INDEMNIFICATION AND ESCROW AGREEMENT
THIS INDEMNIFICATION AND ESCROW AGREEMENT, dated as of September 30, 1996
(the "Agreement"), by and among ▇▇▇▇▇▇▇▇ Manufacturing Corporation, a New York
corporation (the "Company"), DT Industries, Inc., a Delaware corporation (the
"Guarantor"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., the sole stockholder of the Company
(the "Stockholder"), and Manufacturers and Traders Trust Company, a New York
bank, as Escrow Agent ("Escrow Agent").
WHEREAS, H022 Corporation, a New York corporation ("H022"), the Guarantor,
the Company and the Stockholder have entered into an Agreement and Plan of
Merger (the "Merger Agreement") providing for the merger of H022 with and into
the Company (the "Merger") (the Company, as the surviving corporation in the
Merger, sometimes referred to herein as the "Surviving Corporation");
WHEREAS, Section 3.2(b) of the Merger Agreement provides for the delivery
of a sum equal to Two Million Dollars ($2,000,000) (the "Escrow Amount") to the
Escrow Agent on June 30, 1997, and for the delivery to the Escrow Agent of an
irrevocable standby letter of credit in the amount of the Escrow Amount (the
"Letter of Credit") at the closing of the Merger, such Escrow Amount and Letter
of Credit to be delivered to and maintained by the Escrow Agent in accordance
with the terms of this Agreement;
WHEREAS, the parties hereto desire to provide for indemnification for
breaches of representations, warranties and covenants and for certain other
matters under the Merger Agreement; and
WHEREAS, the Guarantor, as the owner of all of the issued and outstanding
capital stock of the Surviving Corporation, has agreed to guaranty the Surviving
Corporation's obligations hereunder.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
2. INDEMNIFICATION.
(a) Subject to the limitations hereinafter set forth in this Section 2,
from and after the Effective Time, the Stockholder shall protect, defend, hold
harmless and indemnify the Surviving Corporation, its officers, directors,
stockholders, employees and agents, and their respective successors and assigns
from, against and in respect of any and all losses, liabilities, deficiencies,
penalties, fines, costs, damages and expenses whatsoever (including without
limitation, reasonable professional fees and costs of investigation, litigation,
settlement and judgment and interest) (collectively, the "Losses")
that may be suffered or incurred by any of them arising from or by reason of any
of the following:
(i) Any breach of any of the representations or warranties made by
the Company in Section 5.5(c) or 5.28 of the Merger Agreement or by the
Stockholder in Section 6.1 or 6.5 of the Merger Agreement;
(ii) Any breach of any representation or warranty made by the
Company or the Stockholder in the Merger Agreement (other than in Sections
5.5(c), 5.28, 6.1 or 6.5) or contained in any certificate executed by the
Company or the Stockholder and delivered to H022 in connection with the Merger;
(iii) Any breach of any covenant or agreement made by the Company in
the Merger Agreement to the extent such breach occurred on or prior to the
Closing Date;
(iv) Any breach of any covenant or agreement made by the Stockholder
in the Merger Agreement, this Agreement or any other document or agreement
executed by the Stockholder and delivered to H022 in connection with the Merger;
(v) Any Taxes imposed on or incurred by the Company for any taxable
period ending on or before the Closing Date (or the portion, determined as
described in Section 2(d), of any Taxes imposed on or incurred by the Company
for any taxable period beginning before and ending after the Closing Date which
is allocable to the portion of such period occurring on or before the Closing
Date (the "Pre-Closing Period")), excluding (A) any such Taxes caused solely by
any election pursuant to Section 338(h)(10) of the Code (or any comparable
provision of applicable state or local tax law) with regard to the acquisition
of the shares of the Company pursuant to the Merger, and (B) any liability for
such Pre-Closing Period Taxes (other than as described in clause (A) of this
sentence) to the extent such liability results in reductions of Taxes
attributable to later periods or portions thereof occurring after the Closing
Date;
(vi) Any matter set forth on Schedule 5.13 or 5.33; and
(vii) Any and all costs and expenses (including without limitation,
reasonable legal fees and accounting fees) incident to the enforcement of the
provisions of this Section 2(a).
(b) Subject to the limitations hereinafter set forth in this Section 2,
from and after the Effective Time, the Surviving Corporation shall protect,
defend, hold harmless and indemnify the Stockholder, his personal or legal
representatives, and his successors and assigns from, against and in respect of
any and all Losses that may be suffered or incurred by any of them arising from
or by reason of any of the following:
(i) Any breach of any of the representations or warranties made by
H022 or the Guarantor in the Merger Agreement or contained in any certificate
executed by H022 or the Guarantor and delivered to the Company or the
Stockholder in connection with the Merger Agreement;
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(ii) Any breach of any covenant or agreement made by H022 or the
Guarantor in the Merger Agreement, this Agreement or any other document or
agreement executed by H022 or the Guarantor and delivered to the Company or the
Stockholder in connection with the Merger Agreement;
(iii) Any claims of any broker, investment banker, Person or firm
acting on behalf of H022 or its Affiliates for a broker's or finder's fee or
any other commission or similar fee arising in connection with the transactions
contemplated by the Merger Agreement;
(iv) Any additional U.S. federal income taxes caused solely by any
election pursuant to Section 338(h)(10) of the Code with regard to the
acquisition of the shares of the Company pursuant to the Merger; and
(v) Any and all costs and expenses (including without limitation,
reasonable legal fees and accounting fees) incident to the enforcement of the
provisions of this Section 2(b).
(c) INDEMNIFICATION PROCEDURES. All claims for indemnification under this
Agreement shall be asserted and resolved as follows:
(i) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim
or claims ("Third Party Claim") asserted against the Indemnified Party which
could give rise to a right of indemnification under this Agreement and (ii)
transmit to the Indemnifying Party with a copy to the Escrow Agent, a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to such claim (if any),
an estimate of the amount of damages attributable to the Third Party Claim, if
reasonably possible, and the basis of the Indemnified Party's request for
indemnification under this Agreement.
(ii) Within ten (10) days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Agreement with respect to such Third Party Claim
and (ii) whether the Indemnifying Party desires, at the sole cost and expense
of the Indemnifying Party, to defend the Indemnified Party against such Third
Party Claim.
(iii) If the Indemnifying Party notifies the Indemnified Party within
the Election Period that the Indemnifying Party does not dispute its potential
liability to the Indemnified Party under this Agreement and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 2(c). The Indemnifying Party shall have full control of such
defense and proceedings including any compromise or settlement thereof;
provided, however,
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that any such compromise or settlement involving non-monetary obligations of the
Indemnified Party, or otherwise having a direct effect upon its continuing
operations, shall be subject to the consent of the Indemnified Party. The
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and which are not unnecessarily prejudicial to the Indemnifying Party. If
requested by the Indemnifying Party, the Indemnified Party shall, at the sole
cost and expense of the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim which the Indemnifying
Party elects to contest, including, without limitation, the making of any
related counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 2(c) and, except as permitted
above or pursuant to this Section 2(c), shall bear its own costs and expenses
with respect to such participation.
(iv) If the Indemnifying Party fails to notify the Indemnified Party
within the Election Period that the Indemnifying Party elects to defend the
Indemnified Party pursuant to this Section 2(c), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 2(c) but fails to
diligently and promptly prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim. The Indemnified Party shall
have full control of such defense and proceedings; provided, however, that the
Indemnified Party may not enter into, without the Indemnifying Party's consent,
which shall not be unreasonably withheld or delayed, any compromise or
settlement of such Third Party Claim. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 2(c), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation.
(v) In the event an Indemnified Party should have a claim against
an Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party, with a copy to the
Escrow Agent, a written notice (the "Indemnity Notice") describing in reasonable
detail the nature of the claim, an estimate of the amount of damages
attributable to such claim, the basis of the Indemnified Party's request for
indemnification under this Agreement and the amount for which a claim for
indemnification is made, taking into account the limitations set forth in
Sections 2(f) and 2(g). If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days from its receipt of the Indemnity
Notice that the Indemnifying Party disputes such claim, the claim specified by
the Indemnified Party in the Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has timely disputed such
claim, as provided above, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
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(vi) Payments of all amounts owing by the Indemnifying Party
pursuant to Sections 2(c)(iii) and (iv) shall be made not later than thirty (30)
days after the latest of (A) the settlement of the Third Party Claim, (B) the
expiration of the period for appeal of a final adjudication of such Third Party
Claim or (C) the expiration of the period for appeal of a final adjudication of
the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by the Indemnifying Party pursuant to
Section 2(c)(v) shall be made not later than thirty (30) days after the
expiration of the thirty-day Indemnity Notice period or, if the Indemnifying
Party has timely disputed such claim, the expiration of the period for appeal of
a final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement.
(vii) The failure to provide notice as provided in this Section 2(c)
shall not excuse any party from its continuing obligations hereunder; however,
any claim shall be reduced by the damages resulting from such party's delay or
failure to provide notice as provided in this Section 2(c).
(viii) Notwithstanding anything to the contrary in this Section 2(c),
should any Third Party Claim hereunder involve a situation where the Indemnified
Party reasonably anticipates that part of the claim will be borne by it and part
of the claim will be borne by the Indemnifying Party due to the existence of the
limitations in Sections 2(f) and 2(g), the parties shall jointly consult and
proceed as to any such Third Party Claim.
(d) Whenever it is necessary for purposes of Section 2(a)(v) or (b)(iv) to
determine the portion of any Taxes imposed on or incurred by the Company for a
taxable period beginning before and ending after the Closing Date which is
allocable to the Pre-Closing Period, the determination shall be made, in the
case of property, ad valorem or franchise Taxes, on a per diem basis and, in the
case of other Taxes, by assuming that the Pre-Closing Period constitutes a
separate taxable period of the Company (and any tax partnerships in which the
Company has an interest) and by taking into account the actual taxable events
occurring during such period (except that exemptions, allowances and deductions
for a taxable period beginning before and ending after the Closing Date that are
calculated on an annual or periodic basis shall be apportioned to the
Pre-Closing Period ratably on a per diem basis).
(e) With respect to claims made under Section 2 and Section 3 hereto, the
Stockholder hereby waives and agrees not to assert against the Company, its
officers, directors, employees or agents, any claims for contribution or
indemnification with respect to the representations, warranties and agreements
made by the Company with respect thereto.
(f) The Stockholder shall have no liability hereunder to indemnify the
Company for Losses arising under Section 3 or Section 2(a)(ii) or under Section
2(a)(vii) to the extent incurred in connection with such breach or breaches
described in Section 2(a)(ii) until the aggregate of all Losses described in
Section 3 and in Section 2(a) exceed One Hundred Thousand Dollars ($100,000)
(the "Basket Amount"), in which event the
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Company shall be entitled to indemnification for all such Losses to the extent
that they exceed the Basket Amount.
(g) The Company shall have no liability hereunder to indemnify the
Stockholder for Losses arising under Section 2(b)(i) or under Section 2(b)(v)
to the extent incurred in connection with such breach or breaches described in
Section 2(b)(i) until the aggregate of all Losses described in Section 2(b)
exceed the Basket Amount, in which event the Stockholder shall be entitled to
indemnification for all such Losses to the extent that they exceed the Basket
Amount.
(h) The indemnification obligations set forth in Section 2 and Section 3
are made notwithstanding any investigation made by or on behalf of any of the
parties hereto or the results of any such investigation and notwithstanding the
participation of any party in the Closing.
3. COMPLIANCE WITH ENVIRONMENTAL REGULATORY REQUIREMENTS AND ENVIRONMENTAL
INDEMNIFICATION.
(a) Subject to Section 2, but notwithstanding any other provision in this
Agreement or the Merger Agreement to the contrary, the Stockholder shall be
responsible for, and shall indemnify and defend the Company against and save it
harmless from, against, and in respect of, and covenant not to ▇▇▇ the Company,
its respective officers, directors, stockholders and agents, and their
respective successors and assigns for, any and all Losses incurred with regard
to the representations and warranties which are the subject of Section 5.22 of
the Merger Agreement or based upon the presence of or any release or disposal of
any Hazardous Material occurring prior to the Closing Date whether caused by any
act or omission of a third party or parties or by virtue of any condition or use
of the properties owned, leased, operated or controlled by the Company or its
respective predecessors in interest.
(b) The indemnification of this Section 3 shall include any and all Losses
relating to or arising out of any claim by any Person or regulatory agency
arising out of, related to or in connection with (i) any violation or alleged
violation of any Environmental Law, attributable to circumstances or events
arising or occurring prior to the Closing Date; (ii) any violation or alleged
violation, attributable to circumstances or events arising or occurring prior to
the Closing Date, of any federal, state, local or foreign license, permit or
other government approval, authorization, order, decree, judgment, injunction,
notice, or request for information pertaining to any environmental matter; (iii)
the generation, transport, treatment, recycling, storage or disposal of
Hazardous Material, or arrangement therefor, prior to the Closing Date, by the
Company or any of its predecessors in interest; and (iv) any remedial action or
corrective action (as the latter term is used in Sections 3004(u), 3004(v), and
3008(h) of the Resource Conservation and Recovery Act) arising out of, related
to, or in connection with property owned, leased, operated, or controlled by the
Company at which Hazardous Material was generated, treated, stored or disposed
of prior to the Closing Date. In the event that liabilities and costs result
from circumstances or events arising or occurring both before and after the
Closing Date, the Stockholder shall be liable under this paragraph only for
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those liabilities and costs attributable to circumstances or events arising or
occurring prior to the Closing Date. If costs and liabilities are not clearly
allocable to circumstances or events arising or occurring either before or after
the Closing Date, such allocation shall be made in an equitable manner.
(c) The indemnification of this Section 3 shall also include any Losses
relating to or arising out of any claim of injury to employees of the Company
caused by the use of asbestos in any manner, provided that this indemnification
shall only be applicable to the extent such injury results from asbestos which
was present in any product or asset of the Company on or prior to the Closing
Date.
4. DEPOSIT OF ESCROW FUNDS.
Upon the execution of this Agreement, H022 will deliver to the Escrow Agent
the Letter of Credit, which, upon receipt thereof, the Escrow Agent will
promptly acknowledge receipt thereof in writing to H022. On June 30, 1997, the
Surviving Corporation will deliver to the Escrow Agent the Escrow Amount by wire
transfer, which, upon receipt thereof, the Escrow Agent will promptly
acknowledge receipt thereof in writing and return the Letter of Credit to the
Surviving Corporation. Upon receipt of the Escrow Amount, the Escrow Agent shall
invest the Escrow Amount in an account identified as being established pursuant
to this Agreement (the "Escrow Account"). In the event that the Surviving
Corporation does not deliver the Escrow Amount in accordance with this
Agreement, the Escrow Agent shall, upon written instruction given by the
Stockholder, make a draw upon the Letter of Credit to fund any shortage and
shall hold such proceeds in accordance with the terms of this Agreement. The
Escrow Agent will hold said Escrow Amount together with all investments thereof,
additions thereto and all interest accumulated thereon and proceeds therefrom
(the "Escrow Funds") in escrow upon the terms and conditions set forth in this
Agreement and shall not withdraw the Escrow Funds from the Escrow Account except
as provided herein.
5. INVESTMENTS.
(a) The Escrow Agent shall invest and reinvest from time to time the
Escrow 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) in any other investment agreed to in writing by the Stockholder and
the Company. In the absence of such direction, the Escrow Agent shall invest the
Escrow Funds in the Vision U.S. Treasury Money Market Fund. 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.
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(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 Escrow Funds pursuant to Section 6 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 Escrow
Funds, except in the case of the gross negligence or willful misconduct of the
Escrow Agent.
6. CLAIMS AMOUNT ESCROW FUND.
The Escrow Amount, when received by the Escrow Agent, shall be known as the
"Claims Amount Escrow Fund" and shall consist of Two Million Dollars
($2,000,000), together with all interest accumulated thereon and all proceeds
therefrom.
(a) At any time and from time to time, during the period from the Closing
through the Escrow Expiration Date (as defined in Section 8 hereof), the Company
may give to the Escrow Agent a copy of one or more Claims Notices or Indemnity
Notices, as described in Section 2(c). Upon receipt of a Claims Notice or an
Indemnity Notice, the Escrow Agent shall, if such Claims Notice or Indemnity
Notice sets forth the amount of such claim, hold a portion of the Claims Amount
Escrow Fund equal to the amount of such claim as set forth in such Claims Notice
or Indemnity Notice (or, if the amount set forth exceeds the entire amount of
the Claims Amount Escrow Fund, the entire amount of the Claims Amount Escrow
Fund) in escrow until receiving notice of a Determination (as defined in Section
6(b) below) of such claim. If the Claims Notice or Indemnity Notice states that
the amount of such claim is not reasonably ascertainable by the Company, the
Escrow Agent shall hold the entire amount of the Claims Amount Escrow Fund then
in its possession until subsequently notified in writing by the Company of the
amount of such claim, and thereafter shall hold a portion of the Claims Amount
Escrow Fund equal to the amount of such claim as set forth in such subsequent
notice in escrow until Determination of such claim. In the case of any claim,
the amount of which is not reasonably ascertainable by the Company at the time
the Claims Notice or Indemnity Notice of such claim is given, the Company agrees
to notify in writing the Escrow Agent and the Stockholder of the amount of such
claim promptly after such amount becomes reasonably ascertainable by the
Company.
(b) For the purpose of this Agreement, a "Determination" shall mean (i) a
written compromise or settlement signed by the Company and the Stockholder or
(ii) 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 the Company and
against the Stockholder and based on a Claim under Section 2(a) or Section 3 of
this Agreement; provided, however, that in the case of a claim described in an
Indemnity Notice, the Indemnity Notice to the Escrow Agent setting forth the
amount thereof as reasonably ascertained by the Company shall constitute a
Determination of such claim unless, within thirty (30) days of the receipt by
the Stockholder of such Indemnity Notice, as above provided, including the
amount of such claim, the Stockholder notifies the Escrow Agent in writing that
he disputes such amount in whole or in part (an "Objection").
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(c) Within ten (10) business days following notice of a Determination, the
Escrow Agent shall disburse to the Company from the Claims Amount Escrow Fund
the amount set forth in such Determination. In the event of an Objection, the
Escrow Agent shall release the amount which is not in dispute, if any, and shall
hold the amount in dispute until such Objection is resolved in accordance with
the provisions of Section 7 hereof.
(d) Unless the Escrow Agent has received a Claims Notice or an Indemnity
Notice, the Escrow Agent shall distribute to the Stockholder quarterly an amount
equal to the interest earned on the Claims Amount Escrow Fund during such
quarter.
(e) Provided there have been no Claim Notices or Indemnity Notices, on
September 30, 1997, the Escrow Agent shall distribute to the Stockholder an
amount equal to one-third (1/3) of the Claims Amount Escrow Fund (including
accrued interest) remaining at that time and on September 30, 1998, the Escrow
Agent shall distribute to the Stockholder an amount equal to the Claims Amount
Escrow Fund remaining at that time minus the amount of the Escrow Funds set
aside by the Escrow Agent for Claims of the Company pursuant to Section 6(a).
7. SETTLEMENT OF DISPUTES.
Any dispute which may arise under this Agreement with respect to the
delivery and/or ownership or right of possession of the Escrow Funds or any part
thereof, or the duties of the Escrow Agent hereunder, shall be settled either by
mutual agreement of the Company and the Stockholder (evidenced by appropriate
instructions in writing to the Escrow Agent, signed by such parties) or by a
binding arbitration award or a final order, decree or judgment of any
appropriate court located in the State of New York or any other jurisdiction
(the time for appeal having expired and no appeal having been perfected), each
party or parties bearing its own costs and expenses with respect to the dispute;
provided, however, that neither the Company nor the Stockholder shall have the
right to dispute any claim which has been the subject of a Determination. 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 Escrow Funds which is the subject of such dispute.
8. TERMINATION OF ESCROW AGREEMENT.
(a) Subject to the provisions of Section 6(a), the escrow created pursuant
to this Agreement shall terminate upon the earlier to occur of: (i) the second
anniversary of the Closing Date; and (ii) the distribution of all of the Escrow
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
pursuant to Section 2(a) or 3 of this Agreement outstanding on the last day of
the foregoing 2 year period, this Agreement will not terminate until the
resolution of all such claims.
