ESCROW AGREEMENT
THIS AGREEMENT is made effective as of the 29th day of December, 2000 among
VOICE MOBILITY INTERNATIONAL, INC. ("VMI"), a Nevada corporation, and PAXXVIII
HOLDINGS LTD., MADRONA INVESTMENTS LTD., XXXXXX CONSULTING LTD. and ALLIANCE
EQUITIES LTD. (referred to herein collectively as "Investors") and OB SERVICES,
INC. ("Escrow Agent"), an affiliate of OWEN, BIRD, Barristers and Solicitors.
WITNESSES THAT WHEREAS:
A. Pursuant to subscription agreements (the "Subscription Agreement") made
as of the 29th day of December, 2000, Investors have agreed to purchase from VMI
and VMI has agreed to issue to Investors an aggregate of $2,000,000 of newly
designated Series B Non-Voting Convertible Preferred Stock of the capital stock
of VMI (the "Preferred Stock") and warrants to purchase up to 500,000 shares of
Common Stock of VMI at $1.75 per share up to November 30, 2003 (the "Warrants").
B. Investors have agreed to pay the full amount of the subscription price
for the Preferred Stock (the "Investors' Funds") into Escrow Agent's trust
account, to be held and disbursed in accordance with the terms of this
Agreement.
C. Escrow Agent has agreed to hold and deal with the Investors' Funds in
accordance with this Agreement.
NOW THEREFORE in consideration of the premises, the mutual covenants and
conditions herein, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS. For all purposes of this Agreement, the following terms
have the following meanings, with such meanings to be equally applicable to both
the singular and plural forms of the respective terms:
a) "Business Day" means a day other than Saturday, Sunday or any
statutory holiday in British Columbia.
b) "Escrow Agent" means OB Services Inc. or its successor in the
capacity as escrow agent under this Agreement from time to
time.
c) "Escrowed Funds" means the amount of US$1,999,985 in readily
payable funds less any amounts paid out by the Escrow Agent
from time to time pursuant to this Agreement.
d) "Escrowed Documents" means 666,667 shares of Preferred Stock
to be held and dealt with in accordance with the terms of this
Agreement.
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1.2 ENTIRE AGREEMENT. This Agreement including any exhibits or schedules
hereto and all documents delivered in support hereof sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of every kind and nature.
1.3 GOVERNING LAW. This Agreement and its validity, construction and
performance shall be governed in all respects by the laws of the Province of
British Columbia and all parties hereby irrevocably attorn to the exclusive
jurisdiction of the courts of British Columbia.
1.4 SEVERABILITY. If any provision of this Agreement or the application of
any provision hereof to any person or circumstance is held invalid, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby.
1.5 SUCCESSORS AND ASSIGNS. This Agreement and all action taken hereunder
in accordance with the terms hereof shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and assigns.
1.6 COUNTERPARTS/HEADINGS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. The headings contained
herein are for purposes of reference only and shall not affect nor shall they be
taken into consideration in determining the meaning or interpretation of the
provisions hereof.
1.7 AMENDMENT/WAIVER. This Agreement shall not be changed, modified or
amended except in writing signed by all the parties hereto. No failure or delay
on the part of any party hereto in the exercise of any right hereunder in
enforcing or requiring the compliance or performance by any of the other parties
of any of the terms or conditions of this agreement shall operate as a waiver of
any such right, or constitute a waiver of a breach of any such terms or
conditions, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right, nor shall any of the
aforementioned failures or delays affect or impair such rights generally in any
way. The waiver by any party of a breach of any term or condition of this
Agreement by any other party shall not operate as nor shall it be construed as a
waiver of any subsequent breach thereof.
1.8 TIME. Time shall be in all respects of the essence herein.
ARTICLE 2
APPOINTMENT OF ESCROW AGENT AND SUCCESSORS
2.1 PURPOSE OF AGREEMENT. This Agreement and the escrow created herein has
been executed, delivered and established for the purpose of holding and
delivering the Investors' Funds and the Escrowed Documents in accordance with
the terms of the Subscription Agreement.
