ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into this 20th day of August
2001, by and between Pre-Settlement Funding Corporation, a Delaware Corporation
(the "Company"); Three Arrows Capital Corp. (the "Underwriter") and The Business
Bank, (the "Escrow Agent").
Background. Pursuant to the Offering of the Company dated on or about
September 1, 2001, the Company is offering for sale through Three Arrows Capital
Corp., shares of common stock (the "Shares"), $.001 par value per share, of the
Company (the "Common Stock") at a price of $1.00 per share (the "Offering").
Those persons who desire to purchase shares ("Subscribers") are required to
execute and deliver to the Underwriter a subscription agreement ("Subscription
Agreement") and are required to pay the purchase price of the shares subscribed
for by check, directed or made payable, to the Escrow Agent as escrow agent for
the Company. Checks will be sent by the Underwriter for deposit no later than
noon of the first business day following receipt.
The sale of any shares pursuant to the Offering is subject to various
conditions, including the receipt of acceptable Subscriptions and payment in
respect of the shares of Common Stock. The purpose of this Escrow Agreement is
to assure that no proceeds of the Offering are disbursed to or on behalf of, the
Company until the conditions set forth herein shall be satisfied. Once
acceptable Subscriptions and funds for the minimum number of shares have been
received, the Escrow Agent, pursuant to this Escrow Agreement, funds will be
released to the Company. The parties hereto, wish to set forth herein the terms
and conditions governing the escrow account and the funds being delivered to and
held by the Escrow Agent.
NOW THEREFORE, in consideration of the mutual promises herein
contained, each intending to be legally bound hereby, the parties hereto agree
as follows:
1. Escrow Agent. On behalf of the Subscribers, the Company hereby
designates and appoints The Business Bank as Escrow Agent to serve in accordance
with the terms and conditions of this Escrow Agreement and the Escrow Agent
agrees to act as such Escrow Agent in accordance with the terms and conditions
of this Escrow Agreement. The Business Bank is a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934.
2. Creation of Escrow. At any time and from time to time after the date
hereof until completion of the Offering and Closing thereunder, the Underwriter
shall cause to be delivered to the Escrow Agent, from the Subscribers, funds or
instruments payable to the Escrow Agent as escrow agent representing the
purchase price of shares subscribed for by Subscribers. The Escrow Agent shall
accept and hold in escrow all such funds so received by it for deposit in escrow
hereunder (the "Escrowed Funds") until released as set forth herein. The Escrow
Agent shall maintain books and records of account detailing the source of all
funds received by the Escrow Agent.
3. Investment of Escrowed Funds. Pending release from escrow, the
Escrowed Funds shall be invested by the Escrow Agent in interest bearing
short-term United States government securities or other short-term federally
insured money market investments, which are readily liquid. All interest accrued
on the Escrowed Funds or interest earned on the Escrowed Funds shall be retained
by the Escrow Agent as part of the Escrowed Funds and released in accordance
with the provisions of this Escrow Agreement. It is acknowledged and agreed that
the Escrowed Funds, including any interest or earnings thereon, are not assets
or deposit liabilities of the Escrow Agent or the Company, but constitute funds
submitted to the Escrow Agent by the Subscribers for safekeeping, pending
disbursement in accordance with the provisions of this Escrow Agreement.
4. Information. The Company has undertaken responsibility for tax
reporting of the interest or other amounts earned on the Escrowed Funds with
respect to each Subscriber in the event of the release of Escrowed Funds in
accordance with the provisions of Section 5(b) hereof, and disbursement of said
interest or other earnings to Subscribers. From time to time upon the request of
the Underwriter as agent for the Subscribers, the Escrow Agent shall furnish to
the Underwriter a statement of the amount of Escrowed Funds held by the Escrow
Agent, the approximate amount of any accrued interest thereon, and such
information as the Underwriter may reasonably request, The Escrow Agent shall
immediately notify the Underwriter if any check or instrument representing
Escrowed Funds or other purported transfer to Escrow Agent of Escrowed Funds
fails to result in the actual delivery of funds to the Escrow Agent.
