SUBSCRIPTION ESCROW AGREEMENT

 

Subscription Escrow Agreement (this “Escrow Agreement”) dated as of the effective date (the “Effective Date”) set forth on schedule 1 attached hereto (“Schedule 1”) by and among the corporation identified on Schedule 1 (the “Issuer”), the corporation identified on Schedule 1 (as applicable) (the “Depositor”) and CSC Trust Company of Delaware, as escrow agent hereunder (the “Escrow Agent”).

 

WHEREAS, the Issuer intends to offer and sell to investors in a private placement transaction (the “Offering”) the securities identified on Schedule 1 (the “Securities”), at the purchase price of $200,000.00 per Unit identified on Schedule 1 (the “Purchase Price”) up to the maximum escrow deposit amount identified on Schedule 1 (the “Maximum Amount”);

 

WHEREAS, the Offering is being made on an “any or all” basis to “accredited investors” in accordance with Rule 506 of Regulation D under the Securities Act, as amended (the “Securities Act”), and/or to “non-U.S. Persons” in accordance with Rule 903 of Regulation S under the Securities Act;

 

WHEREAS, the Issuer may accept any Subscriber’s subscription for a fraction of a Unit at any Initial Closing or Subsequent Closing;

 

WHEREAS, Securities will be offered through the date specified on Schedule 1 (the “Initial Offering Period”), which period may be extended in writing by the Issuer and Depositor (this additional period and the Initial Offering Period shall be referred to as the “Offering Period”);

 

WHEREAS, the initial closing of the Offering (the “Initial Closing”) is conditioned on the receipt of subscriptions in form acceptable to the Issuer and certain other conditions (collectively, the “Initial Closing Conditions”);

 

WHEREAS, after the Initial Closing, the Issuer may continue the Offering until the Maximum Amount has been reached or the end of the Offering Period, whichever is earlier, and subsequent closings (each, a “Subsequent Closing”) may take place on an intermittent basis, as determined by the Issuer and the Depositor, conditioned on the receipt of subscriptions in form acceptable to the Issuer and certain other conditions (collectively, the “Subsequent Closing Conditions”);

 

WHEREAS, the subscribers in the Offering (the “Subscribers”), in connection with their intent to purchase Securities in the Offering, shall execute and deliver Securities Purchase Agreements and certain related documents memorializing the Subscribers’ agreements to purchase and the Issuer’s agreement to sell the number of Securities set forth therein at the Purchase Price;

 

WHEREAS, the parties hereto desire to provide for the safekeeping of the Escrow Deposit (as defined below) until such time as the Escrow Deposit is released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and

 

 

WHEREAS, the Escrow Agent has agreed to accept, hold, and disburse the Escrow Deposit deposited with it and the earnings thereon in accordance with the terms of this Escrow Agreement.

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1.          Appointment. The Issuer and Depositor hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

2.          Escrow Fund. On or before the Initial Closing, or on or before any Subsequent Closing with respect to Securities sold after the Initial Closing, each Subscriber shall have delivered to the Escrow Agent the full Purchase Price for the number of Securities subscribed for by such Subscriber by wire transfer of immediately available funds pursuant to the wire transfer instructions set forth on Schedule 2 (“Schedule 2”) hereto, to the account of the Escrow Agent referenced on Schedule 2 hereto. All funds received from the Subscribers in connection with the sale of Securities in the Offering shall be deposited with the Escrow Agent (the “Escrow Deposit”). The Escrow Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit and the proceeds thereof (the “Escrow Fund”) as directed in Section 3.

 

3.          Investment of Escrow Fund. During the term of this Escrow Agreement, the Escrow Fund shall be invested and reinvested by the Escrow Agent in the investment indicated on Schedule 1 or such other investments as shall be directed in writing by the Issuer and the Depositor and as shall be acceptable to the Escrow Agent. All investment orders involving U.S. Treasury obligations, commercial paper and other direct investments may be executed through broker-dealers selected by the Escrow Agent. Periodic statements will be provided to Issuer and Depositor reflecting transactions executed on behalf of the Escrow Fund. The Issuer and Depositor, upon written request, will receive a statement of transaction details upon completion of any securities transaction in the Escrow Fund without any additional cost. The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated on Schedule 1 or any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund. The Escrow Agent may earn compensation in the form of short-term interest (“float”) on items like uncashed distribution checks (from the date issued until the date cashed), funds that we are directed not to invest, deposits awaiting investment direction or received too late to be invested overnight in previously directed investments.

