ESCROW AND SECURITY AGREEMENT
Exhibit
10.1
This
ESCROW AND SECURITY AGREEMENT (this “Agreement”) is made and
entered into as of September 4, 2009 (the “Effective Date”), by and among XxXxxx
Turbine, Co., a California corporation (“XxXxxx Turbine”), XxXxxx,
Inc., a Nevada corporation (“Seller”), and U.S. Bank
National Association, a national banking association, as Escrow Agent (the
“Escrow
Agent”).
RECITALS
A.
This Agreement is entered
into pursuant to that certain Asset Purchase Agreement, dated as of August 10,
2009 (as amended, the “Purchase
Agreement”) by and among Daewoo Shipbuilding & Marine Engineering
Co., Ltd. (“DSME”),
Seller and Composite Technology Corporation. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings given to
them in the Purchase Agreement.
X.
XxXxxx Turbine, as an
Affiliate of DSME, has assumed all of DSME’s rights and benefits under the
Purchase Agreement, pursuant to that Assignment of Agreement between DSME and
XxXxxx Turbine, dated August 31, 2009.
C.
Section 3.3(a) of the
Purchase Agreement provides that DSME or its Affiliates will be entitled to
withhold from the amounts payable to Seller at Closing cash in the amount of
Seventeen Million One Hundred Seventy-Five Thousand Dollars ($17,175,000) (the
“Escrow Funds”). The Escrow
Funds are to be placed in an escrow account (the “Escrow Account”) for the purpose of
reimbursing DSME or its Affiliates, at least in part, for any and all Losses
DSME or its Affiliates might incur related to the Purchase Agreement and the
transactions thereunder.
X.
XxXxxx Turbine and
Seller are entering into this Agreement to consummate the transactions
contemplated in the Purchase Agreement and as a condition precedent to
consummation of the Closing, and the parties desire to set forth in this
Agreement the terms and conditions pursuant to which the Escrow Funds shall be
deposited, held in and disbursed from the Escrow Account.
NOW,
THEREFORE, the parties hereby agree as follows:
1. Escrow.
(a) Escrow of
Funds.
(i) Escrow Funds.
At the Closing, XxXxxx Turbine shall deposit the Escrow Funds with the Escrow
Agent in the manner contemplated by Section 2(a) of this Agreement.
(ii) Agreement to Hold Escrow
Funds. The Escrow Agent shall hold the Escrow Funds delivered to it
pursuant to Section 1(a)(i) above in escrow for the purpose of paying, at least
in part, any Claims (defined below) which might be made against the Escrow Funds
by XxXxxx Turbine, until the Escrow Agent is required to release such Escrow
Funds in accordance with the terms of this Agreement. The Escrow Agent
agrees to accept delivery of such Escrow Funds and to hold such Escrow Funds in
escrow for the benefit of XxXxxx Turbine and Seller subject to the terms and
conditions of this Agreement.
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(b) Notice of
Claim. As used herein, the term “Claim” means a claim for any
Losses under Section 10.2 of the Purchase Agreement. XxXxxx Turbine shall
deliver a written notice of the Claim (the “Notice of Claim”) to the Seller and the
Escrow Agent in compliance with Section 3 below. Except as set forth in
Section 2(c)(i), XxXxxx Turbine will make a Claim against the Escrow Funds only
as contemplated by Section 10 of the Purchase Agreement. XxXxxx Turbine
may give the Notice of Claim after the determination of any Claims in accordance
with Section 10 of the Purchase Agreement.
(c) Escrow Period.
As used herein, the term “Escrow Period” means that time period
beginning on the Closing Date and ending on the third anniversary thereafter at
5:00 p.m. (Pacific Standard Time), unless and to the extent extended under
Section 2(c)(ii) below.
2. Deposit
of Escrow Funds; Release from Escrow.
(a) Delivery of Escrow
Funds. On the Closing Date, the Escrow Funds shall be delivered by
XxXxxx Turbine to the Escrow Agent by wire transfer.
(b) Investment of Escrow
Funds. The Escrow Funds shall be placed by the Escrow Agent into a
U.S. Bank Money Market Account as described in Exhibit A attached
hereto. All interest or appreciation accrued on the Escrow Funds (the
“Additional Escrow Funds”) shall be deemed to be
Escrow Funds for the purposes contemplated in this Agreement.
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(c)
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Distributions;
Obligations in Case of Administration/Liquidation Proceedings of XxXxxx
Ltd. or 4.15 Claim
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(i) Distributions.
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(A) TECO
Distribution. Upon the earlier of the date that (a)
TECO-Westinghouse Motor Company, Inc. (“TWMC”) agrees with XxXxxx
Turbine (or its assignee) to amend that certain Contract Manufacturing Agreement
between XxXxxx Turbine (or its assignee, and assigned from Seller, who was the
original party) and TWMC, dated May 30, 2008 (the “TWMC Agreement”) to amend the
minimum order requirements under Section 4 thereto, (b) the TWMC Agreement is
terminated by XxXxxx Turbine (or its assignee), other than in connection with a
TWMC/XxXxxx Turbine Release Event (defined below), (c) XxXxxx Turbine (or its
assignee) receives the benefits of the TWMC Agreement notwithstanding TWMC’s
failure to agree to such an amendment for at least six (6) months, or (d) TWMC
agrees to no longer exercise its right to assess a termination fee under the
TWMC Agreement or to terminate the TWMC Agreement (each of the events described
in the foregoing clauses (a), (b), (c) and (d), a “TWMC/Seller Release Event”),
XxXxxx Turbine and Seller shall promptly deliver a joint written instruction (a
“Joint Instruction”) to
the Escrow Agent to immediately release $4,050,000 of the Escrow Funds to
Seller. As soon as is reasonably practical after receipt of such Joint
Instruction, but in no event later than 2 Business Days after such receipt, the
Escrow Agent shall release the $4,050,000 amount to Seller. In the event
(w) the above-mentioned amendment to the TWMC Agreement does not occur, (x)
either TWMC or XxXxxx Turbine terminates the TWMC Agreement, (y) XxXxxx Turbine
(or its assignee) becomes obligated to pay a $4,050,000 termination fee pursuant
to the terms of the TWMC Agreement as an Assumed Liability in accordance with
the Purchase Agreement, and (z) XxXxxx
Turbine (or its assignee) does not receive the benefits of the TWMC Agreement
under a replacement or alternative arrangement with TWMC or its affiliate (all
of the events described in the foregoing clauses (w), (x), (y) and (z),
collectively a “TWMC/XxXxxx
Turbine Release Event”), then XxXxxx Turbine shall deliver a notice to
Seller and the Escrow Agent certifying (in good faith) that a TWMC/XxXxxx
Turbine Release Event has occurred and instructing the Escrow Agent to release
the $4,050,000 amount to XxXxxx Turbine. If Seller does not provide the
Escrow Agent with notice that Seller contests such notice and detailed reasons
therefor within 20 Business Days after receipt by Seller of such notice from
XxXxxx Turbine, then the Escrow Agent shall promptly release the $4,050,000 to
XxXxxx Turbine. As long as neither a TWMC/Seller Release Event nor a
TWMC/XxXxxx Turbine Release Event has occurred, then the $4,050,000 shall remain
in the Escrow Account until the earlier to occur of a TWMC/Seller Release Event
and a TWMC/XxXxxx Turbine Release Event. Notwithstanding anything in the
preceding sentence, if any other Claim(s) has been made for an amount that is
greater than the amount that would remain in the Escrow Account if the release
under this section is made, then the Escrow Agent shall release only such amount
so that the Escrow Account would have sufficient funds to pay such other
Claim(s), and shall release the balance of the $4,050,000, if any, as soon as
all such other Claims are resolved.
(B) XxXxxx Ltd.
Distribution. If between the Closing Date and the second
anniversary of the Closing Date, (a) XxXxxx Ltd. is not the subject of
administration or liquidation proceedings in England or Wales (or similar
proceedings in another jurisdiction) (the “Proceedings Event”) and (b) no
winding up petition has been issued in England or Wales (or an analogous claim
or petition issued in another jurisdiction) against XxXxxx Ltd (the “Wind Up Event,” and each of
the Proceedings Event and Wind Up Event, an “Insolvency Event”) and (c) no
assertion of any claim is made or any action or lawsuits have been filed which
allege to be, or could become, 4.15(n) Losses (as defined in Section 10.2(c) of
the Purchase Agreement) (a “4.15 Claim”), then XxXxxx
Turbine and Seller shall deliver a Joint Instruction to the Escrow Agent to
release $6,975,000 to Seller. As
reasonably practical after receipt of such Joint Instruction, but in no event
later than 2 Business Days after such receipt, the Escrow Agent shall release
$6,975,000 to Seller. Notwithstanding anything in the preceding sentence,
if any other Claim(s) has been made for an amount that is greater than the
amount that would remain in the Escrow Account if the release under this section
is made, then the Escrow Agent shall release only such amount so that the Escrow
Account would have sufficient funds to pay such other Claim(s), and shall
release the balance of the $6,975,000, if any, as soon as all such other Claims
are resolved.
