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EXHIBIT 2.2
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT (this "Escrow Agreement"), dated as of
December 24, 1996, is made by and among COMMERCE SECURITY BANCORP, INC., a
Delaware corporation ("CSBI"), ELDORADO BANCORP, a California corporation
("Eldorado"), and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as escrow
agent (the "Escrow Agent").
R E C I T A L S :
A. Concurrently with the execution and delivery of this Escrow
Agreement, CSBI and Eldorado have entered into an Agreement and Plan of Merger,
dated as of even date herewith (the "Agreement"), pursuant to which CSBI has
agreed, among other things, to acquire all of the issued and outstanding stock
of Eldorado by means of a cash merger.
B. The Agreement requires that CSBI and Eldorado enter into this Escrow
Agreement with the Escrow Agent and that CSBI deposit an amount equal to
$4,500,000 with the Escrow Agent for distribution hereafter on the terms and
conditions set forth in this Escrow Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and promises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Agreement.
2. Appointment of Escrow Agent; Escrow Deposit. CSBI and Eldorado
hereby constitute and appoint the Escrow Agent as, and the Escrow Agent hereby
agrees to assume and perform the duties of, the escrow agent under and pursuant
to this Escrow Agreement. The Escrow Agent acknowledges receipt of (i) an
executed copy of the Agreement, and (ii) the sum of Four Million Five Hundred
Thousand and 00/100 Dollars (U.S. $4,500,000.00) (the "Escrow Deposit") from
CSBI, which CSBI is depositing with Escrow Agent in accordance with Section 2.7
of the Agreement.
3. The Escrow. The Escrow Deposit and all earnings from the investment
thereof (collectively, the "Escrow Funds") shall be held by the Escrow Agent in
escrow number 95424480, which is a separate escrow which shall be maintained
pursuant to the terms of this Escrow Agreement (the "Escrow"). The Escrow Funds
shall be distributed by Escrow Agent in accordance with the terms and subject to
the conditions of this Escrow Agreement and, until distributed, the Escrow Funds
shall be invested in the manner hereinafter set forth in Section 4 hereof.
Neither the Escrow nor the Escrow Funds therein shall be subject to lien,
attachment, charge or encumbrance by any creditor of any party hereto and shall
be used solely for the purposes set forth in this Escrow Agreement.
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4. Investment of the Escrow Funds; Taxes.
(a) Investment of Escrow Funds. The Escrow Agent shall invest
and reinvest all cash funds held from time to time as part of the Escrow Funds
in ninety (90) day interest-bearing United States Treasury Securities ("U.S.
Treasuries") and, on maturity thereof, shall be reinvested in U.S. Treasuries.
(b) Earnings; Taxes. All earnings on the Escrow Funds shall
belong to the party to whom the Escrow Deposit is distributed pursuant to the
Agreement. Taxes in respect of such earnings shall be the obligation of and
shall be paid when due by such party, which shall indemnify and hold the other
party and Escrow Agent harmless from and against such taxes.
5. Disbursement of Escrow Funds; Procedures.
(a) Disbursement of Escrow Funds. The Escrow Agent will hold
the Escrow Funds in its possession until authorized hereunder to deliver such
Escrow Funds as follows:
(i) At the Closing, upon receipt of joint
instructions from CSBI and Eldorado to the effect that all conditions to closing
have been satisfied or waived, an amount equal to the Escrow Funds shall be
disbursed to the Exchange Agent and credited to the Merger Consideration payable
by CSBI under the Agreement.
(ii) If CSBI is entitled to the Escrow Deposit
pursuant to Section 2.7 of the Agreement, CSBI shall deliver a notice (the "CSBI
Termination Notice") which shall specify in reasonable detail the event or
circumstances giving rise to the termination of the Agreement and include CSBI's
demand for the Escrow Agent to disburse the remaining Escrow Funds to CSBI. Upon
receipt thereof, Escrow Agent shall promptly deliver a copy of the CSBI
Termination Notice to Eldorado. If Eldorado disputes CSBI's demand for the
remaining Escrow Funds, it shall so notify Escrow Agent in writing (with a copy
to CSBI) within 10 calendar days after the giving of such notice ("Notice
Period"). If Eldorado fails to deliver such written notice to Escrow Agent
within the Notice Period, Escrow Agent shall presume conclusively that Eldorado
has no objection to the disbursement of the remaining Escrow Funds to CSBI and
Escrow Agent shall promptly disburse the remaining Escrow Funds to CSBI.
