Exhibit 10.10
Escrow Agreement between SunTrust Bank and Chestatee Bancshares, Inc.
ESCROW AGREEMENT
This Escrow Agreement made effective 12-7-2001, by and among Chestatee
Bancshares, Inc.(the "Company"), and SUNTRUST BANK, a Georgia banking
corporation authorized to execute trust powers under the laws of the United
States of America (the "Escrow Agent").
W I T N E S S E T H:
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WHEREAS, the Company intends to raise $9,500,000.00 in capital by the sale
of shares of common stock (the "Interests") at a price of $10.00 per share (the
"Offering"). The Company is offering the Interests on a "best efforts" basis
that permits subscribers to become holders of the Interests as their
subscription agreements are accepted when $3,000,000.00 has been received by the
Company; and
WHEREAS, the Interests are being offered and sold to investors (the
"Subscribers") by the directors and officers of the Company pursuant to an
exemption from registration under the Securities Act of 1933, as amended, and
pursuant to exemptions from registration under certain state securities laws.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Deposits / Record-Keeping.
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A. The Company shall deposit or cause to be deposited in escrow all
subscription proceeds received from Subscribers (the "Escrowed Funds"). The
Escrow Agent shall have no responsibility for subscription proceeds until those
proceeds are actually received and clear through normal banking channels and
become good funds. Checks should read: SunTrust Bank, N.A., Escrow Agent for
Chestatee Bancshares, Inc.
B. The Company shall deliver to the Escrow Agent, in a form acceptable to
Escrow Agent, type-written evidence of names and addresses of the Subscribers,
the number of Interests subscribed for by each Subscriber, the certified Tax ID
number, the amounts received from each Subscriber, and such information as will
enable the Escrow Agent to attribute to a particular Subscriber all subscription
proceeds received by the Escrow Agent from the Company. It is agreed that
delivery by the Company to the Escrow Agent of fully completed and signed
Subscription Agreements, along with the checks, shall satisfy the foregoing
requirement; provided, however, such shall not be the exclusive method for
satisfying the foregoing requirement.
C. Pursuant to 12 C.F.R. 330.4, the Escrow Agent shall expressly disclose,
by way of specific reference on its deposit account records, that the deposit
account in which Escrowed Funds are held, is held by the Escrow Agent as a
fiduciary. The Escrow Agent's records will acknowledge that the Company is also
acting in an agency capacity on behalf of the Subscribers pursuant to Securities
and Exchange Commission Regulation 240.15c2-4. The Escrow Agent will take all
necessary action to comply with the FDIC's deposit insurance regulations
regarding record-keeping requirements, as they may be amended from time to time,
so as to sufficiently disclose for purposes of those regulations that the
Escrowed Funds are held by the Escrow Agent as agent or custodian for the actual
owners of the Escrowed Funds.
2. Rejection of Subscription Agreement.
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A. The Company must notify the Escrow Agent, in writing, that a
Subscription Agreement was rejected. Any Subscription Agreement may be rejected
by the Company in whole or in part. Upon the receipt of a notice of rejection or
partial return, the Escrow Agent shall return to the Subscriber signing the
rejected Subscription Agreement the amount tendered therewith without deduction
or interest, as long as the check has cleared and becomes good funds.
B. At any time prior to receiving notice pursuant to Paragraph 3.A. that a
subscription has been accepted, the Escrow Agent may receive notice from the
Company that a particular Subscription Agreement has been withdrawn. Upon
receipt of a notice of withdrawal of a Subscription Agreement, the Escrow Agent
shall return to the Subscriber who signed the withdrawn Subscription Agreement,
the Subscription Agreement (if then in the Escrow Agent's possession) and the
amount tendered therewith, without deduction or interest. The Company shall have
the responsibility to return any withdrawn Subscription Agreement in its
possession.
3. Disbursement.
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A. At such time as the Escrow Agent has received written notice from the
Company that subscriptions for $3,000,000.00 of good funds have been received by
the Company and placed in escrow with the Escrow Agent, the Escrow Agent shall,
subject to the receipt of said money, transfer the subscription proceeds with
respect to any subscription accepted by the Company to the account of Chestatee
Bancshares, Inc. at SunTrust Bank for appropriate distribution. As soon as
practical after the receipt of notice from the Company of termination of the
Offering by the Company (the "Termination Date"), the Escrow Agent shall
disburse to the account of Chestatee Bancshares, Inc. at SunTrust Bank, Atlanta
all of the subscription proceeds received and collected from all subscribers and
at such time this Escrow Agreement will terminate.
B. If $3,000,000.00 has not been deposited into escrow by 3-31-2002 (or
5-30-2002 if the Company elects to extend the offering), then Escrow Agent shall
refund to each of the subscribers their individual contributions, without
interest.
