Exhibit 10.2
ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement"), dated as of July 14, 2006, by and among
SimplaGene USA, Inc., a Nevada corporation ("SMPG"), New Colorado Prime
Holdings, Inc., a Delaware corporation ("CPH"), Craig Laughlin (the "SMPG
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Controlling Stockholder"), and Scott B. Mitchell, attorney at law (the "Escrow
Agent"). All capitalized terms used in this Agreement, not otherwise defined,
shall have the same meaning ascribed to such terms in the Reorganization
Agreement.
RECITALS
WHEREAS, SMPG, CPH, and the SMPG Controlling Stockholder have entered into
the Agreement and Plan of Reorganization, dated July 14, 2006 (the
"Reorganization Agreement"); and
WHEREAS, Section 5(b) of the Reorganization Agreement obligates the SMGP
Controlling Stockholder to indemnify and hold harmless CPH from Losses, with the
total liability limited at $160,000 (the "Maximum Liability"); and
WHEREAS, Section 5(b) of the Reorganization Agreement provides that the
SMPG Controlling Stockholder will deposit in escrow 900,000 shares of SMPG
common stock registered in the name of the SMPG Controlling Stockholder as
collateral for the obligation of the SMPG Controlling Stockholder to reimburse
SMPG and CPH for Losses incurred on claims subject to indemnification by the
SMPG Controlling Stockholder under the Reorganization Agreement; and
WHEREAS, Escrow Agent is willing to act as an escrow agent in respect of
the 900,000 shares (as adjusted for any reverse stock split, forward split or
share distribution, or other recapitalization) of SMPG Common Stock (the "Escrow
Shares") and in respect of any cash deposited in escrow by the SMPG Controlling
Stockholder, upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, for good and valuable considerations, the receipt and
adequacy of which are hereby acknowledged by each of the parties hereto, the
parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. SMPG, CPH and the SMPG Controlling
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Stockholder hereby appoint the Escrow Agent as escrow agent in accordance with
the terms and conditions set forth herein and the Escrow Agent hereby accepts
such appointment.
2. Delivery of Escrow Shares. Simultaneously with the Closing
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contemplated by the Reorganization Agreement, the SMPG Controlling Stockholder
shall deliver to the Escrow Agent one or more certificates representing the
Escrow Shares together with an equal number of duly executed irrevocable stock
powers. The SMPG Controlling Stockholder shall provide additional duly executed
irrevocable stock powers upon the request of the Escrow Agent. At the option of
the SMPG Controlling Stockholder, and in lieu of delivering the Escrow Shares,
the SMPG Controlling Stockholder may deliver to the Escrow Agent cash in an
amount equivalent to the Maximum Liability. In addition, the SMPG Controlling
Stockholder may, at any time and from time to time, sell the Escrow Shares in
the open market at their prevailing prices and replace those Escrow Shares with
all of the cash proceeds thereof; provided, however that the amount of cash in
escrow need not exceed the Maximum Liability.
3. Release of Escrow Shares and Termination of Escrow. The Escrow
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Shares (or such part thereof that may be remaining in escrow after reimbursement
for SMPG and CPH's Loss on claims subject to indemnification by the SMPG
Controlling Stockholder) shall be delivered by the Escrow Agent to the SMPG
Controlling Stockholder in accordance with the calculations and timeline
provided in this Section 3.
(a) On the date that is six months following the Closing Date ("First
Release Date"), the Escrow Agent shall deliver to the SMPG Controlling
Stockholder such number of Escrow Shares, if any, so that the value on the First
Release Date of the Escrow Shares remaining in escrow and held by the Escrow
Agent plus the cash in escrow and held by the Escrow Agent is equal to $160,000.
The value per share of the Escrow Shares shall equal the average of the closing
prices for SMPG common stock in the Trading Market (as defined below) on the 60
consecutive Trading Days (as defined below) ending three Trading Days prior to
the First Release Date.
(b) On the date that is 12 months following the Closing Date ("Second
Release Date"), the Escrow Agent shall deliver to the SMPG Controlling
Stockholder such number of Escrow Shares, if any, so that the value on the
Second Release Date of the Escrow Shares remaining in escrow and held by the
Escrow Agent plus the cash in escrow and held by the Escrow Agent is equal to
$160,000. The value per share of the Escrow Shares shall equal the average of
the closing prices for SMPG common stock in the Trading Market on the 60
consecutive Trading Days ending three Trading Days prior to the Second Release
Date.
(c) On the date that is 18 months following the Closing Date ("Final Release
Date"), the Escrow Agent shall deliver to the SMPG Controlling Stockholder all
remaining Escrow Shares and cash; provided, however, that no such delivery shall
be made if the Escrow Agent has received on or before the Final Release Date
written notice that SMPG and/or CPH is claiming reimbursement for Loss incurred
and such claim has not been resolved as of the Final Release Date, in which case
the Final Release Date will be automatically extended to the date on which such
claim is resolved.
(d) For purposes of this Agreement the term "Trading Day" means a day on
which the SMPG Common Stock is traded on a Trading Market, and the term "Trading
Market" means the following markets or exchanges on which the SMPG Common Stock
is listed or quoted for trading on the date in question: OTC Bulletin Board, the
Nasdaq Capital Market, the American Stock Exchange, the New York Stock Exchange
or the Nasdaq National Market.
(e) Upon distribution of all of the Escrow Shares and cash, as provided
above, this Agreement will terminate.
4. Claims Procedure.
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(a) In the event SMPG or CPH gives written notice to the SMPG
Controlling Stockholder of any claim for indemnification under the
Reorganization Agreement, it will forward the same written notice of claim to
the Escrow Agent.
(b) If the written notice makes a claim for a stated dollar amount and does
not involve a matter in dispute with a third party, the SMPG Controlling
Stockholder will give written notice to SMPG, CPH and the Escrow Agent within 20
days following the date of SMPG or CPH's notice of claim whether the claim is
accepted.
(c) All claims for indemnification shall be paid by the SMPG Controlling
Stockholder in cash, unless SMPG or CPH, in their sole discretion, agree to
accept payment of such claim in Escrow Shares.
(d) If the claim is accepted by the SMPG Controlling Stockholder, or if SMPG
and CPH are otherwise entitled to payment from the SMPG Controlling Stockholder
pursuant to the final two sentences of this paragraph, and if SMPG or CPH demand
payment of the claim in cash, the SMPG Controlling Stockholder may either (i)
directly pay the claim in cash or (ii) , subject to compliance with applicable
securities laws, direct the Escrow Agent to sell that number of Escrow Shares as
are equal in value to the claim and remit the cash to SMPG and/or CPH. If
Escrow Shares are accepted as payment for indemnification claims by SMPG and/or
CPH, the Escrow Agent will immediately deliver to SMPG for cancellation that
number of Escrow Shares equal to the amount of the claim (the amount of all
claims not to exceed $160,000 in the aggregate). The value of the Escrow Shares
shall be determined by the average of the closing prices for SMPG common stock
in the Trading Market on the 60 consecutive Trading Days ending the date written
notice is given under Section 4(a), above, rounded to the nearest whole share
(the "Reimbursement Shares"). If the SMPG Controlling Stockholder does not
accept the claim, payment shall only be made to SMPG and/or CPH upon resolution
of the issue by written agreement of SMPG, CPH and the SMPG Controlling
Stockholder or in accordance with the final decision or judgment of a trier of
fact with jurisdiction over the matter in dispute. If the SMPG Controlling
Stockholder fails to give written notice as to whether it accepts SMPG's or
CPH's claim within 20 days following the date of SMPG's and/or CPH's notice of
claim, then the SMPG Controlling Stockholder shall be deemed to have accepted
the claim.
(e) If the written notice makes a claim for a dollar amount yet to be
determined or involves a matter in dispute with a third party, the Escrow Agent
will deliver at SMPG and/or CPH's election, cash or Escrow Shares to SMPG for
cancellation in accordance with Section 4(d), above, only upon resolution of the
issue by written agreement of SMPG, CPH and the SMPG Controlling Stockholder or
in accordance with the final decision or judgment of a trier of fact with
jurisdiction over the matter in dispute.
(f) In the event that the SMPG Controlling Stockholders fails to timely make
a cash payment, then SMPG and/or CPH may elect to (i) have the Escrow Agent
deliver Escrow Shares to SMPG for cancellation, which Escrow Shares shall be
valued for purposes of indemnity as if the election was originally made for
delivery of Escrow Shares, or (ii) subject to compliance with applicable
securities laws, direct the Escrow Agent to sell Escrow Shares and deliver the
proceeds thereof to SMPG and/or CPH, which proceeds will be treated as payment
of the indemnity obligation. Subject to Section 6 of this Agreement, the amount
of indemnity paid shall not exceed the Maximum Liability.
(g) Upon distribution of cash and/or Reimbursement Shares to SMPG
and/or CPH to reimburse $160,000 of Loss, in the aggregate, all indemnification
obligations of the SMPG Controlling Stockholder under Section 5(b) of the
Reorganization Agreement will be discharged and performed in full, all remaining
Escrow Shares and cash shall be immediately delivered by Escrow Agent to the
SMPG Controlling Stockholder, and this Agreement will terminate.
5. Limitation of Responsibility and Liability of the Escrow Agent. The
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Escrow Agent:
(a) Shall be authorized to rely upon all written instructions and/or
communications of the Parties that appear to be valid on their face;
(b) 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;
(c) Acts hereunder as a depository only, and is not responsible or liable in
any manner whatsoever for the sufficiency, correctness, genuineness, or validity
of any instrument deposited with it, or with respect to the form or execution of
the same, or the identity, authority, or rights of any person executing or
depositing the same; and
(d) Shall be entitled to comply with any final award in arbitration or final
order, judgment or decree of a court of competent jurisdiction, and/or with the
consistent written instructions from the Parties.
6. Costs and Expenses. The fee of the Escrow Agent is $750, which
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shall be paid entirely by CPH. The fee agreed on for services rendered
hereunder is intended as full compensation for the Escrow Agent's services as
contemplated by this Agreement; however, in the event that the conditions of
this Agreement are not fulfilled, the Escrow Agent renders any material service
not contemplated by this Agreement, there is any assignment of interest in the
subject matter of this Agreement, there is any material modification hereof, any
material controversy arises hereunder, or the Escrow Agent is made a party to or
justifiably intervenes in any litigation pertaining to this Agreement or the
subject matter hereof, the Escrow Agent shall be reasonably compensated for such
extraordinary expenses, including reasonable attorneys' fees, occasioned by any
delay, controversy, litigation, or event and the same may be recoverable
one-half from SMPG and one-half from the SMPG Controlling Stockholder.
7. Notices. All notices and communications shall be deemed to have
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been duly given: at the time delivered by hand, if personally delivered; three
days after be being deposited in the mail, if sent with postage prepaid and
addressed as provided below; when transmission is verified, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery;
If to SMPG Controlling Stockholder:
Craig Laughlin
11900 Wayzata Boulevard, Suite 100
Hopkins, MN 55305
Fax: (952) 546-2529
If to SMPG or CPH:
New Colorado Prime Holdings, Inc.
Attn: Paul A. Roman, Chief Executive Officer
500 Bi-County Boulevard, Suite 400
Farmingdale, NY 11735
Fax: (631) 694-8493
With a copy to:
Moomjian & Waite, LLP
Attn: Gary T. Moomjian, Esq.
100 Jericho Quadrangle, Suite 225
Jericho, NY 11753
Fax: (516) 937-5050
If to Escrow Agent:
Scott B. Mitchell
2469 East 7000 South, Suite 204
Salt Lake City, UT 84121
Fax: (801) 942-7047
Any party may change its address by providing written notice of such change to
the other parties hereto.
8. Resignation by Escrow Agent. Upon 30 days' prior written notice to
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the Parties delivered or sent as required above, the Escrow Agent shall have the
right to resign as escrow agent hereunder and to thereby terminate his duties
and responsibilities hereunder, and shall thereupon be released from these
instructions. Upon resignation by the Escrow Agent, the Escrow Agent shall
provide the Parties with sufficient information concerning the status of the
Escrow to enable the parties to provide the same to a successor escrow agent.
9. Termination of Escrow Agreement. The Escrow Agent's
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responsibilities thereunder shall terminate at such time as the cash and Escrow
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Shares shall have been fully disbursed pursuant to the terms hereof, or upon
earlier termination of this escrow arrangement pursuant to written instructions
executed by all. Such written notice of earlier termination shall include
instruction to the Escrow Agent for the distribution of the Escrow Shares.
10. Entire Agreement. This Agreement contains the entire understanding
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by and among the parties hereto; there are no promises, agreements,
understandings, representations or warranties, other than as herein set forth.
No change or modification of this Agreement shall be valid or effective unless
the same is in writing and is signed by all of the parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto, and their respective
successors and assigns.
12. Investment of Cash. If at any time the Escrow Agent is holding
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cash under this Agreement in escrow, such cash shall be deposited in an interest
bearing savings account at a federally registered financial institution that is
designated as an attorney trust or other segregated account not subject to any
claims against the Escrow Agent, and all interest accruing on funds held in the
savings account shall be accumulated for the benefit of the SMPG Controlling
Stockholder and shall, to the extent not used to discharge any indemnity
obligation of the SMPG Controlling Stockholder, be paid over to the SMPG
Controlling Stockholder on termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective in all respects as of the date and year first hereinabove written.
SIMPLAGENE USA, INC.
By:__________________________
Name:________________________
Title:_______________________
NEW COLORADO PRIME HOLDINGS, INC.
By: /s/Paul A. Roman
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Paul A. Roman, Chief Executive Officer
SMPG CONTROLLING STOCKHOLDER
/s/ Craig Laughlin
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Craig Laughlin
ESCROW AGENT
/s/ Scott B. Mitchell
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Scott B. Mitchell