ESCROW AGREEMENT

 

This Escrow Agreement (this “Agreement”) is entered into as of July 12, 2012, by
and among BOLDFACE Group, Inc., a Nevada corporation (the “Parent”), Nicole
Ostoya, Robin Coe-Hutshing and Maria Torres (singly and collectively, the
“Company Shareholders”) and Gottbetter & Partners, LLP (the “Escrow Agent”).

 

WHEREAS, the Parent has entered into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”) with BOLDFACE Licensing + Branding, a
Nevada corporation (the “Company”), pursuant to which (i) a wholly-owned
subsidiary of the Parent will merge with and into the Company, with the Company
surviving the merger, (ii) the Company will become a wholly-owned subsidiary of
the Parent, and (iii) the Company Shareholders will receive shares of common
stock of the Parent (the “Merger Shares”);

 

WHEREAS, the Merger Agreement provides that 95% of the Merger Shares (the
“Initial Shares”) to be issued to such Company Shareholders shall be delivered
to such Company Shareholders and 5% of the Merger Shares (the “Escrow Shares”)
to be issued to such Company Shareholders shall be delivered to the Escrow Agent
to secure the indemnification obligations of the Company Shareholders as of the
Closing Date, as such term is defined in the Merger Agreement, to the Parent;
and

 

WHEREAS, the Merger Agreement provides for the execution of this Agreement and
the establishment of an escrow account and the parties hereto desire to
establish the terms and conditions pursuant to which such escrow account will be
established and maintained.

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1.          Escrow and Indemnification.

 

(a)          Escrow of Shares. Simultaneously with the execution of this
Agreement, the Parent shall cause to be issued and shall deposit with the Escrow
Agent certificates representing an aggregate number of shares of common stock of
the Parent, as determined pursuant to Section 1.7(b) of the Merger Agreement,
issued in the names of the Company Shareholders. The shares deposited with the
Escrow Agent pursuant to this Section 1(a) are referred to herein as the “Escrow
Shares.” The Escrow Shares shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any party hereto. The Escrow Agent agrees to hold the Escrow
Shares in an escrow account (the “Escrow Account”), subject to the terms and
conditions of this Agreement. The Company Shareholders have heretofore delivered
to the Escrow Agent (i) undated Medallion Guaranteed stock powers with respect
to the Escrow Shares, duly executed in blank in form and substance satisfactory
to the Escrow Agent; and (ii) undated stock transfer instructions addressed to
the Parent’s transfer agent authorizing the transfer of the Escrow Shares.

 

(b)          Indemnification. The Company Shareholders have agreed in Section
6.1 of the Merger Agreement to indemnify and hold harmless the Parent from and
against certain Damages (as defined in Section 6.1 of the Merger Agreement). The
Escrow Shares shall be (i) security for such indemnity obligation of the Company
Shareholders, subject to the limitations, and in the manner provided, in this
Agreement and the Merger Agreement and (ii) shall be the exclusive means for the
Parent to collect any Damages with respect to which the Parent is entitled to
indemnification under Article VI of the Merger Agreement.

 

 

 

 

(c)          Dividends, Etc. Any securities distributed in respect of or in
exchange for any of the Escrow Shares, whether by way of stock dividends, stock
splits or otherwise, shall be issued in the name of the Company Shareholders or
their respective nominee(s) and shall be delivered to the Escrow Agent, who
shall hold such securities in the Escrow Account. Such securities shall be
considered Escrow Shares for purposes hereof. The Company Shareholders shall
deliver to the Escrow Agent undated Medallion Guaranteed stock powers with
respect to any such additional Escrow Shares, duly executed in blank, and any
other documents reasonably requested by the Escrow Agent in connection herewith,
in form and substance and at a time satisfactory to the Escrow Agent. Any cash
dividends or property (other than securities) distributed in respect of the
Escrow Shares shall promptly be distributed by the Escrow Agent to the Company
Shareholders in accordance with Section 3(c) hereof.

 

(d)          Voting of Shares. Each Company Shareholder shall have the right, in
their sole discretion, to direct the Escrow Agent in writing as to the exercise
of any voting rights pertaining to the Escrow Shares issued in their respective
names, and the Escrow Agent shall comply with any such written instructions. In
the absence of such instructions, the Escrow Agent shall not vote any of the
Escrow Shares.

 

(e)          Transferability. The respective interests of the Company
Shareholders in the Escrow Shares shall not be assignable or transferable, other
than by operation of law. Notice of any such assignment or transfer by operation
of law shall be given to the Escrow Agent and the Parent, and no such assignment
or transfer shall be valid until such notice is given.

 

2.          Intentionally Omitted.

 

3.          Distribution of Escrow Shares.

 

(a)          The Escrow Agent shall distribute the Escrow Shares only in
accordance with (i) a written instrument delivered to the Escrow Agent that is
executed by both the Parent and the Company Shareholder whose Escrow Shares are
being distributed and that instructs the Escrow Agent as to the distribution of
some or all of the Escrow Shares, (ii) an order of a court of competent
jurisdiction, a copy of which is delivered to the Escrow Agent by either the
Parent or the Company Shareholders, that instructs the Escrow Agent as to the
distribution of some or all of the Escrow Shares, or (iii) the provisions of
Section 3(b) hereof.

