EXHIBIT 10.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is made and entered into this 27th day of April, 2005, by and among WORLD AIR HOLDINGS, INC., a
Delaware corporation (the "PURCHASER"). DAN MCKINNON, AS TRUSTEE OF THE DAN AND JANICE MCKINNON FAMILY TRUST DATED JANUARY 15, 2005 (the "SELLER"), and SUNTRUST BANK, a Georgia banking corporation, as escrow agent (the "ESCROW AGENT").
BACKGROUND
A. Contemporaneously with the execution and delivery hereof, Purchaser, North American Airlines, Inc., a Delaware corporation ("NAA"), Seller, and Dan McKinnon, an individual, are consummating the transactions contemplated by that certain Stock Purchase Agreement dated as of April 27, 2005 (the "PURCHASE AGREEMENT"), pursuant to which the Seller is selling, transferring, conveying, assigning and delivering to the Purchaser one hundred percent (100%) of the issued and outstanding capital stock of NAA, and in connection therewith, the Seller received consideration in the form of cash and a promissory note.
B. The Purchase Agreement contemplates the establishment of a fund to satisfy certain potential obligations of the Seller with respect to indemnification pursuant to Article IX of the Purchase Agreement.
C. Escrow Agent agrees to accept the Escrow Fund (as defined herein) and to hold, administer and distribute the Escrow Fund in accordance with the terms and conditions set forth herein.
D. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Purchase Agreement.
AGREEMENT
For and in consideration of the premises, the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The Purchaser and the Seller hereby designate and appoint Escrow Agent to serve as escrow agent and Escrow Agent hereby confirms its agreement to act as escrow agent upon the terms, conditions and provisions of this Agreement.
2. Creation of Escrow Fund.
(a) As contemplated in Section 2.3 of the Purchase Agreement, Purchaser is depositing with Escrow Agent an amount equal to Two Hundred Fifty Thousand Dollars and No Cents ($250,000.00) in immediately available funds (said sum as reduced by any disbursements, amounts distributed under Section 5 hereof, or losses on investments, is herein referred to as the "ESCROW FUND"). Unless instructed otherwise in writing, the Escrow Agent shall invest the Escrow Fund in the STI Classic U.S. Treasury Securities Money Market Fund. Notwithstanding
anything to the contrary herein provided, the Escrow Agent shall have no duty to prepare or file any Federal or state tax report or return with respect to the Escrow Fund or any income earned thereon. The Seller shall bear the cost of the investment fees in connection herewith.
(b) The Escrow Agent shall invest the Escrow Fund pursuant to the written instructions of the Seller in (i) investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition by the Escrow Agent, is rated Al or better by Standard & Poor's Corporation or P1 or better by Moody's Investors Service, Inc.; (ii) investments in direct obligations of the United States of America, or any agency or instrumentality of the United States of America, the payment or guarantee of which constitutes a full faith and credit obligation of the United States of America, in either case, maturing in twelve months or less from the date of acquisition thereof; (iii) investments in
Repurchase Agreements banker's acceptances, certificates of deposit and time deposits, in each case maturing within one year from the date of origin, issued by a bank or trust company organized under the laws of the United States or any state thereof, having at the date of the acquisition by the Escrow Agent capital, surplus and undivided profits aggregating at least $500,000,000; or (iv) the STI Classic U.S. Treasury Securities Money Market Fund (or any similar money market fund approved by Escrow Agent, Seller and Purchaser), as directed by Seller in writing. Any income earned on such investments shall be paid by Escrow Agent to the Seller not less often than monthly. The Escrow Fund is to be held, administered and paid by the Escrow Agent as provided herein. The Escrow Agent acknowledges receipt of the Escrow Fund and agrees to hold, administer and pay the same in accordance with the terms of this Agreement and to not permit any withdrawal thereof except pursuant to the terms hereof.
3. Purpose of Escrow Fund. The Escrow Fund has been established for the purpose of providing a source of funds to pay indemnification claims made by the Purchaser under Article IX of the Purchase Agreement.
4. Notices Directing Distribution of Escrow Fund. As used herein, the term "NOTICE OF DISTRIBUTION" means a certificate executed jointly by the Purchaser and the Seller and delivered to Escrow Agent, specifying the disposition to be made of the Escrow Fund in accordance with the provisions of Article IX of the Purchase Agreement.
5. Disposition of Escrow Fund.
(a) Escrow Agent shall pay and disburse the Escrow Fund as follows:
(i) To Purchaser, as specified in any Notice of Distribution received by Escrow Agent; or
(ii) To Seller, as specified in any Notice of Distribution received by Escrow Agent.
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(b) Further, income earned on the Escrow Fund shall be distributed to Seller at least monthly, as provided in Section 2(b) of this Escrow Agreement;
(c) All disbursements hereunder pursuant to Section 5(a)(i) or 5(a)(ii) shall be made by the Escrow Agent within two (2) business days following Escrow Agent's receipt of a Notice of Distribution, as contemplated in Section 5(a) above.
6. The Escrow Agent's Duties. The Escrow Agent shall be obligated to perform only such duties as are expressly set forth in this Agreement, and shall not be required, in carrying out its duties under this Agreement, to take notice of or refer to any other document or agreement, including the Purchase Agreement. The provisions of this Section 6 shall survive the resignation or removal of the Escrow Agent or the termination of this Agreement.
7. The Escrow Agent's Fees and Expenses. The Purchaser agrees to (i) pay or reimburse the Escrow Agent for its attorney's fees and expenses incurred in connection with the preparation of this Escrow Agreement, and (ii) pay the Escrow Agent's compensation for its services hereunder in accordance with the fee schedule attached hereto as Exhibit A and made a part hereof, which may be subject to change hereafter by the Escrow Agent on an annual basis. The Purchaser agrees to reimburse the Escrow Agent on demand for all costs and expenses incurred in connection with the administration of this Escrow Agreement or the escrow created hereby or the performance or observance of its duties hereunder which are in excess of its compensation for normal services hereunder, including without limitation payment of an ...