Document:

Exhibit
10.3

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (this “Agreement”) is entered into and
effective as of the         day of         ,
2006, by and between Congaree Bancshares, Inc., a South Carolina corporation (the
“Company”), and The Bankers Bank (the “Escrow Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Company proposes to offer and sell (the “Offering”) up to 2,500,000
shares of Common Stock, no par value per share (the “Shares”), to investors at
$10.00 per Share pursuant to a registered public offering; and

 

WHEREAS, the Company desires to establish an escrow for funds forwarded by
subscribers for 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 are 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”) in the form of checks received by the
Company from subscribers. All checks shall be made payable to the Escrow Agent.
If any check does not clear normal banking channels in due course, the Escrow
Agent will promptly notify the Company. 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 Company 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 Company 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 to help defray organizational costs.

 

(b)           Subscription agreements for the Shares shall be reviewed
for accuracy by the Company and, immediately thereafter, the Company 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.

 

2.             Investment
of Escrowed Funds. Upon
collection of each check by the Escrow Agent, the Escrow Agent shall invest the
funds in deposit accounts or certificates of deposit which are fully insured by
the Federal Deposit Insurance Corporation or another agency of the United
States government, federal funds, short-term securities issued or fully
guaranteed by the

 

1

 

United
States government, or such other investments as the Escrow Agent and the
Company shall agree. All investments shall comply with applicable laws, rules
and regulations, including Rule 15c2-4 under the Securities Exchange Act of
1934. The Company shall provide the Escrow Agent with instructions from time to
time concerning in which of the specific investment instruments described above
the Escrowed Funds shall be invested, and the Escrow Agent shall adhere to such
instructions. Unless and until otherwise instructed by the Company, the Escrow
Agent shall by means of a “Sweep” or other automatic investment program invest
the Escrowed Funds in blocks of $1,000 in federal funds. 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 expiration date of the
offering as described in the prospectus relating to the offering, (the “Offering
Termination Date”), (i) the Escrow Agent has certified to the Company in
writing that the Escrow Agent has received at least $13,200,000 in Escrowed
Funds, and (ii) the Escrow Agent has received a certificate from the President
or the Chairman of the Board of the Company that all other conditions to the
release of funds as described in the Company’s prospectus related to the
Offering as filed with the Securities and Exchange Commission have been met,
then the Escrow Agent shall deliver the Escrowed Funds to the Company to the
extent such Escrowed Funds are collected funds (the “Closing Date”). If any
portion of the Escrowed Funds is not collected funds, then the Escrow Agent
shall notify the Company 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.

 

(b)           If the Escrowed Funds do not, on or prior to the Offering
Termination Date, become deliverable to the Company based on failure to meet
the conditions described in Paragraph 3(a), or if the Company terminates the
offering at any time prior to the Offering Termination Date and delivers
written notice to the Escrow Agent of such termination (the “Termination Notice”),
the Escrow Agent shall return the Escrowed Funds, without interest, which are
collected funds as directed in writing by the Company to the respective
subscribers in amounts equal to the subscription amount theretofore 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 Company by the Escrow Agent, unless the Escrow Agent is otherwise
specifically directed in writing by the Company.

 

4.             Distribution
of Interest. Any
interest earned on the Escrowed Funds shall be retained by the Company.

 

5.             Fee of
Escrow Agent. The
escrow account will accrue a service charge of $20.00 per month. In addition, a
$20.00 per check fee will be charged if the escrow account has to be refunded
due to a failure to complete the subscription. All of these fees are payable
upon the release of the Escrowed Funds, and the Escrow Agent is hereby
authorized to deduct such fees from the Escrowed Funds prior to any release
thereof pursuant to Section 3 hereof.

 

2

 

6.             Liability
of Escrow Agent.

 

(a)           In performing any of its duties under the 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 gross 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 in 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 misconduct or gross negligence
under this Agreement, then, in that event, the Escrow Agent shall bear all such
losses, claims, damages and expenses.

