EXHIBIT 2.5
INDEMNITY AND ESCROW AGREEMENT
THIS Indemnity and Escrow Agreement (this "Indemnity and Escrow Agreement")
is entered into as of the 11th day of February, 1998, by and among Xxxx Xxxxxx &
Co., Inc., Xxxx Xxxxxx Sons, Inc., Xxxx Xxxxxx & Co. and Xxxxxxx Corp.
(collectively "Xxxx Xxxxxx"); Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, individually and
as Personal Representative of the Estate of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and
Xxxx Xxxxx, Trustees of the Marital Trust under the Last Will and Testament of
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees of the Bypass Trust
under the Last Will and Testament of Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx
Xxxxxxxxx, Trustees u/a Xxxxxx X. Xxxxx dated May 14, 1997, FBO Xxxxxx X. Xxxxx,
and Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxxx, Trustees u/a Xxxxxx X. Xxxxx dated May
14, 1997, FBO Xxxxxx X. Xxxxx, and Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx, Trustees
of the Xxxxxx X. Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust, the Xxxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust, the Xxxxxx X. Xxxxx Trust Share
of the Ely Shanis Trust, and the Xxxxxxx X. Xxxxx Trust Share of the Ely Shanis
Trust (collectively the "Owners"); Xxxxx-Xxxxx Bancshares, Inc. ("Xxxxx-Xxxxx");
Bay Finance, LLC, and Bay Insurance, LLC (the "Subsidiaries"); and FMB Trust
Company, N.A., a national banking association organized under the laws of the
United States ("Escrow Agent"). Capitalized terms used and not otherwise defined
herein shall have the meanings as defined in the Asset Purchase Agreement as of
November 26, 1997, as amended (the "Asset Purchase Agreement").
RECITALS
Execution and delivery of this Indemnity and Escrow Agreement by Xxxx
Xxxxxx and the Owners is a condition to the obligations of Xxxxx-Xxxxx and the
Subsidiaries to close under the Asset Purchase Agreement. The Asset Purchase
Agreement provides that a portion of the Purchase Price shall be held in escrow
in accordance with the terms and conditions of this Indemnity and Escrow
Agreement. Xxxx Xxxxxx and the Owners have approved the transactions
contemplated by the Asset Purchase Agreement ("Transactions") and desire to
enter into this Indemnity and Escrow Agreement to induce Xxxxx-Xxxxx and the
Subsidiaries to consummate the Transactions. This Indemnity and Escrow Agreement
shall be the exclusive mechanism for exercising Xxxxx-Xxxxx'x right to
indemnification under the Asset Purchase Agreement. The Owners plan to liquidate
Xxxx Xxxxxx shortly after the date of this Indemnity and Escrow Agreement. The
individuals named above as trustees under the Trusts identified above and the
Personal Representative sign this Indemnity and Escrow Agreement solely in their
fiduciary capacities and shall have no personal liability hereunder unless such
individuals also sign this Indemnity and Escrow Agreement individually. The
personal liability of Xxxxx X. Xxxxx is limited to the greater of the Escrowed
Amount (as defined in Section 4.2) or the amount of the Purchase Price she
receives as beneficiary of the Marital and Bypass Trusts under the Last Will and
Testament of Xxxxxxx X. Xxxxx.
NOW, THEREFORE, in consideration of and in reliance upon the promises and
covenants in this Indemnity and Escrow Agreement, the parties agree as follows:
1. Indemnification by Xxxx Xxxxxx and the Owners.
1.1. Xxxx Xxxxxx and the Owners, jointly and severally, subject to the
limitations of Section 1.3, shall be liable for, indemnify Xxxxx-Xxxxx and the
Subsidiaries, their successors and assigns and their affiliates and each
director, officer, employee and agent of each of the foregoing (each being
sometimes called an "Indemnified Party" and collectively the "Indemnified
Parties") with respect to, hold the Indemnified Parties harmless from, and
reimburse the Indemnified Parties for, any claims, actions, demands,
proceedings, losses, liabilities, damages (including incidental and
consequential damages), expenses (including reasonable attorneys' fees), or
diminution of value, whether or not involving a third-party claim,
(collectively, the "Xxxxx-Xxxxx Losses," and singly, a "Xxxxx-Xxxxx Loss"),
which arise out of or are in respect of, directly or indirectly:
1.1.1. any breach of any representation or warranty of Xxxx
Xxxxxx contained in the Asset Purchase Agreement;
1.1.2. the breach of any covenant, agreement or obligation of the
Owners or Xxxx Xxxxxx contained in either the Asset Purchase Agreement or the
Assignment of Master Dealer Agreements; or
1.1.3. any claim by any third party arising from any act or
omission by Xxxx Xxxxxx or its officers, employees, agents or affiliates
relating to or arising out of the Business, including, but not limited to,
claims relating to or arising out of the origination, purchase, servicing,
collection or sale of Loans by Xxxx Xxxxxx prior to and including the Closing
Date, whether such a transaction was completed before, on or after the Closing
Date (except with respect to any liability or obligation arising out of any
action by Xxxxx-Xxxxx or the Subsidiaries after the Closing Date).
"Xxxxx-Xxxxx Loss" also includes all amounts which Bay Finance, LLC, would have
had the right to charge against the Reserve Funds identified on Exhibit A
pursuant to the terms of the appropriate Master Dealer Agreement if Bay Finance,
LLC, had acquired such Reserve Funds, or, if no Master Dealer Agreement is
effective at the date hereof, all amounts which Bay Finance, LLC, would have had
the right to charge against the Reserve Funds identified on Exhibit B had the
Master Dealer Agreement attached as Exhibit C been effective. These Xxxxx-Xxxxx
Losses are sometimes called "Xxxxx-Xxxxx Dealer Reserve Losses."
