Exhibit 4.4
ESCROW AGREEMENT
ESCROW AGREEMENT, made the 3rd day of May, 2004, by and among Summus,
Inc. (USA), a Delaware corporation (the "Company"), each of the investors listed
on EXHIBIT A hereto (each an "Investor" and, collectively, the "Investors") and
American Stock Transfer and Trust Company, as Escrow Agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company is offering up to $2,000,000 of the Company's Senior
Convertible Debt (the "Convertible Debt") and shares of its common stock, $0.01
par value per share, that are issuable in connection with the Convertible Debt
(the "Offering"), pursuant to certain Subscription Agreements with the Investors
(the "Subscription Agreements");
WHEREAS, the Company and the Investors desire that 50% of the funds
received in the Offering be placed into a segregated account with the Escrow
Agent (the "Escrow Account") until such time as the release or return of such
funds is required pursuant to Section 4 hereof; and
WHEREAS, the Escrow Agent has consented to act as escrow agent in
connection with the Offering, subject to the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual promises herein made and
intending to be legally bound, the Company, the Investors and the Escrow Agent
hereby agree as follows:
1. The Company and the Investors hereby appoint the Escrow Agent to serve
as escrow agent in connection with the Offering in accordance with the terms and
conditions herein set forth, and the Escrow Agent hereby accepts such
appointment.
2. The Investors shall deliver to the Escrow Agent an aggregate amount of
$1,000,000 (the "Escrow Funds") (in the amount set forth next to such Investors'
name as set forth on Exhibit A) to be held and administered by the Escrow Agent
as provided herein. The Escrow Agent shall promptly deposit the Escrow Funds in
the Escrow Account. The Company shall direct the Investors to wire transfer
their portion of the Escrow Funds, in immediately available funds, to:
XX Xxxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxx Xxxx, XX
ABA# ____________
Account # __________
Attention: __________
The Escrow Agent shall advise the Company in writing as to the name of each
Investor from whom Escrow Funds has been received.
3. The Escrow Account shall be an interest-bearing Money Market Deposit
Account. Interest and other income on amounts deposited in the Escrow Account
shall be added to the amounts so deposited and held in the Escrow Account.
4. The Escrow Funds to be held in the Escrow Account, and any interest or
other income earned thereon, shall be subject to, and distributed in accordance
with, the following provisions:
(a) The Escrow Agent shall hold the Escrow Funds until the earlier
of (i) the date on which it receives a letter signed by each of the Investors
and the Company to the effect that the Company has achieved positive monthly
EBITDA in accordance with generally accepted accounting principles, which letter
shall be accompanied by an executive officer's certificate from the Company that
it has achieved this criteria, (ii) March 31, 2005 or the date on which the
Investors and the Company elect to terminate this Agreement, or (iii) the date
on which it receives a letter signed by each of the Investors and the Company
that a Liquidation Event has occurred. For purposes of this Agreement, the term
"Liquidation Event" shall mean any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary. Upon the happening of Escrow Agent's
receipt of the letter described in Section 4(a)(i), the Escrow Agent shall
release the Escrowed Funds, plus interest earned in the Escrow Account, to the
Company. Upon the happening of either of the events described in Sections
4(a)(ii) or 4(a)(iii), the Escrow Agent shall release the Escrowed Funds, plus
interest earned in the Escrow Account, to the Investors (on a pro rata basis as
set forth on Exhibit A).
(a) The Escrow Funds distributed by the Escrow Agent to the
Investors pursuant to this Agreement shall no longer be subject to the terms and
conditions of this Escrow Agreement and shall (so far as this Agreement is
concerned) be and become the sole property of the party receiving the same, free
and clear of all liens and encumbrances.
5. To induce the Escrow Agent to act hereunder, the Company and the
Investors agree that:
(a) Distribution of the Escrow Account pursuant to Section 4 of
this Agreement by the Escrow Agent shall operate to divest all right, title,
interest, claim, and demand, either at law or in equity, of any party to this
Agreement (other than the distributee) in and to the Escrow Account and shall be
a perpetual bar both at law and in equity as against the Escrow Agent and
against any person claiming or attempting to claim such distributed Escrow
Account from, through, or under the Escrow Agent.
(b) The Escrow Agent shall not be under any duty to give the
monies held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(c) This Escrow Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement except this Escrow Agreement.
