ESCROW AGREEMENT
This Escrow Agreement (this “Agreement”), dated effective as of September 12, 2011, is entered into by and among Marine Drive Mobile Corp., a Nevada corporation (the “Company”), Coventry Capital, LLC, as escrow agent (the “Escrow Agent”) and Xxxxx XxxXxxxxx (the “Selling Shareholder”).
WHEREAS, in connection with the execution of this Agreement, the Company, Marine Drive Technologies Inc., a corporation organized under the laws of the Province of British Columbia, Canada, (“MDT”) and the Selling Shareholder have entered into the Exchange Agreement pursuant to which the Selling Shareholder exchanged all the outstanding shares of MDT for shares of common stock in the Company (the “Exchange”);
WHEREAS, as an inducement to the Company to enter into the Exchange, the Selling Shareholder agreed to have all of the Exchange Shares placed into escrow for the benefit of the Company in the event the combined business of the Company after the Exchange fails to achieve certain revenue and other business milestones as set forth on Exhibit A hereto (each a “Milestone” and collectively, the “Milestones”); and
WHEREAS, the Escrow Agent has agreed to act as escrow agent pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties and the terms and conditions hereof, the parties hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Exchange Agreement will have the meanings given such terms in the Exchange Agreement.
2. Appointment of the Escrow Agent. The Selling Shareholder and the Company hereby appoint the Escrow Agent to act in accordance with the terms and conditions set forth in this Agreement. The Escrow Agent hereby agrees to act as escrow agent in this transaction and subject to the terms of this Agreement. The Parties hereby appoint the Escrow Agent as their joint agent for the purpose of holding and disbursing the Escrow Shares (as defined below) stated herein pursuant to the terms and provisions hereof.
3. Establishment of Escrow. Within seven business days following the Closing Date, the Company shall deliver, or cause to be delivered, to the Escrow Agent certificates evidencing 5,000,000 shares of common stock of the Company (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) registered in the name of the Selling Shareholder as set forth on Exhibit A to the Exchange Agreement (the “Escrow Shares”), and the Selling Shareholder shall deliver a stock power
executed in blank (or such other instruments of transfer as in accordance with the requirements of the Company’s Transfer Agent (as defined below)). The Company understands and agrees that the Selling Shareholder’s right to return of the Escrow Shares shall continue to run to the benefit of the Selling Shareholder even if the Selling Shareholder shall have transferred or sold all or any portion of its Escrow Shares, and that the Selling Shareholder shall have the right to assign its rights to return of all or any such shares of common stock to other persons in conjunction with negotiated sales or transfers of any of its Escrow Shares. As used in this Agreement, “Transfer Agent” means Action Stock Transfer Corporation or such other entity hereafter retained by the Company as its stock
transfer agent as specified in writing from the Company to the Escrow Agent and the Selling Shareholder.
4. Representations of Selling Shareholder. The Selling Shareholder represents and warrants to the Company as follows:
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a. The Selling Shareholder has all individual power and authority to enter into this Agreement and to carry out its obligations hereunder. This Agreement has been duly executed by the Selling Shareholder, and when delivered by the Selling Shareholder in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Selling Shareholder, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general
application.
b. All of the Escrow Shares are validly issued, fully paid and nonassessable shares of the Company, and free and clear of all pledges, liens and encumbrances. Upon any transfer of the Escrow Shares to the Company hereunder, the Company will receive full right, title and authority to such shares.
c. Performance of this Agreement and compliance with the provisions hereof will not violate any provision of any applicable law and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon, any of the properties or assets of the Selling Shareholder pursuant to the terms of any indenture, mortgage, deed of trust or other agreement or instrument binding upon the Selling Shareholder, other than such breaches, defaults or liens which would not have a material adverse effect taken as a whole.
