Document:

EX-10.4

Exhibit
10.4

ESCROW AGREEMENT

UMB Bank, N.A.

1010 Grand Blvd., 4th Floor

Mail Stop: 1020409

Kansas City, MO 64106

			
	            Re:	 	Cole Credit Property Trust IV, Inc.

Ladies and Gentlemen:

COLE CREDIT PROPERTY TRUST IV, INC., a Maryland corporation (the “Company”), will issue in
a public offering (the “Offering”) shares of its common stock (the “Stock”)
pursuant to a registration statement on Form S-11 filed by the Company with the Securities and
Exchange Commission. Cole Capital Corporation, an Arizona corporation (the “Dealer
Manager”), will act as dealer manager for the offering of the Stock. The Company is entering
into this agreement to set forth the terms on which UMB BANK, N.A. (the “Escrow Agent”),
will, except as otherwise provided herein, hold and disburse the proceeds from subscriptions for
the purchase of the Stock in the Offering until such time as: (i) in the case
of subscriptions received from all nonaffiliates of the Company, the Company has received
subscriptions for at least $2,500,000 in shares of Stock in the Offering (the “Required
Capital”); and (ii) in the case of subscriptions received from residents of Pennsylvania
(“Pennsylvania Subscribers”), the Company has received subscriptions for Stock from
nonaffiliates of the Company resulting in total minimum capital raised of $148,750,000 (the
“Pennsylvania Required Capital”).

The Company hereby appoints UMB Bank, N.A. as Escrow Agent for purposes of holding the proceeds
from the subscriptions for the Stock, on the terms and conditions hereinafter set forth:

1. Until such time as the Company has received subscriptions for Stock resulting in total
minimum capital raised equal to the Required Capital and such funds are disbursed from the Escrow
Account (as defined below) in accordance with paragraph 3(a) hereof, persons subscribing to
purchase the Stock (the “Subscribers”) will be instructed by the Dealer Manager or any
soliciting dealers to remit the purchase price in the form of checks, drafts, wires, Automated
Clearing House (ACH) or money orders (hereinafter “instruments of payment”) payable to the
order of “UMB Bank, N.A., Agent for Cole Credit Property Trust IV, Inc.” or a recognizable
contraction or abbreviation thereof, including but not limited to, “UMB Bank, N.A., f/b/o Cole
Credit Property Trust IV” or, in the event that the purchase is made using a subscription agreement
covering the Stock and the stock of one or more other Cole REITs, “UMB Bank, N.A., Agent for Cole
REIT” or a recognizable contraction or abbreviation thereof. After subscriptions are received
resulting in total minimum capital raised equal to the Required Capital and such funds are
disbursed from the Escrow Account in accordance with paragraph 3(a) hereof, subscriptions shall
continue to be so submitted unless otherwise instructed by the Dealer Manager. Any checks, drafts
or money orders received made payable to a party other than the Escrow Agent (or after the Required
Capital is received, made payable by a Subscriber other than a Pennsylvania Subscriber to a party
other than the party designated by the Dealer Manager) shall be returned promptly to the soliciting
dealer who submitted the check, draft or money order. Within one (1) business day after receipt of
instruments of payment from the Offering, the Dealer Manager, the Company or their respective
agents will (a) send to the Escrow Agent: each Subscriber’s name, address, number of shares
purchased, and purchase price remitted, and (b) Escrow Agent will deposit the instruments of
payment from such Subscribers into an interest-bearing deposit account entitled “Escrow Account for
the Benefit of Subscribers for Common

 

Stock of Cole Credit Property Trust IV, Inc.” (the
“Escrow Account”), which deposit shall occur within one (1) business day after the Escrow
Agent’s receipt of the instrument of payment, until such Escrow Account has closed pursuant to
paragraph 3(a) hereof. The Escrow Agent agrees to maintain the funds contributed by the
Pennsylvania Subscribers in a manner in which they may be separately accounted for on the records
of Escrow Agent so that the requirements of Section 3 of this Agreement can be met. The Escrow
Account will be established and maintained in such a way as to permit the interest income
calculations described in paragraph 7. The Company shall, and shall cause its agents to, cooperate
with the Escrow Agent in separately accounting for Pennsylvania subscription proceeds in the Escrow
Account, and the Escrow Agent shall be entitled to rely upon information provided by the Company or
its agents in this regard.

2. The Escrow Agent agrees to promptly process for collection the instruments of payment upon
deposit into the Escrow Account. Deposits shall be held in the Escrow Account until such funds are
disbursed in accordance with paragraph 3 hereof. Prior to disbursement of the funds deposited in
the Escrow Account, such funds shall not be subject to claims by creditors of the Escrow Agent, the
Company, the Dealer Manager, any soliciting dealer or any of their respective affiliates. If any
of the instruments of payment are returned to the Escrow Agent for nonpayment prior to receipt of
the Required Capital or, in connection with subscriptions from Pennsylvania Subscribers, the
Pennsylvania Required Capital, the Escrow Agent shall promptly notify the Dealer Manager and the
Company in writing via mail, email or facsimile of such nonpayment, and is authorized to debit the
Escrow Account in the amount of such returned payment as well as any interest earned on the amount
of such payment.

     3. (a) (i) Subject to the provisions of subparagraphs 3(b)-3(g) below, once the collected
funds in the Escrow Account are an amount equal to or greater than the Required Capital, the Escrow
Agent shall promptly notify the Company and, upon receiving written instruction from the Company,
(A) promptly disburse to the Company, by check, ACH or wire transfer, the funds in the Escrow
Account representing the gross purchase price for the Stock less any funds received from
Pennsylvania Subscribers, and (B) within five business days after the first business day of the
succeeding month, disburse to the Company any interest thereon pursuant to the provisions of
subparagraph 3(g). After such time the Escrow Account shall remain open and the Company shall
continue to cause subscriptions for the Stock to be deposited therein until the Company informs the
Escrow Agent in writing to cease depositing subscriptions received from Subscribers other than
Pennsylvania Subscribers, and thereafter any subscription documents and instruments of payment
received by the Escrow Agent from Subscribers other than Pennsylvania Subscribers shall be
forwarded directly to the Company. For purposes of this Agreement, the term “collected funds”
shall mean all funds received by the Escrow Agent that have cleared normal banking channels and are
in the form of cash or cash equivalent. After the satisfaction of the aforementioned provisions
of this paragraph 3(a)(i), in the event the Company receives subscriptions made payable to the
Escrow Agent (other than subscriptions from Pennsylvania Subscribers), such subscription proceeds
may continue to be received in this account generally, but to the extent such proceeds shall not be
subject to escrow due to the satisfaction of the aforementioned provisions of this paragraph
3(a)(i), such proceeds are not subject to this Escrow Agreement and at the instruction of the
Company to the Escrow Agent shall be transferred from the Escrow Account or deposited directly
into, as the case may be, a commercial deposit account in the name of the Company (the “Deposit
Account”) that has been previously established by the Company, unless otherwise directed by the
Company. The Company hereby covenants and agrees that it shall do all things necessary in order to
establish the Deposit Account, which, if established with the Escrow Agent, shall be subject to the
Escrow Agent’s usual account guidelines and regulations, prior to its use. No provisions of this
Escrow Agreement shall apply to the Deposit Account.

          (ii) regardless of any release of funds from the Escrow Account from Subscribers other than
Pennsylvania Subscribers, the Company, the Dealer Manager and soliciting dealers shall continue to

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forward instruments of payment received from Pennsylvania Subscribers for deposit into the Escrow
Account to the Escrow Agent until such time as the Company notifies the Escrow Agent in writing
that total subscription proceeds (including the amount then in the Escrow Account from Pennsylvania
Subscribers) equal or exceed the Pennsylvania Required Capital. Promptly after receipt by the
Escrow Agent of such notice, the Escrow Agent shall (A) disburse to the Company, by check, ACH or
wire transfer, the funds then in the Escrow Account representing the gross purchase price for the
Stock from Pennsylvania Subscribers, and (B) within five business days after the first business day
of the succeeding month, disburse to the Company any interest thereon pursuant to the provisions of
subparagraph 3(g). Following such disbursements, the Escrow Agent shall close the Escrow Account,
and thereafter any instruments of payment received by the Escrow Agent from Pennsylvania
Subscribers shall not be subject to this Escrow Agreement and shall be deposited directly into the
Deposit Account, as instructed in writing by the Company pursuant to subparagraph 3(a)(i) above.

          (b) Within four business days of the close of business on the date that is one year following
the effective date of the Offering (the Company will notify the Escrow Agent of the effective date
of the Offering) (the “Expiration Date”), the Escrow Agent shall promptly notify the
Company if it is not in receipt of evidence of deposits for the purchase of Stock providing for
aggregate offering proceeds that equal or exceed the Required Capital (from all sources but
exclusive of any funds received from subscriptions for Stock from entities which the Company has
notified the Escrow Agent are affiliated with the Company). Within ten days following the date of
such notice, the Escrow Agent shall promptly return directly to each Subscriber the collected funds
deposited in the Escrow Account on behalf of such Subscriber (unless earlier disbursed in accordance with paragraph 3(c)), or shall return the
instruments of payment delivered, but not yet processed for collection prior to such time, in
either case, together with interest income (which interest shall be paid within five business days
after the first business day of the succeeding month) in the amounts calculated pursuant to
paragraph 7 for each Subscriber at the address provided by the Dealer Manager or the Company to the
Escrow Agent, which the Escrow Agent shall be entitled to rely upon. Notwithstanding the above, in
the event the Escrow Agent has not received an executed IRS Form W-9 at such time for each
Subscriber, the Escrow Agent shall remit an amount to the Subscribers in accordance with the
provisions hereof, withholding the applicable percentage for backup withholding required by the
Internal Revenue Code, as then in effect, from any interest income on subscription proceeds
(determined in accordance with paragraph 7) attributable to each Subscriber for whom the Escrow
Agent does not possess an executed IRS Form W-9. However, the Escrow Agent shall not be required
to remit any payments until the Escrow Agent has collected funds represented by such payments.

          (c) Notwithstanding subparagraphs 3(a) and 3(b) above, if the Escrow Agent is not in receipt
of evidence of subscriptions accepted on or before the close of business on such date that is 120
days after the effective date of the Offering (the “Initial Escrow Period”), and
instruments of payment dated not later than that date, for the purchase of Stock providing for
total purchase proceeds from all nonaffiliated sources that equal or exceed the Pennsylvania
Required Capital, the Escrow Agent shall promptly notify the Company. Thereafter, the Company
shall send to each Pennsylvania Subscriber by certified mail within ten (10) calendar days after
the end of the Initial Escrow Period a notification in the form of Exhibit A. If, pursuant to such
notification, a Pennsylvania Subscriber requests the return of his or her subscription funds within
ten (10) calendar days after receipt of the notification (the “Request Period”), the Escrow
Agent shall, within ten (10) calendar days after receipt of such request, refund directly to each
Pennsylvania Subscriber the collected funds deposited in the Escrow Account on behalf of such
Pennsylvania Subscriber or shall return the instruments of payment delivered, but not yet processed
for collection prior to such time, to the address provided by the Dealer Manager or the Company or
their respective agents to the Escrow Agent, which the Escrow Agent shall be entitled to rely upon,
together with interest income (which interest shall be paid within five business days after the
first business day of the succeeding month) in the amounts calculated pursuant to paragraph 7.
Notwithstanding the above, if

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the Escrow Agent has not received an executed IRS Form W-9 is for
such Pennsylvania Subscriber, the Escrow Agent shall thereupon remit an amount to such Pennsylvania
Subscriber in accordance with the provisions hereof, withholding the applicable percentage for
backup withholding required by the Internal Revenue Code, as then in effect, from any interest
income earned on subscription proceeds (determined in accordance with paragraph 7) attributable to
such Pennsylvania Subscriber. However, the Escrow Agent shall not be required to remit such
payments until the Escrow Agent has collected funds represented by such payments.

          (d) The subscription funds of Pennsylvania Subscribers who do not request the return of their
subscription funds within the Request Period shall remain in the Escrow Account for successive
120-day escrow periods (a “Successive Escrow Period”), each commencing automatically upon
the termination of the prior Successive Escrow Period, and the Company and Escrow Agent shall
follow the notification and payment procedure set forth in subparagraph 3(c) above with respect to
the Initial Escrow Period for each Successive Escrow Period until the occurrence of the earliest of
(i) the Expiration Date (if the Company has not received the Required Capital on or before the
Expiration Date), (ii) the receipt and acceptance by the Company of subscriptions for the purchase
of Stock with total purchase proceeds that equal or exceed the Pennsylvania Required Capital and
the disbursement of the funds from Pennsylvania Subscribers from the Escrow Account on the terms
specified herein, or (iii) all funds held in the Escrow Account from Pennsylvania Subscribers
having been returned to the Pennsylvania Subscribers in accordance with the provisions hereof.

          (e) [reserved]

          (f) If the Company rejects any subscription for which the Escrow Agent has collected funds,
the Escrow Agent shall, upon the written request of the Company, promptly issue a refund to the
rejected Subscriber at the address provided by the Dealer Manager or the Company, which the Escrow
Agent shall be entitled to rely upon. 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 return the funds in the amount of the Subscriber’s check to the
rejected Subscriber, at the address provided by the Dealer Manager or the Company or their
respective agents, which the Escrow Agent shall be entitled to rely upon, after such funds have
been collected. 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.

          (g) At any time after funds are disbursed upon the Company’s acceptance of subscriptions
pursuant to subparagraph 3(a) above, on the fifth business day following the first business day of
the next succeeding month following the date of such acceptance, the Escrow Agent shall promptly
provide directly to the Company the amount of the interest payable to the Company. However, the
Escrow Agent shall not be required to remit any payments until the Escrow Agent has collected the
funds represented by such payments.

          In the event that instruments of payment are returned for nonpayment, the Escrow Agent is
authorized to debit the Escrow Account in accordance with paragraph 2 hereof.

4. The Escrow Agent shall provide to the Company monthly statements (or more frequently as
reasonably requested by the Company) which include, without limitation, if such amounts are not
available to the Company at least daily pursuant to the “TrustDirect” program, the account balance
in the Escrow Account, the account balance of the funds in the Escrow Account from Pennsylvania
Subscribers, and the activity in the Escrow Account and, separately, the activity involving
Pennsylvania Subscribers since the last report. The Escrow Agent will provide access to its
“TrustDirect” program to allow the

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Company to view account balances for the Escrow Account and the
funds in the Escrow Account from Pennsylvania Subscribers at any time.

5. Prior to the disbursement of funds deposited in the Escrow Account in accordance with the
provisions of paragraph 3 hereof, the Escrow Agent shall invest all of the funds deposited as well
as earnings and interest derived therefrom in the Escrow Account in the “Short-Term Investments”
specified below at the written direction of the Company, unless the costs to the Company for the
making of such investment are reasonably expected to exceed the anticipated interest earnings from
such investment in which case the funds and interest thereon shall remain in the Escrow Account
until the balance in the Escrow Account reaches the minimum amount necessary for the anticipated
interest earnings from such investment to exceed the costs to the Company for the making of such
investment, as determined by the Company based upon applicable interest rates.

          “Short-Term Investments” include obligations of, or obligations guaranteed by, the United
States government or bank money-market accounts or certificates of deposit of national or state
banks that have deposits insured by the Federal Deposit Insurance Corporation (including
certificates of deposit of any bank acting as a depository or custodian for any such funds) which
mature on or before the Expiration Date, unless such instrument cannot be readily sold or otherwise
disposed of for cash by the Expiration Date without any dissipation of the offering proceeds
invested. Without limiting the generality of the foregoing, Exhibit B hereto sets forth
specific Short-Term Investments that shall be deemed permissible investments hereunder.

The following securities are not permissible investments:

	 	(a)	 	money market funds;
	 
	 	(b)	 	corporate equity or debt securities;
	 
	 	(c)	 	repurchase agreements;
	 
	 	(d)	 	bankers’ acceptances;
	 
	 	(e)	 	commercial paper; and
	 
	 	(f)	 	municipal securities.

It is hereby expressly agreed and stipulated by the parties hereto that the Escrow Agent shall not
be required to exercise any discretion hereunder and shall have no investment or management
responsibility and, accordingly, shall have no duty to, or liability for its failure to, provide
investment recommendations or investment advice to the parties hereto. It is the intention of the
parties hereto that the Escrow Agent shall never be required to use, advance or risk its own funds
or otherwise incur financial liability in the performance of any of its duties or the exercise of
any of its rights and powers hereunder.

6. The Escrow Agent is entitled to rely upon written instructions received from the Company or the
Dealer Manager or their respective agents, unless the Escrow Agent has actual knowledge that such
instructions are not valid or genuine; provided that, if in the Escrow Agent’s opinion, any
instructions from the Company or the Dealer Manager or their respective agents are unclear, the
Escrow Agent may request clarification from the Company or the Dealer Manager or their respective
agents, as applicable, prior to taking any action, and if such instructions continue to be unclear,
the Escrow Agent may rely upon written instructions from the Company’s legal counsel in
distributing or continuing to hold any funds. However, the Escrow Agent shall not be required to
disburse any funds attributable to instruments of payment that have not been processed for
collection, until such funds are collected and then shall disburse such funds in compliance with
the disbursement instructions from the Company or the Dealer Manager or their respective agents.

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7. If (a) the Offering terminates prior to receipt of the Required Capital, or (b) one or more
Pennsylvania Subscribers elects to have his or her subscription returned in accordance with
paragraph 3, , interest income earned in the Escrow Account on subscription proceeds deposited in
the Escrow Account (the “Escrow Income”) shall be remitted to the applicable Subscribers at
the addresses provided by the Dealer Manager or the Company to the Escrow Agent, which the Escrow
Agent shall be entitled to rely upon, in accordance with paragraph 3 and without any deductions for
escrow expenses. The Company shall reimburse the Escrow Agent for all escrow expenses. If the
Escrow Agent remits interest income pursuant to this Agreement, the Escrow Agent shall be
responsible for any necessary federal tax reporting associated with such income; provided, however,
that the Escrow Agent shall not be responsible for any other tax reporting associated with this
Agreement. The Escrow Agent shall remit all such Escrow Income in accordance with paragraph 3. If
the Company chooses to leave the Escrow Account open to Subscribers other than Pennsylvania
Subscribers after receiving the Required Capital, then it shall make regular acceptances of such
subscriptions therein, but no less frequently than monthly, and the Escrow Income from the last
such acceptance shall be calculated and remitted to the Company pursuant to the provisions of
paragraph 3(g).

8. The Escrow Agent shall receive compensation from the Company as set forth in Exhibit C
attached hereto, which such Exhibit C is hereby incorporated by reference.

9. In performing any of its duties hereunder, the Escrow Agent shall not incur any liability to
anyone for any damages, losses, or expenses, except for willful misconduct, breach of trust, or
gross negligence. Accordingly, the Escrow Agent shall not incur any such liability with respect to
any action taken or omitted (a) in good faith upon advice of the Escrow Agent’s counsel given with
respect to any

questions relating to the Escrow Agent duties and responsibilities under this Agreement, or (b) in
reliance upon any instrument, including any written instrument or instruction provided for in this
Agreement, not only as to its due execution and validity and effectiveness of its provisions but
also as to the truth and accuracy of information contained therein, which the Escrow Agent shall in
good faith believe to be genuine, to have been signed or presented by a proper person or persons
and to conform to the provisions of this Agreement.

10. The Company hereby agrees to indemnify and hold the Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable attorneys’ fees and
disbursements, that may be imposed on or incurred by the Escrow Agent in connection with acceptance
of appointment as the Escrow Agent hereunder, or the performance of the duties hereunder, including
any litigation arising from this Agreement or involving the subject matter hereof, except where
such losses, claims, damages, liabilities, and expenses result from willful misconduct, breach of
trust, or gross negligence.

11. In the event of a dispute between the parties hereto sufficient in the Escrow Agent’s
discretion to justify doing so, the Escrow Agent shall be entitled to tender into the registry or
custody of any court of competent jurisdiction all money or property in its hands under this
Agreement, together with such legal pleadings as deemed appropriate, and thereupon be discharged
from all further duties and liabilities under this Agreement. In the event of any uncertainty as to
the duties hereunder, the Escrow Agent may refuse to act under the provisions of this Agreement
pending order of a court of competent jurisdiction and shall have no liability to the Company or to
any other person as a result of such action. Any such legal action may be brought in such court,
as the Escrow Agent shall determine to have jurisdiction thereof. The filing of any such legal
proceedings shall not deprive the Escrow Agent of its compensation earned prior to such filing.

