ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is entered into as of
February 9, 2000 by and between WAMEX HOLDINGS, INC., a New York corporation
("WAMEX"), M. RICHARD CUTLER, an individual ("Cutler"), BRIAN A. LEBRECHT, an
individual ("Lebrecht"), VI BUI, an individual ("Bui"), and MRC LEGAL SERVICES
CORPORATION, a California corporation doing business as Cutler Law Group, as
escrow agent ("Escrow Agent"). Each of WAMEX, Cutler, Lebrecht, and Bui may be
referred to as a "Party" and collectively as the "Parties".
R E C I T A L S
A. WAMEX, Cutler, Lebrecht, and Bui have entered into a Stock Exchange
Agreement of even date herewith (the "Stock Exchange Agreement") wherein WAMEX
agreed to issue an aggregate of 47,500 shares of "restricted" stock to Cutler,
Lebrecht and Bui (the "Restricted Shares") as follows: Cutler, 36,500 shares
(the "Cutler Restricted Shares"); Lebrecht, 8,250 shares (the "Lebrecht
Restricted Shares"), and Bui, 2,750 shares (the "Bui Restricted Shares").
B. WAMEX has also agreed, as part of the Stock Exchange Agreement, to
issue up to an aggregate of 2,500 shares of "restricted" common stock (the
"Conchology Shareholders Shares") to the six shareholders of Conchology, Inc.
(other than Cutler, Lebrecht, and Bui) (the "Conchology Shareholders") upon
presentment by the Conchology Shareholders of their stock certificates
representing ownership of Conchology common stock at the rate of one share of
WAMEX common stock for each twelve shares of Conchology common stock.
C. WAMEX, Cutler, Lebrecht, and Bui have entered into a Consulting
Agreement of even date herewith (the "Consulting Agreement") wherein WAMEX
agreed to issue an aggregate of 100,000 shares of common stock as follows:
Cutler, 72,000 shares (the "Cutler Consulting Shares"); Lebrecht, 21,000 shares
(the "Lebrecht Consulting Shares"); and Bui, 7,000 shares (the "Bui Consulting
Shares"). As part of the Consulting Agreement, WAMEX has agreed to register the
Cutler Consulting Shares, Lebrecht Consulting Shares, and Bui Consulting Shares
on Form S-8 within five days of execution of the Stock Exchange Agreement.
D. WAMEX, Cutler, Lebrecht, and Bui have entered into a Put Option
Agreement of even date herewith (the "Put Agreement") wherein Cutler, Lebrecht,
and Bui have the option to put the Cutler Consulting Shares, Lebrecht Consulting
Shares, and Bui Consulting Shares back to WAMEX at a price of $6.50 per share.
WAMEX has agreed to issue an additional 70,000 shares of common stock (the
"Security Shares"), to be registered on Form S-8, and deliver them to the Escrow
Agent to be distributed in accordance with the terms of this Escrow Agreement.
E. The Parties hereto have agreed to deposit the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Conchology
Shareholders Shares, Cutler Consulting Shares, Lebrecht Consulting Shares, Bui
Consulting Shares, and the Security Shares (all of which shall be referred to
herein as the "Escrow Shares") with the Escrow Agent to be distributed in
accordance herewith.
F. Escrow Agent has agreed to act as the escrow agent hereunder, in
accordance with the terms and conditions set forth in this Escrow Agreement.
NOW THEREFORE, for and in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. APPOINTMENT OF ESCROW AGENT. The Parties hereby mutually appoint
and designate the Escrow Agent to receive, hold and release, as escrow agent,
the Escrow Shares and the Escrow Agent hereby accepts such appointment and
designation.
2. ESCROW DELIVERY. No later than February 14, 2000, WAMEX shall
deliver the Escrow Shares to the Escrow Agent to be held by the Escrow Agent and
released in accordance with the terms of this Escrow Agreement.
3. CONDITIONS OF ESCROW.
3.1 The Escrow Deposit. Escrow Agent shall hold and release the Escrow
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Shares as follows:
a. Release of the Cutler Restricted Shares, Lebrecht Restricted Shares, Bui
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Restricted Shares, Cutler Consulting Shares, Lebrecht Consulting Shares, and Bui
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Consulting Shares.
