EXHIBIT 6-12
ESCROW AGREEMENT
ESCROW AGREEMENT (this "AGREEMENT"), dated as of December 22,
1997, by and among InnovaCom, Inc. (the "COMPANY"), JNC Opportunity Fund
Ltd. (the "PURCHASER"), and Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
(the "ESCROW AGENT").
RECITALS
A. Simultaneously with the execution of this Agreement, the
Company and the Purchaser have entered into a Convertible Debenture
Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"),
pursuant to which the Company is selling to the Purchaser certain 7%
Convertible Debentures Due December 22, 2002 (the "DEBENTURES") and certain
of the Company's common stock purchase warrants (the "WARRANTS").
Capitalized terms that are used and not otherwise defined in this Agreement
that are defined in the Purchase Agreement shall have the meaning set forth
in the Purchase Agreement.
B. The Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the receipt and then
delivery of the Purchase Price (as described in Section 1.1 of the Purchase
Agreement) to be paid for the Debentures pursuant to Section 1.1 of the
Purchase Agreement less any amounts the Purchaser is to be reimbursed by
the Company under the Purchase Agreement (the "PURCHASE PRICE") and the
delivery of the Debentures and the Warrants, together with the Ancillary
Closing Documents (as defined below) and the Purchase Price, the
"CONSIDERATION").
C. Upon the closing of the transaction contemplated by the
Purchase Agreement (the "CLOSING") and the occurrence of an event described
in Section 2 below, the Escrow Agent shall cause the distribution of the
Consideration in accordance with the terms of this Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEPOSIT OF CONSIDERATION.
a. Concurrently with the execution of this Agreement, each
Purchaser shall deposit with the Escrow Agent the portion of the Purchase
Price due for the Debentures and the Warrant to be purchased by it at the
Closing in accordance with Section 1.1(a)(ii) of the Purchase Agreement and
the Company shall deliver to the Escrow Agent the Debentures and the
Warrants, registered in the name of the appropriate Purchaser, in
accordance with Section 1.1(a)(ii) of the Purchase Agreement and wiring
instructions for transfer of the Purchase Price by the Escrow Agent into an
account specified by the Company for such purpose. In addition, the
Purchaser and the Company shall deposit with the Escrow Agent all other
certificates and other documents required under the Purchase Agreement to
be delivered by them at the Closing (such certificates and other documents
being hereinafter referred to as the "ANCILLARY CLOSING DOCUMENTS").
(i) The Purchase Price shall be delivered by the
Purchaser to the Escrow Agent by wire transfer to the following account:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ABA No.: 000-000-000
For the Account of
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
Attorney Trust Account
Account No.: 00-000-000
Attention: Xxxxxx Xxxxxxxxxx
Reference: InnovaCom, Inc. (10849-16)
(ii) The Debentures, Warrants and the Ancillary
Documents shall be delivered to the Escrow Agent at its address for notice
indicated in Section 5(a).
b. Until termination of this Agreement as set forth in
Section 2, all additional Consideration paid by or which becomes payable
between the Company and the Purchaser shall be deposited with the Escrow
Agent.
c. The Purchaser and the Company understand that all
Consideration delivered to the Escrow Agent pursuant to Section 1(a) shall
be held in escrow in the Escrow Agent's interest bearing business account
until the Closing. After the Purchase Price has been received by the
Escrow Agent and all other conditions of Closing are met, the parties
hereto hereby authorize and instruct the Escrow Agent to promptly effect
the Closing.
d. At the Closing, Escrow Agent is authorized and directed
to deduct from the Purchase Price (i) $100,000 which will be paid to
Cardinal Capital Management, Inc. ("CARDINAL"), $150,000 which will be paid
to CDC Consulting, Inc. ("CDC") and $50,000 which will be paid to Xxxxxxxxx
Xxxxxxxx or her assigns in accordance with the engagement letter among the
Company, Cardinal, CDC and Xxxxxxxxx Xxxxxxxx relating to the transactions
contemplated by the Purchase Agreement (the "ENGAGEMENT LETTER"), for
remittance in accordance with their instructions, (ii) $15,000 which will
be retained by the Escrow Agent in accordance with the Purchase Agreement
and (iii) $10,000, which will be remitted to or as directed by the
Purchaser pursuant to the Purchase Agreement. In addition, the portion of
the Purchase Price released to the Company hereunder shall be reduced by
all wire transfer fees incurred thereupon.
