EXHIBIT 1.4
IMPOUNDMENT AGREEMENT
THIS IMPOUNDMENT AGREEMENT made and entered into this _________ day of
February, 1997, by and between Illuminated Media Inc., (hereinafter called the
"Issuer") Tuschner & Co., Inc. (the "Underwriter") and Bank Windsor with
principal offices in Minneapolis, Minnesota (hereinafter called the
"Impoundment Agent");
WITNESSETH THAT:
WHEREAS, the Issuer has applied to the Commissioner of Commerce for the
State of Minnesota (hereinafter called the "Commissioner") for registration of
up to 1,500,000 Units (each Unit consisting of one share of Common Stock and
one redeemable Warrant for the purchase of
two shares of Common Stock) for sale to the residents of the State of Minnesota
on the basis of 550,000 Units minimum, and 1,500,000 Units maximum; and
WHEREAS, as a condition of registration of such offering under the
Securities Laws of the State of Minnesota the Commissioner requires that the
Issuer provide for the impoundment of the proceeds to be received from such
offering of securities; and
WHEREAS, the Issuer, Underwriter and the Impoundment Agent desire to enter
into an agreement with respect to the said impoundment of proceeds;
NOW, THEREFORE, in consideration of the premises and agreements set forth
herein, the parties hereto agree as follows:
1. PROCEEDS TO BE PLACED IN ESCROW:
All proceeds received from the sale of the securities subject to this
Impoundment Agreement on or after the date hereof shall be paid to the
Impoundment Agent before 12:00 noon on the second business day following the
date of subscription in accordance with Rule 15c2-4
under the Securities Exchange Act of 1934 and deposited by the Impoundment Agent
in an escrow account. During the term of this Impoundment Agreement, the Issuer
shall cause all checks received by it in payment for such securities to be
either payable to the Impoundment Agent or endorsed forthwith to the
Impoundment Agent.
2. IDENTITY OF SUBSCRIBERS:
The Issuer shall cause to be delivered to the Impoundment Agent two
signed counterparts of each Subscription Agreement which shall contain, among
other things, the name and address of each subscriber thereto, the date and
amount subscribed, and the amount paid, or,
in the alternative, shall furnish to the Impoundment Agent with each deposit of
funds in the impoundment a list of the persons who have subscribed the money,
showing the name, address, date and amount of subscription and amount of
money paid. All proceeds so deposited shall
remain the property of the subscriber and shall not be subject to any liens
or charges by the Impoundment Agent, or judgments or creditors` claims against
the Issuer until released to the Issuer as hereinafter provided.
3. DISBURSEMENT OF FUNDS:
Upon the receipt by Impoundment Agent of amounts paid in of not less
than $550,000.00 the Impoundment Agent shall forthwith notify the Commissioner
in writing of the impoundment of such amounts. Upon receipt by the Impoundment
Agent of written authorization from the Commissioner, then said Impoundment
Agent, on demand of the Issuer, shall pay over
to the Issuer all impounded funds. If the specified minimum amount of proceeds
have not been impounded during the term of impoundment, then, within three
business days after the last day of the term of impoundment, the Impoundment
Agent shall notify the Commissioner in writing
that the conditions of impoundment have not been satisfied, and shall within a
reasonable time, but in no event not more than thirty (30) days after the
last day of the term of impoundment refund to each subscriber at the address
appearing on the Subscription Agreement or list of subscribers, or at such other
address as shall be furnished the Impoundment Agent by the
subscriber in writing, all sums paid by him pursuant to his subscription, and
shall then notify the Commissioner in writing of such refund.
4. TERM OF IMPOUNDMENT:
This impoundment shall terminate on the one hundred fiftieth (150th)
day following the effective date of the registration of the Issuer`s securities
in the State of Minnesota, unless
extended by the consent in writing of the parties hereto and all subscribers to
the securities subscribed to date and the Commissioner. Upon termination
hereof, whether after extension or otherwise, the Impoundment Agent shall
disburse the funds in the impoundment account in the
manner and upon the terms directed in paragraph three hereof. The Issuer may
abandon the sale of securities anytime prior to the date above. Upon the
receipt of a copy of the Resolution authorizing said abandonment, duly
attested to by the Secretary of the Issuer, accompanied by the
written consent of the Commissioner, the Impoundment Agent shall be authorized
to refund the monies received from the subscribers.
5. TERMINATION BY REVOCATION OR SUSPENSION:
If at any time prior to the termination under paragraph four of this
impoundment, said Impoundment Agent is advised by the Commissioner that the
registration to sell securities has been revoked or suspended, said
Impoundment Agent shall thereupon return all funds to the
respective subscribers.
6. CONSENT OF COMMISSIONER TO RELEASE FUNDS:
No funds shall be released to the Issuer hereunder except upon the
express written authorization of the Commissioner. If the Commissioner finds
that any conditions of this Agreement have not been satisfied, or that any
provisions of the Minnesota Securities Laws or
regulations have not been complied with, then he may withhold such authorization
for release of funds by the Impoundment Agent to the Issuer and may direct the
Impoundment Agent to return the funds to the subscribers. In making his
determination hereunder, the Commissioner may
require from the Issuer a statement of all expenses and/or all amounts paid into
the escrow, certified by an independent certified public accountant or an
officer of the Issuer and any further
financial or other information as the Commissioner may deem appropriate or
helpful in making such determination.
7. INSPECTION OF RECORDS:
The Commissioner may, at any time, inspect the records of the
Impoundment Agent, insofar as they relate to this Impoundment Agreement, for the
purpose of determining compliance with and conformance to the provisions of this
Impoundment Agreement.
8. DUTY AND LIABILITY OF THE IMPOUNDMENT AGENT:
The sole duty of the Impoundment Agent, other than as herein specified
, shall be to receive said funds and hold them subject to release, in accordance
with the written instructions of the Commissioner, and the Impoundment Agent
shall be under no duty to determine whether the Issuer is complying with
requirements of the Commissioner in tendering to the Impoundment
Agent said proceeds of the sale of said securities.
The Impoundment Agent may conclusively rely upon and shall be
protected in acting upon any statement, certificate, notice, request, consent,
order or other document believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Impoundment 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 Impoundment Agreement. The
Impoundment Agent shall be under no obligation to institute or defend any
action, suit or proceeding in connection with this Impoundment Agreement
unless first indemnified to its satisfaction. The Impoundment Agent may
consult counsel in respect of any question arising under this Impoundment
Agreement and the Impoundment Agent shall not be liable for any action taken or
omitted in good faith upon advice of such counsel. All funds held by
Impoundment Agent pursuant to this Impoundment Agreement shall constitute trust
property for the purposes for which they are held and the
Impoundment Agent shall not be liable for any interest thereon.
9. IMPOUNDMENT AGENT`S FEE:
The Impoundment Agent shall be entitled to reasonable compensation for
its services. The fee agreed upon for services rendered hereunder is intended
as full compensation for the Impoundment Agent`s services as contemplated by
this Agreement; provided, however, in the event that the conditions of this
Impoundment Agreement are not fulfilled, or the Impoundment Agent renders any
material service not contemplated in this Agreement,
or there is any assignment of interest in the subject matter of this Impoundment
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Impoundment Agent is made a party to or
justifiably intervenes in any litigation pertaining to this Impoundment
Agreement, or the subject matter hereof, the Impoundment Agent shall be
reasonably compensated for such extraordinary services
and reimbursed for all costs and expenses, including reasonable
attorney`s fees, occasioned by any delay, controversy, litigation or event, and
the same may be recoverable from the Issuer only.
10. BINDING AGREEMENT AND SUBSTITUTION OF IMPOUNDMENT
AGENT:
The terms and conditions of this Agreement shall be binding on the
heirs, executors and assigns, creditors or transferees,
or successors in interest, whether by operation of law or
otherwise, of the parties hereto. If, for any reason, the Impoundment Agent
named herein should be unable or unwilling to continue
as such Impoundment Agent, then the other parties to this
Agreement may substitute, with the consent of the Commissioner, another
Impoundment Agent. Any apportionment of the fees provided
for in paragraph nine will be subject to agreement of the parties.
11. ISSUANCE OF CERTIFICATES:
Until the terms of this Agreement have been met and the funds
hereunder released to the Issuer, the Issuer may not issue
any certificates or other evidences of securities, except
subscription agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Impoundment
Agreement on the date first above written.
BANK WINDSOR ILLUMINATED MEDIA INC.
By ____________________________ By____________________________
Its ________________________ Its _______________________
(an authorized signature)
TUSCHNER & CO., INC.
By ____________________________
Its ________________________
Accepted and approved for filing this ________ COMMISSIONER OF COMMERCE
day of_____________, 1997.
By___________________________
Its________________________
