ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), is dated as of the 30th day
of July, 2004, by and among (i) Knight Xxxxxx, Inc., a Delaware corporation
("KFI"), and (ii) Xxxxxx Holding Company, Inc., a Delaware corporation, as
escrow agent hereunder ("Xxxxxx", or the "Escrow Agent").
W I T N E S S E T H
WHEREAS, KFI holds shares of common stock of Xxxxxx (the "Xxxxxx
Shares") which KFI desires to distribute to its shareholders as a dividend
in-kind (the "Distribution"); and
WHEREAS, pursuant to the terms of the Voting and Registration Rights
Agreement of even date herewith, by and between KFI, Xxxxxx and Opus
International, LLC (the "Voting and Registration Rights Agreement), Xxxxxx is
required to register the Xxxxxx Shares; and
WHEREAS, KFI desires that Xxxxxx control the voting, registration and
distribution of its common shares to KFI shareholders in order to facilitate the
orderly maintenance of a market thereof and to ensure compliance with applicable
securities laws; and
WHEREAS, the parties hereto wish to enter into this Agreement on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is acknowledged by
each of the parties hereto, the parties hereto hereby agree as follows:
1. Escrow Agent's Appointment and Duties. KFI hereby appoints Xxxxxx as Escrow
Agent hereunder, and the Escrow Agent hereby accepts such appointment. KFI
further appoints Xxxxxx and any officer designated by Xxxxxx as its
attorney-in-fact with respect to the Escrowed Property (as hereinafter defined)
and the account to be maintained pursuant to Section 2(b), with full power to
open and maintain the account, authorize and issue checks, issue stock
certificates, and do any and all acts necessary to fulfill Xxxxxx'x obligations
hereunder. The Escrow Agent's duties hereunder are limited solely to (i) the
holding of the Escrowed Property until the earlier of the Distribution or the
Termination Date (as hereinafter defined), (ii) the voting of the Xxxxxx Shares,
as set forth in the Voting and Registration Rights Agreement, (iii) the giving
of notices to KFI, and (iii) such other duties as are specifically set forth
herein. No duties or obligations not expressly set forth herein shall be implied
to the Escrow Agent.
2. Escrowed Property, Escrow Fee.
(a) Simultaneously with the execution and delivery hereof, KFI has
deposited in escrow with the Escrow Agent, 347,373 Xxxxxx Shares (the
"Deposit"). The Escrow Agent hereby acknowledges receipt of the Deposit.
(b) Escrow Agent will establish a separate account and deposit the
Deposit into such account. The Deposit and any interest earned thereon or
dividends or distributions of any sort whatsoever received therefrom shall be
referred to herein as the "Escrowed Property". The Escrowed Property will be
invested solely in money market funds available for immediate withdrawal. The
tax identification number used to maintain this account shall be KFI's tax
identification number, and any income generated by the account shall be
allocated to KFI.
(c) The Escrow Agent may charge a one-time Escrow Fee upon successful
completion of the Distribution. The Escrow Fee, if any, shall not exceed $15.00
per Beneficial Owner, and is payable only out of Escrowed Property in excess of
the Deposit, in any. There shall be no recourse to KFI if the Escrowed Property
is not sufficient to pay the Escrow Fee.
3. Settlement of Escrowed Property.
(a) Settlements by Escrow Agent. The Escrow Agent shall retain
possession of the Escrowed Property except as follows: (i) upon the Distribution
by Escrow Agent of the Escrowed Property pro-rata to the common shareholders of
KFI and the limited partners of KFI Properties, LP of record July 30, 2004,
excluding Opus International, LLC (individually, a "Beneficial Owner", and
collectively, the "Beneficial Owners"); (ii) upon the tenth anniversary of this
Agreement (the "Termination Date") at which time any Escrowed Property not
distributed to Beneficial Owners will be returned to KFI; (iii) upon receipt of
a final and non-appealable order by any court of competent jurisdiction
instructing the Escrow Agent to do otherwise.
(b) Procedures for Distribution of Escrowed Property prior to
Registration of the Xxxxxx Shares. Any Beneficial Owner who is an Accredited
Investor as defined under the Securities Act of 1933 may request the
distribution of his pro-rata share of the Escrowed Property prior to the
Distribution. Such request must be in writing to Escrow Agent, and the Escrow
Agent may require the execution by the requesting Beneficial Owner of any
documents it deems necessary, in its sole discretion, to comply with applicable
state and federal securities laws. The requesting Beneficial Owner may be
required to pay the direct cost of any legal opinion or transfer fee imposed by
Xxxxxx'x transfer agent, if any. Any Xxxxxx Shares distributed to Beneficial
Owners prior to the Distribution will be unregistered securities and certain
restrictions on their resale will apply. This Section 3(b) shall not apply if
any action contemplated herein would constitute an offering of unregistered
securities or would violate any state or federal securities laws.
(c) Procedures for Settlement Discrepancy. KFI intends to distribute one
share of Xxxxxx for each share of KFI owned, or for each unit of KFI Properties,
LP owned, by the Beneficial Owners as of July 30, 2004. If upon Distribution,
the Deposit shall have been insufficient to accomplish a one-for-one
distribution, as intended, then Xxxxxx shall deposit additional shares into
Escrow. If upon Distribution, there are excess Xxxxxx Shares, they shall be
returned to Xxxxxx for cancellation. Any Escrowed Property in addition to the
Xxxxxx Shares that may have been earned prior to Distribution shall be
distributed along with the Xxxxxx Shares pro-rata to the Beneficial Owners.
(d) Replacement of Escrow Agent.
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(i) Resignation of Escrow Agent. The Escrow Agent may resign, at
any time, and be discharged of the obligations created by this Agreement by
executing and delivering to KFI notice of its resignation as Escrow Agent
hereunder and specifying the date on which such resignation is intended to take
effect and appointment of a successor Escrow Agent. The resignation of the
Escrow Agent shall become effective only upon the acceptance of appointment by
the successor Escrow Agent.
(ii) Discharge of Escrow Agent. Upon the occurrence of any
events under Section 3 (a) above, or the appointment of a successor Escrow Agent
pursuant to Section 3 (c)(i) above, the Escrow Agent will be discharged of its
duties as of such date.
(iii) Successor Escrow Agent. If the Escrow Agent shall be
dissolved, or if its property or affairs shall be taken under the control of any
court or administrative body or agency because of insolvency or bankruptcy or
for any other reason, a vacancy shall forthwith exist in the office of Escrow
Agent, and within a period of thirty (30) days thereafter, a successor shall be
appointed by the KFI. If no successor Escrow Agent shall have been so appointed
and have accepted such appointment within such thirty (30) day period, the
Escrowed Property shall return to KFI.
(iv) Instruments in Writing. Appointments made by KFI and/or the
Seller under this Section 5(b) shall be made by an instrument or instruments in
writing. Copies of each instrument shall be delivered by KFI and the Seller to
the predecessor Escrow Agent and to the successor Escrow Agent so appointed.
4. Governing Law; Arbitration; Jurisdiction Venue.
(a) This Agreement will be governed by and construed under the laws of
the State of Delaware without regard to principles of conflict of laws; and
(b) Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof that cannot be settled by mutual agreement
(except for actions by any party seeking equitable, injunctive or other relief)
will be finally settled by arbitration as follows: Any party who is aggrieved
will deliver a notice to the other parties hereto setting forth the specific
points in dispute. Any points remaining in dispute twenty (20) days after the
giving of such notice will be submitted to arbitration in California, before a
single arbitrator appointed in accordance with American Arbitration Association
Rules, modified as expressly provided. The arbitrator may enter a default
decision against any party who fails to participate in the arbitration
proceedings. The decision of the arbitrator on the points in dispute will be
final, unappealable, and binding, and judgment on the award may be entered in
any court having jurisdiction. The parties irrevocably consent to the
jurisdiction and venue of the state and federal courts located in California, in
connection with any action relating to this Agreement. Notwithstanding any other
provision of this Agreement, the arbitrator will be authorized to apportion its
fees and expenses and the reasonable attorney fees and expenses of the parties
as the arbitrator deems appropriate. In the absence of any such apportionment,
the fees and expenses of the arbitrator will be borne 50% by KFI, on the one
hand, and 50% by Escrow Agent, on the other hand, and each such party will bear
the fees and expenses of its own attorneys. The parties agree that this clause
has been included to rapidly and inexpensively resolve any disputes between them
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with respect to this Agreement, and that this clause will be grounds for
dismissal of any court action commenced by either party with respect to this
Agreement, other than post arbitration actions seeking to enforce an arbitration
award. The parties will keep confidential, and will not disclose to any person,
except as may be required by law, the existence of any controversy hereunder,
the referral of any such controversy to arbitration or the status or resolution
thereof.
5. Notices. All notices, demands, approvals, consents, elections or other
communications permitted or required to be given hereunder (the "Notices") shall
be in writing and shall be deemed given (i) 3 days after being posted certified
mail, return receipt requested, postage prepaid in the proper amount, or (ii)
when delivered, if sent by hand delivery or by overnight courier service.
Notices shall be addressed as follows:
(i) if to KFI, to:
00000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
(ii) if to Xxxxxx, to:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
or to such address as any party may from time to time specify in writing to the
others. If any such Notice is given by hand delivery or overnight courier
service, the person to whom such Notice is given shall, if requested,
acknowledge receipt of such Notice and the date of such receipt on a copy of
such notice.
6. Binding Effect. Subject to Section 5, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs
executors, administrators, legal representatives, successors and assigns.
7. Nouns and Pronouns. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice-versa.
8. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be considered an original but all of which together shall be
deemed to constitute one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX HOLDING COMPANY, INC.
By: ____________________________________
Name: Xxxxxx X. Xxxxx
Title:Co-Chief Executive Officer
KNIGHT XXXXXX, INC.
By: ____________________________________
Name:
Title:
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