14
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into
this 1st day of December, 1997, by and among HAGLER BAILLY, INC.,
a Delaware corporation ("Acquiror"); HAGLER BAILLY ACQUISITION
CORP. 1997-1, a Maryland corporation and a wholly-owned
subsidiary of Acquiror ("Merger Sub"), Richard R. Mudge, acting
by virtue of the Merger Agreement (as hereinafter defined) as the
representative (the "Stockholders' Representative") of the
stockholders (the "Company Stockholders") of Apogee Research,
Inc., a Maryland corporation (the "Company") and State Street
Bank and Trust Company, a Massachusetts banking corporation, as
escrow agent (the "Escrow Agent").
WHEREAS, Acquiror, Merger Sub and the Company have
entered into an Agreement and Plan of Merger, dated as of
November 18, 1997 (the "Merger Agreement"), providing for the
merger of the Company with and into Merger Sub, pursuant to which
the outstanding shares of common stock, par value $.10 per share
of the Company ("Company Common Stock") will be exchanged for
shares of common stock, par value $0.01 per share of Acquiror
("Acquiror Common Stock");
WHEREAS, capitalized terms used but not defined herein
have the meanings assigned to such terms in the Merger Agreement;
WHEREAS, Section 2.3(a) of the Merger Agreement
provides that at the Effective Time, Acquiror shall deposit with
the Escrow Agent five percent (5%) of the aggregate number of
shares of Acquiror Common Stock issuable to the Company
Stockholders and the Unvested Optionholders in connection with
the Merger ("Merger Stock"), which shall fund and be the sole
source of securing the indemnification rights contemplated by
Section 10 of the Merger Agreement;
WHEREAS, as contemplated by Section 2.3(b) of the
Merger Agreement, the Stockholders' Representative has been
appointed by the Company Stockholders as their attorney-in-fact
and authorized and empowered to act, for and on behalf of any or
all of the Company Stockholders (with full power of substitution
in the premises), in connection with responding to the assertion
of any and all claims for indemnification by Acquiror pursuant to
the terms of this Agreement and the provisions of the Merger
Agreement pertaining thereto; and
WHEREAS, the Escrow Agent is willing to act in the
capacity of Escrow Agent hereunder, subject to and upon the terms
and conditions of this Agreement.
WHEREAS, the parties to the Merger Agreement have
agreed that the execution and delivery of this Agreement and the
establishment of the escrow provided for herein shall satisfy the
obligations of the parties to execute and deliver such escrow
agreement.
NOW, THEREFORE, for and in consideration of the
foregoing and of the mutual covenants and agreements hereinafter
set forth, the parties hereto hereby agree as follows:
ARTICLE I
DESIGNATION OF ESCROW AGENT AND ESCROW STOCK
1.1 Appointment by Escrow Agent. Acquiror and the
Stockholders' Representative hereby designate and appoint the
Escrow Agent as escrow agent to receive, hold and disburse the
Escrow Stock (as hereinafter defined), and the Escrow Agent
hereby accepts such appointment and agrees to act in furtherance
of the provisions of the Merger Agreement, but only upon the
terms and conditions provided in this Agreement.
1.2 Escrow Deposit. In accordance with Section 2.3(a)
of the Merger Agreement, Acquiror (or its transfer agent) shall
on the Closing Date issue and deliver to the Escrow Agent one
certificate in the name of the Company Stockholders (the "Escrow
Certificate") representing that number of shares of Acquiror
Common Stock issuable to the Company Stockholders and the
Unvested Optionholders in accordance with Section 2.3(a) of the
Merger Agreement (the "Escrow Stock"), and as set forth in
Schedule A hereto (which Schedule shall identify the name,
address and the percentage interest in the Escrow Stock for each
Company Stockholder and the Unvested Optionholder), which shall
constitute five percent (5%) of the Merger Stock issued in
connection with the Merger.
1.3 Stock Splits/Stock Dividends. In connection with
any delivery of any Escrow Stock pursuant to this Agreement, any
and all securities, property or cash that would have been
distributed to the holders of such Escrow Stock as a result of
any non-taxable stock dividend, stock split, reclassification,
recapitalization, merger, business combination, consolidation,
sale of assets or similar transaction shall be deemed to be
Escrow Stock and shall be subject to the terms hereof to the same
extent as the original Escrow Stock.
