FUNDS ESCROW AGREEMENT
Exhibit
10.11
This
Agreement (this “Agreement”)
is
dated as of the 18th day of September, 2007 among True North Energy Corporation,
a Nevada corporation (“TNEC”),
ICF
Energy Corporation, a Texas corporation (“ICF”;
and
together with TNEC, the “Companies”
and
each a “Company”),
Valens U.S. SPV I, LLC, a Delaware limited liability company (“Valens
U.S.”),
Valens Offshore SPV II, Corp, a Delaware corporation (“Valens
Offshore”;
and
together with Valens U.S., collectively, the “Purchasers”
and
each a “Purchaser”),
and
Loeb & Loeb LLP (the “Escrow
Agent”):
WITNESSETH:
WHEREAS,
the Purchasers have advised the Escrow Agent that (a) the Companies, the
Purchasers and Valens U.S., as agent for the Purchasers have entered into a
Securities Purchase Agreement (the “Securities
Purchase Agreement”)
for
the sale by the Companies to each Purchaser of a secured term note
(collectively, the “Term
Notes”),
(b)
each Company has
issued to each Purchaser two (2) common stock purchase warrants (collectively,
the “Warrants”)
in
connection with the issuance of each Term Note, and (c) each Company and each
Purchaser have entered into various Registration Rights Agreements covering
the
registration of such Company’s common stock underlying each of the Warrants (the
“Registration
Rights Agreements”);
WHEREAS,
the Companies and the Purchasers wish to deliver to the Escrow Agent copies
of
the Documents (as hereafter defined) and, following the satisfaction of all
closing conditions relating to the Documents, the Purchasers to deliver the
Escrowed Payment (as hereafter defined), in each case, to be held and released
by Escrow Agent in accordance with the terms and conditions of this Agreement;
and
WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and
conditions of this Agreement;
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
INTERPRETATION
1.1. Definitions.
Whenever used in this Agreement, the following terms shall have the meanings
set
forth below.
(a) “Agreement”
means this Agreement, as amended, modified and/or supplemented from time to
time
by written agreement among the parties hereto.
(b) “Disbursement
Letter” means that certain letter delivered to the Escrow Agent by the
Companies, acceptable in form and substance to each Purchaser, setting forth
wire instructions and amounts to be funded at the Closing.
(c) “Documents”
means copies of the Disbursement Letter, the Securities Purchase Agreement,
the
Term Notes, the Warrants and the Registration Rights Agreements.
(d) “Escrowed
Payment” means $3,750,000.
(e) “Purchaser
Payments” means the payments to be paid to each Purchaser, as set forth on
Schedule A hereto.
(f) “VCM
Payment” means the payment to be paid to Valens Capital Management, LLC, the
fund manager, as set forth on Schedule A hereto.
1.2. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties hereto with respect
to the arrangement with the Escrow Agent and supersedes all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written with respect to the arrangement with the Escrow Agent. There are no
warranties, representations and other agreements made by the parties in
connection with the arrangement with the Escrow Agent except as specifically
set
forth in this Agreement.
1.3. Extended
Meanings.
In this
Agreement words importing the singular number include the plural and vice versa;
words importing the masculine gender include the feminine and neuter genders.
The word “person” includes an individual, body corporate, partnership, trustee
or trust or unincorporated association, executor, administrator or legal
representative.
1.4. Waivers
and Amendments.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended,
and the terms and conditions hereof may be waived, in each case only by a
written instrument signed by all parties hereto, or, in the case of a waiver,
by
the party waiving compliance. Except as expressly stated herein, no delay on
the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party
of
any right, power or privilege hereunder preclude any other or future exercise
of
any other right, power or privilege hereunder.
1.5. Headings.
The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.6. Law
Governing this Agreement; Consent to Jurisdiction.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. With
respect to any suit, action or proceeding relating to this Agreement or to
the
transactions contemplated hereby (“Proceedings”),
each
party hereto irrevocably submits to the exclusive jurisdiction of the courts
of
the County of New York, State of New York and the United States District court
located in the county of New York in the State of New York. Each party hereto
hereby irrevocably and unconditionally (a) waives trial by jury in any
Proceeding relating to this Agreement and for any related counterclaim and
(b)
waives any objection which it may have at any time to the laying of venue of
any
Proceeding brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have
jurisdiction over such party. As between either or both of the Companies, on
the
one hand, and any Purchaser, on the other, the prevailing party shall be
entitled to recover from the other party its reasonable attorneys’ fees and
costs. In the event that any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, then the
remainder of this Agreement shall not be affected and shall remain in full
force
and effect.
2
1.7. Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Agreement and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the
other.
ARTICLE
II
APPOINTMENT
OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment.
