EXHIBIT 10.6
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ESCROW ARRANGEMENT
DATED AS OF [ ], 2002
BY AND AMONG
GOTHAM GOLF CORP.,
GGC MERGER SUB, INC.,
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS,
AND
THE BANK OF NEW YORK, AS ESCROW AGENT
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS.................................................................... 2
1.1 Definitions........................................................... 2
ARTICLE II
ESCROW AGENT AND ESCROW FUNDS.................................................. 4
2.1 Escrow Agent.......................................................... 4
2.2 Escrow Funds.......................................................... 4
2.3 Liabilities Secured by Escrow Funds................................... 4
2.4 Contingent Right to Escrow Funds; The Escrow Rights................... 5
ARTICLE III
ESCROW FUND.................................................................... 5
3.1 Representation Claims................................................. 5
3.2 Payment of Representation Claims; Remittance of Excess Monies......... 5
3.3 Termination; Release.................................................. 6
ARTICLE IV
FEES AND RESPONSIBILITIES OF ESCROW AGENT...................................... 6
4.1 Fees, Expenses and Taxes.............................................. 6
4.2 Responsibilities of the Escrow Agent.................................. 7
4.3 Investment of Escrow Fund............................................. 8
4.4 Investment Income..................................................... 9
ARTICLE V
MISCELLANEOUS.................................................................. 9
5.1 Distributions by Escrow Agent to Shareholder Beneficiaries............ 9
5.2 Notices............................................................... 9
5.3 Assignment............................................................ 11
5.4 Execution by Escrow Agent............................................. 11
5.5 Governing Law......................................................... 11
5.6 Jurisdiction; Agents for Service of Process........................... 11
5.7 Waiver of Jury Trial.................................................. 11
5.8 Entire Agreement...................................................... 11
5.9 Amendments............................................................ 11
5.10 Severability.......................................................... 11
5.11 Third Party Beneficiaries............................................. 11
5.12 No Strict Construction; Interpretation................................ 12
5.13 Counterparts.......................................................... 12
ESCROW ARRANGEMENT
This ESCROW ARRANGEMENT (this "AGREEMENT"), dated as of [ ]/1/, 2002,
is by and among Gotham Golf Corp. ("GGC"), a Delaware corporation, GGC Merger
Sub, Inc., a Delaware corporation and a wholly owned subsidiary of GGC ("SUB",
and together with GGC, the "GOTHAM PARTIES" and each individually, a "GOTHAM
PARTY"), First Union Real Estate Equity and Mortgage Investments, an Ohio
business trust (the "COMPANY"), and The Bank of New York, as escrow agent (the
"ESCROW AGENT").
W I T N E S S E T H :
WHEREAS, GGC, Sub, the Company, the FUMI Share Trust, FUMI and certain other
parties have entered into an Agreement and Plan of Merger and Contribution,
dated as of February 13, 2002 (as the same may be amended or supplemented from
time to time, the "MERGER AGREEMENT"), pursuant to which, among other things,
(i) the Company shall be merged with and into GGC (the "FUR MERGER"), and the
separate corporate existence of the Company shall cease and GGC shall continue
as the surviving entity (the "SURVIVING CORPORATION") in accordance with the
DGCL as well as all other applicable Laws and subject to the terms and
conditions of the Merger Agreement; and (ii) Sub shall be merged with and into
FUMI (the "FUMI MERGER" and together with the FUR Merger, the "MERGERS"), and
the separate corporate existence of Sub shall cease and FUMI shall continue as
the surviving entity, in accordance with the DGCL as well as other applicable
Laws and subject to the terms and conditions set forth in the Merger Agreement;
WHEREAS, pursuant to the Merger Agreement, certain shares of beneficial
interests, par value $1.00 per share, of the Company (each a "COMPANY COMMON
SHARE") issued and outstanding immediately prior to the Effective Time (as
defined in the Merger Agreement) shall be converted into the right to receive a
certain amount of cash less certain holdbacks, including the Escrow Share
Holdback (as defined in the Merger Agreement);
WHEREAS, the Escrow Share Holdback is determined (i) by mutual agreement of
certain parties to the Merger Agreement or, where such agreement can not be
reached prior to the Effective Time, by a mutually acceptable appraiser and
(ii) with reference to the Reasonably Expected Liabilities (as defined in the
Merger Agreement), which include the expected value of any claims, expenses,
losses, liabilities, and obligations of the Company, the FUMI Share Trust or
their respective subsidiaries whether known or unknown as of February 13, 2002,
absolute or contingent, asserted or unasserted, direct or indirect, arising by
operation of law, equity or otherwise that would reasonably be expected to
arise after February 13, 2002 as a result of, on account of, in connection with
or related to any fact, circumstance, condition or event occurring prior to the
Closing Date (as defined below) that would amount to a breach of any
representation, warranty or covenant contained in the Merger Agreement (or in
certain related agreements) made by or on behalf of the Company, the FUMI Share
Trust or their respective subsidiaries (as if such representations, warranties
and covenants were made as of the date of the Merger Agreement and at and as of
the Effective Time as though made at and as of such time (or, if made as of a
specific date, at and as of such date));
WHEREAS, immediately prior to the consummation of the Mergers, the Company
shall deposit or cause to be deposited with the Escrow Agent in escrow
[$ ] (such amount, together with any investment or other income or
earnings thereon, the "ESCROW FUND"), which is intended by the parties hereto
to equal an amount of cash sufficient to satisfy the Reasonably Expected
Liabilities, subject to the terms and conditions hereof, PROVIDED, HOWEVER,
that the Escrow Fund shall be remitted to the Company in accordance with
Section 3.3(b) hereof in the event that (i) the Merger Agreement is terminated
and/or (ii) the Mergers are not consummated;
WHEREAS, the Escrow Fund, shall be held and disbursed as provided herein for
(i) the satisfaction of the Reasonably Expected Liabilities in the full amount
of the actual liabilities relating to such Reasonably Expected Liabilities
pursuant to Section 2.14 of the Merger Agreement or (ii) the distribution (the
"ESCROW DISTRIBUTION") of the Remaining Escrow Amount (as defined below) as of
the 24-month anniversary of the Closing Date (the "ESCROW DISTRIBUTION DATE")
to holders of Company Common Shares as of the Effective Time (such holders,
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/1/ Closing date of the proposed transaction.
the "SHAREHOLDER BENEFICIARIES") on a pro rata basis (such amount per Company
Common Share, the "ESCROW DISTRIBUTION AMOUNT" and the right to receive such
amount on the part of Shareholder Beneficiaries, the "ESCROW RIGHT");
WHEREAS, the parties hereto acknowledge and agree that (A) the Escrow Rights
(i) are an integral part of the consideration for the Mergers; (ii) do not
represent an ownership interest in the Company or the Gotham Parties; (iii) are
not transferable except by operation of law; and (iv) will not be represented
by any form of certificate or instrument; and (B) the Escrow Distribution
Amount will not depend upon the operating results of the Company or the Gotham
Parties; and
WHEREAS, the Escrow Agent has been granted various powers and authorities
hereunder in order to facilitate the consummation of the transactions
contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements contained herein and in the Merger Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be bound hereby, the parties hereby
covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. When used in this Agreement, the following terms shall
have the respective meanings specified below (such meanings to apply equally to
both the singular and the plural forms of the defined terms):
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person; PROVIDED that, for the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT INDEMNITEES" shall have the meaning set forth in Section 5.2(c).
"AGREEMENT" shall have the meaning set forth in the first paragraph of this
Agreement.
"BANKRUPTCY EVENT" shall have the meaning set forth in Section 2.4.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or a day on
which banks located in New York, New York shall be authorized or required by
Law to close.
"CLAIM CERTIFICATE" shall have the meaning set forth in Section 3.1.
"CLOSING DATE" shall mean the date of this Agreement, which is also the
closing date of the Merger Agreement.
"COMPANY" shall have the meaning set forth in the first paragraph of this
Agreement.
"COMPANY COMMON SHARE" shall have the meaning set forth in the recitals
hereto.
"DAMAGES" shall have the meaning set forth in Section 5.2(c).
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"DGCL" shall mean the Delaware General Corporation Law.
"ESCROW AGENT" shall mean the Person named as the "Escrow Agent" in the
first paragraph of this Agreement until a successor Escrow Agent shall have
become such pursuant to Section 5.2(f), and thereafter "Escrow Agent" shall
mean the Person who is then the Escrow Agent hereunder.
"ESCROW DISTRIBUTION" shall have the meaning set forth in the recitals
hereto.
"ESCROW DISTRIBUTION AMOUNT" shall have the meaning set forth in the
recitals hereto.
"ESCROW DISTRIBUTION COSTS" shall have the meaning set forth in Section 3.3.
"ESCROW DISTRIBUTION DATE" shall have the meaning set forth in the recitals
hereto.
"ESCROW FUND" shall have the meaning set forth in the recitals hereto.
"ESCROW RIGHT" shall have the meaning set forth in the recitals hereto.
"FUMI" shall have the meaning set forth in the first paragraph of this
Agreement.
"FUMI MERGER" shall have the meaning set forth in the recitals hereto.
"FUMI SHARE TRUST" shall have the meaning set forth in the first paragraph
of this Agreement.
"FUR MERGER" shall have the meaning set forth in the recitals hereto.
"GGC" shall have the meaning set forth in the first paragraph of this
Agreement.
"GOTHAM PARTY" and "GOTHAM PARTIES" shall have the meaning set forth in the
first paragraph to this Agreement.
"GOVERNMENTAL OR REGULATORY AUTHORITY" shall mean any instrumentality,
subdivision, court, administrative agency, commission, or other authority of
the United States or any other country or any state, province, prefect,
municipality, locality or other government or political subdivision thereof.
"GOVERNMENTAL SECURITIES" shall have the meaning set forth in Section 4.3(a).
"INDEMNIFIABLE LOSSES" shall have the meaning set forth in Section 2.3(a).
"LAW" shall mean any statute, law, ordinance, rule or regulation of any
Governmental or Regulatory Authority.
"MERGERS" shall have the meaning set forth in the recitals hereto.
"MERGER AGREEMENT" shall have the meaning set forth in the recitals hereto.
"PERMITTED INVESTMENTS" shall have the meaning set forth in Section 4.3(a).
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a Governmental or
Regulatory Authority.
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"QUALIFIED BANK" shall have the meaning set forth in Section 4.2(f).
"REMAINING ESCROW AMOUNT" shall have the meaning set forth in Section 3.3.
"REPRESENTATION CLAIMED AMOUNT" shall have the meaning set forth in Section
3.1(a).
"SHAREHOLDER BENEFICIARIES" shall have the meaning set forth in the recitals
hereto.
"SUB" shall have the meaning set forth in the first paragraph of this
Agreement.
"SURVIVING CORPORATION" shall have the meaning set forth in the recitals
hereto.
"TAXES" shall mean all federal, state, local, foreign or other taxes of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any taxing
authority, including taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, including withholding, AD VALOREM or value added taxes.
ARTICLE II
ESCROW AGENT AND ESCROW FUNDS
2.1 ESCROW AGENT. Each of the Gotham Parties and the Company hereby
designate and appoint the Escrow Agent to serve as escrow agent in accordance
with the terms, conditions and provisions of this Agreement, and the Escrow
Agent hereby agrees to act as escrow agent in accordance with the terms,
conditions and provisions of this Agreement.
2.2 ESCROW FUNDS. (a) Pursuant to the Merger Agreement, the Company hereby
deposits by wire transfer of immediately available funds $[ ] into the
Escrow Fund.
(b) RIGHTS IN ESCROW FUNDS. Upon receipt of the amounts described in
Section 2.2(a) hereof, the Escrow Agent shall deliver to the Company and GGC a
written acknowledgment of such receipt. Except as expressly provided herein,
none of the Gotham Parties, Company or Shareholder Beneficiaries shall have any
right, title or interest in or possession of any of the amounts held in the
Escrow Fund prior to their disbursement therefrom in accordance with the terms
of this Agreement, and no funds may be withdrawn from the Escrow Fund except in
accordance with this Agreement. Except as otherwise provided in Section 2.4,
(i) none of the Gotham Parties, Company or Shareholder Beneficiaries shall have
the ability to pledge, convey, hypothecate or grant a security interest in any
portion of the amounts held in the Escrow Fund unless and until such funds have
been disbursed to such party in accordance with the terms of this Agreement,
and (ii) until disbursed in accordance with the terms of this Agreement, the
Escrow Agent shall be in sole possession of the amounts held in the Escrow
Funds and will not act or be deemed to act as custodian for any party for
purposes of perfecting a security interest therein.
2.3 LIABILITIES SECURED BY ESCROW FUNDS. (a) The Escrow Fund shall, subject
to the terms and conditions of this Agreement, be held to provide for the
advancement of funds, indemnification or reimbursement, as the case may be, to
the Gotham Parties on account the Gotham Parties' satisfaction of the
Reasonably Expected Liabilities in the full amount of the actual liabilities
relating to such Reasonably Expected Liabilities and any costs, fees or
expenses related thereto (the amount so payable, the "INDEMNIFIABLE LOSSES").
The sole recourse by the Gotham Parties against the Shareholder Beneficiaries
or the Company with respect to any such Indemnifiable Losses for which any
Gotham Party is entitled to payment under the Merger Agreement, if any, shall
be limited to the aggregate amount then held in the Escrow Fund (regardless of
whether the remaining
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balance in the Escrow Fund is sufficient to satisfy the remaining Reasonably
Expected Liabilities). For the purpose of clarity, it is acknowledged and
agreed that the "actual liabilities" for which the Gotham Parties are entitled
to payment on account of the Reasonably Expected Liabilities (i) shall in no
way be limited to the estimates of such liabilities as of the date hereof and
(ii) may be in excess of or less than such estimates.
2.4 CONTINGENT RIGHT TO ESCROW FUNDS; THE ESCROW RIGHTS. The parties hereto
acknowledge and agree that:
(a) it is the intent of each of the parties hereto (other than the Escrow
Agent) that the interests, if any, of each of the Gotham Parties and the
Shareholder Beneficiaries in the amounts held in the Escrow Funds is merely
a contingent right to payment from the Escrow Funds, and that neither a
voluntary nor involuntary case under any applicable bankruptcy, insolvency
or similar law nor the appointment of a receiver, trustee, custodian or
similar official in respect of any such party (any of which is referred to
herein as a "BANKRUPTCY EVENT") shall increase its respective interest in
the amounts held in the Escrow Funds or affect, modify, convert or otherwise
change the contingent nature of its respective right to payment from the
Escrow Funds in accordance with the terms of this Agreement;
(b) the Escrow Rights are not securities, financial instruments or other
evidence of ownership, equity participation or rights giving Shareholder
Beneficiaries claims on the assets, operations or earnings of any of the
Gotham Parties or the Company;
(c) the Escrow Rights are not transferable other than by operation of law
including the laws of intestacy; and
(d) the Escrow Rights shall not be represented by any form of certificate
or instrument.
ARTICLE III
ESCROW FUND
3.1 REPRESENTATION CLAIMS. If any Gotham Party has a claim for
Indemnifiable Losses, the Gotham Party shall deliver to the Escrow Agent a
notice of claim certificate (the "CLAIM CERTIFICATE"), which shall:
(a) state that such Gotham Party has paid, has accrued or incurred, and
in each case intends to pay promptly, a liability for Indemnifiable Losses
for which such Gotham Party is entitled to advancement, indemnification
and/or reimbursement under the terms hereof;
(b) set out the amount of the Indemnifiable Losses for which such Gotham
Party is seeking advancement, indemnification and/or reimbursement under
such Claim Certificate (the "REPRESENTATION CLAIMED AMOUNT"); and
(c) describe in reasonable detail each Indemnifiable Loss, including the
basis for such claim and a statement that the applicable Gotham Party has a
good faith belief that such claim is an appropriate Indemnifiable Loss under
the terms hereof.
3.2 PAYMENT OF REPRESENTATION CLAIMS; REMITTANCE OF EXCESS MONIES.
(a) Subject to Section 4.1, as promptly as practicable and in any event no
later than the close of business on the third (3rd) Business Day following the
date of receipt by the Escrow Agent of a Claim Certificate, the Escrow Agent
shall deliver by wire transfer to the account of each applicable Gotham Party
an amount, to the extent available, equal to the Representation Claimed Amount.
(b) If, after a Gotham Party's receipt of monies on account of an
Indemnifiable Loss, it becomes reasonably certain that the monies received are
in excess of the full amount of the subject Indemnifiable Loss, then the
subject Gotham Party shall promptly provide written notice to the Escrow Agent
of such excess monies and shall promptly remit such monies to the Escrow Agent.
Upon receipt thereof, the Escrow Agent shall deposit such
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monies in the Escrow Fund. For the purpose of clarity, it is acknowledged and
agreed that there is no responsibility or duty on the part of the Escrow Agent
to determine whether any funds provided to any Gotham Party on account of any
Indemnifiable Loss are less than or in excess of any Indemnifiable Loss.
3.3 TERMINATION; RELEASE. (a) Subject to Section 4.1, on the Escrow
Distribution Date, the Escrow Agent shall distribute the Remaining Escrow
Amount to the Shareholder Beneficiaries in accordance with Section 5.1. For the
purposes hereof, the "REMAINING ESCROW AMOUNT" shall mean the balance of the
Escrow Fund through the date immediately prior to the disbursement of funds in
accordance with Section 5.1 hereof less (i) subject to Section 4.1(a) hereof,
any fees or expenses payable to any Person on account of, in connection with or
related to this Agreement; (ii) subject to Section 4.1(b) hereof, any Taxes on
earnings of the Escrow Fund (which shall be paid out of the Escrow Fund); (iii)
any costs and expenses arising from or related to the Escrow Distribution and
(iv) any Damages (defined below) that may be imposed on, incurred by or
asserted against the Agent Indemnitees (defined below) (the foregoing
subclauses (i), (ii), (iii) and (iv) collectively, the "ESCROW DISTRIBUTION
COSTS").
(b) Anything to the contrary herein notwithstanding, if and to the extent
that (i) the Merger Agreement is terminated and/or (ii) the Mergers are not
consummated within 90 Business Days of the date hereof, then in either case the
Escrow Agent shall remit the Escrow Fund to the Company promptly.
ARTICLE IV
FEES AND RESPONSIBILITIES OF ESCROW AGENT
4.1 FEES, EXPENSES AND TAXES. (a) Any annual fees of the Escrow Agent, as
set forth on Schedule 1 hereto, shall be paid out of the Escrow Fund on an
annual basis, starting on the date hereof. Any other incremental fees of the
Escrow Agent for services provided under this Agreement, as set forth on
Schedule 1 hereto, may be withdrawn by the Escrow Agent from the Escrow Fund on
a monthly basis with notice thereof in writing provided by the Escrow Agent to
the Surviving Corporation. Each of the Gotham Parties and the Company further
agrees that the Escrow Agent may withdraw an amount equal to any documented
expenses reasonably incurred or made by the Escrow Agent in connection with
carrying out its duties hereunder (other than for Taxes, which are addressed in
Section 4.1(b) below) on a quarterly basis with prior written notice thereof
to, and approval by, the Surviving Corporation. All fees and other expenses of
the Escrow Agent shall be paid first from interest and other earnings on the
Escrow Fund and, to the extent such interest and other earnings are not
sufficient to cover such fees and other expenses, second from the principal of
the Escrow Funds.
(b) Notwithstanding any provision of applicable Law, the parties agree that
an amount equal to all Taxes on the interest and other earnings on the Escrow
Funds shall be paid from the Escrow Fund to the Surviving Corporation prior to
the dates the Surviving Corporation is required to remit such Taxes (including
estimated Tax payments) to the relevant Governmental or Regulatory Authority.
In furtherance of the foregoing, (A) the Escrow Agent shall submit in writing
to the Surviving Corporation the interest and other earnings on the Escrow
Funds on a quarterly basis (at such times and at such places as reasonably
requested by the Surviving Corporation), (B) the Surviving Corporation shall
submit in writing to the Escrow Agent the applicable amount of Taxes (including
estimated Tax payments) and (C) promptly thereafter, but in no event later than
two Business Days, the Escrow Agent shall remit such amounts to the Surviving
Corporation. It shall be assumed for purposes of this Agreement that Taxes on
the interest and other earnings on the Escrow Funds for each taxable period
shall be equal to the product of (i) the interest and earnings on the escrow
funds, to the extent includible in taxable income, for such period and (ii) the
highest marginal U.S. federal income Tax rate applicable to corporations for
such period. The Escrow Agent shall discharge all Tax reporting obligations
imposed by federal, state, local or other applicable Tax Law.
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4.2 RESPONSIBILITIES OF THE ESCROW AGENT. The acceptance by the Escrow
Agent of its duties under this Agreement is subject to the following terms and
conditions, which the parties to this Agreement hereby agree shall govern and
control with respect to such Escrow Agent's rights, duties, liabilities and
immunities:
(a) The Escrow Agent shall act hereunder as depository only, and it shall
not be responsible or liable in any manner whatsoever for the sufficiency of
any amount or property deposited with it. The duties and responsibilities of
the Escrow Agent hereunder shall be determined solely by the express
provisions of this Agreement, and no further duties or responsibilities
shall be implied. Except for this Agreement, the Escrow Agent shall not have
any liability under, nor duty to inquire into the terms and provisions of,
any other agreement or instruction.
(b) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and the validity and
effectiveness of its provisions but also as to the truth and acceptability
of any information therein contained, which it in good faith believes to be
genuine and what it purports to be.
(c) The Escrow Agent shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it, or for any mistake of fact
or law or for anything that it may do or refrain from doing in connection
herewith, except for fraud, criminal acts, gross negligence, willful
misconduct or for any action taken or omitted in bad faith that a court of
competent jurisdiction determines was the primary cause of a loss to the
Gotham Parties or the Shareholder Beneficiaries. The Escrow Agent shall not
incur any liability for following the instructions contained herein. The
Company (on its own behalf and on behalf of the Shareholder Beneficiaries)
and the Gotham Parties covenant and agree, severally and not jointly, to
indemnify and hold harmless the Escrow Agent and its directors, officers,
agents and employees (collectively, the "AGENT INDEMNITEES") from and
against any and all liabilities, losses, damages, fines, suits, actions,
demands, penalties and reasonable costs and expenses (including reasonable
out-of-pocket, incidental expenses, reasonable legal fees and expenses of
outside counsel and the costs and expenses of defending or preparing to
defend against any claim) (collectively, "DAMAGES") that may be imposed on,
incurred by, or asserted against, the Agent Indemnitees or any of them (i)
in connection with any third-party claim against such Agent Indemnitees, and
(ii) for following any instruction or direction upon which the Escrow Agent
is authorized to rely pursuant to the terms of this Agreement; PROVIDED that
(A) the Agent Indemnitees shall not be entitled to the foregoing
indemnification if the Damages incurred by such Agent Indemnitees result
from, directly or indirectly, fraud, gross negligence, bad faith or willful
misconduct on the part of the Agent Indemnitees or its directors, officers,
agents and employees, (B) the amount of any indemnification provided
hereunder shall be paid from the Escrow Fund and (C) the Shareholder
Beneficiaries' obligation to provide indemnification hereunder shall be
limited to their respective share, if any, of the Escrow Fund.
