Exhibit 10.7
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made as of the 31st day of
March, 1999 by and among American Capital Strategies, Ltd. ( the "Company"), and
Norwest Bank Minnesota, National Association ("Norwest"), as escrow agent (the
"Escrow Agent).
Recitals
WHEREAS, the Company has agreed to grant to ACS Funding Trust I ("ACS
Funding") a first priority security interest in certain assets of the Company
pursuant to a Pledge and Security Agreement, dated as of the date hereof, by and
among the Company, ACS Funding and the Escrow Agent (as the same may be amended
from time to time, the "Pledge and Security Agreement");
WHEREAS, the Company has agreed to appoint a escrow agent to hold the
assets so pledged on behalf of ACS Funding in order to perfect the security
interest so granted in such assets; and
WHEREAS, Norwest is willing to act as Escrow Agent hereunder and under
the Pledge and Security Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used but not defined
herein shall have the meanings given to them, or incorporated by reference
therein, in the Pledge and Security Agreement.
Section 2. Appointment of the Escrow Agent; Receipt of Escrowed
Interests. The Company hereby constitutes and appoint the Escrow Agent as, and
the Escrow Agent hereby agrees to assume and perform the duties of, the escrow
agent under and pursuant to this Agreement. The Escrow Agent acknowledges
receipt of the Supplemental Interests (the "Escrowed Interests").
Section 3. The Escrowed Interests.
(a) The Escrowed Interests shall be held by the Escrow Agent in trust
for the benefit of ACS Funding and shall be released and delivered only
in accordance with the terms of this Agreement.
(b) The Escrowed Interests shall be not be subject to lien or
attachment by any creditor of any party hereto, except the first
priority perfected security interest in favor of ACS Funding pursuant
to the Pledge and Security Agreement. The Escrowed Interests
shall not be available to or used by the Escrow Agent to set-off any
obligations of the Company owing to the Escrow Agent in any capacity.
Section 4. Release of the Escrowed Interests.
(a) Upon its receipt of written notice from the Company of the
occurrence of the Approval Date, the Escrow Agent shall release the
Escrowed Interests in accordance with Section 17 hereof.
(b) Upon release and delivery of all of the Escrowed Interests to the
Collateral Agent as provided herein, this Agreement (other than
Sections 6, 7 and 8) shall automatically terminate.
Section 5. Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent shall be limited to and determined solely by the
provisions of this Agreement and the Pledge and Security Agreement, and the
Escrow Agent is not charged with knowledge of, or any duties or responsibilities
in respect of, any other agreement or document. In furtherance and not in
limitation of the foregoing:
(a) the Escrow Agent shall be fully protected in relying in good faith
upon any written certification, notice, direction, request, waiver,
consent, receipt or other document that the Escrow Agent reasonably
believes to be genuine and duly authorized, executed and delivered; and
(b) the Escrow Agent shall not be liable for any error of judgment, or
for any act done or omitted by it, or for any mistake in fact or law,
or for anything that it may do or refrain from doing in connection
herewith; provided, however, that notwithstanding any other provision
in this Agreement, the Escrow Agent shall be liable for its willful
misconduct or gross negligence.
Section 6. Cooperation. The Company shall provide to the Escrow Agent
all instruments and documents within their respective powers to provide that are
necessary for the Escrow Agent to perform its duties and responsibilities
hereunder.
Section 7. Indemnity.
(a) The Company hereby agrees to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense arising out of
or in connection with this Agreement and carrying out its duties
hereunder, including the costs and expenses of defending itself against
any claim of liability, except in those cases where the Escrow Agent
has been guilty of gross negligence or willful misconduct. Anything in
this 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.
(b) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or
demands from any party hereto which,
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in its opinion, conflict with any of the provisions of this Agreement,
it shall be entitled to refrain from taking any action and its sole
obligations shall be to keep safely all property held in escrow until
it shall be directed otherwise in writing by all of the other parties
hereto or by a final order or judgment of a court of competent
jurisdiction.
Section 8. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may not resign. The Escrow Agent may be removed
and replaced on a date designated in a written instrument signed by ACS
Funding and the Deal Agent and delivered to the Escrow Agent.
Notwithstanding the foregoing, no such removal shall be effective until
a successor escrow agent has been appointed. In either event, upon the
effective date of such removal, the Escrow Agent shall deliver the
property comprising the Escrowed Interests to such successor escrow
agent, together with such records maintained by the Escrow Agent in
connection with its duties hereunder and other information with respect
to the Escrowed Interests as such successor may reasonably request.
(b) Upon written acknowledgment by a successor escrow agent appointed
in accordance with the foregoing provisions of this Section 8 of its
agreement to serve as escrow agent hereunder and the receipt of the
property then comprising the Escrowed Interests, the Escrow Agent shall
be fully released and relieved of all duties, responsibilities and
obligations under this Agreement, and such successor escrow agent shall
for all purposes hereof be the Escrow Agent.
Section 9. Notices. All notices, requests, instructions, documents and
other communications provided for herein or given hereunder shall be in writing
and shall be deemed to have been duly given if sent to the parties at the
following addresses in the manner set forth below:
If to the Company, to:
American Capital Strategies, Ltd.
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Escrow Agent, to:
Norwest Bank Minnesota, National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Services
Asset Backed Administration
All such notices, requests, instruction, documents and other communications
shall be sent either by registered or certified mail, postage prepaid, or by a
nationally recognized overnight courier service providing receipt of delivery
and, in the case of notices to the Company, shall be deemed
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to have been given three (3) days after being deposited in the mails or one (1)
day after being delivered to such a courier and, in the case of notices to the
Escrow Agent, shall be effective only when actually received. Any party from
time to time may change its address or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
Section 10. Amendments, etc. This Agreement may be amended or modified,
and any of the terms hereof may be waived, only by a written instrument duly
executed by or on behalf of the Company and the Escrow Agent. No waiver by any
party of any term or condition contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such state, without giving effect to the
conflicts of laws principles thereof.
Section 12. Severability of Provisions. In any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 13. Assignment.
(a) Notwithstanding anything to the contrary contained herein, this
Agreement may not be assigned by the Escrow Agent or the Company except in
connection with a merger or consolidation of the Company with or into, or
disposition of the Company's properties and assets to, another Person, provided,
however, that any such merger, consolidation or disposition shall satisfy the
requirements of Section 9.13 of the Purchase Agreement (which requirements are
incorporated herein by reference).
(b) In connection with any permitted assignment of this Agreement by
the Company, the Company shall deliver to ACS Funding and the Deal Agent an
Officer's Certificate that such assignment complies with this Section 13, and
shall cause such assignee to execute an agreement supplemental hereto, in form
and substance satisfactory to the Company, pursuant to which such assignee shall
expressly assume and agree to the performance of every covenant and obligation
of the Company hereunder, to provide delivery of an Opinion of Counsel that such
supplemental agreement is legal, valid and binding with respect to such
assignee, and to take such other actions and execute such other instruments as
may reasonably be required to effectuate such assignment.
Section 14. Further Assurances. The Escrow Agent and the Company agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the other party more
fully to effect the purposes of this Agreement.
Section 15. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Escrow Agent or the Company, any
right, remedy, power or
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privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privilege
provided by law.
Section 16. Counterparts. This Agreement may be executed in two or more
counterparts including telefax transmission thereof (and by different parties on
separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
Section 17. Binding Effect; Third-Party Beneficiaries. This Agreement
shall inure to the benefit of and the obligations thereunder shall be binding
upon the parties hereto and their respective successors and permitted assigns.
Any permitted assigns of the Company and ACS Funding shall be third-party
beneficiaries of this Agreement. Pursuant to the Pledge and Security Agreement,
the Company has granted a first priority perfected security interest in all of
its right, title and interest in the Escrowed Interests to ACS Funding. The
Company acknowledges that ACS Funding is granting a first priority perfected
security interest in all of its right, title and interest in the Escrowed
Interests to the Deal Agent as agent for the Secured Parties under the Loan
Funding Agreement and that, upon its receipt of the Escrowed Interests on or
after the Approval Date, ACS Funding will deliver the Escrowed Interests to the
Collateral Custodian to further perfect the security interest of the Deal Agent,
and the Company hereby expressly (i) consents to the grant of such security
interest to the Deal Agent and (ii) authorizes the delivery of the Escrowed
Interests to the Collateral Custodian. The Company and ACS Funding agree that
the Deal Agent, as agent for the Secured Parties under the Loan Funding
Agreement shall be a third party beneficiary hereof.
Section 18. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement, together with the Pledge and Security
Agreement, sets forth the entire understanding of the parties relating to the
subject matter hereof, there are no other agreements between the parties for
transactions relating to or similar to the transactions contemplated by this
Agreement, and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
AMERICAN CAPITAL STRATEGIES, LTD.
By:_________________________
Name:_______________________
Title:______________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:_________________________
Name:_______________________
Title:______________________
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