EXHIBIT 10.16
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made and entered into as of the
day of _________, 2002 (the "Effective Date") by and among ARMITEC, INC., a
Delaware corporation (the "Company"or "Armitec"), XXXX XXXXX, an individual
resident of the State of Pennsylvania (the "Shareholder") and Endless Mountain
Abstract ("Escrow Agent").
WITNESSETH:
WHEREAS, Xxxx Xxxxx Associates, Inc. ("Xxxx Xxxxx Associates"), a wholly
owned subsidiary of Armitec, the Shareholder, and Pocono Knits, Inc. ("Pocono")
have entered into that certain Asset Purchase Agreement, dated as of March 15,
2002, as amended by the First Amendment to Asset Purchase Agreement of even date
herewith (collectively, the "Asset Purchase Agreement"), whereby Xxxx Xxxxx
Associates is purchasing all of the assets of Pocono in exchange for the
assumption of all of the Assumed Obligations as such term is defined in the
Asset Purchase Agreement;
WHEREAS, in order to induce Pocono and the Shareholder to enter into the
Asset Purchase Agreement, the Company has agreed to pledge all of the issued and
outstanding shares of Xxxx Xxxxx Associates to the Shareholder to secure the
performance by Xxxx Xxxxx Associates of its obligations in connection with the
Obligations (as such term is defined in the Stock Pledge Agreement of even date
herewith, hereinafter the "Obligations") (the "Pledged Shares"); and
WHEREAS, the Company and the Shareholder wish for the Escrow Agent to hold
certain certificates representing the Pledged Shares (the "Escrowed Shares"), to
be held in escrow until the Escrow Agent receives a written notice, with a copy
to the other party, directing the Escrow Agent to return the Escrow Shares to
the Company or transfer the Escrow Shares to the Shareholder (the "Notice"); and
WHEREAS, the parties hereto wish to specify the terms and conditions for
the release of the Escrowed Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties agree as follows:
1. Terms of the Escrow. The parties hereby agree to establish an escrow
account with the Escrow Agent whereby the Escrow Agent shall hold certain
certificates representing the Escrowed Shares, and duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Shareholder (the "Transfer Documents"). The Company will deliver to the Escrow
Agent, within three (3) days following the Effective Date, the Escrowed Shares
and the Transfer Documents.
2. Term. The term of this Agreement shall commence on the date of the
execution of this Agreement and shall continue until the Escrowed Shares are
returned to the Company or are transferred to the Shareholder.
3. Release of Escrow Shares.
(a) Conditions.
(i) The Escrow Agent shall return the Escrow Shares to the
Company within five (5) days after receipt of Notice of the
satisfaction of either of the following conditions by the Company:
(A) the satisfaction in full of the Obligations; or
(B) the receipt by the Shareholder of a release of
liability from all of the Obligations.
(ii) The Escrow Agent shall transfer the Escrow Shares to the
Shareholder within five (5) days after receipt of Notice of the
failure of the Company to pay any of the Obligations, as and when the
same shall become due and payable and after taking into account any
applicable cure periods.
(b) Escrow Dispute. If the Escrow Agent receives a notice of dispute
by the other party (the "Escrow Dispute") within such five (5) day period,
the Escrow Agent shall notify the parties to that effect (the "Escrow
Agent's Notice"), and the parties shall attempt to resolve the Escrow
Dispute amicably with a period of thirty (30) days from parties receipt of
the Escrow Agent's Notice. If the parties are unable to resolve the Escrow
Dispute within such thirty (30) day period, the Escrow Dispute may at any
time be submitted by any party hereto to arbitration as provided in Section
3(c) below which shall be the sole and exclusive method for resolving and
remedying Escrow Disputes.
(c) Arbitration.
(i) In the event that the Escrow Dispute is not resolved by the
parties with such thirty (30) day period, either party may submit the
Escrow Dispute to arbitration by delivering to each other party
involved therein a notice of arbitration (a "Notice of Arbitration").
Such Notice of Arbitration shall specify the matters as to which
arbitration is sought, the nature of the Escrow Dispute, the claims of
each party to the arbitration and shall specify the amount, the nature
of such claims and any other matters required by the Commercial
Arbitration Rules of the American Arbitration Association in effect
from time to time to be included therein, if any.
(ii) The Shareholder and the Company each shall select one
arbitrator (the arbitrators so selected shall be referred to herein as
the "Shareholder's Arbitrator" and the "Company's Arbitrator,"
respectively). The Shareholder's Arbitrator and the Company's
Arbitrator shall select a third independent, neutral arbitrator expert
in the subject mater of the dispute, and the three (3) arbitrators so
selected shall resolve the matter according to the procedures set
forth in this Section 3(d).
(iii)The arbitration shall be conducted in _________,
Pennsylvania under the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time, except as
modified by the agreement of all of the parties to this Agreement. The
arbitrators shall so conduct the arbitration that a final result,
determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no
event later than thirty (30) days after the delivery of the Notice of
Arbitration not later than ten (10) calendar days following completion
of the arbitration. The Final Determination must be agreed upon and
signed by the sole arbitrator or by at least two of the three
arbitrators (as the case may be). The Final Determination shall be
final and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury,
evident partiality or misconduct by an arbitrator prejudicing the
rights of any party and to correct manifest clerical errors. The
parties may enforce any Final Determination in any state or federal
court located in _______, Pennsylvania. For the purpose of any action
or proceeding instituted with respect to any Final Determination, each
party hereto hereby irrevocably submits to the jurisdiction of such
courts, irrevocably consents to the service of process by registered
mail or personal service and hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or hereafter
have as to personal jurisdiction, the laying of the venue of any such
action or proceeding brought in any such court and any claim that any
such action or proceeding brought in any court has been brought in an
inconvenient form.
4. Exculpation of Escrow Agent. The Escrow Agent shall have no duties or
responsibilities except for those set forth herein (and required by applicable
law). The Escrow Agent shall have no liability whatsoever for the performance of
any duties imposed upon the Escrow Agent under this Agreement or for any action
or failure to act by the Escrow Agent hereunder. The Escrow Agent shall not be
responsible for the acts or omissions of any other parties hereto. Anything in
this Agreement to the contrary notwithstanding, in no event shall the Escrow
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Escrow Agent may rely and/or act upon any
instrument or document believed by the Escrow Agent in good faith to be genuine
and to be executed and delivered by the proper person or party, and may assume
in good faith the authenticity, validity and effectiveness thereof and shall not
be obligated to make any investigation or determination as to the truth or
accuracy of any information contained therein. In the event of any dispute
between the Shareholder and the Company, the Shareholder and the Company shall
pay, on demand, reasonable attorneys' fees and other reasonable costs and
expenses incurred by the Escrow Agent in respect thereof. The Shareholder and
the Company shall be jointly and severally liable for such fees, costs and
expenses, but, as between themselves, such fees, costs and expenses shall be
paid by the party losing such dispute.
5. Indemnification of Escrow Agent. In consideration of its acceptance of
the appointment as Escrow Agent, the other parties hereto, jointly and
severally, agree to indemnify, defend and hold harmless the Escrow Agent from
any against any and all liability incurred by Escrow Agent to any person or
entity by reason of its having accepted the Escrow Shares or in carrying out the
terms hereof, and to reimburse the Escrow Agent for all of its reasonable
expenses (including attorneys' fees and expenses) incurred by reason of its
position hereunder or actions taken pursuant hereto.
6. Miscellaneous.
(a) Notices. Any notice or other communication required or permitted
to be given to the parties hereto shall be in writing and shall be deemed
to have been given if personally delivered, the next business day if
delivered by reputable overnight courier service or three (3) days after
mailing by certified or registered mail, return receipt requested, first
class postage prepaid, addressed as follows (or at such other address as
the addressed party may have substituted by notice pursuant to this Section
9(a)):
If to the Shareholder: 000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Company: Xxxx Xxxxx Associates, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
If to Escrow Agent: Endless Mountain Abstract
00 Xxxxxx Xxxxxx
Xxxxxx-Xxxxx, XX 00000
Facsimile:[ ]
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(b) Amendment. The provisions of this Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing
signed by all the parties hereto.
(c) Successor to Escrow Agent. If Escrow Agent is for any reason
unwilling or unable to serve as Escrow Agent during the term of this
Agreement, Escrow Agent may resign as Escrow Agent by giving at least
thirty (30) days prior written notice to the Shareholder and the Company,
such resignation to be effective thirty (30) days following the date such
notice is given. In addition, the Shareholder and the Company may jointly
remove the Escrow Agent as escrow agent at any time with or without cause,
by an instrument (which may be executed in counterparts) given to the
Escrow Agent, which instrument shall designate the effective date of such
removal. In the event of any such resignation or removal, a successor
escrow agent who is not affiliated with the Company shall be appointed by
the Company with the approval of the Shareholder, which approval shall not
be unreasonably withheld.
(d) Interpretation. In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto which, in its
opinion, conflict with any of the provisions of this Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be
to keep safely all property held in escrow until it shall be directed
otherwise in writing by all of the other parties hereto or by an order of
an arbitrator as provided in Section 3(d) hereof. The validity,
construction, interpretation and enforcement of this Agreement shall be
determined and governed by the laws of the State of Pennsylvania.
(e) Remedies. The rights and remedies of the parties under this
Agreement and the Purchase Agreement are cumulative and not exclusive of
any rights, remedies, powers and privilege that may otherwise be available
to the parties hereto.
(f) Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one agreement.
(g) Assignment. No party may, without the prior express written
consent of each other party, assign this Escrow Agreement in whole or in
part. This Escrow Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the parties.
(h) Waivers. Any waiver by any party by any party of any violation
of, breach of or default under any provision of this Agreement, by the
other party shall not be construed as, or constitute, a continuing waiver
of such provision, or waiver of any other violation of, breach of or
default under any other provision of this Agreement or the Asset Purchase
Agreement.
(i) Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or
entity other than the Shareholder, the Company and the Escrow Agent any
rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties have signed this Escrow Agreement on the
day and year first above written.
PURCHASER:
_____________________________________________
Xxxx Xxxxx
ARMITEC, INC.
By __________________________________________
Name ________________________________________
Title _______________________________________
ESCROW AGENT:
ENDLESS MOUNTAIN ABSTRACT
By _________________________________________
Name ________________________________________
Title _______________________________________