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2.2 APPOINTMENT OF ESCROW AGENT. Investors and VMI hereby appoint Escrow
Agent to act as the escrow agent hereunder and Escrow Agent accepts its
appointment and designation as such pursuant and subject to the terms and
conditions herein.
2.3 SUCCESSORS. Escrow Agent may at any time resign by giving not less than
10 Business Days prior written notice to each of the other parties hereto, and
shall be discharged of its duties hereunder upon the expiration of the said 10
Business Days or upon the earlier appointment of a successor. In the event of
such resignation, a successor escrow agent will be selected by Investors and VMI
jointly in writing and such successor shall thereupon receive the Certificate
herein and shall succeed to all the rights and duties of Escrow Agent as set
forth herein.
ARTICLE 3
ESCROW ARRANGEMENTS
3.1 DELIVERY OF ESCROWED DOCUMENTS. The Escrow Agent confirms that it has
received from Investors and holds in trust the Escrowed Funds, to be held and
dealt with in accordance with the terms of this Agreement. The Escrow Agent
further confirms that it has received from VMI certificates representing an
aggregate of 666,667 shares of Preferred Stock and holds in trust such
certificates, to be held and dealt with in accordance with the terms of this
Agreement (the "Escrowed Documents").
3.2 NOTICE BY VMI. If at any time VMI delivers to Escrow Agent a statutory
declaration of a director or senior officer of VMI (the "VMI Statutory
Declaration") stating that, pursuant to the Subscription Agreement, VMI is
entitled to be paid a portion of the Escrowed Funds then Escrow Agent will
within a reasonable time deliver a copy of the VMI Statutory Declaration (the
"Investors Copy") to Investors.
3.3 PAYMENT TO VMII. If Escrow Agent has not received from Investors within
15 Business Days of deemed receipt by Investors of the Investors Copy (the
"Investors Dispute Period") a statutory declaration of a director or senior
officer of one of the Investors stating that VMI is not entitled to have paid to
it the amount specified in the VMI Statutory Declaration (a "Investors Dispute
Notice") then Escrow Agent will, without the need for further consultation with
or authorization from Investors, pay the amount specified in the VMI Statutory
Declaration to the order of VMI; provided that with respect to the first
disbursement of Escrowed Funds currently anticipated to be made on January 15,
2001, the Investors Dispute Period shall be shortened to such period of time
necessary to accomplish such first disbursement on January 15, 2001.
3.4 NON-DELIVERY TO VMI. If Escrow Agent receives a Investors Dispute
Notice within the Investors Dispute Period then Escrow Agent will not pay the
amount specified in the VMI Statutory Declaration to VMI but will continue to
hold the Escrowed Funds until directed in writing by both Investors and VMI or
ordered by a court of competent jurisdiction.
3.5 NOTICE OF NON-ENTITLEMENT BY INVESTORS. If, at any time, Investors
delivers to Escrow Agent a statutory declaration of a director or senior officer
of one of the Investors (the "Investors Statutory Declaration") stating that VMI
is not entitled to have any further amounts paid to it out
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of the Escrowed Funds then Escrow Agent will within a reasonable time deliver a
copy of the Investors Statutory Declaration (the "VMI Copy") to VMI.
3.6 DELIVERY TO INVESTORS. If Escrow Agent has not received from VMI within
15 Business Days of deemed receipt by VMI of the VMI Copy (the "VMI Dispute
Period") a statutory declaration of a director or senior officer of VMI stating
that VMI is entitled to have further amounts paid to it out of the Escrowed
Funds pursuant to the Subscription Agreement (a "VMI Dispute Notice") then
Escrow Agent will, without the need for further consultation with or
authorization from VMI, pay the Escrowed Funds to Investors.
3.7 NON-DELIVERY TO INVESTORS. If Escrow Agent receives a VMI Dispute
Notice within the VMI Dispute Period then Escrow Agent will cease to make any
further payments out of the Escrowed Funds until directed in writing by both
Investors and VMI or ordered by a court of competent jurisdiction.
