IMPOUND AGREEMENT
This agreement dated June , 1997 is between Huntington National Bank (the
"Impound Agent") and Dynacraft Golf Products, Inc., an Ohio corporation (the
"Company").
The Company proposes to offer directly for sale to investors (the
"Offering") up to 700,000 shares of its Common Stock (the "Shares") at a price
of $5.00 per share (the "Proceeds") as described in its Prospectus. The
Company desires to establish an escrow account in which funds received from
subscribers will be deposited pending completion of the escrow period.
Huntington Bank 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 "_______________________________.
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 $1,500,000 in deposited funds (the "Minimum"), (b) February 28, 1998 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 escrow period the Company is aware and understands that it is
not entitled to any funds received into escrow, 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 of
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
subscribers 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 Agreement," 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 Agreement 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 $1,500,000 prior to the
termination of the Impound Period, the Impound Agent shall promptly refund to
each subscriber the amount received from such subscriber, without deduction,
penalty or expense to such subscriber, and the Impound Agent shall notify the
Company of such distribution. The purchase money returned to each subscriber
shall be free and clear of any and all claims of the Company or any of its
creditors.
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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
and the release provisions set forth in paragraph C below are complied with.
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 ESCROW AMOUNT. Refunds to subscribers pursuant to
paragraph 4A shall include each subscriber's pro-rata share of any interest
earned while the subscriber'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 Agreements.
The Company shall maintain the original Share Purchase Agreements and copies of
all checks, 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 subscribers, the Company shall pay to
the Impound Agent an additional amount sufficient to reimburse it for its actual
cost for disbursing such funds.
9. LIABILITY OF THE IMPOUND AGENT. The Impound Agent may conclusively
rely on, and shall be protected, when it acts in good faith upon, any statement,
certificate, notice, request, consent, order or other document which it believes
to be genuine and which has been signed by the proper party. 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. This Agreement shall be binding upon, and insure to, the benefit of the
parties hereto, their heirs, successors and assigns.
11. This agreement shall terminate in its entirety when all the Escrow
Amount has been distributed as provided in paragraph 4., above.
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12. All statements and other notices produced by the Impound Agent related
to the Escrow Account shall be mailed to the Company as follows:
Dynacraft Golf Products, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
Except for deposits, which shall be made at the ________ office only, all
notices and other communications from the Company shall be made to the Impound
Agent as follows:
Attn:
13. The Impound Agent shall be entitled to rely on all notices and
instructions received from the Company.
14. 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.
15. 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.
16. This Agreement shall be governed by Ohio law and any action or
proceeding, including arbitration, arising in connection with this Agreement
shall be brought and held in Ohio.
HUNTINGTON NATIONAL BANK DYNACRAFT GOLF PRODUCTS, INC.
By: By:
---------------------------- ------------------------------
------------------------- ▇▇▇▇▇ ▇▇▇▇▇▇▇
[title] Chief Financial Officer
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