Exhibit 10(d)
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 10th day of January, 2002 among Artera
Group, Inc., a Delaware corporation (the "Company"), Alpha Capital
Aktiengesellschaft ("Subscriber"), and Grushko & Mittman, P.C. (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 to the
Subscriber of Convertible Notes ("Notes") in the aggregate principal amount of
$550,000; and
WHEREAS, the parties hereto require the Company to deliver the Notes
against payment therefor, with such Notes 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
and thereto by written agreement between the parties;
(b) "Collateral Agent Agreement" means the Collateral Agent Agreement
referred to in the Security Agreement.
(c) "Escrowed Payment" means the sum of $550,000 which is the Purchase
Price, as defined in the Subscription Agreement.
(d) "Finder's Fees" means the Finder's Fees to be paid to the Finder
as described in Section 6 of the Subscription Agreement.
(e) "Legal Opinion" means the original signed legal opinion referred
to in Section 3 of the Subscription Agreement.
(f) "8% Secured Convertible Notes" shall mean the 8% Secured
Convertible Notes of the Company as defined in the Subscription Agreement.
(g) "Security Agreement" means the Security Agreement referred to in
Section 5 of the Subscription Agreement together with original Forms UCC-1
referred to therein.
(h) "Subscription Agreement" means the Subscription Agreement to be
entered into by the parties in reference to the Notes and the exhibits
thereto.
(i) Collectively, the executed Subscription Agreement, Finder's Fee,
Legal Opinion, Notes, Security Agreement and Collateral Agent Agreement
signed by the Company (as set forth in the Security Agreement) are referred
to as "Company Documents."
(j) Collectively, the Escrowed Payment, Subscription Agreement,
Security Agreement and Collateral Agent Agreement signed by the Subscriber
are referred to as "Subscriber Documents."
1.2. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the escrow of the Company Documents and
Subscriber Documents and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto. 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.
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. Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party (which
shall be the party which receives an award most closely resembling the remedy or
action sought) shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
1.7. Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 1.6 hereof, each of the Company and Subscriber hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
1.8. Fees. The Company shall pay the Subscriber's attorney the fees
described in Section 6 of the Subscription Agreement. These fees shall be
payable by deduction from the cash portion of the Escrowed Payment, but only if
the corresponding balance of the cash portion of the Escrowed Payment is to be
released to or on behalf of the Company pursuant to this Agreement.
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. The Escrowed Payment will be delivered pursuant to the following wire
transfer instructions:
Citibank, N.A.
ABA Number: 0210-00089
For Credit to: Grushko & Mittman, IOLA Trust Account
Account Number: 45208884
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 simultaneously
release the Company Documents to the Subscriber and release the
corresponding Subscriber Documents to the Company except that (i) the
Finder's Fees will be delivered to the Finder, (ii) the fee described in
Section 1.8 above will be released to the Subscriber's attorneys, and (iii)
the Security Agreement and Collateral Agent Agreement will be released to
the Collateral Agent. At the request of the Escrow Agent, 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 February 28, 2002, then
the Escrow Agent will promptly return the Company Documents to the Company,
and promptly return the Subscriber Documents to the Subscriber.
(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 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 outside counsel fees, to the extent authorized hereunder)
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 Company
Documents and Subscriber Documents 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 Company Documents and Subscriber Documents 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 agent, 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.
(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 duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
(a) If to the Company, to:
Artera Group, Inc.
20 Ketchum Street
Westport, CT 06880
Attn: Chief Financial Officer
(203) 226-4338 (Telecopier)
With a copy to:
General Counsel
(b) If to the Subscriber, to:
Alpha Capital Aktiengesellschaft
a Lichtenstein corporation
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
011-423-232-3196 (Telecopier)
(c) If to the Escrow Agent, to:
Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
(212) 697-3575 (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 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.
ARTERA GROUP, INC.
the "Company"
By:___________________________________
______________________________________
ALPHA CAPITAL AKTIENGESELLSCHAFT
- "Subscriber"
ESCROW AGENT:
______________________________________
GRUSHKO & MITTMAN, P.C.