Exhibit 10.3
FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 3rd day of March,
2006, among GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation (the
"Company"), Gibraltar Financial Corporation. ("Gibraltar"), and Deutsch, Levy &
Xxxxx, Chartered, an Illinois professional corporation (the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Gibraltar has advised the Escrow Agent that (a) the
Company and the Gibraltar have entered into a Repayment Agreement (the
"Repayment Agreement") for the payoff by the Company to Gibraltar of the balance
due under a Promissory Note and a Revolving Accounts Receivable Funding
Agreement executed by the Company on March 3, 2003, and amended thereafter, and
WHEREAS, the Company and the Gibraltar wish to deliver to the Escrow
Agent the sum of $250,000; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified and/or
supplemented from time to time by written agreement among the parties
hereto.
(b) (intentionally deleted)
(c) "Disbursement Letter" means that certain letter delivered to the
Escrow Agent by Gibraltar, acceptable in form and substance to the
Gibraltar, setting forth wire instructions and amounts to be delivered at
the termination of this Agreement.
(d) "Escrow Payment" means $250,000.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the arrangement with the Escrow Agent
and supersedes all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written with respect to the
arrangement with the Escrow Agent. There are no warranties, representations and
other agreements made by the parties in connection with the arrangement with the
Escrow Agent except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance. Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement; Consent to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. With respect to any
suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby ("Proceedings"), each party hereto irrevocably submits to
the exclusive jurisdiction of the courts of the County of Xxxx, State of
Illinois and the United States District court located in the county of Xxxx in
the State of Illinois. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it may have at any
time to the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party. As between the Company and
Gibraltar, the prevailing party shall be entitled to recover from the other
party its reasonable attorneys' fees and costs. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.
1.7. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. The Company and the Gibraltar hereby irrevocably
designate and appoint the Escrow Agent as their escrow agent for the purposes
set forth herein, and the Escrow Agent by its execution and delivery of this
Agreement hereby accepts such appointment under the terms and conditions set
forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
Gibraltar and the Company shall deliver to the Escrow Agent copies of the
Documents executed by such parties.
2.3. Delivery of Escrow Payment to Escrow Agent. Concurrent with the
payment to Gibraltar provided in the Repayment Agreement, the Company shall
deliver to the Escrow Agent the Escrow Payment. At such time, the Escrow Agent
shall hold the Escrow Payment as agent for Gibraltar, subject to the terms and
conditions of this Agreement.
2.4. Intention to Create Escrow Over the Escrow Payment. Gibraltar and the
Company intend that the Escrow Payment shall be held in escrow by the Escrow
Agent and released from escrow by the Escrow Agent only in accordance with the
terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Escrow Payment to the Company or Gibraltar as the
case may be, from escrow as follows:
(a) Upon the receipt by Escrow Agent of a notice in writing from
Gibraltar that any check(s) Gibraltar has applied to Company's account at
Gibraltar has been returned unpaid, (a "Bad Check"), Escrow Agent shall
remit the amount of the Bad Check to Gibraltar
(b) Upon the 120th day from the date of the receipt of the Escrow
Payment (the "Payment Day") by the Escrow Agent, the Escrow Agent shall
remit the entire remaining Escrow Payment to the Company, unless the Escrow
Agent shall then have received a notice in writing from Gibraltar stating
that (i) a claim against Gibraltar has been made by a Trustee in
Bankruptcy, debtor in possession, receiver, custodian or other party on
behalf of or related to an account debtor of the Company (a "Bankruptcy
Claim") or (ii) that any account debtor of the Company (a "Special Account
Debtor") has filed, or had filed against it, any legal proceeding or action
which could then potentially give rise to a Bankruptcy Claim as defined
above ("a Bankruptcy Action"). At the Payment Day, the Escrow Agent shall
remit the balance of the Escrow Amount to the Company, less (i) the amount
of the Bankruptcy Claim(s) and (ii) the aggregate amount of all checks
received by Gibraltar from any such Special Account Debtor within the time
period ninety (90) days immediately prior to the filing of any such
Bankruptcy Action. Escrow Agent shall continue to hold the balance of the
Escrow Payment Amount until such time as Escrow Agent receives a notice in
writing of a final decision (a "Decision") by a Bankruptcy Court or other
Court, requiring Gibraltar to return monies received by Gibraltar that
Gibraltar had applied to the Company's account at Gibraltar and (ii) with
respect to monies withheld on account of any
Bankruptcy Action of any Special Debtor(s) until the expiration of a period
of one (1) year after the Payment Date (provided no claim has then been
made against Gibraltar with respect thereto), at which time Escrow Agent
shall pay Gibraltar the full amount of the monies Gibraltar is required to
return and pay any balance otherwise not required to continue to be
withheld hereunder to the Company. If within such one (1) year period a
Bankruptcy Claim is made against Gibraltar with regard to checks received
by Gibraltar from a Special Account Debtor in connection with a Bankruptcy
Action as above defined, the Escrow Agent shall continue to hold, and shall
pay and disburse such amounts as provided herein with regard to a
Bankruptcy Claim and shall thereafter pay any balance to the Company.
(c) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a
"Court Order") relating to the Escrow Payment, the Escrow Agent shall remit
the Escrow Payment in accordance with the Court Order. Any Court Order
shall be accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order is a
court of competent jurisdiction and that the Court Order is final and
non-appealable.
3.2. Acknowledgement of Company and Gibraltar; Disputes. The Company and
Gibraltar acknowledge that the only terms and conditions upon which the Escrow
Payment are to be released from escrow are as set forth in Sections 3 and 4 of
this Agreement. The Company and the Gibraltar reaffirm their agreement to abide
by the terms and conditions of this Agreement with respect to the release of the
Escrow Payment. Any dispute with respect to the release of the Escrow Payment
shall be resolved pursuant to Section 4.2 or by written agreement between the
Company and Gibraltar.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Gibraltar and the Company acknowledge and agree that the
Escrow Agent (i) shall not be required to inquire into whether the
Gibraltar, the Company or any other party is entitled to receipt of any or
all or any portion of the Escrow Payment; (ii) shall not be called upon to
construe or review any Document or any other document, instrument or
agreement entered into in connection therewith; (iii) shall be obligated
only for the performance of such duties as are specifically assumed by the
Escrow Agent pursuant to this Agreement; (iv) may rely on and shall be
protected in acting or refraining from acting upon any written notice,
instruction, instrument, statement, request or document furnished to it
hereunder and believed by the Escrow Agent in good faith to be genuine and
to have been signed or presented by the proper person or party, without
being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (v) may
assume that any
person purporting to give notice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized
to do so; (vi) shall not be responsible for the identity, authority or
rights of any person, firm or company executing or delivering or purporting
to execute or deliver this Agreement or any Document or any funds deposited
hereunder or any endorsement thereon or assignment thereof; (vii) shall not
be under any duty to give the property held by Escrow Agent hereunder any
greater degree of care than Escrow Agent gives its own similar property;
and (viii) may consult counsel satisfactory to Escrow Agent, the opinion of
such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder
in good faith and in accordance with the opinion of such counsel.
(b) Gibraltar and the Company acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and that the Escrow Agent
shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. Gibraltar and the Company
hereby, jointly and severally, indemnify and hold harmless the Escrow Agent
and any of Escrow Agent's partners, employees, agents and representatives
from and against any and all actions taken or omitted to be taken by Escrow
Agent or any of them hereunder and any and all claims, losses, liabilities,
costs, damages and expenses suffered and/or incurred by the Escrow Agent
arising in any manner whatsoever out of the transactions contemplated by
this Agreement and/or any transaction related in any way hereto, including
the fees of outside counsel and other costs and expenses of defending
itself against any claims, losses, liabilities, costs, damages and expenses
arising in any manner whatsoever out the transactions contemplated by this
Agreement and/or any transaction related in any way hereto, except for such
claims, losses, liabilities, costs, damages and expenses incurred by reason
of the Escrow Agent's gross negligence or willful misconduct. The Escrow
Agent shall owe a duty only to Gibraltar and the Company under this
Agreement and to no other person.
