Exhibit 10.23
SECURITIES ESCROW AGREEMENT
SECURITIES ESCROW AGREEMENT, dated as of March 5, 2009 (this “Agreement”), by
and among FOUR RIVERS BIOENERGY INC., a company organized under the laws of
Nevada (the “Company”), KREIDO BIOFUELS, INC., a company organized under the
laws of Nevada (“Kreido”), and WALL STREET TRANSFER AGENTS, INC. (“Escrow
Agent”).
WHEREAS, the Company has entered into an Asset Purchase Agreement, dated the
date hereof (the “Purchase Agreement”), with Kreido pursuant to which, among
other matters, the Company has agreed to purchase substantially all of the
assets of Kreido and its wholly-owned subsidiary Kreido Laboratories.
WHEREAS, prior to the date hereof, Kreido issued warrants to purchase up to
18,498,519 shares of its common stock (“Kreido Shares”), at an exercise price of
$1.85 per share, and expiring on January 12, 2012 (each a “Kreido Warrant” and
together the “Kreido Warrants”).
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company has issued
300,000 shares of its common stock, par value $0.001 per share (the “Warrant
Shares”), to Kreido in Kreido’s name, to be delivered by Kreido to the holders
of the Kreido Warrants upon exercise thereof.
WHEREAS, Kreido has agreed as a condition of the Purchase Agreement to deposit
all of the Warrant Shares (the “Escrow Shares” and together with any cash,
others securities or property paid or issued on the Escrow Shares, the “Escrow
Securities”) in escrow as hereinafter provided.
WHEREAS, the Company and Kreido desire that the Escrow Agent accept the Escrow
Securities, in escrow, to be held and disbursed as hereinafter provided.
THEREFORE, IT IS AGREED:
1. Appointment of Escrow Agent. The Company and Kreido 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. Term of Escrow Agreement. This Agreement shall terminate on the earlier of
(i) the exercise or cancellation of all of the Kreido Warrants or
(ii) January 31, 2012 (the “Termination Date”).
3. Deposit of Escrow Securities. On the date hereof, the Company shall deliver
to the Escrow Agent certificates representing the Escrow Shares, to be held and
disbursed subject to the terms and conditions of this Agreement.
4. Disbursement of the Escrow Securities. Upon the valid exercise of a Kreido
Warrant, in accordance with all of the terms and conditions thereof, Kreido
shall provide the Escrow Agent with prompt written notice of such exercise (the
“Exercise Notice”), with a copy to the Company, such notice to include, at the
minimum, the name of the holder of the exercised Kreido Warrant, the exercise
date, the number of Kreido Shares to be issued under such warrant, the
equivalent number of Warrant Shares to be issued as determined by Kreido (which
shall be a whole number and not a fraction), the name and address of the
registered holder of the Warrant Shares, and the name and address of the party
to whom the Escrow Shares shall be delivered to; provided, that in no event
shall the aggregate number of Warrant Shares exceed 300,000. Upon receipt of the
Exercise Notice, the Company shall have three business days to notify the Escrow
Agent and Kreido, in writing, of its objection (and the reason therefor) to the
release of the Escrow Securities, in which case, the Escrow Agent shall not
release any Escrow Securities until it receives joint written instructions from
the Company and Kreido to do so. Absent such objection, the Escrow Agent shall
release that number of Escrow Securities equal to the number of Warrant Shares
set forth in the Exercise Notice to the applicable party set forth in the
Exercise Notice on the fourth business day following its receipt of the Exercise
Notice.

 

 

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5. Final Disbursement of Escrow Securities. Provided that all fees owing to the
Escrow Agent have been paid, the Escrow Agent shall promptly deliver to the
Company any Escrow Securities remaining in escrow on the Termination Date. In
furtherance thereof and as a condition to the Company entering into this
Agreement, Kreido shall have delivered to the Company (i) a Medallion guaranteed
stock power executed in blank, (ii) certified resolutions of its Board of
Directors authorizing such transfer, and (iii) irrevocable instructions to
transfer the remaining shares to the Company for cancellation.
6. Legend. Each certificate for Warrant Shares issued under this Agreement shall
bear a legend as follows:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS.”
7. Rights in the Escrow Securities.
7.1 Voting Rights as a Shareholder. Kreido’s rights as a shareholder of the
Company with respect to the Escrow Securities, including, without limitation,
the right to vote such shares, shall be subject to and governed by the terms of
that Voting Agreement and Proxy, of even date herewith, by and between the
Company and Kreido.
7.2 Dividends and Other Distributions in Respect of the Escrow Securities. All
dividends and other distributions payable in cash, securities or other property
with respect to the Escrow Shares shall be paid to Kreido and shall become part
of the Escrow Securities.
7.3 Restrictions on Transfer. Except as permitted under the terms of this
Agreement, Kreido shall have no right whatsoever to transfer all or a portion of
the Escrow Securities. During the term of this Agreement, Kreido shall not
pledge or grant a security interest in the Escrow Securities or grant a security
interest in its rights under this Agreement.
8. Concerning the Escrow Agent.
8.1 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 or advice of counsel (including
counsel chosen by the Escrow Agent), 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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8.2 Indemnification. The Escrow Agent shall be indemnified and held harmless,
jointly and severally, by the Company and Kreido from and against any expenses,
including reasonable 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
Securities 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 Securities or it may deposit the Escrow Securities with the clerk of
any appropriate court or it may retain the Escrow Securities 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
Securities are to be disbursed and delivered. The provisions of this Section 8.2
shall survive in the event the Escrow Agent resigns or is discharged pursuant to
Sections 8.5 or 8.6 below.
8.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation
from the Company for all services rendered by it hereunder, as set forth on
Exhibit A hereto. 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 reasonable counsel,
advisors’ and agents’ fees and disbursements and all taxes or other governmental
charges.
8.4 Further Assurances. From time to time on and after the date hereof, the
Company and Kreido 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.
8.5 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 Securities held hereunder. If no new escrow agent is so appointed within
the 60 day period following the giving of such notice of resignation, the Escrow
Agent may deposit the Escrow Securities with any court it reasonably deems
appropriate. Upon resignation, the Escrow Agent shall reimburse the Company
pro-rata for any annual fees paid as set forth in Exhibit A.
8.6 Discharge of Escrow Agent. The Escrow Agent shall be discharged from its
duties as escrow agent hereunder if so requested in writing at any time by the
other parties hereto; provided, however, that such resignation shall become
effective only upon acceptance of appointment by a successor escrow agent as
provided in Section 8.5.
8.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent
shall not be relieved from liability hereunder for its own gross negligence or
its own willful misconduct.

 

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9. Miscellaneous.
9.1 Governing Law. This Agreement shall for all purposes be deemed to be made
under and shall be construed in accordance with the laws of the State of New
York. Each of the parties 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 New York or the United States
District Court for the Southern District of New York, and irrevocably submits to
such jurisdiction, which jurisdiction shall be exclusive. Each of the parties
hereby waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
each of the Company, Kreido and the Escrow Agent 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 9.6 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon
each of the Company, Kreido and the Escrow Agent in any action, proceeding or
claim.
9.2 No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person or entity.
9.3 Entire Agreement. 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 the party to the charged.
9.4 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
thereof.
9.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representative,
successors and assigns.
9.6 Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and either be delivered personally or by private
national courier service, or be mailed, certified or registered mail, return
receipt requested, postage prepaid, and shall be deemed given when so delivered
personally or, if sent by private national courier service, on the next business
day after delivery to the courier, or, if mailed, two days after the date of
mailing, as follows:
If to the Company, to:
Four Rivers BioEnergy Inc.
P.O. Box 1056
Calvert City, Kentucky 42029
Fax No.: (270) 395-0323
Attn: Stephen Padgett
with a copy to:
Golenbock Eiseman Assor Bell & Peskoe LLP
437 Madison Avenue, 40th Floor
New York, New York 10022
Fax No.: (212) 754-0330
Attn: Andrew H. Hudders, Esq.

 

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If to Kreido, to:
Kreido Biofuels, Inc.
1070 Flynn Road
Camarillo, California 93010
Fax No.: (805) 384-0989
Attn: G.A. Ben Binninger and John Philpott
with a copy to:
DLA Piper LLP (US)
203 North LaSalle Street, Suite 1900
Chicago, Illinois 60601
Fax No.: (312) 630-5322
Attn: John H. Heuberger, Esq.
and if to the Escrow Agent, to:
Wall Street Transfer Agents, Inc.
12492 Harris Road
Pitt Meadows, British Columbia
Canada V3Y 2J4
Fax No.: (     )      -     
Attn:                                         
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.
9.7 Counterparts. This Agreement may be executed in several counterparts each
one of which shall constitute an original and may be delivered by facsimile
transmission and together shall constitute one instrument.
[Signature page follows]

 

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IN WITNESS WHEREOF, the execution of this Securities Escrow Agreement as of the
date first above written.

            FOUR RIVERS BIOENERGY INC.
      By:   /s/Gary Hudson         Name:   Gary Hudson        Title:  
President        KREIDO BIOFUELS , INC.
      By:   /s/ G. A. Ben Binninger         Name:   G. A. Ben Binninger       
Title:   Chief Executive Officer        WALL STREET TRANSFER AGENTS, INC.
      By:           Name:           Title:      

[Signature page to Securities and Escrow Agreement]

 

 

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EXHIBIT A
Escrow Agent Fees
$250 initial fee, to be paid at closing, for acting agent escrow fee.
An annual fee equal to one-quarter of one percent (0.25%) of the value of the
remaining escrow shares then held by the escrow agent based upon the average
closing price of the Company’s common stock, as reported by the OTC Bulletin
Board, for the 10 trading days preceding the closing date and each subsequent
anniversary thereafter (the “determination date”). The annual fee will be
payable within 15 days of the determination date with the exception of the first
annual fee which shall be payable at closing. Notwithstanding the foregoing, in
no event shall an annual fee exceed $3,000 for any one year period, nor be less
than $500 for any one year period (subject, however, to pro-ration as described
in paragraph 8.5).