EXHIBIT 2.4
RETENTION ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("AGREEMENT") is made and entered into as of
April ___, 2004, by and among Commonwealth Energy Corporation, a California
corporation ("PARENT"), [_________________], a [national banking association]
(the "ESCROW AGENT"); and the following individuals: Xx. Xxxxx Xxxxxxx, Xx. Xxxx
Xxxxxx, Xx. Xxxx Xxxx and Xx. Xxxxx Kvetinskas (collectively, the "SKIPPING
STONE STOCKHOLDERS," and each a "SKIPPING STONE STOCKHOLDER").
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meaning given to them in the Merger Agreement (as defined
below).
INTRODUCTION
A. Parent, Skipping Stone Acquisition Corporation, a Delaware corporation
and wholly owned subsidiary of Commonwealth ("MERGER SUB"), Skipping Stone,
Inc., a Delaware corporation ("SKIPPING STONE") and the Skipping Stone
Stockholders have entered into an Agreement and Plan of Merger dated as of March
29, 2004 (the "MERGER AGREEMENT") pursuant to which Merger Sub will be merged
with and into Skipping Stone, and the Surviving Corporation will be a wholly
owned subsidiary of Parent.
B. The Merger Agreement requires, as a condition to the Merger, the
establishment of an escrow account into which each Skipping Stone Stockholder
will place for the benefit of Parent ten percent (10%) of the aggregate number
of Merger Shares to which he is entitled pursuant to the terms thereof for a
period of, in the case of each of Messrs. Lander, Alam and Kvetinskas, twelve
(12) months, and in the case of Xx. Xxxxxxx, eighteen (18) months, in each case
plus an administrative period.
C. The parties hereto desire to establish the terms and conditions pursuant
to which such escrow account will be established and maintained.
TERMS AND CONDITIONS
The parties hereby agree as follows:
SECTION 1. ESCROW ACCOUNT
1.1 ESCROW OF SHARES. As soon as practicable following the Effective
Time, in accordance with the Merger Agreement, (a) Parent shall deliver to the
Escrow Agent certificates issued in the names of the Skipping Stone
Stockholders, representing in the aggregate one hundred sixty-one thousand one
hundred seven (161,107) shares of Parent Common Stock (the "ESCROW SHARES"), to
be held in escrow on behalf of the Skipping Stone Stockholders, in accordance
with this Agreement and in the amounts with respect to each Skipping Stone
Stockholder set forth on EXHIBIT A. The shares of Parent Common Stock being held
in escrow pursuant to this Agreement shall collectively constitute an escrow
fund (the "ESCROW FUND") with respect to the rights of Parent established
herein. The Escrow Agent agrees to accept
delivery of the Escrow Fund and to hold the Escrow Fund in an escrow account
(the "ESCROW ACCOUNT"), subject to the terms and conditions of this Agreement.
The Escrow Shares shall be treated by the parties for all tax purposes as owned
by the Skipping Stone Stockholders in accordance with the amounts set forth in
Exhibit A in respect of each Skipping Stone Stockholder (as such Exhibit may be
amended from time to time in accordance with this Agreement) until the Escrow
Shares are released pursuant to the terms of this Agreement.
1.2 VOTING OF ESCROW SHARES. On any matter brought before the
stockholders of Parent for a vote, each Skipping Stone Stockholder shall have
the absolute right to have its pro rata portion of the Escrow Shares (and any
additional securities with respect thereto) voted in accordance with the written
instructions of such stockholder at the time of the applicable record date as
given to the Escrow Agent. Each Skipping Stone Stockholder shall deliver written
notice to the Escrow Agent ("VOTING NOTICE") setting forth the manner in which
the Escrow Agent shall vote such Skipping Stone Stockholder's portion of the
Escrow Shares at least five (5) days prior to the date of the taking of any vote
of the stockholders of Parent (the "VOTING NOTICE DATE"). The Escrow Agent shall
vote the Escrow Shares in accordance with the Voting Notice. The Escrow Agent
shall promptly forward to each Skipping Stone Stockholder copies of all proxy
solicitation material received with respect to the Escrow Shares. The Escrow
Agent shall have no obligation to vote any of the Escrow Shares if no Voting
Notice is received prior to the Voting Notice Date or if such notice does not
clearly set forth the manner in which the Escrow Agent shall vote the Escrow
Shares.
1.3 SECURITY INTEREST. To the extent and so long as Escrow Shares are
held in the Escrow Account hereunder, Parent shall have, and the Skipping Stone
Stockholders hereby grant, as of and from the date of this Agreement, a
perfected, first-priority security interest in such Escrow Shares to secure
payment of amounts, if any, payable to Parent in respect of Section 2.1 of this
Agreement. In connection herewith, each Skipping Stone Stockholder expressly
agrees (i) that the Escrow Agent is acting solely as Parent's agent to the
extent necessary to perfect Parent's first-priority security interest in the
Escrow Shares, and (ii) to execute and deliver such instruments as Parent may
from time to time reasonably request for the purpose of evidencing and
perfecting such security interest.
1.4 DIVIDENDS, ETC. For so long as any of the Escrow Shares (or any
additional securities with respect thereto) are held by the Escrow Agent in
accordance with the terms of this Agreement, each Skipping Stone Stockholder
shall have the absolute right to all dividends and distributions (of whatever
nature) on its pro rata portion of the Escrow Shares (and any additional
securities with respect thereto, and any interest or earnings upon such
dividends, distributions or additional securities). The Escrow Agent shall
deliver to each Skipping Stone Stockholder such stockholder's pro rata portion
of any such amounts or securities paid or issued in respect of Escrow Shares
within 10 days of receiving such amounts or securities.
1.5 FRACTIONAL SHARES. No fractional shares of Parent Common Stock or
other securities shall be retained in or released from the Escrow Account
pursuant to this Agreement. In connection with any release of Escrow Shares from
the Escrow Account, all Escrow Shares (including fractions thereof) issuable
upon release to a Skipping Stone
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Stockholder shall be aggregated for purposes of determining whether the release
of Escrow Shares would result in the issuance of any fractional share. If, after
the aforementioned aggregation, the release of Escrow Shares to a Skipping Stone
Stockholder would result in the issuance of any fractional share, Parent and the
Escrow Agent shall, in lieu of issuing any fractional share, pay to such
Skipping Stone Stockholder cash equal to the product of such fraction multiplied
by the Parent Share Price.
1.6 TRUST FUND. The Escrow Fund shall be held as a trust fund and
shall not be subject to any lien, attachment, trustee process or any other
judicial process of any creditor of any shareholder or of any party hereto,
except as contemplated in Section 1.3. The Escrow Agent shall hold and safeguard
the Escrow Fund until the Termination Date (as defined below), provided that if
the Escrow Agent has received from Parent a Claim Notice (as defined below)
setting forth a claim that has not been resolved by the Termination Date, then
the Escrow Agent shall hold and safeguard the Escrow Fund until the claim has
been resolved and the Escrow Fund released in accordance with this Agreement.
SECTION 2. ADMINISTRATION OF ESCROW ACCOUNT. Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Account as follows:
2.1 CALCULATION OF CLAIM. With respect to Messrs. Lander, Alam and
Kvetinskas, if any of them voluntarily resigns other than upon death, Disability
(as defined in Xx. Xxxxxxx'x employment agreement with Parent), or a Change of
Control (as defined in Xx. Xxxxxxx'x employment agreement with Parent) from
employment with Parent and its Affiliates or is terminated for Cause (as defined
in the following sentence) by Parent and its Affiliates prior to the date twelve
(12) months from the Closing Date, then such person shall forfeit any right or
interest in the Escrow Shares, and a claim against such Escrow Shares so
forfeited will exist for the purposes of this Agreement. With respect to Xx.
Xxxxxxx, if he voluntarily resigns other than upon death, Disability (as defined
in Xx. Xxxxxxx'x employment agreement with Parent), or a Change of Control (as
defined in Xx. Xxxxxxx'x employment agreement with Parent) from employment with
Parent and its affiliates or is terminated for Cause (as defined in Xx.
Xxxxxxx'x employment agreement with Parent) by Parent and its Affiliates prior
to the date eighteen (18) months from the Closing Date, then he shall forfeit
any right or interest in the Escrow Shares, and a claim against such Escrow
Shares so forfeited will exist for the purposes of this Agreement.
2.2 DELIVERY OF CLAIM NOTICE. If Parent has a claim pursuant to
Section 2.1 hereof, Parent may, on or prior to, in the case of Messrs. Lander,
Alam and Kvetinskas, the date twelve (12) months from the Closing Date, and in
the case of Xx. Xxxxxxx, the date eighteen (18) months from the Closing Date (in
each case, plus an additional five (5) days for administration, the "TERMINATION
DATE"), deliver a claim notice (a "CLAIM NOTICE") to the relevant Skipping Stone
Stockholder(s) and to the Escrow Agent. A Claim Notice shall state that Parent
believes that there is a claim giving specifics in reasonable detail under
Section 2.1 hereof against specified Escrow Shares, and shall identify the
relevant Skipping Stone Stockholder and Escrow Shares that are the subject of
such claim (the "CLAIMED SHARE AMOUNT"). If Parent does
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not deliver a Claim Notice on or prior to the Termination Date, the Escrow
Shares shall be released in accordance with Section 3.
2.3 RESPONSE NOTICE; UNCONTESTED CLAIMS. Within ten (10) days after
receipt by the Skipping Stone Stockholder(s) of a Claim Notice, the Skipping
Stone Stockholder(s), subject to such claim, may deliver to Parent and to the
Escrow Agent a written response (the "RESPONSE NOTICE") in which such Skipping
Stone Stockholder(s): (i) agree that Escrow Shares (or other property held in
the Escrow Account) specified in the Claim Notice may be released from the
Escrow Account to Parent; or (ii) indicate that no part of the Escrow Fund may
be released from the Escrow Account to Parent in respect of the Claimed Share
Amount. Any part of the Claimed Share Amount that is not agreed to be released
to Parent pursuant to the Response Notice shall be the "CONTESTED SHARE AMOUNT."
If a Response Notice is not received by the Escrow Agent within such ten (10)
day period, then the Skipping Stone Stockholder(s), subject to such claim, shall
be conclusively deemed to have agreed that Escrow Shares (or other property held
in the Escrow Account) equal to the full Claimed Share Amount may be released to
Parent from the Escrow Account.
2.4 UNCONTESTED CLAIMS. If the Skipping Stone Stockholder(s) deliver a
Response Notice agreeing that Escrow Shares (or other property held in the
Escrow Account) may be released from the Escrow Account to Parent, or if the
Skipping Stone Stockholder(s) do not deliver a Response Notice on a timely basis
in accordance with Section 2.3, the Escrow Agent shall within five (5) days
following the receipt of such Response Notice (or, if the Escrow Agent has not
received a Response Notice, within five (5) days following the expiration of the
ten (10) day period referred to in Section 2.3), deliver to Parent such Escrow
Shares (or other property). Such payment shall be deemed to be made in full
satisfaction of the claim described in such Claim Notice, and no recourse under
any circumstances may be had against the Skipping Stone Stockholders.
2.5 CONTESTED CLAIMS.
(a) If the Skipping Stone Stockholder(s), subject to such claim,
and Parent are unable to resolve the dispute relating to any Contested Share
Amount within thirty (30) days after the delivery of the Claim Notice ("INITIAL
RESOLUTION PERIOD"), then the parties shall resolve such dispute pursuant to the
Arbitration provisions of Section 2.7 below.
2.6 Any Escrow Shares released from the Escrow Account shall be deemed
to reduce the Escrow Shares solely of the applicable Skipping Stone Stockholder,
subject to such claim, as set forth on EXHIBIT A.
2.7 ARBITRATION.
(a) Each of the parties hereby waives its right to resolve any
controversy, claim or dispute involving the parties (or their affiliated
persons) directly or indirectly concerning this Agreement or the subject matter
hereof through any court proceeding or litigation and acknowledges that all such
controversies, claims or disputes, shall be finally settled in accordance with
the provisions of this Section 2.7. Each of the parties represents to the
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other that this waiver is made knowingly and voluntarily after consultation with
and upon the advice of counsel and is a material part of this Agreement.
(b) In the event of any controversy, claim or dispute arising out
of or relating to this Agreement, the claiming party or parties shall provide
written notice specifying in reasonable detail the particulars of the dispute,
the provisions of the Agreement which are involved and the party's suggested
resolution of the controversy. Thereupon, the parties agree to attempt in good
faith to expeditiously resolve the controversy, claim or dispute by good faith
negotiation for a period of at least thirty (30) days, including, without
limitation, at least one face-to-face meeting between the relevant Skipping
Stone Stockholder(s) and an officer of Parent with authority to resolve any such
controversy, claim or dispute.
(c) If these negotiations fail to result in a resolution within
thirty (30) days, then such claiming party or parties may submit such
controversy, claim or dispute to mandatory and binding arbitration held in
Orange County, California, in accordance with the rules of commercial
arbitration then followed by the American Arbitration Association or any
successor to the functions thereof. The arbitrator shall have the right and
authority to determine how his decision or determination as to each issue or
matter in dispute may be implemented or enforced. Any decision or award of the
arbitrator shall be final and conclusive on the parties to this Agreement and
their respective affiliates, and may be entered and enforced in any court of
competent jurisdiction.
(d) The parties hereto agree that any action to compel
arbitration pursuant to this Agreement may be brought in the appropriate Orange
County, California, court and in connection with such action to compel the laws
of the State of California shall control. Application may also be made to such
court for confirmation of any decision or award of the arbitrator, for an order
of the enforcement and for any other remedies which may be necessary to
effectuate such decision or award. The parties hereto hereby consent to the
jurisdiction of the arbitrator and the exclusive jurisdiction of such court and
waive any objection to the jurisdiction of such arbitrator and court.
(e) Each of the Parent, on the one hand, and the relevant
Skipping Stone Stockholder(s), on the other hand, shall pay an equal one-half
(1/2) of all costs, fees and expenses of the arbitration and, notwithstanding
any law to the contrary, each party will bear the fees, costs and expenses of
its own counsel, experts and witnesses; provided, however, that in connection
with any judicial proceeding to compel arbitration pursuant to this Agreement or
to confirm, vacate or enforce any award rendered by an arbitrator, the
prevailing party in such a proceeding shall be entitled to recover reasonable
attorney's fees and expenses incurred in connection therewith, in addition to
any other relief to which it may be entitled.
(f) Notwithstanding the foregoing in this Section 2.7, however,
nothing contained herein shall require arbitration of any issue arising under
this Agreement for which injunctive relief is successfully sought.
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SECTION 3. RELEASE OF ESCROW SHARES. Within fifteen (15) days after the
relevant Termination Date with respect to each Skipping Stone Stockholder, the
Escrow Agent shall distribute or cause to be distributed to such Skipping Stone
Stockholder, on behalf of each such Skipping Stone Stockholder, all of the
Escrow Shares (or other property held in the Escrow Account), if any, then held
in escrow and attributable to such stockholder. Notwithstanding the foregoing,
if any Claim Notice with respect to any Escrow Shares has been given and such
claim has not yet been resolved, the Escrow Agent shall retain in the Escrow
Account after such Termination Date such Escrow Shares, upon the terms set forth
herein and shall release all other Escrow Shares as aforesaid.
SECTION 4. VALUATION OF ESCROW SHARES, ETC.
4.1 STOCK SPLITS. All numbers contained in, and all calculations
required to be made pursuant to, this Agreement with respect to the Escrow
Shares shall be adjusted as appropriate to reflect any stock split, reverse
stock split, stock dividend or similar transaction effected by Parent after the
date hereof. In the event of any such stock split or other similar occurrence,
Parent shall deliver to the Skipping Stone Stockholders and the Escrow Agent a
revised version of EXHIBIT A setting forth in the aggregate the new number of
Escrow Shares held in the Escrow Fund and the number of Escrow Shares being held
on behalf of each Skipping Stone Stockholder. Unless and until the Escrow Agent
receives the certificates representing additional shares of Parent Common Stock
or other property pursuant to Section 1.4, the Escrow Agent may assume without
inquiry that no such stock or other property has been or is required to be
issued with respect to the Escrow Shares. Parent shall be obligated to deliver
into escrow promptly any such additional shares registered in the name of the
applicable stockholder.
SECTION 5. FEES AND EXPENSES. The Escrow Agent shall be entitled to receive
from time to time fees in accordance with EXHIBIT B. In accordance with EXHIBIT
B, the Escrow Agent will also be entitled to reimbursement for reasonable and
documented out-of-pocket expenses incurred by the Escrow Agent in the
performance of its duties hereunder and the execution and delivery of this
Agreement. All such fees and expenses shall be paid by Parent.
SECTION 6. LIMITATION OF ESCROW AGENT'S LIABILITY.
6.1 The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document, and no implied covenants or obligations shall be
read into this Agreement against the Escrow Agent. The Escrow Agent shall incur
no liability with respect to any action taken by it or for any inaction on its
part in reliance upon any notice, direction, instruction, consent, statement or
other document believed by it in good faith to be genuine and duly authorized,
nor for any other action or inaction except for its own gross negligence or
willful misconduct. In all questions arising under this Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. In no event shall the Escrow Agent be
liable for incidental, punitive or consequential damages.
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6.2 Parent hereby agrees to indemnify the Escrow Agent and its
officers, directors, employees and agents for, and hold it and them harmless
against, any loss, liability or expense incurred without negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with the
Escrow Agent carrying out its duties hereunder. This right of indemnification,
compensation and reimbursement shall survive the termination of this Agreement,
and the resignation of the Escrow Agent.
SECTION 7. TERMINATION. This Agreement shall terminate on the Termination
Date plus such additional periods as contemplated in this Agreement or, if
earlier, upon the release by the Escrow Agent of the entire Escrow Fund in
accordance with this Agreement; provided, however, that if the Escrow Agent has
received from Parent a Claim Notice setting forth a claim that has not been
resolved by the Termination Date, then this Agreement shall continue in full
force and effect until the claim has been resolved and the Escrow Fund released
in accordance with this Agreement with respect to the portion of the Escrow Fund
that is the subject of the claim.
SECTION 8. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than thirty (30) days after it is
given to all parties hereto. In such event, Parent may appoint a successor
Escrow Agent reasonably acceptable to the Skipping Stone Stockholders. If Parent
fails to appoint a successor Escrow Agent within fifteen (15) days after
receiving the Escrow Agent's written resignation, the Escrow Agent shall have
the right to apply to a court of competent jurisdiction for the appointment of a
successor Escrow Agent. The successor Escrow Agent shall execute and deliver to
the Escrow Agent an instrument accepting such appointment, and the successor
Escrow Agent shall, without further acts, be vested with all the estates,
property rights, powers and duties of the predecessor Escrow Agent as if
originally named as Escrow Agent herein. The Escrow Agent shall act in
accordance with written instructions from Parent as to the transfer of the
Escrow Fund to a successor escrow agent.
SECTION 9. MISCELLANEOUS.
9.1 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (a) when delivered by hand, or
(b) when received by registered mail or, by courier or express delivery service,
or by facsimile, to the address or facsimile telephone number set forth below
(or to such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent:
Xx. Xxx X. Xxxxxx
Chairman of the Board and Chief Executive Officer
Commonwealth Energy Corporation
00000 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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with a copy to (which copy shall not constitute notice):
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Attn: Xxxx X. Xxxxx Xxxxxx, Esq.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Skipping Stone Stockholders to each of:
Xx. Xxxxx Xxxxxxx
Commonwealth Energy Corporation and Commerce Energy Group
00000 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xx. Xxxx Xxxxxx
c/o Skipping Stone
00 Xxxx - Xxxxx 000
Xxxx Xxxxxxx, XX 00000
Xx. Xxxx Xxxx
c/o Skipping Stone
00000 Xxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xx. Xxxxx Kvetinskas
c/o Skipping Stone
00000 Xxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
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with a copy to (which shall not constitute notice):
Stroock & Stroock & Xxxxx LLP
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Escrow Agent:
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The Escrow Agent may assume that any Claim Notice, Response
Notice or other notice of any kind required to be delivered to the Escrow Agent
and any other Person has been received by such other Person on the date it has
been received by the Escrow Agent, but the Escrow Agent need not inquire into or
verify such receipt.
9.2 HEADINGS. The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
9.3 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
9.4 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. In any action between the parties arising out of
or relating to this Agreement or any of the transactions contemplated by this
Agreement: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in the State of California; (b) if any such action is commenced in a
state court, then, subject to applicable law, no party shall object to the
removal of such action to any federal court located in the State of California;
(c) each of the parties irrevocably waives the right to trial by jury; and (d)
each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance with Section 9.2; provided,
however, that nothing in this Section 9.4 shall effect the arbitration
provisions set forth in Section 2.8.
9.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of each of the parties hereto and each of their
respective permitted successors and assigns, if any. The interests of the
Skipping Stone Stockholders in the Escrow Account and in the Escrow Shares shall
not be assignable or transferable, other than by operation of law. No
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assignment or transfer of any of such interests by operation of law shall be
recognized or given effect until Parent and the Escrow Agent shall have received
written notice of such assignment or transfer. No Skipping Stone Stockholder may
assign such shareholder's rights under this Agreement without the express prior
written consent of Parent, and any attempted assignment of this Agreement or any
of such rights by a shareholder without such consent shall be void and of no
effect; provided, however, that upon the death of a Skipping Stone Stockholder,
such Skipping Stone Stockholder's rights under this Agreement shall be
transferred to the person(s) who receive such shareholder's Parent Common Stock
under the laws of descent and distribution.
9.6 WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.7 AMENDMENT. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
9.8 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.9 PARTIES IN INTEREST. Except as expressly provided herein, none of
the provisions of this Agreement, express or implied, is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns, if any.
9.10 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof.
9.11 TAX REPORTING INFORMATION AND CERTIFICATION OF TAX IDENTIFICATION
NUMBERS.
(a) The parties hereto agree that, for tax reporting purposes,
all interest on or other income, if any, attributable to the Escrow Fund or any
other amount held in escrow
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by the Escrow Agent pursuant to this Agreement shall be allocable to the
Skipping Stone Stockholders in accordance with their percentage interests in the
Escrow Fund set forth on EXHIBIT A.
(b) Parent and the Skipping Stone Stockholders agree to provide
the Escrow Agent with certified tax identification numbers for each of them by
furnishing appropriate forms W-9 (or Forms W-8, in the case of non-U.S. persons)
and any other forms and documents that the Escrow Agent may reasonably request
(collectively, "TAX REPORTING DOCUMENTATION") to the Escrow Agent within thirty
(30) days after the date hereof. The parties hereto understand that, if such Tax
Reporting Documentation is not so furnished to the Escrow Agent, the Escrow
Agent shall be required by the Code to withhold a portion of any interest or
other income earned on the investment of monies or other property held by the
Escrow Agent pursuant to this Agreement, and to immediately remit such
withholding to the Internal Revenue Service.
(c) Parent and the Skipping Stone Stockholders acknowledge and
agree that the Escrow Shares were not received by the Skipping Stone
Stockholders on account of or in connection with the performance of services by
any person (for purposes of Section 83 of the Code and any other tax purposes),
or otherwise in any compensatory capacity, and neither Parent nor any of the
Skipping Stone Stockholders will take or cause to be taken any position on any
tax return or other tax reporting position that is inconsistent with this
acknowledgement and agreement (other than possibly protective elections under
Section 83(b) of the Code, any comparable state elections or filings directly
related thereto).
9.12 COOPERATION. The Skipping Stone Stockholders agrees to cooperate
fully with Parent and the Escrow Agent and to execute and deliver such further
documents, certificates, agreements and instruments and to take such other
actions as may be reasonably requested by Parent or the Escrow Agent to evidence
or reflect the transactions contemplated by this Agreement and to carry out the
intent and purposes of this Agreement.
9.13 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
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(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Escrow Agreement on the date first written above.
COMMONWEALTH ENERGY CORPORATION
By:
--------------------------------
Name: Xxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
ESCROW AGENT
By:
--------------------------------
Name:
Title:
XX. XXXXX XXXXXXX
By:
--------------------------------
Xxxxx Xxxxxxx
XX. XXXX XXXXXX
By:
--------------------------------
Xxxx Xxxxxx
XX. XXXX XXXX
By:
--------------------------------
Xxxx Xxxx
XX. XXXXX KVETINSKAS
By:
--------------------------------
Xxxxx Xxxxxxxxxx
13
EXHIBIT A
SKIPPING STONE STOCKHOLDERS SHARES HELD IN ESCROW FUND
SHARES TO BE HELD
SKIPPING STONE STOCKHOLDER ADDRESS IN ESCROW ACCOUNT
-------------------------- ------- -----------------
A-1
EXHIBIT B
ESCROW AGENT
SCHEDULE OF FEES
[To Come]
B-1
