Exhibit 10.7
COMMON STOCK
Minimum Shares and Units: Maximum Shares and Units:
625,000 1,000,000
ESCROW AGREEMENT
First Citizens Bank & Trust Company
Attn: Xxxxx Xxxxxx
Corporate Trust Department - XXX00
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Gentlemen:
This letter will confirm the agreement between the undersigned Xxxxx River
Bankshares, Inc, the holding company, (the "Company") for Xxxxx River Community
Bank, N.A. (the "Bank") and First Citizens Bank & Trust Company (the "Escrow
Agent"), whereby the Escrow Agent agrees to act as escrow agent in connection
with a subscription offering for a minimum of 537,500 shares and a maximum of
912,500 shares of the Company's common stock, no par value per share (the
"Shares"), which will be sold for an aggregate purchase price of $10.00 per
Share and 87,500 Units (Units") which will be sold at an aggregate purchase
price of $10.00 per unit, each consisting of one Share and one warrant to
purchase one Share in the future at $10.00 per share (the Purchase Price")
payable in cash or its equivalent. The offer and sale of the Shares and Units
(the "Offering") will be made pursuant to an Offering Circular dated September ,
1999, and any subsequent amendments or supplements thereto (collectively, the
"Offering Circular").
Pursuant to the Offering Circular, prospective investors who desire to subscribe
for Shares and Units (the "Subscribers") will submit written subscription
agreements ("Subscription Offers") substantially in the form accompanying the
Offering Circular. Under the terms of the Offering, each Subscription Offer must
be accompanied by payment in the full amount of $10.00 per Share or Unit
subscribed (the "Expense Deposit"). Subscription Offers will be accepted through
the date set forth on Exhibit A hereto as the Expiration Date (the "Expiration
Date"), which date may be extended by the Company until the date set forth on
Exhibit A hereto as the Extended Expiration Date. The Offering may be closed,
terminated and/or withdrawn prior to the Expiration Date as described in the
Offering Circular. Exhibit A may be amended by mutual agreement of the Company
and the Escrow Agent after the date of this Escrow Agreement to include the
Expiration Date and Extended Expiration Date, their respective signatures
thereto being evidence of such mutual agreement.
In connection with the foregoing, and the Escrow Agent's indicated willingness
to provide services in connection with the 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 Offering, and as described in the Offering
Circular, the Subscribers will be instructed to make all
checks or money orders delivered with a Subscription Offer as
an Expense Deposit, or otherwise delivered in payment of the
balance of the Purchase Price of Shares or Units, payable to,
and to forward the same with their executed Subscription
Offers to, the Escrow Agent.
2. Escrow Account. The Escrow Agent agrees, in the ordinary
course of its business, to make presentment for payment of all
checks or other payment instruments delivered to it as
provided above in Paragraph I above. All funds delivered to or
received by the Escrow Agent as set forth above will be
received and held by it as escrow agent in a separate and
distinct escrow account entitled "Escrow Account for the
Benefit of Subscribers for the Shares of Xxxxx River
Bankshares, Inc. (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 written request of the Company's President, the
Escrow Agent shall deliver to the Company (i) the entire
amount of such Expense Deposits 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), or (ii) the entire amount of payments for
the balance of the Purchase Price of Shares and Units 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 the Company unless
(i) there has been delivered to the Escrow Agent a copy of
correspondence received from the Office of the Comptroller
of the Currency and the Federal Deposit Insurance
Corporation to the effect that the Bank's charter has been
preliminarily approved and deposit insurance application
has been approved and from the Federal Reserve and
Virginia Bureau of Financial Institutions approving the
Company's ownership of Bank; (ii) the written request for
such release of funds contains or is accompanied by the
written certification of the Company's President that
Subscription Offers have been received and accepted for at
least 537,500 Shares and 87,500 Units, (iii) the Escrow
Agent shall have independently determined that collected
funds have been deposited in the Escrow Account (including
Expense Deposits and payments of the balance of the
Purchase Price of Shares, but excluding any such funds
that have been refunded to subscribers) in an aggregate
amount of at least $6,250,000, and (iv) the Escrow Agent's
fees and charges imposed hereunder to the date of such
proposed release of funds have been paid or otherwise
provided for the Escrow Agent's satisfaction.
(b) If: (i) on the Expiration Date of the Offering (as such
date may be extended as provided in the Offering
Circular), there have not been delivered to the Escrow
Agent copies of Subscription Offers for at least
537,500 Shares and 87,500 Units and deposits to the
Escrow Account of collected funds representing the
aggregate Purchase Price therefor (an aggregate of
$6,250,000) or (ii) the Escrow Agent receives written
notice from the Company's President that the Offering
has otherwise been terminated or withdrawn with no
Shares and Units to be sold, or, (iii) the Escrow Agent
receives written notices from the Company's President
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 Purchase Price
has been received, then the Escrow Agent shall promptly
thereafter return the escrowed funds (or the
appropriate portion thereof related to such specified
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. The
Company's President agrees to give the Escrow Agent
notice of any extension of the Expiration Date prior to
such date.
