EXHIBIT 2.3
SKIPPING STONE STOCKHOLDER ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("AGREEMENT") is made and entered into as of
April ___, 2004, by and among Commonwealth Energy Corporation, a California
corporation ("PARENT"), [_________________], a [________________] (the "ESCROW
AGENT"); and the following individuals: Xx. Xxxxx Xxxxxxx, Xx. Xxxx Xxxxxx, Xx.
Xxxx Xxxx and Xx. Xxxxx Kvetinskas (collectively, the "SKIPPING STONE
STOCKHOLDERS," and each a "SKIPPING STONE STOCKHOLDER").
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meaning given to them in the Merger Agreement (as defined
below).
INTRODUCTION
A. Parent, Skipping Stone Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Commonwealth ("MERGER SUB"), Skipping
Stone, Inc., a Delaware corporation ("SKIPPING STONE") and the Skipping Stone
Stockholders have entered into an Agreement and Plan of Merger dated as of March
29, 2004 (the "MERGER AGREEMENT") pursuant to which Merger Sub will be merged
with and into Skipping Stone, and the Surviving Corporation will be a wholly
owned subsidiary of Parent.
B. The Merger Agreement requires as a condition to the Merger the
establishment of an escrow account into which each Skipping Stone Stockholder
will place for the benefit of Parent twenty percent (20%) of the aggregate
number of Merger Shares to which he is entitled for a period of six (6) months
plus an administrative period.
C. The parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained.
TERMS AND CONDITIONS
The parties hereby agree as follows:
SECTION 1. ESCROW ACCOUNT
1.1 ESCROW OF SHARES. As soon as practicable following the
Effective Time, in accordance with the Merger Agreement, (a) Parent shall
deliver to the Escrow Agent certificates issued in the names of the Skipping
Stone Stockholders, representing in the aggregate three hundred twenty-two
thousand two hundred and fourteen (322,214) shares of Parent Common Stock (the
"ESCROW SHARES"), to be held in escrow on behalf of the Skipping Stone
Stockholders, in accordance with this Agreement and in the percentage interests
and amounts with respect to each Skipping Stone Stockholder set forth on EXHIBIT
A. The shares of Parent Common Stock being held in escrow pursuant to this
Agreement (the "ESCROW SHARES") shall collectively constitute an escrow fund
(the "ESCROW FUND") with respect to the rights of Parent established herein. The
Escrow Agent agrees to accept delivery of the Escrow Fund and to hold
the Escrow Fund in an escrow account (the "ESCROW ACCOUNT"), subject to the
terms and conditions of this Agreement.
The Escrow Shares shall be treated by the parties for all tax
purposes as owned by the Skipping Stone Stockholders in accordance with the
amounts set forth in Exhibit A in respect of each Skipping Stone Stockholder (as
such Exhibit may be amended from time to time in accordance with this Agreement)
until the Escrow Shares are released pursuant to the terms of this Agreement.
1.2 VOTING OF ESCROW SHARES. On any matter brought before the
stockholders of Parent for a vote, each Skipping Stone Stockholder shall have
the absolute right to have its pro rata portion of the Escrow Shares (and any
additional securities with respect thereto) voted in accordance with the written
instructions of such Stockholder at the time of the applicable record date as
given to the Escrow Agent. Each Skipping Stone Stockholder shall deliver written
notice to the Escrow Agent ("VOTING NOTICE") setting forth the manner in which
the Escrow Agent shall vote such Skipping Stone Stockholder's portion of the
Escrow Shares at least five (5) days prior to the date of the taking of any vote
of the stockholders of Parent (the "VOTING NOTICE DATE"). The Escrow Agent shall
vote the Escrow Shares in accordance with the Voting Notice. The Escrow Agent
shall promptly forward to each Skipping Stone Stockholder copies of all proxy
solicitation material received with respect to the Escrow Shares. The Escrow
Agent shall have no obligation to vote any of the Escrow Shares if no Voting
Notice is received prior to the Voting Notice Date or if such notice does not
clearly set forth the manner in which the Escrow Agent shall vote the Escrow
Shares.