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i. The Escrow Agent shall release and distribute the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Cutler Consulting
Shares, Lebrecht Consulting Shares, and Bui Consulting Shares to the respective
holder thereof, or their assigns, immediately upon the filing of a Form 8-K with
the Securities and Exchange Commission describing the transaction contemplated
by the Stock Exchange Agreement, and the receipt of verbal notice by the Escrow
Agent and WAMEX from the NASD that WAMEX is in compliance with Rule 6530.
ii. The Escrow Agent shall release and distribute the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Cutler Consulting
Shares, Lebrecht Consulting Shares, and Bui Consulting Shares to WAMEX in the
event the condition precedent set forth in section 3.1(a)(i) is not satisfied by
March 15, 2000.
b. Release of Conchology Shareholders Shares. The Escrow Agent shall
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release and distribute the Conchology Shareholders Shares to each of the
Conchology Shareholders upon the receipt, by the Escrow Agent, of written notice
from a Conchology Shareholder, accompanied by their Conchology stock
certificate, of their desire to exchange their Conchology common stock for
WAMEX common stock.
c. Release of Security Shares. The Escrow Agent shall release and
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distribute the Security Shares as follows:
i. In the event that Cutler, Lebrecht, and Bui have exercised their rights
under the Put Agreement, and WAMEX has breached their obligations thereunder,
then the Escrow Agent shall sell that number of the Security Shares necessary so
that the gross receipts (excluding brokerage commissions, taxes, and other
similar fees) received as a result of the sale of the Cutler Consulting Shares,
Lebrecht Consulting Shares, Bui Consulting Shares, and Security Shares, is equal
to $650,000.
ii. The Escrow Agent shall release and distribute the Security Shares to
WAMEX in the event the condition precedent set forth in section 3.1(a)(i) is not
satisfied by March 15, 2000.
iii. to WAMEX, Lebrecht, Cutler, and Bui, as the case may be, pursuant to
(a) written instructions executed by WAMEX, Cutler, Lebrecht and Bui, or (b) any
"final order" of a court of competent jurisdiction, any such order being deemed
to be "final" if (i) such order has not been reserved, stayed, enjoined, set
aside, annulled or suspended, (ii) no request for a stay, suspension or an
injunction, petition for reconsideration or appeal, or sua sponte action with
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comparable effect is pending with respect to the order, and (iii) the time for
filing any such request, petition or appeal or further taking of any such sua
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sponte action has expired.
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3.2 Conflicting Instructions. If a controversy arises between the Parties
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concerning the release of the Escrow Assets hereunder, they shall notify the
Escrow Agent. In that event (or, in the absence of such notification, if in the
good faith judgment of the Escrow Agent such controversy exists), the Escrow
Agent shall not be required to resolve such controversy or take an action but
shall be entitled to await resolution of the controversy by joint instructions
from the Parties. The Escrow Agent may institute an interpleader action in
state or federal court in the State of California to resolve such controversy.
If a suit is commenced against the Escrow Agent, it may answer by way of
interpleader and name the Parties as additional parties to such action, and the
Escrow Agent may tender the Escrow Assets into such court for determination of
the respective rights, titles and interests of the Parties. Upon such tender,
the Escrow Agent shall be entitled to receive from the Parties its reasonable
attorneys' fees and expenses incurred in connection with said interpleader
action or in any related action or suit. As between the Parties, such fees,
expenses and other sums shall be paid by the party which fails to prevail in the
proceedings brought to determine the appropriate distribution of the Escrow
Assets. If and when the Escrow Agent shall so interplead such Parties, or
either of them, and deliver the Escrow Assets to the clerk of such court, all of
its duties hereunder shall cease, and it shall have no further obligation in
this regard. Nothing herein shall prejudice any right or remedy of the Escrow
Agent.
4. CONCERNING ESCROW AGENT
4.1 Duties. Escrow Agent undertakes to perform all duties which are
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expressly set forth herein; provided, however, that the Escrow Agent shall not
be required to make or be liable in any manner of its failure to make any
determination under the Agreement or any other agreement, including whether any
of the Parties is entitled to delivery of the Escrow Assets under the Stock
Exchange Agreement, Consulting Agreement, or Put Agreement.
4.2 Indemnification.
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a. Escrow Agent may rely upon and shall be protected in acting or refraining
from acting upon any written notice, instructions or request furnished to it
hereunder and believed by it to be genuine and authorized.
b. Escrow Agent shall not be liable for any action taken by it in good faith
and without gross negligence or wilful misconduct, and believed by it to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement, and may consult with counsel of its own choice and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
c. The Parties, and each of them, hereby agrees to indemnify the Escrow
Agent for, and hold the Escrow Agent harmless against, any loss, liability or
expense incurred without gross negligence or wilful misconduct or bad faith on
the part of the Escrow Agent, arising out of or in connection with the Escrow
Agent's entering into this Escrow Agreement and carrying out the Escrow Agent's
duties hereunder, including, without limitation, costs and expenses of defending
the Escrow Agent against any claim or liability with respect thereto.
d. Escrow Agent shall have no implied obligations or responsibilities
hereunder, nor shall it have any obligation or responsibility to collect funds
or seek the deposit of money or property, nor is the Escrow Agent a party to any
other agreement entered into among the Parties.
