EXHIBIT 10.4
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Escrow Agreement") dated as of August 27, 2004,
by and among Newport International Group, Inc., a Delaware corporation (the
"Company"), Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, as escrow agent (the "Escrow
Agent"), and the investor listed on Schedule A attached hereto (the "Investor").
W I T N E S S E T H:
WHEREAS, pursuant to a Common Stock and Warrant Purchase Agreement
dated as of August 27, 2004 between the Company and the Investor (the "Purchase
Agreement"), the Company and the Investor desire to have 1,000,000 shares (the
"Escrow Shares") of common stock, par value $0.001 per share, of the Company
(the "Common Stock"), and warrants to purchase shares of Common Stock (the
"Warrants") delivered to the Escrow Agent to hold, along with immediately
available funds for the purchase of the Common Stock (the "Escrow Funds"), and
the Escrow Agent has agreed to receive, hold and redeliver the Escrow Shares and
the Escrow Funds, all upon the terms and subject to the conditions hereinafter
set forth;
WHEREAS, the Purchase Agreement contemplates that the Escrow Funds
shall be paid into escrow and the Escrow Shares and Warrants purchased by the
Investor shall be held in escrow and the Escrow Agent has agreed to receive,
hold and pay such Escrow Funds and to receive and deliver the Escrow Shares and
Warrants, upon the terms and subject to the conditions hereinafter set forth;
and
WHEREAS, the Company acknowledges and agrees that this Escrow Agreement
shall serve as irrevocable authorization and direction by the Company to the
Escrow Agent to receive, hold, and ultimately deliver the Escrow Funds and the
Escrow Shares placed in escrow in accordance with the terms and conditions of
this Escrow Agreement.
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 acknowledged, the parties to this Escrow
Agreement hereby agree as follows:
1. ESCROW OF SHARES. On or prior to the date hereof, the Company shall
deliver or cause to be delivered to the Escrow Agent the Escrow Shares (in such
denominations as requested by the Investor), registered in the name of the
Investor (or any nominee designated by the Investor). Upon consummation of each
Closing under the Purchase Agreement for the purchase of the Escrow Shares and
Warrants, the Escrow Agent shall deliver to the Investor the Escrow Shares and
Warrants, PROVIDED, HOWEVER, that prior to delivering the Escrow Shares and
Warrants to the Investor, the Company shall confirm to the Escrow Agent that the
conditions contained in Article IV of the Purchase Agreement have been either
met by the Investor or waived by the Company.
2. ESCROW OF FUNDS. On or prior to the date hereof, the Investor shall
deliver or cause to be delivered to the Escrow Agent the Escrow Funds. Upon
consummation of each Closing under the Purchase Agreement for the purchase of
the Shares and Warrants, the Escrow
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Agent shall wire transfer the Escrow Funds to the Company, PROVIDED, HOWEVER,
that prior to the wiring of the Escrow Funds to the Company, the Investor shall
confirm to the Escrow Agent that the conditions contained in Article IV of the
Purchase Agreement have been either met by the Company or waived by the
Investor.
3. ESCROW PERIOD. The certificates for any Escrow Shares and the Escrow
Funds delivered to the Escrow Agent pursuant hereto shall be deposited for
safekeeping with the Escrow Agent (the "Escrow Account"). During the period
commencing on the Initial Closing Date (as defined in the Purchase Agreement)
through the date that is five (5) business days following the Final Closing Date
(as defined in the Purchase Agreement) (the "Escrow Period'), none of such
Escrow Funds deposited in the Escrow Account shall become the property of the
Company or any other entity or be subject to the debts of the Company or any
other entity except as expressly provided herein. During the Escrow Period, none
of such Escrow Shares deposited in the Escrow Account shall become the property
of the Investor or any other entity or be subject to the debts of the Investor
or any other entity except as expressly provided herein. The Escrow Agent shall
neither make nor permit any disbursements or deliveries from the Escrow Account
except as expressly provided herein.
4. HOLDING OF ESCROW FUNDS AND ESCROW SHARES. The Escrow Agent shall
hold the Escrow Funds and the Escrow Shares in a segregated escrow account where
it normally holds such Escrow Funds and Escrow Shares.
5. FURTHER ASSURANCES. The Company and the Investor 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, remedy 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.
6. CONFLICTING DEMANDS. If conflicting or adverse claims 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 the Escrow Funds and the
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Escrow 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 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. EXPENSES OF THE ESCROW AGENT. The Company agrees to pay any and all
out-of-pocket costs and expenses up to $750 per Closing (as defined in the
Purchase Agreement), excluding the costs and expenses incurred by the Escrow
Agent in connection with the commencement of an interpleader pursuant to Section
5 hereof, incurred by the Escrow Agent in connection with all waivers, releases,
discharges, satisfactions, modifications and amendments of this Escrow
Agreement, the administration and holding of the Escrow Funds and the Escrow
Shares, and the enforcement, protection and adjudication of the Escrow Agent's
rights hereunder by the Escrow Agent, including, without limitation, the
out-of-pocket disbursements of the Escrow Agent itself and expenses and costs of
other attorneys it may retain, if any. The Company shall be liable to the Escrow
Agent for any expenses payable by the Escrow Agent.
9. RELIANCE ON DOCUMENTS AND EXPERTS. The Escrow Agent 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, 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 the
Company and the Investor.
10. STATUS OF THE ESCROW AGENT, ETC. The Escrow Agent is 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 the Investor. The Escrow Agent's only duties are those expressly set
forth in this Escrow Agreement, and the Company and the Investor authorize the
Escrow Agent to perform those duties in accordance with its usual practices in
holding funds of its own or those of other escrows. The Escrow Agent may
exercise or otherwise 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.
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11. Exculpation. The Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall not incur any
liability whatsoever for the investment or disposition of the Escrow Funds and
Escrow 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 authority having
jurisdiction); and the Company and the Investor hereby waive 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; and the
Company and the Investor hereby expressly waive 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.
12. INDEMNIFICATION. The Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall be indemnified,
reimbursed, held harmless and, at the request of the Escrow Agent, defended,
jointly and severally by the Company and the Investor 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, except such as
are occasioned by the indemnified person's own acts and omissions 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.
13. NOTICES. Any notice, request, demand or other 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) upon hand delivery by
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours
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where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or (c) upon actual receipt of such mailing, whichever shall first
occur.
If to the Company: Newport International Group, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President and CEO
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which copies
shall not constitute notice
to the Company) to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇.▇.
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▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: at the address of such
Investor set forth on SCHEDULE I
attached hereto, with a copy to the
Investor's counsel as set forth on
SCHEDULE I attached hereto or as
specified in writing by such Investor.
If to the Escrow Agent: Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
14. SECTION AND OTHER HEADINGS. The section and other 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.
15. GOVERNING LAW. This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts of law. The Company and the Investor
(i) hereby irrevocably submit to the jurisdiction of the United States District
Court sitting in the Southern District of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement or the
Purchase Agreement and (ii) hereby waive, and agree 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
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suit, action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper. The Company and the Investor
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 14
shall affect or limit any right to serve process in any other manner permitted
by law.
16. COUNTERPARTS. This Escrow Agreement may be executed 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.
17. RESIGNATION OF ESCROW AGENT. The Escrow Agent may, at any time, at
its option, elect to resign its duties as Escrow Agent under this Escrow
Agreement by providing notice thereof to the Company and the Investor. In such
event, the Escrow Agent shall deposit the Escrow Funds and the Escrow Shares to
a successor independent escrow agent to be appointed by (a) the Company 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 Escrow Funds and the Escrow Shares, the
Escrow Agent shall be released of and from all liability under this Escrow
Agreement.
18. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Whenever in this 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 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 this Section 18
hereof.
19. NO THIRD PARTY RIGHTS. The representations, warranties and other
terms and provisions of this Escrow Agreement are for the exclusive benefit of
the parties hereto, and no other person, 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.
20. NO WAIVER BY ACTION, ETC. Any waiver or consent 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, warranty, 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
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later time to enforce any such term or provision. No notice to or demand on 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.
21. MODIFICATION, AMENDMENT, ETC. Each and every 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.
22. ENTIRE AGREEMENT. This Escrow Agreement contains the 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
NEWPORT INTERNATIONAL GROUP, INC.
By: /s/ Cery Perle
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Name:
Title:
JENKENS & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
By: /s/ Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
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Name:
Title:
INVESTOR:
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇, Inc.
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Name:
Title:
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SCHEDULE I
INVESTOR
▇▇▇▇▇▇▇▇ ▇▇▇▇ Inc.
European Administration:
4 ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ + 357 2533 9274
Kontaktperson: ▇▇▇▇▇▇▇▇ Magistrate
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