ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated the 31st day of May, 1996 (the "Escrow
Agreement"), is among Raymond J. Rockwell, Jr., Mary D. Mahler, Lewis R.
Sheldon, Barbara S. Lamade, Frederic S. Hering, Stephen R. Leavy, Geoffrey
D. Fuller, Robert M. Mallard, Gary M. Poquette, Barry L. Batchelor, Patrick
W. Brawley, Kenneth A. Randell, and David A. Helgerson, Dennis F. Breen, F.
Patrick Dougherty, Eugene R. Miller, Jr., Brian R. Hill, and Peter B. Zahn
("Series A Shareholders"); and Simon Glatz, Simon Glatz as Trustee of the
Second Amended & Restated Simon Glatz Revocable Trust, John T. Drewry, Otto
P. Jons, Rifka Glatz and Irving P. Cohen as Trustees of the Corey T. Glatz
Generation Skipping Trust, Rifka Glatz and Irving P. Cohen as Trustees of
the Corey T. Glatz Residuary Trust, Rifka Glatz and Irving P. Cohen as
Trustees of the Terrance A. Glatz Generation Skipping Trust, Rifka Glatz
and Irving P. Cohen as Trustees of the Terrance A. Glatz Residuary Trust
("Series B Shareholders") (collectively, the Series A Shareholders and the
Series B Shareholders shall be referred to as the "Sellers"); Nichols
Research Corporation, a Delaware corporation ("Buyer"); Advanced Marine
Enterprises, Inc., a Virginia corporation ("AME"); and SouthTrust Bank of
Alabama, N.A. (the "Escrow Agent").
W I T N E S E T H
Pursuant to that certain Stock Purchase Agreement dated May 31, 1996,
(the "Purchase Agreement"), Buyer has acquired the outstanding capital
stock of AME. Capitalized terms used herein unless otherwise defined shall
have the meaning ascribed to such terms in the Purchase Agreement.
Pursuant to Section 9 of the Purchase Agreement, the Sellers have agreed to
indemnify Buyer and AME and have agreed that the funds deposited pursuant
to this Escrow Agreement shall secure the indemnification obligations and
also secure the obligation to return part of the Purchase Price if required
by Section 1.7 of the Purchase Agreement.
Therefore, pursuant to the Purchase Agreement and in consideration of
the mutual covenants hereinafter contained, the parties hereby agree as
follows:
SECTION 1. On even date herewith and upon the Closing of the
Purchase Agreement, Sellers have caused to be deposited with the Escrow
Agent the sum of Two Million Seven Hundred Thousand ($2,700,000) (the
"Escrow Money"). The Escrow Money shall be held by the Escrow Agent
hereunder as partial security for the performance by Sellers of their
indemnification obligations set forth in Section 9.2 of the Purchase
Agreement and/or to pay Buyer all or any part of any Purchase Price
reduction as provided in Section 1.7 of the Purchase Agreement, subject to
the terms and conditions hereof.
SECTION 2. In the event the Purchase Price shall be decreased
under the provisions of Section 1.7, the amount of such decrease shall be
paid by the Escrow Agent to the Buyer out of the Escrow Money and any
interest, dividends and investment results thereon, provided, however, that
if payment by the Escrow Agent to Buyer would reduce the amount of the
Escrow Money held under this Escrow Agreement to the greater of $2,350,000
or the value of all Claims (as herein defined) filed against the Escrow
Money by Buyer or AME, then the Escrow Agent shall distribute to Buyer an
amount of the Escrow Money, together with interest, dividends and
investment results thereon, as shall not reduce the Escrow Money below the
greater of such amounts. If the entire amount of the decreased Purchase
Price is not paid by the Escrow Agent to the Buyer out of the Escrow Money,
the remaining decreased Purchase Price shall be paid by the Sellers to
Buyer in proportion to each Seller's share of the Purchase Price allocated
under SCHEDULE 1.3 of the Purchase Agreement. The Escrow Agent shall
disburse any decreased Purchase Price under this Section and Section 1.7 of
the Purchase Agreement to Buyer either (i) upon the joint written
instructions of Buyer and Sellers or (ii) written instructions of Buyer
which shall have appended a copy of a letter or other written memorandum
from the Buyer, or in the event of a dispute in regard thereto, a written
memorandum from Coopers & Lybrand, L.L.P., in the event of a dispute,
stating that there has been a Purchase Price reduction under the provisions
of Section 1.7 of the Purchase Agreement and the amount of such Purchase
Price reduction. Sellers shall not be entitled to file any documents or
take any other action which would prevent the Escrow Agent from paying any
decreased Purchase Price to Buyer pursuant to the written instructions of
Buyer (or Coopers & Lybrand, L.L.P., in the event of a dispute). Any
remaining portion of the Escrow Money after any distribution thereof to the
Buyer as a result of the decreased Purchase Price shall continue to be held
under the provisions of this Escrow Agreement and distributed in accordance
with the other provisions of this Escrow Agreement.
