ESCROW AGREEMENT
THIS AGREEMENT is made as of the 13th day of May, 1998 by and among
OBJECTSOFT CORPORATION, with its principal office at Continental Plaza III, 000
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (hereinafter the "Company"), the
"Purchasers" specified on Schedule A attached hereto, with their respective
principal offices at the addresses set forth in Schedule A, SETTONDOWN CAPITAL
INTERNATIONAL LTD. (the "Placement Agent", along with the Purchasers also
referred to as the "Investors") located at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx,
X.X. Xxx X. 0000, Xxxxxx, Bahamas, and XXXXXXXXX, XXXXXXXXX & XXXX, LLP, 00
Xxxxxxxx, 00xx Xx., Xxx Xxxx, XX 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing Common Stock, Warrants A
and B (the collectively "Initial Shares"), and Preferred Stock, from the Company
at a purchase price as set forth in a Private Equity Line Of Credit Agreement
(the "Agreement") dated as of May 13, 1998, which will be issued as per the
terms contained herein and in the Agreement executed by the Company and
Purchaser; and
WHEREAS, the Company will be issuing Common Stock and a Warrant A
(also referred to as the Initial Shares) to the Placement Agent pursuant to the
Agreement; and
WHEREAS, the Company shall have a Put of additional Common Stock to
the Purchasers for the remainder of the Commitment Amount after the Initial
Shares Investment Amount and the Purchase Price for the Preferred Stock has been
paid to the Company, in accordance with the terms and conditions in the
Agreement; and
WHEREAS, it is intended that the purchase of Securities be
consummated in accordance with the requirements set forth by Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold the
Initial Shares Investment Amount, the Purchase Price for the Preferred Stock,
and the remainder of the Commitment Amount in escrow until the Escrow Agent has
received the Initial Shares, and the Put Shares. The Escrow Agent will then
immediately wire transfer or otherwise deliver at the Company's discretion
immediately available funds to the Company's account and arrange for delivery of
the Initial Shares, and Put Shares to the Investors as per the terms and
conditions in the Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE INITIAL SHARES
1.1 The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of the Initial Shares (collectively, with the Preferred Stock and Put Shares,
referred to as the "Securities").
1.2 Upon Escrow Agent's receipt of the Initial Shares Investment
Amount into its attorney trustee account, it shall notify the Company, or the
Company's designated attorney or agent, of the amount of funds it has received
into its account.
1.3 The Company, upon receipt of said notice and acceptance of the
Agreement by both parties, as evidenced by the Company's and the Investor's
execution thereof, shall deliver to the Escrow Agent the Initial Shares. Escrow
Agent shall then communicate with the Company to confirm the validity of its
issuance.
1.4 Once Escrow Agent confirms the validity of the issuance of the
Initial Shares, the Escrow Agent shall immediately wire that amount of funds
necessary to purchase the Initial Shares per the written instructions of the
Company. The Company will furnish Escrow Agent with a "Net Letter" directing
payment of Placement Agent fees, and administrative, legal and escrow fees as
per the terms of the Agreement, such fees are to be remitted to in accordance
with wire instructions that will be sent to Escrow Agent from the Company, with
the net balance payable to the Company. Once the funds (as set forth above) have
been received per the Company's instructions, the Escrow Agent shall then
arrange to have the Securities delivered as per instructions from the Investor.
ARTICLE 2
TERMS OF THE ESCROW FOR THE FIRST TRANCHE
OF PREFERRED STOCK
2.1 Once the Escrow Agent has received certification from the
Company that all of the conditions set forth in Section 2.11 of the Agreement
have been complied with, and once he has received the Purchase Price for the
Preferred Stock to be issued at the Closing for the first tranche of the
Preferred Stock (as set forth in Section 2.11 in the Agreement) into its
attorney trustee account, he shall notify the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
account.
2.2 The Company, upon receipt of said notice, shall deliver to the
Escrow Agent the shares of Preferred Stock being purchased in connection with
the first tranche. The Escrow Agent shall then communicate with the Company to
confirm the validity of their issuance.
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2.3 Once Escrow Agent confirms the validity of the issuance of the
Preferred Stock in connection with the first tranche, he shall immediately wire
that amount of funds necessary to purchase such shares of Preferred Stock per
the written instructions of the Company. The Company will furnish Escrow Agent
with a "Net Letter" directing payment of placement agent fees and legal,
administrative and escrow fees, as per the terms of the Agreement. Such fees are
to be remitted in accordance with wire instructions that will be sent to the
Escrow Agent from the Company, with the net balance payable to the Company. Once
the funds (as set forth above) have been received per the Company's
instructions, the Escrow Agent shall then arrange to have the Preferred Stock
delivered as per instructions from the Investors.
ARTICLE 3
TERMS OF THE ESCROW FOR THE SECOND TRANCHE
OF PREFERRED STOCK
3.1 Once the Escrow Agent has received certification from the
Company that all of the conditions set forth in Section 2.11 of the Agreement
have been complied with, and once he has received the Purchase Price for the
Preferred Stock to be issued at the Closing for the second tranche of the
Preferred Stock (as set forth in Section 2.11 in the Agreement) into its
attorney trustee account, he shall notify the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
account.
3.2 The Company, upon receipt of said notice, shall deliver to the
Escrow Agent the shares of Preferred Stock being purchased in connection with
the second tranche. The Escrow Agent shall then communicate with the Company to
confirm the validity of their issuance.
