Exhibit 4.22
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made as of March __, 2001, by
and among WINTER HARBOR, LLC, a Delaware limited liability company (the
"Holder"), COUNSEL COMMUNICATIONS LLC (the "Purchaser" or "Counsel"), and UNION
BANK OF CALIFORNIA, N.A., as escrow agent (the "Escrow Agent").
Holder and Purchaser have entered into a Securities Purchase Agreement,
dated as of March 1, 2001 (the "Purchase Agreement"). Section 6.3 of the
Purchase Agreement requires that Holder and Purchaser enter into this Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW; INVESTMENT OF CASH DEPOSIT.
(a) Holder is depositing, or will deposit within five business days of the
date hereof, with Escrow Agent an amount equal to Five Million (5,000,000)
shares of I-Link, Incorporated ("I-Link") common stock (the "I-Link Stock") and
the Purchase Price in the amount of Five Million Dollars ($5,000,000) under the
Purchase Agreement (the "Cash Deposit") (the I-Link Stock and the Cash Deposit
are collectively referred to herein as the "Escrow Property"). Escrow Agent will
acknowledge receipt promptly upon receipt of the Escrow Property.
Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard
and disburse the Escrow Property pursuant to the terms and conditions hereof.
Holder shall retain the right to vote the I-Link Stock in escrow and to
receive all proceeds (including dividends and interest) earned or paid on the
Escrow Property.
(b) Upon receipt of the Cash Deposit the Escrow Agent shall pending the
disbursement thereof pursuant to this Agreement, invest the Cash Deposit in
accordance with Holder's written instructions in (a) direct obligations of, or
obligations fully guaranteed by, the United States of America or any agency
thereof, (b) certificates of deposit issued by commercial banks having a
combined capital, surplus and undivided profits of not less than One Hundred
Million Dollars ($100,000,000), (c) repurchase agreements collateralized by
securities issued by the United States of America or any agency thereof, or by
any private corporation the obligations of which are guaranteed by the full
faith and credit of the United states of America, (d) prime banker's
acceptances, (e) money market funds investing in any of the above, or (f) other
investments of equal or greater security and liquidity. Absent written
direction, the Escrow Agent will invest funds in the Provident Cash Management
Shares T-Fund, and the parties acknowledge that the Escrow Agent may render
administrative services and receive additional fees from the administrator or
distributor of said Fund. The Escrow Agent shall pay to Holder by check on a
quarterly basis all interest or other proceeds earned on the Cash Deposit.
2. ADMINISTRATION OF ESCROW PROPERTY. The Escrow Agent shall administer the
Escrow Property as follows:
(a) Delivery of Claim Notice. Upon the receipt of notice (hereinafter the
"Claim Notice"), duly certified by an officer of Purchaser, setting forth
Purchaser's calculation of the portion of Escrow Property due at that time under
Article 6 of the Purchase Agreement (the "Claimed Amount") the Escrow Agent
shall send a copy of such notice to the Holder.
(b) Response Notice; Uncontested Claims. Within ten (10) days of the date
the Claim Notice was sent to Holder (the "Response Date"), Holder shall provide
to Purchaser and to the Escrow Agent a written response (the "Response Notice")
in which Holder shall: (i) agree that the full Claimed Amount may be released
from the Escrow Property to Purchaser, (ii) agree that part, but not all, of the
Claimed Amount (the "Agreed Amount") may be released from the Escrow Property to
Purchaser or (iii) contest that any of the Claimed Amount may be released from
the Escrow Property to Purchaser. Holder may contest the release of all or a
portion of the Claimed Amount only based upon a good faith belief that all or
such portion of the Claimed Amount does not constitute an indemnity obligation
under the Purchase Agreement and Purchaser may make a claim hereunder only based
upon a good faith belief that it is entitled to the Claimed Amount under the
Purchase Agreement. If no Response Notice is delivered by Holder to the Escrow
Agent by the Response Date, Holder shall be deemed to have agreed that the
entire Claimed Amount may be released to Purchaser from the Escrow Property.
(c) Uncontested Claim. If Holder in the Response Notice agrees or is deemed
to have agreed that the Claimed Amount may be released from the Escrow Property
to Purchaser, the Escrow Agent shall, no later than ten (10) days after receipt
of the Response Notice, transfer, deliver, and assign to Purchaser the Claimed
Amount from the Escrow Property.
(d) Partially Contested Claims. If Holder in the Response Notice agrees
that part, but not all, of the Claimed Amount may be released from the Escrow
Property to Purchaser, the Escrow Agent shall, no later than ten (10) days after
receipt of the Response Notice, transfer, deliver, and assign to Purchaser the
Agreed Amount from the Escrow Property (or such lesser amount as is then held in
the Escrow Property).
(e) Fully Contested Claims. If Holder in the Response Notice contests the
release of all or part of the Claimed Amount (the "Contested Amount"), the
matter shall be settled by binding arbitration held in New York City, New York.