(iii) If Eldorado is entitled to the Escrow Deposit
pursuant to Section 2.7 of the Agreement, Eldorado shall deliver a notice (the
"Eldorado Termination Notice") which shall specify in reasonable detail the
event or circumstances giving rise to the termination of the Agreement and
include Eldorado's demand for the Escrow Agent to disburse the Escrow Funds to
Eldorado. Upon receipt thereof, Escrow Agent shall promptly deliver a copy of
the Eldorado Termination Notice to CSBI. If CSBI disputes Eldorado's demand for
the remaining Escrow Funds, it shall so notify Escrow Agent in writing (with a
copy to Eldorado) within the Notice Period. If CSBI fails to deliver such
written notice to Escrow Agent within the Notice Period, Escrow Agent shall
presume conclusively that CSBI has no objection to the disbursement of the
remaining Escrow Funds to Eldorado and Escrow Agent shall promptly disburse the
remaining Escrow Funds to Eldorado.
(iv) If, within either Notice Period under
subparagraphs (ii) or (iii) above, Escrow Agent shall receive notice from
Eldorado or CSBI, as applicable, that there is a dispute with
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respect to any demand for disbursement of the Escrow Funds, then the Escrow
Agent shall not disburse any portion of the Escrow Funds to either party pending
resolution under either clause (A) or clause (B) below, and the Escrow Agent,
Eldorado and CSBI shall proceed as follows:
(A) Either CSBI or Eldorado may bring an
action to resolve the dispute in any court of competent jurisdiction in Orange
County, California. Upon receipt by the Escrow Agent of a court order or
judgment by a court of competent jurisdiction resolving the dispute, together
with evidence satisfactory to the Escrow Agent that such order or judgment has
become a final order from which no appeal has been or can be had (a "Final
Judgment"), the Escrow Agent shall promptly disburse the Escrow Funds in
accordance with the Final Judgment.
(B) If CSBI and Eldorado agree to a
resolution of any such dispute before a Final Judgment relating thereto shall
occur, they shall by joint notice direct the Escrow Agent to make disbursements
from the Escrow Fund as they may agree. Upon receipt of such notice the Escrow
Agent shall promptly deliver such portion(s) of the Escrow Fund in accordance
with such joint instructions, and the dispute shall be deemed to have been
resolved.
(b) Disbursement Procedures. All disbursements of Escrow Funds
hereunder shall be made by wire transfer of immediately available funds to a
bank account designated by CSBI or Eldorado, as the case may be, in any written
notice delivered to Escrow Agent, unless Escrow Agent receives different
disbursement instructions in writing from CSBI or Eldorado specifically revoking
or amending any prior disbursement instructions given to the Escrow Agent by
such party. Escrow Agent shall promptly notify CSBI and Eldorado of all
disbursements pursuant to this Escrow Agreement, and the amount thereof.
(c) Agreement. CSBI and Eldorado acknowledge and agree that
all Escrow Funds distributed to Eldorado pursuant hereto shall be subject to the
terms and provisions of the Agreement.
6. Liquidation of the Escrow Fund. Whenever the Escrow Agent shall be
required to make the payment from the Escrow Fund, the Escrow Agent shall pay
such amounts by liquidating the investment then constituting the Escrow Fund or
such portion thereof as the Escrow Agent deems appropriate in its absolute
discretion.
7. Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent shall be limited to and determined solely by the
provisions of this Escrow Agreement and the certificates delivered in accordance
herewith, and the Escrow Agent is not charged with knowledge of or any duties or
responsibilities in respect of any other agreement or document. In furtherance
and not in limitation of the foregoing:
(i) the Escrow Agent makes no representation as to
the validity, value, genuineness or collectibility of any
security, document or instrument held by or delivered to it
and reasonably believed by the Escrow Agent to be valid and
genuine, and shall not be liable for any loss of interest
sustained as a result of investments made hereunder in
accordance with the terms hereof, including any liquidation of
any investment of the Escrow Funds prior to its maturity
effected in order to make a payment required by the terms of
this Escrow Agreement;
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(ii) the Escrow Agent shall be fully protected in
relying in good faith upon any written certificate, notice,
direction, request, waiver, consent, receipt or other document
that the Escrow Agent reasonably believes to be genuine and
duly authorized, executed and delivered;
(iii) the Escrow Agent shall not be liable for any
error of judgment, or for any act done or omitted by it, or
for any mistake in fact or law, or for anything that it may do
or refrain from doing connection herewith; provided, however,
that notwithstanding any other provision in this Escrow
Agreement, the Escrow Agent shall be liable for its willful
misconduct or gross negligence or breach by Escrow Agent of
this Escrow Agreement unless the breach was unintentional and
the result of other than willful misconduct or gross
negligence; provided further, that CSBI and Eldorado shall,
jointly and severally, exonerate and indemnify the Escrow
