ESCROW AGREEMENT
This Escrow Agreement, dated as of May 29, 1998 (this "Agreement"),
is by and among Reptron Electronics, Inc., a Florida corporation
("Reptron"), HECO Holding Corporation, an Oregon corporation (the
"Company"), OECO, LLC, a Delaware limited liability company ("OECO-LLC"),
John F. Lillicrop as Shareholder Representative (the "Shareholder
Representative") and NationsBank, N.A., as Escrow Agent (the "Escrow
Agent").
Background
Reptron and the Company are parties to an Agreement and Plan of
Merger (the "Merger Agreement") dated as of May 6, 1998 ("Exhibit A"),
pursuant to which Lake Huron Investment Corporation, a Florida corporation
and a wholly-owned subsidiary of Reptron ("Lake Huron"), will merge with
and into the Company (the "Merger") and the outstanding shares of Company
Common Stock will be converted into the right to receive $35.12 per share,
less the Escrow Funds and the Closing Expenses contemplated by Section 3.2
of the Merger Agreement. Reptron and the Company desire to appoint the
Escrow Agent to act for and on behalf of Reptron and the Company, and to
receive, in escrow, the General Escrow Fund, the General Accounts
Receivable Escrow Fund, the Ariel Accounts Receivable Escrow Fund and the
Inventory Escrow Fund. Each Escrow Fund shall be established by Reptron to
secure its Payment Obligations under the Merger Agreement and shall be
fully funded and delivered by Reptron to the Escrow Agent at the Closing.
Capitalized terms not defined herein are used as defined in the Merger
Agreement.
THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the parties agree as follows:
Terms
1. Appointment and Agreement of Escrow Agent. Reptron and the
Company hereby appoint the Escrow Agent to serve as, and the Escrow Agent
hereby agrees to act as, escrow agent upon the terms and conditions of this
Agreement and Article VIII of the Merger Agreement ("Article VIII").
2. Article VIII of Merger Agreement; Conflicts. The escrow
arrangement established by the parties hereto in connection with the Merger
shall be governed by Article VIII and this Agreement. In the event of any
conflict or inconsistency between the terms and provisions of Article VIII
and the terms and provisions of this Agreement, the terms and provisions of
this Agreement shall govern.
3. Escrow Period. Each Escrow Fund shall be in existence on
the date of closing. The General Accounts Receivable Escrow Fund, the
Ariel Accounts Receivable Escrow Fund and the Inventory Escrow Fund shall
terminate at 3:00 p.m., Pacific Time, on December 31, 1998. The General
Escrow Fund shall terminate on the earlier of: (a) the date on which there
is no amount remaining in the General Escrow Fund or (b) the Escrow
Termination Date, unless at such time there is a Reptron Open Claim. If
any Reptron Open Claims exist on the Escrow Termination Date, the General
Escrow Fund shall immediately terminate upon the final distributions from
the General Escrow Fund with respect to the last such Reptron Open Claim.
4. Protection of Each Escrow Fund. The Escrow Agent shall hold
and safeguard each Escrow Fund during the pendency thereof and shall hold
and dispose of each Escrow Fund only in accordance with the terms of this
Agreement and of Article VIII.
5. Obligations of Escrow Agent.
(a) The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and in Article VIII, and
as set forth in any additional written escrow instructions which the Escrow
Agent may receive after the date of this Agreement which are signed by a
duly authorized officer of Reptron and the Shareholder Representative, and
may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
liable for any act done or omitted hereunder as Escrow Agent while acting
in good faith.
(b) The Escrow Agent shall invest and reinvest the deposits in the
Escrow Funds, unless joint written notice to the contrary is received from
Reptron and the Shareholder Representative, in any combination of the
following or any: (a) direct obligations of the Government of the United
States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the government
of the United States, maturing within three months from the date of
purchase, (b) insured interest-bearing accounts or certificates of deposit
of, or time deposits with, any commercial bank that is a member of the
Federal Reserve System and is organized under the laws of the United States
or any state thereof (including without limitation, NationsBank, N.A.) and
has combined capital and surplus of at least $1 billion, and maturing
within three months from the date of purchase, or (c) interests in an
investment company or fund registered under the Investment Company Act of
1940 which invests solely in the foregoing.
(c) The Escrow Agent is hereby expressly authorized to comply with
final and non-appealable orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any
party hereto or any other person to the contrary. In case the Escrow Agent
obeys or complies with any such final and non-appealable 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.
(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 Agreement or any documents or
papers deposited or called for hereunder.
(e) The Escrow Agent shall not be liable for the expiration of any
rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
(f) In performing any duties under this Agreement or Article VIII,
the Escrow Agent shall not be liable to any party for damages, losses or
expenses, except for gross negligence or willful misconduct on the part of
the Escrow Agent. Notwithstanding any other provision of this Escrow
Agreement or any other agreement to the contrary, the Escrow Agent shall
not incur any liability for (A) any act or failure to act done or omitted
in good faith, or (B) any action taken or omitted in reliance upon any
instrument, including any written statement or affidavit provided for in
this Agreement or Article VIII, that the Escrow Agent shall in good faith
believe to be genuine, nor will the Escrow Agent be liable or responsible
for forgeries, fraud, impersonations, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult with
legal counsel in connection with the Escrow Agent's duties under this
Agreement and Article VIII and shall be fully protected in any action
taken, suffered, or permitted by it in good faith in accordance with the
advice of counsel. The Escrow Agent is not responsible for determining and
verifying the authority of any person acting or purporting to act on behalf
of any party to this Agreement.
(g) If any controversy arises between parties to this Agreement, or
with any other party, concerning the subject matter of this Agreement or
Article VIII, or the terms or conditions of this Agreement or Article VIII,
the Escrow Agent will not be required to determine the controversy or to
take any action regarding it. The Escrow Agent may hold all documents and
amounts in the Escrow Funds and may wait for settlement of any controversy
by final appropriate legal proceedings or other means as, in the Escrow
Agent's discretion, the Escrow Agent believes may be required or be
reasonably appropriate, despite what may be set forth elsewhere in this
Agreement or in Article VIII. In such event, the Escrow Agent will not be
liable for damages. Furthermore, the Escrow Agent may, at its option, file
an action of interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The Escrow Agent is authorized to
deposit with the clerk of the court all documents and amounts in the Escrow
Funds, except all costs, expenses, charges and reasonable attorney fees
incurred or likely to be incurred by the Escrow Agent due to the
interpleader action. Upon initiating such action, the Escrow Agent shall
be fully released and discharged of and from all obligations and
liabilities imposed by the terms of this Agreement and Article VIII.
(h) The parties and their respective successors and assigns agree
jointly and severally to indemnify and hold the Escrow Agent harmless
against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, attorneys' fees, and
disbursements that may be imposed on the Escrow Agent or incurred by the
Escrow Agent in connection with the performance of its duties under this
Agreement and Article VIII, including but not limited to any litigation
arising from this Agreement or Article VIII or involving the subject matter
of this Agreement or Article VIII.
6. Termination. This Agreement shall terminate on the earlier
of: (a) fifteen business days after the date on which there is no amount
remaining in the General Escrow Fund (but no earlier than fifteen business
days after December 31, 1998) or (b) fifteen business days after the Escrow
Termination Date, unless at such time there exists a Reptron Open Claim.
If Reptron Open Claims exist on the Escrow Termination Date, this Agreement
shall terminate fifteen business days after the termination of the General
Escrow Fund. The Escrow Agent may resign upon ninety days written notice.
7. Expenses of Escrow Agent. Reptron and the Shareholder
Representative each agree to pay to the Escrow Agent reasonable
compensation for its services under this Agreement and Article VIII and to
reimburse the Escrow Agent for reasonable expenses incurred by it in
connection with the Agreement and Article VIII, one-half being paid by
Reptron and one-half by the Shareholder Representative.
8. Arbitration and Expenses; Governing Law. Any controversies or
claims arising out of or relating to this Agreement or Article VIII
(including, without limitation, any costs, expenses or reasonable
attorneys' fees arising in connection with such controversies or claims)
shall be subject to Section 8.12 of the Merger Agreement. This Agreement
shall be governed by, and construed under, the laws of Florida.
9. Notices. Every notice, consent, demand, approval, and request
required or permitted by this Agreement or Article VIII will be valid only
if it is in writing, delivered personally or by telecopy, commercial
courier, or United States Express Mail, and addressed by the sender to the
party who is the intended recipient at its address set forth below its
signature or to the address most recently designated to the other party by
notice given in accordance with this Section. A validly given notice,
consent, demand, approval, or request will be effective on the earlier of
its receipt, if delivered personally, by telecopy, or by commercial
courier, or the third day after it is postmarked by the United States
Postal Service, if it is delivered by United States Express Mail.
10. Headings. The headings containing in this Agreement are for
convenience of reference only, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the provisions of this
Agreement.
