ESCROW AGREEMENT
ESCROW AGREEMENT dated as of October 16, 1997, among
XXXXXXXX CORPORATION, a New York corporation ("Xxxxxxxx"), XXXXXX ACQUISITION,
INC., a New York corporation ("Acquisition"), and PROSKAUER ROSE LLP, a New
York limited liability partnership (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Xxxxxxxx and Acquisition have entered into an
Agreement and Plan of Merger dated as of even date herewith (the "Agreement")
(capitalized terms used but not defined herein shall have the meanings given
to them in the Agreement);
WHEREAS, pursuant to Section 8.01 of the Agreement,
Acquisition is today delivering to the Escrow Agent the cash sum of $5 million
into escrow, with the Escrow Agent to hold and deliver such amount pursuant to
this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent.
The Escrow Agent agrees to act as the Escrow Agent as set
forth herein, and as such Escrow Agent to receive, hold, administer and
dispose of the $5 million deposited simultaneously herewith by Acquisition
with the Escrow Agent as set forth herein (the "Escrow Deposit") and the
Escrow Agent hereby acknowledges receipt of such Escrow Deposit. All interest
and other proceeds earned on the Escrow Deposit, as well as interest and
proceeds earned thereon, are hereinafter referred to as the "Interest." The
Escrow Deposit and the Interest are hereinafter collectively referred to as
the "Escrow Amount."
2. Deposit of Escrow Deposit; General Intention.
Acquisition herewith deposits the Escrow Deposit with the
Escrow Agent. The Escrow Agent hereby acknowledges receipt of $5 million as
the Escrow Deposit and agrees to hold, administer and deliver the same in
accordance with this Escrow Agreement. The Escrow Agent shall have no
responsibility with respect to the sufficiency of the arrangements
contemplated by this Escrow Agreement to accomplish the intentions of the
parties hereto. The parties agree that the Escrow Amount may be held on behalf
of the Escrow Agent by Xxxxxx Guaranty Trust Company, Citibank, N.A. or the
Bank of New York (each, an "Eligible Bank" and collectively, the "Eligible
Banks"). The provisions of this Section 2 are subject to the provisions of
Section 4 hereof.
3. Investment.
The Escrow Agent shall invest the Escrow Deposit in an
interest-bearing account. The Escrow Agent is hereby authorized to invest and
reinvest the Escrow Amount in any of the
following forms of investment as the Escrow Agent shall select: U.S. Treasury
Notes or interest bearing accounts of an Eligible Bank or "money market"
accounts of an Eligible Bank in each case with maturity dates not later than
30 days after the date of investment.
4. Release of Escrow Amount.
The Escrow Agent shall hold the Escrow Amount until it
delivers the Escrow Amount as provided in this Section 4 as follows:
(a) Upon the receipt, by Escrow Agent, of written
instructions signed by both Xxxxxxxx and Acquisition directing delivery of the
Escrow Amount, then the Escrow Agent shall deliver the Escrow Amount as so
directed in such instructions.
(b) If the Escrow Agent receives written notice
signed by Xxxxxxxx alone stating that Xxxxxxxx is entitled to the Escrow
Deposit, the Escrow Agent shall deliver personally or by overnight delivery or
by United States certified or registered mail, return receipt received, a copy
thereof to Acquisition and, unless the Escrow Agent has received a written
objection from Acquisition within 10 business days after Acquisition's receipt
of such delivery, the Escrow Agent shall deliver the Escrow Deposit to
Xxxxxxxx. If the Escrow Agent so receives a written objection from
Acquisition, the Escrow Agent shall send a copy of such written objection to
Xxxxxxxx by overnight delivery and shall continue to hold the Escrow Deposit
until it shall have received written instruction signed by both Xxxxxxxx and
Acquisition or a final non-appealable order of a court of competent
jurisdiction directing delivery of the Escrow Amount, in which case the Escrow
Agent shall deliver the Escrow Deposit in accordance with such instructions or
such order.
(c) If the Escrow Agent receives written notice
signed by Acquisition alone stating that Acquisition is entitled to the Escrow
Amount, the Escrow Agent shall deliver personally or by overnight delivery or
by United States certified or registered mail, return receipt received, a copy
thereof to Xxxxxxxx and, unless the Escrow Agent has received a written
objection from Xxxxxxxx within 10 business days after Xxxxxxxx'x receipt of
such delivery, the Escrow Agent shall deliver the Escrow Amount to
Acquisition. If the Escrow Agent so receives a written objection from
Xxxxxxxx, the Escrow Agent shall send a copy of such written objection to
Acquisition by overnight delivery and shall continue to hold the Escrow Amount
until it shall have received written instructions signed by both Xxxxxxxx and
Acquisition or a final non-appealable order of a court of competent
jurisdiction directing delivery of the Escrow Amount, in which case the Escrow
Agent shall deliver the Escrow Amount in accordance with such instructions or
such order.
(d) Upon delivery of the Escrow Deposit to Xxxxxxxx
pursuant to this Section 4, the Escrow Agent shall deliver the Interest
thereon to Acquisition in accordance with written instructions signed by
Acquisition.
(e) Anything in this Escrow Agreement to the
contrary notwithstanding, the Escrow Agent may at any time deposit the Escrow
Amount with the clerk of any court of
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competent jurisdiction upon commencement of an action in the nature of
interpleader or in the course of any court proceedings.
Upon any delivery or deposit of the Escrow Amount as provided in this Section
4, the Escrow Agent shall thereupon be released and discharged from any and
all further obligations arising in connection with this Escrow Agreement. In
the event that any investment matures at a date later than the date upon which
either Xxxxxxxx or Acquisition may be entitled to the proceeds thereof, the
party entitled to such proceeds shall have the option either: (i) to compel
delivery of the proceeds thereof and bear the risk of loss of interest thereon
or the cost of arranging for the sale or repurchase of any investment or (ii)
permit the Escrow Agent to retain the investment until the maturity thereof.
5. Concerning the Escrow Agent
The Escrow Agent has been induced to accept its duties under
this Escrow Agreement by the following terms and conditions:
(a) 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. Xxxxxxxx and Acquisition
jointly and severally shall indemnify and hold harmless the Escrow Agent (and
any successor escrow agent) from and against any and all claims, liabilities,
losses, damages, costs, taxes (including, without limitation, interest and
penalties thereon), reasonable attorneys' fees (which term, as used in this
Escrow Agreement shall include, without limitation, such Escrow Agent's normal
hourly charges when acting as attorneys for the Escrow Agent) and other
expenses whatsoever arising out of or in connection with this Escrow
Agreement. Without limiting the foregoing, in no event shall the Escrow Agent
be liable for any matter or thing relating to its investment or reinvestment
of the Escrow Amount in accordance with the provisions of this Escrow
Agreement, including without limitation, any loss of principal or failure to
earn interest on the Escrow Amount, any claim that a higher rate of return
could have been obtained, any delays in the investment or reinvestment of the
Escrow Amount or any loss of principal or interest incident to any such delays
or to the repurchase or sale of any certificate of deposit or Treasury Xxxx or
Note.
(b) In the event of any disagreement among the
parties to this Escrow Agreement, or among them or any one of them and any
other person, resulting in adverse claims or demands being made in connection
with the Escrow Amount, 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 may, at
its option, refuse to comply with any claims or demands on it (but nothing
herein shall obligate the Escrow Agent so to do).
(c) The Escrow Agent shall be entitled to rely upon
any 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 of
the service thereof and irrespective of any facts the Escrow Agent may know or
be deemed to know in any other capacity. The Escrow Agent may act in reliance
upon any instrument
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or signature believed by it to be genuine and may assume that any person
purporting to give any notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
(d) The Escrow Agent shall have no duties or
responsibilities except those expressly set forth in this Escrow Agreement.
The Escrow Agent shall not have any obligations arising out of or be bound by
the provisions of any other agreement, written or oral, including without
limitation the Agreement.
(e) Xxxxxxxx and Acquisition acknowledge that the
Escrow Agent has represented Xxxxxxxx and its affiliates in connection with
the Agreement and this Escrow Agreement and may continue to represent Xxxxxxxx
or its affiliates in connection with the Agreement and this Escrow Agreement
and the transactions contemplated pursuant to each such Agreement, including,
without limitation in the event of disputes arising thereunder. Xxxxxxxx and
Acquisition expressly agree that the Escrow Agent shall not be precluded from
or restricted in any manner whatsoever from representing Xxxxxxxx or any of
its affiliates or otherwise acting as attorneys for Xxxxxxxx or any of its
affiliates in any matter, including without limitation any court proceeding or
other matter related to the Agreement or the transactions contemplated
thereby, or this Escrow Agreement, or the Escrow Amount, whether or not there
is a dispute between Xxxxxxxx and Acquisition with respect thereto. Xxxxxxxx
and Acquisition hereby irrevocably consent to any such representation and
waive any conflict or appearance of conflict with respect thereto.
(f) Acquisition shall report as taxable income any
taxable income resulting from the investment of the Escrow Amount. At the
option of the Escrow Agent, the account in which the Escrow Amount is held may
indicate Acquisition's name and/or its Federal taxpayer I.D. number
(13-397-0392). The Escrow Agent may deduct or withhold from the Escrow Amount
or any payment hereunder any amount that it in good faith estimates is owed to
the Internal Revenue Service or to any other taxing authority by either the
Escrow Amount or by any party that has an interest in the Escrow Amount, and
may in its discretion pay over to the Internal Revenue Service or such other
taxing authority all or part of any such amount that it has deducted or
withheld. To the extent that the Escrow Agent may become liable for the
payment of taxes in respect of income resulting from the investment of the
Escrow Amount, or any payment made hereunder, the Escrow Agent may pay such
taxes from the Escrow Amount. Xxxxxxxx and Acquisition, jointly and severally,
shall indemnify and hold harmless the Escrow Agent from and against any
liability for taxes (including, without limitation, any interest or penalties
in respect thereof) arising out of or relating to any income or gain earned on
or attributable to the Escrow Amount.
(g) All rights of indemnification provided for the
Escrow Agent in this Escrow Agreement shall survive the resignation of the
Escrow Agent, its replacement by a successor Escrow Agent, its delivery or
deposit of the Escrow Amount in accordance with this Escrow Agreement, the
termination of this Escrow Agreement, and any other circumstances whatsoever.
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6. Representations.
To induce the Escrow Agent to enter into this Escrow
Agreement and serve as Escrow Agent hereunder, Xxxxxxxx and Acquisition each
represents and warrants that it has full power and authority to enter into and
perform this Escrow Agreement; that the execution and delivery of this Escrow
Agreement was duly authorized by all necessary corporate action; and that this
Escrow Agreement is enforceable against it in accordance with its terms.
7. Successor Escrow Agent.
(a) The Escrow Agent (and any successor escrow
agent) may at any time resign as such by delivering the Escrow Amount to any
successor escrow agent mutually designated by Xxxxxxxx and Acquisition in
writing, or to any court of competent jurisdiction, whereupon the Escrow Agent
shall be discharged from any and all further obligations arising in connection
with this Escrow Agreement. The Escrow Agent may, at any time, take such
actions as it shall elect in order to terminate its duties as escrow agent
hereunder, including, without limitation, depositing the Escrow Fund with a
court of competent jurisdiction upon commencement of an action in the nature
of interpleader or during the course of any court proceedings. The costs
incurred by the Escrow Agent in connection with taking any such actions
(including the reasonable attorneys' fees of the Escrow Agent) shall be borne
by Xxxxxxxx and Acquisition, jointly and severally.
8. Notices.
Unless otherwise specifically provided herein, all notices,
consents, demands or other communications required or permitted to be given
pursuant to the Agreement shall be in writing and shall be deemed sufficiently
given on (a) the day on which delivered personally during a business day to
the appropriate location listed as the address below, (b) three business days
after the posting thereof by United States registered or certified first class
mail, return receipt requested with postage and fees prepaid, or (c) one
business day after deposit thereof for overnight delivery. Such notices,
consents, demands or other communications shall be addressed respectively:
If to Xxxxxxxx, to:
Xxxxxxxx Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
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If to Acquisition to:
Xxxxxx Acquisition, Inc.
c/o Xxxxxxxx Xxxxx Company, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxx
with a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxx, Esq.
If to the Escrow Agent:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
or to any other address which such party may have subsequently communicated to
the other parties in writing.
9. Miscellaneous.
(a) Any provision of this Escrow Agreement which
may be determined by any court of competent authority to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. It is expressly
understood, however, that the parties hereto intend each and every provision
of this Escrow Agreement to be valid and enforceable and hereby knowingly
waive all rights to object to any provision of this Escrow Agreement.
(b) This Escrow Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns, and shall not be enforceable by or inure to
the benefit of any third party. No party may assign its rights or obligations
under this Escrow Agreement or any interest in the Escrow Amount without the
written consent of the other parties. In no event shall the Escrow Agent be
required to act upon, or be bound by, any notice, instruction, objection or
other communication given by a person other than, nor shall the Escrow Agent
be required to deliver the Escrow Amount to any person other than, Xxxxxxxx or
Acquisition.
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(c) This Escrow Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to conflict of law rules.
(d) The parties hereby irrevocably submit to the
jurisdiction of any New York State or Federal court sitting in New York City
in any action or proceeding arising out of or relating to this Escrow
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 parties hereby consent to and grant to any such
court jurisdiction over the persons of the parties and over the subject matter
of any such dispute and agree that delivery or mailing of any process or other
papers in connection with any such action or proceeding in the manner provided
in Section 8 hereof, or in such other manner as may be permitted by law, shall
be valid and sufficient service thereof.
(e) This Escrow Agreement constitutes the entire
understanding among the parties with respect to the subject matter hereof.
This Escrow Agreement may only be modified or terminated by a writing signed
by all of the parties hereto, and no waiver hereunder shall be effective
unless in writing signed by the party to be charged.
(f) The Escrow Agent shall serve hereunder without
fee; however, Xxxxxxxx and Acquisition, jointly and severally agree to pay to
the Escrow Agent on demand all costs and expenses incurred by the Escrow Agent
in performing its duties hereunder, including without limitation reasonable
attorneys fees.
(g) This Escrow Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts of this Escrow
Agreement taken together shall constitute but one and the same instrument.
(h) The Section headings used herein are for
convenience of reference only and shall not define or limit the provisions of
this Escrow Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Escrow Agreement as of the date first above written.
XXXXXXXX CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
___________________________
Name: Xxxxxxxx X. Xxxxxxx
Title: President
XXXXXX ACQUISITION, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
____________________________
Name: Xxxxxxxx X. Xxxxxxx
Title: President
PROSKAUER ROSE LLP
By: /s/ Xxxxx X. Xxxxxxx
_____________________________
Xxxxx X. Xxxxxxx, a Partner
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