Document:

ex10-2.htm

Exhibit 10.2

 

December 13, 2011

Carman Lehnhof Israelsen LLP

Attn: Jonathan K. Hansen, Esq.

4626 N. 300 W., Suite 160

Provo, Utah 84604

Re:       Escrow Instructions

DKAM Issued Stock | Forbearance Agreement

Dear Mr. Hansen:

These escrow instructions (“Escrow Instructions”) are submitted on behalf of St George Investments LLC, an Illinois limited liability company (“Holder”) and Drinks Americas Holdings, Ltd., a Delaware Corporation (“Issuer”) (Holder and Issuer are collectively referred to herein as the “Parties”) in connection with that certain Forbearance Agreement (“Forbearance Agreement”) between Issuer and Holder dated of even date herewith. Capitalized terms not defined herein shall have the same meaning as set forth in the Forbearance Agreement.

 

The Forbearance Agreement requires Issuer to issue One Hundred Million (100,000,000) shares of Common Stock, in four separate certificates (one certificate for 49,000,000 shares and three certificates each for 17,000,000 shares), in the name of Issuer (“Escrow Certificates”) to be held in escrow. The Parties desire that Carman Lehnhof Israelsen LLP (Attn: Jonathan K. Hansen, Esq.) (“Escrow Agent,” also referred to herein as “you” and “your”) serve as the escrow agent for the transaction.

 

A. ESCROW CERTIFICATES.  According to the terms of the Forbearance Agreement, you will receive from the Issuer the Escrow Certificates.

 

B. RELEASE OF CERTIFICATES.  You are instructed to release the Escrow Certificates only upon the occurrence of one or more of the following events.

 

1. Pursuant to the Forbearance Agreement, if Holder presents a notice of an Event of Default, Trigger Event or notice that Issuer breached any term of the Forbearance Agreement or the Loan Documents (“Notice of Default”), then you are instructed to release the Escrow Certificates to Holder per the instructions set forth in Sections 5(f) of the Forbearance Agreement subject to compliance with the Ownership Limitations (as defined below).

 

2. If you are presented written documentation by both Holder and Issuer indicating that the Forbearance Agreement is fully performed, then you are instructed to promptly release the Escrow Certificates to Issuer per the instructions sets forth in Section 5(f) of the Forbearance Agreement.

 

Disbursements are to be made by mail or courier according to instructions provided by each applicable party.

 

  

  

  

 

C. OWNERSHIP LIMITATION. Notwithstanding anything set forth in these Escrow Instructions to the contrary, in the event any release or delivery of the Escrow Certificates would result in the beneficial ownership by Lender and its affiliates of more than 9.99% of the outstanding Common Stock of Borrower (the “Ownership Limitation”), then (i) such release or delivery shall constitute a legal, valid, binding and enforceable right, (ii) to the extent the release or delivery of shares of Common Stock pursuant to such right would result in a breach of the Ownership Limitation (the number of shares of Common Stock in excess of the Ownership Limitation, the “Excess Shares”), you shall not be obligated to immediately release or deliver the Excess Shares and shall instead reserve the Excess Shares for release or delivery to Lender at a later date; and (iii) immediately upon Lender’s delivery to you of written notice that the issuance of all or any portion of the Excess Shares would not result in a breach of the Ownership Limitation, you shall release or deliver to Lender such Excess Shares. The Ownership Limitation is a valid, binding, and non-waivable provision of these Escrow Instructions.

 

D. LIABILITY; INDEMNIFICATION OF ESCROW AGENT. So long as you perform your duties as specifically set forth herein, you shall have no liability to Holder or Issuer hereunder except to the extent a court of competent jurisdiction determines that your fraud, gross negligence or willful misconduct was the primary cause of any loss to Holder or Issuer.  Notwithstanding anything in these Escrow Instructions to the contrary, in no event shall you be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if you have been advised of the likelihood of such loss or damage and regardless of the form of action.  You undertake to perform only such duties as are expressly set forth herein and no duties shall be implied.  You may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to you hereunder and reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.  You may execute any of your powers and perform any of your duties hereunder directly or through agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by you.  You shall not be liable for anything done, suffered or omitted in good faith by you in accordance with the advice or opinion of any such counsel, accountants or other skilled persons.  In the event that you are uncertain as to your duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in your opinion, conflict with any of the provisions of these Escrow Instructions, or with any instructions, claims or demands from any other party hereto, you shall be permitted to refrain from taking any action and your sole obligation shall be to keep safely all property held in escrow until you shall be directed otherwise in writing by all of the parties hereto or by a final arbitration decision or a non-appealable order or judgment of a court of competent jurisdiction.  Holder and Issuer agree that the following provisions shall control with respect to the rights, duties, liabilities, and immunities of Escrow Agent:

 

1. You are entitled to refrain from taking any action contemplated by these Escrow Instructions in the event that you become aware of any dispute between Parties as to any facts or as to the happening of any contemplated event precedent to such action.  You are hereby authorized to comply with and obey all final nonappealable orders, judgments, decrees or writs entered or issued by any court or final decision of any arbitrator, and in the event you obey or comply with any such final nonappealable order, judgment, decree or writ of any court or final decision of any arbitrator, in whole or in part, after giving Parties seven (7) days prior written notice, you shall not be liable to any of the parties hereto, nor to any other person or entity, by reason of such compliance, notwithstanding that it shall be determined that any such final nonappealable order, judgment, decree, writ, or final decision of a court or final decision of any arbitrator be entered without jurisdiction or be invalid for any reason or be subsequently reversed, modified, annulled or vacated.

 

  

  

  

 

2. Both the Holder and Issuer agree and acknowledge that you represent the Holder as legal counsel and that your only duties to Issuer are contained within these Escrow Instructions and Issuer agrees that you do not have an agency relationship with Issuer.  Notwithstanding anything to the contrary herein, Issuer and Holder expressly agree that in the event any dispute shall arise between Holder and Issuer with respect to the disbursement of the Escrow Certificates, you are permitted but not required: (i) comply with any instructions provided by Holder where you reasonably believe the instructions are justified and valid regardless of any protest by the Issuer, or (ii) resign as Escrow Agent and either interplead the Escrow Certificates, as applicable, into the District Court of the State of Illinois or you may deliver the Escrow Certificates to another Escrow Agent who agrees to perform the services as described in these Escrow Instructions, and thereafter shall be fully relieved from any and all liability or obligation with respect to the Escrow Certificates. In any event, Holder and Issuer will then be required to pursue any redress or recourse in connection with such a dispute without making Escrow Agent a party to same.  Both Holder and Issuer specifically agree that you will no longer have any duties under these Escrow Instructions following your resignation as Escrow Agent and either interpleading the Escrow Certificates or delivering the Escrow Certificates to a new Escrow Agent, and both Holder and Issuer jointly and severally waive any and all potential conflicts of interest and agree that you may represent the Holder in any escrow dispute or controversy.

 

3. Holder and Issuer shall each severally indemnify, defend and save harmless you and your directors, officers, agents and employees (the “Indemnified Parties”) from all loss, liability or expense (including the reasonable fees and expenses of outside counsel and the cost and expense of any interpleader action as authorized above) arising out of or in connection with (i) your execution and performance of these Escrow Instructions, except in the case of any Indemnified Party to the extent that such loss, liability or expense is due to the fraud, gross negligence, or willful misconduct of such Indemnified Party, or (ii) your following any instructions or other directions executed by Parties. Holder and Issuer acknowledge that the foregoing indemnities shall survive the resignation or removal of Escrow Agent or the termination of these Escrow Instructions. You are further entitled to reimbursement for all fees and expenses incurred in the performance of your duties hereunder.

