EXHIBIT 1.4
CRESCENT FINANCIAL CORPORATION
0000 Xxxx Xxxxx Xxxx
Xxxx, XX 00000
ESCROW AGREEMENT
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June __, 2002
Capital Bank
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Gentlemen:
This letter will confirm the agreement between Crescent Financial Corporation
("Crescent"), a North Carolina corporation and Capital Bank, Raleigh, North
Carolina (the "Escrow Agent"), whereby the Escrow Agent agrees to act as an
escrow agent in connection with an offering to Crescent's shareholders of record
as of May 3, 2002 (the "Rights Offering") of a maximum of 145,000 shares of
Crescent's common stock, $1.00 par value per share (the "Shares"), which will be
sold for a purchase price of $9.25 per share (the "Purchase Price") payable in
cash or its equivalent. The Rights Offering of the Shares will be made pursuant
to a prospectus to be dated on or about July __, 2002 and any subsequent
amendments or supplements thereto (collectively, the "Prospectus").
Pursuant to the Prospectus, prospective investors who desire to subscribe for
Shares (the "Subscribers") will deliver, by mail or otherwise, written
subscription agreements ("Subscription Offers") in the form accompanying the
Prospectus to Crescent and a check payable to "Crescent Financial Corporation
Escrow Account" to the following address:
Crescent Financial Corporation
0000 Xxxx Xxxxx Xxxx
Xxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Subscription Offers must be accompanied with full payment of $9.25 per share.
Subscription Offers will be accepted through _______, 2002 (the "Expiration
Date"). Following the Rights Offering, Crescent intends to offer up to 545,000
shares (the "Public Offering"), plus such number of shares as are not subscribed
for in the Rights Offering, to the public at a price of $____ (the "Public
Offering Price").
In connection with the foregoing, and the Escrow Agent's indicated willingness
to provide services in connection with the Rights Offering as described herein,
and in confirmation of the terms of this escrow arrangement, the parties hereto
agree as follows:
1. Receipt and Delivery of Payments for Subscribed Shares. In
connection with the Rights Offering, and as described in the Prospectus, the
Subscribers will be instructed to deliver, by mail or otherwise, all
Subscription Offers to Crescent and to make all checks or money orders
accompanying a Subscription Offer payable to "Crescent Financial Corporation -
Escrow Account."
2. Escrow Account. All funds received by the Escrow Agent will be held
in a separate and distinct escrow account entitled "Escrow Account for the
Benefit of Subscribers for Shares of Crescent Financial Corporation" (the
"Escrow Account").
3. Release of Escrowed Funds.
(a) Subject to the other terms and conditions of this
Agreement, within two (2) business days following receipt by the Escrow Agent of
the joint written request of Crescent's President and Crescent's Chief Financial
Officer, the Escrow Agent shall deliver to Crescent the entire amount of
payments for the Purchase Price of Shares as shall have been deposited to and
remain on deposit in the Escrow Account (or such lesser amount thereof as shall
have been specified in the written request).
However, notwithstanding anything contained herein to the contrary, no funds
shall be released to Crescent unless: (i) the written request for release of
such funds contains or is accompanied by the written certification of Crescent's
President and Crescent's Chief Financial Officer that the Rights Offering and
the Public Offering have each concluded; and (ii) the written request for
release of such funds contains or is accompanied by the written certification of
Crescent's President and Crescent's Chief Financial Officer that the aggregate
number of Shares which have been sold in the Public Offering and for which
Subscription Offers have been received and accepted is at least ________.
(b) If: (i) upon the conclusion of both the Rights Offering
and the Public Offering, the aggregate number of Shares which have been sold in
the Public Offering and for which Subscription offers have been received and
accepted does not exceed _______; or (ii) the Rights Offering has otherwise been
terminated or withdrawn with no Shares to be sold; or (iii) the Escrow Agent
receives written notices from Crescent from time to time that certain specified
Subscription Offers will be rejected or accepted for a lesser number of Shares
than the number for which the Subscription Offer and full payment has been
received, then the Escrow Agent shall promptly thereafter return the escrowed
funds (or the appropriate portion thereof in the case of reduced Subscription
Offers) without any deduction for expenses, charges or fees, to the Subscribers
entitled thereto. Such payments to Subscribers shall be made by Escrow Agent's
check mailed to the Subscribers at their addresses listed in the Subscription
Offers. In addition, should the escrowed funds be returned to the Subscribers
for any reason, the Escrow Agent shall be entitled to a fee equal to the
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greater of $200 or $5.00 per Subscriber to compensate it for the refund to each
Subscriber of such Subscriber's escrowed funds plus pro rata interest thereon.
