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EXHIBIT 4.10
SUBSCRIPTION ESCROW AGREEMENT
THIS AGREEMENT made effective on February __, 1999 by and between PawnMart,
Inc., ("Issuer"), Xxxxxx Capital, Ltd, ( "Dealer"), and Trust Management, Inc.,
("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 by it under the terms of this Agreement subject to Rule 15c2-4
under the Securities 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 (less interest earned thereon which will
be paid to the subscribing investors) 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, 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 three business days after
presentation of such payments to the Agent.
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.
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
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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 (000) 000-0000, 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:
TRUST MANAGEMENT, INC.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
Attention of Corporate Trust Administration
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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:
Xxxxxx Capital, Ltd.
0000 Xxxxxxxxxxxxx Xxxxx, Xxxxx 0-000
Xxxx Xxxxx, Xxxxx 00000
FAX - (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 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
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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:
TRUST MANAGEMENT, INC.
By:
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Xxxxxx. X. Xxxxxx, President
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ESCROW FEE SCHEDULE
ACCEPTANCE FEE. All legal instruments will be reviewed by counsel for the Trust
Management, Inc., prior to account acceptance. All legal expenses incurred in
this review and during the period of escrow will be borne by the parties in
interest.
SUBSCRIPTION ESCROW. Receiving deposits from two or more investors or
subscribers, providing investor recordkeeping, investment of funds as directed,
and disbursement of funds on initial closing; there is a $4,000 minimum per year
or for any portion of a year.
Up to $10,000,000 in aggregate deposits .050%
Next $20,000,000 in aggregate deposits .030%
Next $20,000,000 in aggregate deposits .010%
Next $20,000,000 in aggregate deposits .009%
Balance of deposits .006%
Minimum annual fee: $4,000 for any portion of the year
IN CASE OF RETURN OF SUBSCRIPTION FUNDS TO INVESTORS:
Allocation of interest, disbursements,
1099 reporting relating to return of
subscription funds: $7 per participant
NOTE: This fee structure is limited to 500 participants; an additional charge of
$1.00 per participant will apply if the aggregate escrow exceeds 500
participants.
TRANSACTION CHARGES. Normal transactions including book entries, cash receipts
and disbursements, and wire transfers will be done at no charge. Foreign
securities will be assessed transaction fees as incurred.
EXTRAORDINARY SERVICES AND OUT-OF-POCKET EXPENSES. For services which cannot be
presently anticipated but which may be necessary or desirable, a reasonable fee
will be charged based on nature of the work, time involved, and responsibility
involved.
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