IMPOUND ACCOUNT AGREEMENT
This Impound Account Agreement (the "Agreement") is made as of April 5, 2000 by
and among Paystar Communications Corporation, a Nevada corporation ("Company")
and Community Bank of San Xxxxxxx, a California banking corporation ("Impound
Agent's Representative"). Impound Agent's Representative has entered into an
agreement with Pacific Coast Banker's Bank ("Impound Agent") to act as Impound
Agent.
1. RECITALS OF FACT.
Company will offer shares of its stock for sale to the public in
an offering pursuant to a registration statement filed with the
Securities and Exchange Commission (file # 333-93919), (the "Offering").
Company desires that all funds received from various persons (the
"Subscribers") as subscriptions for shares of Company's stock be placed
in an impound account with a bank or trust company authorized to do
business in California, and desires that Impound Agent's Representative
arrange with Impound Agent to act as the depository for such funds
subject to the registration statement and all applicable laws and
regulations. Company intends at this time to issue and sell a minimum of
1,500,000 shares and a maximum of 5,500,000 shares of its stock at a
price of $2 per share and to deposit all funds received from the
Subscribers as subscriptions for such shares in an account at Impound
Agent in the name of Impound Agent's Representative for the benefit of
Company and Subscribers. Impound Agent's Representative will be entitled
to all interest earned off of such an account.
2. APPOINTMENT OF IMPOUND AGENT'S REPRESENTATIVE.
Company hereby appoints Community Bank of San Xxxxxxx as Impound
Agent's Representative and Community Bank of San Xxxxxxx hereby accepts
such appointment, subject to the terms and conditions set forth in this
Agreement.
3. SUBSCRIPTION FUNDS HELD IN IMPOUND ACCOUNT.
All funds received from the issuance of shares of Company's stock
will be placed in an escrow account with Impound Agent, to be held by
Impound Agent. Such funds shall not become the property of or be released
to Company unless and until Company has sold the minimum of 1,500,000
shares of common stock. The Offering will end on the earlier of (i) 180
days following the date of the Prospectus (ii) the date on which Company
sells its final shares totaling 5,500,000 or (iii) such earlier date on
which Company decides to close Offering.
4. SUBSCRIPTIONS FOR SHARES.
Subscription agreements for shares of Company's stock will be
completed by investor and submitted to Impound Agent in triplicate, along
with checks and other payment orders for the amount of the subscriptions.
Checks and other payment orders shall be made payable to "Pacific Coast
Bankers Bank for CBSJ Impound Account." Company will inform Impound
Agent's Representative of its intent to accept or reject subscriptions or
to accept a subscription in part. If any subscriptions are rejected or
accepted only in part, Impound Agent's Representative will request that
Impound Agent will promptly refund the rejected amount to the Subscriber.
Upon a
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closing of the Offering and as to accepted subscriptions, Impound
Agent will return one copy of the subscription agreement to the
Subscriber, return one copy to Impound Agent's Representative for
delivery to Company, and retain one copy for Impound Agent's records.
5. INVESTMENT IN IMPOUND FUNDS
All funds received from Subscribers as subscriptions for shares of
Company's stock which are accompanied by copies of executed subscription
agreements for such subscriptions including any interest earnings on such
funds, will be placed in an impound account (the "Impound Account") with
Impound Agent to be held by Impound Agent in the manner provided in this
Agreement.
Upon the clearing of checks received for subscriptions for shares under
normal banking practices and as directed in writing by Impound Agent's
Representative, Impound Agent shall invest and reinvest available funds
deposited with it pursuant to this Agreement in an Overnight Federal
Funds account of the Impound Agent. Impound Agent's Representative and
Impound Agent shall not be liable or responsible for any loss resulting
from investments made pursuant to this Section 5, except for losses which
result from the gross negligence or intentional misconduct of either
party.
6. TERM.
This Impound Agreement shall commence as of the date set forth
above and shall expire upon distribution of the Impound Account as
described in Section 7, below.
7. DISTRIBUTION.
a. Upon receipt of notice to Impound Agent's Representative that
the Company has sold at least the minimum number of shares
required and desires closure of the offering and release of the
funds, Impound Agent's Representative will request Impound Agent
to release all funds in the Impound Account to Company ,pursuant
to Company's written instruction to the Impound Agent's
Representative, signed by two of Company's officers.
b. If Company has not sold the minimum shares required within 90
days of the date of the prospectus, which period may be extended
for an additional 30 days, then the Impound Account shall be
distributed to the Subscribers as follows: each Subscriber shall
receive the full amount of his or her subscription, without
interest and without deduction for expenses.
c. In the event that the Impound Account is distributed pursuant
to Section 7b, above, all remaining obligations of Company
described in Sections 9 and 10shall, without any further notice,
become the joint and several obligations of the Company and its
directors. The obligations created pursuant to this Section 7c
shall continue after the expiration of this Agreement.
8. INFORMATION TO COMPANY.
From time to time upon the request of Company, Impound Agent will
provide Company with information relative to the total number of
subscriptions received pursuant to this Agreement together with the
aggregate number of shares for which subscriptions have been received and
the
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total amount of funds received and collected. Upon termination or
expiration of this Agreement, Impound Agent shall provide an accounting
of funds received, and disbursed pursuant to this Agreement together
with a list of Subscriber names and addresses and the number of shares
purchased by each Subscriber, and shall return all original subscription
agreements to Impound Agent's Representative for delivery to Company.
9. UNPAID CHECKS.
In the event that any check received by Impound Agent is returned unpaid
by the drawee bank, Impound Agent will resubmit the check to the drawee
financial institution for repayment. In the event that any such resubmitted
check is returned unpaid a second time, Impound Agent may withdraw funds held by
it pursuant to this Agreement for the amount of that check. Impound Agent
shall forward any such check to Impound Agent's Representative for delivery to
Company endorsed to Company without recourse. In the event that any such check
is returned to Impound Agent as unpaid after the funds represented thereby have
been distributed to any person, upon notification by Impound Agent, Company
shall promptly pay the amount of that check to Impound Agent's Representative
for delivery to Impound Agent and Impound Agent shall forward the check to
Impound Agent's Representative for delivery to Company endorsed to Company
without recourse.
10. RIGHTS OF IMPOUND AGENT'S REPRESENTATIVE AND IMPOUND AGENT.
a. The Company and the Company's Directors agree to pay any
net fees of Impound Agent's Representative, as stated at Exhibit A, as
well as any reasonable fees for extraordinary services performed by
Impound Agent's Representative and/or Impound Agent pursuant to this
Agreement and agreed to in writing by Company to the extent that the sum
total of all fees assessed are not covered by the earnings credit
described at Exhibit A. The Company and the Company's Directors also
agree to pay and/or reimburse Impound Agents' Representative for its
reasonable expenses and disbursements, including those of its agents,
consultants, attorneys and the Impound Agent to the extent that the sum
total of all fees assessed are not covered by the earnings credit
described at Exhibit A. The obligations described in this section shall
continue notwithstanding the expiration or termination of this Agreement
for any reason.
b. If conflicting demands are made or notices served by
parties upon Impound Agent's Representative or Impound Agent with respect
to the Impound Account, Impound Agent's Representative and Impound Agent
shall be entitled to refuse to comply with any such claim or demand and
to suspend performance of this Agreement so long as such disagreements
shall continue; in so doing Impound Agent's Representative and Impound
Agent shall not be held liable for damages or interest to the Company or
to any person (including but not limited to Subscribers) for failure to
comply with such conflicting or adverse demands, Impound Agent's
Representative and Impound Agent shall be entitled to continue to refrain
and refuse to act until:
(i) the rights of the adverse claimants have been
finally adjudicated in a court assuming and having jurisdiction of the
parties and/or the money, papers, and property involved in the claim or
demand; and/or
(ii) all differences have been settled by mutual
agreement and Impound Agent's Representative and Impound Agent have been
notified of the settlement in writing signed by all of the interested
persons.
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In the alternative, either Impound Agent's Representative or
Impound Agent may file a suit in interpleader for the purpose of having
the respective rights of the claimants adjudicated, and deposit with the
court all money, papers, and property held pursuant to this Agreement,
and the Company agrees to pay all costs, expenses and reasonable
attorney's fees incurred by either Impound Agent's Representative or
Impound Agent in connection therewith, the amount thereof to be fixed and
a judgment thereof to be rendered by the court in such suit.
c. Impound Agent shall act as a depository only and Impound
Agent's Representative is a representative for Impound Agent only and
neither is responsible or liable in any manner whatever for the
sufficiency, correctness, genuineness or validity of any instrument
deposited with Impound Agent pursuant to this Agreement, or with respect
to the form or execution of any such instrument, or the identity,
authority, or rights of any person executing or depositing any such
instrument.
d. Impound Agent's Representative and Impound Agent shall have
no responsibility for notifying the Company's Directors, the Company or
any Subscriber of any sale, resale, loan, exchange or other transaction
involving any property described in this Agreement or of any profit
realized by any person or corporation in connection therewith, regardless
of the fact that such transactions may be handled by Impound Agent's
Representative or Impound Agent.
e. The Company and the Company's Directors agree to hold
harmless and indemnify Impound Agent's Representative and Impound
Agent and each of them and their directors, officers, employees and
agents for any loss, cost, liability, damage or expense, including
reasonable attorneys' fees and expenses, arising out of or relating
to this Agreement, the Escrow Account, the performance of Impound
Agent's Representative's or Impound Agent's duties under this
Agreement, or to any offering circular, disclosure document or any
subscription agreement relating to this Agreement; provided, however,
that no indemnification will be made for any act of willful
misconduct or gross negligence of either Impound Agent's
Representative or Impound Agent.