SECTION 3. The Escrow Money and any interest, dividends and
investment results thereon shall be held by the Escrow Agent for the
account of the Sellers, subject to written instruction signed jointly by
the Buyer and Sellers or as otherwise provided herein.
SECTION 4. (a) At anytime on or prior to the Escrow Termination
Date, as hereafter defined, with respect to the Escrow Money, Buyer or AME
may give written notice (the "Initial Notice") to Sellers and the Escrow
Agent of a claim (a "Claim") for indemnification resulting from any Damages
(as defined in the Purchase Agreement) suffered, sustained or incurred by
Buyer or AME or that may reasonably be expected to be suffered by Buyer or
AME as a result of any matters made the subject of Section 9.2 of the
Purchase Agreement or otherwise arising out of the transactions
contemplated by and made the subject of the Purchase Agreement. If the
Sellers dispute such Claim, the Sellers shall send written notice to Buyer
and the Escrow Agent that such Claim is disputed within ten (10) days after
Sellers are deemed to have received the Initial Notice (a "Counter
Notice"). Thereafter, except as provided in the next sentence, the Escrow
Agent shall not deliver any of the Escrow Money or interest, dividends or
investment results thereon made the subject of the Claim to the Buyer, AME
or Sellers except upon joint written instructions of the Buyer, AME and
Sellers. As an alternative to joint written instructions, Buyer, AME or
Sellers may give a notice (a "Claim Notice") to the other party and the
Escrow Agent to the effect that a Claim on all or part of the Escrow Money
(and accrued interest, dividends and investment results) has been resolved,
which notice shall set forth the amount of the Claim to be delivered to
Buyer, AME or Sellers, if any, and shall have appended a copy of a judicial
order, judgment or decree which evidences a resolution of the Claim,
including a certification that neither party has filed an appeal or that
any appeal which has been filed has been finally resolved.
(b) Upon receipt of the Claim Notice with all
necessary attachments, or upon receipt of joint written instructions, the
Escrow Agent shall promptly deliver to Buyer, AME or Sellers the amount due
either as set forth in the Claim Notice, if any, or the amounts set forth
in the joint written instructions.
(c) Buyer or AME may file Claims on both the Escrow
Money and any interest, dividends or investment results thereon, less
disbursement made of net income under Section 5 hereof. If a Claim on less
than all of the Escrow Money and any interest, dividends and investment
results thereon is filed and all or any part of such Claim is ultimately
paid to Buyer or AME, then, in addition to the amount of the Claim required
to be paid to Buyer or AME as a result of joint written instructions or a
Claim Notice, the Escrow Agent shall pay to Buyer, out of any remaining
Escrow Money and any interest, dividends and investment results thereon, an
amount of interest, dividends and investment results equal to the interest,
dividends and investment results allocable to the amount of the Claim
actually paid to the Buyer or AME from the date of the Initial Notice until
the date all or any part of the Claim is paid to Buyer, less disbursements
made of net income under Section 5 hereof.
(d) With respect to all amounts held in the Escrow
Account (and the income earned thereon), the Escrow Termination Date shall
be the earlier of:
(i) May 31, 1998, or
(ii) the date the Escrow Agent no longer holds any funds.
On the Escrow Termination Date, the Escrow Agent shall deliver any
remaining Escrow Money, including any accrued interest, dividends and
investment results thereon, less disbursements of net income made under
Section 5 hereof, to the Representative, unless an Initial Notice, Claim,
or Claim Notice is pending, in any of which cases the amount claimed,
together with interest, dividends and investment results on the amount
claimed from the date of the Initial Notice to the Escrow Termination Date,
shall be retained by the Escrow Agent until a resolution of such pending
Claims. Upon final resolution of the pending Claims and disbursements of
the amounts retained by the Escrow Agent in accordance with Claim Notices
or joint written instructions, this Escrow Agreement shall terminate. All
funds distributed by Escrow Agent to Sellers hereunder shall be distributed
to the Representative for the benefit of the Sellers. It shall be the
responsibility of the Representative to distribute to each Seller his
portion of the funds distributed from the Escrow Account in accordance with
the Purchase Price allocation in SCHEDULE 1.3 of the Purchase Agreement.
(e) The Representative of the Sellers appointed in
Section 24 of the Purchase Agreement is authorized (i) to take all actions
permitted hereunder by the Sellers, including joint instructions, Counter
Notices, and Claim Notices on behalf of the Sellers, (ii) to agree to,
dispute or settle and compromise any Claim, Counter Notice and Claim
Notice given hereunder for and on behalf of the Sellers, (iii) to receive
and respond to any notice or other communication given to the Sellers
hereunder and (iv) to receive all payments on behalf of the Sellers
pursuant to this Escrow Agreement. The Escrow Agent, Buyer and AME shall
be fully protected in dealing exclusively with the Representative as the
authorized agent of the Sellers and the Sellers shall indemnify and hold
harmless the Escrow Agent, Buyer and AME from any liability arising out of
or in connection with the authorization herein granted the Representative
to act for and on behalf of the Sellers.
SECTION 5. The Escrow Agent shall reinvest any interest, dividends
and investment results earned on the Escrow Money. For tax purposes,
interest, dividends and investment results earned on the Escrow Money shall
be taxed to the Sellers in proportion to their share of the Purchase Price
as shown on SCHEDULE 1.3 of the Purchase Agreement, except only so much of
same that is actually distributed to Buyer during any tax period. The
Sellers shall furnish the Escrow Agent with their taxpayer identification
numbers simultaneously upon execution of this Escrow Agreement and a
statement from the Sellers that they are not subject to backup withholding.
The Escrow Agent shall disburse to the Representative for distribution to
the Sellers, in accordance with SCHEDULE 1.3 of the Purchase Agreement,
thirty percent (30%) of the net income earned during each calendar year
within thirty (30) days after the end of such year.
SECTION 6. All notices and other communications under this Escrow
Agreement shall (a) be in writing (which shall include communications by
facsimile), (b) be (i) sent by registered mail or certified mail, postage
prepaid, return receipt requested or by facsimile, or (ii) delivered by
hand, (c) be given at the following respective addresses and facsimile
numbers and to the attention of the following persons:
(i) If to Sellers, to:
John T. Drewry
110 Commonage Drive
Great Falls, Virginia 22066
Telephone No.: (703)759-5829
Facsimile No.: (703)413-9220
(with a copy to:)
David H. Pankey, Esq.
McGuire Woods Battles & Boothe
627 Eye Street, N.W.
Washington, D.C. 20006
Telephone: (202)857-1700
Facsimile: (202)857-1737
(ii) If to Buyer, to:
Nichols Research Corporation
4040 Memorial Parkway, South
Huntsville, Alabama 35802-1326
Attention: Chief Executive Officer
Telephone: (205)883-1140
Facsimile: (205)880-0367
(with a copy to:)
Lanier Ford Shaver & Payne P.C.
200 West Court Square, Suite 5000
P.O. Box 2087
Huntsville, Alabama 35804
Attention: John R. Wynn, Esq.
Telephone: (205)535-1100
Facsimile: (205)533-9322
(iii) If to the Escrow Agent, to:
SouthTrust Bank of Alabama, N.A.
P.O. Box 267
Huntsville, Alabama 35804
Attention: Richard George
Telephone: (205)551-4126
Facsimile: (205)551-4038
or at such other address or facsimile number or to the attention of such
other person as the party to whom such information pertains may hereafter
specify for the purpose in a notice to the other specifically captioned
"Notice of Change of Address," and (d) be effective or deemed delivered or
furnished (i) if given by mail, on the third day after such communication
is deposited in the mail, addressed as above provided, (ii) if given by
facsimile, when such communication is transmitted to the appropriate number
determined as above provided in this Section 6 and the appropriate
acknowledgement is received and (iii) if given by hand delivery, when left
at the address of the addressee addressed as above provided, except that
notices of a change of address or facsimile number shall not be deemed
furnished until received.
SECTION 7. (a) The Escrow Agent shall not be under any duty to
give the property held hereunder any greater degree of care than it gives
its own similar property.
(b) The Escrow Agent may act in reliance upon any
instrument or signature believed to be genuine and may assume that any
person purporting to give any writing, Initial Notice, Counter-Notice,
Claim Notice, Claim, advice or instruction in connection with the
provisions hereof has been duly authorized to do so.
(c) The Escrow Agent may act relative hereto upon
advice of counsel in reference to any matter connected herewith, and shall
not be liable for any acts or omissions unless caused by its negligence or
willful misconduct.
(d) This Escrow Agreement sets forth exclusively the
duties of the Escrow Agent with respect to any and all matters pertinent
hereto and no implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent.
(e) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or
document, or instrument or property held or delivered to it.
(f) Buyer and Sellers agree that they shall be equally
responsible for the payment of all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of such duties
hereunder, including reasonable fees, expenses and disbursements of its
counsel. The Sellers' share of any such fees and expenses of the Escrow
Agent may be withheld and paid from the Escrow Money. The immediately
preceding sentence survives, despite any termination of this Escrow
Agreement or the resignation or removal of the Escrow Agent.
(g) The Escrow Agent does not have and will not have
any interest in any of the Escrow Money deposited or held hereunder but is
serving only as escrow holder and having only possession thereof.
(h) All Escrow Money received by the Escrow Agent
shall be invested and reinvested by the Escrow Agent in one year treasury
notes which may be purchased through SouthTrust Securities, Inc., except
the Escrow Agent may hold a sufficient amount in a money market fund (which
may include a money market fund of the Escrow Agent or its affiliate) to
meet anticipated distributions.
(i) In the event the Escrow Agent before the
termination of the escrow created by this Escrow Agreement receives or
becomes aware of conflicting demands or claims with respect to this escrow
or the rights of any of the parties hereto, or any funds, securities,
property or documents deposited herein or affected hereby, the Escrow Agent
shall have the right to discontinue any or all further acts on its part
until such conflict is resolved to its satisfaction. The Escrow Agent
shall have the further right but not the obligation to commence or defend
any action or proceedings for the determination of such conflict including,
but without limiting the generality of the foregoing, a suit in
interpleader brought by the Escrow Agent. In the event the Escrow Agent
files a suit in interpleader, and delivers to the court all funds,
securities, property or documents then in deposit hereunder, it shall
thereupon be fully released and discharged from all further obligations to
perform any and all duties or obligations imposed upon it by this Escrow
Agreement. Buyer and Sellers agree that they shall be equally responsible
for the payment of all costs, damages, judgments and expenses, including
reasonable attorneys' fees, suffered or incurred by the Escrow Agent in
connection with or arising out of its escrow (except those caused by Escrow
Agent's own negligence or willful misconduct). However, as between the
Buyer and the Sellers, the nonprevailing party with respect to a Claim
shall be required to pay the costs and expenses of the prevailing party
including the prevailing party's share of all of the costs, damages and
expenses of the Escrow Agent, if any.
(j) The Escrow Agent shall not be liable for any error
of judgment or for any act done or omitted by it in good faith, or for
anything which it may in good faith do or refrain from doing in connection
herewith; nor shall the Escrow Agent be liable if, in the event of any
dispute or question as to its duties or obligations hereunder, it acts in
accordance with written opinion of its legal counsel, which may include
attorneys who are members of or who are employed by the Escrow Agent. The
Escrow Agent is authorized to act upon any document believed by it to be
genuine and to be signed by the proper party or parties, and will incur no
liability in so acting.
SECTION 8. (a) This Escrow Agreement and the Purchase Agreement
constitute the entire understanding among the parties in connection with
the subject matter hereof, and no waiver or modification of the terms
hereof shall be valid unless in writing signed by the party to be charged
and only to the extent therein set forth.
(b) This Escrow Agreement shall be governed by, and
construed in accordance with, the internal substantive laws and not the
choice of laws rules of the State of Alabama.
(c) This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs,
administrators, executors, successors and assigns.
(d) This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original of this
Escrow Agreement and all of which taken together shall constitute one and
the same instrument.
(e) If one or more provisions of this Escrow Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Escrow Agreement and the balance of this Escrow
Agreement shall be enforceable in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Escrow Agreement the day and year first above written.
NICHOLS RESEARCH CORPORATION, a
Delaware corporation
Chris H. Horgen
By:_____________________________
Chris H. Horgen
Its Chief Executive Officer
"Buyer"
ADVANCED MARINE ENTERPRISES, INC., a
Virginia corporation
John T. Drewry
By:_____________________________
John T. Drewry
Its President
"AME"
SOUTHTRUST BANK OF ALABAMA, N.A.
Glenda Thompson
By: ____________________________
Its Trust Officer
"Escrow Agent"
SERIES A SHAREHOLDERS:
Raymond J. Rockwell, Jr.
Patrick Brawley
By:_____________________________
Patrick Brawley, Attorney-
In-Fact
Mary D. Mahler
________________________________
Mary D. Mahler
Lewis R. Sheldon
________________________________
Lewis R. Sheldon
Barbara S. Lamade
________________________________
Barbara S. Lamade
David A. Helgerson
________________________________
David A. Helgerson
Barry L. Batchelor
________________________________
Barry L. Batchelor
Patrick W. Brawley
________________________________
Patrick W. Brawley
Stephen R. Leavy
________________________________
Stephen R. Leavy
Frederic S. Hering
________________________________
Frederic S. Hering
Kenneth A. Randell
________________________________
Kenneth A. Randell
Robert M. Mallard
Stephen R. Leavy
By:_____________________________
Stephen R. Leavy, Attorney-
In-Fact
Gary M. Poquette
________________________________
Gary M. Poquette
Geoffrey D. Fuller
Lewis R. Sheldon
By:______________________________
Lewis R. Sheldon, Attorney-
In-Fact
Dennis F. Breen
________________________________
Dennis F. Breen
F. Patrick Dougherty
________________________________
F. Patrick Dougherty
Eugene R. Miller, Jr.
________________________________
Eugene R. Miller, Jr.
Brian R. Hill
________________________________
Brian R. Hill
Peter B. Zahn
________________________________
Peter B. Zahn
SERIES B SHAREHOLDERS:
Simon Glatz
________________________________
Simon Glatz
Simon Glatz
________________________________
Simon Glatz as Trustee
of the Second Amended & Restated
Simon Glatz Revocable Trust
John T. Drewry
________________________________
John T. Drewry
Otto P. Jons
________________________________
Otto P. Jons
Rifka Glatz
________________________________
Rifka Glatz as Trustee of the
Corey T. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Corey T. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Residuary Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Residuary Trust
"Sellers"