Document:

f8k031711a1ex10v_attitude.htm

Exhibit 10.5

 

ESCROW AGREEMENT

 

This Agreement is dated as of the 17th day of March, 2011 among Attitude Drinks, Inc., a Delaware corporation (the “Company”), the subscribers listed on Schedule 1 hereto (“Subscribers”), and Grushko & Mittman, P.C. (the “Escrow Agent”):

 

W I T N E S S E T H:

 

WHEREAS, the Company and Subscribers have entered into a Subscription Agreement calling for the sale by the Company to the Subscribers of  secured convertible Notes and Warrants for an aggregate purchase price of no minimum dollar amount and up to $600,000; and

 

WHEREAS, the parties hereto require the Company to deliver the Notes and Warrants against payment therefor, with such Notes 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:

 

§ “Agreement” means this Agreement and all amendments made hereto and thereto by written agreement between the parties;

 

§ “Broker” shall have the meaning set forth in Section 8(a) and on Schedule 8(a) of the Subscription Agreement;

 

§ “Broker’s Fee” shall have the meaning set forth in Section 8(a) and on Schedule 8(a) of the Subscription Agreement;

 

§ “Closing Date” shall have the meaning set forth in Section 1 of the Subscription Agreement;

 

§  “Escrowed Payment” means an aggregate cash payment of up to $600,000;

 

§  “Legal Opinion” means the original signed legal opinion referred to in Section 6 of the Subscription Agreement;

 

§ “Note” shall have the meaning set forth in the second recital to the Subscription Agreement;

 

  

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§ “Placement Agent” shall have the meaning set forth in Section 8(a) and on Schedule 8(a) of the Subscription Agreement;

 

§ “Placement Agent’s Fee” shall have the meaning set forth in Section 8(a) and on Schedule 8(a) of the Subscription Agreement;

 

§ “Principal Amount” shall mean an aggregate of up to $600,000;

 

§ “Subscriber Legal Fees” shall have the meaning set forth in Section 8(b) of the Subscription Agreement;

 

§ “Subscription Agreement” means the Subscription Agreement (and the exhibits and schedules thereto) entered into or to be entered into by the Company and Subscribers in reference to the sale and purchase of the Notes and Warrants;

 

§ “Warrants” shall have the meaning set forth in Section 2(b) of the Subscription Agreement;

 

§ Collectively, the Legal Opinion, Notes, Warrants, and Subscription Agreement signed and executed by all signators thereto other than the Subscribers, Broker’s Fee/Placement Agent’s Fee and Subscriber Legal Fees and are referred to as “Company Documents”; and

 

§ Collectively, the Escrowed Payment and the Subscribers executed Subscription Agreement are referred to as “Subscriber Documents.”

 

1.2.           Entire Agreement.  This Agreement along with the Company Documents and the Subscriber Documents to which the Subscriber and the Company or Subsidiary are a party 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.

 

  

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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 Subscribers 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 Subscribers 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 execute and deliver the Company Documents to the Escrow Agent.

 

2.2.           Subscriber Deliveries.  On or before the Closing Date, Subscribers shall execute and deliver the Subscription Agreements and shall deliver the Escrowed Payment in cash, to the Escrow Agent. The Escrowed Payment will be delivered pursuant to the following wire transfer instructions:

Citibank, N.A.

1155 6th Avenue

New York, NY 10036

ABA Number: 0210-00089

For Credit to: Grushko & Mittman, IOLA Trust Account

Account Number: 45208884

 

2.3.           Intention to Create Escrow Over Company Documents and Subscriber Documents.  The Subscribers 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.

 

  

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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 Subscribers and release the Subscriber Documents to the Company, except that:

 

(i)           Subscriber Legal Fees will be released directly to the Subscriber’s attorneys. Company Legal Fees will be released directly to Company’s attorneys; and

 

(ii)           the Broker’s Fee/Placement Agent’s Fee will be released to the Broker/Placement Agent as described on Schedule 8 to the Subscription Agreement.