(C) Section 2.3(b)(ii)
Distributions. In the event that Seller makes a payment or payments
in respect of a Liability referenced in clause (ii) of Section 2.3(b) of the
Purchase Agreement, and/or Seller desires that a payment or payments in respect
of a Liability referenced in clause (ii) of Section 2.3(b) of the Purchase
Agreement be made directly to the payee(s) with respect thereto, then XxXxxx
Turbine and Seller shall promptly deliver a Joint Instruction to the Escrow
Agent to release the amount of the payment(s) to Seller in reimbursement or to
such payee(s), as applicable; provided, however, that the
aggregate amount of distributions pursuant to this Section 2(c)(i)(3) shall not
exceed $1,500,000 in the aggregate.
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(D) Other
Distribution. On the date upon which the Escrow Period expires (the
“Release Date”), the Escrow Agent shall
release from the Escrow Account to Seller the remaining Escrow Funds (including
any Additional Escrow Funds), less (A) any Escrow Funds delivered to XxXxxx
Turbine in accordance with this Agreement or Section 10 of the Purchase
Agreement in satisfaction of any Claims by XxXxxx Turbine and (B) any amounts
subject to unresolved Claims for which XxXxxx Turbine has delivered a Notice of
Claim, provided that the Escrow Agent shall promptly release to Seller the
balance of the Escrow Funds (including any Additional Escrow Funds) not subject
to such unresolved Claims as soon as any such Claims are resolved.
(ii) Bankruptcy or 4.15
Claim. Notwithstanding anything in this Agreement, if XxXxxx Ltd.
is the subject of an Insolvency Event or a 4.15 Claim is made at any time before
the Release Date, then:
(A) Either
the $11,625,000 (if the events under Section 2(c)(i)(2) has occurred and
therefore there is no distribution to Seller) or $4,650,000 (if there has been a
distribution under Section 2(c)(i)(2)) or such amount of funds as then remains
in the Escrow Account (the “Bankruptcy Fund”) shall remain
in the Escrow Account and shall not be released to Seller under any provision of
this Agreement (other than this Section 2(c)(ii)) until the dissolution of
XxXxxx Ltd. or full and final resolution of any 4.15 Claim;
(B) If
XxXxxx Turbine and Seller shall deliver a Joint Bankruptcy Fund Notice (as
defined below) to the Escrow Agent, then Escrow Agent shall, as soon as
practicable after receipt of such Joint Bankruptcy Fund Notice, but in no event
later than 2 Business Days after such receipt, release some or all of the
Bankruptcy Fund as directed in the Joint Bankruptcy Fund Notice;
(C) XxXxxx
Turbine and Seller agree to the following:
A. “Joint Bankruptcy Fund Notice” means
a notice (a) instructing Escrow Agent to release all or portion of the
Bankruptcy Fund to XxXxxx Turbine or Seller or other third party, and (b)
certifying (in good faith) that such funds will be used to pay for claims,
settlements, fees, expenses or costs incurred as result of (X) any 4.15 Claim or
(Y) any administrator, liquidator, trustee, creditor or other person seeking to
avoid or otherwise challenging the validity of all or any part of any
transaction (1) involving the transfer of assets between XxXxxx Ltd. and Seller,
(2) involving the transfer of assets between XxXxxx, Inc. and DSME or any of its
Affiliates, and/or (3) contemplated in the Purchase Agreement (together with a
4.15 Claim, each an “Administrator
Challenge”);
B. If
the Administrator Challenge is claimed against Seller, then (X) Seller may
request that XxXxxx Turbine cooperate in such defense or settlement of such
Administrator Challenge (and Seller shall pay for any and all reasonable costs,
expenses and attorneys fees incurred by XxXxxx Turbine in such defense to the
extent not otherwise paid according to the terms of this Agreement), and (Y)
Seller will not settle any Administrator Challenge unless such settlement both
is consented to by XxXxxx Turbine (which consent will not be unreasonably
withheld) and releases XxXxxx Turbine from all potential claims that could arise
under the Administrator Challenge;
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C. If
the Administrator Challenge is claimed against XxXxxx Turbine, then (X) Seller
may request that XxXxxx Turbine defend against such Administrator Challenge and
that Seller co-operate and participate in the defense or settlement of any
Administrator Challenge (and Seller shall pay for any reasonable costs, expenses
and attorneys fees incurred by XxXxxx Turbine in such defense to the extent not
otherwise paid according to the terms of this Agreement ), (Y) XxXxxx Turbine
will not settle any Administrator Challenge unless such settlement both is
consented to by Seller (which consent will not be unreasonably withheld) and
releases Seller from all potential claims that could arise under the
Administrator Challenge, and (Z) Seller agrees to provide XxXxxx Turbine with
reasonable access during regular business hours to any information Seller has
that is reasonably necessary in connection with the preparation of any defense
against or settlement of the Administrator Challenge; and
D. If
Seller is obligated by this section to defend such Administrator Challenge and
does not do so diligently in XxXxxx Turbine’s reasonable determination, XxXxxx
Turbine shall have the exclusive right to defend such Administrator
Challenge.
(D) The
remaining balance of the Bankruptcy Fund shall be immediately released from the
Escrow Account to Seller upon written notice by Seller to XxXxxx Turbine and the
Escrow Agent, which notice is not contested by XxXxxx Turbine within 5 Business
Days of receipt of Seller’s notice, certifying (in good faith) that the
dissolution of XxXxxx Ltd. has occurred or that the 4.15 Claim has been fully
and finally resolved.
(d) Release of Escrow
Funds. The Escrow Funds shall be held by the Escrow Agent for the
benefit of XxXxxx Turbine and Seller until such Escrow Funds are required to be
released pursuant to either: (i) Section 2(c) above; or (ii)
when required under applicable provisions of Section 4 below. The Escrow
Agent shall deliver to Seller or to XxXxxx Turbine, as applicable hereunder, the
requisite amount of Escrow Funds to be released on such applicable date(s) by
wire transfer to such account(s) as have been designed in writing to the Escrow
Agent by Seller or XxXxxx Turbine, respectively.
(e) Nature of Interest in Escrow
Funds. The parties acknowledge and agree that XxXxxx Turbine’s and
Seller’s payment interests in the Escrow Funds are contingent rights to payment
from the Escrow Funds, and that neither a voluntary or involuntary case under
any applicable bankruptcy, insolvency or similar law, nor the appointment of a
receiver, trustee, custodian or similar official in respect of XxXxxx Turbine or
Seller shall increase its respective payment interest in the Escrow Funds or
affect, modify, convert or otherwise change any right it may have to the Escrow
Funds.
(f)
No Transfer or Encumbrance
of Escrow Funds. Both parties have not, and agree that they will
not, subject the Escrow Funds to a Lien or otherwise encumber the Escrow Funds,
except as permitted by this Agreement.
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(g) Grant of Security Interest
to XxXxxx Turbine. In order to secure Seller’s obligations and
enhance XxXxxx Turbine’s rights and remedies under this Agreement and under the
Purchase Agreement, Seller hereby grants to XxXxxx Turbine, effective as of the
date hereof, a security interest in all of Seller’s right, title and interest in
and to the Escrow Account and the Escrow Funds, including, without limitation,
all accounts, certificates of deposit, cash, funds and investments established
or made with the Escrow Funds and any replacements or proceeds thereof.
The Escrow Agent acknowledges that XxXxxx Turbine has a security interest in the
Escrow Account, the Escrow Funds and Additional Escrow Funds, and all assets and
investments which may be held in the Escrow Account from time to time, and shall
maintain and preserve such assets subject to this security interest. The
parties hereto agree that this Agreement including Section 2(g) shall establish
“control,” as defined in Sections 9-104 and 8-106 of the Uniform Commercial
Code, as enacted in the State of California, and as amended from time to time
(the “UCC”), of the
Escrow Funds, which control is effective to perfect XxXxxx Turbine’s security
interest in the Escrow Funds. The Escrow Agent and Seller shall take all
actions as may be reasonably requested in writing by XxXxxx Turbine to perfect
or maintain the security interest created by Seller hereunder in the Escrow
Funds. XxXxxx Turbine is authorized by the other parties hereto to file
UCC financing statements naming Seller as “Debtor” and XxXxxx Turbine as
“Secured Party” and take such other and further actions as XxXxxx Turbine may
reasonably determine to perfect XxXxxx Turbine’s security interest granted
herein, with or without execution by the other parties hereto, to the extent
permitted by applicable law. Such security interest shall automatically be
released solely with respect to any funds properly distributed from the Escrow
Funds pursuant to the terms of this Agreement. XxXxxx Turbine agrees to
promptly execute such instruments of release and termination of the security
interest granted hereunder with respect to any Escrow Funds properly received by
or distributable to Seller pursuant to the terms of this Agreement, and as may
be reasonably requested in writing by Seller. Seller hereby represents and
warrants to XxXxxx Turbine that (1) its exact legal name is as set forth in
the Preamble hereto, (2) it is a Nevada corporation, (3) its organizational
identification number issued by the state of Nevada is E0851042006-3 and (4) its
principal place of business is 0000 XxXxx Xxx., Xxxxxx, Xxxxxxxxxx
00000
(h) Power to Transfer Escrow
Funds. The Escrow Agent is hereby granted the power to effect any
transfer of Escrow Funds contemplated by this Agreement.
