ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
April 14, 2005 by TRUST LICENSING, INC., a Delaware corporation (the "Company");
CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the "Investor");
and XXXXX XXXXXXXX, ESQ. (the "Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor have entered into a Standby
Equity Distribution Agreement (the "Standby Equity Distribution Agreement")
dated as of the date hereof, pursuant to which the Investor will purchase the
Company's Common Stock, par value US$0.0001 per share (the "Common Stock"), at a
price per share equal to the Purchase Price, as that term is defined in the
Standby Equity Distribution Agreement, for an aggregate price of up to Ten
Million U.S. Dollars ($10,000,000). The Standby Equity Distribution Agreement
provides that on each Advance Date, as that term is defined in the Standby
Equity Distribution Agreement, the Investor shall deposit the Advance pursuant
to the Advance Notice in a segregated escrow account to be held by Escrow Agent
and the Company shall deposit shares of the Company's Common Stock, which shall
be purchased by the Investor as set forth in the Standby Equity Distribution
Agreement, with the Escrow Agent, in order to effectuate a disbursement to the
Company of the Advance by the Escrow Agent and a disbursement to the Investor of
the shares of the Company's Common Stock by Escrow Agent at a closing to be held
as set forth in the Standby Equity Distribution Agreement (the "Closing").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the
funds and the shares of the Company's Common Stock deposited with it in
accordance with the terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and shares to effect
the provisions of the Standby Equity Distribution Agreement, the parties hereto
have entered into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:
Definitions. The following terms shall have the following
meanings when used herein:
"Escrow Funds" shall mean the Advance funds deposited with the
Escrow Agent pursuant to this Agreement.
"Joint Written Direction" shall mean a written
direction executed by the Investor and
the Company directing Escrow Agent to disburse all or a portion of the Escrow
Funds or to take or refrain from taking any action pursuant to this Agreement.
"Common Stock Joint Written Direction" shall mean a
written direction executed by the
Investor and the Company directing Investor's Counsel to disburse all or a
portion of the shares of the Company's Common Stock or to refrain from taking
any action pursuant to this Agreement.
Appointment of and Acceptance by Escrow Agent.
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The Investor and the Company hereby appoint Escrow Agent to
serve as Escrow Agent hereunder. Escrow Agent hereby accepts such appointment
and, upon receipt by wire transfer of the Escrow Funds in accordance with
Section 3 below, agrees to hold, invest and disburse the Escrow Funds in
accordance with this Agreement.
The Investor and the Company hereby appoint the
Escrow Agent to serve as the holder of
the shares of the Company's Common Stock which shall be purchased by the
Investor. The Escrow Agent hereby accepts such appointment and, upon receipt via
D.W.A.C or the certificates representing of the shares of the Company's Common
Stock in accordance with Section 3 below, agrees to hold and disburse the shares
of the Company's Common Stock in accordance with this Agreement. The Escrow
Agent shall not receive except as specified in Section 12.4(a) of the Standby
Equity Distribution Agreement.
The Company hereby acknowledges that the Escrow Agent
is general counsel to the
Investor, a partner in the general partner of the Investor and counsel to the
Investor in connection with the transactions contemplated and referenced herein
and will be acting as the escrow agent for shares of the Company's Common Stock
as outlined herein. The Company agrees that in the event of any dispute arising
in connection with this Escrow Agreement or otherwise in connection with any
transaction or agreement contemplated and referenced herein, the Escrow Agent
shall be permitted to continue to represent the Investor and the Company will
not seek to disqualify such counsel.
Creation of Escrow Account/Common Stock Account.
On or prior to the date of this Agreement the Escrow Agent
shall establish an escrow account for the deposit of the Escrow Funds entitled
as follows: Trust Licensing, Inc./Cornell Capital Partners, LP. The Investor
will wire funds to the account of the Escrow Agent as follows:
Bank: Wachovia Bank, N.A.
