IMPOUND AGREEMENT
This agreement dated November , 1999 is between Bank of America.
(the "Impound Agent") and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation (the "Company").
The Company proposes to offer directly for sale to investors (the
"Offering") up to 600,000 shares of its Common Stock (the "Shares") at
a price of $10.00 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. Bank of America 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
"Bank of America 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 $2,000,000 in deposited funds
(the "Minimum"), (b) June 30, 2000, 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 $2,000,000 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 terminationof the Impound Period, the funds 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,
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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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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 at:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
Except for deposits, all notices and other communications from the
Company shall be made to the Impound Agent as follows:
Bank of America
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 21202-1499
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
The Impound Agent shall be entitled to rely on all notices and
instructions received from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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.
Bank of America ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Chief Executive Officer
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