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EXHIBIT 10.5
PURCHASE PRICE ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated as of October 31, 2000 among GEEG
Holdings, L.L.C., a Delaware limited liability company (the "Buyer"), Xxxx X.
XxXxxxxxx and Xxxxxx X. Xxxxxxx (each a "Seller" and collectively the "Seller"),
and United States Trust Company of New York (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to an Acquisition Agreement dated as of
October 31, 2000 (the "Acquisition Agreement") among the Buyer, CFI Holdings,
Inc. ("CFIH") and the Sellers, the Buyer has on this day acquired all of the
outstanding capital stock of CFIH under the terms and conditions of the
Acquisition Agreement;
WHEREAS, the Acquisition Agreement contains certain covenants
on the part of the Sellers and certain rights on the part of the Buyer to be
indemnified with respect to a breach thereof;
WHEREAS, the Acquisition Agreement provides that the Buyer
shall deposit into escrow with the Escrow Agent an amount equal to the Purchase
Price Escrow Amount, to secure the obligations of the Sellers to indemnify and
hold the Buyer harmless from and against certain losses, claims, damages,
liabilities, costs and expenses described in Section 9.2 of the Acquisition
Agreement with respect to the breach of the covenants of the Sellers contained
in Section 2.3(d)(i) of the Acquisition Agreement; and
WHEREAS, the parties hereto have agreed upon and wish to set
forth herein the terms and conditions of said Escrow Agreement with respect to
the Escrow Fund (as defined herein) to be held by the Escrow Agent;
NOW, THEREFORE, it is agreed as follows:
1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Acquisition Agreement.
2. Escrow Agent. The Buyer and the Sellers hereby designate
and appoint the Escrow Agent to serve in accordance with the terms, conditions
and provisions of this Escrow Agreement. The Escrow Agent hereby agrees to act
as escrow agent in accordance with the terms, conditions and provisions of this
Escrow Agreement.
3. Escrow Fund. Pursuant to Section 2.2(b) of the Acquisition
Agreement, the Buyer hereby deposits into escrow with the Escrow Agent an amount
equal to the Purchase Price Escrow Amount (such amount, together with interest
and other income accrued thereon; the "Escrow Fund"). All funds held by the
Escrow Agent pursuant to this Agreement shall constitute trust property for the
purposes for which they are held.
4. Liabilities Secured by Escrow Fund. The Escrow Fund shall,
subject to the terms and conditions of this Escrow Agreement, be property of the
Sellers which is held as
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security for the obligation of the Sellers to indemnify and hold the Buyer
harmless against and in respect of which the Buyer is indemnified under the
provisions of Section 9.2 of the Acquisition Agreement with respect to the
breach of the covenants of the Sellers contained in Section 2.3(d)(i) of the
Acquisition Agreement.
5. Investment of Escrow Fund. (a) The Escrow Fund shall be
invested and reinvested by the Escrow Agent in any one or more Permitted
Investments (as defined below) from time to time as maturities occur and as
directed in writing by the Sellers; provided, however, that in the absence of
such written direction of the Sellers, the Escrow Fund shall be invested and
reinvested by the Escrow Agent in the Government Money Fund issued by Excelsior
Funds, Inc.
"Permitted Investments" shall mean each of (i) U.S. dollar
denominated, direct, noncallable, full-faith-and-credit obligations of the
federal government of the United States of America, (ii) certificates of
deposit, banker's acceptances or time deposits having maturities of six months
or less from the date of acquisition and issued by a United States commercial
bank which has unsecured senior debt securities or letters of credit rated at
least P-1 by Xxxxx'x Investors Service, Inc. or A-1 by Standard & Poor's
Corporation, (iii) commercial paper or securities with maturities of 90 days or
less from the date of acquisition rated at least P-1 by Xxxxx'x Investors
Service, Inc. and A-1 by Standard & Poor's Corporation (or, with respect to
clauses (ii) and (iii) above, if neither of such rating agencies is then
providing ratings, the equivalent thereof by another investor service of
comparable national recognition selected by the Sellers and reasonably
acceptable to the Buyer) and (iv) shares in the Government Money Fund issued by
Excelsior Funds, Inc.
(b) Neither the Buyer nor the Escrow Agent shall have
liability for any loss incurred as a result of investments made in accordance
with the provisions of this Section.
6. Investment Income. (a) All income, interest, increments and
gains of any and all kinds realized shall be retained and reinvested as provided
in Section 5 hereof until distributed. All proceeds received by the Escrow Agent
in respect of any investments of the Escrow Fund shall be added to and become
part of the Escrow Fund.
(b) The Escrow Agent may liquidate any investments made
hereunder at such time as it shall deem necessary to make payments in accordance
with the provisions hereof. The Escrow Agent shall have no liability for any
loss incurred as a result of liquidation made by it in accordance with the
provisions of this Section 6(b).
7. Claims. If at any time or from time to time prior to the
Termination Date (as defined in Section 9 hereof) the Buyer determines that it
has a claim for Losses (as defined in Section 9.2 (a) of the Acquisition
Agreement) against the Escrow Fund in respect of the indemnification obligations
of either Seller set forth in Section 9.2 of the Acquisition Agreement with
respect to the breach of the covenants of the Sellers contained in Section
2.3(d)(i) of the Acquisition Agreement, each of the Buyer and the Escrow Agent
shall deliver to the Sellers a certificate (it being understood that (i) Buyer
shall deliver such notice to the Escrow Agent, (ii) the failure of the Escrow
Agent to provide such notice shall in no way affect the rights and obligations
of the other parties pursuant to this Section 7 and (iii) the obligation of the
Escrow Agent to provide such notice is subject to the prior receipt thereof from
the Buyer) (the "Certificate"), which Certificate shall:
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(i) state that the Buyer is entitled to indemnification;
(ii) specify in reasonable detail the amount by which the
Closing Date Working Capital Amount is less than the Estimated Working
Capital Amount; and
(iii) be sent by certified mail, postage prepaid,
substantially in the form attached hereto as Schedule 1 and, in the
case of the Purchaser, with a copy of the Certificate to the Escrow
Agent and state the date on which it was sent to the Sellers.
If within fifteen (15) business days after receiving the
Certificate, the Buyer and the Escrow Agent shall not have received from the
Sellers a written statement denying the existence of all or any part of such
Losses then the Buyer may instruct the Escrow Agent in writing to deliver to
Buyer so much of the Escrow Fund as may be available and as may be necessary to
pay the amount of such Losses in full and the Escrow Agent shall promptly follow
such instructions. If within fifteen (15) business days after the sending of the
Certificate, the Buyer and the Escrow Agent shall have received from the Sellers
a written statement denying all or a portion of such Losses then the Buyer may
order the Escrow Agent in writing to deliver to the Buyer so much of the Escrow
Fund as may be available and as may be necessary to pay any portion of such
Losses that is not disputed, and the Escrow Agent shall promptly follow such
instructions.
8. Resolution of Losses and Contribution Claims in Dispute. In
the event that the Sellers deny all or a portion of any Losses within the time
and in the manner specified in Section 7 hereof, the portion of such Losses in
dispute shall be resolved as provided in Section 9.3(b) of the Acquisition
Agreement. If the Buyer and the Sellers reach agreement on the disputed portion
of the Losses, the Buyer and the Sellers shall jointly notify the Escrow Agent
thereof and instruct the Escrow Agent in writing to deliver to the Buyer so much
of the Escrow Fund as may be available and as may be necessary to pay the amount
of such Losses or portion thereof that the Buyer and the Sellers agreed to be
justified and the Escrow Agent shall promptly follow such instructions. If a
court determines by final, non-appealable judgment or non-appealable order that
all or a portion of such Losses is payable to the Buyer pursuant to the terms of
the Acquisition Agreement, the Buyer may notify the Escrow Agent thereof, with a
certified copy of such judgment or order, and may instruct the Escrow Agent in
writing to deliver to the Buyer so much of the Escrow Fund as may be available
and as may be necessary to pay the amount of such Losses or portion thereof that
such court decided to be justified and the Escrow Agent shall promptly follow
such instructions. If, after the Termination Date, a court determines by final,
non-appealable judgment or non-appealable order that all or a portion of the
amount of such Losses is not payable to the Buyer pursuant to the terms of the
Acquisition Agreement, the Sellers may notify the Escrow Agent thereof, with a
certified copy of such judgment or order, and may instruct the Escrow Agent in
writing to deliver to the Sellers an amount of the Escrow Fund equal to the
amount of such Losses not payable to the Buyer pursuant to the terms of the
Acquisition Agreement.
9. Termination. Upon the earlier to occur of (i) the date that
is one hundred fifty (150) days after the date hereof (the "Termination Date")
and (ii) termination of this Escrow Agreement pursuant to Section 12 hereof, the
Escrow Agent shall transfer, assign, deliver and pay over to the Sellers the
entire balance of the cash and securities, if any, then in the Escrow Fund. In
the event that, on the Termination Date, there are Losses outstanding which have
not been
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satisfied in full during such period because such Losses are in dispute, then
the Escrow Agent shall retain an amount sufficient to satisfy any such Losses in
full and shall transfer the balance of the Escrow Fund to the Sellers.
10. Fees. Each of the Buyer and the Sellers agree to pay the
Escrow Agent 50% of the fees set forth on Schedule 2 hereto (incorporated herein
by reference). Each of the Buyer and the Sellers further agree to reimburse the
Escrow Agent an amount equal to 50% of any expenses, including reasonable
counsel fees and expenses which it may incur in acting hereunder and the Escrow
Agent's claim therefor shall constitute a first lien against the Escrow Fund.
The Sellers shall pay the Escrow Agent 100% of the transaction fees incurred by
the Escrow Agent in investing and reinvesting the Escrow Fund in the Permitted
Investments. The Sellers may pay their share of any fees and expenses pursuant
to this Section 10 out of the income, interest, increments and gains realized on
investments of the Escrow Fund pursuant to Section 5 hereof.
11. Responsibilities of the Escrow Agent. The acceptance by
the Escrow Agent of its duties under this Escrow Agreement is subject to the
following terms and conditions, which the parties to this Escrow Agreement
hereby agree shall govern and control with respect to its rights, duties,
liabilities and immunities:
(a) The Escrow Agent shall act hereunder as depository only,
and it shall not be responsible or liable in any manner whatsoever for
the sufficiency of any amount deposited with it.
(b) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or
document furnished to it, not only as to its due execution and the
validity and effectiveness of its provisions but also as to the truth
and acceptability of any information therein contained, which it in
good faith believes to be genuine and what it purports to be.
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it, or for
any mistake of fact or law or for anything which it may do or refrain
from doing in connection herewith, except for fraud, gross negligence,
willful misconduct or for any action taken or omitted in bad faith. The
Buyer and the Sellers agree to jointly and severally indemnify and hold
the Escrow Agent harmless against any loss, liability, claim or demand
arising out of or in connection with the performance of its obligations
in accordance with the provisions of this Agreement, except where such
obligations are performed under circumstances constituting fraud, gross
negligence, willful misconduct or bad faith. The foregoing indemnities
in this Section shall survive termination of this Agreement.
(d) The Escrow Agent may consult with, and obtain advice from,
legal counsel in the event of any question as to any of the provisions
hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting in good faith in accordance with the
opinion and instructions of such counsel.
(e) The Escrow Agent is responsible only for Form 1099
interest reporting. The Escrow Agent shall have no duties except those
which are expressly set forth herein, and it shall not be bound by any
notice of a claim, or demand with respect thereto, or any
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waiver, modification, amendment, termination or rescission of this
Escrow Agreement, unless in writing received by it.
(f) The Escrow Agent may resign at any time by giving written
notice thereof to the Buyer and the Sellers, but such resignation shall
not become effective until a successor Escrow Agent mutually agreed to
by the Buyer and the Sellers shall have been appointed and shall have
accepted such appointment in writing. If an instrument of acceptance by
a successor Escrow Agent shall not have been delivered to the Escrow
Agent within thirty (30) days after the giving of such notice of
resignation, the resigning Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent.
12. Amendment and Termination. This Escrow Agreement may be
amended or terminated by and upon written notice to the Escrow Agent at any time
given jointly by Buyer and the Sellers, but the duties or responsibilities of
the Escrow Agent may not be amended or modified without its consent.
13. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when (i) delivered by
hand, (ii) transmitted by telecopier, provided that a copy is sent at about the
same time by registered mail, return receipt requested and, provided further,
that a transmission made on a day which is not a business day or after 3:00 pm
on a business day shall be deemed given on the following business day, (iii) one
business day after mailed, to the addressee, if sent by Express Mail, Fed Ex, or
other overnight delivery service, or (iv) three business days after mailed, to
the addressee, by regular mail delivery of the U.S. Postal Service, to the
addressee at the following addresses or telecopier numbers (or to such other
address or telecopier number as a party may specify by notice given to the other
party pursuant to this provision):
if to the Purchaser, to:
GEEG Holdings, L.L.C.
0000 Xxxxx Xxxx
Xxxxx 0000
Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
Harvest Partners, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
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and
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
if to Xxxx X. XxXxxxxxx, to:
Xxxx X. XxXxxxxxx
00 Xxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: F. Xxxx Xxxxx, Esq.
if to Xxxxxx X. Xxxxxxx, to
Xxxxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: F. Xxxx Xxxxx, Esq.
if to the Escrow Agent to:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Business Unit
Fax: (000) 000-0000
Re: CFI Holdings, Inc. Purchase Price Escrow Account
or to such other person or address as shall be designated in writing by any such
party.
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14. Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of the Sellers, the Buyer and the Escrow Agent.
15. Execution by Escrow Agent. The execution of this Escrow
Agreement by the Escrow Agent shall evidence its acceptance and agreement to the
terms hereof.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereunto have duly caused this
Escrow Agreement to be executed as of the date first above written.
XXXX X. XXXXXXXXX
By /s/ Xxxx XxXxxxxxx
---------------------------------
Xxxx XxXxxxxxx, Seller
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XXXXXX X. XXXXXXX
By /s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx, Seller
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GEEG HOLDINGS, L.L.C.
By /s/ Xxxxx Xxxxxxx
---------------------------------
Name:
Title:
00
XXXXXX XXXXXX XXXXX XXXXXXX XX
XXX XXXX
By /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name:
Title:
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SCHEDULE 1
LETTERHEAD OF GEEG HOLDINGS, L.L.C.
--------- --, ----
00 Xx. Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. XxXxxxxxx and Xxxxxx X. Xxxxxxx
Dear Sirs:
With reference to the Acquisition Agreement dated as of
October 31, 2000 by and among GEEG Holdings, L.L.C., CFI Holdings, Inc., Xxxx X.
XxXxxxxxx and Xxxxxx X. Xxxxxxx, and the Escrow Agreement dated as of October
31, 2000, among GEEG Holdings, L.L.C., Xxxx X. XxXxxxxxx, Xxxxxx X. Xxxxxxx and
United States Trust Company of New York, as Escrow Agent, we hereby claim the
following Losses (as defined in the Acquisition Agreement):
[INSERT THE NATURE OF THE CLAIM INCLUDING THE FOLLOWING:
- ANY AMOUNT DUE AND OWING TO THE PURCHASER UNDER SECTION 2.3(d)(i)
OF THE ACQUISITION AGREEMENT]
Very truly yours,
GEEG Holdings, L.L.C.
By
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Title:
cc: United States Trust Company of New York
