ESCROW AGREEMENT
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ESCROW AGREEMENT (the "Escrow Agreement") made as of the 28th day of
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September, 2000, by and among Staruni Corporation, a California corporation,
with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), Boat Basin Investors LLC, a limited liability company organized
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under the laws of Nevis (the "Investor"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP with
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offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as escrow agent (the
"Escrow Agent").
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W I T N E S S E T H:
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WHEREAS, the Company desires to raise capital in order to finance the
growth of its business operations and for other general corporate purposes;
WHEREAS, the Investor will from time to time as requested by the
Company, purchase shares of the Company's common stock, no par value per share
(the "Common Stock"), from the Company and will be issued Put Warrants in
conjunction with the purchase of such shares of Common Stock as set forth in
that certain Private Equity Line of Credit Agreement (the "Purchase Agreement")
dated the date hereof between the Investor and the Company, which shares will be
issued pursuant to the terms and conditions contained in the Purchase Agreement
and herein; and
WHEREAS, pursuant to the Purchase Agreement, the Company and the
Investor have requested that the Escrow Agent receive from the Company, hold in
escrow and ultimately deliver, as applicable, the Put Warrants, and have further
requested that upon each Put, the Escrow Agent receive, hold, and ultimately
deliver, the relevant number of Put Shares.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowl-edged, the parties to this Escrow
Agreement hereby agree as follows:
1. Defined Terms. Capitalized terms used and not
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otherwise defined herein shall have the meanings respectively assigned to
them in the Purchase Agreement.
2. (a) Escrow of Put Warrants. On or prior to each
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Put Closing Date, the Company shall issue and deliver or cause to be delivered
to the Escrow Agent such number of Put Warrants as required by the Purchase
Agreement The Escrow Agent shall hold the Put Warrants and shall deliver them or
redeliver them to the Investor or to the Company, as applicable, only in
accordance with the terms and conditions of this Escrow Agreement.
(b) Escrow of Put Shares. Each time the Company
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issues a Put Purchase Notice to the Investor pursuant to Section 2.2 of the
Purchase Agreement, the Company shall issue and deliver or cause to be delivered
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to the Escrow Agent a copy of such Put Purchase Notice and that number of shares
of Common Stock (the "Put Shares" and together with the Warrant Shares, the
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"Shares") that would cause the number of shares of Common Stock in the Escrow
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Account as defined in Section 3 hereto) to be equal to the maximum number of
shares of Common Stock the Investor may purchase pursuant to such Put Purchase
Notice. The Escrow Agent shall hold the Put Shares and shall deliver or
redeliver them to the Investor or the Company, as applicable, only in accordance
with the terms and conditions of this Escrow Agreement.
3. Holding of Shares. The Escrow Agent shall hold the
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Shares in a segregated escrow account (the "Escrow Account") in a securities
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brokerage firm where it normally holds such Shares or shall hold the Shares in
certificated form, in the discretion of the Escrow Agent, and shall hold the
Put Warrants in escrow.
4. Release of Shares.
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(a) Upon the receipt of (i) a notice from the Investor
(the "Investor's Notice") on or prior to the Put Closing Date stipulating the
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number of shares of Common Stock it is purchasing on such date pursuant to a Put
Purchase Notice and Section 2.2 of the Purchase Agreement, and (ii) evidence of
payment to the Company of the full purchase price for such shares of Common
Stock being purchased, the Escrow Agent shall release from the Escrow Account
and transfer to the Investor that number of shares of Common Stock stipulated in
the Investor's Notice (the "Draw Down Transfer") and the Put Warrants. The Draw
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Down Transfer shall be made to the Investor through DTC. This Escrow Agreement
shall serve as irrevocable authorization and direction to make Draw Down
Transfer(s) to the Investor pursuant to this Section 4(b).
(b) Except as provided in Sections 4(a) and 4(b), the
Escrow Agent shall release the Shares upon receipt, at any time, of joint
written instructions from the Company and the Investor directing the manner in
which the return or other distribution of the Shares is to be made.