All claims shall be settled by three arbitrators in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association (the "Rules"). Holder and Purchaser shall each designate one
arbitrator within fifteen (15) days of the delivery of the Response Notice
contesting the Claimed Amount. Such designated arbitrators shall mutually agree
upon and shall designate a third arbitrator; provided however, that (i) in the
event the two designated arbitrators fail to reach agreement with respect to the
designation of the third arbitrator within fifteen (15) days of delivery of the
Response Notice, the third arbitrator shall be appointed in accordance with the
Rules and (ii) if either Holder or Purchaser fail to timely designate an
arbitrator, the dispute shall be resolved by the one arbitrator timely
designated. There shall be limited discovery prior to the arbitration hearing,
subject to the discretion of the arbitrators, as follows: (a) exchange of
witness lists and copies of documentary evidence and documents related to or
arising out of the issues to be arbitrated, (b) depositions of all party
witnesses, and (c) such other depositions as may be allowed by the arbitrators
upon a showing of good cause. Depositions shall be conducted in accordance with
the New York Code of Civil Procedure. Each of Holder and Purchaser shall pay its
own costs and expenses (including counsel fees) of any such arbitration. Holder
and Purchaser shall pay the fees and expenses of their respectively designated
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arbitrators and shall bear equally the fees and expenses of the third
arbitrator. The arbitrators shall decide the matter to be arbitrated pursuant
hereto within sixty (60) days after the appointment of the last arbitrator. The
arbitrators' decision shall relate solely to whether Purchaser is entitled to
receive the Contested Amount (or a portion thereof) pursuant to the applicable
terms of the Purchase Agreement and this Agreement. The final decision of the
majority of the arbitrators shall be furnished to Holder, Purchaser and the
Escrow Agent in writing and shall constitute a conclusive determination of the
issue in question, binding upon Holder, Purchaser and the Escrow Agent and shall
not be contested by any of them. Such decision may be used in a court of law
only for the purpose of seeking enforcement of the arbitrators' award. After
delivery of a Response Notice that the Claimed Amount is contested by Holder,
the Escrow Agent shall continue to hold in escrow the Escrow Property, until (i)
delivery of written joint instructions executed by Purchaser and Holder setting
forth instructions to the Escrow Agent as to release of all or portion of the
Escrow Property, or (ii) delivery of a copy of the final award of the majority
of the arbitrators setting forth instructions to the Escrow Agent as to the
release of all or portion the Escrow Property. The Escrow Agent shall thereupon
release the applicable amount from the Escrow Property in accordance with such
joint written instructions or the award of a majority of the arbitrators.
3. FINAL RELEASE OF ESCROW PROPERTY.
(a) Upon the occurrence of an Escrow Termination Event under Section 6.3(a)
of the Purchase Agreement, Holder and Purchaser shall immediately instruct the
Escrow Agent to disburse any remaining Escrow Property to Holder. Upon receipt
of such joint instructions from Holder and Purchaser, the Escrow Agent shall
promptly comply with such joint instructions.
(b) If Holder is unable to get joint instructions from Purchaser, Holder
may deliver a notice to Escrow Agent duly certified by an officer of Holder
stating that an Escrow Termination Event has occurred and that Holder is
entitled to the Escrow Property. Upon receipt of such notice, the Escrow Agent
shall send a copy of such notice to Purchaser. Within ten (10) days of the
notice to Purchaser (the "Purchaser Response Date"), Purchaser shall send a
notice to Escrow Agent and Holder indicating whether or not it agrees that the
Escrow Termination Event has occurred (the "Purchaser Response Notice"). If
Purchaser agrees in its Purchaser Response Notice that an Escrow Termination
Event has occurred or if the Purchaser does not respond to the Escrow Agent
within the Purchaser Response Date, the Escrow Agent shall promptly thereafter
disburse to Holder the Escrow Property. If Purchaser contests in its Response
Notice to the Escrow Agent that an Escrow Termination Event has occurred, the
Escrow Agent shall retain the Escrow Property and Holder and Purchaser shall
resolve their disagreement in accordance with the terms of Section 2(e). After
delivery of a Purchaser Response Notice from Purchaser contesting that an Escrow
Termination Event has occurred, the Escrow Agent shall continue to hold in
escrow the Escrow Property, until (i) delivery of joint written instructions
executed by Purchaser and Holder setting forth instructions to the Escrow Agent
as to release of all or portion of the Escrow Property, or (ii) delivery of a
copy of the final award of the majority of the arbitrators setting forth
instructions to the Escrow Agent as to the release of all or portion of the
Escrow Property. The Escrow Agent shall thereupon release the applicable amount
from the Escrow Property in accordance with such joint written instructions or
the award of a majority of the arbitrators.
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(c) Notwithstanding the other provisions of Section 2 and 3, the Escrow
Agent, upon receipt of written instructions signed by both Holder and Purchaser
with respect to the delivery of all or portion of the Escrow Property, shall
deliver the Escrow Property in accordance with such instructions without any
need for the parties to comply with the other provisions of Sections 2 and 3.
