ESCROW AND SECURITY AGREEMENT
Dated as of April 30, 1998
by and among
MARINE MIDLAND BANK
(as Escrow Agent),
MARINE MIDLAND BANK
(as Trustee)
and
XXXX TECHNOLOGY GROUP LTD.
THIS ESCROW AND SECURITY AGREEMENT (this "Escrow Agreement" or this
"Agreement"), dated as of April 30, 1998, is made by and among MARINE MIDLAND
BANK, as escrow agent (in such capacity, "Escrow Agent") and "securities
intermediary" as defined in Article 8 of the Uniform Commercial Code of the
State of New York (in such capacity, the "Securities Intermediary"), MARINE
MIDLAND BANK, as Trustee (in such capacity, "Trustee") under the Indenture (as
defined herein), and XXXX TECHNOLOGY GROUP LTD., a Delaware corporation (the
"Company").
WHEREAS, pursuant to the Indenture, dated as of the date hereof (the
"Indenture"), between the Company and Trustee, the Company is issuing
$160,000,000 aggregate principal amount of 13% Senior Notes due 2005 (the
"Securities").
WHEREAS, as security for its obligations under the Securities and
the Indenture, the Company hereby grants to the Trustee for the benefit of the
Holders of the Securities, a security interest in and lien upon the Escrow
Account and the other Collateral (each as defined herein).
WHEREAS, the parties have entered into this Agreement in order to
set forth the conditions upon which,
and the manner in which, Collateral will be disbursed from the Escrow Account
and released from the security interest and lien described above.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Indenture. In addition to
any other defined terms used herein, the following terms shall constitute
defined terms for purposes of this Agreement and shall have the meanings set
forth below:
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied (i) to the
payment of interest on the Securities, (ii) pursuant to Section 3(c) hereof, or
(iii) pursuant to Section 6(b)(iii) hereof.
"Available Funds" means, at any date, (A) the sum of (i) the Pledged
Securities and any funds or U.S. Government Securities on deposit in the Escrow
Account, and (ii) interest earned or dividends paid on the Pledged Securities
and any funds or U.S. Government Securities on deposit in the Escrow Account,
less (B) the aggregate disbursements made prior to such date pursuant to this
Agreement.
"Beneficiaries" has the meaning ascribed to such term in Section
2(b).
"Collateral" has the meaning ascribed to such term in Section 6(a).
"Escrow Account" shall mean the escrow account established pursuant
to Section 2.
"Escrow Account Statement" has the meaning ascribed to such term in
Section 2(f).
"Escrow Funds" has the meaning ascribed to such
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term in Section 6(c).
"funds" means cash, revenues and other funds.
"Initial Escrow Amount" shall mean $57 million.
"Interest" has, other than for purposes of Section 2(d)(iii), the
meaning set forth in the Indenture.
"Payment Notice and Disbursement Request" means a notice sent by the
Company to Escrow Agent requesting a disbursement of funds from the Escrow
Account, in substantially the form of Exhibit A hereto. Each Payment Notice and
Disbursement Request shall be signed by an officer of the Company.
"Pledged Securities" means the U.S. Government Securities, as more
fully described on Schedule I attached hereto, deposited into the Escrow
Account. The scheduled payments of principal and interest on the Pledged
Securities must be sufficient to provide for the payment in full of the interest
due on the Securities on the first six scheduled Interest Payment Dates under
the Indenture.
"Secured Obligations" has the meaning ascribed to such term in
Section 6(a).
"U.S. Government Securities" means non-callable securities that are
direct obligations of the United States of America for the payment of which
obligations its full faith and credit is pledged.
Section 2. Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and Trustee hereby
appoint Escrow Agent, and Escrow Agent hereby accepts appointment, as escrow
agent and Securities Intermediary, under the terms and conditions of this
Agreement. The term "Escrow Agent" shall include the capacity of Securities
Intermediary unless otherwise specified.
(b) Establishment of Escrow Account.
(i) On the Issue Date for the Securities, Escrow Agent shall
establish an escrow account entitled the "Escrow Account pledged by Xxxx
Technology Group Ltd. to Marine Midland Bank, as Trustee under an Indenture
between Xxxx Technology Group Ltd. and Marine Midland Bank dated as of April 30,
1998" (the "Escrow Account") at the office of the Escrow Agent located at 000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Escrow Account shall be a
"securities account" as such term is defined in Section 8-501(a) of the
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New York Uniform Commercial Code (the "NY-UCC"). All property, including,
without limitation, funds, the Initial Escrow Amount, Pledged Securities and any
U.S. Government Securities accepted by Escrow Agent pursuant to this Agreement
shall be held subject to the pledge in favor of Trustee, as the secured party
hereunder for the ratable benefit of the Holders of the Securities (such
Holders, collectively, the "Beneficiaries"). All such funds shall be held in the
Escrow Account until disbursed or paid in accordance with the terms hereof. The
Escrow Account and all property held therein, including, without limitation,
funds, the Initial Escrow Amount, the Pledged Securities and any U.S. Government
Securities held by Escrow Agent, shall be under the sole dominion and exclusive
control of Escrow Agent on behalf of and for the sole benefit of Trustee for the
ratable benefit of the Beneficiaries.
