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Exhibit 10(j)
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (the "Escrow Agreement") is made and
entered into as of the ----- day of ------------, 1995, by and
among Top Air Manufacturing, Inc., an Iowa corporation ("Top Air"),
Clay Equipment Corporation, an Iowa corporation ("Clay Equipment"),
and Norwest Bank Iowa, N.A., a national banking association (the
"Escrow Agent").
W I T N E S S E T H:
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WHEREAS, Section 3.02 of that certain Asset Purchase Agreement
dated April 11, 1995 by and among Top Air, Clay Equipment and Clay
Holding, Inc. ("Clay Holding"), as amended by amendatory agreement
dated as of May 5, 1995 (collectively, the "Purchase Agreement"),
a copy of which has previously been delivered to the Escrow Agent,
provides that Top Air and Clay Equipment shall enter into an escrow
agreement with an escrow agent and deposit the shares of "Hold-Back
Stock" (as defined in the Purchase Agreement) into the escrow
account established thereunder as security for the indemnification
obligations of Clay Equipment under Section 10.01 of the Agreement;
and
WHEREAS, the Escrow Agent is willing to act as escrow agent
under this Escrow Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Appointment of Escrow Agent.
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Top Air and Clay Equipment hereby appoint Norwest Bank
Iowa, N.A. as escrow agent (the "Escrow Agent") to receive, hold
and distribute the Hold-Back Stock deposited with the Escrow Agent
hereunder in accordance with this Escrow Agreement. The Escrow
Agent hereby accepts such appointment, all subject to and upon the
terms and conditions set forth herein.
2. General Intention.
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It is the parties' intention that the Escrow Agent shall
receive, hold and distribute the Hold-Back Stock in accordance with
the express provisions of this Escrow Agreement, and, except as
specifically set forth herein, shall not make, be required to make
or be liable in any manner for its failure to make, any
determination under the Purchase Agreement or any other agreement,
including without limitation any determination of whether Top Air
or Clay Equipment have complied with the terms of the Purchase
Agreement or whether either Top Air or Clay Equipment is entitled
to the delivery of any shares of the Hold-Back Stock or to any
other right or remedy under the Purchase Agreement.
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3. Specific Provisions.
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(a) Simultaneously with the execution of this Escrow
Agreement, Top Air will deposit with the Escrow Agent the Hold-Back
Stock to be held by the Escrow Agent pursuant to the terms of this
Escrow Agreement. The Escrow Agent, by execution of this Escrow
Agreement, acknowledges receipt of the Hold-Back Stock.
(b) If and whenever, prior to the second anniversary
date of the date hereof (the "Expiration Date"), Top Air shall
claim a right to indemnification pursuant to Section 10.01 of the
Purchase Agreement, then Top Air shall notify the Escrow Agent and
Clay Equipment, in writing, by registered or certified mail,
postage prepaid. Such notice shall state the basis for such claim
and the nature of the liability, loss, damage, cost or expense
incurred by, or imposed upon Top Air on account thereof. If such
liability, loss, damage, cost or expense is liquidated in amount,
the notice shall so state and such amount shall be deemed the
amount of the particular claim of Top Air against the shares of
Hold-Back Stock then being held by the Escrow Agent hereunder (the
"Escrow Fund"). If the amount is not liquidated, the notice shall
so state and, in such event, a claim shall be deemed asserted
against the Escrow Fund on behalf of Top Air, to be held hereunder
pending the determination of the amount hereof.
(c) If Clay Equipment shall not, within ten (10) days
after the mailing of such notice, advise the Escrow Agent and Top
Air, in writing, that it denies the right of Top Air to indemnity
in respect of such claim, the Escrow Agent is, at the end of such
period, authorized to deem such claim admitted to the extent the
amount is liquidated, and to the extent such claim becomes
liquidated; provided, that, with respect to unliquidated claims,
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upon the determination of the amount of such claim, Top Air shall
give written notice of such amount to the Escrow Agent and Clay
Equipment, whereupon Clay Equipment shall have ten (10) days from
the giving of such notice to notify the Escrow Agent of any dispute
it may have with respect to the amount of such claim.
