Exhibit 10.4 Form of Escrow Agreement between Annapolis National Bancorp, Inc.
and the First National Bank of Maryland
FORM OF ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (the "Escrow Agreement") is made and entered into
as of this __ day of ___________________ by and between ANNAPOLIS NATIONAL
BANCORP, INC. (THE "Company"), a Maryland banking corporation and FMB TRUST
COMPANY, NATIONAL ASSOCIATION, a national banking association ("FMB").
RECITALS
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WHEREAS, the Company is engaged in the offering for sale of a minimum of
$2,000,004 and a maximum of $5,000,004 through the sale of shares of common
stock of the Company, at $6.00 per share (the "Shares");
WHEREAS, the offering is conditioned upon the sale of $2,000,004 through
the sale of common shares (the "Minimum Amount") on or before _______ or such
later dates as may be extended one or more times by the Company, pursuant to an
extension notice as provided in section 5.2 (the "Extension Notice"), (the
"Minimum Subscription Termination Date");
WHEREAS, the Company may offer for sale up to $5,000,004 of common
shares (the "Maximum Amount") on or before _______ or such later date as may be
extended one or more times by the Company pursuant to the Extension Notice, (the
"Termination Date");
WHEREAS, the Company has engaged Xxxxx, Xxxxxxxx & Xxxxx, Inc. to act as
agent in offering the Units; and
WHEREAS, each interested party desiring to purchase shares (a
"Subscriber") will be required to forward to the Company a check payable to the
order of "FMB Trust Company" in an amount equal to his/his/their subscription
computed on the basis of $6.00 per Share (the "Escrow Funds and the Minimum
Amount when actually collected by the Escrow Agent shall hereinafter be referred
to as the "Minimum Escrow Funds" while any amount in excess of the Minimum
Escrow Funds actually collected by the Escrow Agent shall be referred to as
Excess Escrow Funds"); and
WHEREAS, the Company proposes to establish an Escrow Account and desires
that FMB act as escrow agent (the "Escrow Agent") for the sole purpose of
depositing, holding and disbursing the Escrow Funds in accordance with the terms
and conditions hereinafter set forth.
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
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1.1 FMB hereby accepts appointment as Escrow Agent, to deposit, hold,
invest, and disburse the Escrow Funds as provided herein.
1.2 Upon the execution of this Escrow Agreement by the parties hereto,
the Escrow Agent shall establish a separate escrow account (the "Escrow
Account") to be designated substantially as follows: Annapolis National Bancorp
Escrow Account, FMB Trust Company, Escrow Agent.
2. DEPOSIT OF FUNDS
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2.1 The Escrow Agent shall receive checks made payable to FMB Trust
Company along with a copy of the subscription agreement from the Company. The
Escrow Agent shall present the checks for payment and upon receipt of the
proceeds the ("Proceeds") shall hold such Proceeds in escrow. The Escrow Agent
shall notify the Company of all dishonored checks immediately following the
Escrow Agent's notification of same.
2.2 The Escrow Agent shall deliver to the Company when requested the
date and amounts of each deposit.
3. INVESTMENT OF FUNDS
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3.1 The Escrow Agent at the direction of the Company shall invest the
Escrow Funds in ARK U.S. Treasury Money Market Portfolio or ARK U.S. Government
Money Market Portfolio which are proprietary money market funds of the Escrow
Agent for which the Escrow Agent or an affiliate is investment advisor or
provides other services to such money market funds and receives reasonable
compensation for such services, until otherwise directed by the Company in
writing. The ARK Funds seek to maintain a constant net asset value of $1.00 per
share. Shares can be redeemed each day the fund is open.
3.2 The Escrow Agent shall not be allowed to invest the Escrow Funds
until the next banking day after receipt of the Proceeds.
4. DISBURSEMENT OF ESCROW FUNDS
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4.1 Unless the Escrow Agreement has terminated pursuant to Section 5, at
such time as the Company determines that the funds representing the sale of the
Minimum Amount have been deposited in the Escrow Account, the Company shall
notify the Escrow Agent, in writing, that the Minimum Amount of subscriptions
has been accepted. Such written notification also shall instruct the Escrow
Agent to release and disburse the Escrow Funds to the Company, within ten (10)
banking days after receipt of such notice, but only after the Escrow Agent has
verified the Minimum Amount of subscriptions has been accepted and that the
Escrow Funds are collected.
4.2 Following receipt and disbursement of the Minimum Amount, the Escrow
Agent shall disburse the Excess Escrow Funds to the Company on a weekly basis
unless directed by the company in writing to disburse on a less frequent
schedule.
4.3 The Company is entitled to withdraw any interest earned on invested
funds when the Company has determined the Minimum Amount of subscriptions has
been deposited in the Escrow Account.
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5. TERMINATION OF ESCROW AGREEMENT
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5.1 The Escrow Agreement shall terminate upon the final disbursement of
all funds held by the Escrow Agent hereunder, but not later than the Termination
Date. If the funds have not been disbused pursuant to Section 4 on or before the
close of business on the Termination Date, the Escrow Agent shall, without
demand or direction from the Company, return the Escrow Funds (upon verification
that such funds have been collected), with interest, to the Subscribers whose
names have previously been provided to the Escrow Agent within fifteen (15)
banking days after such date. Said disbursement to Subscribers shall be of their
original capital investment with interest at 3% per annum calculated on an
actual over 365 day basis, but without penalty or deduction. The Escrow Agent
will not under any circumstances be required to risk or pay out any of its own
money while carrying out its duties under the Escrow Agreement.
5.2 The Company shall have the option to extend the Minimum Subscription
Termination Date and the Termination Date and the term of this Escrow Agreement
one or more times by providing Minimum Subscription Termination Date or the
Extension Notice in substantially the form attached hereto as Exhibit A. The
Extension Notice shall state that the Termination Date has been extended
consistent with the terms and conditions of the offering and shall specify the
period of time for which the extension is effective. The Minimum Subscription
Termination Date and the Termination Date may not be extended by the Company
beyond ____________, 1999.
6. REJECTED SUBSCRIPTIONS
----------------------
The Company shall notify the Escrow Agent in writing of any Subscription
Agreement rejected by the Company. The Company may reject any Subscription
Agreement in whole or in part. Upon the receipt of a notice of rejection, the
Escrow Agent shall return to the Subscriber signing the rejected Subscription
Agreement within fifteen (15) banking days after receipt of such notice, the
amount tendered therewith, (upon verification that such funds have been
collected) or in the case of a partial rejection, the appropriate portion of the
original deposit
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without interest.
7. RETURN OF ESCROW FUNDS TO SUBSCRIBERS
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All returns and deliveries to a Subscriber hereunder shall be mailed by
a regular first class mail to the residential or business address of such
Subscriber appearing in his Subscription Agreement. Any payment to a Subscriber
may be made by a check or draft drawn on FMB.
8. COMPENSATION
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8.1 The Company agrees to pay to the Escrow Agent as compensation for
performing its duties, a $1,000.00 Acceptance fee, an Annual Administrative fee
of $2,500.00, plus $10.00 for each subscription received in excess of 150
subscriptions and $15.00 for each subscription returned in whole or in part, and
$20.00 for each payment of interest, by check or wire. A transaction fee of
$20.00 per investment will be assessed for any investment other than in ARK
Money Market Funds. The Company will be assessed a $10.00 fee for each returned
check. Any out-of-pocket expenses will be reimbursed to the Escrow Agent by the
Company for all expenses paid or incurred by it in the performance of Escrow
Agent duties hereunder. In the event that the Minimum Amount is not achieved and
the Escrow Agreement is terminated on the Minimum Amount Termination Date, the
Escrow Agent will invoice the Company for all the above described fees due at
that time. If the Minimum Amount is received, then the Escrow Agent will deduct
all fees resulting from the receipt of the Minimum Amount from the disbursement
of the Minimum Amount to the Company. All fees resulting from any Excess Escrow
Funds disbursed to the Company shall be remitted to the Escrow Agent by the
company by the termination date, but not less frequently than annually from the
effective date of the Escrow Agreement.
9. STANDARD OF CARE FOR ESCROW AGREEMENT
-------------------------------------
9.1 The Escrow Agent shall be responsible only for performance of its
duties as
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specified in the Escrow Agreement, and no implied covenants, duties, or
obligations shall bind or be enforceable against the Escrow Agent by any person.
The Escrow Agent shall be held free from all liability to the Company except for
any act or failure to act constituting gross negligence or willful misconduct.
It is expressly understood by the parties hereto that the Escrow Agent's
obligations under this Section 9.1, however, shall survive the termination of
this Escrow Agreement.
9.2 The Escrow Agent may rely conclusively and shall be protected in
acting upon any order, notice, demand, certificate, opinion of counsel, other
advice of counsel (including counsel selected by the Escrow Agent), statement,
instrument, report, or other document (not only as to its due execution and
validity and effectiveness thereof, but also as to the truth and acceptability
of any information therein contained) that is reasonably believed by the Escrow
Agent to be genuine and to be signed by the proper person or persons. The Vice
President of the Company has been designated as the authorized representative of
the Company to act on behalf of the Company in respect of this Escrow Agreement,
and is authorized to take all actions and do all things as the authorized
representative of the Company required or permitted under the terms of this
Escrow Agreement by the Company and his true and genuine specimen signature
appears below.
9.3 The Escrow Agent shall not be bound by any modification,
termination, or rescission of the Escrow Agreement, or any of the terms hereof,
unless executed in writing by the Company and the Escrow Agent and delivered to
the Escrow Agent.
