EXHIBIT 10.2
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made as of the 2nd day of December,
1996, by and between Xxxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxxx Xxxxxx, Xxxxxxx X.
Xxxxxx, Xx., Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx Xxxxxx, Xxxxxxx X. Xxxxxx Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, (collectively the
"Stockholders"), R & A Xxxxxx Property, Ltd. ("Partnership"), Eastern
Environmental Services, Inc. ("Purchaser"), Xxxxxx X. Xxxxxx & Associates, P.C.
("RMK") and XxXxxx, Xxxxxxx & Nurick ("MWN").
RECITALS
The Stockholders, Partnership and Purchaser are parties to an Agreement for
the Sale and Purchase of Stock and Real Estate dated even date with this Escrow
Agreement ("Purchase Agreement"). The parties, wishing to facilitate Closing
under the Purchase Agreement, have entered into this Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. For purposes of this Agreement, all capitalized terms
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which are not defined in this Agreement shall have the meanings given such terms
in the Purchase Agreement. Any capitalized term given a definition in this
Agreement shall have the meaning given such term in this Agreement.
2. Calculation of Purchase Price. The first sentence of Section 1.7(c) of
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the Purchase Agreement provides that the Purchase Price will be calculated, as
provided in Section 1.7(b), on the close of business on Saturday immediately
preceding Closing. The parties hereto agree that, notwithstanding the first
sentence of Section 1.7(c), the calculation of the Purchase Price under Section
1.7(b) of the Agreement shall be made initially as of the close of business on
the Saturday immediately preceding the execution of this Escrow Agreement
("Purchase Price Calculation Date"). The parties hereto further agree that the
date of Closing and the Closing as used throughout the Purchase Agreement shall
mean in all respects the date that (i) Purchaser pays the cash Purchase Price
less the Escrow Funds to Sellers and (ii) the Escrow Agents, as hereinafter
defined, disburse the Escrow Funds to the Sellers and the Closing Documents, as
hereinafter defined, to the parties, in accordance with the terms of this
Agreement, upon the satisfaction of the Closing Conditions, as hereinafter
defined. As of the date of this Escrow Agreement, all closing conditions to the
Purchase Agreement, other than as identified in Paragraph 5, have been
satisfied. The parties further agree that the market value of the Consideration
Stock, as defined in the Purchase Agreement, shall be determined by using the
closing price of Purchaser's Common Stock on the NASDAQ National Market on the
day this Agreement is executed ("Per Share Price"), notwithstanding the
provisions of Section 1.7(a)(ii) of the Purchase Agreement regarding valuation
of the Consideration Stock. The parties also agree that the exercise price of
the Warrants, as defined in the Purchase Agreement, shall be the Per Share
Price. The parties acknowledge that as of the date hereof R & A Xxxxxx, Inc.
("Company") has among its liabilities certain accounts payables its owes its
Stockholders in the approximate amount of Seven Hundred and Fifty Thousand
($750,000) Dollars and an unfunded
pension and profit plan liability of approximately Three Hundred Thirty Thousand
($330,000) Dollars. The actual accounts payables to the Stockholders and the
unfunded pension and profit plan liabilities of the Company on the Closing Date
shall be funded to the Company by the Purchaser and paid by the Company on the
Closing Date and such amounts owed prior to payment are liabilities of the
Company and shall reduce the Purchase Price, as set forth in Section 1.7(b)(i)
of the Purchase Agreement.
3. Escrow of Purchase Price. Simultaneously with the execution of this
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Agreement, RMK and MWN ("Escrow Agents") have opened an interest-bearing bank
account at CoreStates Bank entitled "Escrow Account Regarding the Xxxxxx
Transaction" ("Escrow Account"). Interest on the Escrow Account shall be
reported to the Purchaser's taxpayer I.D. number and Escrow Agents shall remit
all interest earned in the Escrow Account to Purchaser promptly within five days
of the Escrow Agents receiving the bank statement for the Escrow Account.
Simultaneously upon the execution of this Agreement, the Purchaser shall fund to
the Escrow Account by wire transfer an amount equal to Two Million Two Hundred
Thousand ($2,200,000) Dollars ("Escrow Funds"). On and after the date of this
Agreement's execution, Purchaser and Sellers shall cooperate with each other in
calculating the amount of the Purchase Price due under Section 1.7(a) of the
Purchase Agreement as adjusted under Section 1.7(b) of the Purchase Agreement.
Upon the date that the Closing Conditions are satisfied, as defined in Paragraph
5 below, the Purchaser shall pay the cash portion of the Purchase Price to the
Collective Account, as defined in the Purchase Agreement, less the Escrow Funds.
The Escrow Funds shall be distributed by the Escrow Agents as set forth in
Paragraph 5 below.
4. Closing Documents. Within five days of the execution of this
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Agreement, the Purchaser shall deliver to RMK, to be held in escrow, the
executed Warrants and the Consideration Stock described in Paragraph 2 of this
Agreement and in Section 1.7(a) of the Purchase Agreement. Additionally,
Purchaser shall deliver to RMK the originally executed documents described in
Section 1.8(b), (d) and (e) of the Purchase Agreement. Simultaneously with the
execution of this Agreement the Sellers shall deliver to MWN to be held in
escrow the documents described and set forth in Section 1.9(a), (b), (c), (d),
(e), (f), (i) (k) and (l) of the Purchase Agreement. For purposes of this
Agreement, the documents delivered to RMK and MWN in accordance with the
previous two sentences are hereinafter referred to as the "Closing Documents."
5. Conditions of Escrow. The parties hereto acknowledge that as of the
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date of this Agreement, the only remaining conditions to Closing under the
Purchase Agreement to be satisfied are the deliveries to be made by Purchaser as
set forth in Section 1.8(f) of the Purchase Agreement and the condition set
forth in Section 7.6 of the Purchase Agreement ("Closing Conditions"). The
parties hereto agree that they shall diligently cooperate with each other to
satisfy and obtain the items to be provided under Section 1.8(f) of the Purchase
Agreement and the Pennsylvania Department of Environmental Protection's ("DEP")
approval of the change of control of R & A Xxxxxx, Inc. ("Corporation") as set
forth in Section 7.6 of the Purchase Agreement (which approval does not have to
be in writing). Upon the date that the Closing Conditions are satisfied, the
Escrow Agents shall tender to the Purchaser and Sellers, as applicable, the
Closing Documents in their possession which are to be delivered to Purchaser or
Seller, as applicable, in accordance with Section 1.8 and 1.9 of the Purchase
Agreement and the Escrow Agents shall remit to the Collective Account, as
defined
in the Purchase Agreement, $2,100,000 out of the Escrow Account; $100,000 shall
remain in the Escrow Account under the provisions of Section 1.7(c) of the
Purchase Agreement, until final reconciliation of the Purchase Price is
computed, in accordance with Section 1.7(c) of the Purchase Agreement and this
Agreement. If, for any reason, the Closing Conditions are not satisfied on or
before thirty (30) days from the date of this Agreement, RMK shall return the
Closing Documents in RMK's possession to the Purchaser, MWN shall return the
Closing Documents in MWN's possession to the Seller, and the Escrow Agents shall
remit the balance of the Escrow Account to the Purchaser, less the Termination
Fee, as defined in the next sentence, if the Termination Fee is due in
accordance with the provisions of the next sentence. If the DEP objects to
Purchaser controlling the Corporation due to and only due to the compliance
history of the Purchaser with the DEP or any other state or federal governmental
agency, then Escrow Agents shall pay out of the Escrow Account to Sellers the
sum of $150,000 ("Termination Fee").
6. Reconciliation of Purchase Price. In accordance with Section 1.7(c) of
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the Purchase Agreement, $100,000 is to remain in the Escrow Account until
Purchaser and Sellers agree concerning the final reconciliation of the Purchase
Price. On or before 60 days after the date of Closing, Purchaser shall send to
Sellers, Purchaser's computation of the adjustments to be made to the Purchase
Price in accordance with Section 1.7(b) and 1.7(c) of the Purchase Agreement
("Reconciliation Statement"). The Reconciliation Statement shall contain
sufficient backup documentation so that Seller may understand Purchaser's
calculations set forth in the Reconciliation Statement. A copy of the
Reconciliation Statement will be provided to the Escrow Agents and the
Reconciliation Statement shall clearly set forth what, if any, amount of money
is due to Purchaser from the Escrow Account. If the Sellers object to the
Reconciliation Statement, the Sellers shall send to the Purchaser and the Escrow
Agents their written objection within 15 days of their receipt of the
Reconciliation Statement ("Objection Statement"). The Objection Statement shall
detail specifically the items or items in the Reconciliation Statement with
which Sellers do not agree. If Sellers do not object to the Reconciliation
Statement in writing within 15 days of receiving it, Escrow Agents shall
disburse from the Escrow Account the amount due to Purchaser, as set forth in
the Reconciliation Statement and the balance of the Escrow Account, less Twenty
Five Thousand ($25,000) Dollars, to be held by Escrow Agents under Section 7
below, shall be disbursed to the Collective Account. If the balance of the
Escrow Account after disbursement to the Purchaser is less than Twenty Five
Thousand ($25,000), the balance of the Escrow Account and not Twenty Five
($25,000) Dollars shall be held by Escrow Agents under Section 7 below. If
Seller disputes the amount claimed by Purchaser in the Reconciliation Statement,
Purchaser and Seller shall attempt in good faith attempt to resolve their
dispute in accordance with Section 9 below.
7. Reconciliation of Bad Accounts Reserve. In accordance with Section
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1.7(c) of the Purchase Agreement, $25,000 is to remain in the Escrow Account,
until it is determined whether Purchaser owes a payment to Sellers or if Sellers
owe a payment to Purchaser, due to the amount not collected on Company accounts
receivable in existence on the Closing Date ("Accounts Receivable") being in
excess of or less than the Bad Accounts Reserve, as defined in Section
1.7(b)(ii) of the Purchase Agreement ("Accounts Receivable Adjustment"). On or
before 195 days after the date of Closing, Purchaser shall send to Sellers,
Purchaser's computation of the amount
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collected on the Accounts Receivable ("Receivables Statement"). The Receivables
Statement shall state whether the amount of uncollected Accounts Receivable as
of 180 days after the Closing Date, exceeded or was less than the Bad Accounts
Reserve and shall contain sufficient backup documentation so that Sellers may
understand Purchaser's calculations set forth in the Receivables Statement. A
copy of the Receivables Statement will be provided to the Escrow Agents and the
Receivables Statement shall clearly set forth what, if any, amount of money is
due to Purchaser or due to Sellers in accordance with the Accounts Receivable
adjustment payment contained in Section 1.7(c) of the Purchase Agreement. If the
Sellers object to the Receivables Statement, the Sellers shall send to the
Purchaser and the Escrow Agents their written objection within 15 days of their
receipt of the Receivables Statement ("Receivables Objection Statement"). The
Receivables Objection Statement shall detail specifically the items or items in
the Receivables Statement with which Sellers do not agree. If Sellers do not
object to the Receivables Statement in writing within 15 days of receiving it,
Escrow Agents shall disburse from the Escrow Account the amount due to
Purchaser, as set forth in the Receivables Statement and the balance of the
Escrow Account shall be disbursed to the Collective Account. If the Purchaser
owes any money to Sellers due to the amount of uncollected Accounts Receivable
being less than the Bad Accounts Reserve, Purchaser shall pay the amount owed to
Sellers in accordance with Section 1.7(c) of the Purchase Agreement. If the
amount in the Escrow Account is not sufficient to pay the amount Sellers owe
Purchaser due to the uncollected Accounts Receivables exceeding the amount of
the Bad Accounts Reserve, Sellers shall pay the amount owed to Purchaser in
accordance with Section 1.7(c) of the Purchase Agreement. If Sellers dispute the
amount claimed by Purchaser in the Receivables Statement, Purchaser and Sellers
shall attempt in good faith attempt to resolve their dispute in accordance with
Section 9 below.
8. Working Capital Loan. During the term of this Agreement, the Purchaser
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agrees to make working capital loans to the Company up to a maximum amount of
Eight Hundred Thousand ($800,000) Dollars ("Loans"). The Loans shall accrue
interest at the rate of eight percent per annum and shall be evidenced by a
promissory note satisfactory to Purchaser having a provision allowing the entry
of a confession of judgment upon default. The Loans plus any accrued interest
shall be a liability of the Company and shall reduce the cash Purchase Price
payable by Purchaser under the provisions of Section 1.7(b)(i) of the Purchase
Agreement. If Closing does not occur due to the Closing Conditions not being
satisfied within thirty (30) days from the date of this Agreement's date, the
Loans and all accrued interest earned on the Loans shall be due and payable
within ninety (90) days after written demand. The funds representing the Loans
shall be lent by the Purchaser to the Company upon five days written notice. If
Purchaser fails to consummate the Purchase Agreement, when required to do so,
the damages incurred by the Sellers due to Purchaser's default may be offset
against the Loans.
9. Disputes. Escrow Agents shall not disburse the Escrow Funds or Closing
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Documents, if there is a dispute between the parties as to who is entitled to
the Escrow Funds or Closing Documents. In the event of a dispute as to who
should receive any Escrow Funds or Closing Documents, the parties shall have 30
days to resolve the dispute among themselves. If the parties have not resolved
the dispute within the 30-day period, then upon request of any party to this
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Agreement, such dispute or disagreement shall be settled by binding arbitration
to be held under the rules of the American Arbitration Association in
Philadelphia, Pennsylvania, pertaining to commercial disputes. A decision in
any such arbitration shall be binding and conclusive upon all parties and may be
entered of record with any court for enforcement. The award of the arbitrators
shall not be appealable for any reason. It is hereby agreed that the parties in
the arbitration proceeding shall be permitted to request by discovery those
documents which have a bearing on the matter under arbitration and which are
discoverable in accordance with the Judicial Rules then pertaining in the
Federal court for the Eastern District of Pennsylvania. In any arbitration
taking place under this Section 9, the arbitrator shall be:
(i) any person selected by all parties to the dispute, if they all agree
to the same arbitrator within ten (10) days after any party requests
arbitration;
(ii) if the parties do not agree to the same arbitrator, then a three-
member arbitration board consisting of one person selected by Purchaser and one
by Seller and a third person selected by the two arbitrators so selected, who
shall act as chairman of the arbitration board.
All fees of the arbitrators and other costs of the arbitration shall be
borne equally by Sellers and Purchaser, except that the fees of each of the two
members of the arbitration board who are selected individually by the parties to
the dispute shall be borne separately by them, respectively. The arbitration
award shall include all costs of the arbitration, including legal fees and costs
of the party who prevails in the dispute.
10. Limitation of Liability. The Escrow Agents' duties and
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responsibilities shall be limited to those expressly set forth in this
Agreement. The Escrow Agents are not principals, participants or beneficiaries
of any transaction underlying this Agreement and shall have no duty to inquire
beyond the terms and provisions of this Agreement. Escrow Agents shall not be
liable to anyone for damages, losses, costs, expenses or attorneys fees which
Escrow Agents may incur as a result of any act or omission of Escrow Agents,
except for Escrow Agents' own willful misconduct or gross negligence. Escrow
Agents are acting as an accommodation for the parties to this Agreement. Except
for damages, losses, costs, expenses or attorneys fees resulting from Escrow
Agents' gross negligence or willful misconduct, Escrow Agents may rely upon and
shall not be liable for acting or refraining from acting upon any written
notice, instruction or request or other paper furnished to Escrow Agents
hereunder and reasonably believed by Escrow Agents to be genuine, to have been
signed or presented by the proper party or parties and to conform to the
provisions of this Agreement.
11. Information. Escrow Agents shall provide any party to this Agreement
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with all information concerning the Escrow Funds, interest earned thereon, and
notices received by Escrow Agents as are requested by a party.
12. Notices. All notices or other communications required or permitted
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hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, by overnight commercial delivery service or by delivering the same in
person to such party.
(a) If to Purchaser or Sellers, as set forth in the Purchase Agreement.
(b) If to RMK, addressed as follows:
Xxxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
(c) If to MWN, addressed as follows:
Xxxxxxx Xxxxxxxxx, Esq.
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Notice shall be deemed given and effective the day personally delivered, the day
received by overnight commercial delivery service and deposited in the U.S. mail
addressed as above and sent first class mail, certified, return receipt
requested, when actually received. Any party may change the address for notice
by notifying the other parties of such change in accordance with this Section
12.
13. Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws of the Commonwealth of Pennsylvania, without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Pennsylvania.
14. No Waiver. No delay of or omission in the exercise of any right,
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power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach of default occurring before or after that waiver.
15. Captions. The headings of this Agreement are inserted for convenience
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only, shall not constitute a part of this Agreement or be used to construe or
interpret any provision hereof.
16. Severability. In case any provision of this Agreement shall be
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invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not
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possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
17. Announcement. Purchaser agrees not to make an announcement concerning
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this transaction until the earlier of being legally required to do so or the
Closing Conditions being satisfied. Purchaser shall inform Sellers if it
becomes legally required to make an announcement.
18. Construction. The parties have participated jointly in the
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negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means included, without limitation.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SELLERS:
/s/ Xxxxxxx X. Xxxxxx, Xx
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Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxx X. Xxxxxx Xxxxxx
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Xxxxx X. Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx Xxxxxx
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Xxxxxx X. Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx Xxxxxx
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Xxxxxxx X. Xxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
s/ Xxxxxxx X. Xxxxxx/
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Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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R & A Xxxxxx Property, Ltd.
By: /s/ Xxxxxxx X. Xxxxxx
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PURCHASER
Eastern Environmental Services, Inc.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
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ESCROW AGENTS
Xxxxxx X. Xxxxxx & Associates, P.C.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
XxXxxx, Xxxxxxx & Nurick
By: /s/ Xxxxxxx X. Xxxxxxxxx
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