EXHIBIT 10.4
THIS ESCROW AGREEMENT is made this _________ day of March, 1999 among
xxxxxxxXX.xxx, Inc. (the "Issuer" herein), Westminster Securities Corporation
(the "Underwriter" herein) and CITIBANK, N.A. (the "Escrow Agent" herein).
The above-named parties appoint said Escrow Agent with the duties and
responsibilities and upon the terms and conditions provided in schedule A
annexed hereto and made apart hereof.
ARTICLE FIRST: The above-named parties agree that the following provisions
shall control with respect to the rights, duties, liabilities, privileges and
immunities of the Escrow Agent:
a) The Escrow Agent shall neither be responsible for or under, nor chargeable
with knowledge of, the terms and conditions of any other agreement,
instrument or document executed between/among the parties hereto, except as
may be specifically provided in Schedule A annexed hereto. This Agreement
sets forth all of the obligations of the Escrow Agent, and no additional
obligations shall be implied from the terms of this Agreement or any other
agreement, instrument or document.
b) The Escrow Agent may act in reliance upon any instructions, notice,
certification, demand, consent, authorization, receipt, power of attorney or
other writing delivered to it by any other party without being required to
determine the authenticity or validity thereof or the correctness of any
fact stated therein, the propriety or validity of the service thereof, or
the jurisdiction of the court issuing any judgment or order. The Escrow
Agent may act in reliance upon any signature believed by it to be genuine,
and may assume that such person has been properly authorized to do so.
c) Each of the parties, jointly and severally, agrees to reimburse the Escrow
Agent on demand for, and to indemnify and hold the Escrow Agent harmless
against and with respect to, any and all loss, liability, damage or expense
(including, but without limitation, attorneys' fees, costs and
disbursements) that the Escrow Agent may suffer or incur in connection with
this Agreement and its performance hereunder or in connection herewith,
except to the extent such loss, liability, damage or expense arises from its
willful misconduct or gross negligence as adjudicated by a court of
competent jurisdiction. The Escrow Agent shall have the further right at any
time and from time to time to charge, and reimburse itself from, the
property held in escrow hereunder.
d) The Escrow Agent may consult with legal counsel of its selection in the
event of any dispute or question as to the meaning or 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 accordance with the
opinion and instructions of such counsel. Each of the parties, jointly and
severally, agrees to reimburse the Escrow Agent on demand for such legal
fees, disbursements and expenses and in addition, the Escrow Agent shall
have the right to reimburse itself for such fees, disbursements and expenses
from the property held in escrow hereunder.
e) The Escrow Agent shall be under no duty to give the property held in escrow
by it hereunder any greater degree of care than it gives its own similar
property.
f) The Escrow Agent shall invest the property held in escrow in such a manner
as directed in Schedule A annexed hereto, which may include deposits in
Citibank and mutual funds advised, serviced or made available by Citibank or
its affiliates even though Citibank or its affiliates may receive a benefit
or profit therefrom.
The parties to this agreement acknowledge that non-deposit investment
products are not obligations of, or guaranteed, by Citibank/Citicorp nor any
of its affiliates; are not FDIC insured; and are subject to investment
risks, including the possible loss of principal amount invested. Only
deposits in the United States are subject to FDIC insurance.
g) In the event of any disagreement between/among any of the parties to this
agreement, or between/among them or either or any of them and any other
person, resulting in adverse claims or demands being made
in connection with the subject matter of the Escrow, or in the event that
the Escrow Agent, in good faith, be in doubt as to what action it should
take hereunder, the Escrow Agent may, at its option, refuse to comply with
any claims or demands on it, or refuse to take any other action hereunder,
so long as such disagreement continues or such doubt exists, and in any such
event, the Escrow Agent shall not become liable in any way or to any person
for its failure or refusal to act, and the Escrow Agent shall be entitled to
continue so to refrain from acting until (i) the rights of all parties shall
have been fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted and all doubt
resolved by agreement among all of the interested persons, and the Escrow
Agent shall have been notified thereof in writing signed by all such
persons. The Escrow Agent shall have the option, after 30 days' notice to
the other parties of its intention to do so, to file an action in
interpleader requiring the parties to answer and litigate any claims and
rights among themselves. The rights of Escrow Agent under this paragraph are
cumulative of all other rights which it may have by law or otherwise.
h) The Escrow Agent is authorized, for any securities at any time held
hereunder, to register such securities in the name of its nominee(s) or the
nominees of any securities depository, and such nominee(s) may sign the name
of any of the parties hereto to whom or to which such securities belong and
guarantee such signature in order to transfer securities or certify
ownership thereof to tax or other governmental authorities.
i) Notice to the parties shall be given as provided in Schedule A annexed
hereto.
ARTICLE SECOND: The Escrow Agent shall make payments of income earned on the
escrowed property as provided in Schedule A annexed hereto. Each such payee
shall provide to the Escrow Agent an appropriate W-9 form for tax identification
number certification or a W-8 form for non-resident alien certification. The
Escrow Agent shall be responsible only for income reporting to the Internal
Revenue Service with respect to income earned on the escrowed property.
ARTICLE THIRD: The Escrow Agent may, in its sole discretion, resign and
terminate its position hereunder at any time following 60 days written notice to
the parties to the Escrow Agreement herein. Any such resignation shall
terminate all obligations and duties of the Escrow Agent hereunder. On the
effective date of such resignation, the Escrow Agent shall deliver this Escrow
Agreement together with any and all related instruments or documents to any
successor Escrow Agent agreeable to the parties, subject to this Escrow
Agreement herein. If a successor Escrow Agent has not been appointed prior to
the expiration of 60 days following the date of the notice of such resignation,
the then acting Escrow Agent may petition any court of competent jurisdiction
for the appointment of a successor Escrow Agent, or other appropriate relief.
Any such resulting appointment shall be binding upon all of the parties to this
Agreement.
ARTICLE FOURTH: The Escrow Agent shall receive the fees provided in Schedule B
annexed hereto. In the event that such fees are not paid to the Escrow Agent
within 60 days of presentment to the party responsible for such fees as set
forth in said Schedule B, then the Escrow Agent may pay itself such fees from
the property held in escrow hereunder.
ARTICLE FIFTH: Any modification of this Agreement or any additional obligations
assumed by any party hereto shall be binding only if evidenced by a writing
signed by each of the parties hereto.
ARTICLE SIXTH: In the event funds transfer instructions are given (other than in
writing at the time of execution of this Agreement), whether in writing, by
telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of
such instructions by telephone call back to the person or persons designated in
Schedule A annexed hereto, and the Escrow Agent may rely upon the confirmations
of anyone purporting to be the person or persons so designated. To assure
accuracy of the instructions it receives, the Escrow Agent may record such call
backs. If the Escrow Agent is unable to verify the instructions, or is not
satisfied with the verification it receives, it will not execute the
instruction until all issues have been resolved. The persons and telephone
numbers for call backs may be changed only in writing actually received and
acknowleged by the Escrow Agent. The parties agree to notify the Escrow Agent
of any errors, delays or other problems within 30 days
after receiving notification that a transaction has been executed. If it is
determined that the transaction was delayed or erroneously executed as a result
of the Escrow Agent's error, the Escrow Agent's sole obligation is to pay or
refund such amounts as may be required by applicable law. In no event shall the
Escrow Agent be responsible for any incidental or consequential damages or
expenses in connection with the instruction. Any claim for interest payable
will be at the Escrow Agent's published savings account rate in effect in New
York, New York.
ARTICLE SEVENTH: This Agreement shall be governed by the law of the State of New
York in all respects. The parties hereto irrevocably and unconditionally submit
to the jurisdiction of a federal or state court located in the Borough of
Manhattan, City, County and State of New York, in connection with any
proceedings commenced regarding this Escrow Agreement, including but not limited
to, any interpleader proceeding or proceeding for the appointment of a successor
escrow agent the Escrow Agent may commence pursuant to this Agreement, and all
parties irrevocably submit to the jurisdiction of such courts for the
determination of all issues in such proceedings, without regard to any
principles of conflicts of laws, and irrevocably waive any objection to venue or
inconvenient forum.
ARTICLE EIGHTH: This Agreement may be executed in one or more counterparts, each
of which counterparts shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
In witness whereof, the parties have executed this Agreement as of the date
first above written.
CITIBANK, N.A.
as Escrow Agent
By
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(Signature)
Title
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Date
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PARTY A PARTY B
By By
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Title Title
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Date Date
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Schedule A
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Citibank, N.A.
The Citibank Private Bank
Preferred Custody Services
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Westminster Securities Corporation (hereinafter called the "Underwriter"),
and xxxxxxxXX.xxx, Inc., a Delaware corporation (hereinafter called the
"Issuer"), have entered into an underwriting agreement pursuant to which the
Underwriter has been employed to use its best efforts, as agent for the Issuer,
to sell and distribute a maximum of 1,700,000 units ("Units"), each Unit
consisting of one (1) share of Common Stock, $.01 par value, of the Issuer
("Common Stock"), and one (1) Warrant to purchase one (1) share of Common Stock
at $9.00 per Warrant. The nature of the underwriting commitment is such that,
unless at least 850,000 Units have been subscribed and paid for within ninety
(90) days after the prospectus relating to such offering first becomes available
for public distribution, or within an additional 90 days if the Underwriter and
Issuer so agree, the employment of the Underwriter will be terminated and all
funds will be returned to the Under writer for refund in full to the respective
subscribers, with interest and without deduction.
The public offering is required to be commenced promptly after receipt of
notice that the Securities and Exchange Commission has declared the Registration
Statement containing the prospectus effective (the "Effective Date").
The Underwriter will deposit the gross proceeds from all sales of the Stock
with you as Escrow Agent on the terms and conditions hereafter set forth:
1. Persons subscribing to purchase the Units will be instructed to remit
the purchase price by wire transfer as instructed by you or the Underwriter or
in the form of checks, drafts, money orders or other instruments for the payment
of money (collectively, "Instruments of Payment"), payable to the order of
"Citibank, N.A., as Escrow Agent for xxxxxxxXX.xxx, Inc.". Instruments of
Payment will be remitted directly to the Underwriter by the subscribers, or by
selected dealers through whom the
Underwriter may offer the Units, and each day's receipts will be delivered by
the Underwriter to you before 12:00 P.M., on the following business day,
accompanied by a letter of transmittal in duplicate setting forth as to each
subscriber, the name, address, number of Units purchased, tax ID number or
social security number, as applicable, and the amount remitted.
2. The Instruments of Payment are to be collected by you, and the
proceeds thereof are to be held in escrow until the total amount of such cash
and proceeds reaches the sum of $5,100,000 (which represents the proceeds from
the sale of 850,000 Units). Such funds shall be invested by you in a money
market deposit account until either the end of the period set forth in the first
unnumbered paragraph on this Schedule (plus a ten (10) day collection period) or
upon the receipt of the aforesaid sum of $5,100,000.
3. In the event you do not receive from the Underwriter within the period
set forth in the first unnumbered paragraph of this Schedule, Instruments of
Payment in the aggregate sum of $5,100,000 or in the event that such Instruments
of Payment in the aggregate sum of $5,100,000 are received but not collected
within the aforesaid period and a 10-day collection period, you shall issue and
deliver by wire transfer, to the Underwriter amounts equal to the aggregate
amounts received from it and collected by you, together with accrued interest
thereon. You shall notify the Underwriter and the Issuer of your distribution
of funds received and collected by you, as aforementioned, provided, however,
that such distribution shall be made only in respect of funds in hand, in cash,
with you at such time.
4. Upon collection by you of $5,100,000 within the period set forth in
the first unnumbered paragraph of this Schedule (plus a ten (10) day collection
period), which sum of $5,100,000 represents the proceeds from the sale of
850,000 Units, you shall immediately notify the Issuer and the Underwriter of
such fact in writing and you will continue to hold the said $5,100,000 in escrow
until given instructions in writing by the Underwriter as to the disposition of
said funds. Upon such instructions being given you in writing by the
Underwriter, you will deliver at a time fixed by the Underwriter said $5,100,000
in the following manner:
(a) to the Issuer in the amount of $4,641,000 by wire transfer
instructions to be provided by the Issuer.
(b) to the Underwriter in the amount of $459,000 representing
commissions, by wire transfer instructions to be provided by the Underwriter.
5. All notices hereunder shall be mailed by ordinary first class mail
in a sealed post-paid wrapper, at the addresses set forth below:
If to the Issuer: If to the Underwriter:
XxxxxxxXX.xxx, Inc. Westminister Securities
000 Xxxxx Xxxxxx Xxxxxxxxxxx
Xxxxx 0000X 00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Suite 1105
Attn: Xxxxxxxx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000 Attn: Xxxxxxxx X'Xxxx
Facsimile No.: (000) 000-0000 Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Escrow Agent:
At the address set forth above
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