IMPOUND AGREEMENT
This agreement dated July , 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 $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.
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 funda in the Escrow
Account 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.
C. Upon the return or release of funds in the Escrow Account, the
Impound Agent shall notify the Pennsylvania Securities Commission,
0000 Xxxxx Xxxxxxx Xxxxxx, 0xx xxxxx, Xxxxxxxxxx, XX 00000-0000.
That Commission has the right to inspect and make copies of the
records of the Impound Agent at any reasonable time wherever the
records are located.
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 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 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. Escrow Funds not Subject to Claims. 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. The funds in the Escrow Account are not subject to
claims by creditors of the Company, or any of its affiliates,
associates or underwriters until the funds have been released to
the Company pursuant to the terms of this Agreement.
13. Binding upon Successors. This Agreement shall be
binding upon, and inure to, the benefit of the parties hereto,
their heirs, successors and assigns.
14. 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.
15. 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.
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.
16. 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.
By:
XxxxxxxxxXxxxxxXxxxxx.xxx, Inc.
By: Xxxxx X. Xxxxxxx
[title] Chief Executive Officer
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