Exhibit 4.3
Form of Escrow Agreement
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of January __, 1997
by and among PACKAGING ACQUISITION CORPORATION, a Georgia corporation ("Buyer"),
LAMCOR, INCORPORATED ("Lamcor"), XXXXX X. XXXXXXX (the "Shareholders'
Representative"), on behalf of the shareholders of Lamcor and the holders of
Lamcor Options and Lamcor Convertible Securities (as such terms are defined in
the Merger Agreement referenced below), and Norwest Bank Minnesota, N.A. (the
"Escrow Agent").
BACKGROUND
A. Contemporaneously with the execution and delivery hereof, Buyer has
acquired Lamcor pursuant to the merger of LI Acquisition Corporation, a wholly
owned subsidiary of Buyer ("Sub"), with and into Lamcor pursuant to the terms of
that certain Agreement and Plan of Merger dated as of September 30, 1996 (the
"Merger Agreement") among Buyer, Lamcor and Sub. Capitalized terms used but not
defined herein shall have the meaning set forth in the Merger Agreement.
B. The Merger Agreement contemplates the establishment of an escrow
fund to satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy
of any representation or warranty of Lamcor contained in the Merger Agreement,
(ii) the failure of Lamcor to perform any covenant or agreement of Lamcor under
the Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00.
C. Pursuant to the Merger Agreement, the shareholders of Lamcor (the
"Shareholders") have appointed the Shareholders' Representative as their
respective agent and attorney-in-fact to execute and deliver this Escrow
Agreement on their behalf and to act for them hereunder. Pursuant to Option
Cancellation and Purchase Agreements between Lamcor and each holder of Lamcor
Options or Lamcor Convertible Securities (together with the Shareholders, the
"Holders"), such holders have appointed the Shareholders' Representative as
their respective agent and attorney-in-fact to execute and deliver this Escrow
Agreement on their behalf and to act for them hereunder.
D. Escrow Agent is willing to accept the escrow fund and to hold and
distribute the escrow fund in accordance with the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Appointment of Escrow Agent. Lamcor, Buyer and the Shareholders'
Representative hereby designate and appoint Escrow Agent to serve as escrow
agent hereunder, and Escrow Agent hereby confirms its agreement to act as escrow
agent upon the terms, conditions, and provisions of this Agreement.
2. Creation of Escrow Fund. Concurrently with the execution and
delivery of this Agreement, the Exchange Agent has deposited with Escrow Agent
on behalf of the Holders the sum of Two Hundred Thirty One Thousand Eight
Hundred Seventy Eight and 04/100 Dollars ($231,878.04) (the "Escrowed Funds") to
satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy of any
representation or warranty of Lamcor contained in the Merger Agreement, (ii) the
failure of Lamcor to perform any covenant or agreement of Lamcor under the
Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00, subject
to the limitations of Section 11.15 of the Merger Agreement. The Escrowed Funds
shall be invested as set forth in SCHEDULE A. Any investment income earned on
the Escrowed Funds shall be added to and shall become a part of the Escrowed
Funds. The Escrowed Funds are to be held, administered, and paid by Escrow Agent
as provided herein. Escrow Agent acknowledges receipt of the Escrowed Funds and
agrees to hold, administer, and pay the same in accordance with the terms of
this Agreement and not permit any withdrawal thereof except pursuant to the
terms hereof.
3. Claims Against Escrowed Funds. At any time prior to the close of
business on the first anniversary hereof (the "First Anniversary"), the Buyer
may give to Escrow Agent an Indemnification Claim, with a copy being
contemporaneously delivered to the Shareholders' Representative. The
Shareholders' Representative shall have thirty (30) days following receipt of
such Indemnification Claim by the Escrow Agent to give to Escrow Agent a written
objection thereto (the "Objection"), with a copy being contemporaneously
delivered to Buyer. If no Objection is timely given to the Escrow Agent by the
Shareholders' Representative, such Indemnification Claim is an "Uncontested
Claim." If an Objection is timely given to the Escrow Agent by the Shareholders'
Representative, such Claim is a "Contested Claim." The Buyer may withdraw,
either wholly or partially, and either before or after the filing of an
Objection, any Indemnification Claim filed by Buyer hereunder, and the
Shareholders' Representative may withdraw, either wholly or partially, any
Objection timely filed by it hereunder. Any such Withdrawal Notice shall be in
writing and shall be given by the party making such withdrawal to the other
parties hereto.
4. Arbitration.
(a) Any Contested Claim that cannot be resolved by the Buyer and the
Shareholders' Representative within twenty (20) days after Buyer's receipt of an
Objection thereto, shall be submitted to arbitration in accordance with this
Section 4 and such arbitration shall be the sole remedy for such matter. Such
arbitration shall be heard and conducted at a place in the metropolitan
Minneapolis, Minnesota area as may be specified by the arbitrator (or any place
agreed to by Buyer, the Shareholders' Representative and the arbitration panel),
and shall be conducted expeditiously and confidentially in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as
such rules shall be in effect on the date of delivery of demand for arbitration,
with the exception that the arbitration panel may not award any punitive or
exemplary damages or any damages other than compensatory, and except as such
rules may be otherwise inconsistent with the express provisions of this Section
4.
(b) To initiate arbitration, either Buyer or the Shareholders'
Representative shall file a written demand for arbitration by filing a written
notice with the AAA and with the other party, complying with the AAA's
prescribed procedures for such notices. Within fifteen (15) days of delivery of
such demand for arbitration, each party shall appoint one arbitrator, and the
arbitrators so selected shall, within fifteen (15) days of their appointment,
appoint an additional arbitrator. In the event that the arbitrators selected by
the parties are unable to agree upon the selection of the additional arbitrator
after reasonable efforts within such fifteen (15) day period, a list of seven
(7) qualified and available persons shall be requested from the AAA. The parties
shall take turns striking one person each from the list with the last remaining
person being the additional selected arbitrator. Once selected, the arbitration
panel shall meet as expeditiously as possible, select a chairman, schedule the
arbitration hearing, and notify the parties in writing of the date, time and
place of the hearing.
(c) All conclusions of law reached by the arbitrators shall be made in
accordance with the internal laws of the State of Georgia without regard for its
conflict of laws doctrine. Any award rendered by the arbitrators shall be
accompanied by a written opinion setting forth the findings of fact and
conclusions of law relied upon in reaching their decision. The award rendered by
the arbitrators shall be final, binding and non-appealable, and judgment upon
such award may be entered by any court having jurisdiction thereof. The parties
agree that the existence, conduct and content of any such arbitration shall be
kept confidential and no party shall disclose to any person any information
about such arbitration, except as may be required by this Agreement, by law or
for financial reporting purposes.
(d) All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or , if no decision is
rendered, such costs and expenses shall be borne equally by Lamcor as one party
and the Holders as the other party. If the arbitrators' decision is a
compromise, the determination of which party or parties bears the costs and
expenses incurred in connection with any such arbitration proceeding shall be
made by the arbitrators on the basis of the arbitrators' assessment of the
relative merits of the parties' positions.
5. Tentatively Impounded Funds. With respect to each Indemnification
Claim received by Escrow Agent, Escrow Agent shall make a notation on its
records setting aside from the Escrowed Funds the amount asserted by the Buyer
as a Loss (the "Tentatively Impounded Funds"). Upon notification of
determination of the exact amount of the Loss with respect to each
Indemnification Claim (whether by Notice of Release or by Award Notice), the
Tentatively Impounded Funds shall be decreased or increased by the Escrow Agent
as necessary to reflect the difference (if any) between the amount of the Loss
asserted in the Indemnification Claim and the amount of the Loss actually
payable to the Buyer asserting the Indemnification Claim pursuant to Section 6
hereof.
6. Disbursement of Escrowed Funds. Escrow Agent shall pay and disburse
the Escrowed Funds and the Tentatively Impounded Funds as follows:
(a) If the Indemnification Claim is an Uncontested Claim, then
to Buyer in the amount of the Indemnification Claim;
(b) If the Indemnification Claim is a Contested Claim and the
Shareholders' Representative delivers a Withdrawal Notice to Escrow
Agent with respect to such Contested Claim, then to Buyer in the amount
of the Indemnification Claim to which such Objection was withdrawn;
(c) If a Notice of Release is received by the Escrow Agent
with respect to a Contested Claim, then as specified in such Notice of
Release;
(d) If an Award Notice is received by the Escrow Agent with
respect to an Indemnification Claim, then as specified in such Award
Notice;
(e) To the Shareholders' Representative prior to the First
Anniversary in an amount specified in a written notice from Buyer to
the Escrow Agent in accordance with the provisions of Section 11.16(e)
of the Merger Agreement and Section 6(e) of the Option Cancellation
Agreements;
(f) With respect to the excess of the then remaining balance
of the Escrowed Funds over the sum of Tentatively Impounded Funds, as
of the close of business on the First Anniversary, to the Escrow Agent
or Buyer and/or Holders in an amount equal to the amount of the Section
10 Expenses described in a written notice from the Buyer and the
Shareholder's Representative to the Escrow Agent;
(g) With respect to the excess of the then remaining balance
of the Escrowed Funds over the sum of Tentatively Impounded Funds, as
of the close of business on the First Anniversary, to the Shareholders'
Representative in an amount equal to the amount of Representative's
Expenses described in a written notice from the Shareholder's
Representative to the Escrow Agent, less any amount disbursed to the
Escrow Agent pursuant to Section 6(f) above;
(h) To each of the Holders, in Proportionate Shares, following
the First Anniversary in an amount equal to the amount by which the
then remaining balance of the Escrowed Funds exceeds the sum of
Tentatively Impounded Funds, as of the close of business on the First
Anniversary, less any amount disbursed to the Escrow Agent pursuant to
Section 6(f) above and any amount disbursed to the Shareholders'
Representative pursuant to Section 6(g) above; and
(i) To each of the Holders, in Proportionate Shares, and/or
the Buyer as set forth in any Notice of Release or Award Notice
received by Escrow Agent after the First Anniversary.
All disbursements hereunder shall be made by Escrow Agent within three
(3) business days following the events described above. All payments that are to
be made to the Holders hereunder shall be delivered by Escrow Agent to the
Shareholders' Representative, who agrees to promptly distribute any such funds
received by him to the Holders in their respective Proportionate Shares.
7. Escrow Agent's Duties. Escrow Agent shall be obligated to perform
only such duties as are expressly set forth in this Escrow Agreement and the
Schedules hereto, and shall not be required, in carrying out its duties under
this Escrow Agreement, to refer to the Merger Agreement or determine or verify
any party's compliance with the terms of the Merger Agreement. The Escrow Agent
may conclusively rely upon and shall be protected in acting upon any statement,
certificate, notice, request, consent, order or other document believed by it be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document, and its sole
responsibility shall be to act only as expressly set forth in this Agreement.
The Escrow Agent shall be under no obligation to institute or defend any action,
suit or proceeding in connection with this Agreement unless first indemnified to
its satisfaction. The Escrow Agent may consult counsel in respect of any
question arising under this Agreement and the Escrow Agent shall not be liable
for any action taken or omitted in good faith upon advice of such counsel.
8. Remedies of Escrow Agent.
(a) In the event of any disagreement or controversy hereunder, or if
conflicting demands or notices are made upon Escrow Agent, or in the event
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the parties expressly agree and consent that Escrow Agent shall have
the absolute right, at its option, to do either or both of the following things:
(i) stop all further proceedings in, and performance of, this Agreement and of
all instructions received hereunder; and (ii) file a suit in interpleader and
obtain an order from a court of competent jurisdiction requiring all persons
involved to interplead their several claims and rights among themselves and with
Escrow Agent.
(b) While any interpleader proceeding arising out of or relating to
this Agreement is pending, whether the same be initiated by Escrow Agent or by
others, Escrow Agent shall have the right, at its option, to stop all further
proceedings in, and performance of, this Agreement and instructions received
hereunder until all differences shall have been resolved by agreement or until
the rights of all parties shall have been fully and finally determined by the
interpleader proceedings. The rights of Escrow Agent under this Section 8 are in
addition to all other rights which it may have by law or otherwise.
9. Escrow Agent's Fees and Expenses. The reasonable compensation of
Escrow Agent as set forth in SCHEDULE B hereto shall be paid by Buyer.
10. Indemnification. Buyer and the Holders, jointly and severally,
agree to indemnify, protect and save and hold Escrow Agent and its successors
and assigns harmless from all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (including reasonable
attorneys' fees) of whatsoever kind or nature imposed on, incurred by or
asserted against Escrow Agent which in any way relate to or arise out of the
execution and delivery of this Agreement or any action taken hereunder;
provided, however, that neither Buyer nor any Holder shall have any such
obligation to indemnify and save and hold Escrow Agent harmless from any
liability incurred by, imposed upon or asserted against Escrow Agent resulting
from the gross negligence or bad faith of Escrow Agent.
11. Resignation by or Termination of Escrow Agent. Escrow Agent may
resign as such by delivering written notice to such effect at least thirty (30)
days prior to the effective date of such resignation to Buyer and the
Shareholders' Representative. Buyer and the Shareholders' Representative, acting
jointly, may terminate Escrow Agent from its position as such by delivering
written notice to Escrow Agent to such effect executed by Buyer and the
Shareholders' Representative at least thirty (30) days prior to the effective
date of such termination (unless such termination is as a result of Escrow
Agent's breach of its obligations hereunder, in which case the effective date of
such termination shall be any date specified in such notice by Buyer and the
Shareholders' Representative). In the event of such resignation by or
termination of Escrow Agent, a successor Escrow Agent shall be appointed by
mutual agreement between Buyer and the Shareholders' Representative, and Escrow
Agent which has been so terminated or has so resigned shall promptly deliver to
the successor Escrow Agent the entire Escrowed Funds (together with copies of
all records pertaining thereto) upon presentation of evidence reasonably
satisfactory to it of the appointment and authorization of such successor Escrow
Agent by Buyer and the Shareholders' Representative. From and after the
appointment of a successor Escrow Agent pursuant to this Section 11, all
references herein to Escrow Agent shall be deemed to be to such successor Escrow
Agent. Should Buyer and the Shareholders' Representative fail to appoint a
successor Escrow Agent within thirty (30) days of the effective date of any
resignation or termination pursuant to this Section 11, then Escrow Agent may
institute suit in a court of competent jurisdiction to have a successor Escrow
Agent appointed.
12. Definitions. As used herein:
(a) "AWARD NOTICE" means a true copy of the award of the
arbitrators entered in any dispute resolved by arbitration pursuant to
Section 4.
(b) "INDEMNIFICATION CLAIM" means a written declaration by the
Buyer stating (i) that the Buyer has a right to assert an Escrow Claim
under the Merger Agreement, (ii) the facts, circumstances or events
giving rise to such Escrow Claim, and (iii) the amount of the asserted
Loss.
(c) "NOTICE OF RELEASE" means a written declaration, executed
by Buyer and the Shareholders' Representative, specifying the
resolution of a Contested Claim and the disposition to be made of the
Escrowed Funds or any portion thereof that was the subject of such
Contested Claim.
(d) "OBJECTION" means a written objection by the Shareholders'
Representative to an Indemnification Claim stating in reasonable detail
the basis for such objection.
(e) "PROPORTIONATE SHARES" means the respective interest of
each Holder in any amount disbursed to the Holders hereunder, which
interest shall be equal to a fraction, the numerator of which shall be
the sum of (i) the number of such Holder's shares of Lamcor Common
Stock converted into and exchanged for the right to receive a cash
payment from Buyer in accordance with Section 3.1(c) of the Merger
Agreement and (ii) the number of shares of Lamcor Common Stock subject
to such Holder's Lamcor Options or Lamcor Convertible Securities
canceled pursuant to Section 3.5 of the Merger Agreement, and the
denominator of which shall be the sum of (i) the aggregate number of
shares of Lamcor Common Stock so converted and exchanged and (ii) the
aggregate number of shares of Lamcor Common Stock subject to Lamcor
Options or Lamcor Convertible Securities so canceled.
(f) "SECTION 10 EXPENSES" means all amounts paid or payable by
Buyer and/or Holders to the Escrow Agent in accordance with Section 10
hereof.
(g) "WITHDRAWAL NOTICE" means an irrevocable written
declaration (x) withdrawing an Indemnification Claim executed by the
Buyer, or (y) withdrawing an Objection executed by the Shareholders'
Representative.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right or benefit of any
party hereunder may be assigned or transferred by such party without the prior
written consent of all other parties hereto.
(b) Amendment. This Agreement may not be amended or modified without
the prior written consent of all parties.
(c) Waiver. Failure to insist upon strict compliance with any of the
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
(d) Governing Law. Notwithstanding the place where this Agreement may
be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia, without regard for its conflict of laws
doctrine.
(e) Notices. Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) delivered in person or (iv) transmitted by telecopy, at the
address or telecopy number set forth below, or such other address as a party may
provide to the other in accordance with the procedure for notices set forth in
this Section:
If to the Buyer or Lamcor:
Lamcor, Incorporated
Xxxxxxx 000 Xxxxx
Xx Xxxxx, Xxxxxxxxx 00000
Attn: Special Committee of the Board of Directors
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Shareholders' Representative:
Xxxxx X. Xxxxxxx
4900 First Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
3400 City Center
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx XxXxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Escrow Agent:
Norwest Bank Minnesota, N.A.
Norwest Bank Investment Management Trust
0xx & Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx Xxxx
Telephone (612) 667-571
Telecopy: (000) 000-0000
(f) Invalid Provision. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
(g) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
(h) Further Assurances. Each party agrees to execute and deliver all
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
(i) Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.
(j) Person and Gender. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.
(k) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to matters set forth in this Agreement, and
supersedes any prior understanding or agreement, oral or written, with respect
to such matters.
(l) Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
(m) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PACKAGING ACQUISITION LAMCOR INCORPORATED
CORPORATION
By:____________________________________ By_________________________________
Name:__________________________________ Name:______________________________
Title:_________________________________ Title:_____________________________
NORWEST BANK MINNESOTA, N.A.,
as Escrow Agent
By:________________________________
Name:______________________________
Title:_____________________________
-----------------------------------
Xxxxx X. Xxxxxxx,
as Shareholders' Representative
-----------------------------------
Xxxxx X. Xxxxxxx,
as attorney-in-fact for the Holders
SCHEDULE A
The Escrowed Funds shall be invested in the Norwest Ready Cash Investment Fund
Institutional Shares (a money market fund).
SCHEDULE B
The fees and expenses of the Escrow Agent include a one-time fee of $3,000.00,
plus reimbursement of reasonable out-of-pocket expenses of the Escrow Agent
incurred in connection with this Agreement and approved in advance by Buyer.
