EXHIBIT 2.3
FORM OF FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 29th day of June, 1998 among The
Recovery Network, Inc. (the "Company"), the parties identified on Schedule A
hereto, ("Subscriber" or "Subscribers"), and Grushko & Xxxxxxx (the "Escrow
Agent"):
W I T N E S S E T H:
WHEREAS, the Company and Subscriber have entered into a Subscription
Agreement ("Subscription Agreement") calling for the sale by the Company of the
Company's Common Stock ("Company Shares") and Warrants ("Warrants") for the
aggregate purchase price of $2,500,000 to the Subscribers in the denominations
set forth on Schedule A hereto, against payment therefor; and
WHEREAS, the parties hereto require the Company to deliver the Company
Shares, Warrants and other documents against payment therefor, with such Company
Shares, Warrants, documents and payment to be delivered to the Escrow Agent to
be held in escrow and released by the Escrow Agent in accordance with the terms
and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. Whenever used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Agreement" means this Agreement and all amendments made
hereto by written agreement among the parties;
(b) "Company Shares" means common stock of the Company to be
issued to the Subscribers in the amounts designated on Schedule A hereto.
(c) "Warrants" means common stock purchase warrants of the
Company issued to the Subscribers in the amounts designated on Schedule A
hereto.
(d) "Escrowed Payment" means the sum of up to $2,500,000 to be
held in escrow by the Escrow Agent on behalf of the Company and Subscribers.
(e) "Subscription Agreement" means the Subscription Agreement
to be entered into by the parties in reference to the Company Shares and
Warrants, with the exhibits thereto.
(f) "Shares Escrow Agreement" means the Escrow Agreement to be
entered into by the parties and referred to in the Subscription Agreement.
(g) "Escrowed Securities" means the Company Shares, Company
Warrants and Placement Shares components of the Registration Escrow described in
Section 10.1(iv) of the Subscription Agreement.
(h) "Registration Funds Escrow" means the portion of the
Escrowed Payment to be held in escrow pursuant to Section 10.1(iv) of the
Subscription Agreement.
(i) "Placement Shares" means common stock of the Company
deliverable to Placement Agents as described in Section 6 of the Subscription
Agreement, and as set forth on Schedule B hereto.
(j) "Placement Agent Commissions" means the commissions
payable by the Company to Placement Agents as described in Section 6 of the
Subscription Agreement, and as set forth on Schedule B hereto.
(k) "Opinion" means the original legal opinion described in
Section 3 of the Subscription Agreement.
(l) Collectively, the Company Shares, Warrants, Subscription
Agreement signed on behalf of the Company, Shares Escrow Agreement, Placement
Shares, Placement Agent Commissions, Escrowed Securities, and Opinion are
referred to as "Company Documents."
(m) Collectively, the Escrowed Payment and Subscription
Agreement signed on behalf of the Subscribers without exhibits thereto are
referred to as "Subscriber Documents."
1.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the Company Documents and Subscriber
Documents and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. There are no warranties,
representations and other agreements made by the parties in connection with the
subject matter hereof except as specifically set forth in this Agreement.
1.3 Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
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1.4 Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.
1.5 Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to
principles of conflict of laws.
1.7 Consents to Service of Process. The Company and the Subscriber each
hereby irrevocably consent to the exclusive jurisdiction of the courts of the
State of New York and of any Federal Court located in the State of New York,
each as may have competent jurisdiction, in connection with any action, suit or
other proceeding arising out of or relating to this Agreement or any action
taken or omitted hereunder, waive trial by jury, and waive personal service of
any summons, complaint or other process and agree that the service thereof may
be made by certified or registered mail directed to such person at such person's
address for purpose of notice hereunder.
1.8 Fees. The Company shall pay the Escrow Agent a fee of $5,000 in
connection with the Escrow Agent's services hereunder. This fee and other fees
due the Escrow Agent pursuant to the Subscription Agreement shall be paid by
deduction from the Escrowed Payment, but only if the balance of the Escrowed
Payment is to be released pursuant to this Agreement. The Escrow Agent shall be
paid an additional fee of $2,500 (without apportionment) on each anniversary of
the date of this Agreement upon which the Escrow Agent is holding any Company
Documents or Subscriber Documents.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1 Delivery of Company Documents to Escrow Agent. On or about the date
hereof, the Company shall deliver to the Escrow Agent the Company Documents.
2.2 Delivery of Subscriber Documents to Escrow Agent. On or about the
date hereof, the Subscriber shall deliver to the Escrow Agent the Subscriber
Documents and the Escrowed Payment pursuant to the following wire transfer
instructions:
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Citibank, N.A.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000, XXX
ABA Number: 0210-00089
For Credit to: Grushko & Xxxxxxx
XXXX Trust Account
Account Number: 037-00000000
2.3 Intention to Create Escrow Over Company Documents and Subscriber
Documents. The Subscriber and Company intend that the Company Documents and
Subscriber Documents shall be held in escrow by the Escrow Agent pursuant to
this Agreement for their benefit as set forth herein.
2.4 Escrow Agent to Deliver Company Documents and Subscriber Documents.
The Escrow Agent shall hold and release the Company Documents and Subscriber
Documents only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1 Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Company Documents and Subscriber Documents as
follows:
(a) Upon receipt by the Escrow Agent of the Company Documents
and the corresponding Subscriber Documents, the Escrow Agent will release
Escrowed Securities and Registration Funds Escrow to the Escrow Agent identified
in the Shares Escrow Agreement. Simultaneously, the balance of the Company
Documents will be released to the Subscribers and the balance of the
corresponding Subscriber Documents (less the portion to be delivered to the
Escrow Agent pursuant to the Shares Escrow Agreement) will be released to the
Company. The Placement Shares and Placement Agent Commissions (less the portions
to be delivered to the Escrow Agent pursuant to the Shares Escrow Agreement)
will be delivered to the Placement Agents identified on Schedule B hereto. The
Company will provide written facsimile or original instructions to the Escrow
Agent as to the disposition of all funds releasable to the Company.
(b) In the event the Escrow Agent does not receive Company
Documents and the corresponding Subscriber Documents prior to July 10, 1998,
then the Escrow Agent will return the Company Documents to the Company, and
return the Subscriber Documents to the Subscribers.
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(c) Upon receipt by the Escrow Agent of joint written
instructions ("Joint Instructions") signed by the Company and the Subscriber, it
shall deliver the Company Documents and Subscriber Documents in accordance with
the terms of the Joint Instructions.
(d) Upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Company
Documents and Subscriber Documents in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order has competent
jurisdiction and that the Court Order is final and non-appealable.
3.2 Acknowledgement of Company and Subscriber; Disputes. The Company
and the Subscriber acknowledge that the only terms and conditions upon which the
Company Documents and Subscriber Documents are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Subscriber reaffirm
their agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Company Documents and Subscriber Documents. Any
dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between the
Company and Subscriber.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1 Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Subscriber and Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Subscriber or Company is entitled to
receipt of the Company Documents and Subscriber Documents pursuant to, any other
agreement or otherwise; (ii) shall be obligated only for the performance of such
duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person purporting to give notice or make any statement
or execute any document in connection with the provisions hereof has been duly
authorized to do so; (v) shall not be under any duty to give the property held
by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its
own similar property; and (vi) may consult counsel satisfactory to Escrow Agent,
the opinion of such counsel to be full and complete authorization and protection
in respect of any action taken, suffered
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or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.
(b) The Subscriber and Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Subscriber and Company,
jointly and severally, agree to indemnify and hold harmless the Escrow Agent and
any of Escrow Agent's partners, employees, agents and representatives for any
action taken or omitted to be taken by Escrow Agent or any of them hereunder,
including the fees of outside counsel and other costs and expenses of defending
itself against any claim or liability under this Agreement, except in the case
of gross negligence or willful misconduct on Escrow Agent's part committed in
its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a
duty only to the Subscriber and Company under this Agreement and to no other
person.
(c) The Subscriber and Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees) incurred in connection with the performance of its duties and
responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Subscriber and the Company. Prior to the effective date of the resignation as
specified in such notice, the Subscriber and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of the Notes and Escrowed Payment
to a substitute Escrow Agent selected by the Subscriber and Company. If no
successor Escrow Agent is named by the Subscriber and Company, the Escrow Agent
may apply to a court of competent jurisdiction in the State of New York for
appointment of a successor Escrow Agent, and to deposit the Notes and Escrowed
Payment with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any
interest in the Company Documents and Subscriber Documents, but is serving only
as escrow Subscriber, having only possession thereof. The Escrow Agent shall not
be liable for any loss resulting from the making or retention of any investment
in accordance with this Escrow Agreement.
(f) This Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.
(g) The Escrow Agent shall be permitted to act as counsel for
the Subscriber or the Company, as the case may be, in any dispute as to the
disposition of the Company Documents and Subscriber Documents, in any other
dispute between the Subscriber and Company, whether or not the Escrow Agent is
then holding the Company Documents and Subscriber Documents and continues to act
as the Escrow Agent hereunder.
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(h) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2 Dispute Resolution: Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Company Documents and
Subscriber Documents, or if the Escrow Agent shall in good faith be uncertain as
to its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Subscriber Documents pending receipt
of a Joint Instruction from the Subscriber and Company, or (ii) deposit the
Company Documents and Subscriber Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Subscriber and the Company and shall
thereupon be relieved and discharged from all further obligations pursuant to
this Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Company Documents and
Subscriber Documents. The Escrow Agent shall have the right to retain counsel if
it becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to comply
with and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Subscriber and Company
or to any other person, firm, corporation or entity by reason of such
compliance.
ARTICLE V
GENERAL MATTERS
5.1 Termination. This escrow shall terminate upon the release of all of
the Company Documents and Subscriber Documents or at any time upon the agreement
in writing of the Subscriber and Company.
5.2 Notices. All notices, request, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been received one (1) day after being sent by telecopy (with copy delivered by
overnight courier):
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(a) If to the Company, to:
The Recovery Network, Inc.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (Telecopier)
With a Copy by telecopier only to:
Parker, Chapin, Flattau & Klimpl, LLP
Attn: Xxxxx Xxxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (Telecopier)
(b) If to the Subscriber, to: the addresses and
telecopier numbers listed on Schedule A hereto.
(c) If to the Escrow Agent, to:
Grushko & Xxxxxxx
Attorneys at Law
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 (telecopier)
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3 Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
5.4 Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5 Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being
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intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
5.6 Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission.
5.7 Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
THE RECOVERY NETWORK, INC.
"Company"
By:________________________________
AUSTOST ANSTALT XXXXXX
"Subscriber"
By:________________________________
BALMORE FUNDS S.A.
"Subscriber"
By:________________________________
ESCROW AGENT:
GRUSHKO & XXXXXXX
By:________________________________
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5.7. Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
THE RECOVERY NETWORK, INC.
"Company"
By:________________________________
BL SQUARED FOUNDATION
"Subscriber"
By:________________________________
THE SARGON FUND, L.P.
"Subscriber"
By:_________________________________
TLG REALTY
"Subscriber"
By:_________________________________
------------------------------------
XXXXXX XXXXX -"Subscriber"
ZAKENI LTD.
"Subscriber"
By:________________________________
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XXXXXX XXXXX:
GRUSHKO & XXXXXXX
By:________________________________
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FUNDS -SCHEDULE A
SUBSCRIBERS AGGREGATE AGGREGATE AGGREGATE
COMPANY SHARES WARRANTS ESCROWED
PAYMENT
---------------------------------------- --------------------------- ------------------------- -----------------------
AUSTOST ANSTALT XXXXXX 327,869 30,000 $750,000.00
7440 Fuerstentum
Xxxxxxxxxxx
Xxxxxxxxxxx 000
Fax: 000-000-000000000
---------------------------------------- --------------------------- ------------------------- -----------------------
BALMORE FUNDS S.A. 327,869 30,000 $750,000.00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
ZAKENI LTD. 218,579 20,000 $500,000.00
c/o Betuvo AG
Xxxxxx Xxxxxxx
00 Xxxxxxxx 0000
0000 XXX
Xxxxxxxxxxx
Fax: 000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
BL SQUARED FOUNDATION 87,432 8,000 $200,000.00
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
Fax: 000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
THE SARGON FUND, L.P. 65,574 6,000 $150,000.00
00 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx
Tax ID:
Fax: 000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
XXXXXX XXXXX 43,716 4,000 $100,000.00
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
Tax ID: ###-##-####
Fax: 000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
TLG REALTY 21,858 2,000 $50,000.00
c/o Melo
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
---------------------------------------- --------------------------- ------------------------- -----------------------
TOTALS 1,092,897 100,000 $2,500,000.00
======================================== =========================== ========================= =======================
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FUNDS -SCHEDULE B
PLACEMENT AGENT PLACEMENT SHARES PLACEMENT AGENT
COMMISSIONS
----------------------------- ------------------ --------------------
XXXXX ENTERPRISES LTD. 32,787 $75,000.00
00X Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxx
XX0 0XX
Fax: 000-000-000000000
----------------------------- ------------------ --------------------
LIBRA FINANCE S.A. 10,929 $25,000.00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
----------------------------- ------------------ --------------------
TOTALS 43,716 $100,000.00
============================= ================== ====================
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