EXHIBIT 2.4
SHAREHOLDERS' EQUITY ESCROW AGREEMENT
This Shareholders' Equity Escrow Agreement, dated February 11, 1998, among
Xxxxx-Xxxxx Bancshares, Inc., Bay Finance, LLC, and Bay Insurance, LLC
(collectively "Xxxxx-Xxxxx") and Xxxx Xxxxxx & Co., Inc., Xxxx Xxxxxx Sons,
Inc., Xxxx Xxxxxx & Co. and Xxxxxxx Corp. (collectively "Xxxx Xxxxxx") and FMB
Trust Company, N.A., a national banking association organized under the laws of
the United States, as escrow agent ("Escrow Agent").
RECITALS
Capitalized terms used and not otherwise defined herein shall have the
meanings as defined in the Asset Purchase Agreement as of November, 26, 1997
(the "Asset Purchase Agreement"). Execution and delivery of this Shareholders'
Equity Escrow Agreement by Xxxx Xxxxxx is a condition to the obligations of
Xxxxx-Xxxxx to close under the Asset Purchase Agreement. The Asset Purchase
Agreement provides that a portion of the Purchase Price shall be held in escrow
in accordance with the terms and conditions of this Shareholders' Equity Escrow
Agreement. Xxxx Xxxxxx has approved the transactions contemplated by the Asset
Purchase Agreement ("Transactions") and desires to enter into this Shareholders'
Equity Escrow Agreement to induce Xxxxx-Xxxxx to consummate the Transactions.
NOW, THEREFORE, in consideration of and in reliance upon the promises and
covenants in this Shareholders' Equity Escrow Agreement, the parties agree as
follows:
1. Establishment of Escrow
1.1. Xxxxx-Xxxxx is depositing with Escrow Agent an amount equal to
$2,000,000 in immediately available funds (as increased by any earnings thereon
and as reduced by any losses on investments, the "Escrow Fund"). Notwithstanding
such payment to the Escrow Agent, Xxxxx-Xxxxx shall be deemed to have fully
satisfied its obligation to pay such part of the Purchase Price payable pursuant
to the Asset Purchase Agreement. Xxxx Xxxxxx (or the owners of Xxxx Xxxxxx) will
report all income earned on, or derived from, the Escrow Fund as their income.
Escrow Agent acknowledges receipt thereof.
1.2. Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.
2. Investment of Funds
Escrow Agent shall invest the Escrow Fund at the written direction of Xxxx
Xxxxxx and Xxxxx-Xxxxx or of any person designated in writing by such parties
(for purposes of this Section 2, the "Investment Agent") in the direct
obligations of, or in the obligations of any agency or authority of, the United
States, any state of the United States and any political subdivision thereof
(the "Government Obligations"), or in such other investments as are
directed by a writing signed by Xxxx Xxxxxx and Xxxxx-Xxxxx. Uninvested funds
shall be swept using a sweep investment vehicle that invests only in
Government Obligations, including, without limitation, an open-end management
type investment company registered under the Federal Investment Company Act of
1940 for which Escrow Agent or an affiliate provides services as investment
adviser, custodian, transfer agent, registrar or similar or related services
until the Escrow Agent receives written direction from the Investment Agent.
Escrow Agent shall not be liable or otherwise responsible for failure to achieve
any particular rate of return, or for any losses resulting from any investments
provided for pursuant to this Shareholders' Equity Escrow Agreement.
3. Claims
3.1. If Xxxxx-Xxxxx gives a notice to Xxxx Xxxxxx and Escrow Agent stating
that the Adjustment Amount has been determined in accordance with Section 5.2 of
the Asset Purchase Agreement and specifying the dollar amount payable to
Xxxxx-Xxxxx pursuant to Section 5.2 of the Asset Purchase Agreement as a result
of such determination, on the 10th business day (as specified in the notice)
following such notice Escrow Agent shall pay to Xxxxx-Xxxxx the dollar amount so
specified from (and only to the extent of) the Escrow Fund. Escrow Agent shall
not inquire into or consider whether the Adjustment Amount has been determined
in accordance with the requirements of the Asset Purchase Agreement.
3.2. Escrow Agent shall pay and distribute the then remaining amount of the
Escrow Fund, including any income earned on the Escrow Fund, to Xxxx Xxxxxx.