3.8 DELIVERY OF ESCROWED DOCUMENTS. Concurrent with each disbursement of
Escrowed Funds to VMI, VMI shall instruct the Escrow Agent to release to the
Investors certificates representing such number of shares of Preferred Stock, as
previously deposited into the escrow with the Escrow Agent, to the Investors in
such denominations as directed by VMI, which VMI agrees shall correspond to the
amount of Escrowed Funds so disbursed and in accordance with the terms of the
Subscription Agreement. Upon execution of this Agreement, VMI shall deliver
directly to the Investors (and outside of the escrow) the certificates
representing the number of Warrants to be issued to each Investor pursuant to
the terms of the Subscription Agreement.
3.9 INVESTMENT OF ESCROWED FUNDS. Escrow Agent shall invest the Escrowed
Funds in such investment accounts as directed by a senior officer of VMI.
ARTICLE 4
TERMINATION OF ESCROW
4.1 TERMINATION OF ESCROW. This Agreement and the rights and obligations of
the parties hereto shall terminate when the Escrowed Funds and Escrowed
Documents have been delivered to VMI or returned to Investors in accordance with
the terms of this Agreement.
ARTICLE 5
RIGHTS, DUTIES AND REMUNERATION OF THE ESCROW AGENT
5.1 FEES. VMI and Investors will each indemnify Escrow Agent for its
reasonable fees and expenses for acting as escrow agent hereunder.
5.2 RIGHTS OF ESCROW AGENT. Escrow Agent may act upon any instrument or
other writing or transmission reduced to writing believed by it in good faith to
be genuine and to be signed or presented by the proper person. Escrow Agent
shall not be liable to any of the parties hereto for any liability or losses
sustained by any of them as a result of any action taken or omitted to be taken
by it in good faith unless a court of competent jurisdiction determines that
Escrow Agent's wilful misconduct or gross negligence was the primary cause of
any such loss. Escrow Agent
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may consult with qualified outside counsel of its choice at all reasonable
times, and shall have full and complete authorization and protection for any
action taken or omitted by it hereunder in good faith and in accordance with the
opinion of such counsel.
5.3 INDEMNITY. The parties hereto agree, jointly and severally, to
indemnify and save harmless Escrow Agent from all costs, expenses (including
legal fees and disbursements on a solicitor and own client basis), liabilities
and losses that may be incurred by it as a result of being named a party to or
responding to any litigation arising from the performance of its duties
hereunder, except such litigation that arises from any act or failure to act by
Escrow Agent that is determined by a court of competent jurisdiction to
constitute wilful misconduct or gross negligence of Escrow Agent.
5.4 NO LIABILITY. The duties and responsibilities of Escrow Agent hereunder
shall be determined solely by the express provisions of this Agreement, and no
other or further duties or responsibilities shall be implied. Escrow Agent shall
not have any liability under, and shall have no duty to inquire into the terms
and provisions of, any other Agreement, or instructions, other than as set forth
or contemplated in this Agreement.
5.5 DIRECTIONS. If Escrow Agent is uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from any party hereto
which, in its opinion, conflict with any of the provisions of this Agreement,
Escrow Agent shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely the Certificate until it shall be directed
otherwise in a written notice satisfactory to Escrow Agent from the other
parties hereto or by a final order or judgment of a court of competent
jurisdiction.
5.6 INTERPLEADER. In the event of a dispute between any of the parties to
this Agreement and where Escrow Agent deems it necessary for its protection to
do so, Escrow Agent may deposit the Certificate into a court of competent
jurisdiction and, subject to any order of such court, shall thereafter have no
further duties in connection therewith to any of the parties hereto.
5.7 DIRECTIONS FROM THE PARTIES. Escrow Agent shall be entitled to rely
upon directions from Xxxxxxx X. Xxxxx or such other individual as he may appoint
in writing as directions from Investors for all purposes hereof. Escrow Agent
shall be entitled to rely upon directions from the Chief Executive Officer, the
President or the Chief Financial Officer, or such other individual(s) as any of
them may appoint in writing as directions from VMI for all purposes hereof.
