PURCHASE AND ESCROW AGREEMENT
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THIS PURCHASE AND ESCROW AGREEMENT ("Agreement") is made as of November 12,
2003 by and between INTERNATIONAL TRUST & FINANCIAL SYSTEMS, INC. (the
"Company"), William MARMION (the "Purchaser"), and J. BENNETT GROCOCK, P.A., a
Florida professional association and members of the Florida Bar, with offices at
455 S. Orange Ave., Suite 500, Orlando, FL 32801 (the "Escrow Agent").
W I T N E S S E T H:
Company and Purchaser previously entered into a Letter of Intent dated
November 5, 2003, for the purchase of a controlling interest in Company by
Purchaser, which Letter of Intent provided for the parties to enter into a
definitive purchase agreement.
Company and Purchaser desire to set forth the terms and conditions under
which the Purchaser will acquire the controlling interest in the Company.
Purchaser and Company have requested that the Escrow Agent hold the Escrow
Funds, Free Trading Shares, Restricted Shares, and Preferred Shares, all as
hereafter defined, to be delivered in accordance with the terms of this
Agreement
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
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TERMS OF PURCHASE AND SALE
1.1 Purchaser has, or during the course of this Agreement will, deposit
the sum of $225,800 (the "Escrow Funds") with the Escrow Agent, to be disbursed
in accordance with this Agreement. Purchaser will deposit $85,800 immediately
on the execution of this Agreement, will deposit an additional $70,000 no later
than three (3) days prior to the disbursement date provided for in Article 2.3
of this Agreement, and will deposit an additional $70,000 no later than three
(3) days prior to the disbursement date provided for in Article 2.4 of this
Agreement
1.2 The Company shall cause a total of 14,996,565 shares of its $0.001 par
value common stock to be transferred to or deposited with the Escrow Agent, with
executed stock powers attached, with transfer instructions issued to the
Company's transfer agent for, or with DTC transfer instructions issued for
transfer of the shares, of which not less than 14,000,000 shall be free trading
shares (all 14,996,565 shares hereafter being referred to as the "Free Trading
Shares"), for disbursement in accordance with this Agreement. The deposit of
the Free Trading Shares shall be made in installments, with not less than one
third of the total Free Trading Shares either deposited with the Escrow Agent,
or transfer instructions issued to the Company's transfer agent for the transfer
of the Shares delivered to the Escrow Agent, no later than the date of each
disbursement provided for in Articles 2.2, 2.3 and 2.4 of this Agreement,
respectively.
1.3 The Company shall cause 2,360,430 shares of its $0.001 par value
common stock to be transferred to or deposited with the Escrow Agent, with
executed stock powers attached, or shall deliver a copy of written instructions
to the Company's transfer agent to issue such shares, which
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shares shall be unregistered, restricted shares (the "Restricted Shares"), for
disbursement in accordance with this Agreement.
1.4 The Company shall cause 2,870,000 shares of its $0.001 par value
voting, convertible preferred shares to be deposited with the Escrow Agent, with
executed stock powers attached if necessary (the Preferred Shares"), for
disbursement in accordance with this Agreement. The Preferred Shares shall have
the rights and privileges as set forth in Exhibit "A" hereto.
1.5 The Escrow Agent shall receive and hold the Escrow Funds, the Free
Trading Shares, the Restricted Shares and the Preferred Shares and shall
disburse the Escrow Funds, the Free Trading Shares, the Restricted Shares and
the Preferred Shares as hereafter provided.
ARTICLE 2
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DISBURSEMENT
2.1 The Escrow Agent shall disburse the sum of $10,800 immediately for
expenses of the purchase and of the Company, as follows:
2.1.1 To Kelley Trimble the sum of $5,800, for liabilities of the
Company
2.1.2 To or at the direction of Robert Hipple, the sum of $5,000 to
cover the auditor review of the Company's Third Quarter 2003 10-Q filing and for
other expenses.
2.2 On the Closing of the purchase transaction, which shall be on or
before November 12, 2003, the Escrow Agent shall make the following
disbursements:
2.2.1 The Preferred Shares and the Restricted Shares shall be
released to Purchaser, for registration in the name of
Purchaser.
2.2.2 The sum of $50,000 shall be released from the Escrow Funds
to or at the direction of Robert Hipple to pay or satisfy
certain outstanding Promissory Notes of the Company, as
consideration for the Preferred Shares and the Restricted
Shares.
2.2. 3 One-third of the Free Trading Shares shall be released as
follows:
2.2.3.1 One million shares shall be released to Alexander &
Wade, Inc., for registration in the name of Alexander &
Wade, Inc. or its assigns.
2.2.3.2 One million shares shall be released to Ashvin
Mascarenhas, for registration in the name of Ashvin
Mascarenhas, or his assigns.
2.2.3.3 The remainder of the first one third of the Free
Trading Shares, or 2,999,855 shares, shall be released
to Stephen F. Owens, for registration in the name of
Stephen F. Owens, or his assigns.
2.2.4 The sum of $20,000 shall be released from the Escrow Funds
to or at the direction of Robert Hipple to pay or satisfy
certain outstanding Promissory Notes of the Company, as
consideration for the Free Trading Shares released.
2.3 On the date which is 45 days after the initial Closing Date of the
purchase transaction, which date is expected to be on December 26, 2003, the
Escrow Agent shall make the following disbursements:
2.3.1 One-third of the Free Trading Shares shall be released as
follows:
2.3.1.1 One million shares shall be released to Alexander &
Wade, Inc., for registration in the name of Alexander & Wade,
Inc. or its assigns.
2.3.1.2 One million shares shall be released to Ashvin
Mascarenhas, for registration in the name of Ashvin
Mascarenhas, or his assigns.
2.3.1.3 The remainder of the second one third of the Free
Trading Shares, or 2,999,855 shares, shall be released
to Stephen F. Owens, for registration in the name of
Stephen F. Owens, or his assigns.
2.3.2 The sum of $70,000 shall be released from the Escrow Funds
to or at the direction of Robert Hipple to pay or satisfy
certain outstanding Promissory Notes of the Company, as
consideration for the Free Trading Shares released.
2.4 On the date which is 90 days after the initial Closing Date of the
purchase transaction, which date is expected to be on February 10, 2004,
the Escrow Agent shall make the following disbursements:
2.4.1 One-third of the Free Trading Shares shall be released as
follows:
2.4.1.1 One million shares shall be released to Alexander &
Wade, Inc., for registration in the name of Alexander & Wade,
Inc. or its assigns.
2.4.1.2 One million shares shall be released to Ashvin
Mascarenhas, for registration in the name of Ashvin
Mascarenhas, or his assigns.
2.4.1.3 The remainder of the second one third of the Free
Trading Shares, or 2,999,855 shares, shall be released
to Stephen F. Owens, for registration in the name of
Stephen F. Owens, or his assigns.
2.4.2 The sum of $70,000 shall be released from the Escrow Funds
to or at the direction of Robert Hipple to pay or satisfy certain
outstanding Promissory Notes of the Company, as consideration for the
Free Trading Shares released.
2.5 In the event that the Escrow Funds to be released at any release date
set forth above, are not available for release, then the Company may give
written notice of default in payment to the Escrow Agent at any time thereafter,
and the Escrow Agent shall, within five (5) days of the receipt of such written
notice by mail, courier, hand delivery or facsimile, release all of the
remaining shares of Preferred Shares, Restricted Shares and Free Trading Shares
to Robert Hipple, for registration in the name of Robert Hipple, or his assigns,
in complete discharge of the Escrow Agent
ARTICLE 3
TERMS OF THE ESCROW
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3.1 The parties hereby agree to have Escrow Agent serve as escrow agent
for and on their behalves, and Escrow Agent hereby accepts the duties and
responsibilities as Escrow Agent as provided herein, whereby the Escrow Agent
shall receive the Escrow Funds from Purchaser and the Free Trading Shares,
Restricted Shares, and Preferred Shares to hold in escrow and distribute as set
forth in this Agreement.
3.2 Escrow Agent's fees shall be paid by Purchaser pursuant to a separate
agreement between Escrow Agent and Purchaser, for which purpose the remaining
$5,000 of Escrow Funds not otherwise disbursed in accordance with Article 2,
shall be applied immediately on the date of execution of this Agreement
3.3 This Agreement may be altered or amended only with the written consent
of all of the parties hereto. Should the Purchaser or Company attempt to change
this Agreement in any manner, which, in the Escrow Agent's discretion, shall be
undesirable, the Escrow Agent may resign as Escrow Agent by notifying Purchaser
and Company in writing. In the case of the Escrow Agent's resignation pursuant
to the foregoing, his only duty, until receipt of notice from Purchaser and
Company that a successor escrow agent has been appointed, shall be to hold and
preserve the Escrow Funds in a non-interest bearing account and the Preferred
Shares, the Restricted Shares and the Free Trading Shares. Upon receipt by the
Escrow Agent of said notice from Purchaser and Company of the appointment of a
successor escrow agent, the name of a successor escrow account and a direction
to transfer the Escrow Funds and the Preferred Shares, the Restricted Shares and
the Free Trading Shares, the Escrow Agent shall promptly thereafter transfer the
Escrow Funds and the Preferred Shares, the Restricted Shares and the Free
Trading Shares to said successor escrow agent. The Escrow Agent is authorized to
disregard any notices, requests, instructions or demands received by it from
Purchaser or Company after notice of resignation or removal has been given.
3.4 The Escrow Agent shall be reimbursed by Purchaser for any reasonable
expenses incurred in the event there is a conflict between the parties and the
Escrow Agent shall deem it necessary to retain counsel, upon whose advice the
Escrow Agent may rely. The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and in no event shall the Escrow Agent be liable
or responsible except for the Escrow Agent's own gross negligence or willful
misconduct. The Escrow Agent has made no representations or warranties to the
Company or the Purchaser. The Escrow Agent has no liability hereunder to either
party other than to hold the Escrow Funds and the Preferred Shares, the
Restricted Shares and the Free Trading Shares and to deliver the Escrow Funds
and the Preferred Shares, the Restricted Shares and the Free Trading Shares
under the terms hereof. Each party hereto agrees to indemnify and hold harmless
the Escrow Agent from and with respect to any suits, claims, actions or
liabilities arising in any way out of this transaction including the obligation
to defend any legal action brought which in any way arises out of or is related
to this Agreement.
3.5 The parties acknowledge and represent that they are not being
represented in a legal capacity by J. Bennett Grocock, P.A., and have had the
opportunity to consult with their own legal advisors prior to the signing of
this Agreement.
3.6 The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while
acting in good faith, and any act done or omitted by the Escrow Agent pursuant
to the advice of the Escrow Agent's attorney shall be conclusive evidence of
such good faith.
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3.7 The Escrow Agent is hereby expressly authorized to disregard any and
all instructions given by any one of the parties hereto, excepting only
instructions signed by both Purchaser and Company and orders or process of
courts of law and is hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court. In case the Escrow Agent obeys or complies
with any such order, judgment or decree, the Escrow Agent shall not be liable to
any of the parties hereto or to any other person, firm or corporation by reason
of such decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
3.8 The Escrow Agent shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement.
3.9 If the Escrow Agent reasonably requires other or further documents in
connection with this Agreement, the necessary parties hereto shall join in
furnishing such documents.
3.10 It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the funds and shares
held by the Escrow Agent hereunder, then, except as provided in Article 2.5 of
this Agreement, the Escrow Agent is authorized and directed in the Escrow
Agent's sole discretion (a) to retain in the Escrow Agent's possession without
liability to anyone all or any part of the escrow deposits until such disputes
shall have been settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Escrow Agent shall be under no duty whatsoever to institute
or defend any such proceedings or (b) to deliver the escrow deposits to a state
or federal court having competent subject matter jurisdiction and located in
Orange County, State of Florida in accordance with the applicable procedure
therefor.
ARTICLE 4
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MISCELLANEOUS
4.1 No waiver of any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed any extension of the time
for performance of any other obligation or act.
4.2 This Agreement shall be binding upon and shall inure to the benefit of
the permitted successors and assigns of the parties hereto.
4.3 This Agreement is the final expression of, and contains the entire
agreement between, the parties with respect to the escrow subject matter hereof
and the purchase transaction provided for herein, and supersedes all prior
understandings with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the parties to be charged or by
its agent duly authorized in writing or as otherwise expressly permitted herein.
4.4 Whenever required by the context of this Agreement, the singular shall
include the plural and masculine shall include the feminine. This Agreement may
be executed in two or more counterparts, all of which taken together shall
constitute one instrument. Execution and delivery of this Agreement by exchange
of facsimile copies bearing the facsimile signature of a party shall constitute
a valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
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4.5 The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under, and construed and enforced in accordance of the
laws of the State of Florida. The parties agree that any dispute arising under
or with respect to or in connection with this Agreement, whether during the term
of this Agreement or at any subsequent time, shall be resolved fully and
exclusively by binding arbitration in accordance with the commercial rules then
in force of the American Arbitration Association with the proceedings taking
place in Orlando, Florida, before a panel of three (3) arbitrators.
4.6 By signing this Agreement, the Escrow Agent becomes a party hereto
only for the purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY: PURCHASER;
INTERNATIONAL TRUST & FINANCIAL SYSTEMS, INC.
By:
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William Marmion
Its:
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ESCROW AGENT:
J. BENNETT GROCOCK, P.A.
By:
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J. Bennett Grocock, President
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