ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "AGREEMENT") is made and entered into as of
this 9th day of October, 1998, by and among LaSalle National Bank (the "ESCROW
AGENT"), V-ONE Corporation (the "COMPANY") and LaSalle St. Securities, Inc. (the
"SELLING AGENT").
A. The Company proposes to offer (the "OFFERING") for sale solely to
accredited investors (individually a "SUBSCRIBER" and collectively the
"SUBSCRIBERS") through the Selling Agent such number of shares of the Company's
common stock, $0.001 par value per share, ("SHARES") so that the gross sale
proceeds based on the Offering Price per share (as hereinafter defined) is at
least equal to $3,600,000 ("MINIMUM PROCEEDS"); provided, however, that the
Company may raise up to an additional $2,400,000 in gross sale proceeds. The
"OFFERING PRICE" shall be equal to the prevailing closing bid price for the
Shares on the Nasdaq National Market on the date of closing ("CLOSING DATE") of
such Offering, but in no event less than $1.625 per share. The Shares shall be
sold in reliance upon Regulation D promulgated under the Securities Act of 1933,
as amended (the "ACT"), and Section 4(2) of the Act, and as permitted in the
jurisdictions in which the Shares are to be offered;
B. The Company and the Selling Agent desire to establish an escrow account
in which funds received from Subscribers will be deposited; and
X. XxXxxxx National Bank agrees to serve as Escrow Agent in accordance
with the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT. On or prior to the date of the
commencement of the Offering, the parties shall establish an interest-bearing
escrow account with the Escrow Agent, which escrow account shall be entitled
"V-ONE Corporation Escrow Account" (the "ESCROW ACCOUNT"). During the Escrow
Period (as defined in Section 2 herein) the Selling Agent will instruct
Subscribers to make checks for subscriptions for Shares payable to the order of
the Escrow Agent as follows: "LaSalle National Bank, as Escrow Agent for V-ONE
Corporation." Any checks received that are made payable to a party other than
the Escrow Agent shall be returned by the Selling Agent to the Subscriber. All
wire transfers of subscriptions for Shares shall also be sent to the Escrow
Account at the Escrow Agent.
2. ESCROW PERIOD. The "ESCROW PERIOD" shall begin with the
commencement of the Offering and shall terminate upon the earlier to occur of
the following dates:
2.1. October 26, 1998 (I.E., seventeen (17) days from the
date of the Confidential Private Placement Memorandum relating to the Offering),
subject to extension(s) by the mutual agreement of the Company and the Selling
Agent until November 20, 1998 without notice to investors (the "EXPIRATION
DATE"), or
2.2. The date upon which determination is made by the Company
to terminate the Offering prior to the Expiration Date.
The Company is aware and understands that, during the Escrow Period,
it is not entitled to any funds deposited in escrow and no amounts deposited in
the Escrow Account shall become the property of the Company or any other entity,
or be subject to the debts of the Company or any other entity, until the closing
of the Offering.
3. DEPOSITS INTO THE ESCROW ACCOUNT. The Selling Agent agrees that
it shall deliver all monies received from Subscribers for the payment of the
Shares (the "ESCROW FUNDS") to the Escrow Agent for deposit in the Escrow
Account, by noon of the next business day following the receipt, together with a
copy of the subscription documents (the "SUBSCRIPTION DOCUMENTS"), which shall
set forth, among other things, the Subscriber's name and address, the aggregate
subscription amount and whether the consideration received was in the form of a
check, draft, or money order. At the same time, the Selling Agent shall deliver
the original Subscription Documents to the Company. The Selling Agent shall
deliver the Escrow Documents to the following branch office of LaSalle National
Bank:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Corporate Trust, Xxxxxx Xxxxxx
Each business day, the Escrow Agent shall notify the Company which
Subscription Documents it has received, the subscription amount associated with
each such Subscription Documents and whether such amounts constitute "collected
funds" (as hereinafter defined).
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
4.1. On the Closing Date, the amount of Escrow Funds in the
Escrow Account on such date shall be disbursed to the Company, along with
interest thereon. In no event will the Escrow Funds be released to the Company
unless an amount equal to the Minimum Proceeds 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 that have cleared normal
banking channels and are in the form of cash. The Selling Agent agrees to
furnish to the Escrow Agent all appropriate U.S. tax forms from each Subscriber
in order to comply with U.S. tax regulations.
4.2. In the event the Escrow Agent does not receive the
Minimum Proceeds on or before the Expiration Date or the Offering is terminated
pursuant to Section 2.2 of this Agreement, the Company shall notify the Escrow
Agent in writing of termination of the Offering, and shall instruct the Escrow
Agent to return, within five (5) business days following receipt of such
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notification, to each Subscriber the amount received from the Subscriber,
without interest thereon and without charge or deduction, and the Escrow Agent
shall notify the Company and the Selling Agent of its distribution of the funds.
The funds returned to each Subscriber shall be free and clear of any and all
claims of the Escrow Agent, the Company or any of its creditors.
5. COLLECTION PROCEDURE.
5.1. The Escrow Agent is hereby authorized to forward each
Subscriber's 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. Any check returned unpaid to the Escrow Agent
shall be returned to the Selling Agent. In such cases, the Escrow Agent will
promptly notify the Company of such return.
5.2. If the Company 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 for the amount rejected by the Company to
the rejected Subscriber without interest thereon and without charge or
deduction. If the Company rejects any subscription, in whole or in part, for
which the Escrow Agent has not yet collected funds, the Escrow Agent shall
promptly issue a check in the amount of the Subscriber's original check (or in
the amount which was rejected by the Company) to the rejected Subscriber after
the Escrow Agent has cleared such funds without interest thereon and without
charge or deduction. 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, unless the Company has only
rejected the subscription in part, in which circumstance the Escrow Agent shall
promptly issue a check for the amount rejected without interest thereon and
without charge or deduction to the rejected Subscriber after the Escrow Agent
has cleared such funds.
5.3. All returns and deliveries to a Subscriber hereunder
shall be mailed by regular first class mail to the residential or business
address appearing on the Subscriber's Subscription Documents. Any payment to a
Subscriber required by this Section 5 may be made by a check or draft drawn on
the Escrow Account.
6. INVESTMENT OF ESCROW FUNDS. The Escrow Agent may invest the
Escrow Funds only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in (1) bank accounts,
(2) bank money-market accounts, (3) short-term certificates of deposit issued by
a bank, (4) short-term securities issued or guaranteed by the U.S. Government,
(5) banker acceptances, (6) commercial paper, (7) municipal securities or (8)
money market funds authorized to invest only in short-term securities such as
commercial paper, certificates of deposit, fully-collateralized repurchase
agreements and/or U.S. government obligations. The Escrow Agent may use its own
Bond Department in executing purchases and sales of investments.
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7. COMPENSATION. The Escrow Agent shall provide its escrow services
hereunder in consideration of the amount of $5,000, which amount shall be paid
upon the opening of the Escrow Account.
8. EXCULPATION AND INDEMNIFICATION OF ESCROW AGENT.
8.1. The Escrow Agent shall have no duties or
responsibilities other than those expressly set forth herein. The Escrow Agent
shall have no duty to enforce any obligation of any person to make any payment
or delivery, to direct or cause any payment or delivery to be made, or to
enforce any obligation of any person to perform any act. The Escrow Agent shall
be under no liability to anyone by reason of any failure on the part of any
party hereto (other than itself) or any other person, or any maker, guarantor,
endorser or other signatory of any document to perform such person's obligations
under any such document. Except as provided in this Agreement and except for
instructions given to the Escrow Agent relating to the Escrow Account as
provided for in this Agreement or accepted by the Escrow Agent, the Escrow Agent
shall not be obligated to recognize any agreement between any or all of the
persons referred to herein, notwithstanding that references thereto may be made
herein and the Escrow Agent has knowledge thereof.
8.2. The Escrow Agent shall not be liable for any action
taken or omitted by it, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment, and may rely
conclusively and shall be protected in acting upon, any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the
Escrow Agent), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be
signed or presented by the proper person or persons. Except as provided by
Section 2 of this Agreement, the Escrow Agent shall not be bound by any notice
or demand, or any waiver, modification, termination or rescission of this Escrow
Agreement or any of the terms hereof, unless evidenced by a writing delivered to
the Escrow Agent signed by the proper party or parties and, if the duties or
rights of the Escrow Agent are affected, unless it shall give its prior written
consent thereto.
8.3. The Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form of, or the execution, validity, value,
genuineness of, any document or property received, held or delivered by it
hereunder, or of any signature or endorsement thereon, or for any lack of
endorsement thereon, or for any description therein, nor shall the Escrow Agent
be responsible or liable in any respect on account of the identity, authority or
rights of the persons executing or delivering or purporting to execute or
deliver any property or document including this Escrow Agreement. The Escrow
Agent shall have no responsibility with respect to the use or application of any
funds or other property paid or delivered by the Escrow Agent pursuant to the
provisions hereof, provided, however, that nothing herein shall relieve the
Escrow Agent from liability for gross negligence or willful misconduct in
connection with the use or application of any Escrow Funds. The Escrow Agent
shall not be liable for any loss which may be incurred by reason of any
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investment of any monies which it holds hereunder if made in accordance with
Section 6 herein.
8.4. The Escrow Agent shall have the right to assume, in the
absence of written notice to the contrary from the proper person or persons,
that a fact or any event, by reason of which an action would or might be taken
by the Escrow Agent, does not exist or has not occurred, without incurring
liability for any action taken or omitted, in good faith and in the exercise of
its own best judgment, in reliance upon such assumption.
