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EXHIBIT 1(1)
ESCROW AGREEMENT
AGREEMENT made as of this 4th day of June, 1999 by and among CanArgo
Energy Corporation (the "Issuer" or "Company") and SST Holdings, Inc., dba
Signature Stock Transfer, Inc. (the "Escrow Agent"), whose addresses appear on
the Information Sheet attached to this Agreement.
WITNESSETH:
WHEREAS, the Issuer has filed Registration Statement No. 333-72295 (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") on Form S-1 to register under the Securities Act of 1933, 21,264,643
shares (the "Securities") of the Common Stock, par value $.10 per share ("Common
Stock"), of the Issuer;
WHEREAS, following the declaration by the SEC of the effectiveness of
the Registration Statement the Issuer proposes to offer the Securities for sale
on an "all or none" basis with respect to 11,500,000 shares of Common Stock (the
"Minimum Securities Amount") which are to be sold at a price of U.S. Thirty
Cents ($.30) or 2.35 NOK (Norwegian Kroner) per share of Common Stock, all as
set forth on the Information Sheet (the "Information Sheet") attached hereto as
Exhibit A and incorporated herein by this reference;
WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow
Account"), to which subscription monies which are received by the Escrow Agent
directly or indirectly from subscribers in connection with such offering are to
be credited, and the Escrow Agent is willing to establish the Escrow Account on
the terms and subject to the conditions hereinafter set forth;
WHEREAS, the Escrow Agent has established a special bank account into
which the subscription monies, which are received by the Escrow Agent directly
or indirectly from subscribers and credited to the Escrow Account, are to be
deposited;
WHEREAS, subscription monies will also be deposited into bank accounts
maintained by Orkla Finans (Fondsmegling) ASA as escrow agent (the "Norway
Account"); and
WHEREAS, the Escrow Agent also serves as the transfer agent and
registrar for the Common Stock.
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NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise
defined in this Agreement shall have the meaning set forth for such term on the
Information Sheet.
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank
account bearing the designation set forth on the Information Sheet (the "Bank
Account") at Compass Bank, Dallas, Texas (the "Bank"). The purpose of the Bank
Account is for (a) the deposit of all subscription monies (checks, bank drafts,
money orders or wire transfers) which are received from prospective purchasers
of the Securities and are delivered to the Escrow Agent, (b) the holding of
amounts of subscription monies which are collected through the banking system,
and (c) the disbursement of collected funds, all as described herein.
2.2 The Escrow Agent shall not accept any amounts for credit to
the Escrow Account or for deposit in the Bank Account prior to the effective
date of the Registration Statement (the "Effective Date").
2.3 The initial Offering Period shall consist of the period set
forth on the Information Sheet. The Offering Period shall be extended for an
Extension Period only if the Escrow Agent shall have received written notice
thereof at least two (2) business days prior to the scheduled expiration of the
Offering Period. The Extension Period, which shall be deemed to commence
simultaneously with the expiration of then initial Offering Period and shall end
on the date set forth in such notice not to exceed the period set forth on the
Information Sheet. The last day of the initial Offering Period, or the last day
of the Extension Period (if the Escrow Agent has received written notice thereof
as hereinabove provided), is referred to herein as the "Termination Date". After
the Termination Date subscribers shall not deposit, and the Escrow Agent shall
not accept, any additional amounts representing payments by prospective
purchasers.
3. Deposits to the Bank Account.
3.1 Prospective purchasers of the Securities may deliver to the
Escrow Agent monies representing the purchase price of the Securities, which
monies shall be in the form of checks, bank drafts, money orders or wire
transfers. Upon the Escrow Agent's receipt of such monies, they shall be
credited to the Escrow Account. All checks, bank drafts or money orders
(referred to as "checks" herein) delivered to the Escrow Agent shall be made
payable to "Signature Stock Transfer, Inc., as Agent for CanArgo Energy
Corporation". Any check payable other than to the Escrow Agent as required
hereby shall be returned to the prospective purchaser, or if the Escrow Agent
has insufficient information to do so, then to the Company (together with any
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Subscription Information, as defined below or other documents delivered
therewith) by noon of the next business day following receipt of such check by
the Escrow Agent, and such check shall be deemed not to have been delivered to
the Escrow Agent pursuant to the terms of this Agreement.
3.2 Promptly after receiving subscription monies as described in
Section 3.1, the Escrow Agent shall deposit the same into the Bank Account.
Amounts of monies so deposited are hereinafter referred to as "Escrow Amounts".
The Escrow Agent shall cause the Bank to process all Escrow Amounts for
collection through the banking system. Simultaneously with each deposit to the
Escrow Account, the prospective purchaser shall inform the Escrow Agent in
writing of its name, address, taxpayer identification number (if any), the
amount of Securities subscribed for by such prospective purchaser, and the
aggregate dollar amount of such subscription (collectively, the "Subscription
Information"). The Escrow Agent shall xxxx all Subscription Information with the
date and time it is received by the Escrow Agent.
3.3 The Escrow Agent shall not be required to accept for credit
to the Escrow Account or for deposit into the Bank Account checks which are not
accompanied by the appropriate Subscription Information. Wire transfers
representing payments by prospective purchasers shall not be deemed deposited in
the Escrow Account until the Escrow Agent has received in writing the
Subscription Information required with respect to such payments.
3.4 The Escrow Agent shall not be required to accept in the
Escrow Account any amounts representing payments by prospective purchasers,
whether by check or wire, except during the Escrow Agent's regular business
hours.
3.5 Only those Escrow Amounts which have been deposited in the
Bank Account and subscription monies which have been deposited in the Norway
Account and which have cleared the banking system and have been collected in
such Accounts are herein referred to as the "Fund".
3.6 The Escrow Agent and Orkla Finans shall advise each other
daily as to the amount of the Fund held in each of the Norway Account and the
Bank Account. The aggregate Fund in both the Norway Account and Bank Account is
referred to herein as the "Total Fund."
4. Disbursement from the Bank Account.
4.1 If by 9:00 a.m. Central Daylight Time on the Termination
Date the amount of the Total Fund is less than the aggregate Offering Price in
U.S. dollars and/or Norwegian kroner necessary to purchase the Minimum
Securities Amount, as indicated by the Subscription Information submitted to the
Escrow Agent and Orkla
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Finans, then in such case the Escrow Agent shall promptly refund to each
prospective purchaser the amount of payment received from such prospective
purchaser which is then held in the Bank Account or which thereafter clears the
banking system, without interest thereon or deduction therefrom, by drawing
checks on the Bank Account for the amounts of such payments and transmitting
them to the purchasers. In such event, the Escrow Agent shall promptly notify
the Issuer of its distribution of the Fund.
4.2 If at any time up to 9:00 a.m. Central Daylight Time on the
Termination Date, the amount of the Total Fund is at least equal to the
aggregate Offering Price in U.S. dollars and/or Norwegian kroner necessary to
represent the consideration for the purchase of not less than the Minimum
Securities Amount, as indicated by the Subscription Information submitted to the
Escrow Agent and Orkla Finans, the Escrow Agent shall promptly notify the Issuer
of such fact in writing. The Escrow Agent shall promptly disburse the Fund, by
drawing checks on or making wire transfers from the Bank Account in accordance
with instructions in writing signed by the Issuer as to the disbursement of the
Fund, promptly after the Escrow Agent receives such instructions and confirms
the concurrent issuance to the purchasers of the Securities being purchased with
the funds being disbursed.
4.3 In the event the Issuer determines to reject in whole or in
part the subscription of any prospective purchaser for whose account Escrow
Amounts have been deposited in the Escrow Account, the Issuer shall promptly
notify the Escrow Agent of such determination. Upon receipt of such
notification, the Escrow Agent shall promptly refund to such prospective
purchaser the amount of payment received from such purchaser attributable to the
rejected subscription which is then held in the Fund or which thereafter clears
the banking system, without interest thereon or deduction therefrom, by drawing
checks on the Bank Account for the amounts of such payments and transmitting
them to such purchaser.
