FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 14th day of
July, 2005 among ON THE GO HEALTHCARE, INC., a Delaware corporation (the
"Company"), Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP
(the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the
Company and the Purchaser have entered into a Security Agreement (the "Security
Agreement") for the sale by the Company to the Purchaser of a secured
convertible minimum borrowing note (the "Minimum Borrowing Note") and a
secured revolving note (the "Revolving Note"), (b) the Company has issued to
the Purchaser a common stock purchase warrant (the "MBN/Revolving Note
Warrant") in connection with the issuance of the Minimum Borrowing Note and
the Revolving Note, (c) for the sale by the Company to the Purchaser of a
secured convertible term note (the "Term Note") and (d) the Company and the
Purchaser have entered into a Registration Rights Agreement covering the
registration of the Company's common stock underlying the Minimum Borrowing
Note, the Term Note and the MBN/Revolving Note Warrant (the "Registration
Rights Agreement");
WHEREAS, the Company and the Purchaser wish the Purchaser to deliver
to the Escrow Agent copies of the Documents (as hereafter defined) and the
Escrowed Payment (as hereafter defined) to be held and released by Escrow
Agent in accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified and/or
supplemented from time to time by written agreement among the
parties hereto.
(b) "Closing Payment" means the closing payment to be paid to Laurus
Capital Management, LLC, the fund manager, as set forth on
Schedule A hereto.
(c) "Disbursement Letter" means that certain letter delivered to the
Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.
(d) "Documents" means copies of the Disbursement Letter, the Security
Agreement, the Minimum Borrowing Note, the Revolving Note, the Term
Note, the MBN/Revolving Note Warrant and the Registration Rights
Agreement.
(e) "Escrowed Payment" means $3,400,000.
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1.2. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the matters contained herein
and supersedes all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written. There are no
warranties, representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set
forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine
gender include the feminine and neuter genders. The word "person"
includes an individual, body corporate, partnership, trustee or trust
or unincorporated association, executor, administrator or legal
representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, in each case only by a written
instrument signed by all parties hereto, or, in the case of a waiver,
by the party waiving compliance. Except as expressly stated herein,
no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right, power or privilege
hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction
or interpretation of this Agreement.
1.6. Law Governing this Agreement; Consent to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
With respect to any suit, action or proceeding relating to this
Agreement or to the transactions contemplated hereby ("Proceedings"),
each party hereto irrevocably submits to the exclusive jurisdiction of
the courts of the County of New York, State of New York and the United
States District court located in the county of New York in the State
of New York. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement
and for any related counterclaim and (b) waives any objection which it
may have at any time to the laying of venue of any Proceeding brought
in any such court, waives any claim that such Proceedings have been
brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not
have jurisdiction over such party. As between the Company and the
Purchaser, the prevailing party shall be entitled to recover from the
other party its reasonable attorneys' fees and costs. In the event
that any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, then the
remainder of this Agreement shall not be affected and shall remain
in full force and effect.
1.7. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore,
stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party against the other.
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ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. The Company and the Purchaser hereby irrevocably
designate and appoint the Escrow Agent as their escrow agent for the
purposes set forth herein, and the Escrow Agent by its execution and
delivery of this Agreement hereby accepts such appointment under the
terms and conditions set forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
Purchaser shall deliver to the Escrow Agent copies of the Documents
executed by the Company to the extent it is a party thereto.
2.3. Delivery of Escrowed Payment to Escrow Agent. On or about the date
hereof, the Purchaser shall deliver to the Escrow Agent the Escrowed
Payment.
2.4. Intention to Create Escrow Over the Escrowed Payment. The Purchaser
and the Company intend that the Escrowed Payment shall be held in
escrow by the Escrow Agent and released from escrow by the Escrow Agent
only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Escrowed Payment from escrow as follows:
(a) Promptly following receipt by the Escrow Agent of (i) copies of
the fully executed Documents and this Agreement, (ii) the Escrowed
Payment in immediately available funds, (iii) joint written
instructions ("Joint Instructions") executed by the Company and
the Purchaser setting forth the payment direction instructions
with respect to the Escrowed Payment and (iv) Escrow Agent's verbal
instructions from Xxxxx Grin and/or Xxxxxx Grin (each of whom is
a director of the Purchaser) indicating that all closing
conditions relating to the Documents have been satisfied and
directing that the Escrowed Payment be disbursed by the Escrow
Agent in accordance with the Joint Instructions, then the Escrowed
Payment shall be deemed released from escrow and shall be promptly
disbursed in accordance with the Joint Instructions. The Joint
Instructions shall include, without limitation, Escrow Agent's
authorization to retain from the Escrowed Payment Escrow Agent's
fee for acting as Escrow Agent hereunder and the Closing Payment
for delivery to Laurus Capital Management, LLC in accordance with
the Joint Instructions.
(b) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order") relating to the Escrowed Payment,
the Escrow Agent shall remit the Escrowed Payment in accordance
with the Court Order. Any Court Order shall be accompanied by an
opinion of counsel for the party presenting the Court Order to the
Escrow Agent (which opinion shall be satisfactory to the Escrow
Agent) to the effect that the court issuing the Court Order is a
court of competent jurisdiction and that the Court Order is final
and non-appealable.
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3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and
the Purchaser acknowledge that the only terms and conditions upon which
the Escrowed Payment are to be released from escrow are as set forth
in Sections 3 and 4 of this Agreement. The Company and the Purchaser
reaffirm their agreement to abide by the terms and conditions of this
Agreement with respect to the release of the Escrowed Payment. Any
dispute with respect to the release of the Escrowed Payment shall be
resolved pursuant to Section 4.2 or by written agreement between the
Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree that the Escrow
Agent (i) shall not be required to inquire into whether the
Purchaser, the Company or any other party is entitled to receipt
of any Document or all or any portion of the Escrowed Payment;
(ii) shall not be called upon to construe or review any Document
or any other document, instrument or agreement entered into in
connection therewith; (iii) shall be obligated only for the
performance of such duties as are specifically assumed by the
Escrow Agent pursuant to this Agreement; (iv) may rely on and
shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent
in good faith to be genuine and to have been signed or presented by
the proper person or party, without being required to determine the
authenticity or correctness of any fact stated therein or the
propriety or validity or the service thereof; (v) may assume that
any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has
been duly authorized to do so; (vi) shall not be responsible for
the identity, authority or rights of any person, firm or company
executing or delivering or purporting to execute or deliver this
Agreement or any Document or any funds deposited hereunder or any
endorsement thereon or assignment thereof; (vii) shall not be under
any duty to give the property held by Escrow Agent hereunder any
greater degree of care than Escrow Agent gives its own similar
property; and (viii) may consult counsel satisfactory to Escrow
Agent (including, without limitation, Loeb & Loeb, LLP or such
other counsel of Escrow Agent's choosing), the opinion of such
counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent
hereunder in good faith and in accordance with the opinion of
such counsel.
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(b) The Purchaser and the Company acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and that the
Escrow Agent shall not be liable for any action taken by Escrow
Agent in good faith and believed by Escrow Agent to be authorized
or within the rights or powers conferred upon Escrow Agent by this
Agreement. The Purchaser and the Company hereby, jointly and
severally, indemnify and hold harmless the Escrow Agent and any
of Escrow Agent's partners, employees, agents and representatives
from and against any and all actions taken or omitted to be taken
by Escrow Agent or any of them hereunder and any and all claims,
losses, liabilities, costs, damages and expenses suffered and/or
incurred by the Escrow Agent arising in any manner whatsoever out
of the transactions contemplated by this Agreement and/or any
transaction related in any way hereto, including the fees of
outside counsel and other costs and expenses of defending itself
against any claims, losses, liabilities, costs, damages and
expenses arising in any manner whatsoever out the transactions
contemplated by this Agreement and/or any transaction related in
any way hereto, except for such claims, losses, liabilities,
costs, damages and expenses incurred by reason of the Escrow
Agent's gross negligence or willful misconduct. The Escrow Agent
shall owe a duty only to the Purchaser and the Company under
this Agreement and to no other person.
(c) The Purchaser and the Company shall jointly and severally reimburse
the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees (which counsel may be Loeb & Loeb LLP
or such other counsel of the Escrow Agent's choosing) incurred
in connection with the performance of its duties and
responsibilities hereunder, which shall not (subject to
Section 4.1(b)) exceed $1,500.
(d) The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving five (5) business days prior written notice of
resignation to the Purchaser and the Company. Prior to the
effective date of resignation as specified in such notice, the
Purchaser and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Documents and the Escrowed
Payment to a substitute Escrow Agent selected by the Purchaser and
the Company. If no successor Escrow Agent is named by the
Purchaser and the Company, the Escrow Agent may apply to a court
of competent jurisdiction in the State of New York for appointment
of a successor Escrow Agent, and deposit the Documents and the
Escrowed Payment with the clerk of any such court and/or otherwise
commence an interpleader or similar action for a determination of
where to deposit the same.
(e) The Escrow Agent does not have and will not have any interest in
the Documents and the Escrowed Payment, but is serving only as
escrow agent, having only possession thereof.