 

4. In receiving the Escrow Certificates, you act only as a depository for Parties and assume no responsibility except pursuant to the provisions of these Escrow Instructions.  All of the terms and conditions in connection with your duties and responsibilities, and the rights of Parties or anyone else with respect to you, are contained solely in these Escrow Instructions, and you are not expected or required to be familiar with the provisions of any other agreements, and shall not be charged with any responsibility or liability in connection with the observance of the provisions of any such other agreements.

 

No later than December 23, 2011, you will receive from Issuer a disbursement of Fifteen Hundred Dollars ($1,500.00) to be held as a retainer for costs and services rendered. After completion of the transactions contemplated herein and the disbursement of the Escrow Certificates, Escrow Agent will return to Issuer the then remaining retainer amount, if any.

 

  

  

  

 

Thank you for cooperation and assistance with this matter.  Please acknowledge your acceptance of and agreement to be bound by these Escrow Instructions by the authorized signature of Escrow Agent in the space provided below.

 

Sincerely,

ISSUER:

DRINKS AMERICAS HOLDINGS, LTD

	
By:

	  	 
	
Name:

	  	 
	
Title:

	  	 

HOLDER:

ST GEORGE INVESTMENTS LLC

By: Fife Trading, Inc, its Manager

 

	
By:

	  	 
	  	
John M. Fife, President

	 

[Issuer and Holder Signature Page to Escrow Instructions]

 

  

  

  

 

AGREED TO AND ACCEPTED BY:

The undersigned hereby agrees to be bound by these Escrow Instructions.

Carman Lehnhof Israelsen LLP

	
By:

	  	 
	  	
Jonathan K. Hansen, Partner

	 
	  	  	 
	
Date:

	  	 

 

 

[Escrow Agent’s Signature Page to Escrow Instructions]ex10-3.htm

Exhibit 10.3

 

 IRREVOCABLE INSTRUCTIONS TO TRANSFER AGENT

Date:  December 13, 2011

To the transfer agent of Drinks Americas Holdings, Ltd.

Re:           Instruction to Transfer Shares

Ladies and Gentlemen:

Reference is made to that certain Debenture dated as of June 18, 2009 (the “Debenture”), made by Drinks Americas Holdings, Ltd., a Delaware corporation (the “Company”), pursuant to which the Company agreed to pay to St George Investments LLC, an Illinois limited liability company, its successors and/or assigns (the “Holder”), the aggregate sum of $4,000,000.00 plus interest, fees, and collection costs.  The Debenture was issued pursuant to that certain Securities Purchase Agreement dated as of the date of the Debenture by and between the Company and the Holder (the “Purchase Agreement” and together with the Debenture and all other documents entered into in conjunction therewith, including any amendments, waivers, or prior forbearance agreements, the “Loan Documents”).  Pursuant to the terms of the Debenture, at the option of the Holder, the Debenture may be converted into shares of the common stock, par value $0.001 per share, of the Company (the “Common Stock”) (the shares of Common Stock issuable upon conversion, the “Conversion Shares”).

Reference is also made to that certain Forbearance Agreement of even date herewith (the “Forbearance Agreement”), between the Company and the Holder, pursuant to which the Company shall issue One Hundred Million (100,000,000) Conversion Shares in certificate form in the name of the Issuer, and such shares will be reissued and available for sale by the Holder upon the occurrence of both: (i) delivery by either the Holder or the Company of this irrevocable letter of instruction, and (ii) delivery by the Holder of a Request for Repayment in Common Shares (the “Request for Repayment”) substantially in the form attached hereto as Exhibit A (the “Required Events”) (the Conversion Shares as described in this paragraph, the “Forbearance Conversion Shares”).

Reference is also made to that certain Series A Common Stock Purchase Warrant dated as of the date of the Debenture (the “Warrant”), issued by the Company, pursuant to which the Holder may purchase shares of Common Stock.  All shares of Common Stock that may be purchased under the Warrant are hereinafter referred to as the “Warrant Shares.”  The Conversion Shares, the Forbearance Conversion Shares, and the Warrant Shares are hereinafter referred to as the “Shares.”