Routing #: 000000000
Account #: 2000014931134
Name on Account: Xxxxx Xxxxxxxx PC Attorney Escrow Account
Name on Sub-Account: Trust Licensing, Inc./Cornell Capital Partners, LP Escrow
account
On or prior to the date of this Agreement the Escrow Agent shall establish an
account for the D.W.A.C. of the shares of Common Stock. The Company will
D.W.A.C. shares of the Company's Common Stock to the account of the Escrow Agent
as follows:
Brokerage Firm: Xxxxx Securities Corp.
Clearing House: Fiserv
Account #: 00000000
DTC #: 0632
Name on Account: Xxxxx Xxxxxxxx Escrow Account
Deposits into the Escrow Account. The Investor agrees that it shall
promptly deliver all monies for the payment of the Common Stock to the Escrow
Agent for deposit in the Escrow Account.
Disbursements from the Escrow Account.
At such time as Escrow Agent has collected and deposited
instruments of payment in the total amount of the Advance and has received such
Common Stock via D.W.A.C from the Company which are to be issued to the Investor
pursuant to the Standby Equity Distribution Agreement, the Escrow Agent shall
notify the Company and the Investor. The Escrow Agent will continue to hold such
funds until the Investor and Company execute and deliver a Joint Written
Direction directing the Escrow Agent to disburse the Escrow Funds pursuant to
Joint Written Direction at which time the Escrow Agent shall wire the Escrow
Funds to the Company. In disbursing such funds, Escrow Agent is authorized to
rely upon such Joint Written Direction from Company and may accept any signatory
from the Company listed on the signature page to this Agreement and any
signature from the Investor that Escrow Agent already has on file. Simultaneous
with delivery of the executed Joint Written Direction to the Escrow Agent the
Investor and Company shall execute and deliver a Common Stock Joint Written
Direction to the Escrow Agent directing the Escrow Agent to release via D.W.A.C
to the Investor the shares of the Company's Common Stock. In releasing such
shares of Common Stock the Escrow Agent is authorized to rely upon such Joint
Written Direction from Company and may accept any signatory from the Company
listed on the signature page to this Agreement and any signature from the Escrow
Agent has on file.
In the event the Escrow Agent does not receive the amount of the
Advance from the Investor or the shares of Common Stock to be purchased by the
Investor from the Company, the Escrow Agent shall notify the Company and the
Investor.
In the event that the Escrow Agent has not received the Common Stock to
be purchased by the Investor from the Company, in no event will the Escrow Funds
be released to the Company until such shares are received by the Escrow
Agreement. For purposes of this Agreement, the term "Common Stock certificates"
shall mean Common Stock certificates to be purchased pursuant to the respective
Advance Notice pursuant to the Standby Equity Distribution Agreement.
Deposit of Funds. The Escrow Agent is hereby authorized to
deposit the wire transfer proceeds in the Escrow Account.
Suspension of Performance: Disbursement Into Court.
Escrow Agent. If at any time, there shall exist any dispute
between the Company and the Investor with respect to holding or disposition of
any portion of the Escrow Funds or the Common Stock or any other obligations of
Escrow Agent hereunder, or if at any time Escrow Agent is unable to determine,
to Escrow Agent's sole satisfaction, the proper disposition of any portion of
the Escrow Funds or Escrow Agent's proper actions with respect to its
obligations hereunder, or if the parties have not within thirty (30) days of the
furnishing by Escrow Agent of a notice of resignation pursuant to Section 9
hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:
Suspend the performance of any of its obligations (including without limitation
any disbursement obligations) under this Escrow Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
a successor Escrow Agent shall be appointed (as the case may be); provided
however, Escrow Agent shall continue to invest the Escrow Funds in accordance
with Section 8 hereof; and/or
Petition (by means of an interpleader action or any other appropriate method)
any court of competent jurisdiction in any venue convenient to Escrow Agent, for
instructions with respect to such dispute or uncertainty, and to the extent
required by law, pay into such court, for holding and disposition in accordance
with the instructions of such court, all funds held by it in the Escrow Funds,
after deduction and payment to Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with performance of its duties and the
exercise of its rights hereunder.
Escrow Agent shall have no liability to the Company, the Investor, or any person
with respect to any such suspension of performance or disbursement into court,
specifically including any liability or claimed liability that may arise, or be
alleged to have arisen, out of or as a result of any delay in the disbursement
of funds held in the Escrow Funds or any delay in with respect to any other
action required or requested of Escrow Agent.
Investment of Escrow Funds. The Escrow Agent shall deposit the Escrow Funds in a
non-interest bearing money market account.
If Escrow Agent has not received a Joint Written Direction at any time
that an investment decision must be made, Escrow Agent may retain the Escrow
Fund, or such portion thereof, as to which no Joint Written Direction has been
received, in a non-interest bearing money market account.
Resignation and Removal of Escrow Agent. Escrow Agent may
resign from the performance of its duties hereunder at any time by giving thirty
(30) days' prior written notice to the parties or may be removed, with or
without cause, by the parties, acting jointly, by furnishing a Joint Written
Direction to Escrow Agent, at any time by the giving of ten (10) days' prior
written notice to Escrow Agent as provided herein below. Upon any such notice of
resignation or removal, the representatives of the Investor and the Company
identified in Sections 13a.(iv) and 13b.(iv), below, jointly shall appoint a
successor Escrow Agent hereunder, which shall be a commercial bank, trust
company or other financial institution with a combined capital and surplus in
excess of US$10,000,000.00. Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Escrow Agent, and the retiring Escrow
Agent shall be discharged from its duties and obligations under this Escrow
Agreement, but shall not be discharged from any liability for actions taken as
Escrow Agent hereunder prior to such succession. After any retiring Escrow
Agent's resignation or removal, the provisions of this Escrow Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent, after making copies of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.
Liability of Escrow Agent.
Escrow Agent shall have no liability or obligation with
respect to the Escrow Funds except for Escrow Agent's willful misconduct or
gross negligence. Escrow Agent's sole responsibility shall be for the
safekeeping, investment, and disbursement of the Escrow Funds in accordance with
the terms of this Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice or any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained therein, which
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and conform to
the provisions of this Agreement. In no event shall Escrow Agent be liable for
incidental, indirect, special, and consequential or punitive damages. Escrow
Agent shall not be obligated to take any legal action or commence any proceeding
in connection with the Escrow Funds, any account in which Escrow Funds are
deposited, this Agreement or the Standby Equity Distribution Agreement, or to
appear in, prosecute or defend any such legal action or proceeding. Escrow Agent
may consult legal counsel selected by it in the event of any dispute or question
as to construction of any of the provisions hereof or of any other agreement or
its duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or instructions of such
counsel. The Company and the Investor jointly and severally shall promptly pay,
upon demand, the reasonable fees and expenses of any such counsel and Escrow
Agent is hereby authorized to pay such fees and expenses from funds held in
escrow.