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(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be
authorized hereby or within the rights or powers conferred upon
it hereunder, nor for action taken or omitted by it in good faith,
and in accordance with advice of counsel (which counsel may be
Loeb & Loeb, LLP or such other counsel of the Escrow Agent's
choosing), and shall not be liable for any mistake of fact or
error of judgment or for any acts or omissions of any kind except
to the extent any such liability arose from its own willful
misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Company, as the case may be, in any dispute as to
the disposition of the Documents and the Escrowed Payment, in any
other dispute between the Purchaser and the Company, whether or not
the Escrow Agent is then holding the Documents and/or the Escrowed
Payment and continues to act as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the resignation of
the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution; Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery, ownership,
right of possession or disposition of the Documents and/or the
Escrowed Payment, or if the Escrow Agent shall in good faith be
uncertain as to its duties or rights hereunder, the Escrow Agent
shall be authorized, without liability to anyone, to (i) refrain
from taking any action other than to continue to hold the Documents
and the Escrowed Payment pending receipt of a Joint Instruction
from the Purchaser and the Company, (ii) commence an interpleader
or similar action, suit or proceeding for the resolution of any
such dispute; and/or (iii) deposit the Documents and the Escrowed
Payment with any court of competent jurisdiction in the State of
New York, in which event the Escrow Agent shall give written
notice thereof to the Purchaser and the Company and shall
thereupon be relieved and discharged from all further obligations
pursuant to this Agreement. The Escrow Agent may, but shall be
under no duty to, institute or defend any legal proceedings which
relate to the Documents and the Escrowed Payment. The Escrow
Agent shall have the right to retain counsel if it becomes
involved in any disagreement, dispute or litigation on account
of this Agreement or otherwise determines that it is necessary
to consult counsel which such counsel may be Loeb & Loeb LLP or
such other counsel of the Escrow Agent's choosing.
(b) The Escrow Agent is hereby expressly authorized to comply with and
obey any Court Order. In case the Escrow Agent obeys or complies
with a Court Order, the Escrow Agent shall not be liable to the
Purchaser and the Company or to any other person, firm, company or
entity by reason of such compliance.
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ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the
Escrowed Payment in accordance with the terms of this Agreement or
earlier upon the agreement in writing of the Purchaser and the Company
or resignation of the Escrow Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed
to have been duly given one (1) day after being sent by telecopy (with
copy delivered by overnight courier, regular or certified mail):
If to the Company, to: ON THE GO HEALTHCARE, INC
00 Xxxxxxxx Xxxxxx, Xxxx #0
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxx
Facsimile: 000 000 0000
With a copy to:
(b) If to the Purchaser, to:
LAURUS MASTER FUND, LTD.
M&C Corporate Services Limited,
X.X. Xxx 000 XX, Xxxxxx House,
South Church Street, Xxxxxx Town,
Grand Cayman, Cayman Islands,
Fax: 000-000-0000
(c) If to the Escrow Agent, to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as any of them shall give to the others by
notice made pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the
prior written consent of the other parties hereto. This Agreement
shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is
held invalid, illegal, or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being intended that all
of the rights and privileges of the parties hereto shall be enforceable
to the fullest extent permitted by law.
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5.6. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the
same agreement. This Agreement may be executed by facsimile
transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COMPANY:
ON THE GO HEALTHCARE, INC.
By: /s/Xxxxxx Xxxx
-------------------------
Name: Xxxxxx Xxxx
Title: CEO
PURCHASER:
LAURUS MASTER FUND, LTD.
By:/s/Xxxxx Grin
-------------------------
Name:Xxxxx Grin
Title: Director
ESCROW AGENT:
LOEB & LOEB LLP
By:/s/ Xxxxx Xxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxx
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., Term Note in an aggregate
M&C Corporate Services Limited, principal amount of $500,000
X.X. Xxx 000 XX, Xxxxxx House, Minimum Borrowing Note in an
South Church Street, Xxxxxx Town, aggregate principal amount
Grand Cayman, Cayman Islands, of $2,500,000; and Revolving
Fax: 000-000-0000 Note in an aggregate principal
amount of $5,000,000
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TOTAL $5,500,000
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FUND MANAGER CLOSING PAYMENT Closing payment payable in
-------------------------------------------------------------------------------
LAURUS CAPITAL MANAGEMENT, L.L.C. connection with investment by
000 Xxxxx Xxxxxx, 14th Floor Laurus Master Fund, Ltd. for
Xxx Xxxx, Xxx Xxxx 00000 which Laurus Capital Management
Fax: 000-000-0000 L.L.C. is the Manager.
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TOTAL $214,500
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WARRANTS
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WARRANT RECIPIENT WARRANTS IN CONNECTION WITH
OFFERING
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LAURUS MASTER FUND, LTD. The Warrants exercisable into
M&C Corporate Services Limited, 1,420,000 shares of common
X.X. Xxx 000 XX, Xxxxxx House, stock of the Company.
South Church Street, Xxxxxx Town,
Grand Cayman, Cayman Islands,
Fax: 000-000-0000
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TOTAL Warrants exercisable into
1,420,000 shares of common
stock of the Company
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