ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
May ___, 2002, by VIDEOLOCITY INTERNATIONAL INC., a Nevada corporation (the
"Company"); CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the
"Investor"); BUTLER GONZALEZ LLP (the "Investor's Counsel"); and FIRST UNION
NATIONAL BANK, a national banking association, as Escrow Agent hereunder (the
"Escrow Agent").
BACKGROUND
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WHEREAS, the Company and the Investor have entered into an Equity Line
of Credit Agreement (the "Equity Line of Credit Agreement") dated as of the date
hereof, pursuant to which the Investor will purchase the Company's Common Stock,
par value $.001 per share (the "Common Stock"), at a price per share equal to
the Purchase Price, as that term is defined in the Equity Line of Credit
Agreement, for an aggregate price of up to Twenty Million Dollars ($20,000,000).
The Equity Line of Credit Agreement provides that on each Advance Date the
Investor, as that term is defined in the Equity Line of Credit 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 Equity Line of Credit Agreement, with the Investor's Counsel, 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
Investor's Counsel at a closing to be held as set forth in the Equity Line of
Credit Agreement (the "Closing").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the
funds deposited with it in accordance with the terms of this Agreement.
WHEREAS, Investor's Counsel has agreed to accept, hold, and disburse
the shares of the Company's Common Stock which have been 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 Equity Line of Credit Agreement, the parties hereto have
entered into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:
1. Definitions. All capitalized terms used herein and not otherwise
defined herein, shall have the same meaning ascribed to them as in the Equity
Line of Credit Agreement. In addition 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.
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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 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.
2. Appointment of and Acceptance by Escrow Agent and Investor's Counsel.
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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 Investor's Counsel to
serve as the holder of the shares of the Company's Common Stock which shall be
purchased by the Investor. Investor's Counsel 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.
3. Creation of Escrow Account/Common Stock Account.
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a. 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:
Videolocity International Inc./Cornell Capital Partners, LP The Investor will
wire funds to the account of the Escrow Agent as follows:
Bank: First Union National Bank of New Jersey
Routing #: 031201467
Account #: 2020000659170
Name on Account: Butler Gonzalez LLP/First Union as Escrow Agent
Name on Sub-Account: Videolocity International Inc./
Cornell Capital Partners, LP Escrow account
Reference Sub-Account #: 1806-02
Attn: Robert Mercado (732) 452-3005
Carmela Agugliaro (732) 452-3005
Note: Only wire transfers shall be accepted.
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b. On or prior to the date of this Agreement Investor's Counsel 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 Investor's
Counsel as follows:
Brokerage Firm: Investec Ernst & Co.
Account #: 400-07595
DTC #: 0233
Name on Account: Butler Gonzalez LLP Escrow Account
4. Deposits into the Escrow Account.
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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.
5. Disbursements from the Escrow Account.
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a. At such time as Escrow Agent has collected and deposited instruments
of payment in the total amount of the Advance and the Investor's Counsel has
received such Common Stock via D.W.A.C from the Company which are to be issued
to the Investor pursuant to the Equity Line of Credit Agreement, Investor's
Counsel 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 Investor's Counsel directing Investor's Counsel 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 Investor's Counsel 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 Investor's Counsel has on file.
Each of the Company and the Investor agree that within six (6) days
from the date the Advance Notice is delivered to the Investor and/or the
Investor's Counsel the Company and the Investor will each execute and deliver to
the Escrow Agent the Joint Written Direction to the Escrow Agent and the Common
Stock Joint Written Direction to the Investor's Counsel.
In the event the Escrow Agent does not receive the amount of the
Advance from the Investor, the Escrow Agent shall notify the Company and the
Investor. In the event Investor's Counsel does not receive the shares of Common
Stock to be purchased by the Investor Investor's Counsel shall notify the
Company and the Investor.
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In the event that the Escrow Agent is advised by the Investor's Counsel
that the Common Stock has not been received from the Company, in no event will
the Escrow Funds be released to the Company until such shares are received by
the Investor's Counsel. 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 Equity Line of Credit Agreement.
6. Collection Procedure.
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The Escrow Agent is hereby authorized to forward each wire for
collection and, upon collection of the proceeds of each wire deposit the
collected proceeds in the Escrow Account.
Any wires returned unpaid to the Escrow Agent shall be returned to the
Investor. In such cases, the Escrow Agent will promptly notify the Company of
such return.
7. Suspension of Performance: Disbursement Into Court.
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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 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:
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.
b. Investor's Counsel. 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 shares of Common Stock or any other obligations of Investor's
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Counsel hereunder, or if at any time Investor's Counsel is unable to determine,
to Investor's Counsel's sole satisfaction, the proper disposition of any portion
of the shares of Common Stock or Investor's Counsel's proper actions with
respect to its obligations hereunder, then Investor's Counsel may, in its sole
discretion, take either or both of the following actions:
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
Investor's Counsel or until a successor shall be appointed (as the case may be);
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 Investor's Counsel, 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 shares of
the Company's Common Stock funds held by it, after deduction and payment to
Investor's Counsel of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be incurred by
Investor's Counsel in connection with performance of its duties and the exercise
of its rights hereunder.
iii. Investor's Counsel 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 release of shares of the Company's Common Stock or any delay in
with respect to any other action required or requested of Investor's Counsel.