The Escrow Agent is hereby authorized, in its sole
discretion, to comply with orders
issued or process entered by any court with respect to the Escrow Funds, without
determination by the Escrow Agent of such court's jurisdiction in the matter. If
any portion of the Escrow Funds is at any time attached, garnished or levied
upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in any case any order judgment or decree shall be made or
entered by any court affecting such property or any part thereof, then and in
any such event, the Escrow Agent is authorized, in its sole discretion, to rely
upon and comply with any such order, writ judgment or decree which it is advised
by legal counsel selected by it, binding upon it, without the need for appeal or
other action; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even though such order,
writ judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
Indemnification of Escrow Agent. From and at all times after the date of this
Agreement, the parties jointly and severally, shall, to the fullest extent
permitted by law and to the extent provided herein, indemnify and hold harmless
Escrow Agent and each director, officer, employee, attorney, agent and affiliate
of Escrow Agent (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever (including without limitation
reasonable attorney's fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action, or proceeding (including any inquiry or
investigation) by any person, including without limitation the parties to this
Agreement, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Agreement or any transaction contemplated herein, whether or not any such
Indemnified Party is a party to any such action or proceeding, suit or the
target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for liability
finally determined by a court of competent jurisdiction, subject to no further
appeal, to have resulted solely from the gross negligence or willful misconduct
of such Indemnified Party. If any such action or claim shall be brought or
asserted against any Indemnified Party, such Indemnified Party shall promptly
notify the Company and the Investor hereunder in writing, and the Investor(s)
and the Company shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel (who may be selected
by such Indemnified Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party, except that the Investor and/or the
Company shall be required to pay such fees and expense if (a) the Investor or
the Company agree to pay such fees and expenses, or (b) the Investor and/or the
Company shall fail to assume the defense of such action or proceeding or shall
fail, in the sole discretion of such Indemnified Party, to employ counsel
reasonably satisfactory to the Indemnified Party in any such action or
proceeding, (c) the Investor and the Company are the plaintiff in any such
action or proceeding or (d) the named or potential parties to any such action or
proceeding (including any potentially impleaded parties) include both
Indemnified Party the Company and/or the Investor and Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Company or the Investor. The Investor and the Company shall be jointly and
severally liable to pay fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing. All such fees and expenses payable by the Company and/or
the Investor pursuant to the foregoing sentence shall be paid from time to time
as incurred, both in advance of and after the final disposition of such action
or claim. The obligations of the parties under this section shall survive any
termination of this Agreement, and resignation or removal of the Escrow Agent
shall be independent of any obligation of Escrow Agent.
Expenses of Escrow Agent. Except as set forth in Section 11
the Company shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including attorneys' fees, travel expenses, telephone and facsimile
transmission costs, postage (including express mail and overnight delivery
charges), copying charges and the like as outlined in Section 12.4 of the
Standby Equity Distribution Agreement dated the date hereof. All of the
compensation and reimbursement obligations set forth in this Section shall be
payable by the Company, upon demand by Escrow Agent. The obligations of the
Company under this Section shall survive any termination of this Agreement and
the resignation or removal of Escrow Agent.
Warranties.
The Investor makes the following representations and
warranties to the Escrow Agent:
The Investor has full power and authority to execute
and deliver this Agreement and to
perform its obligations hereunder.
This Agreement has been duly approved by all necessary action of the Investor,
including any necessary approval of the limited partner of the Investor, has
been executed by duly authorized officers of the Investor's general partner,
enforceable in accordance with its terms.
The execution, delivery, and performance of the Investor of this Agreement will
not violate, conflict with, or cause a default under the agreement of limited
partnership of the Investor, any applicable law or regulation, any court order
or administrative ruling or degree to which the Investor is a party or any of
its property is subject, or any agreement, contract, indenture, or other binding
arrangement.
Xxxx X. Xxxxxx has been duly appointed to act as the representative of Investor
hereunder and has full power and authority to execute, deliver, and perform this
Agreement, to execute and deliver any Joint Written Direction, to amend, modify,
or waive any provision of this Agreement, and to take any and all other actions
as the Investor's representative under this Agreement, all without further
consent or direction form, or notice to, the Investor or any other party.
No party other than the parties hereto have, or shall have, any lien, claim or
security interest in the Escrow Funds or any part thereof. No financing
statement under the Uniform Commercial Code is on file in any jurisdiction
claiming a security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
All of the representations and warranties of the Investor contained herein are
true and complete as of the date hereof and will be true and complete at the
time of any disbursement from the Escrow Funds.
The Company makes the following representations and warranties to Escrow Agent
and the Investor:
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.
This Agreement has been duly approved by all necessary corporate action of the
Company, including any necessary shareholder approval, has been executed by duly
authorized officers of the Company, enforceable in accordance with its terms.
