EXHIBIT 10.8
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ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") dated as of October 14, 1998 by and
among EPL RESOURCES (DELAWARE) CORP., a Delaware corporation ("Buyer"), SYNERGY
GROUP INTERNATIONAL, INC. ("Synergy"), XXXXXXXXX XXXXX ("Nizic"), XXXX X.
XXXXXXXX ("Xxxxxxxx"), XXXXXXXXX X. XXXXX ("Xxxxx"), DEANSLEY LIMITED, an Isle
of Man corporation ("Deansley"), FIR CONSTRUCTION PTY LIMITED, an Australian
corporation ("FIR"), the principal shareholders of SKYNET HOLDINGS, INC., a
Nevada corporation ("SkyNet"), and EPL RESOURCES (DELAWARE) CORP. in its
capacity as escrow agent ("Escrow Agent"). Nizic, Weber, Cathcart, Deansley and
FIR are hereinafter collectively referred to as the "Principal Shareholders".
WHEREAS, Buyer, SkyNet and the Principal Shareholders are parties to an
Agreement and Plan of Merger dated as of September 28,1998, and as subsequently
amended (the "Merger Agreement") providing for Buyer's acquisition of all of the
issued and outstanding capital stock of SkyNet; and
WHEREAS, the Merger Agreement provides in Section 1.4(b) for the
establishment of an escrow fund (the "Escrow Fund") delivered from the Merger
Consideration consisting of 3,000,000 Buyer Shares (the "Escrow Shares").
NOW, THEREFORE, in consideration of Buyer and the Principal Shareholders
executing the Merger Agreement and of the mutual premises and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions, Other Agreements.
(a) All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement.
(b) It is expressly understood and agreed by the parties hereto that all
references in this Agreement to the Merger Agreement and to any exhibits to such
Merger Agreement are for the convenience of the parties hereto other than the
Escrow Agent, and the Escrow Agent shall have no obligations or duties with
respect thereto other than the obligation to refer to the Merger Agreement for
the purpose of determining the definitions of certain capitalized terms used
herein and not otherwise defined herein or to interpret any provisions of such
other agreements referred to in this Agreement for purposes of implementation
thereof.
2. Appointment of Escrow Agent.
EPL Resources (Delaware) Corp. hereby accepts appointment as Escrow Agent
to serve in accordance with the terms, conditions and provisions of this
Agreement. The acceptance by the Escrow Agent of its duties under this
Agreement is subject to the terms and conditions set
forth at Section 7 hereafter, which the parties to this Agreement hereby agree
shall govern and control with respect to the rights, duties, liabilities and
immunities of the Escrow Agent.
3. Establishment of Escrow Fund; Power of Attorney.
(a) Pursuant to Section 1.4(b) of the Merger Agreement, at the Closing,
Buyer shall deposit with the Escrow Agent, the Escrow Shares constituting the
Escrow Fund. The Escrow Agent shall hold such shares on behalf of the Principal
Shareholders who own such Escrow Shares comprising the Escrow Fund as set forth
on Exhibit "1" hereto. If dividends are paid, or a distribution is made, by
Buyer with respect to the Escrow Shares, in cash or in property, such dividends
or distributions shall also be held as a part of the Escrow Fund. In the event
of any stock splits, recapitalizations or other adjustments to the capital stock
of Buyer, the resulting number of shares, or other securities into which the
Escrow Shares convert, shall be included in the Escrow Fund.
(b) By virtue of the Principal Shareholders' execution of this Escrow
Agreement, each of the Principal Shareholders has, without any further act,
consented to: (i) the establishment of this escrow pursuant to the Merger
Agreement in the manner set forth herein, and (ii) all of the other terms,
conditions and limitations in this Agreement.
(c) By virtue of the Principal Shareholders' execution of this Escrow
Agreement, each of the Principal Shareholders hereby irrevocably constitutes and
appoints the Escrow Agent the true and lawful agent and attorney-in-fact of the
Principal Shareholders with respect to all matters arising in connection with
this Escrow Agreement, including the administration of the Escrow Fund pursuant
to Section 4 below and the subsequent surrender and cancellation of the Escrow
Shares pursuant to Section 4 herein.
4. Operation and Administration of the Escrow Fund.
(a) To the extent provided herein and in the Merger Agreement, the Escrow
Fund shall be established and thereafter applied to the payment of
indemnification claims ("Claims") asserted by Buyer during the twelve (12) month
period following Closing for the benefit of Buyer as provided in Article 7 of
the Merger Agreement.
(b) Buyer shall make application to the Escrow Agent, with a copy to the
Principal Shareholders (the "Application"), if it has incurred or suffered
damages or losses pursuant to Section 7.1(a) of the Merger Agreement. The
Application shall identify the amount of the damages or losses (the "Claim
Amount") and shall include proof that such damage or loss has been paid or
incurred by Buyer and shall instruct the Escrow Agent to apply, subject to
subparagraph (e) below, the Claim Amount in the manner set forth in this
Section.
