ESCROW AGREEMENT
THIS
ESCROW AGREEMENT is made as of the 21st day of December, 2009, by and among
American Eagle Energy Inc., a Nevada corporation (the “Company”), Golden Vista
Energy, LLC, Xxxxxx X. Xxxxx, and Xxxxxx Xxxxxxx (collectively, the
“Stockholders”), and Xxxxx & Xxxxxxxxx LLP (the “Escrow
Agent”).
WHEREAS:
A. Pursuant
to a series of Private Placement Subscription Agreements dated December 21,
2009, entered into by and between the Company and each of the Stockholders,
respectively, the Company sold and issued 9,500,000 shares of its common stock
(collectively, the “Private Placement Shares”) to the stockholder is
substantially even proportions;
B. The
parties have agreed that 5,000,000 of the Private Placement Shares are to be
held in an escrow (the “Escrow Shares”) until the Company has identified
suitable well candidates in the Williston basin for testing of the “Madison
Fracture Play” (such identification being herein referred to as a “Milestone”
and having the meaning ascribed to it in section 1.1???, below);
and
C. The
Company and the Stockholders desire to appoint the Escrow Agent, and the Escrow
Agent has agreed to act as escrow agent, to hold the Escrow Shares and the
Transfer Documents in accordance with the terms hereof.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and such other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
1. DEFINITIONS AND
INTERPRETATION
1.1 Wherever
used in this Agreement, unless the context otherwise requires, the following
words and terms will have the meanings shown:
(a) “Agreement”
means this Escrow Agreement and any amendments to it;
(b) “Company”
means American Eagle Energy Inc.;
(c) “Escrow
Agent” means Xxxxx & Xxxxxxxxx LLP;
(d) “Escrow
Documents” means the Escrow Shares, the transfer Documents, and any other
documents delivered to the Escrow Agent to be held in escrow pursuant
hereto;
(e)
“Escrow Shares” shall have the meaning ascribed to them in the
Recitals;
(f) “Milestone”
means the Company having determined the existence of one or more “Suitable well
candidates in the Williston basin for testing of the “Madison Fracture Play’,”
which means any of the following: (i) in the case of a prospective
candidate, a successful, valid test of an appropriate geologic and engineering
model developed by the Company or others for such candidate, (ii) in the case of
a re-entry or recompletion candidate, a wellbore that is mechanically sound and
can be acquired by the Company for terms economically viable to it, whether by
purchase or farm-in, or (iii) in the case of a new drill location, one that can
be developed by the Company more cost effectively than either a re-entry or
recompletion, and, upon the occurrence of any of which alternatives, the Escrow
Shares shall be released from the Escrow;
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(g) “Transfer
Documents” means, if required, duly executed Stock Transfer Powers of Attorney
for each share certificate representing the Escrow Shares, authorizing the
transfer thereof to the Company.
1.2 In
this Agreement:
(a) the
headings have been inserted for convenience of reference only and in no way
define, limit, or enlarge the scope or meaning of the provisions of this
Agreement;
(b) all
references to any party, whether a party to this Agreement or not, will be read
with such changes in number and gender as the context or reference requires;
and
(c) when
the context hereof makes it possible, the word “person” includes in its meaning
any firm and any body corporate or politic.
2. DEPOSIT INTO
ESCROW
2.1 The
Company will, as soon as practicable following execution of this Agreement,
deliver the Escrow Documents to the Escrow Agent and the Escrow Agent will hold
the Escrow Documents in escrow subject to the terms and conditions of this
Agreement.
2.2 The
Escrow Agent will hold the Escrow Documents in escrow and will, unless then
prohibited by an order of a Court of competent jurisdiction, deliver the Escrow
Documents to the respective Stockholders upon confirmation by the Company of the
satisfaction of the Milestone, as set out herein.
2.3 The
parties irrevocably authorize and direct the Escrow Agent to deliver the
relevant Escrow Documents to each of the Stockholders at any time upon the
satisfaction of the Milestone, provided the Share Certificates have been
delivered by the Company to the Escrow Agent in accordance with paragraph 2.1
and the Escrow Agent has received written confirmation and authorization from
the Company that the applicable Milestone has been achieved.
2.4 In
the event that the Milestone has not been achieved by December 21, 2010, the
parties irrevocably authorize and instruct the Escrow Agent to cancel the Escrow
Shares and return them to the treasury of the Company.
3. ESCROW
PROVISIONS
3.1 The
Company and the Stockholders hereby direct the Escrow Agent to retain the Escrow
Documents and not to cause anything to be done to release the same from Escrow
except in accordance with this Agreement. The Escrow Agent accepts
its responsibilities hereunder and agrees to perform them in accordance with the
terms hereof.
4.
ESCROW
AGENT
4.1 In
exercising the rights, duties and obligations prescribed or confirmed by this
Agreement, the Escrow Agent will act honestly and in good faith and will
exercise that degree of care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
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4.2 The
Company and the Stockholders, jointly and severally, covenant and agree from
time to time and at all times hereafter well and truly to save, defend and keep
harmless and fully indemnify the Escrow Agent, its successors and assigns from
and against all loss, costs, charges, suits, demands, claims, damages, and
expenses that the Escrow Agent, its successors or assigns may at any time or
times hereafter bear, sustain, suffer, or be put unto for or by reason or on
account of its acting pursuant to this Agreement or anything in any manner
relating thereto or by reason of the Escrow Agent’s compliance in good faith
with the terms hereof.
4.3 In
case proceedings should hereafter be taken in any court respecting the Escrow
Documents, the Escrow Agent will not be obliged to defend any such action or
submit its rights to the court until it has been indemnified by other good and
sufficient security in addition to the indemnity given in Clause 4.2 against its
costs of such proceedings.
4.4 The
Escrow Agent will have no responsibility in respect of loss of the Escrow
Documents except the duty to exercise such care in the safekeeping thereof as it
would exercise if the Escrow Documents belonged to the Escrow
Agent. The Escrow Agent may act on the advice of counsel but will not
be responsible for acting or failing to act on the advice of
counsel.
4.5 The
Escrow Agent will not be bound in any way by any contract between the other
parties hereto whether or not it has notice thereof or of its terms and
conditions and the only duty, liability and responsibility of the Escrow Agent
will be to hold the Escrow Documents as herein directed and to pay and deliver
the same to such persons and other such conditions as are herein set
forth. The Escrow Agent will not be required to pass upon the
sufficiency of any of the Escrow Documents or to ascertain whether or not the
person or persons who have executed, signed or otherwise issued or authenticated
the said documents have authority to so execute, sign or authorize, issue or
authenticate the said documents or any of them, or that they are the same
persons named therein or otherwise to pass upon any requirement of such
instruments that may be essential for their validity, but it shall be sufficient
for all purposes under this Agreement insofar as the Escrow Agent is concerned
that the said documents are deposited with it as herein specified by the parties
executing this Agreement with the Escrow Agent.
4.6 In
the event that the Escrow Documents are attached, garnished, or levied upon
under any court order, or if the delivery of such property is stayed or enjoined
by any court order or if any court order, judgment, or decree is made or entered
affecting such property or affecting any act by the Escrow Agent, the Escrow
Agent may, in its sole discretion, obey, and comply with all writs, orders,
judgments or decrees so entered or issued, whether with or without jurisdiction,
notwithstanding any provision of this Agreement to the contrary. If
the Escrow Agent obeys and complies with any such writs, orders, judgments, or
decrees, it will not be liable to any of the parties hereto or to any other
person, form or corporation by reason of such compliance, notwithstanding that
such writs, orders, judgments, or decrees may be subsequently reversed,
modified, annulled, set aside, or vacated.
4.7 Except
as herein otherwise provided, the Escrow Agent is authorized and directed to
disregard in its sole discretion any and all notices and warnings which may be
given to it by any of the parties hereto or by any other person, firm,
association, or corporation. It will, however, obey the order,
judgment, or decree of any court of competent jurisdiction, and it is hereby
authorized to comply with and obey such orders, judgments or decrees and in case
of such compliance, it shall not be liable by reason thereof to any of the
parties hereto or to any other person, firm, association or corporation, even if
thereafter any such order, judgment or decree may be reversed, modified,
annulled, set aside, or vacated.
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4.8 If
the Escrow Agent receives any written instructions contrary to the instructions
contained in this Agreement, the Escrow Agent may continue to hold the Escrow
Documents until the lawful determination of the issue between the parties
hereto.
4.9 If
written notice of protest is made by any of the Stockholders or the Company to
the Escrow Agent to any action contemplated by the Escrow Agent under this
Agreement, and such notice sets out reasons for such protest, the Escrow Agent
may continue to hold the Escrow Documents until the right to the documents is
legally determined by a court of competent jurisdiction or
otherwise.
4.10 The
Escrow Agent may resign as Escrow Agent by giving not less than 30 days’ notice
thereof to all of the Stockholders and the Company. All of the
Stockholders and the Company may terminate the Escrow Agent by giving not less
than 30 days’ notice to the Escrow Agent. The resignation or
termination of the Escrow Agent will be effective and the Escrow Agent will
cease to be bound by this Agreement on the date that is 30 days after the date
of receipt of the termination notice given hereunder or on such other date as
the Escrow Agent, all of the Stockholders, and the Company may
agree. All indemnities granted to the Escrow Agent herein will
survive the termination of this Agreement or the termination or resignation of
the Escrow Agent.
4.11 Notwithstanding
anything herein to the contrary, the Escrow Agent may act upon any written
instructions given jointly by the Company and all of the
Stockholders.
4.12 Notwithstanding
anything to the contrary contained herein, in the event of any dispute arising
between any of the Stockholders, on the one hand, and the Company, on the other
hand, this Agreement or any matters arising hereto, the Escrow Agent may in its
sole discretion deliver and interplead the Escrow Documents and all funds held
in the Escrow Account into court and such delivery and interpleading will be an
effective discharge to the Escrow Agent.
4.13 It
is understood that in addition to acting as the Escrow Agent hereunder, the
Escrow Agent is also acting as attorney for the Company and not for any other
party to this Agreement and the parties have requested that the Escrow Agent act
in this capacity.
4.14 The
Company and each of the Stockholders acknowledge that they have been advised to
consult their own legal advisors with respect to this Agreement, the applicable
hold periods and resale restrictions regarding the Escrow Shares and they
covenant and agree that they are solely responsible for compliance with all
applicable restrictions in respect of the Escrow Shares.
5. GENERAL
5.1 Except
as herein otherwise provided, no subsequent alteration, amendment, change, or
addition to this Agreement will be binding upon the parties hereto unless
reduced to writing and signed by the parties to be bound.
5.2 This
Agreement will inure to the benefit of and be binding upon the parties and their
respective heirs, executors, administrators, and successors.
5.3 The
parties will execute and deliver all such further documents, do or cause to be
done all such further acts and things, and give all such further assurances as
may be necessary to give full effect to the provisions and intent of this
Agreement.
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5.4 Each
of the Stockholders will, at the Company’s request, provide all Transfer
Documents to the Escrow Agent necessary to carry out the intent of this
Agreement.
5.5 This
Agreement will be governed by and construed in accordance with the law of the
State of Nevada.
5.6 Any
notice required or permitted to be given under this Agreement will be in writing
and may be given by delivering, sending by electronic facsimile transmission, or
other means of electronic communication capable of producing a printed copy,
overnight courier, or registered or certified mail, return receipt requested,
postage pre-paid, the notice to the following address:
(a) If
to the Company:
00 Xxxxx
00xx
Xxxxxx, Xxxxx 00 X
Xxxxxxxx,
Xxxxxxx 00000
(b) If
to the Stockholders:
GOLDEN
VISTA ENERGY, LLC
000
Xxxxxx Xxxxx
Xxxxxxxx,
Xxxxxxx 00000
Xxxxxx X.
Xxxxx
0000 X.
Xxx Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Xxxxxx
Xxxxxxx
0000 X.
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
(c) If
to the Escrow Agent:
XXXXX
& XXXXXXXXX LLP
000 Xxxxx
Xxxx., Xxxxx 000
Xxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx
X. Xxxx
(or to
such other address as any party may specify by notice in writing to another
party). Any notice delivered or sent by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy on a business day will be deemed conclusively to have been
effectively given on the day the notice was delivered, or the electronic
communication was successfully transmitted, as the case may be, in either case
only if such date is a business day; otherwise, the effective delivery date
shall be the next business day following the date of such
transmission. Any notice sent by overnight courier mail will be
deemed conclusively to have been effectively given on the next business day
after sending. Any notice sent by registered or certified mail will
be deemed conclusively to have been effectively given on the third business day
after posting; but, if at the time of posting or between the time of posting and
the third business day thereafter, there is a strike, lockout, or other labor
disturbance affecting postal service, then the notice will not be effectively
given until actually delivered.
5.7 Time
is of the essence of this Agreement.
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5.8 It
is understood and agreed by the parties to this Agreement that the only duties
and obligations of the Escrow Agent are those specifically stated herein and no
other.
IN
WITNESS WHEREOF the parties have caused this Agreement to be executed under seal
and delivered as of the 21st day of December, 2009.
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By:
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/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx
Xxxxxxx, President
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GOLDEN
VISTA ENERGY, LLC
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By:
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/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx
Xxxxxxx, authorized signatory
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/s/ Xxxxxx X. Xxxxx
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XXXXXX
X. XXXXX
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/s/ Xxxxxx Xxxxxxx
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XXXXXX
XXXXXXX
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