\ Exhibit 10.11
FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 30th day of
September, 2004 among Creative Vistas, Inc., an Arizona corporation (the
"Company"), Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP (the
"Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the
Company and the Purchaser have entered into a Securities Purchase Agreement (the
"Purchase Agreement") for the sale by the Company to the Purchaser of a secured
convertible term note (the "Term Note"), (b) the Company has issued to the
Purchaser a common stock purchase warrant (the "Term Note Warrant") in
connection with the issuance of the Term Note, and (c) the Company and the
Purchaser have entered into a Registration Rights Agreement covering the
registration of the Company's common stock underlying the Term Note and the Term
Note Warrant (the "Term Note Registration Rights Agreement");
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the
Company and the Purchaser have entered into a Security Agreement (the "Security
Agreement") for the sale by the Company to the Purchaser of a secured
convertible minimum borrowing note (the "Minimum Borrowing Note") and a secured
revolving note (the "Revolving Note"), (b) the Company has issued to the
Purchaser a common stock purchase warrant (the "MBN/Revolving Note Warrant") in
connection with the issuance of the Minimum Borrowing Note and the Revolving
Note, and (c) the Company and the Purchaser have entered into a Registration
Rights Agreement covering the registration of the Company's common stock
underlying the Minimum Borrowing Note and the MBN/Revolving Note Warrant (the
"MBN/Revolving Note Registration Rights Agreement");
WHEREAS, the Company and the Purchaser wish the Purchaser to deliver to
the Escrow Agent copies of the Documents (as hereafter defined) and the Escrowed
Payment (as hereafter defined) to be held and released by Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms shall
have the meanings set forth below. (a) "Agreement" means this Agreement, as
amended, modified and/or supplemented from time to time by written agreement
among the parties hereto.
(b) "Closing Payment" means the closing payment to be paid to Laurus Capital
Management, LLC, the fund manager, as set forth on Schedule A hereto. (c)
"Disbursement Letter" means that certain letter delivered to the Escrow Agent by
each of the Purchaser and the Company setting forth wire instructions and
amounts to be funded at the Closing. (d) "Documents" means copies of the
Disbursement Letter, the Purchase Agreement, the Term Note, the Warrant, the
Registration Rights Agreement, the Security Agreement, the Minimum Borrowing
Note, and the Revolving Note. (e) "Escrowed Payment" means $_________.
1.2. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto with respect to the matters contained herein and supersedes all
prior agreements, understandings, negotiations and discussions of the parties,
whether oral or written. There are no warranties, representations and other
agreements made by the parties in connection with the subject matter hereof
except as specifically set forth in this Agreement. 1.3. Extended Meanings. In
this Agreement words importing the singular number include the plural and vice
versa; words importing the masculine gender include the feminine and neuter
genders. The word "person" includes an individual, body corporate, partnership,
trustee or trust or unincorporated association, executor, administrator or legal
representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance. Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder. 1.5. Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.6. Law Governing this Agreement; Consent to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of laws. With respect to any
suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby ("Proceedings"), each party hereto irrevocably submits to
the exclusive jurisdiction of the courts of the County of New York, State of New
York and the United States District court located in the county of New York in
the State of New York. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it may have at any
time to the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party. As between the Company and the
Purchaser, the prevailing party shall be entitled to recover from the other
party its reasonable attorneys' fees and costs. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.
1.7. Construction. Each party acknowledges that its legal counsel participated
in the preparation of this Agreement and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Agreement to favor any party
against the other.
ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. The Company and the Purchaser hereby irrevocably designate and
appoint the Escrow Agent as their escrow agent for the purposes set forth
herein, and the Escrow Agent by its execution and delivery of this Agreement
hereby accepts such appointment under the terms and conditions set forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
Purchaser shall deliver to the Escrow Agent copies of the Documents executed by
the Company to the extent it is a party thereto. 2.3. Delivery of Escrowed
Payment to Escrow Agent. On or about the date hereof, the Purchaser shall
deliver to the Escrow Agent the Escrowed Payment.
2.4. Intention to Create Escrow Over the Escrowed Payment. The Purchaser and the
Company intend that the Escrowed Payment shall be held in escrow by the Escrow
Agent and released from escrow by the Escrow Agent only in accordance with the
terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the Escrow
Agent shall release the Escrowed Payment from escrow as follows: (a) Promptly
following receipt by the Escrow Agent of (i) copies of the fully executed
Documents and this Agreement, (ii) the Escrowed Payment in immediately available
funds, (iii) joint written instructions ("Joint Instructions") executed by the
Company and the Purchaser setting forth the payment direction instructions with
respect to the Escrowed Payment and (iv) Escrow Agent's verbal instructions from
▇▇▇▇▇ Grin and/or ▇▇▇▇▇▇ Grin (each of whom is a director of the Purchaser)
indicating that all closing conditions relating to the Documents have been
satisfied and directing that the Escrowed Payment be disbursed by the Escrow
Agent in accordance with the Joint Instructions, then the Escrowed Payment shall
be deemed released from escrow and shall be promptly disbursed in accordance
with the Joint Instructions. The Joint Instructions shall include, without
limitation, Escrow Agent's authorization to retain from the Escrowed Payment
Escrow Agent's fee for acting as Escrow Agent hereunder and the Closing Payment
for delivery to Laurus Capital Management, LLC in accordance with the Joint
Instructions.
