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EXHIBIT 10.14
CLOSING ESCROW AGREEMENT
THIS CLOSING ESCROW AGREEMENT ("Closing Escrow Agreement") is made and
entered into as of the 29th day of May, 1998 (the "Effective Date"), by and
among Xxxxxxx X. Xxxxxx Xx., ("Xxxxxx"), individually and as Trustee under the
Xxxxxx and Xxxxxx, Inc. Employee Stock Ownership Plan and Trust ("TP ESOP"),
the other Shareholders of TP and holders of options on shares of TP named
herein and executing this Agreement (collectively, the "Sellers"); Xxxxxxxxxx
Acquisition Corp., a Virginia corporation ("Purchaser"); and Crestar Bank, a
Virginia banking corporation ("Closing Escrow Agent").
RECITALS:
R-1. As of the date hereof Purchaser and Sellers have entered into
an Agreement and Plan of Reorganization (the "Agreement") under the terms of
which Purchaser has agreed to purchase from Sellers and Sellers have agreed to
exchange with Purchaser 100% of the outstanding stock of Xxxxxx and Xxxxxx,
Inc., ("TP") for certain shares of Tea Party Common Stock and options therefor,
all as set forth in the Agreement.
R-2. Under the terms of the Agreement Purchaser is to deliver in
escrow to Closing Escrow Agent 10% of Tea Party Common Stock received in the
transaction, 68,577 shares and 10% of options to purchase being granted and
received pursuant to the transaction, 423 shares of Tea Party Common Stock (the
"Escrowed Securities") which are intended to be applied under the terms of the
Agreement to be valued under the Agreement and paid out in accordance with the
terms hereof and of Article VIII under the Agreement.
R-3. The capitalized terms used but not otherwise defined herein
shall have the meaning given such terms in the Agreement.
NOW, THEREFORE, in consideration of their respective promises and
undertakings hereunder, the parties hereto, each intending to be legally bound
hereby, do covenant and agree respectively as follows:
1. Delivery and Receipt of Funds.
(a) Simultaneously or as soon thereafter as practicable
after Closing of the Agreement, Purchaser will deliver to the Closing Escrow
Agent the Escrowed Securities to be held under the terms and conditions set
forth herein and in the Agreement. Receipt of the so deposited "Escrowed
Securities" is hereby acknowledged by the Closing Escrow Agent.
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(b) Certificates representing the Escrowed Securities
shall be delivered to the Closing Escrow Agent concurrent with the execution
hereof and shall be accompanied by stock powers duly signed with signature
guarantees.
(c) During the Escrow Period, the Closing Escrow Agent
shall receive all of the money, stock dividends, additional shares and
distributions of stock or noncash property of every kind, hereafter distributed
on or in respect of the Escrowed Securities ("Distributions" and, together with
the Escrowed Securities, the "Escrow Fund"), whether in addition to or in
substitution for the Escrowed Securities, in connection with any merger,
consolidation, sale of assets, exchange of shares, reclassification or
otherwise, and such Distributions are hereby deemed assigned, transferred and
delivered to Closing Escrow Agent to be held pursuant to this Closing Escrow
Agreement.
(d) For so long as the Escrowed Securities are held by
the Closing Escrow Agent, the respective Seller shall each be entitled to all
of the rights and privileges including the right to vote the shares accorded
record and beneficial owners of the Common Stock of Tea Party with respect to
the Tea Party Common Stock deposited by each Seller pursuant to this Closing
Escrow Agreement and any additional Tea Party Common Stock pursuant to any
Distribution.
(e) The Escrowed Securities shall not be assigned, sold,
hypothecated, pledged, transferred or otherwise disposed of (except by will,
descent, or operation of law) until released from escrow and each Seller
understands and agrees that the Purchaser and/or Tea Party shall place stop
transfer instructions as to the Escrowed Securities with its transfer agent.
2. Sellers' Representatives.
(a) Xxxxxx, or if Xxxxxx shall be unable or unwilling at
any time to so serve, Xxxxx X. Xxxxxx (the "Alternate Representative"), is
hereby irrevocably appointed attorney-in-fact, and authorized and empowered to
act, for and on behalf of any or all of the Sellers (with full power of
substitution in the premises) in connection with the Closing Escrow Agreement,
as may be reasonably necessary for the consummation of the transactions
contemplated hereby (the above-named representative together with the Alternate
Representative being referred to herein as the "XX Xxxxxxx' Representative").
By his execution hereof, Xxxxxx hereby accepts such appointment and agrees to
act as the XX Xxxxxxx' Representative hereunder. Tea Party and Purchaser, its
or their representatives and agents, and the Closing Escrow Agent and its
representatives and agents, shall be entitled to rely on such appointment and
treat such XX Xxxxxxx' Representative as the duly appointed attorney-in-fact of
each Seller. Each Seller, by such Seller's execution hereof, confirms such
appointment and authority and acknowledges and agrees that such appointment is
irrevocable and coupled with an interest, it being understood that the
willingness of Purchaser to enter into this Agreement is based, in part, on the
appointment of a representative to act on behalf of the Seller. Each Seller,
for itself and for its successors and assigns, pro rata with the other Sellers
based on the value of the shares of Tea Party Common Stock (and options
therefor) received by such Seller
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at the Closing (and based on the Tea Party Common Stock Closing Price), hereby
agrees to indemnify the XX Xxxxxxx' Representative, and to hold the XX Xxxxxxx'
Representative harmless from, any and all actions that the XX Xxxxxxx'
Representative may take in his capacity as such, except for such actions and
forbearances as constitute gross negligence or wilful misconduct on the part of
the XX Xxxxxxx' Representative.
(b) The XX Xxxxxxx' Representative shall not suffer any
liability or loss for any act performed or omitted to be performed by him under
this Agreement in the absence of bad faith or willful misconduct. The Sellers'
Representative may consult with counsel in connection with his duties hereunder
and shall be fully protected by any act taken, suffered, permitted, or omitted
in good faith in accordance with the advice of counsel. The Sellers'
Representative shall not be responsible for the sufficiency or accuracy of the
form, execution, validity or genuineness of documents now or hereafter
presented to him, or of any endorsement thereof or for any lack of endorsement
thereon, or for any description therein, nor shall he be responsible or liable
in any respect on account of the identity, authority, or rights of the persons
executing or delivering or purporting to execute or deliver any such documents
or endorsement, and the Sellers' Representative shall be fully protected in
relying upon any written notice, demand, certificate or document which he in
good faith believes to be genuine.
3. Duties of the Closing Escrow Agent.
(a) To the extent that any cash is maintained in the
Escrow Fund, the Closing Escrow Agent shall hold and invest and reinvest any
cash proceeds in Authorized Investments (as defined below). Interest or other
income and net gains, if any, realized on any assets held in the Escrow Fund
shall be deemed a portion of the Escrow Fund and shall from time to time be
reinvested by the Closing Escrow Agent in Authorized Investments as promptly as
practicable. The Closing Escrow Agent may refrain from investing any portion
of the Distributions until it receives such written investment instructions
from the XX Xxxxxxx' Representative as it may reasonably request. Any cash and
Authorized Investments shall be considered Escrowed Securities for purpose of
any escrow provisions.
(b) For purposes of this Agreement, "Authorized
Investments" means investments in instruments either federally insured or
having a rating of "AA" (or equivalent) or better or in repurchase accounts
that invest in overnight deposits having a rating of "AA" (or equivalent) or
better. All Authorized Investments shall mature not more than ninety (90) days
after the date of purchase thereof.
4. Division of Escrowed Securities. As between the Sellers and
Purchaser, the Escrowed Securities and Distribution shall constitute a single
Escrow Fund and the entire amount thereof shall secure the indemnification
obligations of Sellers to Purchaser under the Agreement; provided, however, as
among the Sellers, the Escrowed Securities and Distributions shall be initially
divided into eleven (11) Seller Accounts (hereinafter individually referred to
as a "Seller
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Account" and collectively as the "Seller's Accounts") representing the
percentages of the total Escrowed Securities as set forth on Schedule A.
5. Termination and Release of Escrowed Securities; Disbursement
of Escrow.
(a) At the earlier of (i) the first (1st) anniversary
following the Closing Date, or (ii) the date of the first audit of financial
statements containing combined operations ("Audit"), the Closing Escrow Agent
shall release to Sellers based on their Accounts from the Escrowed Securities
an amount of Tea Party Common Stock or, in the case of the optionholder,
options of shares of Tea Party Common Stock upon exercise of such option, and
any cash, if applicable, equal to (x) the balance of the Escrowed Securities
less (y) the estimated amount of any Claims set forth in any "written statement
of pending claims" received by the Closing Escrow Agent from Purchaser prior to
the earlier of the first anniversary of the execution of this Closing Escrow
Agreement or the Audit pursuant to Section 8.3 of the Agreement. At least ten
(10) days prior to releasing any portion of the Escrow Fund to Sellers, the
Closing Escrow Agent shall notify XX Xxxxxxx' Representative and Purchaser of
the scheduled date of the release, the amount that the Closing Escrow Agent
intends to release to each Seller and the amounts, if any, being retained
pursuant to any "written statement of pending claims" received from Purchaser.
The escrow shall end on release of the Audit of the date specified in the
sentence of this Section 5(a) and the Escrow Fund shall be released for
everything except where there has been a notice of pending claims and the
amounts shall be retained in sufficient amounts to satisfy such pending
claim(s). For purposes of distribution and claims, the Escrowed Securities are
valued as of the Closing Date of the Agreement and not the fair market value at
the time of the distribution of such Escrowed Securities.
(b) Any amounts of Escrowed Securities retained by the
Closing Escrow Agent pursuant to a "written statement of pending claims" shall
continue to be so held in trust by the Closing Escrow Agent in accordance with
this Agreement until the Closing Escrow Agent receives (i) written instructions
signed by both Purchaser and the Sellers' Representative or (ii) a copy of an
arbitration award entered by arbitrators in accordance with the procedures
referred to in Section 8.3(c) of the Agreement, which copy shall be certified
by such arbitrators, making a final determination with respect to the
disposition of such retained amounts.
(c) The amounts to be released by the Closing Escrow
Agent pursuant to subparagraph (a) hereof shall be made to the Sellers in
proportion to the amounts in their respective Seller Accounts as of the date of
the release of the Tea Party Common Stock and if applicable, any Distributions
on the Escrowed Securities, plus to the extent applicable any accrued but
unpaid interest.
(d) Except as provided in Paragraphs 5(a)-(c) above, the
Closing Escrow Agent shall disburse the Escrowed Securities, or any portion
thereof, only upon receipt, and pursuant to the terms, of (i) written
instructions signed by both Purchaser and the Sellers' Representative, (ii) a
copy of an arbitration award entered by arbitrators in accordance with the
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procedures referred to in Section 8.3(c) of the Agreement, which copy shall be
certified by such arbitrators or (iii) a certified copy of the decree of any
court in litigation in which both Seller and Purchaser were parties and in
which Seller's indemnification obligation pursuant to Section 8.01 was decided.
Notwithstanding anything herein to the contrary, in the event of the payment to
the Purchaser of any amounts payable upon resolution of any Claim, the Closing
Escrow Agent shall, upon notification to the Seller's Representative, be
provided such additional duly executed and guaranteed stock powers as it may
require from time to time.
(e) When the Closing Escrow Agent has taken all of the
actions required by this Agreement, the Closing Escrow Agent shall thereupon
and thereafter be freed and discharged of all obligations and liabilities under
this Closing Escrow Agreement.
6. Fees. Purchaser shall pay to Closing Escrow Agent, in
advance, all fees of the Closing Escrow Agent at its prescribed rate.
7. Limitation Upon Obligation of Closing Escrow Agent.
(a) Closing Escrow Agent shall not be required to inquire
into the truth of any statements or representations contained in any notices,
certificates, or other documents required or permitted hereunder, and it may
assume that the signatures on any such documents are genuine, that the persons
signing on behalf of any party thereto are duly authorized to issue such
document, and that all actions necessary to render any such documents binding
on any party thereto have been duly undertaken. Without limiting the foregoing,
Closing Escrow Agent may in its discretion require from Sellers or Purchaser
additional documents which it deems to be necessary or appropriate to aid it in
the course of performing its obligations hereunder.
(b) Notwithstanding any other provision of this
Agreement, in the event Closing Escrow Agent receives conflicting demands from
Seller and Purchaser respecting the Escrowed Securities to Purchaser hereunder,
Closing Escrow Agent may, in its sole discretion, file an interpleader action
with respect thereto in any court of competent jurisdiction and deposit the
Escrowed Securities with the clerk of the court or withhold release of the
Escrowed Securities until instructed otherwise by court order.
(c) Sellers and Purchaser do hereby jointly and severally
(i) release, and agree to indemnify and hold harmless, Closing Escrow Agent
from and against any and all liability for losses, damages, and expenses
(including attorneys' fees) that may be incurred by it on account of any action
taken by Closing Escrow Agent in good faith pursuant to this Closing Escrow
Agreement, and (ii) agree to defend and indemnify Closing Escrow Agent from and
against any and all claims, demands, or actions arising out of or resulting
from any action taken by Closing Escrow Agent in good faith pursuant to this
Closing Escrow Agreement.
(d) Closing Escrow Agent undertakes to perform only such
duties as are expressly set forth herein. The Closing Escrow Agent (i) shall
not be under any duty to give the
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Escrow Fund any greater degree of care than it gives its own similar property
and (ii) does not have and will not have any interest in the Escrow Fund but is
a mere holder thereof. The Closing Escrow Agent shall be under no obligation
to institute or defend any actions, suit or legal proceeding in connection
herewith or to take any other action likely to involve it in expense unless
first indemnified to its satisfaction.
8. Independent Contractor Status. The parties hereto are and
shall be independent contractors under this Closing Escrow Agreement, and
nothing herein shall be construed to create a partnership, joint venture, or
agency relationship between or among the parties hereto.
9. Term of Agreement. The term of this Closing Escrow Agreement
shall commence on the effective date hereof and shall continue until the entire
Escrow Fund is disbursed to either Purchaser or Sellers pursuant to Section 5
above.
10. Miscellaneous.
(a) The parties hereto agree that they shall comply with
all applicable laws and regulations of governmental bodies or agencies in their
respective performance of their obligations under this Closing Escrow
Agreement.
(b) Except for XX Xxxxxxx' Representative and Xxxxxx as
Trustee of TP ESOP, who are acting on behalf of others, each party represents
that it is acting on its own behalf and is not acting as an agent for or on
behalf of any third party; and further agrees that it may not assign its rights
or obligations under this Closing Escrow Agreement without the prior written
consent of the other parties hereto (except that an assignment by Purchaser of
such rights requires only the consent of the XX Xxxxxxx' Representative, and an
assignment by any Seller requires only the consent of Purchaser).
(c) All notices, consents, waivers, and other
communications under this Closing Escrow 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), provided that a copy is mailed by registered mail, return receipt
requested, 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):
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if to Seller to:
Xxxxxxx X. Xxxxxx, Xx.
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone No.:
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Facsimile No:
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with a required copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esquire
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
if to Purchaser to:
Xxxxxxxxxx Acquisition Corp.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. xxXxxxx
Telephone No. (000) 000-0000 Ext. 4410
Facsimile No. (000) 000-0000
with a copy to:
Xxxxx & Xxxxxx, P.C.
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Esquire
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
if to Closing Escrow Agent to:
Crestar Bank
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust - Escrow Administration
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Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
(d) This Closing Escrow Agreement shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
Commonwealth of Virginia (without giving effect to any choice of law provision
or rule whether of the Commonwealth of Virginia or any other jurisdiction that
would cause the court to apply the law of any other jurisdiction).
(e) No amendment or modification of this Closing Escrow
Agreement shall be effective unless set forth in a writing executed by
authorized representatives of the parties hereto. No waiver of any provision of
this Closing Escrow Agreement shall be effective unless it is set forth in a
writing which refers to the provisions so waived and the instrument in which
such provision is contained and is executed by an authorized representative of
the party waiving its rights. No failure or delay by any party in exercising
any right, power, or remedy will operate as a waiver of any such right, power,
or remedy.
(f) Unless otherwise specified in this Closing Escrow
Agreement, time shall be of the essence with respect to the duties,
obligations, and performance of Seller under this Closing Escrow Agreement.
(g) No party shall be held responsible for any act,
failure, event, or circumstance addressed herein if such act, failure, event,
or circumstance is caused by conditions beyond such party's reasonable control.
(h) If any provision of this Closing Escrow Agreement is
held illegal, unenforceable, or in conflict with any law of any federal, state,
or local government having jurisdiction over this Closing Escrow Agreement, the
validity of the remaining provisions hereof shall not be affected thereby.
(i) The provisions of this Closing Escrow Agreement, by
their terms, constitute the entire agreement between the parties and supersede
all prior agreements, oral or written, and all other communications relating to
the subject matter hereof.
(j) This Closing Escrow Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Closing Escrow
Agreement to be executed by their duly authorized representatives as set forth
below.
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PURCHASER:
XXXXXXXXXX ACQUISITION CORP.
By:
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Xxxxxxx X. XxXxxxx, President
SELLER:
Xxxxxx and Xxxxxx, Inc. Employee Stock
Ownership Plan and Trust
By:
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Xxxxxxx X. Xxxxxx, Xx., Trustee
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Xxxxxxx X. Xxxxxx, Xx., Individually
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Xxxxxxxx X. Xxxxxxxx
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Xxxxxx Xxxxxx
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Xxxxxxxxx X. Xxxxxx
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Xxxxxxxx Xxxxx
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Xxxxx Xxxxxxxxxx
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Xxxxxx Xxxxx
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Xxxxxx X. Xxxxxxxxxx
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Xxxxx Xxxx
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Xxxx Xxxxx, as Optionee
CLOSING ESCROW AGENT:
CRESTAR BANK
By:
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Name:
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Title:
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