EXHIBIT V TO SCHEDULE 13D
ESCROW AGREEMENT dated as of November 1, 1999 (this "Escrow Agreement") by
and among:
(i) Dechert Price & Xxxxxx (as "Escrow Agent");
(ii) Walnut Financial Services, Inc." (which will change its name to
"THCG, Inc.") ("Seller"); and
(iii) Greenwich Street Capital Partners II, L.P. ("Greenwich II"), GSCP
Offshore Fund, L.P. ("GSCP Offshore"), Greenwich Fund, L.P. ("GF"),
Greenwich Street Employees Fund, L.P. ("GSEF") and TRV Executive
Fund, L.P. ("TRV") (each of Greenwich II, GSCP Offshore, GF, GSEF and
TRV, a "Purchaser" and collectively, the "Purchasers").
Witnesseth:
WHEREAS, reference is made to the Securities Purchase Agreement dated as of
October 29, 1999 by and among Seller and the Purchasers (the "Securities
Purchase Agreement"), pursuant to which Purchasers are purchasing from Seller
(i) 2,500,000 shares (the "Shares") of Seller's common stock, $.01 par value per
share (the "Common Stock"), and (ii) warrants (the "Warrants") to purchase
2,000,000 shares of Common Stock; capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Securities
Purchase Agreement;
WHEREAS, the "Merger" and the "Related Transactions" have not yet been
effected in accordance (and as defined in) with the Amended and Restated
Agreement and Plan of Merger, dated as of August 5, 1999, by and among Seller,
Tower Hill Acquisition Corp. and Tower Hill Securities, Inc. (the "Merger
Agreement"), and the "BDC Withdrawal" (as defined in the Merger Agreement) is
not yet effective; and
WHEREAS, the Seller and the Purchasers desire to effect the "Closing" under
the Securities Purchase Agreement pending and contingent upon the consummation
of the Merger and the Related Transactions and the effectiveness of the BDC
Withdrawal.
Now, therefore, the parties hereto agree as follows:
1. Establishment of Escrow. Seller and Purchasers hereby appoint Dechert
Price & Xxxxxx as the "Escrow Agent" to hold in escrow: (i) the Registration
Rights Agreement, the Voting Agreement, the Tag-Along Agreement, the Legal
Opinions and those certificates and agreements (the "Closing Certificates")
delivered by each Purchaser and the Seller pursuant to the terms of Sections
6(b)(iii) and 6(c)(iii), respectively, of the Securities Purchase Agreement,
each in separate counterparts executed by Seller, each Purchaser and the other
parties thereto, as the case may be (the foregoing, the "Escrow Documents");
(ii) certificates representing the Shares and Warrants; and (iii) the aggregate
consideration for the Shares and Warrants in an amount equal to five million
dollars ($5,000,000) (the "Purchase Price"). The Escrow Agent hereby accepts its
appointment and designation as escrow agent pursuant to the terms and conditions
of this Escrow Agreement and acknowledges receipt: (x) from Seller, Purchasers
and the other parties to the Escrow Documents, as the case may be, of the Escrow
Documents; (y)
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from Seller, of certificates representing the Shares and Warrants; and (z) from
Purchasers, of cash in the amount of the Purchase Price pursuant to the terms of
the Securities Purchase Agreement. Subject to Section 4 below, the Escrow
Documents, the certificates representing the Shares and the Warrants and the
Escrow Account (collectively, the "Escrow Fund") shall be held in escrow
hereunder until 10:00 A.M. (New York City time) on November 4, 1999, (the
"Expiration Time").
2. Terms of Escrow Account. The Escrow Agent agrees to deposit the Purchase
Price in the account identified on Schedule A to this Escrow Agreement (the
"Escrow Account"). The Escrow Agent shall have control over the Escrow Account,
and no disbursements shall be made from the Escrow Account without the prior
written consent of the Escrow Agent. The Escrow Agent shall only disburse or
release funds from the Escrow Account in accordance with the provisions of this
Escrow Agreement.
3. Terms of Escrow of Shares and Warrants.
(a) Unless and until the Shares and Warrants are delivered to Purchasers
pursuant to the terms of this Escrow Agreement, no Purchaser shall be entitled
to vote, sell, pledge, convey or otherwise transfer the Shares and Warrants,
receive dividends or other distributions thereon or otherwise exercise any
rights as a stockholder of the Seller. However, Seller and the Purchasers shall
comply in all other respects with provisions of the Purchaser Documents as if
the Shares and Warrants were delivered to the Purchasers on the Closing Date and
as if the Purchaser Documents were effective from and after the Closing Date.
(b) Upon the issuance, payment or distribution of any stock or cash
dividend on or with respect to the Shares, or of any securities, cash or other
property with respect to the Shares upon the recapitalization, conversion,
exchange, reclassification, split or combination of (or similar corporate event
relating to) the Shares or the Warrants, Purchaser and Seller hereby agree that
Seller shall deliver or cause to be delivered such securities, cash or other
property (in the case of securities, delivered in the name of the Purchaser) to
the Escrow Agent and said securities, cash or other property shall thereafter be
deemed to be part of the "Escrow Fund". However, upon delivery of the Warrants
to Purchasers, the Warrants shall be deemed to have been outstanding from and
after the date hereof for purposes of determining whether the holders of the
Warrants are entitled to any adjustments based on the occurrence of any of the
foregoing.
4. Release of Escrow. (a) The Escrow Agent shall deliver the following
promptly upon, or as soon as reasonably practicable following, the receipt by
the Escrow Agent of the "Release Documents" as defined in Section 4(c) hereof:
(i) to Seller and Purchasers, as the case may be, fully executed originals
of the Escrow Documents;
(ii) to Seller, an amount representing the Purchase Price;
(iii) to Purchasers, the certificates representing the Shares and the
Warrants pursuant to the terms of the Agreement; and
(iv) to the Purchasers, all interest or other income earned on the Purchase
Price under the Escrow Account.
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(b) In the event that Seller fails to deliver the Release Documents before
the Expiration Time, Purchasers and Seller hereby agree that the Escrow
Documents and the obligations of the parties to the Securities Purchase
Agreement to effect the sale and purchase of the Securities shall be terminated
(without the necessity of any further action on the part of any of the parties
to the Escrow Documents), and shall be of no further force or effect (subject to
the proviso contained in Section 7 (c) of the Securities Purchase Agreement). In
such case the Escrow Agent shall deliver:
(i) to Seller, the counterparts of the Escrow Documents signed by Seller;
(ii) to each Purchaser, the counterparts of the Escrow Documents signed by
such Purchaser;
(iii) to Purchasers, the Purchase Price together with all the interest and
other income earned on the Purchase Price under the Escrow Account; and
(iv) to Seller, for cancellation, the certificates representing the Shares
and the Warrants.
(c) For purposes of this Escrow Agreement, "Release Documents" shall mean
and include the following:
(i) a copy of the Articles of Merger in the form attached as Exhibit A
hereto certified by the Company as having been filed with the Secretary of State
of New York and as being effective; and
(ii) a copy of the BDC Withdrawal together with evidence of its having been
filed with the United States Securities and Exchange Commission.
5. The Escrow Agent. Acceptance by the Escrow Agent of its duties under
this Escrow Agreement is subject to the following terms and conditions, which
the parties to this Agreement hereby agree shall govern and control the rights,
duties and immunities of the Escrow Agent:
(a) The duties and obligations of the Escrow Agent shall be determined
solely by the express provisions of this Escrow Agreement and the Escrow Agent
shall not be bound by the provisions of any agreement between Seller and
Purchasers or any third party, except that the Escrow Agent is charged with
knowledge of the Escrow Documents;
(b) This Escrow Agreement sets forth the duties and obligations of the
Escrow Agent with respect to all matters pertinent thereto and such duties and
obligations will terminate as set forth herein;
(c) The Escrow Agent shall not be responsible for any failure or inability
of the Seller or the Purchasers or of anyone else, to deliver the Escrow Fund to
the Escrow Agent or otherwise to honor any of the provisions of this Escrow
Agreement or the provisions of any of the other Purchaser Documents;
(d) The out-of-pocket fees and expenses of the Escrow Agent in
administering this Escrow Agreement shall be borne by the Seller. Seller and
Purchasers, jointly and severally,
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hereby agree to indemnify the Escrow Agent and each of its partners, employees
and agents (the "Indemnified Parties") for, and to hold each of the Indemnified
Parties harmless against, any loss, liability or expense, including but not
limited to reasonable attorneys' fees and expenses arising out of or in
connection with its acceptance of, or the performance of its duties and
obligations under this Escrow Agreement (including, but not limited to, any
action taken or omitted by the Escrow Agent in connection with this Escrow
Agreement or any action allegedly so taken or omitted) or by reason of, or as a
result of, the Escrow Agent's compliance with the joint instructions of Seller
and the Purchasers ; provided, however, that the Escrow Agent shall not be
entitled to indemnification with respect to any loss, liability or expense which
arises out of gross negligence or willful misconduct on the part of the Escrow
Agent.
(e) The Escrow Agent shall be fully protected in acting on and relying upon
any written notice, direction, request, waiver, consent, receipt or other paper
or document which the Escrow Agent in good faith believes to be genuine and to
have been signed or presented by the proper party or parties;
(f) The Escrow Agent shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it in good faith or for anything which
it may do or refrain from doing in connection herewith, except its own willful
misconduct or gross negligence; and
(g) The Escrow Agent may seek the advice of legal counsel (which may
include a partner of the Escrow Agent) in the event of any dispute or question
as to the construction of any of the provisions of this Escrow Agreement or its
duties hereunder, and it shall incur no liability and shall be fully protected
in respect of any action taken, omitted or suffered by it in good faith in
accordance with the written opinion of such counsel.
(h) The Escrow Agent is acting, and the parties hereto understand that the
Escrow Agent may continue to act, as counsel to the Purchasers in connection
with the Purchaser Documents (including this Agreement) and the transactions
contemplated thereunder or hereunder, whether or not the Escrow Fund is being
held by the Escrow Agent or has been delivered to an appropriate court in the
State of New York.
(i) The Escrow Agent does not have and will not have any interest in the
Escrow Fund but is serving only as escrow holder and has only possession
thereof.
6. Successor Agent. (a) The Escrow Agent may resign at any time by giving
thirty (30) days' written notice thereof to Seller and the Purchasers . Within
thirty (30) days after receiving such notice, the Seller and the Purchasers ,
shall in good faith agree upon and appoint a successor escrow agent (the
"Successor Escrow Agent") at which time the Escrow Agent shall deliver the
Escrow Fund to the Successor Escrow Agent. After appointment of the Successor
Escrow Agent and delivery of the foregoing by the Escrow Agent, the Escrow Agent
shall have no further duties or responsibilities in connection herewith.
(b) The Seller and the Purchasers may jointly remove the Escrow Agent upon
written notice to the Escrow Agent stating such removal and designating a
Successor Escrow Agent, and, upon delivery of the Escrow Fund to the Successor
Escrow Agent, the Escrow Agent shall thereupon be discharged from all
obligations under this Escrow Agreement and shall have no further duties or
responsibilities in connection herewith.
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(c) If after thirty (30) days from the date of delivery of its written
notice of intent to resign, or of a notice of removal, pursuant to Section 6(b)
above, the Escrow Agent has not received a written designation of a Successor
Escrow Agent, the Escrow Agent's sole responsibility shall be in its sole
discretion either to retain custody of the Escrow Fund, or to apply to a court
of competent jurisdiction for appointment of a Successor Escrow Agent and after
such appointment to have no further duties or responsibilities in connection
herewith.
7. Miscellaneous. (a) This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
applicable to contracts made and to be entirely performed therein. Each of the
parties hereto irrevocably submits to the jurisdiction of any New York State
court sitting in the County of New York and any Federal court sitting in the
Southern District of the State of New York in respect of any suit or proceeding
related to or arising out of this Escrow Agreement. Each party hereto also
hereby irrevocably waives any objection to the laying of the venue of any such
suit or proceeding in any such court and further waives any claim that any such
suit or proceedings brought in any such court has been brought in an
inconvenient forum. In addition to any form of service of process authorized by
law, service of process in any suit or proceeding hereunder shall be sufficient
if mailed to each party hereto at the address specified in Section 7(c) below,
and such service shall constitute "personal service" for purposes of such suit
or proceeding.
(b) This Escrow Agreement may not be assigned by any party hereto without
the written consent of the other parties. This Escrow Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective successors and permitted assigns. This Escrow Agreement shall
not confer any rights or remedies upon any person other than the parties hereto
and their respective heirs, personal representatives, legatees, successors and
permitted assigns.
(c) Any notice or consent hereunder shall be in writing and hand delivered
or sent by registered or certified mail, return receipt requested, or by Federal
Express or other similar courier service or by facsimile, as follows:
if to Seller:
THCG, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Facsimile: (000) 000-0000
if to any of the Purchasers:
Greenwich Street Capital Partners, II L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx and Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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if to the Escrow Agent:
Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or at such other address or facsimile number (or to such other person's
attention) as shall be specified by like notice. Any notice which is hand
delivered in the manner provided herein shall be deemed to have been duly given
to the party to whom it is directed upon actual receipt by such party (or its
agent for notices hereunder). Any notice which is addressed and mailed in the
manner herein provided shall be conclusively presumed to have been duly given to
the party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail. Any
notice which is sent by Federal Express or other similar service shall be
conclusively presumed to have been received on the next business day. Any notice
which is sent by facsimile shall be conclusively presumed to have been received
upon dispatch; any such notice shall be confirmed by mail.
(d) For the convenience of the parties, any number of counterparts hereof
may be executed, each such executed counterpart shall be deemed an original and
all such counterparts together shall constitute one and the same instrument.
(e) This Escrow Agreement may be modified or amended only by an instrument
in writing, duly executed by Seller, each Purchaser and the Escrow Agent. No
such modification or amendment shall be binding on the Escrow Agent unless the
Escrow Agent consents thereto in writing.
(f) No waiver by any party of any term, provision, covenant, representation
or warranty contained in this Escrow Agreement (or any breach thereof) shall be
effective unless it is in writing executed by the party against which such
waiver is to be enforced; no waiver shall be deemed or construed as a further or
continuing waiver of any such term, provision, covenant, representation or
warranty (or breach) on any other occasion or as a waiver of any other term,
provision, covenant, representation or warranty (or of the breach of any other
provision) contained this Escrow Agreement on the same or any other occasion.
(g) In this Escrow Agreement (i) words denoting singular include the plural
and vice versa, (ii) "it" or "its" or words denoting any gender include all
genders, (iii) the word "including" shall mean "including without limitation,"
whether or not expressed, (iv) any reference herein to a Section refers to a
Section of this Escrow Agreement, unless otherwise stated, and (v) when
calculating the period of time within or following which any act is to be done
or steps taken, the date which is the reference day in calculating such period
shall be excluded and if the last day of such period is not a business day, then
the period shall end on the next day which is a business day.
(h) Any provision of this Escrow Agreement which may be determined by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
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jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. It is expressly understood, however, that the parties hereto
intend each and every provision of this Escrow Agreement to be valid and
enforceable and hereby knowingly waive all rights to object to any provision of
this Escrow Agreement.
* * *
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In witness whereof, the undersigned have executed this Escrow Agreement as
of the date first above written.
Dechert Price & Xxxxxx, Walnut Financial Services, Inc.
as Escrow Agent
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------- -----------------------------
Xxxxxx X. Xxxxxx Xxxx X. Xxxxxx
A member of the firm President
Greenwich Street Capital Partners II, L.P.
GSCP Offshore Fund, L.P.
Greenwich Fund, L.P.
Greenwich Street Employees Fund, L.P.
TRV Executive Fund, L.P.
By: Greenwich Street Investments II,
L.L.C., their general partner
By: /s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
Managing Member
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