12. All communications and notices required or permitted by this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or by messenger or by overnight
delivery

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service or when received via telecopy or other electronic transmission, in all cases
addressed to the person for whom it is intended at such person’s address set forth below or to such
other address as a party shall have designated by notice in writing to the other party in the
manner provided by this paragraph:

	 	(a)	 	if to the Company:
	 
	 	 	 	Cole Credit Property Trust IV, Inc.
	 
	 		 	2555 E. Camelback Road, Suite 400
	 
	 	 	 	Phoenix, Arizona 85016
	 
	 	 	 	Fax: (602) 778-8780
	 
	 	 	 	Attention: D. Kirk McAllaster, Jr.
	 
	 	(b)	 	if to the Dealer Manager:
	 
	 	 	 	Cole Capital Corporation
	 
	 		 	2575 E. Camelback Road, Suite 500
	 
	 	 	 	Phoenix, Arizona 85016
	 
	 	 	 	Fax: (602) 778-8780
	 
	 	 	 	Attention: Marc T. Nemer, Esq.
	 
	 	(c)	 	if to the Escrow Agent:
	 
	 	 	 	UMB Bank, N.A.
	 
	 	 	 	Corporate Trust Department M/S 1020409
	 
	 		 	1010 Grand Blvd., 4th Floor
	 
	 	 	 	Mail Stop: 1020409
	 
	 	 	 	Kansas City, MO 64106
	 
	 	 	 	Attention: Lara Stevens

Each party hereto may, from time to time, change the address to which notices to it are to be
delivered or mailed hereunder by notice in accordance herewith to the other parties.

13. This Agreement shall be governed by the laws of the State of Arizona as to both interpretation
and performance without regard to the conflict of laws rules thereof.

14. The provisions of this Agreement shall be binding upon the legal representatives, successors,
and assigns of the parties hereto.

15. The Company and the Dealer Manager hereby acknowledge that UMB Bank, N.A. is serving as Escrow
Agent only for the limited purposes herein set forth, and hereby agree that they will not represent
or imply that, by serving as Escrow Agent hereunder or otherwise, have investigated the
desirability or advisability of investment in the Company or have approved, endorsed, or passed
upon the merits of the Stock or the Company, nor shall they use the name of the Escrow Agent in any
manner whatsoever in connection with the offer or sale of the Stock other than by acknowledgment
that is has agreed to serve as Escrow Agent for the limited purposes herein set forth.

16. This Agreement and any amendment hereto may be executed by the parties hereto in one or more
counterparts, each of which shall be deemed to be an original.

17. Except as otherwise required for subscription funds received from Pennsylvania Subscribers as
provided herein, in the event that the Dealer Manager receives instruments of payment after the
Required

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Capital has been received and the proceeds of the Escrow Account have been distributed to
the Company, the Escrow Agent is hereby authorized to deposit such instruments of payment within
one (1) business day to any deposit account as directed by the Company. The application of said
funds into a deposit account or to forward such funds directly to the Company, in either case
directed by the Company shall be a full acquittance to the Escrow Agent, who shall not be
responsible for the application of said funds thereafter.

18. 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 agreements or understanding between any
other parties, whether or not the Escrow Agent has knowledge of any such agreements or
understandings.

19. Indemnification provisions set forth herein shall survive the termination of this Agreement.

20. In the event that any part of this Agreement is declared by any court or other judicial or
administrative body to be null, void, or unenforceable, said provision shall survive to the extent
it is not so declared, and all of the other provisions of this Agreement shall remain in full force
and effect.

21. Unless otherwise provided in this Agreement, final termination of this Escrow Agreement shall
occur on the date that all funds held in the Escrow Account are distributed either (a) to the
Company or to Subscribers and the Company has informed the Escrow Agent in writing to close the
Escrow Account pursuant to paragraph 3 hereof or (b) to a successor escrow agent upon written
instructions from the Company.

22. Neither the Escrow Agent, nor its agents, shall have responsibility for accepting, rejecting,
or approving subscriptions. The Escrow Agent, or its agent, shall complete an OFAC search, in
compliance with its policy and procedures, of each subscription check and shall inform the Company
if a subscription check fails the OFAC search. The Company shall provide a copy of each
subscription check in order that the Escrow Agent, or its agent, may perform such OFAC search.

23. This Agreement shall not be modified, revoked, released, or terminated unless reduced to
writing and signed by all parties hereto, subject to the following paragraph.

If, at any time, any attempt is made to modify this Agreement in a manner that would increase the
duties and responsibilities of the Escrow Agent or to modify this Agreement in any manner which the
Escrow Agent shall deem undesirable, or at any other time, the Escrow Agent may resign by providing
written notice to the Company and until (a) the acceptance by a successor escrow agent as shall be
appointed by the Company; or (b) thirty (30) days after such written notice has been given,
whichever occurs sooner, the Escrow Agent’s only remaining obligation shall be to perform its
duties hereunder in accordance with the terms of the Agreement.

24. The Escrow Agent may resign at any time from its obligations under this Escrow Agreement by
providing written notice to the Company. Such resignation shall be effective on the date specified
in such notice, which shall be not less than thirty (30) days after such written notice has been
given. The Escrow Agent shall have no responsibility for the appointment of a successor escrow
agent.

25. The Escrow Agent may be removed for cause by the Company by written notice to the Escrow Agent
effective on the date specified in such written notice. The removal of the Escrow Agent shall not
deprive the Escrow Agent of its compensation earned prior to such removal.

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26. The Company shall provide to Escrow Agent any documentation and information reasonably
requested by the Escrow Agent for it to comply with the USA Patriot Act of 2001, as amended from
time to time.

27. If any state securities administrator requires the Company to cause the Escrow Agent to notify
such administrator when the Escrow Agent releases the funds in the Escrow Account to the Company,
the Company shall notify the Escrow Agent of such requirement, and provide the Escrow Agent with
the contact information for such administrator. The Escrow Agent agrees to notify such
administrator in writing when the Escrow Agent releases the funds in the Escrow Account to the
Company. The Escrow Agent agrees to permit state securities administrators to inspect the Escrow
Agent’s records related to the Escrow Account at any reasonable time at the location where the
records are located, and to copy any records that are inspected.

[Signature page follows]

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Agreed to as of the 20th day of January, 2012.

	 	 	 	 	 
	 	COLE CREDIT PROPERTY TRUST IV, INC.

