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Exhibit 10.1
INDEMNITY ESCROW AGREEMENT
INDEMNITY ESCROW AGREEMENT, dated as of October 31, 1997 (this
"Escrow Agreement"), by and among Xxxxxxx Instruments, Inc., a Delaware
corporation ("Buyer"), the Persons listed on Annex A hereto ("Sellers") and The
First National Bank of Chicago, a national banking association, as escrow agent
(the "Escrow Agent"). Capitalized terms used and not otherwise defined herein
shall have the meaning ascribed to them in that certain Stock Purchase Agreement
(the "Agreement"), dated as of August 29, 1997, by and among Buyer, Sellers and
Xxxxxxx Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS the Agreement provides, among other things, for the
purchase by Buyer from each of the Sellers of all outstanding shares of common
stock of the Company owned by such Seller;
WHEREAS, pursuant to the Agreement, Sellers and Buyer have
agreed to enter into this Escrow Agreement with the Escrow Agent for the
purposes of securing certain of Buyer's rights under the Agreement;
WHEREAS, pursuant to the terms of the Agreement, Buyer is
depositing $50,000,000 (the "Escrow Deposit" and together with all interest
thereon not paid from the escrow pursuant hereto, the "Escrow Fund") with the
Escrow Agent on the Closing Date, to be held in escrow pursuant to the terms and
subject to the conditions set forth in this Escrow Agreement; and
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Agreement and the mutual covenants and
agreements set forth herein and therein, each of the Sellers and Buyer agree as
follows, and, in consideration of the mutual covenants set forth herein, the
Escrow Agent agrees as follows:
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1. The Escrow Fund.
Set forth opposite each Seller's name on Annex A is a dollar
amount equal to such Seller's portion of the Escrow Deposit. Upon the execution
of this Escrow Agreement, Buyer is delivering to the Escrow Agent $50,000,000,
constituting, in the aggregate, the Escrow Deposit. The receipt of the Escrow
Deposit will be acknowledged by the Escrow Agent in the form of a receipt. An
additional amount may be deposited in the Escrow Fund by each of the Sellers in
the proportions set forth on Annex A hereto to replenish any payment made from
the Escrow Fund pursuant to the purchase price adjustment set forth in the
Agreement. The Escrow Agent will acknowledge any such deposit in the form of a
receipt, but shall have no duty to determine the sufficiency thereof.
2. Investments.
The Escrow Agent will hold the Escrow Fund. Each of the
Sellers shall be responsible for all tax reporting with respect to the Escrow
Fund and shall pay any and all tax liabilities arising with respect to the
Escrow Deposit, if any, and income generated by the Escrow Fund pro rata in
proportion to such Seller's percentage interest in the Total Purchase Price as
set forth on Annex A. By execution and delivery hereof the Sellers hereby direct
the Escrow Agent to invest the Escrow Deposit only in, or in money market or
mutual funds invested exclusively in, securities or direct obligations of, or
obligations the timely payment of the principal and interest on which is fully
guaranteed by, the United States of America or its Agencies, and which have an
ending maturity of 397 days or less. On April 30, 1998 and on each six-month
anniversary of the date of this Escrow Agreement thereafter (each, an "Income
Calculation Date"), the Escrow Agent will calculate the amount of distributable
income (the "Distributable Income") included in the Escrow Fund as of such
Income Calculation Date. On any applicable Income Calculation Date the
Distributable Income shall be any positive sum calculated in accordance with the
following formula:
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Distributable Income = Aggregate Balance -- ($50,000,000 -
Payout Amounts)
where:
"Aggregate Balance" means the aggregate value of the Escrow
Fund as of the Income Calculation Date, with the value of any
securities in the Escrow Fund being determined on a
marked-to-market basis as of such Income Calculation Date.
"Payout Amounts" means the aggregate amount of any funds paid
out of the Escrow Fund to, as applicable, (i) Buyer, pursuant
to a Final Determination, and (ii) Seller pursuant to Section
3(a) hereof. The foregoing notwithstanding, no amount paid out
of the Escrow Fund pursuant to the provisions of Section
2.5(b) of the Agreement shall be considered a "Payout Amount"
for purposes of this definition or this Escrow Agreement.
If an Income Calculation Date is not a Business Day, the next following Business
Day shall be deemed to be the Income Calculation Date. On the third Business Day
following each Income Calculation Date, the Escrow Agent shall pay to each
Seller pro rata in proportion to such Seller's percentage interest in the Total
Purchase Price as set forth on Annex A, any Distributable Income.