(c) Gibraltar and the Company shall jointly and severally reimburse
the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees incurred in connection with the performance of its duties and
responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent, hereunder
by giving five (5) business days prior written notice of resignation to
Gibraltar and the Company and the Company and Gibraltar may appoint a
substitute escrow agent by giving five (5) business days written notice to
the Escrow Agent. Prior to the effective date of resignation or the
appointment of a substitute escrow agent as specified in such notice, the
Company and Gibraltar will issue to the Escrow Agent a joint instruction
authorizing delivery of the Documents and the Escrow Payment to a
substitute Escrow Agent selected by the Company and Gibraltar. If no
successor Escrow Agent is named by the Gibraltar and the Company, the
Escrow Agent may apply to a court of competent jurisdiction in the State of
Illinois for appointment of a successor Escrow Agent, and deposit the
Documents and the Escrow Payment with the clerk of any such court, and/or
otherwise commence an interpleader or similar action for a determination of
where to deposit the same.
(e) The Escrow Agent does not have and will not have any interest in
the Escrow Payment, but is serving only as escrow agent, having only
possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordance with advice
of counsel, and shall not be liable for any mistake of fact or error of
judgment or for any acts or omissions of any kind except to the extent any
such liability arose from its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Gibraltar or the Company, as the case may be, in any dispute as to the
disposition of the Documents and the Escrow Payment, in any other dispute
between the Gibraltar and the Company, whether or not the Escrow Agent is
then holding the Documents and/or the Escrow Payment and continues to act
as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution; Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Escrow Payment, or if
the Escrow Agent shall in good faith be uncertain as to its duties or
rights hereunder, the Escrow Agent shall be authorized, without liability
to anyone, to (i) refrain from taking any action other than to continue to
hold the Escrow Payment pending receipt of a joint instruction from the
Gibraltar and the Company, (ii) commence an interpleader or similar action,
suit or proceeding for the resolution of any such dispute; and/or (iii)
deposit the Escrow Payment with any court of competent jurisdiction in the
State of Illinois, in which event the Escrow Agent shall give written
notice thereof to the Gibraltar and the Company and shall thereupon be
relieved and discharged from all further obligations pursuant to this
Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Escrow Payment. The
Escrow Agent shall have the right to retain counsel if it becomes involved
in any disagreement, dispute or litigation on account of this Agreement or
otherwise determines that it is necessary to consult.
(b) The Escrow Agent is hereby expressly authorized to comply with and
obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Gibraltar and the
Company or to any other person, firm, company or entity by reason of such
compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the
Escrow Payment in accordance with the terms of this Agreement or earlier upon
the agreement in writing of the Gibraltar and the Company or resignation of the
Escrow Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
(a) If to the Company, to: General Environmental Management, Inc.
0000 Xxxxxx Xxx.
Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxx
(b) If to Gibraltar Financial Corporation, to
00 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
(c) If to the Escrow Agent, to:
Deutsch, Levy & Xxxxx, Chartered
000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrow Payment shall not be required to be held in an
interest bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law. Nothing
herein contained shall lessen or otherwise modify any rights Gibraltar may have
against the Company pursuant to any other agreement.
5.6. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same agreement. This Agreement may
be executed by facsimile transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COMPANY:
GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation
By:___________________________________________________________
Name:
Title:
GIBRALTAR FINANCIAL CORPORATION:
By:___________________________________________________________
Name:
Title:
ESCROW AGENT:
DEUTSCH, LEVY & XXXXX, CHARTERED
By:___________________________________________________________
Name:
Title:
