Restricted Stock Escrow Ag

Exhibit 10.5 - -------------


RESTRICTED STOCK ESCROW AGREEMENT
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RESTRICTED STOCK ESCROW AGREEMENT dated as of March 1, 2003, by and among GEM GLOBAL YIELD FUND, a Nevis, West Indies entity ("GEM"), HERITAGE WORLDWIDE, INC., a Delaware corporation ("HWWI"), MILO FINANCE, S.A., a Luxembourg limited liability entity ("MILO"), and KAPLAN GOTTBETTER & LEVENSON, LLP (the "Escrow Agent").


WHEREAS, GEM, HWWI and MILO are parties to an Acquisition Agreement dated as of February 28, 2003 (the "Acquisition Agreement"), pursuant to which, among other things, HWWI has issued warrants to purchase common stock of HWWI (the "Warrants"), par value $0.001 per share ("Common Stock"), to GEM on the terms and subject to the conditions set forth in Section 12 of the Acquisition Agreement;


WHEREAS, the Warrants provide that GEM and any other holder of the Warrants may not sell or transfer the Common Stock issuable on exercise of the Warrants prior to March 1, 2005 without the prior written consent of the Board of Directors of HWWI;


WHEREAS, GEM, HWWI and MILO are parties to a Stockholders' Agreement dated as of March 1, 2003 (the " Stockholders' Agreement"), pursuant to which GEM and certain other stockholders of HWWI (the "Restricted Stockholders") have agreed to certain restrictions on the sale or transfer of their HWWI Common Stock; and


WHEREAS, GEM and the Restricted Stockholders have agreed to place in escrow their HWWI Common Stock in order to permit the enforcement of the restrictions on sale or transfer of their HWWI Common Stock.


NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as follows:


1. Defined Terms. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Acquisition Agreement or the Stockholders' Agreement, but the Acquisition Agreement and Stockholders Agreement shall not be or be deemed to be part of this Agreement.


2. Deposits of Shares.


(a) Concurrently with the execution and delivery of this Agreement, GEM and the Restricted Stockholders have deposited with the Escrow Agent certificates representing the aggregate of 1,998,000 shares of HWWI Common Stock, in the amounts per stockholder set forth in Schedule A attached hereto (the "Deposited Shares"). The Escrow Agent hereby acknowledges receipt of the Deposited Shares.


(b) GEM and the other holders of the Warrants consent and agree that any certificates for HWWI Common Stock issued upon the exercise of the Warrants (the "Warrant Shares") at any time prior to March 1, 2005 shall be delivered to the Escrow Agent to be held by the Escrow Agent subject to the terms and conditions of this Agreement. The transfer agent of HWWI shall be instructed by


GEM and HWWI to deliver the Warrant Shares to the Escrow Agent in the event of any exercise of the Warrants prior to March 1, 2005.


3. Delivery of Deposited Shares and Warrant Shares.


(a) (i) During the one hundred twenty (120) days after the effective date of this Agreement (the "First Restricted Period"), GEM may request upon notice given hereunder that the Escrow Agent deliver to GEM and the Restricted Stockholders certificates for an aggregate of up to one million (1,000,000) Deposited Shares. Promptly after receipt of such notice, the Escrow Agent shall deliver certificates for the Deposited Shares so requested to GEM or the Restricted Stockholders, in the amounts requested by GEM. The Deposited Shares delivered to GEM and the Restricted Stockholders may be sold or transferred free of all restrictions set forth in the Stockholders' Agreement. The balance of the Deposited Shares shall remain in escrow subject to the terms and conditions of the Stockholders' Agreement and this Agreement.


(ii) During the one hundred twenty (120) days following the First Restricted Period (the "Second Restricted Period"), GEM may request upon notice given hereunder that the Escrow Agent deliver to GEM and the Restricted Stockholders certificates for an aggregate of up to one million five hundred thousand (1,500,000) Deposited Shares, including any Deposited Shares delivered pursuant to section 3(a)(i) above during the First Restricted Period. Promptly after receipt of such notice, the Escrow Agent shall deliver certificates for the Deposited Shares so requested to GEM or the Restricted Stockholders, in the amounts requested by GEM. The Deposited Shares delivered to GEM and the Restricted Stockholders may be sold or transferred free of all restrictions set forth in the Stockholders' Agreement. The balance of the Deposited Shares shall remain in escrow subject to the terms and conditions of the Stockholders' Agreement and this Agreement. At the expiration of the Second Restricted Period, the Escrow Agent shall deliver the balance of the Deposited Shares held by Escrow Agent to the registered owners of the Deposited Shares.


(b) On March 1, 2005, the Escrow Agent shall deliver to the registered owners thereof any and all certificates for Warrant Shares held by the Escrow Agent on such date.


4. Terms and Conditions of the Escrow Agent's Duties.


(a) The duties and obligations of the Escrow Agent shall be determined solely by the provisions of this Agreement and the Escrow Agent shall not be liable except for the willfully wrongful or grossly negligent performance or nonperformance of its duties as such are specifically set forth herein.


(b) HWWI and GEM, jointly and severally, shall (a) indemnify the Escrow Agent for, and hold the Escrow Agent harmless against, any loss, liability, cost or expense, including, but not limited to, reasonable attorney's fees and disbursements except for the willfully wrongful or grossly negligent acts or omissions on the part of the Escrow Agent in connection with such performance; and (b) reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in the performance of its duties hereunder. Except for such indemnity and reimbursement of costs and expenses, t ...