Exhibit 10.2
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of August 19, 2004, by
and between Secured Diversified Investment, Ltd., a Nevada corporation with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 (the
"Target Company"); Gottbetter & Partners, LLP with its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Escrow Agent"); and
Seaside Investments Plc, a corporation organized under the laws of England and
Wales with its offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX ("Seaside").
RECITALS
A. Simultaneously with the execution of this Agreement,
Seaside and the Target Company entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of the date hereof and incorporated herein
by reference, pursuant to which the Target Company has agreed to issue to
Seaside the Consideration Stock in exchange for the Seaside Consideration
Shares.
B. The parties have agreed that the Consideration Stock and
Seaside Consideration Shares shall be deposited into escrow pursuant to this
Agreement, including thirty percent (30%) of the Seaside Consideration Shares to
be deposited into escrow as Downside Price Protection (the "Seaside Escrow
Shares").
C. The Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the purchase of the shares of
Consideration Stock.
D. All capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Stock Purchase Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEPOSIT INTO ESCROW. At Closing, the parties shall deposit
into escrow (i) the Seaside Consideration Shares, (ii) the Consideration Stock
and (iii) the stock power executed by Seaside. The deposit of the Seaside
Consideration Shares, at the election of Seaside, may be made as (i) a
certificate in the name of the Target Company or a provisional letter of
allotment for a trading account in the name of the Escrow Agent representing the
Seaside Escrow Shares and (ii) a certificate in the name of the Target Company
or a provisional letter of allotment for a trading account in the name of the
Escrow Agent (to be held for the benefit of the Target Company) representing the
balance of the Seaside Consideration Shares. The Escrow Agent shall hold the
Seaside Consideration Shares and the Consideration Stock in escrow when
delivered.
2. TERMS OF ESCROW. (a) If the Market Value of the Common
Stock on the date occurring one year after Closing (the "One Year Anniversary")
is less than the Closing Price, the Target Company shall sell to Seaside and
Seaside shall purchase the number of Seaside Escrow Shares (the "Seaside
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Protection Shares") equal to (a) the Seaside Consideration Shares multiplied by
(b) the Percentage Decrease, at a purchase price of 1p per Seaside Consideration
Share (the "Escrow Purchase Price"). The "Percentage Decrease" shall be equal to
1 - Market Value/the Closing Price. "Market Value" shall be the average of the
ten (10) closing bid prices per share of the Common Stock during the ten (10)
trading days immediately preceding the One Year Anniversary.
Within three (3) Business Days of the One Year Anniversary,
Seaside shall (i) send a notice ("Sale Notice") to the Target Company and the
Escrow Agent of the Seaside Protection Shares to be sold by the Target Company
to Seaside, if any, and (ii) deposit the Escrow Purchase Price with the Escrow
Agent, if necessary. Within fourteen (14) Business Days of the Target Company's
and the Escrow Agent's receipt of the Sale Notice and Escrow Agent's receipt of
the Escrow Purchase Price, the Escrow Agent is authorized and directed
simultaneously (i) to pay the Escrow Purchase Price, if any, to the Target
Company, (ii) to deliver the Seaside Protection Shares, if any, to Seaside and
(iii) to deliver the remaining Seaside Escrow Shares, if any, to the Target
Company.
(b) If at any time before September 30, 2004, the Escrow Agent
receives written notice (the "LSE Notice") from Seaside that the Seaside
Consideration Shares are listed on the London Stock Exchange plc (the "London
Exchange"), the Escrow Agent is authorized and directed to distribute, within
fourteen (14) Business Days of receipt of such LSE Notice, (i) the Consideration
Stock to Seaside and (ii) seventy percent (70%) of the Seaside Consideration
Shares to the Target Company. If the Escrow Agent does not receive such LSE
Notice by September 30, 2004, the Escrow Agent is authorized and directed to
distribute, no later than October 5, 2004, (i) the Consideration Stock and the
stock power executed by Seaside to the Target Company and (ii) the Seaside
Consideration Shares to Seaside; provided, however, that the Target Company
shall have the option to extend the September 30, 2004 deadline by providing
written notice to the Escrow Agent with a written acknowledgement from Seaside.
3. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
(a) The parties hereto agree that the duties and obligations
of the Escrow Agent shall be only those obligations herein specifically provided
and no other. The Escrow Agent's duties are those of a depositary only, and the
Escrow Agent shall incur no liability whatsoever, except as a direct result of
its willful misconduct or gross negligence in the performance of its duties
hereunder;
(b) The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or omitted to be taken by
it in accordance with the advice of such counsel;
(c) The Escrow Agent shall not be bound in any way by the
terms of any other agreement to which Seaside and the Target Company are
parties, whether or not the Escrow Agent has knowledge thereof, and the Escrow
Agent shall not in any way be required to determine whether or not any other
agreement has been complied with by Seaside and the Target Company, or any other
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party thereto. The Escrow Agent shall not be bound by any modification,
amendment, termination, cancellation, rescission or supersession of this
Agreement unless the same shall be in writing and signed jointly by Seaside and
the Target Company and agreed to in writing by the Escrow Agent;
(d) If the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict with any of the provisions of this Agreement, the
Escrow Agent shall be entitled to refrain from taking any action other than
keeping safely the Consideration (as defined below) or taking certain action
until the Escrow Agent is directed otherwise in writing jointly by Seaside and
the Target Company or by a final judgment of a court of competent jurisdiction;
(e) The Escrow Agent shall be fully protected in relying upon
any written notice, demand, certificate or document which the Escrow Agent, in
good faith, believes to be genuine. The Escrow Agent shall not be responsible
for the sufficiency or accuracy of the form, execution, validity or genuineness
of documents or securities now or hereafter deposited hereunder or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document, security or
endorsement;
(f) The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration;
(g) If the Escrow Agent at any time, in its sole discretion,
deems it necessary or advisable to relinquish custody of any of the securities
(to the extent delivered to the Escrow Agent pursuant hereto, the
"Consideration"), it may do so by delivering the same to another Person that
agrees to act as escrow agent hereunder and whose substitution for the Escrow
Agent is agreed upon in writing by Seaside and the Target Company; provided,
however that such successor Escrow Agent must be resident in the United States.