f. Impound Agent's Representative and Impound Agent:
(i) shall be deemed conclusively to have given and delivered
any notice required to be given or delivered by it pursuant to this Agreement
if the same is in writing, signed by any one of Impound Agent's
Representative's authorized officers and mailed to Company at the addresses
set forth in this Agreement;
(ii) shall be entitled to consult with legal counsel and
shall not be liable for any action taken or omitted by that counsel;
(iii) shall not, by act, delay, omission or otherwise, be
deemed to have waived any rights or remedies under this Agreement unless such
waiver is in a writing signed by Impound Agent's Representative or Impound
Agent; such waiver of any right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any future
occasion;
(iv) shall not be liable for any action taken or omitted to
be taken in good faith, and shall be liable only for each ones own gross
negligence or willful misconduct;
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(v) shall be entitled to rely on any paper, request,
certificate, schedule, notice or other document which either party in good
faith believes to be genuine and to have been signed or adopted by the proper
party or parties;
(vi) shall under no circumstances be required to risk either
party's own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to that party,
(vii) shall have no duties or responsibilities except those
expressly set forth in this Agreement, and the permissive right of either
Impound Agent or Impound Agent's Representative to do things or omit to do
things as set forth in this Agreement shall not be construed as a duty.
11. REPRESENTATIONS REGARDING IMPOUND AGENT'S REPRESENTATIVE AND IMPOUND
AGENT.
Company represents and agrees that it has not made nor will it in the
future make any representation that states or implies that either Impound
Agent's Representative or Impound Agent has endorsed, recommended or
guaranteed the purchase, value, or repayment of the securities offered for
sale by Company. Company agrees that as soon as the same become available,
Company will furnish to Impound Agent's Representative copies of all written
materials disemminated by Company regarding the Offering, including but not
limited to any Preliminary Prospectus, Prospectus, Form 10-K, Proxy
Statement, and Annual Report.
12. MISCELLANEOUS.
a. This Agreement may be amended only by the written agreement of the
Company and Impound Agent's Representative. This Agreement shall be governed by
the laws of the State of California.
b. This Agreement represents the entire agreement between Company, the
Company's Directors and Impound Agent's Representative.
If Company or any of its officers, directors or agents has executed any
other agreements or documents relating to the subject matter of this Agreement,
or if any agreement is deposited under or arises out of this Agreement, Impound
Agent's Representative shall not be deemed a party to or be responsible for any
provision thereof unless expressly set forth in this Agreement or in a Schedule
to this Agreement. Impound Agent's Representative shall be under no duty to
enforce any such other agreement. In case of any conflict between this
Agreement and any such other agreement or document or any Schedule thereto, the
provisions of this Agreement shall be controlling.
c. This Agreement may be executed and entered into in several
counterparts, each of which shall be deemed to be an original, and all of
which shall constitute but one and the same instrument.
d. Impound Agent's Representative will not resign as Impound
Agent's Representative under this Agreement after the receipt of any funds
from Subscribers without the express written consent of Company.
e. Any notice, report, demand, waiver or consent required or permitted
pursuant to this Agreement shall be in writing and shall be given by prepaid
first class mail, addressed as follows:
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Impound Agent:
MAIL INSTRUCTIONS (FUNDS)
Pacific Coast Banker's Bank
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Impound Account for Community Bank of San
Xxxxxxx
OTHER MAIL INSTRUCTIONS
Community Bank of San Xxxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxxx
WIRE INSTRUCTIONS
Pacific Coast Bankers' Bank
ABA No. 000000000
Attention: Impound Account FBO Community Bank of San
Xxxxxxx
To Company:
Paystar Communications Corporation
0000 X. Xxxxxxxxx Xxxx, Xxxxx 00
Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
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IN WITNESS WHEREOF, Company and Impound Agent's Representative have executed
this Agreement on the day and year first written above.
PayStar Communications Corporation
("Company")
------------------------------------------
By: Xxxxx X. Xxxxxx
Its: Treasurer, Chief Financial Officer
Community Bank of San Xxxxxxx
("Impound Agent's Representative)
------------------------------------------
By: Xxxx Xxxxxxxxxxx
Its: President
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EXHIBIT A
SCHEDULE OF FEES
Basic Impound Account Fee $2,500.00
Subscription Fee $25.00 per Subscription
Rejected/Return Subscription Fee $15.00 per Subscription
Return Checks $15.00 per check
Miscellaneous Fees at cost: Postage
Envelopes
Address Stamp
Overnight Mail
The above charges are assessed Paystar as they occur. At the end of the
contract period, an earnings allowance is then calculated based on the daily
outstanding balances kept in the impound account over the contract period. (The
calculation utilizes the standard money market interest rate offered by the
Community Bank of San Xxxxxxx to its business customers.) The allowance can be
used to offset all types of charges assessed. Any remaining net charges after
the deduction of the earnings allowance is the responsibility of the Company and
is due and payable upon the release of funds to the Company or the termination
of the offering, should the minimum of 1,500,000 shares not be sold in the
required time frame.
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