ESCROW AGREEMENT
Exhibit
10.7
THIS
ESCROW AGREEMENT (the “Agreement”) is entered into as of July 2, 2008, by and
among Crownbutte Wind Power, Inc. (formerly known as ProMana Solutions, Inc.), a
Nevada corporation (the “Company”), Strasbourger Xxxxxxx Tulcin Xxxxx, Inc., as
placement agent (the “Placement Agent”), and Gottbetter & Partners, LLP, a
New York limited liability partnership (the “Escrow Agent”).
RECITALS:
WHEREAS,
the Company intends to offer and sell to investors in a private placement
transaction (the “Offering”) of a minimum (the “Minimum Amount”) of 1,000,000
and a maximum of 10,000,000 units of securities (the “PPO Units”) issued by the
Company, at a purchase price of $0.50 per PPO Unit. Each PPO Unit
consists of (i) one share of common stock, par value $0.001 per share (the
“Common Stock”) and (ii) a warrant (the “Warrant”), representing the right to
purchase one share of Common Stock, each Warrant exercisable for a period of two
years at an exercise price of $2.50 per unit. The Warrant will be
callable by the Company at any time, upon thirty (30) days prior written notice
given to the Warrant holder, if the fair market value (as defined in the
Warrant) of the Common Stock for the twenty (20) consecutive trading days ending
three days prior to the date of the call notice is at least $3.50, subject to
adjustment for stock dividends, stock splits and other anti-dilution provisions
as provided for in the Warrant;
WHEREAS,
the Offering is being made on an “any or all” basis to “accredited investors”,
as defined in Regulation D under the Securities Act of 1933, as amended (the
“Securities Act”), in accordance Rule 506 of Regulation D under the Securities
Act and to non-“U.S. Persons,” as defined in Regulation S under the Securities
Act;
WHEREAS,
the subscribers in the Offering (the “Subscribers”), in connection with their
intent to purchase PPO Units in the Offering, shall execute and deliver
(i) Subscription Agreements (the “Subscription Agreements”) memorializing
the Subscribers’ agreement to purchase and the Company’s agreement to sell the
number of shares of PPO Units set forth therein at the purchase price (the
“Purchase Price”) and (ii) Registration Rights Agreement (the “Registration
Rights Agreement”) (the “Subscription Agreements” and “Registration Rights
Agreement” are hereinafter collectively referred to as the “Transaction
Documents”);
WHEREAS,
the Offering will close only after the receipt of acceptable subscriptions for
the Minimum Amount of PPO Units (the requirement for the receipt of acceptable
subscriptions, together with certain other conditions to closing, are
collectively referred to as the “Closing Conditions”);
WHEREAS,
upon the closing of the Offering, the Placement Agent will receive, (i) a
commission of 10% of the gross proceeds of PPO Units sold in the Offering, (ii)
a fee of 3% of the gross proceeds of PPO Units in the Offering sold to cover
non-accountable expenses, and (iii) warrants to purchase 3,500,000 shares of
Common Stock which warrants will be exercisable for a period of three years at
an exercise price of $0.001 per unit;
WHEREAS,
the parties hereto desire to provide for the safekeeping of the Transaction
Documents and the Escrowed Funds (as defined below) until such time as the
Transaction Documents and Escrowed Funds are released by the 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
DELIVERIES
TO THE ESCROW AGENT
1.1. Subscriber
Deliveries. On or before each closing date, the Company and
the Placement Agent shall instruct each Subscriber that is to participate in
such closing to deliver to the Escrow Agent the full Purchase Price for the
number of PPO Units subscribed for by such Subscriber (the aggregate of such
Purchase Prices for all Subscribers being referred to as the “Escrowed Funds”)
by check, made payable to the order of “Gottbetter & Partners, LLP, as
Escrow Agent for Crownbutte Wind Power, Inc.,” or by wire transfer of
immediately available funds pursuant to the wire transfer instructions provided
below and the completed and executed Transaction Documents to the address
provided below.
Escrow Agent – Wire Transfer
Instructions:
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Bank:
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CITIBANK,
N.A., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
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ABA
Routing #:
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000000000
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Swift
Code:
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XXXXXX00
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Beneficiary:
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Gottbetter
& Partners, LLP, Attorney Trust Account
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Account
#:
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00000000
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Reference:
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“Crownbutte
Wind Power, Inc. – [insert Subscriber’s
name]”
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Gottbetter
& Partners, LLP Accounting Contact:
Xxxxxxx
XxXxxxx; telephone: (000) 000-0000; email: xxx@xxxxxxxxxx.xxx
Escrow Agent – Mailing
Address and Facsimile Number:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Telephone
Number: (000) 000-0000
Facsimile
Number: (000) 000-0000
Attention: Xxxx
X. Xxxxxxxxxx, Esq.
1.2. Intention to Create Escrow
over Transaction Documents and Escrowed Funds. The Company
intends that the Transaction Documents and the Escrowed Funds shall be held in
escrow by the Escrow Agent pursuant to this Agreement for its benefit and for
the benefit of the Subscribers. The Escrow Agent shall provide copies
of the Transaction Documents to the Company promptly after their receipt in
order for the Company to reasonably determine whether to accept the
subscriptions for the PPO Units evidenced thereby.
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1.3. Escrow Agent to Deliver
Transaction Documents and Escrowed Funds. The Escrow Agent
shall hold and release the Transaction Documents and the Escrowed Funds only in
accordance with the terms and conditions of this Agreement.
1.4. No Duty to Enforce
Collection. The Escrow Agent shall have no duty or
responsibility to enforce the collection or demand payment of any funds
deposited into the escrow account. If, for any reason, any check
deposited into the escrow account shall be returned unpaid to the Escrow Agent,
the sole duty of the Escrow Agent shall be to return the check to the Subscriber
and advise the Company and the Placement Agent promptly thereof.
ARTICLE
II
RELEASE
OF TRANSACTION DOCUMENTS AND ESCROWED FUNDS
2.1. Release of
Escrow. Subject to the provisions of Sections 2.1(d) and 3.2,
the Escrow Agent shall release the Transaction Documents and Escrowed Funds as
follows:
(a) Release of Transaction
Documents upon Closing. Prior to each closing, the Company
shall deliver to the Escrow Agent written instructions (“Instructions”) executed
by a duly authorized executive officer of the Company which Instructions shall
provide the day designated as the closing date for certain identified
subscribers and authorization to release PPO Units to such subscribers at
closing. The Instructions will also contain the Company’s
acknowledgement and agreement that as of the closing, the Closing Conditions
have been or will be fully satisfied as to the identified subscribers and shall
specify the time, place and method of delivery of the Transaction Documents and
Escrowed Funds. Prior to each closing, the Company shall also deliver
to the Escrow Agent, manually executed originals of the PPO Units being closed
on at such closing. The Escrow Agent shall, at the time and place and
by the method specified in the Instructions, deliver the Transaction Documents
and Escrowed Funds to the Company and deliver the PPO Units being closed on to
the applicable subscribers.
(b) Return of Escrowed Funds on
Termination of Offering. In the event that the Escrow Agent
shall have received written notice executed by a duly authorized executive
officer of the Company indicating that Offering has been terminated and
designating a termination date, the Escrow Agent shall return to each
Subscriber, the Purchase Price (without interest or deduction) and Transactions
Documents delivered by such Subscriber to the Escrow Agent. The
Company shall provide the Escrow Agent with time, place and method of delivery
for each Subscriber whose purchase price and Transaction Documents the Escrow
Agent is to deliver pursuant to this Section.
(c) Return of Escrowed Funds and
Transaction Documents on Rejection of Subscription. In the
event the Company reasonably determines it is necessary or appropriate to reject
the subscription of any Subscriber for whom the Escrow Agent has received
Escrowed Funds and Transaction Documents, the Company shall deliver written
notice of such event to the Escrow Agent which notice shall include the reason
for such rejection and the time, place and method of delivery for the return to
such Subscriber of the Purchase Price and Transaction Documents delivered by
such Subscriber. The Escrow Agent shall deliver such funds (without
interest or deduction) and documents pursuant to such written
notice.
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(d) Delivery Pursuant to Court
Order. Notwithstanding any provision contained herein, 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”), the
Escrow Agent shall deliver the Transaction Documents and the Escrowed Funds 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 satisfactory to the Escrow Agent) to the effect
that the court issuing the Court Order has competent jurisdiction and that the
Court Order is final and non-appealable.
2.2. Acknowledgement of the
Company. The Company acknowledges that the only terms and
conditions upon which the Transaction Documents and Escrowed Funds are to be
released are set forth in Sections 2.1, 3.1(c) and 3.2 of this
Agreement. Any dispute with respect to the release of the Transaction
Documents or Escrowed Funds shall be resolved pursuant to Section 3.2 or by
agreement between the Company and the Escrow Agent.
ARTICLE
III
CONCERNING
THE ESCROW AGENT
3.1. Duties and Responsibilities
of the Escrow Agent. The Escrow Agent’s duties and
responsibilities shall be subject to the following terms and
conditions:
(a) The
Company acknowledges and agrees that the Escrow Agent (i) shall not be
responsible for or bound by, and shall not be required to inquire into whether
the Company is entitled to receipt of the Transaction Documents or Escrowed
Funds pursuant to any other agreement or otherwise; (ii) shall be obligated
only for the performance of such duties as are specifically assumed by the
Escrow Agent pursuant to this Agreement; (iii) 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; (iv) may assume that
any person believed by the Escrow Agent in good faith to be authorized to give
notice or make any statement or execute any document in connection with the
provisions hereof is so authorized; (v) shall not be under any duty to give
the property held by the Escrow Agent hereunder any greater degree of care than
the Escrow Agent gives its own similar property, but in no event less than a
reasonable amount of care; and (vi) may consult counsel satisfactory to the
Escrow Agent, the opinion of such counsel to be full and complete authorization
and protection in respect of any action taken, suffered or omitted by the Escrow
Agent hereunder in good faith and in accordance with the opinion of such
counsel.
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(b) The
Company acknowledges that the Escrow Agent is acting solely as a stakeholder at
its request and that the Escrow Agent shall not be liable for any action taken
by the Escrow Agent in good faith and believed by the Escrow Agent to be
authorized or within the rights or powers conferred upon the Escrow Agent by
this Agreement. The Company agrees to indemnify and hold harmless the
Escrow Agent and any of the Escrow Agent’s partners, employees, agents and
representatives for any action taken or omitted to be taken by the Escrow Agent
or any of them hereunder, including the fees of outside counsel and other costs
and expenses of defending itself against any claim or liability under this
Agreement, except in the case of gross negligence, willful misconduct or
material breach of this Agreement on the Escrow Agent’s part committed in its
capacity as the Escrow Agent on behalf of the Company under this Agreement and
to no other person.
(c) The
Escrow Agent may at any time resign as the Escrow Agent hereunder by giving five
days prior written notice of resignation to the Company. Prior to the
effective date of the resignation as specified in such notice, the Company will
issue to the Escrow Agent an Instruction authorizing delivery of the Transaction
Documents and the Escrowed Funds to a substitute escrow agent selected by the
Company. If no successor escrow agent is named by the Company, 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 to deposit the Transaction
Documents and Escrowed Funds with the clerk of any such court.
(d) The
Escrow Agent does not have and will not have any interest in the Transaction
Documents or the Escrowed Funds, but is serving only as escrow agent, having
only possession thereof.
(e) 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.
(f) The
provisions of this Section 3.1 shall survive the resignation of the Escrow Agent
or the termination of this Agreement.
3.2. 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 Transaction Documents or the Escrowed Funds, 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
Transaction Documents or the Escrowed Funds pending receipt of an Instruction
from the Company, or (ii) deposit the Transaction Documents and Escrowed
Funds 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 Company
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
Transaction Documents or the Escrowed Funds. 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.
(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 the Subscribers, the Company or to any
other person, firm, corporation or entity by reason of such
compliance.
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3.3. Expenses of Escrow
Agent. The Placement Agent shall reimburse the Escrow Agent
for all of its out-of-pocket fees, costs and expenses, including reasonable
attorneys’ fees, telephone and facsimile transmission costs, postage (including
express mail and overnight delivery charges), copying charges and the like,
incurred or that become due in connection with this Agreement or the escrow
account. Neither the modification, cancellation, termination or
rescission of this Agreement nor the resignation or termination of the Escrow
Agent shall affect the right of the Escrow Agent to retain the amount of any fee
which has been paid, or to be reimbursed or paid any amount which has been
incurred or becomes due, prior to the effective date of any such modification,
cancellation, termination, resignation or rescission. To the extent
the Escrow Agent has incurred any such expenses, or any such fee becomes due,
prior to any closing, the Escrow Agent shall advise the Placement Agent and the
Placement Agent shall direct all such amounts to be paid directly at any such
closing. If no closing is held, the Escrow Agent shall advise the
Placement Agent of any such fees, and the Placement Agent shall direct all such
amounts to be promptly paid.
ARTICLE
IV
INTERPRETATION
4.1. Entire
Agreement. This Agreement and the Transaction Documents
constitute the entire agreement among the parties hereto pertaining to the
subject matter contained herein and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations or other agreements
made by the parties in connection with the subject matter hereof except as
specifically set forth in this Agreement or the Transaction
Documents.
4.3. 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, or other entity in whatever form, a
trustee or trust or unincorporated association, an executor, administrator or
legal representative.
4.4. Waivers and
Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, 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.
4.5. 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.
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4.6. Governing
Law. 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. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement may be brought
in the state courts of New York or in the federal courts located in the state of
New York. The parties and the individuals executing this Agreement
and other agreements referred to herein or delivered in connection herewith
agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney’s fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.
4.7. Specific Enforcement;
Consent to Jurisdiction. The Company acknowledges and agrees
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law. By its execution and delivery of this Agreement,
each party to this Agreement consents to the jurisdiction of the federal and
state courts located in the State of New York.
ARTICLE
V
GENERAL
MATTERS
5.1. Termination. This
escrow shall terminate upon the disbursement in accordance with the provisions
herein or the Transaction Documents and the Escrowed Funds in full or at any
time upon the agreement in writing of the Company.
5.2. Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram or facsimile, addressed as set
forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall
be:
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(a)
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If to the Company,
to:
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000 Xxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx,
XX 00000
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Attention:
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Xxxxxxx
X. Xxxxxx, Chief Executive Officer
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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(b)
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If to the Placement
Agent, to:
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Strasbourger
Xxxxxxx Tulcin Xxxxx, Inc.
00
Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
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Attention:
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Xxx
Xxxxxxxxx
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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(c)
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If to the Escrow
Agent, to:
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Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
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Attention:
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Xxxx
X. Xxxxxxxxxx, Esq.
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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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 Funds 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.
5.5. 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 instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto
have duly executed this Escrow Agreement as of the date first above
written.
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THE
COMPANY
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By:
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/s/ Xxxxxxx X.
Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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President
and Chief Executive
Officer
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THE
PLACEMENT AGENT
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Strasbourger
Xxxxxxx Tulcin Xxxxx, Inc.
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By:
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/s/ Xxx
Xxxxxxxxx
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Name:
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Title:
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ESCROW
AGENT
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Gottbetter
& Partners, LLP
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By:
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/s/ Xxxx X.
Xxxxxxxxxx
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Name:
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Xxxx
X. Xxxxxxxxxx
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Title:
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Managing
Partner
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