Agent against all claims, suits, obligations, liabilities and
damages, including attorney's fees, based upon, arising out of
or resulting from the performance or non-performance by the
Escrow Agent of its obligations hereunder, unless such
performance or non-performance constitutes willful misconduct
or gross negligence;
(iv) the Escrow Agent may seek the advice of legal
counsel selected with reasonable care in the event of any
dispute or question as to the construction of any of the
provisions of this Escrow Agreement or its duties hereunder,
and it shall incur no liability and shall be fully protected
in respect of any action taken, omitted or suffered by it in
good faith in accordance with the opinion of such counsel;
(v) if a controversy arises between one or more of
the parties hereto, or between any of the parties hereto and
any person not a party hereto, as to whether or not or to whom
the Escrow Agent shall deliver any of the Escrow Funds or as
to any other matter arising out of or relating to the Escrow
Funds or this Escrow Agreement, the Escrow Agent shall not
determine the same and shall not make any delivery of the
Escrow Funds or any portion thereof but shall retain the
Escrow Funds until the rights of the parties to the dispute
shall have been finally determined by written agreement among
the parties in the dispute or by a Final Order. The Escrow
Agent shall deliver the Escrow Funds no later than the second
business day after the Escrow Agent has received written
notice of any such agreement or Final Order (accompanied by an
affidavit that the time for appeal has expired without an
appeal having been made) in accordance with the instructions
set forth in such agreement or Final Order. The Escrow Agent
shall be entitled to assume that no such controversy has
arisen unless it has received a written notice that such a
controversy has arisen which refers specifically to this
Escrow Agreement and identifies by name and address the
adverse claimants in the controversy. If a controversy of the
type referred to in this subparagraph arises, the Escrow Agent
may, in its sole discretion (but shall not be obligated to),
commence interpleader or similar actions or proceedings for
determination of the controversy;
(vi) in the event that the Escrow Agent shall in any
instance, after seeking the advice of legal counsel pursuant
to the immediately preceding clause, in good faith be
uncertain as to its duties or rights hereunder, Escrow Agent
shall notify CSBI and Eldorado thereof in writing and after
giving such notice it shall be entitled to
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refrain from taking any action hereunder with respect to the
matter as to which there is any such uncertainty, and in such
event it shall keep safely all funds and investments held in
the Escrow until it shall be directed otherwise in a writing
signed by CSBI and Eldorado or by a final, nonappealable order
of a court of competent jurisdiction; provided, however, in
the event that the Escrow Agent has not received such written
direction or court order within one hundred eighty (180)
calendar days after requesting the same, it shall have the
right to interplead CSBI and Eldorado in any court of
competent jurisdiction and request that such court determine
its rights and duties hereunder;
(vii) the Escrow Agent may execute any of its power
or responsibilities hereunder and exercise any rights
hereunder either directly or by or through agents or attorneys
selected with reasonable care; nothing in this Escrow
Agreement shall be deemed to impose upon the Escrow Agent any
duty to qualify to do business or to act as fiduciary or
otherwise in any jurisdiction other than the State of
California; and the Escrow Agent shall not be responsible for
and shall not be under a duty to examine into or pass upon the
validity, binding effect, execution or sufficiency of this
Escrow Agreement or of any agreement amendatory or
supplemental hereto; and
(viii) the Escrow Agent shall not be responsible in
any manner whatsoever for any failure or inability of any
other party to honor any of the provisions of this Escrow
Agreement, the Agreement or any other agreement.
8. Cooperation and Additional Escrow Instructions. CSBI and Eldorado
shall provide to the Escrow Agent all instruments and documents within their
respective powers to provide that are necessary for the Escrow Agent to perform
its duties and responsibilities hereunder.
9. Fees and Expenses. The fees of Escrow Agent for its services
hereunder shall be as set forth on Exhibit A; Escrow Agent shall also be
entitled to reimbursement for its out-of-pocket expenses reasonably incurred in
connection with the Escrow, including, without limitation, reasonable attorneys'
fees (all such fees and expenses collectively, the "Escrow Fees"). All of the
Escrow Fees of the Escrow Agent for its services hereunder as and when billed by
the Escrow Agent shall be paid from the earnings on the Escrow Funds, and Escrow
Agent is hereby authorized to withdraw from the Escrow Account such Escrow Fees
as and when due, and to withhold the same from any final distributions such
remaining Escrow Fees. If the Escrow Fees exceed the earnings on the Escrow
Deposit, CSBI shall be responsible therefor and shall pay such excess promptly
upon notification from the Escrow Agent.
10. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may resign effective thirty (30) calendar
days following the giving of prior written notice thereof to CSBI and Eldorado.
In addition, the Escrow Agent may be removed and replaced on a date designated
in a written instrument signed by CSBI and Eldorado and delivered to the Escrow
Agent. Notwithstanding the foregoing, no such resignation or removal shall be
effective until a successor escrow agent has acknowledge its appointment as such
as provided in paragraph (c) below. In either event, upon the effective date of
such resignation or removal, the Escrow Agent shall deliver the property
comprising the Escrow to such successor escrow agent,
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together with such records maintained by the Escrow Agent in connection with its
duties hereunder and other information with respect to the Escrow as such
successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged
its appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following the
date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because CSBI and
Eldorado are unable to agree on a successor escrow agent, or for any other
reason, the Escrow Agent may select a successor escrow agent and any such
resulting appointment shall be binding upon all of the parties to this Escrow
Agreement.
(c) Upon written acknowledgment by a successor escrow agent
appointed in accordance with the foregoing provisions of this Section 10 of its
agreement to serve as escrow agent hereunder and the receipt of the property
then comprising the Escrow Account, the Escrow Agent shall be fully released and
relieved of all duties, responsibilities and obligations under this Escrow
Agreement, subject to the provisions contained in paragraph (iii) of Section 7,
and such successor escrow agent shall for all purposes hereof thereafter be the
Escrow Agent.
11. Termination. This Escrow Agreement shall automatically terminate at
such date as all Escrow Funds have been disbursed in accordance with the terms
hereof either to CSBI or Eldorado.
12. Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given if delivered
personally or by facsimile transmission or mailed, certified mail, return
receipt requested, postage prepaid, to the parties at the following addresses or
facsimile numbers:
If to CSBI: Commerce Security Bancorp, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President and CEO
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx X. X'Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Eldorado: Eldorado Bancorp
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: X.X. Xxxxxxx, President and Chief
Executive Officer
Facsimile No.: (000) 000-0000
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with a copy to: Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: C. Xxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Escrow Agent, to: First Trust of California
000 X. Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx,
Assistant Vice President
Facsimile No.: (000) 000-0000
All such notices, requests and other communications will (i) if
delivered personally to an addressee as provided in this Section 12, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section 12, be deemed given upon receipt to
the addressee thereof, and (iii) if delivered by mail in the manner described
above to an addressee as provided in this Section 12, be deemed given upon
receipt thereof or three business days after being deposited in the mail
(whichever is earlier), in each case regardless of whether such notice, request
or other communication is received by any other person to whom a copy of such
notice is to be delivered pursuant to this Section 12. Any party from time to
time may change its address, facsimile number or other information specifying
such change in writing to the other parties thereto.
13. Amendments, etc. This Escrow Agreement may be amended or modified,
and any of the terms hereof may be waived, only by a written instrument duly
executed by or on behalf of CSBI and Eldorado and, with respect to any amendment
that would adversely affect the Escrow Agent, the Escrow Agent. Any such
amendment or modification shall be provided to the Escrow Agent promptly after
execution thereof. No waiver by any party of any term or condition contained in
this Escrow Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this Escrow
Agreement on any future occasion.
14. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to a
contract executed and performed in the State of California without giving effect
to the conflicts of laws principles thereof.
15. Attorneys' Fees. If legal action is instituted on this Escrow
Agreement, or the subject matter hereof, the prevailing party shall be entitled
to recover all costs of suit, including reasonable attorneys' fees.
16. Business Day. For all purposes of this Escrow Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any day on which
banks located in the State of California are authorized or obligated to close.
17. Miscellaneous. This Escrow Agreement is binding upon and will inure
to the benefit of the parties hereto and their respective permitted successors
and assigns. This Escrow Agreement and the applicable provisions of the
Agreement represent the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all negotiations and prior agreements of
the parties or any of them with respect thereto. The headings used in this
Escrow Agreement have been
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inserted for convenience of reference only and do not define or limit the
provisions hereof. This Escrow Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the date first above written.
COMMERCE SECURITY BANCORP, INC., a Delaware
corporation
By: /s/ Xxxxxx Xxxxxx
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Its: President and Chief Executive Officer
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ELDORADO BANCORP,
a California corporation
By: /s/ X.X. Xxxxxxx
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Its: President and Chief Executive Officer
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AGREED AND ACCEPTED
THIS 23RD DAY OF DECEMBER, 0000
XXXXX XXXXX XX XXXXXXXXXX, NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxxxxxxx
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Its: Assistant Vice President
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EXHIBIT A
ESCROW AGENT FEES
