ESCROW AGREEMENT
Exhibit
10.8
THIS ESCROW AGREEMENT (this
“Agreement”) is
made and entered into as of July ___, 2007 by and between BUZZ KILL, INC., a New York
corporation (the “Company”); each party
listed as a “Buyer” on the Schedule of Buyers attached hereto (collectively, the
“Buyers”), and Xxxxxxx X. Xxxxx, PLLC, as
Escrow Agent hereunder (“Escrow
Agent”).
BACKGROUND
WHEREAS, the Company and the
Buyers have entered into a Subscription Agreement (the “Subscription
Agreement”), dated as of the date hereof, pursuant to which the Company
proposes to sell (the “Offering”) secured participating notes (“Notes”) $___,
aggregate principal amount. The Subscription Agreement provides that
the Buyers shall deposit the Purchase Price in a segregated escrow account to be
held by Escrow Agent in order to effectuate a disbursement to the Company at a
closing to be held as set forth in the Subscription Agreement (the “Closing”).
WHEREAS, Escrow Agent has
agreed to accept, hold, and disburse the funds deposited with it in accordance
with the terms of this Agreement.
WHEREAS, in order to establish
the escrow of funds and to effect the provisions of the Subscription Agreement,
the parties hereto have entered into this Agreement.
NOW THEREFORE, in
consideration of the foregoing, it is hereby agreed as follows:
1. Definitions. The
following terms shall have the following meanings when used herein:
a. “Escrow Funds” shall
mean the funds deposited with Escrow Agent pursuant to this
Agreement.
b. “Joint Written
Direction” shall mean a
written direction
executed by the Buyers and the Company directing Escrow Agent to disburse all or
a portion of the Escrow Funds or to take or refrain from taking any action
pursuant to this Agreement.
c. “Escrow Period” shall
begin with the commencement of the date of execution of this Agreement and shall
terminate upon the earlier to occur of the following dates:
(i) The
Closing Date for the sale of the Notes to the Buyers as contemplated by the
Subscription Agreement;
(ii) The
expiration of 30 days from the date of execution of this Agreement (unless
extended by mutual written agreement between the Company and the Buyers with a
copy of such extension to Escrow Agent); or
(iii) The date
upon which a determination is made by the Company and the Buyers to terminate
the Offering prior to the sale of the Notes as contemplated by the Subscription
Agreement.
During
the Escrow Period, the Company and the Buyers are aware that they are not
entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or the Buyers or any
other entity, or be subject to the debts of the Company or the Buyers or any
other entity.
2. Appointment
of and Acceptance by Escrow Agent. The Buyers and
the Company hereby appoint Escrow Agent to serve as Escrow Agent
hereunder. Escrow Agent hereby accepts such appointment and, upon
receipt by wire transfer of the Escrow Funds in accordance with Section 3 below,
agrees to hold, invest and disburse the Escrow Funds in accordance with this
Agreement.
a. The
Buyers hereby acknowledges that Escrow Agent is general counsel to the Company
and a related party to the Collateral Agent. The Company agrees that
in the event of any dispute arising in connection with this Escrow Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, Escrow Agent shall be permitted to continue to represent the
Buyers and the Company will not seek to disqualify such counsel.
3. Creation
of Escrow Funds. Contemporaneously
with the execution of this Agreement, the parties shall establish an escrow
account with Escrow Agent, which escrow account shall be entitled as follows:
Buzz Kill, Inc with Escrow Account for the deposit of the Escrow
Funds. The Buyers shall wire funds to the account of Escrow Agent as
follows:
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Bank:
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The
Chase Manhattan Bank
000
X. 00xx
Xxxxxx
Xxx
Xxxx, XX 00000
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Routing
#:
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000000000
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Account
#:
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987100303565
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Name
on Account:
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Xxxxxxx
X. Xxxxx, PLLC
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Sub-Account
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Buzz
Kill, Inc.
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Telephone
contact is (212) 826 - 1054.