If no such escrow agent is selected within three (3) days after the Escrow Agent
gives notice to Seaside and the Target Company of the Escrow Agent's desire to
so relinquish custody of the Consideration and resign as Escrow Agent, then the
Escrow Agent may do so by delivering the Consideration to the clerk or other
proper officer of a state or federal court of competent jurisdiction situate in
the state and county of New York. The fee of any court officer shall be borne by
the Target Company. Upon such delivery, the Escrow Agent shall be discharged
from any and all responsibility or liability with respect to the Consideration
and this Agreement and each of the Target Company and Seaside shall promptly pay
all monies it may owe to the Escrow Agent for its services hereunder, including,
but not limited to, reimbursement of its out-of-pocket expenses pursuant to
paragraph (i) below;
(h) This Agreement shall not create any fiduciary duty on the
Escrow Agent's part to Seaside or the Target Company, nor disqualify the Escrow
Agent from representing either party hereto in any dispute with the other,
including any dispute with respect to the Stock Purchase Agreement; provided,
however, that in the event of such dispute, the Escrow Agent shall have the
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right to commence an interpleader action in any court of competent jurisdiction
of the state of New York or of the United States located in the county and state
of New York, deposit the Consideration with such court;
(i) The parties acknowledge and agree that the Escrow Agent is
counsel to Seaside. The parties agree to, and agree not to object to, the Escrow
Agent's engagement as Escrow Agent hereunder;
(j) Upon the full performance of this Agreement, the Escrow
Agent shall be deemed released and discharged of any further obligations
hereunder.
4. INDEMNIFICATION.
(a) Seaside hereby indemnifies and holds free and harmless the
Escrow Agent from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amounts paid in
settlement) resulting from claims asserted by the Target Company against the
Escrow Agent with respect to the performance of any of the provisions of this
Agreement;
(b) The Target Company hereby indemnifies and holds free and
harmless the Escrow Agent from any and all losses, expenses, liabilities and
damages (including but not limited to reasonable attorney's fees, and amount
paid in settlement) resulting from claims asserted by Seaside against the Escrow
Agent with respect to the performance of any of the provisions of this
Agreement;
(c) Seaside and the Target Company, jointly and severally,
hereby indemnify and hold the Escrow Agent harmless from and against any and all
losses, damages, taxes, liabilities and expenses that may be incurred by the
Escrow Agent, arising out of or in connection with its acceptance of appointment
as the Escrow Agent hereunder and/or the performance of its duties pursuant to
this Agreement, the Stock Purchase Agreement and the securities, including, but
not limited to, all legal costs and expenses of the Escrow Agent incurred
defending itself against any claim or liability in connection with its
performance hereunder, provided that the Escrow Agent shall not be entitled to
any indemnity for any losses, damages, taxes, liabilities or expenses that
directly result from its willful misconduct or gross negligence in its
performance as Escrow Agent hereunder
(d) In the event of any legal action or Proceeding involving
any of the parties to this Agreement which is brought to enforce or otherwise
adjudicate any of the rights or obligations of the parties hereunder, the
non-prevailing party or parties shall pay the legal fees of the prevailing party
or parties and the legal fees, if any, of the Escrow Agent.
5. MISCELLANEOUS.
(a) All notices, including the Sale Notice, objections,
requests, demands and other communications sent to any party hereunder shall be
deemed duly given if (x) in writing and sent by facsimile transmission to the
Person for whom intended if addressed to such Person at its facsimile number set
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forth below or such other facsimile number as such Person may designate by
notice given pursuant to the terms of this Section 5 and (y) the sender has
confirmation of transmission:
(i) If to the Target Company: Secured Diversified Investment, Ltd.
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: CEO
Tel: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Seaside: Seaside Investments PLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attn: Xxxxx Xxxxx
Tel: 00.000.000.0000
Fax: 00.000.000.0000
(iii) If to the Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) This Agreement has been prepared, negotiated and delivered
in the state of New York and shall be governed by and construed and enforced in
accordance with the laws of the state of New York applicable to contracts
entered into and performed entirely within New York, without giving effect to
the principles of New York law relating to the conflict of laws.
(c) This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The
assignment by a party of this Agreement or any rights hereunder shall not affect
the obligations of such party under this Agreement.
6. TERMINATION OF ESCROW. The term of this Escrow Agreement shall begin
upon the date hereof and shall continue until terminated upon the earlier to
occur of (i) the Seaside Escrow Shares are fully distributed or (ii) the written
agreement of the parties to terminate this Agreement. Upon the termination of
this Escrow Agreement pursuant to subsection (ii), the Escrow Agent shall
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distribute any of the Seaside Escrow Shares then held by it pursuant to the
terms of the written agreement of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
The Target Company:
Secured Diversified Investment, Ltd.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxx
Ttile: President
Seaside:
Seaside Investments Plc.
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: Administrative Director
Escrow Agent:
Gottbetter & Partners, LLP
By: /s/Xxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxx X Xxxxxxxxxx
Title: Managing Partner
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