8. Investment of Escrow Funds.
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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 shall invest the Escrow
Fund, or such portion thereof, as to which no Joint Written Direction has been
received, in investments described above. The foregoing investments shall be
made by the Escrow Agent. Notwithstanding anything to the contrary contained,
Escrow Agent may, without notice to the parties, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
release of funds permitted or required hereunder, and Escrow Agent shall not be
liable or responsible for any loss, cost or penalty resulting from any such sale
or liquidation.
9. Resignation and Removal of Escrow Agent.
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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 15a.(iv) and 15b.(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
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in excess of $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.
10. Liability of Escrow Agent.
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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 Equity Line of Credit Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. Escrow Agent may consult legal
counsel selected by it in any 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.
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
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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.
11. Liability of Investor's Counsel.
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a. Notwithstanding any liability attributable to Investor's Counsel as
counsel to the Investor, Investor's Counsel shall have no liability or
obligation with respect to the shares of the Company's Common Stock except for
Investor's Counsel's willful misconduct or gross negligence. Investor's
Counsel's sole responsibility shall be for the safekeeping and release of the
shares of the Company's Common Stock in accordance with the terms of this
Agreement. Investor's Counsel 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. Investor's Counsel 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 Investor's
Counsel 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 Investor's Counsel be liable
for incidental, indirect, special, and consequential or punitive damages.
Investor's Counsel shall not be obligated to take any legal action or commence
any proceeding in connection with the shares of the Company's Common Stock, any
account in which shares of Common Stock are deposited and this Agreement, or to
appear in, prosecute or defend any such legal action or proceeding. Investor's
Counsel may consult legal counsel selected by it in any 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.
b. Investor's Counsel is hereby authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
shares of the Company's Common Stock, without determination by Butler Gonzalez
of such court's jurisdiction in the matter. If any portion of the shares of the
Company's Common Stock are 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
Investor's Counsel 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 Investor's Counsel 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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12. Indemnification of Escrow Agent.
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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.
13. Indemnification of Investor's Counsel.
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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 Investor's Counsel and each
partner, director, officer, employee, attorney, agent and affiliate of
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Investor's Counsel (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 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 the 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.
14. Expenses of Escrow Agent and/or Investor's Counsel.
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Except as set forth in Section 12 and 13 the Company shall pay the
Investor's Counsel on each Advance Date pursuant to the Equity Line of Credit
the sum of Five Hundred Dollars ($500) to cover all legal, administrative and
escrow fees related to such Advance.
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15. Warranties.
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a. The Investor makes the following representations and warranties to
the Escrow Agent and Investor's Counsel:
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. Mark A. Angelo 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, the Investor and Investor's Counsel:
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 Equity Line of Credit Agreement and
will not violate, conflict with, or cause a default under the certificate of
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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. Robert E. Holt, President of the Company or, in his absence
Larry McNeil, C.F.O. of the Company have 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.
16. 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 Essex 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.
17. 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 mails, by certified mail with return receipt
requested and postage prepaid, when delivered personally, one (1) day delivered
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
101 Hudson Street - Suite 3606
Jersey City, New Jersey 07302
Attention: Mark Angelo
Facsimile: (201) 985-8266
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With copy to: Butler Gonzalez LLP
1000 Stuyvesant Avenue - Suite 6
Union, New Jersey 07083
Attention: David Gonzalez, Esq.
Facsimile: (908) 810-0973
If to Company, to: Videolocity International Inc.
1762 - A Prospector Drive
Park City, Utah 84060
Attention: Robert E. Holt
Facsimile: (801) 521-2844
With a copy to: Leonard E. Neilson, Esq.
8160 South Highlands Drive - Suite 209
Sandy, Utah 84093
Telephone: (801) 733-0800
Facsimile: (801) 733-0808
If to the Escrow Agent, to: First Union National Bank,
407 Main Street
Metuchen, New Jersey 08840
Attention: Robert Mercado
Carmela Agugliaro
Facsimile: (732) 548-5973
Or to such other address as each party may designate for itself by like
notice.
18. 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.
19. 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.
20. 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.
21. 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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22. 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.
23. 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.
24. Termination.
------------
Upon the first to occur of the disbursement of all amounts in the
Escrow Funds pursuant to Joint Written Directions or the disbursement of all
amounts in the Escrow Funds into court pursuant to Section 7 hereof, or upon any
of the termination provisions set forth in the Equity Line of Credit Agreement,
this Agreement shall terminate and Escrow Agent shall have no further obligation
or liability whatsoever with respect to this Agreement or the Escrow Funds.
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.
VIDEOLOCITY INTERNATIONAL INC.
By: /s/ Robert E. Holt
---------------------------
Name: Robert E. Holt
Title: President and C.E.O.
FIRST UNION NATIONAL BANK
By: /s/ Robert Mercado
---------------------------
Name: Robert Mercado
Title: As the Escrow Agent
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Mark A. Angelo
---------------------------
Name: Mark A. Angelo
Title: Portfolio Manager
BUTLER GONZALEZ LLP
By: /s/ David Gonzalez, Esq.
---------------------------
Name: David Gonzalez, Esq.
Title: Partner
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