C. The Company shall make available a true copy of this Escrow Agreement to
each Subscriber.
4. Escrow Agent.
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The parties further covenant, warrant and agree that the Escrow Agent:
A. May invest all funds, to the extent permitted by law and this Escrow
Agreement, and at the written direction of the Company, in the STI Classic U.S.
Treasury Securities Money Market Fund and/or short-term investment funds (in
which the Escrow Agent customarily invests funds on behalf of its customers
generally) invested in obligations issued or guaranteed by the United States of
America;
B. Escrow Agent shall be compensated for its services in accordance with
the schedule of fees in Exhibit A attached hereto, which may be deducted by
Escrow Agent from investment earnings, if any, on the Escrowed Funds; however,
the Company shall be responsible for payment of all agreed fees of Escrow Agent
hereunder. Except for the fee, all interest or earnings on escrow shall be paid
to the Company at termination date.
5. Indemnification and Exculpation.
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A. Escrow Agent undertakes to perform only such duties as expressly set
forth herein, and no additional duties or obligations shall be implied
hereunder. In performing its duties under this Escrow Agreement, or upon the
claimed failure to perform any of its duties hereunder, Escrow Agent shall not
be liable to anyone for any damages, losses or expenses which may be incurred as
a result of Escrow Agent's so acting or failing to so act; provided, however,
Escrow Agent shall not be relieved from liability for damages arising out of its
proven gross negligence or willful misconduct under this Escrow Agreement.
Escrow Agent shall in no event incur any liability with respect to (i) any
action taken or omitted to be taken in good faith upon advice of legal counsel,
which may be counsel to any party hereto, given with respect to any question
relating to the duties and responsibilities of Escrow Agent hereunder or (ii)
any action taken or omitted to be taken in reliance upon any instrument
delivered to Escrow Agent and believed by it to be genuine and to have been
signed or presented by the proper party or parties.
B. The Company warrants to and agrees with Escrow Agent that, unless
otherwise expressly set forth in this Escrow Agreement, there is no security
interest in the Escrowed Funds or any part of the Escrowed Funds; no financing
statement under the Uniform Commercial Code of any jurisdiction is on file in
any jurisdiction claiming a security interest in or describing, whether
specifically or generally, the Escrowed Funds or any part of the Escrowed Funds;
and the Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Escrowed Funds or any part of
the Escrowed Funds or to file any financing statement under the Uniform
Commercial Code of any jurisdiction with respect to the Escrowed Funds or any
part thereof.
C. As an additional consideration for and as an inducement for Escrow Agent
to act hereunder, it is understood and agreed that, in the event of any
disagreement between the parties to this Escrow Agreement or among them or any
other person(s) resulting in adverse claims and demands being made in connection
with or for any money or other property involved in or affected by this Escrow
Agreement, Escrow Agent shall be entitled, at the option of Escrow Agent, to
refuse to comply with the demands of such parties, or any of such parties, so
long as such disagreement shall continue. In such event, Escrow Agent shall make
no delivery or other disposition of the Escrowed Funds or any part of such
Escrowed Funds. Anything herein to the contrary notwithstanding, Escrow Agent
shall not be or become liable to such parties or any of them for the failure of
Escrow Agent to comply with the conflicting or adverse demands of such parties
or any of such parties. Escrow Agent shall be entitled to continue to refrain
and refuse to deliver or otherwise dispose of the Escrowed Funds or any part
thereof or to otherwise act hereunder, as stated above, unless and until:
(i) the rights of such parties have been finally settled by binding
arbitration or duly adjudicated in a court having jurisdiction of
the parties and the Escrowed Funds and Escrow Agent, has received
written instructions as to disbursement of regard thereto; or
(ii) the parties have reached an agreement resolving their differences
and have notified Escrow Agent in writing of such agreement and
have provided Escrow Agent with indemnity satisfactory to Escrow
Agent against any liability, claims or damages resulting from
compliance by Escrow Agent with such agreement.
In the event of a disagreement between such parties as described above,
Escrow Agent shall have the right, in addition to the rights described above and
at the option of Escrow Agent, to tender into the registry or custody of any
court having jurisdiction, all money and property comprising the Escrowed Funds
and may take such other legal action as may be appropriate or necessary, in the
opinion of Escrow Agent or its counsel. Upon such tender, the parties hereto
agree that Escrow Agent shall be discharged from all further duties under this
Escrow Agreement; provided, however, that the filing of any such legal
proceedings shall not deprive Escrow Agent of its compensation hereunder earned
prior to such filing and discharge of Escrow Agent of its duties hereunder.
D. The parties hereto jointly and severally agree that, in the event any
controversy arises under or in connection with this Escrow Agreement or the
Escrowed Funds or Escrow Agent is made a party to or intervenes in any
litigation pertaining to this Escrow Agreement or the Escrowed Funds, to pay to
Escrow Agent reasonable compensation for its extraordinary services and to
reimburse Escrow Agent for all costs and expenses, including legal fees and
expenses, associated with such controversy or litigation.
E. Escrow Agent may resign at any time from its obligations under this
Escrow Agreement by providing written notice to the parties hereto. Such
resignation shall be effective on the date set forth in such written notice
which shall be no earlier than ten (10) days after such written notice has been
given. In the event no successor escrow agent has been appointed on or prior to
the date such resignation is to become effective, Escrow Agent shall be entitled
to tender into the custody of a court of competent jurisdiction all assets then
held by it hereunder and shall thereupon be relieved of all further duties and
obligations under this Escrow Agreement provided however, Escrow Agent shall be
entitled to its compensation earned prior thereto. Escrow Agent shall have no
responsibility for the appointment of a successor escrow agent hereunder.
F. Escrow Agent shall have no obligation to take any legal action in
connection with this Escrow Agreement or toward its enforcement, or to appear
in, prosecute or defend any action or legal proceeding which would or might
involve it in any cost, expense, loss or liability unless security and
indemnity, as provided in this paragraph, shall be furnished.
The Company agrees to indemnify Escrow Agent and its officers, directors,
employees and agents and save Escrow Agent and its officers, directors,
employees and agents harmless from and against any and all Claims (as
hereinafter defined) and Losses (as hereinafter defined) which may be incurred
by Escrow Agent or any of such officers, directors, employees or agents as a
result of Claims asserted against Escrow Agent or any of such officers,
directors, employees or agents as a result of or in connection with Escrow
Agent's capacity as such under this Escrow Agreement by any person or entity.
For the purposes hereof, the term "Claims" shall mean all claims, lawsuits,
causes of action or other legal actions and proceedings of whatever nature
brought against (whether by way of direct action, counterclaim, cross action or
interpleader) Escrow Agent or any such officer, director, employee or agent,
even if groundless, false or fraudulent, so long as the claim, lawsuit, cause of
action or other legal action or proceeding is alleged or determined, directly or
indirectly, to arise out of, result from, relate to or be based upon, in whole
or in part: (a) the acts or omissions of the Company, (b) the appointment of
Escrow Agent as escrow agent under this Escrow Agreement, or (c) the performance
by Escrow Agent of its powers and duties under this agreement; and the term
"Losses" shall mean losses, costs, damages, expenses, judgments and liabilities
of whatever nature (including but not limited to attorneys', accountants' and
other professionals' fees, litigation and court costs and expenses and amounts
paid in settlement), directly or indirectly resulting from, arising out of or
relating to one or more Claims. Upon the written request of Escrow Agent or any
such officer, director, employee or agent (each referred to hereinafter as an
"Indemnified Party"), the Company agrees to assume the investigation and defense
of any Claim, including the employment of counsel acceptable to the applicable
Indemnified Party and the payment of all expenses related thereto and,
notwithstanding any such assumption, the Indemnified Party shall have the right,
and the Company agrees to pay the cost and expense thereof, to employ separate
counsel with respect to any such Claim and participate in the investigation and
defense thereof in the event that such Indemnified Party shall have been advised
by counsel that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those available to
the Company. The Company hereby agrees that the indemnifications and protections
afforded Escrow Agent in this section shall survive the termination of this
Escrow Agreement.
In order to induce and as partial consideration for Escrow Agent's
acceptance of this Escrow Agreement, the Company acknowledges that Escrow Agent
is serving as escrow agent for the limited purposes set forth herein and
represents, covenants and warrants to Escrow Agent that no statement or
representation, whether oral or in writing, has been or will be made to any
prospective subscribers for any of the Interests to the effect that Escrow Agent
has investigated the desirability or advisability of investment in the Interests
or approved, endorsed or passed upon the merits of such investment or is
otherwise involved in any manner with the transactions or events contemplated in
the Company's Offering memorandum, other than as Escrow Agent under this Escrow
Agreement. It is further agreed that no party shall in any way use the name
"SunTrust Bank" or "SunTrust Banks, Inc." in any sales presentation or
literature except in the context of the duties of the Escrow Agent as escrow
agent of the offering of the Interests in the strictest sense. Any breach or
violation of the paragraph shall be grounds for immediate termination of this
Escrow Agreement by Escrow Agent in accordance with the terms and provisions set
forth herein.