 

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(b)          Within five business days after July 11, 2014 (the “Termination
Date”), the Escrow Agent shall distribute to the Company Shareholders all of the
Escrow Shares then held in escrow, registered in the names of the Company
Shareholders. Notwithstanding the foregoing, if the Parent has previously
delivered to the Escrow Agent a copy of a Claim Notice (as hereinafter defined)
and the Escrow Agent has not received written notice of the resolution of the
claim covered thereby, or if the Parent has previously delivered to the Escrow
Agent a copy of an Expected Claim Notice (as hereinafter defined) and the Escrow
Agent has not received written notice of the resolution of the anticipated claim
covered thereby, the Escrow Agent shall retain in escrow after the Termination
Date such number of Escrow Shares as have a Value (as defined in Section 4
below) equal to the Claimed Amount (as hereinafter defined) covered by such
Claim Notice or equal to the estimated amount of Damages set forth in such
Expected Claim Notice, as the case may be. Any Escrow Shares so retained in
escrow shall be distributed only in accordance with the terms of clauses (i) or
(ii) of Section 3(a) hereof. For purposes of this Agreement, a Claim Notice
means a written notification under the Merger Agreement given by the Parent to
the Company Shareholders which contains (i) a detailed description and the
amount (the “Claimed Amount”) of any Damages incurred or reasonably expected to
be incurred by the Parent, (ii) a statement that the Parent is entitled to
indemnification under Article 6 of the Merger Agreement for such Damages and a
reasonable detailed explanation of the basis therefor, and (iii) a demand for
payment (in the manner provided in Section 6.3 of the Merger Agreement) in the
amount of such Damages. For purposes of this Agreement, an Expected Claim Notice
means a notice delivered pursuant to the Merger Agreement by the Parent to a
Company Shareholder, before expiration of a representation or warranty, to the
effect that, as a result of a legal proceeding instituted by or written claim
made by a third party, the Parent reasonably expects to incur Damages as a
result of a breach of such representation or warranty.

 

(c)          Any distribution of all or a portion of the Escrow Shares (or cash
or other property pursuant to Section 2(c)) to the Company Shareholders shall be
made by delivery of stock certificates issued in the name of the Company
Shareholder (or cash or other property), covering such percentage of the Escrow
Shares (or cash or other property) being distributed as is calculated in
accordance with the percentages set forth opposite each such Company
Shareholder’s name on Attachment A attached hereto (which Attachment shall be
updated after the date hereof if the Parent deposits additional Escrow Shares in
the Escrow Account on behalf of additional Company Shareholders after the
Closing Date). Distributions to the Company Shareholder shall be made by mailing
stock certificates to such holders at their respective addresses shown on
Attachment A (or such other address as may be provided in writing to the Escrow
Agent by any such Company Shareholder). No fractional Escrow Shares shall be
distributed to Company Shareholders pursuant to this Agreement. Instead, the
number of shares that each Company Shareholder shall receive shall be rounded up
or down to the nearest whole number (provided that the Indemnification
Representative shall have the authority to effect such rounding in such a manner
that the total number of whole Escrow Shares to be distributed equals the number
of Escrow Shares then held in the Escrow Account).

 

4.          Valuation of Escrow Shares. For purposes of this Agreement, the
“Value” of any Escrow Shares shall be $0.25 per share (subject to subsequent
adjustment for stock splits, stock dividends, or similar events affecting the
Escrow Shares following the Merger), multiplied by the number of such Escrow
Shares.

 

5.          Fees and Expenses of Escrow Agent. The Parent shall pay the fees of
the Escrow Agent for the services to be rendered by the Escrow Agent hereunder.

 

6.          Limitation of Escrow Agent’s Liability.

 

(a)          The Escrow Agent shall incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other documents believed by it to be genuine
and duly authorized, nor for other action or inaction except its own willful
misconduct or gross negligence. The Escrow Agent shall not be responsible for
the validity or sufficiency of this Agreement. In all questions arising under
the Escrow Agreement, the Escrow Agent may rely on the advice of counsel, and
the Escrow Agent shall not be liable to anyone for anything done, omitted or
suffered in good faith by the Escrow Agent based on such advice. The Escrow
Agent shall not be required to take any action hereunder involving any expense
unless the payment of such expense is made or provided for in a manner
reasonably satisfactory to it. In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damages.

 

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(b)          The Parent agrees to indemnify the Escrow Agent for, and hold it
harmless against, any loss, liability or expense incurred without gross
negligence or willful misconduct on the part of Escrow Agent, arising out of or
in connection with its carrying out of its duties hereunder.

 

7.          Amounts Payable by Company Shareholders. The amounts payable by the
Company Shareholders under this Agreement (i.e., the indemnification obligations
pursuant to Section 6(b)) shall be payable solely as follows. The Escrow Agent
shall notify the Company Shareholder of any such amount payable by such Company
Shareholder as soon as it becomes aware that any such amount is payable, with a
copy of such notice to the Parent. On the sixth business day after the delivery
of such notice, the Escrow Agent shall sell such number of Escrow Shares (up to
the number of Escrow Shares then available in the Escrow Account), subject to
compliance with all applicable securities laws, as is necessary to raise such
amount, and shall be entitled to apply the proceeds of such sale in satisfaction
of such indemnification obligations of the Company Shareholders; provided that
if a Company Shareholder delivers to the Escrow Agent (with a copy to the
Parent), within five business days after delivery of such notice by the Company
Shareholder, a written notice contesting the legitimacy or reasonableness of
such amount as applied specifically to them, then the Escrow Agent shall not
sell any Escrow Shares issued in such Company Shareholder’s name to raise the
disputed portion of such claimed amount except in accordance with the terms of
clauses (i) or (ii) of Section 3(a).

 

8.          Termination. This Agreement shall terminate upon the distribution by
the Escrow Agent of all of the Escrow Shares in accordance with this Agreement;
provided that the provisions of Sections 6 shall survive such termination.

 

9.          Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered five business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, or one business day after it is
sent via a reputable nationwide overnight courier service.

 

If to the Parent:

 

BOLDFACE Group, Inc.

1309 Pico Blvd.

Suite #A

Santa Monica, CA 90405

Attn:  Nicole Ostoya, Chief Executive Officer

Facsimile:  310.421.9274

 

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with a copy to (which shall not constitute notice hereunder):

 

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY 10022

Attn:  Scott Rapfogel, Esq.

Facsimile:  212.400.6901

 

If to the Company Shareholder:

 

℅ BOLDFACE Group, Inc.

1309 Pico Blvd., Suite #A

Santa Monica, CA 90405

Facsimile:  310.581.4652

 

If to the Escrow Agent:

 

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY 10022

Attn:  Adam S. Gottbetter, Esq.

Facsimile:  212.400.6901

 

Any party may give any notice, instruction or communication in connection with
this Agreement using any other means (including personal delivery, telecopy or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the party to
whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 9.

 

10.         Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Escrow Agreement, not less than
60 days prior to the date when such resignation shall take effect. The Parent
may appoint a successor Escrow Agent without the consent of the Indemnification
Representative and may appoint any other successor Escrow Agent with the consent
of the Indemnification Representative, which shall not be unreasonably withheld.
If, within such notice period, the Parent provides to the Escrow Agent written
instructions with respect to the appointment of a successor Escrow Agent and
directions for the transfer of any Escrow Shares then held by the Escrow Agent
to such successor, the Escrow Agent shall act in accordance with such
instructions and promptly transfer such Escrow Shares to such designated
successor. If no successor Escrow Agent is named as provided in this Section 10
prior to the date on which the resignation of the Escrow Agent is to properly
take effect, the Escrow Agent may apply to a court of competent jurisdiction for
appointment of a successor Escrow Agent.

 

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11.         General.

 

(a)          Governing Law; Assigns. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
regard to conflict-of-law principles and shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns.

 

(b)          Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

(c)          Entire Agreement. Except for those provisions of the Merger
Agreement referenced herein, this Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.

 

(d)          Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.

 

(e)          Amendment. This Agreement may be amended only with the written
consent of the Parent, the Escrow Agent and the Indemnification Representative.

 

(f)          Consent to Jurisdiction and Service. The parties hereby absolutely
and irrevocably consent and submit to the jurisdiction of the courts in the
State of New York and of any Federal court located in the State of New York in
connection with any actions or proceedings brought against any party hereto by
the Escrow Agent arising out of or relating to this Escrow Agreement. In any
such action or proceeding, the parties hereby absolutely and irrevocably waive
personal service of any summons, complaint, declaration or other process and
hereby absolutely and irrevocably agree that the service thereof may be made by
certified or registered first-class mail directed to such party, at their
respective addresses in accordance with Section 10 hereof.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.

 

  BOLDFACE GROUP, INC.       By: /s/ Noah Levinson   Name:  Noah Levinson  
Title:  Chief Executive Officer       /s/ Nicole Ostoya   Nicole Ostoya      
/s/ Robin Coe-Hutshing   Robin Coe-Hutshing       /s/ Maria Torres   Maria
Torres       GOTTBETTER & PARTNERS, LLP       By: /s/ Adam S. Gottbetter  
Name:  Adam S. Gottbetter   Title:  Managing Partner

 

 

 

 

ATTACHMENT A

 

COMPANY SHAREHOLDERS   PERCENTAGE   ADDRESS           Nicole Ostoya   47.5 %

℅ BOLDFACE Group, Inc.

1309 Pico Blvd., Suite #A

Santa Monica, CA 90405

          Robin Coe-Hutshing   47.5 %

℅ BOLDFACE Group, Inc.

1309 Pico Blvd., Suite #A

Santa Monica, CA 90405

          Maria Torres   5 %

℅ BOLDFACE Group, Inc.

1309 Pico Blvd., Suite #A

Santa Monica, CA 90405