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 Dollars ($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
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and correct and are incorporated herein.
2. ESCROW. The Escrow Agentagrees to accept all funds
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delivered to it derived 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
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on the escrowed funds from the date of deposit to disbursement
shall belong to the Company.
5. DISBURSEMENT OF ESCROWED FUNDS: Provided the
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requirement for 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
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been sold, the 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
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Agreement 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
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deposited 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
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counsel of 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
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interpretation 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
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compensation in 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
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time for any 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
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and enforced according to the laws of the State of Florida.
14. ENTIRE AGREEMENT: This Escrow Agreement represents
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the entire 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
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through the use 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
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permitted 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
