EXHIBIT 34
ESCROW AGREEMENT
ESCROW AGREEMENT (this "AGREEMENT"), dated as of January 22, 1998,
by and among Fix-Corp International, Inc. (the "COMPANY"), JNC Opportunity
Fund Ltd. ("JNC"), Diversified Strategies Fund, L.P. ("DSF"), and Xxxxxxxx
Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP (the "ESCROW AGENT"). DSF and JNC are
each sometimes hereinafter referred to as a "PURCHASER" and collectively as
the "PURCHASERS."
RECITALS
A. Simultaneously with the execution of this Agreement, the
Company and the Purchasers have entered into a Convertible Debenture Purchase
Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"), pursuant
to which the Company is selling to the Purchasers certain of its 4%
Convertible Debentures Due January 22, 2001 (the "DEBENTURES") and certain
common stock purchase warrants (the "WARRANTS"). Capitalized terms that are
used but not defined in this Agreement that are defined in the Purchase
Agreement shall have the meanings set forth in the Purchase Agreement.
B. The Escrow Agent is willing to act as escrow agent pursuant to
the terms of this Agreement with respect to the receipt and then delivery of
the aggregate purchase price (as described in Section 1.1(a) of the Purchase
Agreement) to be paid by the Purchasers for the Debentures and the Warrants
(the "PURCHASE PRICE") and the receipt and then delivery of the Debentures
and the Warrants, together with the Ancillary Closing Documents (as defined
below) and the Purchase Price, the "CONSIDERATION").
C. Upon the closing of the transaction contemplated by the
Purchase Agreement (the "CLOSING") and the occurrence of an event described
in Section 2 below, the Escrow Agent shall cause the distribution of the
Consideration in accordance with the terms of this Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEPOSIT OF CONSIDERATION.
a. Concurrently with the execution hereof, each Purchaser
shall deposit with the Escrow Agent the portion of the Purchase Price due for
the Debentures and Warrant to be purchased by it at the Closing in accordance
with Section 1.1(a)(ii) of the Purchase Agreement, and the Company shall
deliver to the Escrow Agent the Debentures and the Warrants in accordance
with Section 1.1(a)(ii) of the Purchase Agreement, and wiring instructions
for the transfer of amounts to be paid to the Company in accordance with
Section 2(b). In addition, the Purchasers
and the Company shall each deposit with the Escrow Agent all other
certificates and other documents required under the Purchase Agreement to be
delivered by them at the Closing (such certificates and other documents being
hereinafter referred to as the "ANCILLARY CLOSING DOCUMENTS").
(i) The Purchase Price shall be delivered by the
Purchasers to the Escrow Agent by wire transfer to the following account:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ABA No.: 000-000-000
For the Account of
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
Attorney Business Account
Account No.: 00-000-000
Attention: Xxxxxx Xxxxxxxxxx
Reference: Fix-Corp International (10849-10)
(ii) The Debentures, Warrants and the Ancillary Closing
Documents shall be delivered to the Escrow Agent at its address for notice
indicated in Section 5(a).
b. Until termination of this Agreement as set forth in
Section 2, all additional Consideration paid by or which becomes payable
between the Company and the Purchasers shall be deposited with the Escrow
Agent.
c. The Purchasers and the Company understand that all
Consideration delivered to the Escrow Agent pursuant to Section 1(a) shall be
held in escrow in the Escrow Agent's interest bearing business account until
the Closing. After the Purchase Price has been received by the Escrow Agent
and all other conditions of Closing are met, the parties hereto hereby
authorize and instruct the Escrow Agent to promptly effect the Closing.
d. At the Closing, the Escrow Agent is authorized and
directed to deduct from the Purchase Price (i) $7,500 which will be retained
by the Escrow Agent pursuant to Section 5.1 of the Purchase Agreement and
(ii) $250,000 which will be paid to CDC Consulting, Inc. ("CDC") in
accordance with the engagement letter between the Company and CDC relating to
the transactions contemplated by the Purchase Agreement (the "ENGAGEMENT
LETTER"). In addition, the portion of the Purchase Price released to the
Company hereunder shall be reduced by all wire transfer fees incurred
thereupon.