(i)
Tax Reporting.
The parties hereto agree that, for tax reporting purposes, all interest or other
income, if any, attributable to the Escrow Funds or any other amount held in
escrow by the Escrow Agent pursuant to this Agreement shall be allocable to
Seller.
(j)
Certification of Tax
Identification Numbers. XxXxxx Turbine and Seller agree to provide
the Escrow Agent with certified tax identification numbers for each of them by
signing and returning Forms W-8 or W-9 to the Escrow Agent at signing of this
Agreement. The parties hereto understand that, if such tax identification
numbers are not so certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code, as it may be amended from time to time,
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.
3.
Notice of Claim.
(a)
Contents of
Notice. The Notice of Claim given by XxXxxx Turbine pursuant to
Section 1(b) above shall be set forth in writing and shall contain the following
information to the extent it is reasonably available to XxXxxx
Turbine:
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(i) The
amount, if known, or if not known, of an estimate of the foreseeable maximum
amount of claimed Losses (which estimate shall not be conclusive of the final
amount of such Losses) (the “Loss Amount”);
and
(ii)
A detailed description of the
basis for such Claim, including the facts and circumstances justifying XxXxxx
Turbine’s entitlement to indemnification pursuant to Section 10.2 of the
Purchase Agreement with reference to the specific breach alleged or other basis
for such entitlement, and the application (or inapplicability) of the threshold
for a De Minimis Claim, the Deductible and the Cap.
(b) No Release Until Resolved
Under Section 4. The Escrow Agent shall not transfer any of the
Escrow Funds held in the Escrow Account to XxXxxx Turbine pursuant to a Notice
of Claim until such Notice of Claim has been resolved in accordance with Section
4. Notwithstanding the foregoing and for the purpose of clarification, this
Section 3(b) shall not be applicable to any amount of Escrow Funds released to
Seller pursuant to Section 2(c) above.
4.
Resolution of Claims and Transfers of Escrow
Funds. The Notice of Claim received by Seller and the Escrow Agent
pursuant to Section 1(b) and Section 3 above shall be resolved as
follows: After the Notice of Claim has been delivered by XxXxxx
Turbine to Seller and the Escrow Agent pursuant to Section 6(e), Seller will
have 15 Business Days from receipt of such Notice of Claim to dispute the Claim
and shall reasonably cooperate and assist XxXxxx Turbine in determining the
validity of the Claim for indemnity. If Seller does not give notice to
XxXxxx Turbine that it disputes the Claim within 15 Business Days after receipt
of the Notice of Claim, the Claim shall be deemed to be a Loss subject to
indemnification under Section 10 of the Purchase Agreement, and the Escrow Agent
shall: (a) as soon as is reasonably practical release from escrow and
transfer to XxXxxx Turbine an amount of the Escrow Funds equal to (i) the amount
of the Loss Amount specified in the Notice of Claim if the Loss Amount is less
than the amount of the Escrow Funds, or (ii) the amount of the Escrow Funds if
the Loss Amount exceeds the amount of the Escrow Funds; and (b) notify Seller in
writing of such transfer of Escrow Funds as promptly thereafter.
Notwithstanding the foregoing, if Seller gives notice to XxXxxx Turbine, with a
copy to the Escrow Agent, that it disputes the Claim, then the Escrow Agent
shall not release any of the Escrow Funds in favor of XxXxxx Turbine until such
dispute is resolved pursuant to Section 5(b).
5.
Limitation of Escrow Agent’s Liability.
(a) Limitation of
Liability. The Escrow Agent shall incur no liability with respect
to any action taken or suffered by it in good faith 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 its own willful misconduct, fraud or gross negligence or a
material breach of its obligations under this Agreement. The Escrow Agent
shall have no duty to inquire into or investigate the validity, accuracy or
content of the Notice of Claim or any other document delivered to it. The
Escrow Agent also need not inquire into or verify that any Claim set forth in a
Notice of Claim conforms to the requirements of Section 10.5 of the Purchase
Agreement. The Escrow Agent shall not be responsible for the validity or
sufficiency of this Agreement. In all questions arising under this
Agreement, the Escrow Agent may rely on the advice or opinion of counsel, and
for anything done, omitted or suffered in good faith by the Escrow Agent based
on such advice, the Escrow Agent shall not be liable to anyone. The Escrow
Agent shall not be required to take any action hereunder involving any expense
unless the payment of such expense is made or provided for in a manner
satisfactory to it. The Escrow Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
implied duty of good faith and fair dealing.
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(b) Resolution of Conflicting
Demands. In the event conflicting demands are made or conflicting
notices are served upon the Escrow Agent with respect to the Escrow Account, the
Escrow Agent shall not release any of the Escrow Funds, but shall have the
absolute right, at the Escrow Agent’s election, to do any or all of the
following: (i) resign so a successor Escrow Agent can be appointed
pursuant to Section 5(f); (ii) file a suit in interpleader and obtain an order
from a court of competent jurisdiction requiring the parties to interplead and
litigate in such court their several claims and rights among themselves; or
(iii) give written notice to the parties that it has received conflicting
instructions from the parties hereto and is refraining from taking action until
it receives Joint Instructions consented to in writing by both XxXxxx Turbine
and Seller. In the event an interpleader suit as described in clause (ii)
above is brought, the Escrow Agent shall thereby be fully released and
discharged from all further obligations imposed upon it under this Agreement
with respect to the matters that are the subject of such interpleader suit, and
XxXxxx Turbine shall pay the Escrow Agent all costs, expenses and reasonable
attorneys’ fees expended or incurred by the Escrow Agent pursuant to the
exercise of the Escrow Agent’s rights under this Section 5(b) (such costs, fees
and expenses shall be treated as fees and expenses for the purposes of Section
5(g)). The prevailing party shall be entitled to reimbursement from the
other party of any fees and expenses of the Escrow Agent in connection with such
interpleader.
(c)
Indemnification.
Each of XxXxxx Turbine on the one hand and Seller on the other (each an “Indemnifying Party” and together the “Indemnifying Parties”), hereby jointly and
severally covenants and agrees to reimburse, indemnify and hold harmless the
Escrow Agent, and the Escrow Agent’s officers, directors, employees, counsel and
agents (severally and collectively, “Escrow Agent”), from and
against any loss, damage or liability suffered, incurred by or asserted against
Escrow Agent (including amounts paid in settlement of any action, suit,
proceeding or claim brought or threatened to be brought and including reasonable
expenses of legal counsel) arising out of, in connection with or based upon, any
act or omission in good faith by Escrow Agent (not involving negligence, breach
of the terms of this Agreement, gross negligence, willful misconduct or fraud on
Escrow Agent’s part) relating in any way to this Agreement or the Escrow Agent’s
services hereunder. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damages of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damages and regardless of the form of action.
Any Indemnifying Party who reimburses or indemnifies the Escrow Agent pursuant
to this Section 5(c) shall have a right to seek contribution from any and all
other Indemnifying Parties according to their relative fault.
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(d) Defense. Each
Indemnifying Party may participate at its own expense in the defense of any
claim or action that may be asserted against Escrow Agent, and if the
Indemnifying Parties so elect, the Indemnifying Parties may assume the defense
of such claim or action; provided, however,
that if there exists a conflict of interest that would make it inappropriate, in
the sole discretion of the Escrow Agent, for the same counsel to represent both
Escrow Agent and the Indemnifying Parties, Escrow Agent’s retention of separate
counsel shall be reimbursable as hereinabove provided. Escrow Agent’s
right to indemnification hereunder shall survive Escrow Agent’s resignation or
removal as Escrow Agent and shall survive the termination of this Agreement by
lapse of time or otherwise.
(e)
Notice to Indemnifying
Parties. The Escrow Agent shall notify each Indemnifying Party by
letter, or by telephone or telecopy confirmed by letter, of any receipt by
Escrow Agent of a written assertion of a claim against Escrow Agent, or any
action commenced against Escrow Agent, for which indemnification is required
under Section 5(c), within 10 Business Days after Escrow Agent’s receipt of
written notice of such claim. The Indemnifying Parties will be relieved of
their indemnification obligations under this Section 5 if Escrow Agent fails to
timely give such notice and such failure adversely affects the Indemnifying
Parties’ ability to defend such claim. However, Escrow Agent’s failure to
so notify each Indemnifying Party shall not operate in any manner whatsoever to
relieve an Indemnifying Party from any liability that it may have otherwise than
on account of this Section 5.
(f)
Successor to Escrow
Agent. The Escrow Agent may resign as Escrow Agent by giving both
XxXxxx Turbine and Seller 30 days written notice of its intention to
resign. In the case of such a resignation, the Escrow Agent shall
cooperate fully with the other parties in the orderly transfer of the Escrow
Funds to a successor Escrow Agent and shall promptly refund the pro rata portion
of any unearned escrow fees which may have been paid. If the Escrow Agent
resigns or is not available for any reason, XxXxxx Turbine and Seller shall
mutually appoint a successor to the Escrow Agent who (i) is a national bank
having assets of at least $10,000,000,000; and (ii) shall execute a copy of this
Escrow Agreement for delivery to XxXxxx Turbine and Seller. Until such
time as the Escrow Agent’s successor is appointed, the Escrow Agent shall retain
the Escrow Funds.
(g) Fees.
(i) XxXxxx
Turbine on the one hand, and Seller on the other hand, shall each bear 50% of
the Escrow Agent’s fees and expenses and shall timely pay such fees and
expenses. The Escrow Agent’s non-refundable Initial Setup fee in the
amount of $1,000 shall be paid at signing of this Agreement and an additional
fee for each transaction of funds or documents in or out of the escrow,
excluding the initially required documents, including this Agreement, to fully
effect the escrow (the “Transaction Fee”) will be
invoiced (the “Invoice”)
when a transaction occurs, and all fees shall be payable in U.S.
Dollars.
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(ii) In
the event of non-payment of any fees or charges invoiced by the Escrow Agent,
the Escrow Agent shall give notice of non-payment of any fee due and payable
hereunder to the non-paying party and, in such an event, such party shall have
the right to pay the unpaid fee within ten Business Days after receipt of notice
from the Escrow Agent or otherwise give notice of its good faith dispute
thereof. If such party fails to pay in full all undisputed fees due during
such ten business day period, the Escrow Agent shall give notice of non-payment
of any undisputed fee due and payable hereunder to the other party hereto and,
in such event, such party shall have the right, but not the obligation, to pay
the unpaid fee within ten days of receipt of such notice from the Escrow
Agent. A party who pays the other party’s portion of fees pursuant to this
Section 5(g)(ii) shall have a claim against the Escrow Funds for such
amounts. Upon payment of the undisputed unpaid fee by either XxXxxx
Turbine or Seller, as the case may be, this Agreement shall continue in full
force and effect until the end of the applicable term. Failure to pay the
undisputed unpaid fee under this Section 5(g)(ii) by both XxXxxx Turbine and
Seller shall result in termination of this Agreement upon 30 days prior written
notice by the Escrow Agent to Seller and XxXxxx Turbine, unless the Escrow Agent
has been given notice of any good faith dispute of the unpaid fees.
6.
General Terms.
(a) Termination; Successors and
Assigns. Upon the release of all Escrow Funds to Seller and/or to
XxXxxx Turbine pursuant to the terms and conditions of this Agreement, this
Agreement shall terminate and be of no further force and effect. Until
such time, this Agreement shall bind and inure to the benefit of Seller, XxXxxx
Turbine, the Escrow Agent and their respective successors and permitted
assigns. Neither Seller nor XxXxxx Turbine may assign any of its rights or
obligations hereunder without the prior written consent of the other party,
provided that either may assign or delegate any of its rights and obligations
under this Agreement to an Affiliate upon notice to the other parties hereto at
any time without requiring the consent of any party.
(b) Governing Law.
This Agreement shall be governed by and interpreted and enforced in accordance
with the Laws of the State of California, without giving effect to any choice of
Law or conflict of Laws rules or provisions (whether of the State of California
or any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of California.
(c)
Severability.
Any provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(d) Amendment and Waivers;
Rights Non-Exclusive. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound thereby.
The waiver by a party of any breach hereof or default in the performance hereof
will not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The rights and remedies of the parties under this
Agreement are cumulative and not exclusive of any rights or remedies which such
party would otherwise have.
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(e)
Notices. Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed given
(i) on the date established by the sender as having been delivered personally,
(ii) on the date delivered by a private courier as established by the sender by
evidence obtained from the courier, (iii) on the date sent by facsimile, with
confirmation of transmission, if sent during normal business hours of the
recipient, if not, then on the next business day, or (iv) on the fifth day after
the date mailed, by certified or registered mail, return receipt requested,
postage prepaid. Such communications, to be valid, must be addressed as
follows:
If to XxXxxx Turbine, to:
XxXxxx Turbine Co.
0 Xxxx Xxxxx, Xxxxxxxx Xxxxxx Xxxxxxxx,
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx Xx
Seo
Phone: [x00-0-0000-0000]
Facsimile: [x00-0-0000-0000]
With a
required copy to:
Xxxx Xxxxx LLP
0000 Xxxx Xxxx Xxxx, Xxxxx
000
Xxxx Xxxx, XX 00000
Attention: Catharina Y.
