EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made on this the 21 day
of October, 1999, by and among KBK Capital Corporation ("Purchaser"), Xxxxxx
Commercial Finance, L.L.C. ("Seller"), and Whitney National Bank ("Escrow
Agent").
RECITALS:
WHEREAS, the Purchaser and Seller have entered into that certain Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
pursuant to which Purchaser agreed to acquire an aggregate of 483,795 shares of
the Purchaser's common stock, par value $.01 per share ("Common Stock");
WHEREAS, the Stock Purchase Agreement provides that Seller shall deliver to
the Purchaser this Escrow Agreement at the Initial Closing;
WHEREAS, Escrow Agent has agreed to act hereunder on the terms and
conditions set forth herein; and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth below, the parties hereto hereby agree as follows:
ARTICLE I
ESCROW
1.1 Deposit of Deferred Shares. On the date of the Initial Closing and
concurrently with the execution of this Escrow Agreement, Purchaser has
deposited with the Escrow Agent the Deferred Shares and instruments of transfer
duly executed by the Seller in blank, with signatures guaranteed. The
certificates representing the Deferred Shares shall be in the denominations set
forth on Exhibit A hereto. The certificates representing the Deferred Shares
are issued in the name of Seller, and are being delivered to the Escrow Agent
at the office address for the Escrow Agent as set forth in Section 3.1 of this
Escrow Agreement. The parties acknowledge that the Escrow Agent shall hold the
Deferred Shares in trust, for the purposes set forth herein, and shall in no
event be (or be deemed to be) the beneficial owner of the Deferred Shares.
1.2 Receipt by Escrow Agent. Escrow Agent acknowledges receipt of the
Deferred Shares and agrees to hold the Deferred Shares in escrow pursuant to
this Escrow Agreement.
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1.3 Beneficial Ownership of Deferred Shares. The records of the Escrow
Agent shall identify the ownership of the Deferred Shares by the Seller.
Subject to the terms of this Escrow Agreement, the Seller is and shall be the
sole owner of the Deferred Shares, and, subject to the terms of this Escrow
Agreement, shall have complete power and authority over the Deferred Shares,
including the right to vote and receive regular cash dividends; provided,
however, that the Seller shall not have the right to dispose of any portion of
the Deferred Shares during the term of this Escrow Agreement; and provided,
further, that the Seller shall not have any right to shares of Common Stock
issued as a stock dividend or a stock split or any non-cash distribution or any
extraordinary distributions, which shares and distributions shall become a part
of the Deferred Shares. The Escrow Agent shall send, or cause to be sent, to
the Seller a copy of the proxy solicitation material for each annual and special
meeting of shareholders of Purchaser, together with a form requesting
confidential instructions to the Escrow Agent on how to vote the shares of
Common Stock held hereunder for the benefit of the Seller. The Escrow Agent
shall vote each such share of Common Stock as so instructed. In the absence of
timely instructions from the Seller, the Escrow Agent will not vote the shares
of Common Stock held for the Seller. Subject to the terms of this Escrow
Agreement, the Escrow Agent shall send, or cause to be sent, to the Seller any
regular cash dividends distributed with respect to the shares of Common Stock
held hereunder for the benefit of the Seller.
1.4 Transfer of Deferred Shares. With the exception of an interpleader
action pursuant to Section 2.2 hereof or as may be directed by a court of
competent jurisdiction, the Deferred Shares shall be transferred to the
Purchaser only upon receipt by the Escrow Agent of a Deferred Payment, and shall
be released in accordance with the schedule set forth on Exhibit A; provided,
however, that if the Purchaser opts to purchase a greater number of shares of
Common Stock than that set forth on Exhibit A pursuant to Section 1.3 of the
Stock Purchase Agreement and delivers to the Escrow Agent payment for such
shares as set forth in Section 1.3 of the Stock Purchase Agreement, the Escrow
Agent shall transfer such additional Deferred Shares to the Purchaser. If such
greater number of shares is purchased, the number of the remaining shares to be
purchased at each Subsequent Closing will be reduced on a pro rata basis, such
that the aggregate number of shares of Common Stock purchased by the Purchaser
is 483,795.