 

  

  

  

This irrevocable letter of instructions shall serve as the authorization and direction of the Company to Continental Stock Transfer & Trust Co. or its successors as transfer agent to the Company (also referred to hereafter as “you” or “your”), to issue (or where relevant, to reissue in the name of the Holder) shares of Common Stock to the Holder, upon the order of the Holder, (i) upon conversion of the Debenture, or (ii) upon exercise of the Warrant, as follows:

1. You shall reissue and deliver the Forbearance Conversion Shares in certificate form in the Holder’s name and free of any restrictive legend to the Holder upon your receipt of this letter of instruction and upon delivery to you, from either the Holder or the Company, of either (i) a written confirmation that the Shares are registered pursuant to an effective registration statement, or (ii) a legal opinion as to the free transferability of the Shares from counsel, dated within ninety (90) days from the date of conversion, to either the Holder or the Company; provided, however, that in the event the legal opinion is not provided as described above, you will reissue and deliver the Forbearance Conversion Shares subject to a restrictive legend.

2. You shall issue the Conversion Shares free of any restrictive legend to the Holder upon notice, from either the Holder or the Company, of  a conversion of all or any portion of the Debenture, upon delivery to you of (a) a Request for Repayment, and (b) either (i) written confirmation that the Shares are registered pursuant to an effective registration statement, or (ii) a legal opinion as to the free transferability of the Shares from counsel, dated within ninety (90) days from the date of conversion, to either the Holder or the Company; provided, however, that in the event the legal opinion is not provided as described above, you will issue the Conversion Shares subject to a restrictive legend.

 

 

3. You shall issue the Warrant Shares to or at the direction of either the Holder or the Company upon exercise of all or any portion of the Warrant, upon delivery to you of (a) a properly completed and duly executed Notice of Exercise of Warrant (the “Notice of Exercise”) substantially in the form attached hereto as Exhibit B, and (b) either (i) written confirmation that the Shares are registered pursuant to an effective registration statement, or (ii) a legal opinion as to the free transferability of the Shares from counsel dated within ninety (90) days from the exercise date, to either the Holder or the Company; provided, however, that in the event the legal opinion is not provided as described above, you will issue the Warrant Shares subject to a restrictive legend.

4. In the case of a request for shares of Common Stock pursuant to Paragraphs 2 or 3 above, you shall, within three (3) Trading Days (as defined below) thereafter, (a) if you are eligible to participate in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of the Common Stock to the Holder’s or its designee’s balance account with DTC through the Deposit Withdrawal at Custodian (“DWAC”) system, provided the Holder causes its bank or broker to initiate the DWAC transaction, or (b) if you are not eligible to participate in the DWAC system, issue and deliver to the Holder, via a common carrier for overnight delivery, to the address as specified in the Request for Repayment or the Notice of Exercise, as the case may be, a certificate or certificates, registered in the name of the Holder or its designee(s), for such number of shares of Common Stock as may be requested by the Holder to be transferred as set forth in the Request for Repayment or Notice of Exercise, as applicable, up to the number of Shares evidenced by the certificates.  For purposes hereof, “Trading Day” shall mean any day on which the New York Stock Exchange is open for customary trading. Notwithstanding any other provision hereof, the Company and the Holder understand that you shall not be required to perform any issuance or transfer of Shares if (i) such an issuance or transfer of Shares is in violation of any state or federal securities laws or regulations, or (ii) the issuance or transfer of Shares is prohibited or stopped as required or directed by a court order.

 

  

  

  

5. You understand that a delay in either the crediting of Shares or the delivery of certificates hereunder, as the case may be, could result in economic loss to the Holder and that time is of the essence in your processing of a Request for Repayment or Notice of Exercise.

