ESCROW AGREEMENT
BANK ONE, INDIANA, NA
THIS ESCROW AGREEMENT (the "Escrow Agreement") dated and
effective as of the 26th day of September, 1997 among XXXXX & CO.
("Xxxxx"), HEARTLAND BANCSHARES, INC. ("Heartland"), and BANK ONE,
INDIANA, NA, as escrow agent hereunder (in such capacity, the
"Escrow Agent"), all being duly authorized to execute and deliver
this Escrow Agreement.
R E C I T A L S
WHEREAS, Heartland is in the process of forming an Indiana
chartered commercial bank ("Bank"); and
WHEREAS, in connection with the formation of the Bank, Heartland is
offering up to 1,150,000 shares of its common stock ("Shares") in
accordance with the terms and conditions set forth in the
prospectus ("Prospectus") to be dated September 23, 1997
("Offering"); and
WHEREAS, pursuant to the Underwriting Agreement between Heartland
and Xxxxx (the "Underwriting Agreement"), Xxxxx, among other
things, is to deliver a check for the purchase price of the Shares;
and
WHEREAS, pursuant to the Underwriting Agreement, Heartland, among
other things, is to deliver a stock certificate for the Shares
being purchased by Xxxxx; and
WHEREAS, as a condition to the purchase and sale of the Shares
provided for in the Underwriting Agreement, Heartland must have
obtained all necessary regulatory approvals including those of the
Indiana Department of Financial Institutions and the Federal
Deposit Insurance Corporation; and
WHEREAS, pending the receipt of such approval, Xxxxx and Heartland
desire that, and have requested the Escrow Agent to be engaged as
agent in accordance with the terms and conditions hereof to provide
for the safekeeping of both the Shares and the purchase price
therefor; and
WHEREAS, Escrow Agent is willing to perform such services in
accordance with the terms and conditions hereof and has established
the Escrow Account hereunder;
W I T N E S S E T H:
NOW, THEREFORE in consideration of the covenants and
agreements herein contained, and for other good, fair and valuable
considerations and reasonably equivalent value, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto,
the Escrow Agent, Xxxxx and Heartland do agree as follows,
intending to be legally bound:
2
Section 1. CERTAIN RULES OF CONSTRUCTION AND DEFINED TERMS.
For all purposes of this Escrow Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) All Persons and entities defined or mentioned herein as
parties hereto or to the other agreements, instruments, documents
and the like mentioned herein shall include, as applicable, each
and all of their respective heirs, legal representatives,
successors and assigns.
(b) All references to agreements, instruments, documents and
the like herein shall mean and include all amendments, supplements
and modifications thereto and restatements thereof and
substitutions therefor, as such agreements, instruments, documents
and the like are so amended, supplemented, modified or restated in
accordance with their respective terms.
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Escrow Agreement as a whole
and not to any particular Section or other subdivision.
(d) All headings used in this Escrow Agreement are for the
convenience of the parties only and shall not be used in construing
the meaning or intent of the terms and provisions hereof.
(e) The following terms shall have the respective meanings
set forth or referred to below in this Section. Except where the
context otherwise requires, words importing the singular number
shall include the plural and vice versa.
"Business Day" shall mean any day on which banks are open for
general banking business in the State of Indiana, other than a
Saturday, a Sunday, a legal holiday or any other day on which banks
in the State of Indiana are required or authorized by law or
executive order to close. If any action or time for performance
pursuant to this Escrow Agreement is to occur on any day that is
not a Business Day, such time for action or performance shall be
extended to the next Business Day.
"Condition" or "Conditions" shall mean the Escrow Agent, upon
receipt of the Xxxxx Property (as hereinafter defined) and
Heartland Property (as hereinafter defined), shall hold such Xxxxx
Property and Heartland Property as Escrow Agent for Xxxxx and
Heartland until (i) the Bank has received approval of the Indiana
Department of Financial Institutions as a state chartered
commercial bank and (ii) the Bank has received approval for deposit
insurance from the Federal Deposit Insurance Corporation
(collectively the "Banking Regulatory Approvals"). If the Banking
3
Regulatory Approvals are received (as evidenced by written
confirmation by Xxxxx and Heartland), the Escrow Agent shall
deliver the Xxxxx Property and Heartland Property pursuant to the
Escrow Instructions in Section 3. The conditions shall be subject
to the receipt of written instructions in compliance with the
requirements by a Trust Officer of the Escrow Agent at the Escrow
Agent's Corporate Trust Offices, during the Escrow Agent's business
hours on a Business Day on or before the Release Date.