Each
Company and each Purchaser hereby irrevocably designate and appoint the Escrow
Agent as their escrow agent for the purposes set forth herein, and the Escrow
Agent by its execution and delivery of this Agreement hereby accepts such
appointment under the terms and conditions set forth herein.
2.2. Copies
of Documents to Escrow Agent.
On or
about the date hereof, each Purchaser and each Company shall deliver to the
Escrow Agent copies of the Documents executed by such parties.
2.3. Delivery
of Escrowed Payment to Escrow Agent.
Following the satisfaction of all closing conditions relating to the Documents
(other than the funding of the Escrowed Payment), the Purchasers shall deliver
to the Escrow Agent the Escrowed Payment. At such time, the Escrow Agent shall
hold the Escrowed Payment as agent for the Companies, subject to the terms
and
conditions of this Agreement.
2.4. Intention
to Create Escrow Over the Escrowed Payment.
Each
Purchaser and each Company intend that the Escrowed Payment shall be held in
escrow by the Escrow Agent and released from escrow by the Escrow Agent only
in
accordance with the terms and conditions of this Agreement.
ARTICLE
III
RELEASE
OF ESCROW
3.1. Release
of Escrow.
Subject
to the provisions of Section 4.2, the Escrow Agent shall release the Escrowed
Payment from escrow as follows:
(a) Upon
receipt by the Escrow Agent of (i) oral instructions from Xxxxx Grin and/or
Xxxxxx Grin (each of whom is a director of each Purchaser) consenting to the
release of the Escrowed Payment from escrow in accordance with the Disbursement
Letter following the Escrow Agent’s receipt of the Escrowed Payment, (ii) the
Disbursement Letter, and (iii) the Escrowed Payment, the Escrowed Payment shall
promptly be disbursed in accordance with the Disbursement Letter. The
Disbursement Letter shall include, without limitation, Escrow Agent’s
authorization to retain from the Escrowed Payment Escrow Agent’s fee for acting
as Escrow Agent hereunder, and (A) the VCM Payment for delivery to Valens
Capital Management, LLC and (B) the Purchaser Payments for delivery to each
Purchaser, both in accordance with the Disbursement Letter.
3
(b) Upon
receipt by the Escrow Agent of a final and non-appealable judgment, order,
decree or award of a court of competent jurisdiction (a “Court
Order”)
relating to the Escrowed Payment, the Escrow Agent shall remit the Escrowed
Payment in accordance with the Court Order. Any Court Order shall be accompanied
by an opinion of counsel for the party presenting the Court Order to the Escrow
Agent (which opinion shall be reasonably satisfactory to the Escrow Agent)
to
the effect that the court issuing the Court Order is a court of competent
jurisdiction and that the Court Order is final and non-appealable.
3.2. Acknowledgement
of Companies and Purchasers; Disputes.
Each
Company and each Purchaser acknowledge that the only terms and conditions upon
which the Escrowed Payment are to be released from escrow are as set forth
in
Sections 3 and 4 of this Agreement. Each Company and each Purchaser reaffirm
their agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Escrowed Payment. Any dispute with respect to
the
release of the Escrowed Payment shall be resolved pursuant to Section 4.2 or
by
written agreement among the Companies and the Purchasers.
ARTICLE
IV
CONCERNING
THE ESCROW AGENT
4.1. Duties
and Responsibilities of the Escrow Agent.
The
Escrow Agent’s duties and responsibilities shall be subject to the following
terms and conditions:
(a) Each
Purchaser and each Company acknowledge and agree that the Escrow Agent (i)
shall
not be required to inquire into whether any Purchaser, either Company or any
other party is entitled to receipt of any Document or all or any portion of
the
Escrowed Payment; (ii) shall not be called upon to construe or review any
Document or any other document, instrument or agreement entered into in
connection therewith; (iii) shall be obligated only for the performance of
such
duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iv) may rely on and shall be protected in acting or refraining
from
acting upon any written notice, instruction, instrument, statement, request
or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person
or
party, without being required to determine the authenticity or correctness
of
any fact stated therein or the propriety or validity or the service thereof;
(v)
may assume that any person purporting to give notice or make any statement
or
execute any document in connection with the provisions hereof has been duly
authorized to do so; (vi) shall not be responsible for the identity, authority
or rights of any person, firm or company executing or delivering or purporting
to execute or deliver this Agreement or any Document or any funds deposited
hereunder or any endorsement thereon or assignment thereof; (vii) shall not
be
under any duty to give the property held by Escrow Agent hereunder any greater
degree of care than Escrow Agent gives its own similar property; and (viii)
may
consult counsel satisfactory to Escrow Agent (including, without limitation,
Loeb & Loeb LLP or such other counsel of Escrow Agent’s choosing), the
opinion of such counsel to be full and complete authorization and protection
in
respect of any action taken, suffered or omitted by Escrow Agent hereunder
in
good faith and in accordance with the opinion of such counsel.
4
(b) Each
Purchaser and each Company acknowledge that the Escrow Agent is acting solely
as
a stakeholder at their request and that the Escrow Agent shall not be liable
for
any action taken by Escrow Agent in good faith and believed by Escrow Agent
to
be authorized or within the rights or powers conferred upon Escrow Agent by
this
Agreement. Each Purchaser and the Companies hereby, jointly and severally,
indemnify and hold harmless the Escrow Agent and any of Escrow Agent’s partners,
employees, agents and representatives from and against any and all actions
taken
or omitted to be taken by Escrow Agent or any of them hereunder and any and
all
claims, losses, liabilities, costs, damages and expenses suffered and/or
incurred by the Escrow Agent arising in any manner whatsoever out of the
transactions contemplated by this Agreement and/or any transaction related
in
any way hereto, including the fees of outside counsel and other costs and
expenses of defending itself against any claims, losses, liabilities, costs,
damages and expenses arising in any manner whatsoever out the transactions
contemplated by this Agreement and/or any transaction related in any way hereto,
except for such claims, losses, liabilities, costs, damages and expenses
incurred by reason of the Escrow Agent’s gross negligence or willful misconduct.
The Escrow Agent shall owe a duty only to the Purchasers and the Companies
under
this Agreement and to no other person.
(c) The
Purchasers and the Companies shall jointly and severally reimburse the Escrow
Agent for its reasonable out-of-pocket expenses (including counsel fees (which
counsel may be Loeb & Loeb LLP or such other counsel of the Escrow Agent’s
choosing) incurred in connection with the performance of its duties and
responsibilities hereunder, which shall be (subject to Section 4.1(b))
$2,000.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
business days prior written notice of resignation to the Purchasers and the
Companies. Prior to the effective date of resignation as specified in such
notice, the Purchasers and the Companies will issue to the Escrow Agent a joint
instruction authorizing delivery of the Documents and the Escrowed Payment
to a
substitute Escrow Agent selected by the Purchasers and the Companies. If no
successor Escrow Agent is named by the Purchasers and the Companies, the Escrow
Agent may apply to a court of competent jurisdiction in the State of New York
for appointment of a successor Escrow Agent, and deposit the Documents and
the
Escrowed Payment with the clerk of any such court, and/or otherwise commence
an
interpleader or similar action for a determination of where to deposit the
same.
(e) The
Escrow Agent does not have and will not have any interest in the Documents
and
the Escrowed Payment, but is serving only as escrow agent, having only
possession thereof.
(f) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and reasonably believed by it to be authorized hereby or within the rights
or powers conferred upon it hereunder, nor for action taken or omitted by it
in
good faith, and in accordance with advice of counsel (which counsel may be
Loeb
& Loeb LLP or such other counsel of the Escrow Agent’s choosing), and shall
not be liable for any mistake of fact or error of judgment or for any acts
or
omissions of any kind except to the extent any such liability arose from its
own
willful misconduct or gross negligence.
5
(g) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(h) The
Escrow Agent shall be permitted to act as counsel for any Purchaser or either
or
both of the Companies, as the case may be, in any dispute as to the disposition
of the Documents and the Escrowed Payment, in any other dispute between any
Purchaser and either or both of the Companies, whether or not the Escrow Agent
is then holding the Documents and/or the Escrowed Payment and continues to
act
as the Escrow Agent hereunder.
(i) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent
or the termination of this Agreement.
4.2. Dispute
Resolution; Judgments.
Resolution of disputes arising under this Agreement shall be subject to the
following terms and conditions:
(a) If
any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Documents and/or the Escrowed Payment, or if the Escrow
Agent shall in good faith be uncertain as to its duties or rights hereunder,
the
Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
from taking any action other than to continue to hold the Documents and the
Escrowed Payment pending receipt of a joint instruction from the Purchasers
and
the Companies, (ii) commence an interpleader or similar action, suit or
proceeding for the resolution of any such dispute; and/or (iii) deposit the
Documents and the Escrowed Payment with any court of competent jurisdiction
in
the State of New York, in which event the Escrow Agent shall give written notice
thereof to the Purchasers and the Companies and shall thereupon be relieved
and
discharged from all further obligations pursuant to this Agreement. The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to the Documents and the Escrowed Payment. The Escrow
Agent shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel which such counsel may be
Loeb & Loeb LLP or such other counsel of the Escrow Agent’s
choosing.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow
Agent shall not be liable to any Purchaser, either Company or to any other
person, firm, company or entity by reason of such compliance.
6
ARTICLE
V
GENERAL
MATTERS
5.1. Termination.
This
escrow shall terminate upon disbursement of the Escrowed Payment in accordance
with the terms of this Agreement or earlier upon the agreement in writing of
the
Purchasers and the Companies or resignation of the Escrow Agent in accordance
with the terms hereof.
5.2. Notices.
All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given one
(1) day after being sent by telecopy (with copy delivered by overnight courier,
regular or certified mail):
|
(a) If
to the Companies, to:
|
c/o
True North Energy Corporation
0000
Xxxxxxxx Xxxxxx Xxxxx
Xxxxx
000
Xxx
Xxxxxxxxx, Xxxxx 000000
Fax:
(000) 000-0000
Attention:
Chief Executive Officer
|
|
With
a copy to:
|
Xxxxxx
Xxxxx XxXxxxxx Xxxxxxxxx
&
Xxxxx, LLP
0000
Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Fax:
(000) 000-0000
Attention:
X. Xxxxxx Yeates
|
|
(b) If
to the Purchasers, to:
|
c/o
Valens Capital Management, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Portfolio Services
Facsimile:
000-000-0000
|
|
(c) If
to the Escrow Agent, to:
|
Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxxx X. Xxxxxxxx, Esq.
|
or
to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest.
The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith.
5.4. Assignment;
Binding Agreement.
Neither
this Agreement nor any right or obligation hereunder shall be assignable by
any
party without the prior written consent of the other parties hereto. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
7
5.5. Invalidity.
In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall
be
enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same agreement. This Agreement may be executed by facsimile
transmission.
[Signatures
appear on the following pages]
8
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
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COMPANIES:
|
||
|
TRUE
NORTH ENERGY CORPORATION
|
||
| |
|
|
| By: |
/s/
Xxxx X. Folnovic
|
|
|
Name: Xxxx
X. Folnovic
|
||
|
Title: President
and Chief Executive
Officer
|
||
|
ICF
ENERGY CORPORATION
|
||
| |
|
|
| By: |
/s/
Xxxx X. Folnovic
|
|
|
Name: Xxxx
X. Folnovic
|
||
|
Title: President
and Chief Executive
Officer
|
||
|
PURCHASERS:
|
||
|
VALENS
U.S. SPV I, LLC
|
||
|
By:
|
Valens
Capital Management, LLC,
its
investment manager
|
|
| |
|
|
| By: | /s/ Xxxxxx Grin | |
|
Name:
Xxxxxx Grin
|
||
|
Title:
Authorized Signatory
|
||
|
VALENS
OFFSHORE SPV II, CORP.
|
||
| By: |
Valens
Capital Management, LLC,
its
investment manager
|
|
| |
|
|
| By: | /s/ Xxxxxx Grin | |
|
Name:
Xxxxxx Grin
|
||
| Title: Authorized Signatory | ||
|
ESCROW
AGENT:
|
||
|
LOEB
& LOEB LLP
|
||
| By: | /s/ Xxxxx X. Giordamo | |
|
Name:
Xxxxx X. Giordamo
|
||
|
Title:
Partner
|
||
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
|
PURCHASERS
|
PRINCIPAL
NOTE AMOUNTS
|
|
|
VALENS
U.S. SPV I, LLC
c/o
Valens Capital Management, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
|
Term
Note in an aggregate principal amount of $1,875,404
|
|
|
VALENS
OFFSHORE SPV II, CORP.
c/o
Valens Capital Management, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
|
Term
Note in an aggregate principal amount of $1,874,596
|
|
|
TOTAL
|
$3,750,000
|
|
PURCHASERS
|
PURCHASER
PAYMENTS
|
|
|
VALENS
U.S. SPV I, LLC
c/o
Valens Capital Management, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
|
Aggregate
payments payable in connection with investment by Valens U.S. SPV
I, LLC
($46,886).
|
|
|
VALENS
OFFSHORE SPV II, CORP.
c/o
Valens Capital Management, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
|
Aggregate
payments payable in connection with investment by Valens Offshore
SPV II,
Corp. ($46,864)
|
|
|
TOTAL
|
$93,750
|
|
FUND
MANAGER
|
VCM
PAYMENT
|
|
|
VALENS
CAPITAL MANAGEMENT, L.L.C.
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
000-000-0000
|
Payment
payable in connection with investment by Valens U.S. SPV I, LLC and
Valens
Offshore SPV II, Corp. for each of which Valens Capital Management,
L.L.C.
is the investment manager.
|
|
|
TOTAL
|
$71,250
|