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2. TERMS OF ESCROW.
a. The Escrow Agent shall hold the Consideration in escrow
until the earlier to occur of (i) the receipt by the Escrow Agent of the
Purchase Price, the Debentures, the Warrants and the Ancillary Closing
Documents and a writing instructing the Closing and (ii) the receipt by the
Escrow Agent of a written notice, executed by the Company or the Purchasers,
stating that the Purchase Agreement has been terminated in accordance with
its terms and instructing the Escrow Agent with respect to the Purchase
Price, the Debentures, the Warrants and the Ancillary Closing Documents.
b. If the Escrow Agent receives the items referenced in
clause (i) of Section 2(a) prior to its receipt of the notice referenced in
clause (ii) of Section 2(a), then, promptly thereafter, the Escrow Agent
shall deliver (i) to JNC (A) Debentures in aggregate principal amount of
$2,000,000, (B) the JNC Warrant and (C) any interest earned on account of the
portion of the Purchase Price paid by JNC that shall have accrued through the
Closing; (ii) to DSF (A) Debentures in aggregate principal amount of
$500,000, (B) the DSF Warrant and (C) any interest earned on account of the
portion of the Purchase Price paid by DSF that shall have accrued through the
Closing; (iii) to the Company the Purchase Price (net of amounts described
under Section 1(d)) to the Company; (iv) to or as directed by CDC, $250,000
in accordance with the Engagement Letter; and (v) to the appropriate party,
the Ancillary Closing Documents. In addition, the Escrow Agent shall retain
$7,500 of the Purchase Price on account of its fees pursuant to the Purchase
Agreement and Section 1(d).
c. If the Escrow Agent receives the notice referenced in
clause (ii) of Section 2(a) prior to its receipt of the items referenced in
clause (i) of Section 2(a), then the Escrow Agent shall promptly upon receipt
of such notice return (i) the Purchase Price (together with any interest
earned thereon through such date) to the Purchasers in such amounts as shall
have been delivered to and received by prior thereto, (ii) the Debentures and
Warrants to the Company and (iii) the Ancillary Closing Documents to the
party that delivered the same.
d. If the Escrow Agent, prior to delivering or causing to be
delivered the Consideration in accordance herewith, receives notice of
objection, dispute, or other assertion in accordance with any of the
provisions of this Agreement, the Escrow Agent shall continue to hold the
Consideration until such time as the Escrow Agent shall receive (i) written
instructions jointly executed by the Purchasers and the Company, directing
distribution of such Consideration, or (ii) a certified copy of a judgment,
order or decree of a court of competent jurisdiction, final beyond the right
of appeal, directing the Escrow Agent to distribute said Consideration to any
party hereto or as such judgment, order or decree shall otherwise specify
(including any such order directing the Escrow Agent to deposit the
Consideration into the court rendering such order, pending determination of
any dispute between any of the parties). In addition, the Escrow Agent shall
have the right to deposit any of the Consideration with a court of competent
jurisdiction pursuant to Section 1006 of the New York Civil Practice Law and
Rules without liability to any party if said dispute is not resolved within
30 days of receipt of any such notice of objection, dispute or otherwise.
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3. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
a. The parties hereto agree that the duties and obligations of
the Escrow Agent are only such as are herein specifically provided and no
other. The Escrow Agent's duties are as a depositary only, and the Escrow
Agent shall incur no liability whatsoever, except as a direct result of its
willful misconduct.
b. The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
c. The Escrow Agent shall not be bound in any way by the terms
of any other agreement to which the Purchasers and the Company are parties,
whether or not it has knowledge thereof, and the Escrow Agent shall not in
any way be required to determine whether or not any other agreement has been
complied with by the Purchasers and the Company, or any other party thereto.
