EXHIBIT 10Q
[TO BE TYPED ON O.S.H.& R. LETTERHEAD]
______________, 1995
Xxxxxx X. Xxxxx
000 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Micro Bio-Medics Inc.
000 Xxxxxx Xxxxxxx
Xxxxxx Xxxxx, Xxx Xxxx 00000
Re: Escrow Agreement for [1/2 of number of shares to be received
by Xxxxxx pursuant to Merger Agreement]
Shares ("Escrow Shares") of Common Stock of
Micro Bio-Medics Inc. ("MBM")
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Gentlemen:
Reference is made to a certain Agreement for Merger and Reorganization (the
"Merger Agreement") dated as of November 2, 1995 among MBM, Diagnostic Leasing
Corp. ("Newco"), Stone Medical Supply Corporation ("Stone") and Xxxxxx X. Xxxxx
("Xxxxxx"), concerning, INTER ALIA, the delivery to Xxxxxx of shares ("Shares")
of MBM's common stock, par value $.03 per share and to that certain
Noncompetition, Indemnification and Release Agreement dated as of the date
hereof between Newco and Xxxxxx ("Noncompetition Agreement"). In accordance
with the Merger Agreement, Xxxxxx has directed the Exchange Agent (as defined in
the Merger Agreement"), or, in the case of a stock purchase pursuant to Section
8 of the Merger Agreement has directed MBM's transfer agent, to deliver the
certificate (the "Stock Certificate") evidencing the Escrow Shares to
Otterbourg, Steindler, Houston & Xxxxx, P.C. ("Escrow Agent") to hold in escrow
in accordance with the terms and provisions of this letter agreement.
This letter agreement sets forth the terms upon which the Escrow Agent
shall hold the Escrow Shares, together with a stock power duly endorsed in blank
by Xxxxxx ("Stock Power") in escrow. This letter also effects a 'lock-up' of
the Escrow Shares, and Xxxxxx shall not sell, transfer or otherwise dispose of
any or all of the
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Escrow Shares in any manner whatsoever during the term of this letter
agreement. All references herein to "MBM" shall include MBM and Newco, as
the case may be. All initially capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to such term in the
Merger Agreement.
35. The Escrow Agent acknowledges receipt of the Stock Certificate
and Stock Power.
36. The Escrow Shares and Stock Power shall be held in escrow by the
Escrow Agent pursuant to the terms of this letter agreement.
37. The Escrow Shares are to be held by the Escrow Agent as security
for any indemnification claims by MBM or Newco against Xxxxxx ("Indemnification
Claims") pursuant to the Noncompetition Agreement. Such Indemnification Claims
shall not be limited in amount by the value or amount of Escrow Shares held by
Escrow Agent hereunder.
38. MBM shall notify Xxxxxx and the Escrow Agent in writing of any
Indemnification Claim. Such notice to the Escrow Agent shall include, without
limitation, a statement that a copy thereof has been delivered to Xxxxxx not
less than five (5) business days prior to the date of delivery to the Escrow
Agent, a description of the claim and the amount of damages for which
compensation is sought from the Escrow Shares.
39. If Xxxxxx does not respond in writing to the Escrow Agent and MBM
within twenty (20) days of his receipt of notice of an Indemnification Claim, or
if he responds within such period acknowledging as correct the amount of
compensation sought by MBM on account of such Indemnification Claim, the Escrow
Agent shall deliver to MBM within twenty (20) days thereafter Escrow Shares in
the amount of the Indemnification Claim. For the purposes hereof, the Escrow
Shares shall be valued at the price per share at which MBM Shares are valued for
the purpose of determining the Conversion Ratio in accordance with Section 2 of
the Merger Agreement.
40. If Xxxxxx disputes the validity or amount of an Indemnification
Claim, unless he has provided written notice of such dispute to the Escrow Agent
and MBM hereof within twenty (20) days following his receipt of the notice from
the Escrow Agent of such Indemnification Claim, the Escrow Agent shall deliver
Escrow Shares in accordance with paragraph 5 as if no such dispute notices had
been given. Notwithstanding anything else contained in this Agreement, Xxxxxx
xxx dispute an Indemnification Claim under this Agreement on the basis that he
has paid and discharged the Indemnification Claim with assets other than the
Escrow Shares.
41. If Xxxxxx states in a writing delivered to the Escrow Agent that
he disputes part, but not all, of an Indemnification Claim, the Escrow Agent
shall deliver to MBM Escrow Shares equivalent to the amount of the
Indemnification Claim acknowledged by Xxxxxx as correct. The disputed portion
of any such partially
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accepted Indemnification Claim shall be treated as otherwise provided herein.
42. In the event of a dispute which becomes the subject of a lawsuit
or other legal action or proceeding before a court of competent jurisdiction,
the Escrow Agent shall continue to hold the Escrow Shares and Stock Power for as
long as such lawsuit, action or proceeding continues and any appeal from an
order therefrom remains pending and shall dispose of the Escrow Shares and Stock
Power in accordance with the award made in such proceeding or the order of any
confirming or vacating court, as the case may be.
43. During the term of the escrow:
(1) Xxxxxx shall have the right to vote the Escrow Shares (to
the extent the same have voting rights) at meetings of the
shareholders of MBM subject to the covenant contained in subparagraph
1(c) of the Noncompetition Agreement;
(2) Notwithstanding anything to the contrary contained in the
Noncompetition Agreement, cash and/or stock dividends paid on the
Escrow Shares shall be paid to the Escrow Agent who shall hold same on
the same terms and conditions as the Escrow Shares held in escrow
pursuant to the terms hereof. When the Escrow Shares are released,
dividends shall be released in accordance with the release of the
Escrow Shares to which they relate. Notwithstanding the foregoing
provisions of this subparagraph 9(2), if, prior to the release of all
of the Escrow Shares by the Escrow Agent in accordance with the terms
and provisions of this letter agreement, MBM effects a merger,
consolidation or sale of assets by virtue of which MBM's shareholders
receive consideration in a transaction which does not constitute a
tax-free reorganization under the Internal Revenue Code of 1986, as
amended, the Escrow Agent shall release to Xxxxxx fifty (50%) percent
of the consideration received in such transaction as relates to the
Escrow Shares so as to enable Xxxxxx to discharge his income tax
obligations relating to such transaction.
44. After the date two years from the date hereof and so long as no
Indemnification Claim has been asserted which is then unresolved, Escrow Agent
shall deliver to Xxxxxx all Escrow Shares then in the Escrow Agent's custody.
If any Indemnification Claim or Claims is asserted and unresolved at such date,
this Agreement shall continue in effect concerning such Indemnification Claim or
Claims and the Escrow Shares until resolution of such Indemnification Claim or
Claims in accordance with paragraph 8 hereof.
45. The Escrow Agent shall not be responsible for the genuineness of
any certificate or signature when acting upon any notice, affidavit, request,
consent, instruction, check or other instrument believed by it in good faith to
be genuine or to be signed or presented by the proper person, or duly
authorized, or properly made. The Escrow Agent shall have no responsibility
except for the performance of its
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express duties hereunder and no additional duties shall be inferred herefrom
or implied hereby. The Escrow Agent shall have the right to continue to
represent MBM, Newco and their respective affiliates and related persons.
46. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any of the parties hereto or from third persons with respect to the property
held hereunder, which, in its opinion, are in conflict with any provision of
this letter, it shall be entitled to refrain from taking any action (other than
to keep safely said property) until it shall be directed otherwise in writing by
all the parties hereto and said third persons, if any, or by a final order or
judgment of a court of competent jurisdiction.
47. No amendment or modification of this letter agreement or waiver
of its terms shall affect the right and duties of the Escrow Agent unless its
written consent thereto shall have been obtained.