5. Release of Escrowed Funds.
(a) Release of Escrowed Funds to the Company. Immediately upon the
receipt of the Officer's Certificate of the Company as described below, the
Escrow Agent shall release and deliver to the Company such portion of the
Escrowed Funds as represents payment of the purchase price of shares in respect
of which the Company has accepted Subscriptions plus all interest or other
earnings accrued on such portion of the Escrowed Funds. The Escrow Agent shall
not release any portion of the Escrowed Funds to the Company unless the
following condition (the "Condition") shall have been satisfied: it has received
a certification of the President or Chairman of the Board of Directors of the
Company to the effect that (i) the Company has received acceptable Subscriptions
(including payment in full of the purchase price) with respect to not less than
200,000 shares, and has accepted Subscriptions with respect to not less than
200,000 shares, and all terms of the Offering have been complied with. Such
certification shall also indicate the number of shares with respect to which
Subscriptions have been accepted and the number of shares, if any, and identity
of the Subscribers with respect to which Subscriptions have been rejected.
Notwithstanding anything to the contrary contained herein, the delivery of the
foregoing certification shall be in the sole discretion of the Company, and
nothing contained herein shall constitute any obligation, express or implied, of
the Company to deliver such certification, or to deliver it at any specified
time.
(b) Release of Escrowed Funds to Subscribers. Immediately after
receiving a certification of the President or Chairman of the Board of Directors
of the Company to the effect that the Company has either (i) terminated the
Offering in whole or in part; or (ii) rejected, revoked or canceled in whole or
in part any Subscription; or if the Condition shall not have been satisfied
prior to September 1, 2002 then the Escrow Agent shall return to the Subscriber
whose Subscription shall have been rejected, revoked or canceled, in whole or in
part, as a result of termination of the Offering, the failure of satisfaction of
the Condition prior to September 1, 2002 or otherwise, Escrowed Funds
representing such Subscriber's rejected, revoked or canceled payments, or all
Subscribers' payments in the event of termination of the Offering as a whole or
the failure of satisfaction of the Condition, without such Subscriber's share of
any interest or other earnings accrued on such portion of the Escrowed Funds.
6. Limitation of Liability. It is agreed that the duties of the Escrow
Agent are limited to those herein specifically provided and are ministerial in
nature. It is further agreed that the Escrow Agent shall incur no liability
whatsoever except by reason of its willful misconduct, gross negligence or bad
faith. The Escrow Agent shall be under no obligation in respect to amounts held
in escrow hereunder other than faithfully to follow the instructions herein
contained or delivered to the Escrow Agent in accordance with this Escrow
Agreement. It shall not be required to institute legal proceedings of any kind.
It shall have no responsibility for the genuineness or validity of any document
or other item deposited with it, and it shall be fully protected in acting in
accordance with the Escrow Agreement upon written instructions given to it and
reasonably believed by it to have been duly executed by the Company or
Underwriter in accordance herewith. The Company shall indemnify and hold the
Escrow Agent harmless with respect to anything done by the Escrow Agent in good
faith in any and all matters covered by this Agreement in accordance with the
instructions or provisions set forth herein. Neither the Escrow Agent nor any of
its Officers, Directors or employees have reviewed the Offering nor have they or
do they make any representations, or statements regarding the truth, accuracy or
effectiveness of the Offering.
7. Compensation. The Company shall pay all compensation, expenses and
other charges of the Escrow Agent relating to its services hereunder, including
all fees and commissions relating to the investment of the aforesaid escrowed
funds, for so long as the Escrow Agent holds any amount in Escrow hereunder. The
Escrow Agent shall not make any deduction or setoff of the amount of
compensation for its services hereunder (including all expenses, fees and
commissions) against the Escrowed Funds.
8. Resignation. The Escrow Agent, or any successor to it hereafter
appointed, may at any time resign by giving notice in writing to the Company and
Underwriter and, upon the appointment of a successor Escrow Agent as hereinafter
provided, shall be discharged from any further duties hereunder. In the event of
such resignation, a successor Escrow Agent, which shall be a bank or trust
company organized under the laws of the United States of America, shall be
appointed by the Company. Any such successor Escrow Agent shall deliver to the
Company and Underwriter a written instrument accepting such appointment
hereunder, and thereupon it shall succeed to all of the unaccrued rights and
duties of the Escrow Agent hereunder and shall be entitled to receive all of the
then remaining amounts held in escrow hereunder.
9. Termination. This Escrow Agreement shall terminate upon the earlier
of, (i) the receipt by the Escrow Agent of a written notice of termination
signed by the Company accompanied by sufficient certifications or other
documentation to verify that all Subscriptions and commitments to which the
Escrowed Funds relate shall have been accepted and certificates representing
such Shares issued, or rejected in whole; or (ii) the distribution of all of the
Escrowed Funds in accordance with this Escrow Agreement. Upon termination
pursuant to clause (i) above, the Escrow Agent shall deliver any Escrowed Funds
remaining after return to Subscribers of Escrowed Funds representing rejected
Subscriptions as instructed in such notice of termination in accordance with the
provisions of Section 5(b) hereof
10. Notices. Except as otherwise provided in this Agreement, any notice
or other communication hereunder shall be in writing and shall be deemed
delivered upon personal delivery or upon receipt if sent by facsimile
transmission, express delivery service or mailed by registered or certified
first class mail, postage prepaid, and addressed as follows:
To the Company: Pre-Settlement Funding Corp.
000 Xxxxx Xxxxxx Xxxx Xxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, President
=========
Phone: (000) 000-0000
Fax: (000) 000-0000
To the Escrow Agent: The Business Bank
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
To the Underwriter: Three Arrows Capital Corp.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other addresses or persons as the parties, from time to time, may
furnish one another by notice given in accordance with this section.
11. Miscellaneous.
(a) Assignment. This Escrow Agreement and the rights of the
parties hereunder may not be assigned by the Escrow Agent without the consent of
the Company and Underwriter, which consent may be withheld in the absolute
discretion of the Company and Underwriter, and any attempted assignment in
Violation of this Section 11 (a) shall be void. This Escrow Agreement and all
action taken hereunder in accordance with its terms shall be binding upon and
inure to the benefit of each of the parties hereto and its respective
successors, permitted assigns, heirs, and legal representatives.
(b) Amendment. This Escrow Agreement may be amended,
consistent with the protection of the interests of the Subscribers, upon written
notice to the Escrow Agent at any time by the Company or Underwriter, however
the duties, responsibilities or compensation of the Escrow Agent may not be
modified without its consent.
(c) Waiver, Waiver of any term or condition of this Escrow
Agreement by any party shall not be construed as a waiver of a subsequent breach
or failure of the same term or condition, or a waiver of any other term, or
condition of this Escrow Agreement.
(d) Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
(e) Integration. This Escrow Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and there are no other agreements, covenants, representations or warranties
except as set forth herein.
(f) Authority. Each party executing this Escrow Agreement
warrants its authority to execute this Escrow Agreement.
(g) Counterparts. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
(h) Attorneys Fees. In the event Escrow Agent is required to
seek legal advise, take any legal action or defend any legal action the Company
shall reimburse Escrow Agent for all attorney's fees and costs associated
therewith, which are incurred by Escrow Agent.
(i) Beneficiaries. The terms and provisions of this Escrow
Agreement shall create no right in any person, firm or corporation other than
the parties and their respective successors and assigns and no third party shall
have the right to enforce of benefit from the terms hereof.
(j) Transmittal. The Underwriter specifically agrees to transmit
all received funds to the Escrow Agent no later than noon of the day
following receipt.
(k) Commencement of the Offering. The Escrow Period will commence
upon qualification of the Offering by the Securities and Exchange
Commission.
(l) Collected Funds. The phrase "collected funds" relates to the
total amount of funds received by the Escrow Agent from the
Underwriter.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written,
ATTEST:
Pre-Settlement Funding Corporation
By:
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Name: Xxxxxx X. Xxxx
Title: President
Three Arrows Capital Corp.
By:
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Name: Xxxxxx Xxxxxxxx
Title: President
The Business Bank
By: ____________________________
Name: ____________________________
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Title: _____________________________
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