EXHIBIT D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated as of March 23, 2000,
by and among Sales Online Direct, Inc., a corporation organized under the laws
of the State of Delaware, U.S.A. (the "Company"), the buyer set forth on the
execution page hereof (the "Buyer") and H. Xxxxx Xxxxxxx, Xx., a duly licensed
attorney who practices law in the State of North Carolina, U.S.A., as Escrow
Agent (the "Escrow Agent").
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in that Securities Purchase Agreement between the
Company and the Buyer dated of even date herewith (the "Securities Purchase
Agreement").
W I T N E S S E T H:
WHEREAS, the Buyer and the Company have entered into the Securities
Purchase Agreement, pursuant to which the Company has agreed to sell, and the
Buyer has agreed to purchase, at the Closing, a number of Notes along with a
number of Warrants (collectively, the "Securities"); and
WHEREAS, the Buyer and the Company have agreed to effectuate the
Closing utilizing an escrow arrangement as described in this Agreement; and
WHEREAS, it is a condition of the Company's obligation to sell, and the
Buyer's obli-gation to purchase, the Securities, that this Agreement be executed
and delivered; and
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth below, the parties hereto hereby agree as follows:
1. ESCROW ACCOUNT.
1.1 Deposit. On the Closing Date, by wire transfer of immediately
available funds in United States Dollars, Buyer shall deposit the full Purchase
Price (the "Escrow") with the Escrow Agent, to be held by the Escrow Agent in a
separate non-interest bearing account (the "Escrow Account"), established at
Wachovia Bank, N.A., (the "Bank"), subject to the terms and provisions contained
herein. At the request of the Company the Escrow Agent shall provide the Company
with all Bank statements, notices and other writings that it receives from the
Bank in connection with the Escrow Account.
2. DISBURSEMENT OF ESCROW/SECURITIES; ESCROW OF COMMON STOCK.
2.1 Disbursement. At the Closing, upon receipt by the Escrow Agent of
all of the moneys, documents, and things from the respective parties with
respect to such Closing as described in the Securities Purchase Agreement and as
further described in Sections 2.1(a) and 2.1(b) below, the Escrow Agent shall
deliver to each party via facsimile the documents and things (or if requested by
the parties, only the signature pages thereto) to have been delivered by the
other party in accordance with the Securities Purchase Agreement and this
Agreement. The Escrow Agent shall transfer, by the next business day following
the Closing, by wire transfer to the Company the full Escrow then held, less any
charges and fees agreed to be paid by the Company, including (without
limitation) the fees owed by the Company to Delano Group Securities. The Escrow
Agent shall, upon receipt thereof, deliver (via overnight delivery service) to
the Company originals of all other documents and things listed in Section 2.1(b)
below. The Escrow Agent shall, upon receipt thereof, deliver (via overnight
delivery service) originals of all of the documents and things listed in Section
2.1(a) below to the Buyer at the address provided in writing by the Buyer to the
Escrow Agent.
The Closing may take place via facsimile. This shall be accomplished in
the following manner. Each party shall deliver via facsimile to the Escrow
Agent, at the telecopier number provided on the signature page to this
Agreement, the first page and the fully executed signature page to each of the
documents and things to be executed by such party at the Closing. If stock
certificates, Notes or Warrants are to be delivered, each such certificate or
document shall be delivered via overnight courier to the Escrow Agent. Upon
receipt of the requisite documents and things via facsimile or otherwise from
each party, the Escrow Agent shall in turn send to each party the documents and
things received from the other party. Thereafter, upon receipt by the Escrow
Agent of the Purchase Price and the original Notes and Warrants being sold at
such Closing, the Escrow Agent shall wire transfer the Escrow (less any charges
and fees agreed to be paid by the Company to third parties) to the Company. Each
party closing the transactions contemplated herein via facsimile shall deliver
via overnight courier service to the Escrow Agent complete originals of all
documents and things (as called for in Sections 2.1(a) and 2.1(b) below) within
one (1) business day after such delivery via facsimile. Each party hereby agrees
that a facsimile of each document and thing to be delivered hereunder, once
delivered to the Escrow Agent, shall be binding upon such party in the same
manner as would an original to the full extent allowed by applicable law.
(a). Items to be Delivered by the Company to the Escrow Agent.