1.4 Voting Rights of Escrow Stock. All voting rights
with respect to Escrow Stock shall be exercised by the Company
Stockholders in accordance with their proportionate interests
therein, and the Escrow Agent shall from time to time execute and
deliver to the Company Stockholders such proxies, consents or
other documents as may be necessary to enable such Company
Stockholders to exercise such rights and which are delivered to
the Escrow Agent for execution.
1.5 Cash Dividends. Any cash dividends and any
taxable stock dividends paid with respect to the Escrow Stock
shall be paid by Acquiror to the Company Stockholders in
accordance with their respective interests in the Escrow Stock
and shall not be subject to the terms of this Agreement.
1.6 Value of Escrow Stock. For all purposes of this
Agreement, including without limitation the distribution of
Escrow Stock, the value of each share of Escrow Stock shall be
equal to the average of the reported closing price of a share of
Acquiror Common Stock on the Nasdaq Stock Market on each of the
twenty (20) business days prior to the Closing Date (the
"Acquiror Closing Price"), as such Acquiror Closing Price is
certified to the Escrow Agent by the Stockholder Representative
and the authorized representative of the Acquiror.
1.7 Liabilities Covered. The Agreement has been
executed and the deposit of the Escrow Stock hereunder has been
made pursuant to Section 2.3 and Section 10 of the Merger
Agreement. The deposit of the Escrow Stock has been made for the
purpose of funding and securing, to the extent of the value of
the Escrow Stock, the indemnities set forth in Section 10 of the
Merger Agreement until the expiration of the Claims Deadline or
as otherwise provided herein.
ARTICLE II
DELIVERY OF ESCROW STOCK FOR CLAIMS
2.1 Claims Against Escrow Stock. Subject to
Section 2.4 hereof, if, at any time on or prior to the Claims
Deadline (as hereinafter defined), Acquiror (on its own behalf or
on behalf of any other Acquiror Indemnified Person) shall assert
a claim for indemnification pursuant to Article X of the Merger
Agreement, then Acquiror shall submit to the Escrow Agent and to
the Stockholders' Representative a written claim (a "Claims
Notice") signed by an executive officer of Acquiror stating:
(i) that an Acquiror Indemnified Person has incurred the amount
of Losses specified in such Claims Notice; (ii) in reasonable
detail the basis of such Claims Notice; (iii) if the Losses have
actually been incurred, the number of shares of Escrow Stock to
which such Acquiror Indemnified Person is entitled with respect
to such Losses determined by dividing the amount of Losses
specified therein by the Acquiror Closing Price; and (iv) that a
copy of such Claims Notice has been delivered to the
Stockholders' Representative. If the claim is for Losses which
the Acquiror Indemnified Person reasonably believes it may incur,
the written claim of the Acquiror shall state that such written
claim is not a Claims Notice hereunder and the reasonable
estimate of such Losses, in which event a claim shall be deemed
to have been asserted against the Escrow Stock on behalf of the
Acquiror in the amount of such estimated Losses, but no payment
or distribution shall be made by the Escrow Agent out of the
Escrow Stock until (i) such Losses have actually been incurred;
(ii) the Acquiror submits a Claims Notice to the Escrow Agent and
the Stockholders' Representative (whether or not the Losses are
incurred prior to the Claims Deadline); and (iii) the Escrow
Agent determines that no timely Response Notice (as defined
below) has been filed and/or the Escrow Agent has not received
written notice that a dispute as to the requests in the Claims
Notice exists. In the event of a timely Response Notice, the
provisions of Section 2.3 hereof shall apply.
2.2 Resolution of Asserted Claims. If the
Stockholders' Representative does not deliver to the Escrow Agent
and the Acquiror a written objection with respect to a Claims
Notice (a "Response Notice") within twenty-eight (28) days after
the delivery of a Claims Notice hereunder to the Escrow Agent,
then the Escrow Agent shall immediately deliver to the Acquiror
the number of shares of Escrow Stock specified in such Claims
Notice. Any Response Notice shall be signed by the Stockholders'
Representative and state in reasonable detail the basis of any
objection to a Claims Notice. If the Stockholders'
Representative delivers a timely Response Notice to the Escrow
Agent, the Escrow Agent shall comply with the terms of Section
2.3 of this Agreement.
