Exhibit 4.5
ESCROW AGREEMENT
ESCROW AGREEMENT (this "AGREEMENT"), dated as of November 26, 1997, 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 an Amended and Restated Convertible Debenture
Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"),
pursuant to which the Company is reissuing to the Purchasers certain of its 5%
Convertible Debentures Due October 24, 2000 (the "OCTOBER DEBENTURES") and
selling to JNC certain of its 5% Convertible Debenture due November 26, 2000
(the "NOVEMBER DEBENTURES") and selling to JNC certain common stock purchase
warrants (the "NOVEMBER JNC WARRANTS"). The October Debentures and the November
Debentures are sometimes hereinafter referred to as the "DEBENTURES".
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, JNC shall deposit with
the Escrow Agent the portion of the Purchase Price due for the November
Debentures and the November JNC Warrant to be purchased by it at the Closing and
Purchasers shall deliver to the Escrow Agent the 6% Convertible Debentures due
October 24, 2000 (the "6% DEBENTURES") 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 November JNC Warrant 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 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 $7,500 which will be retained by the Escrow Agent
pursuant to Section 5.1 of the Purchase Agreement. In addition, the portion of
the Purchase Price released to the Company hereunder shall be reduced by all
wire transfer fees incurred thereupon.
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
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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) October Debentures in aggregate principal amount of $4,000,000 and
November Debentures in the amount of $3,000,000, (B) the November 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, October
Debentures in aggregate principal amount of $1,000,000, (iii) to the Company the
Purchase Price (net of amounts described under Section 1(d)) and the 6%
Debentures; (iv); and (iv) 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.
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 depository only, and the Escrow Agent shall
incur no liability whatsoever, except as a direct result of its willful
misconduct.
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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 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
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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:
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If to the Company: Fix-Corp International, Inc.
00000 Xxxxx Xx. Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
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: Xxxxxx X. Xxxxx
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.
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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.
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
JNC OPPORTUNITY FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: Director
DIVERSIFIED STRATEGIES FUND, L.P.
By: Encore Capital Management, L.L.C.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Director
XXXXXXXX XXXXXXXXX XXXXXX
ARONSOHN & XXXXXX LLP
By: /s/
------------------------------------
A Member of the Firm
