Exhibit 10.20
ESCROW AGREEMENT
THIS AGREEMENT made the 15th day of September, 1997.
AMONG:
TEXSTAR PETROLEUM, L.L.C, of 1000 Louisiana, Suite 5500, Houston,
Texas 77002
SLATTERY TRUST, of P.O. Box 61268, Houston, Texas 77002-1268
RUSTON TRUST, of P.O. Box 61268, Houston, Texas 77002-1268
HOUSTON TRUST, of P.O. Box 61268, Houston, Texas 77002-1268
STARBUCKS TRUST, of P.O. Box 61268, Houston, Texas 77002-1268
BOONE PETROLEUM INC., c/o 1305 - 1090 West Georgia Street,
Vancouver, British Columbia V6E 3V7
C'EST LA VIE ENTERPRISES, c/o 1305 - 1090 West Georgia Street,
Vancouver, British Columbia V6E 3V7
(hereinafter jointly and severally called the "Security Holders")
OF THE FIRST PART
AND:
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated
under the laws of Canada authorized to carry on business in all
provinces of Canada
(hereinafter called the "Trustee")
OF THE SECOND PART
AND:
BENZ ENERGY LTD., a corporation continued under the laws of the
Yukon Territory and having an office at Suite 1305 - 1090 West
Georgia Street, Vancouver, British Columbia V6E 3V7
(hereinafter called the "Issuer")
OF THE THIRD PART
WHEREAS the Security Holders presently own or are about to receive
securities of the Issuer;
AND WHEREAS in furtherance of complying with the requirements of
the Ontario Securities Commission (the "Commission"), the Security Holders
are desirous of depositing in escrow certain securities of the Issuer owned
or to be received by them;
AND WHEREAS the Trustee has agreed to undertake and perform its
duties according to the terms and conditions hereof;
NOW THEREFORE this Agreement witnesseth that in consideration of
the aforesaid agreements, and of the sum of one dollar ($1.00) now paid by
the parties hereto, each to the other (receipt of which sum the parties do
hereby respectively acknowledge each to the other) the Security Holders
jointly and severally covenant and agree with each other and with the Issuer
and the Trustee as follows:
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1. For the purposes of this agreement the following terms shall have the
following meanings:
(a) "acceptance date" means the date of the receipt issued by the
Director of the Commission pursuant to Section 61 of the SECURITIES
ACT (Ontario) for the final prospectus of the Issuer dated on or
about September 16, 1997 qualifying the issuance of securities upon
the exercise of previously issued special warrants; and
(b) "Commission" means the Ontario Securities Commission.
2. Each of the Security Holders hereby places and deposits in escrow with
the Trustee those of its securities of the Issuer which are represented by
the certificates described or referred to in Schedule "A" hereto (the
"Escrowed Shares") and hereby undertakes and agrees forthwith to deliver
those certificates (including any replacement securities or certificates if
and when such are issued or allotted) to the Trustee for deposit in escrow.
3. The parties hereby agree that except as otherwise set out herein, the
Escrowed Shares and the beneficial ownership of or any interest in them and
the certificates representing them (including any replacement securities or
certificates) shall not be sold, assigned, hypothecated, pledges, charged,
alienated, released from escrow, transferred within escrow, or otherwise in
any manner dealt with, without the express prior consent in writing of the
Commission. The foregoing shall not prevent any transfer or assignment which
may be required by reason of the death or bankruptcy of any Security Holder,
in which case the Trustee shall hold the said securities and certificates in
escrow subject to provisions of this agreement, for whatever person or
company shall be legally entitled to be or become the registered owner
thereof. Notwithstanding the foregoing, in circumstances where one or more
persons or companies, each being at arm's length (as such term is defined in
the Income Tax Act (Canada)) to the Security Holder, (the "Offeror") makes
either (i) a bona fide take-over bid by way of circular (as contemplated by
the Ontario or British Columbia Securities Acts) or (ii) a bona fide take-over
bid (as contemplated under the rules of The Toronto Stock Exchange or the
Vancouver Stock Exchange) through the facilities of The Toronto Stock
Exchange or Vancouver Stock Exchange, to acquire all the common shares of the
Issuer and to all holders of common shares of the Issuer on the same terms,
the Trustee may, upon receiving written direction from the Security Holder,
tender to any such take-over bid the share certificates representing the
number of Escrowed Shares the Security Holder desires to have deposited under
such take-over bid (the "Deposited Escrowed Shares") provided that the
Trustee receives from the Offeror either before or concurrently with the
tendering of the Deposited Escrowed Shares a certificate of an authorized
signing officer of the Offeror to the effect that the terms and conditions of
the take-over bid have been met or satisfied and that the Offeror is
irrevocably obligated to, and will, take up and pay for all securities
deposited under the take-over bid; however, for greater certainty, the
Trustee shall take appropriate steps to ensure that if all the terms and
conditions of the take-over bid are not met or satisfied or all the
securities duly deposited thereunder are not taken up and paid for, the
Deposited Escrowed Shares shall not be taken up or paid for and shall remain in
escrow subject to the terms and provisions of this Agreement.
4. It is agreed that the Escrowed Shares will be released from escrow from
time to time in accordance with the provisions of Article six of Ontario
Securities Commission Policy 5.2 ("Policy 5.2"), with the following
additional qualifications:
(a) all automatic share releases (ie releases based upon expiry of
time) pursuant to Section 6.5 of Policy 5.2 will be made in
accordance with Schedule "B" hereto. The consent of the
Commission is not required for automatic releases in accordance
with Schedule "B" hereto and the Trustee is hereby authorized to
release the certificates representing the Escrowed Shares to the
Security Holders in the amounts and at the times set out in
Schedule "B" hereto; and
(b) all earned share releases pursuant to Sections 6.6 and 6.7 of
Policy 5.2 will be made to the Security Holders other than Boone
Petroleum Inc. and C'est La Vie Enterprises, pro rata in
accordance with the number of securities deposited in escrow as
shown on Schedule "A" hereto.
5. The Security Holders hereby direct the Trustee to retain their
respective securities and the certificates (including any replacement
securities or certificates) representing the same and not to do or cause
anything to be done to release the same from escrow or to allow any sale,
assignment, hypothecation, pledge, charge or alienation
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thereof except with the prior written consent of the Commission. The Trustee
accepts the responsibilities placed on it hereby and agrees to perform the
same in accordance with the terms hereof.
6. If during the period in which any of the said securities are retained
in escrow pursuant hereto, any cash dividend is received by the Trustee in
respect of the escrowed securities, any such cash dividend shall be forthwith
paid or transferred to the respective Security Holders entitled thereto. If
during the period in which any of the said securities are retained in escrow
pursuant hereto, any share dividend or other distribution of securities is
received by the Trustee in respect of the escrowed securities, subject to
Policy 5.2, any certificates representing such share dividend or securities
must be held by the Trustee on and subject to the terms of this agreement. If
during the period in which any of the said securities are retained in escrow
pursuant hereto, any share dividend or other distribution of securities is
received by a Security Holder in respect of the escrowed securities, any
certificates representing such share dividend or securities must be forthwith
deposited with the Trustee to be held by the Trustee on and subject to the
terms of this agreement.
7. All voting rights attached to the escrowed securities shall at all
times be exercised by the respective registered owners thereof and the
Trustee shall take all necessary steps from time to time to permit the
registered holders to exercise such rights.
8. The Security Holders hereby agree that any escrowed securities of the
Issuer remaining in escrow on the day which is the tenth anniversary of the
acceptance date, shall be donated to and cancelled by the Issuer without
payment by the Issuer of any consideration therefor. In order to effect such
donation and cancellation, the Security Holders do hereby nominate,
constitute and appoint the president of the Issuer from time to time as their
true and lawful attorney with full power of substitution to execute in the
name of and on behalf of the Security Holders such deeds, documents and other
instruments as may be necessary or desirable to give full force and effect to
the provisions of this agreement insofar as it relates to the cancellation of
escrowed securities as aforesaid. This power of attorney shall be coupled
with an interest and shall survive the death or incapacity of the Security
Holders. Where an application is made by the Issuer or the Security Holders
to the Commission for an extension of the time by which the escrowed
securities are subject to donation and cancellation then this power of
attorney shall be suspended while such application is being processed but
shall be immediately reinstated for use upon a decision being rendered by the
Commission in respect of such application and only in accordance with the
decision of the Commission.
9. The Security Holders and the Issuer hereby jointly and severally agree
to and do hereby release and indemnify and save harmless the Trustee from and
against all claims, suits, demands, costs, damages and expenses which may be
occasioned by reason of the Trustee's compliance in good faith with the terms
hereof.
10. The Issuer hereby acknowledges the terms and conditions of this
agreement and agrees to take all reasonable steps to facilitate its
performance.
11. If the Trustee should wish to resign, it shall give at least six months
notice to the Issuer and the Commission whereupon the Issuer may, with the
written consent of the Commission, by writing appoint another Trustee in its
place and such appointment shall be binding on the Security Holders and the
new Trustee shall assume and be bound by the obligations of the Trustee
hereunder.
12. The written consent of the Commission to a release from escrow of all
or any part of the escrowed securities shall terminate this agreement only in
respect of those securities so released. For greater certainty, this clause
does not apply to securities transferred within escrow.
13. Any Security Holder may hypothecate, pledge or charge any or all
securities owned by it and deposited in escrow hereunder to a financial
institution, provided that prior to such hypothecation, pledge or charge,
such financial institution enters into an agreement with the Trustee and the
Issuer whereby it agrees to be bound by the provisions of this agreement and
acknowledges that the securities so hypothecated, pledged or charged may
not be sold, transferred or otherwise dealt with except in accordance with
the provisions of this agreement.
14. This agreement may be executed in several parts in the same form and
such parts as so executed shall together form one original agreement, and
such parts if more than one shall be read together and construed as if all
the signing parties hereto had executed one copy of this agreement.
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15. Wherever the singular or masculine are used throughout this agreement,
the same shall be construed as being the plural or feminine or neuter where
the context so requires.
16. This agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the Province of
Ontario. Each of the parties hereto irrevocably attorns to the jurisdiction
of the courts of the Province of Ontario.
17. This agreement shall enure to the benefit of and be binding upon the
parties hereto, their and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS whereof the parties hereto have executed these presents the
day and year first above written.
The Corporate Seal of TEXSTAR PETROLEUM, )
L.L.C. was hereunto affixed in the presence of: )
)
)
)
/s/ [ILLEGIBLE], President )
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Authorized Signatory )
)
)
/s/ [ILLEGIBLE], Treasurer )
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Authorized Signatory )
)
)
)
SLATTERY TRUST
Per:
/s/ [ILLEGIBLE], Trustee
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Authorized Signatory
RUSTON TRUST
Per:
/s/ [ILLEGIBLE], Trustee
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Authorized Signatory
HOUSTON TRUST
Per:
/s/ [ILLEGIBLE], Trustee
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Authorized Signatory
STARBUCKS TRUST
Per:
/s/ HEATHER J. TOMLINSON, Trustee
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Authorized Signatory
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The Corporate Seal of BOONE PETROLEUM INC. )
was hereunto affixed in the presence of: )
)
/s/ [ILLEGIBLE] )
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Authorized Signatory )
)
)
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Authorized Signatory )
)
The Corporate Seal of C'EST LA VIE )
ENTERPRISES was hereunto affixed in the presence )
of: )
)
/s/ [ILLEGIBLE] )
- ------------------------------------------------- )
Authorized Signatory )
)
)
- ------------------------------------------------- )
Authorized Signatory )
)
The Corporate Seal of BENZ ENERGY LTD. was )
hereunto affixed in the presence of: )
)
/s/ [ILLEGIBLE] )
- ------------------------------------------------- )
Authorized Signatory )
)
)
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Authorized Signatory )
)
The Corporate Seal of MONTREAL TRUST )
COMPANY OF CANADA was hereunto affixed in the )
presence of: )
)
/s/ [ILLEGIBLE] )
- ------------------------------------------------- )
Authorized Signatory )
)
)
/s/ [ILLEGIBLE] )
- ------------------------------------------------- )
Authorized Signatory )
)
SCHEDULE "A"
NUMBER OF CERTIFICATE
NAME OF SECURITY HOLDER BENEFICIAL OWNER SECURITIES NUMBER
- ------------------------- ------------------------ ---------- -----------
Texstar Petroleum, L.L.C. Prentis Tomlinson 361,304 5012
174,217 N/A(2)
Slattery Trust Prentis Tomlinso 4,972,500 4337
552,500 4336
Ruston Trust Prentis Tomlinson Family 765,000 4335
Member 85,000 4334
Houston Trust Prentis Tomlinson Family 343,000 4217
Member 765,000 4333
85,000 4332
Starbucks Trust Prentis Tomlinson Family 765,000 4331
Member 85,000 4330
Boone Petroleum Inc. Donald Busby 1,600,000 4046
1,601,681 N/A(2)
1,222,988 N/A(1)(2)
C'est La Vie Enterprises Donald Busby Family
Member 127,590 N/A(1)
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TOTAL: 13,505,780
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(1) A total of 1,350,578 shares will be released from escrow on the
acceptance date as shown on Schedule "B" herein. These 1,350,578 shares
are comprised of 127,590 shares held by C'est La Vie Enterprises and
1,222,988 shares held by Boone Petroleum Inc.
(2) Maintained in book certificate form by Montreal Trust Company of Canada.
No certificate will be issued.
SCHEDULE "B"
AUTOMATIC RELEASES
NUMBER RELEASED
NUMBER OF ---------------------------------------------
NAME OF SECURITY HOLDER BENEFICIAL OWNER SECURITIES YEAR 0(1) YEAR 1(2) YEAR 2(3) YEAR 3(4) BALANCE
- ------------------------- ------------------------------ ---------- --------- --------- --------- --------- ---------
Texstar Petroleum, L.L.C. Prentis Tomlinson 535,521 160,757 374,764
Slattery Trust Prentis Tomlinson 5,523,000 675,289 299,475 4,550,236
Ruston Trust Prentis Tomlinson Family Trust 850,000 187,110 662,890
Houston Trust Prentis Tomlinson Family Trust 1,193,000 428,000 765,000
Starbucks Trust Prentis Tomlinson Family Trust 850,000 450,000 400,000
Boone Petroleum Inc. Donald Busby 4,424,669 1,222,988 675,289 1,726,392 800,000
C'est La Vie Enterprises Donald Busby Family Member 127,590 127,590
---------- --------- --------- --------- --------- ---------
TOTAL: 13,503,780 1,350,578 1,350,578 2,025,867 2,025,867 6,752,890
---------- --------- --------- --------- --------- ---------
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(1) Refer to acceptance date.
(2) Refer to first anniversary of acceptance date.
(3) Refer to second anniversary of acceptance date.
(4) Refer to third anniversary of acceptance date.