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EXHIBIT 10.12
ESCROW AGREEMENT
THIS INDEMNIFICATION AND ESCROW AGREEMENT, dated as of January
4, 1996 (this "Agreement") , by and among CTB-Ventures, Inc., an Indiana
corporation ("Buyer"), each of the persons listed on Exhibit A attached hereto
(collectively the "Shareholders"), and NBD Bank, N.A., as Escrow Agent (the
"Escrow Agent").
WHEREAS, Buyer and the Shareholders are parties to the Stock
Purchase Agreement dated as of November 29, 1995 (the "Stock Purchase
Agreement");
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, the parties hereto agree as follows:
1. Appointment of Escrow Agent.
The Shareholders and Buyer hereby appoint NBD Bank, N.A. to
act as Escrow Agent hereunder, and NBD Bank, N.A. hereby accepts such
appointment and agrees to act as Escrow Agent on the terms and conditions
hereinafter set forth.
2. Escrowed Funds.
(a) Simultaneously herewith there has been delivered to the
Escrow Agent (by wire transfer to account number 00-00000-00 of the Escrow
Agent) an behalf of the Shareholders $5,000,000 in immediately available funds.
The Escrow Agent hereby acknowledges receipt of said funds.
(b) The Escrowed Funds are to provide security for the
obligation of the Shareholders to Buyer and its affiliates pursuant to Section
6.2 of the Stock Purchase Agreement.
3. Cooperation.
In the event a Claim (as defined below) is asserted by any
third party against Buyer, it shall notify Shareholders of such Claim by giving
to Shareholders written notice, and shall give Shareholders and their counsel
access to any and all such files, records and other documents as may be
necessary to enable Shareholders to investigate or participate in the defense
against such Claim (but at the cost and expense of Shareholders) and Buyer shall
otherwise cooperate in connection therewith and shall not unreasonably assume a
position contrary to that of Shareholders with respect to all such third party
claims.
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4. Third Party Claims. Whenever Buyer shall learn after the
date hereof of a claim that, if allowed (whether voluntarily or by judicial or
quasi-judicial tribunal or agency), would constitute a breach of, or give rise
to an obligation of indemnification under, any one or more of the warranties,
representations, covenants or agreements of the Company or any of the
Shareholders as set forth in the Stock Purchase Agreement, before paying the
same or agreeing thereto, Buyer shall promptly notify the Shareholders'
Representative identified on the signature page hereof (the "Shareholders'
Representative") in writing of all such material facts within Buyer's knowledge
with respect to such claim and the amount thereof. If, prior to the expiration
of ten (10) business days from the receipt of such notice, the Shareholders'
Representative shall request, in writing, that the Shareholders' wish to
participate in the defense of such claim, the Shareholders' shall be permitted
to so participate through one counsel of its choosing and at their sole expense,
provided that, Buyer under all circumstances shall retain full control of the
defense of such claim. Counsel for Buyer shall be instructed to periodically
report in writing to the Shareholder Representative the status of such defense.
The Shareholders shall cooperate with Buyer in such defense and make available
to Buyer all such records, materials and other information in their possession
or under their reasonable control relating thereto as is reasonably required by
Buyer. Buyer shall not pay, settle or compromise any such third party claim
without the consent of the Shareholder Representative, which consent shall not
be unreasonably withheld; provided that, Buyer shall not be required to refrain
from paying any claim which has matured by a court judgment or decree, unless an
appeal is duly taken therefrom and execution thereof has been stayed, nor shall
Buyer be required to refrain from paying any claim where the delay in paying or
settling such claim, in the reasonable judgment of Buyer, would result in the
foreclosure of a lien upon any of the property or assets then held by Buyer or
any of its subsidiaries (including the Company) or where any delay in payment
would cause Buyer or any of its subsidiaries a material economic loss; provided
further that, Buyer shall not be required to notify the Shareholders'
Representative prior to paying, settling or compromising any claim of less than
$5,000. The failure to provide notice as provided in this paragraph shall not
excuse the Shareholders from their continuing obligations hereunder; however,
the claim shall be reduced by any damages to the Shareholders resulting from
Buyer's delay or failure to provide notice as provided in this paragraph.
5. Deposit of Escrowed Funds.
On or prior to the Closing Date, Buyer will deliver to the
Escrow Agent the amount specified in Section 2(a) hereof (the "Escrow Amount")
by wire transfer payable to the Escrow Agent,
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the receipt of which is hereby acknowledged by the Escrow Agent. The Escrow
Agent shall invest the Escrow Amount in an account identified as being
established pursuant to this Agreement (the "Escrow Account"). The Escrow Agent
will hold said Escrow Amount together with all investments thereof and all
interest accumulated thereon and proceeds therefrom (the "Escrowed Funds") in
escrow upon the terms and conditions set forth in this Agreement and shall not
withdraw the Escrowed Funds from the Escrow Account except as provided herein.
6. Investments.
(a) The Escrow Agent shall invest and reinvest from time to
time the Escrowed Funds (i) in any obligation of, or guaranteed as to principal
and interest by, the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States supports the
obligation or guarantee of such agency or instrumentality), (ii) in any money
market fund that invests solely in such obligations or types described in clause
(i), (iii) bank deposit account or, (iv) in any other investment directed in
writing by Buyer and the Shareholders' Representative. Investments may be
executed by the Escrow Agent's own Bond Department. To the extent the Escrow
Agent invests any funds in the manner provided for in this Section, no party
hereto shall be liable for any loss which may be incurred by reason of any such
investment. No investment shall exceed the term of this Agreement.
(b) The Escrow Agent shall have the power to reduce, sell or
liquidate the foregoing investments whenever the Escrow Agent shall be required
to release all or any portion of the Escrowed Funds pursuant to Section 7
hereof. The Escrow Agent shall have no liability for any investment losses
resulting from the investment, reinvestment, sale or liquidation of any portion
of the Escrowed Funds, except in the case of the gross negligence or willful
misconduct of the Escrow Agent.
7. Escrowed Funds.
(a) At any time and from time to time, during the period from
the Closing Date through the Escrow Expiration Date (as defined in Section 9
hereof), Buyer may give to the Escrow Agent one or more notices (each, a "Claims
Notice") containing the applicable information set forth in subparagraph (b)
below and stating that, pursuant to the Stock Purchase Agreement and this
Agreement, Buyer is asserting against the Shareholders a right of indemnity
pursuant to Section 6.2 of the Stock Purchase Agreement with respect to a claim
(a "Claim"). In the case of any Claim, the amount of which is not reasonably
ascertainable by Buyer at the time the Claims Notice of such Claim is given,
Buyer agrees to promptly give written notice to the Escrow Agent and
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the Shareholders' Representative of the amount of such Claim promptly after such
amount becomes reasonably ascertainable by Buyer.
(b) A Claims Notice given to the Escrow Agent shall set forth
the nature and details of such Claim, the Section of the Stock Purchase
Agreement or this Agreement pursuant to which the Claim is made, the amount
thereof if reasonably ascertainable by Buyer (or a statement that the amount
thereof is not then reasonably ascertainable by Buyer and the basis for such
statement) and whether or not such Claim arises from the assertion of liability
by a third party. The Escrow Agent shall promptly forward such Claims Notice to
the Shareholders' Representative.
(c) For the purpose of this Agreement, a "Determination" shall
mean (A) a written compromise or settlement signed by Buyer and the
Shareholders' Representative or (B) a binding arbitration award or a judgment of
a court of competent jurisdiction in the United States of America or elsewhere
(the time for appeal having expired and no appeal having been perfected) in
favor of Buyer and against the Shareholders and based on a Claim under this
Agreement.
(d) within ten (10) business days following notice of a
Determination, the Escrow Agent shall disburse to Buyer from the Escrow Amount,
the amount set forth in such Determination. if any amount is in dispute, the
Escrow Agent shall release the amount which is not in dispute, if any, and shall
hold the amount in dispute until such dispute is resolved in accordance with the
provisions of Section 8 hereof.
8. Settlement of Disputes.
Any dispute which may arise under the Escrow Agreement with
respect to the delivery and/or ownership or right of possession of the Escrowed
Funds or any part thereof, or the duties of the Escrow Agent hereunder, shall be
settled either by mutual agreement of Buyer and the Shareholders' Representative
(evidenced by appropriate instructions in writing to the Escrow Agent, signed by
such parties) or, failing such agreement, either Buyer or the Shareholders'
Representative shall have the right to submit the dispute to neutral binding
arbitration pursuant to the provisions of Section 8.8 of the Stock Purchase
Agreement. The Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings. Prior to the settlement of any such dispute, the
Escrow Agent is authorized and directed to retain in its possession, without
liability to anyone, that portion of the Escrowed Funds which is the subject of
such dispute.