"Xxxxx" shall have the meaning assigned to such term in the
preamble to this Escrow Agreement.
"Escrow Agent" shall have the meaning assigned to such term in
the preamble to this Escrow Agreement.
"Indemnified Party" shall mean the Escrow Agent and\or any of
its shareholders, directors, agents, officers and employees.
"Heartland" shall have the meaning assigned to such term in
the preamble to this Escrow Agreement.
"Person" shall mean any individual, corporation, trust,
unincorporated organization, governmental authority or any other
form of entity.
"Permitted Investments" shall mean The One Group U.S. Treasury
Money Market Fund or as otherwise directed by Xxxxx and Heartland
in writing to the Escrow Agent.
"Xxxxx Property" shall mean the following items of property:
Eleven Million Five Hundred Thousand Dollars ($11,500,000).
"Heartland Property" shall mean the following items of
property: One (1) stock certificate for One Million One Hundred
Fifty Thousand shares of Heartland Bancshares, Inc. Common Stock.
"Release Date" shall mean October 31, 1997.
Section 2. DEPOSIT IN ESCROW. Xxxxx and Heartland will
deliver to the Escrow Agent the Xxxxx Property and the Heartland
Property to be held by the Escrow Agent in escrow pursuant to the
provisions of this Escrow Agreement.
Section 3. ESCROW INSTRUCTIONS. The Escrow Agent is hereby
authorized and instructed to deliver the Xxxxx Property, including
any interest earned thereon, to Heartland less the underwriting
discount and interest earned thereon, which shall be paid to Xxxxx
4
and the Heartland Property to Xxxxx as agent for the purchasers
thereof upon strict compliance with the Condition(s); provided,
however, should the Condition(s) not be satisfied by the Escrow
Agent's close of business on the Release Date, the Escrow Agent
shall promptly redeliver the Xxxxx Property, including any interest
earned thereon, to Xxxxx as agent for the prospective purchasers of
the Shares and the Heartland Property to Heartland; whereupon in
either event the Escrow Agent's duties and liabilities in
connection with this Escrow Agreement and the Xxxxx Property and
Heartland Property shall terminate.
Section 4. INVESTMENT OF FUNDS HELD BY ESCROW AGENT. Pending
distribution in accordance with the provisions of Section 3 hereof,
all collected and available funds held by the Escrow Agent pursuant
to this Escrow Agreement shall be invested in The One Group U.S.
Treasury Money Market Fund or, if directed in writing, in other
Permitted Investments. The parties hereby acknowledge and agree
that unless written instructions and collected and available funds
are delivered to the Escrow Agent by 11:00 a.m. Eastern Standard
Time on a business day, the funds will remain uninvested until the
next business day.
Section 5. AVAILABILITY OF FUNDS/DELIVERY OF PROPERTY.
All parties acknowledge and agree that delivery of the Xxxxx
Property is subject to the sale and final settlement of Permitted
Investments. Delivery of the Condition(s) when funds are invested
in The One Group U.S. Treasury Money Market Fund must be made to
the Escrow Agent by 11:00 a.m., Eastern Standard Time, if the
Xxxxx Property is to be delivered by the close of that business
day. Otherwise, the Xxxxx Property and the Heartland Property will
be delivered on the next business day. With respect to the sale
of any other Permitted Investment, if the final settlement of that
sale has not occurred by 1:00 p.m. Eastern Standard Time on the day
the Condition(s) is delivered to the Escrow Agent, all parties
acknowledge and agree that the Xxxxx Property and the Heartland
Property will be delivered on the next business day.