3. Release of the Escrow Fund. The Escrow Agent will hold the
Escrow Fund in its possession until authorized hereunder to distribute any
specified portion thereof, as follows:
(a) On the second anniversary of the Closing Date, the Escrow
Agent shall distribute to the Sellers in accordance with each such Seller's pro
rata share of the
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Total Purchase Price one-half (1/2) of the amount of the funds in the Escrow
Fund, and on the third anniversary of the Closing Date, the Escrow Agent shall
distribute to the Sellers in accordance with each such Seller's pro rata share
of the Total Purchase Price the total amount remaining in the Escrow Fund, in
each case less any amounts then reserved pursuant to clause (b) below with
respect to any unresolved or disputed claims for Damages made by Buyer
hereunder.
(b) Notwithstanding the provisions of Section 3(a) hereof,
upon written notice from Buyer to the Escrow Agent and the Sellers that,
pursuant to Section 10.2 of the Agreement, Buyer is asserting against Sellers a
right of indemnity with respect to Damages (which notice shall state whether or
not such Damages arise from the assertion of liability by a third party (a
"Third Party Claim")) (each a "Claim for Damages"), the Escrow Agent shall
reserve an amount of the Escrow Fund as shall be reasonably necessary (taking
into account the potential amount of the likely exposure) to pay the Damages as
so specified in the Claim for Damages (or, if such amount exceeds the remaining
balance in the Escrow Fund, the entire balance of the Escrow Fund) and continue
to hold such amount in escrow in accordance with paragraphs (c) and (d) below;
provided, however, that, should the Buyer and the Sellers agree, as evidenced by
written instructions to the Escrow Agent signed by each of them, that a
specified amount be reserved in settlement of any contingent claim, the Escrow
Agent shall reserve that specified amount in accordance with such instructions
and such specified amount shall be deemed to be the "reasonably necessary"
amount to be reserved. The Escrow Agent shall have no liability to either Buyer
or Sellers for any shortfall resulting from an incorrect reservation of moneys
in the Escrow Fund unless such shortfall is caused by the gross negligence or
willful misconduct of the Escrow Agent with respect to such estimation. Buyer
shall deliver any notice hereunder to the Sellers in accordance with Section 9
hereof and with the notice provisions in Section 11.9 of the Agreement.
(c) Upon delivery by Buyer of a Claim for Damages to the
Escrow Agent and the Sellers in accordance with
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paragraph (b) above, the Sellers shall have thirty calendar days from the date
such notice is deemed to be received hereunder to notify the Escrow Agent and
Buyer that the Sellers dispute (i) whether the Agreement provides Buyer with a
contractual right to indemnity for the claims asserted in such Claim for Damages
and (ii) in the case of a claim other than a Third Party Claim, the amount of
Damages set forth in such Claim for Damages. Notwithstanding the foregoing, any
notice by the Sellers under clause (i) shall be deemed withdrawn if the Sellers
deliver notice to Buyer of their intent to undertake, conduct or control the
proceedings related to the Third Party Claim which is the subject of such Claim
for Damages. The Escrow Agent shall keep reserved, and not distribute, that part
of the Escrow Fund equal to the amount reserved pursuant to paragraph (b) above
with respect to any Claims for Damages until such dispute has been resolved in
accordance with Section 5 hereof or there has been a Final Determination, as
applicable, and notice of such resolution or Final Determination, as the case
may be, including the amount, if any, to be distributed or remain reserved in
respect of such disputed Claim for Damages, has been delivered to the Escrow
Agent.
(d) Upon notice to the Escrow Agent of a Final Determination
setting forth the amount of the Damages, the Escrow Agent shall promptly
distribute to Buyer from the Escrow Fund an amount, if any, equal to such Final
Determination of Damages.
4. Final Determination. For the purpose of this Escrow
Agreement, a "Final Determination" shall mean (a) in the case of Damages
resulting from a Third Party Claim, a written compromise or settlement signed by
the parties thereto, an arbitration award, or an order, decree, or judgment of a
court of competent jurisdiction, or (b) in the case of Damages not resulting
from a Third Party Claim, (i) if the Sellers have not delivered a notice of
dispute of a Claim for Damages in accordance with Section 3(c) or does not
dispute a portion of the Damages set forth therein, such Claim for Damages with
respect to the Damages or portion thereof; provided that such Claim for Damages
sets forth the
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Damages with specificity, and if not, such later notice which sets forth the
Damages with specificity, or (ii) if the Sellers have delivered a notice of
dispute of a Claim for Damages in accordance with Section 3(c), a written
compromise or settlement signed by the parties thereto, an arbitration award, or
an order, decree, or judgment of a court of competent jurisdiction.
5. Settlement of Disputes. All disputes that may arise under
this Escrow Agreement with respect to the delivery or ownership or right of
possession of the Escrow Fund or any portion thereof, or the duties of the
Escrow Agent hereunder, shall be settled either by mutual agreement of the
parties concerned (evidenced by appropriate instruc tions in writing to the
Escrow Agent, signed by all such parties) or by a binding arbitration, or by a
final order, decree, or judgment of a court of competent jurisdiction in the
United States of America (the time for appeal having expired and no appeal
having been taken, as evidenced by notice of the same delivered in good faith by
either the Sellers or Buyer to the Escrow Agent). Such arbitration proceeding,
if mutually agreed to by Buyer and the Sellers, shall be conducted before a
panel of three arbitrators under the rules of the American Arbitration
Association, all costs and expenses of which shall be paid one-half by Buyer and
one-half by the Sellers. The Escrow Agent shall be under no duty whatsoever to
institute or defend any such proceedings, nor shall the Escrow Agent be required
to determine any dispute arising between the Sellers and Buyer under this Escrow
Agreement or take any other action regarding such dispute. Except as otherwise
specifically provided for in this Escrow Agreement, the Escrow Agent may hold
all docu ments and funds which are subject to such dispute and may wait for
settlement of any such dispute by appropriate legal proceedings or other means
as, in the Escrow Agent's discre tion, it deems necessary or appropriate
(without liability to anyone), notwithstanding any provision to the contrary in
this Escrow Agreement.
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6. Concerning the Escrow Agent.
(a) The Escrow Agent shall be entitled to receive such fees as
are reasonable and customary as compensation for its services hereunder, and
shall be reimbursed for all reasonable expenses, disbursements, and advances
incurred or made by the Escrow Agent in performance of its duties hereunder.
Such fee and reimbursements shall be paid one-half by Buyer and one-half by the
Sellers, as per the Fee Schedule (the "Fee Schedule") attached hereto as Annex B
other than (i) those fees set forth in Section 3 of such Fee Schedule, which
will be borne solely by Sellers, except in the case of fees for wire transfers
made pursuant to Section 3 of this Escrow Agreement, which will be borne
one-half by Buyer and one-half by Sellers, and (ii) the Acceptance Fee specified
in the Fee Schedule, which shall be paid immediately by the Sellers following
the deposit of funds pursuant to Section 1 of this Escrow Agreement.
(b) The Escrow Agent may resign and be discharged from its
duties hereunder at any time by giving notice of such resignation to Buyer and
the Sellers specifying a date when such resignation shall take effect. Upon such
notice, a successor Escrow Agent shall be appointed with the consent of Buyer
and the Sellers, such successor Escrow Agent to become Escrow Agent hereunder
upon the resignation date specified in such notice. If Buyer and the Sellers are
unable to agree upon a successor Escrow Agent within 30 days after such notice,
the Escrow Agent shall be entitled to apply to a court of competent jurisdiction
for the appointment of a successor escrow agent, with any expenses to be shared
equally by the Buyer on the one hand and the Sellers on the other hand. The
Escrow Agent shall continue to serve until its successor accepts the terms of
the escrow and receives the Escrow Fund. Buyer and the Sellers hereto shall have
the right at any time upon their mutual consent to substitute a new Escrow Agent
by giving notice thereof to the Escrow Agent then acting.
(c) With the exception of Section 2.3 and Article X of the
Agreement and the related definitions, the Escrow Agent shall not be charged
with knowledge of the Agreement.
