ESCROW AGREEMENT
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THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of , 2002, by and between NETWORK PRINTING SOLUTIONS, INC., a Delaware corporation (the "Issuer"), and HARBOR NATIONAL BANK, a national banking association (the "Escrow Agent"), collectively referred to herein as the "parties".
A. The Issuer has prepared a Prospectus dated , 2002 (the "Prospectus"), a copy of which has been provided to the Escrow Agent.
B. The Issuer proposes to offer for sale to investors, up to 400,000 shares of its $0.001 par value common stock (the "Shares"), at an offering price of $5.00 per Share, resulting in a maximum offering of $2,000,000 (the "Maximum"). The minimum offering will be 200,000 Shares for $1,000,000 (the "Minimum").
C. The Issuer intends to sell the Shares on a best-efforts basis in a registered public offering (the "Offering"). The Offering has been registered on a Form SB-2 Registration Statement under the Securities Act of 1933, as amended, which was declared effective by the Securities and Exchange Commission on , 2002.
D. Individuals will be required to purchase a minimum of 500 Shares for $2,500, although the Issuer may, in its sole discretion, accept subscriptions for lesser amounts.
E. The Issuer proposes to establish an escrow account with the Escrow Agent for the Offering, and the Escrow Agent is willing to establish and maintain such escrow account on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, including the mutual covenants herein contained, the parties hereto agree as follows:
1. Establishment of the Escrow Account.
1.1 The parties hereto shall establish a non-interest-bearing, bank escrow account at the office of the Escrow Agent located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx (the "Escrow Account"). The name of the Escrow Account shall be "Harbor National Bank as Escrow Agent for Network Printing Solutions, Inc.," The Issuer will instruct subscribers to make checks for subscriptions payable to the order of "Harbor National Bank as Escrow Agent for Network Printing Solutions, Inc." or to the order of the Escrow Agent or the Issuer, with reference to the account number of the Escrow Account. Any checks received that are made payable to a party other than the Escrow Agent or the Issuer, shall be returned to the subscriber who submitted the check.
2. Escrow Period.
The Escrow Period shall begin as of the date of this Agreement and shall terminate upon the earlier to occur of the following dates (the "Termination Date"):
(a) December 31, 2002, subject to extension to a date on or before March 31, 2003, as described in the Prospectus; or
(b) the date upon which the Escrow Agent receives cleared funds for the Maximum; or
(c) the date upon which the Escrow Agent receives written notice from the Issuer that the Offering has been terminated. The Issuer shall be entitled to terminate the Offering and the Escrow, either prior to or after the Escrow Agent's receipt of the Minimum, by giving written instructions to the Escrow Agent to terminate the Escrow. If such termination instructions are
received by the Escrow Agent prior to the Escrow Agent's receipt of the Minimum, then the Escrow Agent shall disburse the Escrow Amount, as defined in Section 3.1 hereof, pursuant to the provisions of Section 4.1 hereof. If such termination instructions are received by the Escrow Agent after the Escrow Agent's receipt of the Minimum, then the Escrow Agent shall disburse the Escrow Amount pursuant to the provisions of Sections 4.2 and 4.3 hereof.
During the Escrow Period, the Issuer is aware and understands that it is not entitled to any funds received into escrow and no amounts deposited in the Escrow Account shall become the property of the Issuer or any other entity, or be subject to the debts of the Issuer or any other entity.
3. Deposits into the Escrow Account.
3.1 The Issuer agrees that it shall deliver all monies received from subscribers by noon on the second business day following the Issuer's receipt of such monies, for the payment of the Shares to the Escrow Agent for deposit in the Escrow Account. All monies deposited in the Escrow Account are referred to as the "Escrow Amount."
3.2 All amounts received from subscribers of the Shares shall be in full payment for the Shares purchased and shall be in U.S. dollars in the form of checks, wire transfers, draft or money orders made payable as described in Section 1.1 herein. Any check, wire transfer, draft or money order made payable other than as set forth in Section 1.1 shall be returned to the subscriber by mail the next business day following receipt of such instrument or wire by the Escrow Agent, and such instrument shall be deemed not to have been delivered to the Escrow Agent pursuant to the terms of this Agreement.
3.3 Simultaneously with each deposit into the Escrow Account, the Issuer shall deliver to the Escrow Agent two (2) copies of the Subscription Agreement, informing the Escrow Agent in writing of the name and address of the subscriber, the number of Shares subscribed by such subscriber, and the aggregate dollar amount of such subscription.
3.4 The Escrow Agent shall not be required to accept for deposit into the Escrow Account checks which (a) do not represent payment in full of the Shares purchased, and/or (b) are not accompanied by the delivery of two (2) copies of the Subscription Agreement. Cash or wire transfers representing payments by prospective purchasers shall not be deemed deposited in the Escrow Account until the Escrow Agent has received in writing, two (2) copies of the Subscription Agreement required with respect to such payments. Until Escrow Agent receives two (2) copies of the Subscription Agreement required with respect to any cash or wire transfers received by Escrow Agent, such funds shall be held by Escrow Agent in a non-interest bearing suspense account until the two (2) copies of the Subscription Agreement have been received, at which time the funds shall be deposited in the Escrow Account.
3.5 In the event any wire received by Escrow Agent is subject to any Office of Foreign Assets Control ("OFAC") restriction, such funds shall not be deemed to have been accepted for deposit into the Escrow Account, but instead shall be subject to such action as may be required by Escrow Agent to fully comply with all applicable OFAC instructions, rules and regulations.
3.6 The Escrow Agent shall not be required to accept any amounts representing payments by subscribers, whether by check, wire transfer, draft or money order, except during the Escrow Agent's regular banking hours.
3.7 Upon confirmation by the Escrow Agent that it has received the Minimum in collected funds, the Escrow Agent shall promptly give notice to the Issuer that the Minimum has been received.
3.8 In the event that the Escrow Agent has made a disbursement of the Escrow Amount pursuant to Section 4.2 below and the Escrow Period has not terminated pursuant to Section 2 above, upon confirmation by the Escrow Agent that it has received the Maximum in collected funds, taking into account the amounts disbursed pursuant to Section 4.2 below, the Escrow Agent shall promptly give notice to the Issuer that the Maximum has been received.
4. Disbursements from the Escrow Account.
4.1 In the event that at the close of regular banking hours on the Termination Date of the Escrow Period the Escrow Amount shall be less than the Minimum, as indicated by the Subscription Agreements submitted to the Escrow Agent, then the Escrow Agent shall promptly (a) notify each subscriber that the offering contemplated hereby did not close and refund to each subscriber the amount of payment received from such subscriber, without interest thereon, and (b) notify the Issuer of its distribution of the Escrow Amount to the subscribers (less amounts due to the Escrow Agent under this Agreement). The funds returned to each subscriber shall be free and clear of any and all claims of the Issuer or any of its creditors.
4.2 If, at any time prior to or as of the Termination Date, the Escrow Amount is equal to or greater than the Minimum, but less than the Maximum, then the Escrow Agent shall release, upon receipt of written instructions from the Issuer, signed by two officers of the Issuer, and deliver to the Issuer, the Escrow Amount, less any amount due to the Escrow Agent under this Agreement; provided, however, that in no event shall the Escrow Amount be released to the Issuer or any other person until such amount is received by the Escrow Agent in collected funds. For purposes of this Agreement, the term "collected funds" shall mean all funds received by the Escrow Agent which have cleared normal banking channels and are in the form of cash. In the event the Minimum is achieved and the Escrow Amount, less the deductions noted above, is released to the Issuer before the Termination Date, then the Escrow shall continue until the Termination Date and any additional funds deposited in the Escrow Account shall be released to the Issuer from time to time until the Termination Date upon receipt by the Escrow Agent of written instructions to do so from the Issuer, executed by Issuer as provided above.
4.3 In the event that the Escrow Agent has made a disbursement of the Escrow Amount pursuant to Section 4.2 above and (a) the Escrow Agent does receive the Maximum or (b) the Escrow Period terminates pursuant to Section 2 above, then the Escrow Agent shall release, upon receipt of written instructions signed by two officers of the Issuer, and deliver to the Issuer, the Escrow Amount, less any amount due to the Escrow Agent under this Agreement; provided, however, that in no event shall the Escrow Amount be released to the Issuer or any other person until such amount is received by the Escrow Agent in collected funds, as defined in Section 4.2 above.
4.4 With respect to subscriptions not accepted, in whole or in part, by the Issuer, by reason of the Offering becoming fully subscribed prior to the Escrow Agent's receipt of such subscription, or because such subscription is received after the Termination Date, or for any other reason, the Escrow Agent shall follow the written (which may be sent by mail or facsimile) instructions of the Issuer with respect to refunding to each subscriber the payments made, pursuant to Section 5.3 below.
4.5 Upon disbursement of the Escrow Amount pursuant to the terms of this Section 4, the Escrow Agent shall be relieved of all further obligations and released from all liability under this Agreement. It is expressly agreed and understood that in no event shall the aggregate amount of payments made by the Escrow Agent exceed the Escrow Amount. It is further expressly agreed and understood that Escrow Agent shall have no responsibility for determining the completeness or accuracy of any of the Subscription Agreements.
5. Collection Procedure.
5.1 The Escrow Agent is hereby authorized to forward each check for collection and, upon collection of the proceeds of each check, deposit the collected proceeds in the Escrow Account. As an alternative, the Escrow Agent may telephone the bank on which the check is drawn to confirm that the check has been paid.
5.2 Any check returned unpaid to the Escrow Agent shall be returned to the subscriber who submitted the check. In such cases, the Escrow Agent will promptly notify the Issuer of such return.
5.3 If the Issuer rejects any subscription, in whole or in part, for which the Escrow Agent has already collected funds, the Escrow Agent shall promptly issue a refund check to the rejected subscriber. If the Issuer rejects any subscription for which the Escrow Agent has not yet collected funds but has submitted the subscriber's check for collection, the Escrow Agent shall promptly issue a check in the amount of the subscriber's check to the rejected subscriber after the Escrow Agent has cleared such funds. If the Escrow Agent has not yet submitted a rejected subscriber's check for collection, the Escrow Agent shall promptly remit the subscriber's check directly to the subscriber.
6. Investment of Escrow Amount. During the entire term of the Escrow Period, the full Escrow Amount shall be held by the Escrow Agent in a non-interest-bearing bank account as described in Section 1.1 hereof at Escrow Agent's office located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
7. Rights, Duties and Responsibilities of Escrow Agent. It is understood and agreed that the duties of the Escrow Agent are purely administrative in nature, and that:
7.1 The Escrow Agent shall not be responsible for the performance by the Issuer of its obligations under this Agreement or under the Prospectus.
7.2 The Escrow Agent shall not be required to accept any Subscription Agreement pertaining to a subscriber unless such Subscription Agreement is accompanied by or preceded by a check, wire transfer, draft or money order made payable either to the Issuer (and endorsed to the order of the Escrow Agent), or to the Escrow Agent, nor shall the Escrow Agent be required to keep records of any information with respect to payments deposited by any subscriber, except as to the amount and dates of such payments; however, the Escrow Agent shall notify any subscriber, within a reasonable time, of a discrepancy between the amount set forth in any Subscription Agreement and the payment delivered to the Escrow Agent therewith. Such payment need not be accepted for deposit in the Escrow Account until such discrepancy has been resolved.
7.3 The Escrow Agent shall be under no duty or responsibility to enforce collection of any check delivered to it hereunder. The Escrow Agent, within a reasonable time, shall return to the subscriber any check received which is dishonored, together with the Subscription Agreement, if any, which accompanied such check. In the event that any check received by Escrow Agent hereunder is returned unpaid by the drawee bank, and notwithstanding any other provision contained herein, the Escrow Agent may deduct from the funds held hereunder the amount of said check and shall notify Issuer of such occurrence.
7.4 The Escrow Agent shall be entitled to rely upon the accuracy, act in reliance upon the contents, and assume the genuineness of, any notice, instruction, certificate, signature, instrument or other document which is given to the Escrow Agent pursuant to this Agreement without the necessity of the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not be obligated to make any inquiry as to the authority, capacity, existence or identify of any person purporting to give any such notice or instructions or to execute any such certificate, instrument or other document.
7.5 The Escrow Agent shall not be liable for any action taken or omitted hereunder, or for the misconduct of any employee, agent or attorney appointed by it, except in the case of Escrow Agent's willful misconduct or gross negligence.
7.6 Within two (2) business days after receiving two (2) copies of a Subscription Agreement (accompanied by payment for the Shares subscribed for), the Escrow Agent shall send to the Issuer by mail or facsimile (with original to be mailed by first class mail on the same date) one (1) complete copy of the Subscription Agreement.
8. Amendment, Resignation, Interpleader.
8.1 This Agreement may be altered or amended only with the written consent of the Issuer and the Escrow Agent. The Escrow Agent may resign for any reason upon thirty (30) days' written
notice to the Issuer. Should the Escrow Agent resign as herein provided, after the effective date of such resignation it shall not be required to accept any deposit, make any disbursement or otherwise dispose of the Escrow Amount, but its only duty shall be to hold the Escrow Amount for a period of not more than five (5) business days following the effective date of such resignation, at which time (a) if a successor escrow agent shall have been appointed by the Issuer and written notice thereof (including the name and address of such successor escrow agent) shall have been given to the resigning Escrow Agent by the Issuer and such successor escrow agent, then the resigning Escrow Agent shall pay the Escrow Amount to the successor escrow agent, less any portion thereof previously paid out in accordance with this Agreement; or (b) if the resigning Escrow Agent shall not have received written notice signed by the Issuer, and a successor escrow agent, then the resigning Escrow Agent shall promptly refund the Escrow Amount to each subscriber, and the resigning Escrow Agent shall notify the Issuer in writing of its liquidation and distribution of the Escrow Amount, whereupon, in either case, the Escrow Agent shall be relieved of all further obligations and released from all liability under this Agreement. Without limiting the provisions of Section 10 hereof, the resigning Escrow Agent shall be entitled to be reimbursed by the Issuer for any expenses incurred in connection with its resignation, transfer of the Escrow Amount to a successor escrow agent or distribution of the Escrow Amount pursuant to this Section 8.1.
8.2 Should the parties not designate a successor agent within 35 days of the Escrow Agent's resignation, or should any dispute arise with respect to the Escrow, the Escrow Amount, this Agreement or the escrowed funds, Escrow Agent may deposit the Escrow Amount with a court of competent jurisdiction and interplead such dispute and the parties will hold Escrow Agent harmless and indemnify it against all consequences and expenses which may be incurred, including Escrow Agent's reasonable attorneys fees.
9. Representations and Warranties. The Issuer hereby represents and warrants to the Escrow Agent that:
9.1 No party other than the Issuer and the subscribers have, or shall have, any lien, claim or security interest in the Escrow Account or any part thereof.
9.2 All of the information contained herein is, as of the date hereof, and will be at the time of disbursement of the Escrow Amount, true and correct.
10. Fees and Expenses. The Issuer shall pay the Escrow Agent a fee for its escrow services in the amount of $2,000, payable upon execution of this Agreement. The Issuer shall pay the Escrow Agent a processing charge of $10 per subscriber, whether or not the Escrow is completed, due upon the closing or termination of the Escrow and a fee of $10.00 per returned subscription funds check if the Escrow is not completed, payable upon Escrow Agent's written demand. The Issuer agrees to reimburse the Escrow Agent for any reasonable expenses incurred in connection with this Agreement, including, but not limited to, reasonable counsel fees not to exceed $500. If it is necessary for the Escrow Agent to return funds to the subscribers of the Shares, the Issuer shall pay to the Escrow Agent such funds as may be required to pay the Escrow Agent its fees, costs and expenses, including indemnification for any damages incurred by the Escrow Agent. However, no such fee, reimbursement for costs and expenses, indemnification for any damages incurred by the Escrow Agent, or any monies whatsoever shall be paid out of or chargeable to the funds on deposit in the Escrow Account.
11. Indemnification and Contribution.
11.1 Notwithstanding the provisions of paragraph 10, the Issuer agrees to indemnify the Escrow Agent and its officers, directors, employees, agents, parent and affiliates (jointly and severally the "Indemnitees") and the Issuer agrees to hold them harmless from, any and all loss, liability, cost, damage and expense, including, without limitation, reasonable counsel fees, which the Indemnitees may suffer or incur by reason of any action, claim or proceeding brought or threatened against the Indemnitees arising out of or relating in any way to this Agreement or any
transaction to which this Agreement relates, unless such action, claim or proceeding is the result of the willful misconduct or gross negligence of the Indemnitees.
11.2 The provisions of this Section 11 shall survive any termination of this Agreement, whether by disbursement of the Escrow Amount, resignation of the Escrow Agent or otherwise.
11.3 The Issuer will not make any reference to Harbor National Bank in connection with the Offering except with respect to its role as Escrow Agent hereunder and in no event will the Issuer state or imply that the Escrow Agent has investigated or endorsed the Offering or the Shares in any manner whatsoever.
12. Governing Law and Assignment. This Agreement shall be construed in accordance with and governed by the laws of the State of California. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
13. No Duty to Pay Taxes. The Escrow Agent shall have no duty or responsibility to pay any federal, state or local income taxes on any escrowed property or to make or file any tax returns or other governmental reports. The escrowed property shall be considered to be the property of the respective investor for all tax purposes.
14. Notices. Any notice, request, demand and other communication which any party hereto may desire or may be required hereunder to give shall be in writing and shall be deemed to be duly given if delivered personally or mailed by certified or registered mail (postage prepaid, return receipt requested), air courier or facsimile transmission (with the original mailed by first class mail on the same date), addressed to such other party as follows:
| If to Issuer: | Network Printing Solutions, Inc. 000 Xxxxxxxxxxxxx Xxxxxxx, Xxxxx Xxxxx Xxxx Xxxx, XX 00000 ATTN: Xxxxx X. X'Xxxxxxxx, Chairman and CEO Fax: |
|
If to Escrow Agent: |
Harbor National Bank 000 Xxxx Xxxxxx, Xxxxx 000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ATTN: Xx Xx Xxxxxx, Senior Vice President Fax: (000) 000-0000 |
|
With a copy to: |
Xx. Xxxxx X. Xxxxxxxxxxx President and Chief Executive Officer Harbor National Bank 00000 Xxxxxxx Xxxxx Xxxxxxx Xxxx Xxxxx, XX 00000 Fax: (000) 000-0000 |
or to such other address as any party hereto may hereafter designate to the other parties in writing. Notice shall be deemed to have been given on the date reflected in the proof or evidence of delivery, or if none, on the date actually received.
15. Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be determined to be invalid or unenforceable, the remaining provisions of this Agreement or the application of such provision to the person or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law.
16. Certificate of Authorization of Officers.
16.1 The Issuer represents and warrants that the following named officers of the Issuer are now acting and qualified to sign on behalf of the Issuer, ACTING TOGETHER WITH BOTH SIGNATURES, all written instructions, consents, waivers, notices, documents, instruments and certificates of the Issuer, in accordance with and as provided in the bylaws of the Issuer, that the specimen signatures appearing opposite the names and titles set forth below are the genuine signatures of such officer and that said officers hold the titles of the Issuer described below. The Escrow Agent is further authorized to recognize these signatures until Escrow Agent receives written instructions to the contrary from Issuer.
| Xxxxx X. X'Xxxxxxxx, Chairman and CEO, Printed Name and Title |
will sign | Signature |
||
Xxxxx X. Xxxxxxxx, Secretary, Printed Name and Title |
will sign |
Signature |
17. Execution in Several Counterparts. This Agreement may be executed in several counterparts or by separate instruments and all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.
18. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings (written or oral) of the parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the day and year first above written.
| Issuer: | Network Printing Solutions, Inc. a Delaware corporation |
||
By: |
Xxxxx X. X'Xxxxxxxx Chairman and CEO |
||
By: |
Xxxxx X. Xxxxxxxx Secretary |
||
Escrow Agent: |
Harbor National nBank a national banking association |
||
By: |
Xxxxx X. Xxxxxxxxxxx President and Chief Executive Officer |
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ESCROW AGREEMENT
RECITALS
