EXHIBIT 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of November 20,
2000, by and among Infinite Group, Inc., a corporation incorporated under the
laws of the State of Delaware, (the "Company"), Cockfield Holdings Limited, a
British Virgin Islands corporation ("Investor"), and Xxxxxxx Xxxxxx & Green,
P.C., (the "Escrow Agent"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Private Equity Line of Credit Agreement
referred to in the first recital.
W I T N E S S E T H:
WHEREAS, the Investor will from time to time as requested by the
Company, purchase shares of the Company's Common Stock from the Company as set
forth in that certain Private Equity Line of Credit Agreement (the "Purchase
Agreement") dated the date hereof between the Investor and the Company, which
will be issued as per the terms and conditions contained herein and in the
Purchase Agreement; and
WHEREAS, the Company and the Investor have requested that the Escrow
Agent hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase Agreement,
and have further requested that upon each exercise of a Put, the Escrow Agent
hold the relevant documents and the applicable purchase price pending receipt by
the Investor of certificates representing the securities issuable upon such Put;
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds and documents
which are referenced in Section 7.2 of the Purchase Agreement.
1.2. At the Initial Closing, the Company shall deliver to the Escrow
Agent:
(i) the initial original Initial Warrant certificate
in the form of Exhibit D to the Purchase
Agreement;
(ii) the original executed Registration Rights
Agreement in the form of Exhibit C to the Purchase
Agreement;
(iii) the original executed opinion of Morse, Zelnick,
Rose & Lander, LLP, counsel of the Company, in the
form of Exhibit E to the Purchase Agreement;
(iv) the sum of $15,000;
(v) a warrant certificate to purchase up to 100,000
shares of Common Stock issued to Jesup and Xxxxxx
Securities Corporation otherwise identical in form
to that of the Warrant (the "J&L Warrant");
(vi) the original executed Company counterpart of this
Escrow Agreement; and
(vii) the original executed Company counterpart of the
Purchase Agreement.
1.3. Upon receipt of the foregoing, and receipt of executed
counterparts from Investor of the Purchase Agreement, the Registration Rights
Agreement and this Escrow Agreement, the Escrow Agent shall calculate the
exercise price of the Initial Warrant and the J&L Warrant and enter the exercise
price, the commencement date and termination date of such warrants on the faces
thereof and immediately transfer the sum of Fifteen Thousand Dollars ($15,000)
to Xxxxxxx Xxxxxx & Green, P.C. ("EB&G"), 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 for the Investor's legal and administrative costs and the Escrow Agent
shall then arrange to have the Initial Warrant certificate, the Purchase
Agreement, this Escrow Agreement, the Registration Rights Agreement and the
opinion of counsel delivered to the Investor and the J&L Warrant certificate
delivered to Jesup & Xxxxxx Securities Corporation.
ARTICLE 2
TERMS OF THE ESCROW FOR EACH PUT
2.1. (a) Each time the Company shall send a Put Notice to the
Investor as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.
(b) Each time the Investor shall purchase shares pursuant to a
Put, the Investor shall send the applicable Investment Amount of the Put Shares
to the Escrow Agent on or before the Closing Date for such Put. The Company
shall promptly, but no later than two (2) Trading Days after receipt of notice
from the Escrow Agent that it has the funds for the Investment Amount cause its
Transfer Agent to deliver the Put Shares to Investor's DTC account through DTC's
DWAC system and the Unit Warrants to the Escrow Agent and the Escrow Agent shall
calculate and enter the number, exercise price, issuance date and termination
date on the face of the Unit Warrant. In the event that the Put Shares are not
in the Investor's DTC account within two (2) Trading Days of the date of the
Escrow Agent's notice, then Investor shall have the right to demand, by notice,
the return of the Investment Amount, and the Put Notice shall be deemed
cancelled. The Escrow Agent shall within one (1) Trading Day of receipt of the
foregoing, wire the Investment Amount per the written instructions of the
Company net of:
(i) a brokerage fee equal to (i), as to the first
$4,000,000 of Put Shares purchased, 4.75% of the
Investment Amount of each Put, (ii) as to the
subsequent $4,000,000 of Put Shares purchased,
4.50% of the Investment Amount of each Put, and
(iii) as to any purchases of Put Shares
thereafter, 4.25%, to Jesup & Xxxxxx Securities
Corporation, less, as to each Put, one thousand
dollars ($1,000) as escrow expenses to the Escrow
Agent, payable out of Jesup & Xxxxxx Securities
Corporation's brokerage fee; and
(ii) as to each Put, one thousand dollars ($1,000) as
escrow expenses to the Escrow Agent.
The Escrow Agent shall remit Broker's fee to Broker in accordance with
wire instructions that will be sent to Escrow Agent from Broker. The Escrow
Agent shall then deliver the Put Shares and the Unit Warrants to the Investor.
ARTICLE 3
MISCELLANEOUS
3.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
All notices or other communications required or permitted hereunder shall be in
writing, and shall be sent by fax, overnight courier, registered or certified
mail, postage prepaid, return receipt requested, and shall be deemed received
upon receipt thereof, as set forth in the Purchase Agreement.
3.2. This Escrow Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and permitted assigns of the parties
hereto.
3.3. This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by their respective agents duly authorized in writing
or as otherwise expressly permitted herein.
3.4. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.
3.5. The parties hereto expressly agree that this Escrow Agreement
shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of New York. Except as expressly set forth herein, any action
to enforce, arising out of, or relating in any way to, any provisions of this
Escrow Agreement shall be brought through the American Arbitration Association
at the designated locale of New York, New York as is more fully set forth in the
Purchase Agreement.
3.6. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Investor and
the Escrow Agent.
3.7. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, excepting only its own gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law (other than Escrow Agent itself)
shall be conclusive evidence of such good faith.
3.8. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
3.9. The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.
3.10. The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in connection with the Escrow Agent's duties hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Investor, and may continue to act as legal counsel for the Investor, from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Investors
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Investor and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
3.11. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Investor. In the event of any such resignation, the Investors
and the Company shall appoint a successor Escrow Agent.
3.12. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
3.13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or federal court having competent subject
matter jurisdiction and located in the State and City of New York in accordance
with the applicable procedure therefor.
3.14. The Company and the Investor agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of this __ day of November, 2000.
INFINITE GROUP, INC.
By:
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Xxxxxxxx X. Xxxxxxxxx, President &
CEO
INVESTOR:
Xxxxxxxxx Holdings Limited
By:
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Name:
Title:
ESCROW AGENT
XXXXXXX XXXXXX & GREEN, P.C.
By:
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Xxxxxx X. Xxxxxxx
Authorized Signatory
