EXHIBIT 2.4
FORM OF SHARES ESCROW AGREEMENT
THIS AGREEMENT dated the 29th day of June, 1998, between The
Recovery Network, Inc., a Colorado corporation (the "Company"), the parties
identified on Schedule A hereto (the "Holder" or "Holders") and Grushko &
Xxxxxxx (the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Company and Holder have entered into a
Subscription Agreement ("Subscription Agreement") calling for the sale by the
Company of the Company's Common Stock ("Company Shares") and Warrants
("Warrants") for the aggregate purchase price of $2,500,000 to the Holders in
the denominations set forth on Schedule A hereto, against payment therefor; and
WHEREAS, Section 10.1(iv) of the Subscription Agreement
requires the Company to deposit the Registration Escrow (as defined in the
Subscription Agreement) with the Escrow Agent to be held in escrow and released
by the 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 following respective meanings:
(a) "Agreement" means this Agreement and all amendments made
hereto and thereto by written agreement between the parties;
(b) "Registration Escrow" means the Registration Escrow
described in Section 10.1(iv) of the Subscription Agreement.
(c) "Funds Escrow" means the funds portion of the Registration
Escrow as described in and to be held in escrow pursuant to Section 10.1(iv) of
the Subscription Agreement.
(d) "Escrowed Securities" means the Company Shares, Company
Warrants, Placement Shares and Placement Agent Commissions components of the
Registration Escrow
described in Sections 6 and 10.1(iv) of the Subscription Agreement, together
with Additional Shares, as defined in Section 9.1(a) of the Registration Escrow
and the additional shares described in Section 10.1(iv) of the Subscription
Agreement.
1.2 Entire Agreement. This Agreement together with the Subscription
Agreement and Convertible Note constitute the entire agreement between the
parties hereto pertaining to the Escrowed Stock and Registration Escrow and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written of the parties. 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, only by a written instrument signed by all parties 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 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to
principles of conflict of laws.
1.7 Consents to Service of Process. The Company and the Holder each
hereby irrevocably consent to the exclusive jurisdiction of the courts of the
State of New York and of any federal court located in the State of New York,
each as may have competent jurisdiction, in connection with any action, submit
or other proceeding arising out of or relating to this Agreement or any action
taken or omitted hereunder, and waive personal service of any summons, complaint
or other process and agree that the service hereto may be made by certified or
registered mail directed to such person at such person's address for purpose of
notice hereunder.
1.8 Fees. The Company shall pay the Escrow Agent a fee of $5,000 in
connection with the Escrow Agent's services hereunder. The Escrow Agent shall be
paid by the Company an additional fee of $2,500 (without apportionment) on each
anniversary of the date of this Agreement upon which the Escrow Agent is holding
any Company Documents or Subscriber Documents.
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ARTICLE II
STOCK TO BE DELIVERED TO THE ESCROW AGENT
2.1 Delivery of Company's Stock to Escrow Agent. As required under
Section 10.1(iv) of the Subscription Agreement, the Company and Holder shall
deliver to the Escrow Agent the Registration Escrow at or prior to the Closing
Date. Such additional common stock of the Company as is required to be delivered
to the Escrow Agent pursuant to the Subscription Agreement shall be delivered to
the Escrow Agent and shall be a portion of the Registration Escrow.
2.2 Intention to Create Escrow Over Registration Escrow. The Holder and
Company intend that the Registration Escrow shall be held in escrow by the
Escrow Agent pursuant to this Agreement for their respective benefits as set
forth herein.
2.3 Escrow Agent to Hold Registration Escrow. The Escrow Agent shall
hold and release the Registration Escrow only in accordance with the terms and
conditions of this Agreement.
ARTICLE III
RELEASE OF REGISTRATION ESCROW
3.1 Subject to the provisions of Section 4.2, the Escrow Agent shall
release the Registration Escrow as follows:
(a) Upon receipt by the Escrow Agent of a notice ("Notice of
Release") signed by a Holder, reciting that a Holder is entitled to receive all
or part of the Registration Escrow designated on Schedule A hereto in accordance
with the terms of the Subscription Agreement, the Escrow Agent shall promptly
deliver a copy of such Notice of Release to the Company. If the Escrow Agent
does not receive from the Company within three (3) business days after notice is
given to the Company by the Escrow Agent, a written notice of objection stating
the reasons for the objection in accordance with the terms of the Subscription
Agreement ("Notice of Objection") signed by the Company, or if the Escrow Agent
shall within such period receive a written consent signed by the Company to such
return, then the Escrow Agent shall deliver to the Holder that amount of the
Registration Escrow as is called for in the Notice of Release; deliver to the
Company the complementary portion of the Registration Escrow; and deliver to the
Placement Agent the corresponding portion of the Placement Shares and Placement
Agent Commissions as described in the Subscription Agreement and set forth on
Schedule B hereto. If the Escrow Agent receives Notice of Objection from the
Company within such three (3) business day period, the Escrow Agent shall
continue to hold the Registration Escrow until otherwise authorized and directed
to distribute the same pursuant to the provisions of Sections 3.3(c) or 3.3(d).
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(b) Upon receipt by the Escrow Agent of a notice ("Notice of
Delivery") signed by the Company stating that the Company is entitled to receipt
of the Registration Escrow or any portion thereof, in accordance with the
provisions of the Subscription Agreement, and stating the reasons therefor, the
Escrow Agent shall promptly send a copy of such Notice of Delivery to the
Holder. If the Escrow Agent does not receive from the Holder within three (3)
business days after notice is given to the Holder by the Escrow Agent, a written
Notice of Objection stating the reasons for the objection in accordance with the
terms of the Subscription Agreement signed by the Holder, or if the Escrow Agent
shall within such period receive a written consent signed by the Holder, then
the Escrow Agent shall deliver the Registration Escrow or such portion thereof
to the Company in accordance with the Notice of Delivery, deliver to the Holder
the complementary portion of the Registration Escrow, and deliver to the
Placement Agent the corresponding portion of the Placement Shares and Placement
Agent Commissions described in the Subscription Agreement and set forth on
Schedule B hereto. If the Escrow Agent receives a Notice of Objection from the
Holder within such three (3) day period, then the Escrow Agent shall continue to
hold the Registration Escrow until otherwise authorized and directed to
distribute the same pursuant to the provision of Sections 3.3(c) or 3.3(d).
(c) Upon receipt by the Escrow Agent of a joint written
instruction (a "Joint Instruction") signed by the Company and the Holder, it
shall deliver the Registration Escrow in accordance with the terms of the Joint
Instruction.
(d) 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"), the Escrow Agent shall deliver the Registration
Escrow 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 has competent jurisdiction and that the
Court Order is final and non-appealable.
3.2 Acknowledgement of Company and Holder; Disputes. The Company and
the Holder acknowledge that the only terms and conditions upon which the
Registration Escrow are to be released are set forth in Section 3 and 4 of this
Agreement. The Company and the Holder reaffirm their agreement to abide by the
terms and conditions of this Agreement with respect to the release of the
Registration Escrow. Any dispute with respect to the release of the Registration
Escrow shall be resolved pursuant to Section 4.2 or by agreement between the
Company and Holder.
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:
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(a) The Holder and Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Holder or Company is entitled to
receipt of the Registration Escrow pursuant to, the Subscription Agreement or
otherwise; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
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 it 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; (iv) 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; (v)
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
(vi) may consult counsel satisfactory to Escrow Agent, 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.
(b) The Holder and 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 right or powers
conferred upon Escrow Agent by this Agreement. The Holder and Company, jointly
and severally, agree to indemnify and hold harmless the Escrow Agent and any of
Escrow Agent's partners, employees, agents and representatives for any action
taken or omitted to be taken by Escrow Agent or any of them hereunder, including
the reasonable fees and costs of outside counsel in defending itself against any
claim or liability under this Agreement, except in the case of gross negligence
or willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the Holder
and Company under this Agreement and to no other person.
(c) The Holder and Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred in connection with the performance of its
duties and responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days' prior written notice of resignation to the
Holder and the Company. Prior to the effective date of the resignation as
specified in such notice, the Holder and Company will issue to the Escrow Agent
a Joint Instruction authorizing delivery of the Registration Escrow to a
substitute Escrow Agent selected by the Holder and Company. If no successor
Escrow Agent is named by the Holder and Company, the Escrow Agent may apply to a
court of competent jurisdiction in the state of New York or any federal court
located in the state of New York for appointment of a successor Escrow Agent.
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(e) The Escrow Agent does not have and will not have any
interest in the Escrowed Stock or Registration Escrow, but is serving only as
escrow holder, having only possession thereof. The Escrow Agent shall not be
liable for any loss resulting from the making or retention of any investment in
accordance with this Escrow Agreement.
(f) 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.
(g) The Escrow Agent shall be permitted to act as counsel for
the Holder or the Company, as the case may be, in any dispute as to the
disbursement of the Escrowed Stock or Registration Escrow or in any other
dispute between the Holder and Company, whether or not the Escrow Agent is then
holding the Escrowed Stock or Registration Escrow and continues to act as the
Escrow Agent hereunder.
(h) 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 Escrowed Stock or
Registration Escrow, 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 Registration Escrow pending receipt of a Joint Instruction
from the Holder and Company, or (ii) deposit the Registration Escrow 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 Holder 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 Escrowed Stock or
Registration Escrow. The Escrow Agent shall have the right to retain counsel if
Escrow Agent becomes involved in any disagreement, dispute or litigation on
account of this Agreement or otherwise determines that it is necessary to
consult counsel.
(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 Holder and Company or
to any other person, firm, corporation or entity by reason of such compliance.
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ARTICLE V
GENERAL MATTERS
5.1 Termination. This escrow shall terminate upon the release of all of
the Registration Escrow or at any time upon the agreement in writing of the
Holder and Company.
5.2 Notices. All notices, request, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been received one (1) day after being sent by telecopy (with copy delivered by
overnight courier):
(a) If to the Company, to:
The Recovery Network, Inc.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (Telecopier)
With a Copy by telecopier only to:
Parker, Chapin, Flattau & Klimpl, LLP
Attn: Xxxxx Xxxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (Telecopier)
(b) If to the Holder, to: the addresses and telecopier
numbers listed on Schedule A hereto.
(c) If to the Escrow Agent, to:
Grushko & Xxxxxxx
Attorneys at Law
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (telecopier)
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
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5.3 Interest. Within fifteen days after receipt by the Escrow Agent of
the Registration Escrow, the Registration Escrow will be deposited and held in
an interest bearing attorney's trust account. Interest will be payable in
connection therewith to the party or parties entitled to receive the principal
of the Registration Escrow (but not the Placement Agents), but only if such
party has provided to the Escrow Agent a United States taxpayer identification
number, reasonably requested documents and forms or satisfactory evidence that
the intended recipient is exempt from United States and local taxation. The
Escrow Agent may deduct from any amount due a party hereto the maximum amount
reasonably believed by the Escrow Agent that will be charged to the Escrow Agent
as tax by the United States and local tax authorities.
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 enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5 Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the 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 instrument. This
Agreement may be executed by facsimile transmission.
5.6 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.
5.7 Agreement. Each of the undersigned states that he has read the
foregoing Shares Escrow Agreement and understands and agrees to it.
THE RECOVERY NETWORK, INC.
"Company"
By:________________________________
AUSTOST ANSTALT XXXXXX
"Subscriber"
By:________________________________
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BALMORE FUNDS S.A.
"Subscriber"
By:________________________________
ESCROW AGENT:
GRUSHKO & XXXXXXX
By:________________________________
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5.7. Agreement. Each of the undersigned states that he has read the
foregoing Shares Escrow Agreement and understands and agrees to it.
THE RECOVERY NETWORK, INC.
"Company"
By:________________________________
BL SQUARED FOUNDATION
"Subscriber"
By:________________________________
THE SARGON FUND, L.P.
"Subscriber"
By:_________________________________
ZAKENI LTD.
"Subscriber"
By:________________________________
-----------------------------------
XXXXXX XXXXX -"Subscriber"
TLG REALTY
"Subscriber"
By:________________________________
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XXXXXX XXXXX:
GRUSHKO & XXXXXXX
By:________________________________
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SHARES -SCHEDULE A
SUBSCRIBERS REGISTRATION ESCROW REGISTRATION REGISTRATION
COMPANY SHARES ESCROW ESCROW FUNDS
WARRANTS
--------------------------------------- -------------------------------- ------------------------ ----------------------
AUSTOST ANSTALT XXXXXX Needed: 98,361 9,000 $225,000
7440 Fuerstentum Short: 42,213
Xxxxxxxxxxx
Xxxxxxxxxxx 000 Deposited: 56,148
Fax: 000-000-000000000
--------------------------------------- -------------------------------- ------------------------ ----------------------
BALMORE FUNDS S.A. Needed: 98,361 9,000 $225,000
X.X. Xxx 0000 Short: 42,213
Zurich, Switzerland
Fax: 000-000-000-0000 Deposited: 56,148
--------------------------------------- -------------------------------- ------------------------ ----------------------
ZAKENI LTD. Needed: 65,573 6,000 $150,000
c/o Betuvo AG Short: 28,141
Xxxxxx Xxxxxxx
00 Postsach 2121 Deposited: 37,432
0000 XXX, Xxxxxxxxxxx
Fax: 000-000-0000
--------------------------------------- -------------------------------- ------------------------ ----------------------
BL SQUARED FOUNDATION Needed: 26,229 2,400 $ 60,000
000 Xxxxxxx Xxxxxx Short: 11,256
Xxx Xxxx, XX 00000
Tax ID: 00-0000000 Deposited: 14,973
Fax: 000-000-0000
--------------------------------------- -------------------------------- ------------------------ ----------------------
THE SARGON FUND, L.P. Needed: 19,672 1,800 $ 45,000
00 Xxxxx Xxxx Short: 8,442
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx Deposited: 11,230
Tax ID:
Fax: 000-000-0000
--------------------------------------- -------------------------------- ------------------------ ----------------------
XXXXXX XXXXX Needed: 13,114 1,200 $ 30,000
0000 Xxxx 00xx Xxxxxx Short: 5,628
Xxxxxxxx, XX 00000
Tax ID: ###-##-#### Deposited: 7,486
Fax: 000-000-0000
--------------------------------------- -------------------------------- ------------------------ ----------------------
TLG REALTY Needed: 6,557 600 $ 15,000
c/o Melo Short: 2,814
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 Deposited: 3,743
Fax: 000-000-0000
--------------------------------------- -------------------------------- ------------------------ ----------------------
TOTALS Needed: 327,867 30,000 $750,000
Short: 140,707
Deposited: 187,160
======================================= ================================ ======================== ======================
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SHARES -SCHEDULE B
PLACEMENT AGENT REGISTRATION ESCROW - REGISTRATION ESCROW
PLACEMENT SHARES -PLACEMENT AGENT
COMMISSIONS
--------------------------------------- ------------------------------------------- ---------------------------------
XXXXX ENTERPRISES LTD. 9,836 $22,500
Xxxxxx, Xxxxxxx
XX0 0XX
Fax: 000-000-000000000
--------------------------------------- ------------------------------------------- ---------------------------------
LIBRA FINANCE S.A. 3,279 $ 7,500
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
--------------------------------------- ------------------------------------------- ---------------------------------
TOTALS 13,115 $30,000
======================================= =========================================== =================================
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