EXHIBIT 10.2
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT (the "Escrow Agreement") made as of the 8th day of
March, 1999, by and among Xybernaut Corporation, a Delaware corporation with
offices at 00000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (the
"Company"), the entities listed on the signature page (the "Purchasers") and
Xxxxxx Xxxxxx Flattau & Klimpl, LLP, a New York limited liability partnership
with offices at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as escrow
agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company desires to raise capital for the production and
marketing of the Company's Mobile Assistant(R) IV and related products and for
general working capital purposes and acquisitions;
WHEREAS, the Company and the Purchasers have agreed that, in order to
raise capital, the Company shall issue and sell to the Purchasers an aggregate
of 10,000 shares of Series D Preferred Stock of the Company (the "Preferred
Stock"), each share convertible into shares of the Company's common stock, $0.01
par value per share (the "Common Stock"), and warrants to purchase an aggregate
of 200,000 shares of Common Stock (the "Warrants"), for an aggregate purchase
price of Ten Million ($10,000,000.00) Dollars (the "Sale");
WHEREAS, pursuant to the Sale, the Company will enter into a Securities
Purchase Agreement dated as of March 8, 1998 (the "Purchase Agreement") with the
Purchasers, in the form attached as Exhibit A hereto; and
WHEREAS, the Purchase Agreement contemplates that all funds shall be
paid into escrow and the original certificates representing the Preferred Stock
(the "Certificates") and original Warrants shall be held in escrow prior to each
Closing Date (as defined in the Purchase Agreement) and the Escrow Agent has
agreed to receive, hold and pay such funds and to receive such Certificates and
Warrants, upon the terms and subject to the conditions hereinafter set forth.
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. Defined Terms. Capitalized terms used and not otherwise defined
herein shall have the meanings respectively assigned to them in the Purchase
Agreement.
2. Escrow of Funds. At or prior to each Closing Date, the following
shall occur: (a) each of the Purchasers shall remit by wire transfer its portion
of the Purchase Price to the Escrow Agent pursuant to this Escrow Agreement as
payment in full for the Preferred Stock and the Warrants (the "Escrow Amount");
(b) the Company shall deliver or cause to be delivered to Escrow Agent the
Certificates and the Warrants registered in the name of each of the Purchasers
(or any nominee designated by each Purchaser at least three days before each
Closing Date), free and clear of all liens, claims, charges and encumbrances.
The Escrow Agent shall hold the Escrow Amount and the Certificates and the
Warrants and shall deliver
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them or redeliver them to the Company or to the Purchasers, as applicable, only
in accordance with the terms and conditions of this Escrow Agreement.
3. Investment of Funds. The Escrow Agent shall invest the monies in the
Escrow Amount in an interest bearing bank account with, or certificates of
deposit or time deposits with maturities of no more than thirty (30) days issued
by, a domestic commercial bank or such other bank or other financial institution
as it normally holds such funds.
4. Release of Funds. (a) The Escrow Agent shall release the Escrow
Amount, after deduction of the amounts specified in section (b) below, and the
Certificates and the Warrants upon receipt, at any time, of instructions from
the Company and the Purchasers directing the manner in which the return or other
distribution of the funds in the Escrow Amount and the Certificates and the
Warrants are to be made.
(b) The Escrow Agent shall deduct from the Escrow Amount the
following amounts:
(i) upon the closing of the first tranche of
$5,000,000, an amount equal to (i) $10,000
for attorneys' fees for the Purchasers; and
(ii) upon the closing of the second tranche of
$5,000,000, an amount equal to$2,500 for
attorneys' fees for the Purchasers and an
amount equal to $50,000 in respect of a fee
to the Purchasers.
(c) Immediately following notification to the Escrow Agent by
the Company and the Purchasers that each of the conditions precedent to a
Closing has been satisfied or waived, the Company shall be paid the Escrow
Amount, less the amounts set forth in subsection (b) above, and the Purchasers
shall receive the Certificates and the Warrants. In addition, upon receipt of
such notice, the Escrow Agent shall release such amounts deducted from the
Escrow Amount to Xxxxxxx & Xxxxxx, Esqs. as payment for the legal fees and
expenses incurred by the Purchasers in connection with negotiating the Purchase
Agreement and the transactions contemplated thereby
(c) If no closing occurs and the Escrow Agent does not receive
joint instructions of the Company and the Purchasers regarding an extension of
the Closing Date, the Escrow Agent shall promptly thereafter return the Escrow
Amount to the Purchasers and the Certificates and the Warrants to the Company.
(d) Any interest earned on the Escrow Amount shall be paid to
the party receiving the Escrow Amount.
5. Further Assurances. The Company and the Purchasers 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 reasonably may 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
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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 Purchasers 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 funds 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 Borough of Manhattan, 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 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 Amount
and the investment of such funds, and the enforcement, protection and
adjudication of the parties' rights hereunder by the Escrow Agent, including,
without limitation, the out-of-pocket disbursements and expenses of the Escrow
Agent itself and those 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, 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 Purchasers. The Escrow Agent shall not be responsible to
review the Certificates other than to confirm that it has been signed or to
determine the clearance of checks received for the Escrow Amount.
11. 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 Purchasers. This Escrow
Agreement shall not be deemed to prohibit or in any way restrict the Escrow
Agent's representation of the Company, who may be advised by the Escrow Agent on
any and all matters pertaining to this Escrow Agreement. To the extent the
Company has been represented by the Escrow Agent, the Company hereby
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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 Company. The Escrow Agent's only duties are
those expressly set forth in this Escrow Agreement, and each of the Company and
the Purchasers 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.
12. 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 funds 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
each of the Company and the Purchasers 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 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 Escrow Amount; and each
of the Company and the Purchasers hereby expressly waives any and all claims and
actions (other than those attributable to a 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.
13. 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, 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 Escrow Amount, 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 as finally determined pursuant to applicable law by a governmental
authority having jurisdiction.
14. Notices. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given, (i) on the date delivered, (a) by personal delivery, or (b) if advance
copy is given by fax, (ii) seven business days after deposit in the United
States
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Postal Service by regular or certified mail, or (iii) three business days
mailing by international express courier, with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.
15. 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.
16. Governing Law. This Escrow Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to the principles thereof regarding the conflict of laws. Each of the
parties consents to the exclusive jurisdiction of the federal courts whose
districts encompass any part of the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on FORUM NON
CONVENIENS, to the bringing of any such proceeding in such jurisdictions. Each
party waives its right to a trial by jury. Each party to this Escrow Agreement
irrevocable consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party to serve process in any other manner permitted by law.
17. 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.
18. 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 each of the Company and the Purchasers.
In such event, the Escrow Agent shall deposit the Escrow Amount with a successor
escrow agent to be appointed by (a) the Company and the Purchasers within thirty
(30) days following the receipt by the parties of such notice of resignation
from the Escrow Agent, or (b) the Escrow Agent if the Company and the Purchasers
shall have not agreed on a successor escrow agent within the aforesaid 30-day
period, upon which appointment and delivery of the Escrow Amount the Escrow
Agent shall be released of and from all liability under this Escrow Agreement.
19. 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 each of the
Company and the Purchasers 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 Purchasers to assign
any of its rights or obligations hereunder to any other person (whether or not
an affiliate of the Company or the Purchasers) 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.
20. 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 Purchasers, shall have any right or claim against any party by reason
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of any of those terms and provisions or be entitled to enforce any of those
terms and provisions against any party.
21. 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 later time to enforce any such term or
provision. No notice to or demand on either the Company or the Purchasers 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.
22. 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.
23. Entire Agreement. This Escrow Agreement and the Purchase Agreement
contain the entire agreement of the parties with respect to the matters
contained herein and therein and supersedes all prior representations,
agreements and understandings, oral or otherwise, among the parties with respect
to the matters contained herein.
[end of page]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
XYBERNAUT CORPORATION
By:_____________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice Chairman
CRYSTALITE INVESTMENTS LTD. (BVI)
By:_____________________________________
Name:
Title:
BULK TRADE INC. (BVI)
By:_____________________________________
Name:
Title:
XXXXXX XXXXXX FLATTAU & KLIMPL, LLP,
as escrow agent
----------------------------------------
Name:
Title:
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