SUNDANCE ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as of May 23, 2003, by and among SUNDANCE
CAPITAL FUND I, a Nevada limited partnership ("Sundance"), INNERSPACE
CORPORATION, a Delaware corporation ("InnerSpace") and XXXXXX X. XXXXX, P.C.
(the "Escrow Agent").
RECITALS
A. Sundance and InnerSpace have entered into a Stock Purchase Agreement dated as
of the Effective Date;
B. The Stock Purchase Agreement contemplates the establishment of an escrow
arrangement to secure the obligations of Sundance under the Stock Purchase
Agreement:
WITNESSETH:
The parties to this Escrow Agreement, intending to be legally bound, hereby
agree as follows:
SECTION 1. DEFINED TERMS; CONFLICTS
Capitalized terms used and not otherwise defined in this Escrow Agreement shall
have the meanings assigned to them in the Stock Purchase Agreement. In the event
of a conflict between the provisions of this Escrow Agreement and the Stock
Purchase Agreement, the provisions of the Stock Purchase Agreement shall
control.
SECTION 2. ESCROW
2.1 SHARES AND STOCK POWERS TO BE PLACED IN ESCROW. InnerSpace shall issue
certificates to Sundance representing 1,900,000 shares (the "Shares") of
common stock, $.0001 par value, of InnerSpace ("InnerSpace Common Stock")
pursuant to Section 1.1 of the Stock Purchase Agreement in certificated
form. Of these Shares, 1,400,000 Shares (the "Escrow Shares") shall be held
in escrow in accordance with this Escrow Agreement and deemed Escrow
Shares. The Escrow Shares shall be held by the Escrow Agent in the Escrow
in accordance with the provisions of this Escrow Agreement and shall not be
subject to any lien, attachment, trustee process or any other judicial
process of any party hereto or creditor thereof.
2.2 VOTING OF SHARES. Sundance shall be entitled to vote the Escrow Shares.
InnerSpace shall give Sundance at least as much notice of meetings of
shareholders as it gives its shareholders generally. Sundance shall direct
the Escrow Agent in writing as to the exercise of voting rights pertaining
to the Escrow Shares as to which such voting instructions have been
received, and the Escrow Agent shall comply with any such written
instructions. In the absence of such instructions, the Escrow Agent shall
not vote any of the Escrow Shares. The Escrow Agent shall have no
obligation to solicit consents or proxies from Sundance for purposes of any
such vote.
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2.3 DIVIDENDS, ETC. Any cash, securities or other property distributable
(whether by way of dividend, stock split or otherwise) in respect of or in
exchange for any Escrow Shares shall be distributed to Sundance.
2.4 TRANSFERABILITY. Sundance shall have the right to assign or transfer the
Escrow Shares or any portion thereof subject to the terms of this
Agreement. No transfer of any of such interests shall be recognized or
given effect until the Escrow Agent and InnerSpace shall have received
written notice of such transfer and the Escrow Agent shall have consented
to such assignment or transfer in writing.
2.5 FRACTIONAL SHARES. No fractional shares of InnerSpace Common Stock shall be
retained in or released from the Escrow pursuant to this Escrow Agreement.
In connection with any release of Escrow Shares from the Escrow, if
Sundance would otherwise be entitled to receive a fraction of a share of
InnerSpace Common Stock (after aggregating all fractional shares of
InnerSpace Common Stock issuable to Sundance), the Escrow Agent shall
retain the fractional share until the Escrow is terminated.
SECTION 3. RELEASE OF SHARES TO SHAREHOLDERS.
7.1 RELEASE. The Escrow Agent may release the Escrow Shares from escrow in
accordance with the following schedule:
(a) 160,000 shares after Sundance invests $100,000 as provided in Section
1.1(b) of the Stock Purchase Agreement;
(b) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(c) of the Stock Purchase Agreement;
(c) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(d) of the Stock Purchase Agreement;
(d) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(e) of the Stock Purchase Agreement;
(e) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(f) of the Stock Purchase Agreement;
(f) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(g) of the Stock Purchase Agreement;
(g) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(h) of the Stock Purchase Agreement;
(h) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(i) of the Stock Purchase Agreement; and
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(i) 155,000 shares after Sundance invests $100,000 as provided in Section
1.1(j) of the Stock Purchase Agreement, and the balance of the shares,
if any, on the first anniversary of execution of the Stock Purchase
Agreement (the "Scheduled Escrow Termination Date").
7.2 PROCEDURES FOR RELEASING SHARES.
Mailing a stock certificate to Sundance certified mail, return receipt
requested, may effect any release of shares to Sundance pursuant to Section 3.1.
SECTION 4. FEES AND EXPENSES
7.1 ESCROW AGENT FEES AND EXPENSES. Upon execution of this Escrow Agreement and
initial deposit of the Escrow Shares, an acceptance fee in accordance with
the Escrow Agent's fee schedules in effect from time to time will be
payable to the Escrow Agent. This acceptance fee will cover the first year
of the Escrow. Thereafter, an annual administrative fee will be payable in
accordance with the Escrow Agent's fee schedules in effect from time to
time. The Escrow Agent will also be entitled to reimbursement for
extraordinary expenses incurred in performance of its duties hereunder.
7.2 PAYMENT OF ESCROW AGENT. InnerSpace shall pay the fees and expenses of the
Escrow Agent for the services to be rendered by the Escrow Agent hereunder.
SECTION 5. LIMITATION OF ESCROW AGENT'S LIABILITY
7.1 LIMITATION. The Escrow Agent shall incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other documents believed by it to be
genuine and duly authorized, nor for other action or inaction except its
own willful misconduct or negligence. The Escrow Agent shall not be
responsible for the validity or sufficiency of this Agreement. In all
questions arising under the Escrow Agreement, the Escrow Agent may rely on
the advice of counsel, and for anything done, omitted or suffered in good
faith by the Escrow Agent based on such advice the Escrow Agent shall not
be liable to anyone. The Escrow Agent shall not be required to take any
action hereunder involving any expense unless the payment of such expense
is made or provided for in a manner reasonably satisfactory to it.
7.2 INDEMNIFICATION OF ESCROW AGENT. InnerSpace and Sundance, jointly and
severally, shall indemnify the Escrow Agent for, and hold it harmless
against, any loss, liability or expense incurred without negligence or
willful misconduct on the part of Escrow Agent, arising out of or in
connection with its carrying out of its duties hereunder. As among
themselves, each of (i) InnerSpace and (ii) Sundance shall be liable for
one-half (1/2) of such amounts and InnerSpace shall be entitled to
reimbursement from the Escrow Shares of Sundance' share of any such loss,
liability or expense.
SECTION 6. SUCCESSOR ESCROW AGENT
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In the event the Escrow Agent becomes unavailable or unwilling to continue in
its capacity herewith, the Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving resignation to the parties to this
Escrow Agreement, specifying not less than 60 days' prior written notice of the
date when such resignation shall take effect. InnerSpace may appoint a successor
Escrow Agent without the consent of Sundance so long as such successor is a bank
with assets of at least $50 million, and may appoint any other successor Escrow
Agent with the consent of Sundance, which consent shall not be unreasonably
withheld. If, within such notice period, InnerSpace provides to the Escrow Agent
written instructions with respect to the appointment of a successor Escrow Agent
and directions for the transfer of any Escrow Shares then held by the Escrow
Agent to such successor, the Escrow Agent shall act in accordance with such
instructions and promptly transfer such Escrow Shares to such designated
successor.
SECTION 7. GENERAL
7.1 OTHER AGREEMENTS. Nothing in this Escrow Agreement is intended to limit any
of InnerSpace's or any other party's rights under the Stock Purchase
Agreement or under any other agreement entered into in connection with the
transactions contemplated by the Stock Purchase Agreement.
7.2 NOTICES. Any notice or other communication required or permitted to be
delivered to any party under this Escrow Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile
telephone number as such party shall have specified in a written notice
given to the other parties hereto:
If to InnerSpace:
InnerSpace Corporation
0000 Xxxx Xxxxxxxxxx Xxxxx, Xxxxx 0
Xxxxx, XX 00000
Attention: Chief Executive Officer
If to Sundance:
Sundance Capital Fund I, LP
0000 Xxxxxxxxx Xxxxx, Xxxx X
Xxxxxxx, Xxxxxxx X0X0X0 Xxxxxx
Attention: Manager
If to the Escrow Agent:
Xxxxxx X. Xxxxx, P.C.
0000X Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
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7.3 COUNTERPARTS. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. To expedite the process of
entering into this Agreement, the parties acknowledge that Transmitted
Copies of this Agreement will be equivalent to original documents until
such time as original documents are completely executed and delivered.
"Transmitted Copies" will mean copies that are reproduced or transmitted
via photocopy, facsimile or other process of complete and accurate
reproduction and transmission.
7.4 HEADINGS. The underlined headings contained in this Escrow Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Escrow Agreement and shall not be referred to in connection with the
construction or interpretation of this Escrow Agreement.
7.5 GOVERNING LAW; VENUE. This Escrow Agreement shall be construed in
accordance with, and governed in all respects by, the internal laws of the
State of Delaware (without giving effect to principles of conflicts of
laws). Any state or federal court in the County of San Mateo in the State
of Arizona shall have exclusive jurisdiction and venue over any dispute
arising out of this Escrow Agreement and the parties hereby consent to the
jurisdiction and venue of such courts.
7.6 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) Subject to Sections 3.5 and 10.7(b), this Escrow Agreement shall be
binding upon: Sundance and Sundance of the Company and their
respective estates, successors and assigns (if any); and InnerSpace
and its successors and assigns (if any). This Escrow Agreement shall
inure to the benefit of: Sundance; InnerSpace; the other indemnified
parties; and the respective successors (if any) of the foregoing
(b) InnerSpace may freely assign any or all of its rights under this
Escrow Agreement, in whole or in part, to any other person without
obtaining the consent or approval of any other party hereto or of any
other person. None of Sundance, Sundance or the Company shall be
permitted to assign any of his, her or its rights or delegate any of
his, her or its obligations under this Escrow Agreement without
InnerSpace's prior written consent.
7.7 WAIVER
(a) No failure on the part of any person to exercise any power, right,
privilege or remedy under this Escrow Agreement, and no delay on the
part of any person in exercising any power, right, privilege or remedy
under this Escrow Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any
such power, right, privilege or remedy shall preclude any other or
further exercise thereof or of any other power, right, privilege or
remedy.
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(b) No person shall be deemed to have waived any claim arising out of this
Escrow Agreement, or any power, right, privilege or remedy under this
Escrow Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such person; and any such
waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
7.8 AMENDMENTS. This Escrow Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of InnerSpace, Sundance and the Escrow Agent.
7.9 SEVERABILITY. In the event that any provision of this Escrow Agreement, or
the application of any such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Escrow Agreement, and
the application of such provision to persons or circumstances other than
those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall
continue to be valid and enforceable to the fullest extent permitted by
law.
7.10 ENTIRE AGREEMENT. This Escrow Agreement and the Reorganization Agreement
and the other agreements contemplated in the Stock Purchase Agreement set
forth the entire understanding of the parties relating to the subject
matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof.
7.11 CONSTRUCTION.
(a) For purposes of this Escrow Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the
feminine gender shall include the masculine and neuter genders; and
the neuter gender shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Escrow
Agreement.
(c) As used in this Escrow Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation,
but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this Escrow Agreement
to "Sections" are intended to refer to Sections of this Escrow
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of
the date first above written.
INNERSPACE CORPORATION
a Delaware corporation
By:/s/ Xxxxxx X. Xxxxx
Its:CEO
SUNDANCE CAPITAL FUND I, LP
By: Sundance Capital Partners, LLC
General Partner
By:/s/ Xxx Xxxxxxxx
Its:Manager
XXXXXX X. XXXXX, P.C.
By:/s/ Xxxxxx X. Xxxxx
Its:President
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