 	 
	 	By:  	/s/
Christopher H. Cole	 
	 	 	Christopher H. Cole 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	COLE CAPITAL CORPORATION

 	 
	 	By:  	/s/
Marc T. Nemer 	 
	 	 	Marc T. Nemer 	 
	 	 	President, Secretary and Treasurer 	 
	 

The terms and conditions contained above are hereby accepted and agreed to by:

UMB Bank, N.A. as Escrow Agent

	 	 	 	 	 

	By:
	 	/s/
Lara L. Stevens
	 	 
	Name:

	 	Lara L.
Stevens 

	 	 
	Title:

	 	Vice
President 

	 	 

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EXHIBIT A

[Form of Notice to Pennsylvania Subscribers]

You have tendered a subscription to purchase shares of common stock of Cole Credit Property Trust
IV, Inc. (the “Company”). Your subscription is currently being held in escrow. The guidelines of
the Pennsylvania Securities Commission do not permit the Company to accept subscriptions from
Pennsylvania residents until an aggregate of $148,750,000 of gross offering proceeds have been
received by the Company. The Pennsylvania guidelines provide that until this minimum amount of
offering proceeds is received by the Company, every 120 days during the offering period
Pennsylvania subscribers may request that their subscriptions be returned.

If you wish to continue your subscription in escrow until the Pennsylvania minimum subscription
amount is received, nothing further is required.

If you wish to terminate your subscription for the Company’s common stock and have your
subscription returned please so indicate below, sign, date, and return to the Escrow Agent, UMB
Bank, N.A.

I hereby terminate my prior subscription to purchase shares of common stock of Cole Credit Property
Trust IV, Inc. and request the return of my subscription funds. I certify to Cole Credit Property
Trust IV, Inc. that I am a resident of Pennsylvania.

	 	 	 	 	 

	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	            (please print)
	 

	 	Date:	 	 
	 

	 	 	 	 

Please send the subscription refund to:

 

 

 

 

 

EXHIBIT B

PERMISSIBLE ESCROW INVESTMENTS

	 	(i)	 	Bank accounts;
	 
	 	(ii)	 	Bank money-market accounts;
	 
	 	(iii)	 	Short time certificates of deposit issued by a bank; and
	 
	 	(iv)	 	Short-term securities issued or guaranteed by the U.S. governmentexhibit101.htm

Exhibit 10.1

 

TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT (“Agreement”), dated as of December 22, 2011, by and between Piedmont Community Bank Holdings, Inc., a Delaware corporation (“Parent”), by and on behalf of each Affiliate of Parent, and Crescent Financial Bancshares, Inc., a Delaware corporation (“Holdco”) and Crescent State Bank, a North Carolina state bank and a wholly-owned banking subsidiary of Holdco (“Bank”).  Parent, its Affiliates, Holdco, and the Bank are sometimes collectively referred to herein as the “Parties” and individually as a “Party.”  Certain capitalized terms used in this Agreement and not otherwise defined have the meanings ascribed to them in Section 1.1.

 

WHEREAS, Parent operates as a bank holding company under the supervision of the Federal Reserve;

 

WHEREAS, pursuant to that certain Investment Agreement dated February 23, 2011, by and among Parent, Crescent Financial Corporation, a North Carolina corporation that is the predecessor of Holdco, and Bank (the “Investment Agreement”), Parent purchased and holds 18,750,000 shares of the Holdco common stock (“Common Stock”);

 

WHEREAS, pursuant to the terms of the Investment Agreement, Parent has agreed to commence a tender offer (as it may be amended from time to time as permitted under this Agreement, the “Offer”) to purchase up to 6,442,105 shares of Holdco Common Stock;

 

WHEREAS, upon acquisition of the shares of Common Stock by Parent pursuant to the terms of the Investment Agreement and consummation of the Offer, Parent is the owner of 24,878,423 shares of Holdco Common Stock, which Common Stock represents at least 80 percent of the total voting power of the stock of Holdco and at least 80 percent of the total value of the stock of Holdco, making Parent, its Affiliates, Holdco, and Bank eligible to file a United States federal consolidated corporate income tax return; and

 

WHEREAS, pursuant to the terms of the Investment Agreement, the Parties have covenanted to enter into a tax sharing agreement upon consummation of the acquisition of Holdco Common Stock sufficient for Parent, Holdco, and Bank to be eligible to file a United States federal consolidated corporate income tax return with Parent as the common parent of consolidated return.

 

NOW, THEREFORE, in consideration of the foregoing, the representations, warranties and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

 

  

  

  

 

ARTICLE I.

DEFINITIONS

 

Section 1.01    Definitions.

 

When used in this Agreement, the following terms shall have the meanings assigned to them in this Section 1.01.

 

“Affiliate” means, with respect to Parent, any entity taxable as a corporation for United States federal income tax purposes, other than Holdco and Bank, in which Parent’s ownership in the stock or other equity interests of that entity is sufficient to cause the corporation to be an includible corporation in the affiliated group of which Parent is the common parent within the meaning of I.R.C. §1504(a).

 

“Acquisition Date” means, the date upon which Parent became the owner of 24,878,423 shares of Common Stock, which Common stock represents at least 80 percent of the total voting power of the stock of Holdco and at least 80 percent of the total value of the stock of Holdco, making Parent, its Affiliates, if any, Holdco, and Bank eligible to file a United States federal consolidated corporate income tax return or, if later, the first day of the taxable year for which Parent, its Affiliates, if any, Holdco, and Bank elect to file a United States federal consolidated corporate income tax return.

 

“After Tax Amount” means the payment of both an amount otherwise required to be paid by any Party under the terms of this Agreement plus an additional amount (determined through a gross-up mechanism) such that the result of deducting the increase in any Taxes due (computed by taking into account the inclusion of the payment and such additional amount in income and any deductions, losses, and credits that are allowed for such payment and additional amount) from the sum of the payment and such additional amount equals the original payment determined to be due under this Agreement as if no Tax had been applied to such original payment.

 

“Agreement” means this Tax Sharing Agreement, including any schedules, exhibits, and appendices attached hereto.

 

"Combined Return" means any combined, unitary, or consolidated Tax Return or report used in the determination of a United States federal, state, local, or foreign Income Tax liability.

 

“Final Determination” shall mean the final resolution of liability for any Tax for a Tax period, including any related interest, penalties or other additions to tax, upon the earliest of  (i) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (ii) by a closing agreement or accepted offer in compromise under Section 7121 or Section 7122 of the Code, or comparable agreements under the laws of other jurisdictions; (iii) by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; or (iv) by any other written agreement or final disposition, including by reason of the expiration of the applicable statute of limitations, 

 

  

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whereby a Taxing Authority is prohibited from seeking any further judicial or administrative remedy with respect to such Tax or Tax period.

 

“Holdco Separate Federal Tax Liability” means, for any Tax period, the amount of federal income tax that would be due and currently payable by Holdco and Bank assuming that Holdco and Bank separately filed a consolidated U.S. federal income tax return, instead of being included in the consolidated U.S. federal income tax return of Parent.

 

“Holdco Separate State Tax Liability” means, for any Tax period, the amount of state income tax that would be due and currently payable assuming that Holdco and Bank separately filed on a consolidated, combined or unitary basis for state income tax purposes, instead of being included in such consolidated, combined or unitary state income tax return of Parent or of one of its Affiliates.