(ii) On the Issue Date, the Company shall deliver, or cause the
delivery of, the Initial Escrow Amount to Escrow Agent for deposit into the
Escrow Account against Escrow Agent's written acknowledgment and receipt of the
Initial Escrow Amount. Escrow Agent shall forthwith purchase, or cause to be
purchased, the Pledged Securities, with all or a portion of the Initial Escrow
Amount. The Pledged Securities shall be held by Escrow Agent and deposited into
the Escrow Account subject to the pledge in favor of Trustee for the ratable
benefit of the Beneficiaries. All payments of interest and principal on the
Pledged Securities shall be deposited into the Escrow Account to be paid or
disbursed in accordance with the terms hereof or, to the extent permitted by
Section 2(d) hereof, reinvested in U.S. Government Securities.
(c) Escrow Agent Compensation. (i) The Company shall pay to Escrow
Agent such compensation for services to be performed by it under this Agreement
as the Company and Escrow Agent have agreed in accordance with Schedule II
attached hereto. Escrow Agent shall be paid any compensation owed to it directly
by the Company and shall not disburse from the Escrow Account any such amounts
nor shall Escrow Agent have any interest in the Escrow Account or the other
Collateral with respect to such amounts, whether by right of set-off or
otherwise.
(ii) The Company shall reimburse Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel.
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Escrow Account any such amounts nor shall Escrow
Agent have any interest in the Escrow Account or the
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other Collateral with respect to such amounts, whether by right of set-off or
otherwise.
(d) Investment of Funds in Escrow Account. Any funds on deposit in
the Escrow Account which are not invested may be invested and reinvested only
upon the following terms and conditions:
(i) Acceptable Investments. The funds deposited in the Escrow
Account on the date hereof shall be invested by Escrow Agent in the Collateral
described in Schedule I. All other funds deposited or held in the Escrow Account
at any time shall be invested by Escrow Agent in U.S. Government Securities in
accordance with Trustee's written instructions from time to time to Escrow
Agent; provided, that Trustee's written instructions to Escrow Agent shall be
satisfied by delivery by Trustee to Escrow Agent of written investment
designations of the Company and so long as (1) the Company shall only designate
investments of funds in U.S. Government Securities maturing in an amount
sufficient to and/or generating interest income sufficient to, when added to the
balance of funds held in the Escrow Account, provide for the payment of interest
on the outstanding Securities on each of the first six scheduled Interest
Payment Dates under the Indenture and (2) any such written instruction shall
specify the particular investment to be made, shall state that such investment
is authorized to be made hereby and in particular satisfies the requirements of
the preceding clause (1) of this proviso, shall contain the certification
referred to in Section 2(d)(ii), if required, and shall be executed by an
officer of the Company.
Neither Escrow Agent nor Trustee shall have any responsibility
for determining whether Collateral held in the Escrow Account in accordance with
the Company's instruction complies with the requirements of this clause (i). All
U.S. Government Securities shall be assigned to and held in the possession of
Escrow Agent for the benefit of Trustee for the ratable benefit of the
Beneficiaries, with such guarantees as are customary, except that U.S.
Government Securities maintained in book entry form with a Federal Reserve Bank
shall be transferred to a book entry account in the name of Escrow Agent at the
Federal Reserve Bank that includes only U.S. Government Securities held by
Escrow Agent for its customers and segregated by separate recordation in the
books and records of Escrow Agent. Escrow Agent shall not be liable for losses
on any investments made by it pursuant to and in compliance with such written
instructions. In the absence of instructions from Trustee that meet the
requirements of this Section 2(d)(i), Escrow Agent shall have no obligation to
invest funds held in the Escrow Account.
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(ii) Security Interest in Investments. No investment of funds
in the Escrow Account shall be made at the request of the Company unless the
Company has certified to Escrow Agent and Trustee that, upon such investment,
Escrow Agent will have a first priority perfected security interest in the
applicable investment.
If such a certificate as to a class of investments has been
provided to Escrow Agent and Trustee, a certificate need not be issued with
respect to individual investments in securities in that class if the certificate
applicable to the class remains accurate with respect to such individual
investments, which continued accuracy Escrow Agent and Trustee may conclusively
assume. Promptly following the date of this Agreement, and on each anniversary
of the date of this Agreement until the date upon which the balance of the
Available Funds shall have been reduced to zero, the Company shall furnish to
each of Trustee and Escrow Agent an Opinion of Counsel to the Company, dated
each such date as applicable, which opinion shall meet the requirements of
Section 314(b) of the United States Trust Indenture Act of 1939, as amended (the
"TIA"), and shall comply with Section 1302 of the Indenture.
(iii) Interest and Dividends. All interest earned and
dividends paid on the Pledged Securities or any funds invested in U.S.
Government Securities shall be deposited in the Escrow Account as additional
Collateral and, if not required to be disbursed in accordance with the terms
hereof, subject to Section 6, shall be reinvested in accordance with the terms
hereof at Trustee's written instruction.
