ESCROW AGREEMENT
Exhibit
10.49
WHEREAS, RIO VISTA ENERGY PARTNERS L.P., a Delaware limited partnership (“Buyer”), REGIONAL
ENTERPRISES, INC., a Virginia corporation (the “Surviving Corporation”), and W. XXXX XXXXXX, XX., a
resident of the Commonwealth of Virginia (“Shareholders’ Agent”), have caused or will cause certain
funds to be deposited in escrow with FIRST CAPITAL BANK, a Virginia banking corporation (the
“Escrow Agent”), on terms and conditions more particularly described herein.
NOW, THEREFORE, in consideration of the premises, the undersigned hereby agree as follows,
effective as of the 27th day of July, 2007:
ARTICLE I
TERMS AND CONDITIONS
TERMS AND CONDITIONS
1.1 Establishment of Funds. The undersigned have caused or will cause to be deposited with
the Escrow Agent the sum of (i) FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) (such sum,
together with any replenishment thereof, as set forth in Section 1.3(A)(ii) hereof, and interest
earned thereon, or the balance thereof remaining from time to time, being referred to herein as the
“Indemnity Fund”), and (ii) ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) (such sum, together with
interest earned thereon, or the balance thereof remaining from time to time, being referred to
herein as the “NS Property Fund”). The Indemnity Fund and the NS Property Fund may be referred to
herein individually as a “Fund” and collectively as the “Funds.”
1.2 Treatment of Funds.
A. The monies constituting the Indemnity Fund shall be deposited into a segregated,
interest-bearing money market account of the Escrow Agent known as The Capital Reserve Account.
Such account (the “Indemnity Escrow Account”) shall be styled the Regional Enterprises Indemnity
Escrow Account. The Indemnity Fund shall not be deposited into an account other than the Indemnity
Escrow Account without the prior written consent of Buyer and Shareholders’ Agent.
B. The monies constituting the NS Property Fund shall be deposited into a segregated,
interest-bearing money market account of the Escrow Agent known as The Capital Reserve Account.
Such account (the “NS Property Escrow Account”) shall be styled the Regional Enterprises NS
Property Escrow Account. The NS Property Fund shall not be deposited into an account other than
the NS Property Escrow Account without the prior written consent of Buyer and Shareholders’ Agent.
1.3 Escrow Procedure and Payment Instruction.
A. The Indemnity Fund, together with all interest earned thereon, which interest shall become
and remain a part of the Indemnity Fund, shall be held and disbursed in accordance with the terms
of this Escrow Agreement as follows:
(i) If, on or prior to August 27, 2008 (the “Indemnity Holdback Release Date”), Buyer
or the Surviving Corporation determines to assert a claim for indemnification (a “Claim”)
under Section 11 of the Agreement and Plan of Merger among Buyer, the Surviving Corporation,
Regional Enterprizes, Inc., a Virginia corporation (“REI”), the Shareholders of REI and
Shareholders’ Agent dated July 27, 2007 (the “Merger Agreement”), then Buyer or the
Surviving Corporation shall give Shareholders’ Agent and the Escrow Agent written notice of
such claim (a “Claim Notice”), specifying in reasonable detail the basis therefor and the
amount and calculation thereof. If Shareholders’ Agent does not deliver to Buyer, the
Surviving Corporation and the Escrow Agent written notice of an objection to the Claim
within thirty (30) days after receipt of the Claim Notice relating thereto, the Escrow Agent
shall disburse to Buyer or the Surviving Corporation (as set forth in the Claim Notice) the
dollar amount of the Claim (as set forth in the Claim Notice) from the Indemnity Escrow
Account. If Shareholders’ Agent shall timely deliver to Buyer, the Surviving Corporation
and the Escrow Agent such written notice of objection, then the Escrow Agent shall not
disburse funds from the Indemnity Escrow Account with respect to the Claim set forth in the
Claim Notice until: (x) Buyer, the Surviving Corporation and Shareholders’ Agent have
executed joint written instructions referring to such Claim Notice and directing the Escrow
Agent to disburse funds from the Indemnity Escrow Account; or (y) the Escrow Agent has
received a copy of a judgment, decree or order of a court, or copy of an arbitration award,
adjudicating the dispute with respect to such claim for indemnification, which
judgment, decree, or arbitration award constitutes a final and binding adjudication of the
matter in controversy which cannot be appealed; whereupon the Escrow Agent shall disburse
funds from the Indemnity Escrow Account in such amount as provided in such joint written
instructions or in such final order, judgment or award.
