ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of May 7, 2004, by and among
Critical Home Care, Inc., a Nevada corporation (the "Corporation"), Xxxx X.
Xxxxxxx XX ("Xxxxxxx"), Xxxxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxxx Xxxxxx & Xxxxxx,
P.C. ("Escrow Agent"). Xxxxxxx and Xxxxxxx are hereinafter each referred to as a
"Seller" and collectively referred to as the "Sellers".
R E C I T A L S
WHEREAS, Corporation and Sellers and others are parties to a certain
Agreement and Plan of Merger dated May 7, 2004 ("Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, Sellers received a total of
21,300,000 shares of common stock of Corporation ("Merger Consideration") in
exchange for all of their common stock in RDKA, Inc. ("RDKA");
WHEREAS, pursuant to Section 2.2 of the Merger Agreement, a copy of which
is attached hereto as Exhibit "A", Sellers agreed that 10,000,000 shares
("Escrowed Shares") of the Merger Consideration received by Sellers would be
subject to forfeiture in the event that certain earnings targets were not
achieved by RDKA, its subsidiary Arcadia Services, Inc., and its affiliate SSAC,
LLC for the twelve month period ending March 31, 2006 and the twelve month
period ending March 31, 2007;
WHEREAS, Escrow Agent is willing to hold, administer and distribute the
Escrowed Shares in accordance with the terms of this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and with the intent to be legally
bound hereby, the parties hereby agree as follows:
1. Appointment of Escrow Agent. Corporation and Sellers hereby appoint the
Escrow Agent to serve as escrow agent and to hold, administer and distribute the
Escrowed Shares as provided hereunder, and Escrow Agent agrees to act as the
Escrow Agent and to perform the services required hereunder.
2. Deposit of Escrowed Shares. Upon receipt of the Merger Consideration,
each Seller shall deliver to Escrow Agent the number of Escrowed Shares set
forth below, together with a Stock Power executed in blank. Escrow Agent agrees
to hold, administer and distribute the Escrowed Shares in the manner set forth
in this Agreement.
Seller # of Escrowed Shares
Xxxxxxx 6,000,000
Xxxxxxx 4,000,000
3. Release of Escrowed Shares. The Escrow Agent shall release the Escrowed
Shares to the Sellers or Company, as applicable, upon the delivery of any of the
following written directions to Escrow Agent:
(a) A joint written instruction executed by the Sellers and Corporation
directing Escrow Agent to deliver to Sellers or Corporation, as
applicable, all or such part of the Escrowed Shares specified in the
written instruction, which written instruction shall be delivered to
Escrow Agent at each of the following times:
(i) within twenty (20) days following the completion of the financial
audit of the Corporation for fiscal year 2005;
(ii) within twenty (20) days following the completion of the financial
audit for fiscal year 2006;
(iii)at any time during if the Corporation's common stock price on
the NASD OTC Bulletin Board (or any other stock exchange) is
either (A) one dollar ($1.00) per share for thirty (30)
consecutive trading days, or (B) the average closing price for
the Corporation's common stock price for any forty-five (45)
consecutive trading days is one ($1.00) per share;
(b) A written instruction executed by the Sellers or Corporation,
attaching a final and nonappealable order from a court of competent
jurisdiction directing Escrow Agent to deliver to the Sellers or
Company, as applicable, all or such part of the Escrowed Shares as is
specified in the order.
3. Shareholder Rights. Notwithstanding anything contained in this Agreement
to the contrary, (i) all of the Escrowed Shares shall constitute issued and
outstanding shares of Company stock, (ii) the Sellers shall be entitled to
receive immediately (and not paid into escrow) any dividends payable with
respect to such Escrowed Shares in the same manner as if such Escrowed Shares
were not subject to this Agreement, and (iii) Sellers (or their authorized
agent) shall have the right to vote the Escrow Shares on all matters required by
law to be submitted or are otherwise submitted to the vote of the shareholders
of the Company in the same manner as if such Escrowed Shares were not subject to
this Agreement. If any dividends on the Escrowed Shares are paid over to the
Escrow Agent, then the Escrow Agent shall promptly distribute such dividends to
the Sellers on a pro rata basis.
4. Transfer of Escrowed Shares. Sellers shall not have the right to sell,
assign, transfer, or convey any part of the Escrowed Shares as long as such
shares remain subject to this Agreement.
5. Compensation. The Corporation shall pay the Escrow Agent the sum of
$1,250 in consideration of the Escrow Agent's services hereunder. In addition,
the Corporation shall pay or reimburse Escrow Agent for all reasonable expenses,
disbursements and advances, including reasonable attorneys' fees, incurred by
Escrow Agent in connection with carrying out its duties under this Agreement.
5. Legal Counsel. Escrow Agent may employ such legal counsel and other
experts as it reasonably may deem necessary to retain for advice in connection
with its obligations hereunder, may rely upon the advice of such counsel or
experts and may pay such counsel or experts reasonable compensation therefor.
6. Resignation. Escrow Agent may resign from its duties hereunder at any
time by giving written notice of such resignation to the Corporation and
Sellers. The resignation shall be effective on the date specified by the Escrow
Agent in the written notice, but in no event less than forty five (45) days
after the giving of such notice. Promptly after such notice, a successor escrow
agent shall be appointed by mutual agreement of Corporation and Sellers. Escrow
Agent agrees to continue to serve until its successor accepts the escrow and
receives the Escrowed Shares. If a successor Escrow Agent has not been appointed
or has been appointed but has not accepted such appointment by the end of the
45-day period, Escrow Agent may apply to a court of competent jurisdiction for
the appointment of a successor Escrow Agent, and the costs, expenses and
reasonable attorneys' fees that are incurred in connection with such proceeding
shall be paid the Corporation.
7. Liability. Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. The duties of Escrow Agent are intended to be
purely ministerial in nature, and it shall not incur any liability whatsoever,
except for Escrow Agent's willful misconduct or gross negligence. Escrow Agent
shall not have any responsibility for the genuineness or validity of any
document or other item deposited with it or of any signature thereon and shall
not have any liability for acting in accordance with any written instructions or
certificates given to it hereunder and believed by it to be signed by the proper
parties. Escrow Agent, when acting or refraining from acting in good faith,
shall be entitled to rely conclusively upon (i) any written notice, instrument
or signature believed by it to be genuine and to have been signed or presented
by the proper party or parties duly authorized to do so hereunder, and (ii) the
advice of legal counsel retained by it. Corporation and Sellers jointly and
severally agree to hold Escrow Agent (and each of its officers, directors,
employees and agents) harmless from, and indemnify Escrow Agent (and each of its
officers, directors, employees and agents) against, any loss, liability, expense
(including, without limitation, reasonable attorneys' fees and expenses), claim,
suit, action, or demand arising out of or in connection with the Escrow Agent's
execution of this Agreement and the performance of Escrow Agent's obligations
under this Agreement, except for any of the foregoing arising out of the gross
negligence or willful misconduct of Escrow Agent. The foregoing indemnification
obligations in this Section shall survive the resignation and substitution of
Escrow Agent and the termination of this Agreement. The costs and expenses of
enforcing these rights of indemnification shall also be paid by the Corporation.
8. Controversies. If any controversy arises involving the Corporation,
Sellers or any third person with respect to the subject matter of this
Agreement, or if any situation not addressed under this Agreement arises or
Escrow Agent is not directed how to act hereunder, Escrow Agent shall not
determine the same or take any action with respect thereto, but shall await the
final resolution of any such controversy, and in such event Escrow Agent shall
not be liable for any damage incurred as a result of, or in connection with,
such controversy. Furthermore, if in its sole, good faith judgment the Escrow
Agent determines that it is confronted with conflicting demands with respect to
the Escrowed Shares such that it risks incurring liability regardless of the
action it takes or refrains from taking in connection with such demands, the
Escrow Agent may, at its option, file an action of interpleader requiring the
parties to answer and litigate any claims and rights among themselves. The
Corporation shall pay all legal fees incurred by Escrow Agent in connection any
such interpleader action.
9. Discharge of Escrow Agent. Escrow Agent agrees that Corporation and
Sellers may, by mutual written agreement at any time, remove Escrow Agent, and
substitute therefor a bank or trust company, in which event, upon receipt of
written notice thereof, payment by the Corporation of any accrued but unpaid
fees due Escrow Agent and reimbursement of Escrow Agent's other fees and
expenses, Escrow Agent shall deliver the Escrowed Shares to such substituted
escrow agent, and Escrow Agent shall thereafter be discharged from all liability
hereunder except for any liability resulting from Escrow Agent's willful
misconduct or gross negligence.
10. Notices. Any notice required or permitted to be given by any party
under this Agreement shall be given in writing and shall be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) on the next
business day after delivery to a nationally recognized overnight courier
service, (iii) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, or (iv) five days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
or facsimile number indicated below for such party or at such other address as
such party may designate upon written notice to the other parties (except that
notice of change of address shall be deemed given upon receipt)
(a) if to Corporation, addressed to
Critical Home Care, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(b) if to Sellers, then to :
Xxxx X. Xxxxxxx and Xxxxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Xxxxxxx and Xxxxx
Detroit Center
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
(c) if to Escrow Agent, then to:
Xxxxxx Xxxxxx & Xxxxxx. P.C.
00000 Xxxxxxxxxxxx Xxx.
Xxxxxxxx Xxxxxx, Xxxxx 000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
11. Termination of Agreement. This agreement shall continue in force until
all of the Escrowed Shares have been properly delivered to the Sellers or
Corporation, as applicable.
12. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the persons,
firm or corporation may require in the context thereof.
13. Governing Law. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
Michigan without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
14. Counterparts. This Agreement may be executed in any number of
counterparts and facsimile signatures, each of which shall be deemed an original
but all of which together shall constitute but one and the same instrument.
15. Amendments and Waivers. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. No amendment, supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the Corporation, Sellers and
Escrow Agent. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
IN WITNESS WHEREOF, the parties hereto have signed this Escrow Agreement as
of the date first above written.
"CORPORATION":
CRITICAL HOME CARE, INC.
By: /s/Xxxxx Xxxxxx
-------------------
Name: Xxxxx Xxxxxx
Title:President
"SELLERS"
/s/ Xxxx X. Xxxxxxx, XX
-----------------------
Xxxx X. Xxxxxxx, XX
/s/ Xxxxxxxx Xxxxxxx
---------------------
Xxxxxxxx Xxxxxxx
"ESCROW AGENT"
/s/Xxxxxx X. Xxxxxx
-------------------
By: Xxxxxx X. Xxxxxx
ts: President
EXHIBIT "A"
SECTION 2.2 OF MERGER AGREEMENT
2.2 Escrow of Parent Common Stock Received by Shareholders. Xxxxxxx and
Xxxxxxx agree to escrow a total of 10,000,000 shares of Parent Common Stock
received by them in connection with the Merger, on a pro rata basis ("Escrow
Shares"). The Escrow Shares shall be released from escrow upon the Company
meeting the following milestones:
(a) Fiscal 2006 EBITDA. Fifty percent (50%) of the Escrow Shares will be
released within thirty (30) days following the completion of the audit
for the twelve (12) month period ending March 31, 2006 ("Fiscal 2006")
if the Company meets an "Adjusted EBITDA" of $9.7 Million for Fiscal
2006. "Adjusted EBITDA" for purposes of this Section 2.2 shall be
determined as set forth in Schedule 2.2a.
(b) Fiscal 2007 EBITDA. The remaining fifty percent (50%) of the Escrow
Shares will be released from escrow upon Company meeting Adjusted
EBITDA of $12.5 Million for the twelve (12) month period ending March
31, 2007 ("Fiscal 2007").
(c) Alternative Release of Escrow Shares. As an alternative to the release
of Escrow Shares set forth in the previous two Subsections, all Escrow
Shares shall be released in 2007, within thirty (30) days of
completion of the audit for Fiscal 2007, if Company obtains a combined
Adjusted EBITDA for Fiscal 2006 and Fiscal 2007 of $22.2 Million or
greater.
(d) Debt to EBITDA Ratio. For any of the Escrow Shares to be released
pursuant to Subsections 2.2a. or 2.2b., the Debt (as defined on
Schedule 2.2d.) to Adjusted EBITDA ratio for the Company must be 2.00
or less for Fiscal 2006, and 2.00 or less for Fiscal 2007. For this
purpose, Debt shall only include the outstanding debt obligations owed
by the Company (and its subsidiaries on a consolidated basis) to
Comerica Bank (or its successor).
(e) Failure to Reach Adjusted EBITDA Numbers. If Company fails to reach
the Adjusted EBITDA numbers set forth in Subsections 2.2a. and 2.2b.,
then, subject to Subsection 2.2f., the Shareholders will forfeit in
2007 the applicable amount of Escrow Shares within sixty (60) days of
completion of the audit for Fiscal 2007, unless the provisions of
Subsection 2.2c. apply.
(f) Additional Means of Obtaining Escrow Shares. Notwithstanding anything
in this Agreement or otherwise to the contrary, Xxxxxxx and Xxxxxxx
will receive, on a pro rata basis, 2,000,000 of the Escrow Shares if
Parent's Common Stock price on the NASD OTC Bulletin Board (or any
other exchange) at any time between the Closing Date and sixty (60)
days after completion of the audit for Fiscal 2007 is either (i) at
least one dollar ($1.00) per share for thirty (30) consecutive trading
days; or (ii) the average closing price for any forty-five (45)
consecutive trading days is at least one dollar ($1.00) per share.
This provision shall apply even if the Adjusted EBITDA targets and
Debt to Adjusted EBITDA ratios discussed above are not met in Fiscal
2006 and/or Fiscal 2007.
(g) Rights with Respect to Escrow Shares while in Escrow. Notwithstanding
anything contained in this Agreement to the contrary, (i) all of the
Escrow Shares shall constitute issued and outstanding shares of Parent
Common Stock, (ii) the Shareholders shall be entitled to receive
immediately (and not paid into escrow) any dividends payable with
respect to the Escrow Shares in the same manner as if such Escrow
Shares were not subject to this Agreement and (iii) the Shareholders
of the Escrow Shares (or their authorized agent) shall have the right
to vote the Escrow Shares on all matters required by law to be
submitted or are otherwise submitted to the vote of the shareholders
of the Parent in the same manner as if such Escrow Shares were not
subject to this Agreement.
