ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
January 20, 2005 by SIGNATURE LEISURE, INC., a Colorado corporation (the
"Company"); KATALYST CAPITAL GROUP LTD (the "Investor"); and XXXXXXXX AND
XXXXXX, P.A. (the "Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor have entered into an 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 $0.001 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 Five
Million Dollars ($5,000,000). The Standby Equity Distribution Agreement provides
that on each Advance Date the Investor, as that term is defined in the Standby
Equity Distribution Agreement, 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:
1. Definitions. The following terms shall have the following meanings when
used herein:
a. "Escrow Funds" shall mean the Advance funds deposited with the
Escrow Agent pursuant to this Agreement.
b. "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.
c. "Common Stock Joint Written Direction" shall mean a written
direction executed by the Investor and the Company directing Company'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.
2. Appointment of and Acceptance by Escrow Agent.
a. 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.
b. 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 of 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.
c. The Investor hereby acknowledges that the Escrow Agent is counsel
to the Company in connection with the transactions contemplated and
referenced herein. The Investor 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
Company and the Investor will not seek to disqualify such counsel.
3. 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: Xxxxxxxx
and Xxxxxx P.A. as trustee for Signature Leisure, Inc./Katalyst Capital Group
Ltd. The Investor will wire funds to the account of the Escrow Agent.
Bank: SunTrust Bank
Routing #: 0 6 1 0 0 0 1 0 4
Account #: 0 7 1 3 7 1 3 0 2 6 9 8 0
Name on Account: Xxxxxxxx and Xxxxxx P.A. Trust Account as trustee for
Signature Leisure, Inc./Katalyst Capital Group Ltd.
4. 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.
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5. Disbursements from the Escrow Account.
a. 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 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
is listed on the signature page to this agreement. 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 Federal Express 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 Common Stock 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
is listed on the signature page to this agreement.
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.
6. Deposit of Funds. The Escrow Agent is hereby authorized to deposit the
wire transfer proceeds in the Escrow Account.
7. Suspension of Performance: Disbursement Into Court.
a. 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:
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i. 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
ii. 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.
iii. 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.
8. 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.
9. 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. 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.
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10. Liability of Escrow Agent.
a. 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.
b. 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.
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11. 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 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 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.
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12. 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.
13. Warranties.
a. The Investor makes the following representations and warranties
to the Escrow Agent and Company:
i. The Investor has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
ii. 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.
iii. 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.
iv. Xxxxx Tribeca 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.
v. 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.
vi. 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.
b. The Company makes the following representations and warranties to
Escrow Agent and, the Investor:
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i. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Nevada, and has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
ii. 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.
iii. 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 certificate 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.
iv. Xxxxxxx X. Xxxxxx 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.
v. 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.
vi. 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.
14. 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 Florida 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 Florida, Seminole 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.
15. 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:
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If to Investor, to: Katalyst Capital Group
Leeward Highway
Providencials, Turks & Caicos Islands, B.W.I.
Attention: Xxxxx Tribeca, Portfolio Manager
Katalyst Capital Group
If to Escrow Agent, to: Xxxxxxxx and Xxxxxx P.A.
000 X. Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Xxxxxxxx and Xxxxxx P.A.
If to Company, to: Signature Leisure, Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or to such other address as each party may designate for itself by like
notice.
16. Amendments or Waiver. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties of 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.
17. 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.
18. Governing Law. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of Nevada without giving effect
to the conflict of laws principles thereof.
19. 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.
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20. 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.
21. 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.
22. 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.
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.
SIGNATURE LEISURE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Katalyst Capital Group
By:/s/ Xxxxx Tribeca
--------------------------
Name: Xxxxx Tribeca
Title: Portfolio Manager
XXXXXXXX AND XXXXXX, P.A.
By: /s/ Xxxxx Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx, Esq.
Title: Partner
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