ESCROW AGREEMENT
This escrow agreement ("Agreement") is executed as of December 13,
2001, by and among Xxxxxx & Associates, as escrow agent ("Escrow Agent"),
Faraday Financial, Inc. ("Faraday"), Sherwood Capital, Inc. ("Sherwood") and
Xxxxxxxx XxXxxx ("XxXxxx").
R E C I T A L S
A. Faraday and NutraStar Incorporated ("NutraStar") are parties to a
settlement and release agreement dated as of December 13, 2001 (the "Settlement
Agreement"), a copy of which has been provided to the Escrow Agent.
X. Xxxxxxx and XxXxxx are parties to a certain Personal Guaranty dated
as of December 13, 2001 (the "Personal Guaranty"), a copy of which has been
provided to the Escrow Agent.
C. In order to induce Faraday to enter into the Settlement Agreement,
XxXxxx and Sherwood are delivering to the Escrow Agent pursuant to this
Agreement a stock certificate representing 735,730 shares of Common Stock of
Alliance Consumer International, Inc., a California corporation ("Alliance") in
the name of XxXxxx that bears a standard Rule 144 restrictive legend (the
"Restricted Stock"), an executed blank stock assignment separated from
certificate in the form attached hereto as Exhibit A for the Restricted Stock
(the "XxXxxx Stock Assignment"), a stock certificate representing 100,000 shares
of Common Stock in the name of Sherwood that is free trading stock and does not
bear any restrictive legend (the "Free Trading Stock"), and an executed blank
stock assignment separated from certificate in the form attached hereto as
Exhibit B for the Free Trading Stock (the "Sherwood Stock Assignment"). The
Restricted Stock and Free Trading Stock (collectively, the "Securities") are to
be held in escrow and distributed under the terms of this Agreement. This
Agreement is executed in furtherance of the Settlement Agreement and the
Personal Guaranty.
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:
1. Appointment of Escrow Agent. Faraday, Sherwood and XxXxxx each
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irrevocably appoint Escrow Agent as the escrow agent under this Agreement, and
Escrow Agent hereby accepts such appointment.
2. Delivery of the Securities. Concurrent with the execution of this
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Agreement, XxXxxx and Sherwood shall have delivered to Escrow Agent the
Securities. Escrow Agent hereby acknowledges receipt of same and agrees to hold
the Securities in accordance with the terms of this Agreement.
a. Representations, Warranties and Covenants of XxXxxx. XxXxxx
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represents and warrants to Faraday that XxXxxx owns the Restricted Stock free
and clear of any liens or encumbrances and covenants to not encumber the
Restricted Stock in any way during the term of this Agreement.
b. Representations, Warranties and Covenants of Sherwood. Sherwood
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represents and warrants to Faraday that Sherwood owns the Free Trading Stock
free and clear of any liens or encumbrances and covenants to not encumber the
Free Trading Stock in any way during the term of this Agreement. The execution,
delivery and performance by Sherwood of this Agreement are within Sherwood's
powers and do not violate any contractual restriction contained in any agreement
which binds or affects or purports to bind or affect Sherwood. This Agreement,
when executed and delivered by Sherwood, will constitute the legal, valid and
binding obligations of Sherwood enforceable against Sherwood in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally.
3. Distribution of the Securities. Escrow Agent shall hold and
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distribute the Securities in accordance with the following instructions:
a. Escrow Agent shall hold the Restricted Stock until it receives
written notice from Faraday (the "Default Notice") stating that (i) Alliance (as
defined in the Personal Guaranty) failed to cause a Registration Statement (as
defined in the Personal Guaranty) to become effective by the Deadline Date (as
defined in the Personal Guaranty) and (ii) there is an outstanding Guaranteed
Amount (as defined in the Personal Guaranty) as of the date of the Default
Notice. Upon receipt by Escrow Agent of the Default Notice, Escrow Agent shall
distribute the Restricted Stock and the XxXxxx Stock Assignment to Faraday.
Concurrent with the execution of this Agreement, XxXxxx shall execute and
deliver to Escrow Agent the XxXxxx Stock Assignment executed in blank to
facilitate the transfer of the Restricted Stock, if necessary, pursuant to this
paragraph. Provided that Faraday has not delivered the Default Notice to Escrow
Agent, Escrow Agent shall distribute the Restricted Stock and XxXxxx Stock
Assignment to XxXxxx upon the earlier of the following to occur: (x) July 31,
2002 and (y) the receipt of written notice from XxXxxx that Alliance caused a
Registration Statement to become effective with adequate proof of same provided
to the Escrow Agent, provided that XxXxxx shall have delivered written notice to
Faraday that a Registration Statement had become effective.
b. Escrow Agent shall hold the Free Trading Stock until it receives
written notice from Faraday (the "Deadline Notice") stating that Alliance failed
to cause a Registration Statement to become effective by the Deadline Date. Upon
receipt by Escrow Agent of the Deadline Notice, Escrow Agent shall distribute
the Free Trading Stock and the Sherwood Stock Assignment to Faraday. Concurrent
with the execution of this Agreement, Sherwood shall execute and deliver to
Escrow Agent the Sherwood Stock Assignment executed in blank to facilitate the
transfer of the Restricted Stock, if necessary, pursuant to this paragraph.
Provided that Faraday has not delivered the Deadline Notice to Escrow Agent,
Escrow Agent shall distribute the Free Trading Stock and Sherwood Stock
Assignment to Sherwood upon the earlier of the following to occur: (x) July 31,
2002 and (y) the receipt of written notice from Sherwood that Alliance caused a
Registration Statement to become effective with adequate proof of same provided
to the Escrow Agent, provided that Sherwood shall have delivered written notice
to Faraday that a Registration Statement had become effective.
c. Nothing contained in this Agreement shall limit the damages,
claims or remedies of Faraday and recovery of same from XxXxxx under the
Personal Guaranty.