2.3 Resolution of Disputed Claims Against Escrow
Stock. If a dispute arises between the Acquiror and the
Stockholders' Representative as evidenced by the delivery by the
Stockholders' Representative of a timely Response Notice pursuant
to the terms of Section 2.2 hereof or by a notice of a dispute
under Section 2.4, then the Escrow Agent shall not be permitted
or required to resolve such dispute or take any action, including
but not limited to, disbursing such Escrow Stock (or any portion
thereof), but shall await resolution of the controversy by:
(a) a certificate signed on behalf of the Acquiror and the
Stockholders' Representative certifying the resolution of the
amount of the asserted claim for Losses in dispute pursuant to
the Dispute Resolution section of the Merger Agreement and
directing the delivery of a specified number of shares of Escrow
Stock to which the Acquiror Indemnified Person is entitled with
respect to such amount; (b) a certified copy of a final, binding
and nonappealable judgment of a court of competent jurisdiction
directing delivery of shares of Escrow Stock to the Acquiror
Indemnified Person; or (c) a certified copy of an award of an
arbitrator, under an arrangement providing for no appeal,
determining the amount of the asserted claim in dispute. Upon
receipt of any such certification, the claim for Losses shall be
treated as a resolved undisputed claim and the Escrow Agent shall
present to the Acquiror's transfer agent (the "Transfer Agent")
the Escrow Certificate and shall obtain from the Transfer Agent
in replacement thereof certificates (a) in the name of the
Acquiror Indemnified Person and (b) in the name of the Company
Stockholders and shall deliver to the Acquiror Indemnified Person
the certificate representing the number of shares of Escrow Stock
to which the Acquiror Indemnified Person is entitled with respect
to such Losses in accordance with and pursuant to such
certification (in all cases, to be determined by dividing the
amount of such Losses by the Acquiror Closing Price).
2.4 Indemnification Cap, Indemnification Basket and
Excluded Matters. Acquiror and the Stockholders' Representative
acknowledge and agree that (a) the value of the Escrow Stock
shall be the total amount that shall be payable for
indemnification under the terms of this Agreement; and (b) any
claim made pursuant hereto shall be for an amount in excess of
$25,000. Acquiror agrees not to unreasonably segregate or
aggregate any claim or claims in order for an individual claim to
exceed $25,000. The Escrow Agent shall make no payment out of
any Escrow Stock if the Escrow Agent receives written notice that
a good faith dispute exists as to segregation or aggregation by
Acquiror. Any such disputes shall be subject to the dispute
resolution process set forth in Section 4.1(i) hereof. Acquiror
acknowledges and agrees that the Acquiror shall have no right to
assert a claim for indemnification hereunder for any matter set
forth on Schedule 2.4.
2.5 The Stockholders' Representative hereby waives any
objections to (including any right to present a Response Notice
to the Escrow Agent), and acknowledges and agrees that Acquiror
shall have the right of indemnification for, Losses resulting
from, imposed upon or incurred by any Acquiror Indemnified
Person, directly or indirectly, as a result of (i) taxes,
penalties and interest pursuant to a certain Notice of Lien of
Judgment for Unpaid Tax dated June 17, 1994, and (ii) taxes,
penalties and interest pursuant to a certain Notice of Federal
Tax Lien dated September 17, 1994, or (iii) release, termination
or discharge of either of such liens ((i), (ii) and (iii) are
collectively referred to herein as the "Acknowledged Claims").
The Stockholders' Representative acknowledges and agrees that no
Response Notice or other challenge may be filed with respect to
the Acknowledged Claims. Acquiror agrees to allow Apogee six (6)
months from the effective date of this Agreement (the "Six Month
Deadline") to release, terminate, discharge or otherwise
eliminate the liens from public record and obtain evidence from
the state and Federal tax authorities that the liens have been
removed. If as of the Six Month Deadline any Acknowledged Claims
remain, Acquiror shall have the right to file a timely
Acknowledged Claim and the Stockholders' Representative shall not
have the right to file a Response Notice to the Escrow Agent or
otherwise challenge an Acknowledged Claim. The Stockholders'
Representative agrees that Section 2.4 shall not be applicable to
any Acknowledged Claim.
ARTICLE III
DISTRIBUTION OF ESCROW STOCK
UPON TERMINATION OF THE AGREEMENT
3.1 Deadline for Claims and Termination. Acquiror or
any other Acquiror Indemnified Person shall not be entitled to
assert any claim against the Escrow Stock after the expiration of
twelve (12) months after the Effective Time, which Time shall be
certified to the Escrow Agent in a written statement signed by
the Stockholders' Representative and an authorized representative
of the Acquiror (the "Claims Deadline") and delivered to the
Escrow Agent as herein provided; provided, however, that any
claim (including any Acknowledged Claim) made in writing on or
prior to the Claims Deadline (whether or not formal legal action
shall yet have been commenced based upon such claim and whether
or not Losses have actually been incurred) shall continue,
subject to final resolution as provided herein and in the Merger
Agreement. This Agreement shall terminate upon complete
distribution of the Escrow Stock in accordance with this
Agreement.
3.2 Distribution of the Escrow Stock upon Termination.
(a) On the first business day after the Claims
Deadline, the Escrow Agent shall deliver to the Transfer Agent
the Escrow Certificates representing each Company Stockholder's
interest in that portion of the Escrow Stock not previously
distributed or otherwise subject to claims pursuant to Section 2
hereof in accordance with the percentages set forth in Schedule A
and shall obtain from the Transfer Agent in replacement thereof
stock certificates in the name of each Company Stockholder, duly
endorsed by Acquiror, representing each Company Stockholder's
interest in such Escrow Stock. Upon receipt of the replacement
stock certificates, the Escrow Agent shall deliver the stock
certificates to the Stockholders' Representative for distribution
to each Company Stockholder. Thereafter, the balance of the
Escrow Stock shall continue to be held by the Escrow Agent in
accordance with the terms of this Agreement until all claims
asserted against the Escrow Stock have been finally resolved in
accordance with Section 2 hereof, whereupon the balance of the
Escrow Stock shall be distributed to the Company Stockholders as
provided in this Section 3.2(a) in full discharge of the Escrow
Agent's obligations under this Agreement.
(b) Notwithstanding the foregoing, in the event
that, under any of the provisions contained herein, the Escrow
Agent would be required to deliver fractional interests in shares
of Acquiror Common Stock to the Company Stockholders, Acquiror
shall be entitled, at its option, to purchase from the Escrow
Agent that number of shares of Escrow Stock (or fractional
interests therein) as shall be necessary to eliminate such
fractional interests, at a purchase price equal to the Acquiror
Closing Price. In such event, the Escrow Agent shall distribute
to the Company Stockholders who would otherwise have been
entitled to fractional interests in shares of Acquiror Common
Stock, the cash equivalent of such fractional shares based on a
purchase price equal to the Acquiror Closing Price. Any such
cash received shall not be invested by the Escrow Agent.
ARTICLE IV
RESPONSIBILITIES AND DUTIES OF ESCROW AGENT
4.1 Rights, Duties, Liabilities and Immunities of
Escrow Agent. The duties and obligations of the Escrow Agent
shall be determined solely by the provisions of this Agreement,
and the Escrow Agent shall be under no obligation to refer to any
other documents between or among the parties related in any way
to this Agreement except for any documents referenced herein, it
being specifically understood that the following provisions of
this Article IV are accepted by all parties hereto.
(a) The Escrow Agent shall be entitled to rely
upon any order, judgment, certificate, demand, notice,
instrument, opinion or other writing delivered to it hereunder
without being required to determine the authenticity or the
correctness of any fact stated therein, any signature thereon or
the propriety or validity of the service thereof (and claims made
therein).
(b) 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 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.
(c) The Escrow Agent shall not be liable for any
error of judgment or for any act done or step taken or omitted by
it in good faith or for any mistake of fact or law or for any
thing which it may do or refrain from doing in connection
herewith, except due to the Escrow Agent's own gross negligence
or willful misconduct.
(d) The Escrow Agent may consult with and obtain
advice from legal counsel (which may be in-house counsel) in the
event of any question as to any of the provisions of this
Agreement or its duties hereunder, and the Escrow Agent shall
incur no liability and shall be fully protected in acting in good
faith in accordance with the opinion and instructions of such
counsel. Subject to the provisions of Section 4.3 hereof, the
cost of such services shall be added to and shall become a part
of the Escrow Agent's compensation hereunder.
(e) The Escrow Agent shall have no duties except
those expressly set forth herein, and shall not be bound by any
notice of a claim or demand with respect thereto, or any waiver,
modification, amendment, termination or rescission of this
Agreement, unless in a writing received by it, and, if its duties
herein are affected, unless it shall have given its prior written
consent thereto.