6. To the extent the applicable Shares being issued or reissued will be or currently are certificated:

	
  

	
(a)

	
the certificates representing the Conversion Shares, including the Forbearance Conversion Shares, to be issued or reissued pursuant to Paragraph 1and 2 above, if the date on which the Request for Repayment is submitted to you is (i) more than twelve (12) months following the date of issuance of the Debenture, or (ii) more than six (6) months following the date of issuance of the Debenture and the Company is subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended;

	
  

	
(b)

	
the certificates representing the Warrant Shares to be issued following:

i)           a “cashless exercise” (as described in the Warrant) pursuant to Paragraph 3 above, if the date on which the Notice of Exercise is submitted to you is (i) more than twelve (12) months following the date of issuance of the Warrant, or (ii) more than six (6) months following the date of issuance of the Warrant and the Company is subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended,

ii)           a “cash exercise” (as described in the Warrant) pursuant to Paragraph 3 above, if the date on which the Notice of Exercise is submitted to you is (i) more than twelve (12) months following the date of the Warrant Shares being issued according to the cash exercise, or (ii) more than six (6) months following the date of the Warrant Shares being issued according to the cash exercise and the Company is subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended,

shall (i) be in the name of the Holder, and (ii) not bear any legend restricting transfer and should not be subject to any stop-transfer restrictions, and shall otherwise be freely transferable on the books and records of the Company, pursuant to the opinion of counsel to the Company or the Holder.  You will accept such opinion of counsel provided that it opines that the certificates may be issued or delivered without restrictive legend in accordance with the applicable securities laws of the United States.

 

  

  

  

7. You shall rely exclusively on the instructions provided in this letter and shall have no liability for relying on such instructions, whether provided by the Holder or the Company.  Any Request for Repayment or Notice of Exercise delivered hereunder shall constitute an irrevocable instruction to you to process such notice or notices in accordance with the terms thereof. Such notice or notices may be transmitted to you by fax or any commercially reasonable method.

8. The Company hereby confirms to you and to the Holder that no instruction other than as contemplated herein will be given to you by the Company with respect to the matters referenced herein. The Company hereby authorizes you, and you shall be obligated, to disregard any contrary instruction received by or on behalf of the Company or any other person purporting to represent the Company.

9. The Company hereby agrees to notify the Holder in the event of any replacement of Continental Stock Transfer & Trust Co. as the Company’s transfer agent.

10.           The Company acknowledges that the Holder is relying on the representations and covenants made by the Company in this irrevocable letter of instructions and that the representations and covenants contained in this letter constitute a material inducement to the Holder to enter into the Forbearance Agreement.  The Company further acknowledges that without such representations and covenants of the Company made in this letter, the Holder would not have entered into the Forbearance Agreement.

11.           The Holder is an intended third-party beneficiary of this irrevocable letter of instructions. The parties hereto specifically acknowledge and agree that in the event of a breach or threatened breach by a party hereto of any provision hereof, the Holder will be irreparably damaged, and that damages at law would be an inadequate remedy if this irrevocable letter of instructions were not specifically enforced.  Therefore, in the event of a breach or threatened breach of this letter, the Holder shall be entitled, in addition to all other rights or remedies, to an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for a specific performance of the provisions of this letter.

12.           By signing below, each individual executing this letter on behalf of an entity represents and warrants that he or she has authority to so execute this letter on behalf of such entity and thereby bind such entity to the terms and conditions hereof.

[Signatures on Following Page]

 

  

  

  

 

Very truly yours,

DRINKS AMERICAS HOLDINGS, LTD

By:                                                                

Name:                                                           

Title:                                                                

ACKNOWLEDGED AND AGREED:

THE HOLDER:

ST GEORGE INVESTMENTS LLC

By: Fife Trading, Inc., Manager

     By:                                                                          

            John M. Fife, President

 

 

Attachments:

Exhibit A – Form of Request for Repayment

Exhibit B – Form of Notice of Exercise

 

[Signature Page to Irrevocable Instructions to Transfer Agent Letter]

 

  

  

  

 

EXHIBIT A

FORM OF REQUEST FOR REPAYMENT

 

 

 

 

 

 

 

 

  

  

  

EXHIBIT B

FORM OF NOTICE OF EXERCISE

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