 

(b)           Notwithstanding the above, upon receipt by the Escrow Agent of joint written instructions (“Joint Instructions”) signed by the Company and the Subscribers, it shall deliver the Company Documents and Subscriber Documents in accordance with the terms of the Joint Instructions.

 

(c)           Anything herein to the contrary notwithstanding, 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.   Acknowledgement of Company and Subscriber; Disputes.  The Company and the Subscribers 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 Subscribers 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 Subscribers.

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:

 

  

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(a)           The Subscribers 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 Subscribers 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 Subscribers 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 Subscribers 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 Subscribers and Company under this Agreement and to no other person.

 

(c)           The Subscribers 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 Subscribers and the Company.  Prior to the effective date of the resignation as specified in such notice, the Subscribers 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 Subscribers and Company.  If no successor Escrow Agent is named by the Subscribers 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)           Other than in connection with the Subscriber Legal Fees, 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 Subscribers in any dispute as to the disposition of the Company Documents and Subscriber Documents, in any other dispute between the Subscribers 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.

 

  

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(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 Subscribers 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 Subscribers 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 Subscribers 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 Subscribers 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:

Attitude Drinks Inc.

10415 Riverside Drive, Suite 101

Palm Beach Gardens, FL 33410

Attn: Roy Warren, CEO and President

Fax: (561) 799-5039

 

  

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With a copy by facsimile only to:

Weed & Co., LLP

4695 MacArthur Court, Suite 1430

Newport Beach, CA 92660

Attn: Rick Weed, Esq.

Fax: (949) 475-9087

(b)           If to the Subscribers: to the addresses set forth on Schedule 1

With copies by facsimile only to (which shall not constitute notice):

 

Grushko & Mittman, P.C.

515 Rockaway Avenue

Valley Stream, New York 11581

Fax: 212-697-3575

Ellenoff Grossman & Schole LLP

150 East 42nd Street, 11th Floor

New York, NY 10017

Attn: Stuart Neuhauser, Esq.

Fax: (212) 370-7889

 

(c)           If to the Escrow Agent, to:

 

Grushko & Mittman, P.C.

515 Rockaway Avenue

Valley Stream, New York 11581

Fax: 212-697-3575

 

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, the Subscribers shall be entitled to receive any accrued interest thereon, but only if the Escrow Agent receives from the Subscriber the Subscribers’ 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 Escrow Agreement and understands and agrees to it.

 

  

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Escrow  Agreement, as of the date first written above.

 

 

	 	“COMPANY”	 
	 	ATTITUDE DRINKS, INC.	 
	 	a Delaware corporation	 
	 	 	 	 
	 	
By: 

	/s/ Roy Warren	 
	 	 	Roy Warren	 
	 	 	President & CEO	 
	 	 	 	 

 

 

	 	ESCROW AGENT:	 
	 	 	 
	 	GRUSHKO & MITTMAN, P.C.	 
	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Grushko & Mittman, P.C.	 
	 	 	Name:	 

                    

SUBSCRIBERS:

 

	ALPHA CAPITAL ANSTALT	 	WHALEHAVEN CAPITAL FUND LIMITED	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	
/s/

	 	By:	
/s/ 

	 
	 	
Name:

	 	 	
Name:

	 
	 	
Title:

	 	 	
Title:

	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By: 	 	 
	 	Name:	 	 	 	 
	 	Title:	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By:	 	 
	 	Name:	 	 	Name:	 
	 	Title:	 	 	Title:	 

                                                                                                                                                   

  

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SCHEDULE 1

(SUBSCRIBERS)

	
SUBSCRIBER

	
PRINCIPAL

AMOUNT

	
ALPHA CAPITAL ANSTALT

[Address Omitted]

	
$125,000.00

 

 

	
J & N INVEST LLC

[Address Omitted]

	
$215,000.00

 

 

	
JOE & SUE MAYA

[Address Omitted]

	
$50,000.00

 

 

	
WHALEHAVEN CAPITAL FUND LIMITED

[Address Omitted]

	
$125,000.00

	
LINDA R. IENNACO

[Address Omitted]

	
$30,000.00

 

 

	
SETH FARBMAN

[Address Omitted]

	
$25,000.00

 

 

	
RAMSHEAD HOLDING LTD.

[Address Omitted]

	
$30,000.00

 

 

	
TOTALS

	
$600,000.00

 

 

9f8k031711a1ex10vi_attitude.htm

Exhibit 10.6

March 8, 2011

Mr. Roy Warren

Attitude Drinks Incorporated

10415 Riverside Drive, Suite 101

Palm Beach Gardens, FL 33410

	
  

	
RE:

	
Placement Agent Agreement for Private Placement of Secured Convertible Promissory Notes and Warrants

Dear Mr. Warren:

 

 

This letter confirms our agreement that Attitude Drinks Incorporated, a Delaware corporation (“ATTD” or the "Company”) has engaged  Perrin Holden & Davenport Capital Corp. (together with its affiliates and subsidiaries, “PHD” or the “Placement Agent”) to act as the Company’s non-exclusive Placement Agent in connection with the proposed private placement (the “Offering”) of secured convertible promissory notes  (the “Notes”) and warrants to purchase common stock (“Warrants” and together with the Notes, the “Securities”) of the Company. The terms of the Securities and the gross proceeds of such Offering will be substantially in the form to be negotiated between the Placement Agent and the Company with one or more accredited investors (described below). The gross proceeds of the Offering will be on a best efforts basis (no minimum) up to an aggregate of $600,000.

Upon acceptance, (indicated by your signature below), this letter agreement (the “Agreement”) will confirm the terms of the engagement between the Placement Agent and the Company.

1.           Appointment.

(a)           Subject to the terms and conditions of this Agreement, the Company hereby retains the Placement Agent, and the Placement Agent hereby agrees to act, as the Company’s non-exclusive Placement Agent in connection with the Offering.  As Placement Agent for the Offering, PHD will advise and assist the Company in identifying and assisting the Company in issuing the Securities to, one or more accredited Investors (“Investors”) in the Offering.  The Company acknowledges and agrees that the Placement Agent is only required to use its “commercially reasonable best efforts” in connection with the Offering and that this Agreement does not constitute a commitment by the Placement Agent to purchase the Securities or introduce the Company to Investors.  PHD will, in its sole discretion, determine the reasonableness of its efforts, and is under no obligation to perform at any level other than what it deems reasonable.  The Company retains the right to determine all of the terms and conditions of the Offering and to accept or reject any proposals submitted to it by the Placement Agent in its sole and absolute discretion.

 

  

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(b)           During the Term of this Agreement (as such term is hereinafter defined), neither the Company nor any of its subsidiaries will, directly or indirectly, solicit or otherwise encourage the submission of any proposal or offer (“Investment Proposal”) from any person or entity relating to any issuance of the Company’s or any of its subsidiaries’ equity securities (including debt securities with any equity feature) or participate in any discussions regarding an Investment Proposal.  The term “Investment Proposal” shall not include (i) any investment in the equity securities of any other entity, and (ii) any transaction or agreement with one or more persons, firms or entities designated as a “strategic partner” of the Company, as determined in good faith by the Board of Directors of the Company, provided that each such person, firm or entity is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.  The Company will immediately cease all contacts, discussions and negotiations with third parties regarding any Investment Proposal.

2.           Information.

(a)           The Company recognizes that, in completing its engagement hereunder, the Placement Agent will be using and relying on both publicly available information and on data, material and other information furnished to Placement Agent by the Company or the Company’s affiliates and agents.  The Company will cooperate with PHD and furnish, and cause to be furnished, to PHD, any and all information and data concerning the Company, its subsidiaries and the Offering that PHD deems appropriate, including, without limitation, the Company’s acquisition and/or merger plans and plans for raising capital or additional financing that is reasonably requested by PHD (the “Information”), including subscription agreements, and the forms of the Notes and Warrants (the “Private Placement Materials”).  Any Information and Private Placement Materials forwarded to prospective Investors will be in form acceptable to Placement Agent and its counsel.  The Company represents and warrants that all Information and Private Placement Materials, including, but not limited to, the Company’s financial statements and all information incorporated by reference therein, will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading.

(b)           It is further agreed that PHD will conduct a due diligence investigation of the Company and the Company will reasonably cooperate with such investigation as a condition of PHD’s obligations hereunder.  The Company recognizes and confirms that the Placement Agent: (i) will use and rely primarily on the Information, the Private Placement Materials and information available from generally recognized public sources in performing the services contemplated by this letter without having independently verified the same; (ii) is authorized as the Placement Agent to transmit to any prospective investors a copy or copies of the Private Placement Materials, forms of subscription documents and any other legal documentation supplied to the Placement Agent for transmission to any prospective investors by or on behalf of the Company or by any of the Company’s officers, representatives or agents, in connection with the performance of the Placement Agent’s services hereunder or any transaction contemplated hereby; (iii) does not assume responsibility for the accuracy or completeness of the Information or the Private Placement Materials and such other information, if any provided to the Investors; (iv) will not make an appraisal of any assets of the Company or the Company generally; and (v) retains the right to continue to perform due diligence of the Company, its business and its officers and directors during the course of the engagement.

 

  

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(c)           Until the date that is one year from the date hereof, PHD will keep all information obtained from the Company confidential except: (i) Information which is otherwise publicly available, or previously known to or obtained by, PHD independently of the Company and without breach of any of PHD’ agreements with the Company; (ii) PHD may disclose such information to its officers, directors, employees, agents, representatives, attorneys, and to its other advisors and financial sources on a need to know basis only and will ensure that all such persons will keep such information strictly confidential.  No such obligation of confidentiality shall apply to information that: (i) is in the public domain as of the date hereof or hereafter enters the public domain without a breach by PHD, (ii) was known or became known by PHD prior to the Company’s disclosure thereof to PHD, (iii) becomes known to PHD from a source other than the Company, and other than by the breach of an obligation of confidentiality owed to the Company, (iv) is disclosed by the Company to a third party without restrictions on its disclosure, (v) is independently developed by PHD or (vi) is required to be disclosed by PHD or its officers, directors, employees, agents, attorneys and to its other advisors and financial sources, pursuant to any order of a court of competent jurisdiction or other governmental body or as may otherwise be required by law.

(d)           The Company recognizes that in order for PHD to perform properly its obligations in a professional manner, the Company will keep PHD informed of and, to the extent practicable, permit PHD to participate in meetings and discussions between the Company and any third party relating to the matters covered by the terms of PHD’ engagement.  If at any time during the course of PHD’s engagement, the Company becomes aware of any material change in any of the information previously furnished to PHD, it will promptly advise PHD of the change.

(e)           The Offering shall be conditioned upon, among other things, the following:

(i) Satisfactory completion by PHD of its due diligence investigation and analysis of: (a) the Company’s arrangements with its officers, directors, employees, affiliates, customers and suppliers, and (b) the audited and unaudited historical financial statements of the Company;

(ii) The Company retaining a firm of independent certified public accountants, and will continue to engage accountants of comparable quality (as may be determined by the Company’s audit committee) for a period of at least three years after the Closing;

(iii) Reserved;

(iv) Reserved;

(v) The Company retaining a transfer agent for the Company’s Common Stock and continuing to retain a competent transfer agent for a period of three (3) years after the Closing;

(vi) Reserved; and

(vii) The Company acknowledges and agrees that the Company will maintain a Chief Financial Officer or a substantially equivalent financial position who shall oversee the Company’s financial reporting.

3.           Compensation.  As compensation for services rendered and to be rendered hereunder by Placement Agent, the Company agrees to pay Placement Agent the following fees in consideration of the services rendered by the Placement Agent in connection with the Offering:

(a)           The Company agrees to pay PHD a cash fee payable upon each closing of the transaction contemplated by this Agreement (“Closing”) equal to ten percent (10.0%) of the gross proceeds received by the Company at each Closing, the fees received by PHD are referred herein as the “Placement Fee”.

 

  

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(b)           The Company shall provide that, at the Closing, the Company shall grant to PHD (or its designated affiliates or assignees) securities purchase warrants (the “Warrants”) covering a number of the securities (“Securities”) equal to ten percent (10.0%) of the total number of Warrants being sold and/or issued in the Offering. The Warrants will be exercisable immediately after the date of the Closing and expire five (5) years after the Closing. The Warrants shall be identical to the Warrants issued to the Investors.

(c)           The Company agrees to pay PHD (or its designated affiliates or assignees) a non-accountable expense allowance (the “Non-Accountable Fee”) upon each Closing equal to 3% of the gross amount raised in each Closing, and payable, at the Company’s sole discretion, in the form of cash or a convertible note identical to the Notes issued to the Investors.

(d)           In addition to any fees payable to PHD hereunder, the Company shall reimburse PHD from the proceeds of the Closing for all expenses (including, without limitation, fees and disbursements of counsel and all travel and other out-of-pocket expenses) incurred by PHD in connection with its engagement hereunder; provided, however that the aggregate fees and expenses which shall be reimbursed by the Company shall not exceed $1,000 plus legal fees (not to exceed $10,000) and expenses.  In the event this Agreement is not completed within the term set forth in Section 4, PHD will be entitled to reimbursement of its out-of-pocket accountable expenses actually incurred in connection with this Offering.

(e)           The Company shall assist and cooperate with legal counsel to PHD in effecting a filing with respect to the public offering if a Registration Statement is filed in connection with the Offering (an “Issuer Filing”) with the Financial Industry Regulatory Authority (“FINRA”) Corporate Financing Department pursuant to FINRA Rule 2710(b)(10)(A)(i) and the Company shall pay the filing fee required by such Issuer Filing and the fees and expenses of counsel to PHD in connection with the Issuer Filing and clearing such filing with FINRA.  The Company shall assist legal counsel to PHD in pursuing the Issuer Filing until FINRA issues a letter confirming that it does not object to the terms of the Offering contemplated by such Registration Statement.

4.           Term of Engagement.

(a)           This Agreement will remain in effect until __________, 2011, after which either party shall have the right to terminate it on fifteen (15) days prior written notice to the other.  The date of termination of this Agreement is referred to herein from time to time as the “Termination Date.”  The period of time during which this Agreement remains in effect is referred to herein from time to time as the “Term”.  In the event, however in the course of PHD’s performance of due diligence it deems it necessary to terminate the engagement, PHD may do so prior to the termination date and upon immediate written notice.   Upon termination of this Agreement and/or upon the closing of the Offering, PHD shall deliver to the Company a final list of all third parties it believed it introduced to the Company for the Company’s review and approval (it being agreed upon that each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited shall not be included, the “List”). Upon agreement of such list by the Company and PHD, such list shall be deemed the final, complete and comprehensive list of all third parties introduced to the Company by PHD. Such list shall be kept confidential for a period of twenty-four (24) months following delivery of the list by PHD to the Company. If, within twenty-four (24) months after the Termination Date, the Company completes any private financing of equity or debt or other capital raising activity of the Company (other than the exercise by any person or entity of any options, warrants or other convertible securities other than the warrants issued pursuant to this Agreement) with any of the Investors set forth on the List, the Company will pay to PHD upon the closing of such financing the compensation set forth in Sections 3(a), 3(b) and 3(e) as a “Source Fee”.

 

  

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(b)           Notwithstanding anything herein to the contrary, subject to the twenty four (24) month limitation described in Section 4(a) above, the obligation to pay the compensation and expenses described in Section 3, this Section 4, Sections 7 and 9-18 and all of Exhibit A attached, hereto (the terms of which are incorporated by reference hereto), will survive any termination or expiration of this Agreement.  The termination of this Agreement shall not affect the Company’s obligation to pay fees to the extent provided for in Section 3 herein and shall not affect the Company’s obligation to reimburse the expenses accruing prior to such termination to the extent provided for herein.  All such fees and reimbursements due shall be paid to the Placement Agent on or before the Termination Date (in the event such fees and reimbursements are earned or owed as of the Termination Date) or upon the closing of the Offering or any applicable portion thereof (in the event such fees are due pursuant to the terms of Section 3 hereof).

5.           Certain Placement Procedures.  The Company and the Placement Agent each represents to the other that it has not taken, and the Company and the Placement Agent each agrees with the other that it will not take any action, directly or indirectly, so as to cause the Offering to fail to be entitled to rely upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”).  In effecting the Offering, the Company and the Placement Agent each agrees to comply in all material respects with applicable provisions of the Act and any regulations thereunder and any applicable state laws and requirements.  In order to induce PHD to enter into this Agreement, the Company agrees that PHD may rely upon any representations and warranties made to any Investor in this Offering (as if fully set forth herein) for its benefit, and that all such representations and warranties shall be true and correct in all material respects, and shall be true and correct in all material respects as of the date of each Closing.   The Company agrees that it shall cause any opinion of its counsel delivered to any Investors in the Offering also to be addressed and delivered to the Placement Agent, or to cause such counsel to deliver to the Placement Agent a letter authorizing it to rely upon such opinion.

6.           Representations, Warranties and Covenants of PHD.

PHD hereby represents and warrants to, and covenants with, the Company that:

(a)           (i)           Sales of the Securities by the Placement Agent will be made only in such jurisdictions in which: (i) the Placement Agent is a registered broker-dealer; and (ii) the Placement Agent has been advised by counsel that the offering and sale of the Securities is registered under, or is exempt from registration under, applicable laws.

(ii)           Offers and sales of the Securities by the Placement Agent will be made in compliance with the provisions of Regulation D under the Act and/or Section 4(2) of the Act, and the Placement Agent shall furnish to each investor a copy of the Offering Documents (including all Schedules and Exhibits thereto) prior to accepting any payments for Securities.

(b)           The Placement Agent is: (i) a registered broker-dealer under the Exchange Act; (ii) a member in good standing of FINRA; and (iii) registered as a broker-dealer in each jurisdiction in which it is required to be registered as such in order to offer and sell the Securities in such jurisdiction.

 

  

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(c)           The Placement Agent will periodically notify the Company of the jurisdiction in which it intends the Securities to be offered by it or will be offered by it pursuant to this Agreement, and will periodically notify the Company of the status of the Offering conducted pursuant to this Agreement.

7.           Indemnification. The Company agrees to indemnify Placement Agent in accordance with the indemnification and other provisions attached to the Agreement as Exhibit A (the “Indemnification Provisions”), which provisions are incorporated herein by reference and shall survive the termination or expiration of the Agreement.

8.           Other Activities.  The Company acknowledges that PHD has been, and may in the future be, engaged to provide services as an underwriter, placement agent, finder, advisor and investment banker to other companies in the industry in which the Company is involved.  Subject to the confidentiality provisions of PHD contained in Section 2 hereof, the Company acknowledges and agrees that nothing contained in this Agreement shall limit or restrict the right of PHD or of any member, manager, officer, employee, agent or representative of PHD, to be a member, manager, partner, officer, director, employee, agent or representative of, investor in, or to engage in, any other business, whether or not of a similar nature to the Company’s business, nor to limit or restrict the right of PHD to render services of any kind to any other corporation, firm, individual or association; provided that PHD and any of its member, manager, officer, employee, agent or representative shall not use the Information to the detriment of the Company.  PHD may, but shall not be required to, present opportunities to the Company.

9.           Future Rights.    Upon the successful completion of any amount of the Offering, for a period of twenty-four (24) months from the final closing the Offering, the Company grants PHD the right of first refusal to act as lead underwriter or placement agent for any and all future public and private equity and debt offerings during such twenty four (24) month period of the Company, or any successor to or any subsidiary of the Company. Any economics in connection with a Financing that will be split with any additional agent(s) or underwriter(s) will be determined solely by PHD.

10.           Governing Law; Jurisdiction; Waiver of Jury Trial.  This Agreement will be governed as to validity, interpretation, construction, effect and in all other respects by the internal law of the State of New York.  The Company and PHD each (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives any objection to the venue of any such suit, action or proceeding, and the right to assert that such forum is an inconvenient forum, and (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding.  Each of the Company and PHD further agrees to accept and acknowledge service of any and all process that may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agree that service of process upon it mailed by certified mail to its address shall be deemed in every respect effective service of process in any such suit, action or proceeding.  The parties hereby expressly waive all rights to trial by jury in any suit, action or proceeding arising under this Agreement.

 

  

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11.           Securities Law Compliance.  The Company, at its own expense, will obtain any registration or qualification required to sell any Securities under the Blue Sky laws of any applicable jurisdictions within the applicable required time periods.

12.           Representations and Warranties.  The Company and PHD each respectively represent and warrant that:  (a) it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder; (b) this Agreement has been duly authorized and executed and constitutes a legal, valid and binding agreement of such party enforceable in accordance with its terms; and (c) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby does not conflict with or result in a breach of (i) such party’s certificate of incorporation or by-laws or (ii) any agreement to which such party is a party or by which any of its property or assets is bound.

13.           Parties; Assignment; Independent Contractor.  This Agreement has been and is made solely for the benefit of PHD and the Company and each of the persons, agents, employees, officers, directors and controlling persons referred to in Exhibit A and their respective heirs, executors, personal representatives, successors and assigns, and nothing contained in this Agreement will confer any rights upon, nor will this Agreement be construed to create any rights in, any person who is not party to such Agreement, other than as set forth in this paragraph.  The rights and obligations of either party under this Agreement may not be assigned without the prior written consent of the other party hereto and any other purported assignment will be null and void.  PHD has been retained under this Agreement as an independent contractor, and it is understood and agreed that this Agreement does not create a fiduciary relationship between PHD and the Company or their respective Boards of Directors.  PHD shall not be considered to be the agent of the Company for any purpose whatsoever and PHD is not granted any right or authority to assume or create any obligation or liability, express or implied, on the Company’s behalf, or to bind the Company in any manner whatsoever.

14.           Validity.  This Agreement contains the entire agreement between the parties hereto.  No party has made any statement, agreement or representation, either oral or written, in connection herewith, modifying, adding or changing the terms and conditions herein set forth. No present or past dealings between the parties shall be permitted to contradict or modify the terms hereof. No modification of this Agreement shall be binding unless such modification is in writing and signed by the parties hereto. In case any term of this Agreement will be held invalid, illegal or unenforceable, in whole or in part, the validity of any of the other terms of this Agreement will not in any way be affected thereby.

15.           Counterparts.  This Agreement may be executed in counterparts and each of such counterparts will for all purposes be deemed to be an original, and such counterparts will together constitute one and the same instrument.

16.           Notices.  All notices will be in writing and will be effective when delivered in person or sent via facsimile and confirmed by letter, to the party to whom it is addressed at the following addresses or such other address as such party may advise the other in writing (copies shall not constitute notice):

	
To the Company:

	
Attitude Drinks Incorporated

	
  

	
10415 Riverside Drive, Suite 101

	
  

	
Palm Beach Gardens, FL 33410

	
  

	
Attention: Roy G. Warrern

	
  

	
Fax No.: (561) 799-5039

 

  

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With a copy to:

	Weed & Co. LLP

	
  

	4695 MacArthur Court, Suite 1430

	
  

	Newport Beach, CA 92660

	
  

	Attention:  Rick Weed

	
  

	Fax No.: (949) 475-9087

	
To PHD:

	
Perrin Holden & Davenport Capital Corp.

	
  

	
5 Hanover Square

	
  

	
New York, NY 10004

	
  

	
Telephone: 212.269.3500

	
  

	
Fax: 212.269.3087

	
  

	
Attention:  Jody Eisenman

 

	With a copy to: 	Ellenoff Grossman & Schole LLP

	
  

	150 East 42nd Street, 11th Floor

	
  

	New York, New York 10017

	
  

	Attention:  Stuart Neuhauser, Esq.

 

17.           Best Efforts Engagement for Capital Raising.  It is expressly understood and acknowledged that PHD’s engagement for the Offering does not constitute any commitment, express or implied, on the part of PHD or of any of its affiliates to purchase or place the Company’s securities or to provide any type of financing and that the Offering will be conducted by PHD on a “best efforts” (no minimum) basis.

18.           Announcements. The Company agrees that PHD shall, upon a successful transaction, have the right to place advertisements in financial and other newspapers and journals at its own expense describing its services to the Company hereunder, provided that PHD shall submit a copy of any such advertisement to the Company for its approval, such approval not to be unreasonably withheld, conditioned or delayed.  The Company further agrees that it shall not issue any press release in connection with the Offering without PHD’s prior written approval of such press release.  The Company further agrees that PHD’s counsel shall have the right to review and comment on any Current Report on Form 8-K regarding the Offering prepared by or on behalf of the Company before the same is filed with the SEC.

(Signature Page Follows)

 

  

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We are delighted at the prospect of working with you and look forward to a successful offering.  If you are in agreement with the foregoing, please execute and return two copies of this engagement letter to the undersigned. This Agreement may be executed in counterparts, electronic mail and by facsimile transmission.

 

 

	 	Very truly yours,	 
	 	 	 
	 	PERRIN HOLDEN & DAVENPORT CAPITAL CORP.	 
	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Jody Eisenman	 
	 	 	Name:  Jody Eisenman	 
	 	 	Title:    Chief Executive Officer	 

 

Agreed to and accepted this 8th day of March, 2011

ATTITUDE DRINKS INCORPORATED

 

By: /s/ Roy G. Warren

Name:           Roy G. Warren

Title:           Chief Executive Officer

 

  

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Exhibit A

INDEMNIFICATION PROVISIONS

Capitalized terms used in this Exhibit shall have the meanings ascribed to such terms in the Agreement to which this Exhibit is attached.

The Company agrees to indemnify and hold harmless Placement Agent and each of the other Indemnified Parties (as hereinafter defined) from and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party)) (collectively, “Losses”), directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with, Placement Agent’s acting for the Company, including, without limitation, any act or omission by Placement Agent in connection with its acceptance of or the performance or non-performance of its obligations under the Agreement between the Company and Placement Agent to which these indemnification provisions are attached and form a part, any breach by the Company of any representation, warranty, covenant or agreement contained in the Agreement or the subscription agreement with the investors (or in any instrument, document or agreement relating thereto, including any agency agreement), or the enforcement by Placement Agent of its rights under the Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification hereunder.

The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement of Placement Agent by the Company or for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct.

These Indemnification Provisions shall extend to the following persons (collectively, the “Indemnified Parties”):  Placement Agent, its present and former affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them.  These indemnification provisions shall be in addition to any liability, which the Company may otherwise have to any Indemnified Party.

 

  

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If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations hereunder.  An Indemnified Party shall have the right to retain counsel of its own choice to represent it, and the fees, expenses and disbursements of such counsel shall be borne by the Company.  Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company.  The Company shall be liable for any settlement of any claim against any Indemnified Party made with the Company’s written consent.  The Company shall not, without the prior written consent of Placement Agent, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by the Company and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations.  No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation.  The relative benefits received (or anticipated to be received) by the Company and it stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Agreement relates relative to the amount of fees actually received by Placement Agent in connection with such transaction or transactions.  Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by Placement Agent pursuant to the Agreement.

Neither termination nor completion of the Agreement shall affect these Indemnification Provisions which shall remain operative and in full force and effect.  The Indemnification Provisions shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.

 

 

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