(ii) If (a) it is determined pursuant to Section 1.8(c) of the Merger Agreement that
there was a shortfall in Working Capital (as defined in the Merger Agreement) as of the
Closing Date (as defined in the Merger Agreement) in excess of any previous downward
adjustment of the Initial Consideration (as defined in the Merger Agreement), and (b) Buyer
elects to have such shortfall paid out of the Indemnity Fund pursuant to Section 1.8(c)(i)
of the Merger Agreement, then Buyer or the Surviving Corporation shall give Shareholders’
Agent and the Escrow Agent written notice of such election (the “Election Notice”),
specifying in reasonable detail the calculation of such shortfall based upon the final
calculation of Working Capital pursuant to Section 1.8(c) of the Merger Agreement. The
Escrow Agent shall disburse to Buyer or the Surviving Corporation (as set forth in the
Election Notice) the dollar amount of such shortfall (as set forth in the Election Notice)
from the Indemnity Escrow Account within three (3) business days of receipt of the Election
Notice, and Shareholders’ Agent shall replenish the Indemnity Fund by the amount of such
shortfall within thirty (30) days of receipt of the Election Notice. The parties hereto
hereby instruct the Escrow Agent to provide notification to all parties in the event the
Indemnity Fund is not replenished by the amount of such shortfall within thirty (30) days of
receipt of the Election Notice.
(iii) If neither Buyer nor the Surviving Corporation has delivered a Claim Notice to
Shareholders’ Agent and the Escrow Agent on or prior to the Indemnity Holdback Release Date,
or if any and all Claim Notices delivered to Shareholders’ Agent and the Escrow Agent on or
prior to the Indemnity Holdback Release Date have been resolved pursuant to subsection (i)
above, then the Escrow Agent shall deliver to Shareholders’ Agent the portion of the funds
remaining in the Indemnity Escrow Account (including any interest). The Escrow Agent shall
deliver such amount to Shareholders’ Agent promptly after the Indemnity Holdback Release
Date, unless one or more Claim Notices have not been finally resolved pursuant to subsection
(i) above, in which case the Escrow Agent shall retain such amount in the Indemnity Escrow
Account until such Claim Notice(s) have been finally resolved pursuant to subsection (i)
above; provided, however, that the Escrow Agent shall disburse to Shareholders’ Agent from
the Indemnity Escrow Account any funds in excess of the aggregate amount of the Claims which
have been asserted but not finally resolved pursuant to subsection (i) above on or prior to
the Indemnity Holdback Release Date. Any amounts not delivered pursuant to this subsection
(ii) shall be delivered in accordance with subsection (i) as provided in a joint written
instruction or a final order, judgment or award.
B. The NS Property Fund, together with all interest earned thereon, which interest shall
become and remain a part of the NS Property Fund, shall be held and disbursed in accordance with
the terms of this Escrow Agreement as follows:
(i) If, on or prior to July 27, 2010 (the “NS Holdback Release Date”), an event occurs
that triggers the release of the NS Property Fund under Section 1.7(b) of the Merger
Agreement, then Buyer, the Surviving Corporation or Shareholders’ Agent (the “Notifying
Party”) shall give Escrow Agent and the other parties hereto written notice of such event (a
“Release Notice”), specifying in reasonable detail the basis therefor. If none of the other
parties delivers to the Notifying Party and the Escrow Agent written notice of an objection
to the Release Notice (a “Notice of Objection”) within thirty (30) days after receipt of the
Release Notice, the Escrow Agent shall disburse to the Shareholders’ Agent or the Surviving
Corporation (as set forth in the Release Notice) the amount of the NS Property Fund
(including any interest) from the NS Property Escrow Account. If any of the other parties
shall timely deliver to the Notifying Party and the Escrow Agent a Notice of Objection, then
the Escrow Agent shall not disburse the NS Property Fund from the NS Property Escrow Account
until: (x) Buyer, the Surviving Corporation and Shareholders’ Agent have executed joint
written instructions directing the Escrow Agent to disburse the NS Property Fund (including
any interest) from the NS Property Escrow Account; or (y) the Escrow Agent has received a
copy of a judgment, decree or order of a court, or copy of an arbitration award,
adjudicating the dispute with respect to such Notice of Objection, which judgment, decree,
or arbitration award constitutes a final and binding adjudication of the matter in
controversy which cannot be appealed; whereupon the Escrow Agent shall disburse the NS
Property Fund (including any interest) from the NS Property Escrow Account as provided in
such joint written instructions or in such final order, judgment or award.
(ii) If neither Buyer, the Surviving Corporation nor Shareholders’ Agent has delivered
a Release Notice to the other parties and the Escrow Agent on or prior to the NS Holdback
Release Date, then the Escrow Agent shall deliver to Shareholders’ Agent the NS Property
Fund (including any interest) from the NS Property Escrow Account promptly after the NS
Holdback Release Date.
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1.4 Termination. This Escrow Agreement shall terminate upon the disbursement of the balance
of both Funds in accordance with the provisions of Section 1.3 hereof.
1.5 Rights of Lender. The parties hereto acknowledge that, notwithstanding anything to the
contrary set forth in this Agreement, the Escrow Agent shall pay any and all amounts, which would
otherwise be released from the Funds to Buyer or the Surviving Corporation pursuant to Section 1.3,
to RZB Finance LLC, a Delaware limited liability company (together with its successors and assigns,
the “Lender”), at the following address: 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xx. Xxxxx Xxxxxx. Each of Buyer and the Surviving Corporation hereby irrevocably authorizes
and directs the Escrow Agent to pay any and all amounts, which would otherwise be released from the
Funds to Buyer or the Surviving Corporation pursuant to Section 1.3, to Lender without the
necessity of any inquiry to Buyer or the Surviving Corporation and without any liability to Buyer
or the Surviving Corporation. The parties hereto agree that this Section 1.5 and Sections 3.3 and
3.6 hereof shall run to the benefit of Lender and that Lender shall be an intended third-party
beneficiary of this Section 1.5 and Sections 3.3 and 3.6 hereof.
ARTICLE II
PROVISIONS AS TO THE ESCROW AGENT
PROVISIONS AS TO THE ESCROW AGENT
2.1 Limitation of the Escrow Agent’s Capacity.
A. This Escrow Agreement expressly and exclusively sets forth the duties of the Escrow
Agent with respect to any and all matters pertinent hereto, and no implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Agent. This Escrow
Agreement constitutes the entire agreement between the Escrow Agent and the other parties
hereto in connection with the subject matter of this escrow, and no other agreement entered
into between the parties, or any of them, shall be considered as adopted or binding, in
whole or in part, upon the Escrow Agent notwithstanding that any such other agreement may be
referred to herein or deposited with the Escrow Agent or the Escrow Agent may have knowledge
thereof, and the Escrow Agent’s rights and responsibilities shall be governed solely by this
Escrow Agreement.
B. The Escrow Agent acts hereunder as a depository only, and is not responsible or
liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of
the subject matter of this Escrow Agreement or any part thereof, or for the form of
execution thereof, or for the identity or authority of any person executing or depositing
such subject matter. The Escrow Agent shall be under no duty to investigate or inquire as
to the validity or accuracy of any document, agreement, instruction or request furnished to
it hereunder reasonably believed by it to be genuine, and the Escrow Agent may rely and act
upon, and shall not be liable for acting or not acting upon, any such document, agreement,
instruction or request. The Escrow Agent shall in no way be responsible for notifying, nor
shall it be its duty to notify, any party hereto or any other party interested in this
Escrow Agreement of any payment required or maturity occurring under this Escrow Agreement
or under the terms of any instrument deposited herewith.
2.2 Authority to Act.
A. The Escrow Agent is hereby authorized and directed by the undersigned to deliver the
subject matter of this Escrow Agreement only in accordance with the provisions of Article I
of this Escrow Agreement.
B. The Escrow Agent shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, power of attorney or other paper or
document which the Escrow Agent in good faith believes to be genuine and what it purports to
be, including, but not limited to, items directing investment or non-investment of funds,
items requesting or authorizing release, disbursement or retainage of the subject matter of
this Escrow Agreement and items amending the terms of this Escrow Agreement.
C. The Escrow Agent may consult with legal counsel at the joint and several cost and
expense of the undersigned (other than the Escrow Agent) in the event of any dispute or
question as to the construction of any of the provisions hereof or its duties hereunder, and
it shall incur no liability and shall be fully protected in acting in accordance with the
advice of such counsel.
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D. In the event of any disagreement between any of the parties to this Escrow
Agreement, or between any of them and any other person, resulting in adverse claims or
demands being made in connection with the matters covered by this Escrow Agreement, or in
the event that the Escrow Agent, in good faith, be in doubt as to what action it should take
hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands
on it, or refuse to take any other action hereunder, so long as such disagreement continues
or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable
in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be
entitled to continue so to refrain from acting until (i) the rights of all interested
parties shall have been fully and finally adjudicated by arbitration or a court of competent
jurisdiction, or (ii) all differences shall have been adjudged and all doubt resolved by
agreement among all of the interested persons, and the Escrow Agent shall have been notified
thereof in writing signed by all such persons. Notwithstanding the foregoing, the Escrow
Agent may in its discretion obey the order, judgment, decree or levy of any court, whether
with or without jurisdiction, or of any agency of the United States or any political
subdivision thereof, or of any agency of the Commonwealth of Virginia or of any political
subdivision thereof, and the Escrow Agent is hereby authorized in its sole discretion, to
comply with and obey any such orders, judgments, decrees or levies. The right of the Escrow
Agent under this sub-paragraph are cumulative of all other rights which it may have by law
or otherwise.
E. In the event that any controversy should arise among the parties with respect to the
Escrow Agreement, or should the Escrow Agent resign and the parties fail to select another
Escrow Agent to act in its stead, the Escrow Agent shall have the right to institute a xxxx
of interpleader in any court of competent jurisdiction to determine the rights of the
parties.
2.3 Compensation/Indemnification.
A. The Escrow Agent’s fees for acting as the Escrow Agent hereunder shall be as
follows: (i) $350.00 with respect to the Indemnity Escrow Account; (ii) $300.00 per year
with respect to the NS Property Escrow Account; and (iii) $150.00 for each Claim Notice,
Election Notice or Release Notice. One-half of all such fees shall be paid by Buyer or the
Surviving Corporation, and one-half shall be paid by Shareholders’ Agent.
B. The parties to this Escrow Agreement (other than the Escrow Agent and Lender) hereby
jointly and severally agree to indemnify and hold the Escrow Agent, its affiliates and their
officers, employees, successors, assigns, attorneys and agents (each an “Indemnified Party”)
harmless from all losses, costs, claims, demands, expenses, damages, penalties and
reasonable attorney’s fees suffered or incurred by any Indemnified Party or the Escrow Agent
as a result of anything which it may do or refrain from doing in connection with this Escrow
Agreement or any litigation or cause of action arising from or in conjunction with this
Escrow Agreement or involving the subject matter hereof or Funds or monies deposited
hereunder or for any interest upon any such monies, including, without limitation, arising
out of the negligence of the Escrow Agent; provided that the foregoing indemnification shall
not extend to the gross negligence or willful misconduct of the Escrow Agent. This
indemnity shall include, but not be limited to, all costs (including reasonable attorneys’
fees) incurred in conjunction with any interpleader which the Escrow Agent may enter into
regarding this Escrow Agreement.
2.4 Miscellaneous.
A. The Escrow Agent shall make no disbursement, investment or other use of funds until
and unless it has collected funds. The Escrow Agent shall not be liable for collection
items until the proceeds of the same in actual cash have been received or the Federal
Reserve has given the Escrow Agent credit for the funds.
B. The Escrow Agent may resign at any time by giving written notice to the parties
hereto, whereupon the parties hereto will immediately commence efforts to appoint a
successor Escrow Agent. Until a successor Escrow Agent has been named and accepts its
appointment or until another disposition of the subject matter of this Escrow Agreement has
been agreed upon by all parties hereto, the Escrow Agent shall not be discharged of any of
its duties hereunder.
C. All representations, covenants, and indemnifications contained in this Article II
shall survive the termination of this Escrow Agreement.
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ARTICLE III
GENERAL PROVISIONS
GENERAL PROVISIONS
3.1 Discharge of the Escrow Agent. Upon the delivery of all of the subject matter or monies
pursuant to the terms of this Escrow Agreement, the duties of the Escrow Agent shall terminate and
the Escrow Agent shall be discharged from any further obligation hereunder.
3.2 Escrow Instructions. Where directions or instructions from more than one of the
undersigned are required, such directions or instructions may be given by separate instruments of
similar tenor. Any of the undersigned may act hereunder through an agent or attorney-in-fact,
provided satisfactory written evidence of authority is first furnished to any party relying on such
authority.
3.3 Notice. Any payment, notice, request for consent, report, or any other communication
required or permitted in this Escrow Agreement shall be in writing and shall be deemed to have been
given when personally delivered to the party hereunder specified, when placed in the United States
mail, registered or certified, with return receipt requested, postage prepaid or when deposited
with an overnight courier service, and is addressed as follows:
| (A) | If to the Escrow Agent, addressed to: | |||
| First Capital Bank | ||||
| 0000 Xxx Xxxx, Xxxxx 000 | ||||
| Xxxx Xxxxx, Xxxxxxxx 00000 | ||||
| Attn: Escrow Department | ||||
| (B) | If to Buyer or the Surviving Corporation, addressed to: | |||
| Rio Vista Energy Partners L.P. | ||||
| Attn: Xxx X. Xxxxxxxx, Acting Chief Executive Officer | ||||
| 000 Xxxxxx Xxxxxx, Xxxxx 000 | ||||
| Xx Xxxxxxx, Xxxxxxxxxx 00000 | ||||
| and | ||||
| Regional Enterprises, Inc. | ||||
| Attn: Chief Executive Officer | ||||
| 000 Xxxxx Xxxxxx | ||||
| Xxxxxxxx, Xxxxxxxx 00000 | ||||
| and | ||||
| RZB Finance LLC | ||||
| 0000 Xxxxxx xx xxx Xxxxxxxx | ||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attn: Xx. Xxxxx Xxxxxx | ||||
| with copies, which shall not constitute notice, to: | ||||
| Law Offices of Xxxxx Xxxxx | ||||
| Attn: Xxxxx X. Xxxxx, Esq. | ||||
| Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 | ||||
| and | ||||
| Christian & Xxxxxx, L.L.P. | ||||
| Attn: Xxxxx X. Xxxxxxx, V, Esq. | ||||
| 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxxxx, Xxxxxxxx 00000-0000 |
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| (C) | If to Shareholders’ Agent, addressed to: | |||
| W. Xxxx Xxxxxx Xx. | ||||
| 00000 Xxxxxx Xxxxx Xxxxx | ||||
| Xxxxxxxx, Xxxxxxxx 00000 | ||||
| with a copy, which shall not constitute notice, to: | ||||
| Cantor Arkema, P.C. | ||||
| Attn: Xxxxx X. Xxxxxxx, Esq. | ||||
| 0000 X. Xxxx Xxxxxx | ||||
| P. O. Xxx 000 | ||||
| Xxxxxxxx, Xxxxxxxx 00000-0000 | ||||
| (D) | If to Lender, addressed to: | |||
| RZB Finance LLC | ||||
| 0000 Xxxxxx xx xxx Xxxxxxxx | ||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attn: Xx. Xxxxx Xxxxxx |
Any party may unilaterally designate a different address by giving notice of each such change
in the manner specified above to each other party. Notwithstanding the foregoing, no notice to the
Escrow Agent shall be deemed given to or received by the Escrow Agent unless actually delivered to
an officer of the Escrow Agent; provided, however, that so long as notice was given by Buyer, the
Surviving Corporation or Shareholders’ Agent, as the case may be, to the Escrow Agent in accordance
with the first sentence of this Section 3.3, the failure to timely deliver notice to an officer of
the Escrow Agent pursuant to the foregoing shall not preclude the Buyer’s, the Surviving
Corporation’s or the Shareholders’ Agent’s rights or remedies under Section 1.3.
3.4 Governing Law. This Escrow Agreement is being made in and is intended to be construed
according to the laws of the Commonwealth of Virginia. It shall inure to and be binding upon the
parties hereto and their respective successors, heirs and assigns.
3.5 Construction. Words used in the singular number may include the plural and the plural may
include the singular. The section headings appearing in this instrument have been inserted for
convenience only and shall be given no substantive meaning or significance whatsoever in construing
the terms and conditions of this Escrow Agreement.
3.6 Amendment. The terms of this Escrow Agreement may be altered, amended, modified or
revoked only by an instrument in writing signed by the undersigned, the Escrow Agent and the
Lender.
3.7 Force Majeure. Escrow Agent shall not be liable to the undersigned for any loss or damage
arising out of any acts of God, strikes, equipment or transmission failure, war, terrorism, or any
other act or circumstance beyond the reasonable control of the Escrow Agent.
3.8 Written Agreement. This Escrow Agreement represents the final agreement between the
parties, and may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the parties.
3.9 Counterparts. This Escrow Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, binding on all parties, notwithstanding that
all parties are not signatories to the same counterpart.
[SIGNATURE PAGE FOLLOWS]
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EXECUTED as of the date set forth above.
| RIO VISTA ENERGY PARTNERS L.P. | ||||||
| By: | Rio Vista GP LLC, General Partner | |||||
| By: | /s/ Xxx X. Xxxxxxxx
|
|||||
| Print Name: Xxx X. Xxxxxxxx | ||||||
| Title: Acting Chief Executive Officer | ||||||
| REGIONAL ENTERPRISES, INC. | ||||||
| By: | /s/ Xxx X. Xxxxxxxx
|
|||||
| Print Name: Xxx X. Xxxxxxxx | ||||||
| Title: President and Chief Executive Officer | ||||||
| /s/ W. Xxxx Xxxxxx, Xx. | ||||||
| W. Xxxx Xxxxxx, Xx., Shareholders’ Agent | ||||||
FIRST CAPITAL BANK, Escrow Agent, hereby accepts its appointment as Escrow Agent as described
in the foregoing Escrow Agreement, subject to the terms and conditions set forth therein.
| FIRST CAPITAL BANK | ||||||
| By: | /s/ Xxxxxxxxx X. Xxxxxx
|
|||||
| Name: Xxxxxxxxx X. Xxxxxx | ||||||
| Title: Senior VP and Chief Operating Officer | ||||||
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