Exhibit 10.10
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into as of
April 8, 2005 by and among Compound Natural Foods, Inc., a Nevada
corporation (the "Company"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxxx
Xxxxxxx ("Duxbury") (Xxxxxx and Duxbury collectively, the "Selling
Shareholders"), Joey Canyon ("Canyon"), Xxxxxxx Xxxxxxxx
("Xxxxxxxx"), Xxxx Xxxxxxx ("Xxxxxxx"), Pure Nature, LLC, a Colorado
limited liability company ("Pure Nature"), and Xxxxx Xxxxxxx, Esq.,
Legal & Compliance, LLC, 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx
Xxxxx, XX 00000 (the "Escrow Agent"), which term shall also include
any successor escrow agent appointed in accordance with Section 6(b)
of this Agreement). Each of the person identified above are referred to
herein also individually as a "Party" and, collectively, as the
"Parties".
Recitals:
A. Each Party is a party to one or more of the following
integrally related legal instruments as of even date hereof, the forms of
which are attached hereto as consecutively indexed Exhibits "A" through
"F," respectively:
1. Letter of Intent dated March 18, 2005, as amended March
31,
2005;
2. Stock Purchase and Sale Agreement among Canyon, Xxxxxx,
Duxbury and the Company;
3. Stock Purchase and Sale Agreement between Xxxxxxxx and
Xxxxxxx;
4. Note Purchase and Proceeds Use Agreement between
Xxxxxxxx and
Canyon;
5. Convertible Promissory Note issued by Canyon; and
6. Pledge and Security Agreement granted by Canyon to Xxxxxxxx
(each
such document, along with this Agreement, referred to
individually herein as a "Transaction Document" and
collectively, as the "Transaction Documents").
B. The Parties acknowledge that the effectiveness of any
one of the Transaction Documents and the transaction or/and subject
matter attributable to each is expressly contingent upon the
concurrent execution, delivery and performance by each other
applicable Party(ies) of his, its Dr their respective and/or
collective duties under such relevant other of the Transaction
Documents.
C. The Parties desire that Xxxxxxx, in her capacity as Escrow
Agent, preside over, safeguard, administer, manage and disburse the
Transaction Documents and their subject matter in accordance with this
Agreement, which the Parties intend be congruent with the mechanics
contained in each of the Transaction Documents.
NOW THEREFORE, in consideration of the mutual promises and
conditions set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the Parties, the
Parties agree:
1. Appointment of Escrow Agent. The Parties desire that
Escrow Agent be appointed to act as escrow agent hereunder in respect
of the Transaction Documents and the
transactions the subject matter of each, and Escrow Agent hereby agrees to act
as such.
2. Delivery into Escrow. The Parties shall concurrently with their
execution and delivery of this Agreement and each Transaction Document as to
which it is a party, deliver into escrow with Escrow Agent, each such
Transaction Document, as well as the principal subject matter of each
(the "Escrow").
3. Fights and Obligations Under Escrow. The Escrow shall exist
to safeguard the Transaction Documents and the principal the subject
matter thereof and shall be administered in accordance with the specific
and general intent set forth in the Transaction Documents.
4. Safeguarding, Administration and Distribution of and from
Escrow.
(a) Safeguarding. Escrow Agent shall establish the Escrow by
receiving into it the Transaction Documents and, as applicable, the
monies, securities and other property referred to in each of the
applicable Transaction Documents. By way of example and not
limitation, Escrow Agent his already received into Escrow, funds of
Xxxxxxxx in the amount of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS
($400,000.00) pursuant to that certain Letter of Intent among the
Parties dated March 18, 2005, as amended, and shall have as of the
date hereof received. into Escrow the Transaction Documents.
(b) Administration. Escrow Agent shall administer the principal
of the Escrow in accordance with the provisions of the applicable
Transaction Documents. By way of example, and not limitation, Escrow
Agent shall administer the Control Securities (as that term is defined
in, among other of the Transaction Documents, the Stock Purchase and
Sale Agreement among Canyon, Xxxxxx, Duxbury and the Company) in a
manner compliant with safeguarding said securities for the benefit
of Canyon, yet in a manner preserving the rights of Xxxxxxxx therein
pursuant to the terms of the Stock Pledge and Escrow Agreement in respect
thereof.
(c) Disbursement. Escrow Agent shall disburse assets
constituting the Escrow in accordance with the Transaction Documents.
