EXHIBIT 10.11
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of 12/18, 1995, between and among GMH
Acquisition Corp., a Delaware corporation (the "Buyer"), Xxxxx Xxxxx Xxxxxx, as
Trustee, Xxxxxxx Xxxxx Xxxxx, Xxxx Xxxx Xxxxx and Xxxxxx X. Xxxxx, Individually
and as Joint Tenant with Xxxxxx X. Xxxxx (collectively, the "Sellers") and Key
Trust Company, a New York Banking Corp. (the "Escrow Agent").
WHEREAS, the Buyer and the Sellers entered into a Stock Purchase Agreement
dated as of October 10, 1995, as amended (the "Stock Purchase Agreement"),
pursuant to which the Buyer agreed to purchase 100% of the issued and
outstanding stock of the Company and 100% of the membership interests in Xxxxx
Housing LLC, a Georgia limited liability company ("Xxxxx"); and
WHEREAS, in connection with the Stock Purchase Agreement, the Buyer and the
Sellers have negotiated certain indemnities; and
WHEREAS, Section 3(b) of the Stock Purchase Agreement provides for the
deposit with the Escrow Agent of $1,000,000 of the Purchase Price due the
Sellers as security for the Sellers' obligations, pursuant to Sections 15(b) and
15(c) of the Stock Purchase Agreement, to indemnify the Buyer against any Loss
and any Litigation Expense with respect thereto;
WHEREAS, it is a condition to closing the transactions contemplated by the
Stock Purchase Agreement that the Buyer, the Sellers and the Escrow Agent shall
have entered into this Agreement; and
NOW THEREFORE, in consideration of the above premises and the mutual
covenants contained in this Agreement, and intending to be legally bound hereby,
the parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the terms defined in the
preamble and recitals hereto shall have the respective meanings specified
therein, and unless otherwise defined, all other capitalized terms used herein
shall have the following meanings:
AGREEMENT shall mean this Escrow Agreement, as the same may be amended
from time to time.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or
public holiday under the laws of the State of New York or other day on which
banking or lending institutions are authorized or obligated to close in Buffalo,
New York.
CLOSING DATE shall mean the date on which the closing of the
transactions under the Stock Purchase Agreement shall occur.
ESCROWED FUNDS shall mean the sum of $1,000,000 deposited with the
Escrow Agent pursuant to the terms hereof.
LITIGATION EXPENSE, shall mean the matters referred to in Sections
15(b)(vii) and 15(c)(ii) of the Stock Purchase Agreement as relates to a Loss
defined therein.
LOSS shall mean the matters referred to in Sections 15(b)(i), (ii),
(iii), (iv) and (vi) and 15(c)(i) of the Stock Purchase Agreement.
PERMITTED INVESTMENTS shall mean:
(a) Demand deposit accounts, money market accounts or bankers'
acceptances maturing in 90 days or less from the date of issue of not less than
the highest rating then available from Standard and Poor's Corporation ("S&P")
or Xxxxx'x Investor Services, Inc. ("Moody's") at the time of investment;
(b) Certificates of deposit or Eurodollar deposits maturing in 90
days or less from the date of deposit and either placed by or with a United
States bank with stockholder capital exceeding Five Hundred Million Dollars
($500,000,000) or a minimum credit rating at the time of investment of A from
S&P or Moody's for its debt instruments (so long as there has been no public
announcement by S&P or Moody's that such credit rating may be subject to a
negative adjustment), and the accounts of which are insured by the Federal
Deposit Insurance Corporation or any successor thereto (an "Acceptable Bank");
(c) Securities which are all of the following (i) commonly known as
"commercial paper", (ii) due and payable within 90 days from the date of issue,
(iii) issued by any corporation organized under the laws of the United States or
of any State thereof and (iv) the ratings for the commercial paper of which, at
the time of the investment therein, are not less than the highest rating then
available from Moody's, S&P or another nationally recognized rating agency;
(d) United States Treasury obligations maturing in 180 days or less
from the date of purchase;
(e) Certificates issued by the Government National Mortgage
Association maturing in 90 days or less from the date of purchase; or
(f) An interest in any fund or other investment vehicle, including,
without limitation, a registered investment company maintained by an Acceptable
Bank, that invests primarily in any of the items specified in clauses (a)
through (e) above, and which does not invest in items which are rated less than
investment grade at the time of investment, including a registered investment
company for which the Escrow Agent or its affiliates provides services and are
separately and additionally compensated therefor.