Crescent agrees to give the Escrow Agent notice of any extension of the
Expiration Date prior to such date.
(c) In the event that the Public Offering Price is less than $9.25, the
Escrow Agent shall refund to each Subscriber an amount equal to the difference
between $9.25 and the Public Offering Price multiplied by the number of shares
for which such Subscriber has successfully subscribed. Such payments to
Subscribers shall be made by Escrow Agent's check mailed to the Subscribers at
their addresses listed in the Subscription Offers. In such event, the Escrow
Agent shall be entitled to an additional fee equal to the greater of $200 or
$5.00 per Subscriber to compensate it for such refund.
4. Investment of Escrowed Funds. Escrowed funds shall be invested by
the Escrow Agent such that all funds on deposit in the Escrow Account are
either: (i) subject to coverage by Federal Deposit Insurance or (ii) invested in
U.S. Government Treasury Notes or Bonds and/or securities of federally sponsored
agencies, including but not limited to Federal Home Loan Bank Bonds and Federal
Farm Credit Bank Bonds, that are in turn pledged as collateral held for the
benefit of any Subscriber(s) whose share of the Escrow Account would not be
subject to coverage by Federal Deposit Insurance.
5. Interest on Escrowed Funds. Funds deposited to the Escrow Account
shall bear interest at current money market rates until such time as the Escrow
Account shall be closed. At such time as the Escrow Account shall be closed, the
Escrow Agent shall deliver all escrowed funds remaining in the Escrow Account to
Crescent, plus any and all interest due to Crescent pursuant to the first
sentence of this Paragraph 5. At such time as the Escrow Agent shall return
escrowed funds in the Escrow Account to Subscribers, as provided in Paragraph 3
above, it shall also deliver or make available to Subscribers all interest
earned to date on such funds pursuant to the first sentence of this Paragraph 5,
each share to be calculated on a Pro Rata Basis. "Pro Rata Basis" shall mean,
for each Subscriber, the portion of such Subscriber's cash investment being
returned multiplied by the number of days such cash investment of the Subscriber
was held in the interest bearing money market investment account pursuant to
Paragraph 4 above, multiplied by the average daily yield earned on the escrowed
funds during such period of days.
6. Liability of Escrow Agent. With regard to the performance of the
Escrow Agent's duties hereunder, it is agreed:
(a) The Escrow Agent shall have no duties, obligations, or
responsibilities hereunder other than those specifically set forth herein.
(b) Nothing herein contained shall be deemed to obligate the
Escrow Agent to pay or transfer any funds hereunder unless the same has been
first received by the Escrow Agent pursuant to the provisions of this Agreement.
(c) The Escrow Agent shall not be responsible in any manner
for the validity or sufficiency of any Subscription Offer or any signatures
thereto, nor shall the Escrow Agent be
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responsible in any manner for the Shares subscribed or for the regularity of the
admission of any Subscribers as shareholders of Crescent.
(d) The Escrow Agent shall have no duty or obligation to
disburse any funds represented by checks delivered to it hereunder until such
funds have been finally collected. The Escrow Agent does agree to make
presentment for payment of such checks in the ordinary course of business.
(e) The Escrow Agent is not deemed a party to nor is the
Escrow Agent bound by or under any duty or obligation to inquire into the
validity and sufficiency of any other agreement, document, certificate, or
instrument which may be referred to herein.
(f) The Escrow Agent shall have no liability hereunder to any
person, including Crescent, for any mistake of fact or error in judgment, or for
any acts or omissions of any kind unless caused by the Escrow Agent's breach of
contract, intentional misconduct, negligence or bad faith.
7. Disputes; Indemnification. In the event of any disagreement between
the parties to this Agreement, or in the event any other person or entity claims
an interest in escrowed funds held hereunder, and such disagreement or claim
results in conflicting demands or claims being made in connection with this
Agreement or any escrowed funds held hereunder, the Escrow Agent shall be
entitled, at its option, to refuse to comply with the instructions, demands or
claims of the parties to this Agreement, or of any such parties, so long as such
disagreement of adverse demand or claim shall continue. In such event, the
Escrow Agent shall not be required to make delivery or other disposition of
escrowed funds held hereunder. Anything herein to the contrary notwithstanding,
the Escrow Agent shall not be or become liable to the parties to this Agreement,
or to any of them, for failure of the Escrow Agent to comply with the
conflicting or adverse demands or claims of the parties, or any of them, or of
any other person claiming an interest in escrowed funds held hereunder. The
Escrow Agent shall be entitled to continue to refrain and refuse to deliver or
otherwise dispose of the escrowed funds held hereunder or any part thereof or to
otherwise act hereunder, as stated above, unless (i) the rights of the parties
and all other persons and entities claiming an interest in escrowed funds held
hereunder have been duly adjudicated in a court having jurisdiction of the
parties and the escrowed funds held hereunder, or (ii) the parties to this
Agreement and such other persons and entities have reached an agreement
resolving their disagreements and conflicting claims and demands and have
provided the Escrow Agent with indemnity satisfactory to it against any
liability, claims or damages resulting from compliance by the Escrow Agent with
such agreement.
In addition to the foregoing, the Escrow Agent shall have the right to tender
any part of or all of the escrowed funds held hereunder into the registry or
custody of any court having jurisdiction. Upon such tender, the parties hereto
agree that the Escrow Agent shall be discharged from all further duties under
this Agreement, provided, however, that the filing of any such legal proceeding
shall not deprive the Escrow Agent of its fees and expenses earned or incurred
prior to such filing and discharge of its duties hereunder.
Crescent hereby agrees to indemnify and hold the Escrow Agent and its directors,
employees, officers, agents, successors and assigns harmless from and against
any and all losses, claims, damages, liabilities
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and expenses, including without limitation, reasonable costs of investigation
and counsel fees and expenses which may be imposed on the Escrow Agent or
incurred by it in connection with its acceptance of this appointment as Escrow
Agent or the performance of its duties hereunder. Such indemnity includes,
without limitation, all losses, damages, liabilities and expenses (including
counsel fees and expenses) incurred in connection with any litigation (whether
at trial or appellate levels) arising from this Agreement or involving the
subject matter hereof, unless caused by or resulting from the Escrow Agent's
breach of contract, misconduct, negligence or bad faith or from other conduct of
or actions by the Escrow Agent for which it is not relieved from liability under
Paragraph 6 above. The indemnification provisions contained in this Paragraph 7
are in addition to any other rights the indemnified parties may have by law or
otherwise and shall survive termination of this Agreement or the resignation or
removal of the Escrow Agent.
8. Notices and Communications. All notices and communications hereunder
shall be in writing to the following parties:
Escrow Agent:
Capital Bank
Attention: Xxxxx X. Xxxx, President
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Crescent Financial Corporation:
Crescent Financial Corporation
Attention: Xxxxxxx X. Xxxxxxx, President
0000 Xxxx Xxxxx Xxxx
Xxxx, Xxxxx Xxxxxxxx 00000
9. Resignation. The Escrow Agent, or any successor hereafter appointed,
may at any time resign by giving notice in writing to the parties hereto, and
the Escrow Agent shall be discharged from any duties hereunder upon the
appointment of a successor Escrow Agent. In the event of any such resignation, a
successor Escrow Agent shall deliver to the parties hereto and to the resigning
Escrow Agent a written instrument accepting such appointment hereunder and,
thereupon, it shall be deemed to be substituted as a party hereto and succeed to
all the rights and duties of the Escrow Agent hereunder and shall be entitled to
receive all funds and other property then held by the predecessor Escrow Agent.
10. Termination. Crescent may, at any time, and upon ten (10) days
written notice, remove the Escrow Agent from its duties hereunder and appoint a
successor escrow agent in the manner provided above, in which event the Escrow
Agent, following such notice period, shall promptly account for and deliver to
the successor escrow agent so appointed all funds and obligations held by it,
and the Escrow Agent shall thereafter be discharged from any further duties
hereunder.
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11. General.
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(a) This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the parties and their respective successors and
assigns.
(b) This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and may be amended only by an
agreement in writing signed by the parties.
(c) This Agreement will be governed by and construed in
accordance with the laws of the State of North Carolina.
(d) This Agreement will remain in full force and effect until
the Escrow Agent has disbursed the entire escrowed funds in accordance with the
terms hereof.
(e) This Agreement may be executed in duplicate, any one copy
of which shall be deemed to be an original.
If the foregoing correctly sets forth the understanding between
Crescent and the Escrow Agent, please indicate the Escrow Agent's acceptance
thereof in the space provided below for that purpose.
Yours very truly,
Crescent Financial Corporation
By: _____________________________________
Xxxxxxx X. Xxxxxxx, President and CEO
Accepted and agreed to this _______ day of June, 2002.
CAPITAL BANK (Escrow Agent)
By:
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Xxxxx X. Xxxx
Title: President and CEO
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