SECOND ESCROW AGREEMENT
SECOND ESCROW AGREEMENT (this"Agreement"), dated this 18th day of
June, 1998, by and among BMCA Key Acquisition Corp., a Delaware corporation (the
"Buyer"), on its own behalf and on behalf of the other Buyer Related Parties (as
defined in the Asset Purchase Agreement referred to below) and Xxxxxx-Xxxxx,
Inc., a Delaware corporation (the "Seller") and The Chase Manhattan Bank (the
"Escrow Agent" and together with the Buyer and the Seller, the "Parties").
W I T N E S S E T H:
WHEREAS, the Buyer and the Seller have entered into an Asset
Purchase Agreement, dated May 26, 1998 (the "Asset Purchase Agreement";
capitalized terms used herein without definition having the respective meanings
ascribed to them in the Asset Purchase Agreement), providing for the sale by the
Seller to the Buyer of substantially all of the assets of the Seller;
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the
Seller is obligated to deposit an aggregate of $2,000,000 of the Cash Purchase
Price (plus any earnings from investment of the Escrow Deposit remaining in the
escrow account in accordance with section 3, the "Escrow Deposit") with the
Escrow Agent;
WHEREAS, the Seller is willing to deposit the $2,000,000 and the
Escrow Agent is willing to hold the Escrow Deposit upon the terms and conditions
specified herein; and
WHEREAS, it is a condition precedent to the closing of the Asset
Purchase Agreement that the Buyer and the Seller enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived herefrom and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Deposit into Escrow. On the date hereof, the Seller shall deposit $2,000,000
with the Escrow Agent by transferring funds to: The Chase Manhattan Bank, Escrow
Exigency Account No. 967006242, Attention: Escrow Administration, ABA No.
000000000, Reference: Xxxxxx-Xxxxx.
2. Release; Notices.
2.1 Procedure. The Seller and the Buyer shall deliver to the Escrow
Agent a joint written notice setting forth (i) the amount of the Escrow Deposit
and the interest earnings thereon through the date of such notice to be
distributed to the Buyer and/or the Seller in accordance with the terms of
Section 4.2 of the Asset Purchase Agreement (it being understood that interest
earnings shall be distributed to the Buyer and/or the Seller in proportion to
the amounts of the Escrow Deposit payable to the Buyer and/or the Seller under
Section 4.2), and (ii) the Buyer and/or the Seller accounts or addresses to
which such amounts should be distributed. Such notice shall be delivered by the
Seller and the Buyer promptly following the final determination of the Purchase
Price to be made pursuant to Section 4.2. The Escrow Agent shall (promptly after
its receipt of such notice) distribute the Escrow Deposit and the interest
earnings thereon through the date of such notice to the Buyer and/or the Seller
in accordance with such notice.
2.2 Exclusivity. Each of the Buyer, on behalf of itself and the
other Buyer Related Parties, on the one hand ("Buyer Group"), and the Seller, on
behalf of itself and its Affiliates and the directors, officers and employees of
Seller and its Affiliates, on the other hand ("Seller Group"), acknowledges and
agrees that the Escrow Deposit shall only be available to satisfy claims of the
Buyer and/or the Seller in respect of the Closing Date Adjusted Working Capital
in accordance with the terms and conditions of Section 4.2 of the Asset Purchase
Agreement, and shall not be available to satisfy, any other obligation now or
hereafter owed by the Seller or any other person or entity to the Buyer Group or
by the Buyer or any other person or entity to the Seller Group, and each of the
Buyer, on behalf of the Buyer Group, and the Seller, on behalf of the Seller
Group, hereby waives and agrees not to assert any other right with respect to,
the Escrow Deposit except as expressly provided herein.
2.3 Notices to Escrow Agent. Any notice or other communication given
by the Buyer, on the one hand, and the Seller, on the other, to the Escrow Agent
shall be concurrently given to the Seller, on the one hand, and the Buyer, on
the other. Any notice to the Escrow Agent shall indicate by what means such
notice has been sent to the Buyer or the Seller, as the case may be. If
applicable, such notice shall also indicate the Return Date.
3. Investment of the Escrow Deposit.
(a) The Escrow Agent shall invest the Escrow Deposit and
reinvest any interest thereon or proceeds therefrom in any of the following, as
directed by the Seller: (i) any evidence of indebtedness with a maturity of 30
days or less issued directly or fully guaranteed or insured by the United States
of America or any agency or instrumentality thereof, provided that the full
faith and credit of the United States is pledged in support thereof, (ii)
certificates of deposit and bankers' acceptances with a maturity of 30 days or
less of any commercial bank organized under the laws of the United States of
America or any State thereof which has combined capital and surplus and
undivided profits of not less than $100,000,000; (iii) commercial paper and loan
participations with a maturity of 30 days or less issued by a corporation that
is not an Affiliate
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(including, for the purpose of this provision, the Non- Affiliates) of Seller
organized under the laws of any state of the United States or the District of
Columbia and rated at least A-1 by Standard & Poors Corporation or at least P-1
by Xxxxx'x Investors Services, Inc. or at least an equivalent rating category of
another nationally recognized securities rating agency; and (iv) fully
collateralized repurchase agreements, having terms of 30 days or less, for
government obligations of the type specified in (i) above with a commercial bank
or trust company meeting the requirements of (ii) above; (v) Chase Vista U.S.
Government Money Market Fund or (vi) in the absence of investment instructions,
Chase Vista U.S. Government Money Market Fund.
(b) The Escrow Agent shall have the right to liquidate any
investments held, in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of any
investment made pursuant to the instructions of the parties hereto or as a
result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or
reinvest the Escrow Fund or any earnings thereon.
4. General Instructions. To induce the Escrow Agent to act
hereunder, it is further agreed by the undersigned that:
(a) The Escrow Agent shall not be under any duty to give the
Escrow Deposit (which term for purposes of this section 4 includes any earnings
on and investments of the initial amount deposited pursuant to section 1 hereof)
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 Agreement. Funds held hereunder shall be invested in accordance
with section 3.
(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
bad faith, gross negligence or willful misconduct, as determined by a court of
competent jurisdiction, and, except with respect to claims based upon such bad
faith, gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other Parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor to the 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. Anything in this agreement
to the contrary notwithstanding, in no event shall the Escrow Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. Without limiting the foregoing, the Escrow Agent shall in no event be
liable in connection with its investment or
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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 own bad faith, gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Deposit, or any loss of interest
incident to any such delays. In the event that the Buyer or the Seller is
required to indemnify and hold harmless the Escrow Agent pursuant to this
section 5(c) or section 5(f), the Buyer or the Seller, as the case may be, shall
have the right to seek contribution from the other Parties hereto (other than
the Escrow Agent) for amounts paid or payable in respect of such indemnity to
the extent permitted by law.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, award, 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. The Escrow Agent may act or refrain from acting in reliance
upon any instrument or signature believed by it to be genuine and may assume
that any person purporting to give 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. The Escrow Agent shall have no duty to verify the
propriety of any conditions imposed by this Agreement upon the Buyer, the Seller
or the Buyer Related Parties.
(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 good faith in accordance with such advice.
(f) The Escrow Agent does not have any interest in the Escrow
Deposit but is serving as escrow holder only and having only possession thereof.
The Buyer and the Seller shall, jointly and severally, pay or reimburse the
Escrow Agent upon request for any transfer taxes or other taxes (other than
income taxes) relating to the Escrow Deposit incurred in connection herewith and
shall, jointly and severally, indemnify and hold harmless the Escrow Agent from
any amounts that it is obligated to pay in the way of such taxes. As between the
Buyer and the Seller, the Buyer, on the one hand, and the Seller, on the other
hand, shall be responsible for any transfer taxes or other taxes (other than
income taxes) incurred in connection herewith in proportion to the amount of
earnings received by such Party. The Escrow Agent shall be entitled to charge
against the Escrow Deposit any transfer taxes incurred in connection herewith.
(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or other
documents 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 of 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 to the Escrow Agent)
may at any time resign as such by delivering the Escrow Deposit and all earnings
thereon to any successor
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to the 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 Escrow Agent shall promptly deliver written notice of
its resignation to the other Parties hereto. 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 to the Escrow Agent, the Escrow Agent's sole responsibility after that
time shall be to safe-keep the Escrow Deposit until receipt of a designation of
successor to the Escrow Agent or a joint written disposition instruction by the
other parties hereto or a final order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of any arbitrator or 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 and the
Seller resulting in adverse claims or demands being made in connection with the
Escrow Deposit, 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 retain the
Escrow Deposit (or such part thereof as is the subject of such disagreement)
until the Escrow Agent shall have received (i) a written agreement executed by
the Buyer and the Seller acting jointly directing delivery of the Escrow Deposit
or such part thereof, or (ii) an order of a court of competent jurisdiction
directing delivery of the Escrow Deposit or such part thereof.
(l) The Buyer and the Seller hereby agree to (i) pay the
Escrow Agent upon execution of this Agreement reasonable compensation (as
payment in full) for the services to be rendered hereunder, as described in
Schedule 2 attached hereto, and (ii) pay or reimburse the Escrow Agent upon
request for all expenses, disbursements and advances, including reasonable
attorney's fees, incurred or made by it in connection with the preparation,
execution, performance, delivery modification and termination of this Agreement.
The fees, costs and expenses of the Escrow Agent and its counsel shall be borne
equally by the Buyer and the Seller. Any fees or expenses of the Escrow Agent or
its counsel which are not paid as provided for herein may be taken from any
property held by the Escrow Agent hereunder.
(m) In the event funds transfer instructions are given (other
than in writing at the time of execution of the Agreement), whether in writing,
by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons designated
on Schedule 2 hereto, and the Escrow Agent may rely upon the confirmations of
anyone purporting to be the person or person so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually
received and acknowledged by the Escrow Agent. The parties to this Agreement
acknowledge that such security procedure is commercially reasonable.
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(n) Each party hereto, except the Escrow Agent shall, in the
notice section of this agreement provide the Escrow Agent with their Tax
Identification Number (TIN) as assigned by the Internal Revenue Service. All
interest or other income earned under the Escrow Agreement shall be allocated
and paid as provided herein and reported by the recipient to the Internal
Revenue Service as having been so allocated and paid.
(o) It is understood that the Escrow Agent and the
beneficiary's bank in any funds transfer may rely solely upon any account number
or similar identifying number provided by either of Seller or Buyer with respect
to funds to be delivered pursuant to this Agreement to the party providing such
information to identify (i) the beneficiary, (ii) the beneficiary's bank, or
(iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds
for any payment order it executes using any such identifying number, even where
its use may result in a person other than the beneficiary being paid, or the
transfer of funds to a bank other than the beneficiary's bank, or an
intermediary bank designated.
5. Choice of Law; Consent to Jurisdiction; Compliance with Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to the conflicts of law rules of such
state. The Buyer and the Seller hereby irrevocably submit to the jurisdiction of
any New York State or Federal court sitting in the State, City and County of New
York in any action or proceeding arising out of or relating to this Agreement,
and the Parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a New York State or
Federal court. The Buyer, the Seller and the Escrow Agent hereby consent to and
grant 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 process
or other papers in connection with any such action or proceeding in the manner
provided herein below shall be valid and sufficient service thereof, provided
service so made shall be deemed completed only upon actual receipt. Nothing
contained in this Section 5 shall be deemed to affect the right of any party to
serve process in any other manner that may be permitted under applicable law.
6. Successors and Assigns.
(a) This 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 any of its rights or obligations under this Agreement
without the written consent of the other Parties; provided, however, that the
Seller and Parent shall be free to merge with or into one another at any time,
provided that the surviving corporation of such merger shall thereafter succeed
to and be responsible for all obligations and rights of the Seller hereunder.
(b) Any corporation into which the Escrow Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate
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trust business of the Escrow Agent in its individual capacity may be
transferred, shall be the Escrow Agent under this Escrow Agreement without
further act.
7. Amendments; Entire Agreement. 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. This
Agreement constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties
related to the subject matter hereof.
8. Notices. All notices, deliveries or other communications required
or permitted hereunder shall be in writing and shall be deemed received (a) upon
delivery when sent by courier, (b) one Business Day after being sent by
facsimile transmission if such transmission is concurrently confirmed by
first-class registered or certified mail, return receipt requested, postage
prepaid, and (c) three days after being mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, and in any case,
addressed as follows:
if to the Buyer, to:
BMCA Key Acquisition Corp.
0000 Xxxx Xxxx
Xxxxx, XX 00000
Telecopy:
Attention: President
and to:
BMCA Key Acquisition Corp.
0000 Xxxx Xxxx
Xxxxx, XX 00000
Telecopy:
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxxxx, Xxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
if to the Seller to:
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Xxxxxx-Xxxxx, Inc.
c/o Xxxxxx Building Products, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Telecopy:
Attention: President
with a copy (which shall not constitute notice) to:
Xxxxxxx, Xxxxxx and Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and, if to the Escrow Agent, to:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Escrow Administration, 15th Floor
provided, however, notice to the Escrow Agent shall not be deemed given until
such notice is actually received by the Escrow Agent at the Escrow Agent's
address given above.
9. Authorization to use a Central Securities Depository. 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 Depository Trust Company and the
Federal Reserve Bank Entry System.
10. Execution. Execution of this Agreement by the Escrow Agent will
constitute its acceptance of the terms hereof and will acknowledge its receipt
of the Escrow Deposit.
11. Counterparts. This Agreement may be in one or more counterparts,
each of which shall be an original, and all of which, when taken together,
constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
BMCA KEY ACQUISITION CORP., on its Own
Behalf and on Behalf of the Other Buyer Related
Parties
By:
--------------------------------------------
Name:
Title:
XXXXXX-XXXXX, INC.
By:
--------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
--------------------------------------------
Name:
Title:
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SCHEDULE 1
Six and one-quarter (6.25) basis points of the highest value of collateral held
on deposit per annum or any part thereof subject to a minimum of $5,000 per
annum or any part thereof without proration for partial years, (includes
investment in a Chase Manhattan Bank Money Market Account or The Chase Manhattan
Bank Mutual Fund known as the Chase Vista Fund).
SCHEDULE 2
Telephone Number(s) for Call-Backs and
Person(s) Designated to Confirm Funds Transfer Instructions
If to the Seller:
Name Telephone Number
---- ----------------
1. Xxxxxxx X. Xxxx, CFO (000) 000-0000
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2.
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3.
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If to the Buyer:
1. Xxxxxxx X. Xxxxx, V.P. (000) 000-0000
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2.
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3.
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Telephone call-backs shall be made to each of the Seller and the Buyer if joint
instructions are required pursuant to the Agreement.
