Exhibit 10.25
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this 5th
day of June, 1997 among First American National Bank (the "Escrow Agent"),
Nova Holdings, Inc., a Delaware corporation ("Purchaser"), and Xxxxxx Xxxxx
and X.X. Xxxxxxxx, III ("Sellers").
WHEREAS, Sellers and Purchaser are parties to a Stock Purchase Agreement,
dated as of June 5, 1997 (the "Purchase Agreement"), providing the terms,
conditions and provisions for the purchase by Purchaser of 100% of the stock
("Stock") of Horizon Health Systems, Inc. ("Horizon");
WHEREAS, Purchaser and Sellers desire to appoint the Escrow Agent, and the
Escrow Agent is willing to accept such appointment, on the terms and
conditions of this Agreement, to act as escrow agent to hold, administer and
disburse the Escrowed Funds (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Definitions.
When used in this Agreement, the following terms shall be defined as
follows:
"Sellers' Representative" shall mean Xxx Xxxxxx, Esq. and Xxxxx Xxxxx or
such other authorized representative of Sellers as shall be designated in
written notice from Sellers received by the Escrow Agent.
"Escrowed Funds" shall mean a portion of the Purchase Price paid for the
Stock in the amount of Two Million Nine Hundred Thousand ($2,900,000.00)
Dollars deposited with the Escrow Agent simultaneously with the execution
hereof, plus any interest or other income earned on the foregoing during the
term of this Agreement, less any disbursements made pursuant to the term of
this Agreement, and all instruments representing the investment or
reinvestment, if any, of such cash.
"Purchaser's Representative" shall mean Xxxx Xxxxxxxxx and Xxxxx
Xxxxxxx, or such other persons as shall subsequently be designated by written
notice from Purchaser received by the Escrow Agent.
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2. Establishment of Escrow.
(a) Simultaneously with the execution of this Agreement, Purchaser has
delivered Escrowed Funds to the Escrow Agent in cash, receipt of which is
hereby acknowledged by the Escrow Agent.
(b) Pursuant to Sections 1.01 and Article VII of the Purchase Agreement,
Purchaser and Sellers appoint Escrow Agent as escrow agent for the purpose of
receiving communications from Purchaser and Sellers, and disbursing the
Escrowed Funds to Purchaser and Sellers pursuant to the terms of the Purchase
Agreement and the terms of this Escrow Agreement. Purchaser, Sellers and the
Escrow Agent agree that the Escrow Agent shall hold, administer and disburse
the Escrowed Funds on the terms and conditions of this Agreement.
3. Investment of Escrow.
All funds received by the Escrow Agent pursuant to this Agreement shall be
invested, to the extent practicable, in a fully liquid instrument of deposit
with the Escrow Agent. Unless otherwise directed in writing by the Seller
Representative and Buyer Representative, the escrow funds held hereunder
shall be invested in Escrow Agent's U.S. Treasury Fund, currently called
"Ameristar Treasury Fund".
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The cost and expenses incurred by the Escrow Agent in the investment or
reinvestment of all or any portion of the Escrowed Funds shall be paid from
the Escrowed Funds and the Escrow Agent is hereby authorized to pay such
cost and expense form the escrowed Funds.
4. Disbursement of Escrowed Funds.
(a) The parties agree that all of the Escrowed Funds are available to
satisfy the obligation of Sellers to indemnify Horizon and Purchaser for
those items set out in Sections 7.02, 7.03 and 7.04 of the Purchase Agreement.
The Escrow Agent shall release all or a portion of the Escrow Deposit to
Purchaser twenty (20) days following receipt by Escrow Agent of a written
statement form Purchaser's Representative, a copy of which shall be provided
simultaneously to Sellers stating (i) the dollar amount of any
indemnification owed to Purchaser by either Seller under the Purchase
Agreement, (ii) a concise statement of the facts giving rise to such claim
for indemnification, (iii) that Purchaser has made a claim for such
indemnification pursuant to the terms of the Purchase Agreement and (iv) that
Purchaser has not received payment of such indemnification amounts within
twenty (20) days after delivery of such claim to the Sellers; provided that
if such sworn written statement shall be disputed by Sellers in writing
delivered to
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Escrow Agent with a copy to Purchaser's Representative within fifteen (15)
days after Escrow Agent's receipt of such written statement from Purchaser's
Representative, the Escrow Agent shall continue to hold in escrow the portion
of the Escrow Deposit subject to such dispute until the dispute shall have
been finally resolved by mutual agreement or by a court of competent
jurisdiction. Any notice disputing the Purchaser's sworn written statement
shall set forth a concise statement of the facts upon which Sellers are
relying in disputing said sworn statement.
The Escrowed Funds to be delivered to Purchaser in accordance with the
preceding paragraph shall be disbursed to Purchaser or Horizon as directed by
Purchaser. Except as expressly set forth in the Stock Purchase Agreement,
Purchaser's failure to claim, or delay in claiming, Escrowed Funds shall not
be a waiver of Purchaser's rights and shall in no way affect or prejudice
Purchaser's rights and remedies against Sellers to recover any amounts due
Purchaser.
(b) In the case of any dispute between Sellers and Purchaser as to any
claim or demand for payment hereunder, Escrow Agent shall withhold an amount
sufficient to cover such claims or demands, until a settlement has been
effected or a final judicial determination has been made.
(c) On the first anniversary of the date of this Escrow Agreement
("Anniversary Date"), the amount held in escrow shall be
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reduced by one half to One Million Four Hundred Fifty Thousand
($1,450,000.00) Dollars, provided that no claims have been made against the
Escrowed Funds. In such event, the sum of One Million Four Hundred Fifty
Thousand ($1,450,000.00) Dollars, shall be disbursed to the Sellers with the
Escrow Agent continuing to hold One Million Four Hundred Fifty Thousand
($1,450,000.00) Dollars for the remaining twelve months of the escrow,
subject to the payment of claims as provided in Section 4(a). If however,
claims have been made against the Escrowed Funds on or before the Anniversary
Date, whether or not said Claims have been paid, the amount of One Million
Four Hundred Fifty Thousand ($1,450,000.00) Dollars to be paid out of escrow
to Sellers on the Anniversary Date shall be reduced by the amount of said
claims, so that the Escrowed Funds which remain in escrow after the
Anniversary Date shall equal the lesser of (i) the sum of One Million Four
Hundred Fifty Thousand ($1,450,000.00) Dollars, plus the amount of claims
made against the Escrowed Funds during the first year of the escrow, or (ii)
Two Million Nine Hundred Thousand ($2,900,000.00) Dollars.
(d) The parties agree that Purchaser shall have the right to make claims
to the Escrowed Funds for a period of two years after Closing ("Claim
Deadline"). In the event that the aggregate of (1) claims of Purchaser paid
from Escrowed Funds (2) amounts withheld to cover disputed claims and demands
and (3) unpaid fees and expenses of the Escrow Agent, does not exceed the
proceeds deposited, Escrow Agent, on the Claim Deadline, shall pay to
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Sellers out of the Escrowed Funds a sum equal to the amount, if any, by which
the proceeds deposited exceeds the aggregate of (1) amounts paid to or
claimed by Purchaser prior to the Claim Deadline and (2) amounts withheld to
cover disputed claims and (3) any fees due Escrowed Agent.
(e) Notwithstanding anything to the contrary which might be set forth
in this Agreement, if Escrow Agent receives any dividends, distributions,
interest or other income in respect of the investment of the Escrowed Funds,
Escrow Agent shall pay to Sellers no more frequently than monthly, any such
dividends, distributions, interest or other income Escrow Agent has received
in respect to the investment of the Escrowed Funds.
5. Certain Provisions Relating to Escrow Agent.
(a) The Escrow Agent shall be entitled to receive fees for its
service under this Agreement in the amount of $1,500.00 for each twelve month
period during which this Agreement shall remain in effect ("Annual Fee"). The
Annual Fee shall be paid by Purchaser with the Annual Fee for the first twelve
month period being due on the date of this Agreement and the Annual Fee for
the second twelve month period being due on the first anniversary of the date
hereof. The Escrow Agent shall also be entitled to be reimbursed for the
reasonable expenses incurred by it in the performance of its obligations
under this Agreement, including the
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reasonable fees of legal counsel which the Escrow Agent may deem necessary to
advise it in connection with its obligations under this Agreement. All
expenses of the Escrow Agent shall be paid by the Purchaser unless
reimbursement for these expenses is claimed as an indemnity item pursuant to
Section 4 above.
(b) The Escrow Agent shall not be liable for any diminution of value of
the Escrowed Funds due to investments, if any, made as provided herein. the
Escrow Agent shall have no authority to disburse or otherwise dispose of the
Escrowed Funds except as provided herein.
(c) Notwithstanding any provision of this Agreement to the contrary,
the Escrow Agent may at all times act upon and in accordance with the joint
written instructions of Sellers' Representative and Purchaser's
Representative. The Escrow Agent shall not be liable for any act done or
omitted by it in accordance with such instructions or the advice of counsel
of its selection.
(d) The duties and responsibilities of the Escrow Agent shall be
limited to those expressly set forth in this Agreement and instructions
given to the Escrow Agent pursuant to this Agreement, and no additional
duties shall be inferred herefrom or implied hereby. The Escrow Agent shall
not be subject to, or obliged to recognize, any other agreement between any
or all of the parties hereto even though reference to such agreement may be
made herein.
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With, and only with, the written consent of the Escrow Agent, this Agreement
may be amended at any time or times by an instrument in writing signed by
Sellers' Representative and Purchaser's Representative.
(e) The Escrow Agent may act in reliance upon any written notice,
demand, certificate or document which it reasonably in good faith believes to
be genuine, without being required to determine the authenticity thereof or
the correctness of any fact stated therein or the propriety or validity of
the service thereof, and may assume that any person purporting to give any
such written notice, demand, certificate or document has been duly authorized
to do so.
(f) The Escrow Agent is authorized, in its sole discretion, to disregard
any and all notices or instructions given by any of the undersigned or by any
other person, firm, or corporation, except only such notices or instructions
as are herein provided for and the orders or process of any court. If any
property subject hereto is at any time attached, garnished, or levied upon
under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by
any court order, or in case any order, judgment or decree shall be made or
entered by a court affecting such property or any part hereof, then and in
any of such events, the Escrow Agent is authorized, in its sole discretion,
to rely upon and
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comply with any such order, writ, judgment or decree, and it shall not be
liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance even though such order, writ,
judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
The Escrow Agent shall not be required to institute or defend any action
involving any matter referred to herein or which affects it or its duties or
liabilities hereunder unless and until requested to do so by any party to
this Escrow Agreement and then only upon receiving full indemnity, in amount
and character satisfactory to the Escrow Agent, against any and all claims,
liabilities and expenses, including attorney's fees, in relation thereto.
(g) The Escrow Agent shall have no liability under this Agreement to
any party other than for its gross negligence or fraud or the gross
negligence or fraud of its agents, servants or employees.
(h) Purchaser and Sellers hereby jointly and severally agree to defend,
indemnify and hold harmless the Escrow Agent from and against any and all
losses, damages, deficiencies or expenses, including court costs and
attorney's fees, arising out of or by reason of this Agreement, the execution
and delivery of this Agreement, the Escrow Agent's execution of its duties
pursuant to
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this Agreement, or any claim against the Escrowed Funds, except those as
arise out or or by reason of gross negligence or fraud.
(i) Escrow Agent shall have no obligation for payment to any person or
entity except from, and to the extent of, Escrowed Funds.
(j) The Escrow Agent may resign by giving thirty (30) days written
notice to Purchaser and Sellers and thereafter shall deliver the Escrowed
Funds to such substitute escrow agent as Purchaser and Sellers shall jointly
direct in writing. If such direction to deliver the Escrowed Funds to a
substitute escrow agent is not received by the Escrow Agent within thirty
(30) days after mailing such notices of resignation, the Escrow Agent may in
its sole discretion, interplead all or such portion of the Escrowed Funds
into a court of competent jurisdiction.
6. Termination of Escrow.
When all of the Escrowed Funds shall have been disbursed by the Escrow
Agent, this Agreement and the escrow established by this Agreement shall
terminate and the Escrow Agent shall be relieved and discharged of all
further responsibilities, obligations and liabilities under this Agreement.
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7. Notices.
(a) All notices, requests, demands and other communications under this
Agreement shall be in writing and delivered in person or sent by telegraph or
certified mail, return receipt requested, and properly addressed as follows:
(a) if to Sellers, to them at:
Xx. Xxxxxx Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Xx. X.X. Xxxxxxxx, III
00000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
with a copy to:
Bass, Xxxxx & Xxxx, PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx., Esq.
(b) if to Purchaser to it at:
Nova Holdings, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
with a copy to:
Xxxxxxxxx Xxxxx Xxxxxx Xxxxxxx Xxxxxxx & Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Xx.
(c) if to the Escrow Agent, to it at:
First American National Bank
Corporate Trust Department
000 Xxxxx Xxxxxxxx Xxxxxx
00
Xxxxxxxxx, Xxxxxxxxx 00000-0000
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section shall be effective
upon delivery.
(b) Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by
the party sought to be charged with the contents.
8. General
(a) The rights of Purchaser and Sellers hereunder are cumulative and are
not exclusive of any other rights Sellers or Purchaser may have under the
Purchase Agreement or otherwise.
(b) This Agreement shall be governed by and construed under the laws of
the State of Tennessee.
(c) This Agreement shall inure to the benefit of and be enforceable by and
against Purchaser, Sellers and the Escrow Agent and their respective
successors and assigns.
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(d) This Agreement may be executed by the parties in several
counterparts, each of which shall be deemed to be an original and one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above written.
FIRST AMERICAN NATIONAL BANK /s/ Xxxxxx Xxxxx
--------------------------
XXXXXX XXXXX
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Vice President
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NOVA HOLDINGS, INC. /s/ X.X. Xxxxxxxx, III
--------------------------
X.X. Xxxxxxxx, III
By: [illegible]
-------------------------
Title: CEO
-------------------------
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