FUNDS ESCROW AGREEMENT
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This Agreement (this "Agreement") is dated as of the 29th day of June, 2004 among Ventures-National Incorporated d/b/a Titan General Holdings, Inc., a Utah corporation (the "Company"), Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP (the "Escrow Agent"):
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W I T N E S S E T H:
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| WHEREAS,
the Company and the Purchaser have agreed to amend and restate that
certain convertible term note in the original principal amount of $750,000
of the Company issued to the Purchaser pursuant to a Securities Purchase
Agreement dated as of March 22, 2004 between the Company and the Purchaser
(the "Purchase Agreement") and in connection therewith,
the Company has agreed to issue addtional common stock purchase warrants
to the Purchaser as set forth on Schedule A hereto; and
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| WHEREAS,
the Purchaser requires the Company to deliver the amended and restated
note against payment therefor, with such Note and payment to be delivered
to the Escrow Agent to be held in escrow and released by the Escrow Agent
in accordance with the terms and conditions of this Agreement; and
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| WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and conditions of this Agreement;
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| NOW THEREFORE, the parties agree as
follows:
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INTERPRETATION
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| 1.1 Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below. Terms not otherwise defined herein shall have
the meaning set forth in the Purchase Agreement.
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| (a) "Agreement"
means this Agreement and all amendments made hereto and thereto by written
agreement between the parties.
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| (b) "Company
Documents" means the Amended and Restated Term Note, Amendment No. 1
to Term Note Registration Rights Agreement, Term Note Warrant, and the
Closing Payment.
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| (c) "Closing
Payment" means the fees to be paid to Laurus Capital Management, LLC
set forth on Schedule A hereto.
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| (d) "Escrowed
Payment" means $1,500,000.
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| (e) "Purchaser
Documents" means the Escrowed Payment Amendment No. 1 to Term Note
Registration Rights Agreement and the Disbursement Letter.
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| (f) "Amended
and Restated Term Note" means the amended and restated convertible
term note of the Company issued to the Purchaser in the amount of
$2,250,000 in the form of Exhibit A annexed hereto.
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| (g) "Amendment
No. 1 to Term Note Registration Rights Agreement" means that certain
amendment to the registration rights agreement executed and delivered
pursuant to the Securities Purchase Agreement.
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| (h) "Term
Note Warrant" means the additional common stock purchase warrant of
the Company to purchase up to 1,800,000 shares of the Company's common
stock, issued to Purchaser in connection with the Amended and Restated
Term Note .
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| 1.2 Entire
Agreement. This Agreement constitutes the entire agreement among the
parties hereto with respect to the matters contained herein and supersedes
all prior agreements, understandings, negotiations and discussions of the
parties, whether oral or written. There are no warranties, representations
and other agreements made by the parties in connection with the subject
matter hereof except as specifically set forth in this Agreement.
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| 1.3 Extended
Meanings. In this Agreement words importing the singular number
include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person"
includes an individual, body corporate, partnership, trustee or trust or
unincorporated association, executor, administrator or legal
representative.
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| 1.4 Waivers
and Amendments. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions hereof may be
waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance.
Except as expressly stated herein, no delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any
right, power or privilege hereunder preclude any other or future exercise
of any other right, power or privilege hereunder.
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| 1.5 Headings.
The division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this
Agreement.
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| 1.6 Law
Governing this Agreement; Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws. With
respect to any suit, action or proceeding relating to this Agreement or to
the transactions contemplated hereby ("Proceedings"), each party
hereto irrevocably submits to the exclusive jurisdiction of the courts of
the County of New York, State of New York and the United States District
court located in the county of New York in the State of New York. Each
party hereto hereby irrevocably and unconditionally (a) waives trial by
jury in any Proceeding relating to this Agreement and for any related
counterclaim and (b) waives any objection which it may have at any time to
the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum
and further waives the right to object, with respect to such Proceedings,
that such court does not have jurisdiction over such party. As between the
Company and the Purchaser, the prevailing party shall be entitled to
recover from the other party its reasonable attorneys' fees and costs.
In the event that any provision of this Agreement is determined by a court
of competent jurisdiction to be invalid or unenforceable, then the
remainder of this Agreement shall not be affected and shall remain in full
force and effect.