4. DUTIES OF ESCROW AGENT.
(a) Escrow Agent shall not be under any duty to give the Escrow Property
held by it hereunder any greater degree of care than it gives its own similar
property.
(b) Escrow Agent shall not be liable, except for its own gross negligence
or willful misconduct and, except with respect to claims based upon such gross
negligence or willful misconduct that are successfully asserted against Escrow
Agent, the other parties hereto shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and
all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with action taken in good faith (not resulting
from its gross negligence or willful misconduct) in connection with the release
of the Escrow Property, or any loss of interest incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Property
deposited hereunder but is serving as escrow agent only and having only
possession thereof.
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
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(h) Holder and Purchaser jointly and severally agree to indemnify and hold
Escrow Agent, its officers, directors, employees and agents (collectively, the
"Indemnified Parties") harmless from all loss, cost, damages, expenses,
liabilities, judgments and attorneys' fees (including without limitation,
allocated costs of in-house counsel) suffered or incurred by the Indemnified
Parties or any of them arising out of or in connection with this Agreement,
except that this indemnity obligation shall not apply in the event of the gross
negligence or willful misconduct of the Indemnified Parties or any of them. This
indemnity obligation shall survive termination of this Agreement.
(i) If Purchaser and Holder provide conflicting instructions to Escrow
Agent, Escrow Agent may refuse to act until the dispute is resolved and may
bring interpleader (all costs with respect thereto to be borne by Holder and
Purchaser).
(j) Escrow Agent (and any successor Escrow Agent) may at any time resign as
such by delivering the Escrow Property to any successor Escrow Agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Agreement. The resignation
of Escrow Agent will take effect on the earlier of (i) the appointment of a
successor (including a court of competent jurisdiction) or (ii) the day which is
thirty (30) days after the date of delivery of its written notice of resignation
to the other parties hereto. If at that time Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Property until
delivery by Escrow Agent of the Escrow Property into a court of competent
jurisdiction or until receipt of a designation of successor Escrow Agent or a
joint written disposition instruction by the other parties hereto or a final
non-appealable order of a court of competent jurisdiction or a written order of
the arbitration panel referred to above.
(k) Holder and Purchaser shall pay Escrow Agent compensation for the
services to be rendered by Escrow Agent hereunder in accordance with Exhibit A
hereto and agree to reimburse Escrow Agent for all reasonable expenses,
disbursements and advances incurred or made by Escrow Agent in performance of
its duties hereunder (including reasonable fees, expenses and disbursements of
its counsel). Any such compensation and reimbursement to which Escrow Agent is
entitled shall be shared equally by Holder and Purchaser. Any fees or expenses
of Escrow Agent or its counsel that are not paid as provided for herein may be
taken from any property held by Escrow Agent hereunder. (l) No printed or other
matter in any language (including, without limitation, prospectuses, notices,
reports and promotional material) that mentions Escrow Agent's name or the
rights, powers, or duties of Escrow Agent shall be issued by the other parties
hereto or on such parties' behalf unless Escrow Agent shall first have given its
specific written consent thereto.
5. LIMITED RESPONSIBILITY.
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this agreement against Escrow Agent. Escrow Agent
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shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
6. NOTICES.
All notices and other communications required or permitted under this
Agreement shall be in writing and shall be delivered personally or sent by: (a)
registered or certified mail, return receipt requested; (b) a
nationally-recognized courier service guaranteeing next-day delivery, charges
prepaid; or (c) facsimile (with the original promptly sent by any of the
foregoing manners). Any such notices shall be addressed to the receiving party
at such party's address set forth below, or at such other address as may from
time to time be furnished by similar notice by either party.
If to Holder:
Winter Harbor, LLC
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Xx.
With a copy to:
Dow, Xxxxxx & Xxxxxxxxx, pllc
0000 Xxx Xxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Wild, Esq.
Facsimile: (000) 000-0000
If to Purchaser:
Counsel Communications LLC
000 Xxxx Xxxxxx
Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, PC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx XX 00000
Attention: Xxxx Manner
Facsimile: (000) 000-0000
If to Escrow Agent:
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Xxxxx Xxxx of California, N.A.
000 X. Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Corporate Trust Department
Facsimile: (000) 000-0000
7. TERMINATION.
This Agreement shall terminate upon the release by the Escrow Agent of
the entire Escrow Property in accordance with this Agreement.
8. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original and all of which, when taken together, will be
deemed to constitute one and the same.
9. SECTION HEADINGS.
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
10. WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11. EXCLUSIVE AGREEMENT; MODIFICATION.
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Purchaser, the
Holder and the Escrow Agent.
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12. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York,
without regard to conflicts of law principles provided that the rights and
duties of the Escrow Agent shall be governed, construed and enforced in
accordance with the laws of the State of California.
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