48. The Escrow Agent shall not be responsible or liable for any act
or omission on its part in the performance of its duties as Escrow Agent under
this letter agreement except as such act or omission constitutes wilful
misconduct, gross negligence or fraud. The Escrow Agent shall not be liable for
the default or misconduct of any employee, agent or attorney appointed by it who
shall have been selected with reasonable care.
49. The Escrow Agent shall serve without separate fee therefor, but
shall be reimbursed for all of its out-of-pocket disbursements in connection
with its serving as Escrow Agent under this Agreement. The Escrow Agent shall
not be required to institute or defend any action involving any matters referred
to herein or which affects it or its duties or liabilities hereunder unless or
until requested to do so by any party to this letter agreement and then only
upon receiving full indemnity, in character satisfactory to the Escrow Agent,
against any and all claims, liabilities and expenses in relation thereto
including attorneys' fees. In the event of any dispute among the parties hereto
with relation to the Escrow Agent or its duties (i) the Escrow Agent may act or
refrain from acting in respect of any matter referred to herein in full reliance
upon and by and with the advice of counsel selected by it (which may be members
of its own law firm) and shall be fully protected in so acting or in refraining
from acting upon the advice of such counsel, or (ii) the Escrow Agent may
refrain from acting until required to do so by an order of a court of competent
jurisdiction.
50. The Escrow Agent may at any time resign hereunder by giving
written notice of its resignation to the other parties hereto at least ten (10)
days prior to the date specified for such resignation to take effect, and upon
the effective date of such resignation, all securities, cash, instruments,
documents and all other property then held by the Escrow Agent hereunder shall
be delivered by it to such person as may be designated in writing by the other
parties hereto whereupon all obligations of the Escrow Agent hereunder shall
cease and terminate. If no such person shall have been designated by such date,
all obligations of the Escrow Agent hereunder shall nevertheless cease and
terminate. Its sole responsibility thereafter shall be to keep
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safely all property then held by it hereunder and to deliver the same to a
person designated by all other parties hereto or in accordance with the
directions of a final order or judgment of a Court of competent jurisdiction.
51. The parties hereto irrevocably consent and submit to the non-
exclusive jurisdiction of the Supreme Court of the State of New York in New York
County and the United States District Court for the Southern District of New
York in connection with any action, proceeding or claim arising out of or
relating to this Agreement. Xxxxxx hereby irrevocably appoints and designates
the law firm of Ruskin, Moscou, Xxxxx & Faltischek, P.C. (or its successor in
business) as his agent for service of process in New York and agrees to consider
any legal process or any demand or notice made or served on the said agent as
being made on him. Xxxxxx hereby agrees that separate confirmation by such
agent of the foregoing irrevocable appointment as agent for service of process
is not required.
52. This letter agreement contains the entire agreement of the
parties concerning the subject matter hereof, and may not be amended, modified,
or terminated except by a writing signed by all parties hereto.
53. Any and all notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or sent by certified or registered mail, postage prepaid, to the parties at the
addresses indicated on the first page hereof or to such addresses as may from
time to time be designated by any of them in writing by notice similarly given
to all parties in accordance with this paragraph 19. Notices under this letter
agreement shall be deemed delivered on the date delivered personally to the
recipient or on the date postmarked by the United States Post Office, as the
case may be.
54. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND WITH RESPECT TO, IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT, ANY INSTRUMENT, DOCUMENT OR GUARANTY DELIVERED
PURSUANT HERETO, OR THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION,
COLLECTION OR ENFORCEMENT HEREOF.
55. This letter agreement shall be governed by and construed
according to the laws of the State of New York.
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If the foregoing correctly states your understanding of our agreement,
kindly indicate your assent by signing below where indicated.
Very truly yours,
OTTERBOURG, STEINDLER, HOUSTON
& XXXXX, P.C.
By:________________________
Xxxxxx X. Xxxxxxx,
A Member of the Firm
READ AND AGREED TO:
___________________________________
Xxxxxx X. Xxxxx
MICRO BIO-MEDICS INC.
By:______________________
Title:___________________
DIAGNOSTIC LEASING CORP.
By:______________________
Title:___________________
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