"Xxxxx-Xxxxx Loss" further includes interest computed on the total amount of
Reserve Funds identified on Exhibits A and B for which the liability has not
been assumed by Bay Finance, LLC, or discharged by payment to the dealers, as
such amount changes from time to time, at an annual interest rate equivalent to
the Prime Rate published in the Money Rates Section of The Wall Street Journal
from time to time. Such Xxxxx-Xxxxx Losses are called "Xxxxx-Xxxxx Dealer
Reserve Interest Losses." Xxxxx-Xxxxx may give Notice of Claim (as described in
Section 1.2) with respect to Xxxxx-Xxxxx Dealer Reserve Interest Losses not more
frequently than quarterly beginning April 1, 1998.
The right to indemnification shall not be affected by any investigation
conducted with respect to or any knowledge acquired by Xxxxx-Xxxxx at any time,
whether before or after the execution and delivery of this Indemnity and Escrow
Agreement, with respect to the accuracy or inaccuracy of or compliance with, any
representation, warranty, covenant or obligation of Xxxx Xxxxxx.
1.2. Notice of Claim. Promptly after notice by Xxxxx-Xxxxx of any
facts or events that may result in a Xxxxx-Xxxxx Loss, Xxxxx-Xxxxx shall give
written notice ("Notice of Claim") to the Owners and the Escrow Agent. The
Notice of Claim shall set forth the amount of the claim, or Xxxxx-Xxxxx'x then
best estimate of the amount of the claim. Xxxxx-Xxxxx shall furnish to the
Owners, in reasonable detail, such information as Xxxxx-Xxxxx may have with
respect to such claim (including copies of any summons, complaint or other
pleading which may have been served and any written claim, demand, invoice,
billing or other document evidencing or asserting the same). No failure or delay
by Xxxxx-Xxxxx in the performance of the foregoing shall reduce or otherwise
affect the obligation of Xxxx Xxxxxx and the Owners to indemnify and hold
Xxxxx-Xxxxx harmless, except to the extent that such failure or delay has
adversely affected Xxxx Xxxxxx or the Owners' ability to defend against, settle
or satisfy the claim.
1.3. Limitations. The obligation of Xxxx Xxxxxx and the Owners to
indemnify the Indemnified Parties is subject to the following limitations:
1.3.1. The Indemnified Parties shall look first to the Escrowed
Amount (as defined in Section 4.2) for the discharge of Xxxx Xxxxxx and the
Owners' obligations hereunder. Such action by the Indemnified Parties, however,
shall not release or satisfy any of Xxxx Xxxxxx' or the Owners' obligations
hereunder to the Indemnified Parties, except to the extent satisfied out of the
Escrowed Amount.
1.3.2. From the date hereof until the first anniversary of this
Indemnity and Escrow Agreement (February 11, 1999) ("First Anniversary"), the
obligation of Xxxx Xxxxxx and the Owners to indemnify the Indemnified Parties
with respect to any Xxxxx-Xxxxx Loss incurred as a result of or in connection
with any claim by any state or federal regulatory authority arising out of or
relating to 16 C.F.R. ss. 444.4 (1997), as it may be amended, is limited to
Notices of Claim made during this period in an aggregate amount of the Purchase
Price.
1.3.3. From the date hereof until the First Anniversary, the
obligation of Xxxx Xxxxxx and the Owners to indemnify the Indemnified Parties
with respect to Xxxxx-Xxxxx Losses not included in Section 1.3.2 is limited to
Notices of Claim made during this period in an aggregate amount of $7,811,742.
1.3.4. From the First Anniversary until the second anniversary of
this Indemnity and Escrow Agreement (February 11, 2000) ("Second Anniversary"),
the obligation of Xxxx Xxxxxx and the Owners to indemnify the Indemnified
Parties with respect to Xxxxx-Xxxxx Losses is limited to Notices of Claim made
during this period in an aggregate amount of $4,311,742.
1.3.5. From the Second Anniversary until the third anniversary of
this Indemnity and Escrow Agreement (February 11, 2001) ("Third Anniversary"),
the obligation of Xxxx Xxxxxx and the Owners to indemnify the Indemnified
Parties with respect to Xxxxx-Xxxxx Losses is limited to Notices of Claim made
during this period in an aggregate amount of $2,311,742.
1.3.6. From the Third Anniversary until the fourth anniversary of
this Indemnity and Escrow Agreement (February 11, 2002) ("Termination Date"),
the obligation of Xxxx Xxxxxx and the Owners to indemnify the Indemnified
Parties with respect to Xxxxx-Xxxxx Dealer Reserve Losses is limited to Notices
of Claim made during this period in an aggregate amount of $311,742. From the
Third Anniversary until the fourth anniversary of this Indemnity and Escrow
Agreement (February 11, 2002) ("Termination Date"), the obligation of Xxxx
Xxxxxx and the Owners to indemnify the Indemnified Parties with respect to
Xxxxx-Xxxxx Dealer Reserve Interest Losses is limited to Notices of Claim made
during this period in an aggregate amount of $25,000.
1.3.7. Notwithstanding any other provision of this Indemnity and
Escrow Agreement, the aggregate amount Xxxx Xxxxxx and the Owners are obligated
to pay under this Indemnity and Escrow Agreement shall not exceed $7,811,742
plus the amount paid under Section 1.3.2, but in no event shall Xxxx Xxxxxx and
the Owners pay more than the Purchase Price.
2. Xxxxx-Xxxxx'x Obligation to Mitigate. Except for claims asserted by
third parties and Xxxxx-Xxxxx Dealer Reserve Losses, Xxxxx-Xxxxx shall exercise
commercially reasonable efforts to mitigate the amount of any Xxxxx-Xxxxx Loss.
3. Xxxx Xxxxxx and the Owners' Defense.
This Section applies only to claims asserted by third parties. If the
claim asserted by a Notice of Claim arises because of a claim or demand that is
asserted by a third party, including, but not limited to, any governmental unit
or a Xxxx Xxxxxx borrower, Xxxx Xxxxxx and the Owners shall have 15 days after
the date of the Notice of Claim to notify Xxxxx-Xxxxx in writing of their
election to defend the claim on behalf of the Indemnified Party. If Xxxx Xxxxxx
and the Owners elect to defend the claim, the Indemnified Party shall make
available to Xxxx Xxxxxx and the Owners all records and other materials which
are reasonably required in the defense of the claim and shall otherwise
cooperate with and assist Xxxx Xxxxxx and the Owners in the defense of the
claim. So long as Xxxx Xxxxxx and the Owners are defending the claim in good
faith, the Indemnified Party shall not pay, settle or compromise the claim. If
Xxxx Xxxxxx and the Owners elect to defend the claim, the Indemnified Party
shall have the right to participate in the defense of the claim, at its own
expense. If Xxxx Xxxxxx and the Owners do not elect to defend the claim, or do
not defend the claim in good faith, then the Indemnified Party shall have the
right, in addition to any other right or remedy it may have hereunder, at Xxxx
Xxxxxx and the Owners' expense, to defend the claim or to pay or settle the
claim. Notwithstanding any of the foregoing, (a) the Indemnified Party shall not
have any obligation to participate in the defense of, or defend, the claim; and
(b) the Indemnified Party's defense of or its participation in the
defense of the claim shall not in any way diminish the obligations of Xxxx
Xxxxxx and the Owners. Xxxx Xxxxxx and the Owners shall not make any settlement
of the claim without written consent of Xxxxx-Xxxxx.
4. Creation of Escrow.
4.1. Appointment. Xxxxx-Xxxxx, the Subsidiaries, Xxxx Xxxxxx and the
Owners jointly appoint the Escrow Agent as the escrow agent for purposes of and
to act in accordance with the terms and conditions hereof, and the Escrow Agent
accepts such appointment.
4.2. Escrow Property. At Closing, Xxxxx-Xxxxx shall pay to the Escrow
Agent a portion of the Purchase Price equal to $7,811,742 (such amount, less the
amount of any payments by the Escrow Agent to Xxxxx-Xxxxx in accordance with the
terms hereof, is referred to as the "Escrowed Amount"). Notwithstanding such
payment to the Escrow Agent, Xxxxx-Xxxxx shall be deemed to have fully satisfied
its obligation to pay such part of the Purchase Price payable pursuant to the
Asset Purchase Agreement. Xxxx Xxxxxx (or the Owners) will report all income
earned on, or derived from, the Escrowed Amount as their income. The Escrowed
Amount shall be received and maintained by the Escrow Agent in an account (the
"Escrow Account") until paid out in accordance with the terms of this Indemnity
and Escrow Agreement.
4.3. Investments. The Escrow Agent shall invest the amounts in the
Escrow Account at the written direction of Xxxx Xxxxxx, the Owners and
Xxxxx-Xxxxx, or of any person designated in writing by such parties (for
purposes of this Section 4.3, the "Investment Agent") in the direct obligations
of, or in the obligations of any agency or authority of, the United States, any
state of the United States and any political subdivision thereof (the
"Government Obligations") or in such other investments as are directed by a
writing signed by Xxxx Xxxxxx, the Owners and Xxxxx-Xxxxx. Uninvested funds
shall be swept using a sweep investment vehicle that invests only in Government
Obligations, including, without limitation, an open-end management type
investment company registered under the Federal Investment Company Act of 1940
for which Escrow Agent or an affiliate provides services as investment advisor,
custodian, transfer agent, registrar or similar of related services until the
Escrow Agent receives written instructions from the Investment Agent. The Escrow
Agent shall not be liable or otherwise responsible for failure to achieve any
particular rate of return, or for any losses resulting from any investments
provided for pursuant to this Indemnity and Escrow Agreement. All earnings in
the Escrow Account shall be paid out to the Owners not less frequently than
quarterly, within 30 days after the end of each calendar quarter.
4.4. Payment of Claims. The Indemnified Parties shall be entitled to
payment from the Escrow Account if Xxxx Xxxxxx or the Owners are obligated to
indemnify the Indemnified Party as provided in Section 1.
4.5. Demand for Payment. From time to time, Xxxxx-Xxxxx may give
written notice ("Demand for Payment") to the Owners and the Escrow Agent
specifying in
reasonable detail the nature and dollar amount of any claim an Indemnified Party
may have under Section 1 for which a Notice of Claim has been made and
requesting payment of the claim from the Escrow Account.
4.6. Disputed Claims, Arbitration. If the Owners do not object in
writing to the Demand for Payment to the Escrow Agent and Xxxxx-Xxxxx within 30
days after the date the Demand for Payment is received, the Escrow Agent shall
pay the amount reported in the Demand for Payment to Xxxxx-Xxxxx to the extent
the Escrow Account contains sufficient funds for that purpose. If the Owners
object to such payment, they shall give written notice to the Escrow Agent and
Xxxxx-Xxxxx of their objection to the payment of the claim (the "Objection
Notice") within 30 days after the Demand for Payment was received. If the
Objection Notice is timely received, the Escrow Agent shall make no payment to
Xxxxx-Xxxxx in respect of the claim reported in the Demand for Payment unless
Xxxxx-Xxxxx and the Owners jointly in writing instruct the Escrow Agent to make
such payment. Xxxxx-Xxxxx and the Owners shall make a good faith attempt to
resolve the dispute. In the absence of joint instructions from Xxxxx-Xxxxx and
the Owners, upon written request by the Owners or Xxxxx-Xxxxx made not earlier
than 30 days after the Objection Notice is received, the Escrow Agent promptly
shall refer the dispute concerning the Demand for Payment to the American
Arbitration Association for settlement by arbitration in accordance with the
Association's Commercial Arbitration Rules. Judgment upon any resulting
arbitration award may be entered in any court of competent jurisdiction. As part
of such award, the arbitrator may establish his fee and expenses in connection
therewith, which Xxxxx-Xxxxx shall promptly pay. However, any award in an
Indemnified Party's favor shall be increased by a percentage of such fees and
expenses equal to the same percentage of an Indemnified Party's claim that is
awarded to an Indemnified Party in arbitration. Any award shall be a conclusive
determination of the matter and shall be final and binding upon all parties. The
Escrow Agent promptly shall pay the amount of any award in an Indemnified
Party's favor to Xxxxx-Xxxxx, to the extent the Escrow Account contains
sufficient funds for that purpose. Arbitration proceedings shall be held in
Baltimore, Maryland, unless the Owners and Xxxxx-Xxxxx agree upon another
location.
4.7. Periodic Determination of Escrowed Amount. On the First
Anniversary, the Escrow Agent shall notify the Owners and Xxxxx-Xxxxx of the
amount of any Notices of Claim and Demands for Payment made against the Escrow
Account, the validity and amount of which have not been determined or the
validity and amount of which have been determined, but which have not been paid.
The Owners and Xxxxx-Xxxxx shall promptly certify to Escrow Agent that each is
in agreement with such amount. This amount is called the "Reserve." Within 5
business days of the First Anniversary, the Escrow Agent shall pay to the Owners
an amount from the Escrow Account equal to the Escrowed Amount minus the Reserve
and minus $4,311,742, to the extent the Escrow Account contains sufficient funds
for that purpose.
Each time an arbitration award is made regarding a claim after
the First Anniversary and before the Second Anniversary, the Escrow Agent shall
pay to the Owners an amount from the Escrow Account equal to the Escrowed Amount
minus the then Reserve and minus $4,311,742, to the extent the Escrow Account
contains sufficient funds for that purpose.
On the Second Anniversary, the Escrow Agent shall notify the
Owners and Xxxxx-Xxxxx of the then amount of the Reserve and, subject to
certification of agreement with such amount by the Owners and Xxxxx-Xxxxx, shall
pay to the Owners within 5 business days of the Second Anniversary an amount
from the Escrow Account equal to the Escrowed Amount minus the Reserve and minus
$2,311,742, to the extent the Escrow Account contains sufficient funds for that
purpose.
Each time an arbitration award is made regarding a claim after
the Second Anniversary and before the Third Anniversary, the Escrow Agent shall
pay to the Owners an amount from the Escrow Account equal to the Escrowed Amount
minus the then Reserve and minus $2,311,742, to the extent the Escrow Account
contains sufficient funds for that purpose.
On the Third Anniversary, the Escrow Agent shall notify the
Owners and Xxxxx-Xxxxx of the then amount of the Reserve and, subject to
certification of agreement with such amount by the Owners and Xxxxx-Xxxxx, shall
pay to the Owners within 5 business days of the Third Anniversary an amount from
the Escrow Account equal to the Escrowed Amount minus the Reserve and minus
$336,742, to the extent the Escrow Account contains sufficient funds for that
purpose.
On the Termination Date, the Escrow Agent shall notify the Owners
and Xxxxx-Xxxxx of the then amount of the Reserve and, subject to certification
of agreement with such amount by the Owners and Xxxxx-Xxxxx, shall pay to the
Owners within 5 business days of the Termination Date an amount from the Escrow
Account equal to the Escrowed Amount minus the Reserve, to the extent the Escrow
Account contains sufficient funds for that purpose. The Escrow Agent shall hold
the Reserve until the claims described above are finally resolved. Upon
resolution of any claims in favor of an Indemnified Party, the amount thereof
shall be paid to the Indemnified Party. Upon resolution of all claims, the
remaining amount shall be distributed to the Owners.
No transfer to the Owners under this Section shall affect (i) any
rights of any Indemnified Party with respect to pending claims for which an
amount is held under this paragraph, or (ii) the continuing obligation of
indemnity of Xxxx Xxxxxx and Owners under Section 1 for the period set forth
therein.
The Escrow Agent shall disburse funds from the Escrow Account
from time to time upon written notice from both Xxxxx-Xxxxx and the Owners.
4.8. Escrow Agent's Responsibility; Resignation; Removal.
4.8.1. The Escrow Agent shall retain the Escrowed Amount in
accordance with the terms and conditions of this Indemnity and Escrow Agreement,
and shall be under no responsibility or obligation other than to follow the
provisions hereof.
4.8.2. The Escrow Agent may resign at any time upon 30 days
written notice to Xxxxx-Xxxxx and the Owners; within 20 days after receipt of
such notice, Xxxxx-Xxxxx shall select an independent bank or trust company to
serve as the successor Escrow
Agent, subject to the reasonable consent of the Owners (which consent shall not
be unreasonably withheld or delayed). In the event a successor is not selected
and agreed upon within the time described above, the Escrow Agent may deposit
the Escrowed Amount into a court of competent jurisdiction and request that the
court appoint or cause the parties to appoint a successor Escrow Agent. Upon
such deposit, the Escrow Agent shall be relieved of all future responsibilities
under this Indemnity and Escrow Agreement.
4.8.3. The Escrow Agent may be removed at any time upon written
notice from both Xxxxx-Xxxxx and the Owners.
4.8.4. This Indemnity and Escrow Agreement expressly sets forth
all the duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Indemnity and
Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be bound
by any provisions of any agreement among the other parties hereto except this
Indemnity and Escrow Agreement.
4.8.5. The Escrow Agent shall be entitled to rely in good faith
upon any order, judgment, certification, demand, notice, instrument, award, or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine and may
assume that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
4.8.6. The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Indemnity and Escrow Agreement and
shall not be liable for any action taken or omitted in good faith in accordance
with such advice.
4.8.7. The Escrow Agent makes no representations as to the
validity, value or genuineness of any amounts, documents or instruments held by
or delivered to it.
4.8.8. XXXXX-XXXXX, XXXX XXXXXX AND THE ESCROW AGENT SPECIFICALLY
WAIVE THE RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATED
TO THIS INDEMNITY AND ESCROW AGREEMENT.
4.9. No Liability of Escrow Agent. The Escrow Agent shall not be
liable for any act or omission in good faith and in the absence of fraud or
willful misconduct. The Escrow Agent shall in all cases be entitled to rely upon
and be fully protected in acting or in refraining from acting under this
Indemnity and Escrow Agreement in accordance with any and all written
notifications received by it in accordance with this Indemnity and Escrow
Agreement.
4.10. Indemnification of Escrow Agent. Xxxxx-Xxxxx and the Owners
hereby agree jointly and severally to indemnify and hold the Escrow Agent
harmless from and against any and all actions, suits, proceedings, losses,
liabilities, damages, costs and expenses (including attorneys' and experts'
fees, costs of investigation, court costs, and sums expended in settlement of
claims or litigation, pending or threatened) arising out of or in connection
with this Indemnity and Escrow Agreement, the failure of any party to perform
its obligations hereunder, or arising out of or in connection with any action or
failure to act in good faith by the Escrow Agent from and after the date of this
Indemnity and Escrow Agreement, save only any action or failure to act by the
Escrow Agent that constitutes fraud or willful misconduct.
4.11. Compensation. The Escrow Agent shall be entitled to reasonable
compensation for all services rendered by it under this Indemnity and Escrow
Agreement as provided for in Schedule A attached hereto. Such compensation shall
be borne 50% by Xxxx Xxxxxx and the Owners and 50% by Xxxxx-Xxxxx and the
Subsidiaries provided that the total amount of such compensation shall be the
joint and several obligation of each of Xxxxx-Xxxxx and the Subsidiaries, on the
one hand, and Xxxx Xxxxxx and the Owners, on the other.
4.12. Successor Escrow Agent. If the Escrow Agent consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation or national banking association, the
resulting, surviving or transferee corporation or national banking association,
without any further act, shall be the successor Escrow Agent with the same
effect as if it had been named as the Escrow Agent herein, unless Xxxxx-Xxxxx
and the Owners provide otherwise.
5. Miscellaneous.
5.1. Representations, Warranties and Covenants of Xxxx Xxxxxx and the
Owners. Xxxx Xxxxxx and the Owners hereby represent, warrant and covenant to
Xxxxx-Xxxxx, the Subsidiaries and the Escrow Agent that they have the full
right, power and authority to enter into this Indemnity and Escrow Agreement;
this Indemnity and Escrow Agreement constitutes their valid, legal and binding
obligations, enforceable against them in accordance with its terms; and no
set-off, counterclaim or other defense to enforcement of this Indemnity and
Escrow Agreement exists or may be asserted by them in connection herewith.
5.2. Governing Law. This Indemnity and Escrow Agreement shall be
governed by and construed and enforced in accordance with the internal,
substantive laws of the State of Maryland without giving effect to the conflict
of law rules thereof.
5.3. Notices. All notices, writings and other communications required
or permitted to be given pursuant to this Indemnity and Escrow Agreement shall
be in writing and shall be given by hand-delivery or transmitted by United
States certified mail, return receipt requested, postage prepaid, or via
overnight carrier, to the addresses set forth below:
If to Xxxx Xxxxxx
or the Owners: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
With a copy to: Adelberg, Rudow, Dorf, Xxxxxxx & Xxxxxx, LLC
600 Mercantile Bank & Trust Building
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esquire
If to Xxxxx-Xxxxx Xxxxx-Xxxxx Bancshares, Inc.
or the Subsidiaries: 00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President and CEO
With a copy to: Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx Xxxxxx, Esquire
If to Escrow Agent: FMB Trust Company, N.A.
00 Xxxxx Xxxxxxx Xxxxxx, Mail Code 101-591
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Each notice shall be deemed to have been received: (i) for hand deliveries, on
the date of transmittal; (ii) for mailing, on the day following such mailing;
and (iii) for overnight deliveries, on the day following such transmittal. The
parties shall have the right to change their respective addresses set forth in
this Section by giving notice of such change in accordance with this Section.
5.4. Entire Agreement. The Recitals are a substantive part of this
Indemnity and Escrow Agreement. This Indemnity and Escrow Agreement together
with all other agreements and documents executed by the parties in connection
with the Transactions represents the entire agreement between the parties and
supersedes and cancels any prior oral or written agreement, letter of intent or
understanding related to the subject matter hereof.
5.5. Counterparts. This Indemnity and Escrow Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument, and
shall become effective when one or more counterparts have been signed by each of
the parties.
IN WITNESS WHEREOF, this Indemnity and Escrow Agreement has been duly
executed by the parties hereto on the day and year first above written.
XXXX XXXXXX & CO., INC.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
XXXX XXXXXX SONS, INC.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
XXXX XXXXXX & CO.
By:/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Ely Shanis Trust,
General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust,
General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Xxxxxxx Xxxxxx Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Xxxxxxx Xxxxxx Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Xxxxxxx Xxxxxx Trust,
General Partner
By:/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, General Partner
By:/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Personal Representative of
the Estate of Xxxxxxx X. Xxxxx, General Partner
XXXXXXX CORP.
By:/s/ Xxxxxx X. Xxxxx (SEAL)
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx (SEAL)
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx (SEAL)
XXXXX X. XXXXX, PERSONAL
REPRESENTATIVE OF THE
ESTATE OF XXXXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx (SEAL)
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee u/a Xxxxxx X. Xxxxx
dated May 14, 1997, FBO Xxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxx (SEAL)
Xxxxxx Xxxxxxxxx, Trustee u/a Xxxxxx X. Xxxxx
dated May 14, 1997, FBO Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee u/a Xxxxxx X. Xxxxx
dated May 14, 1997, FBO Xxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxx (SEAL)
Xxxxxx Xxxxxxxxx, Trustee u/a Xxxxxx X. Xxxxx
dated May 14, 1997, FBO Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Xxxxxxx Xxxxxx Trust
/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Trust Share of the Ely Shanis Trust
/s/ Xxxxxx X. Xxxxx (SEAL)
Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Trust Share of the Xxxxxxx Xxxxxx Trust
Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees of Marital
Trust under the Last Will and Testament of Xxxxxxx
X. Xxxxx
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee
/s/ Xxxx Xxxxx (SEAL)
Xxxx Xxxxx, Trustee
Xxxxx X. Xxxxx and Xxxx Xxxxx, Trustees under
Bypass Trust under the Last Will and Testament of
Xxxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx (SEAL)
Xxxxx X. Xxxxx, Trustee
/s/ Xxxx Xxxxx (SEAL)
Xxxx Xxxxx, Trustee
XXXXX-XXXXX BANCSHARES, INC.
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxx, President
BAY FINANCE, LLC
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxx, President
of Xxxxx-Xxxxx Bancshares, Inc.,
Member
BAY INSURANCE, LLC
By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxx, President
of Xxxxx-Xxxxx Bancshares, Inc.,
Member
FMB TRUST COMPANY, N.A.
By:/s/ Xxxxxx X. Xxxxxx (SEAL)
Xxxxxx X. Xxxxxx, Escrow Agent
Exhibit A
Dealer Reserve list (Dealers with Written Agreements)
-----------------------------------------------------------
DEALER
RESERVE
1/30/98
-----------------------------------------------------------
BELTWAY B $455
-----------------------------------------------------------
XXXXXXX B $1,612
-----------------------------------------------------------
CARPET & FLOOR $ 1,566
GALLERY B
-----------------------------------------------------------
XXXXX AUTO B $14
-----------------------------------------------------------
EASTERN MTR B $2,490
-----------------------------------------------------------
G&W MOTOR B $19,744
-----------------------------------------------------------
XXXXXX MTR B $99
-----------------------------------------------------------
MAIN STREET B $14,745
-----------------------------------------------------------
R&F AUTO B $929
-----------------------------------------------------------
TOTALS $41,654
-----------------------------------------------------------
Exhibit B
Dealer Reserve list (Dealers without Written Agreements)
--------------------------------------------------------
DEALER
RESERVE
1/30/98
--------------------------------------------------------
XXXX XXXXXXX C $20,622
--------------------------------------------------------
COLUMBIA AUTO C $4
--------------------------------------------------------
MERIT MTR C $56,724
--------------------------------------------------------
NORTHEAST C $1,176
--------------------------------------------------------
THRIFT C $12,693
--------------------------------------------------------
USED CAR CONN C $4,906
--------------------------------------------------------
TOTALS $95,065
--------------------------------------------------------
---------------------------------------------------------
RESERVE
---------------------------------------------------------
CHESAPEAKE C $120,982
---------------------------------------------------------
MD AUTO BUYERS C $143
---------------------------------------------------------
VARIETY AUTO C $52,838
---------------------------------------------------------
TOTALS $173,963
---------------------------------------------------------
Exhibit C
MASTER DEALER AGREEMENT
This Agreement made this ___ day of _____, ____, by and between XXXX
XXXXXX CO., INC., hereinafter referred to as "Lender", and ____________,
hereinafter referred to as "Dealer".
1. From time to time Dealer desires to sell Lender certain notes,
chattel mortgages, conditional sales agreements, retail installment contracts,
lease agreements and other obligations (all herein called "notes") endorsed or
assigned by Dealer, all of which Dealer hereby warrants will be valid and
enforceable deferred payment obligations, in accordance with the terms thereof,
of the respective debtors to whom Dealer has leased or sold merchandise, and
which Dealer further warrant are not subject to any disputes, setoffs or
counterclaims. Lender is not obligated hereunder to buy any notes which are not
acceptable to Lender, but when any such notes are sold to lender, the terms and
conditions of this Master Dealer Agreement shall apply to each such sale. The
purchase price for each note shall be agreed to by Lender and Dealer at the time
each note is purchased. Dealer shall furnish Lender all original documents
requested by Lender at the time of purchase. All notes purchased by Lender prior
to the date of this Agreement are also subject to the terms of this Agreement.
