Exhibit 99.2
HCNB BANCORP, INC.
A Minimum of
700,000 Shares of Stock @ $10.00 per Share ($7,000,000)
Up To A Maximum of
900,000 Shares of Stock @ $10.00 per Share ($9,000,000)
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
April 12, 1999, by and between FMB Bank ("FMB"), Financial Institutions
Division, 101-710, X.X. Xxx 0000, Xxxxxxxxx, Xxxxxxxx 00000 (the "Escrow
Agent"), and HCNB Bancorp, Inc., a Maryland corporation, 0000 X. Xxxx Xxxxx,
Xxxxx 000X, Xxxxxxxxx, Xxxxxxxx 00000 (the "Corporation").
WHEREAS: The Corporation proposes to offer for sale and to sell a minimum
of 700,000 and up to a maximum of 900,000 shares of the corporation's Common
Stock, $0.01 par value per share (each a "Share", and collectively, the
"Shares") at a price of Ten Dollars ($10.00) per Share; and
WHEREAS: The Corporation intends to offer and sell the Shares in a public
offering (the "Offering") pursuant to a prospectus (the "Prospectus") which
forms part of the Corporation's registration statement on Form SB-2 (the
"Registration Statement") filed with the Securities and Exchange Commission; and
WHEREAS: Shares may be purchased by execution of the subscription agreement
(the "Subscription Agreement") which is included as Exhibit A to the Prospectus
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and payment of cash per Share upon subscription; and
WHEREAS: The Corporation desires to establish an Escrow Account (as
defined herein) in which funds from subscribers will be deposited pending
completion of the Escrow Period (as defined herein) and FMB agrees to serve as
Escrow Agent in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Escrow. On or prior to the date of the commencement of the Offering,
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the Corporation shall establish a demand deposit escrow account with the Escrow
Agent, which escrow account shall be entitled HCNB Bancorp, Inc. Escrow Account
(the "Escrow Account"). The Escrow Agent shall receive and disburse the proceeds
from the sale of Shares in accordance with the terms of this Agreement. The
Prospectus will provide instructions for subscribers to
make checks for subscriptions payable to the order of "FMB Bank, Escrow Agent"
or to wire funds directly to the Escrow Account. Any checks received by the
Escrow Agent that are made payable to a party other than the Escrow Agent shall
be returned to the Corporation.
2. Escrow Deposits and Subscriber Information. The Corporation shall
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promptly deliver all monies received from subscribers for the payment of Shares
directly to the Escrow Agent together with a written account of each sale, which
account shall set forth, among other things, the subscriber's name, address,
social security number or taxpayer identification number, the number of Shares
purchased, the amount paid therefor. Fractional payments and incomplete
accounts shall be returned to the Corporation. During the Escrow Period (as
defined herein), the Escrow Agent shall deposit all monies received into the
Escrow Account, and all monies so deposited are hereinafter referred to as the
"Escrow Amount."
The period during which funds shall be held in escrow (the "Escrow Period")
shall begin with the commencement of the Offering and shall terminate upon the
earlier to occur of the following dates:
A. The Escrow Release Date (as defined in Section 5) assuming that
as of such date the Escrow Agent has received at least $7,000,000
in Collected Funds (as defined in Section 5).
B. 60 days after the Prospectus is deemed effective by the
Securities and Exchange Commission (or 60 days thereafter if the
offering is extended by the Corporation as permitted in the
Prospectus);
or
C. The date upon which a determination is made by the Corporation to
terminate the Offering prior to the sale of 700,000 Shares, as
described in the Prospectus, and the Escrow Agent is notified in
writing by the Corporation of such termination.
During the Escrow Period, the Corporation is aware and understands that the
Corporation is not entitled to any funds received into escrow and no amounts
deposited in the Escrow Account shall become the property of the Corporation or
any other entity, or be subject to the debts of the Corporation or any other
entity, unless and until such funds are transferred by the Escrow Agent to the
Corporation subject to the provisions of this Agreement.
3. Collection of Checks. During the Escrow Period, the Escrow Agent is
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hereby authorized to forward each check for collection and, upon collection of
the proceeds of each check, deposit the collected proceeds in the Escrow
Account. As an alternative, the Escrow Agent may telephone the bank on which
the check is drawn to confirm that the check has been paid. Any check returned
unpaid shall be returned to the Corporation.
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If, after receipt by the Escrow Agent of any check or instrument hereunder,
the Escrow Agent informs the Corporation that such check or instrument has been
entered for collection by it hereunder, and such check or instrument is
uncollectible, and payment of the funds represented by such check or instrument
has been made by the Escrow Agent, the Corporation shall immediately reimburse
the Escrow Agent for such payment, and the Escrow Agent shall deliver the
returned check or instrument to the Corporation; provided, however, that nothing
contained herein shall require or permit the Escrow Agent to invest or pay out
funds which it has reason to believe are uncollectible; and provided further
that nothing contained herein shall place any responsibility upon the Escrow
Agent for collecting returned checks or instruments or advancing its own funds
in payment of any such checks or instruments.
