ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated the 29th day of August, 1997 (the "Escrow
Agreement"), is among Xxxxxxx Research Corporation, a Delaware corporation
("NRC"); NRC's wholly owned subsidiary, Xxxxxxx SELECT Corporation, a
Delaware corporation ("SELECT") TXEN, Inc., an Alabama corporation,
("TXEN"); the holders of all of the $0.002 par value Class A Common Stock
of TXEN (the "Shareholders"); and SouthTrust Bank, N.A. (the "Escrow
Agent").
W I T N E S E T H
Pursuant to that certain Agreement of Merger dated August 27, 1997,
(the "Merger Agreement"), TXEN has agreed to merge into SELECT with SELECT
as the surviving corporation. Capitalized terms used herein unless
otherwise defined shall have the meaning ascribed to such terms in the
Merger Agreement. Pursuant to Section 17.3 of the Merger Agreement, the
Shareholders have agreed to indemnify NRC and SELECT and have agreed that
the assets deposited pursuant to this Escrow Agreement shall secure the
indemnification obligations.
Therefore, pursuant to the Merger Agreement and in consideration of
the mutual covenants hereinafter contained, the parties hereby agree as
follows:
SECTION 1. On even date herewith, Shareholders have deposited with the
Escrow Agent the sum of Eight Hundred Seventy Seven Thousand Five Hundred
Thirteen and Twenty-Six cents ($877,513.26) (the "Escrow Money") and
54,208 shares of NRC Common Stock (the "Escrow Stock). The Escrow Money
and the Escrow Stock (collectively the "Escrow Fund") shall be held by the
Escrow Agent hereunder as partial security for the performance by
Shareholders of their indemnification obligations set forth in Section 17.3
of the Merger Agreement.
SECTION 2. The Escrow Fund and any interest thereon shall be held by
the Escrow Agent for the account of the Shareholders, subject to written
instruction signed jointly by NRC and Shareholders or as otherwise provided
herein.
SECTION 3. (a) At anytime on or prior to the Escrow Termination Date,
as hereafter defined, with respect to the Escrow Fund, NRC or SELECT may
give written notice (the "Initial Notice") to Shareholders and the Escrow
Agent of a claim (a "Claim") for indemnification resulting from any Damages
(as defined in the Merger Agreement) suffered, sustained or incurred by NRC
or SELECT or that may reasonably be expected to be suffered by NRC or
SELECT as a result of any matters made the subject of Section 17.3 of the
Merger Agreement or otherwise arising out of the transactions contemplated
by and made the subject of the Merger Agreement. If the Shareholders
dispute such Claim, the Shareholders shall send written notice to NRC,
SELECT and the Escrow Agent that such Claim is disputed within twenty (20)
days after Shareholders are deemed to have received the Initial Notice (a
"Counter Notice"). Thereafter, except as provided in the next sentence,
the Escrow Agent shall not deliver any of the Escrow Fund or interest
thereon made the subject of the Claim to NRC, SELECT or Shareholders,
except upon joint written instructions of NRC, SELECT and Shareholders. As
an alternative to joint written instructions, NRC, SELECT or Shareholders
may give a notice (a "Claim Notice") to the other party and the Escrow
Agent to the effect that a Claim on all or part of the Escrow Fund (and
accrued interest thereon) has been resolved, which notice shall set forth
the amount of the Claim to be delivered to NRC, SELECT or Shareholders, if
any, and shall have appended a copy of a judicial order, judgment or decree
which evidences a resolution of the Claim, including a certification that
neither party has filed an appeal or that any appeal which has been filed
has been finally resolved.
(b) Upon receipt of the Claim Notice with all necessary
attachments, or upon receipt of joint written instructions, the Escrow
Agent shall promptly deliver to NRC, SELECT or Shareholders the amount due
such party as set forth in the Claim Notice, if any, or the amount due such
party as set forth in the joint written instructions.
(c) NRC or SELECT may file Claims on both the Escrow Fund
and any interest thereon, less disbursement made of net income under
Section 4 hereof. If a Claim on less than all of the Escrow Fund and any
interest thereon is filed and all or any part of such Claim is ultimately
paid to NRC or SELECT, then, in addition to the amount of the Claim
required to be paid to NRC or SELECT as a result of joint written
instructions or a Claim Notice, the Escrow Agent shall pay to NRC, out of
any remaining Escrow Fund and any interest thereon, an amount of interest
equal to the interest allocable to the amount of the Claim actually paid to
NRC or SELECT from the date of the Initial Notice until the date all or any
part of the Claim is paid to NRC, less disbursements made of net income
under Section 4 hereof.
