ESCROW AGREEMENT
AGREEMENT, dated as of October 14, 2002, by and between E-Rex, Inc., a
Nevada corporation ("E-Rex" or the "Company"), the Purchasers listed on Schedule
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I attached hereto (each a "Purchaser" and collectively, the "Purchasers"), and
The Lebrecht Group, APLC (the "Agent"). Each of the Company, the Purchasers,
and Agent shall be referred to as a "Party" and collectively as the "Parties."
I. Escrow
1.01 Appointment and Acknowledgment of Escrow Agent. The Company and
each of the Purchasers hereby appoint the Agent, and the Agent hereby agrees to
serve, as Escrow Agent pursuant to the terms of this Agreement. The Agent
acknowledges receipt of the following:
(a) from the Company:
(i) a fully executed copy of the Securities Purchase Agreement,
Warrant Agreement, Registration Rights Agreement, Officer's Certificate,
each of the Convertible Notes referenced in the Securities Purchase
Agreement, and Resolution of the Directors of the Company addressed to the
Transfer Agent, each of even date herewith;
(ii) Upon effectiveness of a registration statement as contemplated by
the Securities Purchase Agreement and the Registration Rights Agreement,
the Company shall cause to be deposited with the Agent an aggregate of 1
month's worth of conversion shares of Company common stock, issued without
restrictive legend (the "Shares");
(iii) Within three (3) business days of a conversion of all or any
portion of the Convertible Notes, or upon the exercise of all or any
portion of the Warrants, the Company shall cause to be deposited with the
Agent that number of shares of Company common stock, issued without
restrictive legend, as shall have been distributed from this Escrow by the
Agent upon said conversion or exercise.
(b) from each of the Purchasers:
(iv) a fully executed copy of the Securities Purchase Agreement,
Registration Rights Agreement, and each of the Convertible Notes referenced
in the Securities Purchase Agreement, each of even date herewith.
The properties described in Sections 1.01(a) and 1.01(b) collectively are
referred to as the "Escrowed Property." If the Escrowed Property includes
property on which dividends are paid, on which interest is earned, or to which
other accretions are added, then the Escrowed Property shall include such
dividends, interest, or accretions. If the Escrowed Property consists of stock,
the Agent shall exercise all rights and privileges of a stockholder with respect
to the shares deposited and held pursuant to this Agreement.
1.02 Operation of Escrow.
The Parties hereto agree that the escrow created by this Agreement (the
"Escrow") shall operate as follows:
(a) Upon receipt of the Shares, the Agent shall open a brokerage
account at Spartan Securities Group, Inc., in the name of Agent, and shall
deposit the Shares into said account for distribution in accordance with the
terms of this Agreement.
(b) Upon receipt of a Notice of Conversion of any of the Convertible
Notes, or upon receipt of a Notice of Exercise of any of the Warrants, the Agent
shall, within twenty four (24) business hours, (i) confirm the calculations of
the number of shares to be delivered pursuant to the Notice of Conversion or
Exercise, (ii) deliver to the Company a copy of the Notice of Conversion or
Exercise, and (iii) deliver to the Purchaser or Purchaser(s) submitting the
Notice of Conversion or Exercise, that number of Shares called for in the Notice
of Conversion or Exercise. In the event the Agent is unable to confirm the
calculations as set forth in (i) above, the Agent may ask for written
confirmation from both the Company and the Purchaser of the number of Shares to
be released. If written confirmation is not received by both the Company and
the Purchaser within forty eight (48) hours of the request by the Agent, then
the Agent shall hold all of the Shares until the Parties resolve the discrepancy
pursuant to Section 1.03(f) of this Agreement.
(c) On the earlier of (i) the date which is thirty (30) months from
the date of this Agreement, or (ii) upon receipt of written instructions from
both the Company and each of the Purchasers, the Agent shall release to the
Company those Shares not otherwise distributed.
1.03 Further Provisions Relating to the Escrow.
(a) Distributions by the Agent in accordance with the terms of
this Agreement 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 Escrowed Property distributed and shall be a
perpetual bar both at law and in equity with respect to such distributed
Escrowed Property against the Parties to this Agreement and against any person
claiming or attempting to claim such distributed escrowed property from,
through, or under such party.
(b) The Company agrees to reimburse the Agent for the Agent's
reasonable fees and other expenses (including legal fees and expenses) incurred
by the Agent in connection with its duties hereunder.
(c) The Company and each of the Purchasers, jointly and severally,
agree to indemnify and hold harmless the Agent against and in respect of any and
all claims, suits, actions, proceedings (formal or informal), investigations,
judgments, deficiencies, damages, settlements, liabilities, and legal and other
expenses (including legal counsel fees and expenses of attorneys chosen by the
Agent) as and when incurred and whether or not involving a third party arising
out of or based upon any act, omissions, alleged act, or alleged omission by the
Agent or any other cause, in any case in connection with the acceptance of, or
the performance or nonperformance by the Agent of, any of the Agent's duties
under this Agreement, except as a result of the Agent's bad faith or gross
negligence. The Agent shall be fully protected by acting in reliance upon any
notice, advice, direction, other document, or signature believed by the Agent to
be genuine, by assuming that any person purporting to give the Agent any notice,
advice, direction, or other document in accordance with the provisions hereof,
in connection with this Agreement, or in connection with the Agent's duties
under this Agreement, has been duly authorized so to do, or by acting or failing
to act in good faith on the advice of any counsel retained by the Agent, which
may be The Lebrecht Group, APLC. The Purchasers acknowledge that The Lebrecht
Group, APLC acts as counsel to the Company and may continue to serve in that
capacity, and neither anything contained herein, the execution or delivery
hereof by the Agent, nor the performance by the Agent of its duties hereunder
shall in any way affect or require termination of such relationship with the
Company. The agent shall not be liable for any mistake of fact or of law or any
error of judgment, or for any act or any omission, except as a result of the
Agent's bad faith or gross negligence. If any of the Escrowed Property is
represented by stock certificates, the Agent shall not be liable if the Agent
submits all or a portion of the Escrowed Property to be broken into smaller
denominations to the appropriate transfer agent, and such transfer agent fails
to return properly that portion of the Escrowed Property to the Agent which such
transfer agent was instructed to return.
(d) The Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other document or
instrument held by or delivered to the Agent.
(e) The Agent shall have no duties or responsibilities except those
expressly set forth herein. The Parties hereto agree that the Agent will not be
be called upon to construe any contract or instrument. The 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 Agent and, if the Agent's duties as Escrow Agent hereunder are affected,
unless the Agent shall have given its prior written consent thereto. The Agent
shall not be bound by any assignment by the Company or the Purchasers of its
rights hereunder unless the Agent shall have received written notice thereof
from the assignor. The Agent is authorized to comply with and obey laws, rules,
regulations, orders, judgments, and decrees of any governmental authority,
court, or other tribunal. If the Agent complies with any such law, rule,
regulation, order, judgment, or decree, the Agent shall not be liable to any of
the Parties hereto or to any other person even if such law, rule, order,
regulation, judgment, or decree 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.
(f) If the Agent shall be uncertain as to the Agent's duties or rights
rights hereunder, shall receive any notice, advice, direction, or other document
from any other party with respect to the Escrowed Property which, in the Agent's
opinion, is in conflict with any of the provisions of this Agreement, or should
be advised that a dispute has arisen with respect to the payment, ownership, or
right of possession of the Escrowed Property or any part thereof, or the
property to be exchanged for the Escrowed Property (or as to the delivery,
non-delivery, or content of any notice, advice, direction, or other document),
the Agent shall be entitled, without liability to anyone, to refrain from taking
any action other than to use the Agent's reasonable efforts to keep safely the
Escrowed Property until the Agent shall be directed otherwise in writing by both
other Parties hereto 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 (a "Final Judgment"), but the Agent
shall be under no duty to institute or to defend any proceeding, although the
Agent may, in the Agent's discretion and at the expense of the Company as
provided in Section 1.03(c), institute or defend such proceedings.
(g) The Agent (and any successor escrow agent or 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) is named within such
fifteen (15) day period. The Agent may, but is not obligated to, petition any
court in the State of California having jurisdiction to designate a successor
Escrow Agent. The resignation of the Agent (and any successor escrow agent or
agents) shall be effective only upon delivery of the Escrowed Property 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. If no successor Escrow Agent has been appointed and
has accepted the Escrowed Property within fifteen (15) days after the Notice is
sent, all responsibilities of the Agent hereunder shall, nevertheless, cease.
The Agent's sole responsibility thereafter shall be to use the Agent's
reasonable efforts to keep safely the Escrowed Property and to deliver the
Escrowed Property as may be directed in writing by both of the other Parties
hereto or by a Final Judgment. Except as set forth in this Section 1.03(g),
this Agreement shall not otherwise be assignable by the Agent without the prior
written consent of the other Parties hereto.
(h) The Company and the Purchasers authorize the Agent, if the Agent is
threatened with litigation or is sued, to interplead all interested parties in
any court of competent jurisdiction and to deposit the Escrowed Property with
the clerk of that court.
(i) The Agent's responsibilities and liabilities hereunder, except as a
result of the Agent's own bad faith or gross negligence, will terminate upon the
delivery by the Agent of all the Escrowed Property under any provision of this
Agreement.
(j) As consideration for acting as escrow agent hereunder, the Company
shall pay, in advance and as a condition precedent to the establishment of the
Escrow pursuant to the terms of this Agreement, a fee to the Agent equal to
$5,000.00. This fee shall be deemed to have been earned in full by the Agent
upon establishment of the Escrow, and shall not be subject to pro-ration or
other setoff in the event the Escrow is terminated by any Party.
II. Miscellaneous
2.01 Further Action.
At any time and from time to time, the Company and the Purchasers each
agrees, at its own expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of
this Agreement. If any portion of the Escrowed Property consists of stock
certificates, the Company shall pay any transfer tax arising out of the placing
of the Escrowed Property into the Escrow, the delivery of the Escrowed Property
out of the Escrow, or the transfer of the Escrowed Property into the name of any
person or entity pursuant to the terms of this Agreement. The Agent shall have
no liability regarding transfer taxes even if one or both of the Parties hereto
fails to comply with the obligations set forth in the prior sentence.
2.02 Survival.
Subject to Section 1.03(i), the covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive
the delivery by the Agent of the Escrowed Property, irrespective of any
investigation made by or on behalf of any Party.
2.03 Modification.
This Agreement sets forth the entire understanding of the Parties with
respect to the subject matter hereof, supersedes all existing agreements among
them concerning such subject matter, and (subject to Section 1.03(e)) may be
modified only by a written instrument duly executed by each Party.
2.04 Notices.
Any notice, advice, direction, or other document or communication required
or permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or by Federal Express, Express Mail,
or similar overnight delivery or courier service or delivered (in person or by
facsimile) against receipt to the Party to whom it is to be given at address of
such Party set forth below (or to such other address as the Party shall have
furnished in writing in accordance with the provisions of this Section 2.04)
with a copy to each of the other Parties hereto:
If to the Company: E-Rex, Inc.
11645 Biscayne Boulevard, Suite 21
Miami, FL 33181
Facsimile (305) 895-1400
Attn: Carl Dilley, President
If to Purchasers:
Auxiliarius Fortunare LLC
18830 Rue Loire
Lutz, FL 33558
If to Agent: The Lebrecht Group, APLC
22342 Avenida Empresa, Suite 230
Rancho Santa Margarita, CA 92688
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 635-1244
Any notice, advice, direction, or other document or communication given by
certified mail shall be deemed given at the time of receipt thereof. Any notice
given by other means permitted by this Section 2.04 shall be deemed given at the
time of receipt thereof.
2.05 Waiver.
Any waiver by any Party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of that
provision or of any breach of any other provision of this Agreement. The
failure of a Party to insist upon strict adherence to any term of this Agreement
on one or more occasions shall not be considered a waiver or deprive that Party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
2.06 Binding Effect.
Subject to Section 1.03(g), the provisions of this Agreement shall be
binding upon and inure to the benefit of the Company and the Purchasers and
their respective assigns, heirs, and personal representatives, and shall be
binding upon and insure to the benefit of the Agent and the Agent's successors
and assigns.
2.07 No Third Party Beneficiaries.
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement (except as
provided in Section 2.06).
2.08 Jurisdiction.
The Parties hereby irrevocably consent to the jurisdiction of the courts of
the State of California and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Agreement, and document or instrument delivered pursuant to, in connection with,
or simultaneously with this Agreement, a breach of this Agreement or of any such
document or instrument, or the Escrowed Property.
2.09 Separability.
This entire Agreement shall be void if any provision of this Agreement
other than the second and third sentences of Section 2.11 is invalid, illegal,
unenforceable, or inapplicable to any person or circumstance to which it is
intended to be applicable, except that the provisions of Section 1.03 shall
survive.
2.10 Headings.
The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
2.11 Counterparts; Governing Law.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. It shall be governed by and construed in accordance with
the laws of the State of California without giving effect to conflict of laws.
Any action, suit, or proceeding arising out of, based on, or in connection with
this Agreement, any document or instrument delivered pursuant to, in connection
with, or simultaneously with this Agreement, any breach of this Agreement or any
such document or instrument, or any transaction contemplated hereby or thereby
may be brought only in the appropriate court in Orange County, California, and
each Party covenants and agrees not to assert, by way of motion, as a defense,
or otherwise, in any such action, suit, or proceeding, any claim that such Party
is not subject personally to the jurisdiction of such court, that such Party's
property is exempt or immune from attachment or execution, that the action,
suit, or proceeding is brought in an inconvenient forum, that the venue of the
action, suit, or proceeding is improper, or that this Agreement or the subject
matter hereof may not be enforced in or by such court.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first written above.
"Company" "Purchasers"
E-Rex, Inc. Auxiliarius Fortunare LLC
/s/ Carl Dilley /s/ Kyle G. Kennedy
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President President
"Agent"
The Lebrecht Group, APLC
/s/ Brian A. Lebrecht
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By: Brian A. Lebrecht
Its: President
SCHEDULE I
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