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EXHIBIT 10.6
ESCROW AGREEMENT
The Agreement is made and entered into as of _______________________,
2000, by and among Key Trust Company, N.A. (the "Escrow Agent"), McDonald
Investments, Inc. (the "Sales Agent"), and Ohio Legacy Corp (the "Company").
Recitals
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A. The Company proposes to offer for sale to investors through one or more
registered broker-dealers up to 1,200,000 shares of common stock and
attached warrants (the "Securities") at a price of $10.00 per share (the
"Proceeds").
B. The Sales Agent intends to sell the Securities as the Company's agent on a
best-efforts part-or-none basis for 900,000 shares and on a best-efforts
basis for the remaining Securities in a public offering (the "Offering").
C. The Company and the Sales Agent desire to establish an escrow account in
which funds received from subscribers will be deposited pending completion
of the escrow period. Key Trust Company, N.A. agrees to serve as Escrow
Agent in accordance with the terms and conditions set forth herein.
D. The term Selected Dealer as used herein shall include the Sales Agent and
other selected dealers as part of the selling group. All Selected Dealers
shall be bound by this Agreement. However, for purposes of communications
and directives, the Escrow Agent need only accept those signed by McDonald
Investments, Inc.
Agreement
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Now therefore, in consideration of the foregoing, it is hereby agreed as
follows:
1) Establishment of Escrow Account. On or prior to the date of the
commencement of the offering, the parties shall establish an
interest-bearing escrow account with the Escrow Agent, which escrow account
shall be entitled OLCB Escrow Account. The Selected Dealer will instruct
subscribers to make checks for subscriptions payable to the order of the
Escrow Agent. Any checks received that are made payable to a party other
than the Escrow Agent shall be returned to the Selected Dealer who
submitted the check. Company and/or Sales Agent will be responsible for
delivery of all deposits to Escrow Agent's principal office at 127 Public
Square, 15th Floor, Cleveland, Ohio 44114.
2) Escrow Period. The Escrow Period shall begin with the commencement of the
Offering and shall terminate upon the earlier to occur of the following
dates:
a) The date upon which the Escrow Agent confirms that it has received in
the Escrow Account gross proceeds of $9,000,000 in deposited funds
(the "Minimum"); or
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b) The expiration of 30 days from the date of commencement of the
Offering (unless extended as permitted in the offering document for an
additional 30 days by mutual written agreement between the Company and
the Sales Agent with a copy of such extension to the Escrow Agent); or
c) The date upon which a determination is made by the Company and the
Sales Agent to terminate the offering prior to the sale of the
Minimum.
During the escrow period, the Company is aware and understands that it is
not entitled to any funds received into escrow and 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.
3) Deposits into the Escrow Account. The Selected Dealer agrees to direct
subscribers to submit funds directly to the Escrow Agent in the form of
wire transfer, check, draft, or money order for deposit in the Escrow
Account. If the funds are instead delivered to the Selected Dealer, it
shall promptly deliver all monies received from subscribers for the payment
of the Securities to the Escrow Agent for deposit in the Escrow Account.
For each subscriber, the Selected Dealer shall provide a written account of
each sale, which account shall set forth, among other things, the
subscriber's name and address, the subscriber's Taxpayer Identification
Number, the number of securities purchased, and the amount paid therefor.
All monies so deposited in the Escrow Account are hereinafter referred to
as the "Escrow Amount".
4) Disbursements from the Escrow Account. In the event the Escrow Agent does
not receive the Minimum deposits totaling $9,000,000 prior to the
termination of the Escrow Period, the Escrow Agent shall refund to each
subscriber the amount received from the subscriber, without deduction,
penalty, or expense to the subscriber, and the Escrow Agent shall notify
the Company and the Selected Dealer of its distribution of the funds. The
purchase money returned to each subscriber shall be free and clear of any
and all claims of the Company or any of its creditors. Further, refunds to
subscribers shall include each subscriber's pro-rata share of any income
earned while the subscriber's funds were on deposit in the Escrow Account.
Escrow Agent will not be responsible for tax reporting of any kind.
In the event the Escrow Agent does receive the Minimum prior to termination
of the Escrow Period, in no event will the Escrow Amount be released to the
Company until such amount is received by the Escrow Agent in collected
funds. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal
banking channels and are in the form of cash.
The Minimum may be met by funds that are deposited from the effective date
of the offering up to an including the date on which the contingency must
be met, i.e., during the Escrow Period. However, the escrow cannot be
broken and the offering may not proceed to closing until customer checks
have been collected through the
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normal banking channels in an aggregate amount sufficient to meet the
Minimum. The Escrow Agent makes the determination as to when sufficient
funds have been deposited and collected to break escrow. If the Minimum is
met with checks tendered on the last day of the Escrow Period and,
subsequently, such checks fail to clear the banking system, thereby
reducing the funds received by the escrow Agent to an amount less than that
necessary to meet the Minimum, the offering contingency has not been met.
In this event, the Escrow Agent must promptly return all funds to
subscribers.
In this connection, it should also be noted that purchases made after the
Escrow Period has terminated, but prior to the date escrow is broken
pending clearance of subscribers' funds, may not be subsequently counted to
meet the Minimum should checks tendered prior to the termination of the
Escrow Period fail to clear the banking system. Further, under Securities
and Exchange Commission Rules 15c2-4 and 10b-9, a broker-dealer may not
substitute its own good check for the check of a customer that has
insufficient funds nor otherwise purchase to satisfy the offering
contingency unless the broker-dealer is purchasing for investment prior to
the termination of the Escrow Period and the offering document discloses
the maximum amount of such potential purchase.
All disbursements from the Escrow Account will be directed in writing and
signed by both the Company and Sales Agent stating that the Minimum
threshold amount has been met.
5) Collection Procedure. The Escrow Agent is hereby authorized to forward each
check for collection and, upon collection of the proceeds of each check,
deposit the collected proceeds in the Escrow Account. As an alternative,
the Escrow Agent may telephone the bank on which the check is drawn to
confirm that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Selected dealer that submitted the check. In such cases, the Escrow Agent
will promptly notify the Company of such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund
check to the rejected subscriber. If the Company rejects any subscription
for which the Escrow Agent has not yet collected funds but has submitted
the subscriber's check for collection, the Escrow Agent shall promptly
issue a check in the amount of the subscriber's check to the rejected
subscriber after the Escrow Agent has cleared such funds. If the Escrow
Agent has not yet submitted a rejected subscriber's check for collection,
the Escrow Agent shall promptly remit the subscriber's check directly to
the subscriber.
Should any released Escrow funds be found to be uncollectable by Escrow
Agent after funds have been released to the Company, the Company will
immediately
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deposit such amount via federal fund with Escrow Agent upon demand. Company
shall be responsible in pursuing subscriber regarding the status of their
deposit.
6) Investment of Escrow Amount. The Escrow Agent will invest the Escrow Amount
in The Victory U.S. Government Select Obligation Money Market Fund issued
by the Escrow Agent, as long as the maturity date of the account does not
extend beyond the anticipated contingency occurrence date or, if the
maturity date does extend beyond the anticipated contingency occurrence,
the account can be closed without any dissipation of the offering proceeds
invested.
7) Compensation of Escrow Agent. See Escrow Agent's schedule of fees attached
as "Exhibit A".
8) Indemnification of the Escrow Agent. The Company and the Sales Agent agree
to indemnify and hold harmless the Escrow Agent against any and all losses,
claims, damages, liabilities and expenses which may be imposed upon the
Escrow Agent or incurred by the Escrow Agent in connection with the
performance of its duties hereunder, by reason of any litigation arising
from the agreement or involving the subject matter hereof of the funds
deposited hereunder; provided, however, that such indemnity shall not
extend to any of such losses, claims, damages, liabilities and expenses
which are so imposed upon or incurred by the Escrow Agent by reason of its
own negligence or willful misconduct.
Notwithstanding any provision contained in this agreement to the contrary,
the Escrow Agent, including its officers, directors, employees, and agents,
shall:
a) Have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, subscription
agreements, confirmation of sales, or other documents or instruments
submitted to it in connection with its duties under this agreement;
and
b) Be entitled to deem the signatories of any documents or instruments to
it under this agreement as being those purported to be authorized to
sign such documents or instruments on behalf of the parties thereto
and shall be entitled to rely upon the genuineness of the signatures
of such signatories without inquiry and without requiring
substantiating evidence of any kind.
9) Notices. All notices, requests, demands, and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally, sent by overnight delivery
service, or mailed first-class mail, postage prepaid to the other parties
addressed to the address set forth below or to any other address hereafter
designated by the party to whom notice is given.
10) Governing Law. All questions concerning the validity, intention, or meaning
of this agreement or relating to the rights and obligations of the parties
with respect to
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performance hereunder shall be construed and resolved under the laws of the
State of Ohio.
11) Resignation. The Escrow Agent may resign by mailing written notice to all
parties. In the event of any such resignation, the Escrow Agent shall
refrain from taking any action with respect to the Escrow Funds until it
receives written instructions from all parties to the Escrow Agreement
designating a successor Escrow Agent.
12) Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute but one and the same instrument,
and any party hereto may execute this agreement by signing any such counterpart.
OHIO LEGACY CORP
305 West Liberty Street
Wooster, OH 44691
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By: L. Dwight Douce, President and Chief Executive Officer
McDonald Investments Inc.
800 Superior Avenue
Cleveland, Ohio 44114
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By: Charles R. Crowley, Managing Director
Key Trust Company, N.A.
127 Public Square
Cleveland, Ohio 44114
By: __________________________________________
Name:_________________________________________
Title_________________________________________
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Exhibit A
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Escrow Agent's Schedule of Fees
Key Trust Company, N.A.
One-Time annual administration fee.......................$1,800.00*
*This fee is based on a total of 100 subscriber's check or wire deposits;
Additional subscriber deposits (over 100) will be invoiced at the rate of
$18.00 per deposit.
Additional Fees
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Should it become necessary to return principal and interest to subscribers,
a charge of $25.00 for each disbursement will be payable by the Company,
prior to the mailing of the checks. (Wire transfers will not be available).
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