 

“Income Tax” or “Income Taxes” means all federal, state, local, and foreign income Taxes or other Taxes based on net income, but not including franchise, net worth, or other similar Taxes regardless of how measured or computed.

 

“I.R.C.” means the Internal Revenue Code of 1986, as amended.

 

“IRS” means the Internal Revenue Service.

 

“Liability Issue” has the meaning prescribed in Section 3.03(b).

 

“Other Tax” or “Other Taxes” means all Taxes other than an Income Tax or Income Taxes.

 

“Owed Party” has the meaning prescribed in Section 4.03.

 

“Owing Party” has the meaning prescribed in Section 4.03.

 

“Responsible Party” has the meaning prescribed in Section 3.02(a).

 

“Separate Income Tax Liability” means, for any Tax period, the amount of federal state, local, and foreign Income Tax that is due and currently payable by Parent, Affiliate, Holdco, or Bank, as the case may be, on any Tax Return other than a Combined Return.

 

“Tax” and “Taxes” mean any form of taxation, whenever created or imposed, and whenever imposed by a Taxing Authority, and without limiting the generality of the foregoing, shall include any net income, alternative or add-on minimum tax, gross income, sales, use, ad valorem, gross receipts, value added, franchise, profits, license, transfer, recording, withholding, payroll, employment, excise, severance, stamp, occupation, property, windfall profit, custom duty, or other tax, government fee, or other like assessment or charge, of any kind whatsoever, together with any related interest, penalties, or other additions to tax, or additional amount imposed by any such Taxing Authority.

 

  

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 “Tax Benefit” means, with respect to any Party, a decrease in such Party’s Tax liability with respect to any Tax Return that may arise in connection with the resolution of any Tax Controversy.

 

“Tax Controversy” has the meaning prescribed in Section 3.02(a).

 

“Tax Detriment” means, with respect to any Party, an increase in such Party’s Tax liability with respect to any Tax Return that may arise in connection with the resolution of any Tax Controversy.

 

“Taxing Authority” means any national, municipal, governmental, state, federal, foreign, or other body, or any quasi-governmental or private body, having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit, or any other item (including the basis or adjusted basis of property).

 

“Tax Return” means any return, filing, questionnaire or other document required to be filed, including requests for extensions of time, filings made with estimated Tax payments, claims for refund or amended returns, that may be filed for any taxable period with any Taxing Authority in connection with any Tax or Taxes (whether or not a payment is required to be made with respect to such filing).

 

“Treasury Regulations” means the final and temporary (but not proposed) income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

ARTICLE II.

RESPONSIBILITY AND INDEMNIFICATION FOR TAXES

 

Section 2.01  Responsibility and Indemnification for Taxes.

 

(a) From and after the Acquisition Date, without duplication, each of Parent and its Affiliates, on the one hand, and Holdco and Bank, on the other, shall be responsible for, and shall pay their respective shares of, the liability for Taxes of Parent and its Affiliates, and Holdco and Bank, respectively, as otherwise provided in this Agreement.  Parent and its Affiliates shall indemnify and hold harmless Holdco and Bank from any Taxes for which Parent or its Affiliates are responsible pursuant to this Agreement.  Holdco and Bank shall indemnify and hold harmless Parent and its Affiliates from any Taxes for which Bank and Holdco are responsible pursuant to this Agreement.

 

(b) Payments to Taxing Authorities and between the Parties, as the case may be, shall be made in accordance with the provisions of this Agreement.

 

 

  

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Section 2.02    Income Taxes.

 

(a) Holdco and Bank shall be liable for: (i) all Income Taxes incurred on any Combined Return of which Holdco is the common parent for any Tax period which ends on or before the Acquisition Date; (ii) 100% of any Holdco Separate Federal Income Tax Liability for any Tax period ending after the Acquisition Date; (iii) 100% of any Holdco Separate State Income Tax Liability for any Tax period ending after the Acquisition Date; and (iv) any Separate Income Tax Liability of Holdco or Bank for any Tax period ending after the Acquisition Date.

 

(b) Parent shall be liable for: (i) the excess of (1) all Income Taxes incurred on any Combined Return for any Tax period ending after the Acquisition Date, less (2) all Income Taxes for such Tax period that Holdco or Bank are liable for pursuant to Section 2.02(a); and (ii) any Separate Income Tax Liability of Parent or Affiliate for any Tax period ending after the Acquisition Date.

 

Section 2.03    Other Taxes.

 

(a)           Holdco and Bank shall be responsible for all Other Taxes attributable to Holdco and Bank and their businesses for all Tax periods.

 

(b)           Parent shall be responsible for all Other Taxes attributable to Parent and its Affiliates  and to their business activities for all Tax periods.

 

Section 2.04    Responsibility for and Timing of Payments.

 

(a)           It shall be the responsibility of the Party in whose name any Tax return is filed or required to be filed to timely remit, in appropriate amounts, all Taxes, including estimated Taxes, due with respect to such Tax return to the appropriate Taxing Authority.

 

(b)           All Taxes that are the liability of Holdco and Bank, in accordance with the provisions of Sections 2.02(a)(ii) or 2.02(a)(iii) hereof, shall be paid to Parent not later than ten (10) business days after a request for payment by Parent.

 

(c)           All payments and requests for payment under this Section 2.04 shall be accompanied by a calculation setting forth in reasonable detail the basis for the amount paid or demanded.

 

(d)           To the extent that there is a refund due with respect to any Tax Return, the Party receiving such refund shall remit such refund (including an appropriate share of any interest, if any, received as a part of such refund) to the Party or Parties who remitted in excess of their amount of Taxes for which they are liable under Section 2.02 not later than thirty (30) business days after a receipt of such refund by such Party.  In the event that there is an overpayment reported on any Tax Return that is treated as a credit in computing any Tax liability due with respect to a subsequent Tax Return required to be filed by the Parties, then the Party or Parties having contributed to such overpayment shall receive appropriate credit in determining such Party or Parties obligations with respect to the Tax liability for such subsequent Tax Return.

 

  

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Section 2.05   Payment for Use of Net Operating Loss.

 

If Holdco or Bank have no Holdco Separate Federal Income Tax or Holdco Separate State Income Tax liability with respect to a Tax period ending after the Acquisition Date, due to the existence of a current net operating loss for such Tax period, or a net operating loss incurred after the Acquisition Date and carried forward to such Tax period, and a Combined Return will be filed by Parent with respect to such Tax period, then Parent shall pay to Holdco an amount equal to the product of (1) 100% times (2) the excess, if any, of (i) the Tax that would otherwise have been due with respect to such Combined Return had the results of Holdco and Bank not been included in such Combined Return, over (ii) the actual tax shown as due with respect to such Combined Return.  Such payment shall be made by Parent to Holdco not later than 30 days following the filing of such Combined Return.

 

Section 2.06   Audit Adjustments.

 

(a)           Not later than 30 days after any Final Determination is made with respect to any Tax Return for any Tax period, the Party with responsibility for the payment of Tax with respect to such Tax Return under Section 2.04 (a) shall re-determine each such other Party’s Tax liability, if any, under Section 2.02 of this Agreement, as if such all such adjustments and items included in such Final Determination had been included in such original Tax Return.  Any Party whose re-determined liability for payments under Section 2.02 exceeds his original liability with respect to such Tax Return, shall remit the amount of such excess in the manner required under Section 2.02.  Any Party whose re-determined liability for payments under Section 2.02 is less than his original liability with respect to such Tax Return, shall be entitled to reimbursement of the amounts overpaid.  All such payments and reimbursements shall be made not later than thirty (30) business days after a request for payment by the Party entitled to receive the payment (or who is required to remit amounts to a Taxing Authority).

 

(b)           All payments and requests for payment or remittances of overpayments under this Section 2.06 shall be accompanied by a calculation setting forth in reasonable detail the basis for the amount paid or requested.

 

Section 2.07   Net Operating Loss Carrybacks.

 

(a)           If Holdco or Bank incurs a net operating loss on any Combined Return in which Parent is the common parent, and Holdco or Bank is entitled to carryback such net operating loss to a period ending prior to the Acquisition Date, and if Parent consents (which consent may be given or withheld in its sole discretion), then Holdco and/or Bank shall be permitted to carryback such net operating loss and file any claim for refund as may be required to recover such back Taxes.  Holdco and/or Bank may retain any refund of Taxes, including any interest paid with respect thereto.

 

(b)           If Parent or any of its Affiliates incur a net operating loss that is part of any Combined Return in which Holdco and Bank are members, and Parent or Affiliate is entitled to carryback such net operating loss to a period ending prior to the Acquisition 

 

  

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Date, then Parent and /or Affiliate shall be permitted to carryback such net operating loss and file any claim for refund as may be required to recover such back Taxes.  Parent and/or Affiliate may retain any refund of Taxes, including any interest paid with respect thereto.

 

ARTICLE III.

PREPARATION OF TAX RETURNS

COOPERATION AND EXCHANGE OF INFORMATION

 

Section 3.01    Preparation of Tax Returns.

 

It shall be the responsibility of the Party in whose name any Tax return is filed or required to prepare and timely file such Tax Return.  To the extent that such Return is a Combined Return, all such other Parties included in such Combined Return shall have the right to review and comment as to any tax elections and such other determinations made with respect to the preparation and filing of such Combined Return

 

Section 3.02   Cooperation.

 

(a)           Parent, its Affiliates, Holdco, and Bank shall cooperate fully at such time and to the extent reasonably requested by the other Party in connection with the preparation and filing of any Tax Return or the conduct of any audit, dispute, proceeding, suit, or Tax action concerning any issues or any other matter contemplated hereunder.  Each Party shall make its employees available on a mutually convenient basis, without cost to the other Party, to the extent needed to facilitate such cooperation.  In addition, upon 48 hours notice, each Party shall have the option to use its own employees or agents to view or obtain the materials contemplated in this Section 3.02 on a mutually convenient basis.

 

(b)           Each Party shall make its employees available on a mutually convenient basis, without cost to the other Party, to the extent needed to facilitate such cooperation.  In addition, upon 48 hours notice, each Party shall have the option to use its own employees or agents to view or obtain the materials contemplated in this Section 3.02 on a mutually agreeable and convenient basis.  Any materials contemplated under Section 3.02(a) shall be provided whether or not such material is or may be confidential or proprietary.  If, however, the providing Party determines in good faith that any materials are confidential or proprietary, the providing Party may require the requesting Party to enter into a confidentiality agreement with respect to such materials, not inconsistent with the purposes for which the Party made the request for information.  Each Party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by the other Party if it exercises the same care as it takes to preserve confidentially for its own similar information.

 

(c)           Notwithstanding anything to the contrary in this Agreement, if a Party materially fails to comply with any of its obligations set forth in this Section 3.02, upon reasonable request and notice by the other Party, the non-performing Party shall (i) reimburse the other Party for any internal or incremental costs incurred by such other

 

  

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 Party in having its employees or agents view or obtain such material, and (ii) to the extent such failure results in the imposition of additional Taxes be liable in full for such additional Taxes including any necessary gross-up thereon.

 

Section 3.03   Contest Provisions.

 

(a)           The Party responsible for preparation and filing a Tax Return under Section 3.01 (the “Responsible Party”) shall have the exclusive right to control, contest, and represent the interests of the other Parties in any Tax controversy, including (without limitation) any audit, protest, or claim for refund to the Appeals Division of the IRS, competent authority proceeding, and litigation in Tax Court or any other court of competent jurisdiction (a “Tax Controversy”) related to such Tax Return.  Subject to Section 3.03(c) hereof, such exclusive right shall include the right, in the Responsible Party’s reasonable discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Controversy.  Such control rights shall extend to any matter pertaining to the management and control of a Tax Controversy, including execution of waivers, choice of forum, scheduling of conferences and the resolution of any Tax Item.  Any costs incurred in the handling or contesting of a Tax Controversy shall be borne by the Responsible Party.

 

(b) Parent shall notify Holdco in writing within 60 days of the initiation of any of Tax audits and litigation involving any issue that could give rise to a liability of Holdco or Bank under Section 2.02 and shall use reasonable efforts to keep Holdco advised as to the status of Tax audits and litigation; and Holdco shall notify Parent in writing within 60 days of the initiation of any Tax audits and litigation involving any issue that that could give rise to a liability of Parent or an Affiliate under Section 2.2 and shall use reasonable efforts to keep Holdco advised as to the status of Tax audits and litigation, (in each case, a “Liability Issue”).  Parent and Holdco shall promptly furnish to each other copies of any inquiries or requests for information from any Taxing Authority or any other administrative, judicial, or other governmental authority concerning any Liability Issue pertaining to the other Party.  Without limiting the foregoing, Parent or Holdco, as the case may be, shall each promptly furnish to the other within 30 days of receipt a copy of the relevant section of the revenue agent’s report or similar report, notice of proposed adjustment, or notice of deficiency received by Parent or by Holdco, as the case may be, relating to any Liability Issue or any adjustment referred to in this Section 3.02(b).

 

(c) Notwithstanding anything in Section 3.03(a) to the contrary:

 

(i) To the extent resolution of any Tax Controversy could give rise to a material Tax Detriment or loss of a material Tax Benefit to any Party totaling at least $100,000, but such Party is not the Responsible Party, then the Responsible Party shall provide such other Party (at such other Party’s expense) reasonable participation rights with respect to so much of the Tax Controversy as relates to Taxes for which such other Party may be responsible; and

 

  

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(ii)           A Responsible Party shall not settle or otherwise voluntarily resolve or disclose any Tax Controversy which could give rise to a Tax Detriment or loss of a material Tax Benefit to the other Party totaling at least $50,000 without such other Party’s consent, not to be unreasonably withheld; provided that Parent shall be entitled to participate in such determination.

 

ARTICLE IV.

MISCELLANEOUS

 

Section 4.01   Effectiveness.  This Agreement shall become effective on the Acquisition Date.

 

Section 4.02   Disclaimers.

 

(a)           Parent disclaims all knowledge of or responsibility for the content or accuracy of any separate returns or filings made by or on behalf of Holdco and Bank beginning on or before the Acquisition Date.

 

(b)           Holdco and Bank disclaims all knowledge of or responsibility for the content or accuracy of any Tax Returns or filings made by or on behalf of Parent for any period beginning or prior to the Acquisition Date.

 

Section 4.03   Payments.

 

(a) In the event that one Party (the “Owing Party”) is required to make a payment to another Party (the “Owed Party”) pursuant to this Agreement, then to the extent not otherwise provided for in this Agreement, such payment shall be made according to this Section 4.03.

 

(b) All payments shall be made to the Owed Party or to the appropriate Taxing Authority as specified by the Owed Party within the time prescribed for the payment in this Agreement, or if no period is prescribed, within 30 days after delivery of written notice of payment owing together with a computation of the amounts due.

 

(c) All actions required to be taken by any Party under this Agreement shall be performed within the time prescribed for performance in this Agreement, or if no period is prescribed, such actions shall be performed promptly.

 

(d) If, pursuant to a Final Determination, it is determined that the receipt or accrual of any payment made under this Agreement (other than payments of interest) is subject to any Tax, the Party making such payment shall be liable for (i) the After Tax Amount with respect to such payment, and (ii) interest at the IRS prescribed rate for underpayments applicable in the case of a large corporation on the amount of such tax from the date such Tax is due through the date of payment of such After Tax Amount.  A Party making a demand for payment pursuant to this Agreement and for a payment of an After Tax Amount with respect to such payment shall separately specify and compute such After Tax Amount.  However, a Party may choose not to specify an After Tax 

 

 

  

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Amount in a demand for payment pursuant to this Agreement without thereby being deemed to have waived its right subsequently to demand an After Tax Amount with respect to such payment.

 

(e) Any payment that is required to be made pursuant to this Agreement (A) by Holdco or Bank to Parent or any Parent Affiliate or (B) by Parent or any Parent Affiliate to Holdco or Bank, that is not made on or prior to the date that such payment is required to be made pursuant to this Agreement shall thereafter bear interest at the IRS prescribed rate for underpayments applicable in the case of a large corporation on the amount of such tax from the date such payment is due through the date of actual payment.

 

(f) Any payment that is required to be made pursuant to this Agreement (A) by Holdco or Bank to Parent or (B) by Parent or any of its Affiliates to Holdco or Bank, shall be made by wire transfer of immediately available funds.

 

Section 4.04   Changes in Law. Any reference to a provision of the I.R.C., Treasury Regulations, or a law of another jurisdiction shall include a reference to any applicable successor provision or law.  If, due to any change in applicable law or regulations or their interpretation by any court of law or other governing body having jurisdiction subsequent to the date specified in the preamble to this Agreement, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

 

Section 4.05   Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by standard form of telecommunications, by courier, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

If to Parent or any Parent Affiliate, at:

Piedmont Community Bank Holdings, Inc.

3600 Glenwood Avenue

Suite 300

Raleigh, NC  27612

Attn: Scott Custer, Chief Executive Officer

Facsimile No.: (919) 659-9001

With a copy to:

Bryan Cave LLP

1290 Avenue of the Americas

New York, NY 10104

Attn:  Kenneth Henderson, Esq.

Facsimile No.: (212) 541-1357

 

  

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If to Holdco or Bank, at:

Crescent State Bank

1005 High House Road

Carey, North Carolina 27513

Attention:  Bruce Elder

Facsimile No.:  (919) 460-2528

With a copy to:

Bryan Cave LLP

1290 Avenue of the Americas

New York, NY 10104

Attn:  Kenneth Henderson, Esq.

Facsimile No.: (212) 541-1357

or to such other address as any Party hereto may have furnished to the other Parties by a notice in writing in accordance with this Section 4.05.

 

Section 4.06   Complete Agreement; Corporate Power.

 

(a) This Agreement shall constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

 

(b) Parent, on behalf of itself and each Parent Affiliate, and Holdco and Bank represent, as follows:

 

i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to complete the transactions contemplated hereby and thereby;

 

ii) this Agreement has been duly executed and delivered and constitutes a valid and binding agreement enforceable in accordance with the terms thereof.

 

Section 4.07   Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware as to all matters, including matters of validity, construction, effect, performance and remedies, and without regard to conflicts of laws principles.

 

Section 4.08   Successors and Assigns.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns, but neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any Party without the prior written consent of the other Party.  This Agreement is solely for the benefit of the Parties hereto and their subsidiaries and affiliates and is not intended to confer upon any other Persons any rights or remedies hereunder.

 

  

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Section 4.09   Parties in Interest.  Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties, their respective Affiliates, and their respective successors and permitted assigns, any rights or remedies of any nature whatsoever under or by virtue of this Agreement.

 

Section 4.10   Expenses.  Unless otherwise expressly provided in this Agreement, each Party shall bear any and all expenses that arise from their respective obligations under this Agreement.

 

Section 4.11   Amendments and Modification.  This Agreement may be amended, modified or supplemented only by a written agreement signed by all of the Parties hereto.

 

Section 4.12   No Implied Waivers; Writing Required.  No delay or failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind or character of any breach or default under this Agreement or any such waiver of any provision of this Agreement shall be effective only to the extent in such writing specifically set forth.

 

Section 4.13   Severability.  If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.

 

Section 4.14   Construction.  The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns, pronouns, and verbs shall include the plural and vice versa. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. The Parties have participated jointly in the negotiation and drafting of this Agreement and the Separation Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. The Parties agree that prior drafts of this Agreement shall be deemed not to provide any evidence as to the meaning of any provision hereof or the intent of the Parties hereto with respect hereto.

 

  

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Section 4.15   Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Section 4.16   Delivery by Facsimile and Other Electronic Means.  This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall re-execute original forms thereof and deliver them to all other Parties. No Party shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile machine or other electronic means as a defense to the formation of a contract and each such Party forever waives any such defense.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in multiple originals by their authorized officers, all as of the date and year first above written.

 

 

CRESCENT FINANCIAL BANCSHARES, INC.

 

By:           /s/ Bruce W. Elder 

Name:     Bruce W. Elder

Title:       Vice President and Secretary

 

CRESCENT STATE BANK

 

By:           /s/ Bruce W. Elder 

Name:     Bruce W. Elder

Title:  Senior Vice President and Chief Financial Officer

 

PIEDMONT COMMUNITY BANK HOLDINGS, INC. (on its behalf and on behalf of each of its Affiliate)

 

By:           /s/ Scott Custer

Name:     Scott Custer

Title:       Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Tax Sharing Agreement]

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