 

4.          Disposition and Termination. The Depositor and the Issuer agree to notify the Escrow Agent in writing of the Initial Closing date of the Offering. Additionally, subsequent to an Initial Closing, Depositor and the Issuer agree to notify the Escrow Agent in writing of any Subsequent Closing date, if any, and of the termination of the Offering. Upon receipt of such written notification(s), the following procedures will take place.

 

 

i.            Release of Escrow Fund upon Initial Closing. Prior to the Initial Closing, the Issuer and the Depositor shall deliver to the Escrow Agent joint written instructions executed by a duly authorized executive officer of each of the Issuer and the Depositor (“Instructions”), which Instructions shall provide the day designated as the Initial Closing date, and acknowledge and agree that as of the Initial Closing date the Initial Closing Conditions have been or will be fully satisfied and shall specify the time, places and method of delivery of the Escrow Fund, including with respect to Depositor fees that may be disbursed to the Depositor or to any other co-placement agent or selected dealer. The Escrow Agent shall, at the time and place and by the method specified in the Instructions, deliver the Escrow Fund (along with the interest earned on the investment of the Escrow Fund pursuant to Section 3 above).

 

ii.         Release of Escrow Fund upon a Subsequent Closing. Prior to a Subsequent Closing, the Issuer and the Depositor shall deliver to the Escrow Agent Instructions, which Instructions shall provide the day designated as the Subsequent Closing date, and acknowledge and agree that as of the Subsequent Closing date the Subsequent Closing Conditions have been or will be fully satisfied and shall specify the time, places and method of delivery of the then Escrow Fund, including with respect to Depositor fees that may be disbursed to the Depositor or to any other co-placement agent or selected dealer. The Escrow Agent shall, at the time and place and by the method specified in the Instructions, deliver the then Escrow Fund (along with the interest earned on the investment of the Escrow Fund pursuant to Section 3 above).

 

iii.         Return of Escrow Fund on Termination of Offering. In the event that the Escrow Agent shall have received written notice executed by a duly authorized executive officer of each of the Issuer and the Depositor indicating that the Offering has been terminated prior to the Initial Closing and designating a termination date, the Escrow Agent shall return to each Subscriber, the Purchase Price (without interest and deduction) delivered by such Subscriber to the Escrow Agent. The Issuer and the Depositor shall provide the Escrow Agent with time, place and method of delivery for each Subscriber whose Purchase Price the Escrow Agent is to deliver pursuant to this Section (but in no case shall the Escrow Agent deliver such Purchase Price more than thirty (30) days following receipt by the Escrow Agent of such delivery instructions). In this case, the Escrow Agent shall, at the time and place and by the method specified in the notice of termination of the Offering, deliver to the Depositor any and all interest earned on the investment of the Escrow Fund pursuant to Section 3 above.

 

iv.         Return of Escrow Fund on Rejection of Subscription. In the event the Issuer reasonably determines it is necessary or appropriate to reject the subscription of any Subscriber for whom the Escrow Agent has received an Escrow Deposit, the Issuer shall deliver written notice of such event to the Escrow Agent and Depositor which notice shall include the reason for such rejection and the time, place and method of delivery for the return to such Subscriber of the Purchase Price delivered by such Subscriber. The Escrow Agent shall deliver such funds (without interest and deduction) pursuant to such written notice.

 

v.           Delivery Pursuant to Court Order. Notwithstanding any provision contained herein, 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 Escrow Fund 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.

 

 

Upon delivery of the Escrow Fund by the Escrow Agent (i) to the Issuer following the Initial Closing, if there are to be no Subsequent Closings, (ii) following a final Subsequent Closing, or (iii) to the Subscribers upon termination of the Offering prior to the Initial Closing, as the case may be, and in each case notice of termination of the Offering having been delivered by the Issuer and the Depositor to the Escrow Agent, this Escrow Agreement shall terminate, subject to the provisions of Section 8.

 

5.          Escrow Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Fund. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to the Issuer or Depositor. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

6.          Succession. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving 10 business days advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect. The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of the Escrow Agreement. Any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act.

 

 

7.          Fees. The Issuer and Depositor agree jointly and severally to (i) pay the Escrow Agent upon the Initial Closing and from time to time thereafter reasonable compensation for the services to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule 4 attached hereto, and (ii) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorney’s fees and expenses, incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination of this Escrow Agreement. The Escrow Agent is authorized to deduct such fees from the Escrow Fund at the time of the Initial Closing without prior authorization from the Issuer or Depositor. In the event that the Offering is terminated prior to an Initial Offering, the Issuer and Depositor agree to pay the Escrow Agent the Review Fee and the Acceptance Fee as described in Schedule 4 hereto.

 

8.          Indemnity. The Issuer and the Depositor shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”) from all loss, liability or expense (including the reasonable fees and expenses of in house or outside counsel) arising out of or in connection with (i) the Escrow Agent’s execution and performance of this Escrow Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the gross negligence or willful misconduct of such indemnitee, or (ii) its following any instructions or other directions from the Issuer or the Depositor, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The parties hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Escrow Agreement.

 

9.          TINs. The Issuer and the Depositor each represent that its correct TIN assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1. All interest or other income earned under the Escrow Agreement shall be allocated and/or paid as directed in a joint written direction of the Issuer and the Depositor and reported by the recipient to the Internal Revenue Service or any other taxing authority. Notwithstanding such written directions, Escrow Agent shall report and, as required withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution. In the absence of timely direction, all proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested from time to time by the Escrow Agent as provided in Section 3. In the event that any earnings remain undistributed at the end of any calendar year, Escrow Agent shall report to the Internal Revenue Service or such other authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by the Issuer and the Depositor. In addition, Escrow Agent shall withhold any taxes it deems appropriate and shall remit such taxes to the appropriate authorities.

 

10.         Notices. All communications hereunder shall be in writing and shall be deemed to be duly given and received:

 

(i)          upon delivery if delivered personally or upon confirmed transmittal if by facsimile;

 

(ii)         on the next Business Day (as hereinafter defined) if sent by overnight courier; or

 

 

(iii)       four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address set forth on Schedule 1 or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested.

 

Notwithstanding the above, in the case of communications delivered to the Escrow Agent pursuant to (ii) and (iii) of this Section 10, such communications shall be deemed to have been given on the date received by the Escrow Agent. In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate. “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

 

11.         Security Procedures. In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on schedule 3 hereto (“Schedule 3”), and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The Escrow Agent and the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Issuer or the Depositor to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s bank or an intermediary bank designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable.

 

12.         Miscellaneous. The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto. Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole or in part by any party, except as provided in Section 6, without the prior consent of the other parties, which consent shall not be unreasonably withheld. This Escrow Agreement shall be governed by and construed under the laws of the State of Delaware. Each party hereto irrevocably waives any objection on the grounds of venue, forum non conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of Delaware. The parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Escrow Agreement. No party to this Escrow Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, floods, strikes, equipment or transmission failure, or other causes reasonably beyond its control. This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date set forth in Schedule 1.

 

	CSC Trust Company of Delaware,
	as Escrow Agent

 

	By:	/s/ Alan R. Halpern
		Name: Alan R. Halpern
		Title:   President

 

	ISSUER:
	BOLDFACE Group, Inc.

 

	By:	/s/ Nicole Ostoya
		Name: Nicole Ostoya
		Title: Chief Executive Officer and President

 

	DEPOSITOR:
	Aegis Capital Corp.

 

	By:	/s/ Kevin C. McKenna
		Name: Kevin C. McKenna
		Title:   Chief Compliance Officer

 

 

Schedule 1

 

Effective Date:	December 19, 2012
Name of Issuer:	BOLDFACE Group, Inc.
Issuer Notice Address:	1309 Pico Blvd., Suite A
	Santa Monica, CA 90405
Issuer IRS EIN	02-0811868
With a copy to (which	Gottbetter & Partners, LLP
shall not constitute notice):	488 Madison Avenue, 12th Floor
	New York, NY  10022
	Attn:  Adam S. Gottbetter
Name of Depositor:	Aegis Capital Corp.
Depositor Notice Address:	810 Seventh Avenue, 18th Floor
	New York, NY 10019
Depositor TIN:	11-2671906
Escrow Deposit:	$3,000,000 maximum deposit, in whole or in part
Security:	Units, with each Unit consisting of: (i) a Note in denomination of Two Hundred Thousand Dollars ($200,000), which will be convertible into shares of the Issuer’s common stock and (ii) five-year warrants to purchase 800,000 shares of the Issuer’s common stock, half of which will be exercisable at $0.50 per share and half of which will be exercisable at $1.00 per share.
Purchase Price:	$200,000.00 per Unit
End of Initial Offering Period:	January 31, 2013
End of Offering Period:	n/a (subject to a mutual extension in writing by Aegis Capital Corp. and the Issuer)

 

Investment:

¨

Goldman Sachs Financial Square Funds Prime Obligations Fund (the “Share Class”), an institutional money market mutual fund for which the Escrow Agent serves as shareholder servicing agent and/or custodian or subcustodian. The parties hereto: (i) acknowledge Escrow Agent’s disclosure of the services CSC is providing to and the fees it receives from Goldman Sachs; (ii) consent to the Escrow Agent’s receipt of these fees in return for providing shareholder services for the Share Class; and (iii) acknowledge that the Escrow Agent has provided on or before the date hereof a Goldman Sachs Financial Square Funds Prime Obligations Fund prospectus which discloses, among other things, the various expenses of the Share Class and the fees to be received by the Escrow Agent.

 

¨

Such other investments as Issuer, Depositor and Escrow Agent may from time to time mutually agree upon in a writing executed and delivered by the Issuer and the Depositor and accepted by the Escrow Agent.

 

x

The funds shall not be invested.

 

Escrow Agent notice address:	CSC Trust Company of Delaware
	2711 Centerville Road
	One Little Falls Centre
	Wilmington, DE 19808
	Attention:  Alan R. Halpern
	Fax No.:  302-636-8666
Escrow Agent’s compensation:	See Appended Schedule 4.

 

 

Schedule 2

 

Wire Instructions

 

PNC Bank

300 Delaware Avenue

Wilmington DE 19899

ABA# 031100089

Account Name: CSC Trust Company of Delaware

Account Number: 5605012373

FFC: BOLDFACE Group, Inc. #2; 79-1828 [insert Purchaser’s name]

 

 

Schedule 3

 

Telephone Number(s) for Call-Backs and

Person(s) Designated to Confirm Funds Transfer Instructions

 

If to Issuer:

 

Name		Telephone Number
1. Nicole Ostoya		(415) 602-5265
2. Ashumi Kothary		(310) 450-4501

 

If to Depositor:

 

Aegis Capital Corp.

 

Name		Telephone Number
1. Daniel Kordash		(917) 206-8985 or (917) 297-5009 (cell)
2. Adam Stern		(917) 445-3331

 

Telephone call-backs may be made to each Issuer and Depositor if joint instructions are required pursuant to this Escrow Agreement.

 

 

Schedule 4*

 

REVIEW FEE:

For initial examination of the Escrow Agreement and all supporting documents. This is a one-time fee payable upon execution of the agreement.

 

$500.00

 

ACCEPTANCE FEE:

For initial services associated with establishing the Escrow Account. This is a one-time fee payable upon execution of the agreement.

 

$500.00

 

ANNUAL ADMINISTRATION FEE:

An annual charge or any portion of a 12-month period thereof. This fee is payable 45 days after the opening of the Escrow Account or prior to the final disbursement of the Escrow Fund, whichever event occurs first, and in advance of the annual anniversary date thereafter. This charge is not prorated for the first year. There is an additional annual charge of 250.00/subaccount opened.

 

$1,500.00

 

TRANSACTION FEES:

Wire transfer of fund: $35.00/domestic wire initiated; $50.00/international wire initiated

Checks Cut: $10.00/check cut

Securities Purchase (Buy and Sell): $50.00/transaction

Returned Check: $30.00/returned item

 

*Out-of-pocket expenses, fees and disbursements and services of an unanticipated or unexpected nature are not included in the above schedule.