The execution, delivery, and performance by the Company of this Escrow Agreement
is in accordance with the Standby Equity Distribution Agreement and will not
violate, conflict with, or cause a default under the articles of incorporation
or bylaws of the Company, any applicable law or regulation, any court order or
administrative ruling or decree to which the Company is a party or any of its
property is subject, or any agreement, contract, indenture, or other binding
arrangement.
Xxxxxxx X. Xxxx has been duly appointed to act as the representative of the
Company hereunder and has full power and authority to execute, deliver, and
perform this Agreement, to execute and deliver any Joint Written Direction, to
amend, modify or waive any provision of this Agreement and to take all other
actions as the Company's Representative under this Agreement, all without
further consent or direction from, or notice to, the Company or any other party.
No party other than the parties hereto shall have, any lien, claim or security
interest in the Escrow Funds or any part thereof. No financing statement under
the Uniform Commercial Code is on file in any jurisdiction claiming a security
interest in or describing (whether specifically or generally) the Escrow Funds
or any part thereof.
All of the representations and warranties of the Company contained herein are
true and complete as of the date hereof and will be true and complete at the
time of any disbursement from the Escrow Funds.
Consent to Jurisdiction and Venue. In the event that any party hereto commences
a lawsuit or other proceeding relating to or arising from this Agreement, the
parties hereto agree that the United States District Court for the District of
New Jersey shall have the sole and exclusive jurisdiction over any such
proceeding. If all such courts lack federal subject matter jurisdiction, the
parties agree that the Superior Court Division of New Jersey, Chancery Division
of Xxxxxx County shall have sole and exclusive jurisdiction. Any of these courts
shall be proper venue for any such lawsuit or judicial proceeding and the
parties hereto waive any objection to such venue. The parties hereto consent to
and agree to submit to the jurisdiction of any of the courts specified herein
and agree to accept the service of process to vest personal jurisdiction over
them in any of these courts.
Notice. All notices and other communications hereunder shall
be in writing and shall be deemed to have been validly served, given or
delivered five (5) days after deposit in the United States mail, by certified
mail with return receipt requested and postage prepaid, when delivered
personally, one (1) day delivery to any overnight courier, or when transmitted
by facsimile transmission and addressed to the party to be notified as follows:
If to Investor, to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
If to Escrow Agent, to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Company, to: Trust Licensing, Inc.
000 Xxxxx Xxxx Xxxxxx Xxxx - Xxxxx X000-0000
Xxxxxxxxxx, Xx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: XxXxxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or to such other address as each party may designate for itself by like
notice.
Amendments or Waiver. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties and the Escrow
Agent. No delay or omission by any party in exercising any right with respect
hereto shall operate as waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Governing Law. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of New Jersey
without giving effect to the conflict of laws principles thereof.
Entire Agreement. This Agreement constitutes the entire
Agreement between the parties relating to the holding, investment, and
disbursement of the Escrow Funds and sets forth in their entirety the
obligations and duties of the Escrow Agent with respect to the Escrow Funds.
Binding Effect. All of the terms of this Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective heirs, successors and assigns of the Investor, the
Company, or the Escrow Agent.
Execution of Counterparts. This Agreement and any Joint
Written Direction may be executed in counter parts, which when so executed shall
constitute one and same agreement or direction.
Termination. Upon the first to occur of the termination of the
Standby Equity Distribution Agreement dated the date hereof or the disbursement
of all amounts in the Escrow Funds and Common Stock into court pursuant to
Section 7 hereof, this Agreement shall terminate and Escrow Agent shall have no
further obligation or liability whatsoever with respect to this Agreement or the
Escrow Funds or Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.
TRUST LICENSING, INC.
By:
Name: Xxxxxxx X. Xxxx
Title: CEO
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
By:
Name: Xxxxx Xxxxxxxx, Esq.
