HOLDBACK ESCROW AGREEMENT
THIS HOLDBACK ESCROW AGREEMENT
(the “Agreement”) is made and entered into as of April 24th, 2009 (the
“Effective Date”) by and among Tree Top Industries, Inc., a Nevada corporation
(the “Company”), BioEnergy Systems Management Inc., a Nevada corporation
(“Bio”), Wimase Limited, a Delaware corporation (“Wimase”), Energetic Systems
Inc., a Nevada corporation (“ESI”, and together with Bio and Wimase, the
“Shareholders”) and Xxxxxxx XxXxxxx, as escrow agent (“Escrow
Agent”).
RECITALS:
A. The
Company, the Shareholders and BioEnergy Applied Technologies, Inc., a Nevada
corporation (“BAT”), have entered into a stock exchange agreement dated April
24th, 2009 (the “Exchange Agreement”) and the other transaction agreements
described in Exhibit
A hereto (collectively with the Exchange Agreement, the “Transaction
Agreements”).
B. As
a condition to the Company entering into the Transaction Agreements, the Company
requires the Shareholders to enter into this Agreement and to place in escrow
with the Escrow Agent, 3,500,000 shares of Shareholder Common Stock (as defined
in the Exchange Agreement).
C. Escrow
Agent is willing to act as Escrow Agent hereunder and hold the Shareholder
Common Stock.
D. The
parties hereto desire to establish the terms and conditions upon which the
Shareholder Common Stock and substitutions therefor will be deposited, held in,
and disbursed from, the escrow account.
AGREEMENT:
NOW THEREFORE for and in
consideration of the foregoing recitals, the mutual covenants and agreements set
forth below and other good and valuable, consideration, the receipt and adequacy
of which are acknowledged, the undersigned agree as follows:
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1.
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Purpose of
Escrow.
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(a) Escrow. This
Agreement has been executed and the delivery of the Shareholder Common Stock
hereunder will be made in accordance with Section 3(a) for the
purpose of effecting certain indemnification and performance obligations of
Shareholders pursuant to the Transaction Agreements. Escrow Agent
agrees to accept delivery of the Shareholder Common Stock and to hold such
Shareholder Common Stock in escrow subject to the terms and conditions of, and
for the purposes recited in, this Agreement.
(b) Term of
Escrow. The term of this Agreement shall be for the period
commencing on the Effective Date and ending on the Termination Date as defined
below.
2. Appointment of Escrow
Agent. The Company and the Shareholders hereby appoint Escrow
Agent as escrow agent, to act in accordance with the terms and conditions set
forth in this Agreement, and Escrow Agent hereby accepts such appointment in
accordance with such terms and conditions.
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3.
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Deposit to
Escrow.
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(a) Delivery of
Stock. Upon the closing of the transactions contemplated by
the Transaction Agreements, the Company will deliver the Shareholder Common
Stock to the Escrow Agent. As used in this Agreement, the term
“Escrow Amount” shall mean the Shareholder Common Stock held by the Escrow Agent
at that time.
(b) No Encumbrance. The
Shareholder Common Stock or any beneficial interest therein may not be pledged,
sold, assigned or transferred (including by operation of law) by Shareholders
and may not be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of Shareholders prior to the
delivery to Shareholders of such Shareholder Common Stock.
(c) Power of Escrow Agent to
Transfer Escrow Amount. Escrow Agent is hereby granted the
power to effect any transfer of all or a portion of the Escrow Amount upon joint
written instruction of such transfer by the Company and Shareholders, and as
hereinafter provided in Section 5.
4. Holding of Escrow
Amount. Escrow Agent shall hold the Escrow Amount and only
disperse such to the Company or the Shareholders pursuant to this
Agreement.
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5.
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Disbursement of Shareholder
Common Stock.
