Exhibit 10.5
SURRENDER AND ESCROW AGREEMENT
THIS SURRENDER AND ESCROW AGREEMENT (the "Agreement") is entered into
and effective as of the 9th day of January 2002 by and between American Family
Cookies, Inc., a Delaware corporation (the "Company"), Xxx Xxxxx, Xxxxxx Xxxxx,
Xxxxxx Xxxxxxxx, Xxxx Xxxxxxx and Xxxx Xxx (collectively, the Stockholders") and
Xxxxx & Schloss LLP (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized that the
proper officers of the Company to enter into an agreement to merge with American
Family Cookies LLC, GB Partners and Xxxxxxx Enterprises, Inc. (the "Merger
Entities") in consideration of the Company issuing to the principals of the
Merger Entities an aggregate of 2,700,000 shares of the Company's common stock;
and
WHEREAS, in order to provide the necessary operating capital to the
Company after the merger, the Company will file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission to enable
it to raise a minimum of $1,200,000 (the "Minimum Amount"); and
WHEREAS, as a condition of the merger, the Merger Entities are
requiring the Stockholders to escrow their shares (the "Escrow Shares") with
Xxxxx & Schloss LLP (the "Escrow Agent") which shares the Stockholders have
agreed to surrender to the Company's treasury in the event the Minimum Amount is
not raised prior to the expiration of the offering in accordance with the
termination provisions set forth in the Registration Statement;
NOW, THEREFORE, in consideration of the mutual obligations hereunder,
the parties hereto agree as follows:
1.0 APPOINTMENT OF ESCROW AGENT. The Company hereby appoints the Escrow
Agent to act as escrow agent in accordance with and subject to the terms and
conditions of this Agreement (the "Agreement") for the sole and exclusive
benefit of the parties hereto, and the Escrow Agent hereby accepts such
appointment and agrees to act in accordance with and subject to the terms and
conditions hereof.
2.0 DEPOSIT OF SHARES. In satisfaction of its obligations to the Merger
Entities, the Stockholders are depositing with the Escrow Agent the certificates
representing the Escrow Shares, in the name of the Stockholders and/or their
transferees, as the case may be.
3.0 RELEASE OF SHARES. In the event the Minimum Amount is raised in
accordance with the terms of the Registration Statement, the Escrow Agent shall
release the Escrow Shares to the Stockholders and/or their transferees, as the
case may be. In the event the Minimum Amount is not raised in accordance with
the terms of the Registration Statement, the Escrow Agent shall release the
Escrow Shares to the Company on behalf of the Stockholders and/or their
transferees, as the case may be for surrender to the Company's treasury.
4.0 LOCK-UP. The Stockholders agrees, for the benefit of the Company,
that for a period of one (1) year following the effective date of the Merger,
not to directly or indirectly register, issue, offer, sell, offer to sell,
contract to sell, hypothecate, pledge or otherwise dispose of any Escrow Shares
without the prior written consent of the Company, except that the Stockholders
may transfer by gift, to members of their family or others, Escrow Shares,
providing however that the transfer is subject to the terms of this Agreement.
The Stockholders acknowledge that the Company shall cause its transfer agent to
place appropriate stock transfer restrictions on all Escrow Shares reflecting
the terms of this Agreement.
5.0 LIMITATIONS OF ESCROW AGENT'S CAPACITY.
5.1 This Agreement expressly and exclusively set forth the duties of
the Escrow Agent with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into this Agreement against the
Escrow Agent.
5.2 The Escrow Agent shall act hereunder as a depository and in a
ministerial capacity only, and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity of the
subject matter of this Agreement or any part thereof, whether in form or
substance, or for the form of execution thereof, or for any endorsement or lack
of endorsement thereon or for any description therein. It shall be sufficient if
a writing purporting to be such instrument, document, certificate, statement or
notice is delivered to the Escrow Agent and purports on its face to be correct
in form and signed or otherwise executed by the party or parties required to
sign or execute the same under this Agreement. The Escrow Agent shall not be
required, in any way, to determine the identity or authority of any person
executing the same or the genuineness of such signature.
5.3 This Agreement as it presently exists or may hereafter be amended
constitutes the entire agreement between the Escrow Agent and any other parties
hereto in connection with the subject matter hereof, and no other agreement
entered into between the parties, or any of them, shall be considered as adopted
or binding, in whole or in part, upon the Escrow Agent notwithstanding that any
other agreement may be deposited with the Escrow Agent or the Escrow Agent may
have knowledge thereof.
2
5.4 The Escrow Agent shall have no liability or obligation to notify
any party hereto or any other party interested in this Agreement of any maturity
occurring under this Agreement or under the terms of any instrument deposited
herewith, unless such notice is explicitly provided for in this Agreement.
5.5 The Escrow Agent shall not be charged with notice of knowledge of
any fact or information not herein set forth.
6.0 AUTHORITY OF ESCROW AGENT.
6.1 The Escrow Agent is hereby authorized and directed by the
undersigned to deliver the subject matter of this Agreement only in accordance
with the provisions of Section 3 above.
6.2 The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power of
attorney or other paper or document which the Escrow Agent in good faith
believes to be genuine and what it purports to be, including but not limited to
items requesting or authorizing release, disbursement or retainage of the
subject matter of this Agreement and the items amending the terms of this
Agreement.
6.3 The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof or
its duties hereunder, and shall incur no liability and shall be fully protected
in act and in accordance with the advise of such counsel.
6.4 In the event of any disagreement between any of the parties to this
Agreement, or between any of them and any other person, resulting in adverse
claims or demands being made in connection with the matters covered by this
Agreement, or in the event that the Escrow Agent, in good faith, shall be in
doubt as to what action it should take, the Escrow Agent may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists
and in any such event the Escrow Agent shall not be, or become liable, in any
way or to any person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue to refrain from acting until (i) the rights of all
interested parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have been adjudged and all
doubt resolved by agreement among all the interested persons, and the Escrow
Agent shall have been notified thereof in writing, signed by all such persons.
Notwithstanding the preceding, the Escrow Agent may, in its discretion, obey the
order or judgment, decree or levy of any court, whether with or without
jurisdiction, and the Escrow Agent is hereby authorized in its sole discretion,
to comply with and obey (and shall have no liability to any person or party so
doing) any such orders, judgments, decrees or levies which the Escrow Agent is
advised, by legal counsel of its own choosing, is binding upon it. The rights of
the Escrow
3
Agent under this subsection are cumulative with all other rights which it may
have by law or otherwise.
6.5 The Escrow Agent shall have no liability for any loss arising from
any cause beyond its control, including but not limited to the following (i) the
act, failure or negligence of any agent or correspondent selected by the Escrow
Agent for the remittance of the subject matter hereof (ii) any delay, error
omission or default of any mail, telegraph, cable or wireless agency or operator
(iii) the acts or edicts of any government or governmental agency or other group
or entity exercising governmental powers.
6.6 Without in any way limiting any other provision of this Agreement,
it is expressly understood and agreed that the Escrow Agent shall be under no
duty or obligation to give any notice or to do or to omit the doing of any
action or anything with respect to the subject matter hereof except to receive,
hold and deliver the same in accordance with the terms hereof. The Escrow Agent
shall not be liable for any error in judgment, or act or omission, or any
mistake of law or fact or for doing anything it may do or refrain from doing in
connection herewith, except for its own willful misconduct or gross negligence.
6.7 In the event that any controversy should arise among the parties
with respect to this Agreement, or should the Escrow Agent resign and the
parties fail to select another escrow agent to act in its stead, the Escrow
Agent shall have the right to institute a xxxx of interpleader in any court of
competent jurisdiction to determine the rights of the parties, all at the cost
of the Company.
7.0 INDEMNIFICATION.
7.1 The Company and the Stockholders hereby indemnify and hold free and
harmless 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 Company, the Stockholders
and/or the transferees of the Stockholders, as the case may be, against Escrow
Agent with respect to the performance of any of the provisions of this
Agreement.
7.2 The Company and the Stockholders hereby indemnify and hold free and
harmless 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 Company, Stockholders and/or
the transferees of the Stockholders, as the case may be against Escrow Agent
with respect to the performance of any of the provisions of this Agreement.