1.3 SECURITY INTEREST. To the extent and so long as Escrow
Shares are held in the Escrow Account hereunder, Parent shall have, and the
Skipping Stone Stockholders hereby grant, as of and from the date of this
Agreement, a perfected, first-priority security interest in such Escrow Shares
to secure payment of amounts, if any, payable to Parent in respect of Section
2.1 of this Agreement. In connection herewith, each Skipping Stone Stockholder
expressly agrees (i) that the Escrow Agent is acting solely as Parent's agent to
the extent necessary to perfect Parent's first-priority security interest in the
Escrow Shares, and (ii) to execute and deliver such instruments as Parent may
from time to time reasonably request for the purpose of evidencing and
perfecting such security interest.
1.4 DIVIDENDS, ETC. For so long as the Escrow Shares (or any
additional securities with respect thereto) are held by the Escrow Agent in
accordance with the terms of this Agreement, each Skipping Stone Stockholder
shall have the absolute right to all dividends and distributions (of whatever
nature) on its pro rata portion of the Escrow Shares (and any additional
securities with respect thereto, and any interest or earnings upon such
dividends, distributions or additional securities). The Escrow Agent shall
deliver to each Skipping Stone Stockholder such stockholder's pro rata portion
of any such amounts or securities paid or issued in respect of Escrow Shares
within ten (10) days of receiving such amounts or securities.
1.5 FRACTIONAL SHARES. No fractional shares of Parent Common
Stock or other securities shall be retained in or released from the Escrow
Account pursuant to this
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Agreement. In connection with any release of Escrow Shares from the Escrow
Account, all Escrow Shares (including fractions thereof) issuable upon release
to a Skipping Stone Stockholder shall be aggregated for purposes of determining
whether the release of Escrow Shares would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the release of
Escrow Shares to a Skipping Stone Stockholder would result in the issuance of
any fractional share, Parent and the Escrow Agent shall, in lieu of issuing any
fractional share, pay to such Skipping Stone Stockholder cash equal to the
product of such fraction multiplied by the Parent Share Price.
1.6 TRUST FUND. The Escrow Fund shall be held as a trust fund
and shall not be subject to any lien, attachment, trustee process or any other
judicial process of any creditor of any shareholder or of any party hereto,
except as contemplated in Section 1.3. The Escrow Agent shall hold and safeguard
the Escrow Fund until the Termination Date (as defined below), provided that if
the Escrow Agent has received from Parent a Claim Notice (as defined below)
setting forth a claim that has not been resolved by the Termination Date, then
the Escrow Agent shall hold and safeguard the Escrow Fund until the claim has
been resolved and the Escrow Fund released in accordance with this Agreement.
SECTION 2. ADMINISTRATION OF ESCROW ACCOUNT. Except as otherwise
provided herein, the Escrow Agent shall administer the Escrow Account as
follows:
2.1 CALCULATION OF CLAIM. Parent will make a determination as
of the date six (6) months after the Closing Date as to whether there is a
Post-Closing True Up. The amount of any such Post-Closing True Up shall
represent a claim by Parent for the purposes of this Agreement.
2.2 DELIVERY OF CLAIM NOTICE. If Parent has a claim pursuant
to Section 2.1 hereof, Parent may, on or prior to the date six (6) months and
ten (10) days from the Closing Date (the "TERMINATION DATE"), deliver a claim
notice (a "CLAIM NOTICE") to the Skipping Stone Stockholders and to the Escrow
Agent. A Claim Notice shall state that Parent believes that there is a claim
under Section 2.1 hereof, and shall state the amount of the claim (the "CLAIMED
AMOUNT") and shall set forth in reasonable detail the calculations Parent used
to arrive at such claim. If Parent does not deliver a claim notice on or prior
to the Termination Date, the Escrow Shares shall be released in accordance with
Section 3.1.
2.3 RESPONSE NOTICE; UNCONTESTED CLAIMS. Within ten (10) days
after receipt by the Skipping Stone Stockholders of a Claim Notice, the Skipping
Stone Stockholders may deliver to Parent and to the Escrow Agent a written
response (the "RESPONSE NOTICE") in which the Skipping Stone Stockholders: (i)
agree that Escrow Shares (or other property held in the Escrow Account)
collectively having a "STIPULATED VALUE" (as defined below) equal to the full
Claimed Amount may be released from the Escrow Account to Parent; or (ii) agree
that Escrow Shares (or other property held in the Escrow Account) collectively
having a Stipulated Value equal to part, but not all, of the Claimed Amount (the
"AGREED SHARE AMOUNT") may be released from the Escrow Account to Parent; or
(iii) indicate that no part of the Escrow Fund may be released from the Escrow
Account to Parent in respect of the Claimed Amount. Any part
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of the Claimed Amount that is not agreed to be released to Parent pursuant to
the Response Notice shall be the "CONTESTED SHARE AMOUNT." If a Response Notice
is not received by the Escrow Agent within such ten (10) day period, then the
Skipping Stone Stockholders shall be conclusively deemed to have agreed that
Escrow Shares (or other property held in the Escrow Account) collectively having
a Stipulated Value equal to the full Claimed Amount may be released to Parent
from the Escrow Account.