ARTICLE 6
RELEASE CONDITIONS
6.1 DRAW OF FUNDS. VMI and the Investors hereby agree that, subject to the
conditions precedent set forth in Section 6.2 below, up to $500,000 of the
Escrowed Funds may be paid to VMI on each of January 15, 2001, January 31, 2001,
February 15, 2001 and February 28, 2001 in increments, at the discretion of VMI,
of $100,000. Concurrent with each draw of Escrowed Funds, the Escrow Agent shall
pay to VMI all accrued interest on the amount of the Escrowed Funds so disbursed
to VMI.
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6.2 CONDITIONS PRECEDENT OF FIRST DRAW. VMI and the Investors hereby agree
that the first draw on January 15, 2001, shall be subject to the consummation of
the following conditions precedent:
(a) A Budget approved by the Board of Directors of VMI;
(b) A Revenue Forecast approved by the Board of Directors of VMI;
and
(c) A Technology Development and Implementation Plan approved by
the Board of Directors of VMI.
Other than the foregoing conditions precedent, VMI and the Investors agree that
no other conditions precedent shall exist with respect to any disbursement or
draw of the Escrowed Funds.
6.3 RETRACTION. VMI hereby agrees with the Investors that in the event
funds are available in excess of VMI's working capital requirements, then VMI
shall at such time such excess funds are available, if any, and prior to June
30, 2001, retract the sale of the Preferred Stock pursuant to the Subscription
Agreement to the extent of such excess funds, by refunding to the Investors the
amount of such excess funds (to a maximum of the amount of the Escrowed Funds
disbursed to VMI) and instructing the Escrow Agent to return to the Investors
the balance of any Escrowed Funds, if any, together with all accrued and unpaid
dividends on such Preferred Stock to the date(s) of such repayment/return of
such amounts. The amount of any accrued interest on the balance of the Escrowed
Funds so returned to the Investors shall be credited towards the amount of
accrued dividends to be paid to Investors by VMI on such Preferred Stock. As
conditions to any such retraction, Investors shall deliver to VMI the number of
shares of Preferred Stock previously issued to Investors in the amount so repaid
by VMI (and at the original price per share issued to Investors), free and clear
of all liens, security interests, claims, pledges and encumbrances of any kind,
together with the share certificates representing such shares of Preferred
Stock, duly endorsed for transfer, whereupon VMI will cancel such shares. Upon
delivery of the balance of such Escrowed Funds to the Investors pursuant to such
a return of funds, VMI shall be entitled to instruct the Escrow Agent to return
to VMI all certificates representing shares of Preferred Stock held by Escrow
Agent and not previously delivered to Investors, whereupon VMI will be entitled
to cancel all such shares. In the event any Investor fails to deliver such
certificates representing such shares, VMI shall be entitled to deposit the
funds with the Escrow Agent under an escrow account for the benefit of such
Investor, and thereafter treat such shares of Preferred Stock as cancelled for
all purposes. Any outstanding shares of Preferred Stock not retracted or
refunded hereunder by June 30, 2001, shall be subject to conversion into Common
Stock to the extent set forth in the Articles of Incorporation, as amended, of
VMI. Any retraction or refund hereunder shall not affect any Warrants issued
under the Subscription Agreement and such Warrants shall remain outstanding
regardless of any retraction or refund.
6.4 OBLIGATIONS OF ESCROW AGENT. The provisions of this Article 6 are
intended to define the rights and obligations of VMI, on the one hand, and the
Investors on the other, and except as set forth in Article 3 hereof, the Escrow
Agent shall have no obligations whatsoever to make any determinations under this
Article 6 and shall follow the instructions of the VMI and the Investors as set
forth in Article 3 hereof.