8.5. To the extent that the Escrow Agent becomes liable for
the payment of taxes, including withholding taxes, in respect of income derived
from the investment of funds held hereunder or any payment made hereunder, the
Escrow Agent may pay such taxes. The Escrow Agent shall be indemnified and held
harmless by the other parties hereto against any liability for taxes and for any
penalties or interest in respect of taxes, on such investment income or payments
in the manner provided in Section 8.6.
8.6. The Escrow Agent shall be indemnified and held harmless,
jointly and severally by the other parties hereto, from and against any
expenses, including reasonable counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding
involving any claim, or in connection with any claim or demand, which, in any
way, directly or indirectly arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, the monies or other property held by it
hereunder or any income earned from investment of such monies (except from
liability for its own gross negligence or willful misconduct). Promptly after
the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall, if a
claim in respect thereof is to be made against any of the other parties hereto,
notify such other parties thereof in writing, but unless such notice was not
made promptly by the Escrow Agent the failure by the Escrow Agent to give such
notice shall not relieve any party from any liability which such party may have
to the Escrow Agent hereunder.
For the purposes hereof, the term "expense and loss" shall include
all amounts paid or payable to satisfy any claim, demand or liability, or in
settlement of any claim, demand, action, suit or proceeding settled with the
express written consent of the Escrow Agent and the indemnifying party, and all
costs and expenses, including, but not limited to, reasonable counsel fees and
disbursements, paid or incurred in investigation or defending against any such
claim, demand, action, suit or proceeding. Notwithstanding anything herein to
the contrary, the other parties shall not be required to indemnify or hold
harmless the Escrow Agent for any liabilities, costs or expenses incurred in
connection with or as a result of the Escrow Agent's gross negligence or willful
misconduct related to any action required of it herein.
8.7. If any dispute or difference arises between the Company
and any Subscriber or any other third person, or if any conflicting demand shall
be made upon the Escrow Agent, the Escrow Agent shall not be required to
determine the same or take any action in the premises; but the Escrow Agent may
await settlement of the controversy by final appropriate legal proceedings, or
the Escrow Agent may file suit in interpleader in the courts of the State of
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Illinois, for the purpose of having the respective rights of the parties
adjudicated and may deposit with the court any or all monies held hereunder.
Upon institution of such interpleader suit or other action, depositing the
Escrow Funds with the court and giving notice of such action to the parties
involved either by personal service, or in accordance with the order of the
court, the Escrow Agent shall be fully released and discharged from all further
obligations hereunder with respect to the Escrow Funds so deposited.
From time to time, on and after the date hereof, the other parties
hereto shall deliver, or cause to be delivered, such further documents and
instruments and shall do any further acts, or cause such further acts to be done
as the Escrow Agent or the Company shall reasonably request to carry out more
effectively the provisions and purposes of this Agreement, to evidence company
compliance herewith or to assure itself that it is protected in acting
hereunder.
9. TERMINATION OF AGREEMENT AND RESIGNATION OF ESCROW AGENT.
9.1. This Escrow Agreement shall terminate at the end of the
Escrow Period, as described in Section 2 herein; provided, however, that the
rights and obligations of the parties hereto shall survive the termination
hereof.
9.2. The Escrow Agent may resign at any time and be
discharged from its duties as escrow agent hereunder by giving the Company at
least fifteen (15) days notice hereof. As soon as practicable after its
resignation, the Escrow Agent shall turn over to a successor escrow agent
appointed by the other parties hereto all monies and property held hereunder
upon presentation of the document appointing the new escrow agent and its
acceptance thereof. If no new escrow agent is so appointed within a thirty-day
period following such notice of resignation, the Escrow Agent may deposit the
aforesaid monies and property with any court in the State of Illinois that it
deems appropriate.
10. CONSENTS TO SERVICE OF PROCESS. Each of the parties hereto
hereby irrevocably consents to the jurisdiction of the courts of the State of
Illinois and of any federal court located in such state in connection with any
action, suit or other proceeding arising out of or relating to this Agreement or
any action taken or omitted hereunder, and waives personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to such person at such person's
address for purposes of notices hereunder. Should the person so served fail to
appear or answer within the time prescribed by law, that person shall be deemed
in default and judgment may be entered by the complaining party against that
person for the amount as demanded in any summons, complaint or other process so
served.
11. NOTICES. All notices required by this Agreement shall be in
writing and shall be deemed to have been duly given if sent by first-class mail,
overnight courier service or by hand delivery (with signed return receipt) to
the respective addresses as follows:
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(a) To the Company:
00000 Xxxxxxx Xxxxxxxxx.
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) To the Escrow Agent:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(c) To the Selling Agent:
LaSalle St. Securities, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be duly executed by their authorized representatives as of the date first
written above.
V-ONE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
LASALLE NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------
Title: Trust Officer &
Assistant Secretary
--------------------------
LASALLE ST. SECURITIES, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------
Xxxxxxx Xxxxx
Vice-President
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