EXHIBIT 10.3
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is dated as of June 3,
2004, by and between Cyber-Test, Inc., a Delaware corporation ("Purchaser"),
Cyber-Test, Inc., a Florida corporation ("Seller") and Eckert Seamans Cherin &
Mellott, LLC (the "Escrow Agent").
W I T N E S S E T H:
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WHEREAS, Purchaser and Seller are parties to that certain Asset
Purchase Agreement, dated as of May 27, 2004 (the "Purchase Agreement"),
pursuant to which Purchaser has agreed to purchase from Seller substantially all
of the assets of Seller; and
WHEREAS, a portion of the purchase price otherwise payable to Seller
pursuant to the Purchase Agreement is 50,000,000 shares of common stock of
Advanced Communications Technologies, Inc., priced at $.01 per share, to be
earned by Seller during the three year period commencing fiscal year July 1,
2004 and ending fiscal year June 30, 2007 (the "Escrow Period"), in accordance
with the terms of the Purchase Agreement (the "Shares"); and
WHEREAS, upon earning the Shares, the Shares shall be deposited with,
and held and released by, Escrow Agent in accordance with the terms of this
Escrow Agreement; and
WHEREAS, all of the initially capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound, the parties
hereto hereby agree as follows:
1. Appointment of Escrow Agent. Seller and Purchaser hereby appoint
Escrow Agent to act as escrow agent under this Escrow Agreement, and Escrow
Agent hereby accepts such appointment, for the purpose of receiving, holding,
and releasing the Shares, all in accordance with the terms and conditions set
forth in this Escrow Agreement.
2. Establishment of Escrow Fund; Delivery of Shares; Dividend and Voting
Rights.
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2.1 Deposit of Shares.
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(a) In the event Purchaser achieves the Milestones in any fiscal
year during the Escrow Period, no later than September 30 of the immediately
following fiscal year Purchaser shall deposit, or cause to be deposited, with
Escrow Agent a certificate or certificates representing 16,666,667 Shares.
EXHIBIT 10.3
(b) The certificates representing the Shares shall be issued in
the name of Seller. Seller shall be entitled to vote the Shares on all matters
submitted to a vote of shareholders of Purchaser.
(c) All dividends or distributions in respect of the Shares held
by Escrow Agent, whether in the form of cash, securities or other property,
shall be paid to Seller.
2.2 Escrow Agent agrees to carry out all of the provisions of this
Escrow Agreement to be performed by it hereunder.
3. Release of Shares.
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3.1 Escrow Agent shall hold the Shares until authorized to release
them in accordance with this Section 3.
(a) Release of Shares Per Joint Instructions. Escrow Agent shall
release the Shares at any time pursuant to the joint written instructions of
Purchaser and Seller (which may be executed and/or transmitted in counterparts).
(b) Disbursement to Seller. Upon its receipt of the written
instructions of Purchaser to disburse the Shares to Seller, Escrow Agent shall
deliver to Seller at Seller's address set forth in Section 7 hereof all
certificates representing the Shares then held by Escrow Agent.
(c) Disbursement to Purchaser. In the event that Purchaser
desires to have the Shares disbursed to Purchaser, Purchaser shall deliver
written instructions to Escrow Agent, with a copy to Seller, instructing Escrow
Agent to deliver to Purchaser all certificates representing the Shares then held
by Escrow Agent.
If on or prior to 5:00 p.m., New York City time, on the
fifth business day following the business day on which Escrow Agent received the
instructions described in this Paragraph 3.1(c), Seller shall not have provided
Escrow Agent with a written notice (the "Dispute Notice") that it disputes the
disbursement of the Shares to Purchaser, Escrow Agent shall thereafter deliver
to Purchaser at Purchaser's address set forth in Section 7 hereof all
certificates representing the Shares then held by Escrow Agent.
(d) Dispute as to Disbursement of Shares. If Seller shall have
timely delivered a Dispute Notice to Escrow Agent, Purchaser and Seller shall
thereafter attempt to resolve the matter and Escrow Agent shall thereafter act
only in accordance with this Paragraph 3.1(d) or Paragraph 3.1(e). It is
understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the Shares held by Escrow Agent
hereunder, Escrow Agent is authorized and directed in Escrow Agent's sole
discretion (i) to retain in Escrow Agent's possession, without liability to
anyone, all or any part of the Shares until such dispute shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment of a board of arbitration or a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but Escrow Agent shall be under no duty whatsoever to institute or
EXHIBIT 10.3
defend any such proceedings, or (ii) to deliver the Shares held by Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the Commonwealth of Pennsylvania, City of
Philadelphia, or at Escrow Agent's option, the State and City of New York, in
accordance with the applicable procedure therefore. Upon delivery to such court,
this Escrow Agreement shall terminate and Escrow Agent shall be relieved of all
further duties hereunder.
(e) Court Order. Notwithstanding any provision in this Escrow
Agreement to the contrary, Escrow Agent shall disburse the Shares in accordance
with a final judgment or final court order from a court of competent
jurisdiction directing disposition of the Shares (a "Court Order"). A judgment
or order under any provision of this Escrow Agreement shall not be deemed to be
final until the time within which an appeal may be taken therefrom has expired
and no appeal has been taken, or until the entry of a judgment or order from
which no appeal may be taken. Escrow Agent shall be entitled to receive and may
conclusively rely on an opinion of counsel to the presenting party to the effect
that a Court Order as referred to in this Section is final and nonappealable and
from a court of competent jurisdiction.
3.2 Expiration of Escrow Period.
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(a) If on or prior to October 31, 2007, Escrow Agent shall not
have received any instructions with respect to the Shares, Seller shall have the
right to deliver written instructions to Escrow Agent, with a copy to Purchaser,
instructing Escrow Agent to deliver to Seller all certificates representing the
Shares then held by Escrow Agent.
(b) If on or prior to 5:00 p.m., New York City time, on the
fifth business day following the business day on which Escrow Agent received the
instructions described in this Paragraph 3.2, Purchaser shall not have provided
Escrow Agent with a Dispute Notice, Escrow Agent shall thereafter deliver to
Seller at Seller's address set forth in Section 7 hereof all certificates
representing the Shares then held by Escrow Agent.
(c) If Purchaser shall have timely delivered a Dispute Notice to
Escrow Agent, Purchaser and Seller shall thereafter attempt to resolve the
matter and Paragraphs 3.1(d) and 3.1(e) hereof shall control with respect to the
release of the Shares.
4. Escrow Agent.
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(a) Escrow Agent undertakes to perform only such duties as are
expressly set forth herein.
(b) Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any notice, instruction or request furnished to it
in writing hereunder and reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties.
EXHIBIT 10.3
(c) Escrow Agent shall not be liable for any action taken by it in
good faith without gross negligence, and may consult with counsel of its own
choice and shall have full and complete authorization and protection for any
reasonable action taken or suffered by it hereunder in good faith and in
accordance with the written opinion of such counsel.
(d) Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation specifying
a date (not less than thirty (30) days after the giving of such notice) when
such resignation shall take effect, and by transferring all certificates
representing Shares then held by it pursuant to this Escrow Agreement to the
successor escrow agent. Promptly after such notice, Purchaser and Seller shall
by mutual agreement appoint a successor escrow agent, such escrow agent to hold
the Shares upon the resignation date specified in such notice. If a successor
escrow agent is not appointed within thirty (30) days, Escrow Agent shall have
the right to petition any court of competent jurisdiction for the appointment of
a successor escrow agent. Purchaser and Seller may by mutual agreement at any
time substitute a new escrow agent by giving fifteen (15) days' notice thereof
to Escrow Agent then acting. Escrow Agent shall continue to serve until its
successor accepts the escrow and receives delivery of the Shares.
(e) Purchaser and Seller agree, jointly and severally, to indemnify
Escrow Agent for, and to hold it harmless against, any loss, liability or
expense incurred by it, arising out of or in connection with its entering into
this Escrow Agreement and carrying out its duties hereunder, including the costs
and expenses of defending itself against any claim of liability in the premises,
other than as incurred by reason of its willful or reckless misconduct or bad
faith. The provisions of this section shall survive the resignation or removal
of Escrow Agent and the termination of this Escrow Agreement.
(f) Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by Purchaser, Seller and Escrow Agent.
(g) Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case Escrow Agent obeys or complies with any such order, judgment or
decree, Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
(h) ESCROW AGENT HAS ACTED AS LEGAL COUNSEL FOR PURCHASER, AND MAY
CONTINUE TO ACT AS LEGAL COUNSEL FOR PURCHASER, FROM TIME TO TIME,
NOTWITHSTANDING ITS DUTIES AS ESCROW AGENT HEREUNDER. SELLER CONSENTS TO ESCROW
AGENT ACTING IN SUCH CAPACITY AS LEGAL COUNSEL FOR PURCHASER AND WAIVES ANY
CLAIM THAT SUCH REPRESENTATION REPRESENTS A CONFLICT OF INTEREST ON THE PART OF
ESCROW AGENT. SELLER UNDERSTANDS THAT PURCHASER AND ESCROW AGENT ARE RELYING
EXPLICITLY ON THE FOREGOING PROVISION IN ENTERING INTO THIS ESCROW AGREEMENT.
NOTWITHSTANDING THE FOREGOING, ESCROW AGENT SHALL NOT REPRESENT PURCHASER IN ANY
PROCEEDING RESULTING FROM ESCROW AGENT'S DELIVERY OF THE SHARES INTO COURT AS
CONTEMPLATED IN PARAGRAPHS 3(D) AND 3(E).
EXHIBIT 10.3
5. Termination. This Escrow Agreement shall terminate upon the release
from escrow of the Shares and delivery of the Shares in accordance with this
Escrow Agreement.
6. Representations. Each of Escrow Agent, Purchaser and Seller hereby
represents and warrants to the other parties (a) that this Escrow Agreement has
been duly executed by it and constitutes the valid and legally binding
obligation of it, enforceable against it in accordance with the terms hereof,
except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally and (b) that the execution, delivery and
performance of this Escrow Agreement does not and will not violate any
applicable law or regulation. Escrow Agent hereby represents and warrants that
the Shares, at all times when held by Escrow Agent, will not be subject to any
lien, claim or other encumbrance arising from the escrow.
7. General.
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(a) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon receipt if delivered personally or
sent by facsimile transmission (receipt of which is confirmed mechanically,
personally or by email), or the day after when sent by courier service promising
overnight delivery (with delivery confirmed the next day) or three (3) business
days after deposit in the U.S. mails, first class postage prepaid. Notices shall
be addressed as follows:
(i) if to Seller:
Cyber-Test, Inc.
448 Commerce Way, Suite 100
Florida Central Commerce Park
Longwood, Florida 32750
Attention: Lisa Welton, President
Facsimile: 407.260.5600
With a copy to:
Barrett, Chapman & Ruda, P.C.
18 Wall Street
Orlando, Florida 32801
Attention: Victor Chapman, Esquire
Facsimile:
(ii) if to Purchaser:
EXHIBIT 10.3
Cyber-Test, Inc.
c/o Advanced Communications Technologies, Inc.
420 Lexington Avenue, Suite 2739
New York, NY 10170
Attention: Wayne Danson, Chief Financial Officer
Facsimile: 646.227.1666
with a copy to Escrow Agent
and
Levinson & Lichtman, LLP
120 E. Palmetto Park Road, Suite 100
Boca Raton, FL 33432
Attention: Jonathan J. Lichtman, Esq.
Facsimile No.: 561-869-3601
(iii) if to Escrow Agent:
Eckert Seamans Cherin & Mellott, LLC
1515 Market Street, Ninth Floor
Philadelphia, PA 19102
Attention: Gary A. Miller, Esquire
Facsimile: (215) 851-8383
(b) Entire Agreement. This Escrow Agreement, the Purchase Agreement,
and the other documents entered into in connection herewith and therewith,
constitute the entire agreement between the parties with respect to the
transactions contemplated hereby and thereby and supersede all written or verbal
representations, warranties, commitments and other understandings prior to the
date hereof. No reference shall be made to any draft of this Escrow Agreement,
any other document or any Schedule or Exhibit hereto for purposes of
interpretation or resolution of ambiguity or otherwise.
(c) Counterparts. This Escrow Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Severability. If any provision of this Escrow Agreement shall be
held to be unenforceable or invalid by any court of competent jurisdiction or as
a result of future legislative action, such holding or action shall be strictly
construed and shall not alter the enforceability, validity or effect of any
other provision of this Escrow Agreement.
(e) Assignability. This Escrow Agreement shall be binding upon and
shall inure to the benefit of the successors and permitted assigns of the
parties hereto. Neither this Escrow Agreement nor any of the rights, interests
EXHIBIT 10.3
or obligations hereunder shall be assigned, directly or indirectly, by any party
hereto without the prior written consent of the other parties hereto.
(f) Third Party Beneficiaries. The terms and provisions of this
Escrow Agreement are intended solely for the benefit of each of the parties
hereto and their respective successors and permitted assigns, and it is not the
intention of the parties hereto to confer third party beneficiary rights.
(g) Captions. The descriptive headings herein are inserted for
convenience only and are not intended to be part of or to affect the meaning or
interpretation of this Escrow Agreement.
(h) Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to any principles of conflict of laws.
(i) Amendment and Waiver. This Escrow Agreement may be amended,
modified, supplemented or waived only by an instrument in writing signed by
Purchaser, Seller and Escrow Agent.
(j) Limited Liability. Escrow Agent shall have only those duties as
are specifically provided herein, which shall be deemed purely ministerial in
nature, and shall under no circumstance be deemed a fiduciary for any of the
parties to this Escrow Agreement. Escrow Agent shall neither be responsible for,
nor chargeable with, knowledge of the terms and conditions of any other
agreement, instrument or document between the other parties hereto, in
connection herewith, including, without limitation, the Purchase Agreement. This
Escrow Agreement sets forth all matters pertinent to the escrow contemplated
hereunder, and no additional obligations of Escrow Agent shall be inferred from
the terms of this Escrow Agreement or any other agreement. IN NO EVENT SHALL
ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING BUT NOT
LIMITED TO LOST PROFITS), EVEN IF ESCROW AGENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSSES OR DAMAGES.
[SIGNATURE PAGE FOLLOWS]
EXHIBIT 10.3
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
the day and year first written above.
PURCHASER:
CYBER-TEST, INC., a Delaware corporation
By: /s/ Wayne I. Danson
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Wayne I. Danson, President
SELLER:
CYBER-TEST, INC., a Florida corporation
By: /s/ Lisa Welton
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Lisa Welton, President
ESCROW AGENT:
ECKERT SEAMANS CHERIN & MELLOTT, LLC
By: Gary A. Miller
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Gary A. Miller, Member