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EXHIBIT 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is made and entered into
effective as of this 12th day of January, 2000 ("EFFECTIVE DATE"), by and among
American Gaming & Electronics, Inc., a Nevada corporation ("BUYER") and each of
American Gaming & Electronics, Inc., a New Jersey corporation, and American
Gaming & Electronics of Florida, Inc., a Florida corporation (collectively
"SELLERS") and Xxx Xxxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxx and Xxxxx X'Xxxxxxxxx
(collectively, "SHAREHOLDERS") and American National Bank and Trust Company of
Chicago, a national banking association, as escrow agent ("ESCROW AGENT").
RECITALS
A. Buyer and Sellers and/or Shareholders have entered into the
transaction agreements described in Exhibit A (collectively, the "TRANSACTION
AGREEMENTS").
B. As a condition to Buyer entering into the Transaction Agreements,
Buyer requires Sellers and Shareholders to enter into this Agreement and
$619,385.25 (the "ESCROW CASH") of the consideration payable by Buyer to Sellers
under the Asset Agreement to be placed in an escrow account (the "ESCROW
ACCOUNT") with the Escrow Agent.
C. Buyer is a wholly-owned subsidiary of Xxxxx-Xxxxxxx Electronics
Corporation, an Illinois corporation ("XXXXX-XXXXXXX").
D. The parties hereto desire to establish the terms and conditions upon
which the Escrow Cash will be deposited, held in and disbursed from the Escrow
Account.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Escrow and Indemnification
(a) Escrow. This Agreement has been executed and the deposit of the
Escrow Cash hereunder will be made in accordance with SECTION 2(A) hereof for
the purpose of securing certain indemnification and performance obligations of
the Sellers and Shareholders pursuant to the Transaction Agreements including,
but not limited to:
(i) the indemnification obligations of the Sellers and
Shareholders pursuant to ARTICLE VI of the Asset Agreement and the Shareholder
Agreement; and
(ii) the performance obligations of Sellers and Shareholders
pursuant to the Transaction Agreements.
Escrow Agent agrees to accept delivery of the Escrow Cash and to hold such
Escrow Cash on behalf of Buyer in escrow subject to the terms and conditions of
and for the purposes recited in this Agreement. The parties hereto acknowledge
and agree that Xxxxx-Xxxxxxx, as the parent company of Buyer, shall have the
power and
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authority to pursue any claims on behalf of Buyer arising under the Transaction
Agreements and, accordingly, shall have the right to seek recovery on any such
claims in accordance with the terms and conditions of this Agreement.
(b) Indemnification and Performance Obligations of Sellers and
Shareholders. Subject to the terms and conditions hereof, the Escrow Cash will
serve as security for the obligations of Sellers and Shareholders under the
Transaction Agreements as set forth in SECTION 1(A) of this Agreement. In the
event Buyer desires to seek recovery pursuant to the Transaction Agreements
against any of Sellers and Shareholders by realizing the value of the Escrow
Cash, then Buyer will give Sellers, Shareholders and Escrow Agent written notice
of the basis for such recovery in accordance with SECTION 3 hereof. To the
extent that any such claim is made in connection with or related to the matter
referenced in the side letter of even date herewith between Buyer, Sellers and
Shareholders, such claim shall be referred to herein as a "NEW JERSEY CLAIM." To
the extent that any claim is not a New Jersey Claim, it shall be referred to
herein as an "OTHER CLAIM." New Jersey Claims and Other Claims are collectively
referred to herein as "CLAIMS". In the event Buyer desires to seek recovery for
a Claim against any of Sellers and Shareholders, Sellers and Shareholders,
jointly and severally, hereby covenant and agree to the resolution and payment
of Claims in accordance with this Agreement and the Transaction Agreements.
(c) Term of Escrow. The term of this Agreement shall be for the
period commencing on the Effective Date and ending on the later to occur of the
Fourth Release Date as defined below and the Termination Date as defined below
(the "ESCROW TERM"). The "TERMINATION DATE" will be the date on which Buyer
notifies Escrow Agent, Sellers and Shareholders in writing that Buyer does not,
in the reasonable opinion of Xxxxx Xxxxxxx'x Board of Directors, with the advise
of its counsel, anticipate making a New Jersey Claim at any time.
(d) Amount of Escrow Cash. Subject to the terms and conditions
herein, cash in the amount equal to $619,385.25, plus interest earned, will be
held in the Escrow Account in accordance with the terms and conditions of this
Agreement.
2. Deposit of Escrow Cash: Release from Escrow.
(a) Delivery of Escrow Cash. As soon as practicable after the
consummation of the transactions contemplated by the Transaction Agreements,
Buyer will deliver the Escrow Cash to the Escrow Agent by wire transfer of
immediately available funds in accordance with the wire instructions attached
hereto as Exhibit B.
(b) Distribution to Shareholders.
(i) Subject to the terms of SECTION 2(D) hereof and provided
that the Fourth Release Date (as defined below) has not occurred, within three
(3) business days following the Termination Date, Escrow Agent will disburse
from the Escrow Account to Xxx Xxxxxxxx a portion of the Escrow Cash equal to
$326,000.00 provided that such amount is available in the Escrow Account, less
(i) any Escrow Cash delivered to Buyer in accordance with SECTION 4 hereof in
satisfaction of resolved New Jersey Claims and (ii) any Escrow Cash being held
in accordance with SECTION 4 hereof with respect to any then pending but
unresolved New Jersey Claims. Any Escrow Cash being so held will be released to
Xxx Xxxxxxxx or Buyer, as appropriate, promptly upon resolution of each specific
New Jersey Claim with respect to which the Escrow Cash is then being held.
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(ii) Subject to the terms of SECTION 2(D) hereof and provided
that the Fourth Release Date (as defined below) has occurred, within three (3)
business days following the Termination Date, Escrow Agent will, in accordance
with the guidelines set forth on Exhibit C, disburse from the Escrow Account to
Shareholder all Escrow Cash remaining in the Escrow Account, less any Escrow
Cash being held in accordance with SECTION 4 hereof with respect to any then
pending but unresolved Claims. Any Escrow Cash being so held will be released to
Sellers and Shareholders or Buyer, as appropriate, promptly upon resolution of
each specific Claim with respect to which the Escrow Cash is then being held.
(iii) Subject to the terms of SECTION 2(D) hereof and provided
that the Termination Date has occurred, within three (3) business days following
each of the release dates set forth on Exhibit C hereto (collectively, the
"RELEASE DATES"), Escrow Agent will, in accordance with the guidelines set forth
on Exhibit C, disburse from the Escrow Account to Shareholders a portion of the
Escrow Cash equal to $50,000, provided that such amount is available in the
Escrow Account, less (i) any Escrow Cash delivered to Buyer in accordance with
SECTION 4 hereof in satisfaction of resolved Claims and (ii) any Escrow Cash
being held in accordance with SECTION 4 hereof with respect to any then pending
but unresolved Other Claims. Any Escrow Cash held as a result of clause (ii)
will be released to Sellers and Shareholders or Buyer, as appropriate, promptly
upon resolution of each specific Claim with respect to which the Escrow Cash is
then being held.
(c) Interest and Proceeds. Any interest and proceeds derived from
the Permitted Investments (as defined below) shall be distributed directly to
Shareholders on the later to occur of the Fourth Release Date and the
Termination Date in accordance with Exhibit C.
(d) No Encumbrance. Except as otherwise expressly provided in this
SECTION 2(D), no Escrow Cash or any beneficial interest therein may be pledged,
sold, assigned or transferred (including by operation of law) by Sellers or
Shareholders or may be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of any Seller or Shareholder prior
to the delivery to the Sellers and Shareholders of the Escrow Cash by Escrow
Agent.
(e) Power of Escrow Agent to Transfer Escrow Cash. Escrow Agent is
hereby granted the power to effect any transfer of Escrow Cash contemplated by
this Agreement upon joint written instruction of such transfer by Buyer and the
Representative (as defined in SECTION 7).
(f) Management and Investment of Cash and Escrow Cash. The Escrow
Cash shall be held in the Escrow Account and the Representative (as defined in
SECTION 7) shall direct Escrow Agent, in writing, to invest such cash in the
following types of investments: money market accounts, certificates of deposit
or United States Treasury securities (collectively, the "PERMITTED
INVESTMENTS"). The parties acknowledge that Escrow Agent shall not be
responsible for any diminution in any of the accounts due to losses resulting
from Permitted Investments. Escrow Agent may use its own bond department or
investment department or the bond department or investment department of any
affiliate in executing purchases and sales of Permitted Investments. If the
Representative does not direct the Escrow Agent in writing with respect to the
investment of moneys hereunder, the Escrow Agent shall invest such moneys in One
Group Prime Money Market Fund, Class A. The Escrow Agent shall send statements
to each of the other parties hereto on a monthly basis reflecting activity in
the Escrow Account for the preceding month. Although each of the other parties
recognizes that it may obtain a broker confirmation or written statement
containing comparable information at no additional cost, such parties hereby
agree that confirmations of investments are not required to be issued by the
Escrow Agent for each month
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in which a monthly statement is rendered. However, no statement need be rendered
for the Escrow Account if no activity occurred for such month.
3. Notice of Claim.
(a) Each notice of a Claim (the "NOTICE OF CLAIM") will be in
writing and delivered to Escrow Agent, Sellers and Shareholders pursuant to
SECTION 6 hereof on or before the end of the Escrow Term. The Notice of Claim
will contain the following information:
(i) Buyer's good faith estimate of the reasonably foreseeable
maximum amount of the alleged damages or its calculation of liquidated
damages, as appropriate (which amount may be revised by Buyer at any
time prior to the end of the Escrow Term provided that Buyer gives
written notice of such revision to Escrow Agent);
(ii) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the alleged damages based on
Buyer's good faith belief thereof, including, without limitation, the
identity and address of any third-party claimant (to the extent
reasonably available to Buyer) and copies of any formal demand or
complaint; and
(iii) A certification by Buyer in writing to the Escrow Agent
that Buyer is entitled to payment under SECTION 6 of the Asset
Agreement or Shareholder Agreement.
(b) Escrow Agent will not transfer any of the Escrow Cash held in
the Escrow Account to Buyer pursuant to a Notice of Claim until the Claim to
which such notice pertains has been resolved in accordance with SECTION 4 below.
4. Resolution of Claims and Transfer of Escrow Cash. A Claim as to
which a Notice of Claim has been received by Sellers and Shareholders and Escrow
Agent pursuant to SECTION 3 above will be resolved as follows:
(a) Uncontested Claims. If within thirty (30) calendar days after a
Notice of Claim is delivered to Escrow Agent pursuant to SECTIONS 3 and 6
hereof, no Seller or Shareholder either (i) contests such Claim in writing to
Escrow Agent, Buyer and the other Sellers and Shareholders, or (ii) pays the
amount demanded on the 31st calendar day, then Escrow Agent will on the next
business day thereafter promptly transfer to Buyer the amount of Escrow Cash as
directed in writing by Buyer, having a value (determined pursuant to SECTION
4(C) hereof) equal to the amount of damages specified in the Notice of Claim
which has not been paid by Seller and Shareholder and will provide Sellers and
Shareholders with written notice of such transfer within five (5) business days
of such transfer.
(b) Contested Claims. In the event that any Seller or Shareholder
gives written notice contesting all or a portion of a Claim to Buyer and Escrow
Agent (a "CONTESTED CLAIM") within the 30-day period provided above, the
following procedures shall apply: (i) Claims that are the result of third-party
claims asserted against Buyer will await the final decision, award or settlement
of such third-party claim; provided that any such asserted third-party claim
will be deemed resolved in favor of Buyer if, within twelve (12) months
following the End of the Escrow Term, such asserted third-party claim does not
result in the actual commencement of, or
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written correspondence threatening the commencement of, any litigation,
arbitration or other proceedings by the third-party claimant, provided, however,
that Buyer shall not lose its right to make a Claim with respect thereto, if
such third-party claim is once again asserted against Buyer prior to expiration
of the twelve-month period following the End of the Escrow Term; and/or (ii)
Claims by Buyer for breaches of representations, warranties, agreements and
covenants by any of Sellers or Shareholders under the Transaction Agreements
that do not include claims asserted by third parties, will be settled as
provided for in the relevant Transaction Agreement under which the Claims arose,
as will Claims based on third-party claims successfully asserted under clause
(i), but which any Seller or Shareholder asserts do not result in an
indemnification obligation under any Transaction Agreement in favor of Buyer.
Any portion of a Claim that is not contested will be considered resolved and
Escrow Agent shall be instructed in writing by Buyer as to any disbursement to
make as set forth above in SECTION 4(A). If any Contested Claim which is a
third-party claim asserted against Buyer under clause (i) is resolved against
Buyer and as to which no Seller or Shareholder disputes the indemnification
obligation, then such Contested Claim will be considered resolved and Escrow
Agent will promptly transfer to Buyer the amount of Escrow Cash as directed in
writing by Buyer, having a value (determined pursuant to SECTION 4(C) hereof)
equal to the amount of damages specified in the Notice of Claim which has not
been paid by end of the Escrow Term and will notify Sellers and Shareholders of
such transfer in writing within five (5) business days of such transfer. After
receipt of notice that a Claim has been contested, Escrow Agent will continue to
hold in the Escrow Account the amount of Escrow Cash as directed in writing by
Buyer sufficient to cover such Contested Claim (notwithstanding the expiration
of the Escrow Term) until (i) execution of a settlement agreement by Buyer and
the subject Seller or Shareholder setting forth a resolution of the Claim, or
(ii) receipt of a copy of the final award of the arbitrator or court, as
applicable. The final decision of the arbitrator or court, as applicable will be
furnished to each of Sellers and Shareholders and Buyer in writing and will
constitute a conclusive determination of the issue in question, binding upon the
parties. In acting under this Agreement the Escrow Agent shall be entitled to
receive and may conclusively rely on a certificate of the presenting party to
the effect that a true and correct copy of the final decision of the arbitrator
or court is attached and that such decision is final, binding and
non-appealable.
(c) Determination of Amount of Claims. Any amount which Escrow Agent
is required to pay or deliver to Buyer pursuant to this Agreement, to the extent
not paid in cash by any Seller or Shareholder, will be immediately payable to
Buyer out of the Escrow Cash. Buyer shall give Escrow Agent written notice of
any payment in cash by Seller. In the absence of such notice of payment, Escrow
Agent shall be entitled to assume that no such payment has been made and to act
accordingly.
5. Limitation of Escrow Agent's Liability.
(a) Escrow Agent will incur no liability with respect to any action
taken or suffered by it in reliance upon any notice, direction, instruction,
consent, statement or other document believed by it to be genuine and duly
authorized, nor for any other action or inaction, except its own willful
misconduct or gross negligence. Escrow Agent will not be responsible for the
validity or sufficiency of this Agreement. Escrow Agent undertakes to perform
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into the Agreement against the Escrow
Agent. In all questions arising under this Agreement, Escrow Agent may rely on
the advice of counsel, and for anything done, omitted or suffered in good faith
by Escrow Agent based on such advice, Escrow Agent will not be liable to anyone.
Escrow Agent will not be required to take any action hereunder involving any
expense unless the payment of such expense is made or provided for in a manner
satisfactory to it. Escrow Agent shall not be responsible for determining the
amount of Escrow Cash to be transferred, disbursed or held, and may rely upon,
and shall be fully protected in relying
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upon, any written direction from Buyers, Sellers and Shareholders. Attached
hereto as Exhibit D are the names, titles and specimen signatures of each of the
persons who are authorized, on behalf of the parties hereto, to execute and
deliver written notices and directions to Escrow Agent.
(b) In the event conflicting demands are made or conflicting notices
are served upon Escrow Agent with respect to the Escrow Account, Escrow Agent
will have the absolute right, but no absolute duty or obligation, at Escrow
Agent's election, to do either or both of the following: (i) resign so a
successor can be appointed pursuant to SECTION 10 hereof or (ii) file a suit in
interpleader and obtain an order from a court of competent jurisdiction
requiring the parties to interplead and litigate in such court their several
claims and rights among themselves. In the event such interpleader suit is
brought, Escrow Agent will thereby be fully released and discharged from all
further obligations imposed upon it under this Agreement, and Buyer will pay
Escrow Agent (subject to reimbursement from Sellers and Shareholders in the
amount determined pursuant to SECTION 9 hereof) all costs, expenses and
reasonable attorneys' fees expended or incurred by Escrow Agent pursuant to the
exercise of Escrow Agent's rights under this SECTION 5 hereof (such costs, fees
and expenses will be treated as extraordinary fees and expenses for the purposes
of SECTION 9 hereof).
(c) Each other party hereto, jointly and severally (each an
"INDEMNIFYING PARTY" and together the "INDEMNIFYING PARTIES"), hereby covenants
and agrees to reimburse, indemnify and hold harmless Escrow Agent, Escrow
Agent's employees and agents (severally and collectively, "ESCROW AGENT'S
INDEMNIFIED PARTIES"), from and against any loss, damage, liability or loss
suffered, incurred by, or asserted against Escrow Agent's Indemnified Parties
(including amounts paid in settlement of any action, suit, proceeding, or claim
brought or threatened to be brought and including reasonable expenses of legal
counsel) arising out of, in connection with or based upon any act or omission by
Escrow Agent relating in any way to this Agreement or Escrow Agent's services
hereunder. This indemnity shall exclude negligence, gross negligence or willful
misconduct on Escrow Agent's part. This right of indemnification shall survive
the termination of this Agreement, and the resignation or removal of Escrow
Agent. The costs and expenses of enforcing this right of indemnification shall
also be paid by the Indemnifying Parties.
6. Notices. All notices, instructions and other communications required
or permitted to be given hereunder or necessary or convenient in connection
herewith must be in writing and will be deemed delivered (i) the business day
when personally served or when delivered by facsimile, provided written
confirmation thereof is delivered by hand or deposited in the United States
mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by facsimile, (ii) the first business day
following the date of deposit with an overnight courier service for next day
delivery, charges prepaid, or (iii) on the earlier of actual receipt or the
third business day following the date on which the notice is deposited in the
United States mail, first class certified, postage prepaid, addressed as
follows:
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If to Escrow Agent:
American National Bank and Trust Company of Chicago
000 Xxxxx XxXxxxx Street, 0xx Xxxxx
Xxxx Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer:
American Gaming & Electronics, Inc.
c/o Xxxxx-Xxxxxxx Electronics Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Sellers and Shareholders:
American Gaming & Electronics, Inc.
0000 XxXxxx Xxxxx, Xxxxx 00
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxx Xxxxxxxx and Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
American Gaming & Electronics of Florida, Inc.
0000 XxXxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxx, Driggs, Walch, Santoro, Kearney, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
Xxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Xxxxx Xxxxx
000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Xxxx Xxxxx
0000 Xxxxx Xxxxx Xxxxx
Xxx. 000
Xxxxxxxxx, Xxxxxxx 00000
Xxxxx X'Xxxxxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxx, Driggs, Walch, Santoro, Kearney, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
or to such other address as any party hereto designates in a writing delivered
to each of the other parties hereto. With respect to the Escrow Agent, notices
shall not be deemed given until actually received.
7. Appointment of Representative. Each of the Shareholders hereby
appoints Xxxxx Xxxxx as such Shareholder's exclusive agent to act on such
Shareholder's behalf with respect to this Agreement. In such representative
capacity, Xxxxx Xxxxx or any person who shall succeed him in such representative
capacity is sometimes referred to in this Agreement as the "REPRESENTATIVE." The
Representative shall take, and the Shareholders agree that the Representative
shall take, any and all actions which such Representative believes are necessary
or appropriate under this Agreement for and on behalf of the Shareholders, as
fully as if the Shareholders were acting on their own behalf, including, without
limitation, defending, consenting to, compromising or settling any Claims
against any or all of the Shareholders. Buyer and Escrow Agent shall have the
right to rely upon all actions taken or omitted to be taken by the
Representative pursuant to this Agreement, all of which actions or omissions
shall be legally binding upon each of the Shareholders.
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8. General.
(a) Governing Law; Assigns. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Illinois without
regard to conflicts-of-law principles and will be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(c) Entire Agreement. Except as otherwise set forth in the
Transaction Agreements, this Agreement constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement
and supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of
any breach of any provision of this Agreement will be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, will be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
9. Expenses. Buyer agrees to pay the Annual Fee of Escrow Agent in the
amount of $2,000 as set forth in Exhibit E of this Agreement. Such fees are
payable in advance as compensation for the ordinary administrative services to
be rendered hereunder by Escrow Agent. Subject to SECTION 5(B) hereof, it is the
intention of Buyer and Sellers and Shareholders that any extraordinary activity
fees and expenses as defined in Exhibit E, or expenses incurred by Escrow Agent
in connection with a dispute over the distribution of Escrow Cash or the
validity of a Notice of Claim, will be paid by the non-prevailing party.
Notwithstanding anything to the contrary contained herein, Sellers and
Shareholders shall be solely responsible (to the exclusion of Buyer) for any
fees and expenses of Escrow Agent which are incurred as a result of any transfer
of Escrow Cash, the investment of any cash held in the Escrow Account, or any
other Permitted Investments contemplated by SECTION 2 hereof.
10. Successor Escrow Agent. In the event Escrow Agent becomes
unavailable or unwilling to continue in its capacity hereunder, Escrow Agent may
resign and be discharged from its duties or obligations hereunder by giving
resignation to the parties to this Agreement, specifying a date not less than
ten (10) days following such notice date of when such resignation will take
effect. Buyer will designate a successor escrow agent prior to the expiration of
such ten-day period by giving written notice to Escrow Agent and Sellers and
Shareholders, subject to the approval of Sellers and Shareholders which will not
be unreasonably withheld. Buyer may appoint a successor escrow agent without the
consent of Sellers and Shareholders so long as such successor is a bank with
assets of at least $500 million, and may appoint any other successor escrow
agent with the consent of Sellers and Shareholders, which will not be
unreasonably withheld. Upon receipt of an instrument of acceptance by a
successor escrow agent, Escrow Agent will promptly transfer the Escrow Cash to
such designated successor. If the other parties hereto have failed to appoint a
successor escrow agent prior to the expiration of ten (10) calendar days
following receipt of the notice of resignation or removal, the Escrow Agent may
appoint a successor or petition a court of competent jurisdiction for the
appointment of a successor escrow agent or for other appropriate relief, and any
such resulting appointment shall be binding upon all of the parties hereto.
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11. Limitations of Responsibility. Escrow Agent's duties are limited to
those set forth in this Agreement, and Escrow Agent, acting as such under this
Agreement, is not charged with knowledge of or any duties or responsibilities
under any other document or agreement, including without limitation the
Transaction Agreements. Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys. Escrow Agent shall not be responsible for
and shall not be under a duty to examine into or pass upon the validity, binding
effect, execution or sufficiency of this Escrow Agreement or of any agreement
amendatory or supplemental hereto. The Escrow Agent shall not be liable for any
action taken or omitted under this Agreement so long as it shall have acted in
good faith and without gross negligence. The Escrow Agent shall be entitled to
deem the signatories of any documents or instruments submitted to it hereunder
as being those purported to be authorized to sign such documents or instruments
on behalf of the parties hereto, and shall be entitled to rely upon the
genuineness of the signatures of such signatories without inquiry and without
requiring substantiating evidence of any kind. The Escrow Agent shall be
entitled to refrain from taking any action contemplated by this Agreement in the
event that it becomes aware of any disagreement between the parties hereto as to
any facts or as to the happening of any contemplated event precedent to such
action unless such disagreement can be resolved in accordance with SECTION 4. No
assignment of the interest of any of the parties hereto shall be binding upon
the Escrow Agent unless and until written evidence of such assignment in form
satisfactory to the Escrow Agent shall be filed with and accepted by the Escrow
Agent. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR
ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER,
OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT'S FAILURE TO ACT IN
ACCORDANCE WITH THE REASONABLE COMMERCIAL STANDARDS OF THE BANKING BUSINESS, OR
(ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
12. Amendment. This Agreement may be amended by the written agreement
of Buyer, Escrow Agent and Sellers and Shareholders, provided that, if Escrow
Agent does not agree to an amendment agreed upon by Buyer and the Sellers and
Shareholders, Escrow Agent will resign and Buyer will appoint a successor Escrow
Agent in accordance with Section 10 above.
13. Further Assurances. The parties hereto shall execute such further
documents, and perform such further acts, as may be reasonably necessary to
comply with the purpose and intent of this Agreement, and to otherwise comply
with the terms of this Agreement and consummate the transactions contemplated
hereby.
14. Successor Trustee. Any banking association or corporation into
which the Escrow Agent may be merged, converted or with which the Escrow Agent
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any banking
association or corporation to which all or substantially all of the corporate
trust business of the Escrow Agent shall be transferred, shall succeed to all
the Escrow Agent's rights, obligations and immunities hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
15. Compliance With Legal Orders. In the event that any escrow property
shall be attached, garnished or levied upon by any court order, or the delivery
thereof shall be stayed or enjoined by an order of a court, or any order,
judgment or decree shall be made or entered by any court order affecting the
property deposited under this Agreement, the Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs, orders or
decrees so entered or issued, which it is advised by legal counsel of its own
choosing is binding upon it, whether with or without jurisdiction, and in the
event that the Escrow Agent obeys or complies
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with any such writ, order or decree it shall not be liable to any of the parties
hereto or to any other person, firm or corporation, by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified,
annulled, set side or vacated.
16. Tax Matters. The Escrow Agent shall be under no obligation to
invest the deposited funds or the income generated thereby until it has received
a Form W-9 or W-8, as applicable, from the Sellers and the Shareholders,
regardless of whether such party is exempt from reporting or withholding
requirements under the Internal Revenue Code of 1986, as amended. The Escrow
Agent shall report to the Internal Revenue Service, as of each calendar
year-end, all income earned from the investment of any sum held in the Escrow
Account against Sellers and Shareholders, whether or not said income has been
distributed during such year, as and to the extent required by law. Any tax
returns required to be prepared and filed will be prepared and filed by Sellers
and Shareholders with the Internal Revenue Service in all years income is
earned, whether or not income is received or distributed in any particular tax
year, and Escrow Agent shall have no responsibility for the preparation and/or
filing of any tax return with respect to any income earned by the Escrow
Account. Any taxes payable on income earned from the investment of any sums held
in the Escrow Account shall be paid by Sellers and Shareholders, whether or not
the income was distributed by the Escrow Agent during any particular year. The
Escrow Agent shall have no obligation to pay any taxes or estimated taxes.
SIGNATURES ON THE FOLLOWING PAGE
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12
IN WITNESS WHEREOF, the parties have duly executed this Agreement of
the date first above written.
BUYER:
AMERICAN GAMING & ELECTRONICS,
INC., a Nevada corporation
/s/ Xxxx X. Xxxxxxxxxx
--------------------------------------
By: Xxxx X. Xxxxxxxxxx
-----------------------------------
Its: President
----------------------------------
SELLERS:
AMERICAN GAMING & ELECTRONICS,
INC., a New Jersey corporation
/s/ Xxx Xxxxxxxx
--------------------------------------
By: Xxx Xxxxxxxx
-----------------------------------
Its: President
----------------------------------
AMERICAN GAMING & ELECTRONICS,
OF FLORIDA, INC., a Florida
corporation
/s/ Xxxx Xxxxx
--------------------------------------
By: Xxxx Xxxxx
-----------------------------------
Its: President
----------------------------------
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13
SHAREHOLDERS:
/s/ Xxx Xxxxxxxx
--------------------------------------
Xxx Xxxxxxxx
/s/ Xxxxx Xxxxx
--------------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxx
--------------------------------------
Xxxx Xxxxx
/s/ Xxxxx X'Xxxxxxxxx
--------------------------------------
Xxxxx X'Xxxxxxxxx
ESCROW AGENT:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, as Escrow Agent
/s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------
By: Xxxxx X. Xxxxxxxxxxx
----------------------------------
Its: Vice President
----------------------------------
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