11. Integration; Modification. Together with the Merger Agreement,
this Agreement contains, and is intended as, a complete statement of all
the terms of the arrangements among the parties with respect to the matters
provided for in this Escrow Agreement, and supersedes any prior or
contemporaneous agreements and understandings between the parties with
respect to those matters.
12. Counterparts. This Agreement may be executed by each party
upon a separate copy, and in such case one counterpart of this Agreement
shall consist of enough of such copies to reflect the signatures of all of
the parties.
13. Assignment of Rights to the Escrow Funds; Assignment of
Obligations; Successors. This Agreement may not be transferred or assigned
by any party hereto by operation of law or otherwise without the prior
written consent of the other parties hereto other than the Escrow Agent
(which consent may be granted or withheld in the sole discretion of such
other parties) and any attempted transfer or assignment without such
consent shall be void. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective permitted
assigns.
14. Amendments. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, Reptron,
the Shareholder Representative and (if it affects the duties and
responsibilities of the Escrow Agent) the Escrow Agent, or (b) by a waiver
in accordance with Section 15 of this Agreement.
15. Extension; Waiver. Any party hereto may (a) extend the time
for the performance of any obligation or other act of any other party
hereto or (b) waive compliance by any other party with any agreement or
condition contained herein. Any such extension or waiver shall be valid
only if set forth in a written instrument signed by the party or parties to
be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of
the same term or condition, or a waiver of any other term or condition, of
this Agreement. The failure of any party to assert its rights hereunder
shall not constitute a waiver of any of such rights.
16. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon any such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are consummated to the extent possible.
17. No Third Party Beneficiaries. This Agreement shall inure to
the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall created or be deemed to create
any third party beneficiary rights in any person or entity.
18. Shareholder Representative: Power of Attorney.
(a) Upon appointment, the Shareholder Representative shall act
as agent and attorney-in-fact for each Shareholder (except such
Shareholders, if any, as shall have perfected their dissenters' rights
under Oregon Law), for and on behalf of the Shareholders, to give and
receive notices and communications, to authorize releases to an Indemnified
Party of amounts from the Escrow Funds in connection with claims by an
Indemnified Party, to object to such releases, to agree to, negotiate,
enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of
the Shareholder Representative for the accomplishment of the foregoing.
Notices or communications to or from the Shareholder Representative shall
constitute notice to or from each of the Shareholders.
(b) A decision, act, consent or instruction of the
Shareholder Representative shall constitute a decision of all of the
Shareholders and shall be final, binding and conclusive upon each
Shareholder, and the Escrow Agent and Reptron may rely upon any such
decision, act, consent or instruction as being the decision, act, consent,
or instruction of each and every Shareholder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by each of the undersigned, as of the ___ day of May, 1998.
REPTRON ELECTRONICS, INC.
By: /s/Michael L. Musto
Michael L. Musto
Chief Executive Officer
Address for Notices:
Reptron Electronics, Inc.
14401 McCormick Drive
Tampa, Florida 33626
with a copy to:
William L. Elson, Esq.
Suite 2690
3000 Town Center
Southfield, Michigan 48075
Telecopy No.: (810) 358-4425
and:
Robert J. Grammig, Esq.
Holland & Knight LLP
Suite 2300
400 North Ashley Street
Tampa, Florida 33602
Telecopy No.: (813) 229-0134
HECO HOLDING CORPORATION
By: /s/JOHN F. LILLICROP
John F. Lillicrop
President
Address for Notices:
HECO Holding Corporation
4607 S.E. International Way
Milwaukie, Oregon 97222
Telecopy No.: (503) 652-4045
with a copy to:
Thomas P. Palmer, Esq.
Tonkon Torp LLP
888 S.W. Fifth Avenue, Suite 1600
Portland, Oregon 97204
Telecopy No.: (503) 802-2018
OECO, LLC
By: /s/JOHN F. LILLICROP
John F. Lillicrop
Chief Executive Officer
Address for Notices:
OECO, LLC
4607 S.E. International Way
Milwaukie, Oregon 97222
Telecopy No.: (503) 652-4045
with a copy to:
Thomas P. Palmer, Esq.
Tonkon Torp LLP
888 S.W. Fifth Avenue, Suite 1600
Portland, Oregon 97204
Telecopy No.: (503) 802-2018
SHAREHOLDER REPRESENTATIVE:
Address for Notices:
Telecopy No.:
ESCROW AGENT:
By:
Title:
Address for Notices:
Telecopy No.: