Exhibit 10.4 Escrow Agreement between State Capital Bancorp, Inc.
and the First National Bank of Maryland
EXHIBIT 10.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement") is made and entered into as
of this _______ day of by and between STATE CAPITAL BANCORP, Inc.
(the "Company"), a Maryland corporation and THE FIRST NATIONAL BANK OF MARYLAND,
a national banking association ("FNB").
RECITALS
WHEREAS, the Company is engaged in the offering for sale of a minimum of
550,000 and a maximum of 800,000 shares of common stock of the Company, at
$10.00 per share (the "Shares");
WHEREAS, the offering is conditioned upon the sale of 550,000 Shares (the
"Minimum Amount") on or before September 30, 1997 (the "Minimum Subscription
Termination Date"), unless extended by the Company in its sole discretion;
WHEREAS, the Company had engaged Xxxxxxx X. Xxxx & Co., a division of
Xxxxx, Xxxxxxxx & Xxxxx, Inc., to act as agent in offering the Shares 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 "The First National Bank of Maryland" in an amount equal to
his/her/their subscription computed on the basis of $10.00 per Share (the
"Escrow Funds"); and
WHEREAS, the Company proposes to establish an Escrow Account and desires
that FNB 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
1.1 FNB 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: State Capital Bancorp Escrow Account,
The First National Bank of Maryland, Escrow Agent.
2. DEPOSIT OF FUNDS
2.1 The Escrow Agent shall receive checks made payable to The First
National Bank of Maryland 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 shall hold such proceeds in escrow. The Escrow Agent
shall notify the Agent 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
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
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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 Escrow Funds.
4. DISBURSEMENT OF ESCROW FUNDS
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, and (i) the Company
has received the approval of the Federal Reserve Board to become a bank holding
company; (ii) State Capital Bank has received preliminary approval from the
Maryland State Bank Commissioner of its charter; (iii) State Capital Bank has
received preliminary approval of its application for membership in the Federal
Reserve System from the Federal Reserve Board; and (iv) State Capital Bank has
received preliminary approval from the Federal Deposit Insurance Corporation for
insurance of its deposit accounts (together, the "Regulatory Approvals"), 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, that
the Escrow Funds are collected, and that the Escrow Agent has received a
certification as to receipt by the Company of the Regulatory Approvals (the
"Certification").
4.2 In the event subscription for an insufficient number of
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Shares have been received, and upon written notification from the Company of the
termination of the Offering, the Company shall instruct the Escrow Agent to
return the subscription deposits (upon verification that subscription deposits
are collected funds), within ten (10) banking days after receipt of such notice
to the Subscribers whose names previously have been provided to the Escrow
Agent. Said disbursement to Subscribers shall be of their original capital
investment with interest but without penalty or deduction.
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 and has provided the Escrow Agent with the
Certification.
5. TERMINATION OF ESCROW AGREEMENT
5.1 The Escrow Agreement shall terminate upon the final disbursement of
all funds held by the Escrow Agent hereunder, but no later than the Termination
Date, unless the Termination Date is extended pursuant to Section 5.2. If the
funds have not been disbursed pursuant to Section 4 on or before the close of
business on the Termination Date, or such later date as specified in the
Extension Notice as provided in Section 5.2, the Escrow Agent shall, without
demand or direction from the Company, return the subscription deposits, without
interest, to the Subscribers whose names have previously been provided to the
Escrow Agent within ten (10) banking days after such date.
5.2 The Company shall have the option to extend the Termination Date and
the term of this Escrow Agreement at any time prior to the close of business on
the Termination Date of this Escrow Agreement by providing written notice to the
Escrow Agent (the "Extension Notice") in substantially the form attached hereto
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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 Termination
Date may be extended by the Company for a period of time up to September 30,
1997.
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 ten (10) banking days after receipt of such notice, the amount
tendered therewith, or in the case of a partial rejection, the appropriate
portion of the original deposit.
7. RETURN OF ESCROW FUNDS TO SUBSCRIBERS
All returns and deliveries to a Subscriber hereunder shall be mailed by
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 FNB.
8. COMPENSATION
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 250
subscriptions and $15.00 for each subscription returned in whole or in part, and
$15.00 for each payment of interest, by check or wire. A transaction fee of
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$20.00 per investment will be assessed for any investment other than an 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/or the Certification is not received, and the Escrow Agreement is terminated
on the Minimum Amount Termination Date or such later date as extended pursuant
to Section 5.2 hereof, the Escrow Agent will invoice the Company for all the
above described fees due at that time. If the Minimum Amount and the
Certification are received then the Escrow Agent will deduct all fees due from
the final disbursement to the Company.
9. STANDARD OF CARE FOR ESCROW AGREEMENT
9.1 The Escrow Agent shall be responsible only for performance of its
duties as 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 Chief
Executive Officer of the Company has
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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 and 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 (except for
any act or failure to act on the part of the Escrow Agent constituting gross
negligence or willful misconduct), 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.
10. DISAGREEMENTS
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
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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
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 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
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Funds.
12. NOTICES
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: State Capital Bancorp
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxxx, President
(b) To Escrow Agent: The First National Bank of Maryland
Suite 1601 BANC 101-591
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: State Capital 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
13.1 The rights under this Escrow Agreement shall inure to the
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benefit of, and the obligations created hereby shall be binding upon, the
parties hereto and their respective successors and assigns.
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 Agreement 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: STATE CAPITAL BANCORP
By:_________________________________
Chief Executive Officer
ATTEST: THE FIRST NATIONAL BANK OF MARYLAND,
Escrow Agent
By:___________________________ By:_________________________________
Authorized Officer Vice President
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EXHIBIT "A"
The First National Bank of Maryland
Suite 1601 BAN 101-591
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
ATTN: State Capital Bancorp
Gentlemen:
Under the terms and conditions of the Offering Statement dated ,
1997, and the Escrow Agreement between State Capital Bancorp and The First
National Bank of Maryland dated , 1997, you are hereby
notified that the Termination Date of the Subscription Period has been extended
as indicated below. Official documentation confirming the change noted below is
attached.
The Termination date of the Subscription Period applicable to the Offering
Circular noted above is extended to _________________________, 19____.
Sincerely,
Chief Executive Officer
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