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Exhibit 4.10
SUBSCRIPTION ESCROW AGREEMENT
THIS AGREEMENT made effective on March __, 1999 by and between PawnMart, Inc.,
("Issuer"), Xxxxxx Capital, Ltd., ("Dealer"), and Norwest Bank Texas, N.A.,
("Agent").
WHEREAS, the Issuer is offering for subscription, up to $10,000,000 in principal
amount of its 12% Subordinated Notes Due 2004 (the "Notes") on the terms and
conditions set forth in the Prospectus (the "Prospectus") filed with the
Securities and Exchange Commission in connection with the Issuer's Form S-1
Registration Statement, File No. 333-70635; and
WHEREAS, the Issuer appoints the Agent to perform the services of depository and
escrow agent pursuant to the terms and conditions of this Agreement with respect
to subscriptions to the Issuer made by prospective purchasers of the Notes (the
"Investors");
NOW, THEREFORE, the parties hereto agree as follows:
1. Investor checks shall be delivered and made payable to Agent until the
earlier of (i) the date that Agent receives Investor checks aggregating
at least $250,000 (the "Minimum Subscription"), or (ii) June 30, 1999,
(the "Subscription Cut-off Date"). Dealer shall transmit Investor
checks and subscription agreements to the Agent by noon of the next
business day following receipt by the Dealer, and Agent shall deposit
all subscription checks and other payments for the Notes by Investors
which it receives into an escrow account maintained by Agent (the
"Escrow Fund"). The Escrow Agent will credit the proceeds to an escrow
cash account (the "Escrow Account") to be held and invested by it under
the terms of this Agreement subject to Rule 15c2-4 under the Securities
Exchange Act of 1934.
2. The Issuer reserves the right to reject any subscription. The Issuer
shall promptly refund the subscription amount which has been rejected
to the Investor unless the subscription amount is on deposit with
Agent, in which case Agent, upon written direction of the Issuer, shall
make such refund with interest, if any, as soon as Agent has collected
funds on such Investor's check.
3. Prior to the close of business on the Subscription Cut-Off Date, Agent
shall verify with the Issuer whether or not subscriptions for the
Minimum Subscription have been received.
4. If the Minimum Subscription has been received by Agent prior to the
close of business on the Subscription Cut-Off Date, the Issuer shall
advise Agent in writing that the subscription was successful. Agent
shall then and thereafter remit collected funds (including interest
earned thereon) to the Issuer at the Issuer's request and in the
Issuer's sole discretion. Amounts received by Agent in forms other than
cash shall be available for transfer to the Issuer or to the Investor,
as the case may be, once Agent has collected funds.
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5. If Agent has not received (i) Investor checks or other payments
evidencing the subscription of at least the Minimum Subscription prior
to the close of business on the Subscription Cut-Off Date, AND (ii)
within a reasonable time after the Subscription Cut-Off Date, written
advice from the Issuer as required by Paragraph 4 above concerning the
success of the subscription, all subscriptions and amounts paid in
respect thereto shall be promptly returned to the Investors together
with any interest which has been earned thereon.
6. Agent shall have no authority or obligation to exercise discretion as
to the investment of the Escrow Fund, but will invest and reinvest the
Escrow Fund in short term debt obligations issued or guaranteed by, and
bearing the full faith and credit as to the repayment of full principal
and interest of, the United States of America, shares in money market
mutual funds that invest in such assets, or will deposit the Escrow
Fund in any time or savings deposit of the Agent, not to exceed
$100,000 at any one institution, of any federally insured bank
chartered and supervised by the United States of America and holding
FDIC (or its successor) insurance. The subscription payments will be
invested within three business days after receipt of good funds to the
Agent. The escrow funds shall be in all respects invested in funds
according to Rule 15c2-4 of the Securities Exchange Act of 1934.
7. Agent shall be under no duty or responsibility to enforce collection of
any checks delivered to Agent hereunder. Agent shall promptly notify
and return to the Issuer any check or instrument received from the
Issuer or Investor upon which payment is refused, together with the
related documents which were delivered to Agent. If any check or
instrument delivered to Agent under this Agreement is uncollectible,
Agent shall notify the Issuer and shall deliver the returned check or
instrument to the Issuer.
8. Agent shall provide all administrative and reporting services
contemplated by this Agreement to effect the purpose stated herein.
9. Agent is not a party to, nor is it bound by, any agreement out of which
this Agreement may arise including, but not limited to, the Prospectus.
Agent is not charged with notice of the existence of any agreement out
of which this Agreement may arise other than the Prospectus.