The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Agreement
unless the same shall be in writing and signed by each of the Purchasers and
the Company, and agreed to in writing by the Escrow Agent.
d. In the event that the Escrow Agent shall be uncertain as to
its duties or rights hereunder or shall receive instructions, claims or
demands which, in its opinion, are in conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action, other
than to keep safely, all Considerations held in escrow until it shall jointly
be directed otherwise in writing by the Purchasers and the Company or by a
final judgment of a court of competent jurisdiction.
e. The Escrow Agent shall be fully protected in relying upon
any written notice, demand, certificate or document which it, in good faith,
believes to be genuine. The Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or genuineness of
documents or securities now or hereafter deposited hereunder, or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable in
any respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any such
document, security or endorsement.
f. The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration.
g. If the Escrow Agent at any time, in its sole discretion,
deems it necessary or advisable to relinquish custody of the Consideration,
it may do so by giving five (5) days written notice to the parties of its
intention and thereafter delivering the consideration to any other escrow
agent mutually agreeable to the Purchasers and the Company and, if no such
escrow agent shall be selected within three days of the Escrow Agent's
notification to the Purchasers and the Company of its desire to so relinquish
custody of the Consideration, then the Escrow Agent
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may do so by delivering the Consideration (a) to any bank or trust company in
the Borough of Manhattan, City and State of New York, which is willing to act
as escrow agent thereunder in place and instead of the Escrow Agent, or
(b) to the clerk or other proper officer of a court of competent jurisdiction
as may be permitted by law within the State, County and City of New York.
The fee of any such bank or trust company or court officer shall be borne
one-half by the Purchasers and one-half by the Company. Upon such delivery,
the Escrow Agent shall be discharged from any and all responsibility or
liability with respect to the Consideration and the Company and the
Purchasers shall promptly pay to the Escrow Agent all monies which may be
owed it for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses pursuant to paragraph (i) below.
h. This Agreement shall not create any fiduciary duty on the
Escrow Agent's part to the Purchasers or the Company, nor disqualify the
Escrow Agent from representing either party hereto in any dispute with the
other, including any dispute with respect to the Consideration. The Company
understands that the Escrow Agent has acted and will continue to act as
counsel to the Purchasers.
i. The reasonable out-of-pocket expenses paid or incurred by
the Escrow Agent in the administration of its duties hereunder, including,
but not limited to, all counsel and advisors' and agents' fees and all taxes
or other governmental charges, if any, shall be paid by one-half by the
Purchasers and one-half by the Company.
4. INDEMNIFICATION. The Purchasers and the Company, jointly and
severally, hereby indemnify and hold the Escrow Agent harmless from and
against any and all losses, damages, taxes, liabilities and expenses that may
be incurred, directly or indirectly, by the Escrow Agent, arising out of or
in connection with its acceptance of appointment as the Escrow Agent
hereunder and/or the performance of its duties pursuant to this Agreement,
including, but not limited to, all legal costs and expenses of the Escrow
Agent incurred defending itself against any claim or liability in connection
with its performance hereunder and the costs of recovery of amounts pursuant
to this Section 4.
5. MISCELLANEOUS.
a. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto,
and shall be deemed to have been duly given when (i) if delivered by hand,
upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending
thereof, (iii) if sent by nationally recognized overnight delivery service
(receipt requested), the next business day or (iv) if mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, four
days after posting in the U.S. mails, in each case if delivered to the
following addresses:
If to the Company: Fix-Corp International, Inc.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
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With copies to: Xxxxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxx
If to JNC: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Director
If to DSF: Diversified Strategies Fund, L.P.
c/o Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
With copies to (for Encore Capital Management, L.L.C.
communications to 00000 Xxxxxxx Xxxxxx Xxxxx
either Purchaser): Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
If to the Escrow Agent Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
(the Escrow Agent shall Xxxxxx LLP
receive copies of all 1290 Avenue of the Americas
communications under Xxx Xxxx, XX 00000
this Agreement) Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
or at such other address as any of the parties to this Agreement may
hereafter designate in the manner set forth above to the others.
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(b) This Agreement shall be construed and enforced in
accordance with the law of the State of New York applicable to contracts
entered into and performed entirely within New York.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written.
FIX-CORP INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President/CEO
JNC OPPORTUNITY FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
DIVERSIFIED STRATEGIES FUND, L.P.
By: Encore Capital Management, L.L.C.
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Managing Member
XXXXXXXX XXXXXXXXX XXXXXX
ARONSOHN & XXXXXX LLP
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
A Member of the Firm