(d) With respect to all amounts held in the Escrow Account
(and the interest thereon), the Escrow Termination Date shall be the
earlier of:
(i) September 1, 1998, or
(ii) the date the Escrow Agent no longer holds any
funds hereunder as a result of prior Claims, joint
written instructions or Claim Notices.
On the Escrow Termination Date, the Escrow Agent shall deliver any
remaining Escrow Fund, including any accrued interest thereon, less
disbursements of net income made under Section 4 hereof, to the
Representative, unless an Initial Notice, Claim, or Claim Notice is
pending, in any of which cases the amount claimed, together with interest
on the amount claimed from the date of the Initial Notice to the Escrow
Termination Date, shall be retained by the Escrow Agent until a resolution
of such pending Claims. Upon final resolution of the pending Claims and
disbursements of the amounts retained by the Escrow Agent in accordance
with Claim Notices or joint written instructions, this Escrow Agreement
shall terminate. All assets distributed by Escrow Agent to Shareholders
hereunder shall be distributed to the Representative for the benefit of the
Shareholders. It shall be the responsibility of the Representative to
distribute to each Shareholder his portion of the assets distributed from
the Escrow Account in accordance with the Merger Consideration Allocation
in EXHIBIT "C" of the Merger Agreement.
(e) The Representative of the Shareholders appointed in
Section 21.10 of the Merger Agreement is authorized (i) to take all actions
permitted hereunder by the Shareholders, including joint instructions,
Counter Notices, and Claim Notices on behalf of the Shareholders, (ii) to
agree to, dispute or settle and compromise any Claim, Counter Notice and
Claim Notice given hereunder for and on behalf of the Shareholders, (iii)
to receive and respond to any notice or other communication given to the
Shareholders hereunder and (iv) to receive all payments on behalf of the
Shareholders pursuant to this Escrow Agreement. The Escrow Agent, NRC and
SELECT shall be fully protected in dealing exclusively with the
Representative as the authorized agent of the Shareholders and the
Shareholders shall indemnify and hold harmless the Xxxxxx Xxxxx, XXX and
SELECT from any liability arising out of or in connection with the
authorization herein granted the Representative to act for and on behalf of
the Shareholders.
SECTION 4. For tax purposes, interest earned on the Escrow Fund shall
be taxed to the Shareholders in proportion to their share of the Merger
Consideration as shown on EXHIBIT "C" of the Merger Agreement, except only
so much of same that is actually distributed to NRC during any tax period.
The Shareholders shall furnish the Escrow Agent with their taxpayer
identification numbers simultaneously upon execution of this Escrow
Agreement and a statement from the Shareholders that they are not subject
to backup withholding. The Escrow Agent shall disburse to the
Representative for distribution to the Shareholders, in accordance with the
Merger Consideration Allocation in EXHIBIT "C" of the Merger Agreement,
thirty percent (30%) of the net income earned during each calendar year
within thirty (30) days after the end of such year.
SECTION 5. With respect to the Escrow Stock, the following provisions
shall apply:
(a) Each stock certificate evidencing Escrow Stock shall be
in the name of "SouthTrust Bank, N.A., as Escrow Agent under Escrow
Agreement dated August 29, 1997."
(b) Whenever a disbursement is made from the Escrow Fund,
such disbursement shall be prorata between the money and the NRC Common
Stock deposited in escrow with respect to each Shareholder in accordance
with EXHIBIT "C" of the Merger Agreement. For this purpose, the value of
the Escrow Stock shall be determined in accordance with Section 5(c) below.
(c) The value of the NRC Common Stock for purposes of
paying any portion of the Escrow Funds to NRC or SELECT shall be the
closing sale price of such stock on the NASDAQ National Market (as reported
by the WALL STREET JOURNAL) on the fifth trading day preceding the date of
distribution.
(d) Whenever a distribution of Escrow Stock is made from
the Escrow Fund, the Escrow Agent shall effect such distribution by
delivering the Escrow Stock to the transfer agent with appropriate
instructions to reissue the stock certificate(s) to the persons entitled
thereto.