4. Deposits
into the Escrow Account. The Buyers agrees
that it shall promptly deliver funds for the payment of the Notes to Escrow
Agent for deposit in the Escrow Account.
5. Disbursements from the
Escrow Account.
a. Escrow
Agent will continue to hold such funds until a Buyer and the Company execute a
Joint Written Direction directing Escrow Agent to disburse the Escrow Funds
pursuant to Joint Written Direction signed by the Company and the
Buyers. In disbursing such funds, Escrow Agent is authorized to rely
upon such Joint Written Direction from the Company and a Buyer and may accept
any signatory from the Company listed on the signature page to this Agreement
and any signature from a Buyer that Escrow Agent already has on
file.
b. In the
event Escrow Agent does not receive the amount of the Escrow Funds from the
Buyers prior to the expiration of the Escrow Period, Escrow Agent shall notify
the Company and the Buyers and the Company’s obligations under the Subscription
Agreement shall immediately terminate.
c. In the
event Escrow Agent does receive the amount of the Escrow Funds prior to
expiration of the Escrow Period, in no event will the Escrow Funds be released
to the Company until such amount is received by Escrow Agent in collected
funds. For purposes of this Agreement, the term “collected funds”
shall mean all funds received by Escrow Agent which have cleared normal banking
channels and are in the form of cash.
6. Collection
Procedure. Escrow Agent is
hereby authorized to deposit the proceeds of each wire in the Escrow
Account.
7. Suspension
of Performance: Disbursement Into Court. If at any time,
there shall exist any dispute between the Company and a Buyer with respect to
holding or disposition of any portion of the Escrow Funds or any other
obligations of Escrow Agent hereunder, or if at any time Escrow Agent is unable
to determine, to Escrow Agent’s sole satisfaction, the proper disposition of any
portion of the Escrow Funds or Escrow Agent’s proper actions with respect to its
obligations hereunder, or if the parties have not within thirty (30) days of the
furnishing by Escrow Agent of a notice of resignation pursuant to Section 9
hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following
actions:
a. suspend
the performance of any of its obligations (including without limitation any
disbursement obligations) under this Escrow Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
a successor Escrow Agent shall be appointed (as the case may be); provided
however, Escrow Agent shall continue to invest the Escrow Funds in accordance
with Section 8 hereof; and/or
b. petition
(by means of an interpleader action or any other appropriate method) any court
of competent jurisdiction in any venue convenient to Escrow Agent, for
instructions with respect to such dispute or uncertainty, and to the extent
required by law, pay into such court, for holding and disposition in accordance
with the instructions of such court, all funds held by it in the Escrow Funds,
after deduction and payment to Escrow Agent of all fees and expenses (including
court costs and attorneys’ fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with performance of its duties and the
exercise of its rights hereunder.
c. Escrow
Agent shall have no liability to the Company, any Buyer, or any person with
respect to any such suspension of performance or disbursement into court,
specifically including any liability or claimed liability that may arise, or be
alleged to have arisen, out of or as a result of any delay in the disbursement
of funds held in the Escrow Funds or any delay in with respect to any other
action required or requested of Escrow Agent.
8. Investment
of Escrow Funds.
Escrow Agent shall deposit the Escrow Funds in a non-interest bearing
account.
If Escrow
Agent has not received a Joint Written Direction at any time that an investment
decision must be made, Escrow Agent shall maintain the Escrow Funds, or such
portion thereof, as to which no Joint Written Direction has been received, in a
non-interest bearing account.