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ARTICLE 7
MISCELLANEOUS
7.1 NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing, addressed to the respective
parties hereto at their addresses referred to below (or to such other address as
any party may advise the other parties of by notice) and shall be deemed to have
been given and received: (i) the next Business Day, if by hand delivery or
overnight courier sent on a Business Day; (ii) three Business Days following
post-paid registered or certified mailing if mailed in Canada or the United
States of America, or (iii) upon written acknowledgement of facsimile
transmission; provided however, that in all cases, all notices, requests,
demands and other communications to Escrow Agent shall be deemed to have been
given and received on the date actually received by Escrow Agent:
To Investors:
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ATTENTION:
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Facsimile:
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To VMI: Voice Mobility International, Inc.
Xxxxx 000
00000 Xxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
ATTENTION: CHIEF FINANCIAL OFFICER
Facsimile: (000) 000-0000
With copy to:
Crosby, Heafey, Xxxxx & May, P.C.
1901 Avenue of the Stars, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
To Escrow Agent: OB Services Inc.
Xxxxx 0000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
ATTENTION: XXX X. XXXXXXXX
Facsimile: 604.688.2827
7.2 DELIVERY BY FAX. This Agreement may be effectively delivered by any
party hereto by transmitting by facsimile a copy hereof executed by such party
to each of the other parties as provided for herein.
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IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of
the date first above written.
VOICE MOBILITY INTERNATIONAL, INC. PAXXVIII HOLDINGS LTD.
Per: /s/ Per: /s/
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Authorized Signatory Authorized Signatory
MADRONA INVESTMENTS LTD., ALLIANCE EQUITIES LTD.
Per: /s/ Per: /s/
---------------------------------------- -----------------------------------------
Authorized Signatory Authorized Signatory
XXXXXX CONSULTING LTD. OB SERVICES INC.
Per: /s/ Per: /s/
---------------------------------------- -----------------------------------------
Authorized Signatory Authorized Signatory
AMENDMENT NO. 1 TO ESCROW AGREEMENT
Reference is made to the Escrow Agreement (the "Agreement") dated as of
December 29, 2000 among VOICE MOBILITY INTERNATIONAL, INC. ("VMI"), a Nevada
corporation, and PAXXVIII HOLDINGS LTD., MADRONA INVESTMENTS LTD., XXXXXX
CONSULTING LTD. and ALLIANCE EQUITIES LTD. (referred to herein collectively as
"Investors") and OB SERVICES, INC. ("Escrow Agent"), an affiliate of OWEN, BIRD,
Barristers and Solicitors. Pursuant to Section 1.7 of the Agreement, the parties
hereby amend the Agreement as set forth below:
1. The first sentence of Section 6.3 (RETRACTION) is hereby
amended in its entirety to read as follows: "VMI hereby agrees with the
Investors that in the event funds are available in excess of VMI's working
capital requirements, then VMI shall have the right, at its option, at such time
such excess funds are available, if any, and prior to June 30, 2001, to retract
the sale of the Preferred Stock pursuant to the Subscription Agreement to the
extent of such excess funds, by refunding to the Investors the amount of such
excess funds (to a maximum of the amount of the Escrowed Funds disbursed to VMI)
and instructing the Escrow Agent to return to the Investors the balance of any
Escrowed Funds, if any, together with all accrued and unpaid dividends on such
Preferred Stock to the date(s) of such repayment/return of such amounts."
2. Except as provided herein, the Agreement shall remain
unaffected and in full force and effect.
IN WITNESS WHEREOF the parties have executed and delivered this
Amendment effective as of date first above written.
VOICE MOBILITY INTERNATIONAL, INC. PAXXVIII HOLDINGS LTD.
Per: /s/ Per: /s/
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Authorized Signatory Authorized Signatory
MADRONA INVESTMENTS LTD., ALLIANCE EQUITIES LTD.
Per: /s/ Per: /s/
---------------------------------------- -----------------------------------------
Authorized Signatory Authorized Signatory
XXXXXX CONSULTING LTD. OB SERVICES INC.
Per: /s/ Per: /s/
---------------------------------------- -----------------------------------------
Authorized Signatory Authorized Signatory
