ESCROW AGREEMENT
THIS
ESCROW AGREEMENT (this
"Escrow Agreement”), dated as of June 20, 2007, is entered into by and between
Organic To Go Food Corporation, a Delaware corporation (the "Company") and
Xxxxx
Fargo Bank, National Association, as Escrow Agent (the "Escrow
Agent").
WHEREAS,
the
Company and Investors are entering into concurrently herewith a Securities
Purchase Agreement, dated as of June 26, 2007 (the "Purchase Agreement"),
pursuant to which each Investor has agreed to purchase from the Company, and
the
Company has agreed to sell to each Investor, the number of Shares identified
therein (capitalized terms used and not otherwise defined herein shall have
the
meanings given such terms on Annex
A
to this
Escrow Agreement);
WHEREAS, pursuant
to the Purchase Agreement, the Company and the Investors have agreed to
establish an escrow on the terms and conditions set forth in this Escrow
Agreement; and
WHEREAS,
the
Escrow Agent is willing to accept appointment as Escrow Agent only for the
expressed duties outlined herein.
NOW,
THEREFORE,
in
consideration of the premises set forth above and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1.
Proceeds to be Escrowed. Strictly
for convenience of the Company, a copy of the Purchase Agreement is attached
as
Exhibit
A.
All
amounts provided by the Investors in connection with their acquisition of the
Shares as set forth in the Purchase Agreement shall be deposited with the Escrow
Agent in immediately available funds by federal wire transfer, such funds being
referred to herein as the “Escrow Funds.” The Escrow Funds shall be retained in
escrow by the Escrow Agent in a separate account and invested as stated below.
Pursuant to the Purchase Agreement, the Investors will be required to deposit
their respective Escrow Funds directly to the Escrow Agent.
2.
Identity of Investors. Concurrently
with the execution of the Escrow Agreement, the Company shall expressly furnish
to the Escrow Agent the information comprising the identity of the Investors
in
the format set forth in the “List of Investors,” attached as Exhibit
B,
or in
electronic spreadsheet format with the same information. All Escrow Funds shall
remain the property of the Investors and shall not be subject to any liens
or
charges by the Company, or the Escrow Agent, or judgments or creditors' claims
against the Company, until released to the Company as hereinafter provided.
Escrow Agent will not use the information provided to it by the Company for
any
purpose other than to fulfill its obligations as Escrow Agent. The Company
and
the Escrow Agent will treat all Investor information as
confidential.
3.
Disbursement of Funds.
(a) Subject
to Section 3(c) of this Escrow Agreement, the Escrow Agent shall continue to
hold the Escrow Funds delivered for deposit hereunder by an Investor until
the
earlier of: (1) receipt of a joint written notice from the Company and the
Investors evidencing termination under Section 6.5(a) of the Purchase Agreement,
(2) receipt of a written notice from the Company or an Investor evidencing
termination under Section 6.5(b) of the Purchase Agreement (each of (1) and
(2),
a “Termination Election”) and (3) receipt of both (x) written notice from the
Company that the conditions to closing under Section 5.1 of the Purchase
Agreement shall have been satisfied and (y) joint written notice from the
Company and Xxxx Capital Partners, LLC, who acted as a placement agent in
connection with the transactions contemplated by the Purchase Agreement, to
effect the Closing.
(b) If
the
Escrow Agent receives a Termination Election prior to its receipt of the notices
contemplated under Section 3(a)(3), then the Escrow Agent shall return the
Escrow Funds delivered by such Investor as directed by such Investor. If the
Escrow Agent receives the notices contemplated under Section 3(a)(3) prior
to a
Termination Election, then the Escrow Agent shall disburse the portion of the
Escrow Funds for which the foregoing is the case in accordance with Exhibit
C
to this
Escrow Agreement.
(c) This
Escrow Agreement shall terminate and be of no further force or effect on the
earlier of (i) disbursement of the entire amount of the Escrow Funds by the
Escrow Agent and (ii) the one year anniversary of the Closing Date.
4.
Duty and Liability of the Escrow Agent. The
sole
duty of the Escrow Agent shall be to receive Escrow Funds and hold them subject
to release, in accordance herewith, and the Escrow Agent shall be under no
duty
to determine whether the Company is complying with requirements of this Escrow
Agreement, the Purchase Agreement or applicable law in tendering the Escrow
Funds to the Company and/or the Investors, as the case may be. The Escrow Agent
shall be obligated only to perform the duties specifically set forth in this
Escrow Agreement, which shall be deemed purely ministerial in nature. The Escrow
Agent shall not assume any responsibility for the failure of the Company to
perform in accordance with this Escrow Agreement. No other agreement entered
into between the parties, or any of them, shall be considered as adopted or
binding, in whole or in part, upon the Escrow Agent notwithstanding that any
such other agreement may be referred to herein or deposited with the Escrow
Agent or the Escrow Agent may have knowledge thereof, and the Escrow Agent's
rights and responsibilities shall be governed solely by this Escrow Agreement.
The Escrow Agent shall not be responsible for or be required to enforce any
of
the terms or conditions of the Purchase Agreement or other agreement between
the
Company and any other party. The Escrow Agent may conclusively rely upon and
shall be protected in acting upon any statement, certificate, notice, request,
consent, order or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall
have
no duty or liability to verify any such statement, certificate, notice, request,
consent, order or other document, and its sole responsibility shall be to act
only as expressly set forth in this Escrow Agreement. Concurrent with the
execution of this Escrow Agreement, the Company shall deliver to the Escrow
Agent an authorized signers form in the form of Exhibit
D
to this
Escrow Agreement. The Escrow Agent shall be under no obligation to institute
or
defend any action, suit or proceeding in connection with this Escrow Agreement
unless first indemnified to its satisfaction. The Escrow Agent may consult
and
hire counsel of its own choice with respect to any question arising under this
Escrow Agreement and the Escrow Agent shall not be liable for any action taken
or omitted in good faith upon advice of such counsel. The Escrow Agent shall
not
be liable for any action taken or omitted by it in good faith except to the
extent that a court of competent jurisdiction determines that the Escrow Agent's
gross negligence or willful misconduct was the primary cause of loss. The Escrow
Agent is acting solely as escrow agent hereunder and owes no duties, covenants
or obligations, fiduciary or otherwise, to any other person by reason of this
Escrow Agreement, except as otherwise stated herein, and no implied duties,
covenants or obligations, fiduciary or otherwise, shall be read into this Escrow
Agreement against the Escrow Agent. In the event of any disagreement
between any of the parties to this Escrow Agreement, or between any of them
and
any other person, including any Investor, resulting in adverse claims or demands
being made in connection with the matters covered by this Escrow Agreement,
or
in the event that the Escrow Agent is in doubt as to what action it should
take
hereunder, the Escrow Agent may, at its option, refuse to comply with any claims
or demands on it, or refuse to take any other action hereunder, so long as
such
disagreement continues or such doubt exists, and in any such event, the Escrow
Agent shall not be or become liable in any way or to any person for its failure
or refusal to act, and the Escrow Agent shall be entitled to continue so to
refrain from acting until (i) the rights of all interested parties shall have
been fully and finally adjudicated by a court of competent jurisdiction, or
(ii)
all differences shall have been adjudged and all doubt resolved by agreement
among all of the interested persons, and the Escrow Agent shall have been
notified thereof in writing signed by all such persons. Notwithstanding the
foregoing, the Escrow Agent may in its discretion obey the order, judgment,
decree or levy of any court, whether with or without jurisdiction and the Escrow
Agent is hereby authorized in its sole discretion to comply with and obey any
such orders, judgments, decrees or levies. In the event that any controversy
should arise with respect to this Escrow Agreement the Escrow Agent shall have
the right, at its option, to institute an interpleader action in any court
of
competent jurisdiction to determine the rights of the parties. In no event
shall
the Escrow Agent be liable, directly or indirectly, for any special, indirect
or
consequential losses or damages 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.
The
parties agree that the Escrow Agent has no role in the preparation of the
Purchase Agreement, has not reviewed any such documents and makes no
representations or warranties with respect to the information contained therein
or omitted therefrom. The Escrow Agent shall have no obligation, duty or
liability with respect to compliance with any federal or state securities,
disclosure or tax laws concerning the Purchase Agreement or the issuance,
offering or sale of the Shares. The Escrow Agent shall have no duty or
obligation to monitor the application and use of the Escrow Funds once
transferred to the Company and/or an Investor, that being the sole obligation
and responsibility of such person or entity. Under no circumstances shall the
Escrow Agent be expected or required to use, risk or advance its own funds
in
the performance of its duties or exercise of its rights hereunder.
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5.
Escrow Agent's Fee. The
Escrow Agent shall be entitled to compensation for its services as stated in
the
fee schedule attached hereto as Exhibit
E,
which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by this Escrow Agreement; provided, however, that
in
the event that the conditions for the disbursement of funds under this Escrow
Agreement are not fulfilled, or the Escrow Agent renders any material service
not contemplated in this Escrow Agreement, or there is any assignment of
interest in the subject matter of this Escrow Agreement, or any material
modification hereof, or if any material controversy arises hereunder, or the
Escrow Agent is made a party to any litigation pertaining to this Escrow
Agreement, or the subject matter hereof, then the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs and expenses, including reasonable attorney's fees, occasioned by any
delay, controversy, litigation or event, and the same shall be recoverable
from
the Company.
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6.
Investment of Proceeds. The
Escrow Funds shall be credited by Escrow Agent and recorded in an escrow
account. During the period of this escrow as contemplated in Section 3(c),
Escrow Agent is hereby authorized by the Company to deposit, transfer, hold
and
invest all funds received under this Escrow Agreement, including principal
and
interest in Xxxxx Fargo Money Market Deposit Account Fund in accordance with
Exhibit
F
to this
Escrow Agreement. Any interest received by Escrow Agent with respect to the
Escrow Funds, including reinvested interest shall become part of the Escrow
Funds, and shall be disbursed pursuant to Section 3. For tax reporting purposes,
all interest or other taxable income earned on the Escrow Funds in any tax
year
shall be taxable to the Company.
The
Company shall within thirty (30) days after the date hereof, provide Escrow
Agent with certified tax identification numbers by furnishing appropriate IRS
forms W-9 or W-8 and other forms and documents that Escrow Agent may reasonably
request. The Company understands that if such tax reporting documentation is
not
so certified to Escrow Agent, Escrow Agent may be required by the Internal
Revenue Code of 1986, as amended, to withhold a portion of any interest or
other
income earned on the Escrow Funds pursuant to this Escrow
Agreement.
To
the
extent that Escrow Agent becomes liable for the payment of any taxes in respect
of income derived from the investment of funds held or payments made hereunder,
Escrow Agent shall satisfy such liability to the extent possible from the Escrow
Funds. The Company agrees to indemnify and hold Escrow Agent harmless from
and
against any taxes, additions for late payment, interest, penalties and other
expenses that may be assessed against Escrow Agent on or with respect to any
payment or other activities under this Escrow Agreement unless any such tax,
addition for late payment, interest, penalties and other expenses shall arise
out of or be caused by the gross negligence or willful misconduct of the Escrow
Agent.
The
Company acknowledges that Escrow Agent is not providing investment supervision,
recommendations or advice.
7.
Notices. All
notices, requests, demands, and other communications under this Escrow Agreement
shall be in writing and shall be deemed to have been duly given (a) on the
date
of service if served personally on the party to whom notice is to be given,
(b)
on the day of transmission, if sent by facsimile to the number given below,
and
confirmation of receipt is obtained promptly after completion of transmission,
(c) on the day after delivery to Federal Express or similar overnight courier
or
the Express Mail service maintained by the United States Postal Service, or
(d)
on the fifth day after mailing, if mailed to the party to whom notice is to
be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed, return receipt requested, to the party as
follows:
| If to the Company: |
Organic
To Go Food Corporation
0000
Xxxxx Xxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Attn:
Chief Executive Officer
Facsimile:
(000)
000-0000
|
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| If to Escrow Agent: |
Xxxxx
Fargo Bank, National Association
Corporate
Trust Services
000
Xxxxxxxx Xxxx., 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Facsimile:
|
Any
party
may change its address for purposes of this Section by giving the other party
written notice of the new address in the manner set forth above.
8.
Indemnification of Escrow Agent: The
Company hereby indemnifies and holds harmless the Escrow Agent from and against,
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Escrow Agent may suffer or incur
by reason of any action, claim or proceeding brought against the Escrow Agent
arising out of or relating in any way to this Escrow Agreement or any
transaction to which this Escrow Agreement relates unless such action, claim
or
proceeding is determined by a court of competent jurisdiction to be the direct
result of the willful misconduct of the Escrow Agent. The terms of this Section
shall survive the termination of this Escrow Agreement and the resignation
or
removal of the Escrow Agent.
9.
Successors and Assigns. Except
as
otherwise provided in the Escrow Agreement, no party hereto shall assign the
Escrow Agreement or any rights or obligations hereunder without the prior
written consent of the other parties hereto, each Investor and Xxxx Capital
Partners, LLC and any such attempted assignment without such prior written
consent shall be void and of no force and effect. The Escrow Agreement shall
inure to the benefit of and shall be binding upon the successors and permitted
assigns of the parties hereto. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor Escrow Agent under this Escrow Agreement and shall have
and
succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or
the
performance any further act.
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10.
Governing Law; Jurisdiction. The
Escrow Agreement shall be construed, performed, and enforced in accordance
with,
and governed by, the internal laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof.
11.
Severability. In
the
event that any part of this Escrow Agreement is declared by any court or other
judicial or administrative body to be null, void, or unenforceable, said
provision shall survive to the extent it is not so declared, and all of the
other provisions of this Escrow Agreement shall remain in full force and
effect.
12.
Amendments; Waivers. The
Escrow Agreement may be amended or modified, and any of the terms, covenants,
representations, warranties, or conditions hereof may be waived, only by a
written instrument executed by each of the Company, the Escrow Agent, Xxxx
Capital Partners, LLC and each Investor. Any waiver by any party of any
condition, or of the breach of any provision, term, covenant, representation,
or
warranty contained in the Escrow Agreement, in any one or more instances, shall
not be deemed to be nor construed as further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation, or warranty of the Escrow Agreement. The Company agrees that
any
requested waiver, modification or amendment of this Escrow Agreement shall
be
consistent with the terms of the Purchase Agreement.
13.
Entire Agreement. This
Escrow Agreement contains the entire understanding among the parties hereto
with
respect to the escrow contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written, with regard
to such escrow.
14.
Section Headings. The
section headings in this Escrow Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Escrow
Agreement.
15.
Counterparts. This
Escrow Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which shall constitute the same instrument.
16.
Resignation. The
Escrow Agent may resign upon 30 days advance written notice to the parties
hereto. If a successor escrow agent is not appointed within the 30-day period
following such notice, the Escrow Agent may petition any court of competent
jurisdiction to name a successor escrow agent or interplead the Escrow Funds
with such court, whereupon the Escrow Agent’s duties hereunder shall
terminate.
17.
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person or entity, except for the
Investors and Xxxx Capital Partners, LLC.
[REMAINDER
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Escrow Agreement to be executed the day and
year
first set forth above.
Organic
To Go Food Corporation
Name:
Title:
Xxxxx
Fargo Bank, National Association, as Escrow Agent
Name:
Title:
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