EXHIBIT 2.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is executed this ___th day
of __________, 1998 by and among Consolidated Graphics, Inc., a Texas
corporation ("Buyer"); and Xxxx X. Xxxxx, Xxxxxxxx Xxxxxxxx, Xxxxx Xxxxxx,
Xxxxxxx Xxxxxxx and Xxxxxxxxxxx Xxxxxxxxx (collectively, "Shareholders"); and
Xxxx X. Xxxxx and Xxxxxx Xxxxxxx in their capacity as trustees (the "Trustees"
and, together with the Shareholders, the "Sellers") of the Automated Graphic
Systems, Inc. Employee Stock Ownership Plan (the "ESOP"), and _________________
as Escrow Agent (the "Escrow Agent").
WHEREAS, pursuant to that certain Agreement and Plan of
Reorganization dated _____________, 1998 by and among the Buyer, the Sellers,
AGS Acquisition Co. ("Newco"), and Automated Graphic Systems, Inc. ("AGS") (the
"Reorganization Agreement"), AGS will be merged into Newco on the terms and
conditions specified therein (the "Merger"); and
WHEREAS, pursuant to Section 1.4 of the Reorganization Agreement,
the parties hereto have agreed to deposit $3,100,000 with the Escrow Agent to be
held and distributed by the Escrow Agent on the terms and conditions contained
herein so as to secure the full and prompt payment of all amounts due pursuant
to Sections 12.1 and 12.4 of the Reorganization Agreement; and
WHEREAS, the Escrow Agent is willing to hold such funds in escrow
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. RECITALS. The foregoing recitals are made a part of this
Agreement.
2. DEFINITIONS; SECTION REFERENCES. Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the
Reorganization Agreement.
3. APPOINTMENT OF ESCROW AGENT. ____________________ is hereby
appointed and designated as the Escrow Agent for the purposes set forth herein,
and the Escrow Agent hereby accepts such appointment subject to the provisions
hereof.
4. DELIVERIES TO ESCROW AGENT. With the execution of this
Agreement, Buyer is depositing with Escrow Agent cash in the amount of
$3,100,000 (the "Deposited Amount" and as increased by any earnings thereon
("Escrow Earnings") and as reduced by any disbursements or amounts withdrawn
under Section 6 hereof, the "Escrow Fund"). Escrow Agent acknowledges receipt
thereof. All such funds in the Escrow Fund will be held in escrow by the Escrow
Agent and will subsequently be transferred only in accordance with the terms and
provisions of this Agreement.
5. INVESTMENT OF FUNDS. Except as otherwise expressly provided
herein, or as Buyer and Sellers may from time to time jointly instruct Escrow
Agent in writing, the Escrow Fund shall be invested from time to time, to the
extent possible, in direct obligations of the United States Government or any
agency or instrumentality thereof, which are backed by the full faith and credit
of the United States Government.
6. CLAIMS FOR ESCROWED FUNDS.
(a) From time to time on or after five (5) days following the
Merger but no more than once a month, Xxxx X. Xxxxx, on behalf of Sellers, may
submit to the Escrow Agent invoices, bills or other evidences of obligations due
for services rendered by legal or other professionals on behalf of the Sellers
(to the extent not paid by Buyer, AGS and/or Newco) in connection with the
Reorganization Agreement and the transactions contemplated thereby ("Fee
Statements"). With respect to each such Fee Statement submitted, Escrow Agent
shall disperse, on behalf of the Sellers, an amount from the Escrow Fund
sufficient to cover the amount indicated as due on such Fee Statement with said
disbursements being paid to Xxxx X. Xxxxx and with him to make disbursement to
such professionals; provided however, that, the total amount that may be
withdrawn with respect to such Fee Statements shall in no event exceed the then
amount of Escrow Earnings and further provided that Xxxx X. Xxxxx shall have
obtained the prior consent of Buyer, which shall not be unreasonably withheld,
with respect to each submission of any such invoices or bills to Escrow Agent
before their submission to the Escrow Agent. The Escrow Agent shall be entitled
to rely upon any submission from Xxxx X. Xxxxx provided to Escrow Agent as
contemplated hereinabove.
(b) From time to time on or after five (5) days following the
Merger but no more than once a month, Xxxx X. Xxxxx, may submit to the Escrow
Agent a claim (an "ESOP Claim") with respect to an amount determined to be due
as a result of the administration of or actions taken with regard to the ESOP
prior to its merger into Buyer's 401(k) plan not otherwise covered and paid by
any insurance policy then in effect; provided, however, that in no event shall
the aggregate amount of all such claims
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exceed the sum of $1,000,000.00 plus any undisbursed (as permitted by Section
6(a) hereinabove or to pay the fees of the Escrow Agent) amount of the Escrow
Earnings and further provided that Xxxx X. Xxxxx shall have obtained the prior
consent of Buyer, which shall not be unreasonably withheld, with respect to each
submission of an invoice for an ESOP claim to the Escrow Agent before their
submission to the Escrow Agent. Any such ESOP Claim submitted shall specify the
circumstances under which such ESOP Claim resulted and any information or
documents relevant to such ESOP Claim and shall be offset by the full amount of
insurance available to cover such ESOP Claim. The calculation of such offset
shall be set forth in the ESOP Claim. The Escrow Agent shall dispense, on behalf
of the Sellers, an amount from the Escrow Fund sufficient to cover the amount
indicated as due on the ESOP Claim less any available insurance as also
reflected thereon by disbursing funds to Xxxx X. Xxxxx who shall subsequently
disburse such funds as otherwise required. The Escrow Agent shall be entitled to
rely upon any submission from Xxxx X. Xxxxx, provided to Escrow Agent as
contemplated hereinabove.
(c) From time to time on or before ____________, Buyer may
give notice (a "First Notice") to Sellers specifying in reasonable detail the
nature and dollar amount of any claim (a "Claim") it may have under Section 12.1
of the Reorganization Agreement. Within 30 days after submitting a First Notice
with respect to any Claim, Buyer shall submit a Second Notice to Sellers
specifying in detail and with appropriate backup the fixed dollar amount and
nature of the claim and including all such information as Buyer is required to
provide in its "Claim Notice" pursuant to Section 12.3 of the Reorganization
Agreement and including calculations with respect to the aggregate amount of
claims by Buyer, any tax benefits, insurance proceeds or other similar recovery
or offset realized and the effect of the "Basket" limitations set forth in
Section 12.4 of the Reorganization Agreement. If Sellers give notice to Buyer
disputing any Claim (a "Counter Notice") within 30 days following receipt by
Sellers of the Second Notice regarding such Claim, such Claim shall be resolved
as provided in Section 6(d) hereof. If no Counter Notice is received by Buyer
within such 30 day period, then the dollar amount of damages claimed by Buyer as
set forth in its Second Notice shall be deemed established for purposes of this
Escrow Agreement and, at the end of such 30-day period, Buyer shall send to
Escrow Agent, with a copy to Sellers, a letter ("Buyer's Letter") certifying
that Buyer has complied with the provisions of this subsection 6(c), that
Sellers have not provided a Counter Notice and that Buyer is entitled to
withdraw from the Escrow Fund a specified sum. After five (5) business days
after receipt by Escrow Agent of Buyer's Letter, Escrow Agent shall pay to Buyer
the dollar amount claimed in Buyer's Letter from (and only to the extent of) the
Escrow Fund. Escrow Agent shall not inquire into or consider whether a Claim
complies with the requirements of the Reorganization Agreement and may rely upon
Buyer's Letter.
(d) If a Counter Notice is given with respect to a Claim, Escrow
Agent shall make payment with respect thereto only in accordance with (i) joint
written instructions of Buyer and Sellers or (ii) a final non-appealable order
of a court of competent jurisdiction. Any court order shall be accompanied by a
legal opinion of
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counsel for the presenting party satisfactory to Escrow Agent to the effect that
the order is final and non-appealable. Escrow Agent shall act on such court
order and legal opinion without further question.
