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Exhibit 1(5)
ESCROW AGREEMENT
AGREEMENT made as of this 28th day of July, 1999 by and among CanArgo
Energy Corporation (the "Issuer" or "Company") and Continental Stock Transfer &
Trust Company (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 $.10 per share
("Common Stock"), of the Issuer;
WHEREAS, the SEC declared the Registration Statement effective on June 10,
1999;
WHEREAS, following the declaration by the SEC of the effectiveness of the
Registration Statement the Issuer commenced an offering of the Securities for
sale on an "all or none" basis with respect to 11,500,000 shares of Common
Stock (the "Minimum Securities Amount") which are to be sold at a price of U.S.
Thirty Cents ($.30) or 2.35 NOK (Norwegian Kroner) 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 solicited by National Securities
Corporation ("NSC"), as soliciting dealer, 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 or will establish a special bank
account with Chase Manhattan Bank (the "Bank") 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, subscription monies will also be deposited into bank accounts
maintained by Orkla Finans (Fondsmegling) ASA ("Orkla Finans") as escrow agent
(the "Norway Account") and Signature Stock Transfer, Inc. ("SST") as escrow
agent (the "Texas Account" and together with the Norway Account the "Other
Accounts").
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
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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.
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank account
at the branch of the Bank selected by the Escrow Agent and bearing the
designation set forth on the Information Sheet (heretofore defined as the "Bank
Account"). The purpose of the Bank Account is for (a) the deposit of all
subscription monies (checks, bank drafts, money orders 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 Offering Period shall consist of the period set forth on the
Information Sheet. The last day of the Offering Period 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 Prospective purchasers of the Securities may deliver to the Escrow
Agent monies representing the purchase price of the Securities, which monies
shall be in the form of checks, bank drafts, money orders or wire transfers.
Upon the Escrow Agent's receipt of such monies, they shall be credited to the
Escrow Account. All checks, bank drafts or money orders (referred to as
"checks" herein) delivered to the Escrow Agent shall be made payable to
"Continental Stock Transfer & Trust Company, 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 Escrow Agent, and such check shall be deemed not to have been delivered to
the Escrow Agent pursuant to the terms of 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
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prospective purchaser, and the aggregate dollar amount of such subscription
(collectively, the "Subscription Information"). The Escrow Agent shall xxxx all
Subscription Information with the date and time it is received by the Escrow
Agent.
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 subscription monies which have been deposited in the Norway Account
or the Texas Account and which have cleared the banking system and have been
collected in such Accounts are herein referred to as the "Fund".
3.6 The Escrow Agent shall advise Orkla Finans and SST daily as to the
amount of the Fund held in the Bank Account and Orkla Finans and SST shall
advise Escrow Agent daily as to the amount held in the Norway Account and Texas
Account, respectively. The aggregate Fund in the Norway Account, Texas Account
and Bank Account is referred to herein as the "Total Fund."
4. Disbursement from the Bank Account.
4.1 If by 9:00 a.m. Central Daylight Time on the Termination Date the
amount of the Total Fund is less than the aggregate Offering Price in U.S.
dollars and/or Norwegian kroner necessary to purchase the Minimum Securities
Amount, as indicated by the Subscription Information submitted to the Escrow
Agent, Orkla Finans and SST, then in 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 Bank Account 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 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 9:00 a.m. Central Daylight Time on the Termination
Date, the amount of the Total Fund is at least equal to the aggregate Offering
Price in U.S. dollars and/or Norwegian kroner necessary to represent the
consideration for the purchase of not less than the Minimum Securities Amount,
as indicated by the Subscription Information submitted to the Escrow Agent,
Orkla Finans and SST, based in part on certification provided to the Escrow
Agent by Orkla and SST, the Escrow Agent shall promptly notify the Issuer of
such fact in writing. The
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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 confirmation from SST of 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. The Issuer will receive similar
information from Orkla Finans and SST.
5.2 The Escrow Agent shall not be responsible for the performance by the
Issuer of its obligations under this Agreement, or for any obligations of Orkla
Finans or SST.
5.3 The Escrow Agent shall not be required to accept from the Issuer any
Subscription Information pertaining to prospective purchasers unless such
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
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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 (including
specifically certifications received from Orkla Finans and SST) 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.
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
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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 notmore 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 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.
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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 New York 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; 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
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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: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
Continental Stock Transfer & Trust Company
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman
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: Continental Stock Transfer & Trust Company
Address: 0 Xxxxxxxx - 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
3. The Securities
Description of the Securities to be offered: up to 21,264,643 shares of
Common Stock, par value $.10 per share, of CanArgo Energy Corporation
Offering Price per share: U.S. $0.30 or NOK 2.35 (Norwegian kroner)
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4. Minimum Amount Required for Disbursement of the Escrow Account
The total amount of securities which must be subscribed for and for which
Total Funds have been deposited at the applicable Offering Price based on
each subscription before the Escrow Account may be disbursed to the
Issuer is 11,500,000 shares ("Minimum Securities Amount").
5. Offering Period
Through 9:00 a.m. Central Daylight Time on August 6, 1999
6. Title of Escrow Account: Continental Stock Transfer & Trust Company as
Agent for CanArgo Energy Corporation
7. Wire Instructions
Bank Name: Chase Manhattan Bank
Bank Address: 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Account Name: Continental Stock Transfer & Trust Company as Agent for
CanArgo Energy Corporation
Account Number: ___________
ABA Routing No.: 000000000
8. Escrow Agent Fees
Amount due on execution of the Escrow Agreement: $1,500
Fee for initial closing of at least Minimum Securities Amount: $1,500
Fee for each additional closing: $500
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