4.3 Other Matters. Escrow Agent (and any successor escrow agent or
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agents) reserves the right to resign as the Escrow Agent at any time, provided
fifteen (15) days' prior written notice is given to the other parties hereto,
and provided further that a mutually acceptable successor Escrow Agent(s) within
such fifteen (15) day period, the Escrow Agent may petition any court in the
State of California having jurisdiction to designate a successor Escrow Agent.
The resignation of the Escrow Agent (and any successor escrow agent or agents)
shall be effective only upon delivery of the Escrow Assets to the successor
escrow agent(s). The Parties reserve the right to jointly remove the Escrow
Agent at any time, provided fifteen (15) days' prior written notice is given to
the Escrow Agent. In the event of litigation or dispute by the Parties in which
the performance of the duties of the Escrow Agent is at issue, the Escrow Agent
shall take no action until such action is agreed in writing by the Parties, or
until receipt of any order pursuant to 3.1(c)iii or 3.1(d)iii above directing
the Escrow Agent with respect to the action which is the subject of such
litigation or dispute.
5. TERMINATION. This Escrow Agreement shall be terminated upon the
release of the Escrow Assets in accordance with the terms and conditions of
Section 3 hereof, or otherwise by written mutual consent signed by all parties
hereto.
6. NOTICE. All notices, demands, requests, or other communications
which may be or are required to be given, served or sent by any party to any
other party pursuant to this Escrow Agreement shall be in writing and shall be
hand delivered (including delivery by courier), sent by facsimile, or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to WAMEX: 3040 Nostrand Avenue
Marine Park, NY 11229
Attn: Mitchell H. Cushing, CEO
Facsimile (_____) ____________________
If to the Cutler, Lebrecht c/o Cutler Law Group
or Bui: 610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
If to Escrow Agent: MRC Legal Services Corporation
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: M. Richard Cutler, President
Facsimile (949) 719-1988
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it delivered to the addressee (with the
return receipt, the delivery receipt or the affidavit of messenger being deemed
conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
7. BENEFIT AND ASSIGNMENT. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other than
the parties hereto is or shall be entitled to bring any action to enforce any
provision in this Escrow Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Escrow Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns this Escrow Agreement or any rights hereunder
without the prior written consent of the parties hereto.
8. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement, the Honeyman
Settlement, and the Wilson Settlement executed simultaneously herewith contain
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior oral or written agreements, commitments or
understandings with respect to such matters. This Escrow Agreement may not be
changed orally, but only by an instrument in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
9. HEADINGS. The headings of the sections and subsections contained in
this Escrow Agreement are inserted for convenience only and do not form a part
or affect the meaning, construction or scope thereof.
10. GOVERNING LAW; VENUE. This Escrow Agreement shall be governed and
constructed under and in accordance with the laws of the State of California
(but not including the conflicts of laws and rules thereof). For purposes of
any action or proceeding involving this Escrow Agreement each of the parties to
this Escrow Agreement expressly submits to the jurisdiction of the federal and
state courts located in the State of California and consents to the service of
any process or paper by registered mail or by personal service within or without
the State of California in accordance with applicable law, provided a reasonable
time for appearance is allowed.
11. SIGNATURE IN COUNTERPARTS. This Escrow Agreement may be executed
in separate counterparts, none of which need contain the signature of all
parties, each of which shall be deemed to be an original and all of which taken
together constitute one and the same instrument. It shall not be necessary in
making proof of this Escrow Agreement to produce or account for more than the
number of counterparts containing the respective signatures of, or on behalf of,
all of the parties hereto.
12. ATTORNEY'S FEES. Should any action be commenced between the
parties to this Agreement concerning the matters set forth in this Agreement or
the right and duties of either in relation thereto, the prevailing party in such
action shall be entitled, in addition to such other relief as may be granted, to
a reasonable sum as and for its Attorney's Fees and Costs.
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to
be duly executed and delivered in its name and on its behalf, all as of the date
and year first above written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
___________________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
___________________________________ ___________________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
___________________________________
Vi Bui
MRC LEGAL SERVICES CORPORATION
/s/ M. Richard Cutler
____________________________________
By: M. Richard Cutler
Its: President