Section 6. CONCERNING THE ESCROW AGENT. (a) All parties
acknowledge and agree that the Escrow Agent is acting solely and
exclusively as a depository hereunder. The Escrow Agent shall have
no liability to any Person in acting upon or refraining from
acting on any written notice, request, waiver, consent,
certificate, receipt, authorization, or other paper or document
which the Escrow Agent believes to be genuine and what it purports
to be.
5
(b) The Escrow Agent may confer with legal counsel in the
event of any dispute or question as to the construction of any of
the provisions hereof, or its duties hereunder, and it shall incur
no liability and it shall be fully protected in acting in
accordance with the opinions of such counsel.
(c) In the event of any conflicting or inconsistent claims or
demands being made in connection with the subject matter of this
Escrow Agreement, or in the event that the Escrow Agent is in doubt
as to what action it should take hereunder, the Escrow Agent may,
at its option, refuse to comply with any claims or demands on it,
or refuse to take any other action hereunder so long as such
disagreement continues or such doubt exists, and in any such event,
the Escrow Agent shall not be or become liable in any way or to any
person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue to refrain from acting until (i) the
rights of all parties have been fully and finally adjudicated by a
court of competent jurisdiction, or (ii) all differences shall have
been settled and all doubt resolved by agreement among all of the
interested Persons, and the Escrow Agent shall have been notified
thereof in writing signed by all such Persons. In addition to the
foregoing rights, in the event the Escrow Agent has any doubt as to
the course of action it should take under this Escrow Agreement,
the Escrow Agent is hereby authorized to petition any Superior
Court of Xxxxxx, County or the United States District Court of the
Southern District of Indiana for instructions or to interplead the
funds or assets so held (including the Xxxxx Property, the
Heartland Property and any investments) into such court. The
parties agree to the jurisdiction of either of said courts over
their persons as well as the Xxxxx Property and the Heartland
Property, waive personal service of process, and agree that service
of process by certified or registered mail, return receipt
requested, to the address set forth below each party's signature to
this Escrow Agreement shall constitute adequate service. Xxxxx and
Heartland hereby agree to indemnify and hold the Escrow Agent
harmless from any liability or losses occasioned thereby and to pay
any and all of its fees, costs, expenses, and counsel fees and
expenses incurred in any such action and agree that, on such
petition or interpleader action, the Escrow Agent, its servants,
agents, employees or officers will be relieved of further
liability. The Escrow Agent is hereby given a lien upon, and
security interest in, all Xxxxx Property and Heartland Property in
the Escrow Agent's actual or constructive possession, and all
investment and reinvestment of such Xxxxx Property and Heartland
Property and the earnings thereon, to secure the Escrow Agent's
rights to payment or reimbursement (or both) under this Escrow
Agreement.
6
(d) THE INDEMNIFIED PARTY SHALL NOT BE LIABLE TO ANY PERSON
FOR ANYTHING WHICH IT MAY DO OR REFRAIN FROM DOING IN CONNECTION
WITH THIS ESCROW AGREEMENT, INCLUDING THE INDEMNIFIED PARTY'S OWN
NEGLIGENCE, BUT EXCLUDING THE INDEMNIFIED PARTY'S OWN GROSS
NEGLIGENCE OR WILLFUL MALFEASANCE. THE INDEMNIFIED PARTY'S
LIABILITY FOR ANY GROSSLY NEGLIGENT PERFORMANCE OR NON-PERFORMANCE
SHALL NOT EXCEED ITS FEES IN CONNECTION WITH THE SERVICES PROVIDED
HEREUNDER. IN NO EVENT SHALL THE INDEMNIFIED PARTY BE LIABLE TO
XXXXX OR HEARTLAND OR ANY THIRD PARTY FOR SPECIAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES, OR LOST PROFITS OR LOSS OF BUSINESS, ARISING
UNDER OR IN CONNECTION WITH THIS ESCROW AGREEMENT.
(e) XXXXX AND HEARTLAND HEREBY AGREE JOINTLY AND SEVERALLY
TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED
PARTY AGAINST, ANY AND ALL COSTS, LOSSES, DAMAGES, LIABILITIES,
CLAIMS, EXPENSES (INCLUDING COUNSEL FEES AND EXPENSES) AND CLAIMS
INCURRED BY IT WITHOUT GROSS NEGLIGENCE OR WILLFUL MALFEASANCE ON
THE INDEMNIFIED PARTY'S PART ARISING OUT OF OR IN CONNECTION WITH
ITS ENTERING INTO THIS ESCROW AGREEMENT AND THE CARRYING OUT OF ITS
DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES OF DEFENDING
ITSELF AGAINST ANY CLAIM OF LIABILITY RELATING TO THIS ESCROW
AGREEMENT.
(f) The Escrow Agent may resign for any reason, upon 30 days
written notice to Xxxxx and Heartland to this Escrow Agreement.
Upon expiration of such 30 day notice period, the Escrow Agent may
deliver all cash and other property in its possession, after the
payment of all fees and expenses of the Escrow Agent, under this
Escrow Agreement to any successor escrow agent appointed jointly by
Xxxxx and Heartland, or if no successor escrow agent has been so
appointed, to any court of competent jurisdiction in Xxxxxx County,
Indiana. Upon either such delivery, the Escrow Agent shall be
released from any and all liability under this Escrow Agreement.
A termination under this paragraph shall in no way discharge
clauses (d), (e) and (g) of this Section 6 affecting reimbursement
of expenses, indemnity and fees. The Escrow Agent shall have the
right to deduct from the property to be transferred to any
successor agent any unpaid fees and expenses.
(g) Contemporaneously with the execution of this Escrow
Agreement, Heartland shall pay to the Escrow Agent an Acceptance
Fee of $1,000 and a base Annual Administration Fee of $1,000, which
fee shall be deemed fully earned immediately, regardless of the
actual length of time during which this Escrow Agreement is
effective. In addition, Heartland agrees to pay to the Escrow
Agent its customary fees and expenses, including counsel fees and
expenses for the services rendered by it pursuant to the provisions
of this Escrow Agreement. Heartland agrees to reimburse the Escrow
7
Agent for its expenses, including counsel fees and expenses
incurred in connection with the negotiation of this Escrow
Agreement shall be paid upon execution of this Escrow Agreement.
The Escrow Agent's current fee schedule is attached hereto as
Exhibit A (but such fees may be adjusted from time to time, in
which case Heartland agrees to pay the adjusted fees).
Notwithstanding anything to the contrary from either Xxxxx or
Heartland, the Escrow Agent shall be entitled to retain from any
disbursements requested hereunder any outstanding fees and/or
expenses due to it hereunder. The Escrow Agent is hereby granted
a first lien on the Xxxxx Property and Heartland Property for all
indebtedness that may become owing to the Escrow Agent pursuant to
this Escrow Agreement. In the event such fees or expenses are not
paid to Escrow Agent within thirty (30) days after Escrow Agent
makes demand therefore from Heartland, the Escrow Agent may charge
such fee against the Xxxxx Property, either against the corpus of
the Xxxxx Property or interest earned thereon.
(h) It is strictly understood that the Escrow Agent has no
duty to disburse any funds to any Person until such funds have been
collected by the Escrow Agent and those funds are available in
accordance with normal banking procedures and/or policy. In the
event that any funds, including collected funds, deposited in the
Escrow Account prove uncollectible, Xxxxx and the Escrow Agent
shall immediately reimburse the Escrow Agent upon request for the
face amount of such deposit.
Section 7. MISCELLANEOUS.
(a) All notices and communications hereunder shall be in
writing, and shall be deemed to be duly given if sent first class
mail, postage prepaid to the address set forth below the signature
of the party to receive such notice. Any party to this Escrow
Agreement may, from time to time, change its address for notices by
giving written notice of such change to the other parties hereto.
The Escrow Agent shall not be charged with knowledge of any fact,
including but not limited to performance or non-performance of any
condition, unless it has actually received written notice thereof
from all of the parties hereto of their authorized representative
clearly referring to this Escrow Agreement.
(b) The rights created by this Escrow Agreement shall inure
to the benefit of, and the obligations created hereby shall be
binding upon, the successors and assigns of each of the parties
hereto.
(c) This Escrow Agreement shall be construed and enforced
according to the laws of the State of Indiana.
8
(d) This Escrow Agreement shall terminate and Escrow Agent
shall be discharged of all responsibility hereunder at such time as
Escrow Agent shall have completed its duties hereunder; provided,
however, the Escrow Agent's rights to indemnity and to receive
payment of its fees and expenses shall survive any termination of
this Escrow Agreement.
(e) This Escrow Agreement may be executed in several
counterparts, which taken together shall constitute a single
document.
(f) This Escrow Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the transactions described herein and supersedes all prior
agreements or understandings, written or oral, between the parties
with respect thereto. There are no implied duties under this
Escrow Agreement. The Escrow Agent's only duty is to act in
accordance with specific written instructions furnished by the
parties to this Escrow Agreement. The Escrow Agent is not a party
to any other agreement and the Escrow Agent shall not be subject to
any other agreement even though reference thereto may be made
herein.
(g) If any provision of this Escrow Agreement is declared by
a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue
in full force and effect without being impaired or invalidated in
any way.
(h) No amendment, modification or waiver of any provision of
this Escrow Agreement nor consent to any departure by any Person
from the provisions hereof shall be effective in any event unless
the same shall be in writing and signed by each of Xxxxx, Heartland
and Escrow Agent, and then any such waiver or consent shall be
effective only in the specific instance and purpose for which
given.
(i) Pursuant to the regulations of the Office of the
Comptroller of the Currency [12 C.F.R. 12.5(a)], Xxxxx and
Heartland have the right to receive, at no additional cost and
within five business days of the transaction, a written
notification disclosing certain information relating to securities
purchase and sale transactions in the Escrow Account. The Escrow
Agent has the option of furnishing to Xxxxx and Heartland either
(1) a copy of the broker-dealer confirmation relating to the
transaction or (2) a written notification disclosing: the Escrow
Agent's name, the account name, the Escrow Agent's capacity in the
transaction, the date of execution (and, upon Xxxxx'x and
Heartland's written request, the time of execution) of the
9
transaction, the identity, price and number of shares involved, the
remuneration to the broker-dealer and his identity, the total
remuneration to be received by the Escrow Agent, and, if no
broker-dealer was involved, the identity of the person from whom
the security was purchased or to whom it was sold.
In lieu of the foregoing time and form of notification, Xxxxx
and Heartland agree that the Escrow Agent's periodic statements,
transmitted pursuant to the terms of this Escrow Agreement, will
suffice.
(j) The following persons are authorized to direct the Escrow
Agent regarding any transactions to this Escrow Agreement
including, but not limited to, investment and/or disbursement of
the Xxxxx Property and the Heartland Property.
Xxxx X. Xxxxxxxx Xxxxx Xxxxxxx
Xxxxx Heartland
(k) Xxxxx and Heartland warrant to the Escrow Agent that
there are no federal, state or local tax liabilities or filing
requirements whatsoever concerning the Escrow Agent's actions
contemplated hereunder and warrant and represent to the Escrow
Agent that the Escrow Agent has no duty to withhold or file any
report or any tax liability under any federal or state income
tax, local or state property tax, local or state sales or use
taxes, or any other tax by any taxing authority. Xxxxx and
Heartland hereto agree jointly and severally to indemnify the
Escrow Agent fully from any tax liability, penalties or interest
incurred by the Escrow Agent arising hereunder and agree to pay
in full any such tax liability together with penalty and
interest, if any, that is ultimately assessed against the Escrow
Agent for any reason as a result of its action hereunder (except
for the Escrow Agent's individual income tax liability).
* * * * *
IN WITNESS WHEREOF, Xxxxx, Heartland and Escrow Agent have
executed this Escrow Agreement effective as of the day and year
first above written.
"XXXXX" XXXXX & CO.
Xxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
By: _______________________________
Title:_____________________________
Tax Identification Number:_________
"HEARTLAND" HEARTLAND BANCSHARES, INC.
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx 00000
By: _______________________________
Title:____________________________
Tax Identification Number:________
"ESCROW AGENT" BANK ONE, INDIANA, NA
Corporate Trust Department
000 Xxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
By: _______________________________
Title:_____________________________