Notwithstanding the foregoing, if the Damages of the Agent Indemnitees
result from any action, suit or proceeding between the Company, Gotham
Parties and/or Shareholder Beneficiaries, then the Company or Gotham
Parties, shall directly indemnify the Agent Indemnitees for all such
Damages, which shall not be paid from the Escrow Funds. The provisions of
this Section 4.2(c) shall survive the termination of this Agreement and the
resignation or removal of the Escrow Agent for any reason. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Escrow
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the
Escrow Agent has been advised of such loss or damage and regardless of the
form of action.
(d) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by Escrow Agent
hereunder, Escrow Agent may, in its sole discretion, refrain from taking any
action other than retain possession of the Escrow Funds, unless Escrow Agent
receives written instructions, signed by the Surviving Company, that
eliminates such ambiguity or uncertainty.
(e) In the event of any formal judicial dispute, court proceeding or
similar regulatory proceeding between or conflicting claims by or among the
parties hereto and/or any other person or entity with respect to the Escrow
Fund, the Escrow Agent shall be entitled, in its sole discretion, to refuse
to comply with any
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and all claims, demands or instructions with respect to the Escrow Fund so
long as such dispute or proceeding shall continue, and Escrow Agent shall
not be or become liable in any way to the Gotham Parties or the Shareholder
Beneficiaries for failure or refusal to comply with such conflicting claims,
demands or instructions. Escrow Agent shall be entitled to refuse to act
until, in its sole discretion, either (i) such conflicting or adverse claims
or demands shall have been determined by a final order, judgment or decree
of a court or similar regulatory or officiating body of competent
jurisdiction, which order, judgment or decree is not subject to appeal, or
settled by agreement between the conflicting parties as evidenced in a
writing satisfactory to Escrow Agent or (ii) Escrow Agent shall have
received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all Losses which it may incur by reason of
so acting. Escrow Agent may, in addition, elect, in its sole discretion, to
commence an interpleader action or seek other judicial relief or orders as
it may deem, in its sole discretion, necessary. The costs and expenses
(including reasonable attorneys' fees and expenses) incurred in connection
with such proceeding shall be paid by, and shall be deemed a joint and
several obligation of, the Escrow Fund or, if there are insufficient funds
remaining in the Escrow Fund, the Surviving Corporation.
(f) In the administration of this Agreement and the Escrow Fund
hereunder, the Escrow Agent may consult with counsel or accountants to be
selected and retained by it. The Escrow Agent shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel or accountant.
(g) The Escrow Agent shall have no duties except those which are
expressly set forth herein, and it shall not be bound by any notice of a
claim, or demand with respect thereto, or any waiver, modification,
amendment, termination or rescission of this Agreement, unless in writing
received by it.
(h) The Escrow Agent may resign at any time by giving written notice
thereof to the Surviving Corporation, but such resignation shall not become
effective until a successor Escrow Agent unaffiliated with the Surviving
Corporation, which Escrow Agent shall be a U.S. national or state bank,
trust company or similarly chartered institution having capital and surplus
of at least $100 million on its most recent financial statements (a
"QUALIFIED BANK"), shall have been appointed and shall have accepted such
appointment in writing. If an instrument of acceptance by a successor Escrow
Agent shall not have been delivered to the Escrow Agent within thirty (30)
days after the giving of such notice of resignation, the resigning Escrow
Agent may, at the sole expense of the Escrow Fund, petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent. The
Escrow Agent shall have the right to withhold an amount from the Escrow Fund
equal to the amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the
Escrow Agent in connection with the appointment of a successor Escrow Agent.
Any corporation or association into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or
any corporation or association resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be
a party, or any corporation or association to which all or substantially all
of the corporate trust business of the Escrow Agent in its individual
capacity may be sold or otherwise transferred, shall be the Escrow Agent
under this Agreement without further act.
4.3 INVESTMENT OF ESCROW FUND. (a) At the direction of the GGC, the Escrow
Fund shall be invested and reinvested by the Escrow Agent in any one or more
Permitted Investments (as defined below) from time to time as maturities occur;
PROVIDED, HOWEVER, that in any event, Permitted Investments shall only include
investments that avoid the Escrow Fund and the arrangements contemplated by
this Agreement from qualifying (by way of exception, exemption or otherwise) as
an "investment company" under the Investment Company Act of 1940, as amended.
"PERMITTED INVESTMENTS" shall mean (i) United States currency, (ii) any
security issued or guaranteed as to principal or interest by the United States,
or by a person controlled or supervised by and acting as an instrumentality of
the Government of the United States pursuant to authority granted by the
Congress of the United States; or any certificates of deposit of any of the
foregoing (collectively, "GOVERNMENTAL SECURITIES")
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and (iii) investments in any money market accounts or similar deposit accounts
held with a Qualified Bank that are limited to investments in United States
currency and/or Governmental Securities.
(b) Neither the Gotham Parties nor the Escrow Agent shall have liability for
any loss incurred as a result of investments made in accordance with the
provisions of this Section 4.3.
4.4 INVESTMENT INCOME. (a) All income, interest, earnings, increments and
gains of any and all kinds realized shall be retained and reinvested as
provided in Section 4.3 hereof until distributed pursuant to the terms hereof.
All proceeds received by the Escrow Agent in respect of any investments of the
Escrow Fund shall be added to and become part of the Escrow Fund.
(b) The Escrow Agent may liquidate any investments made hereunder at such
time as it shall deem necessary to make payments in accordance with the
provisions hereof. The Escrow Agent shall have no liability for any loss
incurred as a result of liquidation made by it in accordance with the
provisions of this Section 4.4(b).
ARTICLE V
MISCELLANEOUS
5.1 DISTRIBUTIONS BY ESCROW AGENT TO SHAREHOLDER BENEFICIARIES. In order to
effect the Escrow Distribution pursuant to Section 3.3 of this Agreement, the
Escrow Agent shall use its reasonable best efforts to pay to each Shareholder
Beneficiary the Escrow Distribution Amount, if any, owing to each Shareholder
Beneficiary. In furtherance of the Escrow Agent's obligations in the
immediately preceding sentence, the Escrow Agent shall be entitled to rely on
the identification and contact address supplied by the Surviving Corporation or
its transfer agent. Notwithstanding the foregoing sentence, in the event that
the Escrow Agent believes that (i) it may incur any cost, expense or liability
for which it is entitled to reimbursement or indemnification under the terms
hereof, or (ii) it may have an obligation to pay the Surviving Corporation in
respect of Taxes on the interest or other earnings on the Escrow Fund pursuant
to Section 4.1(b) hereof, in each case the Escrow Agent may withhold funds in
any or all amounts corresponding to such costs, expenses, liabilities or Taxes
until any such cost, expenses, liability or Tax is resolved and paid in full;
PROVIDED that the Escrow Agent may withhold only an amount equal to such costs,
expenses, other liabilities or Taxes (based on its reasonable estimates); and
PROVIDED, FURTHER, that the Escrow Agent shall pay any amounts in excess of
such costs, expenses, other liabilities or Taxes to the Shareholder
Beneficiaries as soon as practicable after such costs, expenses or other
liabilities have been paid in full.
5.2 NOTICES. Any notice or other communication required or permitted under
this Agreement shall be deemed to have been duly given (i) five (5) Business
Days following deposit in the mails if sent by registered or certified mail,
postage prepaid, (ii) when sent, if sent by facsimile transmission, if receipt
thereof is confirmed by telephone, (iii) when delivered, if delivered
personally to the intended recipient and (iv) two (2) Business Days following
deposit with a nationally recognized overnight courier service, in each case
addressed as follows:
If to the Company to:
Imowitz ▇▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9
with copies to:
▇▇▇▇, ▇▇▇▇▇▇ & Parks LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: F. ▇▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Gotham Party to:
Gotham Golf Partners, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.,
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Gotham Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇ and ▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent:
[ ]
or such other address or number as shall be furnished in writing by any such
party.
10
5.3 ASSIGNMENT. This Agreement may not be transferred, assigned, pledged or
hypothecated by any party hereto, other than by operation of law; PROVIDED,
HOWEVER, that any of the Gotham Parties may assign all or a portion of its
respective rights and obligations under this Agreement to any of their
respective Affiliates. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, executors,
administrators, successors and permitted assigns.
5.4 EXECUTION BY ESCROW AGENT. The execution of this Agreement by the
Escrow Agent shall evidence its acceptance and agreement to the terms hereof.