2.4 UNCONTESTED CLAIMS. If the Skipping Stone Stockholders
deliver a Response Notice agreeing that Escrow Shares (or other property held in
the Escrow Account) collectively having a Stipulated Value equal to the full
Claimed Amount may be released from the Escrow Account to Parent, or if the
Skipping Stone Stockholders do not deliver a Response Notice on a timely basis
in accordance with Section 2.3, the Escrow Agent shall within five (5) days
following the receipt of such Response Notice (or, if the Escrow Agent has not
received a Response Notice, within five (5) days following the expiration of the
fifteen (15) day period referred to in Section 2.3), deliver to Parent such
Escrow Shares (or other property). Such payment shall be deemed to be made in
full satisfaction of the claim described in such Claim Notice.
2.5 PARTIALLY CONTESTED CLAIMS. If the Skipping Stone
Stockholders deliver a Response Notice agreeing that Escrow Shares (or other
property held in the Escrow Account) collectively having a Stipulated Value
equal to less than the full Claimed Amount may be released from the Escrow
Account to Parent, the Escrow Agent shall, within five (5) days following the
receipt of such Response Notice, deliver to Parent Escrow Shares (or other
property held in the Escrow Account) collectively having a Stipulated Value
equal to the Agreed Share Amount. Such payment shall not be deemed to be made in
full satisfaction of the claim described in such Claim Notice, but shall count
toward the satisfaction of the claim described in such Claim Notice.
2.6 CONTESTED CLAIMS.
(a) If the Skipping Stone Stockholders and Parent are
unable to resolve the dispute relating to any Contested Share Amount within
thirty (30) days after the delivery of the Claim Notice ("INITIAL RESOLUTION
PERIOD"), then the parties shall resolve such dispute pursuant to the
Arbitration provisions of Section 2.8 below.
2.7 Any Escrow Shares released from the Escrow Account shall
be deemed to reduce the Escrow Shares pro rata with respect to each applicable
Skipping Stone Stockholder in accordance with each Skipping Stone Stockholder's
percentage interest in the Escrow Fund as set forth on EXHIBIT A.
2.8 ARBITRATION.
(a) Each of the parties hereby waives its right to
resolve any controversy, claim or dispute involving the parties (or their
affiliated persons) directly or indirectly concerning this Agreement or the
subject matter hereof through any court proceeding or litigation and
acknowledges that all such controversies, claims or disputes, shall be finally
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settled in accordance with the provisions of this Section 2.8. Each of the
parties represents to the other that this waiver is made knowingly and
voluntarily after consultation with and upon the advice of counsel and is a
material part of this Agreement.
(b) In the event of any controversy, claim or dispute
arising out of or relating to this Agreement, the claiming party or parties
shall provide written notice specifying in reasonable detail the particulars of
the dispute, the provisions of the Agreement which are involved and the party's
suggested resolution of the controversy. Thereupon, the parties agree to attempt
in good faith to expeditiously resolve the controversy, claim or dispute by good
faith negotiation for a period of at least thirty (30) days, including, without
limitation, at least one face-to-face meeting between the Skipping Stone
Stockholders owning a majority of the Skipping Stone Common Stock on the date
hereof and an officer of Parent with authority to resolve any such controversy,
claim or dispute.
(c) If these negotiations fail to result in a
resolution within thirty (30) days, then such claiming party or parties may
submit such controversy, claim or dispute to mandatory and binding arbitration
held in Orange County, California, in accordance with the rules of commercial
arbitration then followed by the American Arbitration Association or any
successor to the functions thereof. The arbitrator shall have the right and
authority to determine how his decision or determination as to each issue or
matter in dispute may be implemented or enforced. Any decision or award of the
arbitrator shall be final and conclusive on the parties to this Agreement and
their respective affiliates, and may be entered and enforced in any court of
competent jurisdiction.