3.3 Once Escrow Agent confirms the validity of the issuance of the
Preferred Stock in connection with the second tranche, he shall immediately wire
that amount of funds necessary to purchase such shares of Preferred Stock per
the written instructions of the Company. The Company will furnish Escrow Agent
with a "Net Letter" directing payment of placement agent fees and legal,
administrative and escrow fees, as per the terms of the Agreement. Such fees are
to be remitted in accordance with wire instructions that will be sent to the
Escrow Agent from the Company, with the net balance payable to the Company. Once
the funds (as set forth above) have been received per the Company's
instructions, the Escrow Agent shall then arrange to have the Preferred Stock
delivered as per instructions from the Investors.
ARTICLE 4
TERMS OF THE ESCROW FOR THE PUT SHARES
4.1 The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of the Put Shares.
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4.2 Upon Escrow Agent's receipt of confirmation in writing that
the Company has properly served a Put Notice in accordance with the Agreement,
and once it has received the Purchase Price for the Put Shares into its attorney
trustee account, it shall notify the Company, or the Company's designated
attorney or agent, of the amount of funds it has received into its account.
4.3 The Company, upon receipt of said notice and acceptance by the
Investors, as evidenced by written notice by the Investor, shall deliver to the
Escrow Agent the Put Shares being purchased. Escrow Agent shall then communicate
with the Company to confirm the validity of its issuance.
4.4 Once Escrow Agent confirms the validity of the issuance of the
Put Shares, he shall immediately wire that amount of funds necessary to purchase
of the Put Shares per the written instructions of the Company. The Company will
furnish Escrow Agent with a "Net Letter" directing payment of placement agent
fees and legal, administrative and escrow fees as per the terms of the
Agreement. Such fees are to be remitted to in accordance with wire instructions
that will be sent to Escrow Agent from the Company, with the net balance payable
to the Company. Once the funds have been received per the Company's
instructions, the Escrow Agent shall then arrange to have the Securities
delivered as per instructions from the Investor.
ARTICLE 5
MISCELLANEOUS
5.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
5.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
(a) ObjectSoft Corporation
Continental Plaza III
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Purchasers, at the addresses set forth on Schedule A
hereto.
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(c) Settondown Capital International Ltd.
Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx
P.O. Box N. 9204
Nassau, Bahamas
Attn: Xxxxxxx X. X. Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(d) Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP
00 Xxxxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other person at such other place as shall designated in writing.
5.3 This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
5.4 This Agreement is the final expression of, and contains the
entire Agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto.
5.5 Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
5.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP and it has
had the opportunity to consult with its own legal advisors prior to the signing
of this Agreement.
5.7 This Agreement will be construed and enforced in accordance
with and governed by the laws of the State of New York, except for matters
arising under the Act, without reference to principles of conflicts of law. Each
of the parties consents to the jurisdiction of the U.S. District Court sitting
in the Southern District of the State of New York or the state courts of the
State of New York sitting in Manhattan 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 hereby agrees
that if another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this
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Agreement irrevocably 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 at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law. Each party waives its right to a trial by jury.
5.8 This Agreement may be altered or amended only with the consent
of all of the parties hereto. Should the Company or Investors attempt to change
this Agreement in a manner which, in the Escrow Agent's discretion, shall be
undesirable, the Escrow Agent may resign as Escrow Agent by notifying the
Company and the Investor in writing. In the case of the Escrow Agent's
resignation or removal pursuant to the foregoing, its only duty, until receipt
of notice from the Company and the Investor or its agent that a successor escrow
agent shall have been appointed, shall be to hold and preserve the funds. Upon
receipt by the Escrow Agent of said notice from the Company and the Investor of
the appointment of a successor escrow agent, the name of a successor escrow
account and a direction to transfer the funds, the Escrow Agent shall promptly
thereafter transfer all of the funds held in escrow to said successor escrow
agent. Immediately after said transfer, the Escrow Agent shall furnish the
Company and the Investor with proof of such transfer. The Escrow Agent is
authorized to disregard any notices, requests, instructions or demands received
by it from the Company or the Investor after notice of resignation or removal
shall have been given, unless the same shall be the aforementioned notice from
the Company and the Investor to transfer the funds to a successor escrow agent
or to return same to the respective parties.
5.9 The Escrow Agent shall be reimbursed by the Company and the
Investor for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
5.10 The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith in accordance with the advice of the Escrow Agent's
counsel; and in no event shall the Escrow Agent be liable or responsible except
for the Escrow Agent's own gross negligence or willful misconduct.
5.11 The Company and the Investors warrant to and agree with the
Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities or any
part thereof;
(ii) no financing statement under the Uniform Commercial Code
is on file in any jurisdiction claiming a security interest or
in describing (whether specifically or generally) the
Securities or any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any
time to ascertain whether or not any security interest exists
in the Securities or any part thereof or to file any financing
statement under the Uniform Commercial Code with respect to
the Securities or any part thereof.
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5.12 The Escrow Agent in its capacity as such has no liability
hereunder to either party other than to hold the funds and the Securities and to
deliver them under the terms hereof. Each party hereto agrees to indemnify and
hold harmless the Escrow Agent in its capacity as such from and with respect to
any suits, claims, actions or liabilities arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Escrow.
[Remainder Of page Intentionally Left Blank]
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have cause this Escrow
Agreement to be executed as of the 13th day of May, 1998.
OBJECTSOFT CORPORATION
By /s/ Xxxxx X.X. Xxxxx
------------------------------
Xxxxx X.X. Xxxxx, Chairman
AVALON CAPITAL , INC.
By /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
AUSTOST ANSTALT XXXXXX
By /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
BALMORE FUNDS S.A.
By /s/ Francois Morax
------------------------------
Francois Morax
SETTONDOWN CAPITAL INTER-
NATIONAL LTD.
By /s/ Xxxxxxx X.X. Xxxxx Xxxxx
------------------------------
Xxxxxxx X.X. Xxxxx Xxxxx
XXXXXXXXX, XXXXXXXXX & XXXX, LLP,
Escrow Agent
By /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxx
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