(c) This Escrow Agreement shall terminate upon the
expiration of the Commitment Period and upon such expiration the Escrow Agent
shall return all Shares in the Escrow Account to the Company.
5. Further Assurances. The Company and the Investor
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agree to do such further acts and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Escrow Agent,
from time to time, may reasonably request in connection with the administration,
maintenance, enforcement or adjudication of this Escrow Agreement in order (a)
to give the Escrow Agent confirmation and assurance of the Escrow Agent's
rights, powers, privileges, remedies and interests under this Escrow Agreement
and applicable law, (b) to better enable the Escrow Agent to exercise any such
right, power, privilege, rem-edy or interest, or (c) to otherwise effectuate the
purpose and the terms and provisions of this Escrow Agreement, each in such form
and substance as may be reasonably acceptable to the Escrow Agent.
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6. Conflicting Demands. If conflicting or adverse claims
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or demands are made or notices served upon the Escrow Agent with respect to the
escrow provided for herein, the Company and the Investor agree that the Escrow
Agent shall refuse to comply with any such claim or demand and withhold and stop
all further performance of this escrow so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be or become liable for
damages, losses, costs, expenses or interest to any or any other person for its
failure to comply with such conflicting or adverse demands. The Escrow Agent
shall be entitled to continue to so refrain and refuse to so act until such
conflicting claims or demands shall have been finally determined by a court or
arbitrator of competent jurisdiction or shall have been settled by agreement of
the parties to such controversy, in which case the Escrow Agent shall be
notified thereof in a notice signed by such parties. The Escrow Agent may also
elect to commence an interpleader or other action for declaratory judgment for
the purpose of having the respective rights of the claimants adjudicated, and
may deposit with the court all Shares held hereunder pursuant to this Escrow
Agreement; and if it so commences and deposits, the Escrow Agent shall be
relieved and discharged from any further duties and obligations under this
Escrow Agreement.
7. Disputes. Each of the parties hereto hereby covenants
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and agrees that the Federal or state courts located in the County of New York,
State of New York shall have jurisdiction over any dispute with the Escrow Agent
or relating to this Escrow Agreement.
8. Reliance on Documents and Experts. The Escrow Agent
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shall be entitled to rely upon any notice, consent, certificate, affidavit,
statement, paper, document, writing or communication (which to the extent
permitted hereunder may be by telegram, cable, telex, telecopier, or telephone)
reasonably believed by it to be genuine and to have been signed, sent or made by
the proper person or persons, and upon opinions and advice of legal counsel
(including itself or counsel for any party hereto), independent public
accountants and other experts selected by the Escrow Agent and mutually
acceptable to each of the Company and the Investor. If the Shares are evidenced
by stock certificates, the Escrow Agent shall not be responsible to review the
stock certificates representing the Shares other than to confirm that it has
been signed.
9. Status of the Escrow Agent, Etc. The Escrow Agent is
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acting under this Escrow Agreement as a stakeholder only. No term or provision
of this Escrow Agreement is intended to create, nor shall any such term or
provision be deemed to have created, any joint venture, partnership or
attorney-client relationship between or among the Escrow Agent and the Company
or the Investor. This Escrow Agreement shall not be deemed to prohibit or in any
way restrict the Escrow Agent's representation of the Investor, who may be
advised by the Escrow Agent on any and all matters pertaining to this Escrow
Agreement. To the extent the Investor has been represented by the Escrow Agent,
the Investor hereby waives any conflict of interest and irrevocably authorizes
and directs the Escrow Agent to carry out the terms and provisions of this
Escrow Agreement fairly as to all parties, without regard to any such
representation and irrespective of the impact upon such Investor. The Escrow
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Agent's only duties are those expressly set forth in this Escrow Agreement, and
each of the Company and the Investor authorizes the Escrow Agent to perform
those duties in accordance with its usual practices in holding property of its
own or those of other escrows. The Escrow Agent may exercise or other-wise
enforce any of its rights, powers, privileges, remedies and interests under this
Escrow Agreement and applicable law or perform any of its duties under this
Escrow Agreement by or through its partners, employees, attorneys, agents or
designees.
10. Exculpation. The Escrow Agent and its designees, and
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their respective partners, employees, attorneys and agents, shall not incur any
liability whatsoever for the disposition of the Shares or the taking of any
other action in accordance with the terms and provisions of this Escrow
Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or other
authority (irrespective of any conflicting term or provision of this Escrow
Agreement), or for any act or omission of any other person selected with
reasonable care and engaged by the Escrow Agent in connection with this Escrow
Agreement (other than for such Escrow Agent's or such person's own acts or
omissions breaching a duty owed to the claimant under this Escrow Agreement and
amounting to gross negligence or willful misconduct as finally determined
pursuant to applicable law by a governmental author-ity having jurisdiction);
and each of the Company and the Investor hereby waives any and all claims and
actions whatsoever against the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, arising out of or related
directly or indirectly to any and all of the foregoing acts, omissions and
circumstances. Furthermore, the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall not incur any
liability (other than for a person's own acts or omissions breaching a duty owed
to the claimant under this Escrow Agreement and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction) for other acts and omissions arising
out of or related directly or indirectly to this Escrow Agreement or the Shares;
and each of the Company and the Investor hereby expressly waives any and all
claims and actions (other than the Escrow Agent's or such person's own acts or
omissions breaching a duty owed to the claimant and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction) against the Escrow Agent
and its designees, and their respective partners, employees, attorneys and
agents, arising out of or related directly or indirectly to any and all of the
foregoing acts, omissions and circumstances.
11. Indemnification. The Escrow Agent and its designees,
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and their respective partners, employees, attorneys and agents, shall be
indemnified, reimbursed, held harmless and, at the request of the Escrow Agent,
defended, by the Company from and against any and all claims, liabilities,
losses and expenses (including, without limitation, the reasonable
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, arising out of or
related directly or indirectly to this Escrow Agreement or the Shares, except
such as are occasioned by the indemnified person's own acts and omissions
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breaching a duty owed to the claimant under this Escrow Agreement and amounting
to willful misconduct or gross negligence as finally determined pursuant to
applicable law by a governmental authority having jurisdiction.
12. Notices. Any notice, request, demand or other
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communication permitted or required to be given hereunder shall be in writing,
shall be sent by one of the following means to the addressee at the address set
forth below (or at such other address as shall be designated hereunder by notice
to the other parties and persons receiving copies, effective upon actual
receipt) and shall be deemed conclusively to have been given: (a) on the first
business day following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail, with the
cost of delivery prepaid; (b) on the fifth business day following the day duly
sent by certified or registered United States mail, postage prepaid and return
receipt requested; or (c) when otherwise actually delivered to the addressee.
If to the Company:
Staruni Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (310)
If to the Investor:
At the address of such Investor set forth on Schedule A to this Escrow Agreement
If to the Escrow Agent:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
13. Section and Other Headings. The section and other
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headings contained in this Escrow Agreement are for convenience only, shall not
be deemed a part of this Escrow Agreement and shall not affect the meaning or
interpretation of this Escrow Agreement.
14. Governing Law. This Escrow Agreement shall be
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governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws. Any controversy or claim
arising out of or related to this Agreement and the Warrants or the breach
thereof, shall be settled by binding arbitration in New York City, New York in
accordance with the rules of the Judicial Arbitration & Mediation Services'
Eastern Regional Office located in New York City, New York ("JAMS"). A
proceeding shall be commenced upon written demand by Company or the Investor to
the other. The arbitrator(s) shall enter a judgment by default against any party
which fails or refuses to appear in any properly noticed arbitration proceeding.