(e) While the NRC Common Stock is held in escrow, each
Shareholder depositing such stock with the Escrow Agent shall be entitled
to instruct the Escrow Agent regarding the voting of his shares and shall
be entitled to all dividends declared thereon, except that NRC stock issued
pursuant to a stock dividend, stock split, or other transaction affected
without consideration shall continue to be held in the Escrow Fund.
SECTION 6. All notices and other communications under this Escrow
Agreement shall (a) be in writing (which shall include communications by
facsimile), (b) be (i) sent by registered mail or certified mail, postage
prepaid, return receipt requested or by facsimile, or (ii) delivered by
hand, (c) be given at the following respective addresses and facsimile
numbers and to the attention of the following persons:
(i) If to Shareholders, to:
Xxxxxx X. Xxxxxxxxx
Shareholder Representative
0000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(with a copy to:)
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxx, L.L.C.
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to NRC, to:
Xxxxxxx Research Corporation
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(with a copy to:)
Xxxxxx Xxxx Xxxxxx & Xxxxx P.C.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) If to SELECT, to:
Xxxxxxx Select Corporation
c/x Xxxxxxx Research Corporation
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(with a copy to:)
Xxxxxx Xxxx Xxxxxx & Xxxxx P.C.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iv) If to the Escrow Agent, to:
SouthTrust Bank, N.A.
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address or facsimile number or to the attention of such
other person as the party to whom such information pertains may hereafter
specify for the purpose in a notice to the other specifically captioned
"Notice of Change of Address," and (d) be effective or deemed delivered or
furnished (i) if given by mail, on the third day after such communication
is deposited in the mail, addressed as above provided, (ii) if given by
facsimile, when such communication is transmitted to the appropriate number
determined as above provided in this Section 6 and the appropriate
acknowledgement is received and (iii) if given by hand delivery, when left
at the address of the addressee addressed as above provided, except that
notices of a change of address or facsimile number shall not be deemed
furnished until received.
SECTION 7. (a) 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.
(b) The Escrow Agent may act in reliance upon any
instrument or signature believed to be genuine and may assume that any
person purporting to give any writing, Initial Notice, Counter Notice,
Claim Notice, Claim, advice or instruction in connection with the
provisions hereof has been duly authorized to do so.
(c) The Escrow Agent may act relative hereto upon advice of
counsel in reference to any matter connected herewith and shall not be
liable for any acts or omissions unless caused by its negligence or willful
misconduct.
(d) This Escrow Agreement sets forth exclusively the duties
of the Escrow Agent with respect to any and all matters pertinent hereto
and no implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent.
(e) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or
document, or instrument or property held or delivered to it.
(f) NRC and Shareholders agree that they shall be equally
responsible for the payment of all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of such duties
hereunder, including reasonable fees, expenses and disbursements of its
counsel. The Shareholders' share of any such fees and expenses of the
Escrow Agent may be withheld and paid from the Escrow Fund. The
immediately preceding sentence survives, despite any termination of this
Escrow Agreement or the resignation or removal of the Escrow Agent.
(g) The Escrow Agent does not have and will not have any
interest in any of the Escrow Fund deposited or held hereunder but is
serving only as escrow holder and having only possession thereof.
(h) All Escrow Fund received by the Escrow Agent shall be
invested and reinvested by the Escrow Agent in treasury notes not having a
greater maturity than one year which may be purchased through SouthTrust
Securities, Inc., except the Escrow Agent may hold a sufficient amount in a
money market fund (which may include a money market fund of the Escrow
Agent or its affiliate) to meet anticipated distributions.
(i) In the event the Escrow Agent before the termination of
the escrow created by this Escrow Agreement receives or becomes aware of
conflicting demands or claims with respect to this escrow or the rights of
any of the parties hereto, or any funds, securities, property or documents
deposited herein or affected hereby, the Escrow Agent shall have the right
to discontinue any or all further acts on its part until such conflict is
resolved to its satisfaction. The Escrow Agent shall have the further
right but not the obligation to commence or defend any action or
proceedings for the determination of such conflict including, but without
limiting the generality of the foregoing, a suit in interpleader brought by
the Escrow Agent. In the event the Escrow Agent files a suit in
interpleader and delivers to the court all funds, securities, property or
documents then in deposit hereunder, it shall thereupon be fully released
and discharged from all further obligations to perform any and all duties
or obligations imposed upon it by this Escrow Agreement. NRC and
Shareholders agree that they shall be equally responsible for the payment
of all costs, damages, judgments and expenses, including reasonable
attorneys' fees, suffered or incurred by the Escrow Agent in connection
with or arising out of its escrow (except those caused by Escrow Agent's
own negligence or willful misconduct). However, as between NRC and the
Shareholders, the nonprevailing party with respect to a Claim shall be
required to pay the costs and expenses of the prevailing party including
the prevailing party's share of all of the costs, damages and expenses of
the Escrow Agent, if any.