If the Corporation rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check in
the amount of the subscription. If the Corporation rejects any subscription for
which the Escrow Agent has not yet collected funds but has submitted the
subscriber's check for collection, the Escrow Agent shall promptly issue a check
in the amount of the subscriber's check to the rejected subscriber after the
Escrow Agent has cleared such funds. If the Escrow Agent has not yet submitted
a rejected subscriber's check for collection, the Escrow Agent shall promptly
remit the subscriber's check directly to the subscriber.
4. Investment of Escrow Amount. The Escrow Amount shall be invested by
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the Escrow Agent at the written direction of the Corporation only in bank
accounts, including savings accounts and bank money-market accounts, short-term
certificates of deposit issued by a bank or short-term securities issued or
guaranteed by the United States Government. In no event shall the Escrow Amount
be invested in instruments that have a maturity of greater than seven days and
that (1) would mature after 60 days after the Prospectus is deemed effective by
the Securities and Exchange Commission or, (2) after such 60 day period, would
mature after an additional 60 day period if the offering is extended by the
Corporation as permitted in the Prospectus.
5. Escrow Release Date. "Qualifying Subscriptions" as used herein shall
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mean all subscriptions that have been received and accepted by the Corporation.
If, at any time prior to the termination of the Escrow Period, the Corporation
has received Qualifying Subscriptions for at least $7,000,000, then the
Corporation shall notify the Escrow Agent and by instructions (which may
accompany such notice or be provided subsequently) given at least one (1)
business day in advance of the date on which the Corporation intends to obtain a
release of funds from the Escrow Account (the "Escrow Release Date"), shall
specify the Escrow Release Date (which must be not more than ten (10) days after
the termination of the Escrow Period), the amount of Qualifying Subscriptions
accepted by the Corporation as of the Escrow Release Date and the identity of
the subscribers whose subscriptions have been accepted as of the Escrow Release
Date (the "Escrow Closing Notice").
On the Escrow Release Date, the Escrow Agent, upon receipt of a certificate
from the Corporation certifying that the Corporation has accepted Qualifying
Subscriptions for at least
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$7,000,000, shall pay to the Corporation the amount specified in the Escrow
Closing Notice, and shall additionally pay to the Corporation the interest
earned on such amount. The Escrow Agent shall pay the Corporation in the form of
the Escrow Agent's check or a wire transfer directly to a non-escrow deposit
account (the "Deposit Account") established by the Corporation at the Escrow
Agent.
Notwithstanding anything to the contrary in this Agreement, in no event
will the Escrow Agent pay over any amount to the Corporation unless the Escrow
Agent has received at least $7,000,000 in Collected Funds. For purposes of this
Agreement, the term "Collected Funds" shall mean all funds received by the
Escrow Agent which have cleared normal banking channels and are in the form of
cash.
6. Subscriptions Received After Escrow Release Date. Notwithstanding
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anything to the contrary contained in this Agreement, after the Escrow Release
Date, any subscriptions received by the Escrow Agent shall be deposited into the
Escrow Account until the Escrow Agent receives written notification from the
Company that such subscriptions may be deposited directly into the Deposit
Account. Upon receipt of such notice, such subscriptions shall be endorsed by
the Escrow Agent to the Company and deposited into the Deposit Account, and the
Escrow Agent shall have no further obligations with respect to such deposits.
7. Failure to Meet Conditions. If, prior to the termination of the
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Escrow Period, the Corporation has not accepted Qualifying Subscriptions for at
least $7,000,000, then the Escrow Agent shall promptly refund to each subscriber
the amount received from the subscriber, without deduction, penalty, interest or
expense to the subscriber in the form of the Escrow Agent's check and the Escrow
Agent shall inform the Corporation of its distribution of the funds. The
purchase money returned to each subscriber shall be free and clear of any and
all claims of the Corporation or any of its creditors.
8. Duties of Escrow Agent. Notwithstanding anything herein to the
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contrary, the Escrow Agent's sole responsibility under this Agreement shall be
for the safekeeping of the Escrow Amount and interest earned thereon, which are
to be delivered only to the parties in the manner and at the times specifically
authorized and directed in this Agreement. The Escrow Agent's sole obligation
will be to act as a custodian of the funds in the Escrow Account as provided
herein and that all administrative and record-keeping activity relating to the
interests of the Corporation or subscribers of the Shares including, but not
limited to, the calculation of amounts due the Corporation from funds verified
by the Escrow Agent to be on deposit hereunder shall be performed by the
Corporation. Except with respect to obligations otherwise provided for herein,
the Escrow Agent shall not be subject to, nor be under any obligation to
ascertain or construe, the terms and conditions of any other instruments or
agreements, including specifically and without limitation, any other instruments
or agreements referred to in this Agreement, nor shall the Escrow Agent be
obligated to inquire as to the form, execution, sufficiency or validity of any
such instruments or agreements or the identity or authority or offices of the
persons executing and delivering same.
