ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is entered into as of July
28, 1999 by and between INDUSTRIAL RUBBER INNOVATIONS, INC., a Florida
corporation ("Seller"), on the one hand, XXXXXXX XXXXXXX ("Xxxxxxx"), XXXXXXXX,
X.X. ("Xxxxxxxx"), EMERALD CORP., ("Emerald"), and M. XXXXXXX XXXXX ("Xxxxx") on
the other hand (each of Requena, Stratton, Emerald, and Xxxxx shall be referred
to as a "Purchaser" and collectively as the "Purchasers"), COVICTORY CAPITAL
LTD. ("Covictory") and MRC LEGAL SERVICES CORPORATION, a California corporation,
as escrow agent ("Escrow Agent").
R E C I T A L S
A. WHEREAS, Seller is the owner of an US$850,000 interest (the "Savant
Interest") in Savant Biomedical, Inc. ("Savant") pursuant to a contract between
EPL Ventures Corp. (the predecessor to Seller) and Savant dated January 16, 1998
(the "Savant Agreement"), and there has not been any stock certificate or other
certificate of interest issued by Savant other than the Savant Agreement;
B. WHEREAS, Seller and Covictory entered into an Agreement to Purchase
dated March 29, 1999 (the "Covictory Agreement"), as amended on July 22, 1999
(the "Covictory Amendment"), for the sale of the Savant Interest and a Savant
Debenture Note with a face value of US$180,000 (the "Debenture") to Covictory
for the sum of US$800,000 (the "Purchase Price"),
C. The parties to the Covictory Agreement and the Covictory Amendment
have agreed to complete the transactions set forth therein in accordance with
the terms and conditions of this Escrow Agreement;
D. Escrow Agent has agreed to act as the escrow agent hereunder, in
accordance with the terms and conditions set forth in this Escrow Agreement.
NOW THEREFORE, for and in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. APPOINTMENT OF ESCROW AGENT. The Parties hereby mutually appoint
and designate the Escrow Agent to receive, hold and release, as escrow agent,
the Purchase Price, the Debenture, and to provide notice to Savant of a change
of ownership of the Savant Interest, as necessary, and the Escrow Agent hereby
accepts such appointment and designation.
2. ESCROW DELIVERY. On or before Closing Date as set forth in the
Agreement, Seller shall deliver or cause to be delivered to Escrow Agent the
Debenture and a letter of authorization substantially similar to Exhibit A
attached hereto (the "Letter of Authorization") sufficient to authorize Escrow
Agent to instruct Savant of a change in ownership of the Debenture and the
Savant Interest. A copy of the Letter of Authorization shall simultaneously be
provided to Savant. On or after the Closing Date, the Purchasers shall deliver
or cause to be delivered to the Escrow Agent, in one or more traunches, the
Purchase Price.
3. CONDITIONS OF ESCROW.
3.1 The Escrow Deposit. Escrow Agent shall deliver a notice of change
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of ownership, and shall hold and release the Debenture and the Purchase Price as
follows:
a. Release of the Purchase Price from Escrow. The Escrow Agent shall
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release and distribute any of the Purchase Price to Seller immediately upon
receipt thereof. Each time a portion of the Purchase Price is delivered to
Seller, Escrow Agent shall provide written notice thereof to Purchasers as set
forth herein.
b. Notice to Savant of Change of Ownership of Savant Interest. The Escrow
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Agent shall provide written notice to Savant of a change of ownership of the
Savant Interest as follows:
i. Upon the receipt of an aggregate of US$300,000 paid towards the Purchase
Price from Purchasers, Escrow Agent shall deliver, via facsimile and U.S. Mail
to the address provided herein, notice to Savant that US$300,000 of the Savant
Interest has been transferred to Purchasers in proportions to be provided to
Escrow Agent by Purchasers.
ii. Upon the receipt of an aggregate of US$550,000 paid towards the Purchase
Price from Purchasers, Escrow Agent shall deliver, via facsimile and U.S. Mail
to the address provided herein, notice to Savant that an additional US$275,000
of the Savant Interest (for an aggregate of US$575,000 when combined with the
interest transferred in 3.1(b)(i)) has been transferred to Purchasers in
proportions to be provided to Escrow Agent by Purchasers.
iii. Upon the receipt of the full Purchase Price by Purchasers, Escrow Agent
shall deliver, via facsimile and U.S. Mail to the address provided herein,
notice to Savant that all of the Savant Interest has been transferred to
Purchasers in proportions to be provided to Escrow Agent by Purchasers.
c. Release of the Debenture from Escrow. The Escrow Agent shall release and
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distribute the Debenture to M. Xxxxxxx Xxxxx, and provide written notice to
Savant of the transfer of said Debenture, immediately upon receipt of the sum of
US$300,000 in accordance with Section 3.1(b)(i).
d. Failure of Purchasers to Pay Full Purchase Price. In the event that the
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Purchasers fail to deliver to the Escrow Agent the full Purchase Price on or
before September 15, 1999 (the "Termination Date"), then on the Termination Date
the Escrow Agent shall deliver the Debenture to Seller (unless the Debenture has
been Released in accordance with Section 3.1(c)), and shall release any of the
Purchase Price held in its possession to Seller, and this Escrow Agreement and
the Escrow Agents duties and obligations hereunder shall cease. Purchasers
hereby acknowledge and agree that if the full Purchase Price is not delivered by
the Termination Date, then Purchasers, and each of them, shall forfeit their
rights to purchase any then-unpurchased Savant Interest (in accordance with the
provisions of Section 3.1b hereof) and the Debenture.
e. General. Notwithstanding the provisions of Sections 3.1a-c hereof,
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Escrow Agent shall release the Purchase Price, the Debenture, and notice of a
change of ownership of the Savant Interest to Purchasers or the Seller, as the
case may be, pursuant to (a) written instructions executed by all Purchasers and
Seller, or (b) any "final order" of a court of competent jurisdiction, any such
order being deemed to be "final" if (i) such order has not been reserved,
stayed, enjoined, set aside, annulled or suspended, (ii) no request for a stay,
suspension or an injunction, petition for reconsideration or appeal, or sua
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sponte action with comparable effect is pending with respect to the order, and
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(iii) the time for filing any such request, petition or appeal or further taking
of any such sua sponte action has expired.
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3.2 Conflicting Instructions. If a controversy arises between the Parties
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concerning the release of the Debenture, notice to Savant, or the Purchase Price
hereunder, they shall notify the Escrow Agent. In that event (or, in the
absence of such notification, if in the good faith judgment of the Escrow Agent
such controversy exists), the Escrow Agent shall not be required to resolve such
controversy or take an action but shall be entitled to await resolution of the
controversy by joint instructions from the Parties. The Escrow Agent may
institute an interpleader action in state or federal court in the State of
California to resolve such controversy. If a suit is commenced against the
Escrow Agent, it may answer by way of interpleader and name Purchasers and
Seller as additional parties to such action, and the Escrow Agent may tender the
Debenture and/or the Purchase Price into such court for determination of the
respective rights, titles and interests of the Parties. Upon such tender, the
Escrow Agent shall be entitled to receive from the Parties its reasonable
attorneys' fees and expenses incurred in connection with said interpleader
action or in any related action or suit. As between Purchasers and Seller, such
fees, expenses and other sums shall be paid by the party which fails to prevail
in the proceedings brought to determine the appropriate distribution of the
Debenture and/or the Purchase Price. If and when the Escrow Agent shall so
interplead such Parties, or either of them, and deliver the Debenture and/or the
Purchase Price to the clerk of such court, all of its duties hereunder shall
cease, and it shall have no further obligation in this regard. Nothing herein
shall prejudice any right or remedy of the Escrow Agent.
4. CONCERNING ESCROW AGENT
4.1 Duties. Escrow Agent undertakes to perform all duties which are
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expressly set forth herein; provided, however, that the Escrow Agent shall not
be required to make or be liable in any manner of its failure to make any
determination under the Agreement or any other agreement, including whether
Purchasers or the Seller is entitled to delivery of the notice of change of
ownership of the Savant Interest, the Debenture, and the Purchase Price under
the Agreement.
4.2 Indemnification.
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a. Escrow Agent may rely upon and shall be protected in acting or refraining
from acting upon any written notice, instructions or request furnished to it
hereunder and believed by it to be genuine and authorized.
b. Escrow Agent shall not be liable for any action taken by it in good faith
and without gross negligence or wilful misconduct, and believed by it to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement, and may consult with counsel of its own choice and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
c. Seller and Purchasers, and each of them, hereby agree to indemnify the
Escrow Agent for, and hold the Escrow Agent harmless against, any loss,
liability or expense incurred without gross negligence or wilful misconduct or
bad faith on the part of the Escrow Agent, arising out of or in connection with
the Escrow Agent's entering into this Escrow Agreement and carrying out the
Escrow Agent's duties hereunder, including, without limitation, costs and
expenses of defending the Escrow Agent against any claim or liability with
respect thereto.
d. Escrow Agent shall have no implied obligations or responsibilities
hereunder, nor shall it have any obligation or responsibility to collect funds
or seek the deposit of money or property, nor is the Escrow Agent a party to any
other agreement entered into among Purchasers and Seller.
4.3 Other Matters. Escrow Agent (and any successor escrow agent or
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agents) reserves the right to resign as the Escrow Agent at any time, provided
fifteen (15) days' prior written notice is given to the other parties hereto,
and provided further that a mutually acceptable successor Escrow Agent(s) within
such fifteen (15) day period, the Escrow Agent may petition any court in the
State of California having jurisdiction to designate a successor Escrow Agent.
The resignation of the Escrow Agent (and any successor escrow agent or agents)
shall be effective only upon delivery of the Debenture, the Letter of
Authorization and/or the Purchase Price to the successor escrow agent(s). The
Parties reserve the right to jointly remove the Escrow Agent at any time,
provided fifteen (15) days' prior written notice is given to the Escrow Agent.
In the event of litigation or dispute by the Parties in which the performance of
the duties of the Escrow Agent is at issue, the Escrow Agent shall take no
action until such action is agreed in writing by the Parties, or until receipt
of any order pursuant to 3.1(e) above directing the Escrow Agent with respect to
the action which is the subject of such litigation or dispute.
5. TERMINATION. This Escrow Agreement shall be terminated upon the
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release of the Debenture and the Purchase Price in accordance with the terms and
conditions of Section 3 hereof, or otherwise by written mutual consent signed by
all parties hereto.
6. NOTICE. All notices, demands, requests, or other communications
which may be or are required to be given, served or sent by any party to any
other party pursuant to this Escrow Agreement shall be in writing and shall be
hand delivered (including delivery by courier), sent by facsimile, or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO PURCHASERS:
Xxxxxxx Xxxxxxx
Xxxxxxxx X.X.
Emerald Corp.
M. Xxxxxxx Xxxxx
c/o Covictory Capital Ltd.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Facsimile (000) 000-0000
IF TO SELLER:
Industrial Rubber Innovations, Inc.
0000 XxXxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx, President
Facsimile (000) 000-0000
IF TO THE ESCROW AGENT:
MRC Legal Services Corporation
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxx, Esq.
Facsimile (000) 000-0000
IF TO SAVANT:
c/o Covictory Capital Ltd.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Facsimile (000) 000-0000
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it delivered to the addressee (with the
return receipt, the delivery receipt or the affidavit of messenger being deemed
conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
7. BENEFIT AND ASSIGNMENT. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other than
the parties hereto is or shall be entitled to bring any action to enforce any
provision in this Escrow Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Escrow Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns this Escrow Agreement or any rights hereunder
without the prior written consent of the parties hereto.
8. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement, the Covictory
Agreement and the Covictory Amendment contain the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior oral
or written agreements, commitments or understandings with respect to such
matters. This Escrow Agreement may not be changed orally, but only by an
instrument in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
9. HEADINGS. The headings of the sections and subsections contained in
this Escrow Agreement are inserted for convenience only and do not form a part
or affect the meaning, construction or scope thereof.
10. GOVERNING LAW; VENUE. This Escrow Agreement shall be governed and
constructed under and in accordance with the laws of the State of California
(but not including the conflicts of laws and rules thereof). For purposes of
any action or proceeding involving this Escrow Agreement each of the parties to
this Escrow Agreement expressly submits to the jurisdiction of the federal and
state courts located in the State of California and consents to the service of
any process or paper by registered mail or by personal service within or without
the State of California in accordance with applicable law, provided a reasonable
time for appearance is allowed.
11. SIGNATURE IN COUNTERPARTS. This Escrow Agreement may be executed
in separate counterparts, none of which need contain the signature of all
parties, each of which shall be deemed to be an original and all of which taken
together constitute one and the same instrument. It shall not be necessary in
making proof of this Escrow Agreement to produce or account for more than the
number of counterparts containing the respective signatures of, or on behalf of,
all of the parties hereto.
12. ATTORNEY'S FEES. Should any action be commenced between the
parties to this Agreement concerning the matters set forth in this Agreement or
the right and duties of either in relation thereto, the prevailing party in such
action shall be entitled, in addition to such other relief as may be granted, to
a reasonable sum as and for its Attorney's Fees and Costs.
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to
be duly executed and delivered in its name and on its behalf, all as of the date
and year first above written.
"PURCHASERS"
/s/ Xxxxxxx Xxxxxxx /s/ M. Xxxxxxx Xxxxx
_____________________________ _____________________________
Xxxxxxx Xxxxxxx M. Xxxxxxx Xxxxx
Xxxxxxxx X.X. Emerald Corp.
/s/ Xxxxx Xxxxxxx /s/ Xxxxxx xx Xxxxx
_____________________________ _____________________________
By: Xxxxx Xxxxxxx By: Xxxxxx xx Xxxxx
Its: President Its: Director
"SELLER" "COVICTORY"
Industrial Rubber Innovations, Inc. Covictory Capital Ltd.
/s/ Xxxx Xxxxxx /s/ Xxxxxx Xxxxxx
_____________________________ _____________________________
By: Xxxx Xxxxxx By: Xxxxxx Xxxxxx
Its: President Its: President
"ESCROW AGENT"
MRC Legal Services Corporation
/s/ M. Xxxxxxx Xxxxxx
_________________________________
By: M. Xxxxxxx Xxxxxx
Its: President
EXHIBIT A
LETTER OF AUTHORIZATION
MRC Legal Services Corporation
Attn: Xxxxx X. Xxxxxxxx, Esq.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Dear Xx. Xxxxxxxx:
This letter of authorization is being provided to you in connection with
that certain Escrow Agreement dated July 28, 1999 by and between Industrial
Rubber Innovations, Inc., Xxxxxxx Xxxxxxx, Xxxxxxxx, X.X., Emerald Corp., M.
Xxxxxxx Xxxxx, Covictory Capital Ltd., and MRC Legal Services Corporation as
escrow agent (the "Agreement").
In accordance with the terms of the Agreement, please allow this letter to
serve as authorization to you to provide notice to Savant Biomedical, Inc. of a
change of ownership of the Savant Interest (as defined in the Agreement) and the
Debenture (as defined in the Agreement).
Please also allow this letter to serve as notice to Savant Biomedical, Inc.
of the transaction contemplated by the Agreement and as our authorization of MRC
Legal Services Corporation to transfer ownership of the Savant Interest and the
Debenture in accordance with the terms of the Agreement.
Executed this 28th day of June, 1999.
Industrial Rubber Innovations, Inc.
/s/ Xxxx Xxxxxx
_______________________________
By: Xxxx Xxxxxx
Its: President
