ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made this 20th day of
June 2000, by and among DELANET, INC., a Delaware corporation ("DelaNet"),
FRONTLINE COMMUNICATIONS CORP., a Delaware corporation (the "Frontline"), and
XXXXXXXX, XXXXXX & FINGER, P.A., as escrow agent ("Escrow Agent").
RECITALS
WHEREAS, DelaNet and Frontline are parties to that certain Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated as of June 20, 2000, between
DelaNet and Frontline, whereby DelaNet has agreed to sell its assets to
Frontline in exchange for the consideration provided therein, including, without
limitation, the depositing of $250,000 cash into escrow pursuant to the terms
provided herein and pursuant to Section 1.5 of the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises herein contained, and in
reliance on the mutual representations, covenants and agreements hereinafter set
forth, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto do hereby agree as follows:
1. Definitions: Terms used herein without definition shall have the
meanings ascribed in the Asset Purchase Agreement.
2. Designation As Escrow Agent. Subject to the terms and conditions hereof,
DelaNet and Frontline hereby appoint Escrow Agent as Escrow Agent and Escrow
Agent hereby accepts such appointment.
3. Deposit of $250,000 with Escrow Agent. Upon execution of this Escrow
Agreement, Frontline shall deposit $250,000 cash (the "Escrow Fund") with the
Escrow Agent, and the Escrow Agent shall hold the Escrow Fund upon the terms and
conditions set forth in this Escrow Agreement and shall not deliver Escrow Fund
except as provided herein.
4. Closing.
a. On the ninetieth (90th) day following the date first written above,
a duly authorized officer of Frontline shall certify as to the number of
Internet Service Subscribers (as defined in the Asset Purchase Agreement)
as of such date;
b. To the extent that on the ninetieth (90th) day following the date
first written above, pursuant to the certificate provided in subsection
4a., the number of Internet Service Subscribers (as defined in the Asset
Purchase Agreement) attributable to the assets of DelaNet transferred to
Frontline pursuant to the Asset Purchase Agreement is less than 9,250, the
Escrow Agent shall deliver to Frontline at the address provided in Section
6, out of the Escrow Fund, $150 for each internet subscriber less than
9,250; and
c. To the extent that after the application of subsections 4a. and 4b.
above, and upon the ninety-first (91st) day following the date first
written above, there remains amounts in the Escrow Funds, the Escrow Agent
shall deliver to DelaNet at the address provided in Section 6, all amounts
remaining in the Escrow Fund.
5. Authority of Escrow Agent and Limitation of Liability.
a. In acting hereunder, Escrow Agent shall have only such duties as
are specified herein and no implied duties shall be read into this Escrow
Agreement, and Escrow Agent shall not be liable for any act done, or
omitted to be done, by it in the absence of its gross negligence or wilful
misconduct.
b. Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, and may assume
the validity and accuracy of any statement or assertion contained in such a
writing or instrument and may assume that any person purporting to give any
writing, notice, advice or instruction in connection with the provisions
hereof has been duly authorized to do so.
c. Escrow Agent shall be entitled to consult with legal counsel in the
event that a question or dispute arises with regard to the construction of
any of the provisions hereof, and shall incur no liability and shall be
fully protected in acting in accordance with the advice or opinion of such
counsel.
d. Escrow Agent shall not be required to use its own funds in the
performance of any of its obligations or duties or the exercise of any of
its rights or powers, and shall not be required to take any action which,
in Escrow Agent's sole and absolute judgement could involve it in expense
or liability unless furnished with security and indemnity which it deems,
in its sole and absolute discretion, to be satisfactory. DelaNet and
Frontline shall, on an equal basis, compensate Escrow Agent for its
services hereunder and, in addition, shall reimburse Escrow Agent for all
of its reasonable out-of-pocket expenses, including attorneys' fees,
telephone and facsimile transmission costs, postage (including express mail
and overnight delivery charges), copying charges and the like. All of the
compensation and reimbursement obligations set forth in this Section 5
shall be payable by DelaNet and Frontline, upon demand by Escrow Agent. The
obligations of DelaNet and Frontline under this Section 5 shall survive any
termination of this Escrow Agreement and the resignation or removal of
Escrow Agent.
e. Notwithstanding anything contained herein to the contrary, in the
event instructions are given, whether in writing, by telecopier or
otherwise, Escrow Agent is authorized (but not required) to seek
confirmation of such instructions by telephone call-back, and Escrow Agent
may rely upon the confirmations of anyone purporting to be such person or
persons. The persons and telephone numbers for call-backs may be changed
only in a writing actually received and acknowledged by Escrow Agent. The
parties to this Escrow Agreement acknowledge that such security procedure
is commercially reasonable.
f. DelaNet and Frontline agree to indemnify Escrow Agent and hold it
harmless from any and against all liabilities, losses, actions, suits or
proceedings at law or in equity, and other
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expenses, fees or charges of any character or nature, including, without
limitation, attorney's fees and expenses, which Escrow Agent may incur or
with which it may be threatened by reason of its acting as Escrow Agent
under this Escrow Agreement or arising out of the existence of the Escrow
Fund, except to the extent the same shall be caused by Escrow Agent's gross
negligence or wilful misconduct. The terms of this paragraph shall survive
termination of this Escrow Agreement.
g. If at any time there shall exist any dispute with respect to the
holding, delivery or presentment of the Escrow Fund or any other
obligations of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper
disposition of the Escrow Fund or Escrow Agent's proper actions with
respect to its obligations hereunder, then Escrow Agent may, in its sole
discretion, take either or both of the following actions:
i. suspend the performance of any of its obligations under this
Escrow Agreement until such dispute or uncertainty shall be resolved
to the sole satisfaction of Escrow Agent or until a successor Escrow
Agent shall have been appointed in writing by DelaNet and Frontline;
or
ii. petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction in any venue
convenient to Escrow Agent, for instructions with respect to such
dispute or uncertainty, and to the extent required by law, pay into
such court, for holding and disposition in accordance with the
instructions of such court, the Escrow Fund, after deduction and
payment to Escrow Agent of all reasonable fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected
to be incurred by Escrow Agent in connection with the performance of
its duties and the exercise of its rights hereunder.
Escrow Agent shall have no liability to the parties hereto or to any other
person with respect to any such suspension of performance or disbursement into
court, specifically including any liability or claimed liability that may arise,
or be alleged to have arisen, out of or as a result of any delay in or with
respect to any action required or requested of Escrow Agent.
6. Notices. Except as otherwise herein provided, any notice, instruction or
instrument to be delivered hereunder shall be in writing and shall be effective
upon receipt at the addresses set forth below or at such other address specified
in writing by the addressee, or if to Escrow Agent, upon receipt via facsimile
or telecopier transmission, at the number set forth below, or at such other
number specified by Escrow Agent.
If to DelaNet:
DelaNet, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxxxx, Xxxxxxxx 00000
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If to Frontline:
Frontline Communications Corp.
Xxx Xxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxxx, Xxx Xxxx 00000
If to Escrow Agent:
Xxxxxxxx Xxxxxx & Finger, P.A.
One Xxxxxx Square
10th & King Streets
Wilmington, Delaware 19899
Attn.: Xxxxxxx X. Xxxxxxx, Esquire
Fax: 000-000-0000
7. Termination. This Escrow Agreement shall terminate automatically without
further action upon the to occurence of the following:
a. Ninety-First (91st) day after the Closing Date; and
b. The full distribution of the Escrow Fund pursuant to the terms
hereof.
8. Governing Law. This is a Delaware contract and shall be governed by
substantive Delaware law in all respects without regard to conflict of law
provisions thereof.
9. Counterparts. This Escrow Agreement may be executed by different parties
in multiple counterparts, and/or by facsimile, and each such counterpart shall
be deemed an original, all of which, when taken together, shall constitute but
one and the same assignment.
10. Amendment or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by DelaNet, Frontline and
Escrow Agent. No delay or omission by any party in exercising any right with
respect hereto shall operate as a waiver. A waiver on any one occasion shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
11. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
12. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the holding and delivery of the Escrow
Funds and sets forth in their entirety the obligations and duties of Escrow
Agent with respect to the Escrow Funds.
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13. Binding Effect. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of, and be
enforceable by the respective heirs, successors and assigns of the parties
hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
have duly executed this Escrow Agreement as of the day and year first written
above.
DELANET, INC.
By:
-----------------------------
Name: Xxxx X. Xxxxx
Title: President
FRONTLINE COMMUNICATIONS CORP.
By:
-----------------------------
Name: Xxxxxxx X. Xxxx-Xxxxxxxx
Title: President
XXXXXXXX, XXXXXX & FINGER, P.A.
(As Escrow Agent)
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxxx, Esq.
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