Min
Phone: (000)
000-0000
Facsimile: (000)
000-0000
If to
Seller, to:
Composite
Technology Corporation
0000
XxXxx Xxx.
Xxxxxx,
XX 00000
Attention: Xxxxxxx
XxXxxxxx
Phone: (000)
000-0000
Facsimile: (000)
000-0000
With a
required copy to:
Milbank,
Tweed, Xxxxxx & XxXxxx LLP
000 X.
Xxxxxxxx Xx., 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attention: Xxxx
Xxxxxxxx
Phone: (000)
000-0000
Facsimile: (000)
000-0000
11
If to
Escrow Agent, to:
U.S. Bank
National Association
Corporate
Trust Services
Xxx
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Attention: Xxxx
Xxxxxxxxx
Phone: (000)
000-0000
Facsimile: (000)
000-0000
or to
such other address or to the attention of such person or persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending
notice as set forth above is used, the earliest notice date established as set
forth above shall control.
(f)
Further
Assurances. XxXxxx Turbine and Seller each agrees to cooperate
fully with the other parties and to execute such further instruments, documents
and agreements and to give such further written assurances as may be reasonably
requested by the other parties to evidence and reflect the transactions provided
for herein and to carry into effect the intent of this Agreement.
(g) Entire
Agreement. This Agreement, any agreements referenced herein, and
any exhibits and schedules hereto constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect to the subject matter hereof. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this
Agreement.
(h) Escrow Agent.
U.S. Bank National Association is acting solely as Escrow Agent and is not a
party to, nor has it reviewed or approved the Purchase Agreement or any other
matter of background related to this Escrow Agreement, other than this Agreement
itself, and has assumed without investigation, the authority of the individuals
executing this Escrow Agreement to be authorized to do so on behalf of the party
or parties involved.
(i)
USA Patriot Act
Compliance. To help the government fight the funding of terrorism
and money laundering activities, federal law requires all financial institutions
to obtain, verify and record information that identifies each person who opens
an account. For a non-individual person such as a business entity, a
charity, a trust or other legal entity the Escrow Agent will ask for
documentation to verify its formation and existence as a legal entity. The
Escrow Agent may also ask to see financial statements, licenses, identification
and authorization documents from individuals claiming authority to represent the
entity or other relevant documentation. The parties each agree to provide
all such information and documentation as to themselves as requested by Escrow
Agent to ensure compliance with federal law.
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(j)
Consent to
Jurisdiction. Each party irrevocably submits to the exclusive
jurisdiction of (i) Los Angeles County, California, and (ii) the United States
District Court for the District of Central California, for the purposes of any
Action arising out of this Agreement or any transaction contemplated
hereby. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE ANCILLARY AGREEMENTS OR THE ACTIONS OF SUCH
PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF AND
THEREOF.
(k)
Counterparts.
This Agreement may be executed in any number of counterparts, and any party
hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto.
[Signature
Pages Follow]
13
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
XXXXXX
TURBINE:
|
||
XXXXXX
TURBINE CO.
|
||
By:
|
/s/
|
|
Name:
|
||
Title:
|
||
SELLER:
|
||
XXXXXX
INC.
|
||
By:
|
/s/
|
|
Name:
|
||
Title:
|
||
ESCROW
AGENT:
|
||
U.S.
BANK, NATIONAL ASSOCIATION
|
||
By:
|
/s/
|
|
Name:
|
Xxxx
Xxxxxxxxx
|
|
Title:
|
Vice
President
|
14
EXHIBIT
A
U. S.
BANK MONEY MARKET ACCOUNTS
ACCOUNT
DESCRIPTION AND TERMS
U.S. Bank
money market accounts are U.S. Bank National Association (“U.S. Bank”) deposit
accounts designed to meet the needs of Corporate Escrow and other Corporate
Trust customers of U. S. Bank. Accounts pay competitive variable interest
rates, which are determined upon the customer’s aggregated balance.
Customer deposits are insured up to $250,000 per depositor pursuant
to the Federal Deposit Insurance Corporation’s insurance rules.
Interest
rates currently offered on the accounts are determined at U. S. Bank’s
discretion and may change daily. U. S. Bank National Association uses the
daily balance method to calculate interest on these accounts. This
method applies a daily periodic rate to the principal in the accounts each day
of the month and divides that figure by the number of days in the
period. Interest on customer deposits begins to accrue on the
business day funds are credited to a U.S. Bank deposit
account. Interest is compounded on a monthly basis.
The owner
of the accounts is U. S. Bank National Association as agent for its
customers. All account deposits and withdrawals are performed by U.S.
Bank National Association.
15