EXHIBIT 10.2
ESCROW AGREEMENT
This Escrow Agreement (herein so called), dated , 2002, made by and
among Xxxxxxxxx Development Corporation, a Delaware corporation ("MD"), Regions
Bank-Tyler ("Escrow Agent") and Xxxxxxxxx Securities, Inc., a Texas corporation;
WHEREAS, MD will serve as the Managing Partner of Xxxxxxxxx Energy
Partners 02-A L.P. and Xxxxxxxxx Energy Partners 03-A, L.P. (the "Partnerships")
in which general and limited partnership interests (collectively, the
"Interests") are to be offered and sold in an offering pursuant to the
Securities Act of 1933 as amended;
WHEREAS, the Partnerships will participate with MD and Xxxxxxxxx Oil
Company ("MOC"), in a program for the purpose of developing oil and gas
prospects through drilling and producing oil and gas thereon (the "Programs");
WHEREAS, the Form S-1 Registration Statement (the "Statement") dated
, 2002 relating to the interests to be sold provides that subscription proceeds
for such Interests ("Subscription Proceeds") from investors who are initially
approved by MD will be deposited in an escrow account with Escrow Agent and may
not be contributed to the capital of a Partnership unless at the end of the
subscription period for the Partnership aggregate Subscription Proceeds of over
$1,000,000 have been received and accepted for such Partnership and certain
other conditions have been met;
WHEREAS, the Statement relating to the Interests to be sold provides
that investors desiring to purchase Interests in a Partnership shall provide MD
with certain information concerning their suitability for investment in a
Partnership by completing the Subscription Agreement (the "Subscription
Agreement");
WHEREAS, MD desires that Escrow Agent provide procedures for the
deposit and safekeeping of the Subscription Proceeds and delivery of the
Subscription Agreement to MD subject to the terms of this Escrow Agreement; and
WHEREAS, Xxxxxxxxx Securities, Inc., an affiliate of MD, is the dealer
manager for the offering of the Interests, and, as such, must comply with SEC
Rule 15c2-4 and NASD Notice to Members 84-7;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties thereto covenant and
agree as follows:
1. Escrow Period. The term of this Escrow Agreement shall begin on the
effective date of the Statement and shall terminate in accordance with Section 7
below.
2. Escrow Account and Deposit of Escrow Funds. For the Partnerships,
Escrow Agent shall open a special trust account (the "Account") at Regions
Bank-Tyler for and in the name of Regions Bank-Tyler as Escrow Agent under this
Escrow Agreement. Following receipt by Escrow Agent of the Subscription
Agreement and Subscription Proceeds for the purchase of Interests in a
Partnership, the Subscription Agreement shall be promptly delivered to MD and
the instruments representing the Subscription Proceeds shall be deposited and
maintained by Escrow Agent in accordance with the terms of this Escrow
Agreement. The Subscription Proceeds so deposited, together with any and all
interest earned thereon, are referred to as the "Escrow Funds."
3. Duties of Escrow Agent. The Escrow Agent shall have the following
general duties (a) to promptly deliver the Subscription Agreement to MD; (b) to
deposit and safely maintain the Escrow Funds in the Account, guarding at all
times against the commingling thereof with any funds of MD or its affiliates
during the term of this Escrow Agreement; (c) at the direction of MD, to invest
the Escrow Funds in investments that are permissible under rule 15c2-4
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, including, without limitation (if
permissible), time deposits, short-term bank certificates of deposit, short-term
governmental obligations, U.S. treasury bills, bank money market accounts to be
held by Escrow Agent, and similar investments; (d) to prepare and maintain true
and complete records with respect to the Escrow Funds, including the name of
each subscriber and the portion of the Escrow Funds from time to time
attributable to him; and (e) to disburse the Escrow Funds in accordance with the
terms of this Escrow Agreement.
4. Payment of Escrow Funds. The Escrow Funds, or portions thereof,
shall be paid out by Escrow Agent in accordance with written instructions from
MD as follows: (a) to each subscriber, if any, whose subscription has been
rejected by MD within five business days after the clearance of those Escrow
Funds, that portion of the Escrow Funds attributable to that subscriber as shown
on Escrow Agent's records, including any interest earned thereon; (b) to each
subscriber, if any, whose Subscription Proceeds have not been contributed to a
Partnership prior to the termination of the offering period for Interests in the
Partnership, and any subscriber who may be rejected as an Investor Partner
subsequent to the period described in Subsection (a) of this Section 4, that
portion of the Escrow Funds attributable to the rejected subscriber as shown on
Escrow Agent's records together with any interest attributable thereto (as
calculated by MD); (c) to each subscriber, if any, whose subscription has been
reduced, that portion of the Escrow Funds equal to the amount of such reduction
attributable thereto as shown on Escrow Agent's records; (d) to MD for
distribution to each subscriber within 60 days of closing of a Partnership, that
portion of accrued and unpaid interest on the Escrow Funds relating to that
Partnership, which Escrow Funds were deposited no fewer than five business days
prior to the termination of the offering of Interests in that Partnership,
attributable to that subscriber as shown on Escrow Agent's records; and (e) to
an account for a Partnership all remaining Escrow Funds attributable to that
Partnership. Notwithstanding the foregoing, no portion of the Escrow Funds may
be paid to a Partnership unless the Escrow Agent shall have the excess of
$1,000,000 in Escrow Funds with respect to the Partnership and MD informs the
Escrow Agent in writing that aggregate Subscription Proceeds for Interests in
such Partnership of $1,000,000 or more have been received and cleared from
subscribers that MD initially approves as suitable to be Investor Partners (as
set forth in the Statement) in the Partnership. Notwithstanding the provisions
of this Section 4, or any other provision of this Escrow Agreement, after the
Escrow Agent shall have in excess of $1,000,000 in Escrow Funds with respect to
a Partnership and MD informs the Escrow Agent in writing that aggregate
Subscription Proceeds for Interests in that Partnership of $1,000,000 or more
have been received and cleared by Escrow Agent, upon the written request of MD,
Escrow Agent shall disburse all or any portion of the Escrow Funds to an account
established by MD for the Partnership.
Notwithstanding anything contained herein to the contrary, it is
expressly contemplated by MD and the Escrow Agent that MD shall be solely
responsible for all computations and disbursements of interest and the
preparation and mailing of all forms with respect thereto, including without
limitation Form 1099 as is contemplated in Subsections (b), (c), and (d) of this
Section 4. The Escrow Agent shall deliver to MD from time to time such records
and information which are
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available to Escrow Agent and are necessary to make the computations of interest
contemplated herein.
5. Expenses and Compensation. All expenses incurred by Escrow Agent in
connection with this Escrow Agreement and the compensation of Escrow Agent set
forth in Exhibit 1 hereto shall be charged to MD and MD agrees to pay promptly
all such expenses and compensation following receipt of an invoice therefor.
6. Escrow Agent. MD and Escrow Agent agree that the following
provisions shall control with respect to the rights, duties, liabilities,
privileges and immunities of Escrow Agent: (a) Escrow Agent is not a party to,
and is not bound by, any agreement or other document out of which this Escrow
Agreement may rise; (b) Escrow Agent is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness, or validity of the
subject matter of this Escrow Agreement; (c) Escrow Agent shall be protected in
acting upon any written notice, request, waiver, consent, certificate, receipt,
authorization, agreement, power of attorney, or other instrument that Escrow
Agent in good faith believes to be genuine and what it purports to be.
As between MD and the Escrow Agent, MD agrees to indemnify the Escrow
Agent and its officers, directors, employees, agents and attorneys
(collectively, the "Indemnified Parties") against and hold the Indemnified
Parties harmless from any and all losses, costs, damages, expenses, claims, and
attorney's fees suffered or incurred by the Indemnified Parties as a result of,
in connection with or arising from or out of the acts of omissions of any
Indemnified Party in performance of or pursuant to this Escrow Agreement, except
such acts or omissions as may result from such Indemnified Party's willful
misconduct or gross negligence.
All protections and indemnitees benefitting the Escrow Agent (and any
other Indemnified Party) are cumulative of any other rights it (or they) may
have by law or otherwise, and shall survive the termination of the Escrow
Agreement or the resignation or removal of the Escrow Agent.
7. Termination. This Escrow Agreement shall terminate upon the first to
occur of any one of the following: December 31, 2002; (a) the full disbursement
of the Escrow Funds with respect to the final Partnership; (b) the written
agreement of termination by MD and Escrow Agent; or (c) the dissolution,
insolvency, or involuntary bankruptcy of MD or an affiliate thereof.
8. Miscellaneous.
(a) All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be deemed to be
delivered when actually received at the address of the addressee set forth below
its name on the signature page of this Escrow Agreement. The rights and
obligations under this Escrow Agreement may not be assigned or delegated by any
party hereto without the prior written consent of the other party hereto. This
Escrow Agreement constitutes the entire agreement and supersedes all other prior
agreements and understandings, whether oral or written, between the parties
hereto with respect to the subject matter hereof;
(b) The Escrow Agent may consult with and rely on the advice
of counsel satisfactory to it at any time in respect to any question relating to
its duties and responsibilities hereunder or otherwise in connection herewith,
and shall not be liable for any action taken suffered,
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or omitted by the Escrow Agent in good faith upon the advice of such counsel,
and shall be fully protected in doing so, and shall be fully compensated for all
costs and expenses in doing so. The Escrow Agent may act through its officers,
employees, agents and attorneys;
(c) Any check included in the Escrow Funds shall be collected
by the Escrow Agent and the proceeds held as part of the Escrow Funds. No monies
shall be disbursed by the Escrow Agent until it has collected funds. The Escrow
Agent may pay out monies held in escrow by its check. The Escrow Agent shall not
be obligated to take any legal action to enforce payment of any item deposited
with it in escrow;
(d) The Escrow Agent shall not be liable for any action that
it may do or refrain from doing in connection herewith, except on account of its
own gross negligence or willful misconduct;
(e) The Escrow Agent's only duty, liability and responsibility
shall be to deliver the Subscription Agreements to MD and to hold the property
as herein directed and to pay and deliver the same to such persons and under
such conditions as are herein set forth;
(f) Should any controversy arise between any party with
respect to this agreement, the Escrow Agreement shall have the right to
institute a xxxx of interpleader in any court of competent jurisdiction to
determine the rights of the parties. Should a xxxx of interpleader be
instituted, or should the Escrow Agent become involved in litigation in any
manner whatsoever on account of this Agreement or the escrow deposit made
hereunder, the obligor, its successors and assigns shall pay the Escrow Agent
reasonable attorneys' fees incurred by the Escrow Agent and shall indemnify and
save the Escrow Agent harmless from any other disbursements, expenses, losses,
costs and damages in connection with and resulting from such litigation, except
such amounts as shall have been caused by the Escrow Agent's gross negligence or
willful misconduct;
(g) The Escrow Agent shall be obligated to perform only such
duties as are expressly set forth herein, and no implied covenants or
obligations shall be inferred from this Agreement;
(h) The Escrow Agent, or any successor to it hereafter
appointed, may at any time resign by giving prior written notice in writing to
the other parties hereto and shall be discharged from its duties hereunder upon
the appointment of a successor Escrow Agent as hereinafter provided. In the
event of any such resignation, a successor Escrow Agent shall be appointed by
the written consent of the parties hereto. In the event that the parties hereto
fail to appoint a successor Escrow Agent within 30 days of the Escrow Agent's
resignation, the Escrow Agent shall have the right to petition a court of
competent jurisdiction to appoint a successor Escrow Agent. Any successor Escrow
Agent shall deliver to the parties hereto a written instrument accepting the
appointment hereunder, and thereupon it shall succeed to all the rights and
duties of the Escrow Agent hereunder and shall be entitled to receive all of the
Escrow Funds then held by the predecessor Escrow Agent hereunder;
(i) THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT THE PORTIONS OF
THE TEXAS TRUST CODE, SECTION 111.001, ET SEQ. OF THE PROPERTY CODE, V.A.T.S.
CONCERNING FIDUCIARY DUTIES AND LIABILITIES OF
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TRUSTEES SHALL NOT APPLY TO THIS AGREEMENT. THE PARTIES EXPRESSLY WAIVE SUCH
DUTIES AND LIABILITIES, IT BEING THEIR INTENT TO CREATE SOLELY AN AGENCY
RELATIONSHIP AND HOLD ESCROW AGENT LIABLE ONLY IN THE EVENT OF ITS GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT IN ORDER TO OBTAIN THE LOWER FEE SCHEDULE RATES
AS SPECIFICALLY NEGOTIATED WITH ESCROW AGENT. ANY LITIGATION CONCERNING THE
SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED IN THE COURTS
OF DALLAS COUNTY, TEXAS, AND ALL PARTIES CONSENT TO THE EXCLUSIVE JURISDICTION
AND VENUE OF THOSE COURTS.
(j) Xxxxxxxxx Securities, Inc. hereby acknowledges the terms of this
Escrow Agreement and agrees to comply with the terms of this Escrow Agreement,
SEC Rule 15c2-4 and NASD Notice to Members 84-7.
IN WITNESS WHEREOF, the undersigned parties have caused this Escrow
Agreement to be signed and attested to by its duly authorized officers, all as
of the date first written above.
ESCROW AGENT:
REGIONS BANK-TYLER
By:
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Address: Attn:
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X.X. Xxx 0000
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
XXXXXXXXX DEVELOPMENT CORPORATION
By
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Address: 0000 Xxxxx Xxxxxxxx
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
XXXXXXXXX SECURITIES, INC.
By
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Address: c/x Xxxxxxxxx Development Corporation
Attn:
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0000 Xxxxx Xxxxxxxx
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
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