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| 1.7 Construction.
Each party acknowledges that its legal counsel participated in the
preparation of this Agreement and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
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ARTICLE II
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APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
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| 2.1 Appointment.
The Company and the Purchaser hereby irrevocably designate and appoint the
Escrow Agent as their escrow agent for the purposes set forth herein, and
the Escrow Agent by its execution and delivery of this Agreement hereby
accepts such appointment under the terms and conditions set forth herein.
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| 2.2 Copies
of Documents to Escrow Agent. On or about the date hereof, the
Purchaser shall deliver to the Escrow Agent copies of the Documents
executed by the Company to the extent it is a party thereto.
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| 2.3 Delivery
of Escrowed Payment to Escrow Agent. On or about the date hereof, the
Purchaser shall deliver to the Escrow Agent the Escrowed Payment.
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| 2.4 Intention
to Create Escrow Over the Escrowed Payment. The Purchaser and the
Company intend that the Escrowed Payment shall be held in escrow by the
Escrow Agent and released from escrow by the Escrow Agent only in
accordance with the terms and conditions of this Agreement.
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ARTICLE III
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RELEASE OF ESCROW
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| 3.1 Release
of Escrow. Subject to the provisions of Section 4.2, the Escrow Agent
shall release the Escrowed Payment from escrow as follows:
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| (a) Promptly
following receipt by the Escrow Agent of (i) copies of the fully executed
Documents and this Agreement, (ii) the Escrowed Payment in immediately
available funds, (iii) joint written instructions ("Joint
Instructions") executed by the Company and the Purchaser setting
forth the payment direction instructions with respect to the Escrowed
Payment and (iv) Escrow Agent's verbal instructions from Xxxxx Grin
and/or Xxxxxx Grin (each of whom is a director of the Purchaser)
indicating that all closing conditions relating to the Documents have been
satisfied and directing that the Escrowed Payment be disbursed by the
Escrow Agent in accordance with the Joint Instructions, then the Escrowed
Payment shall be deemed released from escrow and shall be promptly
disbursed in accordance with the Joint Instructions. The Joint
Instructions shall include, without limitation, Escrow Agent's
authorization to retain from the Escrowed Payment Escrow Agent's fee for
acting as Escrow Agent hereunder and the Closing Payment for delivery to
Laurus Capital Management, LLC in accordance with the Joint Instructions.
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| (b) Upon
receipt by the Escrow Agent of a final and non-appealable judgment, order,
decree or award of a court of competent jurisdiction (a "Court
Order") relating to the Escrowed Payment, the Escrow Agent shall
remit the Escrowed Payment in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party
presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the
Court Order is a court of competent jurisdiction and that the Court Order
is final and non-appealable.
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| 3.2 Acknowledgement
of Company and Purchaser; Disputes. The Company and the Purchaser
acknowledge that the only terms and conditions upon which the Escrowed
Payment are to be released from escrow are as set forth in Sections 3 and
4 of this Agreement. The Company and the Purchaser reaffirm their
agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Escrowed Payment. Any dispute with respect
to the release of the Escrowed Payment shall be resolved pursuant to
Section 4.2 or by written agreement between the Company and Purchaser.
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ARTICLE IV
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CONCERNING THE ESCROW AGENT
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| 4.1 Duties
and Responsibilities of the Escrow Agent. The Escrow Agent's duties
and responsibilities shall be subject to the following terms and
conditions:
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| (a) The
Purchaser and the Company acknowledge and agree that the Escrow Agent (i)
shall not be required to inquire into whether the Purchaser, the Company
or any other party is entitled to receipt of any Document or all or any
portion of the Escrowed Payment; (ii) shall not be called upon to construe
or review any Document or any other document, instrument or agreement
entered into in connection therewith; (iii) shall be obligated only for
the performance of such duties as are specifically assumed by the Escrow
Agent pursuant to this Agreement; (iv) may rely on and shall be protected
in acting or refraining from acting upon any written notice, instruction,
instrument, statement, request or document furnished to it hereunder and
believed by the Escrow Agent in good faith to be genuine and to have been
signed or presented by the proper person or party, without being required
to determine the authenticity or correctness of any fact stated therein or
the propriety or validity or the service thereof; (v) may assume that any
person purporting to give notice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized
to do so; (vi) shall not be responsible for the identity, authority or
rights of any person, firm or company executing or delivering or
purporting to execute or deliver this Agreement or any Document or any
funds deposited hereunder or any endorsement thereon or assignment
thereof; (vii) shall not be under any duty to give the property held by
Escrow Agent hereunder any greater degree of care than Escrow Agent gives
its own similar property; and (viii) may consult counsel satisfactory to
Escrow Agent (including, without limitation, Loeb & Loeb, LLP or such
other counsel of Escrow Agent's choosing), the opinion of such counsel
to be full and complete authorization and protection in respect of any
action taken, suffered or omitted by Escrow Agent hereunder in good faith
and in accordance with the opinion of such counsel.
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| (b) The
Purchaser and the Company acknowledge that the Escrow Agent is acting
solely as a stakeholder at their request and that the Escrow Agent shall
not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Purchaser and the
Company hereby, jointly and severally, indemnify and hold harmless the
Escrow Agent and any of Escrow Agent's partners, employees, agents and
representatives from and against any and all actions taken or omitted to
be taken by Escrow Agent or any of them hereunder and any and all claims,
losses, liabilities, costs, damages and expenses suffered and/or incurred
by the Escrow Agent arising in any manner whatsoever out of the
transactions contemplated by this Agreement and/or any transaction related
in any way hereto, including the fees of outside counsel and other costs
and expenses of defending itself against any claims, losses, liabilities,
costs, damages and expenses arising in any manner whatsoever out the
transactions contemplated by this Agreement and/or any transaction related
in any way hereto, except for such claims, losses, liabilities, costs,
damages and expenses incurred by reason of the Escrow Agent's gross
negligence or willful misconduct. The Escrow Agent shall owe a duty only
to the Purchaser and Company under this Agreement and to no other person.
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| (c) The
Purchaser and the Company shall jointly and severally reimburse the Escrow
Agent for its reasonable out-of-pocket expenses (including counsel fees
(which counsel may be Loeb & Loeb LLP or such other counsel of the
Escrow Agent's choosing) incurred in connection with the performance of
its duties and responsibilities hereunder, which shall not (subject to
Section 4.1(b)) exceed $1,500.
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| (d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving
five (5) business days prior written notice of resignation to the
Purchaser and the Company. Prior to the effective date of resignation as
specified in such notice, the Purchaser and Company will issue to the
Escrow Agent a Joint Instruction authorizing delivery of the Documents and
the Escrowed Payment to a substitute Escrow Agent selected by the
Purchaser and the Company. If no successor Escrow Agent is named by the
Purchaser and the Company, the Escrow Agent may apply to a court of
competent jurisdiction in the State of New York for appointment of a
successor Escrow Agent, and deposit the Documents and the Escrowed Payment
with the clerk of any such court and/or otherwise commence an interpleader
or similar action for a determination of where to deposit the same.
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| (e) The
Escrow Agent does not have and will not have any interest in the Documents
and the Escrowed Payment, but is serving only as escrow agent, having only
possession thereof.
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| (f) The
Escrow Agent shall not be liable for any action taken or omitted by it in
good faith and reasonably believed by it to be authorized hereby or within
the rights or powers conferred upon it hereunder, nor for action taken or
omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be Loeb & Loeb, LLP or such other counsel of the
Escrow Agent's choosing), and shall not be liable for any mistake of
fact or error of judgment or for any acts or omissions of any kind except
to the extent any such liability arose from its own willful misconduct or
gross negligence.
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| (g) This
Agreement sets forth exclusively the duties of the Escrow Agent with
respect to any and all matters pertinent thereto and no implied duties or
obligations shall be read into this Agreement.
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| (h) The
Escrow Agent shall be permitted to act as counsel for the Purchaser or the
Company, as the case may be, in any dispute as to the disposition of the
Documents and the Escrowed Payment, in any other dispute between the
Purchaser and the Company, whether or not the Escrow Agent is then holding
the Documents and/or the Escrowed Payment and continues to act as the
Escrow Agent hereunder.
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| (i) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent or the termination of this Agreement.
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| 4.2 Dispute
Resolution; Judgments. Resolution of disputes arising under this
Agreement shall be subject to the following terms and conditions:
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| (a) If
any dispute shall arise with respect to the delivery, ownership, right of
possession or disposition of the Documents and/or the Escrowed Payment, or
if the Escrow Agent shall in good faith be uncertain as to its duties or
rights hereunder, the Escrow Agent shall be authorized, without liability
to anyone, to (i) refrain from taking any action other than to continue to
hold the Documents and the Escrowed Payment pending receipt of a Joint
Instruction from the Purchaser and Company, (ii) commence an interpleader
or similar action, suit or proceeding for the resolution of any such
dispute; and/or (iii) deposit the Documents and the Escrowed Payment with
any court of competent jurisdiction in the State of New York, in which
event the Escrow Agent shall give written notice thereof to the Purchaser
and the Company and shall thereupon be relieved and discharged from all
further obligations pursuant to this Agreement. The Escrow Agent may, but
shall be under no duty to, institute or defend any legal proceedings which
relate to the Documents and the Escrowed Payment. The Escrow Agent shall
have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or
otherwise determines that it is necessary to consult counsel which such
counsel may be Loeb & Loeb LLP or such other
counsel of the Escrow Agent's choosing.
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| (b) The
Escrow Agent is hereby expressly authorized to comply with and obey any
Court Order. In case the Escrow Agent obeys or complies with a Court
Order, the Escrow Agent shall not be liable to the Purchaser and Company
or to any other person, firm, company or entity by reason of such
compliance.
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ARTICLE V
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GENERAL MATTERS
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| 5.1 Termination.
This escrow shall terminate upon disbursement of the Escrowed Payment in
accordance with the terms of this Agreement or earlier upon the agreement
in writing of the Purchaser and Company or resignation of the Escrow Agent
in accordance with the terms hereof.
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| 5.2 Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been
duly given one (1) day after being sent by telecopy (with copy delivered
by overnight courier, regular or certified mail):
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| If to the Company,
to: Ventures-National
Incorporated d/b/a Titan General Holdings, Inc. 00000 Xxx Xxxx Xxxxxxx Xxxx. Xxxxxxx, XX 00000 Attn: Chief Financial Officer Xxxxxx Xxxxxxx Fax: 000-000-0000 -------------------------------------------------------------------------------------------------- |
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| With a copy
to: Xxxxxx
X. Xxxx Xxxxxxxxx Xxxx Xxxxxxxx Xxxxxxx LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 Phone 000-000-0000 Fax 000-000-0000 If to the Purchaser,
to: LAURUS
MASTER FUND, LTD. (c) If to the Escrow Agent,
to: Loeb
& Loeb LLP |
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| 5.3 Interest.
The Escrowed Payment shall not be held in an interest bearing account nor
will interest be payable in connection therewith.
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| 5.4 Assignment;
Binding Agreement. Neither this Agreement nor any right or obligation
hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
legal representatives, successors and assigns.
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| 5.5 Invalidity.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by
law.
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| 5.6 Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by
different signatories hereto on separate counterparts, each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same agreement. This Agreement may be executed
by facsimile transmission.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written VENTURES-NATIONAL
INCORPORATED By: /s/
Xxxxxx X.
Xxxxxxx LAURUS MASTER FUND, LTD. By:
/s/ Xxxxx
Grin ESCROW AGENT: LOEB & LOEB LLP By: /s/
Xxxx Xxxxxxx |
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER LAURUS MASTER FUND, LTD., Fax: 000-000-0000 TOTAL |
PRINCIPAL NOTE AMOUNT
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| FUND MANAGER
LAURUS CAPITAL MANAGEMENT, L.L.C TOTAL
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CLOSING PAYMENT
Closing payment payable in connection with $54,000
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WARRANTS
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| WARRANT RECIPIENT LAURUS MASTER FUND, LTD. TOTAL |
WARRANTS IN CONNECTION 1,800,000 Term Note Warrants issuable in 1,800,000 |