 

(c)           If a dispute ensues between any of the parties hereto
which, in the opinion of the Escrow Agent, is sufficient to justify its doing
so, the Escrow Agent shall retain legal counsel of its choice as it reasonably
may deem necessary to advise it concerning its obligations hereunder and to
represent it in any litigation to which it may be a part by reason of this
Agreement. 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 the terms of this Agreement, and to file such legal proceedings as
it deems appropriate, and shall thereupon be discharged from all further duties
under this Agreement. Any such legal action may be brought in any such court as
the Escrow Agent shall determine to have jurisdiction thereof. In connection
with such dispute, the Company shall indemnify the Escrow Agent against its
court costs and reasonable attorney’s fees incurred.

 

(d)           The Escrow Agent may resign at any time upon giving thirty
(30) days written notice to the Company. If a successor escrow agent is not
appointed by Company within thirty (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.

 

3

 

7.             Appointment
of Successor. The
Company may, upon the delivery of thirty (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.

  
	
   

  	
   

  
	
  The
  Company: 

  	
  Congaree
  Bancshares, Inc.

  3618 Sunset Boulevard

  West Columbia, South Carolina 29169

  Attention: F. Harvin Ray, Jr.

  Chief Executive Officer

  
	
   

  	
   

  
	
  With a
  copy to: 

  	
  Nelson
  Mullins Riley & Scarborough, LLP

  999 Peachtree Street, Suite 1400

  Atlanta, Georgia 30309

  Attn: J. Brennan Ryan, Esq.

  
	
   

  	
   

  
	
  The
  Escrow Agent: 

  	
  The Bankers Bank

  2410 Paces Ferry Road

  600 Paces Summit

  Atlanta, GA 30339-4098

  
	
   

  	
  Attention:

  	
  Jo W. Avery

  
	
   

  	
   

  	
  First Vice President

  

 

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 Georgia.

 

4

 

(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.

 

(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.

 

IN WITNESS WHEREOF, the
parties have duly executed this Agreement as the date first written above.

 

	
  COMPANY:

  	
   

  	
  ESCROW
  AGENT:

  
	
   

  	
   

  	
   

  
	
  CONGAREE BANCSHARES, INC.

  	
   

  	
  THE BANKERS BANK

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  F. Harvin Ray, Jr.

  Chief Executive Officer

  	
   

  	
   

  	
  Jo W. Avery

  First Vice President

  	
   

  
										

 

5Exhibit 10.5

 

CONGAREE BANCSHARES, INC.

 

STOCK WARRANT AGREEMENT

 

         ,
2006

 

	
  Warrant
  Holder:

  	
   

  	
   

  	
  No. of
  Shares:

  	
   

  

 

Congaree
Bancshares, Inc. (the “Company”), a South Carolina corporation and the holding
company for Congaree State Bank (proposed) (the “Bank”), hereby grants to the
person identified above as the Warrant Holder warrants (the “Warrants”) to
purchase the number of shares set forth above, representing one share of common
stock for every one share of common stock purchased by the Warrant Holder in
the Company’s initial public offering (provided that the maximum number of
shares which may be covered by this Warrant is 10,000 shares), in consideration
of the financial risk associated with Warrant Holder’s investment in the
Company during its organizational stage and the time, expertise, and continuing
involvement of the Warrant Holder in the management of the Bank. Such Warrants
are granted on the following terms and conditions:

 

1.             Exercise of Warrants. All
of the shares (the “Shares”) subject to the Warrants granted in this Agreement
shall vest on each of the first three anniversaries of the date of the opening
of the Bank, subject to the Warrant Holder’s continued service with the Company
or the Bank as of such date as an executive officer or director. Exercise of
the Warrants is subject to the following:

 

(a)                                  Exercise Price. The exercise price
(the “Exercise Price”) shall be $10.00 per Share, subject to adjustment
pursuant to Section 2 below.

 

(b)                                 Expiration of Warrant Term. The
Warrants will expire at 5:00 p.m. Eastern Standard Time on the tenth
anniversary of the opening date of the bank (subject to earlier termination in
certain circumstances pursuant to Section 5 below), and may not be exercised
thereafter (the “Expiration Date”).

