FUNDS ESCROW AGREEMENT
This
Agreement is dated as of the 23rd
day of
October, 2007 among Attitude Drinks Inc., a Delaware corporation (the
"Company"), the parties identified on Schedule A hereto (each
a
“Subscriber”, and collectively “Subscribers”), and
Grushko & Xxxxxxx, P.C. (the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS,
the Company and Subscribers have entered into Subscription Agreements calling
for the sale by the Company to the Subscribers of Notes, Warrants and Purchase
Shares for an Aggregate Purchase Price of up to $1,200,000; and
WHEREAS,
the parties hereto require the Company to deliver the Purchase Shares, Notes
and
Warrants against payment therefor, with such Purchase Shares, Notes, Warrants
and the Escrowed Funds to be delivered to the Escrow Agent to be held in escrow
and released by the 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.
Capitalized terms used and not otherwise defined herein that are defined in
the
Subscription Agreement shall have the meanings given to such terms in the
Subscription Agreement. Whenever used in this Agreement, the following terms
shall have the following respective meanings:
§ "Agreement"
means this Agreement and all amendments made hereto and thereto by written
agreement between the parties;
§ “Collateral
Agent Agreement” shall have the meaning set forth in Section 3 of the
Subscription Agreement;
§ “Due
Diligence Fee” shall have the meaning set forth in Section 8(b) and on Schedule
8(b) of the Subscription Agreement;
§ “Due
Diligence Warrants” shall have the meaning set forth in Section 8(b) and on
Schedule 8(b) of the Subscription Agreement;
§ "Escrowed
Payment" means an aggregate cash payment of up to $1,200,000 which is,
collectively, the Initial Closing Purchase Price and Second Closing Purchase
Price;
§ “Initial
Closing Date” shall have the meaning set forth in Section 1(b) of the
Subscription Agreement;
1
§ “Initial
Closing Legal Opinion” means the original signed legal opinion referred to in
Section 6 of the Subscription Agreement;
§ “Initial
Closing Notes” shall have the meaning set forth in Section 1(b) of the
Subscription Agreement;
§ “Initial
Closing Purchase Price” shall mean up to $600,000;
§ “Initial
Closing Warrants” shall have the meaning set forth in Section 1(b) of the
Subscription Agreement;
§ “Legal
Fees” shall have the meaning set forth in Section 8(c) of the Subscription
Agreement;
§ “Legal
Fee Shares” shall have the meaning set forth in Section 8(c) of the Subscription
Agreement;
§ “Lockup
Agreements” shall have the meaning set forth in Section 9(u) of the Subscription
Agreement;
§ “Purchase
Shares” shall have the meaning set forth in the Subscription
Agreement;
§ “Second
Closing Certificate” shall have the meaning set forth in Section 1(e) of the
Subscription Agreement;
§ “Second
Closing Date” shall have the meaning set forth in Section 1(c) of the
Subscription Agreement;
§ “Second
Closing Legal Opinion” shall have the meaning set forth in Section 1(e) of the
Subscription Agreement;
§ “Second
Closing Notes” shall have the meaning set forth in Section 1(c) of the
Subscription Agreement;
§ “Second
Closing Purchase Price” shall mean up to $600,000;
§ “Security
Agreement” shall have the meaning set forth in Section 3 of the Subscription
Agreement and shall refer to the Security Agreements to be executed by the
Company and include the certificates evidencing ownership of the Subsidiaries
as
described on Annex 1 to the Security Agreement;
§ “Subscription
Agreement" means the Subscription Agreement (and the exhibits thereto) entered
into or to be entered into by the parties in reference to the sale and purchase
of the Purchase Shares, Initial Closing Notes, Second Closing Notes, and
Warrants;
§ “Subsidiary
Guaranty” shall have the meaning set forth in Section 3 of the Subscription
Agreement;
§ “Warrants”
” shall have the meaning set forth in Section 2 of the Subscription
Agreement;
2
§ Collectively,
the executed Subscription Agreement, Purchase Shares, Initial Closing Notes,
Initial Closing Warrants, Initial Closing Legal Opinion, Second Closing Notes,
Second Closing Legal Opinion, Second Closing Certificates, Security Agreement,
Subsidiary Guaranty, Collateral Agent Agreement, Due Diligence Fee, Due
Diligence Warrants, and Legal Fee Shares are referred to as "Company Documents";
and
§ Collectively,
the Escrowed Payment, executed Subscription Agreement, Security Agreement,
Subsidiary Guaranty and Collateral Agent Agreement are referred to as
"Subscriber Documents".
1.2. Entire
Agreement.
This
Agreement along with the Company Documents and the Subscriber Documents
constitute the entire agreement between the parties hereto pertaining to the
Company Documents and Subscriber Documents and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. 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, the Company Documents and the Subscriber
Documents.
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, only by a written instrument
signed by all parties, 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.