The proceeding shall be conducted by one (1) arbitrator, unless the amount
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alleged to be in dispute exceeds two hundred fifty thousand dollars ($250,000),
in which case three (3) arbitrators shall preside. The arbitrator(s) will be
chosen by the parties from a list provided by JAMS, and if they are unable to
agree within ten (10) days, JAMS shall select the arbitrator(s). The arbitrators
must be experts in securities law and financial transactions. The arbitrators
shall assess costs and expenses of the arbitration, including all attorneys' and
experts' fees, as the arbitrators believe is appropriate in light of the merits
of parties' respective positions in the issues in dispute. The award of the
arbitrator(s) shall be final and binding upon the parties and may be enforced in
any court having jurisdiction. Nothing in this section 14 shall preclude the
parties from seeking extraordinary relief in the event that a claim of
irreparable harm arises, provided however, that such application shall be made
in the United States District Court for the Southern District of New York, or in
the Supreme Court of the State of New York, New York County. In the event that
any provision of this Escrow 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.
15. Counterparts. This Escrow Agreement may be executed
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by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original but all such counterparts shall together
constitute one and the same agreement.
16. Resignation of Escrow Agent. The Escrow Agent may, at
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any time, at its option, elect to resign its duties as Escrow Agent under this
Escrow Agreement by providing notice thereof to each of the Company and the
Investor. In such event, the Escrow Agent shall transfer the Shares to a
successor independent escrow agent to be appointed by (a) the Company and the
Investor within thirty (30) days following the receipt of notice of resignation
from the Escrow Agent, or (b) the Escrow Agent if the Company and the Investor
shall have not agreed on a successor escrow agent within the aforesaid 30-day
period, upon which appointment and delivery of the Shares, the Escrow Agent
shall be released of and from all lia-bility under this Escrow Agreement.
17. Successors and Assigns; Assignment. Whenever in this
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Escrow Agreement reference is made to any party, such reference shall be deemed
to include the successors, assigns and legal representatives of such party, and,
without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of each of the
Company and the Investor in this Escrow Agreement shall inure to the benefit of
any successor escrow agent hereunder; provided, however, that nothing herein
shall be deemed to authorize or permit the Company or the Investor to assign any
of its rights or obligations hereunder to any other person (whether or not an
affiliate of the Company or the Investor) without the written consent of each of
the other parties nor to authorize or permit the Escrow Agent to assign any of
its duties or obligations hereunder except as provided in Section 17 hereof.
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18. No Third Party Rights. The representations,
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warranties and other terms and provisions of this Escrow Agreement are for the
exclusive benefit of the parties hereto, and no other per-son, including the
creditors of the Company or the Investor, shall have any right or claim against
any party by reason of any of those terms and provisions or be entitled to
enforce any of those terms and provisions against any party.
19. No Waiver by Action, Etc. Any waiver or consent
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respecting any representation, warranty, covenant or other term or provision of
this Escrow Agreement shall be effective only in the specific instance and for
the specific purpose for which given and shall not be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of a party at any time or times to require performance of, or to exercise
its rights with respect to, any representation, war-ranty, covenant or other
term or provision of this Escrow Agreement in no manner (except as otherwise
expressly provided herein) shall affect its right at a later time to enforce any
such term or provision. No notice to or demand on either the Company or the
Investor in any case shall entitle such party to any other or further notice or
demand in the same, similar or other circumstances. All rights, powers,
privileges, remedies and interests of the parties under this Escrow Agreement
are cumulative and not alternatives, and they are in addition to and shall not
limit (except as otherwise expressly provided herein) any other right, power,
privilege, remedy or interest of the parties under this Escrow Agreement or
applicable law.
20. Modification, Amendment, Etc. Each and every
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modification and amendment of this Escrow Agreement shall be in writing and
signed by all of the parties hereto, and each and every waiver of, or consent to
any departure from, any covenant, representation, warranty or other provision of
this Escrow Agreement shall be in writing and signed by the party granting such
waiver or consent.
21. Entire Agreement. This Escrow Agreement contains the
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entire agreement of the parties with respect to the matters contained herein and
supersedes all prior representations, agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained herein.
22. Fees. The Escrow Agent shall receive as its fee 2% of
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each gross Investment Amount as set forth in each Put Purchase Notice which
shall be deducted by the Investor from the Put Proceeds paid to the Company by
the Investor and paid directly to the Escrow Agent.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
STARUNI CORPORATION
By:_________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Title: Partner
BOAT BASIN INVESTORS LLC
By:
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Name:
Title:
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