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EXHIBIT 10
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this
29th day of December, 1996, by and among Performance Food Group Company, a
Tennessee corporation ("PFG"), McLane Foodservice-Temple, Inc., a Texas
corporation ("Temple"), XxXxxx Company, Inc., a Texas corporation ("Parent")
(Temple and Parent are collectively the "Seller"), and First Union National
Bank of Virginia in Richmond, Virginia, a national banking association (the
"Escrow Agent").
WHEREAS, pursuant to an Asset Purchase Agreement dated October 22,
1996, by and between PFG and Seller (the "Asset Purchase Agreement"),
Performance Food Group of Texas, L.P., a Texas limited partnership ("PFG of
Texas"), as PFG's assignee under the Asset Purchase Agreement, shall purchase
from Seller substantially all of the assets of Temple and certain assets of
Parent (PFG and PFG of Texas are referred to collectively herein as the
"Buyer");
WHEREAS, Section 2.2(b) of the Asset Purchase Agreement requires that
Four Million Dollars ($4,000,000) of the Purchase Price (as that term is
defined in the Asset Purchase Agreement), together with any and all interest
and/or income accruing thereon, be held in escrow (the "Escrow Amount") until
satisfaction of the terms and conditions set forth in Article 10, Section 2.3
and Section 4.20 of the Asset Purchase Agreement; and
WHEREAS, Buyer and Seller desire to appoint Escrow Agent to hold,
invest, and disburse the Escrow Amount in accordance with the terms and
conditions hereinafter set forth, and Escrow Agent has agreed to act as such.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
11. Delivery of Proceeds. Contemporaneous with the execution of
this Agreement, Buyer will deliver at Closing (as that term is defined in the
Asset Purchase Agreement) to Escrow Agent for deposit into a special account
the Escrow Amount. Escrow Agent hereby acknowledges receipt of the Escrow
Amount.
12. Deposit of Escrow Amount. Upon receipt of the Escrow Amount
in immediately-available funds from Buyer, Escrow Agent shall invest the Escrow
Amount in accordance with the written instructions jointly delivered by Buyer
and Seller. If no joint written instructions are received by Escrow Agent,
Escrow Agent may deposit $3,000,000 of the Escrow Amount into interest bearing
government securities or a money market fund consisting of government
securities having a maturity not exceeding the Interim Release Date (as defined
herein) and may deposit the remainder of the Escrow Amount into interest
bearing government securities having a maturity not exceeding the Final Release
Date (as defined herein).
13. Holding and Distribution of Escrow Amount. Escrow Agent will
hold the Escrow Amount until it has been directed in accordance with the
following:
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(a) The Escrow Agent shall release all or part of the
Escrow Amount to Buyer from time to time (i) on receipt of and in
accordance with (A) joint written instructions purportedly signed by
authorized officers of Buyer and Seller or (B) an order or decree or
final and non-appealable judgment of a court of competent jurisdiction
or (ii) as provided below.
(b) On April 25, 1997, the Escrow Agent shall release
from the Escrow Account the balance of the Escrow Account less
$1,000,000 (including any and all interest and/or income accrued on
such released amount) to Seller, subject to the provisions of Section
3(c) below (the "Interim Release Date"). On that date which is one
year from the Closing Date, the Escrow Agent shall release the
remaining balance of the Escrow Amount (which includes any and all
interest and/or income accrued on such amount) to Seller, subject to
the provisions of Section 3(c) below (the "Final Release Date").
(c) Notwithstanding anything to the contrary contained
herein, if on or before the Interim Release Date or the Final Release
Date, the Escrow Agent has received from Buyer a signed and completed
notice in the form of Exhibit A hereto ("Claim Notice") specifying (i)
the amount claimed by Buyer as owing to Buyer under the Asset Purchase
Agreement and designated in the Claim Notice as the "Claimed
Indemnification Amount" and (ii) in the case of the Interim Release
Date, that the Claimed Indemnification Amount exceeds the Escrow
Amount after deducting the amount proposed to be repaid under Section
3(b), the Escrow Agent shall continue to hold and retain such Claimed
Indemnification Amount until release is otherwise required pursuant to
Paragraphs 3(a) or 3(b) above.
(d) Promptly on receipt from Buyer of the Claim Notice,
the Escrow Agent will forward a copy of the Claim Notice to Seller by
registered or certified mail, postage prepaid, return receipt
requested, to Seller's address set forth in Section 6(b) hereof.
Unless Seller delivers to the Escrow Agent a signed notice in the form
of Exhibit B hereto ("Contest Notice"), which must be received by
Escrow Agent within thirty (30) days after the date of Seller's
receipt of the Claim Notice, Seller shall be deemed to have waived any
and all right to contest such claim, and promptly thereafter the
Escrow Agent shall, without further instructions, deliver to Buyer the
Claimed Indemnification Amount. If, prior to making such payment to
Buyer, Escrow Agent shall have received written notice from Buyer that
such indemnification has been satisfied by Seller outside of this
Escrow Agreement, Escrow Agent shall withhold such payment. If the
Escrow Agent duly receives a Contest Notice, it shall endeavor to send
a copy of such Contest Notice to Buyer within fifteen days of its
receipt, to Buyer's address set forth in Section 6(a) hereof.
(e) In the event that Seller shall deliver a Contest
Notice in accordance with Section 3(d) above, Seller and Buyer shall
attempt in good faith to agree upon the rights of the respective
parties with respect to each of the claims which are the subject of
the related Claim Notice. If Seller and Buyer should so agree, a
memorandum setting forth such agreement shall be prepared and signed
by both parties and shall be furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and
distribute funds from the Escrow Amount in accordance with the terms
thereof. If, within ten (10) days after delivery to Buyer of said
Contest Notice and after good faith
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negotiations, no such agreement can be reached, Buyer and Seller shall
each select an arbitrator. Such arbitrators shall promptly select a
third arbitrator. Buyer and Seller shall each pay the fees and
expenses of their respective arbitrators and the fees of the third
arbitrator shall be paid one-half by each party. The decision of the
arbitrators so appointed as to the validity of any claim in such Claim
Notice shall be binding and conclusive upon the parties to this Escrow
Agreement and may be entered in any court of competent jurisdiction.
Anything to the contrary in this Escrow Agreement notwithstanding, the
Escrow Agent shall be entitled to act in accordance with such decision
and make or withhold payment out of the Escrow Amount in accordance
therewith. Any such arbitration shall be held in Atlanta, Georgia,
under the rules then and there in effect of the American Arbitration
Association (the "Association"). The parties hereto shall pay their
own respective expenses of the arbitration, and the cost of the
Association shall be borne one-half by each party.
14. Limitations of Liability and Other Rights of Escrow Agent.
Escrow Agent may employ such legal counsel and other experts as it may deem
necessary to retain for advice in connection with its obligations hereunder,
and may rely upon the advice of such counsel or experts, and shall be protected
from any liability of any kind for actions taken in reasonable reliance upon
such opinion(s) of counsel and other experts. All fees and expenses of counsel
or experts for the Escrow Agent will be paid by Buyer. For agreeing to act as
Escrow Agent hereunder, Escrow Agent shall be paid an annual fee of $1,200,
paid in advance, one-half by Buyer and one-half by Seller.
Escrow Agent may resign by transmitting written notice thereof
to Buyer and Seller. In the event of any such resignation, Buyer and Seller
may appoint a successor Escrow Agent which shall be a banking association or
trust company doing business in Virginia, and shall notify Escrow Agent of the
identity of and appointment of such successor. If Buyer and Seller are unable
to agree upon a successor within 30 days after notice is sent by Escrow Agent
of its resignation, Escrow Agent shall be entitled to appoint its successor,
which shall be a national banking association or trust company doing business
in Virginia. The Escrow Agent may continue to serve until its successor
accepts the escrow and receives the funds or the Escrow Agent may interplead
the Escrow Amount and interest into the registry of the Chancery Court sitting
in Henrico County, Virginia, deducting from the Escrow Amount the costs and
legal fees and expenses of such action. Any successor Escrow Agent shall have
all of the rights, obligations and immunities of Escrow Agent set forth herein.
Upon resignation of Escrow Agent, Escrow Agent shall be discharged of all of
its duties and obligations hereunder, but shall be required to refund such
unearned portion of its fee as has already been paid.
The Escrow Agent shall have no duties or obligations hereunder
except as expressly set forth herein, shall be responsible only for the
performance of such duties and obligations and shall not be required to take
any action otherwise than in accordance with the terms hereof. The Escrow
Agent shall not be in any manner liable or responsible for any loss or damage
arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false
representations, the exercise of its discretion, or any other reason, except
for its gross negligence or willful misconduct. The Escrow Agent may rely on,
and shall be protected in acting or refraining from acting on, any instrument
believed by it, in good faith, to
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be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall not be liable for any action taken or omitted by it in
good faith and believed by it to be authorized hereby. Buyer and Seller each
hereby release Escrow Agent from any liability for any act done or omitted to
be done by Escrow Agent in the performance of Escrow Agent's duties hereunder,
except for acts or omissions that constitute gross negligence or willful
misconduct. In no event will Escrow Agent have any liability for
consequential, special, or incidental damages of any kind.
It is understood and agreed that Escrow Agent assumes no
liability under this Agreement except that of a stakeholder. If there is any
dispute as to whether Escrow Agent is obligated to deliver the Escrow Amount
(or any portion thereof) and/or the interest thereon, or as to whom the Escrow
Amount (or any portion thereof) and/or the interest thereon is to be delivered,
Escrow Agent will not be obligated to make any delivery of any of the Escrow
Amount and/or the interest thereon, but in such event may hold the Escrow
Amount and/or the interest thereon until receipt by Escrow Agent of an
authorization in writing signed by the Buyer and the Seller directing the
disposition thereof, or in the absence of such authorization, Escrow Agent may
hold the Escrow Amount and/or the interest thereon until the final
determination of the rights of the parties in an appropriate proceeding. If
such written authorization is not given, or proceedings for such determination
are not begun and diligently continued, Escrow Agent is not required to bring
an appropriate action or proceeding for leave to deposit the Escrow Amount (or
any portion thereof) and/or interest in court pending such determination but
may, at Escrow Agent's sole discretion, make a deposit of the Escrow Amount (or
any portion thereof) and/or interest into a court of competent jurisdiction and
in such event, all liability and responsibility as escrow agent shall terminate
upon such deposit having been made. Upon making delivery of the Escrow Amount
(or any remaining portion thereof) and/or interest in the manner provided for
in this Agreement, Escrow Agent shall have no further liability in the matter.
In the event that Escrow Agent renders any service hereunder
not provided for in this Agreement, or that there is any assignment of any
interest in the subject matter of this Agreement or modification hereof, or
that any controversy arises hereunder or that Escrow Agent is made a party to,
or intervenes in, any litigation pertaining to this Agreement, Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs and expenses occasioned by such default, delay, controversy or
litigation, and Escrow Agent shall have the right to retain all documents and
other things of value at any time held by it hereunder until such compensation,
fees, costs and expenses have been paid. Buyer hereby promises to pay the
aforesaid sums upon demand.
15. Indemnity. The Buyer and Seller hereby jointly and severally
agree to defend Escrow Agent (with counsel satisfactory to Escrow Agent), and
hereby indemnify and hold Escrow Agent free and harmless, from and against any
claim, liability, expenses, damages, suit, cost (including reasonable
attorneys' fees and disbursements) or other obligation incurred or arising out
of or in connection with this Agreement, the Escrow Amount and/or the Escrow,
excluding only Escrow Agent's liability for its own willful misconduct or gross
negligence.
16. Notices. All notices, requests, permissions, waivers, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given or served if signed by
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the respective persons giving them (in the case of any corporation the
signature shall be by an officer thereof) and hand-delivered or mailed by
registered or certified mail, postage prepaid.
(a) if to Buyer, to:
Performance Food Group Company
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
with a copy to:
Bass, Xxxxx & Xxxx PLC
First American Center
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: F. Xxxxxxxx Xxxxxx, Xx.
(b) if to Seller, to:
XxXxxx Company, Inc.
0000 XxXxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: President
with a copy to:
XxXxxx Company, Inc.
0000 XxXxxx Xxxxxxx
P.O. Box 6115
Temple, Texas 76503-6115
Attention: General Counsel
(c) if to Escrow Agent, to:
First Union National Bank of Virginia
Corporate Trust Department
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Such names and addresses may be changed by such notice. Notices served in
accordance with this Section 6 shall be deemed to have been received, if
hand-delivered, on the date delivered, and if mailed, on the third (3rd) day
after the day deposited in the mail; provided that notice to Escrow Agent shall
be effective only upon receipt thereof.
17. Representations and Warranties. The Buyer and the Seller
severally and not jointly represent and warrant to Escrow Agent as follows:
(a) This Escrow Agreement has been duly authorized by any
necessary corporate or trust action, has been duly executed by the Buyer and
the Seller, has been entered into
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in good faith, and constitutes the legal, valid and binding obligations of the
Buyer and the Seller.
(b) The payment of the Escrow Amount according to the
provisions herein is made for fair consideration, is not made with actual or
constructive intent to hinder, delay, or defraud any creditors of Buyer or the
Seller, and is not made on account of any pre-existing debt of the Buyer or the
Seller.
18. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns shall be deemed to refer to the
masculine, feminine, singular or plural, as the identity of the persons, firm
or corporation may require in the context thereof.
19. Assignment. This Agreement may not be assigned by any party
hereto without the prior written consent of all of the other parties hereto and
shall be binding upon and inure to the benefit of each of the parties and their
respective personal representatives, successors and permitted assigns, if any.
20. Entire Agreement; Amendment. This Agreement constitutes the
entire and sole agreement between the parties hereto with respect to the
subject matter hereof and supersedes and cancels all prior agreements with
respect thereto. This Agreement may not be amended except by an instrument in
writing duly executed by all of the parties to this Agreement to be charged
therewith and delivered on behalf of each of such parties.
21. Applicable Law, Jurisdiction and Venue. This Agreement shall
be interpreted, construed and enforced in accordance with the laws of the
Commonwealth of Virginia. The Buyer and Seller hereby irrevocably consent to
the jurisdiction of all state and federal courts sitting in Henrico County,
Virginia, agree that venue for any such action shall lie exclusively in such
courts, and agree that such courts shall be the exclusive forum for any legal
actions brought in connection with this Escrow Agreement, the Escrow, or the
relationship among the parties hereto.
22. Breach. If any party (other than Escrow Agent) to this
Agreement is finally adjudicated to have breached this Agreement, the breaching
party shall reimburse all expense, including reasonable attorneys' fees and
court costs, incurred, respectively, by the other parties as a result of such
breach.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first written above.
ESCROW AGENT:
FIRST UNION NATIONAL BANK OF VIRGINIA
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Corporate Trust Officer
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BUYER:
PERFORMANCE FOOD GROUP COMPANY
By: /s/ Xxxxx X. Xxxxx
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Title: Executive Vice President
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SELLER:
MCLANE FOODSERVICE-TEMPLE, INC.
By: /s/ W. Xxxxx Xxxxxx
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Title: President
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XXXXXX COMPANY, INC.
By: /s/ W. Xxxxx Xxxxxx
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Title: President
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EXHIBIT A
"Claim Notice"
To: First Union National Bank of Virginia From: Performance Food Group Company
Corporate Trust Department 0000 Xxxxxxx Xxxxx, Xxxxx 000
Post Office Box 26944 Richmond, Virginia 37087
Xxxxxxxx, Xxxxxxxx 00000 Attention: Xx. Xxxxx Xxxxx
Attention: Xxxxxxx X. Xxxxxx
Re: Escrow Agreement ("Escrow Agreement") between Performance Food Group Company ("Buyer"),
McLane Foodservice -- Temple, Inc., XxXxxx Company, Inc. (collectively "Seller"), and
First Union National Bank of Virginia (the "Escrow Agent"), dated October __, 1996
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With regard to the above-referenced Escrow Agreement, the Buyer hereby
certifies to the Escrow Agent as follows:
1. The undersigned is the Buyer under the Escrow Agreement, and
the individual executing this Notice on behalf of the undersigned has full
power and authority to execute this Notice on behalf of the Buyer.
2. The Seller is obligated to discharge certain obligations under
Article 10, Section 2.3, and Section 4.20 of the Asset Purchase Agreement
described in the Escrow Agreement ("Asset Purchase Agreement"), which Seller
has not discharged.
3. The Buyer is entitled to receive from Escrow Agent under the
Escrow Agreement, from the Escrow Amount, the sum of $_____ as the amount of
indemnification due to Buyer under the Asset Purchase Agreement (such amount
being referred to as the "Claimed Indemnification Amount").
IN WITNESS WHEREOF, the Buyer has made and given this certification to
the Escrow Agent on this _____ day of __________, 19___.
Buyer:
PERFORMANCE FOOD GROUP COMPANY
Date of Claim Notice:
By:
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__________, 19___ Title:
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EXHIBIT B
"Contest Notice"
To: First Union National Bank of Virginia From: XxXxxx Company, Inc.
Corporate Trust Department 0000 XxXxxx Xxxxxxx
Post Office Xxx 00000 Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Re: Escrow Agreement ("Escrow Agreement") between Performance Food Group Company ("Buyer"),
McLane Foodservice -- Temple, Inc., XxXxxx Company, Inc. (collectively "Seller"), and
First Union National Bank of Virginia (the "Escrow Agent"), dated October __, 1996
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With regard to the above-referenced Escrow Agreement, the Seller
hereby certifies and represents to the Escrow Agent as follows:
1. The undersigned is the Seller under the Escrow Agreement.
2. The Seller has received a copy of the Claim Notice from the
Buyer dated _____________ (the "Claim Notice"), and hereby gives notice to the
Escrow Agent that Seller contests such Claim Notice.
3. Provided, however, that Seller agrees that a portion of the
claimed indemnification amount specified in the Claim Notice may be paid to
Buyer, as described below, but the remainder is contested by Seller:
Indemnification Amount Claimed
by Buyer in Claim Notice: Amount Objected to by Seller:
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$______________________ $_________________
4. To the extent (if any) the amount specified in the Claim
Notice as the "Claimed Indemnification Amount" (as such term is defined in the
Claim Notice), exceeds the amount specified above under the heading "Amount
Objected to by Seller," Seller agrees that the Escrow Agent may deliver such
excess amount to the Buyer.
IN WITNESS WHEREOF, the Seller has made and given this certification
to the Escrow Agent on this _______ day of __________, 19__.
Seller:
XXXXXX COMPANY, INC.
By:
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Title:
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