STOCK ESCROW AGREEMENT
This
STOCK
ESCROW AGREEMENT
(this
“Agreement”) is made as of _________________, 2008, by and among Renewable
Energy Acquisition Corp. (the “Company”),
a
Nevada corporation, the undersigned parties listed under Investors on the
signature page hereto (each, an “Initial
Stockholder”
and
collectively, the “Initial
Stockholders”)
and
Interwest Transfer Company, Inc. (the “Escrow
Agent”),
a
Utah corporation.
WHEREAS,
the
Company has entered into an Underwriting Agreement, dated ________________,
2008
(“Underwriting
Agreement”),
with
Crusader Securities, Inc., acting as the underwriter (the “Underwriter”),
pursuant to which, among other matters, the Underwriter has agreed to offer
on a
best efforts basis 2,000,000 units (“Units”)
of the
Company. Each Unit consists of one share of the Company’s common stock, par
value $0.001 per share (“Common
Stock”),
and two
warrants (“Warrant”),
each
Warrant to purchase one share of Common Stock, all as more fully described
in
the Company’s final Prospectus, dated ________________, 2008 (“Prospectus”)
comprising part of the Company’s Registration Statement on Form SB-2 (File No.
333-____________) under the Securities Act of 1933, as amended (“Registration
Statement”),
declared effective on _________________, 2008 (“Effective
Date”);
and
WHEREAS,
the
Initial Stockholders have agreed as a condition of the sale of the Units to
deposit their shares of Common Stock of the Company, as set forth opposite
their
respective names in Exhibit A attached hereto (collectively “Escrow
Shares”),
in
escrow as hereinafter provided; and
WHEREAS,
the
Company and the Initial Stockholders desire that the Escrow Agent accept the
Escrow Shares, in escrow, to be held and disbursed as hereinafter provided;
and
NOW,
THEREFORE,
in
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
1. Appointment
of Escrow Agent.
The
Company and the Initial Stockholders hereby appoint the Escrow Agent to act
in
accordance with and subject to the terms of this Agreement and the Escrow Agent
hereby accepts such appointment and agrees to act in accordance with and subject
to such terms.
2. Deposit
of Escrow Shares.
On or
before the Effective Date, each of the Initial Stockholders shall deliver to
the
Escrow Agent certificates (duly endorsed or with stock powers attached, in
either case Medallion guaranteed) representing his, her or its respective Escrow
Shares to be held and disbursed subject to the terms and conditions of this
Agreement. Each Initial Stockholder acknowledges that the certificate
representing his, her or its Escrow Shares is legended to reflect the deposit
of
such Escrow Shares under this Agreement.
3. Disbursement
of the Escrow Shares.
3.1 Each
of
the Initial Stockholders has agreed, and does agree, with the Company that,
if
less than 2,000,000 Units are sold under the Prospectus, each will surrender
to
the Company for cancellation, without consideration, that number of shares
of
Common Stock equal to the product of the number of the Initial Stockholder’s
Escrow Shares held by the Escrow Agent by a fraction, the numerator of which
is
the number of Units sold in the offering under the Prospectus and the
denominator of which is 2,000,000. For example, if the number of Escrow Shares
for an Initial Stockholder is 125,000 and 1,000,000 Units are sold in the
offering, the Initial Stockholder will surrender to the Company for cancellation
62,500 shares of Common Stock [125,000x(1,000,000/2,000,000)] and the remaining
62,500 shares of Common Stock owned by the Initial Stockholder will remain
in
escrow with the Escrow Agent. Within two business days following the final
closing of the offering of Units described in the Prospectus and provided less
than 2,000,000 Units are sold in the offering, the Company will send a written
notice to the Escrow Agent in the form attached hereto as Exhibit A (the
“Cancellation
Notice”),
which
states the number of Units sold in the offering and the number of Escrow Shares
of each Initial Stockholder to be returned to the Company and cancelled pursuant
to this Section 3.1. Each of the Initial Stockholders ratifies and approves
any
Cancellation Notice given by the Company to the Escrow Agent and authorizes
and
directs the Escrow Agent to act in reliance on the Cancellation Notice signed
solely by an officer of the Company and deliver the number of Escrowed Shares
to
be cancelled pursuant to such Cancellation Notice to the Company/, and further
authorizes and directs the Escrow Agent, acting in its capacity as transfer
agent of the Company, to cancel the shares of Common Stock so surrendered on
the
books and records of the Company.
3.2 The
Escrow Agent shall release from escrow the Escrow Shares remaining in escrow
after any cancellation contemplated by Section 3.1 to the Initial Stockholders
on the earlier of (i) the date the Company consummates a merger, stock exchange,
asset acquisition or other similar business combination (“Business
Combination”)
(as
described more fully in the Company’s Registration Statement), (ii) the
liquidation of the Company, and (iii) the date that is three years following
the
date of the Prospectus. The Escrow Agent shall have no further duties hereunder
after the final disbursement of the Escrow Shares in accordance with this
Section 3.2.
4. Rights
of Initial Stockholders in Escrow Shares.
4.1. Voting
Rights as a Stockholder.
Subject
to the terms of the Insider Letter described in Section 4.4 hereof and except
as
herein provided, the Initial Stockholders shall retain all of their rights
as
stockholders of the Company during any period in which Escrow Shares are held
in
escrow, including, without limitation, the right to vote such shares.
4.2. Dividends
and Other Distributions in Respect of the Escrow Shares.
During
any period in which Escrow Shares are held in escrow, all dividends payable
in
cash with respect to the Escrow Shares shall be paid to the Initial
Stockholders, but all dividends payable in stock or other non-cash property
(“Non-Cash
Dividends”)
shall
be delivered to the Escrow Agent to hold in accordance with the terms hereof.
As
used herein, the term “Escrow
Shares”
shall be
deemed to include the Non-Cash Dividends distributed thereon, if any.
4.3. Restrictions
on Transfer.
In
order to induce the Underwriter to enter into the Underwriting Agreement, the
Initial Stockholders will not offer, sell, contract to sell, pledge or otherwise
dispose of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Initial Stockholders or any affiliate of the Initial
Stockholders or any person in privity with the Initial Stockholders or any
affiliate of the Initial Stockholders), directly or indirectly, including the
filing (or participation in the filing) of a registration statement with the
Securities and Exchange Commission (the “Commission”)
in
respect of, or establish or increase a put equivalent position or liquidate
or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the Commission promulgated thereunder with respect to, any Escrow Shares, or
publicly announce an intention to effect any such transaction, during the period
in which such Escrow Shares are held in escrow, provided that the foregoing
sentence shall not apply to (a) any Escrow Shares disposed of as bona fide
gifts, (b) any gifting of Escrow Shares to family members or family trusts,
(c)
any transfer for estate planning purposes of Escrow Shares to persons
immediately related to such transferor by blood, marriage or adoption, or any
trust solely for the benefit of such transferor and/or the persons described
in
the preceding clause, or (d) the exercise of an option granted by one or more
of
the Initial Stockholders to a third party prior to the date hereof; provided,
however, that with respect to each of the transfers described in clauses (a),
(b), (c) and (d) of this sentence, prior to such transfer, the transferee of
such transfer, or the trustee or legal guardian on behalf of any transferee,
agrees in writing to be bound by the terms of this Agreement and of the
corresponding Insider Letter signed by the Initial Stockholder transferring
such
Escrow Shares. During the period in which Escrow Shares are held in escrow,
the
Initial Stockholders shall not pledge or grant a security interest in such
Escrow Shares or grant a security interest in their rights under this Agreement.
5. Concerning
the Escrow Agent.
5.1. Good
Faith Reliance.
The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion, statement, instrument, report or other paper or document (not only
as
to its due execution and the validity and effectiveness of its provisions,
but
also as to the truth and acceptability of any information therein contained)
which is believed by the Escrow Agent to be genuine and to be signed or
presented by the proper person or persons. The Escrow Agent shall not be bound
by any notice or demand, or any waiver, modification, termination or rescission
of this Agreement unless evidenced by a writing delivered to the Escrow Agent
signed by the proper party or parties and, if the duties or rights of the Escrow
Agent are affected, unless it shall have given its prior written consent
thereto.
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5.2. Indemnification.
The
Escrow Agent and each of its officers, directors, employees, agents, and
attorneys shall be indemnified and held harmless by the Company from and against
any expenses, including counsel fees and disbursements, or loss suffered by
the
Escrow Agent in connection with any action, suit or other proceeding involving
any claim which in any way, directly or indirectly, arises out of or relates
to
this Agreement, the services of the Escrow Agent hereunder, or the Escrow Shares
held by it hereunder, other than expenses or losses arising from the gross
negligence or willful misconduct of the Escrow Agent. Promptly after the receipt
by the Escrow Agent of notice of any demand or claim or the commencement of
any
action, suit or proceeding, the Escrow Agent shall notify the other parties
hereto in writing. In the event of the receipt of such notice, the Escrow Agent,
in its sole discretion, may commence an action in the nature of interpleader
in
an appropriate court to determine ownership or disposition of the Escrow Shares
or it may deposit the Escrow Shares with the clerk of any appropriate court
or
it may retain the Escrow Shares pending receipt of a final, non-appealable
order
of a court having jurisdiction over all of the parties hereto directing to
whom
and under what circumstances the Escrow Shares are to be disbursed and
delivered. The provisions of this Section 5.2 shall survive in the event the
Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.
5.3. Compensation.
The
Escrow Agent shall be entitled to reasonable compensation from the Company
for
all services rendered by it hereunder. The Escrow Agent shall also be entitled
to reimbursement from the Company for all expenses paid or incurred by it in
the
administration of its duties hereunder including, but not limited to, all
counsel, advisors’ and agents’ fees and disbursements and all taxes or other
governmental charges.
5.4. Further
Assurances.
From
time to time on and after the date hereof, the Company and the Initial
Stockholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
5.5. Resignation.
The
Escrow Agent may resign at any time and be discharged from its duties as escrow
agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation
shall become effective at such time that the Escrow Agent shall turn over to
a
successor escrow agent appointed by the Company, the Escrow Shares held
hereunder. If no new escrow agent is so appointed within the 30 day period
following the giving of such notice of resignation, the Escrow Agent may deposit
the Escrow Shares with any appropriate court it reasonably deems appropriate.
5.6. Discharge
of Escrow Agent.
The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the Company and a majority
of the Initial Stockholders, jointly; provided, however, that such resignation
shall become effective only upon acceptance of appointment by a successor escrow
agent as provided in Section 5.5.
5.7. Other
Matters.
The
parties hereto agree that the duties and obligations of the Escrow Agent are
only such as are herein specifically provided and no other. The Escrow Agent’s
duties are as a depositary only, and the Escrow Agent shall incur no liability
whatsoever, except as a direct result of its own gross negligence or willful
misconduct. The Escrow Agent may consult with counsel of its choice, and shall
not be liable for any action taken, suffered or omitted by it in accordance
with
the advice of such counsel. In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands which, in its opinion, are in conflict with any of the
provisions of this Agreement, it shall be entitled to refrain from taking any
action, other than to keep safely, the Escrow Securities until it shall jointly
be directed otherwise in writing by the Initial Stockholders and the Company
or
by a final judgment of a court of competent jurisdiction. The Escrow Agent
shall
not be required to institute legal proceedings of any kind and shall not be
required to defend any legal proceedings which may be instituted against it
or
in respect of the Escrow Securities. The Escrow Agent may consult with counsel
of its choice, and shall not be liable for any action taken, suffered or omitted
by it in accordance with the advice of such counsel.
6. Miscellaneous.
3
6.1. Governing
Law.
The
validity, interpretation, and performance of this Agreement shall be governed
in
all respects by the laws of the State of Utah, without giving effect to any
choice or conflict of law, provision or rule (whether of the State of Utah
or
any other jurisdiction that would cause the application of the laws of any
jurisdiction other than the State of Utah). The Company hereby agrees that
any
action, proceeding or claim against it arising out of or relating in any way
to
this Agreement shall be brought and enforced in the courts of the State of
Utah
or the United States District Court for the District of Utah, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
and each of the Initial Stockholders hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenience forum.
Any such process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
6.6 hereof. Such mailing shall be deemed personal service and shall be legal
and
binding upon the Company in any action, proceeding or claim.
6.2. Third
Party Beneficiaries.
Each of
the Initial Stockholders hereby acknowledges that the Underwriter is a third
party beneficiary of this Agreement and this Agreement may not be modified
or
changed without the prior written consent of the Underwriter.
6.3. Entire
Agreement.
The
Escrow Agent shall not be bound in any way by the terms of any other agreement
to which the Initial Stockholders and the Company are parties, whether or not
it
has knowledge thereof, and the Escrow Agent shall not in any way be required
to
determine whether or not any other agreement has been complied with by the
Initial Stockholders or the Company, or any other party thereto. This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and, except as expressly provided herein, may not
be
changed or modified except by an instrument in writing signed by all the parties
hereto.
6.4. Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.5. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal representatives, successors and assigns.
6.6. Notices.
Any
notice, consent or request to be given in connection with any of the terms
or
provisions of this Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt
requested), by hand delivery or by facsimile transmission:
If
to the
Escrow Agent, to:
Interwest
Transfer Company. Inc.
0000
Xxxx
0000 Xxxxx, Xxxxx 000
P.O.
Box
17136
Xxxxxxxx,
XX 00000
Fax:
(000) 000-0000
If
to the
Company, to:
0000
Xxxx
Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Fax:
(000) 000-0000
In
either
case with a copy to:
Crusader
Securities, Inc.
000
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Fax:
________________
4
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the
manner provided herein for giving notice.
6.7. Liquidation
of Company.
The
Company shall give the Escrow Agent written notification of the liquidation
and
dissolution of the Company in the event that the Company fails to consummate
a
Business Combination within the time period(s) specified in the Prospectus.
[signature
page follows]
5
IN
WITNESS WHEREOF,
the
parties have duly executed this Stock Escrow Agreement as of the date first
written above.
|
INTERWEST
TRANSFER COMPANY, INC.
|
||
|
By:
|
|
Name:
|
|
Title:
|
||
|
By:
|
|
Name:
Xxxxx X. Xxxxxxxx
|
|
Title:
Chief Executive Officer
|
||
|
INITIAL
STOCKHOLDERS:
|
||
|
Xxxxx
X. Xxxxxxxx
|
||
|
Xxxxx
Xxxxxxxxxxxxx
|
||
|
Zenghua
Ye
|
||
6
EXHIBIT
A
CANCELLATION
NOTICE
Interwest
Transfer Company. Inc.
0000
Xxxx
0000 Xxxxx, Xxxxx 000
P.O.
Box
17136
Xxxxxxxx,
XX 00000
Ladies
and Gentlemen:
This
Cancellation Notice is given under Section 3.1 of the Stock Escrow Agreement
dated ____________, 2007 (the “Escrow Agreement”), by and between you as Escrow
Agent, Renewable Energy Acquisition Corp. (the “Company”), and Xxxxx X.
Xxxxxxxx, Xxxxx
Xxxxxxxxxxxxx, and Xxxxxxx
Xx (the “Initial Stockholders”). Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to such terms in the Escrow Agreement.
The
offering of Units described in the Prospectus was closed on
__________________________, 2008. The total number of Units sold in the offering
is __________________________.
Pursuant
to Section 3.1 of the Escrow Agreement, you are, upon receipt of this notice,
authorized and directed by the Company and each of the Initial Stockholders
to
deliver to the Company and, in your capacity as transfer agent of the Company,
cancel on the books and records of the Company the following number of Escrow
Shares of each of the Initial Stockholders:
|
Xxxxx
X. Xxxxxxxx
|
125,000x(_______________
|
÷2,000,000)
= _______________
|
cancelled
shares
|
|
Xxxxx
Xxxxxxxxxxxxx
|
125,000x(_______________
|
÷2,000,000)
= _______________
|
cancelled
shares
|
|
Zenghua
Ye
|
125,000x(_______________
|
÷2,000,000)
= _______________
|
cancelled
shares
|
Please
return the shares so cancelled to the status of authorized and unissued
shares.
Xxxxx
X.
Xxxxxxxx, Chief Executive Officer
7