7.3 The Company and the Stockholders, 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,
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.
8.0 RESIGNATION. The Escrow Agent may resign at any time by giving
written notice to the parties hereto whereupon the parties hereto will appoint a
successor Escrow Agent within thirty (30) days thereafter. Until a successor
Escrow Agent has been named and has accepted its appointment or until another
disposition of the subject matter of this Agreement has been agreed upon by all
the parties hereto, the Escrow Agent shall be discharged of all of its duties
hereunder save to keep the subject matter whole.
9.0 GENERAL PROVISIONS.
9.1 The Escrow Agent upon the release of all of the subject matter
pursuant to the terms of this Agreement, shall be discharged from any further
obligation hereunder.
9.2 Where directions or instructions from more than one of the
undersigned are required, such directions or instructions may be given by
separate instruments of similar tenor. Any of the undersigned may act hereunder
through an agent or attorney-in-fact, provided satisfactory written evidence of
authority is first furnished to any party relying on such authority.
9.3 Any payment, notice, request for consent, report, or any other
communication required or permitted in this Agreement shall be in writing, and
either (1) delivered in person; (2) sent by express mail or other overnight
delivery service providing receipt of delivery; (3) mailed by certified mail,
postage prepaid, return receipt requested; or (4) sent by telecopy or other
facsimile transmission, with proof of transmission thereof retained by the
transmitter, as follows:
If to the Escrow Agent:
Xxxxx & Xxxxxxx LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
5
If to the Company:
American Family Cookies, Inc.
000 Xxxxxxx Xxxxxx
XxXxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Stockholders:
c/o Xxx Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party may designate by notice. Any such notice
or communication, if given or made by prepaid, certified mail or by recorded
express delivery, shall be deemed to have been made when actually received, but
not later than three (3) business days after the same was posted or given to
such express delivery service and if made properly by telecopy or other
facsimile transmission such notice or communication shall be deemed to have been
made at the time of dispatch.
Any party may unilaterally designate a different address by giving
notice of each such change in the manner specified above to the other party.
9.4 This Agreement is being made in and is intended to be construed
according to the laws of the State of New York. It shall inure to and be binding
upon the parties hereto and their respective successors, receivers, personal
representatives, trustees and assigns.
9.5 Words used in the singular number may include the plural and the
plural may include the singular. The section headings appearing in this
instrument have been inserted for convenience only and shall be given no
substantive meaning or significance whatsoever in construing the terms and
conditions of this Agreement.
5
9.6 The terms of this Agreement may be altered, amended, modified or
revoked only by an instrument in writing signed by all the parties hereto.
9.7 If one or more of the provisions hereof shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect under applicable
law, such invalidity, illegality or unenforceability shall not affect any other
provisions hereof and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
9.8 The Escrow Agent and any shareholder, director, officer, member,
partner or employee of the Escrow Agent may buy, sell or deal in any of the
securities of the Company, become pecuniarily interested in any transaction in
which the Company or the Stockholders may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though the
Escrow Agent were not Escrow Agent under this Agreement. Nothing herein shall
preclude the Escrow Agent from acting in any other capacity for the Company or
the Stockholders, including, without limitation, as attorney in fact or at law,
or as transfer agent for any securities.
9.9 This Agreement may be executed in counterparts at one time or at
different times and, irrespective of the date of execution between the parties
named herein, it shall be deemed executed as of the date first above written and
constitute one and the same instrument.
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
American Family Cookies, Inc.
By: /s/ XXXXXX XXXXXXX
-------------------------
Xxxxxx Xxxxxxx, President
Xxxxx & Xxxxxxx LLP
By: /s/ XXXXXX X. XXXXX
-------------------
Xxxxxx X. Xxxxx
Stockholders:
/s/ XXX XXXXX
-------------
Xxx Xxxxx
/s/ XXXXXX XXXXX
---------------
Xxxxxx Xxxxx
/s/ XXXXXX XXXXXXXX
------------------
Xxxxxx Xxxxxxxx
/s/ XXXX XXXXXXX
----------------
Xxxx Xxxxxxx
/s/ XXXX XXX
------------
Xxxx Xxx
8