4.4 Upon disbursement of the Fund pursuant to the terms of this
Article 4, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Fund.
5. Rights, Duties and Responsibilities of Escrow Agent. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
5.1 The Escrow Agent shall notify the Issuer, on a daily basis,
of the Escrow Amounts which have been deposited in the Bank Account and of the
amounts, constituting the Fund, which have cleared the banking system and have
been collected by the Escrow Agent. The Issuer will receive similar information
from Orkla Finans.
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5.2 The Escrow Agent shall not be responsible for the
performance by the Issuer of its obligations under this Agreement, or for any
obligations of Orkla Finans.
5.3 The Escrow Agent shall not be required to accept from the
Issuer any Subscription Information pertaining to prospective purchasers unless
such Subscription Information is accompanied by checks or wire transfers meeting
the requirements of Section 3.1, nor shall the Escrow Agent be required to keep
records of any information with respect to payments deposited by the Issuer
except as to the amount of such payments; however, the Escrow Agent shall notify
the Issuer within a reasonable time of any discrepancy between the amount set
forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved.
5.4 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.5 The Escrow Agent shall be entitled to rely upon the
accuracy, act in reliance upon the contents, and assume the genuineness of any
notice, instruction, certificate, signature, instrument or other document which
is given to the Escrow Agent pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall
not be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
5.6 If the Escrow Agent is uncertain as to its duties or rights
hereunder or shall receive instructions with respect to the Bank Account, the
Escrow Amounts or the Fund which, in its sole determination, are in conflict
either with other instructions received by it or with any provision of this
Agreement, it shall be entitled to hold the Escrow Amounts, the Fund, or a
portion thereof, in the Bank Account pending the resolution of such uncertainty
to the Escrow Agent's sole satisfaction, by final judgment of a court or courts
of competent jurisdiction or otherwise; or the Escrow Agent, at its sole option,
may deposit the Fund (and any other Escrow Amounts that thereafter become part
of the Fund) with the Clerk of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined. Upon the deposit by the Escrow
Agent of the Fund with the Clerk of any court, the Escrow Agent shall be
relieved of all further obligations and released from all liability hereunder.
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5.7 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct or gross negligence.
The Escrow Agent shall be entitled to consult with counsel of its own choosing
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
5.8 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Escrow Amounts, the
Fund or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Fund or any part thereof.
6. Amendment; Resignation. This Agreement may be altered or
amended only with the written consent of the Issuer and the Escrow Agent. The
Escrow Agent may resign for any reason upon three (3) business days' written
notice to the Issuer. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement or otherwise
dispose of the Escrow Amounts or the Fund, but its only duty shall be to hold
the Escrow Amounts until they clear the banking system and the Fund for a period
of not more than five (5) business days following the effective date of such
resignation, at which time (a) if a successor escrow agent shall have been
appointed and written notice thereof (including the name and address of such
successor escrow agent) shall have been given to the resigning Escrow Agent by
the Issuer and such successor escrow agent, then the resigning Escrow Agent
shall pay over to the successor escrow agent the Fund, less any portion thereof
previously paid out in accordance with this Agreement; or (b) if the resigning
Escrow Agent shall not have received written notice signed by the Issuer and a
successor escrow agent, then the resigning Escrow Agent shall promptly refund
the amount in the Fund to each prospective purchaser, without interest thereon
or deduction therefrom, and the resigning Escrow Agent shall promptly notify the
Issuer in writing of its liquidation and distribution of the Fund; whereupon, in
either case, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. Without limiting the
provisions of Section 8 hereof, the resigning Escrow Agent shall be entitled to
be reimbursed by the Issuer for any expenses incurred in connection with its
resignation, transfer of the Fund to a successor escrow agent or distribution of
the Fund pursuant to this Section 6.
7. Representations and Warranties. The Issuer hereby represents
and warrants to Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have, any lien, claim or security interest in the
Escrow Amounts or the Fund or any part thereof.
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7.2 No financing statement under the Uniform Commercial Code is
on file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Amounts or the Fund or any part
thereof.
7.3 The Subscription Information submitted with each deposit
shall, at the time of submission and at the time of the disbursement of the
Fund, be deemed a representation and warranty that such deposit represents a
bona fide payment by the purchaser described therein for the amount of
Securities set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet
is, as of the date hereof, and will be, at the time of any disbursement of the
Fund, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the
Escrow Agent Fees set forth on the Information Sheet, payable as and when stated
therein. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including, but
not limited to, reasonable counsel fees.
9. Indemnification and Contribution.
9.1 The Issuer ( the "Indemnitor") agrees to indemnify the
Escrow Agent and its officers, directors, employees, agents and shareholders
(collectively referred to as the "Indemnitees") against, and hold them harmless
of and from, any and all loss, liability, cost, damage and expense, including
without limitation, reasonable counsel fees, which the Indemnitees may suffer or
incur by reason of any action, claim or proceeding brought against the
Indemnitees 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 willful misconduct or gross negligence of the
Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is
applicable, but for any reason is held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of, any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitor.
9.3 The provisions of this Article 9 shall survive any
termination of this Agreement, whether by disbursement of the Fund, resignation
of the Escrow Agent or otherwise.
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10. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State of Texas and
shall be binding upon the parties hereto and their respective successors and
assigns; provided, however, that any assignment or transfer by any party of its
rights under this Agreement or with respect to the Escrow Amounts or the Fund
shall be void as against the Escrow Agent unless (a) written notice thereof
shall be given to the Escrow Agent; and (b) the Escrow Agent shall have
consented in writing to such assignment or transfer.
11. Notices. All notices required to be given in connection with
this Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed, if to the
Issuer at its address set forth on the Information Sheet, and if to the Escrow
Agent, at its address set forth on the Information Sheet.
12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be determined to be
invalid or unenforceable, the remaining provisions of this Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
13. Execution in Several Counterparts. This Agreement may be
executed in several counterparts or by separate instruments, and all of such
counterparts and instruments shall constitute one agreement, binding on all of
the parties hereto.
14. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings (written or oral) of the
parties in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year first above written.
CanArgo Energy Corporation
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
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SST Holdings, Inc., dba,
Signature Stock Transfer, Inc.
By: /s/ Xxxxxxxx Xxxxxxxx
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Xxxxxxxx Xxxxxxxx, President
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ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer
Name: CanArgo Energy Corporation
Address: 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
State of incorporation or organization: Delaware
2. The Escrow Agent
Name: SST Holdings, Inc., dba Signature Stock Transfer, Inc.
Address: 00000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000-0000
3. The Securities
Description of the Securities to be offered: up to 21,264,643 shares of
Common Stock, par value $.10 per share, of CanArgo Energy Corporation
Offering Price per share: U.S. $0.30 or NOK 2.35 (Norwegian kroner)
4. Minimum Amount Required for Disbursement of the Escrow Account
The total amount of securities which must be subscribed for and for
which Total Funds have been deposited at the applicable Offering Price
based on each subscription before the Escrow Account may be disbursed to
the Issuer is 11,500,000 shares ("Minimum Securities Amount").
5. Offering Period
Initial Offering Period: From 9:00 a.m. Central Daylight time on the
date after the day when the prospectus is first available for
distribution in Norway through 9:00 a.m. Central Daylight Time on
any date through June 30, 1999
Extension Period, if any: 9:00 a.m. Central Daylight Time on any date
after June 30, 1999 through August 6, 1999
6. Title of Escrow Account: SST Holdings Inc. Escrow #2
7. Wire Instructions
Bank Name: Compass Bank
Bank Address: 00000 Xxxxxxx Xxxx, Xxxxxx, Xxxxx 00000
Account Name: SST Holdings Inc. Escrow #2
Account Number: 00000000
ABA Routing No.: 000000000
8. Escrow Agent Fees
Amount due on execution of the Escrow Agreement: $1,000
Fee for initial closing of at least Minimum Securities Amount: $1,000
Fee for each additional closing: $500
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