ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of May 7, 2004, by and among
Critical Home Care, Inc., a Nevada corporation (the "Corporation), Xxxxx Xxxxxx
("Bensol"), and Xxxxxx Xxxxxx & Xxxxxx, P.C. ("Escrow Agent").
R E C I T A L S
WHEREAS, Corporation, RDKA, Inc., Xxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxxx
Xxxxxxx ("Xxxxxxx") and others are parties to a certain Agreement and Plan of
Merger dated May 7, 2004 ("Merger Agreement"), wherein Xxxxxxx and Xxxxxxx
agreed to exchange all of their stock in RDKA for shares of common stock in the
Corporation;
WHEREAS, Bensol owns approximately 4,000,000 shares of common stock of
Corporation ("Bensol Shares") and will derive a significant personal benefit
from the consummation of the transactions contemplated by the Merger Agreement;
WHEREAS, to induce RDKA, Xxxxxxx and Xxxxxxx to enter into the Merger
Agreement and to consummate the transactions contemplated thereunder and
pursuant to Section 2.3 of the Merger Agreement, a copy of which is attached
hereto as Exhibit "A", Bensol agreed to forfeit up to 2,000,000 of the Bensol
Shares ("Bensol Escrowed Shares") in the event that certain earnings targets
were not achieved by the Corporation for the twelve month period ending March
31, 2006 and the twelve month period ending March 31, 2007;
WHEREAS, Escrow Agent is willing to hold, administer and distribute the
Bensol Escrowed Shares in accordance with the terms of this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and with the intent to be legally
bound hereby, the parties hereby agree as follows:
1. Appointment of Escrow Agent. Corporation and Bensol hereby appoint the
Escrow Agent to serve as escrow agent and to hold, administer and distribute the
Bensol Escrowed Shares as provided hereunder, and Escrow Agent agrees to act as
the Escrow Agent and to perform the services required hereunder.
2. Deposit of Escrowed Shares. As soon as possible following the closing of
the transactions contemplated by the Merger Agreement, Bensol shall deliver the
Bensol Escrowed Shares to the Escrow Agent, together with a Stock Power executed
in blank. Escrow Agent agrees to hold, administer and distribute the Bensol
Escrowed Shares in the manner set forth in this Agreement.
3. Release of Escrowed Shares. The Escrow Agent shall release the Bensol
Escrowed Shares to the Bensol or the Corporation, as applicable, upon the
delivery of any of the following written directions to Escrow Agent:
(a) A joint written instruction executed by the Corporation and Bensol
directing Escrow Agent to deliver to Corporation or Bensol, as
applicable, all or such part of the Bensol Escrowed Shares specified
in the written instruction, which written instruction shall be
delivered to Escrow Agent at each of the following times:
(i) within twenty (20) days following the completion of the financial
audit of the Corporation for fiscal year 2005;
(ii) within twenty (20) days following the completion of the financial
audit for fiscal year 2006;
(iii)at any time if the Corporation's common stock price on the NASD
OTC Bulletin Board (or any other stock exchange) is either (A)
one dollar ($1.00) per share for thirty (30) consecutive trading
days, or (B) the average closing price for the Corporation's
common stock price for any forty-five (45) consecutive trading
days is one ($1.00) per share;
(b) A written instruction executed by the Corporation or Bensol, attaching
a final and nonappealable order from a court of competent jurisdiction
directing Escrow Agent to deliver to the Corporation or Bensol, as
applicable, all or such part of the Bensol Escrowed Shares as is
specified in the order.
3. Shareholder Rights. Notwithstanding anything contained in this Agreement
to the contrary, (i) all of the Bensol Escrowed Shares shall constitute issued
and outstanding shares of Corporation stock, (ii) Bensol shall be entitled to
receive immediately (and not paid into escrow) any dividends payable with
respect to such Bensol Escrowed Shares in the same manner as if such Bensol
Escrowed Shares were not subject to this Agreement, and (iii) Bensol (or his
authorized agent) shall have the right to vote the Bensol Escrowed Shares on all
matters required by law to be submitted or are otherwise submitted to the vote
of the shareholders of the Corporation in the same manner as if such Bensol
Escrowed Shares were not subject to this Agreement. If any dividends on the
Bensol Escrowed Shares are paid over to the Escrow Agent, then the Escrow Agent
shall promptly distribute such dividends to Bensol.
4. Transfer of Escrowed Shares. Bensol shall not have the right to sell,
assign, transfer, or convey any part of the Bensol Escrowed Shares as long as
such shares remain subject to this Agreement.
5. Compensation. The Corporation shall pay the Escrow Agent the sum of
$1,250 in consideration of the Escrow Agent's services hereunder. In addition,
the Corporation shall pay or reimburse Escrow Agent for all reasonable expenses,
disbursements and advances, including reasonable attorneys' fees, incurred by
Escrow Agent in connection with carrying out its duties under this Agreement.
5. Legal Counsel. Escrow Agent may employ such legal counsel and other
experts as it reasonably may deem necessary to retain for advice in connection
with its obligations hereunder, may rely upon the advice of such counsel or
experts and may pay such counsel or experts reasonable compensation therefor.
6. Resignation. Escrow Agent may resign from its duties hereunder at any
time by giving written notice of such resignation to the Corporation and Bensol.
The resignation shall be effective on the date specified by the Escrow Agent in
the written notice, but in no event less than forty five (45) days after the
giving of such notice. Promptly after such notice, a successor escrow agent
shall be appointed by mutual agreement of the Corporation and Bensol. Escrow
Agent agrees to continue to serve until its successor accepts the escrow and
receives the Bensol Escrowed Shares. If a successor Escrow Agent has not been
appointed or has been appointed but has not accepted such appointment by the end
of the 45-day period, Escrow Agent may apply to a court of competent
jurisdiction for the appointment of a successor Escrow Agent, and the costs,
expenses and reasonable attorneys' fees that are incurred in connection with
such proceeding shall be paid the Corporation.
7. Liability. Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. The duties of Escrow Agent are intended to be
purely ministerial in nature, and it shall not incur any liability whatsoever,
except for Escrow Agent's willful misconduct or gross negligence. Escrow Agent
shall not have any responsibility for the genuineness or validity of any
document or other item deposited with it or of any signature thereon and shall
not have any liability for acting in accordance with any written instructions or
certificates given to it hereunder and believed by it to be signed by the proper
parties. Escrow Agent, when acting or refraining from acting in good faith,
shall be entitled to rely conclusively upon (i) any written notice, instrument
or signature believed by it to be genuine and to have been signed or presented
by the proper party or parties duly authorized to do so hereunder, and (ii) the
advice of legal counsel retained by it. Corporation and Bensol jointly and
severally agree to hold Escrow Agent (and each of its officers, directors,
employees and agents) harmless from, and indemnify Escrow Agent (and each of its
officers, directors, employees and agents) against, any loss, liability, expense
(including, without limitation, reasonable attorneys' fees and expenses), claim,
suit, action, or demand arising out of or in connection with the Escrow Agent's
execution of this Agreement and the performance of Escrow Agent's obligations
under this Agreement, except for any of the foregoing arising out of the gross
negligence or willful misconduct of Escrow Agent. The foregoing indemnification
obligations in this Section shall survive the resignation and substitution of
Escrow Agent and the termination of this Agreement. The costs and expenses of
enforcing these rights of indemnification shall also be paid by the Corporation.
8. Controversies. If any controversy arises involving the Corporation,
Bensol or any third person with respect to the subject matter of this Agreement,
or if any situation not addressed under this Agreement arises or Escrow Agent is
not directed how to act hereunder, Escrow Agent shall not determine the same or
take any action with respect thereto, but shall await the final resolution of
any such controversy, and in such event Escrow Agent shall not be liable for any
damage incurred as a result of, or in connection with, such controversy.
Furthermore, if in its sole, good faith judgment the Escrow Agent determines
that it is confronted with conflicting demands with respect to the Bensol
Escrowed Shares such that it risks incurring liability regardless of the action
it takes or refrains from taking in connection with such demands, the Escrow
Agent may, at its option, file an action of interpleader requiring the parties
to answer and litigate any claims and rights among themselves. The Corporation
shall pay all legal fees incurred by Escrow Agent in connection any such
interpleader action.
9. Discharge of Escrow Agent. Escrow Agent agrees that the Corporation and
Bensol may, by mutual written agreement at any time, remove Escrow Agent, and
substitute therefor a bank or trust company, in which event, upon receipt of
written notice thereof, payment by the Corporation of any accrued but unpaid
fees due Escrow Agent and reimbursement of Escrow Agent's other fees and
expenses, Escrow Agent shall deliver the Bensol Escrowed Shares to such
substituted escrow agent, and Escrow Agent shall thereafter be discharged from
all liability hereunder except for any liability resulting from Escrow Agent's
willful misconduct or gross negligence.
10. Notices. Any notice required or permitted to be given by any party
under this Agreement shall be given in writing and shall be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) on the next
business day after delivery to a nationally recognized overnight courier
service, (iii) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, or (iv) five days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
or facsimile number indicated below for such party or at such other address as
such party may designate upon written notice to the other parties (except that
notice of change of address shall be deemed given upon receipt)
(a) if to Corporation, addressed to:
Critical Home Care, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(b) if to Bensol, then to:
Xxxxx Xxxxxx
0000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile:000-000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(c) if to Escrow Agent, then to:
Xxxxxx Xxxxxx & Xxxxxx. P.C.
00000 Xxxxxxxxxxxx Xxx.
Xxxxxxxx Xxxxxx, Xxxxx 000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
11. Termination of Agreement. This agreement shall continue in force until
all of the Bensol Escrowed Shares have been properly delivered to the
Corporation or Bensol, as applicable.
12. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the persons,
firm or corporation may require in the context thereof.
13. Governing Law. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
Michigan without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
14. Counterparts. This Agreement may be executed in any number of
counterparts and facsimile signatures, each of which shall be deemed an original
but all of which together shall constitute but one and the same instrument.
15. Amendments and Waivers. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. No amendment, supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the Corporation, Bensol and
Escrow Agent. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
IN WITNESS WHEREOF, the parties hereto have signed this Escrow Agreement as
of the date first above written.
"CORPORATION":
CRITICAL HOME CARE, INC.
By: /s/Xxxx X. Xxxxxxx, XX
------------------
Name: Xxxx X. Xxxxxxx, XX
Title: CEO
"BENSOL"
/s/Xxxxx Xxxxxx
---------------
Xxxxx Xxxxxx
"ESCROW AGENT"
/s/Xxxxxx Xxxxxx
-------------------
By: Xxxxxx Xxxxxx
Its: President
EXHIBIT "A"
SECTION 2.3 TO THE MERGER AGREEMENT
2.3 Escrow of Parent Company Stock Owned by Bensol. Bensol agrees to escrow
a total of 2,000,000 shares of Parent Common Stock owned by him as of the
Closing ("Bensol Escrow Shares"). The Bensol Escrow Shares shall be released
from escrow upon the Parent meeting the following milestones: (a) Fiscal 2006
EBITDA. Fifty percent (50%) of the Bensol Escrow Shares will be released within
thirty (30) days following the completion of the audit for the twelve (12) month
period ending March 31, 2006 ("Fiscal 2006") if the Parent meets an "EBITDA" of
$9.7 Million for Fiscal 2006. "EBITDA" for purposes of this Section 2.3 shall be
determined as set forth in Schedule 2.3a.
(b) Fiscal 2007 EBITDA. The remaining fifty percent (50%) of the Bensol
Escrow Shares will be released from escrow upon Parent meeting EBITDA
of $12.5 Million for the twelve (12) month period ending March 31,
2007 ("Fiscal 2007").
(c) Alternative Release of Bensol Escrow Shares. As an alternative to the
release of Bensol Escrow Shares set forth in the previous two
Subsections, all of the Bensol Escrow Shares shall be released in
2007, within thirty (30) days of completion of the audit for Fiscal
2007, if Parent obtains a combined EBITDA for Fiscal 2006 and Fiscal
2007 of $22.2 Million or greater.
(d) Debt to EBITDA Ratio. For any of the Bensol Escrow Shares to be
released pursuant to Subsections 2.3a. or 2.3b., the Parent Debt (as
defined on Schedule 2.3d.) to EBITDA ratio for the Parent must be 2.00
or less for Fiscal 2006, and 2.00 or less for Fiscal 2007. For this
purpose, Debt shall only include the outstanding debt obligations owed
by Parent and each of its subsidiaries (on a consolidated basis) to
Comerica Bank or its successor.
(e) Failure to Reach EBITDA Numbers. If Parent fails to reach the EBITDA
numbers set forth above in this Section 2.3, then, subject to
Subsection 2.3f., Bensol will forfeit in 2007 the applicable amount of
Bensol Escrow Shares within sixty (60) days of completion of the audit
for Fiscal 2007, unless the provisions of Subsection 2.3c. apply.
(f) Additional Means of Obtaining Bensol Escrow Shares. Notwithstanding
anything in this Agreement or otherwise to the contrary, Bensol will
receive 400,000 of the Bensol Escrow Shares if Parent's common stock
price on the NASD OTC Bulletin Board (or any other exchange) at any
time between the Closing Date and sixty (60) days after completion of
the audit for Fiscal 2007 is either (i) at least one dollar ($1.00)
per share for thirty (30) consecutive trading days; or (ii) the
average closing price for any forty-five (45) consecutive trading days
is at least one dollar ($1.00) per share. This provision shall apply
even if the EBITDA targets and Debt to EBITDA ratios discussed above
are not met in Fiscal 2006 and/or Fiscal 2007.
(g) Rights with Respect to Bensol Escrow Shares while in Escrow.
Notwithstanding anything contained in this Agreement to the contrary,
(i) all of the Bensol Escrow Shares shall constitute issued and
outstanding shares of Parent Common Stock, (ii) Bensol shall be
entitled to receive immediately (and not paid into escrow) any
dividends payable with respect to the Bensol Escrow Shares in the same
manner as if such shares were not subject to this Agreement; and (iii)
Bensol (or his authorized agent) shall have the right to vote the
Bensol Escrow Shares on all matters required by law to be submitted or
are otherwise submitted to the vote of the shareholders of the Company
in the same manner as if such Escrowed Shares were not subject to this
Agreement, provided that, all of the Bensol Escrow Shares shall be
subject to the Voting Agreement (as hereinafter defined).
