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EXHIBIT 10.7
XXXXXX INDEMNIFICATION ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated November 27, 1996 is
among Hicks, Muse, Xxxx & Xxxxx Equity Fund III, L.P., a Delaware limited
partnership (the "Buyer"), Atrium Corporation, a Delaware corporation (the
"Company"), Atrium Companies, Inc., a Delaware corporation ("Xxxxxxxx"), Xxxxxx
X. Xxxxxx in his capacities as Xxxxxx Indemnitor Representative under the
Purchase Agreement (hereinafter defined), Seller Representative under the
Xxxxxx Purchase Agreement (hereinafter defined) and Xxxxxx Holder
Representative under the Xxxxxx Exchange Agreement (hereinafter defined) and
the Buy-Sell Agreement (hereinafter defined) (the "Xxxxxx Indemnitor
Representative"), and Citibank N.A., a national banking association with its
headquarters in New York City, New York (the "Escrow Agent").
RECITALS
A. Pursuant to the Stock Purchase Agreement dated as of November
7, 1996 (the "Purchase Agreement"), by and among HMTF Acquisition Corp (whose
interests under the Purchase Agreement have been assigned to Buyer and HM3
Coinvestors, L.P.), the Company and the Selling Securityholders named therein
(including Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxxx
(collectively, the "Xxxxxx Indemnitors")), the Company has agreed to issue and
sell to Buyer and HM3 Coinvestors, L.P., and Buyer and HM3 Coinvestors, L.P.
have agreed to purchase from the Company (the "Purchase"), 32,000,000 shares of
the Company's Common Stock, par value $0.01 per share ("Common Stock"), upon
the terms and conditions set forth in the Purchase Agreement. Unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned
to them in the Purchase Agreement.
B. Pursuant to the Purchase Agreement, the Xxxxxx Indemnitors
have agreed to indemnify and hold the Buyer Indemnified Parties (as defined in
the Purchase Agreement) harmless from and with respect to certain Buyer
Indemnified Costs (as defined in the Purchase Agreement).
X. Xxxxxxxx is the surviving corporation of a merger of Xxxxxxxx
Companies, Inc., a Texas corporation, with and into FCI Holding Corp., a
Delaware corporation.
D. Pursuant to (i) the Stock Purchase Agreement dated as of
August 22, 1996 (the "Xxxxxx Purchase Agreement") by and among Xxxxxxxx (as
successor by merger to Xxxxxxxx Companies, Inc.) and the Xxxxxx Indemnitors,
and (ii) the Securities Exchange Agreement (the "Xxxxxx Exchange Agreement,"
and collectively with the Xxxxxx Purchase Agreement, the "Xxxxxx Agreements")
dated as of August 22, 1996 by and among the Company, Xxxxxxxx (as successor by
merger to Xxxxxxxx Companies, Inc.), the Xxxxxx Indemnitors and the FCI Holders
(as defined in the Xxxxxx Exchange Agreement), the Xxxxxx Indemnitors have
agreed to indemnify and hold Atrium, Xxxxxxxx, the FCI Holders and each of the
Companies (as defined in the Xxxxxx Purchase Agreement) (collectively, the
"Xxxxxx Indemnitees") harmless from and with respect to certain Losses (as
defined in Section 13.1 of the Xxxxxx Purchase Agreement and Section 11.1 of
the Xxxxxx Exchange Agreement, and, collectively with the Buyer Indemnified
Costs, the "Costs").
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E. In order to secure the indemnification obligations of the
Xxxxxx Indemnitors to the Xxxxxx Indemnitees under the Xxxxxx Agreements, the
Company, Xxxxxxxx (as successor by merger to Xxxxxxxx Companies, Inc.), the
Xxxxxx Indemnitors and Xxxxxxx, Xxxx & Xxxxx LLP entered into the Buy-Sell
Agreement dated as of September 30, 1996 (the "Buy-Sell Agreement"), pursuant
to which certain shares of capital stock owned by the Xxxxxx Indemnitors were
delivered to Xxxxxxx, Xxxx & Xxxxx LLP and held by Xxxxxxx, Xxxx & Xxxxx LLP
pursuant to the terms thereof. The Company, Xxxxxxxx, the Xxxxxx Indemnitors
and Xxxxxxx, Xxxx & Xxxxx LLP have entered into the Amendment to Buy-Sell
Agreement made the date hereof (the "Buy-Sell Amendment"), pursuant to which
such parties have agreed, among other things, that $3,000,000 which would
otherwise be received by the Xxxxxx Indemnitors pursuant to the Purchase
Agreement shall be delivered to the Escrow Agent to be held, administered and
disposed of in accordance with the terms and conditions set forth in this
Agreement.
F. It is a condition precedent to the consummation of the
Purchase that the Buyer, the Company, Xxxxxxxx, the Xxxxxx Indemnitor
Representative, on behalf of the Xxxxxx Indemnitors, and the Escrow Agent
execute and deliver this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the recitals and of the respective
agreements and covenants set forth herein and in the Purchase Agreement, and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
Section 1. Establishment of Atrium Escrow Account. At the
Closing (as defined in the Purchase Agreement), the Company will, and the
Xxxxxx Indemnitor Representative hereby instructs the Company to, deliver to
the Escrow Agent $3,000,000 in cash (the "Escrow Property") by wire transfer of
immediately available funds to an account designated by the Escrow Agent as the
"Xxxxxx Escrow Account." The Escrow Property shall be held, administered and
disposed of by the Escrow Agent in accordance with the terms and conditions
hereinafter set forth.
Section 2. Investment of Proceeds of Escrow Property.
(a) The Escrow Agent shall from time to time invest and
reinvest the Escrow Property, if any, in the Pacific Horizon Treasury Only
Fund, or in such other of the following investments as the Buyer and the Xxxxxx
Indemnitor Representative may from time to time elect by joint notice in
writing ("Permitted Investments") from each of the following persons to the
Escrow Agent: Xxxxxxxx X. Xxxxxx, Xx., on behalf of the Buyer, and the Xxxxxx
Indemnitor Representative.
(i) Any U.S. Government or U.S. Government Agency
security;
(ii) Any commercial paper rated A1/P1 or better;
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(iii) Any certificate of deposit or time deposit in
any bank with a long-term debt rating of A or
better from Moody's or Standard & Poor's;
(iv) The Citibank Insured Money Market Deposit
Account; or
(v) The following institutional money market
funds:
(1) Xxxxxxxx Treasury Cash Management
Fund
(2) Provident T-Fund Dollar Account
(3) Federated Treasury Obligations Fund
(4) AIM Treasury Portfolio
(b) Any interest or other income received on such
investment and reinvestment of the Escrow Property shall be set aside and
distributed as provided in Section 2(d).
(c) The Escrow Agent will act upon investment
instructions the day that such instructions are received, provided the requests
are communicated within a sufficient amount of time to allow the Escrow Agent
to make the specified investment. Instructions received after an applicable
investment cutoff deadline will be treated as being received by the Escrow
Agent on the next business day, and the Escrow Agent shall not be liable for
any loss arising directly or indirectly, in whole or in part, from the
inability to invest Escrow Property on the day the instructions are received.
The Escrow Agent shall not be liable for any loss incurred by the actions of
third parties or by any loss arising by error, failure or delay in making of
an investment or reinvestment, unless such error, failure or delay results from
the Escrow Agent's gross negligence or willful misconduct, and the Escrow Agent
shall not be liable for any loss of principal or income in connection
therewith. As and when the Escrow Property or any portion thereof is to be
released under this Agreement, the Escrow Agent shall cause the Escrow Property
to be converted into cash, and the Escrow Agent shall not be liable for any
loss of principal or income in connection therewith. None of the parties
hereto shall be liable for any loss of principal or income due to the choice of
Permitted Investments in which the Escrow Property is invested or the choice of
Permitted Investments converted into cash pursuant to this Section 2(c).
(d) Except as otherwise provided herein, all interest,
dividends and other income earned on the Escrow Property shall be distributed
upon the termination of this Agreement pursuant to Section 16 in accordance
with the joint written instructions received by the Escrow Agent and signed by
each of the Xxxxxx Indemnitor and Buyer. Subject to the provisions of Section
2(e) below, the Escrow Agent shall distribute to the Company, on a quarterly
basis as of the last day of March, June, September and December, upon written
demand of the Company, an amount equal to the product of the Effective Tax Rate
(as defined below) times the taxable interest, dividends and other income
earned on the Escrow Property for the quarter. For purposes of determining
taxable interest, dividends and other income, the Escrow Agent shall provide an
itemized report of all interest, dividends and other income earned on the
Escrow Property for the quarter to the Buyer, the Company and the Xxxxxx
Indemnitor Representative at the close of business of the last day of the end
of each such quarter, and the Company shall provide a summary to the Escrow
Agent of all such income that is taxable. As used in this Agreement, the
"Effective Tax Rate" shall mean the actual effective
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combined federal, state and local income tax rate applicable to the Company as
reasonably computed and provided to the Escrow Agent by the Company.
(e) For tax purposes, the Escrow Property shall be deemed
property of the Company and all interest, dividends and other income earned on
the Escrow Property shall be the income of the Company. The Company and the
Xxxxxx Indemnitors shall file Tax Returns and the Escrow Agent shall file a
Form 1099 consistent with such treatment. In the event that the Internal
Revenue Service or any other governmental authority successfully claims that
the interest, dividends and other income earned on the Escrow Property is
taxable to the Xxxxxx Indemnitor Representative or any of the Xxxxxx
Indemnitors for a taxable period, the Company shall promptly pay to the Xxxxxx
Indemnitor Representative or such Xxxxxx Indemnitor all amounts paid by the
Escrow Agent to the Company pursuant to Section 2(d) for such taxable period,
plus interest on such amounts at the rate specified by section 6621(a)(2) of
the Code and corresponding provisions of applicable state and local laws to the
extent such interest has been received by or credited to the Company, and the
Company shall thereafter no longer have any right to receive payments under
Section 2(d).
Section 3. Release of the Escrow Property to Indemnitees. The
Escrow Agent shall disburse to the Buyer (for its own account or for the
account of any Indemnitee, as defined in Section 8) such portion of the Escrow
Property as instructed pursuant to this Section 3, which amount Buyer agrees to
use, or to deliver to such Indemnitee to use, to pay the Costs for which the
Indemnitee is entitled to be indemnified pursuant to Article X of the Purchase
Agreement, Section 13 of the Xxxxxx Purchase Agreement or Section 11 of the
Xxxxxx Exchange Agreement, as the case may be. Payment shall be made not more
than three business days after: (a) the delivery to the Escrow Agent of joint
written instructions signed by the Buyer and the Xxxxxx Indemnitor
Representative specifying an amount to be paid to an Indemnitee or (b) the
delivery to the Escrow Agent and the Xxxxxx Indemnitor Representative of a copy
of a Final Determination (as defined below) establishing the Indemnitee's right
to reimbursement with respect to such Costs. A "Final Determination" shall
mean a final non-appealable judgment of a court of competent jurisdiction,
accompanied by an opinion of counsel for the presenting party reasonably
satisfactory to the Escrow Agent to the effect that such judgment is a Final
Determination.
Section 4. No Distribution of Expenses. Neither the Xxxxxx
Indemnitor Representative, Buyer nor the Company shall be entitled to
reimbursement out of the Escrow Property for any costs and expenses incurred by
them in connection with exercising their rights or performing their duties
under this Agreement.
Section 5. Segregation of the Fund. (a) (i) Notwithstanding any
other provision of this Agreement to the contrary, from and after such time as
the Escrow Agent shall receive notification that the aggregate amount of Buyer
Indemnified Costs (as defined in the Purchase Agreement) with respect to all
Buyer Claims (as defined in Section 8) asserted by the Indemnitees exceeds the
Minimum Loss (as defined in the Purchase Agreement), the Escrow Agent shall
segregate from the Xxxxxx
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Escrow Account and transfer into a separate account maintained by the Escrow
Agent for the benefit of the Company, the Buyer and the Xxxxxx Indemnitors (the
"Buyer Pending Claims Account") the portion of the Escrow Property that may be
necessary to satisfy in full all Buyer Pending Claims (as defined below) in
excess of the Minimum Loss, and shall hold such portion in accordance with this
Section 5; provided, that the Escrow Agent shall segregate from the Xxxxxx
Escrow Account and transfer to the Buyer Pending Claims Account any portion of
the Escrow Property which an Indemnitee asserts in a written notice is
necessary to satisfy any Unlimited Claim, regardless of whether such amount
exceeds the Minimum Loss. "Buyer Pending Claims" shall mean unresolved Buyer
Claims that are the subject of Claim Notices delivered under Section 8(d).
(ii) Notwithstanding any other provision of this Agreement
to the contrary, from and after such time as the Escrow Agent shall
receive notification that the aggregate amount of Losses (as defined
in Section 13.1 of the Xxxxxx Purchase Agreement and Section 11.1 of
the Xxxxxx Exchange Agreement) with respect to all Xxxxxxxx Claims (as
defined in Section 8) asserted by the Indemnitees exceeds the
limitations as to amount set forth in (x) Section 13.5(a) of the
Xxxxxx Purchase Agreement, or (y) Section 11.6(b) of the Xxxxxx
Exchange Agreement, as the case may be, the Escrow Agent shall
segregate from the Xxxxxx Escrow Account and transfer into a separate
account maintained by the Escrow Agent for the benefit of the Company
and the Xxxxxxxx Indemnitees (the "Xxxxxxxx Pending Claims Account",
and collectively with the Buyer Pending Claims Account, the "Pending
Claims Accounts") the portion of the Escrow Property that may be
necessary to satisfy in full all Xxxxxxxx Pending Claims (as defined
below) in excess of such limitations, and shall hold such portion in
accordance with this Section 5; provided, that the Escrow Agent shall
segregate from the Xxxxxx Escrow Account and transfer to the Xxxxxxxx
Pending Claims Account any portion of the Escrow Property which an
Indemnitee asserts in a written notice to the Escrow Agent are
necessary to satisfy any Xxxxxx Agreements Unlimited Claim or Cash Tax
Claim, regardless of whether such amount exceeds the limitations as to
amount described in this sentence. "Xxxxxxxx Pending Claims" shall
mean unresolved Xxxxxxxx Claims that are the subject of Claim Notices
delivered under Section 8(d). "Buyer Pending Claims" and "Xxxxxxxx
Pending Claims" are some times collectively referred to as "Pending
Claims."
(b) Any portion of the Escrow Property segregated under
Section 5(a) shall continue to be segregated by the Escrow Agent until the
Escrow Agent is directed to release such Escrow Property by (i) written
instructions signed by the Buyer and the Xxxxxx Indemnitor Representative
instructing the Escrow Agent how to pay all or any portion of such segregated
Escrow Property or (ii) a copy of a Final Determination establishing the
Indemnitee's or the Xxxxxx Indemnitor Representative's right to reimbursement
under Section 8. The Escrow Agent shall be entitled to rely conclusively on the
written advice of counsel to the Buyer or the Xxxxxx Indemnitor Representative,
as the case may be, that the judgment delivered to the Escrow Agent pursuant to
this Section 5(b) is a Final Determination. Notwithstanding the foregoing, if
there is no Escrow Property remaining except the Escrow Property held in the
Pending Claims Accounts, the Escrow Agent is authorized and directed to release
from the Pending Claims Accounts any amount that is at the time necessary to
make a payment required under Section 2.
Section 6. Distribution of Escrow Property to Xxxxxx
Indemnitors. Not later than the second business day after March 30, 1998 (the
"Expiration Date"), the Escrow Agent shall distribute from the Escrow Property,
to the extent sufficient therefor, the Escrow Remainder in accordance with
joint written instructions received by the Escrow Agent and signed by Buyer and
the Xxxxxx Indemnitor Representative. For purposes hereof, the "Escrow
Remainder" shall mean an amount equal to $3,000,000 (plus accrued and
undistributed earnings on the Escrow Property) minus the sum
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of (a) the total amount of Escrow Property that is then being segregated with
respect to Pending Claims under Section 5 plus (b) the amount of any Escrow
Property that was previously paid by the Escrow Agent to an Indemnitee with
respect to Buyer Claims, plus (c) the amount of any Escrow Property that was
previously paid by the Escrow Agent to an Indemnitee with respect to Xxxxxxxx
Claims, plus (d) the distributions prior to termination of this Agreement made
pursuant to Section 2(d). Any amounts segregated with respect to Pending
Claims shall be released as provided in Section 5(b).
Section 7. Taxpayer Identification Numbers. The parties
acknowledge that payment of any interest earned on the Escrow Property invested
in this escrow, or the distribution of any other amounts under this escrow,
will be subject to backup withholding penalties unless a properly completed
Internal Revenue Service Form W-8 or W-9 certification is submitted to the
Escrow Agent by the party entitled to receive such payment. Any Form W-8 or
W-9 certification shall be submitted to the Escrow Agent on or before the date
hereof.
Section 8. Claims Against the Escrow Property. From and after
the Closing, but subject to the conditions and limitations set forth in this
Agreement, the Purchase Agreement and the Xxxxxx Agreements, the Buyer
Indemnified Parties, with respect to the Buyer Indemnified Costs, the Xxxxxx
Indemnitees, with respect to Losses, and their respective successors and
assigns (collectively, the "Indemnitees") shall be entitled to reimbursement
out of the Escrow Property for any and all (i) Buyer Indemnified Costs, as
provided in Article X of the Purchase Agreement (each, a "Buyer Claim") and
(ii) Losses as provided in Section 13 of the Xxxxxx Purchase Agreement and
Section 11 of the Xxxxxx Exchange Agreement (each, a "Xxxxxxxx Claim," and
collectively with the Buyer Claims, the "Claims").
(a) Claims against the Escrow Property may be made by the
Buyer, on its own behalf or on behalf of any other Indemnitee, for payment with
respect to any Buyer Indemnified Costs or Losses, as the case may be. No
person other than Buyer shall be permitted to make a claim on behalf of the
Indemnitees against the Escrow Property for Buyer Indemnified Costs or Losses
under this Section 8 unless Buyer provides written notice to Escrow Agent and
the other parties hereto that Buyer has authorized another Indemnitee to make
such claims.
(b) Buyer shall promptly notify the Xxxxxx Indemnitor
Representative and the Escrow Agent in writing (a "Claim Notice") of any sums
which Buyer claims are subject to reimbursement out of the Escrow Property.
Failure of Buyer to exercise promptness in such notification shall not amount
to a waiver of such Claim unless the resulting delay materially prejudices the
position of the Xxxxxx Indemnitors with respect to such Claim. Such Claim
Notice shall consist of a description of the Claim and specify each Indemnitee
and the amount (which may be estimated) of the Claim in United States dollars.
(c) The Xxxxxx Indemnitor Representative may contest the
Claims specified in the Claim Notice (or any portion thereof) by giving Escrow
Agent and Buyer written notice of such contest within ten days after receipt by
the Xxxxxx Indemnitor Representative of the Claim Notice from Buyer, which
notice of contest shall include a statement of the grounds of such contest and
shall state the amount of any such Claim by Buyer that the Xxxxxx Indemnitor
Representative does not dispute.
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(d) Payment of any Claim for reimbursement to which the
Escrow Property is subject shall become due and payable as follows:
(i) If, at 5:00 p.m.( Dallas, Texas time), on the
fifteenth business day after receipt by the Escrow Agent of a Claim Notice, the
Escrow Agent has not received written notice from the Xxxxxx Indemnitor
Representative that the Xxxxxx Indemnitor Representative contests the Claim (or
portion thereof) pursuant to Section 8(c) above, the Claim (or the uncontested
portion thereof) shall be paid by the Escrow Agent to the Indemnitee named in
the Claim Notice;
(ii) If the Xxxxxx Indemnitor Representative
contests the Claim (or portion thereof) pursuant to Section 8(c) within fifteen
business days after receipt by the Escrow Agent of a Claim Notice and the Claim
(or portion thereof) is thereafter settled by written agreement of the Xxxxxx
Indemnitor Representative and Buyer, the amount provided in such written
agreement shall, upon receipt by the Escrow Agent of a copy of such written
agreement, be promptly paid by the Escrow Agent pursuant to the terms of such
written agreement; and
(iii) If the Xxxxxx Indemnitor Representative
contests the Claim (or portion thereof) pursuant to Section 8(c) hereof within
fifteen business days after receipt by the Escrow Agent of a Claim Notice and a
Final Determination is thereafter entered with respect to such Claim (or
portion thereof), such amount of the Final Determination shall be promptly paid
by the Escrow Agent pursuant to the terms of such Final Determination.
(e) Notwithstanding any other provision in this
Agreement, the Xxxxxx Indemnitors shall be liable to the Buyer Indemnified
Parties and the Xxxxxx Indemnitees for no more than $3,000,000 in the aggregate
for Buyer Indemnified Costs and Losses under the Xxxxxx Agreements, except for
(x) Buyer Indemnified Costs arising from Unlimited Claims; and (y) Losses
arising from Xxxxxx Agreements Unlimited Claims and Cash Tax Claims.
Section 9. Expiration of Claim for Reimbursement from Xxxxxx
Escrow Account. Any claim for reimbursement from the Xxxxxx Escrow Account
that is not asserted in writing by Buyer or any Indemnitee in a writing which
is received by the Xxxxxx Indemnitor Representative and the Escrow Agent prior
to 5:00 p.m. (Dallas, Texas time) on the Expiration Date may not be asserted or
pursued and shall be irrevocably waived, and neither Buyer nor any Indemnitee
shall be entitled to make any claim for reimbursement with respect thereto.
Section 10. Appointment of Xxxxxx Indemnitor Representative.
Xxxxxx X. Xxxxxx has been appointed, pursuant to the Purchase Agreement and the
Xxxxxx Agreements, as the agent and representative of the Xxxxxx Indemnitors.
Section 11. Language Concerning the Escrow Agent. To induce the
Escrow Agent to act hereunder, it is further agreed by Buyer, the Company,
Xxxxxxxx and the Xxxxxx Indemnitor Representative that:
(a) The Escrow Agent shall not be under any duty to give
the Escrow Property held by it hereunder any greater degree of care than it
gives its own similar property and shall not
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be required to invest any Escrow Property held hereunder except as directed in
this Agreement. Uninvested Escrow Property held hereunder shall not earn or
accrue interest.
(b) This Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Agreement.
(c) The Escrow Agent shall not be liable, except for its
own gross negligence or willful misconduct and, except with respect to claims
based upon such gross negligence or willful misconduct that are successfully
asserted against the Escrow Agent, Buyer, the Company and the Xxxxxx Indemnitor
Representative shall jointly and severally indemnify and hold harmless the
Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, the Escrow Agent shall in
no event be liable in connection with its investment or reinvestment of any
cash held by it hereunder in good faith, in accordance with the terms hereof,
including without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment
of the Escrow Property or any loss of interest incident to any such delays.
This Section 11(c) shall survive notwithstanding any termination of this
Agreement or the resignation of the Escrow Agent.
(d) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so.
(e) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Agreement and shall not be
liable for any action taken or omitted in accordance with such advice.
(f) The Escrow Agent does not have any interest in the
Escrow Property deposited hereunder but is serving as escrow holder only and
having only possession thereof. The Company and the Xxxxxx Indemnitors shall
on a 50%/50% basis pay or reimburse the Escrow Agent upon request for any
transfer taxes or other taxes relating to the Escrow Property incurred in
connection herewith and shall indemnify and hold harmless the Escrow Agent from
any amounts that it is obligated to pay in the way of such taxes. Any payments
of income from the Escrow Property shall be subject to withholding regulations
then in force with respect to United States taxes. It is understood that the
Escrow Agent shall be responsible for income reporting only with respect to
income earned on investment of the Escrow Property and is not responsible for
any other reporting. This Section 11(f) shall survive notwithstanding any
termination of this Agreement or the resignation of the Escrow Agent.
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(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise
any party as to the wisdom in selling or retaining or taking or refraining from
any action with respect to any securities or other property deposited
hereunder.
(i) The Escrow Agent (and any successor Escrow Agent) may
at any time resign as such by delivering the Escrow Property to any successor
Escrow Agent jointly designated by the other parties hereto in writing or to
any court of competent jurisdiction, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Agreement. The resignation of the Escrow Agent will take effect on
the earlier of (i) the appointment of a successor (including a court of
competent jurisdiction) or (ii) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be
to safekeep the Escrow Property until receipt of a designation of successor
Escrow Agent or a joint written disposition instruction by the other parties
hereto or a Final Determination.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of the arbitrators or any third party contemplated
herein as a means to resolve disputes and may rely without any liability upon
the contents thereof.
(k) In the event of any disagreement between the Buyer or
any other Indemnitee and the Xxxxxx Indemnitor Representative resulting in
adverse claims or demands being made in connection with the Escrow Property, or
in the event that the Escrow Agent in good faith is in doubt as to what action
it should take hereunder, the Escrow Agent shall be entitled to retain the
Escrow Property until the Escrow Agent shall have received (i) a Final
Determination directing delivery of the Escrow Property or (ii) a written
agreement executed by the Buyer and the Xxxxxx Indemnitor Representative
directing delivery of the Escrow Property, in which event the Escrow Agent
shall disburse the Escrow Property in accordance with such Final Determination
or agreement. The Escrow Agent shall act on such Final Determination or
agreement without further question.
(l) The compensation of the Escrow Agent (as payment in
full) for the services to be rendered by the Escrow Agent hereunder shall be
the amount of $4,000 at the time of execution of this Agreement and $3,000
annually thereafter to be paid by the Company and the Xxxxxx Indemnitors on a
50%/50% basis, together with reimbursement for all reasonable and documented
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). All fees and expenses of the Escrow Agent
hereunder, other than initial fee paid upon the execution hereof, shall, if not
otherwise paid in accordance with the immediately preceding sentence, be paid
first out of interest, dividends, and other income earned on the Escrow
Property, if any, and then, to the extent of any shortfall, by the Company and
the Xxxxxx Indemnitors on a 50%/50% basis. Any fees or expenses of the Escrow
Agent or its counsel which are not paid as provided for herein may be taken
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from any property held by the Escrow Agent hereunder. It is understood that
the Escrow Agent's fees may be adjusted from time to time to conform to its
then current guidelines.
(m) The Buyer, the Company, Xxxxxxxx and the Xxxxxx
Indemnitor Representative hereby irrevocably submit to the jurisdiction of any
New York State or federal court sitting in the Borough of Manhattan in New York
City in any action or proceeding arising out of or relating to this Agreement,
and the parties hereby irrevocably agree that all claims in respect of such
action or proceeding shall be heard and determined in such a New York State or
federal court. The other parties hereby consent to and grant to any such court
jurisdiction over the persons of such parties and over the subject matter of
any such dispute and agree that delivery or mailing of any process or other
papers in the manner provided herein above, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
(n) This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto and their respective successors and
assigns, heirs, administrators and representatives and shall not be enforceable
by or inure to the benefit of any third party, except as provided in Section
11(i) with respect to a resignation by the Escrow Agent. No party may assign
any of its rights or obligations under this Agreement without the written
consent of the other parties. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ITS RULE AS TO CONFLICTS OF LAW).
(o) This Agreement may only be modified by a writing
signed by all of the parties hereto, and no waiver hereunder shall be effective
unless in a writing signed by the party to be charged.
(p) The other parties hereto authorize the Escrow Agent,
for any securities held hereunder, to use the services of any United States
central securities depository it deems appropriate, including, but not limited
to, the Depositary Trust Company and the Federal Reserve Book Entry System.
Section 12. Notices. All notices, requests, consents or other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given or delivered by any party (a) when
received by such party if delivered by hand, (b) upon confirmation when
delivered by telecopy (any communication delivered by telecopy shall be
followed promptly with an original thereof), (c) within one day after being
sent by recognized overnight delivery service, or (d) within three business
days after being mailed by first-class mail, postage prepaid, and in each case
addressed as follows:
(i) if to the Buyer, the Company, Xxxxxxxx or to any
other Indemnitee:
Xxxxxxxx X. Xxxxxx, Xx.
Hicks, Muse, Xxxx & Xxxxx Equity Fund III, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
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with copies to:
Xxxxxxx X. Xxxxxxxx
Atrium Corporation
0000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
and
Xxxxxxx X. Xxxxxxx
Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
(ii) if to the Xxxxxx Indemnitor Representative, to:
Xxxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
with copies to
Xxxx X. Xxxxxx, Xx., Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
and to
Xxxxxx X. Xxxx, Esq.
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
(iii) if to the Escrow Agent, to:
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Citibank N.A.
Corporate Trust/Escrow Administration
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone Number - (000) 000-0000
Fax Number - (000) 000-0000
Telex Numbers:
Foreign - 420392 FNC UI
Domestic - 127001 Citibank NYKB
Reference in Telex "Citiswitch - NYCTA"
Federal Reserve Fund Transfers:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
For credit to A/C 36855852
Escrow Administration Concentration Account
for further credit(enter Account Number assigned)
Attn: Xxxx Xxxxxx
ABA Number: 0000-0000-0
Any party by written notice to the other parties pursuant to this Section 12
may change the address or the persons to whom notices or copies thereof shall
be directed.
Section 13. Waivers. Any waiver by any party hereto of any
breach of or failure to comply with any provision of this Agreement by any
other party hereto shall be in writing and shall not be construed as, or
constitute, a continuing waiver of such provision, or a waiver of any other
breach of, or failure to comply with, any other provision of this Agreement.
Section 14. Construction. The headings in this Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement. Unless otherwise stated,
references to Sections and Exhibits are references to Sections and Exhibits of
this Agreement.
Section 15. Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than Buyer, the Company, the Indemnitees, the Xxxxxx Indemnitor
Representative, the Xxxxxx Indemnitors and the Escrow Agent any rights or
remedies under, or by reason of, this Agreement.
Section 16. Termination. This Agreement shall terminate at the
time of the final distribution by the Escrow Agent of all Escrow Property in
accordance with the provisions of this Agreement.
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Section 17. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute a single instrument.
Section 18. Waiver of Offset Rights. The Escrow Agent hereby
waives any and all rights to offset that it may have against the Escrow
Property including, without limitation, claims arising as a result of any
claims, amounts, liabilities, costs, expenses, damages, or other losses
(collectively "Escrow Agent Claims") that the Escrow Agent may be otherwise
entitled to collect from any party to this Agreement or any Xxxxxx Indemnitor,
other than Escrow Agent Claims arising under this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first
above written.
BUYER:
HICKS, MUSE, XXXX & XXXXX EQUITY FUND
III, L.P.
By: HM3/GP Partners, L.P.,
its General Partner
By: Xxxxx, Muse GP Partners III,
L.P.
its General Partner
By: Xxxxx, Muse Fund III
Incorporated,
its General Partner
By: /s/ XXXXXX X. XXXXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
Vice President
THE COMPANY:
ATRIUM CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President
XXXXXXXX:
ATRIUM COMPANIES, INC.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President
[SIGNATURE PAGE TO XXXXXX
INDEMNIFICATION ESCROW AGREEMENT]
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XXXXXX INDEMNITOR REPRESENTATIVE:
on behalf of the Xxxxxx Indemnitors
By: /s/ XXXXXX X. XXXXXX
-------------------------------------
Xxxxxx X. Xxxxxx
AGREED AND ACCEPTED:
Date:
CITIBANK, N.A.
ESCROW AGENT
By: /s/ XXXXXX X. XXXXXXXXXX
-------------------------
Name: Xxxxxx X. Xxxxxxxxxx
-----------------------
Title: Senior Trust Officer
----------------------
[SIGNATURE PAGE TO XXXXXX
INDEMNIFICATION ESCROW AGREEMENT]
S-2