(j) The Escrow Agent shall not be liable for any error of
judgment or for any act done or omitted by it in good faith, or for
anything which it may in good faith do or refrain from doing in connection
herewith; nor shall the Escrow Agent be liable if, in the event of any
dispute or question as to its duties or obligations hereunder, it acts in
accordance with written opinion of its legal counsel, which may include
attorneys who are members of or who are employed by the Escrow Agent. The
Escrow Agent is authorized to act upon any document believed by it to be
genuine and to be signed by the proper party or parties and will incur no
liability in so acting.
SECTION 8. (a) This Escrow Agreement and the Merger Agreement
constitute the entire understanding among the parties in connection with
the subject matter hereof,
and no waiver or modification of the terms hereof shall be valid unless in
writing signed by the party to be charged and only to the extent therein
set forth.
(b) This Escrow Agreement shall be governed by and
construed in accordance with the internal substantive laws and not the
choice of laws rules of the State of Alabama.
(c) This Escrow Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs,
administrators, executors, successors and assigns.
(d) This Escrow Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Escrow
Agreement and all of which taken together shall constitute one and the same
instrument.
(e) If one or more provisions of this Escrow Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Escrow Agreement and the balance of this Escrow
Agreement shall be enforceable in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Escrow Agreement the day and year first above written.
XXXXXXX RESEARCH CORPORATION, a
Delaware corporation
Xxxxxxx X. Xxxx
By ____________________________
Its President
"NRC"
XXXXXXX SELECT CORPORATION, a
Delaware corporation
Xxxxxxx X. Xxxx
By _____________________________
Its Chief Executive Officer
"SELECT"
SOUTHTRUST BANK, N.A.
Xxxxxxx Xxxxxx
By ____________________________
Its Senior Vice President
"Escrow Agent"
SHAREHOLDERS OF TXEN, INC.:
Xxxxxx Xxxxxxx
___________________________________
Xxxxxx Xxxxxxx
Xxxxx X. Xxxxxxx
___________________________________
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
___________________________________
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
___________________________________
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
___________________________________
Xxxxxxx X. Xxxxxx
Xxxx Xxxxxxx
___________________________________
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxxxxx
___________________________________
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxx
___________________________________
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
___________________________________
Xxxxx X. Xxxxxxxx
Xxx X. Xxxxxxx
___________________________________
Xxx X. Xxxxxxx
Xxxxx XxXxxxxxx
___________________________________
Xxxxx XxXxxxxxx
Xxxxxxxx X. Xxxx
___________________________________
Xxxxxxxx X. Xxxx
Xxxx X. Xxxxxx
___________________________________
Xxxx X. Xxxxxx
Xxxxx X. Xxxxx
___________________________________
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
___________________________________
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
___________________________________
Xxxx X. Xxxxxx
Xxx X. Sailor
___________________________________
Xxx X. Sailor
Xxxxxx X. Xxxxxxxx
___________________________________
Xxxxxx X. Xxxxxxxx
Xxxxx X. Till
___________________________________
Xxxxx X. Till
Xxxxxx Xxxx
___________________________________
Xxxxxx Xxxx
Xxxxxxx X. Xxxxxxxx
___________________________________
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
___________________________________
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
___________________________________
Xxxxxxx X. Xxxxx
H. Grey Wood
_____________________________________________
H. Grey Wood
Board of Trustees of the University of
Alabama, for use of and on behalf of the
University of Alabama, Tuscaloosa, Alabama
Xxxxxx X. Xxxxxx
By: _________________________________________
Its Vice President for Financial
Affairs and Treasurer
Xxxx X. Xxxxxx
By: _________________________________________
Its Comptroller Associate Treasurer
Xxxxxx X. Xxxxxxxxx
______________________________________________
Xxxxxx X. Xxxxxxxxx, Trustee of the Xxxxxxxxx
Family Charitable Unitrust, established
August 5, 1997
