ESCROW AGREEMENT
This
Escrow Agreement (the “Agreement”) is made and
entered into on July 3, 2008, by and among Knight Energy
Corp., a Maryland corporation (the “Company”),and
HD Special-Situations, LP (the “Lender”), and
David S. Hamilton, a duly licensed attorney who practices law
in the State of California, as escrow agent (the “Escrow
Agent”).
A.
Capitalized terms used and not otherwise defined herein have
the meanings set forth in the Note Purchase Agreement entered
into between the Company and the Lender dated concurrently
herewith (the “Note Purchase
Agreement”).
B
Pursuant to the Note Purchase Agreement, at the Closing, the
Company has agreed to sell, and the Lender has agreed to
purchase, the Note.
C.
The Lender and the Company have agreed to effectuate the
Closing utilizing an escrow arrangement as described in this
Agreement.
D.
It is a condition of the Company’s obligation to sell,
and the Lender’s obligation to purchase, the Note, that
this Agreement be executed and delivered.
E.
The Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of their respective promises
contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1.
Escrow Account .
On or before the Closing Date, by wire transfer of immediately
available funds in United States Dollars, the Lender shall deposit
the Purchase Price with the Escrow Agent, to be held by the Escrow
Agent in a separate non-interest bearing account (the “Escrow
Account”), established at Bank of America (the
“Bank”), subject to the provisions of this Agreement.
At the request of the Company or the Lender, the Escrow Agent shall
provide the requesting party with copies of all Bank statements,
notices and other writings that he receives from the Bank in
connection with the Escrow Account.
2.
Disbursement of Funds and Documents .
2.1
Closing Procedures .
The Closing shall take place in the following manner:
(a)
The Company and the Lender shall each deliver to the Escrow
Agent via facsimile or other electronic transmission (to be
promptly followed by delivery of original documents via
courier service or Federal Express) complete originals of all
documents as provided in Sections 2.2
and 2.3 below, as applicable (the “Escrowed
Documents”). Pending such delivery, each party hereby
agrees that a facsimile or other electronic transmission of a
document permitted to be delivered
hereunder, once delivered to the Escrow Agent, shall be
binding upon such party in the same
manner as would an original to the full extent permitted by
applicable law.
(ii)
Upon receipt of the requisite documents via facsimile or
otherwise from a party, the Escrow Agent shall, in turn, send
via facsimile (to be promptly followed by delivery of original
documents via courier service or Federal Express) such
documents to the other parties. In addition, upon receipt by
the Escrow Agent of the Purchase Price and the original Note,
the Escrow Agent shall (i) disburse the Purchase Price as
provided in the Disbursement Instructions and (ii) deliver the
original Note to the Lender via courier service. Anything
herein to the contrary notwithstanding, the Escrow Agent shall
not disburse the Purchase Price prior to taking physical
possession of the original Note; likewise, the Escrow Agent
shall not release the original Note prior to receipt in the
Escrow Account of the Purchase Price.
2.2
Items to be Delivered by the Company to the Escrow Agent
.
On or before the Closing Date, the Company shall deliver to the
Escrow Agent on behalf of the Lender each of the following
documents: (i) three (3) fully executed originals of the Note
Purchase Agreement, (ii) one (1)
original fully executed Note, (iii) three (3) fully executed
originals of this Agreement, (iv) three (3)
fully executed originals of the Amendment, (v) one (1)
fully-executed original of the Amendment to Deed of Trust, (vi)
three (3) fully executed originals of the Subsidiary Amendment,
(vii) three (3) fully executed originals of the Disbursement
Instructions and (viii) three (3) fully executed originals of such
other items as may be specified in the Note Purchase Agreement to
be delivered by the Company.
2.3
Items to be Delivered by the Lender to the Escrow Agent
.
In addition to the Purchase Price, on or before the Closing Date,
the Lender shall deliver to the Escrow Agent on behalf of the
Company each of the following documents: (i) three (3) fully
executed originals of the Note Purchase Agreement, (ii) three (3)
fully executed originals of this Agreement, (iii) three (3) fully
executed originals of the Amendment, (iv) three (3) fully executed
originals of the Subsidiary Amendment, (v) three (3) fully executed
originals of the Disbursement Instructions and (vi) three
(3)
fully executed copies of such other items as may be specified in
the Note Purchase Agreement to be delivered by the
Lender.
2.4
Controversies .
If any controversy arises between any of the parties hereto, or
between any of the parties hereto and any person not a party
hereto, as to whether or not or to whom the EscrowAgent shall
deliver the PurchasePrice, the Escrowed Documents, or any portion
thereof, or as to any other matter arising out of or relating to
this Escrow Agreement, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Purchase
Price, the Escrowed Documents, or any portion thereof, but may
retain the same until the rights of the parties to the dispute have
been finally determined by written agreement or by final judgment
of a court of competent jurisdiction after all appeals have been
finally determined (or the time for further appeals has expired
without an appeal having
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