9. Resignation
and Removal of Escrow Agent. Escrow Agent may
resign from the performance of its duties hereunder at any time by giving thirty
(30) days’ prior written notice to the parties or may be removed, with or
without cause, by the parties, acting jointly, by furnishing a Joint Written
Direction to Escrow Agent, at any time by the giving of ten (10) days’ prior
written notice to Escrow Agent as provided herein below. Upon any
such notice of resignation or removal, the representatives of the Buyers(s) and
the Company identified in Sections 13a.(iv) and 13b(iv), below, jointly shall
appoint a successor Escrow Agent hereunder, which shall be a commercial bank,
trust company or other financial institution with a combined capital and surplus
in excess of $10,000,000.00. Upon the acceptance in writing of any
appointment of Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Escrow Agreement, but shall not be discharged from any liability for
actions taken as Escrow Agent hereunder prior to such
succession. After any retiring Escrow Agent’s resignation or removal,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. The retiring Escrow Agent shall transmit all
records pertaining to the Escrow Funds and shall pay all funds held by it in the
Escrow Funds to the successor Escrow Agent, after making copies of such records
as the retiring Escrow Agent deems advisable and after deduction and payment to
the retiring Escrow Agent of all fees and expenses (including court costs and
attorneys’ fees) payable to, incurred by, or expected to be incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder.
10. Liability of Escrow
Agent.
a. Escrow
Agent shall have no liability or obligation with respect to the Escrow Funds
except for Escrow Agent’s willful misconduct or gross
negligence. Escrow Agent’s sole responsibility shall be for the
safekeeping, investment, and disbursement of the Escrow Funds in accordance with
the terms of this Agreement. Escrow Agent shall have no implied
duties or obligations and shall not be charged with knowledge or notice or any
fact or circumstance not specifically set forth herein. Escrow Agent
may rely upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained herein, which Escrow Agent shall in good faith believe to be genuine,
to have been signed or presented by the person or parties purporting to sign the
same and conform to the provisions of this Agreement. In no event
shall Escrow Agent be liable for incidental, indirect, special, and
consequential or punitive damages. Escrow Agent shall not be
obligated to take any legal action or commence any proceeding in connection with
the Escrow Funds, any account in which Escrow Funds are deposited, this
Agreement or the Purchase Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. Escrow Agent may consult legal
counsel selected by it in any event of any dispute or question as to
construction of any of the provisions hereof or of any other agreement or its
duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or instructions of such
counsel. The Company and the Buyers jointly and severally shall
promptly pay, upon demand, the reasonable fees and expenses of any such
counsel.
b. Escrow
Agent is hereby authorized, in its sole discretion, to comply with orders issued
or process entered by any court with respect to the Escrow Funds, without
determination by Escrow Agent of such court’s jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in any case any order judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel selected by it, binding upon it, without
the need for appeal or other action; and if Escrow Agent complies with any such
order, writ, judgment or decree, it shall not be liable to any of the parties
hereto or to any other person or entity by reason of such compliance even though
such order, writ judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
11. Indemnification
of Escrow Agent. From and at all
times after the date of this Agreement, the parties jointly and severally,
shall, to the fullest extent permitted by law and to the extent provided herein,
indemnify and hold harmless Escrow Agent and each director, officer, employee,
attorney and agent of Escrow Agent (collectively, the “Indemnified Parties”)
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorney’s fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action, or proceeding
(including any inquiry or investigation) by any person, including without
limitation the parties to this Agreement, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any person under any
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or failure of performance of this Agreement or any transaction
contemplated herein, whether or not any such Indemnified Party is a party to any
such action or proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted from the
gross negligence or willful misconduct of such Indemnified Party. If
any such action or claim shall be brought or asserted against any Indemnified
Party, such Indemnified Party shall promptly notify the Company and the Buyers
hereunder in writing, and the Buyers and the Company shall assume the defense
thereof, including the employment of counsel and the payment of all
expenses. Such Indemnified Party shall, in its sole discretion, have
the right to employ separate counsel (who may be selected by such Indemnified
Party in its sole discretion) in any such action and to participate and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party, except that the Buyers and/or the
Company shall be required to pay such fees and expense if (a) the Buyers or the
Company agree to pay such fees and expenses, or (b) the Buyers and/or the
Company shall fail to assume the defense of such action or proceeding or shall
fail, in the sole discretion of such Indemnified Party, to employ counsel
reasonably satisfactory to the Indemnified Party in any such action or
proceeding, (c) the Buyers and the Company are the plaintiff in any such action
or proceeding or (d) the named or potential parties to any such action or
proceeding (including any potentially impleaded parties) include both the
Indemnified Party, the Company and/or the Buyers and the Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Company or the Buyers. The Buyers and the Company shall be jointly
and severally liable to pay fees and expenses of counsel pursuant to the
preceding sentence, except that any obligation to pay under clause (a) shall
apply only to the party so agreeing. All such fees and expenses
payable by the Company and/or the Buyers pursuant to the foregoing sentence
shall be paid from time to time as incurred, both in advance of and after the
final disposition of such action or claim. The obligations of the
parties under this section shall survive any termination of this Agreement, and
resignation or removal of Escrow Agent shall be independent of any obligation of
Escrow Agent.
