ESCROW AGREEMENT
ESCROW AGREEMENT, dated ___________, 1996 (the "Escrow Agreement"), among
OMNICOM GROUP INC., a New York corporation ("Omnicom"); XXXXXXX COMMUNICATIONS
HOLDINGS, INC., a Pennsylvania corporation (the "Surviving Corporation"); XXXX
X. XXXXXXX, as Representative (the "Representative") of the former shareholders
of Xxxxxxx Communications Holdings, Inc., a Pennsylvania corporation (the
"Company"); and THE CHASE MANHATTAN BANK, N.A., as Escrow Agent (the "Escrow
Agent").
Omnicom, KCI Acquisition Inc. ("OmniSub") and the Company are parties to a
certain Agreement and Plan of Merger dated March __ 1996 (the "Merger
Agreement"), pursuant to which Omnicom acquired the Company through the merger
of OmniSub with and into the Company. Under the Merger Agreement, the Company
has made certain representations and warranties, and undertaken certain
obligations, to Omnicom, and the former shareholders of the Company
(collectively referred to herein as the "Shareholders") through the mechanism of
this Escrow Agreement have approved the indemnification of Omnicom against
certain Losses which Omnicom or other Indemnified Parties may sustain or to
which Omnicom or other Indemnified Parties may be subjected (as more fully set
forth in the Merger Agreement). Pursuant to the Merger Agreement, the
Shareholders have approved the creation of an "Escrow Fund" in accordance with
the terms of this Agreement to secure Omnicom against such Losses. Any claims
made by Omnicom against the Escrow Fund are herein collectively called "Claims",
and individually a "Claim"; however, a Claim shall become reimbursable hereunder
only if, and to the extent that, it becomes a "Final General Claim for
Reimbursement", as defined in Section 2.2 hereof, or a "Final Special Claim for
Reimbursement", as defined in Section 4.2 hereof. Terms defined in the Merger
Agreement that are not otherwise defined herein are used herein with the
meanings ascribed to them therein; a list of such terms is attached hereto as
Exhibit 1.
The appointment of the Representative and the terms of this Escrow
Agreement were approved by the Shareholders of the Company at a Special Meeting
of Shareholders held on May __, 1996.
Accordingly, the parties hereby agree as follows:
1. ESTABLISHMENT OF ESCROW FUND
1.1 Establishment of Escrow Fund. Simultaneously herewith, pursuant to the
Merger Agreement, Chemical Mellon Shareholder Services, in accordance with
instructions from Omnicom, is depositing with the Escrow Agent on behalf of the
Shareholders, certificates registered in the name of the Shareholders,
representing in the aggregate the number of shares of Omnicom Stock set forth
opposite each Shareholder's name in Schedules A and B hereto, and the
Representative (on behalf of the Shareholders) is depositing stock powers in
respect of such certificates, duly executed in blank. Such Omnicom Stock, and
any other property distributable with respect thereto or in exchange therefor
and held in the Escrow Fund as provided in Section 7.2 hereto, are herein
collectively referred to as the "Common Stock". The Escrow Fund shall be held by
the Escrow Agent and shall be dealt with by the Escrow Agent in accordance with
the terms and conditions of this Escrow Agreement.
1.2 Specific Funds within the Escrow Fund. The Omnicom Stock set forth in
Schedule A hereto ( _______ shares of Omnicom Stock having an aggregate value
(computed in accordance with Section 6.1 hereof) of $4,400,000) shall constitute
that portion of the Escrow Fund which is sometimes hereinafter referred to as
the "General Escrow Fund"; and the Omnicom Stock set forth in Schedule B hereto
( ________ shares of Omnicom Stock having an aggregate value (computed in
accordance with Section 6.1 hereof) of $2,500,000) shall constitute that portion
of the Escrow Fund which is sometimes hereinafter referred to as the "Special
Escrow Fund".
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2. PROCEDURES WITH RESPECT TO GENERAL CLAIMS
2.1 General Claims by Omnicom. (a) If an Indemnified Party has a Claim,
including a Claim arising from a suit, action, proceeding or investigation by a
third party that may result in any Losses under clause (a) of Section 11.2 of
the Merger Agreement ("General Losses" and the Claims with respect thereto,
"General Claims"), Omnicom shall give notice thereof (the "General Claims
Notice") substantially in the form of and in conformity with the instructions
contained in Exhibit 2 hereto to the Representative and to the Escrow Agent. The
General Claims Notice shall describe the General Claim in reasonable detail,
shall indicate the amount (estimated, if necessary, and to the extent feasible)
of the General Losses that have been or may be suffered by Omnicom and for the
applicable Indemnified Party, as the case may be. General Losses shall be
reimbursed solely out of the General Escrow Fund.
(b) Within 30 days after Omnicom shall give the Representative a General
Claims Notice (or sooner, if the nature of the Asserted Liability so requires),
the Representative, by notice to Omnicom with a copy to the Escrow Agent (the
"Representative's Notice"), either shall (i) concede liability in whole with
respect to such General Claim, (ii) demand that an arbitration proceeding under
Section 13 hereof be held to determine whether such General Claim is one covered
by Section 11.2(a) of the Merger Agreement and this Escrow Agreement and/or in
the case of matters other than Third Party Claims to determine the amount of the
General Claim, or (iii) concede liability in part and demand such arbitration in
part. The failure by the Representative to give the Representative's Notice
within the specified period shall be deemed a concession of liability in whole.
The Representative shall be afforded reasonable access by Omnicom to the
documentation relating to any Asserted Liability included in a General Claims
Notice as may under the circumstances reasonably be required by the
Representative to make a determination required to be made by the Representative
under this Section 2.1.
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2.2 Final General Claims for Reimbursement. All General Claims for which
the Representative shall have conceded liability, or shall have been deemed to
have conceded liability pursuant to the provisions of Section 2.1, shall be
final and binding upon the Representative, the Shareholders, Omnicom and the
Surviving Corporation. If the Representative shall demand arbitration as
provided in Section 2.1, the General Claim that was objected to shall become
final and binding upon Omnicom, the Surviving Corporation, the Representative
and the Shareholders upon (a) a final decision in arbitration as provided in
Section 13 hereof, or (b) upon the matter being otherwise agreed to in writing
by Omnicom and the Representative. A General Claim which is final and binding
upon Omnicom, the Surviving Corporation, the Shareholders and the Representative
as of any given time is hereinafter called a "Final General Claim for
Reimbursement".
2.3 Limitation of General Claims. Notwithstanding anything to the contrary
herein, none of the General Escrow Fund will be released and delivered to
Omnicom pursuant to any General Claim (other than a General Claim under Section
3.27 or 3.28 or the last sentence of Section 3.19.3 of the Merger Agreement)
except to the extent that the aggregate amount of all Final General Claims for
Reimbursement (ignoring any General Claim(s) under Section 3.27 or 3.28 or the
last sentence of Section 3.19.3 of the Merger Agreement) exceeds the sum of
$100,000 and then only to the extent of such excess. As a General Claim becomes
a Final General Claim for Reimbursement, Omnicom and the Representative (or the
arbitrator, as the case may be) shall provide the Escrow Agent with a
certificate with respect to the compliance of the Final General Claim for
Reimbursement with this Section 2.3.
3. DISTRIBUTIONS FROM GENERAL ESCROW FUND
3.1 Definitions. As used herein: "First General Distribution Date" shall
mean the business day next following the earlier of (i) the date following the
first independent audit report, if any, of the financial results of the
Surviving Corporation following the Effective Time or (ii) one year from the
date hereof; and "Final General Distribution Date" shall mean the first business
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day on which all matters reserved against in respect of General Claims shall
have been finally determined or settled. If no matters are or remain reserved
against on the First General Distribution Date, the First General Distribution
Date shall also be the Final General Distribution Date. Omnicom shall give
notice to the Escrow Agent, with a copy to the Representative, five business
days prior to the occurrence of the First General Distribution Date.
3.2 Reimbursement of Final General Claims for Reimbursement Before or On
First General Distribution Date. From the date of this Escrow Agreement to and
including the First General Distribution Date, the Escrow Agent from time to
time shall (subject to Section 2.3) transfer and deliver to Omnicom such number
of shares of Common Stock forming the General Escrow Fund as shall have a value
(computed in accordance with Section 6.1 hereof) equal to the Final General
Claims for Reimbursement which have not previously been paid to Omnicom;
provided however, that in no event shall Omnicom receive any distribution from
the General Escrow Fund prior to such time as Omnicom releases and publishes
financial results of the combined operations of Omnicom and the Surviving
Corporation covering a period of at least 30 days after the Effective Time of
the Merger (such time being hereinafter referred to as the "Publication Date").
Omnicom shall promptly give notice (the "Publication Notice") to the Escrow
Agent, with a copy to the Representative, of the release and publishing of such
financial results and the occurrence of the Publication Date substantially in
the form of Exhibit 3 hereto including an authorization and direction to release
the shares of Omnicom Stock set forth on Schedule C hereto; and within five days
after the Publication Date, the Escrow Agent shall mail or deliver to each
Company Affiliate (as such term is used in Section 8) the stock certificate(s)
identified next to his or her name on Schedule C hereto.
3.3 Reservation of Amounts at First General Distribution Date. On the First
General Distribution Date, the Escrow Agent shall reserve in the General Escrow
Fund such number of shares of Common Stock as shall have a value (computed in
accordance with Section 6.1 hereof) equal to the sum of (i) an amount in respect
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of the amounts claimed in all General Claims Notices given pursuant to Section
2.1 hereof which have not become Final Claims for Reimbursement, but which are
still asserted by Omnicom and are then pending and undecided ("Pending General
Claims") as set forth in a certificate signed by Omnicom and delivered to the
Escrow Agent (provided, that if the Representative does not agree on such
amount, the dispute shall be submitted by the Representative to arbitration in
accordance with Section 13 hereof and the determination of the arbitrator shall
be final and conclusive; and further provided that pending the determination of
the arbitrator, the amount to be reserved shall be the amount certified in
writing to the Escrow Agent by Omnicom); and (ii) the aggregate amount of all
Final General Claims for Reimbursement not theretofore paid to Omnicom.
3.4 Distribution at First General Distribution Date. On the First
Distribution Date, the Escrow Agent shall deliver to Omnicom from the General
Escrow Fund any shares reserved pursuant to 3.3(ii) and shall deliver to the
Shareholders in accordance with their respective interests that portion of the
General Escrow Fund equal to the entire amount of the General Escrow Fund as
originally deposited in accordance with Section 1 hereof, less the sum of (a)
all amounts theretofore delivered from the General Escrow Fund to Omnicom
pursuant to Section 3.2 hereof or this Section 3.4 and (b) the amount of the
General Escrow Fund reserved pursuant to Section 3.3(i) hereof. If the foregoing
calculation results in a negative amount, no portion of the General Escrow Fund
shall be delivered to the Shareholders at the First General Distribution Date.
3.5 Distributions As to Pending General Claims After the First General
Distribution Date. After the First General Distribution Date, as each Pending
General Claim reserved for on the First General Distribution Date becomes (x) a
Final General Claim for Reimbursement, or (y) is withdrawn by Omnicom, or (z) is
determined pursuant to a final decision in arbitration (as described in Section
13) not to be a proper General Claim, the Escrow Agent shall, subject to Section
2.3, deliver (a) to Omnicom, such number of shares of Common Stock as shall have
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a value (computed in accordance with Section 6.1 hereof) equal to the Final
General Claim for Reimbursement which results from the determination of such
Pending General Claim (and not previously paid to Omnicom), and (b) to the
Shareholders in accordance with their respective interests, such number of
shares of Common Stock as shall have a value (computed in accordance with
Section 6.1 hereof) equal to the amount, if any, of the excess of the reserve
for such Pending General Claim over the Final General Claim for Reimbursement,
if any, with respect to such Pending General Claim; provided, however, that no
delivery shall be made hereunder to the Shareholders unless the aggregate amount
reserved (after giving effect to such delivery) for all Pending General Claims
is at least equal to the aggregate amount of such Pending General Claims.
3.6 Distribution at Final General Distribution Date. On the Final General
Distribution Date, the Escrow Agent shall deliver to Omnicom such number of
shares of Common Stock as shall have a value (computed in accordance with
Section 6.1 hereof and subject to Section 2.3 hereof) equal to the Final General
Claims for Reimbursement which have not previously been paid to Omnicom, and
shall deliver to the Shareholders in accordance with their respective interests
the balance, if any, of the General Escrow Fund.
4. PROCEDURES WITH RESPECT TO SPECIAL ESCROW FUND
4.1 Special Claims by Omnicom. (a) If an Indemnified Party has a Claim that
may result in any Losses under clause (b) of Section 11.2 of the Merger
Agreement ("Special Losses" and the Claims with respect thereto, "Special
Claims"), Omnicom shall give notice thereof (the "Special Claims Notice")
substantially in the form of and in conformity with the instructions contained
in Exhibit 2 hereto to the Representative and to the Escrow Agent. The Special
Notice shall describe the Special Claim in reasonable detail, shall indicate the
amount (estimated, if necessary, and to the extent feasible) of the Special
Losses that have been or may be suffered by Omnicom and for the applicable
Indemnified Party, as the case may be. Special Losses shall be reimbursed solely
out of the Special Escrow Fund.
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(b) Within 30 days after Omnicom shall give the Representative a Special
Claims Notice (or sooner, if the nature of the Asserted Liability so requires),
the Representative shall give a Representative's Notice in which he shall either
(a) concede liability with respect to the Special Claim or (b) if he shall
dispute the Special Claim demand that an arbitration proceeding under Section 13
be held to resolve such dispute. The failure of the Representative to give the
Representative's Notice within the specified period shall be deemed a concession
of liability in whole with respect to the Special Claim. The Representative
shall be afforded reasonable access by Omnicom to the documentation relating to
a Special Claim as may under the circumstances reasonably be required by the
Representative to make a determination required to be made by the Representative
under this Section 4.1.
4.2 Final Special Claims for Reimbursement. A Special Claim for which the
Representative shall have conceded liability, or shall have been deemed to have
conceded liability pursuant to the provisions of Section 4.1, shall be final and
binding upon the Representative, the Shareholders, Omnicom and the Surviving
Corporation. If the Representative shall demand arbitration as provided in
Section 4.1, the Special Claim shall become final and binding upon Omnicom, the
Surviving Corporation, the Representative and the Shareholders upon (a) a final
decision in arbitration as provided in Section 13 hereof, or (b) upon the matter
being otherwise agreed to in writing by Omnicom and the Representative. A
Special Claim which is final and binding upon Omnicom, the Surviving
Corporation, the Shareholders and the Representative as of any given time is
hereinafter called a "Final Special Claim for Reimbursement".
5. DISTRIBUTIONS FROM SPECIAL ESCROW FUND
5.1 Definitions. As used herein: "First Special Distribution Date" shall
mean the business day next following December 31, 1996; and "Final Special
Distribution Date" shall mean the first business day on which all matters
reserved against in respect of Special Claims shall have been finally determined
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or settled. If no matters are or remain reserved against on the First Special
Distribution Date, the First Special Distribution Date shall also be the Final
Special Distribution Date.
5.2 Reimbursement of Final Special Claims for Reimbursement Before or On
First Special Distribution Date. From the date of this Escrow Agreement to and
including the First Special Distribution Date, the Escrow Agent from time to
time shall transfer and deliver to Omnicom such number of shares of Common Stock
forming the Special Escrow Fund as shall have a value (computed in accordance
with Section 6.1 hereof) equal to the Final Special Claims for Reimbursement
which have not previously been paid to Omnicom; provided however, that in no
event shall Omnicom receive any distribution from the Special Escrow Fund prior
to the Publication Date.
5.3 Reservation of Amounts at First Special Distribution Date. On the First
Special Distribution Date, the Escrow Agent shall reserve in the Special Escrow
Fund such number of shares of Common Stock as shall have a value (computed in
accordance with Section 6.1 hereof) equal to the sum of (i) an amount in respect
of the amounts claimed in all Special Claims Notices given pursuant to Section
4.1 hereof which have not become Final Claims for Reimbursement, but which are
still asserted by Omnicom and are then pending and undecided ("Pending Special
Claims") as set forth in a certificate signed by Omnicom and delivered to the
Escrow Agent (provided, that if the Representative does not agree on such
amount, the dispute shall be submitted by the Representative to arbitration in
accordance with Section 13 hereof and the determination of the arbitrator shall
be final and conclusive; and further provided that pending the determination of
the arbitrator, the amount to be reserved shall be the amount certified in
writing to the Escrow Agent by Omnicom); and (ii) the aggregate amount of all
Final Special Claims for Reimbursement not theretofore paid to Omnicom.
5.4 Distribution at First Special Distribution Date. On the First Special
Distribution Date, the Escrow Agent shall deliver to Omnicom from the Special
Escrow Fund any shares reserved pursuant to 5.3(ii) and shall deliver to the
Shareholders in accordance with their respective interests that portion of the
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Special Escrow Fund equal to the entire amount of the Special Escrow Fund as
originally deposited in accordance with Section 1 hereof, less the sum of (a)
all amounts theretofore delivered from the Special Escrow Fund to Omnicom
pursuant to Section 5.2 hereof or this Section 5.4 and (b) the amount of the
Special Escrow Fund reserved pursuant to Section 5.3(i) hereof. If the foregoing
calculation results in a negative amount, no portion of the Special Escrow Fund
shall be delivered to the Shareholders at the First Special Distribution Date.
5.5 Distributions As to Pending Special Claims After the First Special
Distribution Date. After the First Special Distribution Date, as each Pending
Special Claim reserved for on the First Special Distribution Date becomes (x) a
Final Special Claim for Reimbursement, or (y) is withdrawn by Omnicom, or (z) is
determined pursuant to a final decision in arbitration (as described in Section
13) not to be a proper Special Claim, the Escrow Agent shall deliver (a) to
Omnicom, such number of shares of Common Stock as shall have a value (computed
in accordance with Section 6.1 hereof) equal to the Final Special Claim for
Reimbursement which results from the determination of such Pending Special Claim
(and not previously paid to Omnicom), and (b) to the Shareholders in accordance
with their respective interests, such number of shares of Common Stock as shall
have a value (computed in accordance with Section 6.1 hereof) equal to the
amount, if any, of the excess of the reserve for such Pending Special Claim over
the Final Special Claim for Reimbursement, if any, with respect to such Pending
Special Claim; provided, however, that no delivery shall be made hereunder to
the Shareholders unless the aggregate amount reserved (after giving effect to
such delivery) for all Pending Special Claims is at least equal to the aggregate
amount of such Pending Special Claims.
5.6 Distribution at Final Special Distribution Date. On the Final Special
Distribution Date, the Escrow Agent shall deliver to Omnicom such number of
shares of Common Stock as shall have a value (computed in accordance with
Section 6.1 hereof) equal to the Final Special Claims for Reimbursement which
have not previously been paid to Omnicom, and shall deliver to the Shareholders
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in accordance with their respective interests the balance, if any, of the
Special Escrow Fund.
6. PROCEDURES WITH RESPECT TO DISTRIBUTION
6.1 Valuation. For all purposes of this Escrow Agreement, each share of
Omnicom Stock shall be valued at $________.(1) If, at any time after the Closing
Date and prior to the date of any distribution of Common Stock, Omnicom shall
effect a stock dividend, stock split or combination of the Common Stock, or
other recapitalization affecting the Common Stock, or shall effect a
distribution (other than a distribution of cash dividends as described in
Section 7.1 hereof) with respect to the Common Stock, or if Omnicom shall fix a
record date falling on or prior to the date of any distribution of Common Stock
from the Escrow Fund for any such stock dividend, stock split, combination,
recapitalization, or distribution to take place after the date of such
distribution, the foregoing valuation shall be adjusted appropriately by Omnicom
(but subject to arbitration in accordance with Section 13 in the event of a
dispute).
6.2 Fractional Shares. No fractional shares of the Common Stock shall be
issued or delivered pursuant to any provision of this Escrow Agreement. In
making delivery of the Common Stock to Omnicom or the Representative, the Escrow
Agent shall round off (up or down) any fractional share resulting from any
calculation hereunder to the nearest whole share.
6.3 Allocation. To the extent practicable all distributions made under this
Escrow Agreement from the General Escrow Fund or the Special Escrow Fund, as the
case may be, and whether payable to Omnicom or to the Shareholders, shall be
taken proportionately from the Common Stock held in such Fund, registered in the
name of each Shareholder as his respective interest appears on Schedule A or
Schedule B hereto, respectively.
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(1) Insert the Market Value (as defined in the Merger Agreement)
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6.4 Distribution Consent. Any other provision of this Escrow Agreement to
the contrary notwithstanding, the Escrow Agent shall distribute the Escrow Fund
in such manner at such time or times as Omnicom and the Representative may, in
writing, jointly direct.
6.5 No Recourse. Anything contained in this Escrow Agreement to the
contrary notwithstanding, none of the Indemnified Parties shall have any
recourse for any Losses arising under Section 11.2 of the Merger Agreement
against past, present or future directors, officers or employees of the Company,
the Shareholders, or the Representative, nor shall any of such persons be
personally liable for any such Losses, it being expressly understood that the
sole remedy of the Indemnified Parties for such Losses shall be against the
Escrow Fund in accordance with this Escrow Agreement.
7. DIVIDENDS AND OTHER DISTRIBUTIONS; VOTING RIGHTS
7.1 Cash Dividends. All cash dividends in respect of the Common Stock still
then held in escrow, and all other distributions in respect of the Common Stock
still then held in escrow that are taxable dividends for Federal income tax
purposes (net of any taxes required to be withheld from such cash dividends or
other distributions by Omnicom), shall be paid directly to the applicable
Shareholder and shall be the sole property of such Shareholder, and the Escrow
Agent shall have no duty, liability or obligation whatsoever with respect
thereto.
7.2 Distributions. Distributions of any kind, other than those described in
Section 7.1, shall be made by Omnicom, if practicable, directly to the Escrow
Agent or, if made to any Shareholder, shall be delivered by such Shareholder,
upon request from Omnicom, to the Escrow Agent. All such distributions shall be
held in escrow pursuant to the provisions of this Escrow Agreement, but the
Escrow Agent shall have no duty or obligation whatsoever to require that such
distributions be delivered to it. Any delivery of the Common Stock to Omnicom or
the Representative after any and all such distributions shall be appropriately
adjusted so that the distributees will be in the same position as if such
distributees had been, on any record date for any such distribution with respect
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to the Common Stock, the holders of record of the number of shares of Omnicom
Stock distributable to them prior to any such distributions.
7.3 Voting. Each Shareholder shall be entitled to exercise all voting
rights with respect to the Common Stock registered in his name and constituting
the Escrow Fund so long as such Common Stock continues to be held in escrow, and
the Escrow Agent shall deliver to such Shareholder any proxies with respect
thereto which the Escrow Agent receives.
8. COMPANY AFFILIATES' DEPOSIT OF OMNICOM STOCK
Simultaneously herewith, pursuant to the Merger Agreement and paragraph 3
of the Affiliates Representation Letter referred to in Section 7.2 of the Merger
Agreement, all of the shares of Omnicom Stock issued to the Company Affiliates
under Article II of the Merger Agreement have been deposited with the Escrow
Agent. All such shares of Omnicom Stock not part of the Escrow Fund shall be
subject to the provisions of Section 7 and Sections 10 through 15 of this
Agreement; and shall be released by the Escrow Agent within five days after the
Publication Date by the mailing or delivery to each Company Affiliate of the
stock certificate(s) identified next to his or her name on Schedule C hereto.
9. SECURITY INTEREST IN ESCROW FUND
(a) The Shareholders hereby grant to Omnicom a first priority perfected
security interest in the Escrow Fund to secure the performance of the
indemnification obligations under Section 11.2 of the Merger Agreement and this
Escrow Agreement. The Escrow Agreement shall constitute a security agreement
under applicable law.
(b) The parties agree that this security interest shall attach as of the
execution of this Escrow Agreement. The parties agree that, for the purpose of
perfecting Omnicom's security interest in the above designated Escrow Fund held
by the Escrow Agent pursuant to this Escrow Agreement, Omnicom designates the
Escrow Agent to acquire and maintain possession of the Escrow Fund and act as
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bailee for Omnicom with notice of Omnicom's security interest in said property
under the Uniform Commercial Code and that by possession of the Escrow Fund, the
Escrow Agent acknowledges that it holds the Escrow Fund for Omnicom for purposes
of perfecting the security interest. The Representative and the Escrow Agent
shall take all other actions requested by Omnicom to maintain the perfection and
priority of the security interest in the Escrow Fund; provided that the Escrow
Agent and the Representatives do not make any representation or warranty with
regard to the creation or perfection, hereunder or otherwise, of any such
security interest, and shall have no responsibility at any time to ascertain
whether or not any security interest exists.
(c) Omnicom shall release the security interest herein granted and the
security interest shall be terminated to the extent of any disbursement of the
Escrow Fund hereunder by Escrow Agent in accordance with the terms of this
Escrow Agreement. Upon final disbursement of the Escrow Fund to Omnicom or the
Shareholders, Omnicom shall do all acts and things reasonably necessary to
release and extinguish such security interest. The parties hereto specifically
agree that the grant of this security interest pursuant to this Section 8 shall
not in any way modify the procedures the parties hereto must follow with respect
to the release of Common Stock from the Escrow Fund.
10. ESCROW AGENT'S DUTIES AND FEES
10.1 Duties Limited. The Escrow Agent undertakes to perform only such
duties as are expressly set forth herein, and shall not be required to refer to
the Purchase Agreement in carrying out its duties hereunder. The Escrow Agent
shall not be bound by, or have any responsibility with respect to, any other
agreement between any of the parties. The Escrow Agent shall have no duty or
responsibility with regard to any loss resulting from the decline in the market
value of the Escrow Fund in accordance with the terms of this Agreement. The
Escrow Agent need not maintain any insurance with respect to the Escrow Fund.
10.2 Reliance. The Escrow Agent, acting (or refraining from acting) in good
faith, shall not be liable for any mistake of fact or error of judgment by it or
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for any acts or omissions by it of any kind unless caused by gross negligence or
willful misconduct, and the Escrow Agent may rely, and shall be protected in
acting or refraining from acting, upon any written notice, instruction or
request furnished to it hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties; provided that, as set
forth below, modification of this Escrow Agreement shall be signed by all of the
parties hereto. The Escrow Agent is hereby authorized to comply with any
judicial order or legal process which stays, enjoins, directs or otherwise
affects the transfer or delivery of any part of the Escrow Fund to any party
hereto and shall incur no liability for any delay or loss which may occur as a
result of such compliance.
10.3 Good Faith. Each of Omnicom and the Representative, on behalf of the
Shareholders, jointly and severally, hereby agrees to indemnify the Escrow
Agent, its officers, directors, agents or employees for, and to hold the Escrow
Agent, its officers, directors, agents or employees for, harmless against, any
loss, liability, expense (including reasonable attorneys' fees and expenses),
third party claim and demand, incurred by it without gross negligence or bad
faith on its part, arising out of or in connection with its entering into this
Escrow Agreement and the carrying out of its duties hereunder and in any event
its liability shall be limited to direct damages and shall not include special
or consequential damages; 50% of any such losses shall be payable by Omnicom and
50% shall be payable by the Representative on behalf of the Shareholders. The
Escrow Agent may consult with counsel of its own choice, and shall have full and
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel. The
foregoing indemnification shall survive the resignation of the Escrow Agent or
the termination of this Escrow Agreement.
10.4 Successor Escrow Agents. The Escrow Agent may resign and be discharged
from its duties or obligations hereunder at any time by giving 30 days' notice
in writing of such resignation to the Representative and Omnicom. The
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Representative and Omnicom, together, shall have the right to terminate the
appointment of the Escrow Agent hereunder by giving to it notice in writing of
such termination specifying the date upon which such termination shall take
effect. In either such event, the Representative and Omnicom hereby agree to
promptly appoint a successor escrow agent; if the Representative and Omnicom are
unable to appoint a successor escrow agent within 25 days after the Escrow
Agent's notice of resignation, the Escrow Agent may petition a court of
competent jurisdiction to appoint a successor. The parties hereto agree that,
upon demand of such successor escrow agent, all property in the Escrow Fund
shall be turned over and delivered to such successor escrow agent, which
thereupon shall become bound by all of the provisions hereof. Notwithstanding
any of the foregoing, no appointment of a successor Escrow Agent shall become
effective until all fees, charges and expenses of the original Escrow Agent have
been paid. The original Escrow Agent will not be liable for the acts or
omissions of any successor hereunder.
10.5 Fees and Expenses. Omnicom and the Surviving Corporation each agrees
to pay to the Escrow Agent one-half of the fees determined in accordance with,
and payable as specified in, the Schedule of Fees attached hereto as Attachment
1 as compensation for the services to be rendered by it hereunder and to pay or
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances (including reasonable attorneys' fees) incurred or made by it in
connection with the carrying out of its duties hereunder.
11. WAIVERS
This Escrow Agreement may be amended, superseded or canceled, and any of
the terms or conditions hereof may be waived, only by a written instrument
executed by the parties hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver of any nature, whether by conduct or
otherwise in any one or more instances, of any provision hereof, shall be deemed
to be, or construed as, a further or continuing waiver of any such provision or
of another provision hereof.
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12. NOTICES
Any notice, instructions or other communication required or which may be
given hereunder (including without limitation the delivery of Common Stock to
the Representative out of the Escrow Fund) shall be in writing either delivered
personally or mailed by certified or registered mail, return receipt requested,
or sent by facsimile transmission, and shall be deemed given when so delivered
personally, mailed or sent by facsimile, as follows:
If to Omnicom or the Surviving Corporation, to:
Omnicom Group Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
Fax No.: 000-000-0000
if to the Representative, to:
Xx. Xxxx X. Xxxxxxx
c/o Omnicom Group Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
and if to the Escrow Agent, to:
The Chase Manhattan Bank, N.A.
4 Chase Manhattan Center, 3rd floor
Xxxxxxxx, Xxx Xxxx 00000
Attention: Escrow Department
Fax No.: 000-000-0000
Any party may change the persons and addresses to which notices, payments,
instructions or other communications are to be sent to such party by giving
written notice of any such change in the manner provided herein for giving
17
notice. Notices sent by facsimile transmission shall be confirmed in writing by
registered or certified mail, return receipt requested.
13. ARBITRATION
If any demand shall be made for arbitration hereunder in respect of any
Claim or other matter in dispute hereunder between the Representative and
Omnicom, such Claim or matter shall be settled by arbitration in New York, New
York, before one arbitrator chosen from the Commercial Panel in accordance with
the Rules then pertaining of the American Arbitration Association. The
arbitrator shall consider only the items in dispute and shall be instructed to
act within thirty days to resolve all items in dispute. The "final decision" of
the arbitrator shall be a conclusive determination of the matter and shall be
binding upon the Representative, the Shareholders, Omnicom, the Surviving
Corporation and the Escrow Agent, and shall not be contested by any of them. In
making its determination the arbitrator shall be instructed to take into account
the definition of Losses, the limitations of liability applicable to Losses, and
other provisions of Article XI of the Merger Agreement. The arbitrator shall
determine the party (Omnicom or the Representative, as the case may be) whose
asserted positions before the arbitrator are in the aggregate further from the
aggregate resolutions determined by the arbitrator, which non-prevailing party
shall pay the costs and expenses of the arbitrator.
14. JURY WAIVER
All parties to this Agreement waive any rights they may have to a jury
trial.
15. MISCELLANEOUS
(a) This Escrow Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
(b) This Escrow Agreement shall be binding upon, and inure to the benefit
of the Representative (or his successor) and the successors and assigns of
18
Omnicom, and the Escrow Agent, but no delegation of any obligations provided for
herein may be made by any party hereto without the express written consent of
the other parties hereto, except for the provisions of Section 9.4 hereof
respecting successor escrow agents.
(c) The section headings contained in this Escrow Agreement are inserted
for convenience of reference only, and shall not affect the meaning or
interpretation of this Escrow Agreement.
19
WITNESS the execution of this Escrow Agreement as of the date first above
written.
OMNICOM GROUP INC.
By:
--------------------------------------
XXXXXXX COMMUNICATIONS
HOLDINGS, INC.
By:
-------------------------------------
Xxxx X. Xxxxxxx
THE CHASE MANHATTAN BANK, N.A.
By:
--------------------------------------
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Schedule A to Escrow Agreement
Shares Subject to General Escrow Fund
[To be completed]
Schedule B to Escrow Agreement
Shares Subject to Special Escrow Fund
[To be completed]
-ii-
Schedule C to Escrow Agreement
Additional Shares to be Held Until
the Publication Date
[To be completed]
-iii-
Exhibit 1 to Escrow Agreement
Terms Defined in the Merger Agreement
and their Meanings
"Affiliates Representation Letter" means the letter delivered by each
Company Affiliate pursuant to Section 7.2 of the Merger Agreement.
"Asserted Liability" means any demand, claim or circumstances which gives
rise, or with lapse of time would or might give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation that may result in any Losses.
"Closing Date" means ________, 1996, or such other date chosen by the
parties to the Merger Agreement for the closing of the transactions contemplated
by the Merger Agreement in accordance with Section 2.2 of the Merger Agreement.
"Company Affiliate" means those persons identified on Schedule C hereto as
"affiliates" of the Company, as the term "affiliate" is used in Paragraphs (c)
and (d) of Rule 145 under the Securities Act of 1933 or in SEC XXX Xx. 000.
"Effective Time" means the time when the Merger shall have become
effective.
"Indemnified Parties" mean Omnicom and its affiliates, directors, officers
and employees.
"Losses" mean all liabilities (including liabilities for taxes),
obligations, bonuses, damages, penalties, claims, actions, suits, judgments,
settlements, out-of-pocket costs, expenses and disbursements (including
reasonable costs of investigation, and reasonable attorneys', accountants' and
expert witnesses' fees, whether or not suit is brought) of whatever kind and
nature, to the extent not covered by insurance which the applicable Indemnified
Parties will be entitled to obtain the benefits.
"Omnicom Stock" means shares of Omnicom common stock, par value $.50 per
share.
"Subsidiary" means all of the Company's directly and indirectly owned
subsidiaries.
-iv-
Exhibit 2 to Escrow Agreement
GENERAL CLAIMS NOTICE
[Xxxx X. Xxxxxxx] [Xxxxxx Xxxx], as Shareholder Representative
Xxxxxxx Communications Holdings, Inc.
Six, PPG Place
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
The Chase Manhattan Bank, N.A.
4 Chase XxxxxXxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Escrow Department
Gentlemen:
The undersigned refers to the Escrow Agreement by and among Omnicom Group
Inc., Xxxxxxx Communications Holdings, Inc., Xxxx X. Xxxxxxx as Representative,
and The Chase Manhattan Bank, N.A. dated ___ __, 1996 (the "Escrow Agreement";
the terms defined therein being used herein as therein defined) and hereby gives
you notice, pursuant to Section 2.1 of the Escrow Agreement that [Name of
Indemnified Party] has suffered General Losses in the [approximate] amount of
$_______. The General Losses are in the nature of [provide description of the
General Losses].
Very truly yours,
OMNICOM GROUP INC.
By
------------------------------------
-v-
Exhibit 3 to Escrow Agreement
PUBLICATION NOTICE
The Chase Manhattan Bank, N.A.
4 Chase XxxxxXxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Escrow Department
Gentlemen:
The undersigned refers to the Escrow Agreement by and among Omnicom Group
Inc., Xxxxxxx Communications Holdings, Inc., Xxxx X. Xxxxxxx as Representative,
and The Chase Manhattan Bank, N.A. dated ___ __, 1996 (the "Escrow Agreement";
the terms defined therein being used herein as therein defined) and hereby gives
you notice, that Omnicom has released and published financial results of the
combined operations of Omnicom and the Surviving Corporation covering a period
of at least 30 days after the Effective Time of the Merger.
Accordingly, the Publication Date has occurred. You are hereby authorized
and directed to mail or deliver to each Shareholder the stock certificate(s)
identified next to his or her name on Schedule C hereto.
Very truly yours,
OMNICOM GROUP INC.
By
----------------------------------
-vi-