(d) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the Company and the Investors shall, jointly and
severally, indemnify and hold harmless the Escrow Agent (and any successor
Escrow Agent) from and against any and all losses, deficiencies, liabilities,
claims, suits, actions, damages, settlements and expenses, including reasonable
attorneys fees and disbursements, arising out of and in connection with this
Escrow Agreement. Without limiting the foregoing, the Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms hereof,
including, without limitation, any liability for any delays (not resulting from
it gross negligence or willful misconduct) in the investment or reinvestment of
any Escrow Funds, or any loss of interest incident to any such delays.
(e) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
(f) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in accordance with such advice.
(g) The Escrow Agent does not have any interest in the amounts
deposited hereunder but is serving as escrow holder only and having only
possession thereof. The Company shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the escrowed property
incurred in connection herewith and shall indemnify and hold harmless the Escrow
Agent from any amounts that it is obligated to pay in the way of such taxes. Any
payments of income from this Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The parties
hereto will provide the escrow agent with appropriate W-9 forms for tax I.D.,
number certifications, or W-8 forms for non-resident alien certifications. It is
understood that the Escrow Agent shall be responsible for income reporting only
with respect to income earned on investment of funds deposited in the Escrow
Account and is not responsible for any other reporting. This Section 5(g) and
Section 5(d) shall survive notwithstanding any termination of this Escrow
Agreement or the resignation of the Escrow Agent.
(h) The Escrow Agent shall have no duties or responsibilities
except those expressly set forth herein. The Escrow Agent shall not be bound by
any notice of a claim, or demand with respect thereto, or any waiver,
modification, amendment, termination, cancellation, or revision of this
Agreement, unless in writing and signed by the other parties hereto and received
by the Escrow Agent, and, if the Escrow Agent's duties as escrow agent hereunder
are affected, unless the Escrow Agent shall have given its prior written consent
thereto. The Escrow Agent shall not be bound by any assignment by the Company or
the Investors of any rights hereunder unless the Escrow Agent shall have
received written notice thereof from the assignor.
The Escrow Agent is authorized to comply with and obey laws, orders, judgments,
decrees, and regulations of any governmental authority, court, tribunal, or
arbitrator. If the Escrow Agent complies with any such law, order, judgment,
decree, or regulation, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person even if such law, order, judgment, decree,
or regulation is subsequently reversed, modified, annulled, set aside, vacated,
found to have been entered without jurisdiction, or found to be in violation of
or beyond the scope of a constitution or a law.
(i) If the Escrow Agent (i) shall be uncertain as to the Escrow
Agent's duties or rights hereunder, (ii) shall receive any notice, advice,
direction, or other document from any other party with respect to the Escrow
Account which, in the Escrow Agent's opinion, is in conflict with any of the
provisions of this Agreement, or with any notice, advice, direction or other
document it has received from another party, or (iii) should be advised that a
dispute has arisen with respect to the payment, ownership, or right of
possession of the Escrow Account or any part thereof (or as to the delivery,
non-delivery, or content of any notice, advice, direction, or other document),
the Escrow Agent shall be entitled, without liability to anyone, to refrain from
taking any action other than to use the Escrow Agent's best efforts to keep
safely the Escrow Account until the Escrow Agent shall be directed otherwise in
writing by the Company and the Investors or by an order, decree, or judgment of
a court of competent jurisdiction which has been finally affirmed on appeal or
which by lapse of time or otherwise is no longer subject to appeal, but the
Escrow Agent shall be under no duty to institute or to defend any proceeding,
although the Escrow Agent may, in the Escrow Agent's discretion and at the
expense of the Company and the Investors as provided in Section 5(o), institute
or defend such proceedings.
(j) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(k) The Company and the Investors authorize the Escrow Agent, if
threatened with litigation or sued, to interplead all interested parties in any
court of competent jurisdiction and to deposit the Escrow Account with the clerk
of that court.
(l) The Escrow Agent shall not be called upon to advise any party
as to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(m) The Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the total of the Escrow Funds received by the
Escrow Agent and all interest and other income earned thereon to any successor
Escrow Agent designated by the Escrow Agent, in writing, or to any court of
competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent will take effect on the earlier
of (i) the appointment of a successor (including a court of competent
jurisdiction), or (ii) the day which is ten (10) days after the date of delivery
of its written notice of resignation to the Company and the Investors. If at
that time the Escrow Agent has not designated a successor Escrow Agent, the
Escrow Agent's sole responsibility after that time shall be to safekeep the
Escrow Funds received
by the Escrow Agent and all interest and other income earned thereon until
receipt of a designation of successor Escrow Agent or a final order of a court
of competent jurisdiction.