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(a) Charge. When and if,
BAT incurs any liability, tax, compensation obligation, or similar charge (each
of which, a “Charge”), related to any period prior to the Closing Date (as
defined in the Exchange Agreement), the Company shall, within a reasonable time,
deliver a written notarized affidavit to Escrow Agent (“Affidavit”) in which it
certifies (i) as to the date on which the subject Charge was incurred, (ii) as
to the aggregate cost of the subject Charge, (iii) as to the number of shares of
Shareholder Common Stock which shall, in the aggregate, have a value equal to
the cost of the subject Charge (collectively, the “Charge Stock”), (iv) that it
has delivered notice of the subject Charge to the Shareholders and (v) that it
had followed all the requirements for the resolution of any disputes as set
forth in the Exchange Agreement. Upon receipt of the Affidavit,
Escrow Agent shall return the Charge Stock to the Company.
(b) Delivery. Escrow
Agent shall deliver the remaining Shareholder Common Stock then held by it on
the Termination Date (as defined below) to the Shareholders pro rata, based on
each Shareholders’ ownership of BAT Stock (as defined in the Exchange Agreement)
prior to the Closing Date.
6. Notice. Each notice
of a Charge shall be in writing and delivered to Shareholders pursuant to
Section 5(a)(iv) hereof and Section 9.7of the Exchange Agreement and shall
contain the information required in an Affidavit.
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7.
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Exculpation and Indemnification
of Escrow Agent.
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(a) Duties. Escrow
Agent will have no duties or responsibilities other than those expressly set
forth herein. In acting hereunder, Escrow Agent shall have such
duties as are specified herein, and no implied duties shall be read into this
Agreement, and Escrow Agent shall not be liable for any act done, or omitted to
be done, by it in the absence of its gross negligence or willful
misconduct. Escrow Agent will be under no liability to anyone by
reason of any failure on the part of any party hereto (other than Escrow Agent)
or any maker, endorser or other signatory of any document to perform such
person’s or entity’s obligations under any such document. Except to
the extent specifically provided for in this Agreement, Escrow Agent is not
obligated to render any statements or notices of non-performance hereunder to
any party hereto but may, in its discretion, inform any party hereto of any
matters pertaining to this Agreement and their counsel. Escrow Agent
shall not be charged with knowledge of any fact, including but not limited to
performance or non-performance of any condition herein, unless it has actually
received written notice thereof.
(b) Reliance. Other
than as related to Section 5(a) above,
Escrow Agent may rely upon any written notice, request, waiver, consent,
certificate, receipt, authorization, note, power of attorney or other instrument
or document which Escrow Agent in good faith believes to be genuine and to be
what it purports to be.
(c) Consult. Escrow
Agent shall be entitled to consult with legal counsel in the event that a
question or dispute arises with regard to the construction of any of the
provisions hereof and shall incur no liability and shall be fully protected in
acting in accordance with the advice or opinion of such counsel.
(d) Funds. Escrow
Agent shall not be required to use its own funds in the performance of any of
its obligations or duties or the exercise of any of its rights or powers, and
shall not be required to take any action which, in Escrow Agent’s sole and
absolute judgment, could involve it in expense or liability, unless furnished
with security and indemnity which it deems, in its sole and absolute discretion,
to be satisfactory.
(e) Bankruptcy. The
bankruptcy, insolvency or absence of any of the parties to this Agreement shall
not affect or prevent performance by the Escrow Agent of its obligations and
instructions hereunder
(f) Costs. The
Shareholders and the Company shall indemnify, hold harmless and defend Escrow
Agent from and against any fees, costs, expenses (including reasonable counsel
fees and disbursements), claims, damages or losses suffered by Escrow Agent in
connection with this Agreement, the services of Escrow Agent hereunder, or the
filing by Escrow Agent of any action related to this Agreement other than as a
result of Escrow Agent’s gross negligence or willful
misconduct. Escrow Agent may retain counsel of its choice to
participate in the defense of any indemnified claims, at the expense of the
Company and the Shareholders, and the Company and the Shareholders shall not
settle or otherwise resolve any indemnified claim without an unconditional
release in favor of Escrow Agent in form, scope and substance satisfactory to
Escrow Agent.
8. Fees and Expenses of Escrow
Agent. Escrow Agent shall be paid a fee of One Thousand
Dollars ($1,000). Furthermore, Escrow Agent shall be entitled to
reimbursement for reasonable expenses paid or incurred by it in the
administration of its duties hereunder, including, but not limited to, all
reasonable counsel, advisors’ agents’ and service fees and disbursements (except
those for which indemnification would not be available under Section 7(f) hereof)
and all taxes or other governmental charges. Escrow Agent shall
provide copies of invoices and the like evidencing such expenses to the Company
and the Shareholders.
9. Termination of
Agreement. This Agreement will terminate eighteen (18) months
from the Closing Date (the “Termination Date”), except for the respective rights
and obligations of Escrow Agent and the other parties hereto under Sections 7, 11, 12 and 17 hereof, which will
survive such disposition.
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10.
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Resignation or Replacement of
Escrow Agent.
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(a) Resignation. Escrow
Agent may resign as such following the giving of thirty (30) days’ prior written
notice to the other parties hereto. Similarly, Escrow Agent may be
removed and replaced following the giving of thirty (30) days’ prior written
notice to Escrow Agent by each of the Company and the
Shareholders. The duties of Escrow Agent shall terminate thirty (30)
days after the date of such notice (or as of such earlier dates as may be
mutually agreeable), and Escrow Agent shall then, upon payment of its costs and
expenses as provided herein, deliver the Shareholder Common Stock to a successor
Escrow Agent as shall be appointed by the other parties hereto as evidenced by a
written notice filed with Escrow Agent.
(b) Successor. If
the other parties hereto are unable to agree upon a successor prior to the
expiration of thirty (30) days following the date of the notice of resignation
or removal, the then acting Escrow Agent may petition any court of competent
jurisdiction for the appointment of a successor Escrow Agent or other
appropriate relief; and any such resulting appointment shall be binding upon all
of the parties hereto.
(c) Costs. Upon
payment of the costs and expenses of Escrow Agent, and acknowledgement by any
successor Escrow Agent of the receipt of the Escrow Amount, the then acting
Escrow Agent shall be fully released and relived of all further duties,
responsibilities, and obligations under this Agreement.
11. Records. Escrow
Agent will maintain accurate records of all transactions
hereunder. Promptly after the termination of this Agreement, Escrow
Agent shall provide the Shareholders and the Company with a complete copy of
such records, certified by Escrow Agent to be a statement showing all
transactions related to this Agreement. The authorized
representatives of the Shareholders and the Company will also have access to
such records at all reasonable times during normal business hours upon
reasonable notice to Escrow Agent.
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12. Notices. Any and
all notices, requests, demands and other communications permitted under or
required pursuant to this Agreement (each a “notice”) shall be in writing and
shall be deemed given if personally delivered, faxed (to be followed by hard
copy delivered in one of the manners contemplated in this Section 11) or mailed,
postage prepaid, certified or registered mail, return receipt requested, or by
overnight courier requiring a signature before releasing deliver, to the parties
of the addresses or fax numbers set forth below, or at such other addresses as
they may indicate by written notice given as provided in this Section
10:
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a.
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If
to the Company:
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000 Xxxxx
Xxxxxx
Xxxxx
000
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxx
Xxxxxxxx
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b.
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If
to the
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Shareholders:
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Xx.
Xxxxxxxxx Xxxxxxxxxx
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With
a copy to:
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Santoro,
Driggs, Walch, Kearney, Xxxxxx &
Xxxxxxxx
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000
Xxxxx Xxxxxx Xxxxxx
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Xxx
Xxxxx, Xxxxxx 00000
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Facsimile:
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(000)
000-0000
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Attention:
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Xxxxxxx
X. Xxxxxxx, Esq.
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c. If
to Escrow
Agent: Xxxxxxxxx
& McMurdo, LLP
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
XxXxxxx
The
Company and the Shareholders each shall provide the other with a copy of any
notices given to Escrow Agent.
