ESCROW AGREEMENT
This Escrow Agreement is entered into as of April 14, 2000, by and
among Nashua Corporation, a Delaware corporation (the "Buyer"), the
Stockholders listed on Schedule I attached hereto (the "Stockholders") and
LaSalle Bank, N.A. (the "Escrow Agent").
WHEREAS, the Buyer, Rittenhouse Paper Company (the "Company") and
the Stockholders have entered into a Stock Purchase Agreement dated March
21, 2000 (the "Stock Purchase Agreement") pursuant to which the Buyer will
purchase all of the issued and outstanding shares of the Company;
WHEREAS, the Stock Purchase Agreement provides that an escrow fund
will be established to secure the indemnification obligations of the
Stockholders to the Buyer; and
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow fund will be established and
maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. General.
(a) The Escrow Agent is hereby constituted and appointed the
escrow agent hereunder.
(b) The Stock Purchase Agreement by this reference is
incorporated herein and made a part of this Agreement to the same extent as
if its terms were fully set forth herein. Except as otherwise defined
herein, capitalized terms used herein shall have the meaning given to them
in the Stock Purchase Agreement, provided, however, that the Escrow Agent
shall not be charged with knowledge thereof nor subject in any way to the
terms and conditions thereof.
2. Appointment of Stockholders' Representatives. The Stockholders
hereby appoint The Stockholders' Representatives as their representatives
for purposes of this Agreement with the power and authority set forth in
subparagraph 8(c) below.
3. Escrow and Indemnification.
(a) Escrow Fund. Simultaneously with the execution of this
Agreement, the Stockholders shall deposit with the Escrow Agent, by wire
transfer or delivery of checks payable to the Escrow Agent, the sum of
$2,500,000 (the "Escrow Amount") to an account (the "Escrow Account")
designated by the Escrow Agent. The Escrow Account shall be increased by
any interest or other amount received with respect thereto and any
compounding interest or other return (collectively, "Interest") and
decreased by the distributions provided for in Sections 4 and 6 hereof. The
amounts in the Escrow Account from time to time, but not including any
Interest (whether or not still in the Escrow Account), are hereinafter
referred to as the "Escrow Fund". The Escrow Agent agrees to hold, invest
and otherwise act with respect to the Escrow Fund and any Interest earned
thereon in accordance with the terms and conditions of this Agreement The
Escrow Agent shall invest the Escrow Fund and any Interest received thereon
contained in the Escrow Account as directed by instruction of the
Representative, in Permitted Investments (as defined in Section 5 herein)
from time to time during the term of this Agreement. The Escrow Agent
hereby acknowledges receipt of such sum. The Escrow Agent agrees to hold
the Escrow Fund in an escrow account subject to the terms and conditions of
this Agreement.
(b) Indemnification. The Stockholders have agreed in Section 10
of the Stock Purchase Agreement, to indemnify and hold harmless the Buyer
from and against specified Losses (as defined in Section 10 of the Stock
Purchase Agreement). The Escrow Fund shall be security for such indemnity
obligation of the Stockholders, subject to the limitations, and in the
manner provided, in this Agreement.
(c) Transferability. The respective interests of the
Stockholders in the Escrow Fund shall not be assignable or transferable,
other than by operation of law. Notice of any such assignment or transfer
by operation of law shall be given to the Escrow Agent and the Buyer, and
no such assignment or transfer shall be valid until such notice is given.
4. Disbursement of Escrow Fund.
(a) Disbursement by Escrow Agent. The Escrow Agent shall
disburse the Escrow Fund only in accordance with (i) a written instrument
delivered to the Escrow Agent that is executed by both the Buyer, on the
one hand, and the Stockholders' Representatives, on the other hand and that
instructs the Escrow Agent as to the disbursement of some or all of the
Escrow Fund, (ii) an order of a court of competent jurisdiction, which is
final and with respect to which all applicable appeal periods have expired
or which is non-appealable, a copy of which is delivered to the Escrow
Agent by either the Buyer or the Stockholders' Representatives, that
instructs the Escrow Agent as to the disbursement of some or all of the
Escrow Fund, or (iii) the provisions of Section 4(b) hereof. The Buyer and
the Stockholders' Representatives agree to cooperate with each other in
good faith to comply with the provisions of this Section 4 and to use
reasonable efforts to resolve any disputes relating to the distribution
from the Escrow Account.
(b) Disbursement Following Termination Date. Within five
business days after October 14, 2001 (the "Termination Date"), the Escrow
Agent shall distribute to the Stockholders all of the Escrow Fund then held
in escrow. Notwithstanding the foregoing, if the Buyer has previously
delivered to the Escrow Agent a copy of a Claim Notice (as defined in
Section 10.02 of the Stock Purchase Agreement) and the Escrow Agent has not
received written notice of the resolution of the claim covered thereby, the
Escrow Agent shall retain in escrow after the Termination Date an amount
equal to the amount stated in such Claim Notice. Any funds so retained in
escrow shall be disbursed only in accordance with the terms of clauses (i)
or (ii) of Section 4(a) hereof.
(c) Method of Disbursement. Any distribution of all or a
portion of the Escrow Fund to the Stockholders shall be made in accordance
with the percentages set forth opposite the stockholders' respective names
on Schedule I. Distributions to the Stockholders shall be made by mailing
checks to such stockholders at their respective addresses shown on Schedule
I (or such other address as may be provided in writing to the Escrow Agent
by any such stockholder).
5. Investment of Escrow Fund.
(a) Permitted Investments. Any monies held in the Escrow Fund
shall be invested by the Escrow Agent, to the extent permitted by law and
as directed by the Stockholders' Representatives, in (i) obligations issued
or guaranteed by the United States of America or any agency or
instrumentality thereof having maturities of two months or less from the
date of acquisition, (ii) obligations (including certificates of deposit
and bankers' acceptances) of banks which at the date of their last public
reporting had total assets in excess of $500,000,000, (iii) commercial
paper rated at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or P-1 or the equivalent thereof by Moody's Investor Service,
Inc. and in each case maturing within two months after the date of
acquisitions, and (iv) money market mutual funds invested exclusively in
some or all of the securities described in the foregoing clauses (i), (ii)
and (iii).
(b) Tax Reporting. The parties hereto agree that, for tax
reporting purposes, all interest or other income earned from the investment
of the Escrow Fund or any portion thereof shall be allocable to the party
which ultimately receives such Escrow Fund or portion thereof.
(c) Certification of Tax Identification Number. The parties
hereto agree to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W-9 to the Escrow
Agent prior to the date on which any income earned on the investment of the
Escrow Fund is credited to such Escrow Fund. The parties hereto understand
that, in the event their tax identification numbers are not certified to
the Escrow Agent, the Internal Revenue Code, as amended from time to time,
may require withholding of a portion of any interest or other income earned
on the investment of the Escrow Fund.
6. Fees and Expenses. The Buyer, on the one hand, and the
Stockholders, on the other hand, shall each pay one-half of the fees of the
Escrow Agent for the services to be rendered by the Escrow Agent hereunder,
as described in Schedule II attached hereto.
7. Limitation of Escrow Agent's Liability.
(a) Limitation on Liability. The Escrow Agent shall incur no
liability with respect to any action taken or suffered by it in reliance
upon any notice, direction, instruction, consent, statement or other
documents believed by it to be genuine and duly authorized, nor for other
action or inaction except its own willful misconduct or gross negligence.
The Escrow Agent shall not be responsible for the validity or sufficiency
of this Agreement. In all questions arising under the Escrow Agreement, the
Escrow Agent may rely on the advice of counsel, and the Escrow Agent shall
not be liable to anyone for anything done, omitted or suffered in good
faith by the Escrow Agent based on such advice. The Escrow Agent shall not
be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it. In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damages.
(b) Indemnification. The Buyer and the Stockholders hereby,
jointly and severally, and the Buyer hereby agree to indemnify the Escrow
Agent for, and hold it harmless against, any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of
Escrow Agent, arising out of or in connection with its carrying out of its
duties hereunder. The Buyer, on the one hand, and the Stockholders, on the
other hand, shall each be liable for one-half of such amounts.
8. Liability and Authority of Stockholders' Representatives;
Successors and Assignees.
(a) Limitation on Liability. The Stockholders' Representatives
shall incur no liability to the Stockholders with respect to any action
taken or suffered by him in reliance upon any note, direction, instruction,
consent, statement or other documents believed by him to be genuinely and
duly authorized, nor for other action or inaction except their own willful
misconduct or gross negligence. The Stockholders' Representatives may, in
all questions arising under the Escrow Agreement, rely on the advice of
counsel and the Stockholders' Representatives shall not be liable to the
Indemnifying Stockholders for anything done, omitted or suffered in good
faith by the Stockholders' Representatives based on such advice.
(b) Successor Stockholders' Representatives. In the event of
the death or permanent disability of the Blatner Stockholders'
Representative, or his resignation as the Blatner Stockholders'
Representative, a successor Blatner Stockholders' Representatives shall be
elected by a majority vote of the Blatner Stockholders, with Stockholders
to be given a vote equal to the respective percentages set forth on
Schedule I. In the event of the death or permanent disability of Andrew
Albert, or his resignation as the Albert Stockholder's Representative,
Kenneth Granat shall be the successor Albert Stockholder's Representative.
Each respective successor Stockholders' Representative shall have all of
the power, authority, rights and privileges conferred by this Agreement
upon the original Stockholders' Representatives, and the term
"Stockholders' Representatives" as used herein shall be deemed to include
successor Stockholders' Representatives.
(c) Power and Authority. The Stockholders' Representatives,
acting unanimously, shall have full power and authority to represent the
Stockholders, and their successors, with respect to all matters arising
under this Agreement and all actions taken by the Stockholders'
Representatives hereunder shall be binding upon the Stockholders, and their
successors, as if expressly confirmed and ratified in writing by each of
them. Without limiting the generality of the foregoing, the Stockholders'
Representatives shall have full power and authority to interpret all of the
terms and provisions of this Agreement, to compromise any claims asserted
hereunder and to authorize payments to be made with respect thereto, on
behalf of the Stockholders and their successors. All actions to be taken by
the Stockholders' Representatives hereunder shall be evidenced by, and
taken upon, the written direction of a majority thereof.
(d) Reliance by Escrow Agent. The Escrow Agent may rely on the
Stockholders' Representatives as the exclusive agents of the Stockholders
under this Agreement and shall incur no liability to any party with respect
to any action taken or suffered by it in reliance thereon.
9. Amounts Payable by Stockholders. The amounts payable by the
Stockholders under this Agreement (i.e., the fees of the Escrow Agent
payable pursuant to Section 6 and the indemnification obligations pursuant
to Section 7(b)) shall be payable solely as follows. The Escrow Agent shall
notify the Stockholders' Representatives of any such amount payable by the
Stockholders as soon as it becomes aware that any such amount is payable,
with a copy of such notice to the Buyer. On the sixth business day after
the delivery of such notice, the Escrow Agent shall disburse such amount
from the Escrow Fund (up to the amount then available in the Escrow Fund)
to the party to whom such amount is owed in satisfaction of such
indemnification obligations of the Stockholders; provided that if the Buyer
delivers to the Escrow Agent (with a copy to the Stockholders'
Representatives), within five business days after delivery of such notice
by the Escrow Agent, a written notice contesting the legitimacy or
reasonableness of such amount, then the Escrow Agent shall not disburse the
disputed portion of such claimed amount except in accordance with the terms
of clauses (i) or (ii) of Section 4(a) hereof.
10. Creditors.
(a) No Person other than the Company and the Sellers are
entitled to receive any payment out of the Escrow Account. The Company and
the Sellers will be entitled to receive payments to of the Escrow Account
solely in accordance with the express terms hereof.
(b) Except as otherwise specifically provided for herein, no
creditor of the Company, Buyer, the Sellers or the Escrow Agent or any of
their respective affiliates or agents shall have any rights in or to the
Escrow Account or the funds held therein. Accordingly, in order to
effectuate the parties' intentions under this Agreement, the Company hereby
grants to the Sellers, and the Sellers hereby grant to the Company, a
security interest in all of the grantor's rights, title and interest in and
to the Escrow Account and any proceeds thereof (as such term is defined in
the Uniform Commercial Code as in effect in the State of Illinois) so long
as the Escrow Account and/or any such proceeds remains subject to the terms
of this Agreement. In addition, the Company and the Sellers hereby appoint
the Escrow Agent a the Company's and the Sellers' agent for possession of
the Escrow Account in order to perfect the Company's and the Sellers'
respective security interests therein. The Escrow Agent agrees to this
appointment and acknowledges that, in connection with the security interest
granted in this Section 10(b), it is acting as bailee with respect to such
Escrow Account and/or such proceeds on behalf of the Company and the
Sellers but subject to the terms and conditions set forth in this
Agreement. The Company and the Sellers further agree to take any and all
necessary additional steps to perfect and continue perfection of the
security interests granted hereunder. Notwithstanding the foregoing, the
Escrow Agent shall have a first perfected security interest in and prior
lien upon all property held by it under this Escrow Agreement but solely in
order to secure the obligations of the parties to the Escrow Agreement
arising under Sections 6 and 7(b) hereof, and shall have the right to
reimburse itself from such property for any and all such obligations which
remain unpaid thirty (30) or more days subsequent to demand by the Escrow
Agent for payment thereof given as provided for in Section 10(b) hereof. In
no event shall the Escrow Agent be responsible for the validity,
enforceability, perfection or priority of any security interest claimed by
any person (other than the Escrow Agent itself) in the Escrow Account.
11. Termination. This Agreement shall terminate upon the
disbursement by the Escrow Agent of all of the Escrow Funds in accordance
with this Agreement; provided that the provisions of Sections 7 and 8 shall
survive such termination.
12. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow
Agent may resign and be discharged from its duties or obligations hereunder
by delivering a resignation to the parties to this Escrow Agreement, not
less than 60 days' prior to the date when such resignation shall take
effect. The Buyer may appoint a successor Escrow Agent without the consent
of the Stockholders' Representatives so long as such successor is a bank
with assets of at least $500 million, and may appoint any other successor
Escrow Agent with the consent of the Stockholders' Representatives, which
shall not be unreasonably withheld. If, within such notice period, the
Buyer provides to the Escrow Agent written instructions with respect to the
appointment of a successor Escrow Agent and directions for the transfer of
any Escrow Fund then held by the Escrow Agent to such successor, the Escrow
Agent shall act in accordance with such instructions and promptly transfer
such Escrow Fund to such designated successor. If no successor Escrow Agent
is named as provided in this Section 12 prior to the date on which the
resignation of the Escrow Agent is to properly take effect, the Escrow
Agent may apply to a court of competent jurisdiction for appointment of a
successor Escrow Agent.
13. Miscellaneous.
(a) Entire Agreement. Except for those provisions of the Stock
Purchase Agreement referenced herein, this Agreement constitutes the entire
agreement among the parties and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral,
with respect to the subject matter hereof.
(b) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns.
(c) Counterparts and Facsimile Signature. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument. This Agreement may be executed by facsimile signature.
(d) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(e) Notices. All notices, instructions and other communications
hereunder shall be in writing. Any notice, instruction or other
communication hereunder shall be deemed duly delivered four business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, in each case
to the intended recipient as set forth below:
If to the Buyer: Nashua Corporation
44 Franklin Street
Nashua, NH 03061
Attn: Peter C. Anastos,
Vice President and
General Counsel
With a copy to: John K. P. Stone, III
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
If to the Company: Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath and Rosenthal
Suite 800, Sears Tower
233 South Wacker Drive
Chicago, IL 60606
If to the Stockholders' Simon Blattner, Jr.
Representatives 109 Alpine Terrace
San Francisco, CA 94117
and
Andrew Albert
c/o Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath and Rosenthal
Suite 800, Sears Tower
233 South Wacker Drive
Chicago, IL 60606
If to the Escrow Agent: Kevin Kolb
LaSalle Bank, N.A.
135 S. LaSalle Street
Chicago, IL 60603
Any party may give any notice, instruction or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic
mail), but no such notice, instruction or other communication shall be
deemed to have been duly given unless and until it actually is received by
the party to whom it is intended. Any party may change the address to which
notices, instructions, or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in
this Section.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of
Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the Delaware.
(g) Amendments and Waivers. This Agreement may be amended only
with the written consent of the Buyer, the Escrow Agent and the
Stockholders' Representatives. No waiver of any right or remedy hereunder
shall be valid unless the same shall be in writing and signed by the party
giving such waiver. No waiver by any party with respect to any condition,
default or breach of covenant hereunder shall be deemed to extend to any
prior or subsequent condition, default or breach of covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
(h) Submission to Jurisdiction. Each of the parties (a) submits
to the jurisdiction of any state or federal court sitting in Illinois in
any action or proceeding arising out of or relating to this Agreement, (b)
agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of any other party with
respect thereto. Any party may make service on another party by sending or
delivering a copy of the process to the party to be served at the address
and in the manner provided for the giving of notices in Section 13. Nothing
in this Section, however, shall affect the right of any party to serve
legal process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
NASHUA CORPORATION
By /s/ Gerald G. Garbacz
_______________________________
STOCKHOLDER REPRESENTATIVE
/s/ Simon Blattner
_________________________________
/s/ Andrew B. Albert
_________________________________
_________________________________
_________________________________
LASALLE BANK, N.A.
By: /s/ R. C. Bergman
_______________________________
Name:
Title: