EXHIBIT 10.8
[EXECUTION COPY]
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (this "Agreement") made and entered into as of
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July 22, 1998, by and between Xxxxxxx Xxxxx Rental, L.P., a Pennsylvania limited
partnership (the "Company") and Xxxxxxx Iron and Metal Company, a Pennsylvania
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general partnership ("AIM"), and Xxxxx Brothers Xxxxxxxx & Co., a New York
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general partnership, as escrow agent (the "Escrow Agent").
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WHEREAS, the Company, AIM and certain other persons entered into a
Recapitalization Agreement, dated as of July 22, 1998, (the "Recapitalization
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Agreement"), pursuant to which, among other things, the Company has distributed
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certain amounts to AIM;
WHEREAS, the Recapitalization Agreement contains certain distribution
amount adjustment provisions and certain indemnification provisions for the
benefit of the Company; and
WHEREAS, as security for the performance of AIM's obligations under
such distribution amount adjustment provisions and such indemnification
provisions, the Recapitalization Agreement provides for the execution and
delivery of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. Capitalized terms used herein but not otherwise defined
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shall have the meanings given to such terms in the Recapitalization Agreement.
2. Delivery of Funds. Pursuant to Section 1.02(e) of the
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Recapitalization Agreement, simultaneously with execution and delivery of this
Agreement, on the Closing Date, the Company has deposited an aggregate of
$4,000,000 (the "Escrow Amount") with the Escrow Agent. The Escrow Agent shall
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use the Escrow Amount to create a fund (the "Escrow Fund") (such term not to
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include the interest thereon) which will be subject to the terms and conditions
of this Agreement. The Escrow Agent hereby acknowledges receipt of the Escrow
Amount.
3. Escrow Fund Income.
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(a) Investments. The Escrow Agent shall invest the Escrow Fund in any
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of the following investments as directed by AIM from time to time: (i)
securities issued or directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof; (ii) certificates of
deposit and Eurodollar time deposits and overnight bank deposits with any
domestic commercial bank having combined capital and surplus in excess of
$175,000,000; (iii) repurchase obligations with a term of not more than seven
days for underlying securities of the type described in clauses (i) and (ii)
above entered into with any financial institution meeting the qualifications
specified in clause (ii) above; and (iv) commercial paper rated A-1 or the
equivalent thereof by Standard & Poor's Corporation or P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc. All investments made by the Escrow
Agent prior to the first anniversary of the date of this Agreement shall mature
on or prior to such first anniversary. To the extent that any portion
of the Escrow Fund is withheld for Pending Claims (as defined below) pursuant to
Section 5(b) below, the Escrow Agent shall invest such funds in a taxable money
market account of the Escrow Agent until such time as such funds are required to
be distributed hereunder.
(b) Absence of Direction from AIM. In the absence of any instructions
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from AIM as to investment of the Escrow Fund, the Escrow Amount shall be
invested in a taxable money market account of the Escrow Agent.
(c) Treatment of Interest. Any interest received by the Escrow Agent
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("Escrow Income") shall accrue to the Escrow Fund and remain in the Escrow Fund
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and shall be paid to AIM, on a monthly basis on the fifth business day of each
month to the extent that Escrow Income has accrued and is available to be paid
on the investments made by the Escrow Agent. Fees associated with the Escrow
Income, including fees associated with the wiring of such Income, shall be
deducted from such monthly payment.
4. Claims.
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(a) Notice of Claim for Distribution Amount Adjustment. Upon a final
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determination of the Distribution Amount in accordance with the Recapitalization
Agreement, the Company and AIM shall, jointly deliver to the Escrow Agent
written notice (the "Distribution Amount Adjustment Notice") setting forth the
amount, if any, by which the Actual Distribution Amount is less than the
Estimated Amount paid at the Closing. Within two (2) days after receipt by the
Escrow Agent of the Distribution Amount Adjustment Notice, the Escrow Agent
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shall pay to the Company the amount of such shortfall in cash in accordance with
Section 4(c) below. The Company shall seek any amounts due to it in accordance
with the Recapitalization Agreement with respect to the Distribution Amount
Adjustment in excess of the Escrow Amount directly from AIM. In the case that
the Escrow Fund holds greater than $2,000,000 after payment of the Distribution
Amount Adjustment, such excess of $2,000,000 shall be distributed by the Escrow
Agent to AIM.
(b) Notice of Claims for Indemnification. Upon a determination by the
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Company that the Company has a claim for indemnification under Section 8 of the
Recapitalization Agreement (each, an "Indemnity Claim"), the Company shall
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deliver to the Escrow Agent a copy of the notice (each, a "Claim Notice")
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delivered to AIM pursuant to the Recapitalization Agreement. With respect to
each Indemnity Claim, the Escrow Agent shall pay the following amounts to the
Company from the Escrow Amount in cash in accordance with Section 4(c) below:
(i) the amount of such Indemnity Claim if thirty (30) days
shall have expired since the Company delivered the Claim Notice to the
Escrow Agent and the Escrow Agent shall not have received written
notice within such time from AIM that the amount of the claim is being
contested;
(ii) the amount of such Indemnity Claim (or portion thereof)
directed to be so paid in any written notice received by the Escrow
Agent from AIM; and
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(iii) the amount of any arbitration award reflected in a final
determination of which the Escrow Agent shall have received a certified
copy, in favor of the Company in any proceeding for indemnity under the
Recapitalization Agreement;
(c) Payment. All claims of the Company against the Escrow Amount
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shall be paid promptly out of cash in the Escrow Fund to the extent thereof. To
the extent that cash in the Escrow Fund is insufficient to pay a claim of the
Company in the amount and on the date determined in accordance with Section 4(a)
or Section 4(b) above, the Escrow Agent shall so notify both the Company and AIM
and AIM shall have five (5) days from the time the Escrow Agent delivers notice
thereof to instruct the Escrow Agent as to which non-cash assets of the Escrow
Fund are to be sold or liquidated for the purpose of paying the claim. If such
instructions are not given by AIM within such period, such instructions shall be
given by the Company.
5. Distribution and Termination of the Escrow Fund.
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(a) Escrow Fund Distribution. On the first anniversary of the date of
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this Agreement, the Escrow Agent shall distribute the remainder of the Escrow
Fund (along with accrued interest thereon) to AIM; provided that if any
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Indemnity Claim (of which the Escrow Agent has received a Claim Notice on or
before such date) remains pending on such dates (each such pending claim
hereinafter referred to as a "Pending Claim"), the Escrow Agent shall withhold
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in the Escrow Fund from the amount to be otherwise distributed an amount equal
to such Pending Claim(s). Notwithstanding the foregoing, any distributions
provided for herein shall be subject to the rights of the Escrow Agent under
Section 6(d) below.
(b) Withheld Assets. Assets withheld pursuant to Section 5(a) above
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for individual Pending Claims shall be retained by the Escrow Agent in the
Escrow Fund and paid to the Company from the Escrow Amount in cash in accordance
with Section 4(c) above as follows:
(i) the amount of such Pending Claim if thirty (30) days shall
have expired since the Company delivered to the Escrow Agent and AIM a
copy of the Claim Notice with respect to such Pending Claim and the
Escrow Agent shall not have received written notice within such time
from AIM that the amount of the Pending Claim is being contested;
(ii) the Escrow Agent receives written direction from both the
Company and AIM directing the Escrow Agent to disburse the assets
withheld for the Pending Claim, in which case disbursement shall be
made in accordance with such direction; and
(iii) the Escrow Agent receives a certified copy of an
arbitration award reflected in a final determination, in which case
disbursement of the assets withheld for the Pending Claim shall be made
in the amount or amounts, if any, of the award or awards set forth in
such final determination in favor of the Company in any proceeding for
indemnity under the Recapitalization Agreement.
(c) Disposition of Pending Claims. At each such time as any Pending
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Claim (or portion thereof) is disposed of and no longer pending, the Escrow
Agent shall distribute to AIM, the balance
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of the assets withheld in respect of such Pending Claim disposed of and no
longer pending. A Pending Claim shall be considered disposed of and no longer
pending when (i) an event described in Section 5(b)(ii) or 5(b)(iii) of this
Agreement has occurred (unless there are amounts still under claim or dispute in
respect of a Pending Claim after giving effect to the amounts paid, in which
case the Escrow Agent shall continue to retain in the Escrow Fund the amounts
still under claim or dispute) or (ii) the Escrow Agent has received a certified
copy of a final determination of an arbitration award in any proceeding for
indemnity under the Recapitalization Agreement in respect of such Pending Claim
and the Escrow Agent has distributed to the Company any amount required pursuant
to Section 5(b)(iii) of this Agreement.
(d) Termination. When the entire Escrow Fund has been distributed in
accordance with Section 4 and/or this Section 5, this Escrow Agreement shall
terminate.
6. Miscellaneous.
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(a) Escrow Agent Obligations. The obligations and duties of the
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Escrow Agent are confined to those specifically enumerated in this Agreement.
The Escrow Agent shall not be subject to, nor be under any obligation to
ascertain or construe the terms and conditions of the Recapitalization Agreement
or any other instrument, whether or not now or hereafter deposited with or
delivered to the Escrow Agent or referred to in this Agreement, nor shall the
Escrow Agent be obligated to inquire as to the form, execution, sufficiency, or
validity of any such instrument as to the identity, authority, or rights of the
person or persons executing or delivering the same.
(b) Escrow Agent Liability. The Escrow Agent and its partners,
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officers and employees shall not be personally liable for any act which it may
do or omit to do hereunder in good faith or for any mistake of fact or law for
any action it may take or refrain from taking in connection herewith unless
caused by or arising out of its own gross negligence or willful misconduct. The
Escrow Agent shall not be held liable for any losses that may occur as the
result of the investment or reinvestment of the Escrow Fund.
(c) Conflicts. If the Escrow Agent should receive or become aware of
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any conflicting demands or claims with respect to this Agreement, or the rights
of any of the parties hereto, or any money, property, or instruments deposited
herein or affected hereby, the Escrow Agent shall have the right in its sole
discretion, without liability for interest or damages, to discontinue any or all
further acts on its part until such conflict is resolved to its satisfaction
and/or to commence or defend any action or proceeding (for which the Escrow
Agent shall be reimbursed for reasonable legal fees and expenses)for the
determination of such conflict.
(d) Indemnification of Escrow Agent. Subject to the provisions of
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Section 6(b) above, the Company and AIM will jointly and severally indemnify and
hold the Escrow Agent harmless from and against all costs, damages, judgments,
attorneys' fees, expenses, obligations, and liabilities of every kind and nature
which the Escrow Agent may incur, sustain, or be required to pay in
connection with or arising out of this Agreement, and to pay to the Escrow Agent
on demand the amount of all such consents, damages, judgments, attorneys' fees,
expenses, obligations, and
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liabilities, except such liability and expense as may result from the gross
negligence or willful misconduct of the Escrow Agent.
If the Escrow Agent is entitled to receive, pursuant to this Section
6(d), any amount in indemnification, then, as between the Company, on the one
hand, and AIM, on the other hand, each shall be responsible for one-half thereof
and shall be entitled to contribution from the other or others for any excess
paid to the Escrow Agent. In the event any such indemnification expense shall
arise by reason of acts or omissions of the Company or AIM in violation of any
of their respective obligations under this Agreement, then the party or parties
which is or are in such violation shall be liable for payment of the amount of
such part of the indemnification expense arising from such acts or omissions.
(e) Escrow Agent's Conduct; Fees. In performing its duties hereunder,
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the Escrow Agent may rely on statements or documents furnished to it by an
officer of the Company or by AIM, or any other evidence deemed by the Escrow
Agent to be reliable. The Escrow Agent shall be entitled to the payment of
compensation for its services hereunder, which shall be set forth in Schedule A
hereto, and which shall be paid by the Company. The Escrow Agent hereby
acknowledges sufficiency of such consideration.
(f) Successors. This Escrow Agreement shall be binding on and inure
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to the benefit of the Company, AIM, the Escrow Agent and their respective
successors.
(g) Representatives and Notices. All notices, requests, demands,
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claims, and other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be deemed duly
given if (and then one (1) business day after) it is sent by reputable overnight
courier service, and addressed to the intended recipient as set forth below:
To AIM:
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Xxxxxxx Iron and Metal Company
0000 Xxxx Xxxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
with a copy to:
(which copy shall not constitute notice to AIM)
Xxxxxxxx Xxxxxxx
Xxx Xxxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
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To the Company:
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Xxxxxxx Xxxxx Rental, L.P.
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Xxxxxx Xxxxxx
with a copy to:
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(which copy shall not constitute notice to the Company)
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Learner
E. Xxxx Xxxxx
To the Escrow Agent:
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Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Any party hereto may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means, including delivery in person, by certified or registered
mail (with return receipt requested) or facsimile transmission, but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party hereto may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party hereto notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed
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in accordance with the domestic laws of the Commonwealth of Massachusetts
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Massachusetts or any other jurisdiction) that
would cause the application to this Agreement of the laws of any jurisdiction
other than the Commonwealth of Massachusetts.
(i) Amendments. No amendment of any provision of this Agreement shall
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be valid unless the same shall be in writing and signed by the Escrow Agent, the
Company and AIM, on behalf of AIM.
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(j) Reports from the Escrow Agent. The Escrow Agent shall furnish to
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the Company and AIM on a monthly basis a report listing each transaction made by
the Escrow Agent with respect to this Agreement.
(k) Distributions. All payments and distributions to the Company or
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AIM, shall be by wire transfer to the following accounts:
To AIM:
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Laurel Bank
ABA#: 031 301 053
For the account of
Xxxxxxx Iron and Metal Co.
Account No.: 601 004 17
To the Company:
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Fleet Bank
ABA#: 011 900 571
For the account of
Xxxxxxx Xxxxx Rental, L.P.
Account No.: 9415845022
(l) Withdrawal of Escrow Agent. The Escrow Agent may, at any time and
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for any reason upon the giving of ten (10) days prior notice and without
liability for interest or damages, withdraw as Escrow Agent hereunder, in which
case the Company and AIM will promptly select a successor Escrow Agent. If the
Escrow Agent shall withdraw as Escrow Agent, the Company and AIM shall jointly
appoint a successor.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.
XXXXXXX XXXXX RENTAL, L.P.
By: ACR Management, L.L.C., its general
partner
By: /s/ Xxxxxx X. Xxxxxx
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Its: Secretary
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XXXXXXX IRON AND METAL COMPANY
By: Xxxxxxx Xxxxx Rental, Inc., its managing
general partner
By: /s/ Xxxxx X. Xxxxxxx
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Its: General Partner
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/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Chief Financial Officer
XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: Manager
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SCHEDULE A
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Re: Xxxxxxx Xxxxx Rental, L.P. Escrow Account
The Escrow Agent's annual fee for services provided in accordance with the terms
of the Escrow Agreement shall be $5,000.00.
In addition, a charge of $1.00 per $1,000.00 of funds invested in any
instruments not sponsored by the Escrow Agent, including Treasury securities,
Repurchase Agreements, and Commercial Paper, subject to a minimum fee of $30.00
and a maximum fee of $250.00 per investment
No additional fee will be charged for funds invested in Certificates of Deposit
or Money Market Funds sponsored by the Escrow Agent.
