FUNDS ESCROW AGREEMENT
This
Agreement is dated as of the 8th day of January, 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 for an Aggregate
Purchase Price of up to $520,000; and
WHEREAS,
the parties hereto require the Company to deliver the Notes against payment
therefor, with such Notes 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;
§
“Closing Date” shall have the meaning set forth in Section 1(b) 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;
§
"Escrowed Payment" means an aggregate cash payment of up to
$430,000;
§
“Guaranty” shall have the meaning set forth in Section 3 of the Subscription
Agreement;
§
“Legal Fees” shall have the meaning set forth in Section 8(c) of the
Subscription Agreement;
1
§
“Legal Opinion” shall have the meaning set forth in Section 6 of the
Subscription Agreement;
§
“Note” shall have the meaning set forth in Section 1 of the Subscription
Agreement;
§
“Note Principal” shall mean up to $520,000;
§
“Purchase Price” shall mean up to $430,000;
§
“Security Agreement” shall have the meaning set forth in Section 3 of the
Subscription 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 Notes;
§
Collectively, the executed Subscription Agreement, Notes and Legal Opinion
are
referred to as "Company Documents"; and
§
Collectively, the Escrowed Payment and the executed Subscription 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.
2
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.
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1.
Closing
Company Deliveries
. On or
about the Closing Date, the Company shall deliver to the Escrow Agent the
executed and signed Company Documents.
2.2.
Subscriber
Deliveries.
On or
before the Closing Date, Subscriber shall deliver to the Escrow Agent the
Purchase Price, and the executed Subscription Agreement. The Escrowed Payment
will be delivered pursuant to the following wire transfer
instructions:
Citibank,
N.A.
0000
0
xx
Xxxxxx
Xxx
Xxxx,
XX 00000, XXX
ABA
Number: 0210-00089
For
Credit to: Grushko & Xxxxxxx, XXXX Trust Account
Account
Number: 00000000
2.3.
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.
2.4.
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.
3
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:
(a)
On the Closing Date, the Escrow Agent will simultaneously release the
Company Documents to the Subscriber and release the Subscriber Documents
to the
Company except that the Due Diligence Fee will be released to the Due Diligence
Fee Recipient and the Legal Fees will be released to the Subscriber’s
attorneys.
(b)
All funds to be delivered to the Company shall be delivered on the
Closing Date pursuant to the wire instructions to be provided in writing
by the
Company to the Escrow Agent.
(c)
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.
(d)
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.
4
(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:
5
(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.
(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
6
|
(b)
|
If
to the Subscriber, to: the addresses and fax numbers listed on
Schedule A
hereto.
|
|
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.
7
5.7.
Agreement
. Each
of the undersigned states that he has read the foregoing Funds Escrow Agreement
and understands and agrees to it.
“SUBSCRIBERS”
|
/s/
|
/s/
|
|
XXXXXXX
ASSOCIATES
|
CMS
CAPITAL
|
|
|
|
|
/s/
|
|
|
MAMONA
CAPITAL
|
|
|
|
|
|
|
ESCROW
AGENT:
|
|
|
|
|
|
/s/
|
|
|
GRUSHKO
& XXXXXXX, P.C.
|
8
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
|
SUBSCRIBER
|
NOTE PRINCIPAL
|
ESCROWED PAYMENT
|
|||||
|
XXXXXXX
ASSOCIATES
|
$
|
362,790
|
$
|
300,000
|
|||
|
CMS
CAPITAL
0000
Xxx Xxxx Xxxx. #000
Xxxxxxxx
Xxxx, XX 00000
Fax
(000) 000-0000
|
$
|
120,930
|
$
|
100,000
|
|||
|
MOMONA
CAPITAL LLC
000
Xxxxxxx Xxxx Xxxxx, 0 xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax
(000) 000-0000
|
$
|
36,280
|
$
|
30,000
|
|||
|
|
|
|
|||||
|
TOTALS
|
$
|
520,000.00
|
$
|
430,000.00
|
|||
9
