Exhibit 10.12
ESCROW AGREEMENT
This agreement (the "Agreement"), dated November 15, 1995, by and between
Xxxxx Cable Communications, Inc. (the "Company") and Xxxx Marks & Xxxxx LLP, as
escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Article VIII of the Company's restated articles of incorporation
("Article VIII") provides for the indemnification by the Company of the
Company's present, future and former officers and directors in accordance with
the terms thereof; and
WHEREAS, in order to better assure persons who served as an officer and/or
director of the Company at any time from and after January 1, 1993
(individually, an "Executive" and, collectively, the "Executives") of the
benefit to them from the indemnification provided under Article VIII and to
induce the Executives who presently serve in any such position to continue to
serve in their capacities as such and to induce persons to serve as Executives
in the future, the Company has agreed to create an indemnification fund for the
payment of any claims giving rise to indemnification by the Company of any of
the Executives under Article VIII and Article 2.02-1 of the Texas Business
Corporation Act (the "Texas Act") in the amount of $500,000 (the
"Indemnification Fund") to be placed and held in escrow and distributed
therefrom in accordance with the terms hereof.
NOW, THEREFORE, in consideration of ten dollars ($10) and other good and
valuable consideration, the sufficiency of which is acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
1. Establishment of Escrow. (a) On the date hereof, the Company has
deposited with the Escrow Agent the Indemnification Fund in immediately
available funds (the "Escrow Fund"). The Escrow Agent agrees to hold the Escrow
Fund subject to, and in accordance with, the terms and provisions of this
Agreement.
(b) Annexed hereto as Schedule 1 is a list of the Executives who
have served in such capacity up to the date hereof and are entitled to
indemnification under Article VIII and the Texas Act and in accordance with the
terms of this Agreement.
(c) The Company shall make such additional deposits of immediately
available funds with the Escrow Agent as may be required from time to time
during the Indemnification Period (as hereinafter defined) to replenish the
Escrow Fund so that the amount thereof during the Indemnification Period shall
not be less than $200,000
(the "Minimum Required Funds"). Such additional deposits shall be made within
ten (10) days from the receipt of a written notice from the Escrow Agent that
the amount of the Escrow Fund shall have declined below the Minimum Required
Funds (a copy of which notice shall be concurrently delivered to the Executives
serving in such capacity on the date hereof at their addresses set forth on
Schedule 1 as well as those who serve in any such position after such date).
Upon such deposits, such additional amounts shall be deemed deposited as part of
the Escrow Fund and shall be held and distributed in accordance with this
Agreement. In the event the Company shall have not deposited such additional
amounts with the Escrow Agent as required under this paragraph 1(c), the Escrow
Agent shall promptly notify such Executives in writing to that effect.
Notwithstanding the foregoing, this Agreement shall not terminate and, the
Escrow Agent shall continue to serve in his capacity as such, unless and until
this Agreement is terminated in accordance with paragraph 3(b) hereof.
(d) The Escrow Agent shall hold the Escrow Fund in its escrow
account and shall keep an accurate record of all transactions with respect
thereto.
2. Investment. (a) The Escrow Agent shall promptly invest and reinvest the
Escrow Fund in interest-bearing accounts maintained at Chemical Bank or a
comparable bank in New York City. Except as otherwise provided herein, the
Escrow Agent shall not be responsible for any loss arising out of or resulting
from any such investment.
(b) Any interest or other income received on such investments (net
of any expenses of such investments) shall be paid by the Escrow Agent to the
Company on a monthly basis.
3. Delivery. (a) An Executive who was or is threatened to be made a named
defendant or respondent in a Proceeding (as hereinafter defined), at any time
from the date hereof until November 15, 2000 (the "Indemnification Period"),
shall promptly thereafter submit a written notice of claim for indemnification
("Notice of Claim") to the Escrow Agent (a copy of which Notice of Claim shall
be concurrently delivered by the Executive to the Company). Such Notice of Claim
shall state in reasonably specific terms the basis of the claim and a good faith
estimate of the amount of such claim together with a request that the Escrow
Agent reimburse Expenses (as hereinafter defined) incurred by Executive in
connection with the defense of the claim. In addition, such Notice of Claim
shall include (i) an assertion by the Executive that he has acted in good faith
and reasonably believed that his conduct was in the Company's best interest and
in the case of any criminal proceeding, that he had no reasonable cause to
believe his conduct was unlawful (the "Required Standard of Conduct") and (ii)
an unlimited general undertaking by or on behalf of the Executive to reimburse
the Company for all funds advanced for legal fees if it is ultimately determined
by order of a court of competent jurisdiction, which has become final by appeal
or lapse of time, that (Y) the Executive has not met the Required Standard of
Conduct or (Z) the Executive has been found liable for willful or intentional
misconduct in the performance of his duty to the Company and, as a result, is
not entitled to such
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indemnification. The Notice of Claim shall be accompanied by appropriate
supporting documents (including copies of all relevant filings with any court
served upon the Executive). The Company shall have the right to assume the
defense of the claim, including employment of counsel and the payment of all
Expenses related thereto. Upon request by the Company accompanied by a statement
or invoice of counsel employed by the Company, the Escrow Agent shall reimburse
the Company for Expenses incurred by it. If within ten (10) days of the receipt
of the Notice of Claim by the Company, the Escrow Agent shall not have received
a written notice from the Company (which notice shall be concurrently delivered
by the Company to the Executive) that the Company has elected to assume the
defense of such claim, the Escrow Agent shall reimburse the Executive for
Expenses incurred by him after the date of the Notice of Claim (as evidenced by
a statement or invoice from counsel to Executive) for defense against such
claim. In the event that (i) an order or judgment of a court of competent
jurisdiction shall have been subsequently issued against the Executive in
connection with the Proceeding (a "Court Judgment") (other than a Court Judgment
which shall have become final by appeal or lapse of time, and which shall have
involved the finding or admission of willful or intentional misconduct of the
Executive in the performance of his duty to the Company, in which event the
Executive shall not be entitled to any indemnification under Article VIII or the
Texas Act) or (ii) a Settlement (as hereinafter defined) shall have been
accepted by the Executive in connection with the Proceeding, then, within ten
(10) days of the receipt of a copy thereof by the Escrow Agent (together with
documentary evidence of the date on which a copy of such Court Judgment or
Settlement, as the case may be, has been delivered to the Company), the Escrow
Agent shall pay the amount required for the satisfaction of any such Court
Judgment or Settlement, as the case may be. As used herein, the term
"Proceeding" shall mean (i) any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, any appeal
in such an action, suit or proceeding and any inquiry or investigation that
could lead to such action, suit or proceeding, in each case, in which the
Executive was or is threatened to be made a party by reason of being or having
been such an Executive (whether or not an Executive at the time such costs or
expenses are incurred or may by incurred by or imposed upon the Executive), or
(ii) any Settlement. "Settlement" shall mean any settlement in connection with
the Proceeding to which the Company shall have consented in writing, provided
that such Settlement does not involve the finding or admission of willful or
intentional misconduct of the Executive in the performance of his duty to the
Company. "Expenses" shall mean all reasonable costs and expenses, including
reasonable attorneys' fees and court costs incurred by the Executive in
connection with the Proceeding.
(b) Upon the expiration of the Indemnification Period, the Escrow
Agent shall (after deducting all payments and reimbursements to which it is
entitled pursuant to paragraph 5 hereof, and which shall not have been withdrawn
by the Escrow Agent from the Escrow Fund prior to the expiration of the
Indemnification Period in accordance with paragraph 5 hereof), deliver the
amount of the then unclaimed Escrow Fund to the Company, provided that if there
is then pending a Notice of Claim, the Escrow Agent shall not distribute the
Escrow Fund until a Judgment or Settlement regarding the matter described
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in the Notice of Claim is obtained unless within one year from receipt by the
Escrow Agent of the Notice of Claim, the Executive delivering the same shall not
have delivered to the Escrow Agent evidence of the initiation of a suit with
respect thereto (in which case the Escrow Agent shall distribute the Escrow Fund
upon the expiration of such one year period). This Agreement shall terminate
upon the delivery of the unclaimed Escrow Fund in accordance with the provisions
hereof.
4. Rights, Duties and Responsibilities of Escrow Agent. It is understood
and agreed that the duties of the Escrow Agent are purely ministerial in nature,
and that:
(a) The Escrow Agent shall be entitled to rely upon the accuracy,
act in reliance upon the contents, and assume the genuineness, of any notice,
instruction, certificate, signature or document that is delivered to the Escrow
Agent pursuant to this Agreement without the necessity of the Escrow Agent
verifying its truth or accuracy.
(b) In the event that the Escrow Agent shall be uncertain as to its
duties or rights under this Agreement or shall receive instructions with respect
to the Escrow Fund which, in its reasonable determination, are in conflict with
either other instructions received by it or with any provision of this
Agreement, the Escrow Agent shall be entitled to deposit the Escrow Fund with
the clerk of a court of competent jurisdiction in a proceeding to which all
parties in interest are joined. Upon the deposit by the Escrow Agent of the
Escrow Fund with such clerk, the Escrow Agent shall be relieved of all further
obligations and released from all obligations and responsibilities under this
Agreement.
(c) The Escrow Agent shall not be liable for any error of judgment
or any action taken or omitted under this Agreement, except in the case of its
willful misconduct. The Escrow Agent shall be entitled to consult with counsel
of its own choosing (which may be the law firm of Xxxx Marks & Xxxxx LLP), and
shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel. The Escrow Agent may rely, without
liability, upon the contents of any order or judgment of any court served upon
it.
5. Fees. The Escrow Agent shall not charge any fee for its services under
this Agreement. The Company agrees to pay, or to reimburse the Escrow Agent,
promptly following written demand and accounting therefor, for all expenses
incurred by it in connection with this Agreement, including, but not limited to,
reasonable attorneys' fees and expenses. If, within thirty (30) days of the
delivery of any such written demand to the Company the Escrow Agent shall not
have been paid or reimbursed for such expenses, the Escrow Agent shall be
entitled to withdraw such expenses from the Escrow Fund.
6. Indemnification. The Company agrees to indemnify and hold harmless the
Escrow Agent from and against any liabilities, losses, damages or expenses
(including, but not limited to, reasonable attorneys' fees and expenses and
court costs), which the Escrow Agent may suffer or incur as a result of any
claim, action or proceeding asserted or
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brought against the Escrow Agent by any third party arising out of this
Agreement, unless such claim, action or proceeding arises out of the willful
misconduct of the Escrow Agent. The Escrow Agent shall not be under any
obligation to institute suit or defend any claim, action or proceeding by reason
of its serving as Escrow Agent or having custody of the Escrow Fund unless and
until the expenses of any such claim, action or proceeding are advanced to it by
the Company, provided, however, that in the event the Escrow Agent elects to
institute suit or defend any such claim, action or proceeding, and the Company
shall not have advanced the expenses requested therefor promptly after the
receipt of written demand thereof, the Escrow Agent shall be entitled to
withdraw such amounts from the Escrow Fund.
7. Removal or Resignation. So long as Xxxxx X. Xxxxxxxxx shall be serving
as President of the Company, the Company shall be permitted to remove the Escrow
Agent and to appoint a successor in accordance with this paragraph 7. The Escrow
Agent may resign from its duties and obligations hereunder by giving the Company
at least 5 days' written notice, specifying the date when such resignation shall
take effect. Prior to the effective date of such resignation, the Company shall
appoint a successor Escrow Agent to assume the duties and obligations of, and to
be substituted for, the Escrow Agent. Upon the appointment of a successor Escrow
Agent, the Escrow Agent shall deliver the Escrow Fund (or assign its rights to
the Escrow Fund) to its successor, and the Escrow Agent shall then be relieved
and released of and from its duties and obligations under this Agreement, except
to execute such documents and take such further actions as may be reasonably
required to effect the termination and transfer of its obligations and
responsibilities under this Agreement.
8. Notices. All notices and other communications required or permitted
under this Agreement shall be deemed given if delivered personally or by prepaid
overnight courier (in each case, against receipt) or mailed by registered or
certified mail, return receipt requested, as follows:
(i) If to the Company:
Xxxxx Cable Communications, Inc.
0 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, President and CEO
(ii) If to the Escrow Agent:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
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(iii) If to any Executive, listed on Schedule 1 at the
addresses set forth on Schedule 1
or to such other address as any party may hereafter designate in writing in the
manner provided in this Section 8. All such notices and other communications
shall be effective when received.
9. Miscellaneous. (a) This Agreement constitutes the entire agreement
between the parties relating to its subject matter and merges and supersedes and
terminates all prior written and oral agreements between the parties. This
Agreement may not be changed in any respect except by writing duly executed by
the Company, at least four of the Executives presently serving and any other
Executive (if not one of said four) who has delivered an unsatisfied Notice of
Claim, provided that in no event shall the obligations of the Escrow Agent
hereunder be modified without its written consent.
(b) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to conflict of laws
principles applied in the State of New York.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties and to their respective successors and assigns. This
Agreement shall inure to the benefit of the Executives, their heirs and
successors and each of them.
(d) The headings of the paragraphs of this Agreement are for
convenience of reference only, are not part of this Agreement and shall not be
used in its interpretation.
(e) No provision of this Agreement that is held to be unenforceable
by a court of competent jurisdiction shall in any way invalidate any other
provision of this Agreement, all of which shall remain in full force and effect.
(f) The failure of any party at any time to require performance by
any other party of a provision of this Agreement or to resort to a remedy at law
or in equity or otherwise, shall in no way affect the right of such party to
require full performance or to resort to such remedy at any time thereafter nor
shall a waiver by any party of the breach of any provision of this Agreement be
taken or held to be a waiver of any subsequent breach of such provision unless
expressly so stated in writing. No waiver of any of the provisions of this
Agreement shall be effective unless in writing signed by the party to be
charged.
(g) The Escrow Agent is counsel for the Company, and one of the
Executives is a partner of the Escrow Agent. The Escrow Agent may continue to
serve as counsel to the Company and may represent the Company in connection with
any claim, action or proceedings involving the Company and any of the Executives
in connection with
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this Agreement, and neither anything contained herein, the execution or delivery
hereof by the Escrow Agent, nor the performance by the Escrow Agent of its
duties hereunder, shall in any way affect or require termination of such
relationships with the Company.
(h) For tax reporting purposes, all income earned with respect to
the Escrow Fund shall be attributed to the Company. The federal tax
identification number of the Company is 00-0000000.
XXXXX CABLE COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
President, Chief Executive Officer
and a Director
ESCROW AGENT:
XXXX MARKS & XXXXX LLP
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
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SCHEDULE 1
* Xxxxx X. Xxxxxxxxx * Xxxxxx X. Xxx
00 Xxxxxxx Xxxx Xxxx 0 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000 Xxxxxxxx, Xxxxxxxxxxx 00000
* H. Xxxxxx Xxxxxxx, Xx. Xxxxx X. Xxxxxxxx
00 Xxxxx Xxxxx Xxxx 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000 Xxxxx, Xxxxx 00000
Xxxxxxx X. Xxxxx * J. Xxxx Xxxxxxx
000 Xxxx 00xx Xxxxxx 0000 Xxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxxxx, Xxxxx 00000
* Xxxxxx X. Xxxx * Day X. Xxxxxxxxx
00 Xxxxxx Xxxxx 000 Xxxxx Xxxxxx, #0-X
Xxxxxx, Xxxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
* Xxxx X. Xxxxxxxx, Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxxx Xxxxx 00 Xxxxxxx Xxxx
Xxx Xxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxx, Xxxxxxxxxxx 00000
---------- * Xxxxxxx X. Xxxxx
* Serving on the date hereof 0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
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