5. Disbursement of Escrow Shares.
a. Upon achievement of the Milestones on or before the date associated with such Milestones on Exhibit A, the Company shall promptly provide written notice to the Escrow Agent and the Selling Shareholder of such achievement (the “Completion Notice”). Upon the passage of all of the Milestone dates set forth on Exhibit A for which the Company has not achieved all of the Milestones, the Company shall promptly provide written notice to the Escrow Agent and the Selling Shareholder of such failure to achieve the
Milestones (the “Noncompletion Notice”). In carrying out its duties under this Agreement, the Escrow Agent need only rely on such written notices received from the Company and will disregard any contrary instructions.
b. The Selling Shareholder agrees that if the Escrow Agent has received the Noncompletion Notice with respect to the Milestones, the Escrow Agent shall instruct the Transfer Agent to transfer to the Company for no additional consideration, all of the Escrow Shares (as adjusted for any stock splits, stock combinations, stock dividends or similar transactions). The Selling Shareholder shall promptly provide any written instruction (with a copy to the Company) requested by the Escrow Agent in connection with such transfer, provided that the failure of the Selling Shareholder to provide such written instructions shall not affect the
authority of the Escrow Agent to make such transfer.
c. Upon receipt of the Completion Notice, the Selling Shareholder shall immediately provide written instruction (with a copy to the Company) to the Escrow Agent to release fifty percent (50%) of the Escrow Shares to the Selling Shareholder twelve (12) months from the Closing Date and the remaining fifty percent (50%), twenty four (24) months from the Closing Date.
6. Duration. This Agreement shall terminate on the sooner of (i) the distribution of all the Escrow Shares, or (ii) October 31, 2013.
7. Escrow Shares. If Escrow Shares are deliverable to the Company in accordance with this Agreement, the Selling Shareholder covenants and agrees to execute all such instruments of transfer (including stock powers and assignment documents) as are customarily executed to evidence
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8. Interpleader and Other Resolutions of Controversies Among the Parties. Should any controversy arise among the parties hereto with respect to this Agreement or with respect to the right to receive any Escrow Shares, the Escrow Agent shall have the right to consult and hire counsel and/or to institute an appropriate interpleader action to determine the rights of the parties. The Escrow Agent is also hereby authorized to institute an appropriate interpleader action upon receipt of a written letter of direction executed by the parties so directing the Escrow Agent. If the Escrow Agent is directed to institute an appropriate interpleader action, it
shall institute such action not prior to thirty (30) days after receipt of such letter of direction and not later than sixty (60) days after such date. Any interpleader action instituted in accordance with this Section 8 shall be filed in any court of competent jurisdiction in the State of Nevada, and the Escrow Shares in dispute shall be deposited with the court and in such event the Escrow Agent. Should any controversy arise among the parties hereto or any third person with respect to this Agreement, the Escrow Agent may also, at its discretion, hold all funds, documents and instruments, and may wait for settlement of any such controversy by final appropriate legal proceedings or other means as, in the Escrow Agent’s sole discretion, it deems reasonable. The Escrow Agent may await settlement of any controversy by appropriate legal proceeding or otherwise,
notwithstanding any provision of this Escrow Agreement or related agreements to the contrary. In the event of a controversy, the Escrow Agent shall not be liable for interest on any money held in escrow or damages for nondelivery thereunder.
9. Exculpation and Indemnification of the Escrow Agent.
a. The Escrow Agent is not a party to, and is not bound by or charged with notice of any agreement out of which this escrow may arise. The Escrow Agent acts under this Agreement as a depositary only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of the escrow, or any part thereof, or for the form or execution of any notice given by any other party hereunder, or for the identity or authority of any person executing any such notice. The Escrow Agent will have no duties or responsibilities other than those expressly set forth herein. The Escrow Agent will be under no liability to anyone by reason of any failure on the part
of any party hereto (other than the Escrow Agent) or any maker, endorser or other signatory of any document to perform such person’s or entity’s obligations hereunder or under any such document. Except for this Agreement and instructions to the Escrow Agent pursuant to the terms of this Agreement, the Escrow Agent will not be obligated to recognize any agreement between or among any or all of the persons or entities referred to herein, notwithstanding its knowledge thereof. The Escrow Agent is not charged with any obligation to conduct any investigation into the Milestone or make any other investigation related thereto. In the event of any actual or alleged mistake or fraud of the Company, its auditors or any other person in connection with delivery or failure to deliver the Completion Notice or Noncompletion Notice, the Escrow Agent shall not
have any obligation or liability to any party hereunder.
b. The Escrow Agent will not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, absent gross negligence or willful misconduct. The Escrow Agent may rely conclusively on, and will be protected in acting upon, any order, notice, demand, certificate, or opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by the Escrow Agent to be genuine and to be signed or presented by the proper person
or persons.
