ESCROW AGREEMENT
CREATIVE
BUSINESS CONCEPTS, INC.
and
CREATIVECORP,
INC.
01
March, 2007
I
PARTIES
THIS
ESCROW AGREEMENT (the
“Agreement”) is
entered into effective as of the 1st
day of
March, 2007, by and between CREATIVE BUSINESS CONCEPTS, INC., a California
corporation (“CBC”); and,
CREATIVECORP, INC., a Delaware corporation (collectively, “Buyer”). CBC and
Buyer are sometimes referred to collectively herein as the “Parties”, and each
individually as a “Party”.
II
RECITALS
A. Concurrent
with the execution of this Agreement, CBC and Buyer
have
executed and entered into an Asset Purchase Agreement (the “Purchase
Agreement”), pursuant to which Buyer would acquire substantially all of the
Assets of CBC.
B. This
Agreement will be executed and entered into pursuant to and subject to all
terms
and conditions of the Purchase Agreement as if set forth in full
herein.
Capitalized terms not defined herein shall have the same meanings attached
to
them in the Purchase Agreement.
C. This
Agreement is that certain Escrow Agreement attached to the Purchase Agreement
as
Exhibit 3.3.2.(b) and is hereby executed in order to receive and administer
the
Hold Back, as well as to provide an additional remedy under the indemnification
provisions of the Purchase Agreement. The Hold Back shall be administered
and
distributed strictly in accordance with this Agreement.
D. In
connection with the transactions contemplated under the Purchase Agreement
and
the Settlement Documents, the Parties desire to define herein the terms and
conditions under which the Hold Back shall be retained in Escrow and distributed
to the appropriate Party.
E. NOW,
THEREFORE,
in
consideration of the promises and the mutual covenants contained herein,
and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Parties, intending to be legally bound, hereby agree
as
follows:
III
CREATION
OF ESCROW
3.1
Escrow.
An
escrow is hereby created for the purpose of holding administering the Hold
Back
pursuant to the terms and conditions of this Agreement and the Purchase
Agreement (the “Escrow”). The term Escrow shall also expressly include the trust
account maintained by the Escrow Holder and into which the Hold Back shall
be
deposited.
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3.2 Purpose
of Escrow.
The
Parties agree that the purpose of the Escrow is to ensure the proper collection
of the Accounts Receivable acquired by Buyer under the Purchase Agreement,
and
to provide an additional remedy under the indemnification provisions of the
Purchase Agreement. The Escrow is expressly not for, and must not be interpreted
as, a guaranty as to the collectibility of the Accounts Receivable.
3.3 Escrow
Holder.
At all
times hereunder, XXXXXX X. XXXXXX shall serve as “Escrow Holder” hereunder. CBC
acknowledges that Escrow Holder is legal counsel to Buyer and that Escrow
Holder
is not providing legal services hereunder. As such, CBC shall not be deemed
to
be a client of Escrow Holder and waives any right to contend that Escrow
Holder
has a conflict of interest in serving hereunder or continuing to represent
Buyer, even in any action prospective action involving CBC.
3.4 Delivery
of Hold Back.
Upon
Closing under the Purchase Agreement, the Hold Back shall be delivered to
Escrow
Holder and immediately deposited into the attorney/client trust account of
Escrow Holder. The amount retained in Escrow hereunder may change from
time-to-time hereunder, and the Escrow Holder shall act in accordance with
this
Agreement to effect any and all necessary changes.
IV
RELEASE
OF HOLD BACK
4.1 Pro
Rated Release.
On the
1st
and
15th
calendar
day of each month (or the next business day if such day is a Saturday or
Sunday
or a national holiday) following the Closing, the Parties shall agree upon
how
much of the Accounts Receivable has been collected by Buyer (the “Collected
Amount”). Escrow Holder shall then immediately release from Escrow and transfer
to CBC that percentage of the Hold Back then held in Escrow equal to the
Collected Amount divided by the then balance of the Hold Back held in
Escrow.
4.2 Release
to Buyer.
Escrow
Holder shall immediately release and transfer to Buyer any and all amounts
of
the Accounts Receivable which CBC has collected and has not remitted to Buyer.
4.3 Immediate
Final Release.
Notwithstanding other any other provision herein to the contrary, upon the
occurrence of the first of the following to occur, Escrow Holder shall
immediately release and transfer to CBC all remaining amounts of the Hold
Back:
(a) The
collection of the entire amount of the Accounts Receivable; or
(b) Ninety
(90) days from the Closing Date.
4.5 Offset
Rights.
Escrow
Holder shall also immediately release and transfer to Buyer those amounts
to
which Buyer is judicially entitled to pursuant to the indemnification provisions
of Article X of the Purchase Agreement.
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4.6 Procedure
for Release.
Any and
all amounts of the Hold Back to be released hereunder shall be effected by
Escrow Holder as quickly as possible. CBC and Buyer must agree on all amounts
to
be released from Escrow. In the event CBC and Buyer disagree as to the amount
of
any claimed release, Escrow Holder shall not make the distribution. Instead,
all
disputes shall be immediately resolved by arbitration pursuant to Section
13.15
of the Purchase Agreement. Said arbitration shall be commenced within fifteen
(15) days after Escrow Holder informs the Parties he will not effect the
release
in question.
V
RIGHTS
OF ESCROW HOLDER
The
Parties acknowledge that Escrow Holder is assuming the obligations hereunder
as
an accommodation to the Parties only, and that Escrow Holder shall have no
responsibility to the Parties other than to comply with the terms and conditions
of this Agreement. The Parties jointly and severally agree to indemnify and
hold
Escrow Holder harmless from any and all costs, expenses, claims, or actions
which may be asserted by or against Escrow Holder, including claims or actions
by either Party, except for actions involving the gross negligence or
intentional misconduct of Escrow Holder. If, in the sole discretion of Escrow
Holder, it is necessary for Escrow Holder to file an action to determine
or
ascertain the rights of any of the Parties under the terms of this Agreement
or
to interpret any of the provisions of this Agreement, the Parties shall equally
pay any and all costs incurred by Escrow Holder in such action, including
reasonable attorneys' fees as determined by the court.
VI
ADDITIONAL
PROVISIONS
The
notice provisions of Article XII of the Purchase Agreement, and all provisions
of Article XIII of the Purchase Agreement, are hereby incorporated by reference
herein as if set forth in full.
VII
EXECUTION
IN
WITNESS WHEREOF,
this
ESCROW AGREEMENT has been duly executed by the Parties in Orange County,
California, and shall be effective as of and on the Effective Date set forth
in
Article I of this Agreement. Each of the undersigned Parties hereby represents
and warrants that it (i) has the requisite power and authority to enter into
and
carry out the terms and conditions of this Agreement, as well as all
transactions contemplated hereunder; and, (ii) it is duly authorized and
empowered to execute and deliver this Agreement.
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EXECUTION
PAGE TO ESCROW AGREEMENT
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BUYER:
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CBC:
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CREATIVECORP,
INC.,
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CREATIVE
BUSINESS CONCEPTS, INC.,
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a
Delaware corporation
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a
California corporation
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BY:
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BY:
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NAME:
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NAME:
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TITLE:
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TITLE:
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DATED:
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DATED:
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*
* * * *
* * *
The
undersigned hereby agrees to serve as the “Escrow Holder” and further agrees to
comply with the terms and conditions of this Agreement in regard to acting
as
Escrow Holder.
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DATED:
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NAME:
XXXXXX X. XXXXXX
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