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Exhibit 10.16
EARNOUT ESCROW AGREEMENT
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EARNOUT ESCROW AGREEMENT ("Escrow Agreement") made as of April 3, 1998,
by and among Conley, Canitano & Assoc., Inc., an Ohio corporation ("CCAi"),
Kelly-Levey & Associates, Inc., a Kentucky corporation (the "Company"), Burke &
Company, P.L.L. (the "Shareholders' Representative") and Anthony F. Kelly,
Ronnie Crumpler and Gary Levey (the "Controlling Shareholders").
RECITALS
WHEREAS, CCAi, the Company and the Controlling Shareholders are parties
to the Stock Purchase Agreement dated as of April 3, 1998 (the "Purchase
Agreement") and CCAi and the shareholders of the Company other than the
Controlling Shareholders (the "Minority Shareholders") are parties to Minority
Share Purchase Agreements dated as of April 3, 1998 (the "Minority Share
Purchase Agreements") (the Purchase Agreement and the Minority Share Purchase
Agreements collectively referred to as the "Purchase Agreement") pursuant to
which CCAi acquired all of the capital stock of the Company from the
shareholders of the Company;
WHEREAS, pursuant to the terms of the Purchase Agreement, an additional
sum not to exceed One Million One Hundred Twenty Six Thousand Five Hundred
Thirty Four Dollars ($1,126,534) (the "Kelly Earnout Consideration") is payable
to Anthony F. Kelly ("Kelly") subject to Kelly complying with his Non-Compete
Agreement;
WHEREAS, pursuant to the terms of the Purchase Agreement, an additional
sum not to exceed Three Million Three Hundred Seventy Three Thousand Four
Hundred Sixty Six Dollars ($3,373,466) (the "Shareholders Earnout
Consideration") is payable to the shareholders of the Company other than Anthony
F. Kelly (collectively the "Shareholders") if certain target financial
objectives are met (the Kelly Earnout Consideration and the Shareholders Earnout
Consideration are collectively referred to as the "Earnout Consideration");
WHEREAS, CCAi, the Company and the Controlling Shareholders entered
into that certain Earnout Agreement dated as of April 3, 1998 (the "Earnout
Agreement") whereby the parties thereto defined the target financial objectives
and contingencies which will result in the distribution of the Earnout
Consideration to the Shareholders and Kelly;
WHEREAS, each of the Minority Shareholders agreed to be bound by the
terms and conditions of the Earnout Agreement; and
WHEREAS, the Earnout Consideration is to be deposited with the
Shareholders' Representative and distributed as provided in this Escrow
Agreement; and
WHEREAS, the parties to this Escrow Agreement have agreed upon and
desire to set forth the terms and conditions with respect to the Earnout
Consideration to be distributed to the Shareholders and Kelly.
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NOW THEREFORE, the parties agree as follows:
1. SHAREHOLDERS' REPRESENTATIVE. CCAi, the Company and the Controlling
Shareholders hereby designate and appoint the Shareholders' Representative to
serve in accordance with the terms, conditions and provisions of this Escrow
Agreement, and the Shareholders' Representative hereby agrees to act as such
upon the terms, conditions and provisions provided in this Escrow Agreement.
2. DEPOSITS OF FUNDS. Funds attributable to the Earnout Consideration
(the "Earnout Deposits") shall be paid to the Shareholders' Representative to be
distributed to the Shareholders and Kelly at such times and in such amounts as
set forth in the Earnout Agreement. The payment of the Earnout Deposits by CCAi
to the Shareholders' Representative under this Escrow Agreement shall constitute
payments to each of the Shareholders and Kelly under the Purchase Agreement,
each of the Minority Share Purchase Agreements and the Earnout Agreement.
3. EARNOUT CONSIDERATION. Earnout Deposits shall be distributed to the
Shareholders and Kelly by the Shareholders' Representative as soon as
practicable after being deposited as provided in this Escrow Agreement, but in
no event later than thirty (30) days after such Earnout Deposits are deposited
in this Escrow. Kelly and each Shareholder shall receive his or her
proportionate share of such Earnout Deposit as set forth on EXHIBIT A; PROVIDED,
HOWEVER, if a Termination Event (as defined in the Earnout Agreement) shall have
occurred with respect to any Shareholder other than Kelly (the "Terminated
Shareholder"), then such Terminated Shareholder shall not be entitled to receive
any Earnout Deposits earned after the date of such Termination Event. In such
event, each remaining Shareholder (other than Kelly) shall receive pro rata in
accordance with his or her ownership interest in the Company immediately prior
to the closing of the transactions contemplated by the Purchase Agreement as
among themselves that amount of the Earnout Deposit that would have been due the
Terminated Shareholder. The parties acknowledge that disbursements by the
Shareholders' Representative hereunder shall be made (i) to the Shareholders and
Kelly individually and (ii) into an escrow account established for purposes of
distributing funds due to former employees of the Company under the Company's
Retention Incentive Bonus Plan, all in accordance with EXHIBIT A.
4. RESPONSIBILITIES OF THE SHAREHOLDERS' REPRESENTATIVE. The
Shareholders' Representative shall have no duties or responsibilities except
those expressly set forth herein. The Shareholders' Representative shall have no
responsibility or liability for the truth, accuracy or validity of any
agreements referred to in this Escrow Agreement (including, without limitation,
EXHIBIT A and the Earnout Agreement), or for the performance of any such
agreements by any party thereto or for interpretation of any of the provisions
of any of such agreements. The Shareholders' Representative shall not be liable
for any action or determination taken or made in good faith with respect to this
Escrow Agreement or any other agreements referenced herein. The liability of the
Shareholders' Representative hereunder shall be limited solely to bad faith,
willful misconduct or gross negligence on its part. The Shareholders'
Representative shall be protected in acting upon any certificate, notice or
other instrument whatsoever received by the Shareholders' Representative under
this Escrow Agreement, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and accuracy of any
information therein contained, which the
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Shareholders' Representative in good faith believes to be genuine and to have
been signed or presented by a proper person or persons.
If the Shareholders' Representative is uncertain as to its duties or
rights hereunder or receives instructions with respect to any funds to be
distributed pursuant to this Escrow Agreement which, in the opinion of the
Shareholders' Representative and its counsel, are in conflict with any of the
provisions of this Escrow Agreement, the Shareholders' Representative shall be
entitled to refrain from taking any action until it is directed otherwise in
writing by all of the other parties hereto or by an order of a court of
competent jurisdiction. The Shareholders' Representative shall be deemed to have
no notice of, or duties with respect to, any agreement or agreements with
respect to any property held by it in escrow pursuant to this Escrow Agreement
other than this Escrow Agreement or except as otherwise provided herein. This
Escrow Agreement sets forth the entire agreement relating to the matters set
forth herein between the parties hereto and the Shareholders' Representative. If
any of the terms and provisions of any other agreement (excluding any amendment
to this Escrow Agreement) between any of the parties hereto conflict or are
inconsistent with any of the terms and provisions of this Escrow Agreement, the
terms and provisions of this Escrow Agreement shall govern and control in all
respects.
5. RESIGNATION. The Shareholders' Representative shall have the right,
in its discretion, to resign as agent at any time, by giving at least 30 days'
prior written notice of such resignation to CCAi and the Company. The
Shareholders' Representative shall be discharged from all further duties
hereunder upon the expiration of such 30-day period provided, however, that
during such 30-day period, the Shareholders must appoint a successor
representative.
6. FEES AND EXPENSES. The Controlling Shareholders shall be liable for
the Shareholders' Representative's fees and expenses for its services hereunder.
For services rendered under this Escrow Agreement, the Controlling Shareholders
shall pay the Shareholders' Representative a fee of $_____.
7. NOTICES. All communications and disbursements required pursuant to
this Earnout Escrow Agreement shall be addressed to the Shareholders, CCAi, the
Company and the Controlling Shareholders respectively as follows:
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If to the Shareholders' Representative:
Burke & Company P.L.L.
2105 Grandin Road
Cincinnati, Ohio 45208
Attention: Pat Burke
If to CCAi or Company:
Conley, Canitano & Assoc., Inc.
CCAi Renaissance Centre
5800 Landerbrook Drive
Mayfield Heights, OH 44124
Facsimile No. (440) 684-6700
Attention: Nicholas A. Canitano
With a copy to counsel:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Facsimile No.: (216) 579-0212
Attention: John M. Saada, Jr., Esq.
If to Anthony F. Kelly:
Anthony F. Kelly
787 Gallant Fox
Union, Kentucky 41091
With a copy to counsel:
Deters, Benzinger & LaVelle, P.S.C.
Thomas More Park
2701 Turkeyfoot Road
Covington, Kentucky 41017
Attention: John C. LaVelle, Esq.
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If to Ronnie Crumpler:
Ronnie Crumpler
2720 Lakeshore Lane
Carrollton, Texas 75006
With a copy to counsel:
Thompson, Coe, Cousins & Irons, L.L.P.
200 Crescent Court, Eleventh Floor
Dallas, Texas 75201-1853
Attention: Michael A. McClelland, Esq.
