EXHIBIT 10.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is made and entered into this
27th day of April, 2005, by and among WORLD AIR HOLDINGS, INC., a Delaware
corporation (the "PURCHASER"). XXX XXXXXXXX, AS TRUSTEE OF THE XXX AND XXXXXX
XXXXXXXX FAMILY TRUST DATED JANUARY 15, 2005 (the "SELLER"), and SUNTRUST BANK,
a Georgia banking corporation, as escrow agent (the "ESCROW AGENT").
BACKGROUND
A. Contemporaneously with the execution and delivery hereof, Purchaser,
North American Airlines, Inc., a Delaware corporation ("NAA"), Seller, and Xxx
XxXxxxxx, an individual, are consummating the transactions contemplated by that
certain Stock Purchase Agreement dated as of April 27, 2005 (the "PURCHASE
AGREEMENT"), pursuant to which the Seller is selling, transferring, conveying,
assigning and delivering to the Purchaser one hundred percent (100%) of the
issued and outstanding capital stock of NAA, and in connection therewith, the
Seller received consideration in the form of cash and a promissory note.
B. The Purchase Agreement contemplates the establishment of a fund to
satisfy certain potential obligations of the Seller with respect to
indemnification pursuant to Article IX of the Purchase Agreement.
C. Escrow Agent agrees to accept the Escrow Fund (as defined herein) and
to hold, administer and distribute the Escrow Fund in accordance with the terms
and conditions set forth herein.
D. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Purchase Agreement.
AGREEMENT
For and in consideration of the premises, the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Appointment of Escrow Agent. The Purchaser and the Seller hereby
designate and appoint Escrow Agent to serve as escrow agent and Escrow Agent
hereby confirms its agreement to act as escrow agent upon the terms, conditions
and provisions of this Agreement.
2. Creation of Escrow Fund.
(a) As contemplated in Section 2.3 of the Purchase Agreement,
Purchaser is depositing with Escrow Agent an amount equal to Two Hundred Fifty
Thousand Dollars and No Cents ($250,000.00) in immediately available funds (said
sum as reduced by any disbursements, amounts distributed under Section 5 hereof,
or losses on investments, is herein referred to as the "ESCROW FUND"). Unless
instructed otherwise in writing, the Escrow Agent shall invest the Escrow Fund
in the STI Classic U.S. Treasury Securities Money Market Fund. Notwithstanding
anything to the contrary herein provided, the Escrow Agent shall have no duty to
prepare or file any Federal or state tax report or return with respect to the
Escrow Fund or any income earned thereon. The Seller shall bear the cost of the
investment fees in connection herewith.
(b) The Escrow Agent shall invest the Escrow Fund pursuant to the
written instructions of the Seller in (i) investments in commercial paper
maturing in 270 days or less from the date of issuance which, at the time of
acquisition by the Escrow Agent, is rated Al or better by Standard & Poor's
Corporation or P1 or better by Xxxxx'x Investors Service, Inc.; (ii) investments
in direct obligations of the United States of America, or any agency or
instrumentality of the United States of America, the payment or guarantee of
which constitutes a full faith and credit obligation of the United States of
America, in either case, maturing in twelve months or less from the date of
acquisition thereof; (iii) investments in repurchase agreements, banker's
acceptances, certificates of deposit and time deposits, in each case maturing
within one year from the date of origin, issued by a bank or trust company
organized under the laws of the United States or any state thereof, having at
the date of the acquisition by the Escrow Agent capital, surplus and undivided
profits aggregating at least $500,000,000; or (iv) the STI Classic U.S. Treasury
Securities Money Market Fund (or any similar money market fund approved by
Escrow Agent, Seller and Purchaser), as directed by Seller in writing. Any
income earned on such investments shall be paid by Escrow Agent to the Seller
not less often than monthly. The Escrow Fund is to be held, administered and
paid by the Escrow Agent as provided herein. The Escrow Agent acknowledges
receipt of the Escrow Fund and agrees to hold, administer and pay the same in
accordance with the terms of this Agreement and to not permit any withdrawal
thereof except pursuant to the terms hereof.
3. Purpose of Escrow Fund. The Escrow Fund has been established for the
purpose of providing a source of funds to pay indemnification claims made by the
Purchaser under Article IX of the Purchase Agreement.
4. Notices Directing Distribution of Escrow Fund. As used herein, the term
"NOTICE OF DISTRIBUTION" means a certificate executed jointly by the Purchaser
and the Seller and delivered to Escrow Agent, specifying the disposition to be
made of the Escrow Fund in accordance with the provisions of Article IX of the
Purchase Agreement.
5. Disposition of Escrow Fund.
(a) Escrow Agent shall pay and disburse the Escrow Fund as follows:
(i) To Purchaser, as specified in any Notice of Distribution
received by Escrow Agent; or
(ii) To Seller, as specified in any Notice of Distribution
received by Escrow Agent.
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(b) Further, income earned on the Escrow Fund shall be distributed
to Seller at least monthly, as provided in Section 2(b) of this Escrow
Agreement;
(c) All disbursements hereunder pursuant to Section 5(a)(i) or
5(a)(ii) shall be made by the Escrow Agent within two (2) business days
following Escrow Agent's receipt of a Notice of Distribution, as contemplated in
Section 5(a) above.
6. The Escrow Agent's Duties. The Escrow Agent shall be obligated to
perform only such duties as are expressly set forth in this Agreement, and shall
not be required, in carrying out its duties under this Agreement, to take notice
of or refer to any other document or agreement, including the Purchase
Agreement. The provisions of this Section 6 shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement.
7. The Escrow Agent's Fees and Expenses. The Purchaser agrees to (i) pay
or reimburse the Escrow Agent for its attorney's fees and expenses incurred in
connection with the preparation of this Escrow Agreement, and (ii) pay the
Escrow Agent's compensation for its services hereunder in accordance with the
fee schedule attached hereto as Exhibit A and made a part hereof, which may be
subject to change hereafter by the Escrow Agent on an annual basis. The
Purchaser agrees to reimburse the Escrow Agent on demand for all costs and
expenses incurred in connection with the administration of this Escrow Agreement
or the escrow created hereby or the performance or observance of its duties
hereunder which are in excess of its compensation for normal services hereunder,
including without limitation payment of any legal fees and expenses incurred by
the Escrow Agent in connection with resolution of any claim by any party
hereunder.
8. Provisions Relating To The Escrow Agent.
(a) The Escrow Agent shall not be liable for any action or omission
hereunder, except for its own gross negligence or willful misconduct. Further,
except with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against the Escrow Agent, Purchaser
agrees to indemnify and hold harmless the Escrow Agent and each of its officers,
directors, employees and agents (and any successor escrow agent) from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising directly or
indirectly out of or in connection with this Agreement or the Escrow Agent's
undertaking to serve as escrow agent hereunder. As between the parties hereto
other than the Escrow Agent, if Seller's acts or omissions give rise to the
above-mentioned indemnity obligation to the Escrow Agent, then Seller shall
reimburse Purchaser for any expense incurred by Purchaser in connection with the
indemnity of Escrow Agent. Without limiting the foregoing, the Escrow Agent
shall in no event be liable in connection with its investment or reinvestment of
any cash held by it hereunder in good faith, in accordance with the terms
hereof, including, without limitation, any liability for any delays (not
resulting from its own gross negligence or willful misconduct) in the investment
or reinvestment of the Escrow Fund, or any loss of interest incident to any such
delays.
(b) Provided that the Escrow Agent acts in good faith, the Escrow
Agent shall be entitled to rely upon any order, judgment, certification, demand,
notice, instrument or other writing delivered to it hereunder without being
required to determine the authenticity or the
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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 provided that it
believes in good faith that the person executing such instrument has been
authorized to do so. The Escrow Agent may conclusively assume that the
undersigned representative of any party hereto which is an entity other than a
natural person has full power and authority to instruct the Escrow Agent on
behalf of that party unless written notice to the contrary is delivered to the
Escrow Agent.
(c) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall be fully protected
and not be liable for any action taken or omitted by it in good faith in
accordance with such advice.
(d) Any payments of income from the Escrow Fund shall be subject to
withholding regulations then in force with respect to United States taxes. The
Seller will provide the Escrow Agent with appropriate Internal Revenue Service
Forms W-9 for tax identification number certification or non-resident alien
certifications. The Escrow Agent shall have no duty or obligation with respect
to the preparation or the filing of any report or return pertaining to any state
or Federal taxation. The Seller agrees that, for purposes of federal and state
income taxes, the Seller will report all income, if any, that is earned on, or
derived from, the Escrow Fund as its income in the taxable year or years in
which such income is properly includable and pay any taxes attributable thereto.
(e) In the event of any disagreement between the Purchaser on the
one hand, and the Seller on the other hand, or any other dispute or disagreement
resulting in adverse claims or demands being made in connection with the Escrow
Fund or this Agreement or in the event that the Escrow Agent is in doubt as to
what action it should take hereunder, the Escrow Agent shall be entitled to (i)
retain the Escrow Fund until the Escrow Agent shall have received (A) a final
non-appealable order of an arbitrator or a court of competent jurisdiction
directing delivery of the Escrow Fund, or (B) Notice of Distribution directing
delivery of the Escrow Fund, in which event the Escrow Agent shall disburse the
Escrow Fund in accordance with such Notice of Distribution; or (ii) tender into
the registry or custody of any court of competent jurisdiction any part or all
of the Escrow Fund, in which case the Escrow Agent shall thereupon be discharged
from all further duties as escrow agent under this Agreement. Any court order
shall be accompanied by a legal opinion by counsel for the presenting party
reasonably satisfactory to the Escrow Agent to the effect that the order is
final and non-appealable. The Escrow Agent may rely conclusively and without
inquiry on the validity and genuineness of any such court order and opinion
furnished to the Escrow Agent and shall act in accordance with such court order
and legal opinion without further question.
(f) The provisions of this Section 8 shall survive the resignation
or removal of the Escrow Agent or the termination of this Agreement.
9. Resignation of the Escrow Agent. The Escrow Agent may at any time
resign as escrow agent hereunder by giving thirty (30) days' prior written
notice of resignation to the Purchaser and the Seller. Prior to the effective
date of the resignation as specified in such notice, the Purchaser and the
Seller will issue to the Escrow Agent joint written instructions directing
redelivery of all property held pursuant to this Agreement to a bank or trust
company which they
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mutually select. If, however, the Purchaser and the Seller shall fail to name
such a successor escrow agent within twenty (20) days after the notice of
resignation from the Escrow Agent, the Escrow Agent may (i) apply to a court of
competent jurisdiction for appointment of a successor escrow agent, or (ii)
deposit all property held pursuant to this Agreement into the registry of a
court of proper jurisdiction, and in either such case the Escrow Agent shall
thereupon be relieved of any further obligation under this Agreement. Any such
successor escrow agent must agree to be and shall be bound by, and shall have
all the rights, duties and responsibilities of the Escrow Agent under this
Agreement. Such resignation shall not deprive the Escrow Agent of its
compensation earned prior to such resignation, the Escrow Agent's right to
reimbursement of expenses, or the Escrow Agent's rights to the indemnification
provided for in Section 8 hereof.
10. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
If to the Seller:
0000 Xxxxxxx Xxxxx Xxxxx, Xxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx XxXxxxxx
Telecopier: (000) 000-0000
Tax ID# __________________
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx XxXxxxx Xxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
If to Purchaser:
World Air Holdings, Inc.
The HLH Building
000 Xxxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxx 00000
Attn: General Counsel
Telecopier: (000) 000-0000
Tax ID# __________________
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With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxxx LLP
One Atlantic Center, Fourteenth Floor
0000 Xxxx Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xx. Xxxxxx X. XxXxxxx
Telecopier: (000) 000-0000
If to Escrow Agent, to:
SunTrust Bank
Corporate Trust Department
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xx. Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11. Governing Law. This Agreement shall be governed by the laws of the
State of Georgia, without regard to such State's conflicts of law principles.
12. Jurisdiction; Service of Process. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of Georgia,
County of Xxxxxx, or, if it has or can acquire jurisdiction, in the United
States District Court for the Northern District of Georgia, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of which,
when taken together, will be deemed to constitute one and the same instrument.
14. Section Headings. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.
15. Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation
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of the claim or right unless in writing signed by the other parties; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
16. Exclusive Agreement and Modification. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement, as between
the parties other than the Escrow Agent) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the Purchaser, the Seller, and the Escrow Agent.
17. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of each other Party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal as of the day and year first written above.
PURCHASER:
WORLD AIR HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx (SEAL)
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: CEO & President
Tax ID#: ______________________________________
SELLER:
/s/ Xxx XxXxxxxx (SEAL)
------------------------------------------
Xxx XxXxxxxx
As Trustee of the Xxx and Xxxxxx XxXxxxxx Family
Trust dated January 15, 2005
Tax ID#: ______________________________________
ESCROW AGENT:
SUNTRUST BANK
By: /s/ Xxxx Xxxxxx (SEAL)
--------------------------------------
Name: XXXX XXXXXX
Title: FIRST VICE PRESIDENT
EXHIBIT A
SCHEDULE OF FEES FOR ESCROW AGENT SERVICES
The annual fee of [___________________________ DOLLARS ($_______________)]
[PENDING CONFIRMATION] for administering this Escrow Agreement is payable in
advance at the time of closing and, if applicable, will be invoiced each year to
the appropriate party(ies) on the anniversary date of the closing of the Escrow
Agreement.
Out of pocket expenses such as, but not limited, to postage, courier,
overnight mail, insurance, money wire transfer, long distance telephone charges,
facsimile, stationery, travel, legal or accounting, etc., will be billed at
cost.
These fees do not include extraordinary services which will be priced
according to time and scope of duties. The fees shall be deemed earned in full
upon receipt by the Escrow Agent, and no portion shall be refundable for any
reason, including without limitation, termination of the Escrow Agreement.
It is acknowledged that the schedule of fees shown above are acceptable
for the services mutually agreed upon and the undersigned authorizes the Escrow
Agent to perform said services.