(c) Unless the Escrow Agent is otherwise informed in writing by two or more
of the Principal Shareholders within thirty (30) days from the date of their
receipt of the Application, disputing the Claim Amount or the application
thereof against the Escrow Fund, then the Escrow Agent shall apply the Escrow
Fund in the manner set forth in the Application.
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(d) If the Escrow Agent is notified that two or more of the Principal
Shareholders in good faith contest the Claim Amount or the application of the
Claim Amount against the Escrow Fund, then, and in that event, the Escrow Agent
shall be permitted to submit the issues in dispute to arbitration in accordance
with the provisions of Section 9.8 of the Merger Agreement.
(e) If the arbitration results in a finding (or settlement between the
parties) in support of the Application (which for this purpose shall include any
finding, conclusion or settlement which awards Buyer at least 80% of the Claim
Amount (hereafter, the "Adjusted Claim Amount")); then, and in that event, there
shall be added to the Adjusted Claim Amount: (i) interest on the Adjusted Claim
Amount in the amount of ten (10%) percent per annum, applied from the date of
the Application.
(f) Any cash received in respect of the Escrow Shares (e.g., dividends)
shall be placed in a simple interest bearing client trust fund account of Escrow
Agent and shall become a part of the Escrow Shares.
(g) The Claim Amount shall be applied against the Escrow Shares and the
Escrow Shares subject to the Claim Amount shall be surrendered to the Buyer for
cancellation. The number of Escrow Shares subject to the Claim Amount shall be
determined by surrendering to the Buyer the "fair market value" of the Escrow
Shares equal to the Claim Amount. For this purpose, the "fair market value" of
the Escrow Shares shall be sixty percent (60%) of the average closing price of
the Buyer's common stock (on the exchange, NASDAQ or OTC Bulletin Board on which
the shares principally trade) for the ten (10) trading days prior to the final
determination of the Claim Amount.
5. Release of Escrow Shares; Termination.
All of the Escrow Shares shall remain in escrow subject to Claims under the
indemnification section of the Merger Agreement. Certain of the Escrow Shares,
however, may be released from Escrow in accordance with the following schedule:
(a) 1,250,000 of the Escrow Shares (the "Audit Escrow Shares") shall remain
in escrow subject to application pursuant to Section 4 hereof for a period of
twenty (20) days after the Audited Financial Statements are delivered to Buyer
and Synergy. In the event that no Claim Notice is delivered by Synergy to the
Buyer with respect to the Audited Financial Statements at the expiration of such
twenty (20) day period, the Audit Escrow Shares shall be delivered and released
to the Principal Shareholders.
(b) An additional 1,000,000 of the Escrow Shares (the "Additional Escrow
Shares") shall remain in escrow subject to application pursuant to Section 4
hereof for a period of six (6) months following the Closing and upon the six (6)
month anniversary date, the Additional Escrow Shares shall be delivered and
released to the Principal Shareholders provided prior 20 day notice is provided
by Buyer to Synergy and no objection is asserted to Buyer within such 20 day
period by Synergy.
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(c) The remainder of the Escrow Shares shall remain in escrow subject to
application pursuant to Section 4 hereof for a period of one (1) year following
the Closing, and upon the one (1) year anniversary date, any of the Escrow
Shares remaining in the Escrow Fund shall be delivered and released to the
Principal Shareholders provided prior 20 day notice is provided by Buyer to
Synergy and no objection is asserted within such 20 day period.
(d) Notwithstanding the above, on the one (1) year anniversary of the
Closing, the six (6) month anniversary of the Closing or the expiration of the
twenty (20) day period set forth in Section 5(a) hereof, as applicable, the
Escrow Agent may continue to retain in escrow, subject to the terms of this
Agreement, any Escrow Shares, Additional Escrow Shares or Audit Escrow Shares,
as applicable, that may, upon Buyer's reasonable estimate, be necessary to
satisfy any pending, outstanding or contested Buyer's Claims timely submitted
prior to such anniversary or expiration date pursuant to Article 7 of the Merger
Agreement. The Escrow Shares retained pursuant to this subparagraph shall
remain subject to escrow until resolution of the matters identified herein.
(e) Once all of the Escrow Shares have been either released to Buyer for
cancellation or returned to the Principal Shareholders, the provisions of this
Escrow Agreement shall no longer be of any force and effect and this Escrow
Agreement shall be deemed to have terminated.
6. Fees and Expenses of Escrow Agent.
The Escrow Agent shall not be entitled to any fees as Escrow Agent.