(iv) Limitation on Escrow Agent's Responsibilities. Escrow
Agent's sole responsibilities under this Section 2 shall be (A) to retain
possession of certificated U.S. Government Securities (except, however, that
Escrow Agent may surrender possession to the issuer of any such U.S. Government
Securities for the purposes of effecting assignment, crediting interest, or
reinvesting such security or reducing such security to cash) and to be the
registered or designated owner of the Pledged Securities and any U.S. Government
Securities which are not certificated, (B) to follow Trustee's written
instructions given in accordance with Section 2(d)(i) and the other provisions
of this Agreement; (C) to invest and reinvest funds pursuant to this Section
2(d) and (D) to use reasonable efforts to reduce to cash such U.S. Government
Securities as may be required to fund any disbursement or payment in accordance
with Section 3. In connection with clause (A) above, Escrow Agent will maintain
continuous possession in the jurisdiction of its principal place of business of
certificated U.S. Government Securities and cash
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included in the Collateral and will cause the Pledged Securities and any
uncertificated U.S. Government Securities to be registered in the book-entry
system of, and transferred to an account of Escrow Agent or a sub-agent of
Escrow Agent at, any Federal Reserve Bank and to have an appropriate notation
entered into the books and records of the applicable intermediary or custodian
that such securities are subject to the security interest referred to herein.
Except as provided in Section 6, Escrow Agent shall have no other
responsibilities with respect to perfecting or maintaining the perfection of the
security interest in the Collateral and shall not be required to file any
instrument, document or notice in any public office at any time or times. In
connection with clause (D) above and subject to the following sentence, Escrow
Agent shall not be required to reduce to cash any U.S. Government Securities to
fund any disbursement or payment in accordance with Section 3 in the absence of
written instructions signed by an officer of Trustee specifying the particular
investment to liquidate; provided, that Trustee's written instructions to Escrow
Agent shall be satisfied by delivery by Trustee to Escrow Agent of written
liquidation designations of the Company. If no such written instructions are
received, Escrow Agent may liquidate those U.S. Government Securities having the
nearest maturity.
(e) Substitution of Escrow Agent. Escrow Agent may resign by giving
no less than 15 Business Days prior written notice to the Company and Trustee,
unless a shorter period shall be acceptable to the Company and Trustee. Such
resignation shall take effect upon the later to occur of (i) delivery of all
funds, the Pledged Securities and any U.S. Government Securities maintained by
Escrow Agent hereunder and copies of all books, records, plans and other
Collateral and documents in Escrow Agent's possession relating thereto or this
Agreement to a successor escrow agent mutually approved by the Company and
Trustee (which approvals shall not be unreasonably withheld or delayed) and the
taking of such other steps as may be necessary to give the successor escrow
agent a first priority perfected security interest in the Pledged Securities and
(ii) the Company, Trustee and such successor escrow agent entering into this
Agreement or any written successor agreement no less favorable to the interests
of the Holders of the Securities and Trustee than this Agreement; and Escrow
Agent shall thereupon be discharged of all obligations under this Agreement and
shall have no further duties, obligations or responsibilities in connection
herewith, except as set forth in Section 4. If a successor escrow agent has not
been appointed or has not accepted such appointment within 20 Business Days
after notice of resignation is given to the Company, Escrow Agent may apply to a
court of competent jurisdiction for the appointment of a successor escrow agent.
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(f) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, Escrow Agent shall deliver to the Company and Trustee a
statement setting forth with reasonable particularity the balance of funds then
in the Escrow Account and the manner in which such funds are invested ("Escrow
Account Statement"). The parties hereto irrevocably instruct Escrow Agent that
on or promptly following the first date upon which the balance in the Escrow
Account (including the holdings of all U.S. Government Securities) is reduced to
zero, Escrow Agent shall deliver to the Company and to Trustee a notice that the
balance in the Escrow Account has been reduced to zero.
Section 3. Disbursements.
(a) Payment Notice and Disbursement Request; Disbursements. No later
than the fifth Business Day prior to an Interest Payment Date, the Company may
submit to Escrow Agent, with a copy to Trustee, a completed Payment Notice and
Disbursement Request substantially in the form of Exhibit A hereto.
Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b). Provided such Payment Notice and
Disbursement Request is not rejected by it for failure to satisfy such
conditions, Escrow Agent, as soon as reasonably practicable on the Interest
Payment Date, but in no event later than 10:00 a.m. (New York City time) on the
Interest Payment Date, shall disburse the funds requested in such Payment Notice
and Disbursement Request by wire or book-entry transfer of immediately available
funds to the account of Trustee for the benefit of the Beneficiaries. Escrow
Agent shall notify Trustee and the Company as soon as reasonably possible (but
not later than one (1) Business Day from the date of receipt of the Payment
Notice and Disbursement Request) if any Payment Notice and Disbursement Request
is rejected and the reason(s) therefor. In the event such rejection is based
upon nonsatisfaction of the condition in Section 3(b)(i), the Company may, no
later than one Business Day after it is notified of such rejection thereupon
resubmit the Payment Notice and Disbursement Request with appropriate changes.
(b) Conditions Precedent to Disbursement. Escrow Agent's payment of
any disbursement shall be made only if: (i) the Company shall have submitted, in
accordance with the provisions of Section 3(a), a completed Payment Notice and
Disbursement Request to Escrow Agent substantially in the form of Exhibit A with
blanks appropriately filled in, and (ii) Escrow Agent shall not have received
any notice from Trustee that as a result of an Event of Default the
8
indebtedness represented by the Securities has been accelerated and has become
due and payable (in which event Escrow Agent shall apply all Available Funds as
required by Section 6(b)(iii)).