5.5 GOVERNING LAW. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.
5.6 JURISDICTION; AGENTS FOR SERVICE OF PROCESS. Any judicial proceeding
brought against any of the parties to this Agreement on any dispute arising out
of this Agreement or any matter related hereto may be brought in the courts of
the State of New York located in New York City or in the United States District
Court for the Southern District of New York and, by execution and delivery of
this Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Each of the parties to this
Agreement agree that service of any process, summons, notice or document by
U.S. registered mail to such party's address set forth below shall be effective
service of process for any action, suit or proceeding in New York with respect
to any matters for which it has submitted to jurisdiction pursuant to this
Section 5.6.
5.7 WAIVER OF JURY TRIAL. Each of the parties to this Agreement waives, to
the fullest extent permitted by applicable Law, any right it may have to a
trial by jury in respect of any litigation as between the parties directly or
indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated hereby or disputes relating hereto. Each of the
parties to this Agreement (i) certifies that no representative, agent or
attorney of the other party has represented, expressly or otherwise that such
other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (ii) acknowledges that it and the other party have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 5.7.
5.8 ENTIRE AGREEMENT. This Agreement, including the other documents
referred to herein which form a part hereof, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
5.9 AMENDMENTS. This Agreement may not be changed, and any of the terms,
covenants, representations, warranties and conditions cannot be waived, except
pursuant to an instrument in writing signed by the parties hereto or, in the
case of a waiver, by the party waiving compliance.
5.10 SEVERABILITY. If any term, provision, agreement, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, agreements, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such a determination, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a reasonably acceptable manner in order that
the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
5.11 THIRD PARTY BENEFICIARIES. Except for indemnified parties described
herein and the Shareholder Beneficiaries, this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than
the parties hereto.
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5.12 NO STRICT CONSTRUCTION; INTERPRETATION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event any ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by all parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provision of this Agreement. The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. In this
Agreement, unless a contrary intention appears, (i) the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, (ii) the words "subsidiary" or "subsidiaries", with respect to any
party, shall mean any corporation, trust, partnership, limited liability
company, joint venture or other legal entity, whether incorporated or
unincorporated, of which (X) such party or any other subsidiary of such party
is a general partner (excluding partnerships, the general partnership interests
of which held by such party or any subsidiary of such party do not have a
majority of the voting interests in such partnership) or (Y) at least a
majority of the securities or other interests, which have by their terms
ordinary voting power to elect or appoint a majority of the Board of Directors
or others performing similar functions with respect to such corporation, trust,
limited liability company, joint venture or other entity, as applicable, is
directly or indirectly owned or controlled by such party or by any one or more
of such party's subsidiaries, and (iii) any reference to an Article or a
Section shall mean such Article or Section hereof. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
5.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts (including by facsimile transmission of signature pages hereto),
all of which taken together shall constitute one instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereunto have duly caused this Agreement to
be executed as of the date first above written.
GOTHAM GOLF CORP.
By:
-----------------------------------
Name:
Title:
GGC MERGER SUB, INC.
By:
-----------------------------------
Name:
Title:
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, by and on behalf of itself and the
Shareholder Beneficiaries
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------------
Name:
Title:
13
SCHEDULE 1--FEES AND ACCOUNT INFORMATION OF ESCROW AGENT
ACCEPTANCE FEE........................................................... $1,500
This one time fee is payable upon closing date and includes:
[_] Review of Agreement and supporting documents
[_] Establishment of accounts
ANNUAL ADMINISTRATION FEE................................................ $6,000
This fee is not subject to pro-ration and is payable upon the funding of the
account and on each anniversary date and includes:
[_] Monitoring of accounts
[_] Reporting
ACTIVITY FEES
[_] Outgoing Wire Transfer/Checks, each.................................. $ 25
[_] Per Investment, each trade........................................... $ 25
For each directed investment purchase/sale other than The Bank of New York
Cash Reserve and approved money market funds
OUT-OF-POCKET EXPENSES
Fees quoted do not include any out-of-pocket expenses including, but not
limited to, expenses of foreign depositaries, stationery, overnight courier,
and messenger costs. These expenses will be billed, at our cost, when incurred.
In the event the transaction terminates before closing, all out-of-pocket
expenses incurred, including our counsel fees, will be billed to the account.
EXTERNAL COUNSEL FEES
This proposal does not include outside counsel fees. A ▇▇▇▇ for counsel fees
incurred up to closing will be presented for payment on the closing date.
MISCELLANEOUS SERVICES
The charges for performing services not contemplated at the time of the
execution of the documents or not specifically covered elsewhere in the
schedule will be determined by appraisal in amounts commensurate with the
service.
14