EXHIBIT 10.27
ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) is made as of this 6th day of October,
2011, by and among WEB MERCHANTS ATLANTA, LLC, a Georgia limited liability
company (“Purchaser”), LIBERATOR, INC. (f/k/a WES Consulting, Inc.), a Florida
corporation ( “Seller”), and TRANSFER ONLINE, INC., an Oregon corporation
(“Escrow Agent”).

WITNESSETH

WHEREAS, the Purchaser has agreed to purchase all of the outstanding stock of
Web Merchants, Inc., a Delaware corporation (the “Company”) from the Seller
pursuant to the terms and conditions of that certain Stock Purchase Agreement,
dated as of October 6, 2011, and effective October 1, 2011, by and among the
Purchaser, the Seller, the Company, Louis S. Friedman and Fyodor Petrenko (the
“Purchase Agreement”);

WHEREAS, a portion of the purchase price under the Purchase Agreement consists
of the return by Petrenko of Twenty-Five Million Three Hundred and Ninety-Four
Thousand Four Hundred (25,394,400) shares of the $.01 par value common stock of
Seller (hereinafter the “Liberator Common Stock”); and

WHEREAS, Section 1.4(g) of the Purchase Agreement provides that Purchaser shall
deliver to Escrow Agent the certificate(s) representing the Liberator Common
Stock acquired from Petrenko under the Purchase Agreement (the “Escrowed
Stock”), and for Escrow Agent to disburse the Escrowed Stock in accordance with
the terms and conditions hereof.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

1.           Appointment of Escrow Agent.   Seller and Purchaser hereby
designate and appoint Escrow Agent to serve as escrow agent hereunder, and
Escrow Agent hereby confirms its agreement to act as escrow agent upon the
terms, conditions, and provisions of this Agreement.

2.           Delivery of Escrowed Stock.  Upon the closing of the transactions
under the Purchase Agreement, Purchaser shall deliver to the Escrow Agent the
certificate(s) representing the Escrowed Stock.  The Escrowed Stock is to be
held, administered, and delivered from (subject to Section 3 below) escrow by
the Escrow Agent as provided for herein. Escrow Agent acknowledges receipt of
the Escrowed Stock and agrees to hold, administer, and deliver the same from
escrow in accordance with the terms of this Agreement.   Escrow Agent shall
release such Escrowed Stock only as expressly permitted hereunder.

3.           Disbursement of Escrowed Stock from Escrow.   The Escrow Agent
shall hold, administer and deliver the certificate(s) representing the Escrowed
Stock as follows:

 
 

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(a)           If on or before August 1, 2012, Seller has either satisfied, or
Petrenko and Company have been provided with written release of any liability as
a guarantor or co-borrower by the respective lender under, (1) that certain
credit facility loan from Advance Financial Corporation to Seller, dated as of
May 24, 2011, in the original amount of Seven Hundred Fifty Thousand Dollars
($750,000) (the “Advance Financial Loan”), and (2) that certain loan from Credit
Cash LLC to Seller, dated as of May 19, 2011, in the original amount of Four
Hundred Thousand Dollars ($400,000) (the “Credit Cash Loan”), then the Escrow
Agent shall deliver the Escrowed Stock to the Seller.

(b)           If by August 1, 2012, Seller has not satisfied the Advance
Financial Loan and the Credit Cash Loan and Petrenko and Company have not been
provided with the written releases of liability described in subsection (a),
then the Escrow Agent shall deliver the Escrowed Stock to the Purchaser.

(c)           At all times from the date hereof until the time when the
conditions for delivery of the Escrowed Stock are satisfied under subsections
(a) or (b) above, the Escrowed Stock shall serve as a source of funds to satisfy
indemnifiable Loss(es) incurred by Fyodor  Petrenko under Section 6.1(e) of the
Purchase Agreement arising from claims for repayment under the Advance Financial
Loan and/or the Credit Cash Loan, subject to the provisions of Article VI of the
Purchase Agreement.

4.           Escrow Agent’s Duties.  Escrow Agent shall be obligated to perform
only such duties as are expressly set forth in this Agreement.

5.           Liability of Escrow Agent.  The Escrow Agent’s sole duty and
responsibility hereunder is to receive and distribute the Escrowed Stock in
accordance with the terms of this Agreement.  The Escrow Agent’s liability under
this Agreement shall be limited to such responsibilities, which shall be carried
out as the Escrow Agent shall determine.  The Escrow Agent shall be protected in
acting upon any written notice, request, affidavit, certificate, waiver,
consent, receipt, judgment, court order or other paper or document which Escrow
Agent in good faith believes to be genuine and what it purports to be.  In
performing any of its duties hereunder, the Escrow Agent shall not incur any
liability to anyone for damages, losses or expenses, except for willful default
or breach of trust, and, accordingly, the Escrow Agent shall not incur any such
liability with respect to (a) any action taken or omitted in good faith upon
advice of its counsel given with respect to any questions relating to the duties
and responsibilities of the Escrow Agent under this Agreement, or (b) any action
taken or omitted in reliance upon any instrument, including any written notice,
request or instruction provided for in this Agreement, not only as to its due
execution and the validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein, which the Escrow
Agent shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons and to conform with the provisions of
this Agreement.  The Escrow Agent shall not be liable for any error or judgment,
or for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection herewith, except its own gross negligence or willful misconduct.  The
Escrow Agent shall have no responsibility with respect to the application of the
Escrowed Stock disbursed by it pursuant to the provisions hereof.

 
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6.           Disputes Affecting Escrowed Stock.  In the event of any
disagreement between Seller and Purchaser resulting in adverse claims and
demands being made in connection with the Escrowed Stock (or any portion
thereof) involved herein or affected hereby, the Escrow Agent shall be entitled
to refuse to comply with any such claims or demands as long as such disagreement
may continue, and in so refusing, shall make no delivery or other disposition of
any part of the Escrowed Stock then held under this Agreement which are the
subject of such disagreement, and in so doing shall be entitled to continue to
refrain from acting until (a) the right of adverse claimants shall have been
finally settled by binding arbitration or finally adjudicated in a court in
Fulton County, Georgia assuming and having jurisdiction of the Escrowed Stock
involved herein or affected hereby or (b) all differences shall have been
adjusted by agreement and the Escrow Agent shall have been notified in writing
of such agreement signed by the parties hereto. In the event of such
disagreement, the Escrow Agent may, but need not, tender into the registry or
custody of any court of competent jurisdiction in Fulton County, Georgia all
money or property in the Escrow Agent’s hands under the terms of this Agreement,
together with such legal proceedings as the Escrow Agent deems appropriate and
thereupon to be discharged from all further duties under this Agreement. The
filing of any such legal proceeding shall not deprive the Escrow Agent of
compensation earned prior to such filing. The Escrow Agent shall have no
obligation to take any legal action in connection with this Agreement or towards
its enforcement, or to appear in, prosecute or defend any action or legal
proceeding which would or might involve the Escrow Agent in any cost, expense,
loss or liability unless indemnification shall be furnished to the Escrow Agent.

7.           Escrow Agent’s Fees.   The parties shall pay Escrow Agent a one
time fee of $750 as compensation for its duties hereunder.

8.           Indemnification.  So long as Escrow Agent has met the standard of
care required of it pursuant to this Agreement, the parties agree to indemnify
and hold Escrow Agent harmless from and against any and all loss, damage,
expense, liability or claim to which Escrow Agent may become subject as a result
of performing its duties as Escrow Agent under this Agreement; provided that the
Escrow Agent shall not be entitled to any indemnity for any losses, damages,
taxes, liabilities or expenses that directly result from its own willful
misconduct or gross negligence.

9.           Ownership for Tax and Corporate Law Purposes.  The parties hereto
agree that, for purposes of federal and other taxes based on income, and for
purposes of exercising any voting rights associated with or receiving any
dividends or other distributions (including liquidating distributions) payable
upon the Escrowed Stock, Seller is and will be treated as the beneficial owner
of the Escrowed Stock unless and until it is disbursed to a person other than
Seller pursuant to Section 3(b) or (c) above, and will report all income, if
any, that is earned on, or derived from, the Escrowed Stock as its income in the
taxable year or years in which such income is properly included and pay any
taxes attributable thereto.  Escrow Agent will not be responsible for tax
reporting. Escrow Agent shall report and, as required, withhold any taxes as it
reasonably determines may be required by any law or regulation in effect at the
time.

 
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10.           General Provisions.

(a)           Assignment. Neither this Agreement nor any right or benefit of any
party hereunder may be assigned or transferred by such party without the prior
written consent of all other parties hereto.

(b)           Amendment. This Agreement may not be amended or modified without
the prior written consent of all parties.

(c)           Waiver.  Failure to insist upon strict compliance with any of the
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.

(d)           Governing Law.  Notwithstanding the place where this Agreement may
be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia, without regard for its conflict of laws
doctrine.

(e)           Notices.  Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) delivered by overnight
courier service, or (iii) delivered in person, at the address set forth below,
or such other address as a party may provide to the others in accordance with
the procedure for notices set forth in this Section:

     
If to the Purchaser:
 
With a copy to:
     
Web Merchants Atlanta, LLC
 
Busch, Slipakoff & Schuh, LLP
1820 Peachtree Rd NW
 
3350 Riverwood Pkwy, Suite 1550
Atlanta, GA 30309
 
Atlanta, GA 30339
Attn:  Fyodor Petrenko, Sole Member
 
Attn:  Adam Slipakoff, Esq.

If to the Seller:
 
With a copy to
     
Liberator, Inc.
 
Friedman, Dever & Merlin, LLC
2745 Bankers Industrial Drive
 
5555 Glenridge Connector NE, Suite 925
Atlanta, GA 30360
 
Atlanta, GA  30342
Attn:  Louis S. Friedman, President
 
Attn:  Sheldon E. Friedman, Esq.

If to the Escrow Agent:
         
Transfer Online, Inc.
   
512 SE Salmon Street
   
Portland, OR 97214
   
Attn:  Lori Livingston, President & CEO
   

 
 
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Notices shall be effective upon the date of delivery or refusal of personal
delivery, certified mail or courier delivery.  Any party may change the address
to which notices are to be sent by giving written notice of such change of
address to the other parties in the manner above provided for giving notice.

(f)           Invalid Provision. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.

(g)           Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.

(h)           Further Assurances.  Each party agrees to execute and deliver all
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.

(i)           Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.

(j)           Person and Gender. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.

(k)           Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to matters set forth in this Agreement, and
supersedes any prior understanding or agreement, oral or written, with respect
to such matters.

(l)           Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.

(m)           Execution in Counterparts.   This Agreement may be executed in any
number of counterparts (including facsimile and .pdf counterparts), each of
which shall be an original, and all such counterparts shall constitute one and
the same Agreement.
 
[Signatures on Following Page]

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

 
PURCHASER:
     
WEB MERCHANTS ATLANTA, LLC
     
By:
/s/ Fyodor Petrenko
 
Name:
F. Petrenko
 
Title:
Sole Member

 
SELLER:
     
LIBERATOR, INC.
     
By:
/s/ Louis S. Friedman
 
Name:
Louis S. Friedman
 
Title:
President and CEO

 
ESCROW AGENT:
     
TRANSFER ONLINE, INC.
     
By:
   
Name:
Lori Livingston
 
Title:
President & CEO

 
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