(c) The Company Payments. If the Company makes any interest payment
or portion of an interest payment on the Securities from a source of funds other
than the Escrow Account (the "Company Funds"), the Company may, after payment in
full of such interest payment, and so long as no Default or Event of Default
under the Indenture shall have occurred and be continuing, request Trustee, and
Trustee shall direct Escrow Agent to release to the Company or at the direction
of the Company an amount of funds from the Escrow Account less than or equal to
the amount of the Company Funds so expended; provided, however, that neither
Trustee nor Escrow Agent shall have any obligation under this Agreement to
independently verify whether any Default or Event of Default under the Indenture
shall have occurred. Upon receipt of a proper written request from the Company
(including the certificate described in the following sentence) and so long as
no Default or Event of Default shall have occurred or would occur as a result
thereof, Trustee shall direct Escrow Agent to pay over to the Company the
requested amount. Concurrently with any request by the Company to Trustee for
release of funds pursuant to this Section 3(c), the Company will deliver to
Trustee a certificate signed by an authorized signatory of the Company stating
that such release has been duly authorized by all necessary corporate action,
and does not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Certificate of Incorporation of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or result in the creation or imposition of
any Lien on any assets of the Company and also stating that no Default or Event
of Default has occurred or would occur under the Indenture as a result thereof.
(d) If at any time the principal of and interest on the Collateral
exceeds 100% of the amount sufficient, in the written opinion of a nationally
recognized firm of independent accountants selected by the Company and delivered
to Escrow Agent and Trustee, to provide for payment in full of the interest on
Outstanding Securities on each of the first six scheduled Interest Payment Dates
under the Indenture (or, in the event one or more interest payments have been
made thereon, an amount sufficient to provide for the payment in full of any and
all interest payments on the Securities then remaining), Trustee shall, upon the
Company's properly executed written request together with a written
certification from the Company to the effect set forth in Section 3(c) above,
direct Escrow
9
Agent to release any such overfunded amount to the Company or to such other
party as the Company may direct. The Company may request Trustee to direct
Escrow Agent to pay, or cause the payment, over to the Company or the Company's
designee, as the case may be, any such overfunded amount, only so long as no
Default or Event of Default shall have occurred and be continuing under the
Indenture.
Section 4. Limitation of Escrow Agent's Liability; Responsibilities
of Escrow Agent. Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) Escrow Agent does not represent,
warrant or guaranty to the Holders of the Securities from time to time the
performance of the Company; (ii) Escrow Agent shall have no responsibility to
the Company or the Holders of the Securities or Trustee from time to time as a
consequence of performance or non-performance by Escrow Agent hereunder, except
for any bad faith, gross negligence or willful misconduct of Escrow Agent; (iii)
the Company shall remain solely responsible for all aspects of the Company's
business and conduct; and (iv) Escrow Agent is not obligated to supervise,
inspect or inform the Company or any third party of any matter referred to
above. In no event shall Escrow Agent be liable (i) for acting in accordance
with or relying upon any instruction, notice, demand, certificate or document
permitted hereunder from the Company or any entity acting on behalf of the
Company unless Escrow Agent shall have knowledge directly contrary thereto, (ii)
for any consequential, punitive or special damages, (iii) for the acts or
omissions of its nominees, correspondents, designees, subagents or
subcustodians, (iv) for an amount in excess of the value of the Escrow Account,
valued as of the date of deposit or (v) for the validity, sufficiency or
priority of this Agreement or any Collateral or other security furnished hereby.
No implied covenants or obligations shall be inferred from this
Agreement against Escrow Agent, nor shall Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any Collateral held by it
hereunder, including without limitation any liability for any delay not
resulting from negligence or willful misconduct in such investment, reinvestment
or liquidation, or for any loss of principal or income incident to any such
delay.
Escrow Agent shall be entitled to rely upon any judicial or
administrative order or judgment, upon any opinion of counsel or upon any
certification, instruction,
10
notice, or other writing delivered to it by the Company or Trustee in compliance
with the provisions of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of service thereof unless Escrow Agent shall have knowledge directly
contrary thereto. Escrow Agent may act in reliance upon any instrument
comporting with the provisions of this Agreement or signature believed by it to
be genuine and may assume that any person purporting to give notice or receipt
or advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so unless Escrow Agent shall
have knowledge directly contrary thereto.
At any time Escrow Agent may request in writing an instruction in
writing from Trustee (other than any disbursement pursuant to Section
6(b)(iii)), and may at its own option include in such request the course of
action it proposes to take and the date on which it proposes to act, regarding
any matter arising in connection with its duties and obligations hereunder;
provided, however, that Escrow Agent shall state in such request that it
believes in good faith that such proposed course of action is consistent with
another identified provision of this Agreement. Escrow Agent shall not be liable
to the Company or Trustee for acting without Trustee's consent in accordance
with such a proposal on or after the date specified therein if (i) the specified
date is at least four Business Days after Trustee receives Escrow Agent's
request for instructions and its proposed course of action, and (ii) prior to so
acting, Escrow Agent has not received the written instructions requested from
Trustee. Trustee may request in writing an instruction in writing from the
Company in connection with any request by Escrow Agent for written instructions
from Trustee in accordance with the foregoing.