3.3. If Xxxx Xxxxxx gives a notice to Xxxxx-Xxxxx and Escrow Agent prior to
the 10th business day following Xxxxx-Xxxxx'x notice referred to in Section 3.1,
Escrow Agent shall make no payment to Xxxxx-Xxxxx in the absence of joint
instructions from Xxxxx-Xxxxx and Xxxx Xxxxxx. Xxxxx-Xxxxx and Xxxx Xxxxxx shall
make a good faith attempt to resolve their dispute. Upon written request by Xxxx
Xxxxxx or Xxxxx-Xxxxx made not more than 10 business days after Xxxx Xxxxxx'
notice, Escrow Agent promptly shall refer the dispute concerning the Escrow Fund
to the American Arbitration Association for settlement by arbitration in
accordance with the Association's Commercial Arbitration Rules. Judgment upon
any resulting arbitration award may be entered in any court of competent
jurisdiction. As part of such award, the arbitrator may establish his fee and
expenses in connection therewith, which Xxxxx-Xxxxx shall promptly pay. However,
any award in a party's favor shall be increased by a percentage of such fees and
expenses equal to the same percentage of a party's claim that is awarded to a
party in arbitration. Any award shall be a conclusive determination of the
matter and shall be final and binding upon all parties. Escrow Agent promptly
shall pay the amount of any award to the prevailing party to the extent the
Escrow Fund contains sufficient funds for that purpose. Arbitration proceedings
shall be held in Baltimore, Maryland, unless Xxxx Xxxxxx and Xxxxx-Xxxxx agree
upon another location.
4. Termination of Escrow
On June 1, 1998, Escrow Agent shall pay and distribute the then amount of
the Escrow Fund to Xxxx Xxxxxx, unless prior thereto Xxxxx-Xxxxx has notified
Escrow Agent to make no
disbursement of the Escrow Fund. In that case the entire Escrow Fund shall be
retained by Escrow Agent until it receives joint written instructions of Xxxx
Xxxxxx and Xxxxx-Xxxxx. Upon written request by Xxxx Xxxxxx or Xxxxx-Xxxxx,
Escrow Agent promptly shall refer the dispute to arbitration as described above
in Section 3.3.
5. Escrow Agent's Responsibility; Resignation; Removal.
5.1. Escrow Agent shall retain the Escrow Fund in accordance with the terms
and conditions of this Shareholders' Equity Escrow Agreement, and shall be under
no responsibility or obligation other than to follow the provisions hereof.
5.2. Escrow Agent may resign at any time upon 30 days written notice to
Xxxxx-Xxxxx and Xxxx Xxxxxx; within 20 days after receipt of such notice,
Xxxxx-Xxxxx shall select an independent bank or trust company to serve as the
successor Escrow Agent, subject to the reasonable consent of Xxxx Xxxxxx (which
consent shall not be unreasonably withheld or delayed). In the event a successor
is not selected and agreed upon within the time described above, Escrow Agent
may deposit the Escrow Fund into a court of competent jurisdiction and request
that the court appoint or cause the parties to appoint a successor Escrow Agent.
Upon such deposit, Escrow Agent shall be relieved of all future responsibilities
under this Shareholders' Equity Escrow Agreement.
5.3. Escrow Agent may be removed at any time upon written notice from both
Xxxxx-Xxxxx and Xxxx Xxxxxx and shall thereupon remit all Escrow Funds as
directed in the written notice.
5.4. Escrow Agent shall not be liable for any act or omission in good faith
and in the absence of fraud or willful misconduct. Escrow Agent shall in all
cases be entitled to rely upon and be fully protected in acting or in refraining
from acting under this Shareholders' Equity Escrow Agreement in accordance with
any and all written notifications received by it in accordance with this Escrow
Agreement.
5.5. Xxxxx-Xxxxx and Xxxx Xxxxxx hereby agree jointly and severally to
indemnify and hold Escrow Agent harmless from and against any and all actions,
suits, proceedings, losses, liabilities, damages, costs and expenses (including
attorneys' and experts' fees, costs of investigation, court costs, and sums
expended in settlement of claims or litigation, pending or threatened) arising
out of or in connection with this Shareholders' Equity Escrow Agreement, the
failure of any party to perform its obligations hereunder, or arising out of or
in connection with any action or failure to act in good faith by Escrow Agent
from and after the date of this Shareholders' Equity Escrow Agreement, save only
any action or failure to act by the Escrow Agent that constitutes fraud or
willful misconduct.
5.6. Escrow Agent shall be entitled to reasonable compensation for all
services rendered by it under this Shareholders' Equity Escrow Agreement as
provided for in Schedule A attached hereto. Such compensation shall be borne 50%
by Xxxx Xxxxxx and 50% by Xxxxx-Xxxxx provided that the total amount of such
compensation shall be the joint and several obligation of each of Xxxx Xxxxxx
and Xxxxx-Xxxxx.
5.7. If Escrow Agent consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association, without any further act,
shall be the successor Escrow Agent with the same effect as if it had been named
as Escrow Agent herein, unless Xxxxx-Xxxxx and Xxxx Xxxxxx provide otherwise.
5.8. This Shareholders' Equity Escrow Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters pertinent hereto.
No implied duties or obligations shall be read into this Shareholders' Equity
Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be bound
by any provisions of any agreement among the other parties hereto except this
Shareholders' Equity Escrow Agreement.
5.9. The Escrow Agent shall be entitled to rely in good faith upon any
order, judgment, certification, demand, notice, instrument, award, or other
writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine and may
assume that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
5.10. The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Shareholders' Equity Escrow Agreement and
shall not be liable for any action taken or omitted in good faith in accordance
with such advice.
5.11. The Escrow Agent makes no representations as to the validity, value or
genuineness of any amounts, documents or instruments held by or delivered to it.
5.12. XXXXX-XXXXX, XXXX XXXXXX AND THE ESCROW AGENT SPECIFICALLY WAIVE THE
RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATED TO THIS
SHAREHOLDERS' EQUITY ESCROW AGREEMENT.
6. Miscellaneous.
6.1. This Shareholders' Equity Escrow Agreement shall be governed by and
construed and enforced in accordance with the internal, substantive laws of the
State of Maryland without giving effect to the conflict of law rules thereof.
6.2. All notices, writings and other communications required or permitted to
be given pursuant to this Shareholders' Equity Escrow Agreement shall be in
writing and shall be given by hand-deliveryor transmitted by United States
certified mail, return receipt requested, postage prepaid, or via overnight
carrier, to the addresses set forth below:
If to Xxxx Xxxxxx: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
With a copy to: Adelberg, Rudow, Dorf, Xxxxxxx & Xxxxxx, LLC
600 Mercantile Bank & Trust Building
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esquire
If to Xxxxx-Xxxxx: Xxxxx-Xxxxx Bancshares, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President and CEO
With a copy to: Xxxxxx, Feinblatt, Rothman, Hoffberger &
Xxxxxxxxx, LLC
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx Xxxxxx, Esquire
If to Escrow Agent: FMB Trust Company, N.A.
00 Xxxxx Xxxxxxx Xxxxxx, Mail Code 101-591
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Each notice shall be deemed to have been received: (i) for hand deliveries,
on the date of transmittal: (ii) for mailing, on the day following such mailing;
and (iii) for overnight deliveries, on the day following such transmittal. The
parties shall have the right to change their respective addresses set forth in
this Section by giving notice of such change in accordance with this Section.
6.3. This Shareholders' Equity Escrow Agreement together with all other
agreements and documents executed by the parties in connection with the
Transactions represents the entire agreement between the parties and supersedes
and cancels any prior oral or written agreement, letter of intent or
understanding related to the subject matter hereof.
6.4. This Shareholders' Equity Escrow Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument, and shall
become effective when one or more counterparts have been signed by each of the
parties.
IN WITNESS WHEREOF, this Shareholders' Equity Escrow Agreement has been duly
executed by the parties hereto on the day and year first above written.
XXXX XXXXXX & CO., INC.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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XXXX XXXXXX SONS, INC.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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XXXX XXXXXX & CO.
By:/s/ Xxxxx X. Xxxxx (SEAL)
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Xxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
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Xxxxx X. Xxxxx, Trustee of the Xxxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
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Xxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx
Trust, General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
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Xxxxx X. Xxxxx, Trustee of the Xxxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx
Trust, General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx
Trust, General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx
Trust, General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx, General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
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Xxxxx X. Xxxxx, Personal Representative of
the Estate of Xxxxxxx X. Xxxxx, General
Partner
XXXXXXX CORP.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
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XXXXX-XXXXX BANCSHARES, INC.
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxx, President
BAY FINANCE, LLC
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxx, President of Xxxxx-
Xxxxx Bancshares, Inc., Member
BAY INSURANCE, LLC
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxx, President of Xxxxx-
Xxxxx Bancshares, Inc., Member
FMB TRUST COMPANY, N.A.
By:/s/ Xxxxxx X. Xxxxxx (SEAL)
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Xxxxxx X. Xxxxxx, Escrow Agent