(d) The parties hereto agree that any action to
compel arbitration pursuant to this Agreement may be brought in the appropriate
Orange County, California, court and in connection with such action to compel
the laws of the State of California shall control. Application may also be made
to such court for confirmation of any decision or award of the arbitrator, for
an order of the enforcement and for any other remedies which may be necessary to
effectuate such decision or award. The parties hereto hereby consent to the
jurisdiction of the arbitrator and the exclusive jurisdiction of such court and
waive any objection to the jurisdiction of such arbitrator and court.
(e) Each of the Parent, on the one hand, and the
Skipping Stone Stockholders, on the other hand, shall pay an equal one-half
(1/2) of all costs, fees and expenses of the arbitration and, notwithstanding
any law to the contrary, each party will bear the fees, costs and expenses of
its own counsel, experts and witnesses; provided, however, that in connection
with any judicial proceeding to compel arbitration pursuant to this Agreement or
to confirm, vacate or enforce any award rendered by an arbitrator, the
prevailing party in such a proceeding shall be entitled to recover reasonable
attorney's fees and expenses incurred in connection therewith, in addition to
any other relief to which it may be entitled.
(f) Notwithstanding the foregoing in this Section
2.8, however, nothing contained herein shall require arbitration of any issue
arising under this Agreement for which injunctive relief is successfully sought.
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2.9 Cash Payments. Notwithstanding any other provision of this
Agreement, the Skipping Stone Stockholders may elect to pay any and all of the
Claimed Amount determined to be owed to Parent under this Agreement in cash, as
opposed to Escrow Shares, provided that any such cash payment is made to Parent
on or before the date of release of such Escrow Shares under this Agreement. If
the Skipping Stone Stockholders timely elect to make such cash payment(s), then
the Escrow Agent shall promptly thereafter distribute or cause to be distributed
to the Skipping Stone Stockholders such number of Escrow Shares (or other
property held in the Escrow Account) having a value equal to such cash payment
divided by the Parent Share Price.
SECTION 3. RELEASE OF ESCROW SHARES.
3.1 Within twenty (20) days after the Termination Date, the
Escrow Agent shall distribute or cause to be distributed to the Skipping Stone
Stockholders, on behalf of each of the Skipping Stone Stockholders, all of the
Escrow Shares (or other property held in the Escrow Account), if any, then held
in escrow. Notwithstanding the foregoing, if any Claim Notice has been given and
such claim has not yet been resolved, the Escrow Agent shall retain in the
Escrow Account after the Termination Date a number of Escrow Shares (valued at
the Stipulated Value) equal in the aggregate to one hundred percent (100%) of
the Claimed Amount or Contested Share Amount, as the case may be, which has not
then been resolved, upon the terms set forth herein.
SECTION 4. VALUATION OF ESCROW SHARES, ETC.
4.1 STIPULATED VALUE. For purposes of this Agreement, the
"STIPULATED VALUE" of each Escrow Share shall be deemed to be equal to the
Parent Share Price.
4.2 STOCK SPLITS. All numbers contained in, and all
calculations required to be made pursuant to, this Agreement with respect to the
Escrow Shares shall be adjusted as appropriate to reflect any stock split,
reverse stock split, stock dividend or similar transaction effected by Parent
after the date hereof. In the event of any such stock split or other similar
occurrence, Parent shall deliver to the Skipping Stone Stockholders and the
Escrow Agent a revised version of EXHIBIT A setting forth in the aggregate the
new number of Escrow Shares held in the Escrow Fund and the number of Escrow
Shares being held on behalf of each Skipping Stone Stockholder. Unless and until
the Escrow Agent receives the certificates representing additional shares of
Parent Common Stock or other property pursuant to Section 1.4, the Escrow Agent
may assume without inquiry that no such stock or other property has been or is
required to be issued with respect to the Escrow Shares. Parent shall be
obligated to deliver into escrow promptly any such additional shares registered
in the name of the applicable stockholder.
SECTION 5. FEES AND EXPENSES. The Escrow Agent shall be entitled to
receive from time to time fees in accordance with EXHIBIT B. In accordance with
EXHIBIT B, the Escrow Agent will also be entitled to reimbursement for
reasonable and documented out-of-pocket expenses incurred by the Escrow Agent in
the performance of its duties hereunder and the execution and delivery of this
Agreement. All such fees and expenses shall be paid by Parent.
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SECTION 6. LIMITATION OF ESCROW AGENT'S LIABILITY.
6.1 The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document, and no implied covenants or obligations shall be
read into this Agreement against the Escrow Agent. The Escrow Agent shall incur
no liability with respect to any action taken by it or for any inaction on its
part in 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 for its own gross negligence or
willful misconduct. In all questions arising under this Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. In no event shall the Escrow Agent be
liable for incidental, punitive or consequential damages.
6.2 Parent hereby agrees to indemnify the Escrow Agent and its
officers, directors, employees and agents for, and hold it and them harmless
against, any loss, liability or expense incurred without negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with the
Escrow Agent carrying out its duties hereunder. This right of indemnification,
compensation and reimbursement shall survive the termination of this Agreement,
and the resignation of the Escrow Agent.
SECTION 7. TERMINATION. This Agreement shall terminate on the
Termination Date or, if earlier, upon the release by the Escrow Agent of the
entire Escrow Fund in accordance with this Agreement; provided, however, that if
the Escrow Agent has received from Parent a Claim Notice setting forth a claim
that has not been resolved by the Termination Date, then this Agreement shall
continue in full force and effect until the claim has been resolved and the
Escrow Fund released in accordance with this Agreement.
SECTION 8. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent
becomes unavailable or unwilling to continue as escrow agent under this
Agreement, the Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving its written resignation to the parties to this
Agreement. Such resignation shall take effect not less than xxxxxx (30) days
after it is given to all parties hereto. In such event, Parent may appoint a
successor Escrow Agent reasonably acceptable to the Skipping Stone Stockholders.
If Parent fails to appoint a successor Escrow Agent within fifteen (15) days
after receiving the Escrow Agent's written resignation, the Escrow Agent shall
have the right to apply to a court of competent jurisdiction for the appointment
of a successor Escrow Agent. The successor Escrow Agent shall execute and
deliver to the Escrow Agent an instrument accepting such appointment, and the
successor Escrow Agent shall, without further acts, be vested with all the
estates, property rights, powers and duties of the predecessor Escrow Agent as
if originally named as Escrow Agent herein. The Escrow Agent shall act in
accordance with written instructions from Parent as to the transfer of the
Escrow Fund to a successor escrow agent.
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SECTION 9. MISCELLANEOUS.
9.1 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received (a) when delivered by
hand, or (b) when received by registered mail or, by courier or express delivery
service, or by facsimile, to the address or facsimile telephone number set forth
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Xx. Xxx X. Xxxxxx
Chairman of the Board and Chief Executive Officer
Commonwealth Energy Corporation
00000 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which copy shall not constitute notice):
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Attn: Xxxx X. Xxxxx Xxxxxx, Esq.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Skipping Stone Stockholders to each of:
Xx. Xxxxx Xxxxxxx
Commonwealth Energy Corporation and Commerce Energy Group
00000 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xx. Xxxx Xxxxxx
c/o Skipping Stone
00 Xxxx - Xxxxx 000
Xxxx Xxxxxxx, XX 00000
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Xx. Xxxx Xxxx
c/o Skipping Stone
00000 Xxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xx. Xxxxx Kvetinskas
c/o Skipping Stone
00000 Xxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
with a copy to (which shall not constitute notice):
Stroock & Stroock & Xxxxx LLP
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Escrow Agent:
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The Escrow Agent may assume that any Claim Notice, Response
Notice or other notice of any kind required to be delivered to the Escrow Agent
and any other Person has been received by such other Person on the date it has
been received by the Escrow Agent, but the Escrow Agent need not inquire into or
verify such receipt.
9.2 HEADINGS. The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
9.3 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
9.4 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. In any action between the parties arising out of
or relating to this Agreement or any of the transactions contemplated by this
Agreement: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in the
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State of California; (b) if any such action is commenced in a state court, then,
subject to applicable law, no party shall object to the removal of such action
to any federal court located in the State of California; (c) each of the parties
irrevocably waives the right to trial by jury; and (d) each of the parties
irrevocably consents to service of process by first class certified mail, return
receipt requested, postage prepaid, to the address at which such party is to
receive notice in accordance with Section 9.2; provided, however, that nothing
in this Section 9.4 shall effect the arbitration provisions set forth in Section
2.8.
9.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties hereto and each of
their respective permitted successors and assigns, if any. The interests of the
Skipping Stone Stockholders in the Escrow Account and in the Escrow Shares shall
not be assignable or transferable, other than by operation of law. No assignment
or transfer of any of such interests by operation of law shall be recognized or
given effect until Parent and the Escrow Agent shall have received written
notice of such assignment or transfer. No Skipping Stone Stockholder may assign
such shareholder's rights under this Agreement without the express prior written
consent of Parent, and any attempted assignment of this Agreement or any of such
rights by a shareholder without such consent shall be void and of no effect;
provided, however, that upon the death of a Skipping Stone Stockholder, such
Skipping Stone Stockholder's rights under this Agreement shall be transferred to
the person(s) who receive such shareholder's Parent Common Stock under the laws
of descent and distribution.
9.6 WAIVER. No failure on the part of any Person to exercise
any power, right, privilege or remedy under this Agreement, and no delay on the
part of any Person in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. No Person shall be deemed to have waived any
claim arising out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power, right, privilege
or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.7 AMENDMENT. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
9.8 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
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9.9 PARTIES IN INTEREST. Except as expressly provided herein,
none of the provisions of this Agreement, express or implied, is intended to
provide any rights or remedies to any Person other than the parties hereto and
their respective successors and assigns, if any.
9.10 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof.
9.11 TAX REPORTING INFORMATION AND CERTIFICATION OF TAX
IDENTIFICATION NUMBERS.
(a) The parties hereto agree that, for tax reporting
purposes, all interest on or other income, if any, attributable to the Escrow
Fund or any other amount held in escrow by the Escrow Agent pursuant to this
Agreement shall be allocable to the Skipping Stone Stockholders in accordance
with their percentage interests in the Escrow Fund set forth on EXHIBIT A.
(b) Parent and the Skipping Stone Stockholders agree
to provide the Escrow Agent with certified tax identification numbers for each
of them by furnishing appropriate forms W-9 (or Forms W-8, in the case of
non-U.S. persons) and any other forms and documents that the Escrow Agent may
reasonably request (collectively, "TAX REPORTING DOCUMENTATION") to the Escrow
Agent within thirty (30) days after the date hereof. The parties hereto
understand that, if such Tax Reporting Documentation is not so furnished to the
Escrow Agent, the Escrow Agent shall be required by the Code 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, and to
immediately remit such withholding to the Internal Revenue Service.
(c) Parent and the Skipping Stone Stockholders
acknowledge and agree that the Escrow Shares were not received by the Skipping
Stone Stockholders on account of or in connection with the performance of
services by any person (for purposes of Section 83 of the Code and any other tax
purposes), or otherwise in any compensatory capacity, and neither Parent nor any
of the Skipping Stone Stockholders will take or cause to be taken any position
on any tax return or other tax reporting position that is inconsistent with this
acknowledgement and agreement (other than possibly protective elections under
Section 83(b) of the Code, any comparable state elections or filings directly
related thereto).
9.12 COOPERATION. The Skipping Stone Stockholders agrees to
cooperate fully with Parent and the Escrow Agent and to execute and deliver such
further documents, certificates, agreements and instruments and to take such
other actions as may be reasonably requested by Parent or the Escrow Agent to
evidence or reflect the transactions contemplated by this Agreement and to carry
out the intent and purposes of this Agreement.
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9.13 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the
context requires: the singular number shall include the plural, and vice versa;
the masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement.
(c) As used in this Agreement, the words "include"
and "including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in
this Agreement to "Sections" and "Exhibits" are intended to refer to Sections of
this Agreement and Exhibits to this Agreement.
[SIGNATURE PAGE FOLLOWS]
12
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.
COMMONWEALTH ENERGY CORPORATION
By:
--------------------------------
Name: Xxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
ESCROW AGENT
By:
--------------------------------
Name:
Title:
XX. XXXXX XXXXXXX
By:
--------------------------------
Xxxxx Xxxxxxx
XX. XXXX XXXXXX
By:
--------------------------------
Xxxx Xxxxxx
XX. XXXX XXXX
By:
--------------------------------
Xxxx Xxxx
XX. XXXXX KVETINSKAS
By:
--------------------------------
Xxxxx Xxxxxxxxxx
13
EXHIBIT A
SKIPPING STONE STOCKHOLDERS PRO RATA PERCENTAGE INTEREST IN ESCROW FUND
PRO RATA
SHARES TO BE PERCENTAGE
SKIPPING STONE HELD IN ESCROW INTEREST IN
STOCKHOLDER ADDRESS ACCOUNT ESCROW FUND
-------------- ------- -------------- -----------
A-1
EXHIBIT B
ESCROW AGENT
SCHEDULE OF FEES
[To Come]
B-1