At the expense of the Company, Escrow Agent may act pursuant to the
advice of counsel chosen by it with respect to any matter relating to this
Agreement and (subject to clause (ii) of the first paragraph of this Section 4)
shall not be liable for any action taken or omitted in accordance with such
advice.
Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement
with respect to any funds, securities or property deposited hereunder, Escrow
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds, securities or
11
property, and Escrow Agent shall not be or become liable for its failure or
refusal to comply with conflicting claims, demands or instructions. Escrow Agent
shall be entitled to refuse to act until either any conflicting or adverse
claims or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting claimants as
evidenced in a writing, satisfactory to Escrow Agent, or Escrow Agent shall have
received security or an indemnity satisfactory to Escrow Agent sufficient to
save Escrow Agent harmless from and against any and all loss, liability or
expense which Escrow Agent may incur by reason of its acting. Escrow Agent may
in addition elect in its sole option to commence an interpleader action or seek
other judicial relief or orders as Escrow Agent may deem necessary. The costs
and expenses (including reasonable attorney's fees and expenses) incurred in
connection with such proceedings shall be paid by, and shall be deemed an
obligation of the Company.
No provision of this Agreement shall require Escrow Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
Escrow Agent shall not incur any liability for not performing any
act or fulfilling any duty, obligation or responsibility hereunder by reason of
any occurrence beyond the control of Escrow Agent (including but not limited to
any act or provision of any present or future law or regulation or governmental
authority, any act of God or war, or the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility).
Section 5. Indemnity. The Company shall indemnify, hold harmless and
defend Trustee and Escrow Agent and their respective directors, officers,
agents, employees and controlling persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, reasonable legal fees, and
claims for damages, arising from Trustee's or Escrow Agent's performance or
non-performance, or in connection with Escrow Agent's acceptance of appointment
as Escrow Agent under this Agreement, except to the extent that such liability,
expense or claim is solely and directly attributable to the bad faith, gross
negligence or willful misconduct of any of the foregoing persons. The provisions
of this Section 5 shall survive any termination, satisfaction or discharge of
this Agreement as well as the resignation or removal of Escrow Agent or Trustee.
Section 6. Grant of Security Interest; Instructions to Escrow Agent.
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(a) The Company hereby irrevocably grants a first priority perfected
security interest in, security entitlement and Lien on, and pledges to Trustee
for the ratable benefit of the Beneficiaries, all of the Company's right, title
and interest in the Escrow Account, and all property now or hereafter placed or
deposited in, or delivered to Escrow Agent for placement or deposit in, the
Escrow Account, including, without limitation, the Pledged Securities, all cash,
revenues and other funds held in the Escrow Account, all U.S. Government
Securities and other securities, financial assets and investment property held
in the Escrow Account by (or otherwise maintained in the name of) Escrow Agent
pursuant to Section 2, and all income thereon and proceeds thereof as well as
all rights of the Company under this Agreement (the Escrow Account and such
other items, collectively, the "Collateral"), in order to secure all obligations
and indebtedness of the Company under the Indenture, the Securities, this
Agreement and any other obligation, now or hereafter arising, of every kind and
nature, owed by the Company under the Indenture or the Securities to the Holders
of the Securities or to Trustee (the "Secured Obligations"). Escrow Agent hereby
acknowledges Trustee's security interest and Lien as set forth above. The
Company shall take all actions necessary on its part to insure the continuance
of a first priority security interest in the Collateral in favor of Trustee in
order to secure all such obligations and indebtedness.
(b) The Company and Trustee hereby irrevocably instruct Escrow Agent
to, and Escrow Agent shall:
(i)(A) maintain sole dominion and exclusive control over the
Collateral for the benefit of Trustee for the ratable benefit of the
Beneficiaries to the extent specifically required herein, (B) maintain, or cause
its agent within the jurisdiction of its principal place of business to
maintain, possession of all certificated U.S. Government Securities purchased
hereunder that are physically possessed by Escrow Agent in order for Trustee for
the ratable benefit of the Beneficiaries to enjoy a continuous perfected first
priority security interest therein under the law of the State of New York (the
Company hereby agreeing that in the event any certificated U.S. Government
Securities are in the possession of the Company or a third party, the Company
shall deliver all such certificates to Escrow Agent), (C) comply with all
directions furnished by the Company to Escrow Agent to enjoy a continuous
perfected first priority security interest under any applicable Federal or State
of New York law in all U.S. Government Securities purchased hereunder that are
not certificated and (D) maintain the Collateral free and clear of all liens,
security interests, safekeeping or other charges, demands and claims against the
Company, Escrow
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Agent or Trustee of any nature now or hereafter existing in favor of anyone
other than Trustee (other than tax liens for taxes not yet due and payable);
(ii) promptly notify Trustee if Escrow Agent receives written
notice that any Person other than Escrow Agent has a Lien or security interest
upon any portion of the Collateral other than as permitted in clause (i) of this
Section 6(b); and
(iii) in addition to disbursing amounts held hereunder
pursuant to any Payment Notice and Disbursement Requests given to it pursuant to
Section 3, upon receipt of written notice from Trustee of the acceleration of
the maturity of the Securities, and direction from Trustee to disburse all
Available Funds to Trustee, as promptly as practicable, disburse all funds held
in the Escrow Account to Trustee and transfer title to all U.S. Government
Securities held by Escrow Agent hereunder to Trustee. In addition, upon an Event
of Default under the Indenture and for so long as such Event of Default
continues, Trustee may, and Escrow Agent shall on behalf of Trustee when
instructed by Trustee, exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party under the NY-UCC or other applicable
law, and Trustee may, and Escrow Agent shall on behalf of Trustee when
instructed by Trustee, also upon obtaining possession of the Collateral as set
forth herein, without notice to the Company except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Trustee may
deem commercially reasonable. The Company acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale. The Company agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to the
Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Trustee
shall not be obligated to make any sale regardless of notice of sale having been
given. Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
The Lien and security interest provided for by this Section 6
shall automatically terminate and cease as to, and shall not extend or apply to,
and Trustee and Escrow Agent shall have no security interest in, any funds
14
disbursed by Escrow Agent whether for payment of interest or to the Company
pursuant to this Agreement to the extent not inconsistent with the terms hereof.