(n) The Escrow Agent shall have no responsibility for the contents
f any writing of the arbitrators or any third party contemplated herein as a
means to resolve disputes and may rely without any liability upon the contents
thereof.
(o) The Company agrees to pay the Escrow Agent $2,500 for its
services hereunder and to reimburse the Escrow Agent for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel).
(p) Each party hereby irrevocably submits to the jurisdiction of
any New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Escrow Agreement, and hereby
irrevocably agrees that all claims in respect of such action or proceeding shall
be heard and determined in such a New York State or federal court. Each party
hereby consents to and grants to any such court jurisdiction over such party and
over the subject matter of any such dispute and agrees that delivery or mailing
of any process or other papers in the manner provided herein, or in such manner
as may be permitted by law, shall be valid and sufficient service thereof.
(q) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) which
mentions the Escrow Agent's name or the rights, powers, or duties of the Escrow
Agent shall be issued by the Company or any Investor unless the Escrow Agent
shall first have given its specific written consent thereto.
(r) The Company and the Investors authorize the Escrow Agent, for
any securities held hereunder, if any, to use the services of any United States
central securities depository it deems appropriate, including, but not limited
to, the Depositary Trust Company and the Federal Reserve Book Entry System.
(s) The Escrow Agent's responsibilities and liabilities hereunder,
except as a result of the Escrow Agent's own bad faith or gross negligence, will
terminate upon the delivery by the Escrow Agent of the Escrow Funds under any
provision of this Agreement.
6. This Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors and assigns, and shall not
be enforceable by or inure to the benefit of any third party except as provided
in Section 5(m) with respect to a resignation by the Escrow Agent. No party may
assign any of its rights or obligations under this Agreement without the written
consent of the other party.
7. This Agreement may only be modified by a writing signed by the parties
hereto, and no waiver hereunder shall be effective unless in a writing signed by
the party to be charged.
8. This Agreement shall be construed in accordance with the laws of the
State of New York, without regard to its rules respecting conflicts of laws. It
may be executed in several counterparts, each of which shall be deemed an
original, and all of which shall constitute but one instrument.
9. Any notice, consent or request to be given in connection with any of
the terms or provisions of this Agreement shall be in writing and shall be sent
by certified mail, return receipt requested, or delivered against written
receipt:
(a) if to the Escrow Agent, to:
American Stock Transfer and Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: ___________
Telephone: _____________
Facsimile: _____________
(b) if to the Company, to:
Summus, Inc. (USA)
000 Xxxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, X.X. 00000
Attention: Xxxx X. Ban, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any notice, consent or request given by certified mail shall be deemed given at
the time of certification thereof.
10. This Agreement shall terminate upon the date on which all Escrow Funds and
interest or other income earned thereof has been fully disbursed from the Escrow
Account in accordance with Section 4 of this Agreement.
(a) [Signature Page Follows]
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the date first above written.
SUMMUS, INC. (USA)
By:________________________________________
Xxxx X. Ban
Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By:________________________________________
Name:
Title:
JDS CAPITAL, L.P.
By:________________________________________
Name:
Title:
EMPIRE CAPITAL PARTNERS, LP
By:________________________________________
Name:
Title:
THE FOCUS FUND, L.P.
By:_______________________________________
Name:
Title:
XXXX X. XXXXXXXX
_____________________________________
XXXXXX X. XXXXXXX
_____________________________________
XXXXXX X. XXXXX, XX.
_____________________________________
EXHIBIT A
TO
ESCROW AGREEMENT
Dated as of May 3, 2004
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NAME OF INVESTOR AMOUNT OF ESCROW FUNDS
------------------------------------ ----------------------- -
JDS Capital, L.P. $_______
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Empire Capital Partners, LP $______
------------------------------------ ----------------------- -
The Focus Fund, L.P. $_______
------------------------------------ ----------------------- -
Xxxxxx X. Xxxxxxx $________
------------------------------------ ----------------------- -
Xxxx X. Xxxxxxxx $________
------------------------------------ ----------------------- -
Xxxxxx X Xxxxx, Xx. $_______
------------------------------------ ----------------------- -
TOTALS: $1,000,000
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