FUNDS ESCROW AGREEMENT
|
|
| This
Agreement is dated as of the 30th day of March, 2004 among
Ventures-National Incorporated d/b/a Titan General Holdings, Inc., a Utah
corporation (the "Company") and Laurus Master Fund, Ltd.
(the "Purchaser"), and Dechert LLP (the "Escrow
Agent"):
|
|
W I T N E S S E T H:
|
| WHEREAS,
the Company and the Purchaser have entered into a Securities Purchase
Agreement ("Purchase Agreement") for the sale by the
Company to the Purchaser of a convertible term note and issuance of a
common stock purchase warrants to the Purchaser; and a Security Agreement
(the "Security Agreement") for the sale by the Company of
a minimum borrowing note and secured revolving note in the aggregate
principal amounts and in the denominations set forth on Schedule A hereto;
and
|
| WHEREAS,
the Purchaser requires the Company to deliver the notes against payment
therefor, with such notes 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
|
| WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and conditions of this Agreement;
|
| NOW
THEREFORE, the parties agree as follows:
|
|
ARTICLE I |
|
INTERPRETATION |
|
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. |
| (a) "Agreement" means this Agreement and all amendments made hereto and thereto by written agreement between the parties. |
| (b) "Company Documents" means the Purchase Agreement, the Term Note, Term Note Registration Rights Agreement, Term Note Warrant, the Security Agreement, the Charter Documents, the Legal Opinion and the Closing Payment. |
| (c) "Charter Documents" means the certified copy of the certificate of incorporation of the Company and its bylaws, and each of its subsidiaries. |
| -------------------------------------------------------------------------------------------------------------------- |
| (d) "Closing Payment" means the fees to be paid to Laurus Capital Management, LLC set forth on Schedule A hereto. |
| (e) "Disbursment Letter" means that certain letter delivered to the Escrow Agent by each of the Purchaser and the Company setting forth wire instructions and amounts to be funded at the Closing. |
| (f) "TTGH Security Agreement" means that certain Security Agreement delivered by the Company pursuant to the Securities Purchase Agreement. |
| (g) "TTGH Subsidiary Security Agreement" means that certain Subsidiary Security Agreement delivered by the Company pursuant to the Securities Purchase Agreement. |
| (h) "TTGH Subsidiary Guaranty" means that certain Subsidiary Guaranty delivered by each of the Company's subsidiairies pursuant to the Securities Purchase Agreement. |
| (i) "Escrowed Payment" means $750,000. |
| (j) "Legal Opinion" means the original signed legal opinion |
| Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP. |
| (k) "Purchaser Documents" means the Escrowed Payment, the Purchase Agreement and the Security Agreement, Minimum Borrowing Note Registration Rights Agreement ], Term Note Registration Rights Agreement and the Disbursement Letter. |
| (l) "Term Note" means the convertible term note of the Company issued to the Purchaser in the amount of $750,000 in the form of Exhibit A annexed to the Securities Purchase Agreement. |
| (m) ("Term Note Registration Rights Agreement" means that certain registration rights agreement executed and delivered pursuant to the Securities Purchase Agreement. |
| (n) "Term Note Warrant" means the common stock purchase warrant of the Company to purchase up to 750,000 shares of the Company's common stock, issued to Purchaser in connection with the Term Note . |
| 1.2.
Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters contained herein
and pertaining to the Company Documents and Purchaser Documents 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.
|
|
2 |
| -------------------------------------------------------------------------------------------------------------------- |
| 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.
|
| 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, only by a written instrument signed by all parties,
or, in the case of a waiver, by the party entitled to the benefit thereof
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.
|
| 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.
|
| 1.6.
Law Governing this Agreement. 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. Any action brought by any party
against any other party concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the city of New York, the state of New York.
Each of the parties hereto and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement.
|
| 1.7.
Consent to Jurisdiction. Subject to Section 1.6 hereof, each of the
Company, the Escrow Agent and the Purchaser hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
|
| 1.8.
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 any other.
|
|
3 |
| -------------------------------------------------------------------------------------------------------------------- |
|
ARTICLE II |
| 2.1. Delivery of Company Documents to Escrow Agent. On or about the date hereof, the Company shall deliver to the Escrow Agent the Company Documents executed by the Company to the extent it is a party thereto. |
| 2.2
Delivery of Purchaser Documents to Escrow Agent. On or about the
date hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser
Documents executed by the Purchaser.
|
| 2.3.
Intention to Create Escrow Over Company Documents and Purchaser
Documents. The Purchaser and the Company intend that the Company
Documents and Purchaser Documents shall be held in escrow by the Escrow
Agent pursuant to this Agreement for their benefit as set forth herein.
|
| 2.4.
Escrow Agent to Deliver Company Documents and Purchaser Documents.
The Escrow Agent shall hold and release the Company Documents and
Purchaser Documents only in accordance with the terms and conditions of
this Agreement.
|
|
ARTICLE III |
| 3.1.
Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Company Documents and Purchaser Documents
pursuant to (a), (b) or (c) below, as follows:
|
| (a)
Upon receipt by the Escrow Agent of the Company Documents and the
corresponding Purchaser Documents, the Escrow Agent will simultaneously
release the Company Documents to the Purchaser and release the
corresponding Purchaser Documents to the Company except that (i) the
Closing Payment will be delivered to the fund managers, Laurus Capital
Management, LLC; and (ii) the reasonable legal fees for counsel to the
Purchaser, which shall be paid pursuant to Section 2(c) of the Purchase
Agreement, will be released to the Purchaser. At the request of the Escrow
Agent, the Company each will provide written facsimile or original
instructions to the Escrow Agent as to the disposition of all funds
releasable to the Company.
|
| (b)
Upon receipt by the Escrow Agent of joint written instructions ("Joint
Instructions") signed by the Company and the Purchaser, it shall
deliver the Company Documents and Purchaser Documents in accordance with
the terms of the Joint Instructions.
|
|
4 |
| -------------------------------------------------------------------------------------------------------------------- |
| (c)
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"), the Escrow Agent shall deliver the Company Documents and
Purchaser Documents 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 has
competent jurisdiction and that the Court Order is final and non-appealable.
|
| 3.2.
Acknowledgement of Company and Purchaser; Disputes. The Company and
the Purchaser acknowledge that the only terms and conditions upon which
the Company Documents and Purchaser Documents are to be released are set
forth in Articles 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 Company Documents and
Purchaser Documents. Any dispute with respect to the release of the
Company Documents and Purchaser Documents shall be resolved pursuant to
Section 4.2 or by agreement among the Company and Purchaser.
|
|
ARTICLE IV |
| 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:
|
| (a) The Purchaser and the Company acknowledge and agree that the Escrow Agent (i) shall not be responsible for or bound by, and shall not be required to inquire into whether either the Purchaser or the Company is entitled to receipt of the Company Documents and Purchaser Documents pursuant to any other agreement or otherwise; (ii) shall be obligated only for the performance of such duties as are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) 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; (iv) 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; (v) shall not be responsible for the identity, authority or rights of any person, firm or corporation executing or delivering or purporting to execute or deliver this Escrow Agreement or any document deposited hereunder or any endorsement thereon or assignment thereof; (vi) 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 (vii) may consult counsel satisfactory to Escrow Agent, 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. |
|
5 |
| -------------------------------------------------------------------------------------------------------------------- |
| (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, jointly and severally, agree to indemnify and hold harmless the
Escrow Agent and any of Escrow Agent's partners, employees, agents and
representatives for any action taken or omitted to be taken by Escrow
Agent or any of them hereunder, including the reasonable fees of outside
counsel and other costs and expenses of defending itself against any claim
or liability under this Agreement, except in the case of gross negligence
or willful misconduct on Escrow Agent's part committed in its capacity as
Escrow Agent under this Agreement. The Escrow Agent shall owe a duty only
to the Purchaser and Company under this Agreement and to no other person.
|
| (c)
The Purchaser and the Company jointly and severally agree to reimburse the
Escrow Agent for its reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred in connection with the performance of
its duties and responsibilities hereunder.
|
| (d)
The Escrow Agent may at any time resign as Escrow Agent hereunder by
giving five (5) days prior written notice of resignation to the Purchaser
and the Company. Prior to the effective date of the resignation as
specified in such notice, the Purchaser and Company will issue to the
Escrow Agent a Joint Instruction authorizing delivery of the Company
Documents and Purchaser Documents to a substitute Escrow Agent selected by
the Purchaser and the Company. If no successor Escrow Agent is named by
the Purchaser and 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 to deposit the Company Documents and Purchaser
Documents with the clerk of any such court.
|
| (e)
The Escrow Agent does not have and will not have any interest in the
Company Documents and Purchaser Documents, but is serving only as escrow
agent, having only possession thereof.
|
| (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 accordnace with advice of
counsel (which counsel may be of the Escrow Agent's own choosing), and
shall not be liable for any mistake of fact or error of judgement or for
any acts or omissions of any kind except for its own willful misconduct or
gross negligence.
|
| (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.
|
| (h)
The Escrow Agent shall not 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 Company Documents and Purchaser Documents, in any other
dispute among the Purchaser and the Company, whether or not the Escrow
Agent is then holding the Company Documents and Purchaser Documents and
continues to act as the Escrow Agent hereunder.
|
|
6 |
| -------------------------------------------------------------------------------------------------------------------- |
| (i)
The provisions of this Section 4.1 shall survive the resignation of the
Escrow Agent or the termination of this Agreement.
|
| 4.2.
Dispute Resolution: Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
|
| (a)
If any dispute shall arise with respect to the delivery, ownership, right
of possession or disposition of the Company Documents and Purchaser
Documents, 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 Company Documents and Purchaser Documents
pending receipt of a Joint Instruction from the Purchaser and Company, or
(ii) deposit the Company Documents and Purchaser Documents 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 Company Documents and Purchaser Documents. 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.
|
| (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, corporation or entity by reason of such
compliance.
|
|
ARTICLE V |
| 5.1.
Termination. This escrow shall terminate upon the release of all of
the Company Documents and Purchaser Documents or at any time upon the
agreement in writing of the Purchaser and Company.
|
| 5.2.
Notices. All notices, request, 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):
|
|
7 |
| -------------------------------------------------------------------------------------------------------------------- |
| (a) If to the Company, to: |
| Ventures-National
d/b/a Titan General Holdings, Inc. Attn: Chief Financial Officer Fax: 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 (b) If to the Purchaser, to: LAURUS MASTER FUND, LTD. c/o Ironshore Corporate Services Ltd. X.X. Xxx 0000 G.T., Queensgate House, South Church Street Grand Cayman, Cayman Islands Fax: 000-000-0000 (c) If to the Escrow Agent, to: Dechert LLP 00 Xxxxxxxxxxx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Fax: (000) 000-0000 or to such other address as any of them shall give to the others by notice made pursuant to this Section 5.2.
|
| 5.3.
Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
|
| 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.
|
| 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.
|
| 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
instrument. This Agreement may be executed by facsimile transmission.
|
|
8 & 9 |
| -------------------------------------------------------------------------------------------------------------------- |
| 5.7.
Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
|
| VENTURES-NATIONAL
INCORPORATED D/B/A TITAN GENERAL HOLDINGS, INC. the "Company" |
| By:
/s/ Xxxxxx X.
Xxxxxxx Name: Xxxxxx X. Xxxxxxx Title: Chief Financial Officer |
| PURCHASER: LAURUS MASTER FUND, LTD. By: /s/ Xxxxx Grin Name: Xxxxx Grin Title: Partner/Fund Manager |
| ESCROW
AGENT: DECHERT LLP By: /s/ Xxxxxx Xxxxx Name: Xxxxxx Xxxxx Title: Partner |
|
10 |
| --------------------------------------------------------------------------------------------------------------------
|
|
SCHEDULE A TO FUNDS ESCROW AGREEMENT |
|
PURCHASER |
PRINCIPAL NOTE AMOUNT |
|
LAURUS MASTER FUND, LTD., Fax: 000-000-0000 |
$750,000 Term Note
|
|
TOTAL |
$750,000 |
|
FUND MANAGER |
CLOSING PAYMENT |
|
LAURUS CAPITAL MANAGEMENT, L.L.C. |
Closing payment payable in connection with investment by Laurus Master Fund, Ltd. for which Laurus Capital Management, L.L.C. is the Manager. |
|
TOTAL |
$27,000 |
WARRANTS
|
WARRANT RECIPIENT |
WARRANTS IN CONNECTION WITH OFFERING |
|
LAURUS MASTER FUND, LTD. |
750,000 Term Note Warrants issuable in connection with investment by Laurus Master Fund, Ltd. |
|
TOTAL |
750,000 Warrants |
|
11 |
|
