Escrow Agreement
Agreement made this 1st day of July, 1999 between and among Reliable
Corporation ("Reliable"), Xxxxxxxx X. Xxxxxx ("Shukla"), Reliable-West
Tech, Inc.("RWT") and Westbury Realty Management, Inc. ("WRM") .
WITNESSETH:
WHEREAS, the parties other than WRM have entered into that
certain Asset Purchase Agreement dated May 5, 1999, as amended by that certain
First Amendment dated July 1, 1999 (collectively, the "Agreement"); and
WHEREAS, capitalized terms not defined herein shall have the meanings ascribed
to them in the Agreement; and
WHEREAS, the parties wish to close the transactions described
in the Agreement, in escrow, pursuant to the terms set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. Partial Payment of Cash Portion of Purchase Price
On this day RWT has, at the direction of Reliable, caused to
be paid to The Chase Manhattan Bank, the sum of Nine Hundred Thousand Dollars
($900,000), by wire transfer, in partial satisfaction of WRT's obligations under
Section 3.2 (c) of the Agreement.
On or before July 15, 1999 (the "Due Date"), time being of the
essence, RWT shall pay to Reliable the sum of One Hundred Thousand Dollars
($100,000) plus the Inventory Amount in the manner set forth in Section 3.2 (c)
of the Agreement plus interest on such amounts at the same per annum interest
rate as charged by Chase Manhattan Bank pursuant to the terms of its payoff
letter dated June 30, 1999 (such amounts being collectively referred to as the
"Cash Balance").
2. Escrow of Documents
The parties have executed and delivered the agreements and
instruments listed on the document entitled "Closing Agenda" annexed hereto (the
"Closing Documents"). The Closing Documents shall be held in escrow by
XxXxxxxxxx & Xxxxx, LLP (the "Escrow Agent") pursuant to the terms hereof
(except for those documents relating to the transfer of the Owned Real Property
which shall be held by RWT's title company)..
Upon payment of the Cash Balance, the Closing Documents shall
be released from escrow as follows:
(i) the promissory note in the amount of $915,000 shall be delivered to Reliable
and the promissory note in the amount of $185,000 shall be delivered to Shukla;
(ii) the Guaranty and Mortgage shall be delivered to Shukla;
(iii) the Security Agreement and the UCC-1 shall be delivered
to Reliable;
(iv) the original UCC termination statements from Xxxxxxx
Xxxxx and Xxxxx Manhattan Bank, the Xxxx of Sale, the Assignment of Purchased
Assets and the deposit check in the amount of $100,000 shall be delivered to
RWT; and
(v) the deeds shall be delivered to WRM.
From the date hereof until payment of the Cash Balance,
Reliable and Shukla shall continue to be subject to the obligations set forth in
Section 6.2 and 6.3 of the Agreement and RWT shall continue to be subject to the
obligations set forth in Sections 6.3 and 6.4 of the Agreement . Payment of the
Cash Balance and RWT's obligations to close the transactions described in the
Agreement shall continue to be subject to the satisfaction of the conditions set
forth in Section 7.2 of the Agreement. Reliable's and Shukla's obligations to
close shall continue to be subject to the satisfaction of the conditions set
forth in Section 7.1 of the Agreement.
If the Cash Balance is not paid by the Due Date then at the
option of Reliable , the documents described in clause (iv) above shall be
returned to Reliable, except for the original deposit check which shall be
delivered to Xxxx Xxxxxxxxx to be held in escrow pursuant to the terms of the
Agreement, the deeds shall be returned to Shukla and, simultaneously therewith,
the items described in Clauses (i) through (iii) shall be returned to RWT,
Shukla shall repay to RWT the sum of Nine Hundred Thousand Dollars (such actions
being hereafter referred to as the "Reversal"). Notwithstanding the Reversal,
the parties shall still have and the rights, and shall be subject to the
obligations set forth in the Agreement.
3. Operation of Business During Interim Period.
As of the date hereof, RWT shall commence operations of Reliable's business as
if the transactions described in the Agreement had closed without escrow on this
date provided that during the Interim Period (defined below) RWT shall continue
to operate the business under the name "Reliable Corporation". Provided that the
Reversal does not occur, all rights and obligations arising with respect to the
operation of the business on or after July 1, 1999 shall belong to RWT. If the
Reversal occurs then all rights with respect to the operation of the business
shall revert to Reliable, and RWT shall indemnify Reliable to the extent that
the liability for obligations incurred during such interim period exceed the
revenues derived from operations during such period.
4. Insurance
Until payment of the Cash Balance or the Reversal (the "Interim Period"), Shukla
and Reliable shall continue their existing insurance policies with respect to
the Purchased
Assets and the Owned Real Property. Shukla and/or Reliable shall submit claims
for any damages covered by such policies and arising during the Interim Period
and shall deliver to RWT and/or WRM , as the case may be, the proceeds payable
by such insurers with respect to such damages. Upon closing of the transactions
described in the Agreement, RWT shall reimburse Reliable for the costs of
insurance premiums paid for the Interim Period.
5. Provisions Regarding Escrow Agent
The parties acknowledge that Escrow Agent is acting solely as
a stakeholder at their request and for their convenience. Escrow Agent is not a
party to and is not bound by any other agreement between the parties. Escrow
Agent is acting in the capacity of a depository only. Escrow Agent shall not be
deemed to be the agent of either of the parties and Escrow Agent shall not be
liable to either of the parties for any act or omission on its part unless taken
or suffered in bad faith, in willful disregard of this agreement or involving
gross negligence. The parties shall jointly and severally indemnify and hold
Escrow Agent harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees and disbursements incurred in connection with the
performance of the Escrow Agent's duties hereunder, except with respect to acts
or omissions taken or suffered by Escrow Agent in bad faith, in willful
disregard of this agreement or involving gross negligence on the part of Escrow
Agent.
Escrow Agent may consult with and obtain advice of legal
counsel in the event of any dispute or question as to the construction of any of
the provisions of this agreement. Escrow Agent shall incur no liability and
shall be fully protected in acting in good faith in accordance with the opinion
and instructions of its counsel.
If the Escrow Agent shall be uncertain of its duties or in
the event of a dispute, Escrow Agent shall either continue to hold the Closing
Documents until otherwise directed by joint written instructions signed by both
Reliable and RWT or by a final judgment of a court of competent jurisdiction, or
(ii) Escrow Agent may deposit the Closing Documents with a court of competent
jurisdiction and, after giving written notice of such action to Seller and
Purchaser, Escrow Agent shall have no further obligations or liability with
respect to the Closing Documents.
The parties each acknowledge and agree that, if a dispute
arises with respect to the Closing Documents or otherwise in connection with
this agreement, Escrow Agent may continue to represent RWT and WRM.
IN WITNESS WHEREOF, the parties have executed this Agreement
this 1st day of July, 1999.
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Xxxxxxxx X. Xxxxxx
RELIABLE CORPORATION
By: ______________________
Xxxxxxxx X. Xxxxxx,
President
RELIABLE-WEST TECH, INC.
By: _______________________
Xxxxxx Xxxxxxx
President
WESTBURY REALTY MANAGEMENT, INC
By: _______________________
Xxxxxx Xxxxxxx
Escrow Agent:
XXXXXXXXXX & XXXXX, LLP
By: ______________________
Xxxxxx X. Xxxxx
