EXHIBIT 10.7
ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement") dated as of April 15, 2002, by and
between X X INTERNATIONAL INC., a British Virgin Islands corporation (the
"Company"), NAVIGATOR INVESTMENTS HOLDING IX LIMITED, a Nevis corporation (the
"Purchaser") and ATLAS XXXXXXXX, P.A., a Florida professional association (the
"Escrow Agent").
WITNESSETH
WHEREAS, the Company and the Purchaser are parties to a Common Stock
Purchase Agreement of even date herewith (the "Purchase Agreement"). Unless
otherwise defined herein, capitalized terms shall have the meanings accorded to
them in the Purchase Agreement; and
WHEREAS, the Purchase Agreement contemplates that, from time-to-time during
the Commitment Period, the Company will sell to the Purchaser and the Purchaser
will purchase from the Company, up to $10,000,000 in shares of the Company's
Common Stock (the "Shares"); and
WHEREAS, the Company and the Purchaser desire to engage the Escrow Agent to
facilitate delivery of the Shares and payment of the Purchase Price therefor, as
contemplated by the Purchase Agreement, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the process of delivery of the Shares to the Purchaser against
delivery of the Purchase Price to the Company is herein referred to as
"Settlement"; and
WHEREAS, the Escrow Agent has agreed to facilitate Settlement, as
aforesaid, upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each of the parties hereto, the
parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. The Company and the Purchaser hereby
appoint the Escrow Agent as escrow agent upon the terms and conditions set forth
herein, and the Escrow Agent hereby accepts such appointment.
2. Delivery of Escrow Property.
(a) At least one day prior to each Settlement Date:
(i) the Company and the Purchaser shall each execute and deliver
to the other, and the Escrow Agent, via facsimile transmission, a
Settlement Certificate in the Form of Exhibit A, quantifying the amount of
the Draw Down and the number of shares of Common Stock to be purchased (the
"Settlement Certificate");
(ii) the Company shall file a supplement to the prospectus
forming a part of the Registration Statement with the Securities and
Exchange Commission, and deliver a copy of the prospectus and prospectus
supplement, along with confirmation of its filing with the Securities and
Exchange Commission (the "Prospectus, as Supplemented") to the Purchaser
and the Escrow Agent;
(iii) the Company shall cause the delivery of that number of
whole shares of Common Stock of the Company specified in the Settlement
Certificate under "Number of Shares to the Purchaser" (the "Subscription
Shares"), in certificated form registered in the name of the Purchaser, or,
if so determined by the Purchaser, via DWAC to the account designated by
the Escrow Agent on Exhibit B (the "Escrow Shares Account"); and
(iv) the Purchaser shall transmit payment in an amount equal to
the payment specified in the Settlement Certificate under "Investment
Amount" (the "Subscription Payment"), to the Escrow Agent, via wire
transfer to the account designated by the Escrow Agent on Exhibit C (the
"Escrow Funds Account").
(b) The Escrow Funds Account and the Escrow Shares Account are
hereinafter collectively referred to as the "Escrow Accounts" and the
Subscription Payments and the Subscription Shares are hereinafter collectively
referred to as the "Escrow Property."
(c) The parties acknowledge that the delivery of Shares under this
Agreement via DWAC is subject to factors outside of the parties' control,
including the Company's or its transfer agent's eligibility to participate in
DWAC transactions. Any obligation of the Escrow Agent to receive and/or deliver
Shares hereunder via DWAC shall be subject to such eligibility requirements.
3. Investment of the Escrow Property. The Escrow Accounts shall not bear
interest and no investment of the Escrow Property shall be made while held by
the Escrow Agent.
4. Release of Escrow Property. The Escrow Agent shall disburse the Escrow
Property, as follows:
(a) Provided that the Escrow Agent shall have received a signed copy
of the Settlement Certificate, a copy of the Prospectus, as Supplemented, the
Subscription Shares and the Subscription Payment, all as aforesaid, on each
Settlement Date:
(i) the Escrow Agent shall transmit to the Company the amount
equal to the payment specified in the Settlement Certificate under "Net
Proceeds to the Company", via wire transfer, to the account designated by
the Company on Exhibit D (the "Company Account") and
(ii) the Escrow Agent shall cause (A) physical delivery of
certificates evidencing the Subscription Shares to be made to the Purchaser
at the address specified in
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Section 9 hereof, or, if the Escrow Agent holds the Shares in electronic
form, (B) delivery thereof via DWAC, to the account designated by the
Purchaser on Exhibit E (the "Purchaser Account").
(b) In the event the Escrow Agent has not received all of the Escrow
Property required to be delivered to it prior to an applicable Settlement Date,
and such failure continues for three business days thereafter, the Escrow Agent
may, upon notice to each of the parties, (i) return any Escrow Property then
under its custody to the party from whom such Escrow Property was received, in
such manner as the Escrow Agent reasonably deems appropriate or (ii) take action
pursuant to Section 5 hereof.
5. Disbursement Into Court. At any time, the Escrow Agent, in its sole
discretion, may commence an action in the nature of interpleader in any court it
deems appropriate, to determine ownership or disposition of the Escrow Property
or it may deposit the Escrow Property with the clerk of any appropriate court or
it may retain the Escrow Property pending receipt of a final, non-appealable
order of a court having jurisdiction over all of the parties hereto directing to
whom and under what circumstances the Escrow Property are to be disbursed and
delivered. During the pendency of any such action, the Escrow Agent may suspend
the performance of any of its obligations under this Escrow Agreement until such
dispute or uncertainty shall be resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall have been appointed (as the case
may be). The Escrow Agent shall have no liability to the Company, the Purchaser
or any other person with respect to any such suspension of performance or
disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the disbursement of funds held in the Escrow Accounts or any delay
in or with respect to any other action required or requested of Escrow Agent.
6. Limitation of Responsibility and Liability and Duties of the Escrow
Agent. The acceptance by the Escrow Agent of its duties as such under this
Escrow Agreement is subject to the following terms and conditions, which all
parties to this Escrow Agreement hereby agree shall govern and control with
respect to the rights, duties, liabilities and immunities of the Escrow Agent:
(a) The Escrow Agent shall not be liable for any error in judgment or
mistake of law or fact, or for any action taken or omitted to be taken by it, or
any action suffered by it to be taken or omitted by it, in good faith and in the
exercise of its own best judgment. The Escrow Agent shall not be liable for any
delay in delivering Escrow Property as required hereby, absent its own gross
negligence or willful misconduct.
(b) The Escrow 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 Escrow Agent other than itself), statement,
instrument, report or other paper or document (not only as to its due execution
and validity and effectiveness of its provisions, but also as to the truth and
acceptability of any information therein contained) which is believed by the
Escrow Agent to be genuine and to be signed or presented by the proper person or
persons.
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(c) The Escrow Agent shall not be bound by any notice or demand, or
any waiver, modification, termination or rescission of this Escrow Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the
Company and the Purchaser and, if the duties or rights of the Escrow Agent are
affected by any such modification of or waiver under this Escrow Agreement
unless the Escrow Agent shall have given its prior written consent thereto.
(d) The Escrow Agent acts hereunder as a depositary only, and shall
not be responsible for the sufficiency or accuracy, 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 Escrow Agent be responsible or liable 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 paid or delivered by
the Escrow Agent pursuant to the provisions hereof.
(e) The Escrow Agent shall have the right to assume, in the absence of
written notice to the contrary from the Company and the Purchaser, that a fact
or an event by reason of which an action would or might be taken by the Escrow
Agent does not exist or has not occurred, without incurring liability for any
action taken or omitted, in good faith and in the exercise of its own best
judgment, in reliance upon such assumption.
(f) The Escrow Agent shall be indemnified and held harmless by the
Company and the Purchaser, upon demand by the Escrow Agent, from and against any
claims, demands, losses, damages, liabilities, costs and expenses, including
counsel fees and disbursements, (collectively, "Damages") suffered by the Escrow
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 Escrow Agreement, the services of
the Escrow Agent hereunder, the monies or other property held by it hereunder or
any such Damages. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall, if a claim in respect thereof shall be made against the
other parties hereto, notify such parties thereof in writing; but the failure by
the Escrow Agent to give such notice shall not relieve any party from any
liability which such party may have to the Escrow Agent hereunder, except to the
extent of actual prejudice demonstrated by such party. The obligations of the
Company and the Purchaser under this Section 6(f) shall survive any termination
of this Escrow Agreement and the resignation or removal of the Escrow Agent.
(g) From time to time on and after the date hereof, the parties shall
deliver or cause to be delivered to the Escrow Agent such further documents and
instruments and shall do or cause to be done such further acts as the Escrow
Agent shall reasonably request (it being understood that the Escrow Agent shall
have no obligation to make such request) to carry out more effectively the
provisions and purposes of this Escrow Agreement, to evidence compliance
herewith or to assure itself that it is protected in acting hereunder.
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(h) The Escrow Agent may resign at any time and be discharged from its
duties as Escrow Agent hereunder by its giving the other parties hereto prior
written notice of at least seven business days. As soon as practicable after its
resignation, the Escrow Agent shall turn over to a successor escrow agent
appointed by the other parties hereto, jointly, all of the Escrow Property held
hereunder upon presentation of the document appointing the new escrow agent and
its acceptance thereof. If no new escrow agent is so appointed within the 20 day
period following the giving of such notice of resignation, the Escrow Agent may
deposit the Escrow Property with any court it deems appropriate.
(i) The Escrow Agent may consult with, and obtain advice from, legal
counsel in the event of any dispute or question as to the construction of any of
the provisions hereof or its duties hereunder, and it shall incur no liability
and shall be fully protected in acting in good faith in accordance with the
opinion and instructions of such counsel, other than itself.
(j) The Escrow Agent is authorized, in its sole discretion, to comply
with orders issued or process entered by any court with respect to the Escrow
Property, without determination by the Escrow Agent of such court's jurisdiction
in the matter. If any portion of the Escrow Property is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court affecting such property or any part thereof,
then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel selected by it (other than itself)
is binding upon it without the need for appeal or other action; and if the
Escrow Agent complies with any such order, writ, judgment or decree, it shall
not be liable to any of the parties hereto or to any other person or entity by
reason of such compliance even though such order, writ, judgment or decree may
be subsequently reversed, modified, annulled, set aside or vacated.
(k) The parties acknowledge that the Escrow Agent has acted as counsel
to the Purchaser and/or its affiliates in various matters, including in
connection with the transactions contemplated by the Purchase Agreement, and has
prepared this Escrow Agreement, and may continue to act as counsel to the
Purchaser and/or its affiliates during and following the term of this Escrow
Agreement. All parties to this Escrow Agreement waive any conflicts that exist
or may arise by reason of such representation; provided, however, that the
Escrow Agent shall ensure that the Escrow Accounts are under the sole control of
the Escrow Agent.
7. Fees of Escrow Agent. The Escrow Agent shall be compensated for its
services hereunder at the rate of $1,500 for each Settlement facilitated by the
Escrow Agent. The compensation obligations set forth in this Section 7 shall be
payable by the Company, prior to disbursement to the Company. The obligations
under this Section 7 shall survive any termination of this Escrow Agreement and
the resignation or removal of Escrow Agent.
8. Governing Law; Jurisdiction, Venue. This Escrow Agreement shall be
governed by and construed and enforced in accordance with the law (other than
the law governing conflict of law questions) of the State of Florida. Except as
otherwise set forth herein, any suit, action or proceeding arising out of or
relating to this Escrow Agreement shall be brought in State Circuit
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Court or Federal District Court located in Broward County, Florida, and the
parties hereby (a) submit to the exclusive jurisdiction of such courts, (b)
waive any objection to the laying of venue in such courts, and (c) agree that
service of process in any such suit, action or proceeding, in addition to any
other method permitted by applicable law, may be effected by certified mail,
return receipt requested, to a party at its address set forth in Section 9
hereof.
9. Notices. All notices and communications shall be deemed to have been
duly given: at the time (a) delivered by hand, if personally delivered; (b) when
received, if deposited in the mail, postage prepaid, addressed as provided
below; (c) when transmission is verified, if telecopied; and (d) on the next
business day, if timely delivered to a courier service guaranteeing overnight
delivery; provided that the Escrow Agent shall have no obligation hereunder
unless notice is actually received by it;
To the Company: X X INTERNATIONAL INC.
Xxxx #00, 00/X, Xxxxx X
Xxxxx Xxxxxxxxxx Xxxxxx
00 Xxx Xxx Xxxxxx
Xxxx Xxx, Xxxxxxx, Xxxx Xxxx
Tel: 000 000 0000 0000
Fax: 000 000 0000 0000
Attn: Yu Xxxxx Xxx, Chairman
With copies to (not
constituting service) to: XXXXXX X. XXXXXXXXX, P.C.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
To the Purchaser: NAVIGATOR INVESTMENTS HOLDING IX LIMITED
P.O. Box 556, Xxxxxxx Plaza
Charlestown
Nevis, British West Indies
Attn: Xxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy (not Navigator Asset Manager AdvisErs, Ltd.
constituting service) to: 00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx XXX 0XX
Xxxxxx Xxxxxxx
Attn: Xxxxx Xxxxxx
Tel: 00 00 0000 0000
Fax: 00 00 0000 0000
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To the Escrow Agent: ATLAS XXXXXXXX, P.A.,
as Escrow Agent
000 Xxxx Xxx Xxxx Xxxx.
00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxx, Esq.
Any party may change its address by providing written notice of such change to
the other parties hereto. All notices and communications provided by the Company
and/or the Purchaser to the Escrow Agent shall be signed by duly authorized
persons of each.
10. Termination of Escrow Agreement. The Escrow Agent's responsibilities
hereunder shall terminate upon the earliest to occur of the termination of the
Purchase Agreement, the termination or rescission of this Agreement by mutual
consent of the Company and the Purchaser, the disbursement of the Escrow
Property into court under Section 5 hereof, and the resignation of the Escrow
Agent under Section 6(h) hereof.
11. Entire Escrow Agreement. This Escrow Agreement (and the exhibits
attached hereto) contains the entire understanding by and among the parties
hereto with respect to the subject matter hereof; there are no promises,
agreements, understandings, representations or warranties, other than as herein
set forth. No change or modification of this Escrow Agreement shall be valid or
effective unless the same is in writing and is signed by all of the parties
hereto.
12. Counterparts. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their respective hands
to be set hereto with the intention of being bound effective in all respects as
of the date and year first hereinabove written.
X X INTERNATIONAL INC.
By:
-------------------------------------
Its:
------------------------------------
NAVIGATOR INVESTMENTS HOLDING
IX LIMITED
By:
-------------------------------------
Its:
------------------------------------
ATLAS XXXXXXXX, P.A.
By:
-------------------------------------
Its:
------------------------------------
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EXHIBIT A
FORM OF SETTLEMENT CERTIFICATE
X X INTERNATIONAL INC.
SETTLEMENT CERTIFICATE
This Settlement Certificate is executed and delivered in furtherance of (i)
the Common Stock Purchase Agreement dated April 15, 2002 (the "Purchase
Agreement"), by and between X X International Inc. (the "Company") and Navigator
Investments Holding IX Limited (the "Purchaser") and (ii) the Escrow Agreement
dated April 15, 2002 (the "Escrow Agreement"), by and among the Company, the
Purchaser and Atlas Xxxxxxxx, P.A. (the "Escrow Agent"). Unless otherwise
defined herein, capitalized terms shall have the meanings ascribed to them in
the Purchase Agreement and the Escrow Agreement.
Settlement Date:
------------------------------------------
Investment Amount: $
------------------------------------------
Number of Shares to
the Purchaser:
------------------------------------------
Escrow Agent Fee: $
------------------------------------------
Placement Agent Fee: $
------------------------------------------
Adjustments*: $
------------------------------------------
Net Proceeds to
the Company: $
------------------------------------------
Settlement of this transaction shall take place in the manner described in
the Purchase Agreement and the Escrow Agreement.
Purchase of the Shares shall be on a delivery versus payment basis, as more
fully described in the Purchase Agreement and the Escrow Agreement.
By its execution of this Settlement Certificate, the Company hereby
certifies that each of its representations and warranties in the Purchase
Agreement is true and accurate on the date hereof and that the Company has
satisfied each condition precedent to the transaction evidenced by this
Settlement Certificate and remains in compliance with each and every obligation
and covenant made by it in the Purchase Agreement. Without limitation of the
foregoing, the Company hereby certifies that (i) the Registration Statement has
become effective under the Securities Act of 1933, as amended (the Securities
Act"), (ii) the Registration Statement and
prospectus included therein is current and no stop order is in effect with
respect to its use and (iii) the Company has filed, or prior to the Settlement
Date will file, a prospectus supplement with respect to the Purchaser's resale
of the Shares.
The Escrow Agent is hereby directed to comply with the provisions of
Section 4 of the Escrow Agreement without further instruction by or notice to
the Company or the Purchaser.
X X INTERNATIONAL INC. NAVIGATOR INVESTMENTS HOLDING
IX LIMITED
By: By:
-------------------------- ---------------------------
Date: Date:
* Description of Adjustments:
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EXHIBIT B
DESIGNATION OF ESCROW SHARES ACCOUNT
EXHIBIT C
DESIGNATION OF SUBSCRIPTION FUNDS ACCOUNT
WIRE INSTRUCTIONS
Atlas Xxxxxxxx, P.A.
Trust Account
ABA 000000000
Account No. 12001650242
CITY NATIONAL BANK OF
FLORIDA
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, XX 00000
FBO: File No. 7595.00400
EXHIBIT D
DESIGNATION OF COMPANY ACCOUNT
EXHIBIT E
DESIGNATION OF PURCHASER ACCOUNT