Notwithstanding any other provision contained in this Agreement, and except to
the extent it is acting in its capacity as securities intermediary, Escrow Agent
shall act solely as Trustee's agent in connection with its duties under this
Section 6 or any other duties herein relating to the Escrow Account or the
Pledged Securities or any of the other Collateral. Escrow Agent shall not have
any right to receive compensation from Trustee and shall have no authority to
obligate Trustee or to compromise or pledge Trustee's security interest
hereunder. Accordingly, Escrow Agent is hereby directed to cooperate with
Trustee in the exercise of its rights in the Collateral provided for herein.
(c) Any money and U.S. Government Securities collected by Trustee
pursuant to Section 6(b)(iii) shall be applied as provided in the Indenture.
(d) The Company will execute and deliver or cause to be executed and
delivered, or use its best efforts to procure, all stock powers, proxies,
assignments, instruments and other documents, deliver any instruments to Trustee
and take any other actions that are necessary or desirable to perfect, continue
the perfection of, or protect the first priority of Trustee's security interest
in and to the Collateral, to protect the Collateral against the rights, claims,
or interests of third persons or to effect the purposes of this Agreement and
the Indenture. The Company also hereby authorizes Trustee to file any financing
or continuation statements with respect to the Collateral without the signature
of the Company (to the extent permitted by applicable law). The Company will pay
all reasonable costs incurred in connection with any of the foregoing. It is
expressly understood and agreed that Trustee has no duty to determine whether to
file or record, or to actually file or record, any document or instrument
relating to Collateral.
(e) The Company hereby appoints Trustee as its attorney-in-fact with
full power of substitution to do any act which the Company is obligated
hereunder to do, and Trustee may, but shall not be obligated to, exercise such
rights as the Company might exercise with respect to the Collateral and take any
action in the Company's name to protect Trustee's security interest hereunder.
(f) If at any time Escrow Agent shall receive an "entitlement order"
(within the meaning of Section 8-102(a)(8) of the NY-UCC) issued by Trustee and
relating to the Escrow Account, Escrow Agent shall comply with such entitlement
order without further consent by the Company or
15
any other Person.
Section 7. Termination. This Agreement and the security interest in
the Collateral evidenced by this Agreement shall terminate automatically and be
of no further force or effect upon the payment in full in cash, as certified by
Trustee to Escrow Agent, of all interest (including any Additional Interest) due
through the sixth scheduled Interest Payment Date under the Indenture and the
remaining Collateral, if any, shall promptly be paid over and transferred to the
Company; provided, however, that the obligations of the Company under Section
2(c) and Section 5 (and any existing claims thereunder) shall survive
termination of this Agreement and the resignation of Escrow Agent and Trustee.
However, after a period of five years after the termination of this Agreement,
in the event the Collateral has not been applied to pay any amounts owed
pursuant to Section 2(c) or 5, Escrow Agent shall, pursuant to a certificate of
an officer of the Company, reassign and redeliver to the Company all of the
Collateral hereunder that has not been sold, disposed of, retained or applied by
Escrow Agent in accordance with the terms of this Agreement and the Indenture.
Such reassignment and delivery shall be without representation or warranty by or
recourse to Escrow Agent in its capacity as such, except as to the absence of
any Liens on the Collateral created by or arising through Escrow Agent, and
shall be at the sole expense of the Company.
Section 8. Representations and Warranties. The Company hereby
represents and warrants that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
Certificate of Incorporation or By-laws of the Company or of any material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Company or result in the creation or imposition of any Lien on any assets of
the Company, except for the security interests granted under this Agreement.
(b) The Company is the beneficial owner of the Collateral, free and
clear of any Lien or claims of any person or entity (except for the security
interest, granted under this Agreement). No financing statement covering the
Collateral is on file in any public office other than the financing statements,
if any, filed pursuant to this Agreement.
