EXHIBIT 10.4
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, dated as of __________ __, ^ 1999 between
VILLAGE FINANCIAL CORPORATION, a New Jersey Corporation (the "Company") and
SUMMIT BANK, a Banking Corporation organized and existing under the laws of the
State of New Jersey (the "Escrow Agent").
WITNESSETH:
-----------
The Company, pursuant to a Prospectus and Subscription Agreement dated
as of __________ ____, ^ 1999 (collectively, the "Agreement") is offering
securities (the "Offering"), to certain subscribers (the "Subscribers"),
consisting of a minimum of 100 shares and a maximum of 50,000 shares of the
Company's common stock per subscriber, for a purchase price of $10.00 per share.
The aggregate minimum subscriptions that must be received before any
subscription payments will be released to the Company from the escrow created
pursuant to the terms and conditions contained herein is ^ 425,000 shares
aggregating ^ $4,250,000 (the "Minimum Aggregate Subscriptions Amount").
Additionally, certain other conditions set forth in the Agreement under the
caption "Summary" (the "Closing Conditions") must be satisfied. Subscription
payments will be released to the Company upon written certification by the
Company to the Escrow Agent that all closing conditions have been satisfied.
Pursuant to the terms of the offering, subscribers or the Company will
deliver to the Escrow Agent each subscription payment (a "Subscription
Payment"). The Subscription Payment of each subscriber will be collectively held
in one escrow by the Escrow Agent on the
terms and conditions hereinafter set forth. The Escrow Agent shall forward to
the Company any Subscription Agreements received by the Escrow Agent. The Escrow
Agent will maintain all subscriber records and at least weekly and at such other
times as reasonably requested by the Company supply the Company with a list
showing such subscribers name, address and amount of Subscription Payment.
NOW, THEREFORE, the Company and the Escrow Agent agree as
follows;
1. Deposits. Each Subscription Payment received by the Company from a
subscriber shall be forwarded to the Escrow Agent along with a copy of the
Subscriber's Subscription Agreement containing the name, address, social
security number and telephone number of such subscriber, the number of shares
being purchased and the purchase price being paid for the same. If the
Subscription Payment is in the form of a check, it shall be enclosed with the
Subscription Agreement. If the Subscription Payment is to be made by wire
transfer, the Subscription Agreement shall also state the name, address and
telephone number of the financial institution that will be wiring such
Subscription Payment. Each Subscription Payment received by the Escrow Agent
from the Subscribers or the Company will be deposited and held in accordance
with Section 6(a) below. Such account will be held in the name of Village
Financial Corporation in an account which shall be known as "Village Financial
Corporation Stock Purchase Account" (the "Escrow"). It is understood that all
checks received by Escrow Agent are subject to clearance time and the funds
represented thereby cannot be drawn upon or invested until such time as the same
constitute good and collected funds. It is additionally understood
-2-
that should any checks be returned to the Escrow Agent as uncollectible, or
returned because of insufficient funds, the Escrow Agent is authorized and
instructed to charge expenses incurred by the Escrow Agent on such uncollected
checks to the Company. The Escrow Agent shall redeposit such check(s) for
collection only upon the verbal instruction of the Company; however, in no
instance shall the check(s) be presented for collection more than two (2) times.
Should the check(s) be uncollectible after the second presentation, the Escrow
Agent, shall promptly notify the Company and hold said check(s) until the
subscriber has replaced the same with a cashier's check or such other form of
draft that the Company and Escrow Agent approve, at which time the Escrow Agent
shall as soon as practicable return said uncollectible check(s) to the
subscriber. In the event the subscriber does not replace said check(s) with a
cashier's check or such other form or draft acceptable to Escrow Agent and the
Company, the Escrow Agent shall as soon as practicable return the same to such
subscriber.
