Exhibit 10.4
Flexxtech Corporation
May Davis Group, Inc.
ESCROW AGREEMENT
With
FIRST UNION NATIONAL BANK
This Agreement is made and entered into as of August 14, 2001 by and
among Flexxtech Corporation (the "Company"), a Nevada corporation, May Davis
Group, Inc. (the "Placement Agent"), a Maryland corporation, and FIRST UNION
NATIONAL BANK, a national banking association with a principal New York
corporate trust office at 12 E. 49th Street, 37th Floor, New York, New York
10017 (the "Escrow Agent").
WHEREAS, the Company proposes to offer for sale to several investors
through the Placement Agent (a) up to $500,000 of the Company's debentures due
August 8, 2003 (the "Debentures") convertible into shares of the Common Stock,
$.001 par value per share (the "Common Stock") at the rate set forth therein
and (b) up to $10,000,000 of the Common Stock. The Debentures are being
offered through the Placement Agent pursuant to the terms of a Securities
Purchase Agreement (the "Purchase Agreement") being entered into between the
Company and the buyers named therein, and the Stock is being offered through
the Placement Agent pursuant to the terms of an Equity Line of Credit
Agreement (the "Equity Line of Credit Agreement") being entered into between
the Company and one or more investors.
WHEREAS, all such investments will be made in reliance upon registration
under the Securities Act of 1933, as may be amended.
WHEREAS, the offering of Debentures under the Purchase Agreement will be
consummated at a closing (the "Debenture Closing") to be held pursuant to the
terms and conditions of the Purchase Agreement
WHEREAS, the offering of Common Stock under the Equity Line of Credit
Agreement will terminate at the close of business thirty-six (36) calendar
months after the date the registration statement covering the Common Stock is
declared effective (the "Termination Date").
WHEREAS, with respect to all investment payments for the Debentures and
the Common Stock received from investors, the Company proposes to establish a
single escrow account with the Escrow Agent at the office of its Corporate
Trust Department, 12 E. 49th Street, 37th Floor, New York, New York 10017.
WHEREAS, the Company and the Placement Agent desire to establish an
escrow account ("Escrow Fund Account") in which those funds received from
purchasers of the Debentures will be deposited pending the Closing and in
which those funds received from the investors of the Common Stock (the
"Subscribers") will be deposited pending receipt of the number of shares of
Common Stock being purchased. The Escrow Agent agrees to serve as escrow
agent in accordance with the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. The Escrow Agent shall hold the Escrow Fund Account subject to
the terms of this Escrow Agreement and shall act in accordance with the
instructions contained in this Escrow Agreement.
2. Upon the written instructions of the Placement Agent and the
Company, the Escrow Agent shall deliver all or a part of the funds in the
Escrow Fund Account and any Common Stock it may receive as Escrow Agent, at
such times and in such manner as shall be set forth in such written
instructions.
Wire transfers to the Company shall be made as follows:
Beneficiary Account Name: North Texas Circuit Board Co., Inc.
1501 W. Shady Grove Road
Grand Prairie, TX 75050
Beneficiary Account No.: 867713
ABA/Transit No.: 111901234
Beneficiary Bank: Legacy Bank of Texas
With notice to: Steve Young
3. Unless otherwise instructed by the Placement Agent, any cash
balances held under this Escrow Agreement shall be invested in the Evergreen
Cash Management Treasury Money Market Fund # 765. All income earned from the
Escrow Fund Account shall be retained by the Escrow Agent and disbursed for
any fees, expenses or other amounts due to the Escrow Agent.
4. This Escrow Agreement shall terminate upon the final
distribution of all amounts in the Escrow Account and any income earned
thereon, unless terminated sooner by the written instructions of the Company
and Placement Agent.
5. (a) The Escrow Agent shall not in any way be bound or
affected by any notice of modification or cancellation of this Escrow
Agreement unless in writing signed by the Company and the Placement Agent, nor
shall the Escrow Agent be bound by any modification hereof unless the same
shall be satisfactory to it. The Escrow Agent shall be entitled to rely upon
any notice, certification, demand or other writing delivered to it hereunder
by the Company and/or the Placement Agent without being required to determine
the authenticity or the correctness of any facts stated therein, the propriety
or validity of the service thereof, or the jurisdiction of the court issuing
any judgment.
(b) The Escrow Agent may act in reliance upon any signature
believed by it to be genuine, and may assume that any person purporting to
give any notice or receipt, or make any statements in connection with the
provisions hereof has been duly authorized to do so.
(c) The Escrow Agent may act relative hereto in reliance
upon advice of counsel in reference to any matter connected herewith, and
shall not be liable for any mistake of fact or error or judgment, or for any
acts or omissions of any kind, unless caused by its willful misconduct or
gross negligence.
(d) The Escrow Agent may resign and be discharged of its
duties as Escrow Agent hereunder by giving ten (10) days written notice to the
Company and the Placement Agent. Such resignation shall take effect ten (10)
days after the giving of such notice, or upon receipt by the Escrow Agent of
an instrument of acceptance executed by a successor escrow agent and upon
delivery by the Escrow Agent to such successor of all of the escrowed
documents and funds or securities then held by it. If no successor escrow
agent is appointed in writing ten (10) days after giving such notice, the
Escrow Agent shall deliver all funds in the Escrow Account to the Company.
(e) The Company and the Placement Agent hereby agree to
jointly and severally, indemnify and hold the Escrow Agent harmless from any
loss, liability or expense, arising out of or related to this Escrow
Agreement, and for all costs and expenses, including the fees and expenses of
counsel, incurred in connection with this Escrow Agreement. The provisions of
this paragraph shall survive the termination of this Agreement.
(f) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement and the Escrow
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Escrow Agreement. The
Escrow Agent shall have no liability or duty to inquire into the terms and
conditions of any agreement to which it is not a party.
(g) If a controversy arises between one or more of the
parties hereto, or between any of the parties hereto and any person not a
party hereto, as to whether or not or to whom the Agent shall deliver the
Escrow Account or any portion thereof or as to any other matter arising out of
or relating to this Agreement or the Escrow Account deposited hereunder, the
Escrow Agent shall not be required to determine same and need not make any
delivery of the funds in the Escrow Account or any portion thereof but may
retain such funds until the rights of the parties to the dispute shall have
finally been determined by agreement or by final order of court of competent
jurisdiction, provided, however, that the time of appeal of any such final
order has expired without an appeal having been made. The Escrow Agent shall
deliver the Escrow Account or any portion thereof within 15 days after the
Escrow Agent has received written notice of any such agreement or final order
(accompanied by an affidavit that the time for appeal has expired without an
appeal having been made). The Escrow Agent shall be entitled to assume that
no such controversy has arisen unless it has received a written notice that
such a controversy has arisen which refers specifically to this Agreement and
identifies by name and address the adverse claimants to the controversy. If a
controversy of the type referred to in this paragraph arises, the Escrow Agent
may, in its sole discretion but shall not be obligated to, commence
interpleader or similar actions or proceedings for determination of the
controversy.
(h) The Escrow Agent shall not be required to institute or
defend any action (including interpleader) or legal process involving any
matter referred to herein which in any manner affects it or its duties or
liabilities hereunder. In the event the Escrow Agent shall institute or
defend any such action or legal process, it shall do so only upon receiving
full indemnity in an amount and of such character as it shall require, against
any and all claims liabilities, judgments, attorney's fees and other expenses
of every kind in relation thereto, except in the case of its own willful
misconduct or gross negligence.
(i) In the event that the Escrow Agent receives or becomes
aware of conflicting demands or claims with respect to any funds, securities,
property or documents deposited or delivered in connection herewith, or the
parties disagree about the interpretation of this Agreement, or about the
rights and obligations, or the propriety, of any action contemplated by the
Escrow Agent hereunder, or if the Escrow Agent otherwise has any doubts as to
the proper disposition of funds or the execution of any of its duties
hereunder, the Escrow Agent shall have the right to discontinue any or all
further acts on its part until such conflict, disagreement or doubt is
resolved to its satisfaction. In addition, the Escrow Agent may, in its sole
discretion, file an action in interpleader in any court of competent
jurisdiction to resolve the dispute or uncertainty. The Placement Agent and
the Company agree, jointly and severally, to indemnify the Escrow Agent and
hold it harmless from and against all costs, including reasonable attorney's
fees and expenses incurred by it in connection with such action. In the event
that the Escrow Agent files an action in interpleader, it shall thereupon be
fully released and discharged from all further obligations to perform any and
all duties or obligations imposed upon it by this Agreement, other than
safekeeping of the assets in the Escrow Account, if not paid into Court.
6. Any notice, direction, request, instruction, legal process, or
other instrument to be given or served hereunder by any party to another shall
be in writing, shall be delivered personally or sent by certified mail, return
receipt requested, to the respective party or parties at the following
addresses, and shall be deemed to have been given when received.
IF TO THE COMPANY,
Flexxtech Corporation
5777 W. Century Blvd, Suite 767
Los Angeles, CA 94010
Tel.: 310-342-0794
Fax: 310-342-0791
Tax ID#
WITH A COPY TO,
William E. Swart, Esq.
Bell, Nunnally & Martin LLP
3232 McKinney Avenue
Dallas, TX 75204-2429
Tel: 214 740.1400
Fax: 214 740-1499
IF TO THE PLACEMENT AGENT,
Hunter Singer
May Davis Group, Inc.
c/o National Securities
28th Floor
120 Broadway
New York, New York 10271
Tax ID#
WITH A COPY TO,
William A. Newman, Esq.
McGuireWoods LLP
9 West 57th Street, Suite 1620
New York, NY 10 019
Tel.: 212 548-2160
Fax: 212 548-2150
If to the Escrow Agent:
First Union National Bank
Corporate Trust Department
12 E. 49th Street
37th Floor
New York, New York 10017
Tel: (212) 451-2531
Fax: (212) 451-2537
Any party may change its or his address by written notice to each
of the other parties.
7. The Escrow Agent's fee for acting under this Escrow Agreement
shall be set forth in a separate letter and agreed to by the party or parties
responsible for payment Schedule A attached hereto. The Escrow Agent's fees
and expenses, including counsel fees, shall be paid by the Company. The
Escrow Agent is hereby given a first priority lien on the Escrow Fund to
protect, indemnify and reimburse itself for all fees, costs, expenses and
liabilities arising out of this Escrow Agreement and the performance of its
duties hereunder.
8. This Escrow Agreement shall be binding upon the parties hereto
and the Escrow Agent, and their respective successors, legal representatives
and assigns.
Flexxtech Corporation May Davis Group, Inc.
By: ________________________________ By:__________________________________
FIRST UNION NATIONAL BANK
Escrow Agent
Date: ____________________________ By:______________________________