13. Right of
Interpleader. Should any controversy arise involving the
parties to this Agreement or any of them or any other person, firm or entity
with respect to this Agreement, or should a successor Escrow Agent fail to be
designated as provided in Section 8 of this Agreement, or if Escrow Agent should
be in doubt as to what action to take, Escrow Agent shall have the right, but
not the obligation, either to (a) withhold delivery of the Escrow Amount until
the controversy is resolved, the conflicting demands are withdrawn or its doubt
is resolved; or (b) institute a petition for interpleader in any court of
competent jurisdiction to determine the rights of the parties to this
Agreement. In the event Escrow Agent is a party to any dispute,
Escrow Agent shall have the additional right to refer such controversy to
binding arbitration.
14. Prohibition Against Security
Interests. The Company and the Shareholders hereby covenant
and warrant that each shall keep its respective interests in this Agreement and
all amounts, sums, monies, and deposits to be made pursuant hereto free from all
liens, claims, encumbrances and third-party interests of any kind whatsoever
without the prior written consent of the other party. In addition,
the Company and the Shareholders hereby agree that neither party shall allow its
respective interests in this Agreement and all amounts, sums, monies and
deposits to be made pursuant hereto to be pledged, hypothecated, mortgaged or
otherwise use as collateral or security without the prior written consent of the
other party.
15. Counterparts; Facsimile
Signatures. This Agreement may be executed in more than one
counterpart, all of which shall together constitute a single
agreement. The parties may execute more than one copy of this
Agreement, in which case each executed copy shall constitute an
original. Copies (whether facsimile, photostatic or otherwise) of
signatures to this Agreement shall be deemed to be originals and may be relied
on to the same extent as the originals.
16. Assignment and
Modification. This Agreement and the rights and obligations
hereunder of any of the parties hereto may not be assigned without the prior
written consent of the other parties hereto having been
obtained. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of each of the parties hereto and their respective
successors and permitted assigns. No other person will acquire or
have any rights under, or by virtue of, this Agreement. This
Agreement may be changed or modified only in writing signed by all of the
parties hereto.
17. Governing Law and Dispute
Resolution. This Agreement will be governed by and construed
in accordance with the laws of the State of New York, without regard to its
conflict of laws principals. Any and all disputes, controversies or
claims arising out of or related in any way to the Agreement shall be resolved
by way of arbitration, as provided in this Section 15; provided, however, that a
party may seek a preliminary injunction or other provisional judicial relief if,
in its judgment, such action is necessary to avoid irreparable damage or to
preserve the status
quo. Arbitration proceedings brought by the parties hereto
shall be held in New York, New York. A single arbitrator (the
“Arbitrator”), mutually agreeable to the parties involved in the arbitration,
shall preside over such proceedings and shall make all decisions with respect to
the resolution of the dispute, controversy or claim between such
parties. The parties shall be entitled to reasonable levels of
discovery (as determined by the Arbitrator in his or her sole and absolute
discretion) in accordance with the Federal Rules of Civil
Procedure. The parties also hereby acknowledge that it is their
intent to expedite the resolution of the dispute, controversy or claim in
question, and that the Arbitrator shall schedule the timing of the hearing
consistent with that intent. During the course of the proceedings,
all fees to be paid to the Arbitrator, and all expenses incurred by the
Arbitrator in connection with the arbitration, shall be borne equally by the
Shareholders and the Company. However, the Arbitrator shall be
entitled to award all costs and fees to the party prevailing in the Arbitration
as part of any award.
18. Headings. Headings
in this Agreement are for the purpose of reference only and shall not limit or
otherwise affect any of the terms hereof.
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IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first written
above.
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COMPANY
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ESCROW
AGENT
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TREE
TOP INDUSTRIES, INC
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XXXXXXX
X. XXXXXXX, ESQ.
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By:
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Name:
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Signature
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Title:
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SHAREHOLDERS
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BIOENERGY
SYSTEMS MANAGEMENT INC.
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By:
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Its:
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WIMASE
LIMITED
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By:
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Its:
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ENERGETIC
SYSTEMS INC., LLC
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By:
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Its:
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