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. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
New
York or in the federal courts located in the state of New York. Both parties
and
the individuals executing this Agreement and other agreements on behalf of
the
Company agree to submit to the jurisdiction of such courts and waive trial
by
jury. The prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered
in
connection herewith is invalid or unenforceable under any applicable statute
or
rule of law, then such provision shall be deemed inoperative to the extent
that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of
any other provision of any agreement.
1.7. Specific
Enforcement, Consent to Jurisdiction.
The
Company and Subscriber acknowledge and agree that irreparable damage would
occur
in the event that any of the provisions of this Agreement were not performed
in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law
or
equity. Subject to Section 1.6 hereof, each of the Company and Subscriber hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court,
that
the suit, action or proceeding is brought in an inconvenient forum or that
the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
3
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1. Initial
Closing Company Deliveries.
On or
about the date hereof, the Company shall deliver to the Escrow Agent the
executed Subscription Agreement, the Purchase Shares, Legal Fee Shares, Initial
Closing Notes, Initial Closing Warrants, Initial Closing Legal Opinion, Security
Agreement, Subsidiary Guaranty, Collateral Agent Agreement, Due Diligence Fee
and Due Diligence Warrants (collectively, the “Initial Closing Company
Documents”).
2.2. Second
Closing Company Deliveries.
On or
prior to the Second Closing Date, the Company will deliver to the Escrow Agent
the Second Closing Notes, Second Closing Warrants, Second Closing Certificate,
Second Closing Legal Opinion, and Due Diligence Fee (collectively, the “Second
Closing Company Documents”).
2.3. Subscriber
Deliveries.
On or
before the Initial Closing Date, each Subscriber shall deliver to the Escrow
Agent such Subscriber’s portion of the Initial Closing Purchase Price and the
executed Subscription Agreement and Security Agreement. On or before the Second
Closing Date, each Subscriber will deliver such Subscriber’s portion of the
Second Closing Purchase Price to the Escrow Agent. The Escrowed Payment will
be
delivered pursuant to the following wire transfer instructions:
Citibank,
N.A.
0000
0xx
Xxxxxx
Xxx
Xxxx,
XX 00000, XXX
ABA
Number: 0210-00089
For
Credit to: Grushko & Xxxxxxx, XXXX Trust Account
Account
Number: 00000000
2.4. Intention
to Create Escrow Over Company Documents and Subscriber Documents.
The
Subscriber and Company intend that the Company Documents and Subscriber
Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement
for their benefit as set forth herein.
2.5. Escrow
Agent to Deliver Company Documents and Subscriber Documents.
The
Escrow Agent shall hold and release the Company Documents and Subscriber
Documents only in accordance with the terms and conditions of this
Agreement.
ARTICLE
III
RELEASE
OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1. Release
of Escrow.
Subject
to the provisions of Section 4.2, the Escrow Agent shall release the Company
Documents and Subscriber Documents as follows:
4
(a) On
the
Initial Closing Date, the Escrow Agent will simultaneously release the Initial
Closing Company Documents to the Subscriber and release the Subscription
Agreement and the Initial Closing Purchase Price to the Company except that
(i)
the Due Diligence Fee and Due Diligence Warrants will be released to the
recipient identified on Schedule 8(b) to the Subscription Agreement; (ii) the
Legal Fees (less any amounts paid prior to the Initial Closing Date) and Legal
Fee Shares in connection with the Initial Closing will be released to the
Subscribers’ attorneys; and (iii) the original Security Agreement, Subsidiary
Guaranty and Collateral Agent Agreement will be released to the Collateral
Agent.
(b) On
the
Second Closing Date, the Escrow Agent will simultaneously release the Second
Closing Company Documents to the Subscriber and release the Second Closing
Purchase Price to the Company.
(c) All
funds
to be delivered to the Company shall be delivered pursuant to the wire
instructions to be provided in writing by the Company to the Escrow Agent.
(d) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Subscriber, it shall
deliver the Company Documents and Subscriber Documents in accordance with the
terms of the Joint Instructions.
(e) Notwithstanding
the above, 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"), the Escrow Agent shall deliver the Company Documents and Subscriber
Documents 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 has competent jurisdiction
and
that the Court Order is final and non-appealable.
3.2. Acknowledgement
of Company and Subscriber; Disputes.
The
Company and the Subscriber acknowledge that the only terms and conditions upon
which the Company Documents and Subscriber Documents are to be released are
set
forth in Sections 3 and 4 of this Agreement. The Company and the Subscriber
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Company Documents and Subscriber Documents.
Any dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between
the
Company and Subscriber.
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
Subscriber and Company acknowledge and agree that the Escrow Agent (i) shall
not
be responsible for or bound by, and shall not be required to inquire into
whether either the Subscriber or Company is entitled to receipt of the Company
Documents and Subscriber Documents pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties
as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
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; (iv) may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) 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 (vi) may consult
counsel satisfactory to Escrow Agent, 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.
