ESCROW AGREEMENT AND INSTRUCTIONS
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This Escrow Agreement and Instructions dated as of April 28, 1997 (this
"Agreement") is made by and among Brunswick Corporation, a Delaware corporation
("Brunswick"), American Recreation Company, Inc., a Delaware corporation
("Seller"), Xxxx Sports Corp., a Delaware corporation ("Parent"), and The First
National Bank of Chicago ("Bank").
RECITALS
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A. Brunswick, Parent and Seller have entered into an Asset Purchase
Agreement dated April 1, 1997 (the "Purchase Agreement") pursuant to which,
among other things, Brunswick has agreed to pay into the escrow created hereby
the sum of $500,000 to be disbursed as provided in this Agreement. Bank is not a
party to the Purchase Agreement.
B. Brunswick, Parent and Seller desire Bank to act as escrowee of the
total amount paid into escrow and income earned thereon as provided herein, and
Bank is willing to so act. Bank has agreed to act in accordance with the terms
of this Agreement.
AGREEMENT
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It is agreed as follows:
1. Creation of Escrow Fund. Brunswick has paid, or will pay to the
Bank, to be held in escrow pursuant hereto, the sum of $500,000 (the "Escrow
Fund").
2. Income. The Escrow Fund shall be invested pursuant to Section 6
hereof until it is released and paid as provided herein. Income earned by the
Escrow Fund shall accrue and become part of the Escrow Fund to be used as
provided herefor. Parent and Seller shall be responsible for, and report, all
taxes on income earned by the Escrow Fund.
3. Disbursements from Escrow Fund.
3.1 Disbursement from Escrow Fund for Breach of
Representations and Warranties, Covenants and Agreements. Whenever Brunswick
demands payment from the Escrow Fund for breach of any representation or
warranty, covenant or agreement of Parent and Seller pursuant to Section 2.6 or
Section 9.2 of the Purchase Agreement, Brunswick shall give notice thereof to
Bank and to Parent (acting on behalf of Parent and Seller), which notice ("Claim
Notice") shall specify the amount claimed and the basis for the claim. If after
fifteen (15) business days after such Claim Notice is so received, Parent has
not given notice to Bank of Parent's objection to the disbursement of such funds
in the amount claimed by Brunswick in such Claim Notice, Bank shall disburse to
Brunswick from the Escrow Fund the full amount so claimed. If, on the other
hand, Parent gives written notice to Bank objecting to the distribution of the
claimed amount or any portion thereof within fifteen (15) business days of the
giving of a Claim Notice, Bank shall not disburse any funds to Brunswick with
respect to the amount disputed under such Claim Notice, unless and until Bank
has either received the written notice of Parent evidencing Parent's acceptance
of such disbursement or a non-appealable court order has been issued, in a court
of competent jurisdiction, providing that such funds be disbursed.
3.2 Final Disbursement. Unless this Agreement is terminated
earlier in accordance with Section 4 hereof, the full amount of the Escrow Fund,
less any amounts previously disbursed to Brunswick pursuant hereto, shall be
disbursed to Seller on the date written direction to disburse is delivered to
the Escrow Agent by Brunswick and Parent (acting on behalf of Parent and
Seller). Brunswick and Parent covenant to each other that such written notice
shall be delivered on the fifteenth day after the final determination of the
Final Inventory Value (as defined in the Purchase Agreement), such fifteenth day
being the "Disbursement Date". Notwithstanding anything to the contrary herein,
if on the Disbursement Date there is pending one or more Claim Notices which
have not been the subject of a disbursement or other final resolution, Bank
shall not disburse from the Escrow Fund amounts which would deplete the Escrow
Fund below the amount so claimed by Brunswick unless and until final resolution
of such matters is made.
4. Termination. This Escrow Agreement shall terminate and be of no
further force and effect upon the earlier of (a) the date that no funds remain
in the Escrow Fund to be disbursed hereunder,
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and (b) the Disbursement Date, unless one or more pending Claim Notices exist on
such date, in which case this Escrow Agreement will terminate upon final
resolution of such pending Claim Notices.
5. Investments. Bank shall invest and reinvest any cash in the Escrow
Fund in any one of the following investments: (i) direct obligations of or
obligations guaranteed by the United States of America; (ii) in repurchase
agreements collateralized by investments in (i) above, (iii) commercial paper
rated A-1 by Standard & Poor's Corporation or Prime-1 by Moody's Investors
Services, Inc., or better; (iv) certificates of deposit issued by United States
commercial banks having capital and surplus of at least $500,000,000; (v)
investments in institutional money market funds of Bank investing principally in
obligations permitted by clauses (i) through (iv) above; (vi) such other
investments as may be mutually agreed upon by Brunswick and Parent ("Permitted
Investments"), provided, that, in any case any investments shall be with such
maturities as Parent and Brunswick may determine are compatible with the
payments which may be required hereunder. The parties agree that the Escrow Fund
shall initially be invested in the Bank's Pegasus U.S. Government Securities
Cash Management Fund. Bank acknowledges that it has no interest in any cash or
investments held in the Escrow Fund from time to time, and further acknowledges
that the Escrow Fund is to be held for the benefit of Brunswick, Parent and
Seller in the manner contemplated in the Purchase Agreement. Bank covenants and
agrees that (i) it will keep all cash and Permitted Investments in the Escrow
Fund in an account conspicuously marked on the records of Bank as "Escrow
Account for the benefit of Brunswick, Parent and Seller", together with the
account number thereof, (ii) it will issue Form 1099 to Parent and Seller with
respect to income earned by them, to the extent required by the Internal Revenue
Code of 1986, as amended, (iii) it will report all income earned by the Escrow
Fund to Parent and Seller and (iv) it will give such further assurances as
Brunswick and Parent may reasonably request from time to time in order to ensure
that Bank is in compliance with the provisions of this Agreement.
6. General Terms.
6.1 Duties. The duties and responsibilities of Bank shall be
limited to those expressly set forth herein.
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6.2 No Additional Liability. Bank shall not be personally
liable for any act taken or omitted hereunder if taken or omitted by it in good
faith and in the exercise of its own best judgment and Bank shall also be fully
protected in relying upon any written notice, demand, certificate, or document
which it in good faith believes to be genuine.
6.3 Assumed Validity of Documents. Bank shall not be
responsible for the sufficiency or accuracy of the form, execution, validity or
genuineness of documents deposited hereunder, or of any endorsement thereon or
for lack of endorsement thereon, or for any description therein, nor shall Bank
be responsible or liable in any respect on the account of the identity,
authority or right of the persons executing or delivering or purporting to
execute or deliver any such document or endorsement.
6.4 Fees. Bank shall be paid a reasonable fee for its services
and shall be reimbursed for its reasonable expenses incurred in connection with
the ordinary administration of the Escrow Fund, including charges for the
acceptance, disbursement and investment of the Escrow Fund. Brunswick and Parent
shall each pay one-half of Bank's reasonable fees and expenses.
6.5 Indemnification. Brunswick, Parent and Seller each agree
to hold Bank harmless and to indemnify Bank against any loss, liability or
expenses (including reasonable attorneys' fees and expenses) incurred by Bank
and arising out of or in connection with the performance of its obligations in
accordance with the provisions of this Agreement, except for any loss, liability
or expense incurred as a result of the negligence or willful misconduct of Bank.
The foregoing indemnity in this paragraph shall survive the resignation of Bank
or the termination of this Agreement.
6.6 Notices. All claims, notices, requests, demands, or other
communications hereunder shall be in writing and be given in person, by express
mail service or by mail, and shall become effective (a) on delivery if given in
person, (b) on the date of delivery if sent by facsimile or by express mail
service, return receipt requested, or (c) four business days after being
deposited in the mails, with proper postage for first-class registered or
certified mail, prepaid.
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Notices shall be addressed as follows:
(a) If to Brunswick:
Brunswick Corporation
Xxx Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Brunswick Outdoor Recreation Group
0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
(b) If to Parent or Seller:
Xxxx Sports Corp.
00000 X. Xxxxxx Xxxx, Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(c) If to Bank:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Facsimile: (000) 000-0000
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or such other address as any party may from time to time specify by notice to
the other parties.
6.7 Responsibilities and Rights of Bank.
(a) Bank undertakes to perform only such duties as are
expressly set forth herein. Without limiting the generality of the
foregoing, Bank shall have no duty or responsibility with regard to
any: (i) security as to which a default in the payment of principal or
interest has occurred, to give notice of default, make demand for
payment or take any other action with respect to such default; and (ii)
loss occasioned by delay in the actual receipt of notice of any
payment, redemption or other transaction regarding any item in the
Escrow Fund as to which it is authorized to take action hereunder. Bank
may consult with counsel and shall be fully protected with respect to
any action taken in good faith in accordance with such advice.
(b) Bank does not make any representation or warranty with
regard to the creation or perfection, hereunder or otherwise, of a
security interest in the Escrow Fund or regarding the negotiability or
transferability of, or existence of other interest in the Escrow Fund.
Bank shall have no responsibility at any time to ascertain whether or
not any security interest exists in the Escrow Fund or any part thereof
or to file any financing statement under the Uniform Commercial Code of
any state with respect to the Escrow Fund or any part thereof.
(c) Bank is hereby authorized to comply with any judicial
order or legal process which stays, enjoins, directs or otherwise
affects the transfer or delivery of the Escrow Fund or any party hereto
and shall incur no liability for any delay or loss which may occur as a
result of such compliance.
(d) Bank shall have no duty or responsibility with regard to
any loss resulting from the investment, reinvestment, sale or
liquidation of the Escrow Fund in accordance with the terms of this
Agreement. Bank need not maintain any insurance with respect to the
Escrow Fund.
(e) Except as otherwise expressly provided herein, Bank is
authorized to execute instructions and take other actions
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pursuant to this Agreement in accordance with its customary processing
practices for similar customers and, in accordance with such practices
Bank may retain agents, including its own subsidiaries or affiliates,
to perform certain of such functions. All collection and receipt of
funds or securities and all payment and delivery of funds or securities
under this Agreement shall be made by Bank as agent, at the risk of the
other parties hereto with respect to their actions or omissions and
those of any person other than Bank. In no event shall Bank be
responsible or liable for any loss due to forces beyond its control,
including, but not limited to, acts of God, flood, fire, nuclear
fusion, fission or radiation, war (declared or undeclared), terrorism,
insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, movement action, including any laws, ordinances,
regulations or the like which restrict or prohibit the providing of the
services contemplated by this Agreement, inability to obtain equipment
or communications facilities, or the failure of equipment or
interruption of communications facilities, and other causes whether or
not of the same class or kind as specifically named above. In the event
that Bank is unable substantially to perform for any of the reasons
described in the immediately preceding sentence, it shall so notify the
other parties hereto as soon as reasonably practicable.
(f) Notwithstanding any provision of this Agreement to the
contrary, Bank shall not be bound by, or have any responsibility with
respect to, any other agreement or contract between Brunswick, Parent
and Seller (whether or not Bank has knowledge thereof). In no event
shall Bank be liable to Brunswick, Parent and Seller, or any other
person whatsoever for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits),
even if Bank has been advised of the likelihood of such loss or damage
and regardless of the form of action.
(g) It is understood and agreed that should any dispute arise
with respect to the payment and/or ownership or right of possession of
the Escrow Fund, Bank is authorized and directed to retain in its
possession, without liability to anyone, all or any part of the Escrow
Fund until such dispute shall have been settled either by mutual
agreement by the parties concerned or by the final order, decree or
judgment of any court or other tribunal of competent jurisdiction in
the
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United States of America and time for appeal has expired and no appeal
has been perfected, but Bank shall be under no duty whatsoever to
institute or defend any such proceedings.
(h) Brunswick, Parent and Seller acknowledge and agree that
Bank shall not be responsible for taking any steps, including without
limitation, the filing of forms or reports, or withholding of any
amounts in connection with any tax obligations of Brunswick, Parent and
Seller or any other party in connection with the Escrow Fund. Bank
shall be entitled to take any action such as withholding, that it deems
appropriate to ensure compliance with its obligations under any
applicable tax laws.
7. Instructions; Escrow Fund Transfers.
(a) Bank is authorized to rely and act upon all instructions
given or purported to be given by one or more officers, employees or
agents of Brunswick, Parent or Seller (i) authorized by or in
accordance with a corporate resolution delivered to Bank or (ii)
described as authorized in a certificate delivered to Bank by the
appropriate Secretary or an Assistant Secretary or similar officer
(each such officer, employee or agent or combination of officers,
employees and agents authorized pursuant to clause (ii) or described
pursuant to clause (ii) of this Subsection 7(a) is hereinafter referred
to as an "Authorized Officer"). (The term "instructions" includes,
without limitation, instructions to sell, assign, transfer, deliver,
purchase or receive for the Escrow Fund any and all stocks, bonds and
other securities or to transfer all or any portion of the Escrow Fund.)
Bank may also rely and act upon instructions when bearing or purporting
to bear the signature or facsimile signature of any of the individuals
designated by an Authorized Officer regardless of by whom or by what
means the actual or purported facsimile signature or signatures thereon
may have been affixed thereto if such facsimile signature or signatures
resemble the facsimile specimen or specimens from time to time
furnished to Bank by any of such Officers, Secretary or an Assistant
Secretary or similar officer.) In addition, and subject to subsection
7(b) hereof, Bank may rely and act upon instructions received by
telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess acceptable to it which Bank believes in good faith to have
been given by an
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Authorized Officer or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Bank may specify.
Bank shall incur no liability to Brunswick or Seller or otherwise for
having acted in accordance with instructions on which it is authorized
to rely pursuant to the provisions hereof. Any instructions delivered
to Bank by telephone shall promptly thereafter be confirmed in writing
by an Authorized Officer but Bank shall incur no liability for a
failure to send such confirmation in writing, the failure of any such
written confirmation to conform to the telephone instruction which it
received, the failure of any such written confirmation to be signed or
properly signed, or its failure to produce such confirmation at any
subsequent time. Bank shall incur no liability for refraining from
acting upon any instructions which for any reason it, in good faith, is
unable to verify to its own satisfaction. Unless otherwise expressly
provided, all authorizations and instructions shall continue in full
force and effect until canceled or superseded by subsequent
authorizations or instructions received by Bank's safekeeping account
administrator. Bank's authorization to rely and act upon instructions
pursuant to this paragraph shall be in addition to, and shall not
limit, any other authorization which either Brunswick or Seller may
give to it hereunder.
(b) With respect to written or telephonic instructions or
instructions sent by facsimile transmission to transfer funds from the
Escrow Fund in accordance herewith (such instructions hereinafter
referred to as "Transfer Instructions"), the security procedure agreed
upon for verifying the authenticity of Transfer Instructions is a
callback by Bank to any of the persons designated below, whether or not
any such person has issued such Transfer Instructions. (It is
recommended that the persons designated below not be persons who
generally issue Transfer Instructions; whenever possible, Bank will
endeavor to call someone other than the issuer of the Transfer
Instructions).
(i) With respect to Transfer Instructions given by Brunswick
pursuant to its authority under this Agreement:
Name/Title Telephone No.
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Xxxxxxx X. X'Xxxxx, (000) 000-0000
Vice President & Treasurer
Xxxxx X. Xxxxxxxx, (000) 000-0000
Senior Vice President and
Chief Financial Officer
(ii) With respect to Transfer Instructions given by the
Parent or Seller pursuant to its authority under this
Agreement:
Name/Title Telephone No.
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Xxxxxx X. Xxxxxx, (000) 000-0000
Chief Financial Officer
Xxxxx X. Xxxxxx, Vice President
and Corporate Controller (000) 000-0000
Alternatively, at Bank's option, the callback may be made to any person
designated in the certified resolutions or other certificates or documentation
furnished to it by a party in connection with the Escrow Fund as authorized to
issue Transfer Instructions or otherwise transact business with respect to the
Escrow Fund for that party. Brunswick and Seller shall implement any other
authentication method or procedure or security device required by Bank at any
time or from time to time.
8. Resignation or Removal of Bank.
(a) Bank may resign at any time by giving written notice to
Brunswick and Seller. Brunswick and Seller may remove Bank upon joint
written notice to Bank. Such resignation or removal shall take effect
upon delivery of the Escrow Fund to a successor Bank designated in
writing by Brunswick and Seller, and Bank shall thereupon be discharged
from all obligations under this Agreement, and shall have no further
duties or responsibilities in connection herewith. The obligations of
Brunswick and Seller to Bank and the rights of Bank hereunder shall
survive termination of this Agreement or the resignation or removal of
Bank.
(b) In the event that Bank submits a notice of resignation,
its only duty, until a successor Bank shall have been appointed and
shall have accepted such appointment, shall
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be to hold, invest and dispose of the Escrow Fund in accordance with
this Agreement, but without regard to any notices, requests,
instructions, demands or the like received by it from the other parties
hereto after such notice shall have been given, unless the same is a
direction that the Escrow Fund be paid or delivered in its entirety.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Escrow
Agreement to be executed by its duly authorized officer effective as of the day
and year first above written.
BRUNSWICK CORPORATION
By: Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary
AMERICAN RECREATION COMPANY, INC.
By: Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
XXXX SPORTS CORP.
By: Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
The undersigned hereby accepts the terms and provisions of the foregoing
Escrow Agreement and agrees to accept, hold, deal with and dispose of any
property comprising the Escrow Fund in accordance with the foregoing Escrow
Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By: Xxxxxxx Xxxxxxx
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Title: Vice President
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