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9. Termination of Escrow Agreement
(a) This Agreement shall terminate upon the earlier to occur
of; (i) the date which is thirty days after the Company's audit of the year
ended December 31, 1996 is completed (the "Scheduled Expiration Date") (or at
the time of the final resolution of any unresolved or unsettled Claims then
outstanding); and (ii) the distribution of all of the Escrowed Funds by the
Escrow Agent pursuant to this Agreement (the earliest to occur of (i) and (ii)
above being hereinafter referred to as the "Escrow Expiration Date"); provided,
however, that if there are any unresolved or unsettled Claims then outstanding
on the Scheduled Expiration Date this Agreement will not terminate until the
resolution of all such Claims.
(b) As soon as practicable after the Escrow Expiration Date,
the Escrow Agent shall promptly deliver to the Shareholders out of the Escrow
Fund the excess, if any, of the total amount remaining in the Escrowed Funds
over the sum of all amounts under unresolved or unsettled Claims then
outstanding, and the Escrow Agent shall continue to retain in the Escrow Fund
all such amounts under unresolved or unsettled Claims then outstanding, subject
to the terms of this Agreement until resolution of such Claims. Payments from
the Escrow Fund to the Shareholders shall be made among the Shareholders in
accordance with Exhibit A hereto.
10. Concerning the Escrow Agent.
(a) The Escrow Agent shall have no duties or responsibilities
except those expressly set forth herein. The Escrow Agent may consult with
counsel and shall have no liability hereunder except for its own negligence or
willful misconduct. It may rely on any notice, instruction, certificate,
statement, request, consent, confirmation, agreement or other instrument which
it reasonably believes to be genuine and to have been signed or presented by a
proper person or persons.
(b) The Escrow Agent shall have no duties with respect to any
agreement or agreements with respect to any or all of the Escrowed Funds other
than as provided in this Agreement. In the event that any of the terms and
provisions of any other agreement between any of the parties hereto conflict or
are inconsistent with any of the terms and provisions of this Agreement, the
terms and provisions of this Agreement shall govern and control in all respects.
Notwithstanding any provision to the contrary contained in any other agreement,
the Escrow Agent shall have no interest in the Escrowed Funds except as provided
in this Agreement.
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(c) so long as the Escrow Agent shall have any obligation to
pay any amount to the Shareholders and/or Buyer from the Escrowed Funds
hereunder, the Escrow Agent shall keep proper books of record and account, in
which full and correct entries shall be made of all receipts, disbursements and
investment activity in the Escrow Account.
(d) The Escrow Agent shall not be bound by any modification of
this Agreement affecting the rights, duties and obligations of the Escrow Agent,
unless such modification shall be in writing and signed by the other parties
hereto, and the Escrow Agent shall have given its prior written consent thereto.
The Escrow Agent shall not be bound by any other modification of this Agreement
unless the Escrow Agent shall have received written notice thereof.
(e) The Escrow Agent may resign as escrow agent at any time by
giving thirty (30) days written notice by registered or certified mail to Buyer
and the Shareholders' Representative and such resignation shall take effect at
the end of such 30 days or upon earlier appointment of a successor. A successor
escrow agent hereunder may be appointed by designation in writing signed by
Buyer and the Shareholders' Representative. Buyer and the Shareholders'
Representative shall undertake to utilize their best efforts to arrange for the
appointment of a successor escrow agent. If any instrument of acceptance by a
successor escrow agent shall not have been delivered to the Escrow Agent within
sixty (60) days after the giving of such notice of resignation, the resigning
Escrow Agent may at the expense of Buyer and the Shareholders petition any court
of competent jurisdiction for the appointment of a successor escrow agent.
(f) If at any time hereafter the Escrow Agent shall resign, be
removed, be dissolved or otherwise become incapable of acting, or the bank or
trust company acting as the Escrow Agent shall be taken over by any government
official, agency, department or board, or the position of the Escrow Agent shall
become vacant for any of the foregoing reasons or for any other reason, the
Shareholders' Representative and Buyer shall appoint a successor escrow agent to
fill such vacancy.
(g) Every successor escrow agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor, and also to Buyer and the
Shareholders' Representative, an instrument in writing accepting such
appointment hereunder, and thereupon such successor escrow agent, without any
further act, shall become fully vested with all the rights, immunities and
powers and shall be subject to all of the duties and obligations, of its
predecessor; and every predecessor escrow agent shall deliver all property and
moneys held by it hereunder to its successor.
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(h) The fee charged by the Escrow Agent for performing its
services hereunder, any reasonable out of pocket costs incurred by the Escrow
Agent in performing its duties hereunder and any other amounts payable to the
Escrow Agent pursuant hereto shall be paid one-half by the Buyer and one-half
from the Escrowed Funds.
(i) Buyer and the Shareholders shall indemnify and hold the
Escrow Agent harmless from and against any and all expenses (including
reasonable attorneys' fees), liabilities, claims, damages, actions, suits or
other charges ("Agent Claims") incurred by or assessed against the Escrow Agent
for anything done or omitted by the Escrow Agent in the performance of the
Escrow Agent's duties hereunder, except such which result from the Escrow
Agent's bad faith, gross negligence or willful misconduct.
(j) The Escrow Agent's fees shall be in the amounts set forth
on Exhibit B hereto.
11. Miscellaneous.
(a) This Agreement shall be construed by and governed in
accordance with the laws of the State of Indiana, without regard to such
jurisdiction's conflicts of laws principles.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto.
(c) This Agreement may be executed in one or more counterparts
which taken together shall constitute but one and the same instrument.
(d) Section headings contained herein have been inserted for
reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a
written instrument duly executed by all parties hereto or their respective
successors or assigns.
(f) All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(unless otherwise specifically provided for herein) if delivered personally
(including by courier), telecopied (which is confirmed) or mailed (registered or
certified mail), postage prepaid to:
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If to Buyer:
c/o American Securities Captial Partners, L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
If to the Shareholders:
c/o CTB, Inc.
Xxxxx Xxxx 00 Xxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: J. Xxxxxxxxxxx Xxxxxxx
with a copy to:
Yoder, Ainlay, Xxxxx &
Buckingham
000 Xxxxx Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxx, Esq.
If to the Escrow Agent:
NBD Bank, N.A.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx
or to such other addresses or persons as any party may have furnished to the
other parties in writing, in accordance herewith, provided, however, that
notices to the Escrow Agent shall be deemed effective only upon receipt.
(g) The Escrow Agent shall not be liable to pay any tax on any
interest earned on the Escrow Amount, it being the understanding of the parties
that such tax shall be the responsibility of the Shareholders. The tax
identification numbers for the Shareholders are set forth on Exhibit A.
(h) The Shareholders have irrevocably and unconditionally
appointed J. Xxxxxxxxxxx Xxxxxxx as their
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Shareholders' Representative to take any and all action on the Shareholders'
behalf in connection with this Agreement.
(i) if any party hereto refuses to comply with, or at any time
violates or attempts to violate, any term, covenant or agreement contained in
this Agreement, any other party hereto may, by injunctive action, compel the
defaulting party to comply with, or refrain from violating, such term, covenant
or agreement, and may, by injunctive action, compel specific performance of the
obligations of the defaulting party.
(j) Except as provided herein, the rights and obligations of
the parties under this Agreement shall not be assigned to any person or entity,
without the written consent of the other parties. The parties hereto acknowledge
that the right of the Buyer to receive payments from the Escrowed Funds may be
pledged to its senior lender. This Agreement shall not confer any benefits on
any persons other than the parties hereto.
(k) Any terms which are capitalized herein but not otherwise
defined shall have the meanings ascribed to them in the Stock Purchase
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above written.
NBD BANK, N.A., as Escrow
Agent
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Title: Second Vice
President
Xxxxx X. Xxxxxxxxx
CTB VENTURES, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Title: Vice President
/s/ J. Xxxxxxxxxxx Xxxxxxx
----------------------------------------
J. Xxxxxxxxxxx Xxxxxxx,
individually and as
Shareholder Representative
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EXHIBIT A
TO ESCROW
AGREEMENT
Shareholder Name/Tax ID Number Percentage
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