(b) Upon receipt by the Escrow Agent of a final and non-appealable judgment,
order, decree or award of a court of competent jurisdiction (a "Court Order")
relating to the Escrowed Payment, the Escrow Agent shall remit the Escrowed
Payment in accordance with the Court Order. Any Court Order shall be accompanied
by an opinion of counsel for the party presenting the Court Order to the Escrow
Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect
that the court issuing the Court Order is a court of competent jurisdiction and
that the Court Order is final and non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and the
Purchaser acknowledge that the only terms and conditions upon which the Escrowed
Payment are to be released from escrow are as set forth in Sections 3 and 4 of
this Agreement. The Company and the Purchaser reaffirm their agreement to abide
by the terms and conditions of this Agreement with respect to the release of the
Escrowed Payment. Any dispute with respect to the release of the Escrowed
Payment shall be resolved pursuant to Section 4.2 or by written agreement
between the Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's duties
and responsibilities shall be subject to the following terms and conditions: (a)
The Purchaser and the Company acknowledge and agree that the Escrow Agent (i)
shall not be required to inquire into whether the Purchaser, the Company or any
other party is entitled to receipt of any Document or all or any portion of the
Escrowed Payment; (ii) shall not be called upon to construe or review any
Document or any other document, instrument or agreement entered into in
connection therewith; (iii) shall be obligated only for the performance of such
duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iv) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof; (v)
may assume that any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so; (vi) shall not be responsible for the identity, authority
or rights of any person, firm or company executing or delivering or purporting
to execute or deliver this Agreement or any Document or any funds deposited
hereunder or any endorsement thereon or assignment thereof; (vii) shall not be
under any duty to give the property held by Escrow Agent hereunder any greater
degree of care than Escrow Agent gives its own similar property; and (viii) may
consult counsel satisfactory to Escrow Agent (including, without limitation,
Loeb & Loeb, LLP or such other counsel of Escrow Agent's choosing), the opinion
of such counsel to be full and complete authorization and protection in respect
of any action taken, suffered or omitted by Escrow Agent hereunder in good faith
and in accordance with the opinion of such counsel. (b) The Purchaser and the
Company acknowledge that the Escrow Agent is acting solely as a stakeholder at
their request and that the Escrow Agent shall not be liable for any action taken
by Escrow Agent in good faith and believed by Escrow Agent to be authorized or
within the rights or powers conferred upon Escrow Agent by this Agreement. The
Purchaser and the Company hereby, jointly and severally, indemnify and hold
harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents
and representatives from and against any and all actions taken or omitted to be
taken by Escrow Agent or any of them hereunder and any and all claims, losses,
liabilities, costs, damages and expenses suffered and/or incurred by the Escrow
Agent arising in any manner whatsoever out of the transactions contemplated by
this Agreement and/or any transaction related in any way hereto, including the
fees of outside counsel and other costs and expenses of defending itself against
any claims, losses, liabilities, costs, damages and expenses arising in any
manner whatsoever out the transactions contemplated by this Agreement and/or any
transaction related in any way hereto, except for such claims, losses,
liabilities, costs, damages and expenses incurred by reason of the Escrow
Agent's gross negligence or willful misconduct. The Escrow Agent shall owe a
duty only to the Purchaser and Company under this Agreement and to no other
person.
(c) The Purchaser and the Company shall jointly and severally reimburse the
Escrow Agent for its reasonable out-of-pocket expenses (including counsel fees
(which counsel may be Loeb & Loeb LLP or such other counsel of the Escrow
Agent's choosing) incurred in connection with the performance of its duties and
responsibilities hereunder, which shall not (subject to Section 4.1(b)) exceed
$2,000.
(d) The Escrow Agent may at any time resign as Escrow Agent hereunder by giving
five (5) business days prior written notice of resignation to the Purchaser and
the Company. Prior to the effective date of resignation as specified in such
notice, the Purchaser and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Documents and the Escrowed Payment to a
substitute Escrow Agent selected by the Purchaser and the Company. If no
successor Escrow Agent is named by the Purchaser and the Company, the Escrow
Agent may apply to a court of competent jurisdiction in the State of New York
for appointment of a successor Escrow Agent, and deposit the Documents and the
Escrowed Payment with the clerk of any such court and/or otherwise commence an
interpleader or similar action for a determination of where to deposit the same.