The
parties agree that neither payment by the Company or the Buyers of any claim by
Escrow Agent for indemnification hereunder shall impair, limit, modify, or
affect, as between the Buyers and the Company, the respective rights and
obligations of Buyers, on the one hand, and the Company, on the other
hand.
12. Expenses
of Escrow Agent. Except as set
forth in Section 11 the Buyers shall reimburse Escrow Agent for all of its
reasonable out-of-pocket expenses, including attorneys’ fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like. All of the
compensation and reimbursement obligations set forth in this Section shall be
payable by the Buyers, upon demand by Escrow Agent. The obligations
of the Buyers under this Section shall survive any termination of this Agreement
and the resignation or removal of Escrow Agent.
13. Warranties.
a. Each
Buyer makes the following representations and warranties to Escrow
Agent:
(i) Such
Buyers has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
(ii) This
Agreement has been duly approved by all necessary action of such Buyer,
including any necessary approval of the limited partner of the such Buyer or
necessary corporate approval, as applicable, has been executed by duly
authorized officers of such Buyer, enforceable in accordance with its
terms.
(iii) The
execution, delivery, and performance of such Buyer of this Agreement will not
violate, conflict with, or cause a default under any agreement of limited
partnership of such Buyer or the articles of incorporation or bylaws of such
Buyer as applicable), any applicable law or regulation, any court order or
administrative ruling or degree to which such Buyer is a party or any of its
property is subject, or any agreement, contract, indenture, or other binding
arrangement.
(iv) No party
other than the parties hereto have, or shall have, any lien, claim or security
interest in the Escrow Funds or any part thereof. No financing
statement under the Uniform Commercial Code is on file in any jurisdiction
claiming a security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
(v) All of
the representations and warranties of such Buyer contained herein are true and
complete as of the date hereof and will be true and complete at the time of any
disbursement from the Escrow Funds.
b. The
Company makes the following representations and warranties to Escrow
Agent:
(i) The
Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
(ii) This
Agreement has been duly approved by all necessary corporate action of the
Company, including any necessary shareholder approval, has been executed by duly
authorized officers of the Company, enforceable in accordance with its
terms.
(iii) The
execution, delivery, and performance by the Company of this Agreement is in
accordance with the Subscription Agreement and will not violate, conflict with,
or cause a default under the certificate of incorporation or bylaws of the
Company, any applicable law or regulation, any court order or administrative
ruling or decree to which the Company is a party or any of its property is
subject, or any agreement, contract, indenture, or other binding arrangement,
including without limitation to the Subscription Agreement, to which the Company
is a party.
(iv) Xxxxxx
Xxxxx has been duly appointed to act as the representative of the Company
hereunder and has full power and authority to execute, deliver, and perform this
Agreement, to execute and deliver any Joint Written Direction, to amend, modify
or waive any provision of this Agreement and to take all other actions as the
Company’s Representative under this Agreement, all without further consent or
direction from, or notice to, the Company or any other party.
