STOCK ESCROW AGREEMENT
This Stock Escrow Agreement (this "Agreement) is made and entered into as
of the _____ day of June 2000, by, between and among XXXXX BROTHERS, INC., a
Delaware corporation ("Buyer"); BOULDER POTATO COMPANY, INC., a Colorado
corporation ("Seller"); and Xxxxxx, Xxxxxxxx & Company, Incorporated, a
____________ corporation (the "Escrow Agent").
WITNESSETH:
WHEREAS, Buyer and Seller are parties to a certain Agreement for Purchase
and Sale of Assets, dated as of June ____, 2000 (the "Purchase Agreement"),
pursuant to which Buyer has agreed to deliver to the Escrow Agent a certificate
or certificates, registered in the name of Seller, representing the issuance of
$300,000 in Fair Market Value (computed as of Closing) of Xxxxx Brother's, Inc.
common stock, par value of $.01 (one cent) per share (the "Xxxxx Brothers
Securities") (such Xxxxx Brothers Securities and any distributions or dividends
with respect thereto, together with any proceeds of any permitted sale of Xxxxx
Brothers Securities hereunder and together with interest or other income earned
from investment of any such dividends, being referred to herein as the "Escrow
Sum"), such Escrow Sum to be held by the Escrow Agent, and released to Seller
and/or Buyer, under the conditions and in accordance with the terms hereof.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1: ESCROW AGENT
1.1. APPOINTMENT. The Escrow Agent is hereby appointed depositary and
escrow agent for Buyer and Seller with respect to the Escrow Sum. Escrow Agent
is also constituted an agent of Buyer to hold the Xxxxx Brothers Securities in
escrow and in pledge for the benefit of Buyer. Seller hereby grants a security
interest in and to, and pledges, the Escrow Sum to Buyer to secure the
obligations of Seller under and pursuant to the Purchase Agreement, including,
without limitation, the obligations of Seller referenced in Section 3.1 below,
and Escrow Agent hereby accepts such designation as Buyer's agent for that
purpose.
1.2. BINDING OBLIGATIONS. Except for this Agreement, the Escrow Agent is
not a party to, nor is it bound by, any agreement between Buyer and Seller.
Reference in this Agreement to other documents or instruments is for
identification purposes only, and such reference shall not modify or affect the
terms hereof or cause such documents or instruments to be deemed incorporated
herein. The only duties and responsibilities of the Escrow Agent shall be to
hold the Escrow Sum as Escrow Agent according to the provisions of this
Agreement and to dispose of and deliver the Escrow Sum as provided in this
Agreement.
1.3. ACTS OF ESCROW AGENT. The Escrow Agent's sole responsibilities shall
be for the safekeeping and investment of the Escrow Sum and the disbursement of
the Escrow Sum and interest thereon in accordance with this Agreement. The
Escrow Agent's authority is limited to the express provisions of this Agreement,
and the Escrow Agent shall not have any duties other than those expressly set
forth herein. The Escrow Agent has no duty to determine or inquire into any
happening or occurrence or any performance or failure of performance of Buyer or
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Seller or any other party with respect to their agreements or arrangements with
each other or with any other party other than those imposed by this Agreement or
any other agreement to which the Escrow Agent is a party in connection herewith.
The Escrow Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement, except its own negligence or
misconduct or any failure to carry out its duties under this Agreement. The
Escrow Agent may confer with legal counsel of its own choosing in the event of
any dispute or question as to the construction of any of the provisions hereof,
or its duties hereunder, and it shall incur no liability and shall be fully
protected in acting in reasonable reliance upon the opinions of such counsel.
The Escrow Agent may rely and shall be protected in acting upon any documents
which may be submitted to it in connection with its duties hereunder and which
he reasonably believes to be genuine and to have been signed or presented by the
proper party or parties, and the Escrow Agent shall have no liability or
responsibility with respect to the form of execution or validity thereof except
as otherwise herein specifically set forth. The Escrow Agent is hereby expressly
authorized to comply with and obey any and all orders, judgments, or decrees of
any court relating to this Agreement, the Escrow Sum, or the relationship
between Buyer and Seller, and in case the Escrow Agent obeys or complies with
any such order, judgment, or decree of any court, it shall not be liable to
either Buyer or Seller, or to any other person, by reason of such compliance,
notwithstanding any such order, judgment, or decree being subsequently reversed,
modified, annulled, set aside, or vacated, or found to have been entered without
jurisdiction. Buyer and Seller agree jointly and severally to indemnify the
Escrow Agent against any expenses or liabilities, claims, losses, or damages
incurred by the Escrow Agent that may arise out of or in connection with the
Escrow Agent's acting as Escrow Agent under and in strict compliance with the
terms of this Agreement or as a result of any litigation or threat of any
litigation in connection herewith or performance in accordance herewith, except
in those instances where the Escrow Agent has been guilty of negligence or other
misconduct or has otherwise acted inconsistently with the terms of this
Agreement or inconsistently with the obligations imposed upon the Escrow Agent
by law.
1.4. ADVERSE CLAIMS OR DEMANDS. In the event of any disagreement resulting
in adverse or conflicting claims or demands being made in connection with the
subject matter of this Agreement or upon the Escrow Agent, causing the Escrow
Agent to have doubt as to what action it should take hereunder, or in the event
that the Escrow Agent, in good faith, otherwise has doubt as to what action it
should take hereunder, the Escrow Agent may, at its option and in its
discretion, petition any court of competent jurisdiction in the State of
Arizona, for instructions or interplead the funds or assets so held into such
court. The parties agree to the jurisdiction of such court, waive personal
service of process, and agree that service of process by certified or registered
mail, return receipt requested, to the address set forth in Section 5.1 hereof
shall constitute adequate service. The parties hereby agree to indemnify and
hold the Escrow Agent harmless from any liability or losses occasioned by such
interpleader action or request for instructions and to pay any and all of its
costs, expenses, and attorney's fees incurred in any such action and agree that
on upon entry of an order permitting interpleader and full compliance therewith,
the Escrow Agent, its servants, agents, employees, or officers will be relieved
of further liability.
1.5. LITIGATION. The Escrow Agent shall not be required to institute legal
proceedings of any kind. In the event litigation is instituted by Buyer against
Seller or by Seller against Buyer that: (a) requires additional duties of the
Escrow Agent; (b) requires court appearances by or on behalf of the Escrow
Agent; or (c) requires the Escrow Agent to incur expenses or make disbursements
in the resolution of contested claims against the Escrow Sum, then the Escrow
Agent shall be entitled to reimbursement for any reasonable expenses or
disbursements, and such reimbursement shall include, but not be limited to, the
actual cost of legal services if the Escrow Agent deems it necessary to retain
an attorney.
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1.6. FEES. The fees and expenses of the Escrow Agent shall be paid one-half
(1/2) by Buyer and one-half (1/2) by Seller from funds other than the Escrow
Sum.
ARTICLE 2: DELIVERY OF SECURITIES
The Escrow Agent hereby acknowledges receipt of, or will acknowledge, upon
actual receipt of, the Xxxxx Brothers Securities from Buyer. The Escrow Agent
further acknowledges its acceptance of the authorization herein conferred and
agrees to carry out and perform the duties contained herein pursuant to the
provisions of this Agreement.
ARTICLE 3: RELEASE OF SECURITIES
3.1. RELEASE OF ESCROW SUM TO BUYER. (A) If any time prior to two (2) years
from the date hereof Buyer learns of facts which lead Buyer to conclude that it
may suffer Damages for which Seller may be liable pursuant to the provisions
Article 11 of the Purchase Agreement, then Buyer shall promptly advise the
Escrow Agent and Seller of such claim ("Claim") by delivering written notice
thereof (the "Notice of Claim") to the Escrow Agent and Seller. The Notice of
Claim: (i) shall state the claimed nature of Seller's alleged liability; and
(ii) shall state the maximum amount of the payment that Buyer claims it is
entitled to receive from the Escrow Sum. Seller shall have thirty (30) days
after receipt of the Notice of Claim in which to advise the Escrow Agent and
Buyer that it disputes the Claim by delivering written notice of Seller's
dispute (the "Notice of Dispute") to the Escrow Agent and to Buyer. The Notice
of Dispute may contest all or any portion of the Notice of Claim based on a
dispute concerning the existence of a Claim, Seller's liability or the estimated
amount of the alleged loss.
(A) If Seller fails to deliver a Notice of Dispute within such thirty
(30) day period, Seller shall be deemed to have acknowledged that Buyer is
entitled to payment as set forth in the Notice of Claim and shall be deemed to
have directed the Escrow Agent to disburse such payment (the "Claim Payment") to
Buyer in accordance with the provisions of Section 3.4. In the event a Notice of
Dispute is timely delivered, then the undisputed portion of the Claim, if any
(the "Undisputed Claim Payment"), shall be promptly disbursed to Buyer in
accordance with the provisions of Section 3.4, and only the sum that is subject
to a dispute shall be held by the Escrow Agent until the Claim is resolved;
provided, however, that any Claim which is based upon the assertion or threat of
a third party claim against Buyer shall be conclusively deemed to be resolved
four (4) years after the Notice of Claim is delivered unless litigation,
arbitration, assessment, or some other formal proceeding is commenced against
Buyer within that four (4) year period. If such a formal proceeding is not
commenced within the four (4) year period, then the Claim shall be deemed
abandoned and of no further force and effect for purposes of this Agreement. In
the event a formal proceeding is commenced within the four (4) year period, then
the resolution of the Claim will occur only upon the resolution of such
proceeding and any related appellate proceedings.
(B) Subject to Seller's right to dispute a Claim as set forth above,
once a Notice of Claim is delivered to the Escrow Agent, the Escrow Agent shall
not permit the Escrow Sum to be reduced by disbursement to Seller pursuant to
Section 3.2 to an amount which is less than the amount of the Claim (the Xxxxx
Brothers Securities then held by the Escrow Agent being valued for the purpose
of any such determination based on the average closing price per share of Xxxxx
Brothers, Inc. stock for the immediately preceding ten (10) trading days before
the date for which the valuation is being determined, as reported in the Wall
Street Journal (the "Valuation Price")). If such reports are not ready
obtainable from the Wall Street Journal, the reasonable determination of a
financial advisor to Buyer knowledgeable about the stock price of Xxxxx
Brothers, Inc. common stock shall be substituted. Furthermore, if the amount of
any Claim or the aggregate amount of any Claims should ever exceed the amount of
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the Escrow Sum (the Xxxxx Brothers Securities then held by the Escrow Agent
being valued for such purposes based on the Valuation Price), then no portion of
the Escrow Sum shall be disbursed pursuant to Section 3.2 during such time that
such a deficit exists.
(C) Notwithstanding anything to the contrary herein or in the Purchase
Agreement, no sums shall be disbursed to Buyer hereunder unless the aggregate
amount of Claims theretofore made by Buyer, together with any Claim then made by
Buyer, exceeds $20,000.00, whereupon the total amount of such Claims which are
not subject to dispute shall be released to Buyer under the terms of this
Agreement. Without limiting the foregoing, at no time shall the total Valuation
Price for all Xxxxx Brothers Securities released to Buyer hereunder exceed
$300,000.00. Upon release of $300,000.00 in total Valuation Price of Xxxxx
Brothers Securities, the remainder of the Xxxxx Brothers Securities shall be
released to Seller pursuant to the provisions of Section 3.2 below.
3.2. CERTAIN RELEASES OF ESCROW SUM. One year from the date hereof, the
Escrow Agent shall irrevocably and unconditionally disburse to Seller the
difference between: (a) one-half of the Escrow Sum; less (b) the amount of any
Claims previously paid pursuant to the terms of this Agreement and the Purchase
Agreement and of the amount of any then existing Claim or Claims which are
unresolved and/or which are then the subject of a pending Notice of Claim. Two
years from the date hereof, the remainder of the Escrow Sum, if any, shall be
irrevocably and unconditionally disbursed to Seller (or Buyer, if appropriate),
in one or more disbursements, upon final resolution of all Claims then pending
and/or which are then the subject of a pending Notice of Claim.
3.3. DELIVERY. Unless delivery is made in person at the Escrow Agent's
office or unless the Escrow Agent is properly instructed in writing by Buyer or
Seller, as the case may be, to make delivery in such other manner, the Escrow
Agent shall be deemed to have properly delivered to Buyer or Seller, as the case
may be, such funds as Buyer or Seller is entitled to receive, upon placing the
same in the United States Mail in a suitable package or envelope, registered or
certified mail, return receipt requested, postage prepaid, addressed to the
address referred to in Section 5.1 hereof or such other address as may be
furnished to the Escrow Agent in writing.
3.4. TREATMENT OF XXXXX BROTHERS SECURITIES. In the event that the Escrow
Agent is required to make a Claim Payment or an Undisputed Claim Payment
pursuant to the provisions of Section 3.1 at a time when a portion of the Escrow
Sum is composed of Xxxxx Brothers Securities, the Escrow Agent shall, at Buyer's
election (which election may include any combination of funds and/or values
under clause (i) and/or (ii) below): (i) transfer to Buyer such number of shares
of the Xxxxx Brothers Securities as shall be necessary to satisfy all or any
portion of such Claim Payment or Undisputed Claim Payment (such Xxxxx Brothers
Securities being valued for such purposes based on the Valuation Price on the
date transferred); or (ii) disburse to Buyer an appropriate portion of the
Escrow Sum not represented by Xxxxx Brothers Securities, which, when aggregated
with the valuation arrived at under clause (i) above, shall equal a total
valuation equal to the Claim Payment and/or Undisputed Claim Payment in
question.
ARTICLE 4: INVESTMENT AND INTEREST; PERMITTED SALES
4.1. INVESTMENT. At Seller's written direction and with Buyer's
countersignature, the Escrow Agent shall invest the Escrow Sum (other than the
Xxxxx Brothers Securities) in interest-bearing, federally insured bank accounts,
money market funds or instruments, government securities, financial institution
obligations, or similar instruments. All investments in obligations which are
not direct obligations of the United States must be rated AI or PI by Moody's or
Standard & Poor's, and must have a maturity of one (1) year or less. The Escrow
Agent shall not be liable to Buyer or Seller for any claim related to the
investment or management of the Escrow Sum, provided that the Escrow Agent
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complies strictly with the provisions of this Section 4.1 and Section 4.3.
Disbursement by the Escrow Agent of the Escrow Sum shall be made in accordance
with and at the time or times specified in Sections 3.1 and 3.2 of this
Agreement.
4.2. INTEREST AND OTHER INCOME. Any distributions or dividends with respect
to the Xxxxx Brothers Securities or any other investments or instruments held in
escrow from time to time, together with the proceeds of any sale, transfer, or
other disposition thereof and any interest or other income earned from
investment of any such proceeds, during the period of these escrow arrangements
shall accrue and be held by the Escrow Agent as part of the Escrow Sum.
4.3. INVESTMENT INSTRUCTIONS. Seller shall direct the Escrow Agent
regarding the investment of the Escrow Sum pursuant to Section 4.1. Seller and
Buyer, and not Escrow Agent, shall be solely responsible for following the
guidelines for investments set forth in Section 4.1, including, without
limitation, investigating and satisfying themselves regarding the liquidity of
the firms and/or institutions with which the Escrow Sum is to be placed. Seller
shall deliver to Escrow Agent the name(s), address(es), and contact person(s) of
the firm(s) and/or banking institution(s) with which the Escrow Sum is to be
placed, together with a description of the type of investment to be made. Unless
otherwise explicitly stated by Seller in the written instructions to Escrow
Agent, at no time will any investment of the Escrow Sum or any portion thereof
(other than the Xxxxx Brothers Securities and any direct obligation of the
United States) exceed one (1) year in duration, nor will any such investment be
subject to automatic renewal.
4.4. CERTAIN PERMITTED SALES. At any time after one year from the date
hereof, at Seller's written direction and with Buyer's countersignature, such
countersignature not to be unreasonably withheld or delayed, Seller shall have
the option of directing the Escrow Agent to sell, pursuant to all applicable
securities laws and private contractual restrictions, all or any portion of the
Escrow Sum constituting Xxxxx Brothers Securities upon the terms and conditions
set forth in this Section 4.4. The net price per share received by Escrow Agent
with respect to any such sale may not be less than the value per share of the
Xxxxx Brothers Securities on the date hereof computed in accordance with the
Purchase Agreement. When such net proceeds are received by Escrow Agent, they
shall become a portion of the Escrow Sum and held thereafter by Escrow Agent
under the terms hereof.
ARTICLE 5: MISCELLANEOUS
5.1. NOTICES. Any notice or consent pursuant to or in connection with this
Agreement shall be in writing and Seller be deemed to be delivered (a) upon
receipt, if personally delivered or delivered by reputable overnight courier, or
(b) at the close of business on the fifth business day next following the day
when placed in the United States mail postage prepaid, certified or registered,
addressed to the appropriate party or parties, at the address stated below (or
at such other address as such party may designate by written notice to all other
parties), with a copy thereof sent to the persons indicated:
If to Seller: Boulder Potato Company, Inc.
Attn: Xx. Xxxx X. Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxx, #000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With copy to: Xxxxxx & Xxx
Attn: Xxxxx X. Xxxxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxxxx 000, Amcore Financial Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer: Xxxxx Brothers, Inc.
Attn: Xx. Xxxx X. Xxxxx
0000 Xxxxx Xx Xxxxxx Xx.
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Mariscal, Weeks, XxXxxxxx & Xxxxxxxxxxx, P.A.
Attn: Xxxx X. Xxxxx, Esq.
0000 Xxxxx Xxxxxxx Xxx., #000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent: Xxxxxx, Xxxxxxxx & Company, Incorporated
c/o Xx. Xxxxx Xxxx
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Telephone 000-000-0000
Facsimile 000-000-0000
5.2. ENTIRE AGREEMENT; AMENDMENT. Except as otherwise expressly set forth
herein, this Agreement contains the entire agreement among the parties with
respect to the subject matter hereof, and no representations, inducements,
promises, or agreements, oral or otherwise, not embodied herein shall be of any
force or effect. This Agreement may be amended, modified, or supplemented, and
waivers or consents to departures from the provisions hereof may be given, only
pursuant to a written instrument signed by Buyer and Seller, and, if, but only
if, the rights and responsibilities of the Escrow Agent are modified by such
amendment, modification, or supplement, by the Escrow Agent.
5.3. PARTIES BOUND. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, assigns, and
other legal representatives.
5.4. MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for each of the parties to
execute each of such counterparts, but when all of the parties have executed and
delivered one or more of such counterparts, the several parts, when taken
together, shall be deemed to constitute one and the same instrument, enforceable
against each in accordance with its terms. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart
executed by the party against whom enforcement of this Agreement is sought.
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5.5. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
5.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, without regard to principles
of conflicts or choice of law. Any action or arbitration brought to enforce or
construe this Agreement or to declare the rights of the parties shall be
commenced and maintained in an appropriate state or federal court or before an
appropriate arbitrator in Phoenix, Arizona, and each party irrevocably consents
to exclusive jurisdiction and venue in such forum for such purposes.
5.7. SEVERABILITY. If any provision of this Agreement is held to be illegal
invalid, or unenforceable under present or future laws effective during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part of this Agreement; and the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a provision as similar in terms to such illegal, invalid,
or unenforceable provision as may be possible and be legal, valid, and
enforceable, and this Agreement shall be reformed accordingly.
5.8. LEGAL FEES AND COSTS. In the event Buyer or Seller elects to incur
legal expenses in connection with any arbitration or litigation to enforce or
interpret any provision of this Agreement or to declare the rights of the
parties under this Agreement, the prevailing party will be entitled to recover
such legal expenses, including reasonable attorney's fees, expert witness fees,
paralegal expenses, costs and necessary disbursements, in addition to any other
relief to which such party shall be entitled.
5.9. [RESERVED]
5.10. RESIGNATION AND TERMINATION. The Escrow Agent may resign as such by
delivering written notice to that effect at least sixty (60) days prior to the
effective date of such resignation to Seller and Buyer. Upon expiration of such
sixty (60) day notice period, the Escrow Agent may deliver the portion of the
Escrow Sum remaining it its possession to any successor Escrow Agent appointed
by Seller and Buyer pursuant to this Section 5.10, or if no successor Escrow
Agent has been appointed, to any court of competent jurisdiction in Phoenix,
Arizona, or in accordance with the joint written instructions of Buyer and
Seller. Seller and Buyer, acting jointly, may terminate the Escrow Agent from
its position as such by delivering to the Escrow Agent written notice to that
effect executed by Seller and Buyer at least thirty (30) days prior to the
effective date of such termination. In the event of such resignation or
termination of the Escrow Agent, a successor Escrow Agent shall be appointed by
mutual agreement between Seller and Buyer, and the Escrow Agent shall deliver
the portion of the Escrow Sum remaining in its possession to such successor
escrow agent. From and after the appointment of a successor Escrow Agent
pursuant to this Section 5.10, all references herein to the Escrow Agent shall
be deemed to be to such successor Escrow Agent. The delivery by the Escrow Agent
of the Escrow Sum hereunder in accordance with the provisions of this Section
5.10 shall constitute a full and sufficient discharge and acquittance of the
Escrow Agent in respect to such sums delivered, and the Escrow Agent shall be
entitled to receive releases and discharges therefor. The indemnities in favor
of the Escrow Agent contained in this Agreement and the obligations of Buyer and
Seller under Section 1.6 hereof shall survive for the benefit of the Escrow
Agent after any resignation or termination.
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5.11. NON-ASSIGNMENT. The duties, responsibilities, interests, and rights
of the parses under this Agreement are non-transferable and nonassignable
(without the express written consent of Buyer and Seller), and any purported or
attempted transfer or assignment in violation of this provision shall be void
and shall vest no rights in the purported transferee or assignee.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER: BOULDER POTATO COMPANY, INC., a
Colorado corporation,
By:
------------------------------------
Its:
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PURCHASER: XXXXX BROTHERS, INC., a Delaware
corporation
By:
------------------------------------
Its:
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ESCROW AGENT: Xxxxxx, Xxxxxxxx & Company,
Incorporated, a _________________
By:
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Its:
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