2. TERMS OF ESCROW.
a. The Escrow Agent shall hold the Consideration in escrow
until the earlier to occur of (i) the receipt by the Escrow Agent of the
Purchase Price, the Debentures, the Warrants and the Ancillary Closing
Documents and a writing instructing the Closing and (ii) the receipt by the
Escrow Agent of a written notice, executed by the Company or the Purchaser,
stating that the Purchase Agreement has been terminated in accordance with
its terms and instructing the Escrow Agent with respect to the Purchase
Price, the Debentures, the Warrants and the Ancillary Closing Documents.
b. If the Escrow Agent receives the items referenced in
clause (i) of Section 2(a) prior to its receipt of the notice referenced in
clause (ii) of Section 2(a), then, promptly thereafter, the Escrow Agent
shall deliver (i) the Debentures, the Warrants, any interest earned on
account of the Purchase Price through the Closing and the amounts payable
to the Purchaser pursuant to Section 1(d) on the Consideration to the
Purchaser entitled to the same, (ii) the Purchase Price (net of amounts
described under Section 1(d)) to the Company, (iii) the amounts payable to
Cardinal, CDC and Xxxxxxxxx Xxxxxxxx under the Engagement Letter in
accordance with their instructions, (iv) the amounts payable to the
Purchaser or as directed by Purchaser pursuant to the Purchase Agreement
and (v) the Ancillary Closing Documents to the party entitled to receive
the same. In addition, the Escrow Agent shall retain $15,000 of the
Purchase Price on account of its fees pursuant to the Purchase Agreement.
c. If the Escrow Agent receives the notice referenced in
clause (ii) of Section 2(a) prior to its receipt of the items referenced in
clause (i) of Section 2(a), then the Escrow Agent shall promptly upon
receipt of such notice return (i) the Purchase Price (together with any
interest earned thereon through such date) to the Purchaser, (ii) the
Debentures and Warrants to the Company and (iii) the Ancillary Closing
Documents to the party that delivered the same.
d. If the Escrow Agent, prior to delivering or causing to
be delivered the Consideration in accordance herewith, receives notice of
objection, dispute, or other assertion in accordance with any of the
provisions of this Agreement, the Escrow Agent shall continue to hold the
Consideration until such time as the Escrow Agent shall receive (i) written
instructions jointly executed by the Purchaser and the Company, directing
distribution of such Consideration, or (ii) a certified copy of a judgment,
order or decree of a court of competent jurisdiction, final beyond the
right of appeal, directing the Escrow Agent to distribute said
Consideration to any party hereto or as such judgment, order or decree
shall otherwise specify (including any such order directing the Escrow
Agent to deposit the Consideration into the court rendering such order,
pending determination of any dispute between any of the parties). In
addition, the Escrow Agent shall have the right to deposit any of the
Consideration with a court of competent jurisdiction pursuant to Section
1006 of the New York Civil Practice Law and Rules without liability to any
party if said dispute is not resolved within 30 days of receipt of any such
notice of objection, dispute or otherwise.
3. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
a. The parties hereto agree that the duties and
obligations of the Escrow Agent are only such as are herein specifically
provided and no other. The Escrow Agent's duties are as a depositary only,
and the Escrow Agent shall incur no liability whatsoever, except as a
direct result of its willful misconduct.
b. The Escrow Agent may consult with counsel of its
choice, and shall not be liable for any action taken, suffered or omitted
by it in accordance with the advice of such counsel.
c. The Escrow Agent shall not be bound in any way by the
terms of any other agreement to which the Purchaser and the Company are
parties, whether or not it has knowledge thereof, and the Escrow Agent
shall not in any way be required to determine whether or not any other
agreement has been complied with by the Purchaser and the Company, or any
other party thereto. The Escrow Agent shall not be bound by any
modification, amendment, termination, cancellation, rescission or
supersession of this Agreement unless the same shall be in writing and
signed by the Purchaser and the Company, and agreed to in writing by the
Escrow Agent.
d. In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions, claims
or demands which, in its opinion, are in conflict with any of the
provisions of this Agreement, it shall be entitled to refrain from taking
any action, other than to keep safely, all Considerations held in escrow
until it shall jointly be directed otherwise in writing by the Purchaser
and the Company or by a final judgment of a court of competent
jurisdiction.
e. The Escrow Agent shall be fully protected in relying
upon any written notice, demand, certificate or document which it, in good
faith, believes to be genuine. The Escrow Agent shall not be responsible
for the sufficiency or accuracy of the form, execution, validity or
genuineness of documents or securities now or hereafter deposited
hereunder, or of any endorsement thereon, or for any lack of endorsement
thereon, or for any description therein; nor shall the Escrow Agent be
responsible or liable in any respect on account of the identity, authority
or rights of the persons executing or delivering or purporting to execute
or deliver any such document, security or endorsement.
f. The Escrow Agent shall not be required to institute
legal proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration.
g. If the Escrow Agent at any time, in its sole
discretion, deems it necessary or advisable to relinquish custody of the
Consideration, it may do so by giving five (5) days written notice to the
parties of its intention and thereafter delivering the consideration to any
other escrow agent mutually agreeable to the Purchaser and the Company and,
if no such escrow agent shall be selected within three days of the Escrow
Agent's notification to the Purchaser and the Company of its desire to so
relinquish custody of the Consideration, then the Escrow Agent may do so by
delivering the Consideration (a) to any bank or trust company in the
Borough of Manhattan, City and State of New York, which is willing to act
as escrow agent thereunder in place and instead of the Escrow Agent, or (b)
to the clerk or other proper officer of a court of competent jurisdiction
as may be permitted by law within the State, County and City of New York.
The fee of any such bank or trust company or court officer shall be borne
one-half by the Purchaser and one-half by the Company. Upon such delivery,
the Escrow Agent shall be discharged from any and all responsibility or
liability with respect to the Consideration and the Company and the
Purchaser shall promptly pay to the Escrow Agent all monies which may be
owed it for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses pursuant to paragraph (i)
below.
h. This Agreement shall not create any fiduciary duty on
the Escrow Agent's part to the Purchaser or the Company, nor disqualify the
Escrow Agent from representing either party hereto in any dispute with the
other, including any dispute with respect to the Consideration. The
Company understands that the Escrow Agent has acted and will continue to
act as counsel to the Purchaser.
i. The reasonable out-of-pocket expenses paid or incurred
by the Escrow Agent in the administration of its duties hereunder,
including, but not limited to, all counsel and advisors' and agents' fees
and all taxes or other governmental charges, if any, shall be paid by one-
half by the Purchaser and one-half by the Company.
4. INDEMNIFICATION. The Purchaser and the Company, jointly and
severally, hereby indemnify and hold the Escrow Agent, its employees,
partners, members and representatives harmless from and against any and all
losses, damages, taxes, liabilities and expenses that may be incurred,
directly or indirectly, by the Escrow Agent and/or any such person, arising
out of or in connection with its acceptance of appointment as the Escrow
Agent hereunder and/or the performance of its duties pursuant to this
Agreement, including, but not limited to, all legal costs and expenses of
the Escrow Agent and any such person incurred defending itself against any
claim or liability in connection with its performance hereunder and the
costs of recovery of amounts pursuant to this Section 4.
5. MISCELLANEOUS.
a. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto,
and shall be deemed to have been duly given when (i) if delivered by hand,
upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending
thereof, (iii) if sent by nationally recognized overnight delivery service
(receipt requested), the next business day or (iv) if mailed by first-class
registered or certified mail, return receipt requested, postage prepaid,
four days after posting in the U.S. mails, in each case if delivered to the
following addresses:
If to the Company: InnovaCom, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxx
If to the Purchaser: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxx
With copies to: Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
If to the Escrow Agent Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
(the Escrow Agent shall Xxxxxx LLP
receive copies of all 1290 Avenue of the Americas
communications under Xxx Xxxx, XX 00000
this Agreement) Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
or at such other address as any of the parties to this Agreement may
hereafter designate in the manner set forth above to the others.
(b) This Agreement shall be construed and enforced in
accordance with the law of the State of New York applicable to contracts
entered into and performed entirely within New York.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written.
INNOVACOM, INC.
By: ___________________________
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By: ___________________________
Name:
Title:
XXXXXXXX XXXXXXXXX XXXXXX
ARONSOHN & XXXXXX LLP
By: ___________________________
A Member of the Firm
