EXHIBIT 10.1
FORM OF AMENDED AND RESTATED ESCROW AGREEMENT
This AMENDED AND RESTATED ESCROW AGREEMENT (this "AGREEMENT") made as
of the 30th day of June, 2005, by and among XStream Beverage Network, Inc.
("XSTREAM" or "ISSUER"), _______ (the "PLACEMENT AGENT"), whose addresses and
other information appear on the Information Sheet (as defined herein) attached
to this Agreement, and American Stock Transfer & Trust Company, 00 Xxxxxx Xxxx
Xxxxx, Xxx Xxxx, XX 00000 (the "ESCROW AGENT") shall amend in its entirety the
Escrow Agreement previously entered into between the above named parties, dated
April 27, 2005.
WITNESSETH:
WHEREAS, the Issuer proposes to sell up to $4,000,000 (the "OFFERING
AMOUNT"), subject to an over-allotment option of up to an additional $600,000 of
Units, each Unit consisting of: (i) a $100,000 12% Convertible Promissory Note;
(ii) 100,000 warrants to purchase shares of the Issuer's Common Stock; and (iii)
10,000 shares of the Issuer's Common Stock (the "SECURITIES") to investors (the
subscribers of the Securities pursuant to this offering are hereinafter referred
to as "INVESTORS"), in a private offering to accredited investors on a "best
efforts" basis through the Placement Agent (the "OFFERING");
WHEREAS, the Issuer and the Placement Agent propose to establish an
escrow account (the "ESCROW Account"), to which subscription monies which are
received by the Escrow Agent from the Placement Agent in connection with such
private offering are to be credited, and the Escrow Agent is willing to
establish the Escrow Account on the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Escrow Agent has agreed to establish a special bank
account at X.X. XXXXXX XXXXX BANK (the "BANK") into which the subscription
monies, which are received by the Escrow Agent from the Placement Agent and
credited to the Escrow Account, are to be deposited.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise defined in
this Agreement shall have the meaning set forth for such term on the information
sheet which is attached to this Agreement as Exhibit A and is incorporated by
reference herein and made a part hereof (the "INFORMATION SHEET").
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank account at the
branch of Bank selected by the Escrow Agent, and bearing the designation set
forth on the Information Sheet (heretofore defined as the "BANK ACCOUNT"). The
purpose of the Bank Account is for (a) the deposit of all subscription monies
(checks or wire transfers) which are received by the Placement Agent from
prospective purchasers of the Securities and are delivered by the Placement
Agent to the Escrow Agent, (b) the holding of amounts of subscription monies
which are collected through the banking system and (c) the disbursement of
collected funds, all as described herein.
2.2 On or before the date of the initial deposit in the Bank Account pursuant to
this Agreement, the Placement Agent shall notify the Escrow Agent in writing of
the date of the commencement of the Offering (the "Effective Date"), and the
Escrow Agent shall not be required to accept any amounts for credit to the
Escrow Account or for deposit in the Bank Account prior to its receipt of such
notification.
2.3 The "Offering Period," which shall be deemed to commence on the Effective
Date, shall consist of the number of calendar days or business days set forth on
the Information Sheet. The Offering Period shall be extended at the mutual
discretion of the Issuer and the Placement Agent (an "EXTENSION PERIOD") only if
the Escrow Agent shall have received written notice thereof prior to the
expiration of the Offering Period. The Extension Period, which shall be deemed
to commence on the next calendar day following the expiration of the Offering
Period, shall consist of the number of calendar days or business days set forth
on the Information Sheet. The last day of the Offering Period, or the last day
of the Extension Period (if the Escrow Agent has received written notice thereof
as herein above provided), is referred to herein as the "Termination Date".
Except as provided in Section 4.3 hereof, after the Termination Date, the
Placement Agent shall not deposit, and the Escrow Agent shall not accept, any
additional amounts representing payments by prospective purchasers.
3. Deposits to the Bank Account.
3.1 The Placement Agent shall promptly deliver to the Escrow Agent all monies
which it receives from prospective purchasers of the Securities, which monies
shall be in the form of checks or wire transfers. Upon the Escrow Agent's
receipt of such monies, they shall be credited to the Escrow Account. All checks
delivered to the Escrow Agent shall be made payable to "American Stock Transfer
& Trust Company - XStream Beverage Network, Inc. Escrow Account." Any check
payable other than to the Escrow Agent as required hereby shall be returned to
the prospective purchaser, or if the Escrow Agent has insufficient information
to do so, then to the Placement Agent (together with any Subscription
Information, as defined below or other documents delivered therewith) by noon of
the next business day following receipt of such check by the Escrow Agent, and
such check shall be deemed not to have been delivered to the Escrow Agent
pursuant to the terms of this Agreement.