7. Duties and Liabilities of the Escrow Agent.
(a) The Escrow Agent shall act hereunder as depository only, and it shall
not be responsible or liable in any manner whatever for any determinations
regarding the cancellation and forfeiture of the Escrow Shares to be made
pursuant to Section 4 hereof. It is agreed that the duties and obligations of
the Escrow Agent are those herein specifically provided and no other. Except as
otherwise specifically provided in this Agreement, the Escrow Agent shall not
have any liability under, nor duty to inquire into, the terms and provisions of
any agreement or instrument, other than this Agreement. The duties of the
Escrow Agent are ministerial in nature, and the Escrow Agent shall not incur any
liability whatsoever other than for its own willful misconduct or gross
negligence.
(b) The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto. The Escrow Agent shall not have any responsibility
for the genuineness or validity of any document or other material presented to
or deposited with it nor shall it have any liability for any action taken,
suffered or omitted in accordance with any written instructions or certificates
given to it hereunder and believed by it in good faith to be what it purports to
be and to be signed by the proper party or parties, nor for retaining the Escrow
Fund in the absence of instructions to the contrary.
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(c) The Escrow Agent shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for anything which it may do or refrain from doing in connection
with this Agreement, except its own gross negligence or willful misconduct.
(d) The Escrow Agent may consult with, and obtain the advice of, legal
counsel selected by it in the event of any question as to any of the provisions
hereof or its duties hereunder, and the Escrow Agent shall incur no liability
and shall be fully protected for any action taken, suffered or omitted by it in
good faith in accordance with the advice of such counsel, provided that the
Escrow Agent shall have used reasonable care in the selection of such counsel.
(e) In the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall have received instructions, claims or demands from
any party hereto which, in its reasonable opinion, conflict with any of the
provisions of this Agreement or with instructions, claims or demands of any
other party hereto, the Escrow Agent shall refrain from taking any action and
its sole obligation shall be to keep safely all property held in escrow
hereunder until it shall be directed otherwise in writing by all of the parties
hereto or by a final order or judgment of an arbitration panel or court of
competent jurisdiction, or an award of an arbitrator pursuant to an arbitration
conducted pursuant to Section 9.8 of the Stock Purchase Agreement.
(f) The Escrow Agent shall not be required to institute legal proceedings
of any kind and shall not be required to initiate or defend any legal
proceedings which may be instituted against it in respect of the subject matter
of this Agreement, provided that the Escrow Agent shall at all times take such
action as is reasonably necessary to keep safely all property held in escrow
hereunder. If the Escrow Agent does elect to so act or is required to so act in
order to keep safely all property held in escrow hereunder, the Escrow Agent
will do so only to the extent that it is indemnified to its reasonable
satisfaction against the cost and expense of such defense or initiation.
8. Amendment.
This Agreement may be amended, modified or rescinded by and upon written
consent of Escrow Agent, Buyer, the Principal Shareholders and Synergy.
9. Voting of Escrow Shares; Rights During Escrow Period; Restriction on
Transfer.
All rights to vote the Escrow Shares while they are part of the Escrow Fund
shall be retained by the Principal Shareholders The Principal Shareholders
shall not have any right to transfer or assign their interest in the Escrow
Shares in the Escrow Fund during such period of time as such Escrow Shares
remain a part of the Escrow Fund unless Buyer shall first have consented thereto
in writing and provided that any such transferee shall deliver to the Escrow
Agent a duly signed stock power covering such Escrow Shares and the Escrow Agent
shall hold such transferee's shares and stock powers in escrow subject to this
Agreement.
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10. Notices.
Any notices or other communications required or permitted hereunder shall
be sufficiently given if sent by certified mail, postage prepaid and return
receipt requested, or by hand delivery or by telecopy (promptly confirmed by
delivery of an original copy of such notice or communication):
(i) If to the Buyer, to:
Synergy Group International, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx, P.C.
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
(ii) If to the Principal Shareholders, to
Xx. Xxxxxxxxx Xxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxxxxx X. Xxxxx
Foxholes
Winter Hill Road
Cookham Xxxx SL6 6PJ
England
Xx. Xxxx X. Xxxxxxxx
000 Xxxx Xxxx.
00-000
Xxxxxxx Xxxxxxx, XX 00000
Deansley Limited
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxx xx Xxx 0X0 0XX
FIR Construction Pty. Limited
c/o Vjekoslave Nizic
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000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
11. Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit of the
successors and permitted assigns of each of the parties hereto.
12. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
13. Governing Law.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware applicable to contracts
executed and to be performed entirely within said State.
14. Severability.
In case any provision in this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions hereof will not in any way be affected or impaired thereby, unless
the provisions held invalid shall substantially impair the benefits of the
remaining portions of this Agreement.
