ESCROW AGREEMENT
Escrow Agreement (this "Escrow Agreement"), dated as of November 23,
1999, by and among Liberty Food Group, LLC, a Delaware limited liability company
(the "Buyer"), Ferro Foods Corporation, a New York corporation, Xxxxx Xxxxx, Xx.
and Xxxxx Xxxxxxx (collectively, the "Seller"), and Xxxxxxx, Xxxxxxxxx LLP (the
"Escrow Agent").
RECITALS
WHEREAS, the Buyer and the Seller have entered into a certain Asset
Purchase Agreement dated the date hereof (the "Purchase Agreement"; capitalized
terms used herein not otherwise defined shall have the meanings given to such
terms in the Purchase Agreement) pursuant to which, among other things, the
Buyer is purchasing substantially all of the assets of the Seller;
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase Agreement, the Buyer is requiring that the Seller
borrow a sufficient amount of funds from a third party in order to satisfy all
the outstanding debts and liabilities connected with the Business (collectively,
the "Debt"), none of which are being assumed by the Buyer in the transaction;
and
WHEREAS, until the financial accommodation to satisfy the Debt is in
place which is satisfactory to the Buyer, the Seller agrees to deposit the
Shares with the Escrow Agreement as herein provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. The Buyer and each of the Sellers hereby appoint the Escrow Agent to
serve in such capacity hereunder. The Escrow Agent hereby accepts such
appointment and acknowledges receipt from the Buyer of (1) stock certificate
#___ in the amount of 1,000,000 shares of common stock of the Buyer issued in
the name of the Seller and (2) stock certificate #___ in the amount of 1,000,000
shares of common stock of the Buyer issued in the name of the Seller, and agrees
to hold and distribute the Shares in accordance with this Escrow Agreement.
2. Upon the receipt of a letter from the Buyer indicating that the
Shares shall be released to a financial institution as collateral for a loan to
satisfy the Debt, the Escrow Agent shall promptly deliver the Shares as
instructed by the Buyer.
3. Alternatively, the Buyer may deliver a notice to the Escrow Agent
instructing the Escrow Agent to deliver only 1,000,000 of the shares of the
Buyer to a financial institution and to deliver to the Buyer the balance of the
Shares to the Buyer. The Buyer and the Seller agree that such a notice will only
be delivered to the Escrow Agent if the financial accommodation to satisfy the
Debt, which must be to satisfactory to the Buyer, in its sole and absolute
discretion, is not established within thirty (30) days from the date hereof.
4. Each of the Sellers and the Escrow Agent acknowledge that the Shares
are subject to a Voting Trust and Proxy Agreement, and shall remain subject to
said agreement in accordance with the terms thereof.
5. The duties and responsibilities of the Escrow Agent hereunder shall
be determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities shall be implied. The Escrow Agent
shall not have any liability under, nor duty to inquire into the terms and
provisions of any agreement or instructions, other than outlined in this Escrow
Agreement.
6. The Escrow Agent may act upon any judgement, certification, demand,
notice, instrument or other writing believed by it, in good faith, to be genuine
and purporting to be signed on behalf of the party for whom it is signed without
being required to determine the authenticity or correctness of any fact stated
therein or the propriety or validity of the signature or service thereof. The
Escrow Agent may assume that any person purporting to give any notice or receipt
or advice or to make any statement or execute any document in connection wit the
provisions hereof has been duly authorized to do so. Notwithstanding any
provision to the contrary, notice to the Escrow Agent shall not be effective
unless actually received by such Escrow Agent.
7. In the event of any disagreement between any of the parties to this
Escrow Agreement, or between any of them and any other person, resulting in
adverse claims or demands being made in connection with the Shares, or in the
event that the Escrow Agent in good faith is in doubt as to what action it
should take hereunder, the Escrow Agent may, at its option, continue to hold the
Shares and refuse to comply with any claims or demands on it until (i) the
Escrow Agent shall have received a final, non-appealable order of a court of
competent jurisdiction located in the County of New York directing delivery of
the Shares or (ii) all differences shall have been adjusted and all doubt
resolved by written agreement executed by the parties to such disagreement.
8. The Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Shares to any successor Escrow Agent reasonably
acceptable to the parties hereto, designated by the Escrow Agent in writing, or
the Clerk of the United States District Court for the Southern District of New
York, or the Supreme Court of the State of New York, County of New York
whereupon the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Escrow Agreement.
9. The Escrow Agent shall not be liable for any action taken or omitted
by it in good faith unless a court of competent jurisdiction determines that the
Escrow Agent's willful misconduct was the primary and direct cause of any loss
to the Buyer or Seller. In the administration of the escrow account hereunder,
the Escrow Agent may act directly or through agents or attorneys and may, in its
sole discretion, consult with such counsel, accountants and other skilled
persons selected and retained by it. The Escrow Agent shall not be liable for
any acts, suffered or omitted in good faith by it in accordance with the advice
or opinion of any such counsel, accountants or other skilled persons. 10. Buyer
and the Seller, jointly and severally, shall indemnify, defend and save harmless
the Escrow Agent from all loss, liability or expense (including the fees and
expenses of outside counsel) arising out of or in connection with (i) its
execution and performance of this Escrow Agreement, except to the extent that
such loss, liability or expense is due to the gross negligence or willful
misconduct of the Escrow Agent, or (ii) its following any instructions or other
directions from the Buyer, except to the extent that following any such
instruction or direction is expressly forbidden by the terms hereof. Anything in
this Escrow Agreement to the contrary notwithstanding, in no event shall the
Escrow Agent be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. 11. All notices and communications hereunder
shall be in writing and shall be deemed to be duly given if sent by registered
mail, return receipt requested, or by facsimile as follows:
a. if to the Escrow Agent:
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx, Esq.
b. if to the Seller:
Ferro Foods Corporation
00 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: 718-
Attention: Xxxxx Xxxxx, Xx.
c. if to the Buyer:
Liberty Group Holdings, Inc.
00 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxx
or at such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested and any such
notice or communication given in the manner specified in this Paragraph 11 shall
be deemed to have been given as of the date received by the applicable party. In
the event that the Escrow Agent, in its sole discretion, shall determine that an
emergency exists, the Escrow Agent may use such other means of communications as
the Escrow Agent deems advisable.
12. The provisions of this Escrow Agreement may be waived, altered,
amended or supplemented in whole or in part, only by a writing signed by all of
the parties hereto.
13. Neither this Escrow Agreement nor any right or interest hereunder
may be assigned in whole or in part by any party without the prior consent of
the other parties, other than the rights and obligations of the Buyer.
14. This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto.
16. Each of the Sellers hereby acknowledges and agrees that Xxxxxxx,
Xxxxxxxxx LLP may act as Escrow Agent hereunder notwithstanding that Xxxxxxx,
Xxxxxxxxx LLP represents the Buyer in the transactions contemplated by the
Purchase Agreement. Each of the Sellers further covenants that Escrow Agent may
at all times represent Buyer, even if a dispute or controversy arises between
the parties hereto with respect to this Escrow Agreement or the Purchase
Agreement, or any other matter whether or not related to this Escrow Agreement
or the Purchase Agreement, and each party hereby waives any claim of conflict of
interest it may now have, or in the future obtain, against the Escrow Agent.
17. This Escrow Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
its principles of conflicts of laws. All actions and proceedings arising out of,
or relating to, this Agreement shall be heard and determined in any state or
federal court sitting in New York, New York. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-conveniens or any
similar grounds and irrevocably consents to service of process by mail or in any
other manner permitted by applicable law and consents to the jurisdiction of
said courts.
[Remainder of Page Intentionally Omitted; Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date and year first above written.
XXXXXXX, XXXXXXXXX LLP
as Escrow Agent
By:
---------------------------
Name:
Title:
FERRO FOODS CORPORATION
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
-------------------------------
Xxxxx Xxxxx, Xx.
--------------------------------
Xxxxx Xxxxxxx
LIBERTY FOOD GROUP, LLC
By: LIBERTY GROUP HOLDINGS, INC.,
f/k/a BIO-RESPONSE, INC.,
its sole member
By:
----------------------------
Name:
Title:
