EXHIBIT 10.4
ESCROW AGREEMENT
This Escrow Agreement, dated as of October 11, 2002, is entered into by
and among XxxxXxxx.xxx, Inc., a Delaware corporation ("Buyer"), Delta Computec
Inc., a New York corporation ("Seller"), and The Bank of New York Trust Company
of Florida, N.A., a national banking association, as escrow agent ("Escrow
Agent").
This is the Escrow Agreement referred to in the Asset Purchase
Agreement dated as of May 31, 2002, as approved pursuant to that certain Order
of the United States Bankruptcy Court for the District of New Jersey dated
August 7, 2002 (the "Order"; together with the Asset Purchase Agreement, the
"Purchase Agreement") among the Buyer, Seller and NQL Inc., the sole stockholder
of Seller. Capitalized terms used in this agreement without definition shall
have the respective meanings given to them in the Purchase Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent an amount equal to
$250,000 in immediately available funds (as increased by any earnings
thereon and as reduced by any disbursements, amounts withdrawn under
Section 5(j) of this Escrow Agreement, or losses on investments, the
"Escrow Fund"). Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to
hold, safeguard and disburse the Escrow Fund pursuant to the terms and
conditions hereof.
2. INVESTMENT OF FUNDS
Except as Buyer and Seller may from time to time jointly instruct
Escrow Agent in writing, the Escrow Fund shall be deposited and maintained in a
money market deposit account with Escrow Agent, until disbursement of the entire
Escrow Fund. Escrow Agent is authorized to liquidate in accordance with its
customary procedures any portion of the Escrow Fund consisting of investments to
provide for payments required to be made under this Escrow Agreement.
3. PAYMENTS
(a) From time to time between October 11, 2002 and February 8,
2003, Xxxxxx Xxxxx or Xxxxxx Xxxxxx of Buyer and Xxxxxxx Xxxxxxxx of
Seller, or a written designee of any such person, may collectively give
a written notice signed by all such persons on behalf of Buyer and
Seller (an "Early Payment Notice") to Escrow Agent specifying in
reasonable detail the nature, the payee and dollar amount of any
payment (an "Early Payment") to be made under Section 3.4 of the
Purchase Agreement to pay certain Escrowed Liabilities. Within 3
business days of receipt of an Early Payment Notice, Escrow Agent shall
pay to the designated payee the dollar amount set forth in the Early
Payment Notice from (and only to the extent of) the Escrow Fund. Escrow
Agent shall not inquire into or consider whether an Early Payment
complies with the requirements of the Purchase Agreement.
1
(b) On February 8, 2003, and at any time after such date if a
demand is made by Seller according to the provisions of Section 3(e)
below, Buyer shall reasonably estimate the amount by which the
remaining Escrow Fund on such date exceeds the aggregate amount of any
remaining Escrowed Liabilities that exist on such date (the "Released
Funds"). Upon determining the amount of Released Funds, if any, Buyer
shall provide a written notice (the "Released Funds Notice") to Escrow
Agent and Seller specifying the dollar amount of the Released Funds and
that within 3 business days of receipt of a Released Funds Notice,
Escrow Agent shall pay to Seller the dollar amount set forth in the
Released Funds Notice from (and only to the extent of) the Escrow Fund.
Escrow Agent shall not inquire into or consider whether the Released
Funds payment complies with the requirements of the Purchase Agreement.
(c) From time to time on and after February 8, 2003, if any
Escrow Fund remains after the payment to Seller of any Released Funds
(such remaining funds being referred to as the "Remaining Funds"),
Xxxxxx Xxxxx or Xxxxxx Xxxxxx of Buyer and Xxxxxxx Xxxxxxxx of Seller,
or a written designee of any such person, may collectively give a
written notice signed by all such persons on behalf of Buyer and Seller
(a "Remaining Payment Notice") to Escrow Agent specifying in reasonable
detail the nature, the payee and dollar amount of any payment (a
"Remaining Payment") to be made under Section 3.4 of the Purchase
Agreement to pay certain Escrowed Liabilities. Within 3 business days
of receipt of a Remaining Payment Notice, Escrow Agent shall pay to the
designated payee the dollar amount set forth in the Remaining Payment
Notice from (and only to the extent of) the Escrow Fund. Escrow Agent
shall not inquire into or consider whether a Remaining Payment complies
with the requirements of the Purchase Agreement.
(d) If after February 8, 2003 there are any Remaining Funds
and Buyer reasonably estimates that there are no remaining Escrowed
Liabilities, Buyer shall provide a written notice (the "Final Notice")
to Escrow Agent and Seller specifying that the Remaining Funds be paid
to Seller and that within 3 business days of receipt of the Final
Notice, Escrow Agent shall pay to Seller the Remaining Funds from (and
only to the extent of) the Escrow Fund. Escrow Agent shall not inquire
into or consider whether the Remaining Funds payment complies with the
requirements of the Purchase Agreement.
(e) At any time after February 8, 2003 Seller may give a
written demand to Buyer that Buyer provide a Released Funds Notice or
Final Notice to Escrow Agent. A copy of such demand must also be sent
to Escrow Agent. To the extent Buyer does not provide Seller and Escrow
Agent with a signed writing setting forth all of the facts which form
the basis of Buyer's reasonable belief that Escrowed Liabilities exist
and the amount of Remaining Funds reasonably necessary to satisfy such
Escrowed Liabilities (the "Buyer Response"), Buyer shall provide such
Released Funds Notice or Final Notice to Escrow Agent and Seller within
3 business days of Buyer's receipt of Seller's demand. Should Buyer
fail to provide the Buyer Response, the Remaining Funds Notice or Final
Notice as set forth in this Section 3(e), Seller may provide Escrow
Agent with an affidavit attesting to the fact that Buyer has not
complied with this Section 3(e). Within 10 business days of Escrow
Agent's receipt of such affidavit, Escrow Agent shall release all of
the Remaining Funds to Seller. Escrow Agent shall be entitled to fully
rely upon the facts set forth in such affidavit and will not inquire
into or consider whether the Remaining Funds payment complies with the
requirements of the Purchase Agreement.
2
4. TERMINATION OF ESCROW
Once the Escrow Fund has been paid by the Escrow Agent in its entirety
in the form of Early Payments, Released Funds, Remaining Payments and/or
Remaining Funds pursuant to the Final Notice, this Escrow Agreement shall
terminate. Section 5(e) and Section 5(b) shall survive notwithstanding any
termination of this Escrow Agreement or the resignation of Escrow Agent.
5. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the
Escrow Fund held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any
funds held hereunder except as directed in this Escrow Agreement.
(b) 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 Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless 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 Escrow Agreement. Without limiting the foregoing,
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 Fund, or any loss of interest incident to any such delays.
THE INDEMNIFICATION OF THE ESCROW AGENT SHALL REMAIN IN FULL
FORCE AND EFFECT EVEN IF ANY CLAIM DIRECTLY OR INDIRECTLY RESULTS FROM,
ARISES OUT OF, OR RELATES TO OR IS ASSERTED TO HAVE RESULTED FROM,
ARISEN OUT OF, OR RELATED TO THE SOLE NEGLIGENCE OR CONCURRENT
NEGLIGENCE OF THE ESCROW AGENT OTHER THAN AS TO GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE ESCROW AGENT.
(c) Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing
delivered to it in connection herewith without being required to
determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. Escrow
Agent may act in reliance upon any instrument or signature believed by
it to be genuine and may assume that the 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. Escrow Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity has full power
and authority to instruct Escrow Agent on behalf of that party unless
written notice to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted by it in good faith in
accordance with such advice.
3
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having
only possession thereof. It is not acting in a fiduciary capacity. Any
payments of income from this Escrow Fund shall be subject to
withholding regulations then in force with respect to United States
taxes. The parties hereto will provide Escrow Agent with appropriate
Internal Revenue Service Forms W-9 for tax identification number
certification or non-resident alien certifications. During the term of
this Escrow Agreement, Escrow Agent shall provide Buyer and Seller such
information and reports concerning the Escrow Fund as any of them may
reasonably request. Promptly after the termination of this Escrow
Agreement or the resignation of Escrow Agent, Escrow Agent shall make
an accounting of the Escrow Fund to Buyer and Seller. The fees and
expenses of Escrow Agent with respect to such reports and accountings
shall be borne by Buyer and Seller as provided in Section 5(j).
(f) 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.
(g) 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.
(h) Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrow Fund to any successor
Escrow Agent jointly designated by the other parties hereto in writing,
or to any court of competent jurisdiction, whereupon Escrow Agent shall
be discharged of and from any and all further obligations arising in
connection with this Escrow Agreement. The resignation of 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 Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow Agent's sole
responsibility after that time shall be to retain and safeguard the
Escrow Fund until receipt of (i) a designation of successor Escrow
Agent, (ii) a joint written disposition instruction by the other
parties hereto or (iii) a final non-appealable order of a court of
competent jurisdiction.
(i) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection
with the Escrow Fund or in the event that Escrow Agent is in doubt as
to what action it should take hereunder, Escrow Agent shall be entitled
to retain the Escrow Fund until Escrow Agent shall have received (i) a
final non-appealable order of a court of competent jurisdiction
directing delivery of the Escrow Fund or (ii) a written agreement
executed by the other parties hereto directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and
non-appealable. Escrow Agent shall act on such court order and legal
opinion without further question.
(j) Buyer and Seller shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent
hereunder in the amount of $1,250 at the time of execution of this
Escrow Agreement to be paid by Buyer, $1,250 to be retained by Escrow
Agent from the Escrow Fund as payment by Seller and $2,500 in the
aggregate annually thereafter and
4
agree to reimburse Escrow Agent for all reasonable expenses,
disbursements and advances incurred or made by Escrow Agent in
performance of its duties hereunder (including reasonable fees,
expenses and disbursements of its counsel). Except as specifically set
forth above, any such compensation and reimbursement to which Escrow
Agent is entitled shall be borne 50% by Buyer and 50% by Seller.
Seller's portion, and only Seller's portion, of any fees or expenses of
Escrow Agent or its counsel may be taken from the Escrow Fund with
Seller's prior written consent.
(k) No printed or other matter in any language (including,
without limitation, prospectuses, notices, reports and promotional
material) that mentions Escrow Agent's name or the rights, powers, or
duties of Escrow Agent shall be issued by the other parties hereto or
on such parties' behalf unless Escrow Agent shall first have given its
specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any
securities held hereunder, to use the services of any United States
central securities depository it reasonably deems appropriate,
including, without limitation, the Depositary Trust Company and the
Federal Reserve Book Entry System.
6. LIMITED RESPONSIBILITY
This Escrow Agreement expressly sets forth all the duties of Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Escrow Agreement against Escrow Agent.
Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Escrow Agreement.
7. OWNERSHIP FOR TAX PURPOSES
Seller agrees that, for purposes of federal and other taxes based on
income, Seller will be treated as the owner of the Escrow Fund and that Seller
will report all income, if any, that is earned on, or derived from, the Escrow
Fund as its income in the taxable year or years in which such income is properly
includible and pay any taxes attributable thereto.
8. NOTICES
All notices, consents, waivers and other communications under this
Escrow Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with telephonic confirmation of receipt) provided that a copy is
mailed by registered mail, return receipt requested, or (c) received by the
addressee, if sent by a nationally recognized overnight delivery service, in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
5
To Buyer:
XxxxXxxx.xxx, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
with copies to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: 000-000-0000
To Seller:
Delta Computec Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Facsimile No.: 201-440-1311
with a copy to:
Xxxxxxx Fleishmann & Mugel, LLP
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: 000-000-0000
Angel and Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
To the Escrow Agent:
The Bank Of New York Trust Company Of Florida, N.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Corporate Trust; Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
6
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Escrow Agreement may be brought against any of
the parties in the courts of the State of Texas, County of Dallas, or, if it has
or can acquire jurisdiction, in the United States District Court for the
Northern District of Texas, and each of the parties consents to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
10. COUNTERPARTS
This Escrow Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
11. SECTION HEADINGS
The headings of sections in this Escrow Agreement are provided for
convenience only and will not affect its construction or interpretation.
12. WAIVER
The rights and remedies of the parties to this Escrow Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Escrow Agreement or the
documents referred to in this Escrow Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Escrow Agreement or the documents referred to in this Escrow
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party,
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given, and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Escrow Agreement or the documents referred
to in this Escrow Agreement.
13. EXCLUSIVE AGREEMENT AND MODIFICATION
This Escrow Agreement supersedes all prior agreements among the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Escrow Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Escrow Agreement may not be amended except by a written agreement executed
by Buyer, Seller and Escrow Agent. Other than with respect to the escrow of the
Escrow Fund as set forth herein, nothing herein shall supersede or affect the
rights and obligations of Buyer, Seller and their successors and assigns under
the Purchase Agreement.
14. GOVERNING LAW
This Escrow Agreement shall be governed by the laws of the State of
Texas, without regard to conflicts of law principles.
* * * * *
7
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement as of the date first written above.
BUYER
XXXXXXXX.XXX, INC., a Delaware corporation
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Xxxxxx X. Xxxxxx, Chief Financial
Officer and Senior Vice President
SELLER
DELTA COMPUTEC INC., a New York corporation
By: /s/ XXXX XXXXXX
----------------------------------------
Xxxx XxXxxx, President
ESCROW AGENT
THE BANK OF NEW YORK TRUST COMPANY OF
FLORIDA, N.A., as Escrow Agent
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Vice President
8