10. The Agent may resign, for any reason, upon ten (10) days written notice
to the parties to this Agreement. Upon expiration of such ten (10) days
notice period (or as soon as practicable with respect to funds that are
not collected funds at the expiration of such period), the Agent shall
deliver all cash or property in its possession under this Agreement to
any successor Agent appointed by the Issuer, or if no successor Agent
has been appointed, to any court of competent jurisdiction in Tarrant
County, Texas. Upon either such delivery, Agent shall be released from
any and all liability under this Agreement.
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11. Agent may act upon any notice, request, certificate, approval, consent
or other paper believed by it to be genuine and to be signed by the
proper party or parties. Agent shall not be required to take any action
(or refrain from taking any action) if, in the reasonable opinion of
Agent, such action (or inaction) could expose Agent to a risk of
incurring costs, expenses or liabilities against which Agent has not,
in its reasonable opinion, received adequate indemnity and security.
12. The Agent shall be entitled to compensation from the Issuer for acting
hereunder in accordance with the fee schedule attached as EXHIBIT A
hereto. Agent fees will be paid by the Issuer to the Agent in
accordance with the attached fee schedule. The Agent shall also be
entitled to reimbursement of out-of-pocket expenses incurred in
connection with the performance of its services as Agent, including
reasonable fees and disbursements of legal counsel.
13. Agent and its affiliates shall not be liable, responsible, or
accountable for damages or otherwise to the Issuer or any Broker/Dealer
for any act or omission under the provisions of this Agreement, unless
such act or omission constitutes gross negligence, willful misconduct,
or fraud on behalf of the Agent.
14. The Agent, its affiliates, and each of its officers, directors,
employees, agents and attorneys (collectively, the "Indemnified
Parties") shall be indemnified against and be held harmless by the
Issuer from any and all losses, costs, damages, expenses, claims and
attorney's fees suffered or incurred by the Indemnified Parties as a
result of, in connection with or arising from, or out of, but not
limited to, the acts or omissions of any Indemnified Party in
performance of or pursuant to this Agreement, except such acts or
omissions as may result from such Indemnified Party's willful
misconduct, gross negligence or fraud.
15. The Agent shall not be responsible for the sufficiency or accuracy, or
the form, execution, validity or genuineness, of documents or
securities now or hereafter deposited or received hereunder, or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein, nor shall it be responsible or liable in any
respect on account of the identity, authority or rights of any person
executing, depositing or delivering or purporting to execute, deposit
or deliver any such document, security or endorsement or this
Agreement, or on account of or by reason of forgeries, false
representations, or the exercise of its discretion in any particular
manner, nor shall the Agent be liable for any mistake of fact or of law
or any error of judgment, or for any act or omission, except as a
result of its gross negligence or willful malfeasance. The Agent's
liability for any grossly negligent performance or non-performance
shall not exceed its fees and charges in connection with the services
provided hereunder. Under no circumstances shall Agent be liable for
any general or consequential damages or damages caused, in whole or in
part, by the action or inaction of the Issuer or any of its agents or
employees. Agent shall not be liable for any damage, loss, liability or
delay caused by accidents, strikes, fire, flood, war, riot, equipment
breakdown, electrical or mechanical failure, acts of God or any cause
which is reasonably unavailable or beyond its reasonable control.
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16. In the event of any disagreement involving a party to this Agreement
resulting in adverse claims or demands being made in connection with
the subject matter of this Agreement, or in the event that the Agent is
in doubt as to what action it should take hereunder, the Agent may, at
its option, refuse to comply with any claims or demands on it, or
refuse to take any other action hereunder so long as such disagreement
continues or such doubt exists, and in any such event, the Agent shall
not be or become liable in any way or to any person for its failure or
refusal to act, and the Agent shall be entitled to continue to refrain
from acting until (i) the rights of all parties have been fully and
finally adjudicated by a court of competent jurisdiction or (ii) all
differences shall have been adjudged and all doubt resolved by
agreement among all of the interested persons, and the Agent shall have
been notified thereof in writing signed by all such persons. In
addition to the foregoing remedies, the Agent is hereby authorized in
the event of any doubt as to the course of action it should take under
this Agreement, to petition the District Court of Tarrant County,
Texas, for instructions or to interplead the funds or assets so held
into such court. The parties agree to the jurisdiction of said court
over their persons as well as all amounts on deposit in the Escrow
Fund. In the event of any dispute and/or any litigation concerning the
subject matter of the Agreement (including any litigation incident to
the resignation of Agent), Agent shall be entitled to retain counsel of
its choice and Issuer shall indemnify, defend and hold harmless Agent
of and from any and all costs, loss, damage and exposure associated
with such dispute and/or litigation, including all reasonable and
necessary attorney's fees of Agent incurred in connection with such
dispute and/or litigation. Parties hereto agree that Agent shall be
entitled to recover such cost, loss, damages or expense (including
attorney fees) directly from the funds on deposit with Agent or
interplead with a court (as permitted under this Agreement) without
prejudice to Agent's further right of recovery against any party hereto
in the event such funds shall be insufficient to fully reimburse Agent.
This provision shall survive the resignation of Agent.
17. Each party to this Agreement shall be deemed conclusively to have given
and delivered any notice, request or instruction required to be given
or delivered hereunder if the same is in writing, signed by such party
and mailed by first class mail, postage prepaid, addressed to the other
party hereto, at the address set forth below; provided, however, that
the verification required of Agent by Paragraph 3 above, shall be given
orally (by telephone or in person) by contacting the officer of the
Issuer executing this Agreement on behalf of the Issuer at (817)
335-7296, and then confirmed in writing if the Issuer so requests. Any
written notices required by this Agreement shall be addressed as
follows:
If to Agent:
Xxxxxx Xxxxx
Norwest Bank Texas, N.A.
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
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If to Issuer:
Xxxxxx X. Xxxxx
PawnMart, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
If to Dealer:
Xxxxxxx Xxxxxx
Xxxxxx Capital, Ltd.
0000 Xxxxxxxxxxxxx Xxxxx, Xxxxx 0-000
Xxxx Xxxxx, Xxxxx 00000
Telecopy - (000) 000-0000
18. This Agreement expressly and exclusively sets forth the duties of Agent
with respect to any and all matters pertinent hereto and no implied
duties or obligations shall be read into this Agreement against Agent.
19. Unless and until the Escrow Fund is delivered to the Issuer under
Paragraph 4, it is specifically recognized and agreed that the Issuer
shall not have any right, title or interest in such funds; it being the
intention of the parties hereto that the Escrow Fund shall not be
subject to claims against the Issuer or any of its affiliates unless
and until the Minimum Subscriptions of ____ are achieved and delivery
of the funds thereof is made, as aforesaid, and the escrow account
hereunder is ended.
20. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT THE PORTIONS OF THE
TEXAS TRUST CODE, SECTION 111.001, ET SEQ. OF THE PROPERTY CODE,
V.A.T.S. CONCERNING FIDUCIARY DUTIES AND LIABILITIES OF TRUSTEE SHALL
NOT APPLY TO THIS AGREEMENT. THE PARTIES EXPRESSLY WAIVE SUCH DUTIES
AND LIABILITIES, IT BEING THEIR INTENT TO CREATE SOLELY AN AGENCY
RELATIONSHIP AND HOLD AGENT LIABLE ONLY IN THE EVENT OF ITS GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR IN ORDER TO OBTAIN THE LOWER FEE
SCHEDULE RATES AS SPECIFICALLY NEGOTIATED WITH AGENT. ANY LITIGATION
CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY
PROSECUTED IN THE COURTS OF TARRANT COUNTY, TEXAS, AND ALL PARTIES
CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THOSE COURTS.
This Agreement shall inure to and be binding upon the parties hereto,
their successors and assigns. The terms of this Agreement shall
commence with the date hereof and shall
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continue until the offering of the Minimum Subscriptions is achieved or
fails to be achieved by the Subscription Cut-Off Date, and the Escrow
Fund is disposed of under Paragraphs 4 or 5. All protections and
indemnities benefitting Agent (and any other Indemnified Party) are
cumulative of any other rights it (or they) may have by law or
otherwise, and shall survive the termination of this Agreement or the
resignation or removal of the Agent.
21. Except as otherwise required by law, neither Agent nor any successor
Agent shall be required to obtain or post a bond or any other security
in connection with the performance of its services hereunder.
22. No amendment to this Agreement shall be binding unless such amendment
is in writing and signed by the Agent or any successor Agent and the
Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by duly authorized representatives as of the date first
above written.
ISSUER:
PAWNMART, INC.
By:
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Xxxxxx X. Xxxxx, Senior Vice President and Chief Financial Officer
DEALER:
XXXXXX CAPITAL, LTD.
By:
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Xxxxxxx Xxxxxx, President
AGENT:
NORWEST BANK TEXAS, N.A.
By:
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Xxxxxx Xxxxx, Senior Vice President and Lead Trust Manager
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EXHIBIT A
ESCROW FEE SCHEDULE
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