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EXHIBIT 99.2
EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement") is made to be effective
as of [March ], 1998, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("Shareholders"), AO Capital Corp. ("AO"), American Business
Information, Inc., a Delaware corporation ("Buyer") and [ ] (the
"Escrow Agent"), as contemplated by that certain Stock Purchase Agreement,
dated to be effective as of February [ ], 1998, by and among Shareholders, AO
and Buyer (the "Stock Purchase Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Stock Purchase
Agreement. Shareholders and AO are sometimes collectively referred to herein
as "Sellers".
WHEREAS, Buyer and Sellers have entered into the Stock Purchase
Agreement to provide for the purchase of all of the outstanding common stock,
no par value, and warrants to purchase 74 shares of said common stock (together
referred to hereinafter as the "Shares"), of Armonk List Companies Corp., a New
York corporation (the "Company") (the "Acquisition");
WHEREAS, the Shareholders and AO have agreed to indemnify Buyer in
certain circumstances pursuant to Section 10 of the Stock Purchase Agreement;
WHEREAS, the closing of the transactions contemplated by the Stock
Purchase Agreement are taking place as of the date hereof and the execution of
this Escrow Agreement by the parties is an express condition thereto; and
WHEREAS, Buyer has relied upon the representations, warranties and
covenants of Sellers provided in the Stock Purchase Agreement and in schedules,
certificates and other documents delivered pursuant to the Stock Purchase
Agreement;
NOW, THEREFORE, to induce Buyer to proceed with the Closing and the
Acquisition and in consideration of such Closing and Acquisition, and in
further consideration of the mutual covenants and agreements contained herein
and in the Stock Purchase Agreement, and intending to be legally bound, the
parties hereto do hereby agree as follows:
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ARTICLE I
ESCROW FUND
SECTION 1.1. Contemporaneous with the execution of this Escrow
Agreement, Buyer shall deposit at Closing, by wire transfer of immediately
available funds, $2,000,000 of the Purchase Price (the "Escrow Amount") with
the Escrow Agent, such deposit to constitute an escrow fund (the "Escrow Fund")
to be governed by the terms set forth herein. The Escrow Agent shall invest
the Escrow Amount in interest bearing United States government securities or
mutual funds rated at least "AAA" by Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., consisting of United States
government securities and repurchase agreements having a maturity not exceeding
the Escrow Period. Upon compliance with the terms hereof, Buyer shall be
entitled to receive payment from the Escrow Fund for all Losses for which Buyer
is entitled to indemnification under Section 10 of the Stock Purchase
Agreement.
SECTION 1.2. The Escrow Agent shall hold, safeguard and dispose of
the Escrow Fund in accordance with the terms hereof and shall treat such Escrow
Fund as an escrow fund in accordance with the terms hereof and not as the
property of Buyer or Sellers.
ARTICLE II
ESCROW PERIOD
The Escrow Fund shall remain in existence for a period ending on March
[ ], 1999 (the "Escrow Period"); provided, however, that the Escrow Fund shall
continue to be maintained beyond the Escrow Period to the extent set forth in
Article V hereof, in the event that there exists any Claim (as defined in
Article III hereof) that is pending or not yet resolved pursuant to Article IV
hereof.
ARTICLE III
CLAIMS AGAINST ESCROW FUND
SECTION 3.1. Upon receipt by the Escrow Agent on or before the last
day the Escrow Fund remains in existence of a certificate signed by the Chief
Executive Officer or Chief Financial Officer of Buyer and by any Vice President
of AO and each of the Shareholders ("Officer's Certificate"):
(a) stating that Buyer has a Loss and that Buyer is
entitled to indemnification out of the Escrow Fund pursuant to this
Escrow Agreement and the Stock Purchase Agreement; and
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(b) specifying in reasonable detail (i) the amount of the
Loss; (ii) the individual items of Losses included in the amount so
stated; (iii) the basis for the Loss and (iv) the section of the Stock
Purchase Agreement to which such claim relates;
the Escrow Agent shall, subject to the provisions of Article IV hereof, deliver
to Buyer, as promptly as practicable, out of the Escrow Fund, such amount out
of the Escrow Fund having a value equal to the amount of such Losses. The
Escrow Agent shall make no delivery out of the Escrow Fund pursuant to this
Article III unless the Escrow Agent shall have received the Officer's
Certificate signed by each of the parties specified in this Section 3.1 to make
such delivery.
