EXHIBIT 4.3
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is dated as of the date set forth
below, by and between, Iroquois Bio-Energy Company, LLC (the "Company"), and
Peoples State Bank of Francesville (the "Escrow Agent"). (The "Escrow Agent" and
the "Company" may also be hereinafter referred to as the "Parties").
RECITALS
A. The Company desires to establish an escrow account with the
Escrow Agent into which certain monies and documents will be deposited and held
in escrow until a minimum of $18,500,000 has been raised in connection with the
Company's public offering (the "Offering") of its Units, which represents
ownership interest in the Company (the "Units").
B. The Company will offer and sell the Units on a best efforts
basis.
C. The Company has agreed to provide for the impoundment of the
proceeds to be received from the sale of the Units.
X. Xxxxxxx State Bank of Francesville hereby agrees to act as
Escrow Agent, and the Company desires to retain Peoples State Bank of
Francesville as Escrow Agent on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. SUBSCRIPTION PAYMENTS: The Company shall deliver to the Escrow Agent all
checks, drafts and money orders ("Subscription Payments") and all
Subscription Agreements and other related documents ("Subscription
Documents") received by the Company from Subscribers in connection with the
Offering. All Subscription Payments shall be made payable to "PEOPLES STATE
BANK OF FRANCESVILLE AS ESCROW AGENT FOR - IROQUOIS BIO-ENERGY COMPANY, LLC
ESCROW."
ALL FUNDS HELD BY THE ESCROW AGENT SHALL REMAIN THE PROPERTY OF THE
SUBSCRIBERS ACCORDING TO THEIR RESPECTIVE INTERESTS AND SHALL NOT BE SUBJECT
TO ANY LIEN OR CHARGE BY THE ESCROW AGENT OR BY JUDGMENT OR CREDITORS'
CLAIMS AGAINST THE COMPANY OR THE ESCROW AGENT UNTIL RELEASED TO THE COMPANY
IN ACCORDANCE WITH SECTION 3 HEREOF. IN NO EVENT SHALL ANY OF THE
SUBSCRIPTION PAYMENTS BE COMMINGLED WITH DEPOSIT ACCOUNTS OF THE ESCROW
AGENT OR OTHERWISE TREATED AS A DEPOSIT ACCOUNT OR REFLECTED ON THE
FINANCIAL STATEMENTS OF THE ESCROW AGENT.
2. INVESTMENT OF FUNDS: All Subscription Payments shall be cleared and held by
the Escrow Agent in the Escrow Account. The Escrow Agent shall invest the
Subscription Payments, along with all earned interest, in the following,
provided that the Escrow Account
must accrue interest on a daily basis and allow for the immediate withdrawal
of funds without premium or penalty:
a. Direct obligations of the United States of America or obligations
in which the principal and interest are unconditionally guaranteed
by the United States of America;
b. United States Treasury Money Market funds (money market funds
investing exclusively in U.S. Treasury securities and other
investments that are unconditionally guaranteed by the United
States of America); or
c. Such other obligations as directed by the Company, provided that
the principal and interest are obligations of the United States of
America or are guaranteed by the United States of America.
Notwithstanding anything to the contrary, in no event may Subscription Payments
or accrued interest be held in any deposit account of the Escrow Agent in an
amount that exceeds $100,000.
3. DISBURSEMENT OF FUNDS:
a. TERMINATION OF THE OFFERING: If the Escrow Agent has not received, on
or before January 31, 2003, subject to extension by the Company to no
later than April 30, 2003, or such other date designated for the close
of the Offering, as set forth in the Company's Registration Statement
on Form SB-2 filed with the Securities and Exchange Commission on
October 22, 2002, as amended ("Termination Date"), Subscription
Payments in the aggregate amount of at least $18,500,000, then the
Escrow Agent shall refund to Subscribers without interest, all
Subscription Payments held in the Escrow Account per written
instruction from the Company. Unless instructed otherwise, the Escrow
Agent shall release all Subscription Payments held in the Escrow
Account to each Subscriber respectively, at the address given by such
Subscriber in the Subscription Agreement. All disbursements by the
Escrow Agent pursuant to this Section shall be made by the Escrow
Agent's usual escrow checks and shall be mailed by first class United
States Postal Service mail, postage pre-paid, as soon as practicable
but not later than the third business day after the Termination Date.
All interest on funds held in the Escrow Account shall be for the
account of the Company and shall be paid to the Company.
b. DISBURSEMENT OF ESCROW FUNDS: The Escrow Agent shall disburse
("Initial Disbursement") to the Company, pursuant to written
instruction from the Company, substantially in the form attached
hereto as Exhibit A, all of the Subscription Payments held in the
Escrow Account in immediately available funds if the Escrow Agent has
received, on or before the Termination Date:
i. Subscription Payments in an aggregate amount of not less
than $18,500,000 and written acceptance of each
Subscriber's subscription by the Company;
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ii. Written confirmation from the Company that it has executed
a design-build agreement and a process licensing agreement
for the construction and operations of its ethanol plant
("Design-Build Notice"); and
iii. Written confirmation from the Company that the Company has
closed on $26,559,000 to $33,234,000 of debt financing
(collectively with Design-Build Notice, "Closing Notice").
If the Escrow Agent receives additional Subscription Payments after
the Initial Disbursement, then the Escrow Agent shall disburse the
Subscription Payments to the Company upon written instruction from the
Company, substantially in the Form attached hereto as Exhibit A. If
the Escrow Agent does not receive the Closing Notice from the Company
by the Termination Date, then the Escrow Agent shall refund to
Subscribers without interest, each Subscriber's Subscription Payment
per written instruction from the Company. The Escrow Agent shall also
disburse to the Company all interest on funds held in the Escrow
Account.
c. REJECTION OF SUBSCRIPTION OR TERMINATION OF OFFERING: No later than 10
days after receipt by the Escrow Agent of written notice (i) from the
Company that the Company intends to reject a Subscriber's
subscription, or (ii) from the Company that it is terminating the
Offering, the Escrow Agent shall pay to the Subscribers the amount of
Subscription Payment held in the Escrow Account for each Subscriber
without interest or deduction. All interest on funds held in the
Escrow Account shall be for the account of the Company and shall be
paid to the Company.
4. COLLECTED FUNDS: No Subscription Payment shall be disbursed pursuant to
Section 3 until the Escrow Agent receives such Subscription Payment in
immediately available funds. If, upon presentment for payment, any payment
instrument is dishonored, the Escrow Agent shall immediately notify the
Company of such dishonor and return such payment instrument to the Company.
5. LIABILITY OF ESCROW AGENT: In performing its duties under this Agreement,
the Escrow Agent shall not be liable to the Company, any Subscriber, or any
Party for damages, losses, or expenses, except for negligence or willful
misconduct on the part of the Escrow Agent. The Escrow Agent shall not incur
any liability for (i) any act or failure to act made or omitted in good
faith, or (ii) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement
that the Escrow Agent should in good faith believe to be genuine. The Escrow
Agent shall not be liable or responsible for forgeries, fraud,
impersonations, or determining or verifying the scope of any person's
authority acting or purporting to act on behalf of any party to this
Agreement. In addition, the Escrow Agent may consult with legal counsel in
connection with the Escrow Agent's duties under this Agreement and shall be
fully protected in any action taken, suffered, or permitted by it in good
faith in accordance with the advice of counsel.
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6. FEES AND EXPENSES: Escrow Agent will receive a fee of $4,000 in exchange for
its services under this Agreement. If the conditions of this Agreement are
not promptly fulfilled, or if the Escrow Agent renders any service not
provided for in this Agreement, or if the Company requests a substantial
modification of its terms, or if any controversy arises, or if the Escrow
Agent is made a party to, or intervenes in, any litigation pertaining to
this escrow or its subject matter, the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for all costs,
attorney's fees, and expenses occasioned by such default, delay, controversy
or litigation, and the Escrow Agent shall have the right to retain all
documents and/or things of value at any time held by the Escrow Agent in
this escrow until such compensation, fees, costs and expenses are paid, up
to the amount of such compensation, fees, costs and expenses. Unless
otherwise provided, the Escrow Agent may deduct such sums from the funds
deposited in the Escrow Account if the funds are to be disbursed to the
Company.
7. CONTROVERSIES: If any controversy arises between the Parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement or its terms or conditions, the Escrow Agent will not be required
to resolve the controversy or to take any actions regarding it. The Escrow
Agent may hold all documents and funds and may wait for settlement of any
such controversy by final appropriate legal proceedings or other means, as
the Escrow Agent, in its discretion may deem appropriate, despite what may
be set forth elsewhere in this Agreement. In such event, the Escrow Agent
will not be liable for interest or damage. Furthermore, the Escrow Agent
may, at its option, file an action of interpleader requiring the parties to
answer and litigate any claims and rights amongst themselves. The Escrow
Agent is authorized to deposit with the clerk of the court all documents and
funds held in escrow, less any interest on funds held in the Escrow Account
to be applied against all costs, expenses, charges and reasonable attorney
fees incurred by the Escrow Agent due to the interpleader action and which
the Company agrees to pay. Upon initiating such action, the Escrow Agent
shall be fully released, and discharged of and from, all obligations and
liability imposed by the terms of this Agreement.
8. INDEMNIFICATION OF ESCROW AGENT: The Company and its successors and assigns
agree to indemnify and hold the Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable
costs of investigation, or counsel fees that may be imposed on the Escrow
Agent or incurred by the Escrow Agent in connection with the performance of
its duties under this Agreement, including but not limited to any litigation
arising from this Agreement or involving its subject matter, except to the
extent such action, loss, claim, damage, liability, or expense results from
or is caused by the willful misconduct or negligence of the Escrow Agent.
9. RESIGNATION OR REMOVAL OF ESCROW AGENT: The Escrow Agent may resign at any
time upon giving at least thirty (30) days written notice to the Company.
The Company may remove the Escrow Agent, with or without cause, at any time
upon giving ten (10) days prior written notice to the Escrow Agent. However,
such resignation or removal shall not become effective until the appointment
of a successor escrow agent, which shall be accomplished as follows: The
Company shall use its best efforts to obtain a successor escrow agent within
thirty (30) days after receiving a resignation notice or giving a removal
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notice. If the Company fails to appoint a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow
agent. The resignation shall take effect upon the appointment of a successor
escrow agent, the successor escrow agent executing and delivering an
instrument accepting such appointment, and upon receipt, to their reasonable
satisfaction, by the Company and the successor escrow agent, of a full
accounting of all Escrow Funds held and disbursed by the Escrow Agent
hereunder. Upon the occurrence of the above and without further acts, the
successor escrow agent shall be vested with all the estates, properties,
rights, powers, and duties of the predecessor escrow agent as if originally
named as escrow agent. The predecessor escrow agent shall be discharged from
its duties and obligations under this Escrow Agreement, but shall not be
discharged from any liability hereunder for actions taken as escrow agent
hereunder prior to such succession. After any predecessor escrow agent's
resignation or removal, the provisions of this Escrow Agreement shall
continue to apply as to any actions taken or omitted to be taken by it while
acting as escrow agent under this Escrow Agreement.
10. AUTOMATIC SUCCESSION: Upon the Company's consent, any company into which the
Escrow Agent may be merged or with which it may be consolidated, or any
company to whom the Escrow Agent may transfer substantially all of its
assets, shall be the successor to the Escrow Agent without the execution or
filing of any paper or any further act on the part of any of the Parties,
anything herein to the contrary notwithstanding. The successor escrow agent
shall be vested with all the estates, properties, rights, powers, and duties
of the predecessor escrow agent as if originally named as escrow agent.
11. TERMINATION: This Escrow Agreement shall terminate on the Termination Date.
Upon termination, the Escrow Agent shall disburse the funds in the Escrow
Account in the manner and upon the terms directed in paragraph 3 hereof. The
Company may, in its sole discretion, terminate the Offering and abandon the
sale of the Units at any time prior to the Termination Date. The Company may
terminate this Agreement at any time in its sole discretion by providing
Escrow Agent at least 30 days prior written notice.
12. REPRESENTATION AND WARRANTIES: The Escrow Agent hereby represents to the
Company that:
a. It has all necessary trust powers and authority to act as an escrow
agent as set forth in this Agreement;
b. It is "well capitalized" as defined under applicable state and
federal banking laws and regulations;
c. Its most recent Consolidated Report of Condition and Income,
including the supporting schedules and financial statements, as
filed with the Federal Deposit Insurance Corporation is true and
correct; and
d. No supervisory action by any regulatory authority against the Escrow
Agent has been initiated, or is pending or threatened.
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13. MISCELLANEOUS:
a. GOVERNING LAWS: This Agreement is to be construed and interpreted
according to Indiana law.
b. COUNTERPART: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
c. NOTICES: All instructions, notices and demands herein provided for
shall be in writing and shall be mailed postage prepaid, first class
mail, delivered by courier, or telecopied as follows:
If to the Company: If to the Escrow Agent:
Iroquois Bio-Energy Company, LLC Peoples State Bank of Francesville
0000 Xxxx 000xx Xxxxxx X.X. Xxx 000
Xxxxxx, XX 00000-0000 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone No: (000) 000-0000 Telephone No: (000) 000-0000
Telecopier No: (000) 000-0000 Telecopier No:(000) 000-0000
d. AMENDMENTS: This Agreement may be amended by written notice signed
by the Company, except that Section 6 through Section 13 may be
amended only with the consent of the Escrow Agent.
e. BINDING AGREEMENT AND SUBSTITUTION OF ESCROW AGENT: The terms and
conditions of this Escrow Agreement shall be binding on the heirs,
executors and assigns, creditors or transferees, or successors in
interest, whether by operation of law or otherwise, of the Parties
hereto. If, for any reason, the Escrow Agent named herein is unable
or unwilling to continue to act, then the Company, at its sole
discretion, may substitute another escrow agent.
f. REPRESENTATION. The Company represents and agrees that it has not
made, nor will it make in the future, any representation that states
or implies that the Escrow Agent has endorsed, recommended or
guaranteed the purchase, value, or repayment of the Securities
offered for sale by the Company. The Company further agrees that it
will furnish to the Escrow Agent a copy of the registration
statement, prospectus, subscription agreement or other offering
document.
g. SEVERABILITY. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
last date set forth below.
IROQUOIS BIO-ENERGY COMPANY, LLC: PEOPLES STATE BANK OF FRANCESVILLE:
By: /s/ Xxxxx Xxxxxx, Treasurer By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- ----------------------------------
Print Name: XXXXX XXXXXX Print Name: XXXXX X. XXXXXXXX
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Date: 12/3/02 Date: 12/4/02
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EXHIBIT A
FUND DISBURSEMENT INSTRUCTIONS
The undersigned certifies that he, she or it is duly authorized to
execute and deliver this Escrow Notice on behalf of Iroquois Bio-Energy Company,
LLC (the "Company"). Pursuant to the Escrow Agreement dated ___________________,
2002 (the "Escrow Agreement") by and among the Company and Peoples State Bank of
Francesville (the "Escrow Agent"), the Company hereby requests that the Escrow
Agent remit, in immediately available funds, $_________________ from the Escrow
Account to the following parties as follows:
PARTY AMOUNT
Iroquois Bio-Energy Company, LLC $
$
TOTAL $______
IN WITNESS WHEREOF, the undersigned have executed this Fund Disbursement
Instruction as of the date set forth below.
IROQUOIS BIO-ENERGY COMPANY, LLC
Dated: ___________________ By: ________________________________________
Its: _________________________________
