IMPOUND OF FUNDS AGREEMENT
This Agreement, dated ______________, 2001, by and between XXXXXXXXX.XXX
CORP., a Massachusetts corporation (hereinafter referred to as "Issuer") and
CITIZEN BANK (hereinafter referred to as the "Depository"). The Depository is
located at 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000. The issuer warrants that it has
applied for authority from the Administrators of Securities of the States listed
on Schedule A hereto to sell certain securities pursuant to the Issuer's
Registration Statement on Form SB-2 (SEC File No. 333-46592) and the Issuer
intends that, if it is unable to sell securities in the minimum sum of
$1,500,000 by the _______ day of ______________, 2001 (the "Closing Date"), then
the offering shall be terminated and the proceeds paid in by each of the
subscribers shall be returned to them pursuant to this Agreement.
The Depository is willing to act as the depository hereunder.
In consideration of the mutual covenants and of other good and valuable
consideration, the parties agree as follows:
1. The Issuer shall deposit all monies received from the sale of
securities in a special impound account in the depository to be
designated the "SonicSave Impound Account" (the "Impound Account").
The Issuer and its agents shall cause all checks received by it for
the payment of securities to be made payable to the Depository
Impound Account. The Issuer agrees to include with the deposits made
in the Impound Account a copy of each subscription agreement which
shall include the name, address and social security or other tax
identification number of each Subscriber and the date and amount of
each subscription. All funds so deposited shall be held in escrow by
the Depository, and shall not be subject to judgment or creditors
claims against the Issuer unless and until released to said Issuer
in accordance with this Agreement.
2. Unless the Administrator directs to the contrary, the funds
deposited in the Impound Account may be invested as directed by the
Issuer in bank certificates of deposit, United States government
obligations or placed in an interest bearing savings account.
3. Deposits in the form of checks that fail to clear the bank upon
which they are drawn, together with the related subscription
agreement, shall be returned by the Depository to the Subscriber. A
copy thereof shall be sent to the Issuer.
4. (a) Subject to subparagraph (b) below, if, on or before the
Closing Date, the funds deposited in the Impound Account amount to
or exceed $1,500,000 (the "Minimum Subscription"), then the
Depository shall pay such funds, and all other funds deposited
thereafter, to the Issuer. The Depository shall notify the
Administrator in writing upon the release of funds.
(b) Notwithstanding anything to the contrary contained herein,
prior to the release of any of the funds deposited in the Impound
Account, the Issuer shall provide written evidence to Escrow Agent
that the Issuer's promoters shall have made an equity contribution
equal to or greater than the amounts set forth on
Schedule B hereto either by the conversion of outstanding loans into
equity or by contribution to the Issuer of new funds as an
additional capital contribution.
5. Upon receipt by the Depository of written notification signed by the
Issuer advising that it was unable to sell the Minimum Subscription
within the specific offering period, the funds deposited in the
Impound Account shall be returned by the Depository to the
Subscribers according to the amount each contributed. Total
interest, less interest used to satisfy Depository costs and fees,
will be divided and returned to subscribers based upon the
investment.
6. If, at any time prior to the disbursement of funds by the Depository
as provided in Paragraph 4 or 5 of this Agreement, the Depository is
advised by the Administrator that the registration to sell
securities of the Issuer has been suspended or revoked, that any
condition of its registration permit has not been suspended or
revoked, that any condition of its registration permit has not been
met or that any provision of the securities laws of the
participating states have not been complied with, then the
Administrator may direct the Depository not to disburse the proceeds
until further notice by the Administrator.
7. This Impound Agreement shall terminate upon the disbursement of
funds pursuant to Paragraphs 4 or 5; provided, however, the Issuer
may abandon the public offering. Upon the receipt of a letter from
the Issuer stating that the offering has been abandoned, copy to the
Administrator, the Depository is authorized to return the monies
received hereunder to the subscribers according to the amount each
subscriber contributed with interest, less interest used to satisfy
Depository costs and fees, and this Agreement shall terminate upon
said distribution.
8. The sole duty of the Depository other than as herein specified,
shall be to establish and maintain the Impound Account and receive
and hold the funds deposited by the company pursuant to all
applicable banking laws and regulations.
9. The Issuer acknowledges that the Depository is performing the
limited function of Depository and that this fact in no way means
the Depository has passed in any way upon the merits or
qualifications of, or has recommended, or given approval to, any
person, security or transaction. A statement to this effect shall be
included in the offering circular.
10. The Administrator may, at any time, inspect the records of the
Depository, insofar as they relate to this Agreement, for the
purpose of making any determination hereunder or effecting
compliance with and conformance to the provisions of this Agreement.
11. 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 Depository named herein
should be unable or unwilling to continue as such
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depository, then the Company may substitute, with the consent of the
Administrator, another person to serve as Depository.
IN WITNESS WHEREOF, the parties have executed this Agreement the _______
day of ____________, 2001.
ISSUER: XXXXXXXXX.XXX CORP.
By _________________________________
President
DEPOSITORY: CITIZEN BANK
By _________________________________
Its _________________________________
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SCHEDULE A
PARTICIPATING STATES
Arizona
California
Indiana
Massachusetts
Michigan
Missouri
Oregon
Pennsylvania
Xxxxxxxx
Xxxxxxxxxx
Ohio
Minnesota
Tennessee
SCHEDULE B
Required Impound Funds to
Promoter's Equity Investment Be Released
---------------------------- -----------
(i) $135,000 (i) First - $1,500,000
(ii) $25,000 (ii) Next - $500,000
(iii) $25,000 for each $1,000,000 of Impound funds to be released over
$2,000,000 (pro rata for partial amounts.)
