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EXHIBIT 2.02
ESCROW AGREEMENT
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This Escrow Agreement (hereinafter "Agreement") entered into on the
22nd day of May, 1997, by and between Specialty Chemical Resources, Inc., a
Delaware corporation, (hereinafter "Purchaser"), Hysan Corporation, an Illinois
corporation (hereinafter "Seller"), and Bank One Trust Company, NA, a national
banking association (hereinafter "Escrow Agent"), all being duly authorized to
execute and deliver this Agreement.
RECITALS
WHEREAS, Seller and Purchaser have entered into an Asset Purchase
Agreement dated May 22, 1997 (hereinafter referred to as the "Purchase
Agreement"), pursuant to which Purchaser will buy all of the Acquired Assets (as
defined therein); and
WHEREAS, Purchaser and Seller desire that, and have requested Escrow
Agent be engaged in accordance with the terms and conditions hereof, and the
funds designated for deposit with Escrow Agent shall be maintained in an
interest bearing account (the "Escrow Account"); and
WHEREAS, Escrow Agent is willing to perform such services in accordance
with the terms and conditions hereof and has established the Escrow Account
hereunder;
NOW, THEREFORE, in consideration of the foregoing and the agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
TERMS
SECTION 1. THE ESCROW AGENT.
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A. The duties and responsibilities of Escrow Agent shall be limited to
those expressly set forth in this Agreement. No implied duties of Escrow Agent
shall be read into this Agreement and Escrow Agent shall not be subject to, or
obliged to recognize any other agreement between, or direction or instruction
of, any or all the parties hereto even though reference thereto may be made
herein.
B. Escrow Agent shall invest the Escrow Account at the direction of
Purchaser and Seller in (i) obligations issued or guaranteed by the United
States of America by any agency or instrumentality thereof, (ii) obligations
(including certificates of deposit and bankers' acceptances) of banks which at
the date of their last public reporting had total assets in excess of
$500,000,000, (iii) commercial paper rated at least AA or Aa, and (iv) money
market funds invested exclusively in
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some or all of the securities described in the foregoing clauses (i), (ii) and
(iii). Income from any such investment shall be held by Escrow Agent, shall be
reinvested in accordance with this section 1B and shall be considered part of
the Escrow Account. If Purchaser and Seller fail to provide unanimous direction
to Escrow Agent as to the manner in which Escrow Agent shall invest the Escrow
Account in accordance with this section 1B, then Escrow Agent shall invest the
Escrow Account in obligations (including certificates of deposit and bankers'
acceptances) of banks which at the date of their last public reporting had total
assets in excess of $500,000.00.
C. Escrow Agent is authorized, in its sole discretion, to disregard any
and all notices or instructions given by any other party hereto or by any other
person, firm or corporation, other than such notices or instructions as are
herein provided for and orders or process of any court entered or issued with or
without jurisdiction. If any property subject hereto is at any time attached,
garnished, or levied upon under any court order or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property or any part
hereof, then and in any of such events Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree with which it is advised by legal counsel of its own choosing is binding
upon it, and if it complies with any such order, writ, judgment or decree it
shall not be liable to any other party hereto or to any other person, firm or
corporation by reason of such compliance even though such order, writ, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated.
D. Escrow Agent may rely, and shall be protected in acting or
refraining from acting, upon any instrument furnished to it hereunder and
believed by it to be genuine and believed by it to have been signed or presented
by the appropriate party or parties (including without limitation, with respect
to any party which is a corporation, any instrument purporting to have been
signed on its behalf by an authorized person listed on Exhibit A hereto (which
list may from time to time be revised by such corporation)).
