EXHIBIT 10.5
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT is made and entered into this ___ day of
November, 1997, by and between MEDLEY CREDIT ACCEPTANCE CORP., a Delaware
corporation (hereinafter referred to as "Company"), MEDLEY GROUP, INC., a
Delaware Corporation (hereinafter referred to as "Group") and TURNBERRY
BANK (hereinafter referred to as "Escrow Agent").
WITNESSETH
WHEREAS, the Company has filed a registration statement with the
Securities and Exchange Commission for a public offering ("Public
Offering"), of a minimum of One Million Two Hundred Thousand (1,200,000)
shares of common stock at $5.50 per share and redeemable warrants to
purchase a minimum of One Million Two Hundred Thousand (1,200,000) shares
of common stock at $.15 per warrant on a best efforts, all or none basis
(the "Minimum Offering") and a maximum of One Million Six Hundred Thousand
(1,600,000) shares of common stock and warrants to purchase One Million Six
Hundred Thousand (1,600,000) shares of common stock on a best effort basis
(the "Maximum Offering"), and
WHEREAS, to close on the Minimum Offering and disburse the escrowed
funds, the Escrow Agent must receive the sum of Six Million Seven Hundred
Eighty Thousand ($6,780,000.00) from the sale of shares and warrants in
cash, and
WHEREAS, the ownership of the shares of Common Shares to be sold in
the Minimum Offering are owned as follows:
(1) Company 1,000,000
(2) Group 200,000
and,
WHEREAS, as a condition to closing on the Minimum Offering, Group has
agreed on behalf of Medley Refrigeration, Inc., Group's majority owned
subsidiary, to remit directly to Company the proceeds from the sale of
Group's 200,000 shares of common stock in the Minimum Offering ($990,000)
for the express purpose of satisfying in their entirety all receivables
then outstanding from Medley Refrigeration, Inc., to the Company, and
WHEREAS, pending the sale of the Minimum Offering, the proceeds of
the sale are required to be held in escrow so that in the event by December
31, 1997, the Minimum Offering is not sold, all monies received will be
refunded to the subscribers in full, and
WHEREAS, provided the funds from the Minimum Offering in the sum of
Six Million Seven Hundred Eighty Thousand Dollars ($6,780,000.00) have been
received by the Escrow Agent, timely, the Escrow Agent will be responsible
for paying the proceeds received as required by this Agreement, and
WHEREAS, the Company, Group and Escrow Agent desire to memorialize
their agreement concerning the escrow into a written instrument.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration,
the parties agree as follows:
1. RECITALS. The above and foregoing recitals are true and
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correct and are incorporated herein.
2. ESCROW. The Escrow Agent agrees to accept all funds
delivered
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to it derived from the sale of common stock and redeemable warrants arising
from the sale of common stock and redeemable warrants arising from the
Minimum Offering of the Company and to hold and disburse said funds in
furtherance of the terms of this agreement. The Escrow Agent shall
acknowledge to the each other the receipt of all funds on Friday of each
week during the term of this escrow.
3. REQUIREMENTS FOR DISBURSEMENT OF ESCROWED FUNDS:
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The Escrow Agent shall disburse and pay over all funds held in escrow upon
the satisfaction of the following conditions:
a. Escrow Agent shall have received Six Million Seven
Hundred Eighty Thousand Dollars ($6,780,000.00) in cash.
In the event the foregoing requirement is not satisfied by December
31, 1997, all monies received by Escrow Agent will be refunded and returned
to the subscribers in full within a reasonable time.
4. INTEREST ON ESCROWED FUNDS: All interest accruing on the
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escrowed funds from the date of deposit to disbursement shall belong to the
Company.
5. DISBURSEMENT OF ESCROWED FUNDS: Provided the requirement
for
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disbursement set forth in Section 3 above have been satisfied, Escrow Agent
shall disburse the escrowed funds as directed by a Letter of Authorization
signed by the Company's Board of Directors.
6. CLOSING DATE: Provided the Minimum Offering has been sold,
the
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closing of this Escrow and the disbursement of the escrowed funds shall
take place within 48 hours of the Escrow Agents' receipt of the Company's
Letter of Authorization.
7. INVESTMENTS: Funds held in escrow under this Escrow
Agreement
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shall be invested in short term U.S. Government Securities, money market
funds or such other similar short term, highly liquid investments as
authorized by the Company. Investment income derived on the funds held in
escrow shall accrue and be deposited into a separate escrow fund for
accounting purposes.
8. ESCROW AGENT'S RIGHT TO RELY: DUTIES: All funds deposited
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with the Escrow Agent shall be accepted, subject to clearance. The Escrow
Agent may act in reliance upon any writing or instrument or signature which
it, in its sole discretion, believes to be genuine; may assume the validity
and accuracy of any statements or assertions contained in such writing or
instrument; and may assume that any person purporting to give any writing,
notice, advice, or instruction in connection with provisions hereof, has
been duly authorized to do so. The Escrow Agent shall not be liable to any
party to this Escrow Agreement, or to any other individual or entity in any
manner for the sufficiency or correctness as to form, manner of execution,
or validity of any written instructions delivered to it, nor as to the
identity, authority, or rights of any person executing the same. The
Escrow Agent undertakes to perform only such duties as are expressly set
forth herein, and no implied duties or obligations shall be read into this
Escrow Agreement as against the Escrow Agent.
9. INDEMNIFICATION. The Escrow Agent may consult with counsel
of
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its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel. The Escrow Agent shall
otherwise not be liable for any mistakes of fact or error of judgment, or
for any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence and the Company and Group agree to indemnify
and hold harmless the Escrow Agent from any claims, demands, causes of
action, liabilities, damages or judgments, including the cost of defending
any action against it, together with any reasonable attorney's fees of any
nature (including appeal) incurred therewith in connection with Escrow
Agent's undertakings pursuant to the terms and conditions of the Escrow
Agreement, unless such act or omission is a result of the willful
misconduct or gross negligence of the Escrow Agent.
10. INTERPLEADER: If disagreement arises about the
interpretation
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of this Escrow Agreement, or about the rights and obligations or the
propriety of any action contemplated by the Escrow Agent hereunder, Escrow
Agent may, at its sole discretion, file an action in interpleader to
resolve the said disagreement. The Escrow shall be indemnified by the
Company and Group for all costs, including reasonable attorneys' fees of
any nature (including appeal) in connection with any aforesaid interpleader
action and the Escrow Agent shall be fully protected in suspending all or a
part of its activities under this Escrow Agreement until a final judgment
in the interpleader action shall have been rendered by the appropriate
judicial body.
11. COMPENSATION: The Escrow Agent shall receive compensation
in
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accordance with its schedule of fees attached hereto as "Exhibit A" and
incorporated herein as part of this Escrow Agreement. The fee schedule may
be modified from time to time, provided however, that all parties hereto
shall be given 30 days' notice prior to the effective date of any fee
increase.
12. RESIGNATION: The Escrow Agent may resign at any time for
any
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reason upon the giving of 30 days' written notice to the Company. If a
notice of appointment of a successor Escrow Agent is not delivered to the
Escrow Agent within 30 days after notice of resignation, the Escrow Agent
may petition any court of competent jurisdiction (the "Court") to name a
successor Escrow Agent, and the Escrow Agent herein shall be fully relieved
of all liability to any and all parties upon the transfer of all cash or
property in its possession under the Escrow Agreement to the Successor
Escrow Agent either designated or appointed by the Court.
13. GOVERNING LAW: This Escrow Agent shall be construed and
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enforced according to the laws of the State of Florida.
14. ENTIRE AGREEMENT: This Escrow Agreement represents the
entire
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agreement between Turnberry Bank, as Escrow Agent, and all other parties to
this Escrow Agreement, with respect to the subject matter of this Escrow
Agreement, and shall be binding upon the parties, their respective
successions and assigns.
15. COUNTERPARTS: This Agreement may be executed through the
use
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of separate signature pages or in any number of counterparts, and each of
such counterparts shall, for all purposes, constitute one agreement binding
on all the parties, notwithstanding that all parties are not signatories to
the same counterpart.
16. NOTICES: Any notices and communication required or
permitted
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hereunder shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed as follows:
(a) If to Company, addressed to:
MEDLEY CREDIT ACCEPTANCE CORP.
Attn: Xxxxxx X. Press, President
0000 Xxxxx xx Xxxx Xxxx.
Xxxxx Xxxxxx, Xxxxxxx 00000
with a copy to:
XXXXXXX X. XXXXXXX, ESQ.
XXXXXXX & XXXX
0000 Xxxxx xx Xxxx Xxxx.
Xxxxx Xxxxxx, Xxxxxxx 00000
(b) If to the Escrow Agent, addressed to:
Turnberry Bank
Attention: Xxxxxxx Xxxx
00000 X.X. 00 Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(c) If to GROUP, addressed to:
Medley Group, Inc.
Attn: Xxxxxx X. Press, President
0000 Xxxxx xx Xxxx Xxxx.
Xxxxx Xxxxxx, Xxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have hereunder set their hands
and seals as of the day and year first above written.
COMPANY:
MEDLEY CREDIT ACCEPTANCE CORP.
BY: /s/ Xxxxxx X. Press
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XXXXXX X. PRESS, PRESIDENT
GROUP:
MEDLEY GROUP, INC.
BY: /s/ Xxxxxx X. Press
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XXXXXX X. PRESS, PRESIDENT
ESCROW AGENT:
TURNBERRY BANK
BY: /s/ Xxxxxxx Xxxx
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XXXXXXX XXXX, PRESIDENT
