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