E. Unless otherwise specifically indicated herein, Escrow Agent shall
proceed as soon as practicable to collect any checks or other collection items
at any time deposited or received hereunder. All such collections shall be
subject to the usual collection agreement regarding items received by its
commercial banking department for deposit or collection. It shall not be
required or have a duty to (i) notify anyone of any payment or maturity under
the terms of any instrument deposited or received hereunder, or (ii) take any
legal action to enforce payment of any check, note or security deposited or
received hereunder. In the event that any funds, including cleared funds,
deposited in the Escrow Account prove uncollectible after the funds represented
thereby have been released by Escrow Agent pursuant to this Agreement, the party
receiving the disbursement of said funds from Escrow Agent, if a party to this
Escrow Agreement, shall immediately reimburse Escrow Agent upon request for the
face amount of such check or checks, and Escrow Agent shall deliver the returned
checks or other instruments to the party originally depositing said checks or
instruments, who shall also be liable for any fees or expenses incurred as a
result of the returned checks or instruments. The party originally depositing
said checks or instruments shall not thereby be relieved
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of any obligation to deposit said funds. In the event that the party receiving
the disbursement of said funds is not a party to this Escrow Agreement, Escrow
Agent shall request such party to return said funds to Escrow Agent. If said
party does not return the disbursed funds, then the party originally depositing
said instrument with Escrow Agent shall immediately reimburse Escrow Agent for
the face amount of said checks or instruments, and shall also reimburse Escrow
Agent for any fees or expenses incurred as a result of the return of said checks
or instruments. Escrow Agent shall have no liability for, or obligation to, pay
interest on any money deposited or received hereunder.
F. Escrow Agent shall not be responsible for the sufficiency or
accuracy, or the form, execution, validity or genuineness, of documents or
securities now or hereafter deposited or received hereunder, or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein, nor shall it be responsible or liable in any respect on
account of the identity, authority or rights of any person executing, depositing
or delivering or purporting to execute, deposit or deliver any such document,
security or endorsement or this Agreement, or on account of or by reason of
forgeries, false representations, or the exercise of its discretion in any
particular manner, nor shall Escrow Agent be liable for any mistake of fact or
of law or any error of judgment, or for any act or omission, except as a result
of its gross negligence or willful malfeasance. Escrow Agent's liability for any
grossly negligent performance or non-performance shall not exceed its fees and
charges in connection with the services provided hereunder. Under no
circumstances shall Escrow Agent be liable for any general or consequential
damages or damages caused, in whole or in part, by the action or inaction of
Purchaser or Seller or any of their respective agents or employees. Escrow Agent
shall not be liable for any damage, loss, liability, or delay caused by
accidents, strikes, fire, flood, war, riot, equipment breakdown, electrical or
mechanical failure, acts of God or any cause which is reasonably unavoidable or
beyond its reasonable control.
G. Escrow Agent may consult with legal counsel of its own choosing and
shall be fully protected in acting or refraining from acting in good faith and
in accordance with the opinion of such counsel.
H. In the event any demand, direction, instruction or request, not
contemplated by the terms of this Agreement, is made upon Escrow Agent, then
Purchaser and Seller hereby jointly and severally authorize Escrow Agent, at its
election, to hold any funds deposited hereunder until an action shall be brought
in a court of competent jurisdiction to determine the rights of Purchaser and
Seller. Deposit by Escrow Agent of such funds with such court, or holding such
funds until such court determines their disposition, after deducting therefrom
its expenses incurred in connection with any such court action, shall relieve
Escrow Agent of all liability and responsibility hereunder.
SECTION 2. DELIVERIES.
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Any notices or payments which Escrow Agent is required or desires to
give or make hereunder to any other party hereto shall be in writing and may be
given by mailing the same to the address indicated below opposite the signature
of such party (or to such other address as such party has theretofore
substituted therefore by written notification to Escrow Agent), by certified
mail,
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return receipt requested. In addition, a copy of notices so sent to Seller shall
be sent via facsimile transmission to Seller's agent, Xxxxxxx & Xxxxx,
Attention: Xxxxxxx X. Xxxxx, (000) 000-0000; a copy of notices so sent to
Purchaser shall be sent via facsimile transmission to Purchaser's agent,
Benesch, Friedlander, Xxxxxx & Xxxxxxx, Attention: Xxx X. Xxxxxx,(000) 000-0000.
Notices to Escrow Agent shall be in writing and shall not be deemed to be given
until actually received by Escrow Agent's Corporate Trust department employee or
officer who administers the Escrow Account pursuant to this Agreement. In
addition, a copy of notices so sent to Escrow Agent by Purchaser shall be sent
via facsimile transmission to Seller, with a copy to Seller's agent, and a copy
of notices so sent to Escrow Agent by Seller shall be sent via facsimile
transmission to Purchaser, with a copy to Purchaser's agent. Whenever under the
terms hereof the time for giving notice or performing an act falls upon a
Saturday, Sunday or Bank Holiday, such time shall be extended to the next day on
which Escrow Agent is open for business.
SECTION 3. FEES AND EXPENSES OF ESCROW AGENT.
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The parties hereto hereby agree to share the fees, costs and expenses
(including counsel fees and expenses) of Escrow Agent equally. Seller's portion
of Escrow Agent's fees, costs and expenses shall be deducted from accrued
interest in the Escrow Account. Escrow Agent shall have a first lien on any
property held hereunder for payment of such fees, costs and expenses. If such
fees, costs and expenses are not promptly paid. Escrow Agent shall have the
right to (a) sell the property held hereunder and reimburse itself from the
proceeds of such sale, or (b) reimburse itself from the cash held hereunder.
SECTION 4. DISTRIBUTION.
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A. Escrow Agent shall release all or part of the Escrow Fund to Seller
or Purchaser from time to time (i) upon receipt of and in accordance with (a)
joint written instructions signed by an authorized person of Seller and an
authorized person of Purchaser or (b) a certified arbitration award pursuant to
Sections 1.5d or 10.9 of the Purchase Agreement; or (ii) as provided in Section
4B or 4D below.
B. Subject to this Section 4, on January 31, 1998 (the "Release Date"),
Escrow Agent shall immediately release the Escrow Fund to Seller.
C. Subject to Section 4D below, if on or before the Release Date, an
Inventory Claim Notice (as defined below) is outstanding or Escrow Agent has
received written notice from Purchaser ("Claim Notice") that it claims in good
faith that Seller is obligated to indemnify Purchaser pursuant to Article VIII
of the Purchase Agreement, Escrow Agent shall continue to hold and retain any
amounts remaining in the Escrow Fund up to the value of the amount of
indemnification claimed and claimed by Purchaser to be due to it, if any, under
an Inventory Claim Notice, until release is otherwise required pursuant to
Section 4A(i) above.
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D. Notwithstanding Escrow Agent's receipt of a Claim Notice, no amounts
payable on the Claim Notice shall be paid until such time as all amounts due on
an Inventory Claim Notice, if any, shall have been paid in accordance with
Section 4A(i). For purposes of this Agreement, an "Inventory Claim Notice" is a
notice for payment of an inventory adjustment pursuant to Section 1.5(b) of the
Purchase Agreement. Purchaser shall not be entitled to and Escrow Agent shall
not make any payment on any claims contained in an Inventory Claim Notice,
unless such Inventory Claim Notice is received by Escrow Agent and Seller on or
before June 23, 1997.
E. Subject to 4D, promptly upon receipt from Purchaser of a Claim
Notice, Escrow Agent will forward a copy of the Claim Notice to Seller by
registered or certified mail, postage prepaid, return receipt requested, or by
facsimile transmission. Unless Seller gives Purchaser and Escrow Agent notice in
writing ("Contest Notice") within thirty (30) days after the date of receipt of
the Claim Notice by Escrow Agent that Seller intends to contest the Claim
Notice, Escrow Agent shall notwithstanding anything to the contrary contained
herein and without further instructions, deliver to Purchaser such amount of the
Escrow Fund as is equal in value to the amount specified in the Claim Notice,
unless Escrow Agent shall have received written notice from Purchaser that such
claim has been satisfied by Seller outside of this Agreement. If Escrow Agent
duly receives a Contest Notice, it shall continue to retain the specified amount
of the Escrow Fund until release is otherwise required pursuant to Section 4A,
above.
F. Upon distribution of all of the Escrow Fund pursuant to this
Agreement, Escrow Agent shall be discharged from all obligations under this
Agreement and shall have no further duties or responsibilities in connection
herewith.
SECTION 5. INDEMNIFICATION OF ESCROW AGENT.
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Purchaser and Seller hereby agree jointly and severally to protect,
defend, indemnify and hold harmless Escrow Agent against and from any and all
costs, losses, liabilities, expenses (including reasonable counsel fees and
expenses) and claims imposed upon or asserted against Escrow Agent on account of
an action taken or omitted to be taken in connection with its acceptance of or
performance of its duties and obligations under this Agreement as well as the
costs and expense of defending itself against any claim or liability arising out
of or relating to this Agreement. Notwithstanding the foregoing, Purchaser and
Seller shall not be required to indemnify Escrow Agent for any costs, losses,
liabilities, expenses and claims incurred which are a result of reckless or
intentional conduct, in the form of acts or omissions on the part of Escrow
Agent or its agents. This indemnification shall survive the release, discharge,
termination, and/or satisfaction of the Agreement.
SECTION 6. ACKNOWLEDGMENT OF ESCROW AGENT AND SELLER.
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Escrow Agent and Seller hereby acknowledge that Purchaser has assigned
its rights under this Agreement to Star Bank, National Association ("Star"), 000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000, and that subject to the terms and
conditions of said assignment, Star may exercise the rights of Purchaser under
this Agreement. For purposes of the notice requirements under this Escrow
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Agreement, the parties hereto shall not be required to give notice to Star
unless and until each Seller and Escrow Agent have received from Star notice
that an "Event of Default" has occurred under the "Loan Documents", as the terms
Event of Default and Loan Documents are defined in the Financing Agreement
between Purchaser and Star dated September 18, 1996, as amended.
SECTION 7. RESIGNATION OF ESCROW AGENT.
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It is understood that Escrow Agent reserves the right to resign as
Escrow Agent at any time by giving written notice of its resignation, specifying
the effective date thereof, to each of the other parties hereto. Said effective
date must not precede thirty (30) days from the date written notice of the
resignation is received by Purchaser and Seller. Within fifteen (15) days after
receiving the aforesaid notice, the other party or parties hereto shall appoint
a successor Escrow Agent to which Escrow Agent may distribute the property then
held hereunder, less its fees, costs and expenses (including reasonable counsel
fees and expenses) which may remain unpaid at that time. If a successor Escrow
Agent has not been appointed and has not accepted such appointment by the end of
such thirty (30) day period, Escrow Agent may apply to a court of competent
jurisdiction for the appointment of a successor Escrow Agent.
SECTION 8. ENTIRE AGREEMENT.
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This Agreement constitutes the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, written and oral, among the parties with
respect to such subject matter.
SECTION 9. MODIFICATION.
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None of the terms or conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by Purchaser, Seller, and Escrow Agent.
SECTION 10. ENFORCEABILITY.
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A. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
B. This Agreement shall be binding upon, and inure to the benefit of,
and be enforceable by and against the respective successors and assigns of the
parties to this Agreement.
C. This Agreement shall be construed, enforced and administered in
accordance with the laws of the State of Illinois.
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SECTION 11. HEADINGS DESCRIPTIVE
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The headings of the several sections of the Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this agreement.
SECTION 12. BUSINESS DAY.
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Business day shall mean a day on which commercial banks in Cleveland,
Ohio are open for the general transaction of business. If any action or time for
performance pursuant to this Agreement is to occur on any Saturday, Sunday or
holiday, such time for action or performance shall be extended to the next
Business Day.
SECTION 13. EXECUTION IN COUNTERPARTS.
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This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed an original, but all of which shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, Purchaser, Seller, and Escrow Agent have caused
this agreement to be executed by their authorized representative as of the date
first above written.
"PURCHASER"
SPECIALTY CHEMICAL 0000 Xxxxxx Xxxx Xxxx
XXXXXXXXX, XXX. Xxxxxxxxx, Xxxx 00000
By: /s/ Xxxxx Xxxx
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Its: Vice President
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"SELLER"
HYSAN CORPORATION 0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
By: /s/ Xxxxx Xxxxxxxxxxx
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Its: President
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"ESCROW AGENT"
BANK ONE TRUST COMPANY, NA 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
By: /s/ Xxxxxxx Xxxxxxx
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Its: Assistant Vice President
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EXHIBIT A
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Authorized Persons of Specialty Chemical Resources, Inc.
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Xxxxx X. Xxxx
Xxxxx X. Xxxx
Xxxxx Xxxxx
Xxxx Xxxxxx
Authorized Persons of Hysan Corporation
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Xxxx X. Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxx, Xx.
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