For example, as of the date hereof and assuming the proper execution
and delivery of all of the Transaction Documents by the Parties and
the Control Securities to Escrow by Xxxxxx and Duxbury, in accordance with
the provisions of the Stock Purchase and Sale Agreement among Canyon,
Xxxxxx, Duxbury and the Company and the Note Purchase and Proceeds
Use Agreement among Xxxxxxxx and Canyon, Escrow Agent shall disburse
from Escrow the aggregate amount of $260,913 to Xxxxxx and
Duxbury, $208,72-0.40 as to Xxxxxx and $52,182.60 as to Duxbury in the
manner previously specified by each in their emails to Escrow Agent of March
19, 2005 and March 21, 2005, respectively.
(d) Claims Process. Notwithstanding Section 4(a), in the event a
Party to this Escrow Agreement (a "Claiming Person") asserts a right
to the Escrow, such Claiming Person shall execute and deliver to the
Escrow Agent and the other Parties hereto (each a "Non-Claiming
Person''') a written notice to such effect (a "Notice of Claim") and
the right being asserted in a Notice Of Claim (hereinafter referred to
as a "Claim") setting forth the nature and details of such Claim and
the nature of the element of the Escrow being sought (or if not
ascertainable, a reasonable maximum amount thereof) and instructing
the Escrow Agent to deliver that element out of Escrow as shall
correspond to the Claim of such Claiming Person. If within 30 days
after receipt of any such Notice of Claim by the Escrow Agent pursuant
to this Section 4(b), no NonClaiming Person notifies the Escrow Agent
that such Claim, or the element sought in connection therewiitlh, is
disputed, the Escrow Agent shall deliver to such Claiming Person the
subject matter of such Claim as set forth in such Notice of Claim. If
a Non-Claiming Person does notify the Escrow Agent that there is a
dispute in respect of the subject matter of a Notice of Claim, the
Escrow Agent shall not deliver the sought subject matter to such
Claiming Person until such dispute has been settled as provided in
Section 7 and notice of such settlement and the requirements of such
settlement have been discharged and bona fide evidence thereof has
been delivered to the Escrow Agent.
5. Termination. This Agreement may be terminated at any time and
upon the receipt by the Escrow Agent of 10 days' prior written notice
of termination executed by all Parties directing the distribution of
all items then held by the Escrow Agent under and pursuant to this
Agreement. This Agreement shall automatically terminate if and when
all items held in escrow shall have been distributed by the Escrow
Agent in accordance with the terms of this Agreement or the underlying
Transaction Document. Notwithstanding any termination of this Agreement,
the provisions of Section 6(c) and 6(d) shall survive such termination
and remain in full force and effect.
6. Escrow Agent.
(a) Obligations. The obligations of the Escrow Agent hereunder are
those specifically provided in this Agreement consistent with the
applicable provisions of the Transaction Documents and no other, and the
Escrow Agent shall have no liability under, or duty to inquire into the
terms and provisions of, any other agreement between or among the
parties. The duties of the Escrow Agent are purely ministerial in nature,
and it shall not incur any liability hereunder whatsoever, except for
willful misconduct or, gross negligence. The Escrow Agent may consult with
counsel of its choice and shall not be liable for any action taken or not
taken or suffered by it in accordance with the advice of such counsel. The
Escrow Agent shall have no responsibility for the genuineness or validity
of any document or other item deposited with it or of any signature
thereon and shall not have any liability for acting in accordance with
any written instructions or certificates given to it hereunder and
believed by it to be signed by the proper parties.
(b) Resignation and Removal. The Escrow Agent may resign (and be
discharged) from its duties hereunder at any time by giving at least 10
days' written notice of such resignation to all Parties specifying the date
upon which such resignation shall take effect. Upon receipt of such written
notice of resignation, a successor escrow agent shall be appointed by
the Parties, such successor escrow agent to become the Escrow Agent
hereunder on the resignation date specified in such notice. If an
instrument of acceptance by a successor escrow agent shall not have
been delivered to the Escrow Agent within 10 days after the giving of such
written notice of resignation, the resigning escrow agent may petition
any court of competent jurisdiction for the appointment of a successor
escrow agent. The Parties may at any time substitute a new escrow agent by
giving 10 days' written notice thereof to the current escrow agent and
paying all fees and expenses of such current escrow agent.
(c) Indemnification. The Parties, jointly and severally, shall
hold the Escrow Agent harmless from, and indemnify the Escrow Agent
against, any loss, liability, expense (including reasonable
attorneys' fees and expenses), claim or demand arising out of or
in connection with the performance of its obligations in
accordance with the provisions of this Agreement, except for any
claim or demand arising out of the gross negligence or willful misconduct
of the Escrow Agent. The indemnities contained in this Section 6(c)
shall survive the resignation or substitution of the Escrow Agent and the
termination of this Agreement.
(d) Fees and Expenses. The Escrow Agent shall receive
reimbursement for out-of-pocket expenses, and in respect of any material
ongoing involvement in the administration of the Escrow, shall be entitled
to be compensated at her normal fee. Any amount owing Escrow Agent hereunder
shall be paid upon within 10 days from written request made by the Escrow
Agent to Canyon or the Company.
7. Disputes. If any dispute should arise with respect to
ownership or right of possession of any instrument or asset in Escrow, and
in respect of an alleged right of disbursement therefrom, the Escrow Agent
is authorized and directed to retain in its possession, without liability
to anyone, all or any part of the Escrow until such dispute shall have
been settled either by collective agreement of the Parties concerned or by
the final order, decree or judgment of a court of competent jurisdiction in
the United States of America (the time for appeal having expired with
no appeal having been taken) in a proceeding to which the applicable
Parties to this Agreement are parties, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such
proceedings.
8. Miscellaneous.
(a) Recitals. The Recitals hereinabove set forth are true and
correct in all respects and are incorporated herein.
(b) Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified; (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not,
then on the next Business Day; (c) five (5) Business Days after having been
sent by registered or certified mail, return receipt requested, postage
prepaid; or (d) one (1) Business Day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with
written verification of receipt. For purposes hereof, "Business Day"
means any day that is not a Saturday, a Sunday or other day on which banks
are required or authorized by law to be closed in the State of Florida.
All communications shall be sent in each case to the respective address
specified below:
Escrow Agent: Xxxxx Xxxxxxx, Esq.
Legal and Compliance, LLC
000 Xxxxxxxx Xxxxxx, Xxx. 000
Xxxx Xxxx Xxxxx, XX 00000
(000) 000-0000 (facsimile)
Xxxxxx: Xxxxxx X. Xxxxxx
000 X. Xxxxxxxxx Xxxx., Xxx. 000
Xxxxxxx Xxxxx, XX 00000
(000) 000-0000
Duxbury: Xxxxxxx Xxxxxxx
00 Xxxxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Canyon: Joey Canyon
9312. Xxxxxxxx Xx.
Xxxx Xxxx, XX 00000
Xxxxxxx: Xxxx Xxxxxxx
0000 Xxxxxxxxx Xx.
Xxxxxxx Xxxx, XX 00000
Xxxxxxxx: Xxxxxxx Xxxxxxxx
000 X. Xxxxxx Xx.
Xxxxxx, XX 00000
or at such other address as a Party may designate by ten (10) days advance
written notice to the other Parties hereto.
(c) Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute
but one agreement.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable
to contracts made and to be performed therein.
(e) Benefits Assignment. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. Anything
contained herein to the contrary notwithstanding, this Agreement shall not be
assignable by any party without the written consent of the other parties.
(g) Amendment, This Agreement may not be amended except by an
instrument in writing signed the Parties and the Escrow Agent.
(h) Headings. The headings contained in this Agreement are for
reference purposes only and. shall not control or affect in any way the
meaning or interpretation of this Agreement.
(i) Construction. The parties hereto agree that the terms and
language of this Agreement were the result of negotiations among the
parties, and that there shall be no presumption that any ambiguities in
this Agreement shall be resolved against any party. Any controversy
regarding the construction or interpretation of this Agreement shall be
decided neutrally, in light of its purposes, and without regard to events of
authorship or negotiation.
[The remainder of this page intentionally left blank. Signature page
follows.]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered on the date first above written.
ESCROW:
/s/ Xxxxx X. Xxxxxxx
XXXXXX:
/s/ Xxxxxx X. Xxxxxx
DUXBURY:
/s/ Xxxxxxx Xxxxxxx
CANYON:
/s/ Joey Canyon
XXXXXXXX:
/s/ Xxxxxxx Xxxxxxxx
XXXXXXX:
/s/Xxxx Xxxxxxx
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