5
(b) The
Subscriber and 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 Subscriber and Company, jointly and severally, agree to indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim
or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the
Subscriber and Company under this Agreement and to no other person.
(c) The
Subscriber and Company jointly and severally agree to reimburse the Escrow
Agent
for outside counsel fees, to the extent authorized hereunder and incurred in
connection with the performance of its duties and responsibilities
hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Subscriber and the Company.
Prior to the effective date of the resignation as specified in such notice,
the
Subscriber and Company will issue to the Escrow Agent a Joint Instruction
authorizing delivery of the Company Documents and Subscriber Documents to a
substitute Escrow Agent selected by the Subscriber and Company. If no successor
Escrow Agent is named by the Subscriber and 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 to deposit the Company Documents and Subscriber
Documents with the clerk of any such court.
(e) The
Escrow Agent does not have and will not have any interest in the Company
Documents and Subscriber Documents, but is serving only as escrow agent, having
only possession thereof. The Escrow Agent shall not be liable for any loss
resulting from the making or retention of any investment in accordance with
this
Escrow Agreement.
(f) 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.
(g) The
Escrow Agent shall be permitted to act as counsel for the Subscriber in any
dispute as to the disposition of the Company Documents and Subscriber Documents,
or in any other dispute between the Subscriber and Company, whether or not
the
Escrow Agent is then holding the Company Documents and Subscriber Documents
and
continues to act as the Escrow Agent hereunder.
(h) 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 Company Documents and Subscriber Documents, 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 Company
Documents and Subscriber Documents pending receipt of a Joint Instruction from
the Subscriber and Company, or (ii) deposit the Company Documents and Subscriber
Documents 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 Subscriber
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
Company Documents and Subscriber Documents. 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.
6
(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 Subscriber and Company or to any other person,
firm, corporation or entity by reason of such compliance.
ARTICLE
V
GENERAL
MATTERS
5.1. Termination.
This
escrow shall terminate upon the release of all of the Company Documents and
Subscriber Documents or at any time upon the agreement in writing of the
Subscriber and Company.
5.2. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(a) If
to the
Company, to:
00000
X.X. Xxxxxxx
0, Xxxxx 000
Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn:
Xxx
Xxxxxx, CEO and President
Fax:
(000) 000-0000
With
a
copy by telecopier only to:
Weed
& Co., LLP
0000
XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxx Xxxx, Esq.
Fax:
(000) 000-0000
7
(b) If
to the
Subscriber, to: the addresses and fax numbers listed on Schedule A
hereto.
(c) If
to the
Escrow Agent, to:
Grushko
& Xxxxxxx, P.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
000-000-0000
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. In the event the Escrowed Payment
is deposited in an interest bearing account, the Subscriber shall be entitled
to
receive any accrued interest thereon, but only if the Escrow Agent receives
from
the Subscriber the Subscriber’s United States taxpayer identification number and
other requested information and forms.
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 enure 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 instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
8
5.7. Agreement.
Each of
the undersigned states that he has read the foregoing Funds Escrow Agreement
and
understands and agrees to it.
|
the
“Company”
|
|
|
By
|
|
“SUBSCRIBERS”
|
XXX
XXXXXX
|
ALPHA
CAPITAL ANSTALT
|
|
|
WHALEHAVEN
CAPITAL FUND LIMITED
|
MONARCH
CAPITAL FUND LTD.
|
|
|
ESCROW
AGENT:
|
||
|
|
||
|
GRUSHKO
& XXXXXXX, P.C.
|
9
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
|
SUBSCRIBER
|
INITIAL CLOSING
DATE ESCROWED
PAYMENT
(PURCHASE PRICE)
|
|
SECOND CLOSING
DATE ESCROWED
PAYMENT
(PURCHASE PRICE)
|
||||
|
XXX
XXXXXX
00000
X.X. Xxxxxxx
0, Xxxxx 000
Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Fax:
(000) 000-0000
|
$
|
50,000.00
|
$
|
50,000.00
|
|||
|
ALPHA
CAPITAL ANSTALT
Pradafant
7
9490
Furstentums
Vaduz,
Lichtenstein
Fax:
000-00-00000000
|
$
|
300,000.00
|
$
|
300,000.00
|
|||
|
WHALEHAVEN
CAPITAL FUND LIMITED
3rd
Fl., 00 Xxx-Xx-Xxxxx Xx.
Xxxxxxxx,
Xxxxxxx XX00
Fax:
(000) 000-0000
|
$
|
150,000.00
|
$
|
150,000.00
|
|||
|
MONARCH
CAPITAL FUND LTD.
Xxxxxxx
Xxxxx, 0xx
Xxxxx
Xxxxxxxxxx
Xxxxx, Xxxx Xxxx
Xxxxxxx,
BVI
Fax
(000) 000-0000
|
$
|
100,000.00
|
$
|
100,000.00
|
|||
|
TOTALS
|
$
|
600,000.00
|
$
|
600,000.00
|
|||
10