1.5 Transfer of Deferred Shares Upon Failure of Deferred Payment. In the
event any Deferred Payment is not received by Escrow Agent on the applicable
Subsequent Closing and Deferred Payment is not made by the Purchaser in full
within 10 business days following receipt of notice by the Purchaser from the
Seller of nonreceipt thereof, the Escrow Agent shall deliver to Seller all
shares of Common Stock or other property held in escrow pursuant to this Escrow
Agreement.
1.6 Investment of Funds. When cash dividends, Deferred Payment or cash is
received by Escrow Agent pursuant to this Escrow Agreement, Escrow Agent shall
deposit or invest such amounts for the benefit of Seller in Treasury Obligations
Institutional Shares Money Market Fund. Administrative fees may be accepted by
Whitney National Bank in its capacity as Escrow Agent from mutual funds
companies as the result of investments made with such companies.
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Such fees are not and shall not constitute compensation due to Escrow Agent
under Section 2.4 of this Escrow Agreement and shall not otherwise be paid into
the account.
1.7 Transfer of Funds to Seller. As soon as practicable following the
receipt of cash dividends, Deferred Payment or cash, the Escrow Agent shall
wire transfer such funds, together with the investment earnings thereon pursuant
to Section 1.6 to Seller as follows:
Hibernia National Bank
Bank Route # 000000000
Account # 2080042321
Seller may change its wire transfer instructions by providing Escrow Agent
with notice complying with the provisions of Section 3.1 hereof.
ARTICLE II
ESCROW AGENT
2.1 Responsibilities of Escrow Agent. The Seller and Purchaser agree that
Escrow Agent shall have no responsibility except for the safekeeping and
handling of the Deferred Shares deposited with Escrow Agent pursuant to this
Escrow Agreement. Additionally, Escrow Agent shall not be liable for any
depreciation in or change of the value of the Deferred Shares deposited with
Escrow Agent hereunder. Nor shall Escrow Agent be liable for any act or thing
done or caused to be done by it under or pertaining to this Escrow Agreement or
the Deferred Shares deposited with it pursuant to this Escrow Agreement, except
for the negligence or willful misconduct of Escrow Agent; and in the event of
any conflicting demands made upon Escrow Agent, he may withhold performance
under instructions contained in this Escrow Agreement until such conflicting
demands are withdrawn or until the rights of the respective parties shall have
been settled by a court of competent jurisdiction.
2.2 Right of Interpleader. Should any controversy arise involving the
parties hereto or any of them or any other person, firm or entity with respect
to this Escrow Agreement, or should a substitute escrow agent fail to be
designated as provided in Section 2.6 hereof, or if Escrow Agent should be in
doubt as to what action to take, Escrow Agent shall have the right, but not the
obligation, either to (a) withhold delivery of the Deferred Shares or the taking
of any other action hereunder until the controversy is resolved, the conflicting
demands are withdrawn or its doubt is resolved, in any event to the satisfaction
of Escrow Agent, and Escrow Agent shall not in any event be or become liable
for its refusal or failure to act during such period and/or (b) institute a
petition for interpleader in any state or federal district court in either East
Baton Rouge or Calcasieu Parishes in the state of Louisiana to determine the
rights of the parties hereto. Should a petition for interpleader be instituted,
or should Escrow Agent be threatened with litigation or become involved in
litigation in any manner whatsoever in connection with this Escrow Agreement,
Seller hereby agrees to reimburse Escrow Agent for his attorneys' fees and
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any and all other expenses, losses, costs and damages incurred by Escrow Agent
in connection with or resulting from such threatened or actual litigation prior
to any disbursement hereunder.
2.3 Indemnification. Seller hereby agrees to indemnify the Escrow Agent,
and his partners, employees and agents (each herein called an "Indemnified
Party") against, and hold each Indemnified Party harmless from, any and all
expenses, including, without limitation, attorneys' fees and court costs,
losses, costs, damages and claims, including, but not limited to, costs of
investigation and litigation suffered or incurred by any Indemnified Party in
connection with or arising from or out of this Escrow Agreement, except such
acts or omissions as may result from the negligence or willful misconduct of
such Indemnified Party.
2.4 Compensation and Reimbursement of Expenses. Seller hereby agrees to
pay the fees, in accordance with Exhibit B, and expenses of Escrow Agent for his
services hereunder and to pay all expenses incurred by Escrow Agent in
connection with the performance of his duties and enforcement of its rights
hereunder and otherwise in connection with the preparation, operation,
administration and enforcement of this Escrow Agreement, including, without
limitation, reasonable attorneys' fees and related expenses incurred by Escrow
Agent, if any. Upon the Initial Closing, the Seller will pay the Escrow Agent
its fees as estimated for the term of this Escrow Agreement, provided, however,
that any unearned portion of such fees shall be refunded to the Seller upon
termination of this Escrow Agreement.
2.5 Resignation of Escrow Agent. Escrow Agent may resign as Escrow Agent
under this Escrow Agreement by giving written notice to the Purchaser and Seller
in accordance with the terms of this Escrow Agreement at least twenty (20) days
prior to the effective date of such resignation. Thereafter, Escrow Agent shall
deliver any remaining items held pursuant to this Escrow Agreement upon the
joint written and signed order of the Seller and Purchaser. If no such order is
received by Escrow Agent within twenty (20) days after the giving of such
notice, Escrow Agent is authorized and empowered to deposit all of same into the
registry of the United States District Court for the Northern District of Texas,
Fort Worth Division or, in the event that federal jurisdiction does not pertain,
in the courts of the state of Texas located in Tarrant County, Texas.
2.6 Removal of Escrow Agent. The Seller and Purchaser, acting jointly,
may remove Escrow Agent, with or without cause, and appoint a substitute escrow
agent or otherwise designate the disposition of the Deferred Shares without
other formality than giving written notice to Escrow Agent at Escrow Agent's
address set forth below, in which event Escrow Agent shall deliver the Deferred
Shares held by Escrow Agent hereunder in accordance with the joint written and
signed instructions of the Seller and Purchaser, and shall thereupon be deemed
to be removed as of the date designated in such notice, or if no date is
designated, as of the date such delivery is made.
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ARTICLE III
MISCELLANEOUS
3.1 Notice. Any notice or other communication provided or required to
be given hereunder shall be in writing and shall be given by personal delivery
or by certified mail, return receipt requested. All notices hereunder shall be
addressed to the person to receive such notice at the address set forth below
and shall be delivered to them at such address. Notices given by personal
delivery shall be deemed given and received when received at the proper address
stated herein. Notices given by certified mail shall be deemed given and
received when deposited with the U.S. Postal Service, postage prepaid. The
parties hereto may change their respective addresses for the receipt of notice
hereunder by giving the other parties hereto written notice of a change of
address for such purposes provided that such new address is located in the
United States of America. The address of the respective parties hereto for
notices hereunder are as follows:
if to Seller, to: Xxxxxx Commercial Finance, L.L.C.
c/o Xxxxxx X. Xxxxxx
P. O. Xxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
with a copy to: Xxxxx X. Xxxxxx
P. O. Box 51869
Xxxxxxxxx, Xxxxxxxxx 00000
Fax No.: (000) 000-0000
if to the Purchaser, to: Xx. Xxxxxx X. XxXxx
KBK Capital Corporation
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
with a copy to: Xx. Xxxx X. Xxxxx
Xxxxx Xxxxxxx & Xxxx LLP
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Fax No.: (000) 000-0000
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If to Escrow Agent, to: Whitney National Bank Trust Division
Attention: Xxxx X. Xxxxx, Xx.
000 Xx. Xxxxxxx Xxxxxx, Xxx. 000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
3.2 Reconciliation with Agreement. To the extent any of the terms and
provisions of this Escrow Agreement are contrary to or in addition to the terms
and provisions of the Stock Purchase Agreement, the Stock Purchase Agreement
shall be deemed to be hereby modified and amended in accordance with the terms
and provisions hereof. The Stock Purchase Agreement shall not be further
amended without the joinder or consent of all parties to this Escrow Agreement.
3.3 No Oral Modification. This Escrow Agreement may not be modified,
amended or altered except by an Escrow Agreement in writing signed by Purchaser,
the Seller and Escrow Agent.
3.4 Governing Law. The substantive laws of the State of Louisiana shall
govern the validity, construction, enforcement and interpretation of this Escrow
Agreement. Venue of any case or controversy arising under or pursuant to this
Escrow Agreement shall lie in the in any state or federal district court in
either East Baton Rouge or Calcasieu Parishes in the state of Louisiana.
3.5 Severability. If any covenant or provision of this Escrow Agreement
shall be held illegal, invalid or unenforceable under present or future laws
effective during the term of this Escrow Agreement, then and in that event, it
is the intention of the parties hereto that the remainder of this Escrow
Agreement shall not be affected thereby, and that this Escrow Agreement shall
otherwise continue in full force and effect. It is the further intention of the
parties that in lieu of each covenant or provision of this Escrow Agreement that
is held illegal, invalid, or unenforceable, there be added as a part hereof a
clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid and
enforceable.
3.6 Entirety. This Escrow Agreement embodies the entire Escrow Agreement
between the parties, and supersedes all prior escrow agreements and
understandings, if any, relating to the subject matter hereof.
3.7 Binding Effect and Assignment. The terms of this Escrow Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives, provided, however,
that neither party hereto may, without the prior written consent of the other,
assign any rights, powers, duties, or obligations hereunder; and further
provided, however, that this Escrow Agreement shall not inure to the benefit of
any party other than the parties to this Escrow Agreement.
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3.8 Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Escrow Agreement.
3.9 Counterparts. This Escrow Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
Escrow Agreement, and any of the parties hereto may execute this Escrow
Agreement by signing any such counterpart.
3.10 Time of the Essence. Time is of the essence of this Escrow
Agreement.
3.11 Term. The term of this Escrow Agreement shall commence upon the date
hereof, and shall continue in effect until all of the Deferred Shares shall have
been distributed hereunder, retransfer to Seller pursuant to Section 1.5, or
pursuant to the final order of a court of competent jurisdiction. The
provisions of Sections 2.3 and 2.4 hereof shall survive such termination.
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EXECUTED as of the date first above written.
KBK CAPITAL CORPORATION
By:/s/ XXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxx X. XxXxx
-----------------------------------
Title: Chairman of the Board
-----------------------------------
And Chief Executive Officer
-----------------------------------
XXXXXX COMMERCIAL FINANCE, L.L.C.
By:/s/ XXXXXX XXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxx
------------------------------------
Title: Managing Member
-----------------------------------
WHITNEY NATIONAL BANK
By: /s/ XXXX X. XXXXX, XX.
---------------------------------------
Name: Xxxx X. Xxxxx, Xx.
------------------------------------
Title: Trust Officer
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EXHIBIT A*
PAYMENT DATE** Number of Shares of Stock Price per Share
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December 31, 1999 55,000 $5.08
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March 31, 2000 55,000 $5.15
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June 30, 2000 55,000 $5.23
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September 30, 2000 55,000 $5.30
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December 31, 2000 55,000 $5.38
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March 31, 2001 55,000 $5.45
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June 30, 2001 53,795 $5.53
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TOTAL 383,795
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* Subject to any required action by the Purchaser's directors and
stockholders, the above schedule shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock), a stock split, a reverse stock
split, or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Purchaser.
** If the Payment Date is not a business day, the Subsequent Closing to be
held on such Payment Date shall occur on the next following business day.
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