EXHIBIT 10.7
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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., an Arizona corporation (`Synergy"), and those
stockholders identified on the signature page hereto (the "Signatories") and EPL
RESOURCES (DELAWARE) CORP. in its capacity as escrow agent ("Escrow Agent").
Synergy and the Signatories are hereinafter collectively referred to as the
"Shareholders".
WHEREAS, Buyer, SkyNet Holdings, Inc., a Nevada corporation ("SkyNet"), and
the principal shareholders of SkyNet are parties to an Agreement and Plan of
Merger dated as of September 28,1998, and as amended thereafter (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(a) for the
establishment of an escrow fund (the "Escrow Fund") to be delivered by certain
stockholders of Buyer prior to the Merger Agreement consisting of 2,000,000
Buyer Shares (the "Escrow Shares").
NOW, THEREFORE, in consideration of Buyer and SkyNet 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 its 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(a) of the Merger Agreement, at the Closing,
Shareholders shall deposit with the Escrow Agent, the Escrow Shares constituting
the Escrow Fund; and the Escrow Agent shall hold such shares in Trust on behalf
of the Shareholders who own such Escrow Shares comprising the Escrow Fund as set
forth on the signature page hereof. 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 Shareholders' execution of this Escrow Agreement, each
of the 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 Shareholders' execution of this Escrow Agreement, each
of the Shareholders hereby irrevocably constitutes and appoints the Escrow Agent
the true and lawful agent and attorney-in-fact of the 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; Release of Escrow
Shares.
(a) To the extent provided herein and in the Merger Agreement, the Escrow
Fund shall be established and thereafter applied as set forth in this Section 4
to secure the performance of Buyer with respect to the timely completion of the
Minimum Offering pursuant to Section 5.12 of the Merger Agreement.
(b) If a closing with respect to the Minimum Offering is not completed
within fifteen (15) days after the period established within the Merger
Agreement for the completion of the Minimum Offering (the "Release Date"), Buyer
may on such Release Date make application to the Escrow Agent, with a copy to
Synergy on behalf of the Shareholders (the "Application"), seeking the Escrow
Agent to release from escrow 250,000 of the Escrow Shares for surrender and
cancellation by Buyer. Thereafter, until the Minimum Offering is completed,
Buyer may make additional Application for the release from escrow of 250,000 of
the Escrow Shares for each fifteen (15) day period in which the Minimum Offering
is not completed. These Applications may continue until either all of the
Escrow Shares have been surrender to Buyer for cancellation or the Minimum
Offering has been completed.
(c) Upon completion of the Minimum Offering, Synergy, on behalf of the
Shareholders, shall make Application to Escrow Agent instructing the Escrow
Agent to release and deliver all Escrow Shares remaining in the Escrow Fund to
the Shareholders.
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(d) Unless the Escrow Agent is otherwise informed in writing by Synergy (in
the case of an Application by Buyer) or by Buyer (with respect to an Application
by Synergy on behalf of the Shareholders) within thirty (30) days from the date
of its receipt of any such Application disputing the direction contained within
any such Application then the Escrow Agent shall apply the Escrow Shares in the
manner set forth in such Application.
(d) If the Escrow Agent is notified that Synergy (with respect to an
Application of Buyer) or Buyer (with respect to an Applicant of Synergy on
behalf of the Shareholders) in good faith contest the direction contained within
the Application, 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) 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.
5. Termination.
(a) The Escrow Shares shall remain in escrow until Buyer's completion of
the Minimum Offering. Notwithstanding the above, in the event that there is a
dispute with respect to any Application, the Escrow Shares which are subject to
such dispute shall remain subject to escrow until resolution of the matters
identified herein.
(b) Once all of the Escrow Shares have been either released to Buyer for
cancellation or returned to the 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 be not entitled to receive a fee for serving as
Escrow Agent hereunder.
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
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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.
(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 Merger 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
notice to the Escrow Agent given by Buyer, on the one hand, and Synergy on
behalf of the Principal Shareholders, on the other hand; provided that the
rights, duties, liabilities, indemnities and immunities of the Escrow Agent
hereunder may not be adversely affected at any time without the written consent
of the Escrow Agent; and provided further that the interest of the Shareholders
may not be adversely affected without the written consent of Synergy on behalf
of the Shareholders. Any written notice of Buyer with respect to the amendment,
modification, or rescission of this Agreement shall be approved by the Acquiror
Designee to the Board of
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Directors of Buyer under Section 5.18 of the Agreement. The failure of the
Shareholders to object to a modification of this Agreement, shall not act as a
waiver of the right of the Shareholders to object to that modification at a
later date.
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 Shareholders. The 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.
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:
SkyNet Holdings, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx
(ii) If to the Principal Shareholders, to
Synergy Group International, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxx, 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.
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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.
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 10 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 written request of 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 Synergy 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.
Buyer and the 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
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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
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
Shareholders shall have been materially impaired by such failure. Each of Buyer
and the 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 Shareholders shall be liable for any
counsel fees or other expenses incurred by the Escrow Agent after the date that
Buyer or the Shareholders shall have so elected to assume the defense and
control of any such suit or proceeding. In addition, neither Buyer nor the
Shareholders shall be liable for any settlement of any such suit, proceeding or
claim without the prior written consent of Buyer and the Shareholders.
18. Counterparts. This Agreement may be executed in two or more
counterparts and delivered via facsimile, each of which shall be deemed to be an
original, and all of which together shall be deemed to be one and the same
instrument.
(THIS SPACE LEFT BLANK INTENTIONALLY)
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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
Name: Xxxxxxx X. Xxxxxx
Title: President
SYNERGY GROUP INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
EPL RESOURCES (DELAWARE) CORP.
a Delaware corporation in its capacity
as Escrow Agent
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
SHAREHOLDERS CONTRIBUTING SHARES TO BE HELD IN ESCROW
Synergy Group Xxxxxxx X. Xxxxxx
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Name Name
/s/ Xxxxxxx X. Xxxxxx, President /s/ Xxxxxxx X. Xxxxxx
-------------------------------- ---------------------
Signature Signature
250,000 750,000
------- -------
No. of Escrow Shares No. of Escrow Shares
Xxxxx Xxxxxxx MCZ Investment Co., Inc.
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Name Name
/s/ Xxxxx Xxxxxxx /s/ illegible
----------------- -------------
Signature Signature
5,000 400,000
------- -------
No. of Escrow Shares No. of Escrow Shares
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Fincord Holding Co., Inc.
------------------------- -------------------------------
Name Name
/s/ Xxxx Xxxxxxx
---------------- -------------------------------
Signature Signature
590,000
------- -------------------------------
No. of Escrow Shares No. of Escrow Shares
------------------------------- -------------------------------
Name Name
------------------------------- -------------------------------
Signature Signature
------------------------------- -------------------------------
No. of Escrow Shares No. of Escrow Shares
------------------------------- -------------------------------
Name Name
------------------------------- -------------------------------
Signature Signature
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No. of Escrow Shares No. of Escrow Shares
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