2
3.2 Promptly after receiving subscription monies as described in Section 3.1,
the Escrow Agent shall deposit the same into the Bank Account. Amounts of monies
so deposited are hereinafter referred to as "Escrow Amounts". The Escrow Agent
shall cause the Bank to process all Escrow Amounts for collection through the
banking system. Simultaneously with each deposit to the Escrow Account, the
Placement Agent (or the Issuer, if such deposit is made by the Issuer) shall
inform the Escrow Agent in writing of the name and address of the prospective
purchaser, the amount of Securities subscribed for by such purchase, and the
aggregate dollar amount of such subscription (collectively, the "SUBSCRIPTION
INFORMATION").
3.3 The Escrow Agent shall not be required to accept for credit to the Escrow
Account or for deposit into the Bank Account checks which are not accompanied by
the appropriate Subscription Information. Wire transfers representing payments
by prospective purchasers shall not be deemed deposited in the Escrow Account
until the Escrow Agent has received in writing the Subscription Information
required with respect to such payments.
3.4 The Escrow Agent shall not be required to accept in the Escrow Account any
amounts representing payments by prospective purchasers, whether by check or
wire, except during the Escrow Agent's regular business hours.
3.5 Only those Escrow Amounts, which have been deposited in the Bank Account and
which have cleared the banking system and have been collected by the Escrow
Agent, are herein referred to as the "Fund."
3.6 If at any time prior to the close of regular banking hours on the
Termination Date, the Fund equals or exceeds the Minimum Offering Amount (as
defined below), the Escrow Agent shall thereafter promptly give written notice
to the Issuer, the Placement Agent, Cogent Capital Corp. ("COGENT") and
Investors Bank & Trust Company ("IBTC") confirming that the Fund is at least
equal to the Minimum Offering Amount; provided that such notice shall be given
to each of Cogent and IBTC at the following addresses: Cogent Capital Corp.,
Attn: Xxxx Xxxxxxx, 00000 Xxxxx 0000 Xxxx, Xxxxx, XX 00000; Investors Bank &
Trust Company, Attn: Xxxxxxxxxxx Xxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxxxxx, XX
00000.. The disbursement of the Fund pursuant to Section 4.2 below shall be
subject to the condition that the Fund equal or exceed the Minimum Offering
Amount (the "FUNDING CONDITION").
3.7 If the Offering is terminated before the Termination Date, the Escrow Agent
shall refund any portion of the Fund prior to disbursement of the Fund in
accordance with Article 4 hereof upon instructions in writing signed by both the
Issuer and the Placement Agent.
3
4. Disbursement from the Bank Account.
4.1 Subject to Section 4.3 below, if by the close of regular banking hours on
the Termination Date the Escrow Agent determines that the amount in the Fund is
less than $1,300,000 ("MINIMUM OFFERING AMOUNT"), as indicated by the
Subscription Information submitted to the Escrow Agent, then in either such
case, the Escrow Agent shall promptly refund to each prospective purchaser the
amount of payment received from such purchaser which is then held in the Fund or
which thereafter clears the banking system, without interest thereon or
deduction therefrom, by drawing checks on the Bank Account for the amounts of
such payments and transmitting them to the purchasers. In such event, the Escrow
Agent shall promptly notify the Issuer and the Placement Agent of its
distribution of the Fund.
4.2 Provided the Funding Condition has been satisfied, but subject to Section
4.3 below, if at any time or on multiple occasions up to the close of regular
banking hours on the Termination Date, the Escrow Agent has received notice from
the law firm of Ellenoff Xxxxxxxx & Schole LLP ("EGS") and from an officer of
Issuer that all conditions for release of funds and the issuance of the
Securities have been met for closing (and, with respect to the first closing,
the Escrow Agent determines that the amount in the Fund represents the sale of
the minimum amount as described in Exhibit A), the Escrow Agent shall promptly
notify the Issuer and the Placement Agent of such fact in writing. The Escrow
Agent shall promptly disburse the Fund as follows: (i) the first $300,000
thereof shall be paid by wire transfer of immediately available funds to the
account of Cogent in accordance with the following wire instructions: Cogent
Capital Corp. account number 0000000 at Investors Bank & Trust Company (ABA no.