(v) No party
other than the parties hereto have, or shall have, any lien, claim or security
interest in the Escrow Funds or any part thereof. No financing
statement under the Uniform Commercial Code is on file in any jurisdiction
claiming a security interest in or describing (whether specifically or
generally) the Escrow Funds or any part thereof.
(vi) All of
the representations and warranties of the Company contained herein are true and
complete as of the date hereof and will be true and complete at the time of any
disbursement from the Escrow Funds.
14. Consent
to Jurisdiction and Venue; Governing Law. The parties
hereto acknowledge that the transactions contemplated by this Agreement and the
exhibits hereto bear a reasonable relation to the State of New
York. The parties hereto agree that the internal laws of the State of
New York shall govern this Agreement and the exhibits hereto, including, but not
limited to, all issues related to usury. Any action to enforce the
terms of this Agreement or any of its exhibits shall be brought exclusively in
the state and/or federal courts situated in the County and State of New
York. Service of process in any action by any of the parties to
enforce the terms of this Agreement may be made by serving a copy of the summons
and complaint, in addition to any other relevant documents, by commercial
overnight courier to the Company at its principal address set forth in this
Agreement.
15. Notice. All notices and
other communications hereunder shall be in writing and shall be deemed to have
been validly served, given or delivered five (5) days after deposit in the
United States mails, by certified mail with return receipt requested and postage
prepaid, when delivered personally, one (1) day delivered to any overnight
courier, or when transmitted by facsimile transmission and upon confirmation of
receipt and addressed to the party to be notified as follows:
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If
to Buyers(s), to:
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Telephone:
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Facsimile:
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If
to Escrow Agent, to:
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Xxxxxxx
X. Xxxxx, PLLC
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0000
Xxxxxxxx, 00xx Xx.
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Xxx
Xxxx, XX 00000
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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If
to the Company, to:
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Buzz
Kill, Inc.
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0
Xxxx Xxxxxx Xxxxx, Xxxxx 00
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Xxx
Xxxx, XX 00000
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With
a copy to:
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Gottbetter
& Partners, LLP
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000
Xxxxxxx Xxxxxx,
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Xxx
Xxxx, XX 00000
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Attention: Xxxx
X. Xxxxxxxxxx, Esq.
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Telephone: (000)
000-0000
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Facsimile:
(000) 000-0000
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Or to
such other address as each party may designate for itself by like
notice.
16. Amendments
or Waiver. This Agreement
may be changed, waived, discharged or terminated only by a writing signed by the
parties hereto. No delay or omission by any party in exercising any
right with respect hereto shall operate as waiver. A waiver on any
one occasion shall not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.
17. Severability. To the extent any
provision of this Agreement is prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition, or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
18. Entire
Agreement. This Agreement
constitutes the entire Agreement between the parties relating to the holding,
investment, and disbursement of the Escrow Funds and sets forth in their
entirety the obligations and duties of Escrow Agent with respect to the Escrow
Funds.
19. Binding
Effect. All of the terms
of this Agreement, as amended from time to time, shall be binding upon, inure to
the benefit of and be enforceable by the respective heirs, successors and
assigns of the Buyers, the Company, or Escrow Agent.
20. Execution
of Counterparts. This Agreement
and any Joint Written Direction may be executed in counter parts, which when so
executed shall constitute one and same agreement or direction.
21. Termination. Upon the first to
occur of the disbursement of all amounts in the Escrow Funds pursuant to Joint
Written Directions or the disbursement of all amounts in the Escrow Funds into
court pursuant to Section 7 hereof, this Agreement shall terminate and Escrow
Agent shall have no further obligation or liability whatsoever with respect to
this Agreement or the Escrow Funds.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties
have hereunto set their hands and seals the day and year above set
forth.
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BUZZ
KILL INC.
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By:_______________________________
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Name: Xxxxxx
Xxxxx
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Title: President
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BUYER
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By:_______________________________
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Name:
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Title:
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XXXXXXX
X. XXXXX, PLLC
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By:_______________________________
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Name: Xxxxxxx
X. Xxxxx
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