(e) The Escrow Agent does not have and will not have any interest in the
Documents and the Escrowed Payment, but is serving only as escrow agent, having
only possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or omitted by it
in good faith and reasonably believed by it to be authorized hereby or within
the rights or powers conferred upon it hereunder, nor for action taken or
omitted by it in good faith, and in accordance with advice of counsel (which
counsel may be Loeb & Loeb, LLP or such other counsel of the Escrow Agent's
choosing), and shall not be liable for any mistake of fact or error of judgment
or for any acts or omissions of any kind except to the extent any such liability
arose from its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow Agent with
respect to any and all matters pertinent thereto and no implied duties or
obligations shall be read into this Agreement. (h) The Escrow Agent shall be
permitted to act as counsel for the Purchaser or the Company, as the case may
be, in any dispute as to the disposition of the Documents and the Escrowed
Payment, in any other dispute between the Purchaser and the Company, whether or
not the Escrow Agent is then holding the Documents and/or the Escrowed Payment
and continues to act as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the resignation of the
Escrow Agent or the termination of this Agreement. 4.2. Dispute Resolution;
Judgments. Resolution of disputes arising under this Agreement shall be subject
to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery, ownership, right of
possession or disposition of the Documents and/or the Escrowed Payment, or if
the Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone, to
(i) refrain from taking any action other than to continue to hold the Documents
and the Escrowed Payment pending receipt of a Joint Instruction from the
Purchaser and Company, (ii) commence an interpleader or similar action, suit or
proceeding for the resolution of any such dispute; and/or (iii) deposit the
Documents and the Escrowed Payment with any court of competent jurisdiction in
the State of New York, in which event the Escrow Agent shall give written notice
thereof to the Purchaser and the Company and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement. The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to the Documents and the Escrowed Payment. The Escrow
Agent shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel which such counsel may be
Loeb & Loeb LLP or such other counsel of the Escrow Agent's choosing.
(b) The Escrow Agent is hereby expressly authorized to comply with and obey any
Court Order. In case the Escrow Agent obeys or complies with a Court Order, the
Escrow Agent shall not be liable to the Purchaser and Company or to any other
person, firm, company or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the Escrowed
Payment in accordance with the terms of this Agreement or earlier upon the
agreement in writing of the Purchaser and Company or resignation of the Escrow
Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given one (1) day after being sent by telecopy (with copy delivered by overnight
courier, regular or certified mail):
If to the Company, to:
Creative Vistas, Inc.
Attention: Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇-▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 905.666.9795
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Purchaser, to: LAURUS MASTER
FUND, LTD.
M&C Corporate Services Limited, ▇.▇. ▇▇▇ ▇▇▇
▇▇, ▇▇▇▇▇▇ House, South Church Street, ▇▇▇▇▇▇
Town, Grand Cayman, Cayman Islands, Fax:
▇▇▇-▇▇▇-▇▇▇▇
(c) If to the Escrow Agent, to:
Loeb & Loeb LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest bearing
account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal, or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law. 5.6.
Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by different signatories hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same agreement. This Agreement may
be executed by facsimile transmission.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
COMPANY:
CREATIVE VISTAS, INC.
By:_________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:_________________________________
Name:
Title:
ESCROW AGENT:
LOEB & LOEB LLP
By:_________________________________
Name:
Title:
SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., Term Note in an aggregate principal amount of
M&C Corporate Services Limited, ▇.▇. ▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇ $4,500,000
House, South Church Street, ▇▇▇▇▇▇ Town, Grand Cayman, Cayman
Islands, Fax: ▇▇▇-▇▇▇-▇▇▇▇ Minimum Borrowing Note in an aggregate principal
amount of $1,000,000
Revolving Note in an aggregate principal amount of
$2,000,000
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TOTAL $___________
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FUND MANAGER CLOSING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection with
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor investment by Laurus Master Fund, Ltd. for which
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Laurus Capital Management, L.L.C. is the Manager.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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TOTAL $______________
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WARRANTS
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WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
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LAURUS MASTER FUND, LTD. Warrant exercisable into ______ shares of common A
Cayman Island corporation stock of the Company issuable in connection with the
M&C Corporate Services Limited, ▇.▇. ▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇ Term Note, the Minimum
Borrowing Note and the House, South Church Street, ▇▇▇▇▇▇ Town, Grand Cayman,
Cayman Revolving Note.
Islands, Fax: ▇▇▇-▇▇▇-▇▇▇▇
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TOTAL Warrants exercisable into ________ shares of common
stock of the Company
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