(c) This Agreement has been duly executed and
16
delivered by the Company and assuming the due authorization and valid execution
and delivery of this Agreement by Trustee and Escrow Agent, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, (ii) general
principles of equity and commercial reasonableness or, (iii) the rights to
indemnification hereunder that may be limited by U.S. federal and state
securities laws and public policy considerations.
(d) Upon the delivery to Escrow Agent of the certificates or
instruments, if any, representing the Collateral and the filing of financing
statements, if any, required by the NY-UCC, and the transfer and pledge to
Escrow Agent of the Collateral and the acquisition by Escrow Agent of a security
entitlement thereto in accordance with Section 6, the pledge of the Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in and to the Collateral, securing the payment of the Secured
Obligations for the benefit of the Beneficiaries.
(e) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by the
Company of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Company (except for any filings
necessary to perfect Liens on the Collateral) or (ii) for the exercise by
Trustee or Escrow Agent of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except, in
each case, as may be required in connection with the disposition of any of the
Collateral by laws affecting the offering and sale of securities.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations T,
U and X of the Board of Governors of the Federal Reserve System).
17
Section 9. Covenants. The Company covenants and agrees with the
Beneficiaries from and after the date of this Agreement until the earlier of
payment in full in cash of (A) all interest due through the sixth scheduled
Interest Payment Date under the Indenture or (B) all obligations due and owing
under the Indenture and the Securities in the event such obligations become due
and payable prior to the payment of the first six scheduled interest payments on
the Securities:
(a) The Company agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral (except for the Lien created pursuant to or permitted
under this Agreement) and at all times will be the sole beneficial owner of the
Collateral.
(b) The Company agrees that it will not (i) enter into any agreement
or understanding that restricts or inhibits Escrow Agent's or Trustee's rights
or remedies hereunder, including, without limitation, Trustee's right to sell or
otherwise dispose of the Collateral other than any agreement with the Trustee or
(ii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Collateral.
Section 10. Power of Attorney. In addition to all of the powers
granted to Trustee pursuant to the Indenture, the Company hereby appoints and
constitutes Trustee as the Company's attorney-in-fact to exercise to the fullest
extent permitted by law all of the following powers upon and at any time after
the occurrence and during the continuance of an Event of Default: (i) collection
of proceeds of any Collateral; (ii) conveyance of any item of Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 6; (iv) making of any payments or taking any acts under Section 11; and
(v) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by Trustee in its sole discretion, and such payments made by
Trustee to become the obligations of the Company to Trustee, due and payable
immediately upon demand. Trustee's authority hereunder shall include, without
limitation, the authority to endorse and negotiate any checks or instruments
representing proceeds of Collateral in the name of the Company, execute and give
receipt for any certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral, sign the Company's name on
all financing statements (to the
18
extent permitted by applicable law) or any other documents deemed necessary or
appropriate by Trustee to preserve, protect or perfect its security interest in
the Collateral and to file the same, prepare, file and sign the Company's name
on any notice of Lien, to take any other actions arising from or incident to the
powers granted to Trustee or Escrow Agent in this Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Company.
Section 11. Trustee May Perform. If the Company fails to perform any
agreement contained herein, Trustee may itself perform, but shall not be
obligated to, or cause performance of, such agreement, and the reasonable
expenses of Trustee incurred in connection therewith shall be payable by the
Company under Section 13 hereof.
Section 12. No Assumption of Duties; Reasonable Care. The rights and
powers granted to Trustee or Escrow Agent hereunder are being granted in order
to preserve and protect Trustee's security interest in and to the Collateral
granted hereby and shall not be interpreted to, and shall not, impose any duties
on Trustee or Escrow Agent in connection therewith other than those expressly
imposed under applicable law. Except as provided by applicable law or by the
Indenture, Trustee or Escrow Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Trustee or
Escrow Agent, as the case may be, accords similar property in similar
situations, it being understood that neither Trustee nor Escrow Agent shall have
any responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Trustee or Escrow Agent has or is deemed to have
knowledge of such matters or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral; provided, however, that
nothing contained in this Agreement shall relieve Escrow Agent of any
responsibilities as a securities intermediary under applicable law. The Trustee
is entering into this Agreement solely in its capacity as Trustee under the
Indenture, and not in its individual capacity, and shall be entitled to the
rights, protections and exculpations furnished to it under the Indenture,
including, without limitation, Article 6 thereof, in addition to (and not in
limitation of) any rights, protections or exculpations furnished to it under
this Agreement. The Escrow Agent will at all times during the term of this
Agreement treat the Company as the "entitlement holder" as defined in Article 8
of the NY-UCC with respect to the Escrow Account and that part of the Collateral
which constitutes "security entitlements" as defined in Article 8 of the NY-UCC.
19
Section 13. Expenses. The Company will upon demand pay to Trustee
and Escrow Agent the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel, experts and agents retained by Trustee or Escrow Agent that Trustee or
Escrow Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Beneficiaries hereunder, or (iv) the
failure by the Company to perform or observe any of the provisions hereof.
Section 14. Security Interest Absolute. All rights of the
Beneficiaries and security interests hereunder, and all obligations of the
Company hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Securities or the
Indenture or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or nonperfection of any Liens
on any other collateral for all or any of the Secured Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Secured Obligations or of this
Agreement.
Section 15. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid
20
provision shall be construed as if it were written so as to effectuate, to the
maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the Beneficiaries (including Holders of the
Securities) and their assigns shall be entitled to the benefits hereof and to
enforce this Agreement.
(e) Time. Time is of the essence with respect to each provision of
this Agreement.
(f) Entire Agreement; Amendments. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments, whether oral or written. Any amendment or waiver of any provision
of this Agreement and any consent to any departure by the Company from any
provision of this Agreement shall be effective only if made or duly given in
compliance with all of the terms and provisions of the Indenture, and none of
Escrow Agent, Trustee or any Holder of Securities shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of Escrow Agent,
Trustee or any Holder of Securities to exercise, or delay in exercising, any
right, power or privilege hereunder shall not operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Escrow
Agent, Trustee or any Holder of Securities of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that
Escrow Agent, Trustee or such Holder of Securities would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
(g) Notices. All notices and other
21
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been duly given and received
when actually received, including: (a) on the day of hand delivery; (b) three
Business Days following the day sent, when sent by United States certified mail,
postage and certification fee prepaid, return receipt requested, addressed as
set forth below; (c) when transmitted by telecopy with verbal confirmation of
receipt by the telecopy operator to the telecopy number set forth below; or (d)
one Business Day following the day timely delivered to a next-day air courier
addressed as set forth below:
To Escrow Agent:
Marine Midland Bank
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
To Trustee:
Marine Midland Bank
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
To the Company:
Xxxx Technology Group Ltd.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
22
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE
LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY,
ESCROW AGENT, TRUSTEE AND THE HOLDERS OF SECURITIES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SECURITIES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY
OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH
(AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS
THE CASE MAY BE) TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. THE COMPANY AGREES
THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY
PROCEEDING BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iii) THE COMPANY, ESCROW AGENT AND TRUSTEE EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF ESCROW
23
AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES SHALL HAVE ANY LIABILITY TO THE
COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON
ESCROW AGENT, TRUSTEE OR SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF ESCROW AGENT,
TRUSTEE OR SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, CONSTITUTING BAD
FAITH, NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF
SECURITIES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE
HAND AND ESCROW AGENT, TRUSTEE AND/OR THE HOLDERS OF SECURITIES ON THE OTHER
HAND.
(k) No Adverse Interpretation of Other Agreements. This Agreement
may not be used to interpret another pledge, security or debt agreement of the
Company or any subsidiary thereof. No such pledge, security or debt agreement
may be used to interpret this Agreement.
(l) Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
(m) Interpretation of Agreement. All terms not defined herein or in
the Indenture shall have the meaning set forth in the applicable provisions of
the NY-UCC, except where the context otherwise requires. To the extent a term
24
or provision of this Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term or provision. Acceptance
of or acquiescence in a course of performance rendered under this Agreement
shall not be relevant to determine the meaning of this Agreement even though the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
(n) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall, except for Section 5 which shall survive,
terminate only upon the termination of this Agreement.
(o) Waivers. The Company waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
the Company might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
(p) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instruments, designated and
appointed Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, Xxx Xxxxxxxxxxxx Xxxxx, Xxx
Xxxx, XX 00000 (and any successor entity, "Agent"), as its authorized agent upon
which process may be served in any suit or proceeding arising out of or relating
to this Agreement that may be instituted in any federal or state court in the
Borough of Manhattan, City of New York, State of New York and represents and
warrants that Agent has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding and (iii) agrees
that service of process upon Agent and written notice of said service to the
Company in accordance with the provisions of this Agreement shall be deemed in
every respect effective service of process upon the Company in any such suit or
proceeding. The Company further agrees to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of Agent in full force
and effect for as long as any of the Securities remain outstanding; provided,
however, that the Company may, and to the extent Agent ceases to be able to be
served on the basis contemplated herein shall, by written notice to Escrow Agent
and Trustee, designate such additional or alternative agent for service of
process that (i) maintains an office located in the Borough of Manhattan, City
of New York, State of New York, and (ii) is either (x) United States counsel for
the Company or (y) a corporate service company which acts as
25
agent for service of process for other Persons in the ordinary course of its
business. Such written notice shall identify the name of such agent for service
of process and the address of the office of such agent for service of process in
the Borough of Manhattan, City of New York, State of New York.
To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court of any jurisdiction in which the Company
owns or leases property or assets or the United States or the State of New York,
or from any legal process (whether through service of notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property and assets or this Agreement, the Indenture,
the Escrow Account or the other Collateral or actions to enforce judgments in
respect of any thereof, the Company hereby irrevocably waives such immunity in
respect of its
26
obligations under the above-referenced documents, to the extent permitted by
law.
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow Agreement as of the day first above written.
MARINE MIDLAND BANK,
as Escrow Agent
By:_________________________________
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By:_________________________________
Name:
Title:
XXXX TECHNOLOGY GROUP LTD.
By:_________________________________
Name: Xxxx X. Xxxx
Title: President
27
SCHEDULE I
PLEDGED SECURITIES
INTEREST DUE
ON FIRST 6
INTEREST
SECURITY MATURITY CUSIP YIELD PRICE COST PAYMENT DATES
-------- -------- ----- ----- ----- ---- -------------
Total Purchase Price:
