ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ____________, 1997 by and between
SENTINEL FINANCING, LTD., L.P., a Florida limited partnership (the "Company")
and [ ] (the "Selling Agent") and BANK OF MONTREAL TRUST COMPANY
(the "Escrow Agent").
WHEREAS, the Company proposes to sell a minimum of $1,000,000 and a
maximum of $15,000,000 principal amount of 12% Secured Fixed Rate Notes due 2002
(the "Notes"), as described in the Company's Registration Statement on Form SB-2
as declared effective by the Securities and Exchange Commission on __________,
1997 ("Registration Statement") in denominations of $1,000;
WHEREAS, the Notes are being offered and sold to investors by the
Selling Agent, pursuant to the Securities Act of 1933, and pursuant to
registration or exemptions from registration under state securities laws;
WHEREAS, the offering of the Notes will terminate on ____________
subject to extension to ________________ in the discretion of the Company (the
"Termination Date") and if acceptable subscriptions to purchase a minimum of
$1,000,000 principal amount of Notes have not been received by the Company on or
before the Termination Date, no Notes will be sold and all payments made by
subscribers will be refunded by the Escrow Agent as provided for herein; and
WHEREAS, with respect to all subscription payments received by
subscribers, the Company proposes to establish an escrow account with the Escrow
Agent at its offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
NOW, THEREFORE, it is agreed as follows:
1. ESTABLISHMENT OF ESCROW. The Escrow Agent hereby agrees to
receive and disburse the proceeds from the offering of the Notes and any
interest earned thereon in accordance herewith.
2. DEPOSIT OF ESCROWED PROPERTY. The Selling Agent, on behalf of
the subscribers of the Notes, shall from time to time, cause to be wired to or
deposited with the Escrow Agent funds or checks of the subscribers delivered in
payment for the Notes (the "Escrowed Property"). Any checks delivered to the
Escrow Agent pursuant to the terms hereof shall be made payable to or endorsed
to the order of ____________________________________________________. Subject
to Section 3, the Escrow Agent upon receipt of such checks shall present such
checks for payment to the drawee-bank under such checks. Any checks not honored
by the drawee-bank thereunder after the first presentment for payment shall be
returned to the Company in the same manner notices are delivered pursuant to
Section 5. Upon receipt of funds or checks from
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the Selling Agent, the Escrow Agent shall credit such funds and the amount of
such checks to an interest-bearing account (the "Escrow Account") held by the
Escrow Agent. If following the credit of the amount of any check to the Escrow
Account such check is dishonored, the Escrow Agent shall debit the Escrow
Account for the amount of such dishonored check.
3. LIST OF SUBSCRIBERS. The Selling Agent shall furnish or cause to
be furnished to the Escrow Agent, at the time of each deposit of funds or checks
pursuant to Section 2, a list, substantially in the form of EXHIBIT A hereto,
containing the name of, the address of, number of Notes subscribed for by, the
subscription amount delivered to the Escrow Agent on behalf of and the social
security number, if applicable, of, each subscriber whose funds are being
deposited, and to which is attached a completed W-9 form (or, in the case of any
subscriber who is not a United States citizen or resident, a W-8 form) for each
listed subscriber. The Escrow Agent shall notify the Selling Agent and the
Company of any discrepancy between the subscription amounts set forth on any
list delivered pursuant to this Section 3 and the subscription amounts received
by the Escrow Agent. The Escrow Agent is authorized to revise such list to
reflect the actual subscription amounts received and the release of any
subscription amounts pursuant to Section 4. Any provision of this Agreement to
the contrary notwithstanding, if any funds delivered to the Escrow Agent for
deposit are not accompanied by such list with respect to such funds, the Escrow
Agent shall not have any obligation to deposit such funds or invest such funds
until the applicable list has been furnished to the Escrow Agent.
4. WITHDRAWAL OF SUBSCRIPTION AMOUNTS.
(a) If the Escrow Agent shall receive a notice, substantially in
the form of EXHIBIT B hereto (an "Offering Termination Notice"), from the
Company, the Escrow Agent shall, promptly after receipt of such Offering
Termination Notice and the clearance of all checks received by the Escrow Agent
as Escrowed Property, send to each subscriber listed on the list held by the
Escrow Agent pursuant to Section 3 whose total subscription amount shall not
have been released pursuant to paragraph (b) or (c) of this Section 4 in the
manner set forth in paragraph (d) of this Section 4, a check to the order of
such subscriber in the amount of the remaining subscription amount plus any
accrued interest thereon held by the Escrow Agent as set forth on such list held
by the Escrow Agent. The Escrow Agent shall notify the Company and the Selling
Agent in writing promptly after the distribution of such funds to the
subscribers.
(b) In the event that (i) a minimum of $1,000,000 principal
amount of Notes have been subscribed for and funds in respect thereof shall have
been deposited with the Escrow Agent on or before the Termination Date and (ii)
no Offering Termination Notice shall have been delivered to the Escrow Agent,
the Company and the Selling Agent from time to time may deliver to the Escrow
Agent a joint notice, substantially in the form of EXHIBIT C hereto (a "Closing
Notice"), designating the date on which Notes are to be sold and delivered to
the subscribers thereof (a "Closing Date"), which date shall not be earlier than
the clearance of any checks received by the Escrow
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Agent as Escrowed Property, the proceeds of which are to be distributed on such
Closing Date, and identifying the subscribers and the number of Notes to be sold
to each subscriber on such Closing Date not more than seven (7) business days
prior to such Closing Date. The Escrow Agent after receipt of such Closing
Notice and the clearance of such checks shall, pay to the Company on such
Closing Date, in federal or other immediately available funds and otherwise in
the manner specified by the Company in such Closing Notice, an amount equal to
the aggregate of the purchase price for the Notes purchased by each subscriber
identified in such Closing Notice for the Notes to be sold on such Closing Date
as set forth on the list held by the Escrow Agent pursuant to Section 3 together
with any and all interest on the Escrowed Property, and shall return to each
subscriber a check in the amount of funds delivered by each subscriber in excess
of the purchase price per share (the "Excess Funds"), as more fully set forth on
the Closing Date.
(c) If at any time and from time to time prior to the release of
any subscriber's total subscription amount pursuant to paragraph (a) or (b) of
this Section 4 from escrow, the Company or the Selling Agent shall deliver to
the Escrow Agent a notice, substantially in the form of EXHIBIT D hereto (a
"Subscription Termination Notice"), to the effect that any or all of the
subscriptions of such subscriber have been rejected by the Company (a "Rejected
Subscription"), the Escrow Agent shall, promptly after receipt of such
Subscription Termination Notice and, if such subscriber delivered a check in
payment of its Rejected Subscription, after the clearance of such check, send to
such subscriber, in the manner set forth in paragraph (d) of this Section 4, a
check to the order of such subscriber in the amount of such Rejected
Subscription amount, together with interest earned on such amount, if any.
(d) For the purposes of this Section 4, any check that the
Escrow Agent shall be required to send to any subscriber shall be sent to such
subscriber by first class mail, postage prepaid, at such subscriber's address
furnished to the Escrow Agent pursuant to Section 3.
5. NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be (a) delivered by hand or
(b) sent by mail, registered or certified, with proper postage prepaid, and
addressed as follows:
If to the Company, to:
Sentinel Financing, Ltd., L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Selling Agent, to:
[ ]
______________________
______________________
Attention: __________
Phone: (___) ________
Fax: (___) __________
If to the Escrow Agent, to:
Bank of Montreal Trust Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall be effective when deposited in the
mails, except that notices and communications to the Escrow Agent and notices of
changes of address shall not be effective until received.
6. CONCERNING THE ESCROW AGENT. To induce the Escrow Agent to act
hereunder, it is further agreed by the Company and Selling Agent that:
(a) The Escrow Agent shall not be under any duty to give the
Escrowed Property held by it hereunder any greater degree of care than it gives
its own similar property and shall not be required to invest any funds held
hereunder except as directed by the Company in writing. The parties acknowledge
that the Escrow Agent shall not be responsible for any diminution in escrowed
funds due to losses resulting from investments. Uninvested funds held hereunder
shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own
gross negligence or willful misconduct, and, except with respect to claims based
upon such gross
4
negligence or willful misconduct that are successfully asserted against the
Escrow Agent, the other parties hereto shall jointly and severally indemnify and
hold harmless the Escrow Agent (and any successor Escrow Agent) from and against
any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Escrow Agreement. The costs and expenses of enforcing this
right of indemnification shall also be paid by the other parties hereto.
Without limiting the foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it hereunder
in good faith, in accordance with the terms hereof, including without limitation
any liability for any delays (not resulting from gross negligence or willful
misconduct) in the investment or reinvestment of the Escrowed Property, or any
loss of interest incident to any such delays.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in good faith and in accordance with such
advice.
