EXHIBIT 4.20
THIS ESCROW AGREEMENT (this "AGREEMENT") is made on August 18, 2004
BY AND AMONG
1. NAM TAI ELECTRONICS INC., a company incorporated in the British Virgin
Islands with its registered office at McW. Todman & Co., McNamara Chambers, P.O.
Box 3342, Road Town, Tortola, British Virgin Islands ("NAM TAI");
2. WELCOME SUCCESS TECHNOLOGY LIMITED, a company duly incorporated in the
British Virgin Islands, with its registered office at Trident Trust Company
(B.V.I.) Ltd., Trident Chambers, P.O. Box 146, Road Town, Tortola, British
Virgin Islands. ("WELCOME SUCCESS")
3. REMOTE REWARD SAS, a French Societe par Actions simplifiee with its
registered office at 4 ter rue de l'ouest, 92100 Boulogne (the "RR");
4. JOHNSON STOKES & MASTER, 16th - 19th Floors, Prince's Building, 10 Chater
Road, Central Hong Kong (the "ESCROW AGENT");
5. ANDRE JOLIVET, of a French National born on July 4, 1962, in Quimper, France,
residing at 47 rue Henri Tariel, 92130 Issy les Moulineaux, France. (the
"DIRECTOR"); and
6. ALAIN JOLIVET, the director General of Stepmind, a French National born on
April 14, 1949, in Plogastel Saint-Germain, France, residing at rue de General
Gouraud, 92190 Meudon, France (the "DIRECTOR GENERAL").
WHEREAS
(A) Nam Tai and RR are, together with the Director, the Director General and AGF
Innovation 3, AGF Innovation 4, AGF Innovation 5 (together "AGF PE"), and Mighty
Wealth Group Limited ("MWGL"), parties to the Amended and Restated Investment
Agreement relating to Stepmind and dated 22 March 2004 (the "INVESTMENT
AGREEMENT"). Nam Tai have agreed to proceed with their subscription for 647,874
ABSA Shares 2, consisting of 647,874 class B shares in the capital of Stepmind,
with one Warrant (as defined in Article 2.4 of the Investment Agreement)
attached to each such class B share (the "SHARES") on the condition that Remote
Reward will purchase Nam Tai and Welcome Success' entire share holding
(including all warrants) in Stepmind.
(B) Nam Tai and Welcome Success agree to deposit with the Escrow Agent (i) a
subscription form (bulletin de souscription) in the form as provided by the
Investment Agreement, duly signed by Nam Tai and dated as of August 16, 2004
whereby it agrees to subscribe for the Shares (the "SUBSCRIPTION FORM") and (ii)
share transfer orders (ordres de mouvement) (the "SHARE TRANSFER FORMS"), in the
forms attached hereto, duly executed by Nam Tai and Welcome Success and dated as
of August 17, 2004, whereby each transfers to RR all of the shares and warrants
of Stepmind respectively held by them immediately following the subscription for
the Shares, namely 809,846 ABSA Shares 1, consisting of 809,846 class B shares
in the capital of Stepmind, with one anti-dilution warrant and one BSA1 warrant
attached to each such class B share (all currently held by Welcome Success) and
the Shares (the "TRANSFERRING SHARES") and (iii) a letter, signed by Welcome
Success and Mr. Jackie Wah pursuant to which Welcome Success, whose permanent
representative is Mr. Wah, resigns as a member of the board of
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directors of Stepmind as of August 17, 2004 (the "RESIGNATION LETTER", and
together with the Subscription Forms and Transfer Forms, the "ESCROW DOCUMENTS")
(C) RR has agreed to deposit a sum of Euro 4,253,301.98 (the "PAYMENT AMOUNT"),
which represents the purchase price payable by RR for the purchase of the
Transferring Shares from Nam Tai and Welcome Success, with the Escrow Agent,
within three calendar days of the execution of this Agreement, which shall be
released by the Escrow Agent in accordance with the terms of this Agreement.
(D) RR shall be responsible for procuring all necessary consents and waivers of
pre-emption rights, for the transfer of the Transferring Shares, whether
required pursuant to Stepmind's Articles of Association, the Shareholders'
agreement entered into in respect of Stepmind on November 28, December 9 and 10,
2003, and as subsequently amended on 22 March 2004 ("SHAREHOLDERS' AGREEMENT")
or otherwise.
(E) RR have agreed to procure that the directors nominated by them to the board
of Stepmind shall, and the Director and the Director General have agreed that
they shall, vote against the Third Capital Increase.
NOW IT IS WITNESSED as follows:
1. DEFINITIONS
Unless the context otherwise requires or if otherwise defined in this
Agreement, capitalised terms used in this Agreement shall have the
meanings attributed to them in the Investment Agreement.
2. DEPOSIT OF SUBSCRIPTION AGREEMENT
Simultaneously with the execution and delivery of this Agreement, Nam Tai
and Welcome Success shall deliver the Escrow Documents, all duly executed
and dated as provided in the recitals above, to the Escrow Agent.
3. PAYMENT OF THE PAYMENT AMOUNT AND RELEASE OF THE ESCROW DOCUMENTS
3.1 As soon as possible following the execution of this Agreement, and in any
event within three (3) calendar days of its execution, RR shall remit by
telegraphic transfer in immediately available funds, the Payment Amount to
the Escrow Agent, to the following account (which shall not be interest
bearing) (the "NOMINATED ACCOUNT"):
Bank Name : The Hongkong & Shanghai Banking Corporation Limited ("HSBC")
Bank Address: 1 Queen's Road Central, Hong Kong
A/C Name : Johnson Stokes & Master
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A/C Number : 004-002-226173-220
SWIFT : HSBCHK HHHKH
Reference : MSR/67152882
Beneficiary : Remote Reward SAS
In the event that the Payment Amount has not been received by the Escrow
Agent prior to 17:00 hrs on the third calendar day following the execution
of this Agreement, Nam Tai shall be entitled to terminate this Agreement
with effect from such date, by giving written notice to each of the
parties. Upon such termination, the Escrow Documents shall themselves
terminate and shall be deemed to cease to have effect, and the Escrow
Agent shall return the Escrow Documents to Nam Tai at such address as it
notifies in writing to the Escrow Agent.
3.2 The Escrow Agent shall regularly inquire to HSBC as to whether the Payment
Amount has been credited to the Nominated Account. As soon as reasonably
practicable after the Escrow Agent learns, to its reasonable satisfaction,
that the Payment Amount has been credited to the Nominated Account, but in
no event later than four hours thereafter, the Escrow Agent shall release
to RR the Escrow Documents by hand delivery of the originals to Mr.
Philippe Rechsteiner, the authorised representative of RR, at the offices
of the Escrow Agent or if requested in writing by Mr. Rechsteiner (or if
Mr. Rechsteiner is not present at the offices of the Escrow Agent at such
time, to his counsel Mr. Greg Liu at the Hong Kong offices of Paul Weiss
Rifkind Wharton & Garrison. As soon as reasonably practicable following
the release of the Escrow Documents to RR, the Escrow Agent shall remit to
Nam Tai the Payment Amount, by transferring it to the following account:
Bank Name : The Hongkong and Shanghai Banking Corporation Limited
(Macau Office)
Bank Address: 639 Avenida da Praia Grande, Macau
A/C Number : 001-046507-151
Beneficiary : Nam Tai Electronics, Inc.
3.3 As soon as reasonably practicable following the release of the Escrow
Documents to RR as described in Clause 3.2 above, RR shall procure the
receipt of the consent of MWGL and AGF PE (or alternatively the waiver of
their pre-emption rights) to the transfer of the Transferring Shares
pursuant to the Shareholders' Agreement, as well as any consent to the
transfer of the Transferring Shares that may be required pursuant to the
articles of association of Stepmind or as may be required pursuant to any
other relevant document or provision.
3.4 Furthermore, RR agrees to comply with the provisions of Section 4.2 of the
Shareholders' Agreement, and shall comply with, and perform Nam Tai and
Welcome Success's obligations as a "Transferor" pursuant to Section 4.2 of
the Shareholders' Agreement, including, but not limited to, selling the
"Transferred Shares" to such other shareholders in Stepmind that wish to
exercise their pre-emption rights pursuant to Section 4.2.
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3.5 In addition RR shall, if it is lawfully required to do so, comply with its
and Nam Tai and Welcome Success's obligations pursuant to Section 4.4 of
the Shareholders' Agreement and RR hereby undertakes to purchase any
shares or warrants of Stepmind that it is lawfully required to purchase
pursuant to the provisions of Section 4.4 of the Shareholders' Agreement.
3.6 If either Nam Tai or RR (the "PAYEE") produces a judgment of a court of
competent jurisdiction to the effect that the Payee is entitled to be paid
the amount stated in such judgment from the Nominated Account, provided
such judgment is not the subject of any appeal within fourteen (14) days
thereof, the Escrow Agent shall pay or hold the amount stated in such
judgment to or for the Payee or in the manner directed in the Payee's
written instructions (provided such instructions are consistent with such
judgment), on the fourteenth (14th) calendar day following receipt by the
Escrow Agent of the relevant judgment.
3.7 The Director and the Director General hereby represent and undertake that
they shall not exercise any right of pre-emption or tag along right, which
they may be entitled to pursuant to Sections 4.2 and 4.4 of the
Shareholders' Agreement.
4. THE THIRD CAPITAL INCREASE
4.1 RR, the Director and Director General hereby agree that they shall vote
against, or (in the case of RR) procure that the director appointed by it
shall vote against, the Third Capital Increase at any meeting of the board
of directors of Stepmind called to discuss the same, so that Nam Tai shall
not be required to subscribe for any ABSA Shares 4 pursuant to Article 2.4
of the Investment Agreement. In addition, RR, the Director and the
Director General agree to use their best efforts to procure that the Third
Capital Increase does not occur.
4.2 If, notwithstanding the provisions of Clause 4.1 above and 5.3 below, the
Third Capital Increase is approved by the board of directors of Stepmind,
RR agrees to assume responsibility for Nam Tai's proportionate share of
the Third Capital Increase pursuant to Clause 2.4 of the Investors
Agreement, together with Nam Tai's obligation to underwrite and subscribe
for any part of the Third Capital Increase which any other Investor
declines to subscribe for. In addition, RR hereby agrees to indemnify Nam
Tai and Welcome Success against each and every claim, loss, liability and
cost which they may suffer or incur and which arises in any way in
relation to the Third Capital Increase.
5. CONSEQUENCES OF EXIT OF NAM TAI AND WELCOME SUCCESS
5.1 Following the release of the Escrow Documents and the Payment Amount
pursuant to Clause 3.2 above, the Director, the Director General, and RR
hereby agree and acknowledge that Nam Tai and Welcome Success shall by
virtue of the transfer of the Transferring Shares to RR, no longer be
parties to the Shareholders' Agreement, and they shall be discharged of
all their obligations under the Shareholders' Agreement and Investment
Agreement (except for any confidentiality obligations set forth therein)
and in
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return, Nam Tai and Welcome Success renounce all rights that they may have
under the Investment Agreement or the Shareholders' Agreement.
5.2 Each of Nam Tai and Welcome Success agree to, and to cause its
representatives to, keep as confidential all information, including
without limitation product information, technical information, market
information and customer information, relating to Stepmind and its
products, that it learned by virtue of its shareholding in and
representation on the board of Stepmind. Nam Tai and Welcome Success
acknowledge the importance to Stepmind of maintaining the confidentiality
of all such information. This provision shall survive for a period of
three (3) years.
5.3 In connection with the transactions and matters contemplated by this
Agreement, and assuming the due execution by Nam Tai and Welcome Success
of their obligations under this Agreement, in addition to the
indemnification obligations set forth in Clauses 3.4 and 4.2 above, RR
shall indemnify and hold harmless Nam Tai and Welcome Success against each
and every claim, loss, liability and cost ("LIABILITY") which they may
suffer or incur and which arises in any way pursuant to the transactions
and matters contemplated by this Agreement , including:
(a) the settlement of any such Liability;
(b) the costs of any legal proceedings relating to such Liability; and
(c) the enforcement of any such settlement or legal proceedings.
5.4 Following the termination of this Agreement in accordance with Clause 7(a)
below, RR, the Director and the Director General, undertake to Nam Tai and
Welcome Success, and in return Nam Tai and Welcome Success undertake to
RR, the Director and the Director General, that neither of them shall
bring any claims against the other in relation to their investment in, or
involvement with, Stepmind save and except as provided in this Agreement.
6. THE ESCROW AGENT
6.1 In order to induce the Escrow Agent to act hereunder, RR and Nam Tai
expressly acknowledge and agree that:
(a) this Agreement expressly sets forth all of the Escrow Agent's duties
with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the
Escrow Agent and it shall not be bound by the provisions of any
other agreement between the parties hereto (whether or not they have
any knowledge thereof), except this Agreement;
(b) the Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or
validity or the service thereof. The Escrow Agent may act in
reliance upon any instrument or signature believed by it to be
genuine and
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may assume that any person purporting to give notice or receipt or
advance or make any statement or execute any document in connection
with the provisions hereof has been duly authorized to do so; and
(c) they shall not bring any claim against the Escrow Agent in respect
of any exercise of its powers or functions under this letter and
they severally agrees to indemnify it and hold it harmless fully
against all costs, claims, actions, damages, liabilities and losses
whatsoever and howsoever arising in connection with it holding the
Escrow Documents or the Payment Amount or acting pursuant to or as
contemplated in this Agreement, save in the case of its willful
default or dishonesty.
7. TERMINATION OF ESCROW AGREEMENT
Subject to the provisions of Clauses 4, 5, 7, 8 and 9, which shall
continue in full force and effect, this Agreement shall terminate upon the
earlier of:
(a) the release of the Escrow Documents and the Payment Amount pursuant
to Clauses 3.2 and 3.3 above; or
(b) 31 August 2004, if the Escrow Documents and the Payment Amount have
not been released pursuant to Clauses 3.2 above, prior to such date,
upon which date the Escrow Agent shall return (i) the Escrow
Documents to Nam Tai and, (ii) upon notification in writing to the
Escrow Agent from RR of the details of its nominated bank account,
the Payment Amount to RR.
8. FEES
Each party shall be responsible for it own costs in connection with the
execution of this Agreement and the matters contemplated by it, save and
except that Nam Tai shall be responsible for the fees, costs, expenses and
disbursements of the Escrow Agent.
9. TERMS AND CONDITIONS
9.1 This Agreement shall be governed by the laws of the Hong Kong Special
Administrative Region of the People's Republic of China ("HONG KONG"), and
the parties submit to the non-exclusive jurisdiction of the courts of Hong
Kong.
9.2 Except as otherwise permitted herein, this Agreement may be modified only
by a written amendment signed by all the parties hereto, and no waiver of
any provision hereof shall be effective unless expressed in writing signed
by the party to be charged.
9.3 This Agreement shall constitute the entire agreement of the parties with
respect to the subject matter and supersedes all prior oral or written
agreements in regard thereto.
9.4 The provisions of this Section 9 shall survive termination of this
Agreement and/or the resignation or removal of the Escrow Agent.
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9.5 This Agreement may be executed by each of the parties hereto in any number
of counterparts, each of which counterpart, when so executed and
delivered, shall be deemed to be an original and all such counterparts
shall together constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed as of the day and year first written above.
NAM TAI ELECTRONICS INC
By:__________________________
Name:
Title:
WELCOME SUCCESS TECHNOLOGY LIMITED
By:__________________________
Name:
Title
REMOTE REWARD SAS
By:__________________________
Name:
Title:
JOHNSON STOKES & MASTER
By:__________________________
Name:
Title:
_____________________________
ANDRE JOLIVET
____________________________
ALAIN JOLIVET