(d) If Clay Equipment shall notify the Escrow Agent and
Top Air, in writing, that it disputes any claim made by Top Air
against the Escrow Fund or the amount thereof, the parties hereto
shall endeavor to settle and compromise said claim or the amount
thereof, and if unable to agree on any settlement or compromise,
such claim of liability shall be settled by litigation brought in
a court of competent jurisdiction. Any liability established by
reason of such settlement, compromise or litigation shall be paid
and satisfied from the Escrow Fund.
(e) Notwithstanding any other provisions of this Escrow
Agreement, Top Air shall be entitled to make claims against the
Escrow Fund until the Expiration Date.
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4. Escrow Agent.
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The Escrow Agent has been induced to accept its duties
under this Escrow Agreement by the following terms, conditions,
agreements and representations of Top Air and Clay Equipment:
(a) The Escrow Agent shall not be liable to Top Air or
Clay Equipment, or any of them, or any of their successors,
representatives, heirs and assigns, for any action or failure to
act by the Escrow Agent hereunder, except for the Escrow Agent's
own gross negligence or willful misconduct. Top Air and Clay
Equipment shall jointly and severally indemnify and hold harmless
the Escrow Agent and any successor, representative, employee or
agent of the Escrow Agent, from and against any and all losses,
liabilities, claims, actions, damages and expenses, including
reasonable attorney's fees and disbursements, arising out of or in
connection with this Escrow Agreement, except for claims against
the Escrow Agent based upon such gross negligence or willful
misconduct that are successfully asserted against the Escrow Agent.
(b) In the event of any disagreement between Top Air and
Clay Equipment resulting in adverse claims or demands being made in
connection with the Escrow Agreement, or in the event that the
Escrow Agent in good faith is in doubt as to what action it should
take hereunder, the Escrow Agent shall be entitled to hold the
Escrow Account until the Escrow Agent shall have received (i) a
final non-appealable order of a court of competent jurisdiction
directing delivery of the Escrow Fund or (ii) written instructions
executed by Top Air and Clay Equipment directing delivery of the
Escrow Fund, in which event the Escrow Agent shall disburse the
Escrow Fund in accordance with such order or agreement.
(c) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other
writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. The
Escrow Agent may act in reliance upon any instrument or signature
believed by it to be genuine and may assume that any person
purporting to give any notice or receipt or advice or make any
statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
(d) This Escrow Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters
pertinent hereto. The Escrow Agent shall not be bound by the
provisions of any other agreement, including, without limitation,
the Purchase Agreement.
(e) The 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.
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5. Ownership of Escrow and Shares.
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Pursuant to and in furtherance of the "Distribution" (as
defined in the Purchase Agreement), the shares of Hold-Back Stock
being held hereunder will be issued to, and in the name of, a
third-party designated by Clay Equipment (the "Record Owner"), as
the record holder thereof for the benefit of the "ESOP
Participants" (as defined in the Purchase Agreement). Such ESOP
Participants, as beneficial holders, shall have all of the rights
of a shareholder with respect to the Hold-Back Stock, including the
right to vote such shares; provided, however, that all of the
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shares of Hold-Back Stock shall be subject to the provisions
hereof, including the provisions with respect to the retransfer of
any shares pursuant to paragraph 6 hereof. Except as expressly
permitted hereunder, none of the shares of Hold-Back Stock shall be
sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of by the Record Owner or any beneficial owner thereof at
any time during the term of this Escrow Agreement.
6. Distribution and Termination.
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(a) Upon the determination of the amount of any claim of
Top Air for which it is entitled to indemnification pursuant to
Section 10.01 of the Purchase Agreement, the Escrow Agent shall
deliver to Top Air that number of shares of the Hold-Back Stock
(rounded up to the nearest whole number), together with a related
stock power endorsed in blank, the value of which equals the amount
of the claim successfully established by Top Air pursuant to
paragraph 3 hereof. The value of the shares of Hold-Back Stock
shall be determined by reference to the "Market Value" (as
hereinafter defined) thereof on the date of such delivery.
(b) This Escrow Agreement shall terminate upon the date
upon which all claims of Top Air pursuant to Section 10.01 of the
Purchase Agreement which shall have been made by Top Air prior to
the Expiration Date shall have been settled or otherwise disposed
of.
(c) Upon such termination, and after satisfying all
delivery requirements of subparagraph (a) of this paragraph 6 to
Top Air, the Escrow Agent shall distribute the remaining Hold-Back
Stock, if any, to the Record Holder, or to the ESOP Participants as
instructed by the Record Holder.
(d) "Market Value" means the average of the bid and
asked prices of the shares of Top Air common stock, on a per share
basis, as reported on the NASDAQ Small-Cap Market (or on such other
market on which such bid and asked prices are reported or quoted)
for the trading day immediately preceding the date on which shares
of Hold-Back Stock are delivered to Top Air pursuant to paragraph
3.
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7. Notices.
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Any notices, objections or other communications required
or permitted hereunder shall be in writing and shall, except as set
forth elsewhere in this Escrow Agreement, be deemed to have been
duly given when delivered by hand; or when telecopied, receipt
confirmed; or when mailed by first-class, certified mail, postage
prepaid, to Top Air, Clay Equipment and the Escrow Agent at the
following addresses:
If to Top Air:
Top Air Manufacturing, Inc.
Steven R. Lind, President
406 Highway 20
Parkersburg, Iowa 50665
Telecopy No.: (319) 346-1527
with a copy to:
Robert H. Wexler, Esq.
Gallop, Johnson & Neuman, L.C.
101 South Hanley
St. Louis, Missouri 63105
Telecopy No.: (314) 862-1219
If to Clay Equipment:
Clay Equipment Corporation
101 Lincoln Street, Box 729
Cedar Falls, Iowa 50613
Attention: Leonard J. Hare
Telecopy No.: -----------------------------
With a copy to:
John C. Larsen, Esq.
Redfern, Mason, Dicter, Larsen & Moore
315 Clay Street
Cedar Falls, Iowa 50613
Telecopy No.: (319) 277-3531
If to Escrow Agent:
Norwest Bank Iowa, N.A.
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Attention:----------------------------------
Telecopy No.: ------------------------------
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Notices or communications so given shall be deemed to have been
given on the date so delivered, deposited in the United States mail
or sent via telecopier; provided, however, that no notice or
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communication given to the Escrow Agent shall be deemed effective
until actually received by the Escrow Agent. Any address or
telecopy number set forth above may be changed by notice given
pursuant to this paragraph 7.
8. Miscellaneous.
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(a) Any provision of this Escrow Agreement which may be
determined by a final judgment to be prohibited or unenforceable
shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. It is expressly understood, however, that the parties
hereto intend each and every provision of this Escrow Agreement to
be valid and enforceable and hereby knowingly waive all rights to
object to any provisions of this Escrow Agreement.
(b) The Escrow Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective
representatives, heirs, successors and assigns. No party may
assign any of its rights or obligations under this Escrow Agreement
without the written consent of the other parties. This Escrow
Agreement shall be construed in accordance with and governed by the
internal law of the State of Iowa.
(c) This Escrow Agreement may only be modified or
terminated by a writing signed by Top Air, Clay Equipment and
Escrow Agent, and no waiver hereunder shall be effective unless in
a writing signed by or on behalf of the party to be charged.
(d) Top Air shall pay or reimburse the Escrow Agent upon
request for all reasonable expenses, including reasonable
attorney's fees, incurred by the Escrow Agent in performance of its
duties under this Escrow Agreement.
(e) This Escrow Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute
this Escrow Agreement by signing any such counterpart.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Escrow Agreement as of the day and year first above written.
"Top Air"
TOP AIR MANUFACTURING, INC.
By: -------------------------------------
Title: ----------------------------------
"Clay Equipment"
CLAY EQUIPMENT CORPORATION
By: -------------------------------------
Title: ----------------------------------
"Escrow Agent"
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By: -------------------------------------
Title: ----------------------------------
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