2. ACCEPTANCE OF ESCROW. The Escrow Agent hereby acknowledges the
receipt from the Buyer and the Sellers of the Escrowed Funds. The Escrow Agent
shall hold and dispose of the Escrowed Funds and shall act as Escrow Agent for
the Buyer and the Sellers with respect to the Escrowed Funds in accordance with
the terms, conditions and provisions of this Agreement.
3. INVESTMENT OF ESCROWED FUNDS. The Escrow Agent shall invest the
Escrowed Funds in (a) such Permitted Investments as the Buyer may from time to
time direct, (b) in such other investments as the Buyer and the Sellers shall
jointly direct in writing or (c) in the absence of direction pursuant to clause
(a) or (b), demand deposit accounts, money market accounts or bankers'
acceptances maturing in 90 days or less from the date of issue, of any
Acceptable Bank. All securities and deposits representing investment of the
Escrowed Funds shall be held in the name of the Escrow Agent or its nominee, or
in bearer form, and the Escrow Agent may deposit any securities or other
property in a depository or clearing corporation. The Escrow Agent shall receive
and collect all funds payable in connection with such
investment. Except to the extent that payment of the Escrowed Funds is required
to be made pursuant to this Agreement, the Escrow Agent shall retain the
Escrowed Funds and invest the Escrowed Funds as provided for herein.
4. DISTRIBUTION OF INTEREST. All interest and other income realized in
respect of the Escrowed Funds shall be segregated from the Escrowed Funds and
shall be distributed to the Buyer within five (5) Business Days after the date
of receipt by the Escrow Agent, unless otherwise instructed pursuant to the
direction of the Buyer.
5. DISTRIBUTION OF ESCROWED FUNDS. The Buyer and the Sellers shall be
entitled to receive from the Escrow Agent, payments of the Escrowed Funds in the
following manner and upon the following terms and conditions:
(a) In the event that the Buyer is entitled to be paid the amount of
any Loss required to be paid by the Sellers pursuant to either Section
15(b) (other than Section 15(b)(v)), or 15(c) of the Stock Purchase
Agreement or any Litigation Expense with respect thereto required to be
paid by the Sellers pursuant to either Section 15(b)(vii) or Section
15(c)(ii) of the Stock Purchase Agreement, which Loss or Litigation Expense
has not otherwise been paid by or on behalf of the Sellers, the Buyer may
give written notice thereof, including the amount to be paid to the Buyer
out of the Escrowed Funds, to the Escrow Agent (a "Statement") prior to the
Termination Date (as defined in Section 9 hereof). Within not more than
three (3) Business Days after its receipt thereof, the Escrow Agent shall
send a copy of the Statement to the Sellers. If a written objection to such
Statement is delivered to the Escrow Agent by or on behalf of the Sellers
within ten (10) Business Days after the date such notice is deemed given to
the Sellers under the provisions of Section 10 hereof (the "Objection
Notice"), the Escrow Agent shall send to the Buyer a copy thereof within
three (3) Business Days after its receipt of the Objection Notice, and the
provisions of Section 5(b) relating to a Statement as to which an Objection
Notice has been timely delivered shall apply to such Statement; otherwise
the Escrow Agent is hereby authorized, empowered and directed to deliver to
the Buyer from the Escrowed Funds, an amount equal to the amount set forth
in such Statement.
(b) The Escrow Agent shall not make any distribution under this
Section 5 with respect to the portion of the indemnification claims set
forth in a Statement which are the subject of an Objection Notice delivered
under Section 5(a) above, but shall reserve in a claims account (the
"Claims Account"), the amount of such claims and shall continue to hold
such amount in the Claims Account, notwithstanding the expiration of the
term of this Escrow Agreement, until the receipt by the Escrow Agent of
either (i) joint written instructions of the Buyer and the Sellers
directing the Escrow Agent to remit the amount held with respect to such
Statement in accordance with such written instructions or (ii) a certified
copy of a final court order, no longer subject to appeal, which contains a
final determination of the entitlement to and the specific amount of the
indemnification obligation owed to the Buyer with respect to such
Statement. Upon its receipt of either of the above, the Escrow Agent (x)
shall disburse to the Buyer the amount, if any, determined to be due to it
in accordance with the terms of such instructions or court order, (y) if
all of the outstanding and undischarged Statements are fully reserved in
the Claims Accounts established therefor, the excess, if any, of the
balance in the discharged Claims Account shall either be returned to the
Escrowed Funds general account or, if the Termination Date has
passed, distributed to the Sellers, and (z) if all of the outstanding and
undischarged Statements are not fully reserved in the Claims Accounts
established therefor, then the balance in the discharged Claims Account, if
any, shall be applied first to satisfy any deficiencies in the Claims
Accounts with respect to such outstanding and undischarged Statements, and
the remaining balance, if any, shall either be retained in the Escrowed
Funds general account or, if the Termination Date has passed, distributed
to the Sellers. In the event an Objection Notice relates to only a portion
of a Statement, the Escrow Agent shall deliver to the Buyer from the
Escrowed Funds that portion of such Statement which is not subject to the
Objection Notice in accordance with the provisions of Section 5(a) hereof.
(c) Promptly after the Termination Date, the Escrow Agent shall
deliver to the Sellers and the Buyer a full and complete final period
statement with respect to the Escrowed Funds. If, as of the close of
business on the Termination Date, all Statements which have been filed with
the Escrow Agent prior to the Termination Date have been finally discharged
in accordance with the provisions of Section 5(b) hereof, the Escrow Agent
shall deliver to the Sellers any remaining Escrowed Funds and shall deliver
to the Buyer all interest accrued thereon to the date of such payment.
However, if, upon the Termination Date, any Statement remains outstanding
and undischarged, the Escrow Agent shall continue to hold both the Claims
Account with respect to such outstanding Statements, and if no Claims
Account has yet been established with respect to any outstanding Statement,
that portion of the Escrowed Funds equal to the amount claimed under all
Statements then outstanding as to which no Claims Account has yet been
established. With respect to the Escrowed Funds retained by the Escrow
Agent after the Termination Date pursuant to this Section 5(c), the Escrow
Agent shall continue to hold the Escrowed Funds in accordance with the
provisions of this Agreement and shall make payments to the Buyer and/or
the Sellers and discharge Statements as provided in Section 5(b). All
Escrowed Funds remaining after the discharge of all Statements, together
with all interest accrued thereon, shall be distributed to the Sellers
within five (5) Business Days after the discharge of the last remaining
Statement.
6. DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow Agent
shall have no duties or obligations hereunder except those specifically set
forth herein, and such duties and obligations shall be determined solely by the
express provisions of this Agreement.
(a) In connection with its duties hereunder, the Escrow Agent shall
be protected in acting or refraining from acting based solely and
exclusively upon any written notice, request, consent, certificate,
instruction, Statement, Objection Notice, court order, or other document
furnished to it hereunder and believed by it to be genuine and to have been
signed or sent by the proper party or parties, and it shall not be
necessary for the Escrow Agent to inquire into the authority of the signers
thereof or to determine the accuracy or completeness of any written notice,
request, consent, certificate, instruction, court order, Statement,
Objection Notice or other documents, except and to the extent expressly
provided in this Agreement. The Escrow Agent shall not be liable for
anything it may do or refrain from doing in connection with its duties
hereunder except as a result of its own gross negligence, willful
misconduct or bad faith. The Escrow Agent shall not be responsible for any
loss to the Escrowed Funds resulting from the investment thereof in
accordance with the terms of this Agreement. The Escrow Agent may consult
its
counsel and shall be protected in respect of any action taken or omitted to
be taken by it in good faith on the advice of such counsel.
(b) The Sellers and the Buyer shall, jointly and severally, indemnify
and hold the Escrow Agent harmless for any liability, cost or expense,
including reasonable attorneys' fees actually and reasonably incurred by
the Escrow Agent, arising out of or relating to the performance of its
duties hereunder; provided, however, that the Escrow Agent shall not be
entitled to any indemnity hereunder if it is determined to have acted with
gross negligence, in bad faith or with willful misconduct. The obligations
of the Sellers and the Buyer under this Section 6(b) shall survive
termination of this Agreement or resignation of the Escrow Agent.
(c) By written instrument signed by the Sellers and the Buyer, the
Escrow Agent may be removed as Escrow Agent at any time for any reason. The
Escrow Agent may resign as Escrow Agent at any time upon prior written
notice to the Sellers and the Buyer stating the effective date of such
resignation. Upon receiving such notice of resignation or upon such
removal, the Sellers and the Buyer shall promptly appoint a successor
Escrow Agent by a written instrument, and no such resignation or removal
shall be effective until the date upon which a successor Escrow Agent shall
have been appointed and shall have accepted such appointment. Any such
successor Escrow Agent appointed by the Sellers and the Buyer shall be an
Acceptable Bank. The Escrow Agent shall have no liability whatsoever to the
Sellers or the Buyer to advise, inform or make any comment as to the
suitability, financial or otherwise, of any successor Escrow Agent so
appointed. If a successor Escrow Agent is not appointed by the resignation
date set forth in the notice from the Escrow Agent, the Escrow Agent may
petition a court of competent jurisdiction to name a successor. Until the
successor Escrow Agent has accepted such appointment, the Escrow Agent
shall hold the Escrowed Funds and manage and distribute the Escrowed Funds
in accordance with the provisions of this Agreement.
(d) The Escrow Agent shall not be required to institute or defend any
action or legal process involving any matter referred to herein which in
any manner affects it or its duties or liabilities hereunder. In the event
the Escrow Agent shall institute or defend any such action or legal
process, it shall do so only upon receiving full indemnity in an amount and
of such character as it shall require, against any and all claims,
liabilities, judgments, attorneys' fees and other expenses of every kind in
relation thereto, except in the case of its own willful misconduct or gross
negligence.
(e) If any two parties, whether or not they are parties of this
Agreement, shall be in disagreement about the interpretation of this
Agreement, or about the rights and obligations, or the propriety, of any
action contemplated by the Escrow Agent, or if any other dispute shall
arise hereunder, or if the Escrow Agent otherwise has any doubts as to the
proper disposition of funds or any execution of any of its duties
hereunder, the Escrow Agent may, at its sole discretion, file action in
interpleader to resolve the said disagreement in New York State Supreme
Court, Buffalo, New York. The Escrow Agent shall be indemnified for all
costs, including reasonable attorneys' fees and expenses, in action, and
shall be fully protected in suspending all or part of its activities under
this Agreement until a final judgment in the interpleader action is
received.
7. ESCROW FEES. The Escrow Agent shall be entitled to receive
reasonable compensation for its services hereunder pursuant to the schedule of
fees attached hereto and made a part hereof and, in addition thereto, shall be
reimbursed for all out of pocket expenses, including reasonable attorneys' fees,
actually and reasonably incurred by it in connection with the performance of its
duties and obligations under this Agreement. All such fees and expenses shall be
borne equally by the Buyer and the Sellers. The Escrow Agent shall render
monthly statements, including therein a statement of all interest or other
income earned on the Escrowed Funds, to the Sellers and the Buyer. The Escrow
Agent shall have a lien on and may offset against the Escrowed Funds to the
extent any amounts due to it hereunder are not paid when due.
8. SAVINGS CLAUSE. Notwithstanding anything to the contrary contained
herein, as between the Sellers and the Company, the Company's rights to recover
from the Sellers on any claim made pursuant to the Stock Purchase Agreement
shall be governed by the provisions of the Stock Purchase Agreement and shall
not be limited (a) to the amount or availability of Escrowed Funds or (b) by any
action or failure to act of the Buyer or the Company pursuant to this Agreement,
except to the extent a Statement is discharged pursuant to the terms hereof.
9. TERM. This Agreement shall terminate on the third anniversary of the
date hereof unless sooner terminated by a written notice to the Escrow Agent
from the Sellers and the Company (the "Termination Date"); provided, however
that if on such date, any Statement shall remain outstanding and not discharged,
then this Agreement shall remain in full force and effect until all Escrowed
Funds have been disbursed by the Escrow Agent in accordance with the provisions
hereof at which time this Agreement shall terminate and be of no further force
or effect; provided, further, however, that, upon payment of any of the Escrowed
Funds to the Company or the Sellers as provided for herein, any funds so paid
shall be released from and shall no longer be subject to this Agreement.
10. NOTICES, ETC. All notices, consents, demands, requests, Statements,
Objection Notices, approvals and other communications which are required or may
be given hereunder shall be in writing and shall be deemed to have been duly
given (a) when delivered personally, (b) if sent by telecopy, when receipt
thereof is acknowledged at the telecopy number below, (c) the second day
following the day on which the same has been delivered prepaid to a national air
courier service or (d) five (5) Business Days following deposit in the mail,
registered or certified postage prepaid in each case, addressed as follows:
If to the Sellers:
c/o Xxxxxx X. Xxxxx
General Manufactured Housing, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
Telecopy: 000-000-0000
with copies to:
Xxxx X. Xxxxxx, Esq.
Xxxx and Xxxxxx, P.C.
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy: 000-000-0000
and
X. Xxxxxx Xxxxxx, Esq.
Holland & Knight
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy: 000-000-0000
If to the Buyer:
GMH Acquisition Corp.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Telecopy: 000-000-0000
with copies to:
Strategic Investments & Holdings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy: 000-000-0000
and
Nixon, Hargrave, Devans & Xxxxx LLP
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: 716-853-8109
If to the Escrow Agent:
Key Trust Company
00 Xxxxxxxx Xxxxx 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxxx
Telecopy: 000-000-0000
or to such other person or persons at such address or addresses as may be
designated by written notice hereunder. Any notice given in accordance with this
Section may be given by a party hereto or by such party's counsel.
11. ASSIGNMENT. Neither the Sellers nor the Buyer may assign or convey
this Agreement or any of their respective rights or obligations hereunder to any
other party without the prior written consent of each of the other parties to
this Agreement; provided, however, that (a) the Buyer may assign all of its
rights hereunder to an institutional lender or lenders providing financing for
the transactions contemplated by the Stock Purchase Agreement and (b) prior to
the Closing Date, any one or more of the Sellers may assign all of his or her
rights and obligations hereunder to the trustee of a trust, all of the
beneficial interests of which are owned by such Seller(s) or his, her or their
immediate family members.
12. APPLICABLE LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws or the State of New York without giving
effect to conflict of laws principles thereof.
13. ENTIRE AGREEMENT. This Agreement, the Stock Purchase Agreement
and all Exhibits hereto embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersede any prior
agreement or understanding between the parties; provided, however, the entire
agreement of the Buyer and the Sellers with the Escrow Agent is contained in
this Agreement. The Escrow Agent is not expected or required to be familiar with
the provisions of any other instrument, agreement or document, specifically
including, without limitation, the Stock Purchase Agreement, and shall not be
charged with any responsibility or liability in connection with the observance
or non-observance by any other party whatsoever of the provisions of any such
other instrument, agreement or document, including, without limitation, the
Stock Purchase Agreement. This Agreement may not be amended except in a writing
executed by each party to this Agreement.
14. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
15. HEADINGS. Headings of the Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
16. BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
administrators, executors, successors and permitted assigns; provided, however,
that nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective successors and
permitted assigns, any rights and remedies, obligations or liabilities under or
by reason of this Agreement.
17. CONSTRUCTION. Wherever the context may require, any pronoun used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
SELLERS:
/S/ XXXXX XXXXX XXXXXX
-----------------------------------
Xxxxx Xxxxx Xxxxxx, as Trustee
/S/ XXXXXXX XXXXX XXXXX
-----------------------------------
Xxxxxxx Xxxxx Xxxxx
/S/ DREW XXXX XXXXX
-----------------------------------
Drew Xxxx Xxxxx
/S/ XXXXXX X. XXXXX
-----------------------------------
Xxxxxx X. Xxxxx, Individually and as
Joint Tenant
/S/ XXXXXX X. XXXXX
-----------------------------------
Xxxxxx X. Xxxxx, as Joint Tenant
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Title: Chairman of the Board
BUYER:
GMH ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxx
-------------------------------
Title: President
ESCROW AGENT
KEY TRUST COMPANY
By: /s/ [illegible]
-------------------------------
Title: Vice President
