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EXHIBIT 1.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of the 8th
day of March, 2000, by and among Northern Star Financial, Inc., a Minnesota
corporation (the "COMPANY"), Banc Stock Financial Services, Inc.
(the "SALES AGENT"), and Firstar Bank, N.A. (the "ESCROW AGENT").
W I T N E S S E T H:
WHEREAS, the Company proposes to offer and sell up to 1,000,000 shares
of Common Stock, $0.01 par value (the "SHARES"), to investors at $10.50 per
share pursuant to a registered public offering (the "PUBLIC OFFERING");
WHEREAS, the Sales Agent intends to sell the Shares as the Company's
agent on a best efforts, all-or-none basis as to the first 500,000 Shares and on
a best efforts basis for the remaining Shares; and
WHEREAS, the Company desires to establish an escrow for funds forwarded
by subscribers for the Shares, and the Escrow Agent is willing to serve as
Escrow Agent upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time accept,
in its capacity as escrow agent, subscription funds for the Shares (the
"ESCROWED FUNDS") received by it from subscribers. In the event subscribers send
their subscription funds to the Sales Agent or Company, such party will transmit
such subscription funds to the Escrow Agent by noon of the next business day
after receipt of such funds. All checks shall be made payable to "Firstar Bank,
N.A., Escrow Agent for Northern Star Financial, Inc." If any check does not
clear normal banking channels in due course, the Escrow Agent will promptly
notify the Company and the Sales Agent. Any check which does not clear normal
banking channels and is returned by the drawer's bank to Escrow Agent will be
promptly turned over to the Sales Agent, along with all other subscription
documents relating to such check. Any check received that is made payable to a
party other than the Escrow Agent shall be returned to the Sales Agent for
return to the proper party. The Company in its sole and absolute discretion may
reject any subscription for Shares for any reason and upon such rejection it
shall notify and instruct the Escrow Agent in writing to return the Escrowed
Funds by check made payable to the subscriber. If the Company rejects or cancels
any subscription for any reason the Company will retain any interest earned on
the Escrowed Funds, subject to state law, to help defray organizational costs.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy and completeness by the Company or the Sales Agent and, immediately
thereafter, the Company or the Sales Agent shall deliver to the Escrow Agent the
following information: (i) the name and address of the subscriber; (ii) the
number of Shares subscribed for by such subscriber; (iii) the subscription price
paid by such subscriber; (iv) the subscriber's tax identification number
certified by such subscriber; and (v) a copy of the subscription agreement
signed by such subscriber.
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by
the Escrow Agent, the Escrow Agent shall invest the funds in permissible
investments under Exchange Act
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Rule 15c2-4, including short-term certificates of deposit issued by a bank or
short-term securities issued or guaranteed by the United States government. In
no event shall the Escrow Agent invest such funds in any instrument with a
maturity date that extends beyond the expiration date of the Public Offering as
described in the prospectus relating to the Public Offering (the "CLOSING
DATE"). Interest and other earnings shall start accruing on such funds as soon
as such funds would be deemed to be available for access under applicable
banking laws and pursuant to the Escrow Agent's own banking policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall
distribute the Escrowed Funds in the amounts, at the times, and upon the
conditions hereinafter set forth in this Agreement.
(a) If at any time on or prior to the Closing Date, (i) the Escrow
Agent has certified to the Company and the Sales Agent in writing that the
Escrow Agent has received at least $5,250,000 in Escrowed Funds, (ii) the Escrow
Agent has received a certificate signed by the Company and the Agent stating
that all other conditions to the release of funds as described in the Company's
Registration Statement filed with the Securities and Exchange Commission
pertaining to the Public Offering have been met, and (iii) the Escrow Agent has
received written authorization from the Commissioner of Commerce of the State of
Minnesota to release the Escrowed Funds, then the Escrow Agent shall deliver the
Escrowed Funds to the Company to the extent such Escrowed Funds are collected
funds. If any portion of the Escrowed Funds are not collected funds, then the
Escrow Agent shall notify the Company and the Sales Agent of such facts and
shall distribute such funds to the Company only after such funds become
collected funds. For purposes of this Agreement, "COLLECTED FUNDS" shall mean
all funds received by the Escrow Agent which have cleared normal banking
channels. In all events, the Escrow Agent shall deliver not less than $5,250,000
in collected funds to the Company, except as provided in Paragraph 3(b) hereof.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the conditions
described in Paragraph 3(a), or if the Company terminates the Public Offering at
any time prior to the Closing Date and delivers written notice to the Escrow
Agent of such termination (the "TERMINATION NOTICE"), the Escrow Agent shall
return the Escrowed Funds which are collected funds as directed in writing by
the Company and the Sales Agent to the respective subscribers in amounts equal
to the subscription amount paid by each of them. All uncleared checks
representing Escrowed Funds which are not collected funds as of the initial
Closing Date shall be collected by the Escrow Agent, and together with all
related subscription documents thereof shall be delivered to the Sales Agent by
the Escrow Agent, unless the Escrow Agent is otherwise specifically directed in
writing by the Company and the Sales Agent. The Company is aware and understands
that, until it becomes entitled to receive the Escrowed Funds as described in
Paragraph 3(a), it is not entitled to any Escrowed Funds and that no amounts
deposited in the Escrow Account shall become the property of the Company or any
other entity or be subject to the debts of the Company or any other entity.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed
Funds shall be retained by the Company, except as otherwise provided herein. In
the event that Escrowed Funds are returned to subscribers pursuant to Paragraph
3(b), the Company shall pay to such subscribers all interest earned on such
subscribers' subscriptions.
5. FEES OF ESCROW AGENT. The Company shall pay the Escrow Agent for
its services hereunder fees in accordance with the fee schedule attached hereto.
The Escrow Agent is hereby authorized to deduct outstanding fees from the
Escrowed Funds prior to any release thereof pursuant to Section 3 hereof.
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6. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under this Agreement, or upon
the claimed failure to perform its duties hereunder, the Escrow Agent shall not
be liable to anyone for any damages, losses or expenses which it may incur as a
result of the Escrow Agent so acting, or failing to act; provided, however, the
Escrow Agent shall be liable for damages arising out of its willful default or
misconduct or its negligence under this Agreement. Accordingly, the Escrow Agent
shall not incur any such liability with respect to (i) any action taken or
omitted to be taken in good faith upon advice of its counsel or counsel for the
Company which is given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder; or (ii) any action taken or
omitted to be taken in reliance upon any document, including any written notice
or instructions provided for this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its provisions but also as to
the truth and accuracy of any information contained therein, if the Escrow Agent
shall in good faith believe such document to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements which may be imposed by the Escrow Agent or incurred by
it in connection with its acceptance of this appointment as Escrow Agent
hereunder or the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter thereof; except, that if the Escrow Agent shall be found guilty
of willful default or misconduct or of negligence under this Agreement, then, in
that event, the Escrow Agent shall bear all such losses, claims, damages and
expenses.
(c) The Escrow Agent may resign at any time upon giving 30 days
written notice to the Company and the Sales Agent. If a successor escrow agent
is not appointed by Company within 30 days after notice of resignation, the
Escrow Agent may petition any court of competent jurisdiction to name a
successor escrow agent and the Escrow Agent herein shall be fully relieved of
all liability under this Agreement to any and all parties upon the transfer of
the Escrowed Funds and all related documentation thereto, including appropriate
information to assist the successor escrow agent with the reporting of earnings
of the Escrowed Funds to the appropriate state and federal agencies in
accordance with the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by the court.
7. APPOINTMENT OF SUCCESSOR. The Company and the Sales Agent may,
upon the delivery of 30 days written notice appointing a successor escrow agent
to the Escrow Agent, terminate the services of the Escrow Agent hereunder. In
the event of such termination, the Escrow Agent shall immediately deliver to the
successor escrow agent selected by the Company all documentation and Escrowed
Funds including interest earnings thereon in its possession, less any fees and
expenses due to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other communications
or deliveries required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given three days after having been
deposited for mailing if sent by registered mail, or certified mail return
receipt requested, or delivery by courier, to the respective addresses set forth
below:
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as specified in
their Subscription Agreements.
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IF TO THE COMPANY:
Northern Star Financial, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
WITH A COPY TO:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
IF TO THE ESCROW AGENT:
Firstar Bank, N.A.
Corporate Trust Department
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
IF TO THE SALES AGENT:
Banc Stock Financial Services, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx Xxxxxxx
WITH A COPY TO:
Xxxxxx & Xxxxxx
Xxx Xxxxxxxxxx Xxxxx, Xxxxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
9. REPRESENTATIONS OF THE COMPANY. The Company hereby acknowledges
that the status of the Escrow Agent with respect to the offering of the Shares
is that of agent only for the limited purposes herein set forth, and hereby
agrees it will not represent or imply that the Escrow Agent, by serving as the
Escrow Agent hereunder or otherwise, has investigated the desirability or
advisability in an investment in the Shares, or has approved, endorsed or passed
upon the merits of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale of the
Shares, other than by acknowledgment that it has agreed to serve as Escrow Agent
for the limited purposes herein set forth.
10. GENERAL.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Minnesota without regard to its
conflict of laws provisions.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
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(c) This Agreement sets forth the entire agreement and understanding
of the parties with regard to this escrow transaction and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by the
party waiving compliance. The failure of any part at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver in any one or more instances by
any part of any condition, or of the breach of any term contained in this
Agreement, whether by conduct or otherwise, shall be deemed to be, or construed
as, a further or continuing waiver of any such condition or breach, or a waiver
of any other condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The Escrow Agent
shall be bound only by the terms of this Escrow Agreement and shall not be bound
by or incur any liability with respect to any other agreement or understanding
between the parties except as herein expressly provided. The Escrow Agent shall
not have any duties hereunder except those specifically set forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all the parties to this
Agreement, executed with the same formalities as this original Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as the date first written above.
COMPANY: ESCROW AGENT:
NORTHERN STAR FINANCIAL, INC. FIRSTAR BANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxx By /s/ Xxxxx Xxxxxx
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Name: Xxxxxx Xxxxxxxxxx Name: Xxxxx Xxxxxx
Title: Chief Executive Officer Title: Vice President
and President
SALES AGENT:
BANC STOCK FINANCIAL SERVICES, INC. ACCEPTED FOR FILING:
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx Commissioner of Commerce
Title: Vice President of the State of Minnesota
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