Exhibit 10.14
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 27th day of April, 2004 among Sequiam
Corporation, a California corporation (the "COMPANY"), Laurus Master Fund, Ltd.
(the "PURCHASER"), and Dechert LLP (the "ESCROW AGENT"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered into a Securities
Purchase Agreement dated as of the date hereof (the "PURCHASE AGREEMENT"),
providing for the sale by the Company to the Purchaser of the Term Note and the
issuance by the Company to the Purchaser of the Warrant, in each case, to the
Purchaser in the aggregate principal amount and in the denominations set forth
on Schedule A hereto;
WHEREAS, the parties hereto require the Company to deliver the Documents to
the Escrow Agent to be held in escrow and released by the Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
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shall have the meanings set forth below. Terms not otherwise defined herein
shall have the meaning set forth in the Purchase Agreement.
(a) "Agreement" means this Agreement and all amendments made hereto
by written agreement among the parties hereto.
(b) "Charter Documents" means each of the Company's and each of its
Subsidiaries' certified copy of its certificate of incorporation
and bylaws (or equivalent organizational documents).
(c) "Closing Payment" means the fees to be paid to Laurus Capital
Management L.L.C. set forth on Schedule A hereto.
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(d) "Disbursment Letter" means that certain letter delivered to the
Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.
(e) "Documents" means the Securities Purchase Agreement, the Term
Note, the Registration Rights Agreement, the Warrant, the Master
Security Agreement, the Stock Pledge Agreement, the Subsidiary
Guaranty, the Disbursment Letter, the Incremental Funding Side
Letter, the Subordination Agreement, the Charter Documents, the
Legal Opinion, the Pledged Stock and the Closing Payment.
(f) "Escrowed Payment" means $2,000,000.
(g) "Incremental Funding Side Letter" means that certain Increemntal
Funding Side Letter dated the date hereof by and among the
Company and the Purchaser and executed and delivered pursuant to
the Purchase Agreement.
(h) "Legal Opinion" means the original signed legal opinion of
Xxxxxxxxx Xxxxxxx, P.A..
(i) "Master Security Agreement" means that certain Master Security
Agreement dated as of the date hereof by and among the Company,
certain Subsidiaries of the Company and the Purchaser and
executed and delivered pursuant to the Purchase Agreement.
(j) "Pledged Stock" shall have the meaning provided such term in the
Stock Peldge Agreement and shall, for the purposes of this
Agreement, also include stock powers related thereto (which stock
powers shall be endorsed in blank).
(k) "Purchase Agreement" shall have the meaning provided in the
recitals hereto.
(l) "Registration Rights Agreement" means that certain registration
rights agreement executed and delivered pursuant to the Purchase
Agreement.
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(m) "Stock Pledge Agreement" means that certain Stock Pledge
Agreement dated as of the date hereof by and among the Company,
certain Subsidiaries of the Company and the Purchaser and
executed and delivered pursuant to the Purchase Agreement.
(n) "Subordination Agreement" means that certain Subordination
Agreement dated as of the date hereof by and among Xxxx
Xxxxxxxxxxx, Xxxx XxxxxxXxxxxx and the Purchaser and executed and
delivered pursuant to the Purchase Agreement.
(o) "Subsidiary Guaranty" means that certain Subsidiary Guaranty
dated as of the date hereof by and among certain Subsidiaries of
the Company and the Purchaser and executed and delivered pursuant
to the Purchase Agreement.
(p) "Term Note" means the convertible term note of the Company issued
to the Purchaser in the amount of $2,000,000 substantially in the
form of Exhibit A annexed to the Purchase Agreement.
(q) "Warrant" means the common stock purchase warrant of the Company
to purchase up to 666,666 shares of the Company's common stock
(subject to adjustment as provided therein), issued to Purchaser
in connection with the Term Note.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto with respect to the matters contained herein and
pertaining to the Documents and supersedes all prior agreements, understandings,
negotiations and discussions of the parties, whether oral or written. There are
no warranties, representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set forth in
this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
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number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties hereto, or, in
the case of a waiver, by the party entitled to the benefit thereof waiving
compliance. Except as expressly stated herein, no delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
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waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder preclude any other or future exercise of any other
right, power or privilege hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
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subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement. This Agreement shall be governed by
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and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by any party
against any other party concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Each of the parties hereto
and the individuals executing this Agreement and other agreements on behalf of
the Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
1.7. Consent to Jurisdiction. Subject to Section 1.6 hereof, each of
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the Company, the Escrow Agent and the Purchaser hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
1.8. Construction. Each party acknowledges that its legal counsel
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participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against any other.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Delivery of Documents to Escrow Agent by the Company and its
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Subsidiaries. On or about the date hereof, each of the Company and each of its
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Subsidiaries shall deliver to the Escrow Agent the executed by the Company
and/or such Subsidiary to the extent it is a party thereto or in control
thereof.
2.2 Delivery of the Documents to Escrow Agent by the Purchaser. On or
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about the date hereof, the Purchaser shall deliver to the Escrow Agent the
Documents executed by the Purchaser to the extent that it is a party thereto.
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2.3. Intention to Create Escrow Over the Documents. Each of the
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Purchaser and the Company intend that the Documents shall be held in escrow by
the Escrow Agent pursuant to this Agreement for their benefit as set forth
herein.
2.4. Escrow Agent to Deliver the Documents. The Escrow Agent shall
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hold and release the Documents only in accordance with the terms and conditions
of this Agreement.
ARTICLE III RELEASE OF THE DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
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Escrow Agent shall release the Documents pursuant to (a), (b) or (c) below, as
follows:
(a) Upon receipt by the Escrow Agent of the Documents and the
satisfaction of the conditions set forth in Articles III and IV of this
Agreement, the Escrow Agent will simultaneously release to each of the Company
and the Purchaser fully executed copies of the Documents, except that (i) the
Closing Payment will be delivered to Laurus Capital Management, L.L.C.; and (ii)
the reasonable due diligence and legal fees and expenses for counsel to the
Purchaser, which shall be paid pursuant to each of the Purchase Agreement and
the Security Agreement, as the case may be, will be released to the Purchaser.
At the request of the Escrow Agent, the Company each will provide written
facsimile or original instructions to the Escrow Agent as to the disposition of
all funds releasable to the Company.
(b) Upon receipt by the Escrow Agent of joint written instructions
("JOINT INSTRUCTIONS") signed by the Company and the Purchaser, it shall deliver
the Documents in accordance with the terms of the Joint Instructions.
(c) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "COURT
ORDER"), the Escrow Agent shall deliver the Documents in accordance with the
Court Order. Any Court Order shall be accompanied by an opinion of counsel for
the party presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the Court
Order has competent jurisdiction and that the Court Order is final and
non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company
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and the Purchaser acknowledge that the only terms and conditions upon which the
Documents are to be released are set forth in Articles III and IV of this
Agreement. The Company and the Purchaser reaffirm their agreement to abide by
the terms and conditions of this Agreement with respect to the release of the
Documents. Any dispute with respect to the release of the Documents shall be
resolved pursuant to Section 4.2 or by agreement among the Company and
Purchaser.
ARTICLE IV
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CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow
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Agent's duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Purchaser or the Company is entitled
to receipt of the Documents pursuant to, any agreement other than this
Agreement; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
may rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so; (v) shall not be responsible for the identity, authority or
rights of any person, firm or corporation executing or delivering or purporting
to execute or deliver this Agreement or any document deposited hereunder or any
endorsement thereon or assignment thereof; (vi) shall not be under any duty to
give the property held by Escrow Agent hereunder any greater degree of care than
Escrow Agent gives its own similar property; and (vii) may consult counsel
satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.
(b) The Purchaser and the Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Purchaser and the Company,
jointly and severally, agree to indemnify and hold harmless the Escrow Agent and
any of Escrow Agent's partners, employees, agents and representatives for any
action taken or omitted to be taken by Escrow Agent or any of them hereunder,
including the fees of outside counsel and other costs and expenses of defending
itself against any claim or liability under this Agreement, except in the case
of gross negligence or willful misconduct on Escrow Agent's part committed in
its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a
duty only to the Purchaser and Company under this Agreement and to no other
person.
(c) The Purchaser and the Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees) incurred in connection with the performance of its duties and
responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Purchaser and the Company. Prior to the effective date of the resignation as
specified in such notice, the Purchaser and Company will
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issue to the Escrow Agent a Joint Instruction authorizing delivery of the
Documents to a substitute Escrow Agent selected by the Purchaser and the
Company. If no successor Escrow Agent is named by the Purchaser and Company, the
Escrow Agent may apply to a court of competent jurisdiction in the State of New
York for appointment of a successor Escrow Agent, and to deposit the Documents
with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any interest
in the Documents, but is serving only as escrow agent, having only possession
thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordnace with advice of
counsel (which counsel may be of the Escrow Agent's own choosing), and shall not
be liable for any mistake of fact or error of judgement or for any acts or
omissions of any kind except for its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Documents, in any other dispute among the Purchaser and the
Company, whether or not the Escrow Agent is then holding the Documents and
continues to act as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution: Judgments. Resolution of disputes arising
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under this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Documents, or if the Escrow
Agent shall in good faith be uncertain as to its duties or rights hereunder, the
Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
from taking any action other than to continue to hold the Documents pending
receipt of a Joint Instruction from the Purchaser and Company, or (ii) deposit
the Documents with any court of competent jurisdiction in the State of New York,
in which event the Escrow Agent shall give written notice thereof to the
Purchaser and the Company and shall thereupon be relieved and discharged from
all further obligations pursuant to this Agreement. The Escrow Agent may, but
shall be under no duty to, institute or defend any legal proceedings which
relate to the Documents. The Escrow Agent shall have the right to retain
counsel if it becomes involved in any disagreement, dispute or litigation on
account of this Agreement or otherwise determines that it is necessary to
consult counsel.
(b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the
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Escrow Agent shall not be liable to the Purchaser and Company or to any other
person, firm, corporation or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release of all
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of the Documents or at any time upon the agreement in writing of the Purchaser
and Company.
5.2. Notices. All notices, request, demands and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
(a) If to the Company, to:
Sequiam Corporation
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxxxxxx Traurig, P.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Facsimile: 000-000-0000
(b) If to the Purchaser, to:
LAURUS MASTER FUND, LTD.
c/o Ironshore Corporate Services Ltd.
X.X. Xxx 0000 G.T., Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
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(c) If to the Escrow Agent, to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
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bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any
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right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
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contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6 Counterparts/Execution. This Agreement may be executed in any
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number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission.
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5.7. Agreement. Each of the undersigned states that he has read this
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Agreement and understands and agrees to it.
COMPANY:
SEQUIAM CORPORATION
By:___________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:___________________________________
Name:
Title:
ESCROW AGENT:
DECHERT LLP
By:___________________________________
Name:
Title:
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., 2,000,000 Term Note
x/x Xxxxxxxxx Xxxxxxxxx Xxxxxxxx Xxx., X.X. Xxx
0000 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands
Fax: 000-000-0000
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FUND MANAGER CLOSING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection with
000 Xxxxx Xxxxxx, 00xx Floor investment by Laurus Master Fund, Ltd. for
Xxx Xxxx, Xxx Xxxx 00000 which Laurus Capital Management, L.L.C.
Fax: 000-000-0000 is the Manager.
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TOTAL $ 105,000
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WARRANTS
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WARRANT RECIPIENT WARRANT IN CONNECTION WITH OFFERING
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LAURUS MASTER FUND, LTD.
A Cayman Island corporation Warrant exercisable into up to 666,666 of
c/o Ironshore Corporate Services Ltd. shares of common stock of the Company
X.X. Xxx 0000 G.T. (subject to adjustment as provided therein)
Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx issued in connection with investment by
Grand Cayman, Cayman Islands Laurus Master Fund, Ltd.
Fax: 000-000-0000
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