4. Investment of Escrowed Funds. Escrowed funds shall be invested
by the Escrow Agent in a First Citizens Bank Trust Department
utilized Money Market Fund that is fully insured by the
Federal Deposit Insurance Corporation or fully collateralized
by the U. S. Government, state or local government securities.
5. Interest on Escrowed Funds. At such time as the Escrow Account
shall be closed and Escrow Agent shall deliver all escrowed
funds remaining in the Escrow Account to the Company, or shall
return all such funds to Subscribers, as provided in Paragraph
3 above, it also shall deliver or make available to the
Company any and all interest or income earned to date on such
funds. All interest or other income earned or paid on funds in
the Escrow Account shall belong to the Company.
6. Fees and Charges. For its ordinary services rendered
hereunder, the Escrow Agent shall be entitled to receive fees
as described in Exhibit A to this Escrow Agreement and which
shall be the obligation of and paid to the Escrow Agent by the
Company.
7. Liability of Escrow Agent. In regard to the performance of the
Escrow Agent's duties hereunder, it is agreed that:
(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 hereto, nor shall the Escrow
Agent be responsible in any manner for the subscribed
for Shares or Units or for the regularity of the
admission of any Subscribers as shareholders of the
Company.
(d) The Escrow Agent shall have no duty or obligation to
disburse any funds represented by any checks delivered
to its hereunder until such funds have been finally
collected;
(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, circular, certificate, or
instrument which may be referred to herein; and,
(f) The Escrow Agent shall have no liability hereunder to
any person, including the Company or the Bank, for any
mistake of fact or error in judgment, or for any acts
or omissions of any kind unless caused by Escrow
Agent's misconduct, gross negligence or bad faith.
8. 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 or 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 notified the Escrow Agent in writing of
such agreement 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,
including interest earned, 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
expense hereunder earned or incurred prior to such filing and
discharge of the Escrow Agent of its duties hereunder.
The Company 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 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 its 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 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 7 above. The indemnification provisions
contained in this Paragraph 8 are in addition to any other
rights any of 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.
9. Notices and Communications. All notices and communications
hereunder shall be in writing and shall be deemed duly given
if sent by U.S. mail, postage prepaid, or by hand delivery, to
the following parties:
the Escrow Agent: First Citizens Bank & Trust Company
Attention: Xxxxx Xxxxxx
Corporate Trust Department - DAC61
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
the Company: Xxxxx River Bankshares, Inc.
000 X. Xxxxxx Xxxxxx, #00
P. O. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
10. Resignation. The Escrow Agent, or any successor hereafter
appointed, may at any time resign by giving thirty (30) days
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 be appointed
in writing by the Company's President. Any such successor
Escrow Agent shall deliver to the parties hereto and to the
resigning Escrow Agent 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 hereunder.
11. Termination. The Company's President may, at any time, and
upon thirty (30) days written notice, may 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
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.
12. General.
(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 manner hereof and
may be amended only by an agreement in writing duly
signed by the parties hereto.
(c) This Agreement will be governed by and construed in
accordance with the laws 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 the
Company and the Escrow Agent, please indicate the Company's and the Escrow
Agent's acceptance thereof in the space provided below for that purpose.
ACCEPTED AND AGREED TO as of this ___ day of September, 1999.
FIRST CITIZENS BANK & TRUST COMPANY
(Escrow Agent)
By:___________________________________
Title:___________________________________
ACCEPTED AND AGREED TO as of this ___ day of September, 1999.
XXXXX RIVER BANKSHARES INC.
(COMPANY)
By:___________________________________
X. X. XxXxxxxx
Title: President and CEO
EXHIBIT A
The subscriber information be delivered to First Citizens in a diskette format
that can be readily accessed by First Citizens, the following fee will be in
effect:
The greater of $2,000 or $5.00 per Subscription Offer for which any funds are
deposited to the Escrow Account. Fees shall be payable at the time the Escrow
Account is closed and all remaining funds are released to the bank or returned
to the Subscribers.
Amendment to Exhibit A
Expiration Date:
Extended Expiration Date:
Date of this Amendment: , 1999
Xxxxx River Bankshares, Inc. First Citizens Bank & Trust Company
By:_________________________________ By:________________________________
X. X. XxXxxxxx
Title: President and CEO Title:_____________________________
