IMPOUND AGREEMENT
This agreement dated May , 1999 is between NationsBank, N.A., (the
"Impound Agent") and XxxxxxxxxXxxxxxXxxxxx.xxx, Inc., a Delaware corporation
(the "Company").
The Company proposes to offer directly for sale to investors (the
"Offering") up to 500,000 shares of its Common Stock (the "Shares") at a
price of up to $12.00 per share (the "Proceeds") as described in its
Prospectus. The Company desires to establish an escrow account in which
funds received from investors will be deposited pending completion of the
escrow period. NationsBank, N.A. agrees to serve as Impound Agent in
accordance with the terms and conditions of this agreement and certifies
that it is not affiliated with the Company.
1. Establishment of Escrow Account. Effective as of the date of
the commencement of the Offering, the Company establishes an interest
bearing escrow account with the Impound Agent, entitled "NationsBank, N.A.
Escrow Account No. [ ]" (the "Escrow Account").
2. Impound Period. The Impound Period shall begin with the commencement
of the Offering and shall terminate upon the earlier to occur of: (a) the
date upon which the Impound Agent has received in the Escrow Account gross
proceeds of $[ ]in deposited funds (the "Minimum"), (b) one year after
the commencement of the Offering, or (c) the date upon which a determination
is made by the Company to terminate the offering prior to the sale of the
Minimum.
During the Impound Period the Company is aware and understands that
it is not entitled to any funds received into the Escrow Account, such funds
are not assets of the Company and no amounts deposited in the Escrow Account
shall become property of the Company or any other entity, or be subject to
the debts of the Company or any other entity.
3. Deposits into the Escrow Account. The Company agrees that it
shall properly deliver, within 48 hours of its receipt, all monies received
from investors for the payment of the Shares to the Impound Agent for
deposit in the Escrow Account, accompanied with a copy of the attached form
of "Share Purchase Order," executed by the Company and the investor. Checks
payable to the Company shall be endorsed by the Company for deposit to the
Escrow Account. If checks are delivered to the Impound Agent unendorsed,
the Impound Agent may supply the Company's endorsement and deposit them into
the Escrow Account. All payments to the Company by reason of credit card
purchases of the Shares shall be forwarded into the Escrow Account. The
Company shall date and number-stamp each Share Purchase Order and shall also
provide the Escrow Agent with, and maintain for its own records, a copy of
the form of consideration.
4. Disbursements from the Escrow Account. A. In the event the
Impound Agent does not receive the Minimum deposits totaling $[ ] prior to
the termination of the Impound Period, the Impound Agent shall promptly
refund to each investor the amount received from such investor, without
deduction, penalty or expense to such investor, and the Impound Agent shall
notify the Company of such distribution. The purchase money returned to
each
investor shall be free and clear of any and all claims of the Company or any
of its creditors.
B. In the event the Impound Agent receives the Minimum prior to
the termination of the Impound Period, the Escrow Amount will not be
released to the Company until such amount is received by the Impound Agent
in collected funds. For purposes of this Agreement, the term "collected
funds" shall mean all funds received by the Impound Agent which have cleared
normal banking channels and are in the form of cash, plus any interest
accrued on such funds. The Minimum may be met by funds that are deposited
from the effective date of the offering up to and including the date on
which the contingency must be met.
5. Collection Procedure. The Company agrees that if a deposited
check is returned unpaid for any reason, the Impound Agent may charge the
Escrow Account for the amount of the check. However, the Impound Agent may
represent a returned check for payment by the financial institution on which
it is drawn, but the Impound Agent is not required to do so. The Impound
Agent may represent the check without notifying the Company that it is doing
so or that the check was not paid. Any check returned unpaid to the Impound
Agent shall be returned to the Company.
6. Interest on Funds in Escrow Account. Refunds to investors
pursuant to paragraph 4A shall include each investor's pro-rata share of any
interest earned while the investor's funds were on deposit.
7. Records to be Maintained by the Impound Agent. Records and
accounts of the transactions kept by the Impound Agent shall include records
of all transactions in the Escrow Account and copies of all Share Purchase
Orders. The Company shall maintain the original Share Purchase Orders,
along with any other records of transactions for a period of five years
after the termination of the Impound Period.
8. Compensation of Impound Agent. The Company shall pay the
Impound Agent a fee for its escrow services in an amount of $ [ ]. If it
is necessary for the Impound Agent to return funds to investors, the Company
shall pay to the Impound Agent an additional amount sufficient to reimburse
it for its actual cost for disbursing such funds.
9. Protection of the Impound Agent from Liability. The Impound
Agent may conclusively rely on, and shall be protected, when it acts in good
faith upon, a writing signed by Xxxxx X. Xxxxxxx, Chief Executive Officer of
the Company. Provided it uses due care, the Impound Agent shall have no
duty or liability to verify any such statement, certificate, notice,
request, consent, order or other document and its sole responsibility shall
be to act only as expressly set forth in this Agreement. The Impound Agent
shall be under no obligation to institute or defend any action, suit or
proceeding in connection with the Agreement unless it is indemnified to its
satisfaction. The Impound Agent may consult counsel in respect of any
questions arising under this Agreement and the Impound Agent shall not be
liable for any action taken, or omitted, in good faith upon advise of such
counsel.
10. Indemnification of the Impound Agent. The Company hereby
agrees to defend, indemnify, and to hold the Impound Agent harmless against,
any loss, liability or expense incurred without gross negligence or bad
faith on the part of Impound Agent arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder,
including the cost and expense of defending itself against any claim or
liability.
11. Direction by Court. In the event the Impound Agent shall be
uncertain as to its duties or rights hereunder or it shall receive
instructions, claims or demands from any of the parties hereto or from third
parties with respect to the property held hereunder, which, in its opinion,
are in conflict with any provision of this Agreement, it shall be entitled
to refrain from taking any action (other than to keep safely the funds in
the Escrow Account) until it shall be directed to act by order or judgment
of a court of competent jurisdiction.
12. Binding upon Successors. This Agreement shall be binding upon,
and inure to, the benefit of the parties hereto, their heirs, successors and
assigns.
13. Termination of Agreement. This agreement shall terminate in
its entirety when all funds in the Escrow Account have been distributed as
provided in paragraph 4., above.
14. Notices. All statements and other notices produced by the
Impound Agent related to the Escrow Account shall be mailed to the Company
as follows:
XxxxxxxxxXxxxxxXxxxxx.xxx, Inc.
0000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Chief Executive Officer
Except for deposits, all notices and other communications from the
Company shall be made to the Impound Agent as follows:
NationsBank, N.A.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn:
The Impound Agent shall be entitled to rely on all notices and instructions
received from Xxxxx X. Xxxxxxx, Chief Executive Officer of the Company.
15. Governing Law. This Agreement shall be governed by
Maryland law and any action or proceeding, including arbitration, arising in
connection with this Agreement shall be brought and held in Maryland.
NationsBank, N. A. XxxxxxxxxXxxxxxXxxxxx.xxx, Inc.
By: By:
Xxxxx X. Xxxxxxx
[title] Chief Executive Officer