(f) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only. Any payments
of income from the Escrow Account shall be subject to withholding regulations
then in force with respect to United States taxes. The parties hereto will
provide the Escrow Agent with appropriate W-9 forms for tax I.D., number
certification, or non-resident alien certifications.
This paragraph (f) and paragraph (c) of this Section 6 shall
survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
(g) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectibility of any security or other documents or
instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
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(i) The Escrow Agent (and any successor escrow agent) at any
time may be discharged from its duties and obligations hereunder by the delivery
to it of notice of termination signed by both the Company and the Selling Agent
or at any time may resign by giving written notice to such effect to the Company
and the Selling Agent. Upon any such termination or resignation, the Escrow
Agent shall deliver the Escrowed Property to any successor escrow agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction if no such successor escrow agent is agreed upon, whereupon the
Escrow Agent shall be discharged of and from any and all further obligations
arising in connection with this Escrow Agreement. The termination or
resignation of the Escrow Agent shall take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or (ii)
the day that is 30 days after the date of delivery: (A) to the Escrow Agent of
the other parties' notice of termination or (B) to the other parties hereto of
the Escrow Agent's written notice of resignation. If at that time the Escrow
Agent has not received a designation of a successor escrow agent, the Escrow
Agent's sole responsibility after that time shall be to keep the Escrowed
Property safe until receipt of a designation of successor escrow agent or a
joint written disposition instruction by the other parties hereto or an
enforceable order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of any third party contemplated herein as a means to
resolve disputes and may rely without any liability upon the contents thereof.
(k) In the event of any disagreement among or between the other
parties hereto and/or the subscribers of the Notes resulting in adverse claims
or demands being made in connection with the Escrowed Property, or in the event
that the Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrowed Property
until the Escrow Agent shall have received (i) a final and non-appealable order
of a court of competent jurisdiction directing delivery of the Escrowed Property
or (ii) a written agreement executed by the other parties hereto and consented
to by the subscribers directing delivery of the Escrowed Property, in which
event the Escrow Agent shall disburse the Escrowed Property in accordance with
such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and non-
appealable. The Escrow Agent shall act on such court order and legal opinions
without further question.
(l) As consideration for its agreement to act as Escrow Agent as
herein described, the other parties hereto, jointly and severally, agree to pay
the Escrow Agent fees determined in accordance with the terms set forth on
EXHIBIT E hereto (and made a part of this Escrow Agreement as if herein set
forth). In addition, the other parties hereto, jointly and severally, agree to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel).
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(m) The other parties hereto irrevocably (i) submit to the
jurisdiction of any Florida state or federal court in any action or proceeding
arising out of or relating to this Escrow Agreement, (ii) agree that all claims
with respect to such action or proceeding shall be heard and determined in such
Florida state or federal court and (iii) waive, to the fullest extent possible,
the defense of any inconvenient forum. The other parties hereby consent to and
grant any such court jurisdiction over the persons of such parties and over the
subject matter of any such dispute and agree that delivery or mailing of process
or other papers in connection with any such action or proceeding in the manner
provided hereinabove, or in such other manner as may be permitted by law, shall
be valid and sufficient service thereof.
(n) No printed or other matter in any language (including,
without limitation, the Registration Statement, notices, reports and promotional
material) which mentions the Escrow Agent's name or the rights, powers, or
duties of the Escrow Agent shall be issued by the other parties hereto or on
such parties' behalf unless the Escrow Agent shall first have given its specific
written consent thereto. The Escrow Agent hereby consents to the use of its
name and the reference to the escrow arrangement in the Registration Statement.
7. MISCELLANEOUS. (a) This Escrow Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and assigns, heirs, administrators and representatives, and the
subscribers of the Notes and shall not be enforceable by or inure to the benefit
of any other third party except as provided in paragraph (i) of Section 6 with
respect to the termination of, or resignation by, the Escrow Agent. No party
may assign any of its rights or obligations under this Escrow Agreement without
the written consent of the other parties.
(b) This Escrow Agreement shall be construed in accordance with
and governed by the internal law of the State of Florida (without reference to
its rules as to conflicts of law).
(c) This Escrow Agreement may only be modified by a writing
signed by all of the parties hereto and consented to by the subscribers of the
Notes adversely affected by such modifications. No waiver hereunder shall be
effective unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the payment
pursuant to Section 4 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience only and
shall not affect the construction thereof. Unless otherwise indicated,
references to Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and the
same
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instrument: provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a single copy of this
Agreement which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
SENTINEL FINANCING LTD., L.P.
By: Sentinel Acceptance Corporation
General Partner
By:
--------------------------------
Name:
Title:
BANK OF MONTREAL TRUST COMPANY
By:
-------------------------------------
Name:
Title:
[SELLING AGENT]
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EXHIBIT A
SUMMARY OF CASH RECEIVED
NEW PARTICIPANT DEPOSIT
Deposit Date: Date____________________________________
Investment Date: List Number_____________________________
Batch Number: Page ________________ of _______________
Approved By_____________________________
For Bank use only
JOB#:___________________________
TITLE:______________________________
ORIGINATING BANK AND
NAME DEPOSIT NOTES ADDRESS TAX ID NUMBER FOR BANK USE ONLY FED. REFERENCE #
------------------------------------------------------------------------------------------------------------------------------------
TAX CODE
EXEMPT (Y/N)
W-9 (YR) MRA
W-8 (YR)
1000(87)
------------------------------------------------------------------------------------------------------------------------------------
Broker Misc. Misc. II Misc. III TAX CODE
EXEMPT (Y/N)
W-9 (YR) MRA
W-8 (YR)
1000(87)
------------------------------------------------------------------------------------------------------------------------------------
Broker Misc. Misc. II Misc. III TAX CODE
EXEMPT (Y/N)
W-9 (YR) MRA
W-8 (YR)
1000(87)
------------------------------------------------------------------------------------------------------------------------------------
Broker Misc. Misc. II Misc. III TAX CODE
EXEMPT (Y/N)
W-9 (YR) MRA
W-8 (YR)
1000(87)
------------------------------------------------------------------------------------------------------------------------------------
Broker Misc. Misc. II Misc. III TAX CODE
EXEMPT (Y/N)
W-9 (YR) MRA
W-8 (YR)
1000(87)
------------------------------------------------------------------------------------------------------------------------------------
A-1
EXHIBIT B
[Form of Offering Termination Notice]
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ______________________
Dear ________________:
Pursuant to Section 4(a) of the Escrow Agreement dated as of ________,
____ (the "Escrow Agreement") among Sentinel Financing, Ltd., L.P. (the
"Company"), [_______________________] and you, the Company hereby notifies you
of the termination of the offering of the Notes (as that term is defined in the
Escrow Agreement) and directs you to make payments to subscribers provided for
in Section 4(a) of the Escrow Agreement.
Very truly yours,
SENTINEL FINANCING, LTD., L.P.
By: Sentinel Acceptance Corporation
General Partner
By:
-------------------------------
Name:
Title:
B-1
EXHIBIT C
[Form of Closing Notice]
Bank of Montreal Trust Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ______________________
Dear ________________:
Pursuant to Section 4(b) of the Escrow Agreement dated as of ________,
____ (the "Escrow Agreement") among Sentinel Financing, Ltd., L.P. (the
"Company"), [___________________] and you, the Company hereby certifies that it
has received subscriptions for the minimum of $1,000,000 principal amount of
Notes (as that term is defined in the Escrow Agreement) and the Company will
sell and deliver [$________ principal amount] Notes to the subscribers thereof
at a closing to be held on [_______________, ____] (the "Closing Date"). The
names of the subscribers concerned, the number of Notes subscribed for by each
of such subscribers, the related subscription amounts [and the Excess Funds] are
set forth on the schedule annexed hereto.
C-1
We hereby request that the aggregate subscription amount, other than
the Excess Funds, be paid to us as follows:
[To be inserted].
Very truly yours,
SENTINEL FINANCING, LTD., L.P.
By: Sentinel Acceptance Corporation
General Partner
By:
--------------------------------
Name:
Title:
[__________]
By:
-------------------------------------
Name:
Title:
C-2
EXHIBIT D
[Form of Subscription Termination Notice]
Bank of Montreal Trust Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ______________________
Dear ________________:
Pursuant to Section 4(c) of the Escrow Agreement dated as of ________,
____ (the "Escrow Agreement") among Sentinel Financing, Ltd., L.P. (the
"Company"), [_______________________] (the "Selling Agent") and you, the
undersigned hereby notifies you that the following subscription(s) have been
rejected.
Number of Subscribed Amount of
Name of Subscriber(s) Notes Rejected Rejected Subscription
--------------------- -------------------- ---------------------
Very truly yours,
D-1
EXHIBIT E
Fee Schedule
E-1