EXHIBIT 10.3

 

FORM OF ESCROW AGREEMENT

 

 

 

 

 

EXHIBIT B

 

ESCROW AGREEMENT

 

This Agreement is dated as of the ___ day of May, 2005 among River Capital
Group, Inc., a Delaware corporation (the "Company"), the Subscribers identified
on Schedule A hereto (each a “Subscriber” and collectively the “Subscribers”),
and Troutman Sanders LLP, as escrow agent (the “Escrow Agent”).”

WHEREAS, the Company and Subscribers have entered into a Subscription Agreement
calling for the sale by the Company to the Subscriber of Convertible Notes and
Warrants for an aggregate purchase price of $200,000.

WHEREAS, the parties hereto require the Company to deliver the Notes and
Warrants against payment therefor, with such Notes, Warrants and the Escrowed
Funds 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.

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. Capitalized terms used and not otherwise defined herein
that are defined in the Subscription Agreement shall have the meanings given to
such terms in the Subscription Agreement. Whenever used in this Agreement, the
following terms shall have the following respective meanings:

(a)     "Agreement" shall mean this Agreement and all amendments made hereto and
thereto by written agreement between the parties;

(b)     “Closing Date” shall have the meaning set forth in Section 1 of the
Subscription Agreement;

(c)     "Diligence Shares" shall have the same meaning set forth in Section
14(a) of the Subscription Agreement;

(d)     "Escrowed Payment" shall mean an aggregate cash payment of $200,000
which is the Purchase Price as defined in the Subscription Agreement;

(e)     “Legal Fees” shall have the meaning set forth in Section 14(a) of the
Subscription Agreement;

 

 

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(f)   “Legal Opinion” shall mean the original signed legal opinion referred to
in Section 6 of the Subscription Agreement;

(g)  “Notes” shall have the meaning set forth in the second “WHEREAS’ clause of
the Subscription Agreement;

(h)  "Subscription Agreement" shall mean the Subscription Agreement (and the
exhibits thereto) dated this date between the Company and the Subscribers with
respect to the sale and purchase of the Notes and Warrants;

(i)   “Warrants” shall mean the Common Stock Purchase Warrants to purchase a
specified number of shares of Common Stock of the Company, which warrants are
purchased by the Subscriber pursuant to the Subscription Agreement as described
in Section 3 of the Subscription Agreement;

(j)   the "Company Documents" shall have the meaning set forth in Section 2.1
hereof; and

(k)  Collectively, the Escrowed Payment and the executed Subscription Agreement
are referred to as the "Subscriber Documents".

1.2  Entire Agreement. This Agreement along with the Company Documents and the
Subscriber Documents constitute 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, the Company Documents and
the Subscriber Documents.

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.

 

 

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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 that would have the effect of causing the law of
any other jurisdiction to apply. 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.

ARTICLE II

DELIVERIES TO THE ESCROW AGENT

 

2.1  Closing Company Deliveries. On or about the date hereof, the Company shall
deliver to the Escrow Agent the executed Subscription Agreement, the executed
Notes, the executed Warrants, the executed Diligence Shares, the executed Legal
Opinion and the Legal Fees (collectively, the “Company Documents”).

 

 

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2.2  Subscriber Deliveries. On or before the Closing Date, each Subscriber shall
deliver to the Escrow Agent its portion of the Purchase Price, and the executed
Subscription Agreement. The Escrowed Payment will be delivered pursuant to the
following wire transfer instructions:

 

Attorney Trust Account

JP Morgan Chase

1211 Avenue of the Americas

New York, New York 10036

Account Name: Troutman Sanders LLP

Account Number: 739-293990

ABA # 021000021

 

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 the joint written instructions of the Company and the Subscribers,
the Escrow Agent will simultaneously release the Company Documents to the
Subscriber and release the Subscription Agreement, and the Purchase Price to or
for the benefit of the Company except that the Legal Fees will be released to
the Subscribers.

(b)  All funds to be delivered to the Company shall be delivered pursuant to the
wire instructions to be provided in writing by the Company to the Escrow Agent.

(c)   Notwithstanding the above, 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.

 

 

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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 Subscribers 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 Subscribers 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 the 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 believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (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 Subscribers 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 Subscribers 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

 

 

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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 Subscribers and Company jointly and severally agree to reimburse the
Escrow Agent for outside counsel fees, to the extent authorized hereunder and
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 Docum

(f)   ents 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.

(g)  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.

(h)  The Company hereby waives any conflict of interest relating to the fact
that the Escrow Agent is acting as counsel to the Subscribers in this
transaction. The Company further agrees that the Escrow Agent shall be permitted
to act as counsel for the Subscribers in any dispute as to the disposition of
the Company Documents and Subscriber Documents, in any other dispute between the
Subscribers 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.

(i)   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:

 

 

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(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 Subscribers and the 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 Subscribers 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 Subscribers and Company.

5.2  Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:

 

 

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(a)

If to the Company, to:

The Exchange Tower

130 King Street West

Suite 3680

P.O. Box 99

Toronto, Ontario

Canada M5X 1B1

Telecopier number 416-366-8179

 

(b)  If to the Subscriber, to the addresses and fax numbers listed on Schedule A
hereto.

(c)

If to the Escrow Agent, to:

Troutman Sanders LLP

405 Lexington Avenue

New York, New York 10174

Fax: (212) 704-6288

Attention: Martin E. Weisberg, Esq.

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. In the event the
Escrowed Payment is deposited in an interest bearing account, the Subscriber
shall be entitled to receive any accrued interest thereon, but only if the
Escrow Agent receives from the Subscriber the Subscriber’s United States
taxpayer identification number and other requested information and forms.

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.

 

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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 and delivered by facsimile
transmission.

[The Remainder of this Page is Intentionally Blank.]

 

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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.

RIVER CAPITAL GROUP, INC.

 

By:________________________________

Name:

Title:

 

 

 

LONGVIEW FUND LP

 

By:________________________________

Name:

Title:

 

 

 

[OTHER SUBSCRIBER]

 

By:________________________________

Name:

Title:

 

 

 

TROUTMAN SANDERS LLP

 

By:________________________________

Name:

Title:

 

 

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SCHEDULE A TO FUNDS ESCROW AGREEMENT

 

 

SUBSCRIBERS

PURCHASE PRICE

WARRANTS

LONGVIEW FUND LP

1325 Howard Avenue #422
Burlingame, CA 94010
Attn: S. Michael Rudolph
Fax: (650) 343-2506

 

 

[Other Subscriber – to be added]

 

 

 

 

TOTALS

200,000.00

_________

 

 

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