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EXHIBIT 1(1)
ESCROW AGREEMENT
AGREEMENT made as of this ____ day of _____, 1999 by and among CanArgo
Energy Corporation (the "Issuer" or "Company") and 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 [ten million (10,000,000)] shares of
Common Stock (the "Minimum Securities Amount") which are to be sold for a gross
sales price of [Three Million Dollars ($3,000,000)] (the "Minimum Dollar
Amount"), at the price of [Thirty Cents ($.30)] 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; and
WHEREAS, the Escrow Agent also serves as the transfer agent and
registrar for the Common Stock.
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.
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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 the ________________ branch of __________________ (the "Bank"). The
purpose of the Bank Account is for (a) the deposit of all subscription monies
(checks 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 effective date of the commencement of the offering
pursuant to the Registration Statement is [_____ __, 1999] (the "Effective
Date"), and the Escrow Agent shall not accept any amounts for credit to the
Escrow Account or for deposit in the Bank Account prior to such date.
2.3 The initial Offering Period, which shall commence on the
Effective Date, 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, shall consist of the number of calendar days or
business days 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 Each prospective purchaser of the Securities shall deliver to
the Escrow Agent all monies representing the purchase price of the Securities,
which monies shall be in the form of checks or wire transfers. Upon the Escrow
Agent's receipt of such monies, they shall be credited to the Escrow Account.
All checks 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 Subscription Information, as
defined below or other documents delivered therewith) by noon of the next
business day following receipt of such check by the
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Escrow Agent, and such check shall be deemed not to have been delivered to the
Escrow Agent pursuant to the terms of the 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").
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 which have cleared the banking system and have been collected
by the Escrow Agent, are herein referred to as the "Fund".
3.6 If the proposed offering is terminated before the Termination
Date, the Escrow Agent shall refund any portion of the Fund remaining upon
termination after disbursement of the Fund in accordance with instructions
delivered by the Issuer to the Escrow Agent in accordance with Article 4 hereof.
4. Disbursement from the Bank Account.
4.1 If by the close of regular banking hours on the Termination
Date the Escrow Agent determines that the amount in the Fund is less than the
Minimum Dollar Amount or is insufficient to purchase the Minimum Securities
Amount, as indicated by the Subscription Information submitted to the Escrow
Agent, then in either 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 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
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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 the close of regular banking hours on
the Termination Date, the Escrow Agent determines that the amount in the Fund is
at least equal to the Minimum Dollar Amount and represents consideration for the
sale of not less than the Minimum Securities Amount, 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.
5.2 The Escrow Agent shall not be responsible for the performance
by the Issuer of its obligations under this Agreement.
5.3 The Escrow Agent shall not be required to accept from the
Issuer any Subscription Information pertaining to prospective purchasers unless
such
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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.
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.
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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.
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
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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.
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;
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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:_________________________
Title:______________________
Signature Stock Transfer, Inc.
By:_________________________
Title:______________________
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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 Signature Stock Transfer, Inc.
Address 00000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000-0000
3. The Securities
Description of the Securities to be offered: Shares of Common Stock, par value
$.10 per share, of CanArgo Energy Corporation
Offering price per share: $_____________
4. Minimum Amounts Required for Disbursement of the Escrow Account
Aggregate dollar amount which must be collected before the Escrow
Account may be disbursed to the Issuer ("Minimum Dollar Amount")
[$3,000,000]
Total amount of securities which must be subscribed for before the
Escrow Account may be disbursed to the Issuer ("Minimum Securities
Amount") shares
5. Offering Period
Initial Offering Period: Effective Date through June 30, 1999
Extension Period, if any: Through August 6, 1999
6. Title of Escrow Account: Signature Stock Transfer, Inc. as Agent for
CanArgo Energy Corporation
7. Wire Instructions
Bank Name:
Bank Address:
Account Name: Signature Stock Transfer, Inc., as Agent for CanArgo Energy
Corporation
Account Number:
ABA Routing No.:
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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