 

(c)                                  Payment. The purchase price for
Shares as to which the Warrants are being exercised shall be paid in cash, by
wire transfer, by certified or bank cashier’s check, or by personal check drawn
on funds on deposit with the Bank.

 

(d)                                 Method of Exercise. The Warrants
shall be exercisable by a written notice delivered to the Chief Executive
Officer or Secretary of the Company which shall:

 

(i)                                     State
the owner’s election to exercise the Warrants, the number of Shares with
respect to which it is being exercised, the person in whose name the stock
certificate for such Shares is to be registered, and such person’s address and
tax identification number (or, if more than one, the names, addresses and tax
identification numbers of such persons);

 

(ii)                                  Be
signed by the person or persons entitled to exercise the Warrants and, if the
Warrants are being exercised by any person or persons other than the

 

 

original
holder thereof, be accompanied by proof satisfactory to counsel for the Bank of
the right of such person or persons to exercise the Warrants; and

 

(iii)                               Be accompanied by the
originally executed copy of this Stock Warrant Agreement.

 

(e)                                  Partial Exercise. In the event of a
partial exercise of the Warrants, the Company shall either issue a new
agreement for the balance of the Shares subject to this Stock Warrant Agreement
after such partial exercise, or it shall conspicuously note hereon the date and
number of Shares purchased pursuant to such exercise and the number of Shares
remaining covered by this Stock Warrant Agreement.

 

(f)                                    Restrictions on Exercise. The
Warrants may not be exercised (i) if the issuance of the Shares upon such
exercise would constitute a violation of any applicable federal or state
securities or banking laws or other law or regulation or (ii) unless the Bank
or the holder hereof, as applicable, obtains any approval or other clearance
which the Bank determines to be necessary or advisable from the Federal Reserve
Board, the Federal Deposit Insurance Corporation or any other state or federal
banking regulatory agency with regulatory authority over the operation of
Company or the Bank (collectively the “Regulatory Agencies”). The Company may
require representations and warranties from the Warrant Holder as required to
comply with applicable laws or regulations, including the Securities Act of
1933 and state securities laws.

 

2.             Anti-Dilution; Merger. If,
prior to the exercise of Warrants hereunder, the Company (i) declares, makes or
issues, or fixes a record date for the determination of holders of common stock
entitled to receive, a dividend or other distribution payable on the Shares in
shares of its capital stock, (ii) subdivides the outstanding Shares, (iii)
combines the outstanding Shares, (iv) issues any shares of its capital stock by
reclassification of the Shares, capital reorganization or otherwise (including
any such reclassification or reorganization in connection with a consolidation
or merger or and sale of all or substantially all of the Company’s assets to
any person), then the Exercise Price, and the number and kind of shares
receivable upon exercise, in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder of any
Warrant exercised after such time shall be entitled to receive the aggregate
number and kind of shares which, if such Warrant had been exercised immediately
prior to such time, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, distribution, subdivision, combination,
reclassification, reorganization, consideration, merger or sale.

 

3.             Valid Issuance of Common Stock.
The Company possesses the full authority and legal right to issue this Warrant
and the Shares issuable pursuant to this Warrant. The issuance of this Warrant
vests in the holder the entire legal and beneficial interests in this Warrant,
free and clear of any liens, claims, and encumbrances and subject to no legal
or equitable restrictions of any kind except as described herein. The Shares
that are issuable upon exercise of this Warrant, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid, and non-assessable,
and will be free of restrictions on transfer other than restrictions under
applicable state and federal securities.

 

2

 

4.             Restrictions on Transferability.
This Agreement and the Warrants may not be assigned,
transferred, pledged, or hypothecated in any way (whether by operation of law
or otherwise) and shall not be subject to execution, attachment, or similar
process. Any attempted assignment, transfer, pledge, hypothecation, or other
disposition of these Warrants contrary to the provisions hereof shall be
without legal effect.

 

5.             Mandatory Exercise; Termination.

 

(a)                                  Warrant
Holder shall exercise all of Warrant Holder’s then exercisable Warrants within
90 days of the date that Warrant Holder ceases to serve the Company as an
executive officer, or director, or the then exercisable Warrants shall
terminate; provided that such 90 day period shall be extended to one year if
the cessation of service was a result of the Warrant Holder’s death or disability.
In the event the Warrant Holder fails to exercise any of the Warrants referred
to in this subparagraph within the specified day period, such Warrants shall be
forfeited.

 

(b)                                 The
Company may be required to increase its capital to meet capital requirements
imposed by statute, rule, regulation, or guideline. In order to achieve such
capital increase, the Regulatory Agencies may direct the Company to require, or
the Company on its on volition may decide to require, the Warrant Holders to
either (i) exercise all or part of their Warrants or (ii) allow the Warrants to
be terminated. In such an event, the Warrant Holder must exercise or forfeit
the Warrants as set forth below.

 

(c)                                  When
the Company is required or determines to increase its capital as described in
subsection (b) above, the Company shall send a notice (the “Notice”) to the
Warrant Holder (i) specifying the number of Shares relating to the Warrants for
which the Warrants must be exercised (the “Number”) (if less than all shares
relating to warrants held by all holders of warrants of the Company under
agreements substantially similar to this one are required by the Company to be
exercised or cancelled, the Number for the Warrant Holder shall reflect a
proportionate allocation based on the number of Shares subject to this
Agreement as compared to the total number of shares subject to warrants held by
all such warrant holders as a group); (ii) specifying the date prior to which
the Warrants must be totally or partially exercised, as the case may be (the “Deadline”);
and (iii) stating that the failure of the Warrant holder to exercise the
Warrants shall result in their automatic termination.

 

(d)                                 If
the Warrant Holder does not exercise the Warrants pursuant to the terms of the
Notice, this Agreement shall be automatically terminated on the Deadline,
without further act or action by the Warrant Holder or the Company, and the
Warrant Holder shall deliver this Agreement to the Company for cancellation. If
the Number is less than the total number of Shares that are then subject to
exercise under this Agreement, the Company shall issue a new Stock Warrant
Agreement in compliance with Section 1(e) hereof.

 

6.             Covenants of the Company. During
the term of the Warrants, the Company shall:

 

3

 

(a)                                  at
all times authorize, reserve and keep available, solely for issuance upon
exercise of this Warrant, sufficient shares of common stock from time to time
issuable upon exercise of this Warrant;

 

(b)                                 on
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft, or
destruction, on delivery of any indemnity agreement or bond reasonably
satisfactory in form and amount to the Company or, in the case of mutilation,
on surrender and cancellation of this Warrant, at its expense execute and
deliver, in lieu of this Warrant, a new Warrant of like tenor; and

 

(c)                                  on
surrender for exchange of this Warrant or any Warrant substituted therefor
pursuant hereto, properly endorsed, to the Company, at its expense, issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder, calling in the aggregate on the face or
faces thereof for the issuances of the number of shares of common stock
issuable pursuant to the terms of the Warrant or Warrants so surrendered.

 

7.             No Dilution or Impairment.
The Company shall not amend its Articles of Incorporation or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action for the purpose of
avoiding or seeking to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but will at all times in
good faith assist in carrying out all such action as may be reasonably
necessary in order to protect the exercise rights of the holder against
improper dilution or other impairment.

 

8.             Amendment.
Neither this Agreement nor the rights granted hereunder may be amended, changed
or waived except in writing signed by each party hereto.

 

[Signatures on Following Page]

 

4

 

IN
WITNESS WHEREOF, the Company has executed and the holder has accepted this
Stock Warrant Agreement as of the date and year first above written.

 

	
   

  	
  CONGAREE
  BANCSHARES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Franklin H. Ray, Jr., Chief Executive Officer

  
	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  , Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARRANT
  HOLDER:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name

  
							

 

5

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