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It is agreed that the Escrow Agent's duties are only such as are herein
specifically provided. The Escrow Agent shall have no responsibility (1) for
the disposition or investment of funds by the Corporation after they are
transferred by the Escrow Agent to the Deposit Account or (2) to determine that
the share certificates representing Common Stock are issued and delivered to the
subscribers. The Escrow Agent shall not be required to institute legal
proceedings of any kind. The Escrow Agent will not incur any liability to the
Corporation in acting in accordance with any written or oral instructions given
to it hereunder by an authorized representative of the Corporation. The Escrow
Agent shall be under no duty or have any liability with respect to the Escrow
Account, other than those duties imposed by this Agreement and by applicable
statutes or laws.
Notwithstanding anything herein to the contrary, the Escrow Agent may be
discharged from its duties under this Agreement upon notice of such discharge
from the Corporation. Upon the discharge of the Escrow Agent, the Escrow Agent
shall deliver all funds held hereunder to a person or persons designated by the
Corporation and this Agreement shall terminate.
9. Indemnification. The Escrow Agent, any parent or affiliate of the
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Escrow Agent, and any officer, director, shareholder or employee of the Escrow
Agent (any parent or affiliate of the Escrow Agent, and any officer, director,
shareholder or employee of the Escrow Agent, are referred to herein as the
Escrow Agent's "Agents") shall not be liable to the Corporation or any
subscriber for any act which the Escrow Agent or its Agents may do or omit to do
hereunder in good faith, and the Corporation hereby warrants and agrees forever
to save, hold and keep the Escrow Agent and its Agents harmless from any
liability or claims (including reasonable attorney's fees and court costs)
suffered or incurred in connection with its acting as Escrow Agent or with the
Prospectus or the Offering, or any federal and state securities laws; provided,
however, that the Escrow Agent and its Agents shall be responsible for any and
all acts of gross negligence or willful misconduct on the part of the Escrow
Agent or its Agents.
10. Remuneration. The Corporation agrees to pay to the Escrow Agent as
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compensation for performing its duties, an annual administrative fee of
$1,500.00, plus $25.00 for each subscription returned in whole or in part by
check or wire. A transaction fee of $50.00 per investment will be assessed for
any investment other than a sweep repurchase agreement. The Corporation will be
assessed a $3.50 fee for each returned check. The Escrow Agent will establish a
sweep feature on the Escrow Account to invest the funds under a sweep repurchase
agreement of U.S. Treasury obligations. There is a $105.00 monthly fee
associated with the sweep feature. The monthly account maintenance for the
Escrow Account is $16.00 plus other various transaction fees.
Any out-of-pocket expenses will be reimbursed to the Escrow Agent by the
Corporation for all expenses paid or incurred by it in the performance of Escrow
Agent duties hereunder. In the event that $7,000,000 minimum (the "Minimum
Amount") is not achieved prior to the termination of the Escrow Period, the
Escrow Agent will invoice the Corporation 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
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Minimum Amount to the Corporation. All fees resulting from any funds collected
in excess of the Minimum Amount disbursed to the Corporation shall be remitted
to the Escrow Agent by the Corporation by the termination date of this
Agreement, but not less frequently than annually from the effective date of the
Escrow Agreement.
11. Disputes. If the Corporation and/or any other party disagrees on any
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matter connected with the Escrow Account (a) the Escrow Agent may wait for a
settlement by appropriate legal proceedings or other means that the Escrow Agent
may require, and in such event the Escrow Agent will not be liable for interest
or damage, (b) the Escrow Agent will be entitled to such reasonable compensation
for services, costs and attorneys' fees as a court may award if the Escrow Agent
intervenes in or is made a party to any legal proceedings, the Escrow Agent
shall be entitled to hold documents and funds deposited in the Escrow Account
pending settlement of the disagreement by any of the above means, and (d) the
Escrow Agent shall be entitled to file an interpleader action and deposit any
funds or property with an appropriate court.
12. Notices to Escrow Agent. Any written notice required to be given or
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delivered to the Escrow Agent shall be deemed conclusively given and delivered
hereunder if the written notice is mailed, by registered or certified mail or by
overnight delivery service, addressed as follows:
FMB Bank
Financial Institutions Division 101-710
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Vice President
13. Assignment. This Agreement may be assigned by a party hereto only
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with the consent of the other parties, and shall be binding on the successors
and permitted assigns of each of the parties.
14. Governing Law. This Agreement shall be governed, construed and
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enforced in accordance with laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST/WITNESS: HCNB BANCORP, INC.
/s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx X. Xxxxx
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Secretary Chairman
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FMB BANK
/s/ Xxxxxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Vice President
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