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A copy of the Agreement has been delivered to the Escrow Agent prior to the date
hereof. The Escrow Agent undertakes to perform such duties as are specifically
set forth herein and no implied duties shall be read into this Escrow Agreement
against the Escrow Agent; and may conclusively rely, and shall be protected in
acting or refraining from acting, on any written notice, instrument, or
signature believed by it to be genuine and to have been signed or presented by
the proper party or parties duly authorized to do so; provided, however, in
accordance with Section 2.3 of the Agreement, any action taken or decision made
by Sellers hereunder shall be evidenced in a writing signed by all of the
Sellers. Buyer and the Sellers are the only authorized persons upon which the
Escrow Agent may conclusively rely for all purposes under this Agreement;
provided, however, each of the Buyer and the Sellers (in the case of the
Sellers, by a writing signed by all of them) may notify the Escrow Agent and the
other party in writing that other persons are authorized to act on behalf of
Buyer or the Sellers, as the case may be. The Escrow Agent shall have no
responsibility for the contents of any writing contemplated herein and may rely
without any liability upon the contents thereof.
(d) The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized hereby or
within the rights or power conferred upon it hereunder, nor for action taken or
omitted by it in good faith, and in accordance with advice of counsel (which
counsel may be of the Escrow Agent's own choosing), and shall not be liable for
any mistake or fact or error of judgment or for any acts or omissions of any
kind unless attributable solely to its willful misconduct or gross negligence.
(e) Each party hereto agrees to indemnify the Escrow Agent and
hold it harmless against any and all liabilities incurred by it hereunder as a
consequence of such party's action, and the parties agree jointly and severally
to indemnify the Escrow Agent and hold it harmless against any and all
liabilities incurred by it hereunder that are not a consequence of any party's
action, except in
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either case for liabilities incurred by the Escrow Agent resulting solely from
its own willful misconduct or gross negligence.
7. Payments.
Any payment required to be made by the Escrow Agent to any
Seller under this Escrow Agreement shall be made to such Seller's account in
accordance with instructions each Seller will provide to the Escrow Agent within
14 days of the date of this Escrow Agreement.
8. Appointment of Agents.
(a) The Escrow Agent may appoint one or more agents (each, an
"Agent") which shall be authorized to act on behalf of the Escrow Agent. An
Agent shall have the powers and authority granted to and conferred upon it
hereby and such further powers and authority to act on behalf of the Escrow
Agent as may be mutually agreed upon by the Escrow Agent and Agent. Each Agent
shall be acceptable to the Sellers and Buyer and shall at all times be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia. If at any time an Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Agent shall resign immediately in the manner and with the effect specified
in this Section.
(b) An Agent may resign at any time by giving written notice
thereof to the Escrow Agent. The Escrow Agent may at any time terminate the
agency of an Agent by giving written notice thereof to such Agent and to the
Sellers and Buyer.
9. Miscellaneous.
(a) This Escrow Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of laws thereof. The parties hereto consent to
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the jurisdiction of and venue in the Federal courts located in the Borough of
Manhattan, in New York City.
(b) This Escrow Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(c) This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York, New York or Chicago, Illinois are
authorized or obligated by law or executive order to be closed.
10. Termination. This Escrow Agreement may be terminated upon
the distribution of the entire balance of the Escrow Fund pursuant to the terms
hereof, or at any other time, upon the mutual written consent of Buyer, the
Sellers and the Escrow Agent. Upon such termination, Buyer, the Sellers and the
Escrow Agent shall be discharged from all obligations under this Escrow
Agreement.
11. Notices. Any notice, request, instruction or other
document to be given hereunder by any party (or other Person referred to herein)
shall be deemed given if in writing and delivered personally or sent by
facsimile (if a facsimile number for the intended recipient is provided in this
Section or in a notice given as provided in this Section), by telegram, by
registered or certified mail (return receipt requested) or by national courier
service:
(a) if to the Sellers, to their respective addresses specified
on Annex C hereto, with a copy to:
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Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
(b) if to Buyer, to:
Xxxxxxx Instruments, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxxx Instruments, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
(c) if to the Escrow Agent, to:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Corporate Trust Services Division;
Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice given by mail,
national courier service or telegram shall be effective when received. Any
notice given by facsimile shall be effective when the appropriate facsimile
answerback is received.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by Buyer, Sellers and the Escrow Agent as of the date first above
written.
XXXXXXX INSTRUMENTS, INC.
By: /s/ Xxxxxxx X. May
-------------------------------
Name: Xxxxxxx X. May
Title: Vice President, General
Counsel & Secretary
THE XXXXXXX X. XXXXXXX CHARITABLE
REMAINDER UNITRUST UAD 5/23/97
By: /s/ Xxx Van
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Name: Xxx Van
Title: Trustee
THE XXXXXX X. XXXXXXX, XX. TRUST
UAD 8/2/93
By: /s/ Xxxxx Xxxxxxx-Xxxxx
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Name: Xxxxx Xxxxxxx-Xxxxx
Title: Co-Trustee
By: /s/ Xxxxxx X. Xxxxxxx III
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Name: Xxxxxx X. Xxxxxxx III
Title: Co-Trustee
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THE XXXXXXX FAMILY LIMITED
PARTNERSHIP
By: THE XXXXXXX X. XXXXXXX TRUST
UAD 8/2/93, as General Partner
By: /s/ Xxx Van
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Name: Xxx Van
Title: Successor Trustee
THE XXXXXX X. XXXXXXX, XX. TRUST
UAD 8/2/93, as General Partner
By: /s/ Xxxxx Xxxxxxx-Xxxxx
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Name: Xxxxx Xxxxxxx-Xxxxx
Title: Co-Trustee
By: /s/ Xxxxxx X. Xxxxxxx III
-------------------------------
Name: Xxxxxx X. Xxxxxxx III
Title: Co-Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Escrow Agent
By: /s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President
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Annex A
% of
Total Purchase Amount
Number Purchase Price in
Sellers of Shares Price Payable Escrow
----------------------- --------- -------- -------------- -------------
THE XXXXXXX X.
XXXXXXX CHARITABLE
REMAINDER UNITRUST:
- Class A Common Stock 2,250 23.35 $169,474,117 $10,271,159
- Class B Common Stock 308 $ 23,199,124 $ 1,406,007
THE XXXXXX X.
XXXXXXX, XX. TRUST:
- Class A Common Stock 2,143 19.57 $161,414,680 $ 9,782,708
- Class B Common Stock 0 $ 0 $ 0
THE XXXXXXX FAMILY
LIMITED PARTNERSHIP:
- Class A Common Stock 5,500 57.08 $414,270,063 $25,107,277
- Class B Common Stock 752 $ 56,642,016 $ 3,432,849
----- ----- ------------ -----------
Subtotal Class A - 9,893
Class B - 1,060
-----
Total 10,953 100.00 $825,000,000 $50,000,000
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ANNEX B
FIRST CHICAGO NBD
FEE SCHEDULE
ESCROW AGENCY SERVICES
XXXXXXX INSTRUMENTS, INC./THE XXXXXXX FAMILY LIMITED PARTNERSHIP
-------------------------------------------------------------------------------
I. Account Acceptance
A fee for services in connection with the initial set-up of this escrow
account will be charged as follows:
Account Acceptance $2,500
Legal Fee Included
The fee covers examination and execution of an escrow agreement and all
required documentation.
II. Annual Administration
A fee for ordinary administration of this escrow account will be charged at
$2,500. The fee will be payable annually in advance for the annual period
or any portion thereof.
III. Operating Services
A. Wire transfers $20.00 each
B. Purchase or sale of securities $75.00 each
There will be no transaction charge for investments made in the
Pegasus Funds.
IV. Miscellaneous
Fees for services not specifically covered in this schedule will be
assessed in amounts commensurate with the services rendered. The fees in
this schedule are subject to reasonable adjustments as changes in laws,
procedures, or costs of doing business demand. The costs of supplies and
other out-of-pocket expenses that can be directly allocated will be added
to our regular charges.
For investments in the Pegasus Funds, First Chicago NBD and/or our
affiliates may earn service fees/expenses associated with these funds as
disclosed in the mutual fund prospectus.
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ANNEX C
ADDRESSES OF SELLERS
1. If to the Xxxxxxx X. Xxxxxxx Charitable Remainder
Unitrust, to:
Xxx Van
c/o H. Xxxxxxxx Xxxxxxxx, Esq.
Xxxxxxxx & Xxx LLC
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
2. If to the Xxxxxx X. Xxxxxxx, Xx. Trust, to:
Xxxxx X. Xxxxxxx-Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
and to:
Xxxxxx X. Xxxxxxx III
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
3. If to the Xxxxxxx Family Limited Partnership, to:
a) Xxxxxxx X. Xxxxxxx Trust
c/o Xxx Van
c/o H. Xxxxxxxx Xxxxxxxx, Esq.
Xxxxxxxx & Xxx LLC
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
b) Xxxxxx X. Xxxxxxx, Xx. Trust
c/o Xxxxx X. Xxxxxxx-Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
and to:
c/o Xxxxxx X. Xxxxxxx III
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
C-1