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The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement and no other or further duties or responsibilities shall be implied, including, but not limited to, any obligation under or imposed by any laws of the State of Nevada upon fiduciaries. THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.
c. The Company and the Selling Shareholder each hereby, jointly and severally, indemnify and hold harmless each of the Escrow Agent, and any of its principals, partners, agents, employees and affiliates from and against any expenses, including reasonable attorneys’ fees and disbursements, damages or losses suffered by the Escrow Agent in connection with any claim or demand, which, in any way, directly or indirectly, arises out of or relates to this Agreement or the services of the Escrow Agent hereunder; except, that if the Escrow Agent is guilty of willful misconduct or gross negligence under this Agreement, then the Escrow Agent will bear all
losses, damages and expenses arising as a result of its own willful misconduct or gross negligence. Promptly after the receipt by the Escrow Agent of notice of any such demand or claim or the commencement of any action, suit or proceeding relating to such demand or claim, the Escrow Agent will notify the other parties hereto in writing. For the purposes hereof, the terms “expense” and “loss” will include all amounts paid or payable to satisfy any such claim or demand, or in settlement of any such claim, demand, action, suit or proceeding settled with the express written consent of the parties hereto, and all costs and expenses, including, but not limited to, reasonable attorneys’ fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding. The provisions of this Section 9 shall survive
the termination of this Agreement, and the resignation or removal of the Escrow Agent.
10. Resignation of the Escrow Agent. At any time, upon ten (10) days’ written notice to the Company, the Escrow Agent may resign and be discharged from its duties as the Escrow Agent hereunder. As soon as practicable after its resignation, the Escrow Agent will promptly turn over to a successor escrow agent designated by both the Company and the Selling Shareholder, the Escrow Shares held hereunder upon presentation of a document appointing the new escrow agent and evidencing its acceptance thereof. If, by the end of the ten (10) day period following the giving of notice of resignation by the Escrow Agent, the Company and the Selling Shareholder
shall have failed to appoint a successor escrow agent, the Escrow Agent may interplead the Escrow Shares into the registry of any court having jurisdiction. Upon the transfer of and accounting for the Escrow Shares as set forth in this Section 10, the Escrow Agent shall be fully relieved of all liability under this Agreement to any and all parties.
11. Notice. All notices, communications and instructions required or desired to be given under this Agreement must be in writing and shall be deemed to be duly given if sent by fax, registered or certified mail, return receipt requested, or overnight courier, to the addresses listed below:
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If to the Company:
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0000 Xxxxxxx Xx., Xxxxx #000
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Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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Attention: Chief Executive Officer
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Telephone: (000) 000-0000
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with a copy to:
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Xxxxxxxxx Xxxxxxx, LLP
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Attention: Xxxx X. Xxx, Esq.
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0000 X Xxxxxx, Xxxxx 0000
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Xxxxxxxxxx, Xxxxxxxxxx 00000
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Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
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If to the Escrow Agent:
Coventry Capital, LLC
Attention: President
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
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If to the Selling Shareholder:
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Xxxxx XxxXxxxxx
#000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 158
Telephone: (000) 000-0000
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If to the Transfer Agent:
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Action Stock Transfer Corporation
0000 X. Xxxxxxxx Xx., Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Justeene Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
12. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
13. Assignment and Modification. This Agreement and the rights and obligations hereunder of any of the parties hereto may not be assigned without the prior written consent of the other parties hereto. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns. No other person will acquire or have any rights under, or by virtue of, this Agreement. No portion of the Escrow Shares shall be subject to interference or control by any creditor of any party hereto, or be subject to being taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of any such party hereto prior to the disbursement thereof to such party hereto in accordance with the provisions of this Agreement. This Agreement may be amended or modified only in writing signed by all of the parties hereto.
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14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without giving effect to the principles of conflicts of laws thereof.
15. Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.
16. Attorneys’ Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party (unless such other party is the Escrow Agent), which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date set forth opposite their respective names.
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COMPANY:
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By:_____________________________
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
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ESCROW AGENT:
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COVENTRY CAPITAL, LLC
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By:_____________________________
Name:
Title:
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SELLING SHAREHOLDER:
XXXXX XXXXXXXXX
_____________________________
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