ESCROW AGREEMENT
THIS
AGREEMENT made as of March 30, 2010
BETWEEN:
HELIX
WIND CORP., a Nevada corporation
0000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000
(the
“Company”)
AND:
XXXXXXX
X. XXXXXX
000 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxx,
Xxxxxx 00000
(“Xxxxxx”)
AND:
LAW
OFFICES OF XXXXXXX X. XXX
0000
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
(the
“Escrowholder”)
WHEREAS:
A. The
Company has entered into that certain Note and Warrant Purchase Agreement and
issued a Convertible Secured Promissory Note in the principal amount of seven
hundred seventy nine thousand five hundred dollars ($779,500), each dated March
30, 2010 (the “Financing Documents”) with St. Xxxxxx Investments, LLC (the
“Lender”).
B. The
Financing Documents require that as a condition to closing the financing under
the Financing Documents, that Xxxxxx pledge four million eight hundred thousand
(4,800,000) shares (the “Pledged Shares”) of his Company common stock to the
Lender under the terms of the Stock Pledge Agreement dated March 30, 2010 (the
“Pledge Agreement”) between Xxxxxx and the Lender, to secure the Company’s
obligations under the Financing Documents.
X. Xxxxxx
has agreed to the terms of Stock Pledge Agreement and the deliver the Pledged
Shares in accordance with the Pledge Agreement, so long that the Company agrees
to issue Xxxxxx an aggregate of six million (6,000,000) shares of Company’s
common stock (the “Replacement Shares”) in the event that Xxxxxx forfeits the
Pledged Shares subject to the default provisions of the Pledge Agreement (the
“Forfeiture Event”)
D. The
Company, Xxxxxx, and the Escrowholder agree that simultaneous with the closing
under the Financing Documents, the Company and Xxxxxx entered into that certain
Settlement Agreement and Mutual Release dated March 30, 2010 (the “Settlement
Agreement”) pursuant to which the parties thereto agree to settle and dismiss
the Action (as defined in the Settlement Agreement) in exchange for the
Company’s payment in the amount of $150,000 to Xxxxxx.
E. The
Company has issued that certain Irrevocable Instructions to Transfer Agent,
dated March 24, 2010 (the “Instructions”) wherein the Company, Xxxxxx, and the
Lender have agreed that upon default under the Note (as defined in the
Instructions) and as set forth in the Default Notice (attached as Exhibit B to
the Instructions), the Company provides instructions to Island Stock Transfer,
the Company’s stock transfer agent, to transfer the Pledged Shares to the Lender
upon its receipt of a properly completed and executed Default Notice (the
“Default Notice”) as set forth in Section 2 of the Instructions.
F. The
Company, Xxxxxx, and the Escrowholder hereby enter into this Escrow Agreement in
furtherance of the Pledge Agreement and the Settlement Agreement.
NOW THEREFORE WITNESSETH that for and
in consideration of the covenants and agreements herein contained, the parties
hereto declare and agree as follows:
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1.
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The
Company hereby delivers to the Escrowholder the following documents which
shall be held by the Escrowholder in escrow subject to the terms and
conditions of this Escrow
Agreement:
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(a)
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Two
Common Stock Certificates representing an aggregate of six million
(6,000,000) Replacement Shares registered in the name of Xxxxxxx X.
Xxxxxx;
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(b)
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A
copy of the following Issuance Resolutions, each signed by Xxxxx X.
Xxxxxxx, the Chief Financial Officer of the Company and submitted to
Island Stock Transfer, the Company’s duly appointed stock transfer agent
with instructions to issue and deliver the Replacement Shares to the
Escrowholder;
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(c)
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A
copy of the resolutions adopted by the Company’s Board of Directors
wherein and showing that the issuance of the Replacement Shares have been
approved at a duly constituted meeting or written action of the Company’s
Board of Directors in conformity with the requirements of the Company’s
By-laws and the Nevada General Corporation Law;
and
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(c)
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An opinion of Xxxxxx
X. Xxxxx, Esq. addressed to Xxxxxx and opining: (i) that all of the
Replacement Shares, have been validly issued, fully paid-for, and are
non-assessable shares of the capital stock of the Company; and (ii) that
in the event of a Forfeiture Event, all of the Replacement Shares are not
and will not be subject to any claims or interests of the Company, and
that at all times immediately following any Forfeiture Event, Xxxxxx will
acquire and hold the Replacement Shares free of any claims or interests of
the Company.
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(which
documents are hereinafter called the “Escrow Documents”).
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2.
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For
the purposes of the Pledge Agreement, the Escrowholder holds the Escrow
Documents on behalf of Xxxxxx and shall deliver the Escrow Documents in
accordance with this paragraph 2. The Escrowholder
shall:
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2
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(a)
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deliver
the Escrow Documents to Xxxxxx within five (5) business days after
Escrowholder’s receipt of: (i) a copy of the Default Notice from the
Company or upon any reasonable notice that the Lender has exercised its
rights and remedies (as defined in Section 11 of the Pledge Agreement)
stating (i) there is an Event of Default under the Pledge Agreement or
(ii) the Company has received notice from the Lender that an Event of
Default has occurred under the Convertible Secured Promissory Note issued
by the Company to the Lender and in the original principal amount of Seven
Hundred Seventy-Nine Thousand Dollars ($779,000) (the “Secured Note”)
(both, as “Written Notice”) unless then prohibited by an order of a court
of competent jurisdiction.
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3.
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The
Company agrees that in furtherance of the intent and purposes of this
Escrow Agreement, it shall, upon receipt of any notice from the Lender,
the Transfer Agent, or any third party that the Lender has exercised its
rights to the Collateral or that an Event of Default has occurred under
the Secured Note, promptly and within one (1) business day give written
notice to the Escrowholder of the same and include in said notice
reasonable additional details together a copy of all documents it has
received relating to or arising out of any said exercise of the Lender’s
rights, the occurrence of an Event of Default, or both of them. If Xxxxxx
receives the Escrow Documents under the provisions of paragraph 2 hereof,
Xxxxxx shall acquire and hold all rights to the Replacement Shares as the
sole and exclusive stockholder of all the Replacement
Shares. If Xxxxxx receives
the Escrow Documents under the provisions of paragraph 2 hereof, Xxxxxx
shall be deemed to have assigned to the Company, without the requirement
of any further action by any party, any and all rights Xxxxxx may have in
the Pledged Shares or any proceeds from the Pledged Shares which may inure
to Xxxxxx under the Pledge Agreement. Xxxxxx agrees to execute any
and all documents reasonably required by the Company to evidence such
assignment.
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4.
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In
the event that the Escrowholder does not receive any Default Notice or
Written Notice, and Escrowholder receives reasonable written notice from
the Company that the Secured Note and all obligations to the Lender under
the terms of the Secured Note have been satisfied then the Escrowholder
shall return the Replacement Shares to the Company. All of the
parties hereto agree that any notice to be given under this Escrow
Agreement shall be deemed to have been duly and sufficiently given if
mailed by prepaid registered mail, telexed or telecopied to, or delivered
at, the address of the other party as hereinafter set
forth:
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(a) To
Xxxxxx: (then to the address on the first page above)
(b) To
the Company: (then to the address on the first page above)
(c) To
the Escrowholder: (then to the address on the first page above)
or at
such other address as the other party may from time to time direct in writing,
and any such notice shall be deemed to have been received, if mailed, telexed or
telecopied, 48 hours after the time of mailing, telexing or telecopying, and, if
delivered, upon the date of delivery. If normal mail service, telex
service or telecopy services is interrupted by strike, slowdown, force majeure
or other case, a notice send by the impaired means of communication will not be
deemed to be received until actually received, and the party sending the notice
shall utilize any other such services which have not been so interrupted or
shall deliver such notice in order to ensure prompt receipt
thereof.
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5.
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Xxxxxx
shall pay from time to time the reasonable fees and expenses of the
Escrowholder in connection with the performance of its duties hereunder,
and the Company and Xxxxxx shall jointly and severally indemnify and save
harmless the Escrowholder of and from all other claims, demands, damage,
loss and expense arising out of its performance of its duties
hereunder.
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6.
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The
Escrowholder will incur no liability hereunder except for its willful
misconduct or gross negligence so long as it has acted in good
faith. The Escrowholder shall have no responsibility in respect
of loss of the Escrow Documents except the duty to exercise such care in
the safekeeping thereof as it would exercise if the Escrow Documents were
the property of the Escrowholder.
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7.
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The
Escrowholder will not be required to defend any legal proceedings which
may be instituted against it in respect of or arising out of anything
herein contained unless requested to do so by a party hereto and
indemnified to its reasonable satisfaction against the costs and expense
of such defense.
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8.
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The
Escrowholder may seek and obtain the advice of legal counsel in the event
of any question or dispute as to any of the provisions hereof or its
duties hereunder, and it shall incur no liability and shall be fully
protected in acting in good faith in accordance with the opinion, advice
and instructions of such legal counsel (the reasonable costs of such legal
services shall be added to and be part of the Escrowholder’s expenses
hereunder).
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9.
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The
Escrowholder is not responsible or liable for the sufficiency, form or
manner of making any notice or demand or direction provided for under this
Escrow Agreement or of the identity of the persons executing the same, but
it shall be sufficient in any writing purporting to be such a notice,
demand, protest or direction is served under the Escrowholder in any
manner sufficient to bring it to its attention. The
Escrowholder shall not be liable for any error of judgment, for any act
done or omitted by it in good faith, or for anything which it may in good
faith do or refrain from doing in connection
herewith.
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10.
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Nothing
contained herein shall be construed as limiting the duties of the
Escrowholder to Xxxxxx in its capacity as counsel to
Xxxxxx.
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11.
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This Escrow Agreement shall be
governed by and construed in accordance with the laws of the state of
California as if this Agreement were fully performed and fully executed
within the State of California. Any dispute or claim arising to or
in any way related to this Agreement shall be settled by binding
arbitration in San Diego, California. All arbitration shall be
conducted in accordance with the rules and regulations of the American
Arbitration Association ("AAA"). AAA shall designate an arbitrator from an
approved list of arbitrators following both parties' review and deletion
of those arbitrators on the approved list having a conflict of interest
with either party. Each party shall pay its own expenses
associated with such arbitration. A demand for arbitration shall be made
within a reasonable time after the claim, dispute or other matter has
arisen and in no event shall such demand be made after the date when
institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statutes of
limitations. The decision of the arbitrators shall be rendered
within 60 days of submission of any claim or dispute, shall be in writing
and mailed to all the parties included in the arbitration. The
decision of the arbitrator shall be binding upon the parties and judgment
in accordance with that decision may be entered in any court having
jurisdiction thereof.
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12.
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This
Escrow Agreement, after full execution, acknowledgment and delivery,
memorializes and constitutes the entire agreement and understanding
between the parties and supersedes and replaces all prior negotiations and
agreements of the parties, whether written or unwritten. Each
of the parties to this Escrow Agreement acknowledges that no other party,
nor any agent or attorney of any other party has made any promises,
representations, or warranty whatsoever, express or implied, which is not
expressly contained in this Escrow Agreement; and each party further
acknowledges that he or it has not executed this Escrow Agreement in
reliance upon any belief as to any fact not expressly recited
hereinabove.
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13.
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This
Escrow Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors, administrators and
assigns.
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14.
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Time
shall be of the essence of this Escrow
Agreement.
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15.
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This
Escrow Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute one and the same
instrument.
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16.
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The
obligations of the Escrowholder shall terminate at the earlier of: (a) the
delivery of the Escrow Documents to Xxxxxx; or (b) the return of the
Replacement Shares to the Company. At all times hereunder, the
Escrowholder shall be entitled to reasonably rely upon the information and
documents it receives in exercising its obligations under this Escrow
Agreement.
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remainder of this page has been left intentionally blank.]
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IN WITNESS WHEREOF the parties hereto
have duly executed this Escrow Agreement as of the date first above
written.
XXXXXXX
X. XXXXXX
By: /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
HELIX
WIND CORP.
By: /s/ Xxxxx X.
Xxxxxxx
Xxxxx X. Xxxxxxx, Chief Financial Officer
LAW
OFFICES OF XXXXXXX X. XXX
Per: /s/ Xxxxxxx X.
Xxx
Xxxxxxx
X. Xxx
[SIGNATURE PAGE TO ESCROW
AGREEMENT]
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