SECTION 3.2. Any claim by Buyer against the Escrow Fund made in an
Officer's Certificate pursuant to this Article III shall be referred to herein
as a "Claim" or, if multiple, "Claims."
ARTICLE IV
RESOLUTION OF DISPUTES
SECTION 4.1. If AO or either of the Shareholders shall not have
consented to the delivery to Buyer of that portion of the Escrow Fund equal to
the amount of Losses in respect of any Claim made in an Officer's Certificate
pursuant to Article III, AO, Shareholders and Buyer shall attempt in good faith
to agree upon the rights of the respective parties with respect to each such
Claim. If AO, Shareholders and Buyer so agree, a memorandum setting forth such
agreement shall be prepared and signed by Buyer, AO and Shareholders and shall
be furnished to each of them and a Officer's Certificate will be presented to
the Escrow Agent.
SECTION 4.2. If no such agreement can be reached after good faith
negotiation, but in any event after 30 days after AO or either Shareholder
refuses to consent to the delivery of a portion of the Escrow Fund for the
amount of a Loss in respect of any Claim made by Buyer (a "Dispute"), such
Dispute shall be submitted to mandatory and binding arbitration. The
arbitration shall be pursuant to the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA"). The arbitration hearing shall be
held in such neutral location as the parties may mutually agree. The
arbitration panel will have no power or authority, under the Commercial
Arbitration Rules of the AAA or otherwise, to relieve the parties from their
agreement hereunder to arbitrate or otherwise to amend or disregard any
provision of this Agreement, including, without limitation, the provisions of
this Section 4.2. Any award rendered by the arbitration panel will be final,
conclusive and binding upon the parties and any judgment hereon may be entered
and enforced in any court of competent jurisdiction.
SECTION 4.3. If at any time there shall arise a dispute between AO
and Shareholders concerning which of them shall be liable for payment of a
Claim or Claims, AO and Shareholders each hereby expressly acknowledge and
agree that: (i) such dispute will not in any way whatsoever delay the delivery,
in the ordinary course, to Buyer of any amount out of the Escrow Fund pursuant
to Article III hereof; (ii) AO and Shareholders shall attempt in good faith to
agree upon their rights with respect to each such Claim; (iii) if AO and
Shareholders so agree, a memorandum setting forth
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such agreement shall be prepared and signed by AO and Shareholders and shall be
furnished to the Escrow Agent and Buyer; and (iv) if no such agreement can be
reached after good faith negotiation, but in any event after 30 days after
either AO or Shareholders, as the case may be, raises a dispute as referenced
in this Section 4.3, then the dispute shall be submitted to binding arbitration
before a single arbitrator, who shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. Esq. or such
other arbitrator or arbitrators mutually agreed to by AO and the Shareholders.
ARTICLE V
EXPIRATION OF ESCROW PERIOD
If, upon expiration of the Escrow Period, Buyer shall have asserted a
Claim and such Claim is pending or unresolved at the time of such expiration,
the Escrow Agent shall retain in the Escrow Fund that portion of the Escrow
Amount, net of any distributions made or to be made with respect to other
Claims, equal in value to the Loss asserted in such Claim until such matter is
resolved. If it is determined that Buyer is entitled to recovery on account of
such Claim, the Escrow Agent shall deliver or cause to be delivered to Buyer
the Escrow Amount having a value equal to the amount due and payable with
respect to such Claim. The first $1,000,000, net of any amounts for which AO
is liable under Section 10 of the Stock Purchase Agreement, of the remainder of
the Escrow Fund (if there is more than $1,000,000 remaining following any
delivery of that portion of the Escrow Fund in accordance with this Article V),
shall be delivered to AO pursuant to this Escrow Agreement. If there is less
than $1,000,000 remaining, all such remainder,net of any amounts for which AO
is liable under Section 10 of the Stock Purchase Agreement, shall be delivered
to AO pursuant to this Escrow Agreement. The remainder of the Escrow Fund, if
any, following any delivery to AO, shall be delivered to Shareholders pursuant
to this Escrow Agreement. If any amount is paid by the Escrow Agent pursuant
to a Claim and the actual Losses with respect to such Claim are at any time
determined to be less than such payment, Buyer shall promptly return such
excess to the Escrow Agent to be deposited into the Escrow Fund, if this Escrow
Agreement is then in effect, or to AO or Shareholders, as the case may be in
accordance with the provisions of this Article V, if this Escrow Agreement is
no longer in effect. Notwithstanding any other provision of this Escrow
Agreement, any interest earned on the Escrow Amount will not be considered part
of the Escrow Amount and will not be distributed to Buyer. Upon expiration of
the Escrow Period, an amount equal to fifty percent of any such interest earned
will be distributed to AO and the remaining fifty percent of any such interest
earned will be distributed equally between each of the Shareholders.
ARTICLE VI
ESCROW AGENT'S RIGHTS AND RESPONSIBILITIES
To induce the Escrow Agent to act hereunder, it is further agreed
that:
(a) Any recitals contained in this Escrow Agreement shall
be deemed to be those of the principals and not those of the Escrow
Agent.
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(b) The Escrow Agent shall not be under any duty to give
the property held hereunder any greater degree of care than it gives
its own similar property.
(c) The Escrow Agent may engage legal counsel who may be
counsel for any party to the Escrow Agreement and may act upon advice
of counsel in reference to any matter connected herewith and shall not
be liable for any acts or omissions taken or suffered pursuant to the
opinion of such counsel. The fees and expenses of such counsel shall
be deemed to be a proper expense for which the Escrow Agent will have
a lien against the Escrow Fund.
(d) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver this
Escrow Agreement or any documents or papers deposited or called for
hereunder. The Escrow Agent shall be protected in acting upon any
notice, request, consent, certificate, order, affidavit, letter,
telegram or other paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or
persons.
(e) The Escrow Agent shall not be liable for the
outlawing of any rights under any statute of limitations with respect
to this Escrow Agreement or any documents deposited with the Escrow
Agent.
(f) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or
by any other person, excepting only orders or process of courts of
law, and is hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court. In case the Escrow Agent
obeys or complies with any such order, judgment or decree of any
court, the Escrow Agent shall not be liable to any of the parties
hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
(g) The Escrow Agent is authorized to rely on the written
instructions of AO or Shareholders as being the acts, respectively, of
AO and Shareholders, and the written instructions of the Chief
Executive Officer of Buyer as being the act of Buyer.
(h) The duties of the Escrow Agent shall be as expressed
under this Escrow Agreement, and the Escrow Agent shall have no
implied duties. The permissive right or power to take any action
shall not be construed as a duty to take action under any
circumstances, and the Escrow Agent shall not be liable except in the
event of its gross negligence or willful misconduct.
(i) The Escrow Agent shall not be called upon to advise
any party as to its rights and obligations hereunder.
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(j) In consideration of its acceptance of the appointment
as the Escrow Agent, and except with respect to the Escrow Agent's own
gross negligence or willful misconduct or acts or omissions by the
Escrow Agent not in good faith, the other parties hereto agree,
jointly and severally, to indemnify and hold the Escrow Agent harmless
as to any loss or liability incurred by it to any person, firm or
corporation by reason of its having accepted the same or in carrying
out any of the terms hereof, and to reimburse the Escrow Agent for all
its expenses, including attorneys' fees, incurred by reason of its
position hereunder or actions taken pursuant hereto. The Escrow Agent
shall have no liability under, or duty to inquire into, the terms and
provisions of this Escrow Agreement, and it is agreed that its duties
are purely ministerial in nature and that the Escrow Agent shall incur
no liability whatsoever except for willful misconduct or gross
negligence so long as it has acted in good faith. This paragraph (j)
shall survive the termination of the Escrow Agreement.
(k) The Escrow Agent may execute any of the duties under
this Escrow Agreement by or through agents or receivers.
(l) Unless specifically required by this Escrow
Agreement, the Escrow Agent shall not be required to give any bond or
surety or report to any court despite any statute, custom or rule to
the contrary.
(m) In the event the Escrow Agent becomes involved in
litigation by reason hereof, it is hereby authorized to deposit with
the clerk of the court in which the litigation is pending any and all
funds, securities or other property held by it pursuant hereto, less
its fees, expenses and advances, and thereupon shall stand fully
relieved and discharged of any further duties hereunder. Also, in the
event the Escrow Agent is threatened with litigation by reason hereof,
it is hereby authorized to implead all interested parties in any court
of competent jurisdiction and to deposit with the clerk of such court
any such funds, securities or other property held by it pursuant
hereto, less its fees, expenses and advances, and thereupon shall
stand fully relieved and discharged of any further duties hereunder.
(n) The Escrow Agent shall not be obligated to risk its
own funds in the administration of the Escrow Fund and shall have a
lien against any funds, securities or other property in its possession
or control for its fees, expenses and advancements. The Escrow Agent
need not take any action under this Escrow Agreement which may involve
it in any expense or liability until indemnified to its satisfaction
for any expense or liability it reasonably believes it may occur.
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ARTICLE VII
RECORDS
The Escrow Agent shall maintain a record of all Claims against the
Escrow Fund filed with it pursuant to Article III, a record of all such Claims
which shall become payable as provided in Article III or IV and a record of all
payments from the Escrow Fund to Buyer.
ARTICLE VIII
RESIGNATION OF ESCROW AGENT
The Escrow Agent, or any successor, may resign as Escrow Agent
hereunder by giving 30 days' written notice thereof to Buyer, AO and
Shareholders by registered or certified mail. Such resignation shall become
effective following such written notice upon the earlier of the appointment by
Buyer, AO and Shareholders of a successor Escrow Agent that accepts the
appointment and agrees to be bound by the provisions of this Agreement or the
expiration of 30 days thereafter. Upon the effectiveness of such resignation,
all duties of the Escrow Agent so resigning shall cease, other than the duty to
account in accordance with Article VII. Buyer, AO and Shareholders shall have
the right to terminate the appointment of the Escrow Agent hereunder by giving
written notice thereof to the Escrow Agent, specifying the date upon which such
termination shall take effect. A condition precedent to such termination shall
be the designation of a successor Escrow Agent that has accepted the
appointment and agreed to be bound by the provisions of this Agreement. In
event of such termination, the Escrow Agent shall turn over and deliver to such
successor Escrow Agent the Escrow Fund, and any other sums and the records and
instruments held by it under this Escrow Agreement and render the accounting
required by Article VII.
ARTICLE IX
NOTICES
All notices and other communications pursuant to this Escrow Agreement
shall be in writing and shall be deemed given if delivered personally, sent by
a nationally recognized overnight courier, or mailed by registered or certified
mail (return receipt requested), postage prepaid, or sent by facsimile
(followed with a copy sent by courier or registered or certified mail) to the
parties at the following addresses (or at such other address for a party as
shall be specified by notice hereunder):
To Buyer: American Business Information, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief
Financial Officer Telephone: (402)
▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Corporate Counsel
American Business Information, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To AO: AO Capital Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Shareholders: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
[Home address ]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
[Home address]
To Escrow Agent: [Name and address]
with a copy to: [ ]
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of delivery by nationally recognized overnight courier, on the business
day following dispatch, (c) in the case of mailing, on the third business day
following such mailing, and (d) in the case of a facsimile, when the party
receiving such facsimile shall have confirmed receipt of the communication (or
when the copy sent by courier or registered or certified mail shall have been
deemed to have been received pursuant to clause (a), (b) or (c)).
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ARTICLE X
SUCCESSORS AND ASSIGNS
This Escrow Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties hereto.
ARTICLE XI
GOVERNING LAW
This Escrow Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the choice
of law principles thereof.
ARTICLE XII
ESCROW FEES
It is agreed that the fees to be paid to the Escrow Agent in
connection with the Escrow Fund, will be paid by Buyer.
ARTICLE XIII
EXPENSES
In the event of any dispute that results in a suit or other legal
proceeding to construe or enforce any provision of this Agreement or because of
an alleged breach, default or misrepresentation in connection with any of the
provisions of this Escrow Agreement, the parties agree that each party shall be
responsible for its own attorneys' fees and other costs incurred in any action
or proceeding.
ARTICLE XIV
COUNTERPARTS
This Escrow Agreement may be executed in any number of counterparts,
each of which when so executed shall constitute an original hereof, but all of
which together shall constitute one agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Escrow
Agreement to be effective as of the day and year first above written.
SELLERS: BUYER:
AMERICAN BUSINESS INFORMATION, INC.
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AO CAPITAL CORP. ESCROW AGENT
[ ]
By: By:
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