9.4 The Company shall indemnify the Escrow Agent and hold it harmless
from any and all claims, liabilities, losses, or any other expenses, fees, or
charges of any character or nature, that it may incur or with which it may be
threatened by reason of its acting as Escrow Agent under the Escrow Agreement,
including, but not limited to, any and all damages, direct, indirect,
consequential, special or punitive, costs, losses, and other expenses, including
reasonable attorney's fees and expenses, resulting from or arising in connection
with any action, suit, or proceeding incident to the Escrow Agent's acting as
such hereunder.
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10. DISAGREEMENTS
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In the event of any dispute in respect of the disbursement of all or any
portion of the Escrow Funds, or if any disagreements arise among the parties
hereto in respect of the interpretation of this Escrow Agreement, or concerning
their rights and obligations hereunder, or the propriety of any action
contemplated by the Escrow Agent hereunder, or if the Escrow Agent in good faith
is in doubt as to what action should be taken hereunder, the Escrow Agent shall
not be obligated to resolve the dispute or disagreement or to make any
disbursement of all or any portion of the Escrow Funds, but may commence an
action in the nature of an interpleader and seek to deposit such funds in a
court of competent jurisdiction, and thereby shall be discharged from any
further duty or obligation in respect to the Escrow Funds. The Escrow Agent, in
its sole discretion, may elect in lieu of filing such action in interpleader to
cease to perform under the Escrow Agreement and all instructions received in
connection herewith until the Escrow Agent has received a written notice of
resolution of such dispute or disagreement signed by the parties to such dispute
or disagreement.
11. RESIGNATION OF ESCROW AGENT
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The Escrow Agent or any successor to the Escrow Agent ("Successor Escrow
Agent") may at any time resign and be discharged of the escrow hereby created by
giving written notice to the Company specifying the date upon which it desires
that such resignation shall take effect. Such resignation shall take effect on
the earlier of (a) the date specified in such notice, which date shall not be
earlier than thirty (30) banking days after giving such notice, or (b) the date
upon which the Company shall have appointed the Successor Escrow Agent. If no
Successor Escrow Agent shall have been appointed as of the effective date of the
resignation of the Escrow Agent as set forth above, the Escrow Agent may
petition, but shall not be required to petition, a court of competent
jurisdiction for the appointment of a Successor Escrow Agent.
The Escrow Agent's sole duty shall be to hold, invest in permitted money
market funds and retain the Escrow Funds absent written notice by the Company or
a court of competent
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jurisdiction to release of funds to a Successor Escrow Agent or directed
recipient. All outstanding fees and expenses of the Escrow Agent shall be
deducted prior to the release of Escrow Funds to the Successor Escrow Agent or
the directed recipient of the Escrow Funds.
12. NOTICES
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12.1 All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by first class mail, or by an overnight
delivery service, to the respective addresses hereafter set forth.
(a) To the Company: Annapolis National Bancorp, Inc.
000 Xxxxxxx Xxxxxxxx Xx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxxx, Vice President
(b) To Escrow Agent: FMB Trust Company, N.A.
Suite 1601 BANC 101-591
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Annapolis National Bancorp,
Escrow Account.
12.2 The Company and Escrow Agent shall each have the right to change
the addresses to which notices shall be delivered upon notice thereof to the
other party sent pursuant to the provisions of this Section 12.
13. GENERAL
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13.1 The rights under this Escrow Agreement shall inure to the benefit
of, and the obligations created hereby shall be binding upon, the parties hereto
and their respective successors and assigns.
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13.2 This Escrow Agreement shall be construed, governed, and enforced
according to the laws of the State of Maryland.
13.3 This Escrow Agreement constitutes the entire agreement and
understanding of the parties hereto in respect of the matters herein set forth,
and all prior negotiations, writings and understanding relating to the subject
matter of the Escrow Agreement are merged herein and are superseded and
cancelled by this Escrow Agreement. The Company agrees to execute any and all
additional documents reasonably required by the Escrow Agent to carry into
effect the intent of this Escrow Agreement.
IN WITNESS WHEREOF, each party has caused this Escrow Agreements to be
signed and executed in its name by its proper and duly authorized officer or
officers on the day and year first above written.
ATTEST: ANNAPOLIS NATIONAL BANCORP, INC.
By: ______________________
Vice President
ATTEST: FMB TRUST COMPANY, NATIONAL
ASSOCIATION, Escrow Agent
By: ______________________ By: ______________________
Authorized Officer Vice President
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EXHIBIT "A"
FMB Trust Company, N.A.
Suite 1601 BAN 101-591
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
ATTN: Corporate Trust Dept.
Gentlemen:
Under the terms and conditions of the Prospectus dated ________, 1997,
and the Escrow Agreement between Annapolis National Bancorp and FMB Trust
Company, N.A. dated ___________, 1997, you are hereby notified that the Minimum
Subscription Termination Date or Termination Date has been extended as indicated
below. Official documentation confirming the change noted below is attached.
The Minimum Subscription Termination Date or the Termination Date
applicable to the Prospectus noted above is extended to ____________, 19__.
Sincerely,
Vice President
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