15. Consent to Limited Jurisdiction.
The Escrow Agent hereby agrees that any legal action or proceeding with
respect to disputes arising out of this Agreement not otherwise subject to
arbitration under Section 9.8 of the Merger Agreement may be brought in the
state or federal courts of the State of California, Los Angeles County, and, by
execution and delivery of this Agreement, the Escrow Agent irrevocably accepts
for itself and in respect of the property held by it as Escrow Agent hereunder
the jurisdiction of the aforesaid courts, it being understood and agreed that
such consent to jurisdiction is for the sole and limited purpose of resolving
disputes under this Agreement and shall in no way be deemed to be a general and
unconditional consent to the jurisdiction of the aforesaid courts.
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16. Resignation and Removal of Escrow Agent.
(a) The Escrow Agent may at any time resign as Escrow Agent hereunder by
giving written notice of its resignation to each of the parties hereto, at their
respective addresses set forth in Section 11 of this Agreement, at least thirty
(30) days prior to the date specified for such resignation to take effect. The
Escrow Agent may be removed at any time by an instrument in writing delivered to
the Escrow Agent by Synergy.
(b) If at any time the Escrow Agent shall resign or shall be removed in
accordance with the provisions of clause (a) above, Buyer and the Principal
Shareholders shall use their respective best efforts to jointly appoint a
successor escrow agent under this Agreement. In the event of the resignation or
removal of the Escrow Agent, if no appointment of a successor escrow agent shall
have been made pursuant to the preceding sentence within the thirty (30) day
period referred to in the first sentence of paragraph (a) above, then the
retiring Escrow Agent may apply to any court of competent jurisdiction to
appoint a successor escrow agent. Such court may thereupon, after such notice,
if any, as such court may deem proper and prescribe, appoint a successor escrow
agent hereunder.
17. Indemnification.
Except for the expenses in Section 6 of this Agreement, Buyer and the
Principal Shareholders, jointly and severally agree to indemnify, defend and
hold the Escrow Agent harmless from and against any and all loss, damage,
liability and expense that may be incurred by the Escrow Agent arising out of or
in connection with its duties, obligations or performance as Escrow Agent
hereunder, except as caused by its negligence or willful misconduct, including
without limitation the reasonable legal costs and expenses of defending itself
against any claim or liability in connection with its performance hereunder.
The terms of this Section 17 shall survive the termination of this Agreement
and, with respect to claims arising in connection with the Escrow Agent's duties
while acting as such, the resignation or removal of the Escrow Agent. The
Escrow Agent agrees to notify Buyer and the Principal Shareholders in writing of
the written assertion of a claim against the Escrow Agent or of any suit or
proceeding commenced against the Escrow Agent promptly after the Escrow Agent
has received any such written assertion of a claim or has been served with the
summons or other legal process, in each case giving information as to the nature
and basis of the claim, but in no event will the failure to give such notice
affect the obligation of Buyer to indemnify the Escrow Agent pursuant to this
Section 17 unless the rights of Buyer and Principal Shareholders shall have been
materially impaired by such failure. Each of Buyer and the Principal
Shareholders will be entitled to participate at its own expense in the defense
of any suit or proceeding brought to enforce any such claim and, if it so elects
in writing, may assume the entire defense and control of any such suit or
proceeding. Neither Buyer nor the Principal Shareholders shall be liable for
any counsel fees or other expenses incurred by the Escrow Agent after the date
that Buyer or the Principal Shareholders shall have so elected to assume the
defense and control of any such suit or proceeding. In addition, neither Buyer
nor the Principal Shareholders shall be liable for any settlement of any such
suit, proceeding or claim without the prior written consent of Buyer and the
Principal Shareholders.
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IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first written above.
EPL RESOURCES (DELAWARE) CORP.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
By: /s/ Vjekoslaw Nizic
-------------------
XXXXXXXXX XXXXX
By: /s/ Xxxxxxxxx X. Xxxxx
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XXXXXXXXX X. XXXXX
By: /s/ Xxxx X. Xxxxxxxx
--------------------
XXXX X. XXXXXXXX
DEANSLEY LIMITED
an Isle of Man corporation
By: /s/ E. N. Xxxxxx
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Name: E. N. Xxxxxx
Title: Director
FIR CONSTRUCTION PTY LIMITED
an Australian corporation
By: /s/ Vjekoslaw Nizic
--------------------
Name: Xxxxxxxxx Xxxxx
Title: Managing Director
SYNERGY GROUP INTERNATIONAL, INC.
a Delaware corporation
By: Xxxxxxx X. Xxxxxx
Name: /s/ Xxxxxxx X. Xxxxxx
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Title: President
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EXHIBIT 1
PRINCIPAL SHAREHOLDER NUMBER OF ESCROW SHARES
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XXXXXXXXX XXXXX 67,339
XXXXXXXXX X. XXXXX 168,169
XXXX X. XXXXXXXX 693,280
DEANSLEY LIMITED 1,040,859
FIR CONSTRUCTION PTY LIMITED 1,030,353
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TOTAL: 3,000,000
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