2. WARRANTIES AND RIGHTS. With regard to each note sold to Lender under
this agreement:
(a) Dealer represents and warrants that any note sold to Lender will
have resulted from the sale or lease of Dealer's own property. Dealer further
represents and warrants that any merchandise covered by said notes shall have
been unconditionally accepted by the debtors and that at the time of assignment
of any note by Dealer to Lender the merchandise will be in the possession of the
debtor and will be the identical merchandise described in the note. Dealer
further represents and warrants that Dealer has fully complied with, and that
all notes covered by the terms hereof, shall be valid under all laws and
regulations relative to said notes (including, but not limited to, the
provisions of the Federal Truth-In-Lending Act, the Federal Equal Credit
Opportunity Act, the Laws of the State of Maryland, and any and all laws and
regulations controlling consumer and/or installment credit transactions). Dealer
further represents and warrants that the debtors on any such notes shall not
assert or allege and shall not have asserted or alleged at any time whether
before or after the sale of such notes to Lender, any claims, counterclaims,
setoffs or defenses of any nature whatsoever to such notes offered from Dealer
for purchase by Lender. If any debtor should return to us any merchandise
covered by any note sold by Dealer to Lender or if any debtor is dissatisfied
with such merchandise, Dealer agrees to remedy any defect or to make adjustments
to Lender's satisfaction. Lender shall have the right to make any compromise
settlement with any debtor where the amount due upon any note is in dispute or
where claims are made for allowances or discounts upon returned merchandise, but
before consummating same Lender shall notify Dealer and Dealer shall thereupon
be entitled to take a reassignment of such account upon the payment of the
amount thereof to Lender, less any unearned discount. If any rebate or credit is
allowed to any debtor by Dealer or by Lender, as provided for in this paragraph,
Dealer agrees to reimburse Lender for such amounts within ten (10) days after
demand.
(b) If Dealer makes any settlement with a debtor on any of the notes
without Lender's prior written consent, or in the event that any of the
warranties, representatives and/or covenants of Dealer's set forth herein or in
any note offered to Lender shall not be fully complied with or shall be found to
be untrue or materially misleading, Dealer shall be liable to Lender for the
unpaid balance of any such notes and Dealer hereby agrees that, at Lender's
option and Immediately upon Dealer's request therefor, Dealer will repurchase
any Lender's notes from Lender and Dealer further agrees that Dealer will not
contest said transfer and reassignment of any such notes made pursuant to the
terms hereof.
(c) Lender's rights and remedies hereunder shall be cumulative and
Lender may exercise any right or remedy, whether against the debtors under the
notes, against the security therefor, against the sums withheld or retained by
Lender hereunder, against Dealer or against any combination of the foregoing, in
such order as Lender sees fit without thereby releasing any other right Lender
may have.
(d) Lender does not assume any obligation or liability of Dealer's
in respect to any note, merchandise or service covered by any note or otherwise,
as well as any claim, counterclaim, set-off, or defense of any nature whatsoever
alleged or asserted by any debtor arising therefrom or as a result thereof and
Dealer will indemnify and hold Lender harmless from and against any and all
expense (including, without limitation, attorneys' fees), obligation, liability,
loss, damage and penalty incurred or suffered by Lender as the result of or
arising out of any liability, obligation, misfeasance, malfeasance, action or
omission of ours relating in any way whatsoever thereto or to any applicable
federal, state or local law or regulation (including, but not limited to, the
provisions of the Federal Truth-In-Lending Act, the Federal Equal Credit
Opportunity Act, the Laws of the State of Maryland, and any and all laws and
regulations controlling consumer and/or installment credit transactions).
3. COLLECTIONS. Lender shall have the sole right to make collections on
all notes and to notify each debtor of such purchase. Dealer agrees not to
solicit or make any collections with respect to any notes sold to Lender except
pursuant to Lender's written instruments, and to forward to Lender promptly all
communications, inquiries and the identical remittances which Dealer may receive
with reference to said notes, and Lender may endorse Dealer's name upon any
commercial paper received in payment upon said notes. Lender may audit Dealer's
books and records relating to said notes.
4. HOLDBACK. APPLICABLE IF INITIALLED _____ DEALER _____ LENDER At the
time of any assignment of notes by Dealer, Lender may withhold from the agreed
purchase price an amount equal to ______ percent of the total unpaid balance of
the notes then purchased by Lender, and _____________ days after the date of
each such purchase, Lender agrees to pay such holdback to Dealer, provided that,
if before such date Lender shall find that there is a breach of warranty or
representation regarding any of the notes, if the balances due on said notes
cannot be verified, or if for any reason any of the notes are not acceptable to
Lender, the amount to be paid to Dealer from the holdback shall be diminished by
the amount of the unpaid balance of each such note, less the discount as shown
by Lender's records, and Lender shall release to Dealer all right and interest
which Lender may have in respect to the particular notes deducted from the
holdback.
5. RESERVE. APPLICABLE IF INITIALLED _____ DEALER _____ LENDER
(a) From the amount which Lender agrees to pay upon each assignment
or transfer by Dealer or any notes, Lender may retain an amount equal to
________ percent of the total unpaid balance of all the notes then purchased by
Lender, to be called a Reserve Fund.
(b) From the amount which Lender agrees to pay upon each assignment
or transfer of any notes, Lender may retain from the finance charge contained in
each such note $___________ per $100 per annum as Lender's sole property. All
that part of the finance charge in excess thereof shall be called a Reserve
Fund.
Dealer agrees to use only those rate charts which shall be first
approved by Lender. It is agreed that Dealer shall within ten (10) days of
Lender's request, repurchase for cash any notes in default which are endorsed
"With Recourse," "Repurchase," or "partial Recourse" without charging such notes
to the Reserve Fund. However, all such notes and all other notes purchased by
Lender under the terms of any other agreement may, at Lender's option, be
charged against said Reserve Fund. The Reserve Fund may at Lender's option, be
used to pay any payments and expenses incurred by Lender or other defaults and
losses which may occur _________ any and all notes purchased by Lender from
Dealer which Dealer has not repurchased or upon those notes which Dealer has
agreed to repurchase, but has not paid lender the entire balance of said notes.
The repurchase price shall be the full amount remaining unpaid under the note
plus all expenses incurred by Lender.
The Reserve Fund shall be subject to the terms and conditions as
follows:
(a) It shall be in Lender's entire discretion and judgment as to
which notes shall be considered losses or in default and when such notes shall
be charged against said Reserve fund.
(b) Upon charging a note against the said Reserve Fund Lender
shall be obligated to reassign such note to Dealer in the event the note is
fully paid thereby and in the event Dealer requests such reassignment in
writing.
(c) If Lender has taken any action, whether by suit or
otherwise, upon any such note, or security therefor, Lender will only be
obligated to reassign to Dealer the rights which Lender then has in any such
note or security.
(d) Unless such reassignment is so requested by Dealer, the
notes charged against said Reserve Fund shall be held by Lender as part of said
Reserve Fund and any collections upon such notes shall be added to and treated
as part of said Reserve Fund.
(e) The Reserve Fund may be used at Lender's option by Lender to
satisfy any losses, costs, damages, or expenses which Lender may suffer or incur
by reason of Dealer's default or of any breach by Dealer of any of the
provisions set out in this agreement or because of any breach or default of any
of the provisions in the notes purchased pursuant to the terms of this
agreement.
(f) Every _______ months after the date of this agreement, or
more often if Lender desires, Lender shall determine if the amount in said
Reserve Fund exceeds ____ percent of the unpaid balances of all notes which
Lender has purchased from Dealer, and which are then unpaid. The amount of any
such excess so purchased from Dealer, and which are then
unpaid. The amount of any such excess so determined shall be paid by Lender to
Dealer, provided Dealer has complied with the terms and provisions of this
agreement, and further provided that such excess so determined shall not be paid
by Lender to Dealer which would reduce the Reserve Fund below the Amount of
$200.00. There shall be no obligation upon lender under this sub-paragraph,
unless Lender receives from Dealer a written request for an accounting is
desired. In the event Dealer stops selling notes to Lender, or Lender stops
buying notes from Dealer, Lender may hold and apply the Reserve Fund until
Liquidation of all notes purchased from Dealer.
(g) Lender may charge Dealer's regular or special reserve
account or reduce Dealer's advance to provide Lender with a minimum charge of
$____________ on any note.
(h) In the event that any note is prepaid, refinanced, or if the
goods securing the same are repossessed or if Lender shall sustain any loss with
respect to any note, Dealer agrees to refund to Lender the same percentage of
all reserves credited to or paid Dealer on such note as the amount of refund
which Lender makes bears to the amount of the original finance charge exclusive
of insurance premiums.
(i) The Reserve Fund shall remain in Dealer's possession until
paid out to Lender in accordance with the foregoing and Lender agrees to sign
all documents requested by Dealer to perfect Dealer's Lien on said Reserve Fund,
and Lender covenants not to encumber or pledge or otherwise transfer said funds,
and that said funds shall not be the subject of any of Lender's creditors'
claims.
6. TERMINATION. Either Dealer or Lender may terminate this agreement at
any time in writing to that effect to the other; but such notice shall not
effect any obligation hereunder on the part of either party to this agreement,
which arose out of purchase of notes hereunder prior to the termination.
7. WAIVER. The waiver of any default hereunder shall not operate as a
waiver of successive defaults, but all rights hereunder shall continue
notwithstanding one or more waivers. No waiver or change of any provision herein
shall be binding on Lender unless evidenced in writing signed by Lender and this
agreement shall inure to and bind the respective legal representatives,
successors and assigns of the parties to this agreement, and any company
affiliated with Lender which may transact business hereunder.
This agreement shall be deemed as being made in the State of Maryland
and shall be governed by and construed in accordance with the laws of the State
of Maryland. This agreement is valid and enforceable only if signed by an
officer of Dealer's corporation if Dealer is a valid corporation, if signed by
the owner if Dealer is a sole proprietorship, or if signed by all partners if
Dealer is a partnership.
WITNESS our hands and seal the date first above written.
XXXX XXXXXX CO., INC.
LENDER
BY____________________________ BY_______________________________________
BY_______________________________________
NAME TITLE
GUARANTY. If completed, the undersigned, jointly and severally if more
than one, do hereby absolutely and unconditionally PERSONALLY guarantee to
Lender and its assigns the prompt payment of all funds due Lender under the
Agreement and/or the prompt performance of all requirements of the Agreement if
Dealer defaults on the Agreement in any manner. Each of the undersigned
expressly waives presentment, protest, demand, notice of dishonor or default,
notice of acceptance of this Guaranty and notice of any kind with respect to
said Agreement or this Guaranty or the performance of the obligations under said
Agreement or this Guaranty. Each of the undersigned consent to and agrees to be
bound by all terms and provisions of the Agreement.
--------------------------------- ------------------------------------------
WITNESS GUARANTOR
--------------------------------- ------------------------------------------
WITNESS GUARANTOR
--------------------------------- ------------------------------------------
WITNESS GUARANTOR
--------------------------------- ------------------------------------------
WITNESS GUARANTOR
