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EXHIBIT 4.4
ESCROW AGREEMENT
THIS AGREEMENT is made as of the day of September, 1998 by and among
MUSTANG SOFTWARE, INC., with its principal office at 6200 Lake Ming Road,
Bakersfield, CA 93306 (hereinafter the "Company"), the "Purchasers" specified on
Schedule A attached hereto, with their respective principal offices at the
addresses set forth in Schedule A, SETTONDOWN CAPITAL INTERNATIONAL LTD.,
(the "Placement Agent") located at Charlotte House, Charlotte Street, P.O. Box
N. 9204, Nassau, Bahamas, and GOLDSTEIN, GOLDSTEIN & REIS, LLP, 65 Broadway,
10th Fl., New York, NY 10006 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing Common Stock, Preferred
Stock and Warrants (collectively the "Initial Shares"), from the Company at a
purchase price as set forth in a Securities Purchase Agreement (the "Agreement")
dated as of September , 1998, which will be issued as per the terms contained
herein and in the Agreement executed by the Company and Purchaser; and
WHEREAS, the Company will be issuing Common Stock, Preferred Stock,
and Warrants (also referred to as the Initial Shares) to the Placement Agent
pursuant to the Agreement; and
WHEREAS, the Company shall have a Put of additional Common Stock to
the Purchasers for the remainder of the Commitment Amount after the Initial
Shares Investment Amount and the Purchase Price for the Preferred Stock has been
paid to the Company, in accordance with the terms and conditions in the
Agreement; and
WHEREAS, it is intended that the purchase of Securities be consummated
in accordance with the requirements set forth by Regulation D promulgated under
the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold the
Initial Shares Investment Amount, and the remainder of the Commitment Amount in
escrow until the Escrow Agent has received the Initial Shares, and the Put
Shares. The Escrow Agent will then immediately wire transfer or otherwise
deliver at the Company's discretion immediately available funds to the Company's
account and arrange for delivery of the Initial Shares, and Put Shares to the
Investors, and the shares of Preferred Stock, Common Stock and Warrants to the
Placement Agent as per the terms and conditions in the Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE INITIAL SHARES
1.1 The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
the Initial Shares.
1.2 Upon Escrow Agent's receipt of the Initial Shares Investment
Amount into its attorney trustee account, it shall notify the Company, or the
Company's designated attorney or agent, of the amount of funds it has received
into its account.
1.3 The Company, upon receipt of said notice and acceptance of the
Agreement by both parties, as evidenced by the Company's and the Purchasers and
Placement Agent's execution
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thereof, shall deliver to the Escrow Agent the Initial Shares and the Securities
issued to the Placement Agent. Escrow Agent shall then communicate with the
Company to confirm the validity of such issuance.
1.4 Once Escrow Agent confirms the validity of the issuance of the
Initial Shares and the Securities issued to the Placement Agent, the Escrow
Agent shall immediately wire that amount of funds necessary to purchase the
Initial Shares per the written instructions of the Company. The Company will
furnish Escrow Agent with a "Net Letter" directing payment of Placement Agent
fees, and administrative, legal and escrow fees as per the terms of the
Agreement, such fees are to be remitted to in accordance with wire instructions
that will be sent to Escrow Agent from the Company, with the net balance payable
to the Company. Once the funds (as set forth above) have been received per the
Company's instructions, the Escrow Agent shall then arrange to have the
Securities delivered as per instructions from the Purchasers and the Placement
Agent.
ARTICLE 2
TERMS OF THE ESCROW FOR THE PUT SHARES
2.1 The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
the Put Shares.
2.2 Upon Escrow Agent's receipt of confirmation in writing that the
Company has properly served a Put Notice in accordance with the Agreement, and
once it has received the Purchase Price for the Put Shares into its attorney
trustee account, it shall notify the Company, or the Company's designated
attorney or agent, of the amount of funds it has received into its account.
2.3 The Company, upon receipt of said notice and acceptance by the
Purchasers, as evidenced by written notice by the Purchasers, shall deliver to
the Escrow Agent the Put Shares being purchased, along with the Securities being
issued to the Placement Agent (as per the terms of the Subscription Agreement).
Escrow Agent shall then communicate with the Company to confirm the validity of
such issuance.
2.4 Once Escrow Agent confirms the validity of the issuance of the Put
Shares along with the Securities being issued to the Placement Agent (as per the
terms of the Subscription Agreement), he shall immediately wire that amount of
funds necessary to purchase of the Put Shares per the written instructions of
the Company. The Company will furnish Escrow Agent with a "Net Letter" directing
payment of placement agent fees and legal, administrative and escrow fees as per
the terms of the Agreement. Such fees are to be remitted to in accordance with
wire instructions that will be sent to Escrow Agent from the Company, with the
net balance payable to the Company. Once the funds have been received per the
Company's instructions, the Escrow Agent shall then arrange to have the
Securities delivered as per instructions from the Purchasers and the Placement
Agent.