2. Rejection of Subscription Payment. The Company hereby certifies that
each Subscription Agreement provides that the purchase of any shares of common
stock is subject to the approval of the Company. The Company agrees to notify
the Escrow Agent in writing or telephonically with written confirmation as to
which Subscriptions are being accepted and which rejected. All such rejections
shall be refunded to the respective subscribers directed in writing by the
Company.
3. Release of Escrow Funds on Closing. If on the date of closing (as
more fully described in the Agreement), the Escrow Agent (a) holds Subscription
Payments, Representing
-3-
subscriptions as to which the Company has notified the Escrow Agent, pursuant to
paragraph 2 hereof, that the Company has accepted, and (b) has received from the
Company a Certificate executed by an authorized representative of the Company
stating that the Minimum Aggregate Subscription Amount has been accepted and all
other closing conditions have been satisfied, then the Escrow Agent is
authorized and instructed to make the following payments: (i) all principal
amounts and interest owed thereon held by the Escrow Agent in the Escrow
representing subscriptions as to which the Company has notified the Escrow
Agent, pursuant to paragraph 2 hereof, that the Company has accepted, shall be
paid to the Company; (ii) all principal amounts ^ held by the Escrow Agent in
the Escrow, representing subscriptions as to which the Company has notified the
Escrow Agent, pursuant to paragraph 2 hereof, that the Company has rejected,
shall be paid to the subscriber. All payments to be made by the Escrow Agent to
a subscriber shall be forwarded to the last known address of the subscriber, as
communicated in writing to the Escrow Agent by the Company, or the subscriber,
mailed by first class mail. All payments to be made by the Escrow Agent to the
Company shall be forwarded to the Company at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or issued to such account as the
Company shall direct. Upon (i) release of any funds pursuant to paragraph 4, and
(ii) the completion of the offering as described in the Agreement, the Escrow
shall be closed as to the funds released; provided, however, that this Escrow
Agreement shall remain in effect for further Subscription Payments received by
the Escrow Agent from subscribers which shall be placed in Escrow and held by
the Escrow Agent in accordance with the terms of this Escrow Agreement.
-4-
4. Other Refunds. If the Escrow Agent has received from the Company a
certificate stating that the Offering is being terminated, then the Escrow Agent
is authorized and instructed to ^ refund all principal amounts ^ held by the
Escrow Agent in the Escrow to the subscribers of the Company. Any interest
earned thereon will be paid to the Company by the Escrow Agent. The expenses
incurred by the Escrow Agent for uncollected checks shall be paid to the Escrow
Agent by the Company. All payments to be made by the Escrow Agent to the
subscriber, as communicated in writing to the Escrow Agent by the Company, shall
be mailed by first class mail. All payments to be made by the Escrow Agent to
the Company shall be forwarded to the Company at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or issued to such account as the Company may direct. Upon
release of the funds pursuant to this paragraph 4, the Escrow Agent's duties as
Escrow Agent will cease and the Escrow shall be closed.
5. Fees. The Company hereby agrees that the Escrow Agent shall be
entitled to (i) a one-time document review fee of $500, (ii) an annual
administration fee of $3,000 and (iii) a returned check fee of $10.00 (to the
extent applicable) plus all reasonable out-of-pocket expenses (billed at cost
plus a slight administrative fee, if appropriate) incurred by the Escrow Agent
(the "Escrow Fee"). The fee is due and payable by the Company upon execution of
this Agreement.
6. Liabilities and Indemnification of the Escrow Agent.
(a) The Escrowed Funds shall be invested by the Escrow
Agent in bank accounts, short-term U.S. Government securities (or mutual funds
consisting thereof) and/or in FDIC-insured short-term Certificates of Deposit.
The foregoing mutual fund is the U.S.
-5-
Treasury Securities portfolio of The Pillar Funds managed by the Investment
Management Division of the Escrow Agent. The Investment Management Division of
the Escrow Agent derives a fee for managing the Funds and acting as its
Custodian.
In investing the Escrowed Funds, the Escrow Agent shall rely upon the
written instructions of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of the Company, or his
successor and the Escrow Agent shall be and hereby is relieved of all liability
with respect to making, holding, redeeming or selling such investments in
accordance with such instructions. In the absence of the written investment
instructions contemplated herein, for any reason whatsoever, the Escrow Agent
shall be and hereby is relieved of all liability with respect to making,
holding, redeeming or selling investments made in accordance with the preceding
paragraph which prescribes the permissible investment vehicles for the Escrowed
Funds.
Escrow Agent is and shall be under no duty to enforce the obligation of
the Company to furnish written investment instructions nor shall the Escrow
Agent be liable to any person, firm or corporation, including any of the parties
hereto, for the investments made, held, redeemed or sold as permitted hereby in
the event that written investment instructions from the company are not
furnished to the Escrow Agent.
(b) The Escrow Agent shall not be responsible for or be
required to enforce any of the terms or conditions of the Escrow Agreement or
any other agreement between the Company and any subscriber.
-6-
The Escrow Agent shall not be responsible or liable in any manner
whatsoever for the performance of or by the Company of its obligations under
this Escrow Agreement nor shall the Escrow Agent be responsible or liable in any
manner whatsoever for the failure of the Company to honor any of the provisions
of this Escrow Agreement.
(c) The Company represents to the Escrow Agent that it is
authorized to enter into this Escrow Agreement by its duly authorized
representatives and that the Escrow Agent is entitled to rely on this
representation without the need to confirm the authority of the representatives.
(d) The duties and obligations of the Escrow Agent shall be
limited to and determined solely by the express provisions of this Escrow
Agreement and no implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent.
(e) The Escrow Agent is not bound by and is under no duty to
inquire into the terms or validity of any other agreements or documents,
including any agreements or documents which may be related to, referred to in or
deposited with the Escrow Agent in connection with this Escrow Agreement.
(f) The Escrow Agent shall be entitled to rely upon and shall
be protected in acting in reliance upon any instruction, notice, information,
certificate, instrument or other document which is submitted to it by the
Company in connection with its duties under this
-7-
Escrow Agreement. The Escrow Agent shall have no liability with respect to the
form, executions validity or authenticity thereof.
(g) The Escrow Agent shall not be liable for any act which the
Escrow Agent may do or omit to do hereunder, or for any mistake of fact or law,
or for any error of judgment, or for the misconduct of any employee, agent or
attorney appointed by it, while acting in good faith, unless caused by or
arising from its own gross negligence or willful misconduct.
(h) The Escrow Agent shall be entitled to consult with counsel
of its own selection and the opinion of such counsel shall be full and complete
authorization and protection to the Escrow Agent in respect of any action taken
or omitted by the Escrow Agent hereunder in good faith and in accordance with
the opinion of such counsel.
(i) The Escrow Agent shall have the right at any time to
resign for any reason and be discharged of its duties as Escrow Agent hereunder
by giving written notice of its resignation to the parties hereto at least
thirty (30) business days prior to the date specified for such resignation to
take effect. All obligations of the Escrow Agent hereunder shall cease and
terminate on the effective date of its resignation and its sole responsibility
thereafter shall be to hold the Escrowed Funds, etc. for a period of thirty (30)
business days following the effective date of resignation, at which time,
-8-
(A) if a successor escrow agent shall have been
appointed and written notice thereof shall have been given to the resigning
Escrow Agent by parties hereto and the successor escrow agent, then the
resigning Escrow Agent shall deliver the Escrowed Funds, etc. to the successor
escrow agent; or
(B) if a successor escrow agent shall not have
been appointed within a reasonable period of time, for any reason whatsoever,
the resigning Escrow Agent shall deliver the Escrowed Funds, etc. to a court of
competent jurisdiction and give written notice of the same to the parties
hereto.
The resigning Escrow Agent shall be entitled to be reimbursed
by the Company for any reasonable expenses incurred in connection with its
resignation and transfer of the Escrowed Funds, etc., pursuant to and in
accordance with the provisions of this section.