Without limitation to any release, indemnification or hold harmless
provision in favor of Escrow Agent as elsewhere provided in this Escrow
Agreement, the Company agrees to indemnify Escrow Agent and its officers,
directors, employees and agents and to hold Escrow Agent and such officers,
directors, employees and agents and to hold Escrow Agent and such officers,
directors, employees and agents harmless from and against all liability, costs,
losses and expenses, including but not limited to attorneys' fees and expenses
which are suffered or incurred by Escrow Agent or any such officer, director,
employee or agent as a direct or indirect result of the threat or the
commencement of any claim or proceeding against Escrow Agent or any such
officer, director, employee or agent based in whole or in part upon the
allegation of a misrepresentation or an omission of a material or significant
fact in connection with the same or subscription of any one or more of the
Interests. Escrow Agent shall have no responsibility for approving or accepting
on behalf of the Company any proceeds delivered to it hereunder, nor shall
Escrow Agent be responsible for authorizing issuance of the Interests or for
determining the qualification of any purchaser or the accuracy of the
information contained in the Company's Offering memorandum.
6. Notices.
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Any and all notices, elections, demands, requests and responses thereto
permitted or required to be given under this Escrow Agreement shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed to have been properly given and shall be effective upon being personally
delivered or delivered by nationally recognized courier such as Federal Express
which maintains a record of receipt and delivery, or three (3) days after being
deposited in the United States mail, postage prepaid, certified with return
receipt requested, or by facsimile, followed by said mail, to the other party at
the address of such other party set forth below or at such other address within
the continental United States as such other party may designate by notice
specifically designated as a notice of change of address and given in accordance
herewith; provided, however, that the time period in which a response to any
such notice, election, demand or request must be given shall commence on the
earlier of the date of actual or deemed receipt thereof; and provided further
that no notice of change of address shall be effective until the earlier of the
date of actual or deemed receipt thereof. Personal delivery to a party or to any
officer, agent or employee of such party at said address shall constitute
receipt. Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice have been received shall also constitute
receipt. Any such notice, election, demand, request or response shall be
addressed as follows:
If to the Company:
Chestatee Bancshares, Inc.
0000 XXX 00 X.
Xxxxxxxxxxx, Xx 00000
With a copy to:
Chestatee State Bank
Attn : Xxxxxx Xxxxxx, Pres/CEO 0000
XXX 00 X.
Xxxxxxxxxxx, XX 00000
If to the Escrow Agent:
SunTrust Bank, Atlanta
Stock Transfer Department
00 Xxxxxxxx Xxxxxx
Xxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
7. Successors and Assigns.
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The rights created by this Escrow Agreement shall inure to the benefit of
and the obligations created hereby shall be binding upon the successors and
assigns of the Escrow Agent and the Company. This Escrow Agreement may not be
amended without the written consent of all parties in writing.
8. Construction.
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This Escrow Agreement shall be construed and enforced according to the laws
of the State of Georgia.
9. Term.
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A. This Escrow Agreement shall terminate and the Escrow Agent shall be
discharged of all responsibility hereunder at such time as the Escrow Agent
shall have transferred to the account of the Company (as appropriate) all
amounts deposited with it (along with interest earned thereon) with respect to a
total of subscriptions for 600,000 shares of common stock accepted by the
Company or this Escrow Agreement is terminated earlier pursuant to Paragraphs
3.A or 9.B of this Escrow Agreement.
B. Notwithstanding anything herein to the contrary, upon receipt of written
notice from the Company that the Offering has been terminated with or without
acceptance of subscriptions for Interests, the Escrow Agent shall return to each
Subscriber whose subscription has not been accepted by the Company by such time,
the subscription proceeds received and collected from him hereunder, and at such
time this Escrow Agreement will terminate. Any 1099 interest earned shall be
reported to the IRS by the Escrow Agent.
C. In no event shall this Escrow Agreement be in effect for a period beyond
6-30-2002 and, on that date, all sums shall be transferred pursuant to Paragraph
3.B hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the day and year first above written.
"COMPANY"
Chestatee Bancshares, Inc.
By:
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Name: Xxxxxx X. Xxxxx
Title: CFO
"ESCROW AGENT"
SUNTRUST BANK
By:
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Name:
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Title:
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Exhibit A
Schedule of Fees
SunTrust Bank as Escrow Agent
Subscription Escrow Agent Fees
Base Fee: $ 2,500.00
Review Fee: $ 500.00 *
Transaction Fee: $ 2.00 per transaction
(Deposits)
* Waived if standard escrow documents used with minimal changes.
In addition to the fees above, if the subscription is not successful and funds
are returned to the subscribers, the fees listed below will apply:
Disbursements to subscribers:
Subscription amount only: $ 10.00 per check
Subscription amount plus interest $ 15.00 per check
(includes tax reporting - 1099 INT)
Out-of-Pocket expenses such as, but not limited to, postage, courier, insurance,
long distance telephone calls, facsimile, stationery, travel, legal and/or
accounting, etc., will be billed at cost.
These fees do not cover extraordinary services which will be priced according to
time and scope of duties.
It is acknowledged that the scheduled fees shown above are acceptable for the
services agreed upon and the undersigned will engage SunTrust Bank to perform
these services.