At the Closing. On the Closing Date, the Company shall send to the
Escrow Agent on behalf of the Buyer, unless otherwise stated, three (3) fully
executed (by the authorized officer(s) of the Company) originals of each of the
following documents: (I) the Securities Purchase Agreement, (II) the
Registration Rights Agreement, (III) one (1) original of each Note, as
applicable, fully executed, along with two (2) copies of each Note issued by the
Company; (IV) one (1) original fully executed Warrant along with two (2) copies
of the Warrant; (V) the executed original Legal Opinion (Exhibit E to the
Securities Purchase Agreement) along with two (2) copies thereof; and (VII) this
Agreement.
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(b) Items to be Delivered by the Buyer to the Escrow Agent.
At the Closing. On or before the Closing Date, the Buyer shall send to
the Escrow Agent on behalf of the Company, unless otherwise stated, three (3)
fully executed originals of each of the following documents: (I) the Securities
Purchase Agreement, (II) the Registration Rights Agreement, (III) this
Agreement; and (IV) the full purchase price for the Securities being purchased
at such Closing, via wire transfer to the Escrow Account.
2.2. Escrow of Common Stock. In accordance with Section 4(h) of the
Securities Purchase Agreement, and based upon certain representations and
warranties contained in the Securities Purchase Agreement, upon registration of
the Registrable Securities, and from time to time as requested by the Buyer
thereafter, the Company shall place in trust with the Escrow Agent one or more
stock certificates representing a number of non-legended shares of Common Stock
as specified in the Securities Purchase Agreement ("Escrow Shares"). The Escrow
Agent shall hold the Escrow Shares in certificate form or in a brokerage account
as the Escrow Agent deems appropriate to fulfill his duties under the Securities
Purchase Agreement and hereunder. None of the Escrow Shares shall be disbursed
other than in accordance with the terms of Section 4(h) of the Securities
Purchase Agreement and of the terms hereof, or in accordance with the written
instructions of both the Company and the Buyer delivered to the Escrow Agent. In
no event shall the Escrow Agent release or transfer any Escrow Shares to any
party other than to the Buyer (or another buyer) or to the Company in accordance
with this Agreement, absent express written instructions from the Company to
transfer Escrow Shares to a third party.
Upon a full or partial conversion of the Note, the Buyer shall deliver
via facsimile to the Escrow Agent a copy of the Notice of Conversion. The Escrow
Agent shall use its reasonable best efforts to cause the delivery from escrow to
the Buyer (in accordance with the Buyer's written instructions to the Escrow
Agent, and via electronic transfer or otherwise) of the number of shares of
Common Stock specified in the Notice of Conversion within three (3) business
days after receipt of such Notice of Conversion. The Escrow Agent shall not be
responsible for any breach by the Company of its obligation to timely deliver
sufficient Escrow Shares to effect a conversion or exercise.
Upon Buyer's receipt of all Common Stock due upon conversion of all of
the Notes issued to the Buyer, the Buyer shall inform the Escrow Agent in
writing that the requirements of the Securities Purchase Agreement with respect
to the Notes have been satisfied. The Company shall instruct the Escrow Agent in
writing as to the return to the Company of the remaining Escrow Shares, and the
Escrow Agent shall as soon as practicable return such remaining Escrow Shares in
accordance with the Company's instructions. Thereafter the Escrow Agent shall
have no further obligation to any party with respect to the Escrow Shares,
whether those delivered to the Buyer or those returned to the Company.
2.3 Controversies. If any controversy arises between two or more of the
parties hereto, or between any of the parties hereto and any person not a party
hereto, as to whether or not or to whom the Escrow Agent shall deliver the
Escrow or any portion thereof or as to any other matter arising out of or
relating to this Escrow Agreement, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Escrow concerned or any
portion thereof but may retain the same until the rights of the parties to the
dispute shall have been finally determined by agreement or by final judgment of
a court of competent jurisdiction after all appeals have been finally determined
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(or the time for further appeals has expired without an appeal having been
made). The Escrow Agent shall deliver that portion of the Escrow concerned
covered by such agreement or final order within five (5) days after the Escrow
Agent receives a copy thereof. The Escrow Agent shall assume that no such
controversy has arisen unless and until it receives written notice from the
Buyer or the Company that such controversy has arisen, which refers specifically
to this Agreement and identifies the adverse claimants to the controversy.
2.4 No Other Disbursements. No portion of the Escrow shall be disbursed
or otherwise transferred except in accordance with this Section 2, Section 4 or
Section 5.1(b). Without limiting the foregoing, neither Escrow Agent nor the
Buyer shall be entitled to any right of offset against the Escrow or otherwise
entitled to receive any portion of the Escrow.
3. ESCROW AGENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Escrow Agent:
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any cash,
investments or other amounts deposited with or held by the Escrow Agent.