ARTICLE 3
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MISCELLANEOUS
3.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
3.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
(a) Mustang Software, Inc.
6200 Lake Ming Road
Bakersfield, CA 93306
Attention: Jim Harrer
Facsimile: (805) 873-2457
Telephone: (805) 873-2500
(b) If to the Purchasers, at the addresses set forth on Schedule A
hereto.
(c) Settondown Capital International Ltd.
Charlotte House, Charlotte Street
P.O. Box N. 9204
Nassau, Bahamas
Attention: Anthony L. M. Inder Riden
Telephone: (242) 325-1033
Facsimile: (242) 323-7918
(d) Goldstein, Goldstein & Reis, LLP
65 Broadway, 10th Fl.
New York, NY 10006
Attn: Sheldon E. Goldstein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
or to such other person at such other place as shall
designated in writing;
3.3 This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
3.4 This Agreement is the final expression of, and contains the entire
Agreement between, the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect thereto.
3.5 Whenever required by the context of this Agreement, the singular
shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this
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Agreement.
3.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Goldstein, Goldstein & Reis, LLP and it has
had the opportunity to consult with its own legal advisors prior to the signing
of this Agreement.
3.7 This Agreement will be construed and enforced in accordance with
and governed by the laws of the State of New York, except for matters arising
under the Act, without reference to principles of conflicts of law. Each of the
parties consents to the jurisdiction of the U.S. District Court sitting in the
Southern District of the State of New York in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trial by jury.
3.8 This Agreement may be altered or amended only with the consent of
all of the parties hereto. Should the Company, any of the Purchasers or the
Placement Agent attempt to change this Agreement in a manner which, in the
Escrow Agent's discretion, shall be undesirable, the Escrow Agent may resign as
Escrow Agent by notifying the Company and the Purchasers in writing. In the case
of the Escrow Agent's resignation or removal pursuant to the foregoing, its only
duty, until receipt of notice from the Company and the Purchasers or their agent
that a successor escrow agent shall have been appointed, shall be to hold and
preserve the funds. Upon receipt by the Escrow Agent of said notice from the
Company and the Purchasers of the appointment of a successor escrow agent, the
name of a successor escrow account and a direction to transfer the funds, the
Escrow Agent shall promptly thereafter transfer all of the funds held in escrow
to said successor escrow agent. Immediately after said transfer, the Escrow
Agent shall furnish the Company and the Purchasers with proof of such transfer.
The Escrow Agent is authorized to disregard any notices, requests, instructions
or demands received by it from the Company or the Purchasers after notice of
resignation or removal shall have been given, unless the same shall be the
aforementioned notice from the Company and the Purchasers to transfer the funds
to a successor escrow agent or to return same to the respective parties.
3.9 The Escrow Agent shall be reimbursed by the Company and the
Purchasers for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
3.10 The Escrow Agent shall not be liable for any
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action taken or omitted by it in good faith in accordance with the advice of the
Escrow Agent's counsel; and in no event shall the Escrow Agent be liable or
responsible except for the Escrow Agent's own gross negligence or willful
misconduct.
3.11 The Company and the Purchasers warrant to and agree with the
Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities or any part
thereof;
(ii) no financing statement under the Uniform Commercial Code is
on file in any jurisdiction claiming a security interest or in
describing (whether specifically or generally) the Securities or
any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security interest exists in the
Securities or any part thereof or to file any financing statement
under the Uniform Commercial Code with respect to the Securities
or any part thereof.
3.12 The Escrow Agent in its capacity as such has no liability
hereunder to either party other than to hold the funds and the Securities and to
deliver them under the terms hereof. Each party hereto agrees to indemnify and
hold harmless the Escrow Agent in its capacity as such from and with respect to
any suits, claims, actions or liabilities arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Escrow.
IN WITNESS WHEREOF, the parties hereto have cause this Escrow Agreement to
be executed as of the ____ day of September, 1998.
MUSTANG SOFTWARE, INC.
By /s/ JAMES A HARRER
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James A Harrer, President
By /S/ DONALD M. LEONARD
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Donald M. Leonard,
Chief Financial Officer
SETTONDOWN CAPITAL INTER-
NATIONAL LTD., Placement Agent
By /s/ [SIGNATURE ILLEGIBLE]
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SETTONDOWN CAPITAL INTER-
NATIONAL LTD., Investor
By /s/ [SIGNATURE ILLEGIBLE]
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THE CUTTY HUNK FUND LIMITED,
Investor
By /s/ [SIGNATURE ILLEGIBLE]
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CANAL, LTD, Investor
By /s/ [SIGNATURE ILLEGIBLE]
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MANCHESTER ASSET
MANAGEMENT LTD, Investor
By /s/ [SIGNATURE ILLEGIBLE]
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GOLDSTEIN, GOLDSTEIN & REIS, LLP,
Escrow Agent
By /s/ SCOTT H. GOLDSTEIN
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Scott H. Goldstein