000000000; Short Name: Investors Xx Xxx; ABA Lookup: Investors Bank & Trust Co.,
Boston, MA; Beneficiary's Bank: 569530395; Beneficiary: 4735938; Reference for
Beneficiary: Cogent Capital Corp. in accordance with instructions in writing
signed by each of the Issuer, the Placement Agent and EGS as to such
disbursement of the Fund, and (ii) thereafter the balance of the Fund shall be
disbursed by drawing checks on the Bank Account in accordance with instructions
in writing signed by each of the Issuer, the Placement Agent and EGS as to the
disbursement of the Fund, promptly after it receives such instructions.
4.3 This Section 4.3 applies only if a Collection Period has been provided for
by the appropriate indication on the Information Sheet. If the Escrow Agent or
the Placement Agent has on hand at the close of business on the Termination Date
any uncollected amounts which when added to the Fund would raise the amount in
the Fund to at least the Minimum Offering Amount and result in the Fund
representing the sale of at least the Minimum Offering Amount, the Collection
Period (consisting of the number of business days set forth on the Information
Sheet) shall be utilized to allow such uncollected amounts to clear the banking
system. During the Collection Period, the Placement Agent (and the Issuer) shall
not deposit, and the Escrow Agent shall not accept, any additional amounts;
provided, however, that such amounts as were received by the Placement Agent (or
the Issuer) by the close of business on the Termination Date may be deposited
with the Escrow Agent by noon of the next business day following the Termination
Date. If at the close of business on the last day of the Collection Period an
amount sufficient to raise the amount in the Fund to represent the sale of the
Minimum Offering Amount shall not have cleared the banking system, the Escrow
4
Agent shall promptly notify the Issuer and the Placement Agent in writing of
such fact and shall promptly return all amounts then in the Fund, and any
amounts which thereafter clear the banking system, to the prospective purchasers
as provided in Section 4.2 hereof.
4.4 Upon disbursement of the Fund pursuant to the terms of this Article 4, the
Escrow Agent shall be relieved of further obligations and released from all
liability under this Agreement. It is expressly agreed and understood that in no
event shall the aggregate amount of payments made by the Escrow Agent exceed the
amount of the Fund.
5. Rights, Duties and Responsibilities of Escrow Agent. It is understood and
agreed that the duties of the Escrow Agent are purely ministerial in nature, and
that:
5.1 The Escrow Agent shall notify the Placement Agent, on a daily basis, of the
Escrow Amounts which have been deposited in the Bank Account and of the amounts,
constituting the Fund, which have cleared the banking system and have been
collected by the Escrow Agent.
5.2 The Escrow Agent shall not be responsible for or be required to enforce any
of the terms or conditions of the selling agreement or any other agreement
between the Placement Agent and the Issuer nor shall the Escrow Agent be
responsible for the performance by the Placement Agent or the Issuer of their
respective obligations under this Agreement.
5.3 The Escrow Agent shall not be required to accept from the Placement Agent
(or the Issuer) any Subscription Information pertaining to prospective
purchasers unless such Subscription Information is accompanied by checks or wire
transfers meeting the requirements of Section 3.1, nor shall the Escrow Agent be
required to keep records of any information with respect to payments deposited
by the Placement Agent (or the Issuer) except as to the amount of such payments;
however, the Escrow Agent shall notify the Placement Agent within a reasonable
time of any discrepancy between the amount set forth in any Subscription
Information and the amount delivered to the Escrow Agent therewith. Such amount
need not be accepted for deposit in the Escrow Account until such discrepancy
has been resolved.
5.4 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Placement Agent any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.5 If the Escrow Agent is uncertain as to its duties or rights hereunder or
shall receive instructions with respect to the Bank Account, the Escrow Amounts
or the Fund which, in its sole determination, are in conflict either with other
instructions received by it or with any provision of this Agreement, it shall be
entitled to hold the Escrow Amounts, the Fund, or a portion thereof, in the Bank
Account pending the resolution of such uncertainty to the Escrow Agent's sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise.
5
5.6 The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct or gross negligence. The Escrow
Agent shall be entitled to consult with counsel of its own choosing and shall
not be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.
5.7 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Escrow Amounts, the Fund or
any part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the Fund or any part thereof.
6. Amendment; Resignation or Removal of Escrow Agent. This Agreement may be
altered or amended only with the written consent of the Issuer, the Placement
Agent and the Escrow Agent. The Escrow Agent may resign and be discharged from
its duties hereunder at any time by giving written notice of such resignation to
the Issuer and the Placement Agent specifying a date when such resignation shall
take effect and upon delivery of the Fund to the successor escrow agent
designated by the Issuer or the Placement Agent in writing. Such successor
Escrow Agent shall become the Escrow Agent hereunder upon the resignation date
specified in such notice. If the Issuer fails to designate a successor Escrow
Agent within thirty (30) days after such notice, then the resigning Escrow Agent
shall promptly refund the amount in the Fund to each prospective purchaser,
without interest thereon or deduction. The Escrow Agent shall continue to serve
until its successor accepts the escrow and receives the Fund. The Issuer shall
have the right at any time to remove the Escrow Agent and substitute a new
escrow agent by giving notice thereof to the Escrow Agent then acting. Upon its
resignation and delivery of the Fund as set forth in this Section 6, the Escrow
Agent shall be discharged of and from any and all further obligations arising in
connection with the escrow contemplated by this Agreement. Without limiting the
provisions of Section 8 hereof, the resigning Escrow Agent shall be entitled to
be reimbursed by the Issuer and the Placement Agent for any expenses incurred in
connection with its resignation, transfer of the Fund to a successor escrow
agent or distribution of the Fund pursuant to this Section 6.
7. Representations and Warranties. The Issuer and the Placement Agent hereby
severally represent and warrant to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective purchasers have,
or shall have, any lien, claim or security interest in the Escrow Amounts or the
Fund or any part thereof.
7.2 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 Amounts or the Fund or any part thereof.
6
7.3 The Subscription Information submitted with each deposit shall, at the time
of submission and at the time of the disbursement of the Fund, be deemed a
representation and warranty that such deposit represents a bona fide payment by
the purchaser described therein for the amount of Securities set forth in such
Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of the date
hereof, and will be, at the time of any disbursement of the Fund, true and
correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow Agent
Fees set forth on the Information Sheet, payable as and when stated therein. In
addition, the Issuer agrees to reimburse the Escrow Agent for any reasonable
expenses incurred in connection with this Agreement, including, but not limited
to, reasonable counsel fees.
9. Indemnification and Contribution.
9.1 The Issuer and the Placement Agent (collectively referred to as the
"Indemnitors") jointly and severally agree to indemnify the Escrow Agent and its
officers, directors, employees, agents and shareholders (collectively referred
to as the "Indemnitees") against, and hold them harmless of and from, any and
all loss, liability, cost, damage and expense, including without limitation,
reasonable counsel fees, which the Indemnitees may suffer or incur by reason of
any action, claim or proceeding brought against the Indemnitees arising out of
or relating in any way to this Agreement or any transaction to which this
Agreement relates, unless such action, claim or proceeding is the result of the
willful misconduct or gross negligence of the Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is applicable, but for
any reason is held to be unavailable, the Indemnitors shall contribute such
amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
the aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of, any action, claim or
proceeding arising out of or relating in any way to any actions or omissions of
the Indemnitors.
9.3 The provisions of this Article 9 shall survive any termination of this
Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent
or otherwise.
10. Termination of Agreement. This Agreement shall terminate on the final
disposition of the Fund pursuant to Section 4, provided that the rights of the
Escrow Agent and the obligations of the other parties hereto under Section 9
shall survive the termination hereof and the resignation or removal of the
Escrow Agent.
11. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
regard to the conflicts of laws principles thereof, and shall be binding, upon
the parties hereto and their respective successors and assigns; provided,
7
however, that any assignment or transfer by any party of its rights under this
Agreement or with respect to the Escrow Amounts or the Fund shall be void as
against the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
12. Notices. All notices required to be given in connection with this Agreement
shall be sent by registered or certified mail, return receipt requested, or by
hand delivery with receipt acknowledged, or by the Express Mail service offered
by the United States Postal Service, and addressed, if to the Issuer or the
Placement Agent, at their respective addresses set forth on the Information
Sheet, and if to the Escrow Agent, at its address set forth above, to the
attention of the Trust Department.
13. Severability. If any provision of this Agreement or the application thereof
to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
14. Execution in Several Counterparts. This Agreement may be executed in several
counterparts or by separate instruments and by facsimile transmission and all of
such counterparts and instruments shall constitute one agreement, binding on all
of the parties hereto.
15. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings (written or oral) of the parties in
connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: /s/
--------------------------
Name:
Title:
XSTREAM BEVERAGE NETWORK, INC.
By: /s/
--------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: CEO
PLACEMENT AGENT
By: /s/
--------------------------
Name:
Title:
8