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d. Pending distribution of the Restricted Securities, all dividends,
income and other proceeds resulting from ownership of the Securities shall
remain in escrow and, upon distribution of the Securities, shall be distributed
to the persons or entities then entitled to the Securities in the proportions to
which they are entitled to same.
4. Indemnification.
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a. Faraday, Sherwood and XxXxxx shall hold Escrow Agent harmless and
shall indemnify Escrow Agent against any loss, liability, expense (including
reasonable attorneys' fees and expenses), claim or demand arising out of or in
connection with the performance of its obligations in accordance with the terms
of this Agreement, except for gross negligence or willful misconduct of Escrow
Agent. The foregoing indemnities in this paragraph shall survive the resignation
of Escrow Agent or the termination of this Agreement.
b. Escrow Agent's duties are only such as are specifically provided
herein, and Escrow Agent shall incur no liability whatsoever to Faraday,
Sherwood or XxXxxx, except for gross negligence or willful misconduct. Escrow
Agent shall have no responsibility hereunder other than to follow faithfully the
instructions herein contained. Escrow Agent may consult with counsel and shall
be fully protected in any action taken in good faith in accordance with such
advice. Escrow Agent shall be fully protected in acting in accordance with any
written instructions given to it hereunder and believed by it to have been
executed by the proper parties.
5. Disputes. Faraday, Sherwood and XxXxxx understand and agree that
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should any dispute arise with respect to the payment and/or ownership or right
of possession of the Securities, Escrow Agent is authorized and directed to
retain in its possession, without liability to anyone, all or any part of the
Securities until such dispute shall have been settled either by mutual agreement
by the parties concerned or by the final order, decree or judgment of a court or
other tribunal of competent jurisdiction in the United States of America and
time for appeal has expired and no appeal has been perfected, but Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings.
6. Fees of Escrow Agent. Faraday XxXxxx each shall be responsible for
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one-half (1/2) of Escrow Agent's fees and expenses. The fees shall be $1,000
upon execution of this Agreement (the "Initial Fees") and $1,000 upon the
distribution of the Securities in Section 3 hereof (the "Closing Fees"). Such
fees shall be payable as compensation for the ordinary administrative services
to be rendered by Escrow Agent hereunder. XxXxxx shall pay the Initial Fees and
Faraday shall pay the Closing Fees. Any expense reimbursement submitted by
Escrow Agent shall be paid equally between XxXxxx and Faraday upon receipt of
Escrow Agent's invoice.
7. Notice. Whenever the service or the giving of any document or
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consent by or on behalf of any party hereto upon any other party is herein
provided for, or becomes necessary or convenient under the provisions of this
Agreement or any document related hereto, a valid and efficient service of such
document shall be effected by delivering the same in writing to such party in
person, by Federal Express or other reputable courier, by facsimile, or by
sending the same by registered or certified mail, return receipt requested, and
shall be deemed received upon personal delivery if delivered personally, by
Federal Express or other reputable courier or by facsimile, or four (4) business
days after deposit in the mail in the United States, postage prepaid, addressed
to the person to receive such notice or communication at the following address:
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Escrow Agent: Xxxxxx & Associates
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Salt Lake City, Utah
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Faraday: 00 Xxxxxxxx Xxxxx Xxxx Xxxx Xxxx,
Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
XxXxxx: Xxxxxxxx XxXxxx
0000 Xxxx'x Xxxxxx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notice of change of address shall be given by written notice in the manner
detailed in this paragraph 7.
8. Law Governing. This Agreement shall be construed in accordance with,
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and shall be governed by, the laws of the State of Utah.
9. Successors and Assigns. This Agreement shall be binding upon and
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enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
10. Attorneys' Fees. In the event of the bringing of any action by any
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party hereto against any other party arising out of this Agreement, the party
who is determined to be the prevailing party shall be entitled to recover from
the other party all costs and expenses of suit, including reasonable attorneys'
fees.
11. Counterparts. This Agreement may be executed in counterparts, each
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of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument.
12. Severability. In the event any portion of this Agreement shall be
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declared by any court of competent jurisdiction to be invalid, illegal or
unenforceable, such portion shall be deemed severed from this Agreement, and the
remaining parts hereof shall remain in full force and effect, as fully as though
such invalid, illegal or unenforceable portion had never been a part of this
Agreement.
13. Further Assurance. Each party agrees that upon the request of the
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other it will, from time to time, execute and deliver to such other party all
such instruments and documents of further assurance or otherwise, and will do
any and all such acts and things, as reasonably may be required to carry out the
obligations of such party hereunder and consummate the transactions contemplated
hereby.
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14. Headings. The headings of this Agreement are included for purposes
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of reference and convenience only and shall not limit or otherwise affect the
construction or interpretation of any of the provisions of this Agreement.
15. Entire Agreement; Modification. Except as contemplated and
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referenced in this Agreement with respect to the Personal Guaranty and the
Settlement Agreement. This Agreement, including all exhibits, constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection herewith. No supplement,
modification or amendment of this Agreement shall be effective unless executed
in writing by all of the parties hereto.
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IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.
Xxxxxx & Associates
("Escrow Agent")
By:
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Its:
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Xxxxxxxx XxXxxx, an individual
Faraday Financial, Inc.
By:
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Xxxxx Xxxxxx, President
Sherwood Capital, Inc.
By:
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Xxxxxxx X. Xxxxxx, President
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