FUND ESCROW AGREEMENT
THIS AGREEMENT is made this __th day of February, 1999, by and among
PROFORMANCE RESEARCH ORGANIZATION, INC., a Delaware corporation (the
"Company"), GLOBAL FINANCIAL GROUP, INC. (the "Placement Agent") and BANK
WINDSOR, Minneapolis, Minnesota (the "Escrow Agent").
WHEREAS, the Company desires to make a public offering of 1,000,000 shares of
its common stock (the "Shares") under an arrangement whereby all of the
Shares are to be offered to investors at the offering price of 5.00 per Share
(the "Public Offering"); and
WHEREAS, the Shares are to be registered on a registration statement filed under
the Securities Act of 1933, as amended (File No. 333-61533); and
WHEREAS, the Company has engaged Global Financial Group, Inc. to act as a
Placement Agent for the Company with respect to the Public Offering of
securities proposed to be made under the aforesaid registration statement; and
WHEREAS, provision must be made to impound in escrow the gross proceeds which
may be received from the sale of all 1,000,000 Shares; and
WHEREAS, the Company, the Placement Agent, and the Escrow Agent desire to enter
into an agreement with respect to the above-described escrow;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, the parties hereto agree as follows:
1. The Placement Agent and any broker-dealer participating in the Public
Offering, by noon of the next business day following receipt thereof,
shall deliver to the Escrow Agent all proceeds from the sale of all
1,000,000 Shares in the Public Offering at the offering price of $5.00 per
Share, or an aggregate amount of $5,000,000, together with a written
account of each sale which shall set forth, among other things, each
subscriber's name and address, the number of Shares subscribed for, and
the amount paid therefor.
2. All monies delivered to the Escrow Agent pursuant hereto shall be
deposited immediately by the Escrow Agent in a separate non-interest
bearing account designated substantially as follows: "Proformance
Research Organization, Inc. Escrow Account" (the "Escrow Account"). The
Escrow Account shall be designated Account No. 0000000 and be created and
maintained subject to the customary rules and regulations of the Escrow
Agent pertaining to such accounts. All checks related to the purchase of
the Shares shall be made payable to the Escrow Agent.
3. During the Escrow Period (as hereinafter defined), all amounts deposited
in the Escrow Account shall not become the property of the Company or any
other entity, or be subject to the debts of the Company or any other
entity, except as expressly provided herein with respect to payments by
the Escrow Agent to the Company and the Placement Agent, and the Escrow
Agent shall make or permit no disbursements from the Escrow Account except
as expressly provided herein. The Escrow Agent shall not be required to
make any disbursement until all funds deposited with it have cleared and
been finally paid.
4. (a) The Escrow Period shall begin with the commencement of the Public
Offering under the aforesaid Registration Statement, which date
shall be the effective date of the Registration Statement (the
"Offering Date").
(b) The Escrow Period shall terminate upon the earliest of:
(i) gross proceeds of $5,000,000 in funds cleared in Minneapolis
having been deposited in the Escrow Account; or
(ii) 90 days from the Offering Date (which date may be extended for
up to an additional 90 days, upon the mutual agreement of the
Company and the Placement Agent); or
(iii) notice of the termination of the Public Offering having been
provided the Escrow Agent by the Company and the Placement
Agent.
5. In the event the Escrow Period terminates pursuant to the provisions of
paragraph 4(b)(i) hereof, the Escrow Agent shall deliver and pay over to
the Company on the Closing Date, as defined in the Agency Agreement, all
amounts deposited in the Escrow Account, less an amount equal to $0.50 per
Share sold in the Public Offering on Shares not directed by the Company
(the selling commission) and $ -0- (the unpaid nonaccountable expense
allowance), which amounts shall be paid to the Placement Agent on the
Closing Date. On the making of the payments by the Escrow Agent as
provided for in this paragraph, the Escrow Agent shall be completely
discharged and released of any and all further liabilities or
responsibilities hereunder.
6. In the event the Escrow Period terminates pursuant to the provisions of
paragraph 4(b)(ii) or paragraph 4(b)(iii) hereof, the Escrow Agent shall,
as promptly as possible after such termination and on the basis of its
records of the Escrow Account, return to Southwest Securities on behalf of
each of the subscribers of the Company's securities in the Public
Offering, the amounts paid in by each subscriber for the purchase of the
Shares. Each amount payable to each subscriber pursuant to this paragraph
shall be deemed to be the property of each subscriber, free and clear of
any or all claims of the Company or of any of its creditors, and the
respective agreements to purchase the Shares made and entered into in the
Public Offering shall thereupon be xxxxxx, XXXX FACTO, to be cancelled
without any further liability of said subscribers to pay for the Shares
subscribed for. The Escrow Agent shall be required to make such payment
only to Southwest Securities. At such time as the Escrow Agent shall have
made all of the payments and remittances provided for in this paragraph,
the Escrow Agent shall be completely discharged and released of any and
all further liabilities and responsibilities hereunder.
7. The Company agrees to give to the Escrow Agent prompt and appropriate
written notice of the Offering Date, any extension of the offering period,
and the Closing Date.
8. The Escrow Agent, in its actions pursuant to this Agreement, shall be
fully protected in every reasonable exercise of its discretion and shall
have no obligations hereunder either to the Company or to any other party,
except as expressly set forth herein. The Escrow Agent undertakes to
perform only such duties as are expressly set forth herein. No duties or
obligations of the Escrow Agent not expressly set forth shall be inferred
from this Agreement.
9. The Escrow Agent has waived its fee for its services under this Agreement.
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10. The Escrow Agent shall have no obligation to anyone to invest any of the
deposited funds.
11. The Escrow Agent shall not issue any certificate of deposit, stock
certificate, or any other instrument or document representing any interest
in the deposited funds, but written notice acknowledging receipt of the
deposited funds from the Placement Agent will be delivered from time to
time by the Escrow Agent to the Company. The Escrow Agent shall give the
Company prompt written notice if and when collected funds deposited in the
Escrow Account total $5,000,000.
12. In performing any of its duties hereunder, the Escrow Agent shall not
incur any liability to anyone for any damages, losses, or expenses, except
for willful default or gross negligence, and it shall, accordingly, not
incur any such liability with respect to (i) any action taken or omitted
in good faith upon advice of its counsel or counsel for the Company given
with respect to any questions relating to the duties and responsibilities
of the Escrow Agent under this Agreement, or (ii) any action taken or
omitted in reliance upon any instrument, not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which the Escrow
Agent shall in good faith believe to be genuine, to have been signed and
presented by a proper person or persons, and to conform with the
provisions of this Agreement.
13. If at any time a dispute shall exist as to the duties of the Escrow Agent
and the terms hereof, or the Escrow Agent has not been able to locate a
subscriber to return his funds, the Escrow Agent may deposit said funds
with the Clerk of the United States District Court for the District of
Minnesota, located in Hennepin County, Minnesota, and may interplead the
parties hereto. Upon so depositing such funds and filing its complaint in
interpleader, the Escrow Agent shall be completely discharged and released
from all further liability or responsibility under the terms hereof. The
parties hereto, for themselves, their heirs, successors, and assigns, do
hereby submit themselves to the jurisdiction of said court and do hereby
appoint the Clerk of said Court as their agent for service of all process
in connection with the proceedings mentioned in this paragraph.
14. The Company and the Placement Agent hereby agree to indemnify and hold
harmless the Escrow Agent against any and all losses, claims, damages,
liabilities, and expenses, including reasonable costs of investigation and
counsel fees and disbursements, which may be imposed upon the Escrow Agent
or incurred by the Escrow Agent in connection with its acceptance of
appointment as Escrow Agent hereunder, or the performance of its duties
hereunder, including any litigation arising from this Agreement or
involving the subject matter hereof.
15. The Escrow Agent is hereby expressly authorized and directed to disregard
any and all notices or warnings given by any of the parties hereto, other
than those notices and warnings specifically called for in this Agreement,
or by any other person or corporation, excepting only orders or process of
court, and is hereby expressly authorized to comply with and obey any and
all orders, judgments, or decrees of any court, and in case the Escrow
Agent obeys or complies with any such order, judgment, or decree of any
court, it shall not be liable to any of the parties hereto or to any other
person, firm, or corporation by reason of such compliance, notwithstanding
that any such order, judgment, or decree may be subsequently reversed,
modified, annulled, set aside, or vacated, or found to have been entered
without jurisdiction.
16. Except for the Impoundment Agreement among the Company, the Escrow
Agent, and the Placement Agent (the "Impoundment Agreement"), This
Agreement constitutes an integrated contract and is the entire
agreement among the parties, apart from the corporate resolution of the
Company dated August 10, 1998, authorizing the Public Offering,
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a copy of which is attached hereto and incorporated herein by this
reference. It is intended by the parties that in the event the terms of
the Impoundment Agreement conflict with the terms of this Agreement, that
the terms of the Impoundment Agreement shall govern. This Agreement is
intended to set forth additional terms not included in the Impoundment
Agreement. No parol evidence may be considered in determining the meaning
of any term used herein or in interpreting this Agreement.
17. All notices, demands, or requests required or authorized hereunder shall
be deemed given sufficiently if in writing and sent by registered mail or
certified mail, return receipt requested and postage prepaid, or by tested
telex, telegram, or cable to:
in case of the Company: with a copy to:
Proformance Research Organization, Inc. Xxx X. Xxxxxxxxx, Esq.
0000 X. 00xx Xxxxxx Xxxx, Dill, Carr, Xxxxxxxxxx &
Xxxxxx, Xxxxxxxx 00000 Xxxxxxxxx, P.C.
Attention: Xxxxxxx X. Xxxxx, President 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
in the case of the Placement Agent: with a copy to:
Global Financial Group, Inc. Xxxxxx X. Xxxx, Esq.
000 Xxxxxxxxxx Xxxxxx Xxxxx Abdo & Abdo
Xxxxx 0000 000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 000 Xxxxxxxxx Xxxxxx
Attention: Xxxxx X. Xxxxxx, President Xxxxxxxxxxx, Xxxxxxxxx 00000
and in case of the Escrow Agent: with a copy to:
Bank Windsor -----------------------------
000 Xxxxxxxxx Xxxxxx -----------------------------
Xxxxxxxxxxx, Xxxxxxxxx 00000 -----------------------------
Attention: _____________________ -----------------------------
18 The validity, interpretation, and construction of this Agreement and of
each part hereof shall be governed by the laws of the State of Minnesota.
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IN WITNESS WHEREOF, the Company, the Placement Agent, and the Escrow Agent have
executed this Agreement on the day and year first above written.
"Company"
PROFORMANCE RESEARCH ORGANIZATION, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
"Placement Agent"
GLOBAL FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx, President
"Escrow Agent"
BANK WINDSOR
By: /s/ Xxxxx Xxxx, VP
-------------------------------------
Authorized officer
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