3.2 The Escrow Agent shall be protected in acting upon any written
notice, certificate, instruction, request or other paper or document believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder
except in the case of the Escrow Agent's willful misconduct or bad faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
that are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect his duties unless it shall have given his written consent thereto. The
Escrow Agent shall not be prohibited from owning an equity interest in the
Company, the Buyer, another buyer, any of their respective subsidiaries or any
third party that is in any way affiliated with or conducts business with either
the Company, the Buyer or another buyer.
3.6 The Company and the Buyer specifically acknowledge that the Escrow
Agent is a practicing attorney in Raleigh, North Carolina U.S.A., and may have
worked with or be affiliated with the Company, the Buyer, or affiliates of
either of them on other transactions, and that they and each of them has
specifically requested that the Escrow Agent draft the documents for the said
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transactions and act as Escrow Agent with respect to the said transactions. Each
party represents that it has retained legal and other counsel of its choosing
with respect to the transactions contemplated herein and in the Securities
Purchase Agreement, and is satisfied in its sole discretion with the form and
content of the documentation drafted by the Escrow Agent, as the same has been
approved prior to closing by the parties and their respective counsel. The
Escrow Agent may own an equity interest in the Company and/or may be an equity
owner of the Buyer or another buyer, and may increase or sell any such interest,
so long as in accordance with any and all applicable law, and without further
disclosure of any kind to any party. The said parties hereby waive any objection
to the Escrow Agent so acting based upon conflict of interest or lack of
impartiality. The Escrow Agent agrees to act impartially and in accordance with
the terms of this Agreement and with the parties' respective instructions, so
long as they are not in conflict with the terms of this Agreement.
4. TERMINATION. This Agreement shall terminate on the earlier of (a)
the date on which the Escrow and all other escrowed documents and things
described herein shall have been fully disbursed in accordance with the terms
and conditions of this Agreement, (b) any other date agreed to by the Buyer and
the Company, or (c) the next business day after the maturity date of the last of
the Notes to be issued by the Company in accordance with the terms of the
Securities Purchase Agreement, in which event the Escrow shall be disbursed in
full to the Company.
5. MISCELLANEOUS.
5.1 Indemnification of Escrow Agent.
(a) The Company and the Buyer each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without willful misconduct or bad faith on the Escrow Agent's part,
arising out of or in connection with the administration of this Agreement,
including the costs and expenses of defending himself against any claim or
liability in connection with the exercise or performance of any of his powers or
duties hereunder. This indemnification shall not apply to with respect to a
direct claim against the Escrow Agent by the Company or the Buyer alleging in
good faith a breach of this Agreement by the Escrow Agent, which claim results
in a final non-appealable judgment against the Escrow Agent with respect to such
claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Buyer, the Company or the Escrow Agent hereunder, the Escrow
Agent may at any time or from time to time interplead, deposit and/or pay all or
any part of the Escrow Funds with or to a court of competent jurisdiction
sitting in Wake County, North Carolina or in any appropriate federal court, in
accordance with the procedural rules thereof. The Escrow Agent shall give notice
of such action to the Company and the Buyer. Upon such interpleader, deposit or
payment, the Escrow Agent shall immediately and automatically be relieved and
discharged from all further obligations and responsibilities hereunder,
including the decision to interplead, deposit or pay such funds.
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5.2 Amendments. This Agreement may be modified or amended only by a
written instrument executed by each of the parties hereto.
5.3 Notices. All communications required or permitted to be given under
this Agreement to any party hereto shall be sent by first class mail or
facsimile to such party at the address, except in the case of the Escrow Agent,
of such party set forth in the Securities Purchase Agreement and, in the case of
the Escrow Agent, at 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx
X.X.X. 00000; fax number 000.000.0000.
5.5 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Escrow Agent shall not assign his duties under this
Agreement.
5.6 Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of North Carolina.
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO ESCROW AGREEMENT DATED AS OF MAR. 23, 2000]
THE COMPANY:
SALES ONLINE DIRECT, INC.
By: /s/Xxxx Xxxxxx
-------------------------------------
Xx. Xxxx Xxxxxx, CEO
THE BUYER:
AUGUSTINE FUND, L.P.
By: Augustine Capital Management, L.L.C., its General
Partner
By:/s/Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xx. Xxxxxx X. Xxxxxxxxx, Member
ESCROW AGENT:
/s/ H. Xxxxx Xxxxxxx, Xx.
------------------------------------------
H. XXXXX XXXXXXX, XX., ESQ.
Address: 0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx XXX 00000
Telephone 000.000.0000
Telecopier 919.785.3116
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