Exhibit 10.3 - Escrow Agreement
FUNDS ESCROW AGREEMENT
----------------------
This Agreement is dated as of the ____ day of March, 2009 among
AirtimeDSL, a Nevada corporation (the "Company"), Whalehaven Capital
Fund Limited ("Subscriber"), and Grushko & Xxxxxxx, P.C. (the "Escrow
Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Subscriber have entered into a Subscription
Agreement calling for the sale by the Company to the Subscriber of
Notes and Warrants for an aggregate purchase price of up to $400,000 in
the amounts set forth on Schedule A hereto; and
WHEREAS, the parties hereto require the Company to deliver the Notes
and Warrants against payment therefor, with such Notes, Warrants and
the Escrowed Funds to be delivered to the Escrow Agent, along with the
other documents, instruments and payments hereinafter described, 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:
o "Agreement" means this Agreement and all amendments made hereto
and thereto by written agreement between the parties;
o "Closing Date" shall have the meaning set forth in Section 1 of
the Subscription Agreement;
o "Escrowed Payment" means an aggregate cash payment of up to
$400,000 which is the Purchase Price;
o "Legal Fees" shall have the meaning set forth in Section 8 of the
Subscription Agreement;
o "Legal Opinion" means the original signed legal opinion referred
to in Section 6 of the Subscription Agreement;
o "Lockup Agreements" means the original Lockup Agreements in the
form of Exhibit F annexed to the Subscription Agreement, executed
by each of the persons and entities identified on Schedule 9(w) to
the Subscription Agreement;
o "Notes" shall have the meaning set forth in Section 2(a) of the
Subscription Agreement;
o "Principal Amount" shall mean up to $480,000;
o "Subscription Agreement" means the Subscription Agreement (and the
exhibits and schedules thereto) entered into or to be entered into
by the Company and Subscriber in reference to the sale and
purchase of the Notes and Warrants;
o "Warrants" shall have the meaning set forth in Section 2(b) of the
Subscription Agreement in the amount calculated pursuant to
Section 2(b) of the Subscription Agreement;
o Collectively, Legal Opinion, Lockup Agreements, Notes, the
executed Subscription Agreement, and Warrants are referred to as
"Company Documents"; and
o Collectively, the Escrowed Payment and the Subscriber 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 supersedes 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 conflicts of laws principles that would result in the
application of the substantive laws of another jurisdiction. 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.
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. Company Deliveries. On or before the Closing Date, the Company
shall deliver the Company Documents to the Escrow Agent.
2.2. Subscriber Deliveries. On or before the Closing Date, each
Subscriber shall deliver to the Escrow Agent such Subscriber's portion
of 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 0xx Xxxxxx
Xxx Xxxx, XX 00000
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.
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 Legal Fees will be released to
the Subscriber's attorneys.
(b) All funds to be delivered to the Company shall be delivered
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. If a Closing does not take place during the time periods
set forth in Section 1 of the Subscription Agreement, the Escrow Agent
will promptly return the applicable Company Documents to the Company
and return the Subscriber Documents to the Subscriber.
3.3. 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.
(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, 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:
(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:
AirtimeDSL
Attn: Xxxxxx X. Xxxxxx, CEO
0000 X. Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
facsimile: ( 561 )852 -2322
With a copy by fax only to (which copy shall not constitute notice):
Tag Industries, Inc.
000 XX 0xx Xxxxxx #000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, CEO
Facsimile: (000) 000-0000
With a copy by fax only to:
Xxxxxx & Xxxxxx LLP
Attn: Xxxxxx X. Xxxxxxx, Esq.
000 Xxxxx 0 Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
facsimile: (000) 000-0000
(b) If to the Subscriber, to:
Whalehaven Capital Fund Limited
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, X.X. 00000
facsimile: (000) 000-0000
With a copy by facsimile only to:
Grushko & Xxxxxxx, P.C.
Attn: Xxxxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
facsimile: (000) 000-0000
(c) If to the Escrow Agent, to:
Grushko & Xxxxxxx, P.C.
Attn: Xxxxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
facsimile: (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, each Subscriber shall be entitled to receive its pro rata
portion of any accrued interest thereon, but only if the Escrow Agent
receives from such 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.
5.7. Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
AIRTIMEDSL
the "Company"
By:_______________________________________
"SUBSCRIBER"
_________________________________________
WHALEHAVEN CAPITAL FUND LIMITED
ESCROW AGENT:
______________________________________
GRUSHKO & XXXXXXX, P.C.