If to Gary Levey:
Gary Levey
11424 Kayak Court
Indianapolis, Indiana 46236
With a copy to counsel:
Siegel, Carter & Dassow, LLP
300 North Meridian Street
Suite 1800
Indianapolis, Indiana 46204
Attention: Robert T. Dassow, Esq.
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
Any notice, instructions or delivery under any of the provisions of
this Escrow Agreement shall be in writing and shall be delivered personally, or
sent by reputable courier service, delivery charges prepaid and proof of
delivery requested. Any such notice shall be deemed given (i) if delivered
personally, when so delivered to the applicable address set forth above in this
paragraph 7 or (ii) if sent by courier service to the applicable address set
forth above in this paragraph 7, two days after delivery to such courier
service. Notwithstanding any of the foregoing, no notice or instructions to the
Shareholders' Representative shall be deemed to have been received by the
Shareholders' Representative prior to actual receipt by the Shareholders'
Representative.
8. PARTIES IN INTEREST. This Escrow Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, and administrators, successors and assigns.
9. CAPTIONS. The paragraph captions used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Escrow Agreement.
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10. INDEMNIFICATION OF SHAREHOLDERS' REPRESENTATIVE. The Controlling
Shareholders, jointly and severally, agree to hold the Shareholders'
Representative harmless and to indemnify the Shareholders' Representative
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 Escrow Agreement, except for bad faith, gross negligence or willful
misconduct of the Shareholders' Representative. The foregoing indemnities in
this paragraph 10 shall survive termination of this Escrow Agreement.
11. DISAGREEMENTS. If any disagreement or dispute arises between the
parties to this Escrow Agreement concerning the meaning or validity of any
provision under this Escrow Agreement or concerning any other matter relating to
this Escrow Agreement, the Shareholders' Representative (a) shall be under no
obligation to act, except under process or order of court, or until it has been
adequately indemnified to its full satisfaction, and shall sustain no liability
for its failure to act pending such process or court order or indemnification,
and (b) may deposit, in its sole and absolute discretion, the Earnout Deposits
or that portion of the Earnout Deposits it then holds with any court of
competent jurisdiction and interplead the parties. Upon such deposit and filing
of interpleader, the Shareholders' Representative shall be relieved of all
liability as to the Earnout Deposits and shall be entitled to recover from the
parties its reasonable attorneys' fees and other costs incurred in commencing
and maintaining such action.
12. THIRD-PARTY BENEFICIARIES. The Shareholders and their respective
successors, heirs, executors, administrators and other estate representatives
shall be third party beneficiaries of the provisions of this Escrow Agreement,
and shall be entitled to enforce the provisions hereof, in each such case as
fully and to the same extent as if they were parties to this Escrow Agreement.
Except as provided in the immediately preceding sentence, nothing in this Escrow
Agreement, express or implied, is intended to or shall confer upon any person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Escrow Agreement, and no Person (other than as provided in
the immediately preceding sentence) shall be deemed to be a third party
beneficiary under or by reason of this Escrow Agreement.
13. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Ohio without
giving effect to any choice of law or conflict of law provision or rule (whether
of the state of Ohio or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the state of Ohio.
14. AMENDMENTS; COUNTERPARTS. This Escrow Agreement may be executed in
one or more counterparts, all of which together shall constitute one instrument
and cannot be amended or modified in any manner other than by a written
instrument duly executed by each party hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE TO FOLLOW.]
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IN WITNESS WHEREOF, the parties hereunto have duly caused this Escrow
Agreement to be executed as of the first day above written.
BURKE & COMPANY, P.L.L.,
as Shareholders' Representative
By: /s/ Patrick Burke
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Its: Managing Partner
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CONLEY, CANITANO & ASSOC., INC.
By: Annette Canitano
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Its: Executive Vice President
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KELLY-LEVEY & ASSOCIATES, INC.
By: /s/ Anthony F. Kelly
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Its: President
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/s/ Anthony F. Kelly
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Anthony F. Kelly
/s/ Gary Levey
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Gary Levey
/s/ Ronnie Crumpler
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Ronnie Crumpler
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Subject to the terms and conditions of this Agreement and the Earnout
Agreement, the undersigned Shareholders hereby acknowledge and agree with the
disbursement of the Earnout Consideration as set forth on Exhibit A.
/s/ Trevor Montgomery
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Trevor Montgomery
/s/ Rob Petersen
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Rob Petersen
/s/ Don Kirby
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Don Kirby
/s/ Gary Levey
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Gary Levey
/s/ Anthony F. Kelly
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Anthony F. Kelly
/s/ Ronnie Crumpler
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Ronnie Crumpler