EXHIBIT 2.2(a)
XXXXXXX MONEY ESCROW AGREEMENT
XXXXXXX MONEY ESCROW AGREEMENT (this "Agreement") is made and entered
into as of March 3, 1997, by and among PLATINUM ENTERTAINMENT, INC., a Delaware
corporation ("Buyer"), K-TEL INTERNATIONAL, INC., a Minnesota corporation
("Seller") and MIDWEST TRUST SERVICES, INC., as Escrow Agent ("Escrow Agent").
The parties hereto are entering into this Agreement pursuant to the
terms of that Asset Purchase and Sale Agreement dated as of March 3, 1997 (the
"Purchase Agreement"), by and among Buyer and Seller.
Accordingly, the parties hereto agree as follows:
1. Definition of Terms. Terms not otherwise defined herein shall have
the meaning ascribed to such terms in the Purchase Agreement. The Escrow Agent
shall not be responsible for any other provisions of the Purchase Agreement.
2. Appointment and Acceptance. Buyer and Seller hereby appoint Escrow
Agent as escrow agent for the purposes and upon the terms and conditions
hereinafter set forth. Escrow Agent hereby accepts such appointment and agrees
to act as escrow agent hereunder and to hold, invest and dispose of any funds
received by it hereunder in accordance with the terms and conditions hereinafter
set forth.
3. Deposit of Escrowed Funds. On the date hereof, Buyer shall, as
partial payment of the Purchase Price, deliver to Escrow Agent for deposit in
escrow pursuant to the provisions hereof, a wire transfer of immediately
available funds in the amount of $1,750,000 (the "Escrowed Funds") into an
interest bearing account.
4. Purpose of Agreement. Seller and Buyer represent that this Agreement
has been executed pursuant to SECTION 2.2(a) of the Purchase Agreement. Buyer
represents that it will make the deposit of the Escrowed Funds pursuant to
SECTION 2.2(a) of the Purchase Agreement on Tuesday, March 4, 1997.
5. Delivery of Escrowed Funds. Subject to the terms set forth in
ARTICLE XII of the Purchase Agreement, if at any xxxx Xxxxxx or Buyer shall
claim that it is entitled to payment of all or a portion of the Escrowed Funds
pursuant to the terms set forth in the Purchase Agreement (a "Right of
Payment"), such party shall give notice of such Right of Payment (the "Notice of
Payment") to the other party and the Escrow Agent. The Notice of Payment shall
be an affidavit describing the event or circumstances giving rise to the Right
of Payment, specifying the amount of the Escrowed Funds requested and certifying
that the Notice of Payment is being submitted in good faith.
If Escrow Agent shall have received a Notice of Payment, Escrow Agent
shall promptly deliver a copy thereof to the other party hereto. Within fifteen
(15) business days ("Dispute Period") after delivery by Escrow Agent of a copy
of such Notice of Payment to such other party, such other party may deliver to
Escrow Agent a written notice (the "Notice of Dispute") disputing the request
for payment of Escrowed Funds stated in the Notice of Payment. The Notice of
Dispute shall be an affidavit specifying the amount being disputed (the
"Disputed Amount"), describing in reasonable detail the reasons for such dispute
and certifying that the Notice of Dispute is being submitted in good faith. If
Escrow Agent has not received a Notice of Dispute prior to the expiration of
Dispute Period referred to above, then Escrow Agent shall immediately pay to
such requesting party, by check or wire transfer of immediately available funds,
the full amount of the Escrowed Funds requested in the Notice of Payment. If
Escrow Agent has received a Notice of Payment during the Dispute Period which
disputes in part the request for payment of Escrowed Funds stated in the Notice
of Payment, then Escrow Agent shall, following receipt of such notice of claim,
immediately pay to such requesting party, by check or wire transfer of
immediately available funds, the amount, if any, of Escrowed Funds requested in
the Notice of Payment which is in excess of the Disputed Amount.
If Escrow Agent receives a Notice of Dispute, Escrow Agent shall
promptly deliver a copy of the Notice of Dispute to the other party hereto, and
shall not deliver all or the portion of the requested amount of Escrowed Funds
set forth in the Notice of Payment constituting the Disputed Amount until Escrow
Agent shall have received one of the following:
(a) A certified copy of an order, decree or judgment issued or
rendered by a court of competent jurisdiction, which order, decree or
judgment has been finally affirmed on appeal or which by lapse of time
or otherwise is no longer subject to appeal (a "Final Decision")
directing the distribution of the Escrow Funds; or
(b) A joint written direction executed by Buyer and Seller
directing the distribution of the Escrowed Funds.
Upon receipt of either (a) or (b) above, Escrow Agent shall immediately
deliver the Escrowed Funds to the proper party(ies) in accordance therewith.
6. Investment of Escrowed Funds. Escrow Agent shall invest the Escrowed
Funds, from time to time, in 30-day United States Treasury obligations or
certificates of deposit having a maturity not to exceed 30 days, any
governmental mutual funds, or such other investments jointly designated in
writing by Buyer and Seller. The proceeds of all investments made hereunder
shall be distributed in accordance with this Agreement. Escrow Agent shall
deliver monthly statements to Buyer and Seller in accordance with Escrow Agent's
regular practice; the parties hereby agree that, except for the foregoing,
Escrow Agent shall have no obligations to monitor, or advise the parties with
respect to, such investments. All interest or other income earned on the Escrow
Funds shall be paid to Buyer on a monthly basis.
7. Release Date and Termination of Escrow.
(a) On the Closing Date or the effective date of an earlier
termination of the Purchase Agreement in accordance with the terms
thereof (the "Release Date"), Escrow Agent shall ascertain the amount
of the escrow balance (the "Escrow Balance"), which amount shall equal
the amount of Escrowed Funds (including all interest or other income
attributable thereto and not previously distributed) then held
hereunder less the amount of Escrowed Funds, if any, then (i) covered
by a pending Notice of Payment which is subject to a Notice of Dispute
as provided in SECTION 5 hereof, (ii) covered by a pending Notice of
Payment which was delivered by Escrow Agent to a party hereto at any
time prior to the Release Date and which either has not been paid or is
subject to the ability of a party hereto to provide a Notice of Dispute
with respect thereto in accordance with the terms hereof, or (iii)
covered by a Notice of Payment to the extent determined to be valid and
no longer subject to a Notice of Dispute, but not yet paid. On the
Release Date (i), if such date is the Closing Date, Escrow Agent shall
deliver to Seller (or its designee) the Escrow Balance or (ii) if such
date is the effective date of an earlier termination of the Purchase
Agreement in accordance with the terms thereof, the provisions of
SECTION 5 above shall apply to any release of the Escrow Balance.
(b) Notwithstanding the foregoing, this Agreement may be
terminated at any time by and upon the receipt by Escrow Agent of
written notice of termination executed by both Buyer and Seller
directing the distribution of all property then held by Escrow Agent
under and pursuant to this Agreement, and this Agreement shall
automatically terminate if and when all the Escrowed Funds (and all the
securities in which any of the Escrowed Funds shall have been invested)
shall have been distributed by Escrow Agent in accordance with the
terms of this Agreement.
(c) Escrow Agent is authorized to liquidate the securities
held hereunder (unless directed in writing by Seller to distribute such
securities in some other specified manner) to the extent necessary to
distribute to Seller (or its designee) the Escrowed Funds as provided
in SECTION 7(a) above and shall have no liability for any loss arising
out of any such liquidation.
8. Liens on Escrowed Funds. During the term of this Escrow Agreement,
each of Buyer and Seller agree to keep the Escrowed Funds free and clear of all
liens, claims, encumbrances, levies, garnishments or other attachments arising
with respect to it.
9. Notices. Any notices or other communication required to be sent or
given hereunder by any of the parties shall in every case be in writing and
shall be deemed properly served if (a) delivered personally, (b) sent by
registered or certified mail, in all such cases with first class postage
prepaid, return receipt requested, (c) delivered by a recognized overnight
courier service, or (d) sent by facsimile transmission to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing.
(a) If to Seller:
K-tel International, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxxx & Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
Xxxxxx Xxxxx
K-5 Leisure Products, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxx, Xxxxxx X0X 0X0
Telecopy No.: (000) 000-0000
(b) If to Buyer:
Platinum Entertainment, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(c) If to Escrow Agent:
Midwest Trust Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) the next succeeding business day after date of delivery to
the overnight courier if sent by overnight courier or (z) the next succeeding
business day after transmission by facsimile.
10. Escrow Agent's Liability. Escrow Agent undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement against
Escrow Agent. In the absence of bad faith, gross negligence or wilful misconduct
on its part, Escrow Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to Escrow Agent. Escrow Agent may act upon
any instrument, certificate, opinion or other writing believed by it in good
faith and without gross negligence to be genuine, and shall not be liable in
connection with the performance by it of its duties pursuant to the provisions
of the Agreement, except for its own bad faith, gross negligence or wilful
misconduct. Escrow Agent may consult with counsel of its own choice and shall
have full and complete authorization and protection for any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
opinion of such counsel. Escrow Agent may execute powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys.
11. Indemnification of Escrow Agent. Buyer and Seller hereby agree
severally and not jointly (one-half to be borne by Buyer and one-half to be
borne by Seller) to indemnify Escrow Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, wilful
misconduct or bad faith on the part of Escrow Agent, arising out of or in
connection with its entering into the Agreement, carrying out its duties
hereunder and accepting the Escrowed Funds, including the costs and expenses of
defending itself against any claim of liability in connection with the exercise
or performance of any of its powers or duties hereunder (including reasonable
fees, expenses and disbursements of its counsel).
12. Escrow Agent to Follow Instructions of Buyer and Seller.
Notwithstanding any provision contained herein to the contrary, Escrow Agent
shall at any time and from time to time take such action hereunder with respect
to the Escrowed Funds (and the securities in which any of the Escrowed Funds
shall have been invested) as shall be directed in writing by both Buyer and
Seller, provided that Escrow Agent shall first be indemnified to its
satisfaction with respect to any of its costs or expenses which might be
involved.
13. Resignation of Escrow Agent. Escrow Agent, or any successor, may
resign at any time upon giving written notice, thirty (30) days before such
resignation shall take effect, to Buyer and Seller. In the event Escrow Agent
shall resign or be unable to serve, it shall be succeeded by such bank or trust
company as Buyer and Seller shall appoint, or if no appointment is made, by a
bank or trust company appointed by a court of competent jurisdiction. In the
absence of a successor so appointed by Buyer and Seller, Escrow Agent may
petition such a court to appoint a successor escrow agent. The resigning escrow
agent shall transfer to its successor all monies, securities and investments
then held subject to this escrow and all pending notices, instructions and
directions then in its possession, and shall thereupon be discharged, and the
successor shall thereupon succeed to all the rights, powers and duties and shall
assume all of the obligations of the resigning escrow agent.
14. Escrow Agent's Fee and Expenses, Etc.
(a) Escrow Agent shall be entitled to (i) a $50 annual fee,
which annual fee shall be prorated to the date of termination of this
Agreement, for services rendered and for reimbursement of extraordinary
expenses incurred in performance of its duties which expenses are not
included in said fee, plus (ii) out of pocket expenses which expenses
shall be charged as incurred. Such annual fees shall be paid by Buyer
and such out-of-pocket expenses shall be divided equally between the
Buyer, on one hand and Seller, on the other hand.
(b) In case said property shall be attached, garnished, or
levied upon any court order, or the delivery thereof shall be stayed or
enjoined by an order of court, or any order, judgement or decree shall
be made or entered by any court order affecting the property deposited
under this Agreement, or any part thereof, Escrow Agent is hereby
expressly authorized in its sole direction, 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 case Escrow Agent obeys or complies 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 aside or vacated.
(c) In case said Escrow Agent becomes involved in litigation
on account of this deposit or of this Agreement, it shall have the
right to retain counsel and shall have a lien on the property deposited
hereunder for any and all costs, attorneys' fees, charges,
disbursements, and expenses in connection with such litigation; and
shall be entitled to reimburse itself therefor out of the property
deposited hereunder, and if it shall be unable to reimburse itself from
the property deposited hereunder, the parties hereto jointly and
severally agree to pay to said Escrow Agent on demand, its reasonable
charges, counsel and attorneys' fees, disbursements, and expenses in
connection with such litigation.
(d) In case conflicting demands are made upon it for any
situation not addressed in this Agreement, Escrow Agent may withhold
performance of this escrow until such time as said conflicting demands
shall have been withdrawn or the rights of the respective parties shall
have been settled by court adjudication, arbitration, joint order or
otherwise.
(e) The parties acknowledge that Escrow Agent will have no
obligations or responsibilities with respect to tax reporting of the
parties.
15. Successors. The obligations imposed and the rights conferred by
this Escrow Agreement shall be binding upon and inure to the benefit of the
respective heirs (including estates), successors and permitted assigns of the
parties hereto, but will not be assignable or delegable by any party without the
prior written consent of the other parties.
16. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without giving
effect to principles of conflicts of law.
17. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
18. Amendment. This Agreement cannot be terminated, altered or amended
except pursuant to an instrument in writing signed by Buyer, Seller and Escrow
Agent.
19. Enforceability. If any provision of the Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid or
unenforceable any other provision of this Escrow Agreement, and the Agreement
shall be carried out as if any such invalid or unenforceable provision were not
contained herein.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed on original and all of which
together shall constitute one and the same instrument.
21. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.
22. Attorneys' Fees. In the event of a dispute between Buyer and Seller
regarding the distribution of the Escrowed Funds, upon the issuance of a final,
non-appealable order or judgment by a court of competent jurisdiction, the
prevailing party's legal fees and related expenses shall be paid by the
non-prevailing party. The determination of which party is the "prevailing" party
shall be made by the court issuing such final, non-appealable order or judgment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
K-TEL INTERNATIONAL, INC.,
a Minnesota corporation
By:
Its:
PLATINUM ENTERTAINMENT, INC.,
a Delaware corporation
By:
Its:
MIDWEST TRUST SERVICES, INC., AS ESCROW AGENT
By:
Its:
