EXHIBIT 10.7
ESCROW AGREEMENT
RELATING TO:
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(XXXX INDUSTRIES INCORPORATED PROJECT) SERIES 0000
XX XXX XXXX XX XXXXX, XXXXXXXXX
THIS AGREEMENT is made the 29th day of December, 1998, by and between
U.S. Bank Trust National Association, in Saint Xxxx, Minnesota (the "Escrow
Agent") and Xxxx Industries Incorporated (the "Company"):
WITNESSETH THAT:
WHEREAS, the City of Anoka, Minnesota (the "Issuer") has heretofore
issued $5,450,000 aggregate principal amount of its Industrial Development
Revenue Bonds (Xxxx Industries Incorporated Project), Series 1994 (the "Bonds")
pursuant to an Indenture of Trust dated as of September 1, 1994 (the
"Indenture") by and between the Issuer and U.S. Bank Trust National Association,
formerly known as First Trust National Association, as trustee (the "Trustee"),
for the purpose of acquiring, constructing and equipping a manufacturing
facility owned by the Company and located within the corporate boundaries of the
Issuer (the "Project"); and
WHEREAS, to provide for the defeasance of the Bonds, all in accordance
with Section 6-2 of the Indenture, the Company has directed the Trustee to
transfer $729,486.53 on deposit in the funds and accounts created under the
Indenture to an Escrow Fund created herein, and has additionally delivered
$3,181,560.03 of other funds to the Trustee for deposit to the Escrow Fund
identified below (the "Escrow Fund"), which shall be held, invested and used in
accordance with the terms and conditions of this Escrow Agreement; and
WHEREAS, the foregoing sums shall simultaneously be invested in
securities (the "Escrowed Obligations") as described in Exhibit A attached
hereto, which Escrowed Obligations shall be used to pay debt service on the
Bonds on each September 1 and March 1, from March 1, 1999 to and including
September 1, 2004, the Stated Maturity of the Bonds, all as further described on
Exhibit B hereto (the Escrowed Obligations (or evidence of the investment
therein and constructive receipt of) are herein called the "Escrow Deposit");
NOW, THEREFORE, in consideration of the premises and of the respective
agreements on the part of the Escrow Agent and the Company herein contained, the
parties hereto hereby agree as follows:
1. Deposit. The Company hereby irrevocably directs that $729,486.53 be
transferred by the Trustee to the Escrow Fund from the funds and accounts
created under the Indenture, and herewith irrevocably delivers the sum of
$3,181,560.03 for deposit to the Escrow Fund, and hereby directs and authorizes
the Trustee to acquire the Escrowed Obligations described on Exhibit A attached
hereto.
2. Acknowledgment of Deposit and Transfer of Funds. Receipt of the
Escrow Deposit shall be acknowledged on behalf of the Escrow Agent on the date
hereof by execution of an Acknowledgment in the form attached hereto as Exhibit
C by a duly authorized officer of the Escrow Agent. The Escrow Deposit shall be
invested in the Escrowed Obligations specified in Exhibit A and the Escrow Agent
is hereby authorized and directed to make such investments as instructed by the
Company.
3. Notice of Defeasance. Upon receipt of the Escrow Deposit, the Escrow
Agent shall, in its capacity as the Trustee, mail a notice of defeasance to the
owners of the Bonds.
4. Compensation; Waiver of Lien. The fees and expenses of the Escrow
Agent relative to its duties under this Agreement in the amount of $12,850.19
have been paid by the Company on the date hereof. Such amount is payment in full
to the Escrow Agent relative to its duties hereunder. The Escrow Agent expressly
waives any lien upon or claim against the moneys and investments in the Escrow
Fund.
5. Collection and Remittance; Payment of Principal of Bonds. The Escrow
Agent will collect all remittances of interest on the Escrowed Obligations in
the Escrow Fund as and when such interest becomes due and payable and will cause
such Escrowed Obligations to be presented for payment and converted into cash on
their respective maturity or due dates in accordance with the schedule of cash
payments included in the Escrow Verification Report, prepared by McGladrey and
Xxxxxx (the "Escrow Report"). The Escrow Agent will remit from the Escrow Fund
to the paying agent for the Bonds (which paying agent is currently the Trustee)
the funds required for the payment of the Bonds as set forth on Exhibit B
hereto.
6. Sufficiency of Escrow Deposit. In reliance upon the Escrow Report,
the Company represents, and the Escrow Agent acknowledges, that the amount of
the Escrow Deposit deposited in the Escrow Fund, if the principal of and
interest on the Escrowed Obligations are paid in accordance with their terms, is
sufficient to produce cash in such amounts to enable the Escrow Agent to make
full and timely payments of debt service on the Bonds as provided in paragraph 5
above.
7. Release of Guaranty. In accordance with Section 2.02 of that certain
Guaranty Agreement dated as of September 1, 1994, from Xxxx International
Holdings, Inc. (the "Guarantor") in favor of the Trustee, the Guaranty shall
remain in effect until the date which is one year plus 15 days after all Bonds
shall have been paid or provided for (i.e. January 14, 2000). On such date the
Trustee shall execute and deliver to the Company and the Guarantor a release of
the Guaranty in the form of Exhibit D attached hereto.
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8. Trust; Remission of Remaining Moneys. It is recognized that the
Escrowed Obligations and money held in the Escrow Fund from time to time shall
be subject to the charge and lien thereon of this Escrow Agreement and the use
thereof required to be made by the provisions of this Escrow Agreement. The
Escrow Agent shall hold all such money and obligations in a special trust fund
and account (herein the "Escrow Fund") separate and wholly segregated from all
other funds and securities of the Company or the Escrow Agent or deposited with
the Escrow Agent, and shall never commingle such money or securities with other
money or securities, provided that nothing contained herein shall be construed
as requiring the Escrow Agent to keep the identical moneys, or any part thereof,
received for the Escrow Fund on hand, but moneys of an equal amount, except to
the extent such are investments permitted under this Escrow Agreement, shall
always be maintained on hand as funds held by the Escrow Agent as trustee,
belonging to the Company, and a special account thereof evidencing such fact
shall at all times be maintained on the books of the Escrow Agent, together with
such investments.
In the event of the Escrow Agent's failure to account for any money or
obligations held by it in the Escrow Fund, such money and obligations shall be
and remain the property of the Company, and if for any reason such money or
obligations cannot be identified, all other assets of the Escrow Agent shall be
impressed with a trust for the amount thereof and the Company shall be entitled
to a preferred claim upon such assets. All moneys remaining in the Escrow Fund
after payment therefrom of all sums required to be paid under this Escrow
Agreement shall be promptly remitted to the Company.
9. Sale and/or Reinvestment. (a) The Escrow Agent may sell or reinvest,
or both, all or a part of the Escrowed Obligations, or the proceeds thereof, in
securities set forth in Minnesota Statutes, Section 475.67, Subdivision 8, if
and only if (i) such sales or reinvestment, or both, are approved by a duly
authorized representative of the Company and otherwise permitted by the laws of
Minnesota, (ii) an opinion of a certified public accountant or a financial
advisor is first obtained to the effect that such sale or reinvestments, or
both, will not prevent the Escrow Agent from making all of the payments to the
paying agent of the Bonds as required in paragraph 5 above, and (iii) an opinion
of nationally recognized bond counsel or tax counsel recognized as having an
expertise in the area of tax-exempt financing is first obtained to the effect
that such sales or reinvestment, or both, (A) will not cause the Bonds to become
arbitrage bonds or prohibited advance refunding bonds under Sections 148 or
149(d) of the federal Internal Revenue Code of 1986, as amended, and the
applicable regulations and administrative interpretations thereunder, (B) will
not otherwise cause the interest on the Bonds to become includable in the gross
income of the owners thereof for federal income tax purposes, and (C) will not
materially adversely affect the legal rights of the holders of the Bonds.
(b) The Escrow Agent shall notify the Company within two Business Days
of monies becoming available. Monies credited to the Escrow Fund hereunder which
are uninvested pending disbursement or receipt of proper investment directions
or as directed herein, may be deposited to and held in a non-interest bearing
demand deposit account established with the Commercial Banking Department of the
Escrow Agent or with any bank affiliated with the Escrow Agent, without the
pledge of securities to or other collateralization of such deposit accounts.
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10. Final Statement. No later than January 15 of each year the Escrow
Agent shall render a statement to the Company, which statement shall set forth
for the preceding twelve month period the cash on hand and Escrowed Obligations
which have matured and the amounts received by the Escrow Agent by reason of
such maturity, the interest earned on any of the Escrowed Obligations, a list of
any investments or reinvestments made by the Escrow Agent in other Escrowed
Obligations and the interest and/or principal derived therefrom, the amounts of
cash paid for the principal and interest on the Bonds, as said payments became
due and payable, and any other transactions of the Escrow Agent pertaining to
its duties and obligations as set forth herein.
11. Trust; Safekeeping. All Escrowed Obligations, moneys and investment
income deposited with or received by the Escrow Agent pursuant to this Escrow
Agreement shall be subject to the trust created by this Escrow Agreement, and
the Escrow Agent shall be liable for the preservation and safekeeping thereof;
provided, however, that it shall not be responsible for any depreciation in
value of any of the Escrowed Obligations or for the reinvestment of the same
except as herein provided.
12. Duties; Obligations and Liabilities. The duties and obligations of
the Escrow Agent shall be as prescribed by the provisions of this Escrow
Agreement, and the Escrow Agent shall not be liable hereunder except for failure
to perform its duties and obligations as specifically set forth herein or to act
in good faith in the performance thereof, and no implied duties or obligations
shall be incurred by the Escrow Agent other than those specified herein. The
Escrow Agent may consult with counsel of its choice and the opinion of such
counsel shall be full and complete authorization and protection with respect to
any action taken or not taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
13. Resignation; Successor. The Escrow Agent may at any time resign and
be discharged of its obligations hereunder by giving to the Chief Financial
Officer of the Company written notice of such resignation and by refunding to
the Company a pro rata amount of the escrow fee described in paragraph 4 hereof
based on the remainder of the term of this Escrow Agreement compared to its
complete term, not less than 60 days before the date when the same is to take
effect, and by publication of a copy of such notice in any available daily or
weekly newspaper or periodical which circulates throughout the State of
Minnesota and furnishes financial news as part of its service, not less than 30
days prior to such date. Such resignation shall take effect upon the appointment
and qualification of a successor escrow agent. In the event of receipt of notice
of such resignation, a successor shall be promptly appointed by the Company, and
the Company shall immediately give written notice thereof to the predecessor
agent and publish the same in a Minnesota newspaper as described above. If in a
proper case no appointment of a successor agent is made within 45 days after the
receipt by the Company of notice of such resignation, the Escrow Agent or the
holder of any Bond may apply to any court of competent jurisdiction to appoint a
successor Escrow Agent, which appointment may be made by the court after such
notice, if any, as the court may prescribe.
Any successor agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor agent and to the Company a written acceptance of such
appointment, and shall thereupon without any further act, deed or conveyance
become fully vested with all moneys,
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properties, duties and obligations of its predecessor, but the predecessor shall
nevertheless pay over, transfer, assign and deliver all moneys, securities or
other property held by it to the successor agent, shall execute, acknowledge and
deliver such instruments of conveyance and do such other things as may
reasonably be required to vest and confirm more fully and certainly in the
successor agent all right, title and interest in and to the property held by it
hereunder. Any bank into which the Escrow Agent may be merged or with which it
may be consolidated or any bank resulting from any merger or consolidation to
which it shall be a party or any bank to which it may sell or transfer all or
substantially all of its corporate trust business shall, if the Company
approves, be the successor agent without the execution of any document or the
performance of any further act.
14. Successors and Assigns; Beneficiaries. This Escrow Agreement shall
be irrevocable and binding upon and shall inure to the benefit of the Company
and the Escrow Agent and their respective successors and assigns. In addition,
this Escrow Agreement shall constitute a third party beneficiary contract for
the benefit of the Issuer and the holders at any time of the Bonds. Said third
party beneficiaries shall be entitled to enforce performance and observance by
the Company and Escrow Agent of the respective agreements and covenants herein
contained as fully and completely as if said third party beneficiaries were
parties hereto.
15. Supplemental Agreements. For any one or more of the following
purposes, the Company and Escrow Agent may enter into any supplemental
agreements to this Escrow Agreement as shall not adversely affect the rights of
the holder or holders of the Bonds and as shall not be inconsistent with the
terms and provisions of this Escrow Agreement, without the consent of or notice
to the holder or holders of the Bonds:
(a) To cure any ambiguity or formal defect or omission in this
Escrow Agreement;
(b) To grant to, or confer upon, the Escrow Agent for the
benefit of the holder or holders of the Bonds any additional rights,
remedies, powers or authority that may lawfully be granted to, or
conferred upon, such holder or holders; and
(c) To provide additional funds, securities or properties
under this Escrow Agreement.
16. Consent Otherwise to Amendments. Except as expressly provided in
paragraph 15 above, this Escrow Agreement may not be repealed, revoked, altered
or amended without the unanimous written consent of the Company and the holder
or holders of the Bonds, and the written consent of the Escrow Agent.
17. Headings. Headings in this Escrow Agreement are for convenience of
reference only and are not a part hereof, and shall not limit or define the
meaning of any provision hereof.
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U.S. BANK TRUST NATIONAL ASSOCIATION
By /s/ Xxxxx X. Xxxxx
---------------------------------
Its Vice President
---------------------------------
Escrow Agreement by and between U.S. Bank Trust National Association and Xxxx
Industries Incorporated
6
XXXX INDUSTRIES INCORPORATED
By /s/ Xxxxxx X. Xxx
-------------------------
Its Chief Financial Officer
Escrow Agreement by and between U.S. Bank Trust National Association and Xxxx
Industries Incorporated.
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EXHIBIT A
ESCROWED OBLIGATIONS
SCHEDULE OF INVESTMENTS
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Maturity Type Coupon Yield $Price Par Principal Cost +Accrued =Total Cost
Amount Interest
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08/31/1999 T-NOTE 5.875% 4.581% 100.8351790% 520,000 524,342.93 10,127.07 534.470.00
08/31/2000 T-NOTE 6.250% 4.510% 102.7593140% 544,000 559,010.67 11,270.72 570,281.39
08/31/2001 T-NOTE 6.500% 4.535% 104.8792230% 579,000 607,250.70 12,475.69 619,726.39
08/31/2002 T-NOTE 6.250% 4.553% 105.6665840% 620,000 655,132.82 12,845.30 667,978.12
08/15/2003 T-NOTE 5.750% 4.494% 105.1930670% 659,000 693,222.31 14,003.75 707,226.06
08/15/2004 T-NOTE 7.250% 4.561% 113.2109530% 700,000 792,476.67 18,755.43 811,232.10
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3,622,000 3,831,436.10 79,477.96 3,910,914.06
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COMPOSITION OF ESCROWED OBLIGATIONS
Cash Deposit.........................................$ 132.50
Cost of Investments Purchased with Escrow Deposi.....$3,910,914.06
Total Cost of Investments............................$3,911,046.56
A - 1
EXHIBIT B
DEBT SERVICE SCHEDULE FOR BONDS
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CITY OF ANOKA, MINNESOTA
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(XXXX INDUSTRIES INCORPORATED PROJECT)
SERIES 1994
DEBT SERVICE SCHEDULE
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DATE PRINCIPAL COUPON INTEREST TOTAL P+1 FISCAL TOTAL
-----------------------------------------------------------------------------------------------
09/01/1998 -- -- -- -- --
03/01/1999 -- -- 114,742.50 114,742.50 --
09/01/1999 520,000.00 6.100% 114,742.50 634,742.50 749,485.00
03/01/2000 -- -- 98,882.50 98,882.50 --
09/01/2000 545,000.00 6.200% 98,882.50 643,882.50 742,765.00
03/01/2001 -- -- 81,987.50 81,987.50 --
09/01/2001 580,000.00 6.300% 81,987.50 661,987.50 743,975.00
03/01/2002 -- -- 63,717.50 63,717.50 --
09/01/2002 620,000.00 6.350% 63,717.50 683,717.50 747,435.00
03/01/2003 -- -- 44,032.50 44,032.50 --
09/01/2003 660,000.00 6.400% 44,032.50 704,032.50 748,065.00
03/01/2004 -- -- 22,912.50 22,912.50 --
09/01/2004 705,000.00 6.500% 22,912.50 727,912.50 750,825.00
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Total 3,630,000.00 -- 852,550.00 4,482,550.00 --
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B - 1
EXHIBIT C
ACKNOWLEDGMENT
I, being duly authorized to execute this acknowledgment on behalf of
U.S. Bank Trust National Association, as Escrow Agent, do hereby acknowledge
that there has on this date been irrevocably deposited with the Escrow Agent in
trust for the security of the holders and owners of the City of Anoka,
Minnesota's Industrial Development Revenue Bonds (Xxxx Industries Incorporated
Project) each dated September 1, 1994, as the date of original issue,
$3,911,046.56 as that certain Escrow Deposit required to be deposited with the
Escrow Agent on December 29 1998 in accordance with the Escrow Agreement dated
as of December 29, 1998, by and between the Escrow Agent and Xxxx Industries
Incorporated.
Dated this 29 day of December, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
By
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Its Vice President
C - 1
EXHIBIT D
RELEASE OF GUARANTY
In accordance with Paragraph 7 of that certain Escrow Agreement (the
"Escrow Agreement") dated December 29, 1998, between the undersigned and Xxxx
Industries Incorporated (the "Company"), one year and fifteen (15) days has
elapsed since the Company provided for payment of the City of Anoka, Minnesota
Industrial Development Revenue Bonds (Xxxx Industries Incorporated Project)
Series 1994 (the "Bonds") pursuant to the Escrow Agreement, and in consideration
thereof, that certain Guaranty Agreement, dated as of September 1, 1994 (the
"Guaranty"), between the undersigned and Xxxx International Holdings, Inc. (the
"Guarantor") is hereby released and terminated.
Dated: January 14, 2000 U.S. BANK TRUST NATIONAL ASSOCIATION
By
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Title
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D - 1
