereunder or any
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payment
made hereunder, the Agent may pay such taxes. The Agent may withhold from
any
payment of monies held by it hereunder such amount as the Agent estimates
to be
sufficient to provide for the payment of such taxes not yet paid, and may
use
the sum withheld for that purpose. The Agent shall be indemnified and held
harmless against any liability for taxes and for any penalties or interest
in
respect of taxes, on such investment income or payments in the manner provided
in Section 4.6.
4.6 The
Agent
will be indemnified and held harmless by the Company from and against any
and
all expenses, including reasonable counsel fees and disbursements, or loss
suffered by the Agent in connection with any action, suit or other proceeding
involving any claim, or in connection with any claim or demand, which in
any
way, directly or indirectly, arises out of or relates to this Agreement,
the
services of the Agent hereunder, the monies or other property held by it
hereunder or any income earned from investment of such monies; provided,
however, that such indemnification shall not extend to proven acts of gross
negligence, willful misconduct or bad faith by the Agent. The Agent shall
have a
lien for the amount of any such expenses or loss on the monies and other
property held by it hereunder and shall be entitled to reimburse itself from
such monies or property for the amount of any such expense or loss. Promptly
after the receipt by the Agent or notice of any demand or claim or the
commencement of any action, suit or proceeding, the Agent shall, if a claim
in
respect thereof is to be made against the Company, notify the Company thereof
in
writing, but the failure by the Agent to give such notice shall not relieve
the
Company from any liability which the Company may have to the Agent hereunder.
Notwithstanding any obligation to make payments and deliveries hereunder,
the
Agent may retain and hold for such time as it deems necessary such amount
of
monies or property as it shall, from time to time, in its sole discretion,
deem
sufficient to indemnify itself for any such loss or expense and for any amounts
due it under Section 7. The terms of this Section 4.6 shall survive the
termination of this Agreement.
4.7 For
the
purposes hereof, the term “expense
or loss”
shall
include all amounts paid or payable to satisfy any claim, demand or liability,
or in settlement of any claim, demand, action, suit or proceeding settled
with
the express written consent of the Agent, and all costs and expenses, including,
but not limited to, reasonable counsel fees and disbursements, paid or incurred
in investigating or defending against any such claim, demand, action, suit
or
proceeding.
5. Termination
of Agreement and Resignation of Agent.
5.1 This
Escrow Agreement shall terminate on the final disposition of the monies and
property held in escrow hereunder, provided that the rights of the Agent
and the
obligations of the other parties hereto under Sections 4 and 7 shall survive
the
termination hereof.
5.2 The
Agent
may resign at any time and be discharged from its duties as Agent hereunder
by
giving the Company and Strasbourger at least 30 days' notice thereof. As
soon as
practicable after its resignation, the Agent shall turn over to a successor
escrow agent appointed by the Company all monies and property held hereunder
(less such amount as the Agent is entitled to retain pursuant to Section
7) upon
presentation of the document appointing the new escrow agent and its acceptance
thereof. If no new Agent is so appointed within the 60-day period following
such
notice of resignation, the Agent may deposit the aforesaid monies and property
with any court it deems appropriate.
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6. Form
of Payments by Agent.
6.1 Any
payments by the Agent to subscribers or to persons other than the Company
pursuant to the terms of this Agreement shall be made by check, payable to
the
order of each respective subscriber or other person, or by wire
transfer.
6.2 Except
as
otherwise specifically indicated, all amounts referred to herein are expressed
in United States Dollars and all payments by the Agent shall be made in such
dollars.
7. Compensation
of Agent.
For
services rendered, the Agent shall receive as compensation $3,500 and all
interest income on the funds received pursuant to this Agreement. The Agent
shall also be entitled to reimbursement from the Company for all reasonable
expenses paid or incurred by it in the administration of its duties hereunder,
including, but not limited to, all counsel, advisors' fees and disbursements
and
all reasonable taxes or other governmental charges upon presentation of
supporting documentation, if requested by the Company. It is anticipated
that
such disbursement shall not exceed $1,000 barring any unforeseen
circumstances.
8. Notices.
All
notices, requests, demands and other communications provided for herein shall
be
in writing, shall be delivered by overnight courier providing a receipt of
delivery or by certified or registered mail, shall be deemed given when received
and shall be addressed to the parties hereto at their respective addresses
listed below or to such other persons or addresses as the relevant party
shall
designate as to itself from time to time in writing delivered in like
manner.
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if
to the Company:
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0000
X. Xxxxxx Xxxxxx
Xxxxx
Xxxx, XX 00000
Attention:
Xxxx X Xxxxxxx
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Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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with
a copy to:
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Xxxxxx
& Xxxxxxxxx
600
1st
Source Bank Building
000
X. Xxxxxxxx Xx
Xxxxx
Xxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
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Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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if
to the Agent:
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Wilmington
Trust Company
0000
Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxx Xxxx
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Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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5
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if
to Strasbourger:
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Strasbourger
Xxxxxxx Tulcin Xxxxx Inc.
00
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxx Xxxxxxxxx
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Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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with
a copy to:
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Gottbetter
& Partners, LLP
000
Xxxxxxx Xxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxx X. Xxxxxxxxxxx
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Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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9. Further
Assurances.
From
time to time on and after the date hereof, the Company shall deliver or cause
to
be delivered to the Agent such further documents and instruments and shall
do
and cause to be done such further acts as the Agent shall reasonably request
(it
being understood that the Agent shall have no obligation to make any such
request) to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected in acting hereunder.
10. Consent
to Service of Process.
Each of
the Company, Strasbourger and Agent hereby irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action, suit or other proceeding
arising out of or relating to this Agreement or any action taken or omitted
hereunder, and waives personal service of any summons, complaint or other
process and agrees that the service thereof may be made by certified or
registered mail directed to each of the Company and Strasbourger at its address
for purposes of notices hereunder.
11. Miscellaneous.
11.1 If
for
any reason the escrow deposits are not received by the Agent as contemplated
herein, the Company shall reimburse the Agent for all expenses, including
reasonable counsel fees and disbursements, paid or incurred by it in making
preparations for providing the services contemplated hereby.
11.2 This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing such instrument to be drafted.
The terms “hereby,”“hereof,”“hereto,”“hereunder” and any similar terms, as
used in this Agreement, refer to the Agreement in its entirety and not only
to
the particular portion of this Agreement where the term is used. The word
“person” shall mean any natural person, partnership, company, government and any
other form of business or legal entity. All words or terms used in this
Agreement, regardless of the number or gender in which they are used, shall
be
deemed to include any other number and any other gender as the context may
require. This Agreement shall not be admissible in evidence to construe the
provisions of any prior agreement. The rule of ejusdem generis shall not
be
applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
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11.3 This
Agreement and the rights and obligations hereunder of the Company may be
assigned by the Company only to a successor to the Company's entire business.
This Agreement and the rights and obligations hereunder of the Agent may
be
assigned by the Agent only to a successor to its entire business. This Agreement
shall be binding upon and inure to the benefit of each party's respective
successors, and permitted assigns. No other person shall acquire or have
any
rights under or by virtue of this Agreement. This Agreement may not be changed
orally or modified, amended or supplemented without an express written agreement
executed by the Agent and the Company. This Agreement is intended to be for
the
sole benefit of the parties hereto, and (subject to the provisions of this
Section 11.3) their respective successors, and assigns, and none of the
provisions of this Agreement are intended to be, nor shall they be construed
to
be, for the benefit of any third person.
11.4 This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York. The representations and warranties contained
in
this Agreement shall survive the execution and delivery hereof and any
investigations made by any party. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect any of
the
terms hereof.
12. Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original as against any party whose signature appears thereon,
and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signature of all of the parties
reflected hereon as the signatures.
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the
day and year first above written.
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WILMINGTON
TRUST COMPANY
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By:
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/s/
Xxxxx X. Xxxx
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Name:
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Xxxxx
X. Xxxx
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Title:
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Financial
Services Officer
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MAGNETECH
INTEGRATED SERVICES CORP.
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By:
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/s/
Xxxx X. Xxxxxxx
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Name:
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Xxxx
X. Xxxxxxx
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Title:
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President
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STRASBOURGER
XXXXXXX TULCIN XXXXX, INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxxxxx
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Name:
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Xxxxxxx
X. Xxxxxxxxxx
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Title:
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President
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