(j) The company agrees to indemnify and hold the Escrow Agent
harmless from and against any and all liabilities, causes of action, claims,
demands, judgments, damages, costs and expenses (including reasonable attorneys
fees and expenses) that may arise out of or in connection with the Escrow
Agent's good faith acceptance of or performance of its duties and obligations
under this Escrow Agreement provided, however, that the Company shall not be
required to indemnify and hold the Escrow Agent harmless from and against any of
the foregoing resulting from or arising out of Escrow Agent's willful misconduct
or gross negligence.
-9-
(k) In the event that the Escrow Agent shall be uncertain as
to its duties or rights hereunder or shall receive instructions with respect to
the Escrow Fund which, in its sole discretion, are in conflict either with other
instructions received by it or with any provision of this Agreement, the Escrow
Agent shall have the absolute right to suspend all further performance under
this Escrow Agreement (except for the safekeeping of the Escrow Fund) until the
resolution of such uncertainty or conflicting instructions to the parties'
satisfaction. In the event the parties are unable to resolve the uncertainty,
the Escrow Agent may submit the matter to a court of competent jurisdiction.
(l) In the event that any controversy arises between one or
more of the parties hereto or any other party with respect to this Escrow
Agreement or the Escrow Fund which cannot reasonably be resolved among the
parties, the Escrow Agent shall not be required to determine the proper
disposition of such controversy or the proper disposition of the Escrow Fund and
shall have the absolute right, in its sole discretion, to deposit the Escrow
Fund with the Clerk of a court of competent jurisdiction, file a suit in
interpleader and obtain an order from the court requiring all parties involved
to litigate in such court their respective claims arising out of or in
connection with the Escrow Fund. Upon the deposit by the Escrow Agent of the
Escrow Fund with the Clerk of a court of competent jurisdiction in accordance
with this provision, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
-10-
(m) Neither this Escrow Agreement, the Agreement or any other
agreement between the Company and the Escrow Agent shall be deemed to create a
joint venture between the Escrow Agent and the Company. Nor shall the Escrow
Agent be considered the alter ego of the Company by virtue of this Agreement, or
any other agreement.
7. Modification, Amendment, Rescission. No rescission, modification,
amendment, supplement or change of this Escrow Agreement shall be valid or in
effect unless notice thereof is given to the Escrow Agent in writing by the
Company and accepted by the Escrow Agent.
8. Successors and Assigns. The provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, heirs, successors or assigns and shall survive the termination
of this Escrow Agreement.
9. Copies. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. Notices. All notices, instructions and other communications under
this Escrow Agreement shall be in writing except as otherwise specified herein
and shall be deemed duly given it sent by certified or registered mail, postage
prepaid, return receipt requested and addressed as follows:
-11-
(a) If to the Escrow Agent:
Summit Bank
Attn: Corporate Trust: Administration
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Trust Officer
(b) If to the Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Village Financial Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
and to:
▇▇▇▇ ▇. Spidi, Esq.
▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
11. Applicable Law. This Escrow Agreement shall be
governed by and construed in accordance with the laws of the
State of New Jersey.
12. Escrow Period. The Escrow Period shall begin with the
date of the Agreement and shall terminate upon the earlier of the
following dates:
(a) The date upon which the Escrow Agent confirms that
it has received the certificate from the Company and paid the proceeds in
accordance with paragraph 3 hereof;
-12-
(b) The date upon which a determination is made by the Company
to terminate the Offering prior to the sale of the Minimum Aggregate
Subscription Amount; or,
(c) __________ __, ^ 1999 unless extended as permitted in the
Agreement for an additional period as determined by the current Incorporators of
the Company with a copy of such extension provided to the Escrow Agent.
IN WITNESS WHEREOF, parties hereto have executed this Escrow Agreement
on the day and year first above written.
VILLAGE FINANCIAL CORPORATION
By:
SUMMIT BANK, as Escrow Agent
By:
Title:
- 13 -
