FORM OF ESCROW AGREEMENT
FORM
OF ESCROW AGREEMENT
THIS
ESCROW AGREEMENT
(this
"Agreement") is made this _____ day of ______________________, 200_, by and
between East Coast Ethanol, LLC, a Delaware limited liability company ("East
Coast") and ____________________________ as escrow agent (the “Escrow Agent”).
W
I T N E S S E T H:
WHEREAS,
East
Coast proposes to offer a minimum of 22,545
and
a
maximum of 39,455
of
its
Membership Units (the "Units") at a price of $15,000 per Unit, in minimum blocks
of one-third Units after an initial minimum purchase of 1 Unit in an offering
registered with the Securities and Exchange Commission and in the states of
Florida,
Maryland, New York, South Carolina, North Carolina, Georgia and
Tennessee,
and
possibly offered in other states pursuant to state securities registration
exemptions and under the provisions of the Securities Act of 1933, as amended
(the “Offering”);
WHEREAS,
East
Coast will file a registration statement to register the Units with the
Securities and Exchange Commission, the States of Florida,
Maryland, New York, South Carolina, North Carolina, Georgia and
Tennessee,
and
possibly other states;
WHEREAS,
East
Coast will allow investors in the Offering to deliver the purchase price of
the
subscribed Units in installments; and
WHEREAS,
East
Coast desires to comply with the requirements of federal and state securities
laws and regulations, and desires to protect the investors in the Offering
by
providing, under the terms and conditions herein set forth, for the return
to
subscribers of the money which they may pay on account of purchases of Units
in
the Offering if the Minimum Escrow Deposit (as hereinafter defined) is not
deposited with the Escrow Agent.
NOW,
THEREFORE,
in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties agree as follows:
1. Acceptance
of Appointment.
_______________________________ hereby agrees to act as Escrow Agent under
this
Agreement. The Escrow Agent shall have no duty to enforce any provision hereof
requiring performance by any other party hereunder.
2. Establishment
of Escrow Account.
An
escrow account (the "Escrow Account") is hereby established with the Escrow
Agent for the benefit of the investors in the Offering. Except as specifically
provided in this Agreement, the Escrow Account shall be created and maintained
subject to the customary rules and regulations of the Escrow Agent pertaining
to
such accounts.
3. Ownership
of Escrow Account.
Until
such time as the funds deposited in the Escrow Account (the "Deposited Funds")
shall equal the Minimum Escrow Deposit (as hereinafter defined), all funds
deposited in the Escrow Account by East Coast shall not become the property
of
East Coast or be subject to the debts of East Coast or any other person but
shall be held by the Escrow Agent solely for the benefit of the investors who
have purchased Units in the Offering.
4. Deposit
of Proceeds.
All
proceeds from sales of Units in the Offering shall be delivered by East Coast
to
the Escrow Agent, within forty-eight hours of the receipt thereof from
investors, endorsed (if appropriate) to the order of the Escrow Agent, together
with an appropriate written statement setting forth name, address and social
security number of each person purchasing Units, the number of Units purchased,
and the amount paid by each such purchaser. Any such proceeds deposited with
the
Escrow Agent in the form of uncollected checks shall be promptly presented
by
the Escrow Agent for collection through customary banking and clearing house
facilities. As the proceeds of each sale are deposited with the Escrow Agent,
East Coast shall reserve the number of Units confirmed to the purchaser thereof
in connection with such sale. All such deposited proceeds are referred to herein
as the "Escrow Funds".
5. Investment
of Escrow Account.
The
Escrow Funds shall be credited by the Escrow Agent and recorded in the Escrow
Account. The Escrow Agent shall be permitted, and is hereby authorized to
deposit, transfer, hold and invest all funds received under this Agreement,
including principal and interest, in those investments directed, in writing
by
East Coast. The Escrow Agent is hereby authorized to invest Escrow Funds in
the
Federated Treasury Obligations Money Market Mutual Fund for temporary investment
without written direction. Any interest received by the Escrow Agent with
respect to the Escrow Funds shall be paid to East Coast , or the investors,
as
indicated elsewhere in this Agreement.
6. Termination
of Escrow.
This
Agreement and the Escrow created hereunder shall be terminated as provided
in
paragraph 7 hereof or as of the date in calendar year 2009 (the "Termination
Date"), which is one year and one day following the date in calendar year 2008
upon which the Securities and Exchange Commission authorizes the Offering (the
"Offering's Effective Date"). The Company shall notify Escrow Agent of the
Offering's Effective Date within 30 days of the receipt of notice of the
Offering's Effective Date from the Securities and Exchange Commission.
7. Disposition
of Escrow Funds.
The
Escrow Agent shall have the following duties and obligations under this
Agreement:
A. The
Escrow Agent shall send a written notice acknowledging the receipt of the
Deposited Funds every seven days to the Company.
B. The
Escrow Agent shall give the Company prompt written notice when the Deposited
Funds equal $33,817,500
(exclusive of interest). Following receipt of such notice, the Company will
advise the purchasers of Units to remit to the Escrow Agent the balance of
the
purchase price within 20 days. Thereafter, Escrow Agent shall give the Company
written notice acknowledging the receipt of the Deposited Funds every seven
days. The Escrow Agent shall give the Company prompt written notice when the
Deposited Funds total $338,175,000
(exclusive of interest).
C. At
the
time (and in the event) that: (a) the Deposited Funds shall, during the term
of
this Agreement, equal $338,175,000
in
subscription proceeds (exclusive of interest) (the "Minimum Escrow Deposit");
(b) the Escrow Agent
shall
have received written confirmation from the Company that the Company has
obtained a written debt financing commitment for debt financing ranging from
a
minimum of $ $243,805,000 to a maximum of $497,455,000; (c) the Company has
affirmatively elected in writing to terminate this Agreement; (d)
the
Escrow Agent shall have provided to each state securities department in which
the Company has registered its securities for sale, as communicated to the
Escrow Agent by the Company, an affidavit stating that the foregoing
requirements (a), (b) and (c) of this subsection 7C have been
satisfied;
and
(d)
in each state in which consent is required, the state securities commissioners
have consented to release of the funds on deposit, then this Agreement shall
terminate, and the Escrow Agent shall promptly disburse the funds on deposit,
including interest, to the Company to be used in accordance with the provisions
set out in the Registration Statement. The Company will deliver a copy of the
Registration Statement to the Escrow Agent upon execution of this Agreement.
The
Escrow Agent will have no responsibility to examine the Registration Statement
with regard to the Escrow Account or otherwise and the Registration Statement
shall contain a provision to such effect. Upon the making of such disbursement,
the Escrow Agent shall be completely discharged and released of any and all
further responsibilities hereunder.
D. In
the
event the Deposited Funds do not equal or exceed the Minimum Escrow Deposit
on
or before the Termination Date or if the Company has not received a written
debt
financing commitment as described herein on or before the Termination Date,
the
Escrow Agent shall return to each of the purchasers of the Units in the
Offering, as promptly as possible after such Termination Date and on the basis
of its records pertaining to the Escrow Account: (a) the sum which each
purchaser initially paid in on account of purchases of the Units in the Offering
and (b) each purchaser's portion of the total interest earned on the Escrow
Account as of the Termination Date, (c) reduced by the transaction fees provided
in paragraph 10 hereof. Computation of any purchaser's share of the net interest
earned will be a weighted average based on the proportion of such purchaser's
deposit in the Escrow Account from the Offering to all such purchasers' deposits
held by the Escrow Agent and upon the length of time in days such deposit was
held in the Escrow Account as compared to all such deposits. All computations
with respect to each purchaser's allocable share of net interest shall be made
by the Escrow Agent, which determinations shall be final and conclusive. Any
amount paid or payable to a purchaser pursuant to this paragraph shall be deemed
to be the property of such purchaser, free and clear of any and all claims
of
the Company or its agents or creditors; and the respective purchases of the
Units made and entered into in the Offering shall thereupon be deemed, ipso
facto, to be cancelled without any further liability of the purchasers or any
of
them to pay for the Units purchased. At such time as the Escrow Agent shall
have
made all the payments called for in this paragraph, the Escrow Agent shall
be
completely discharged and released of any and all further responsibilities
hereunder, and the Units reserved (as provided in paragraph 5) shall be released
from such reservation, except that Escrow Agent shall be required to prepare
and
issue a single IRS Form 1099 to each investor in the event that funds are
returned to investors.
8. Agreement
with Escrow Agent.
To
induce Escrow Agent to act hereunder, it is agreed by East Coast
that:
A. The
sole
duty of the Escrow Agent, other than as herein specified, shall be to receive
the Escrow Funds and hold them subject to release, in accordance herewith,
and
the Escrow Agent shall be under no duty to determine whether East Coast is
complying with the requirements of this Agreement in tendering to the Escrow
Agent said proceeds of the sale of said Units. The Escrow Agent may conclusively
rely upon and shall be protected in acting upon any statement, certificate,
notice, request, consent, order or other document believed by it to be genuine
and to have been signed or presented by the proper party or parties. The Escrow
Agent shall have no duty or liability to verify any such statement, certificate,
notice, request, consent, order or other document, and its sole responsibility
shall be to act only as expressly set forth in this Agreement. The Escrow Agent
shall be under no obligation to institute or defend any action, suit or
proceeding in connection with this Agreement unless first indemnified to its
satisfaction. The Escrow Agent may consult counsel in respect of any question
arising under this Agreement and the Escrow Agent shall not be liable for any
action taken or omitted in good faith upon advice of such counsel.
B. East
Coast hereby indemnifies and holds harmless the Escrow Agent from and against
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Escrow Agent may suffer or incur
by reason of any action, claim or proceeding brought against the Escrow Agent
arising out of or relating in any way to this Agreement or any transaction
to
which this Agreement relates unless such action, claim or proceeding is the
result of the gross negligence or willful misconduct of the Escrow Agent.
9. Resignation
and Removal of Escrow Agent Successors.
The
Escrow Agent may resign upon 30 days advance written notice to East Coast .
If a
successor Escrow Agent is not appointed within the 30-day period following
such
notice, Escrow Agent may petition any court of competent jurisdiction to name
a
successor Escrow Agent. Any commercial banking institution or trust company
with
which Escrow Agent may merge or consolidate, and any commercial banking
institution or trust company to which Escrow Agent transfers all or
substantially all of its corporate trust business shall be the successor Escrow
Agent without further act.
10. Fees
and Expenses of Escrow Agent.
East
Coast agrees to pay the Escrow Agent the fees specified in the Escrow Agent’s
fee schedule attached hereto as Exhibit A, in the manner set forth therein,
unless otherwise agreed to by the parties in writing. The parties further agree
that such fees shall be paid from interest on the escrow account only and not
from principal. In the event the interest on the escrow account is insufficient
to satisfy the full amount of fees payable hereunder, East Coast shall be solely
responsible for the payment of such fees and the Escrow Agent shall not seek
payment of the fees from investors or apply any principal deposited by investors
in the escrow account against such fees. The fee agreed upon herein is intended
as full consideration for the Escrow Agent's services as contemplated by this
Agreement; provided,
however,
that in
the event the Escrow Agent renders any material service not contemplated in
this
Agreement or there is any assignment of interest in the subject matter of this
Agreement, or any material modification hereof; or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Agreement, or the subject matter hereof, then the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney's fees,
occasioned by any delay, controversy, litigation or event, and the same shall
be
recoverable from East Coast , but not from the escrow account.
11. Notices.
All
notices, requests, demands, and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given (a) on the date of
service if served personally on the party to whom notice is to be given, (b)
on
the day of transmission if sent by facsimile transmission to the facsimile
number given below, and telephonic confirmation of receipt is obtained promptly
after completion of transmission, (c) on the next day on which such deliveries
are made in Columbia, South Carolina, when delivery is to Federal Express or
similar overnight courier or the Express Mail service maintained by the United
States Postal Service, or (d) on the fifth day after mailing, if mailed to
the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested,
to
the party as follows:
If
to
Escrow Agent:
__________________________
__________________________
__________________________
__________________________
Attn:______________________
Fax:_______________________
Phone:_____________________
If
to
East Coast :
0000
Xxxxxxxx Xxxx Xxxx Xxxxxx Xxx 0000
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
Fax:
(000) 000-0000
with
a
required copy to:
Brown,
Winick, Graves, Gross, Xxxxxxxxxxx and Schoenebaum, P.L.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxxxxx
Fax:
(000) 000-0000
12. Governing
Law.
This
Agreement shall be construed, performed, and enforced in accordance with, and
governed by, the internal laws of the State of South Carolina, without giving
effect to the principles of conflict of laws thereof.
13. Successors
and Assigns.
Except
as otherwise provided in this Agreement, no party hereto shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent to the other parties hereto and any such attempted assignment without
such prior written consent shall be void and of no force and effect. This
Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto.
14. Severability.
In the
event that any part of this Agreement is declared by any court or other judicial
or administrative body to be null, void, or unenforceable, said provision shall
survive to the extent it is not so declared, and all of the other provisions
of
this Agreement shall remain in full force and effect.
15. Further
Assurances.
Each of
the parties shall execute such documents and other papers and take such further
actions, as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
16. Amendments.
This
Agreement may be amended or modified, and any of the terms, covenants,
representations, warranties, or conditions hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. Any waiver by any party of any condition,
or of
the breach of any provision, term, covenant, representation, or warranty
contained in the Agreement, in any one or more instances, shall not be deemed
to
be nor construed as further or continuing waiver of any such conditions, or
of
the breach of any other provision, term, covenant, representation, or warranty
of this Agreement.
17. Entire
Agreement.
This
Agreement contains the entire understanding among the parties hereto with
respect to the escrow contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written, with regard
to such escrow.
18. Section
Headings.
The
section headings in this Agreement are for reference purposes only and shall
not
affect the meaning or interpretation of this Agreement.
19. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the parties hereto have hereunto affixed their signatures
as of
the day and year first written above.
| EAST COAST: | ESCROW AGENT | ||
| East Coast Ethanol, LLC | |||
|
|
|||
| By: | By: | ||
|
Xxxxx
Xxxxxx, CEO
|
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||
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| Title: | |||
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|
Exhibit
A
Escrow
Agent Fee Schedule
East
Coast Solutions, LLC
|
Administration
|
$
|
|
Transaction
Fees
|
|
|
Subscriber
|
$
|
|
Disbursement/Each
|
$
|
|
1099
Filing
|
$
|
|
$
|
All
out
of pocket costs and expenses, including postage, supplies, long distance
telephone charges, wires and reasonable attorney’s fees will be in addition
hereto.
We
reserve the right to revise fees, including establishing new minimums, as
necessitated by changing economic conditions.
All
fees
are charged in arrears and are quoted on an annualized basis; however we reserve
the right to xxxx in advance, or on a more frequent basis.