7. TERMINATION OF ESCROW. On _____________________, Escrow Agent
shall pay and distribute the then amount of the Escrow Fund to each of the
Sellers in the percentages as reflected on Schedule A attached hereof, unless
(i) any Claims are then pending, in which case an amount equal to the aggregate
amount of such Claims (as shown in the Notices of such Claims) shall be retained
by Escrow Agent in the Escrow Fund and the balance paid to Sellers or (ii) Buyer
has given notice to Sellers and Escrow Agent specifying in reasonable detail the
nature of any other claim it may have under Section 12.1 of the Reorganization
Agreement with respect to which it is unable to specify the amount of such
claim, in which case the entire Escrow Fund shall be retained by Escrow Agent,
in either case until it receives joint written instructions of Buyer and Sellers
or a final non-appealable order of a court of competent jurisdiction as
contemplated by Section 6(d) with respect to the dispersement of the retained
funds.
8. ESCROW AGENT COMPENSATION. The Escrow Agent shall receive a fee
as set forth on Schedule A, which is attached hereto and made a part hereof, for
the services rendered hereunder and shall also be reimbursed for any reasonable
out-of-pocket expenses actually incurred in connection with his duties under
this Agreement. Buyer and Sellers agree that the entire cost of the Escrow
Agent, or any person or organization acting on his behalf, including such
expenses and other costs as may be reasonably incurred by the Escrow Agent in
discharging his duties hereunder, shall be paid out of the Escrow Fund.
9. APPOINTMENT OF AGENT FOR SELLERS. Each Seller hereby irrevocably
appoints Xxxx X. Xxxxx as his or its agent, with full power and authority to act
for him or it, for the purpose of performing the administrative duties to be
performed under this Agreement, including, without limitation, delivering and
receiving notices on behalf of the Sellers, submitting (or refraining to submit,
if appropriate) Fee Statements, ESOP Claims or Counterclaims to the Escrow Agent
in accordance with Section 6(a), (b) or (c) hereof, executing joint written
instructions with the Buyer in accordance with Section 6(d) hereof, agreeing to
extend any of the dates by which certain events must occur, and such other
administrative activities as are described in this Agreement. Buyer and Newco
are hereby authorized to rely upon any written documents executed by Xxxx Xxxxx
in his capacity as Agent for the Sellers.
10. DUTIES AND STANDARD OF CARE FOR ESCROW AGENT; INDEMNIFICATION.
10.1 ACCEPTANCE; RELIANCE. The Escrow Agent, by its signature
affixed hereto, agrees to accept the duties and obligations of Escrow Agent as
defined in this Agreement and acknowledges that it has received a copy of the
Reorganization
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Agreement. The Escrow Agent shall be entitled to rely and shall be protected in
acting in good faith reliance upon any provision of this Escrow Agreement, and
shall be entitled to treat as genuine, and as the document it purports to be,
any letter, paper or other document furnished to him by Buyer or Sellers, and
believed by him in good faith to be genuine and signed by the appropriate party.
10.2 STANDARD OF CARE. Escrow Agent shall not be under any
duty to give the Escrow Fund held by it hereunder any greater degree of care
than it gives its own similar property and shall not be required to invest any
funds held hereunder except as directed in this Agreement.
10.3 COMPLIANCE. The parties hereto agree, and the Escrow
Agent is hereby expressly authorized, to comply with and obey any and all orders
of any court, and any and all judgments and decrees of any court, and the Escrow
Agent shall not be liable to any of the parties hereto or to any other person,
firm, or corporation by reason of such compliance.
10.4 INDEMNIFICATION. Buyer, on the one hand, and Sellers, on
the other hand, agree to indemnify and hold harmless the Escrow Agent from and
against the amount of any and all liability, damages, claims, costs or expense
arising out of the performance by the Escrow Agent of its duties and obligations
pursuant to the terms of this Agreement, except those arising out of or
resulting from its own gross negligence, willful malfeasance or fraud.
10.5 DISPUTES; RIGHT OF INTERPLEADER. Notwithstanding any
provision hereof to the contrary, if the Escrow Agent shall be unable at any
time to determine to whom the monies placed in escrow pursuant to this Agreement
belong or if a dispute should develop between the parties concerning to whom
such monies belong, then the Escrow Agent shall have the right by Xxxx of
Interpleader to place the monies into a court and interplead the Buyer and
Sellers with respect thereto, and thereafter the Escrow Agent shall be
discharged of all obligations in connection with this Agreement. The written
non-appealable decision of the court shall be binding, final and conclusive upon
the parties. All cost incurred by the Escrow Agent in participating in any such
dispute shall be borne by the nonprevailing party.
11. SUCCESSOR AGENT. Escrow Agent (and any successor Escrow Agent)
may at any time resign as such by delivering the Escrow Fund to any successor
Escrow Agent jointly designated by Buyer and Xxxx Xxxxx in writing, or to any
court of competent jurisdiction, whereupon Escrow Agent shall be discharged of
and from any and all further obligations arising in connection with this
Agreement. The resignation of Escrow Agent will take effect on the earlier of
(a) the appointment of a successor (including a court of competent jurisdiction)
or (b) the day which is 30 days after the date of delivery of its written notice
of resignation to the other parties hereto. If at that time Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow
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Agent's sole responsibility after that time shall be to retain and safeguard the
Escrow Fund until receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a final
non-appealable order of a court of competent jurisdiction.
12. NOTICES. All payments, checks, notices, letters, requests,
demands, and other communications required hereunder shall be in writing and
shall be deemed to be duly given if delivered or mailed by registered or
certified mail, postage prepaid, return receipt requested to the following
addresses or such other address as the appropriate party may from time to time
advise each other party hereto:
(a) If the Buyer:
Consolidated Graphics, Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxx, Chief Executive Officer
With a copy to:
R. Xxxxx Xxxxxx, Xx., Esq.
Xxxxxxxx Xxxxxxxx & Xxxxxxx P.C.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
(b) If the Sellers:
c/o Xxxx X. Xxxxx
______________________________________
______________________________________
______________________________________
With a copy to:
Xxxxxxx, Baetjer & Xxxxxx, LLP
1800 Mercantile Bank & Trust Building
Two Xxxxxxx Plaza
Baltimore, Maryland 21201-2978
Attention: Xxxxx X. Xxxxxxxxx
(c) If the Escrow Agent:
______________________________________
______________________________________
______________________________________
______________________________________
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13. MISCELLANEOUS.
13.1 WAIVER. Any failure of a party to promptly exercise its
rights under this Agreement shall not constitute a waiver of such rights.
13.2 BENEFIT AND ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No person or entity other than the parties hereto is or
shall be entitled to bring any action to enforce and provisions of this
Agreement against any of the parties hereto, and the covenants and agreements
set forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors and
assigns.
13.3 FURTHER ASSURANCES. Each of the parties hereto hereby
agrees to take or cause to be taken such further actions, and to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments, as may be reasonably necessary in order to fully
effectuate the purposes, terms and conditions of this Agreement.
13.4 HEADINGS. The section headings in this Agreement have
been inserted for convenience of reference only and shall not be given any
effect in the construction or interpretation, of this Agreement.
13.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland (without regard
to principles of conflict of laws).
13.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
13.7 AMENDMENT. This Agreement may only be amended by a
written agreement executed by all of the parties hereto and delivered to the
Escrow Agent, and any such amendment shall not be effective until and unless
such a fully executed amended agreement has been so delivered to the Escrow
Agent.
[THIS SPACE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
WITNESS: AUTOMATED GRAPHIC SYSTEMS, INC.
___________________ By: _______________________
Name:
Title:
SHAREHOLDERS:
___________________ _______________________________
Xxxx X. Xxxxx
___________________ _______________________________
Xxxxxxxx Xxxxxxxx
___________________ _______________________________
Xxxxx Xxxxxx
___________________ _______________________________
Xxxxxxx Xxxxxxx
___________________ _______________________________
Xxxxxxxxxxx Xxxxxxxxx
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AUTOMATED GRAPHIC SYSTEMS,
INC. EMPLOYEE STOCK OWNERSHIP PLAN
___________________ By: _______________________
Xxxx X. Xxxxx, Trustee
___________________ By: _______________________
Xxxxxx Xxxxxxx, Trustee
___________________________
___________________________
___________________ By: _______________________
Name:
Title:
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SCHEDULE A
$________ a year plus any customary bank charges for any banking activity,
such as , for example, fees to maintain a checking account, purchase of
investments and wire transfers.