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(b) As soon as practicable after the Escrow Expiration Date, the Escrow
Agent shall promptly deliver to the Stockholder out of the Claims Amount Escrow
Fund the excess, if any, of the total amount remaining in the Escrow Funds over
the sum of all amounts under unresolved or unsettled claims then outstanding,
and the Escrow Agent shall continue to retain in the Claims Amount Escrow Fund
all such amounts under unresolved or unsettled Claims then outstanding, subject
to the terms of this Escrow Agreement until resolution of such claims. Payments
from the Claims Amount Escrow Fund to the Stockholder pursuant to the first
sentence of this Section 8(b) shall be made in accordance with the Stockholder's
written directions to the Escrow Agent.
(c) The occurrence of the Escrow Expiration Date, the termination of the
escrow and the distribution of all of the Escrow Funds shall not terminate this
Agreement or the indemnification obligations of the Surviving Corporation and
the Stockholder hereunder, which obligations shall continue, with respect to the
representations and warranties for the survival periods set forth in Section
14.1 of the Merger Agreement, and otherwise until ninety (90) days after the
expiration of the applicable limitations period for any claim for which
indemnification may be sought under this Agreement.
9. 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 Escrow 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 Escrow Funds except as provided in this Agreement.
(c) So long as the Escrow Agent shall have any obligation to pay any
amount to the Stockholder and/or the Company from the Escrow 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
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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 the Company
and the Stockholder and such resignation shall take effect at the end of such
thirty (30) days or upon earlier appointment of a successor. A successor escrow
agent hereunder may be appointed by designation in writing signed by the Company
and the Stockholder. The Company and the Stockholder 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 the
Stockholder and the Company 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 Stockholder
and the Company 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 the Company and the
Stockholder, 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.
(h) The Company and the Stockholder shall share equally the fee charged by
the Escrow Agent for performing its services hereunder. Except as provided in
subsection 9(i) hereof, the Company and the Stockholder shall share equally any
reasonable out of pocket cost incurred by the Escrow Agent in performing its
duties hereunder. This covenant shall survive termination of this Agreement.
(i) The Company and the Stockholder hereby agree to 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. Agent Claims payable
hereunder shall be paid one-half by the Company and one-half by the Stockholder.
This indemnity shall survive the resignation of the Escrow Agent or the
termination of this Agreement.
11
(j) To the extent any amount due to the Escrow Agent pursuant to Sections
9(h) or 9(i) is not paid, the Escrow Agent may deduct the same from the Escrow
Account.
(k) The Escrow Agent's fees shall be Five Hundred Dollars ($500) per year,
payable in advance on the date this Agreement is executed by the Escrow Agent
and on each subsequent anniversary date thereof, as long as the Escrow Agent is
holding any of the Escrow Funds and/or the Letter of Credit hereunder.
10. MISCELLANEOUS.
(a) This Agreement shall be construed by and governed in accordance with
the laws of the State of New York, 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 or:
If to the Company:
c/o DT Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Stockholder:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent:
Manufacturers and Traders Trust Company
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
Fax (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Oviatt, Gilman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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.
13
(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 any
tax attributable to interest earned on the Escrow Funds shall be the
responsibility of the Stockholder. The tax identification number the Stockholder
is ###-##-####.
(h) 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.
(i) 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. Notwithstanding the foregoing, H022, the
Surviving Corporation and the Guarantor shall be entitled to assign their
respective rights under this Agreement, before and after the Closing, to their
senior lenders, including The Boatmen's National Bank of St. Louis, as Agent for
itself and other lenders, and their respective successors and assigns. All
covenants, representations, warranties and agreements of the parties contained
herein shall be binding upon, inure to the benefit of and be enforceable by
their respective successors and permitted assigns.
[The balance of this page has been intentionally left blank.]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
▇▇▇▇▇▇▇▇ MANUFACTURING CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., President
STOCKHOLDER:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
H022 CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
Subject to the limitation of Section 2(g), the undersigned corporation hereby
unconditionally guarantees the full and punctual payment and performance of all
of the obligations of the Surviving Corporation to the Stockholder arising under
this Agreement. The liability of the undersigned hereunder shall be primary, and
in any right of action which shall accrue to the Stockholder under this
Agreement, the Stockholder may at his option, proceed against the undersigned
without having commenced any action, or having obtained any judgment, against
the Surviving Corporation.
DT INDUSTRIES, INC., as Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
