ESCROW AGREEMENT
THE UNDERSIGNED, El Chico Restaurants, Inc., a Texas corporation
("Seller"), and El Chico Holding Company, L.P., a Texas limited
partnership ("Buyer"), collectively referred to as the "Undersigned", in
order to designate Texas Bank (the "Escrow Agent"), as the escrow agent of
the Undersigned for the purposes and upon the terms and conditions herein
set forth, do hereby represent and warrant to, and agree with each other
and the Escrow Agent, as follows:
1. Appointment. The Escrow Agent is hereby appointed escrow
agent for the Undersigned with respect to the "Escrow Fund" as that term
is herein defined.
2. The Escrow Fund. Concurrently with the execution and delivery
hereof, Buyer has delivered to the Escrow Agent in accordance with the
terms hereof, the amount of Two Million Five Hundred Thousand Dollars
($2,500,000) (which, together with any and all interest or other income
earned thereon during the term hereof, is referred to herein as the
"Escrow Fund") and direct that it be held and disposed of by the Escrow
Agent as herein provided.
3. Escrow Agent's Duties and Authority to Act.
(a) The Escrow Agent must receive written and signed notice (the
"Notice") from Buyer, Seller, or both before the Escrow Agent shall have
any obligation hereunder to deliver all or any part of the Escrow Fund.
The Notice shall request delivery of the Escrow Fund based on the
occurrence of one of the following events: (i) the closing of the merger
of El Chico Acquisition, Inc., a Texas corporation and wholly-owned
subsidiary of Buyer ("Sub"), with and into Seller (the "Closing"); (ii)
the failure of the Closing due to a material breach by Buyer of the
Agreement and Plan of Merger (the "Agreement") dated as of the date hereof
by and among Buyer, Sub, and Seller (including, without limitation, as a
result of Buyer's failure to perform its obligations at the Closing
because of an inability to obtain financing therefor); or (iii) the
cancellation of the Closing due to any reason other than that set forth in
Section 3(a)(H). Seller shall be entitled to receive the Escrow Fund as
liquidated damages as the result of the occurrence of an event described
in Section 3(a) (ii). Buyer shall be entitled to receive the Escrow Fund
as the result of the occurrence of an event described in Section 3(a)(i)
or (iii). Upon receipt of the Notice given by either Buyer or Seller, the
Escrow Agent shall as soon as reasonably practicable thereafter send a
copy of the Notice to the other party by hand delivery signed for by the
other party. Within 48 hours of receipt by the other party of the Notice
(the "Objection Period"), the other party may indicate its objection to
the delivery of the Escrow Fund pursuant to the Notice either orally or in
writing to the Escrow Agent. If the other party fails to object within
the Objection Period, then the Escrow Agent is hereby authorized and
directed to deliver the Escrow Fund as requested in the Notice. If the
other party does object within the Objection Period, then the Escrow Agent
shall deliver no part of the Escrow Fund to either party until directed to
do so by either a writing signed by both Buyer and Seller or the final
order of a court of competent jurisdiction. Upon receipt of such a
writing or order, or upon receipt of the Notice if signed by both Buyer
and Seller, the Escrow Agent is hereby authorized and directed to deliver
the Escrow Fund as directed in such writing, order, or Notice. The Escrow
Agent shall as soon as reasonably practicable deliver the entire Escrow
Fund to the appropriate party pursuant to this Section 3(a). In the event
of objection to the Notice by either Buyer or Seller pursuant to this
Section 3(a), the party that ultimately receives the Escrow Fund in
accordance with this Section 3(a) shall be entitled to receive from the
other party, as a reasonable current estimate of the damages to be
incurred as a result of the delivery to the Escrow Agent of improper
Notice or objection thereto and not as a penalty, an amount equal to 14%
per annum of the amount of the Escrow Fund prorated for the number of days
between the date of the Notice and the date the Escrow Fund is delivered
to the prevailing party.
(b) The Escrow Agent is authorized and directed by the Undersigned
to withhold from the Escrow Fund, prior to distribution of said funds and
prior to termination of this Escrow Agreement, reasonable amounts
sufficient to compensate it for all costs and expenses imposed upon it as
a result of, in connection with, or arising on account of this Escrow
Agreement or as a result of litigation or threatened litigation arising on
account of this Escrow Agreement and to reimburse it for reasonable
attorney's fees, disbursements, expenses, costs and damages, if any,
suffered or incurred hereunder.
(c) If Buyer or Seller terminates the Agreement within 30 days
following the date of the Agreement as a result of Buyer's inability to
obtain financing for the Closing, then Seller shall be entitled to receive
$250,000 of the Escrow Fund as liquidated damages and the remainder of the
Escrow Fund shall be distributed to Buyer.
4. Standards of Care. The Undersigned agree that the following
provisions shall control with respect to the rights, duties, liabilities,
privileges and immunities of the Escrow Agent:
(a) The Escrow Agent is not a party to, and is not bound by, or
charged with notice of, any agreement out of which this escrow may arise.
(b) The Escrow Agent acts hereunder as a depository only, and is
not responsible or liable in any manner whatever for the sufficiency,
correctness, genuineness or validity of the subject matter of the escrow,
or any part thereof, or for the form or execution thereof, or for the
identity or authority of any person executing or depositing it.
(c) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization,
power of attorney or other paper or document which the Escrow Agent in
good faith believes to be genuine and what it purports to be.
(d) The Escrow Agent may consult with legal counsel in the event
of any dispute or question as to the construction of any of the provisions
hereof or its duties hereunder, and it shall incur no liability and shall
be fully protected in acting in accordance with the opinion and
instructions of such counsel.
(e) The Escrow Agent shall not be liable for anything it may do or
refrain from doing in connection with this Escrow Agreement unless caused
by its own negligence, willful misconduct or omission.
5. Investments. Escrow Agent shall invest the Escrow Fund in
U.S. government securities maturing in 30 days or less.
6. Termination. This Escrow Agreement shall terminate without
further action of any party when all of the terms hereof have been fully
performed, whereupon Escrow Agent's obligations hereunder shall
ten-terminate.
7. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Texas (exclusive of the
conflict of law provisions thereof) and any action arising out of this
Escrow Agreement shall be maintained in any court of competent
jurisdiction in Dallas, County, Texas. Buyer, Seller and the Escrow Agent
each hereby submit themselves to the jurisdiction of any court of
competent jurisdiction of Dallas County, Texas for the purpose of
resolving any disputes hereunder.
8. Notice. Any notice required or permitted hereunder shall be
in writing and shall be sufficiently given if personally delivered or
mailed by certified or registered mail, return receipt requested,
addressed as follows:
If to Buyer:
El Chico Holding Company, L.P.
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X.X. Xxxxxxx
Copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Stone, L.L.P.
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
U.S. Restaurant Properties Master L.P.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx, Esq.
Middleberg, Xxxxxx & Xxxxx
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
If to Seller:
El Chico Restaurants, Inc.
00000 Xxxxxxxx Xxxxxxx
Xxxxx X 00
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Copy to:
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq
If to the Escrow Agent:
Texas Bank
000 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx 00000
(or to such other address as may be stated in written notice furnished by
any party to the other party), and shall be deemed to have been delivered
as of the date so personally delivered or mailed.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed this 23d day of September, 1997.
EL CHICO HOLDING COMPANY, L.P.
By: CRACKEN, HARKEY, STREET & CO.,
L.L.C., General Partner
By: /xXxxx X. Xxxxxx, Xx.
________________________
Xxxx X. Xxxxxx, Xx., Manager
EL CHICO RESTAURANTS, INC.
By: /s/Xxxxxxx X. Xxxxx
---------------------------
Print Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
The Escrow Agent hereby acknowledges receipt of the Escrow Fund and
accepts the same subject to the terms and conditions of this Escrow Agreement
on this 23' day of September, 1997.
TEXAS BANK
By: /s/C. Xxxxxx Xxxxxxx
------------------------------
Print Name: Xxxxxx Xxxxxxx
Title: President & CEO
