ESCROW AGREEMENT
This
Escrow Agreement (this “Agreement”) is entered into as of December 18, 2007, by
and between UFood Restaurant Group, Inc., a Nevada corporation (the “Company”),
and Gottbetter & Partners, LLP (the “Escrow Agent”).
WHEREAS,
pursuant to an Agreement and Plan of Merger and Reorganization (the “Merger
Agreement”) among the Company, a wholly-owned subsidiary of the Company
(“Acquisition Corp.”) and KnowFat Franchise Company, Inc., a Delaware
corporation (“KnowFat”), KnowFat and Acquisition Corp. have merged (the
“Merger”), with KnowFat being the surviving corporation in the
Merger;
WHEREAS,
as contemplated by the Merger Agreement, the Company has engaged in a private
placement of units (“Units”) of securities of the Company;
WHEREAS,
the Company agreed to use the net proceeds from the sale of the Units for
purposes described under the “Use of Proceeds” section of the Confidential
Private Placement Memorandum dated October 17, 2007, including applying
$1,000,000 from the net proceeds for public and investor relations
programs;
WHEREAS,
the parties hereto desire to establish an escrow account to provide for the
safekeeping of the Escrowed Funds (as defined herein) until such time as the
Escrowed Funds are released by the Escrow Agent in accordance with the terms
and
conditions of this Agreement.
All
capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Merger Agreement and the other Transaction
Documentation.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1. At
the
First Closing, the Company shall cause to be deposited $1,000,000 (the “Escrowed
Funds”) with the Escrow Agent pursuant to the following wiring
instructions:
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Bank:
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Citibank,
N.A.
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000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
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ABA
Routing #:
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000000000
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Swift
Code:
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XXXXXX00
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Beneficiary:
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Gottbetter
& Partners, LLP, Attorney Trust Account
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Account
#:
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00000000
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Reference:
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“UFood
Restaurant Group, Inc. - IR Funds”
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Xxxxxxx
XxXxxxx; telephone: (000) 000-0000; e-mail:
xxx@xxxxxxxxxx.xxx.
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2. The
Company agrees that the Escrowed Funds shall be held in escrow by the Escrow
Agent pursuant to this Agreement for its benefit as set forth herein and that
the Escrow Funds shall be used to retain the services of public and investor
relations firms.
3. The
Escrow Agent shall hold and release the Escrowed Funds only in accordance with
the terms and conditions of this Agreement.
4. Subject
to the provisions of Section 6 herein, the Escrow Agent shall release the
Escrowed Funds as follows:
(a) All
funds
shall be delivered pursuant to written instructions substantially in the form
of
Exhibit
A
hereto
(the “Instructions”) signed by the Company.
(b) 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 Escrowed Funds 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.
(c) The
Company acknowledges that the only terms and conditions upon which the Escrowed
Funds are to be released are set forth in this Agreement. The Company reaffirms
its agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Escrowed Funds. Any dispute with respect to the
release of the Escrowed Funds shall be resolved pursuant to Section 6 herein
or
by agreement between the parties.
5. The
Escrow Agent’s duties and responsibilities shall be subject to the following
terms and conditions:
(a) The
Company acknowledges and agrees that the Escrow Agent (i) shall not be
responsible for or bound by, and shall not be required to inquire into whether
the Company is entitled to receipt of the Escrowed Funds 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 the Escrow Agent gives its own similar property, but in no event
less than a reasonable amount of care; and (vi) may consult with counsel
satisfactory to the 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 the Escrow Agent hereunder in good faith and in accordance with
the opinion of such counsel.
(b) The
Company acknowledges that the Escrow Agent is acting solely as a stakeholder
at
its request and that the Escrow Agent shall not be liable for any action taken
by Escrow Agent in good faith and believed by the Escrow Agent to be authorized
or within the rights or powers conferred upon the Escrow Agent by this
Agreement. The Company agrees to indemnify and hold harmless the Escrow Agent
and any of the Escrow Agent’s partners, employees, agents and representatives
for any action taken or omitted to be taken by the 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 the part of the Escrow
Agent committed in its capacity as Escrow Agent under this Agreement. The Escrow
Agent shall owe a duty only to the Company under this Agreement and to no other
person.
2
(c) The
Company agrees 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 Company. Prior to the effective
date of the resignation as specified in such notice, the Company will issue
to
the Escrow Agent an instruction authorizing delivery of the Escrowed Funds
to a
substitute escrow agent selected by the Company. If no successor escrow agent
is
named by the 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 Escrowed Funds with the clerk of any such
court.
(e) The
Escrow Agent does not have and will not have any interest in the Escrowed Funds,
but is serving only as escrow agent in connection therewith, having only
possession thereof.
(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
provisions of this Agreement shall survive the resignation of the Escrow Agent
or the termination of this Agreement.
6. 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 Escrowed Funds, 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 Escrowed Funds pending receipt of an
Instruction from the Company, or (ii) deposit the Escrowed Funds 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 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 Escrowed Funds. 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.
3
(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 Company or to any other person, firm,
corporation or entity by reason of such compliance.
7. The
escrow established hereby shall terminate upon the delivery by the Escrow Agent
of all of the Escrowed Funds in accordance with this Agreement.
8. The
Escrowed Funds shall neither be held in an interest bearing account nor will
interest be payable in connection therewith.
9. Notices.
All
notices, instructions and other communications given hereunder or in connection
herewith shall be in writing. Any such notice, instruction or communication
shall be sent either (i) by registered or certified mail, return receipt
requested, postage prepaid, or (ii) via a reputable nationwide overnight
courier service, in each case to the address set forth below. Any such notice,
instruction or communication shall be deemed to have been delivered five
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service.
If
to the
Company:
000
Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx, Chief Executive Officer
Facsimile:
(000) 000-0000
with
a
copy to (which shall not constitute notice hereunder):
Xxxxxxxx
& Xxxx LLP
000
Xxxx
Xxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
If
to the
Escrow Agent:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
4
Any
party
may give any notice, instruction or communication in connection with this
Agreement using any other means (including personal delivery, telecopy or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the party
to
whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this
Section 9.
10. General.
(a) Governing
Law; Assigns.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to conflict-of-law principles
and
shall be binding upon, and inure to the benefit of, the parties hereto and
their
respective successors and assigns.
(b) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
(c) Entire
Agreement.
This
Agreement constitutes the entire understanding and agreement of the parties
with
respect to the subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.
(d) Waivers.
No
waiver by any party hereto of any condition or of any breach of any provision
of
this Agreement shall be effective unless in writing. No waiver by any party
of
any such condition or breach, in any one instance, shall be deemed to be a
further or continuing waiver of any such condition or breach or a waiver of
any
other condition or breach of any other provision contained herein.
(e) Amendment.
This
Agreement may be amended only with the written consent of the Company and the
Escrow Agent.
(f) Consent
to Jurisdiction and Service.
The
parties hereby absolutely and irrevocably consent and submit to the jurisdiction
of the courts in the State of New York and of any federal court located in
the
State of New York in connection with any actions or proceedings brought against
any party hereto by the Escrow Agent arising out of or relating to this
Agreement. In any such action or proceeding, the parties hereby absolutely
and
irrevocably waive personal service of any summons, complaint, declaration or
other process and hereby absolutely and irrevocably agree that the service
thereof may be made by certified or registered first-class mail directed to
such
party, at their respective addresses in accordance with Section 9
hereof.
5
IN
WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as of
the
day and year first above written.
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| By: | /s/ Xxxxxx Xxxxxxx | |
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Name: Xxxxxx
Xxxxxxx
Title: Chief
Executive Officer
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| GOTTBETTER & PARTNERS, LLP | ||
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| By: | /s/ Xxxx Xxxxxxxxxx | |
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Name: Xxxx
X. Xxxxxxxxxx
Title: Partner
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EXHIBIT
A
Form
of Instructions
Xx.
Xxxx
X. Xxxxxxxxxx
Xxxxxxxxxx
& Partners, LLP
000
Xxxxxxx Xxx., 00xx Xxxxx
Xxx
Xxxx,
XX 00000-0000
Phone:
000-000-0000
Facsimile:
000-000-0000
Dear
Xx.
Xxxxxxxxxx:
With
respect to the Escrow Agreement by and between UFood Restaurant Group, Inc.
and
Gottbetter & Partners, LLP, as escrow agent, we hereby authorize the release
of the Escrowed Funds to the following public and investor relations
firms:
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Name
of Firm
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Amount
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| UFOOD RESTAURANT GROUP, INC. | ||
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| By: | ||
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Name: Xxxxxx
Xxxxxxx
Title: Chief
Executive Officer
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