ESCROW DEPOSIT AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") dated this 13th day of January
2006, by and between Stonegate Securities, Inc. ("Stonegate" or "Placement
Agent"), having an address at 0000 Xxxxxx Xxxx, 0xx Xxxxx, Xxxxxx, Xxxxx 00000,
Consolidated Energy, Inc., a Wyoming corporation (the "Company"), having an
office at 00 Xxxxxx Xxxx, Xxxxx Xxxx, XX 00000 and SIGNATURE BANK ("Signature
Bank" or the "Escrow Agent"), a New York State chartered bank and having an
office at, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Capitalized terms used
but not defined herein shall have the meanings set forth in the Purchase
Agreement referred to in the first recital.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Securities Purchase Agreement, dated
January 13, 2006 (the "Purchase Agreement") the Company desires to sell (the
"Offering") a maximum of, in the aggregate, $6,500,000 ("Maximum Subscription
Amount") of securities of the Company; and
WHEREAS, unless the Company consummates the Offering by January 13, 2006
(the "Termination Date"), the Offering will terminate and all funds will be
returned to the Purchasers (hereinafter defined); and
WHEREAS, the Company and Placement Agent desire to establish an escrow
account with the Escrow Agent into which the Company and Placement Agent shall
instruct purchasers introduced to the Company by Placement Agent (the
"Purchasers") to deposit checks and other instruments for the payment of money
made payable to the order of "Signature Bank as Escrow Agent for Consolidated
Energy, Inc." and Escrow Agent is willing to accept said checks and other
instruments for the payment of money in accordance with the terms hereinafter
set forth; and
WHEREAS, the Company and Placement Agent represent and warrant to the
Escrow Agent that they have not stated to any individual or entity that the
Escrow Agent's duties will include anything other than those duties stated in
this Agreement; and
WHEREAS, the Company and Placement Agent warrant to the Escrow Agent that a
copy of each document that has been delivered to Purchasers and third parties
that include Escrow Agent's name and duties, has been attached hereto as
Schedule I.
NOW, THEREFORE, IT IS AGREED as follows:
1. Delivery of Escrow Funds.
(a) Placement Agent and the Company shall instruct Purchasers to
deliver to Escrow Agent checks made payable to the order of "Signature
Bank, as Escrow Agent for Consolidated Energy, Inc." or wire transfer to
Signature Bank, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA No.
000000000 for credit to Signature Bank, as Escrow Agent for Consolidated
Energy, Inc., Account No. 1500721657, in each case, with the name, address
and social security number or taxpayer identification number of the
individual or entity making payment. In the event any Purchaser's address
and/or social security number or taxpayer identification number are not
provided to Escrow Agent by the Purchaser, then Placement Agent and/or the
Company agree to promptly provide Escrow Agent with such information in
writing. The checks or wire transfers shall be deposited into a non
interest-bearing account at Signature Bank entitled "Signature Bank, as
Escrow Agent for Consolidated Energy, Inc." (the "Escrow Account").
(b) The collected funds deposited into the Escrow Account are referred
to as the "Escrow Funds."
(c) 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 Purchaser and advise the Company
and Placement Agent promptly thereof.
2. Release of Escrow Funds. The Escrow Funds shall be paid by the Escrow
Agent in accordance with the following:
(a) In the event that the Company and Placement Agent advise the
Escrow Agent in writing that the Offering has been terminated (the
"Termination Notice"), the Escrow Agent shall promptly return the funds
paid by each Purchaser to said Purchaser without interest or offset.
(b) The Escrow Agent shall, upon receipt of written instructions, in
the form of Exhibit A attached hereto or in form and substance satisfactory
to the Escrow Agent, received from the Company and Placement Agent, pay the
Escrow Funds in accordance with such written instructions, such payment or
payments to be made by wire transfer within one (1) business day of receipt
of such written instructions.
(c) If by 3:00 P.M. Eastern time on the Termination Date, the Escrow
Agent has not received written instructions from the Company and Placement
Agent regarding the disbursement of the Escrow Funds, then the Escrow Agent
shall promptly return the Escrow Funds to the Purchasers without interest
or offset. The Escrow Funds returned to each Purchaser shall be free and
clear of any and all claims of the Escrow Agent.
(d) Following the distribution of the Escrow Funds by the Escrow Agent
in accordance with (b) of this Section 2 through the Termination Date, the
Escrow Agent shall from time to time distribute any additional Escrow
Funds, by wire transfer or bank check, in accordance with written
instructions received from the Placement Agent and the Company in the form
of Exhibit A or in form and substance satisfactory to the Escrow Agent.
(e) The Escrow Agent shall not be required to pay any uncollected
funds or any funds that are not available for withdrawal.
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(f) If the Termination Date or any date that is a deadline under this
Agreement for giving the Escrow Agent notice or instructions or for the
Escrow Agent to take action is not a Banking Day, then such date shall be
the Banking Day that immediately preceding that date. A Banking Day is any
day other than a Saturday, Sunday or a day that a New York State chartered
bank is not legally obligated to be opened.
3. Acceptance by Escrow Agent. The Escrow Agent hereby accepts and agrees to
perform its obligations hereunder, provided that:
(a) The Escrow Agent may act in reliance upon any signature believed
by it to be genuine, and may assume that any person who has been designated
by Placement Agent or the Company to give any written instructions, notice
or receipt, or make any statements in connection with the provisions hereof
has been duly authorized to do so. Escrow Agent shall have no duty to make
inquiry as to the genuineness, accuracy or validity of any statements or
instructions or any signatures on statements or instructions. The names and
true signatures of each individual authorized to act singly on behalf of
the Company and Placement Agent are stated in Schedule II, which is
attached hereto and made a part hereof. The Company and Placement Agent may
each remove or add one or more of its authorized signers stated on Schedule
II by notifying the Escrow Agent of such change in accordance with this
Agreement, which notice shall include the true signature for any new
authorized signatories.
(b) The Escrow Agent may act relative hereto in reliance upon advice
of counsel in reference to any matter connected herewith. The Escrow Agent
shall not be liable for any mistake of fact or error of judgment or law, or
for any acts or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
(c) Placement Agent and the Company agree to indemnify and hold the
Escrow Agent harmless from and against any and all claims, losses, costs,
liabilities, damages, suits, demands, judgments or expenses (including but
not limited to reasonable attorney's fees) claimed against or incurred by
Escrow Agent arising out of or related, directly or indirectly, to this
Escrow Agreement unless caused by the Escrow Agent's gross negligence or
willful misconduct.
(d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be entitled to (i)
refrain from taking any action other than to keep safely the Escrow Funds
until it shall be directed otherwise by a court of competent jurisdiction,
or (ii) deliver the Escrow Funds to a court of competent jurisdiction.
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(e) The Escrow Agent shall have no duty, responsibility or obligation
to interpret or enforce the terms of any agreement other than Escrow
Agent's obligations hereunder, and the Escrow Agent shall not be required
to make a request that any monies be delivered to the Escrow Account, it
being agreed that the sole duties and responsibilities of the Escrow Agent
shall be to the extent not prohibited by applicable law (i) to accept
checks or other instruments for the payment of money and wire transfers
delivered to the Escrow Agent for the Escrow Account and deposit said
checks and wire transfers into the non-interest bearing Escrow Account, and
(ii) to disburse or refrain from disbursing the Escrow Funds as stated
above, provided that the checks received by the Escrow Agent have been
collected and are available for withdrawal.
4. Resignation and Termination of the Escrow Agent. The Escrow Agent may
resign at any time by giving 30 days' prior written notice of such resignation
to Placement Agent and the Company. Upon providing such notice, the Escrow Agent
shall have no further obligation hereunder except to hold as depositary the
Escrow Funds that it receives until the end of such 30-day period. In such
event, the Escrow Agent shall not take any action, other than receiving and
depositing Purchasers checks and wire transfers in accordance with this
Agreement, until the Company has designated a banking corporation, trust
company, attorney or other person as successor. Upon receipt of such written
designation signed by Placement Agent and the Company, the Escrow Agent shall
promptly deliver the Escrow Funds to such successor and shall thereafter have no
further obligations hereunder. If such instructions are not received within 30
days following the effective date of such resignation, then the Escrow Agent may
deposit the Escrow Funds held by it pursuant to this Agreement with a clerk of a
court of competent jurisdiction pending the appointment of a successor. In
either case provided for in this paragraph, the Escrow Agent shall be relieved
of all further obligations and released from all liability thereafter arising
with respect to the Escrow Funds.
5. Termination. The Company and Placement Agent may terminate the appointment
of the Escrow Agent hereunder upon written notice specifying the date upon which
such termination shall take effect, which date shall be at least 30 days from
the date of such notice. In the event of such termination, the Company and
Placement Agent shall, within 30 days of such notice, appoint a successor escrow
agent and the Escrow Agent shall, upon receipt of written instructions signed by
the Company and Placement Agent, turn over to such successor escrow agent all of
the Escrow Funds; provided, however, that if the Company and Placement Agent
fail to appoint a successor escrow agent within such 30-day period, such
termination notice shall be null and void and the Escrow Agent shall continue to
be bound by all of the provisions hereof. Upon receipt of the Escrow Funds, the
successor escrow agent shall become the escrow agent hereunder and shall be
bound by all of the provisions hereof and Signature Bank shall be relieved of
all further obligations and released from all liability thereafter arising with
respect to the Escrow Funds and under this Agreement.
6. Investment. All funds received by the Escrow Agent shall be invested only
in non-interest bearing bank accounts at Signature Bank.
7. Compensation. Escrow Agent shall be entitled, for the duties to be
performed by it hereunder, to a fee of $2,500, which fee shall be paid by the
Company upon the signing of this Agreement. In addition, the Company shall be
obligated to reimburse Escrow Agent for all fees, costs and expenses incurred or
that become due in connection with this Agreement or the Escrow Account,
including reasonable attorney's fees. Neither the modification, cancellation,
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termination or rescission of this Agreement nor the resignation or termination
of the Escrow Agent shall affect the right of 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 Company and the
Company shall direct all such amounts to be paid directly at any such closing.
8. Notices. All notices, requests, demands and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if sent by hand-delivery, by facsimile (followed by
first-class mail), by nationally recognized overnight courier service or by
prepaid registered or certified mail, return receipt requested, to the addresses
set forth below:
If to Placement Agent:
Stonegate Securities, Inc.
0000 Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
If to the Company:
Consolidated Energy, Inc.
Attn:
Fax:
If to Escrow Agent:
Signature Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Senior Vice President
Fax: (000) 000-0000
9. General.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements
made and to be entirely performed within such State, without regard to
choice of law principles.
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(b) This Agreement sets forth the entire agreement and understanding
of the parties with respect to the matters contained herein and supersedes
all prior agreements, arrangements and understandings relating thereto.
(c) All of the terms and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties
hereto, as well as their respective successors and assigns.
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by
the party waiving compliance. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver of any party of
any condition, or of the breach of any term contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of
any other term of this Agreement. No party may assign any rights, duties or
obligations hereunder unless all other parties have given their prior
written consent.
(e) If any provision included in this Agreement proves to be invalid
or unenforceable, it shall not affect the validity of the remaining
provisions.
(f) This Agreement and any modification or amendment of 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.
10. Form of Signature. The parties hereto agree to accept a facsimile
transmission copy of their respective actual signatures as evidence of their
actual signatures to this Agreement and any modification or amendment of this
Agreement; provided, however, that each party who produces a facsimile signature
agrees, by the express terms hereof, to place, promptly after transmission of
his or her signature by fax, a true and correct original copy of his or her
signature in overnight mail to the address of the other party.
******************************
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first set forth above.
CONSOLIDATED ENERGY, INC. STONEGATE SECURITIES, INC.
By: /s/ Xxxxx Xxxxxxx By:
-------------------- --------------------
Name: Xxxxx Xxxxxxx Name:
Title: President Title:
SIGNATURE BANK
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
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Schedule I
OFFERING DOCUMENTS
Purchase Agreement and all exhibits and schedules thereto.
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Schedule II
The Escrow Agent is authorized to accept instructions signed or
believed by the Escrow Agent to be signed by any one of the following on behalf
of the Company and Placement Agent.
Consolidated Energy, Inc.
Name True Signature
_______________________ ____________________
Stonegate Securities, Inc.
Name True Signature
_______________________ ____________________
_______________________ ____________________
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Exhibit A
INSTRUCTIONS TO DISBURSE ESCROW FUNDS
Date:
SIGNATURE BANK
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxx Xxxxxx, Senior Vice President
Dear Xx. Xxxxxx:
In accordance with the terms of paragraph 2(_) of an Escrow Deposit
Agreement dated ___ _______, by and among Consolidated Energy, Inc. (the
"Company"), Stonegate Securities, Inc. ("Placement Agent"), and Signature Bank
(the "Escrow Agent"), the Company and Placement Agent hereby notifies the Escrow
Agent that the ________ closing will be held on ___________ for gross proceeds
of $_________.
PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER OR CHECK OR TRANSFER AS FOLLOWS (wire
instructions attached if applicable):
Consolidated Energy, Inc. $
Stonegate Securities, Inc. $
____________ $
Very truly yours,
Consolidated Energy, Inc.
By:_____________
Name:__________
Title:____________
Stonegate Securities, Inc.
By:_____________
Name:___________
Title:____________
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