(f) The Escrow Agent is not a party to and is not
bound by the Merger Agreement, nor is it a party to or bound by
or charged with notice of any other agreement (other than this
Agreement) out of which the Escrow Stock might arise or to which
they may relate. The Escrow Agent is not responsible for the
recitals appearing in this Agreement. The recitals shall be
deemed to be statements of the Acquiror and the Company.
(g) In the event of any disagreement between any
of the parties to this Agreement or between them or any one of
them and any other person, resulting in adverse claims or demands
being made in connection with the subject matter of this
Agreement, or in the event the Escrow Agent in good faith shall
be in doubt as to what action it should take hereunder, the
Escrow Agent shall thereupon have the right (i) to refrain from
complying with any claims or demands asserted on it as the Escrow
Agent or (ii) to refuse to take any other action hereunder, so
long as such disagreement continues or exists, and in either such
event, the Escrow Agent shall not be or become liable in any way
to any person for the Escrow Agent's failure to act, and the
Escrow Agent shall be entitled to continue to refrain from
acting, until the rights of all parties shall have been fully and
finally resolved pursuant to the Dispute Resolution provisions
set forth in Schedule B attached hereto and the Escrow Agent
shall have been notified thereof by a writing signed by all such
persons. The rights of the Escrow Agent under this
subsection (g) are cumulative of all other rights which it may
have by law or otherwise. The Escrow Agent may, but shall be
under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Escrow Fund.
(h) Acquiror hereby agrees to indemnify the
Escrow Agent for its officers, directors, employees and agents
for, and hold them harmless against, any loss, liability or
expense incurred without gross negligence or willful misconduct
on the part of the Escrow Agent arising out of or in connection
with its entering into this Agreement and carrying out its duties
hereunder, including costs and expenses of defending itself from
any claims of liability with respect thereto. This
Section 4.1(h) shall survive the termination of this Agreement
and the resignation of the Escrow Agent.
(i) The Dispute Resolution provisions set forth
in Schedule B attached hereto are incorporated herein and shall
apply hereto.
4.2 Copies of Certifications, Notices and Other
Documentation. Promptly after receipt by the Escrow Agent from
the Stockholders' Representative or Acquiror of any written
certificate, notice, request, waiver, consent, receipt or other
document, the Escrow Agent shall furnish a copy of any of such
items to the Stockholders' Representative or Acquiror, as the
case may be. Upon receipt by the Escrow Agent of the Escrow
Stock to be held in escrow pursuant to this Agreement, the Escrow
Agent shall deliver a written receipt therefor to Acquiror and
Stockholders' Representative.
4.3 Compensation. The Escrow Agent undertakes to
perform all duties which are expressly set forth herein for the
fee set forth in Schedule C attached hereto . The fee shall be
payable upon execution of this Agreement. The Escrow Agent shall
also be entitled to reimbursement for all reasonable expenses,
disbursements and advances incurred or made by the Escrow Agent
in accordance with any of the provisions of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its counsel (other than in-house legal counsel)
and of all persons not regularly in its employ), exclusive of any
such expense, disbursement or advance that may arise from its own
gross negligence or willful misconduct. All such compensation
and reimbursement of the Escrow Agent under the provisions of
this Section 4.3 shall be paid equally by the Company
Stockholders and Acquiror. The Acquiror shall have the option at
any time to pay any compensation and reimbursement due to the
Escrow Agent in satisfaction of the Company Stockholders'
obligations hereunder, and upon any such payment, the Acquiror
may treat the amount of such payment as an immediate liquidated
claim against the Escrow Stock pursuant to Article II above, for
which a Response Notice cannot be delivered.
4.4 Successor Escrow Agent. The Escrow Agent (and
any successor Escrow Agent) may at any time resign by giving
notice in writing to the Stockholders' Representative and the
Acquiror, and the Escrow Agent shall be discharged from its
duties hereunder upon the appointment of a successor Escrow Agent
as hereinafter provided. In the event of any such resignation, a
successor Escrow Agent shall be appointed by written consent of
the Stockholders' Representative and the Acquiror; provided if no
such successor is so appointed within thirty (30) days of the
Escrow Agent's resignation, the Escrow Agent may apply to a court
of competent jurisdiction for appointment of a successor. Any
successor Escrow Agent shall deliver to the Stockholders'
Representative and Acquiror a written instrument accepting the
appointment hereunder, and thereupon it shall succeed to all the
rights and duties of the Escrow Agent hereunder and shall be
entitled to receive all assets then held by the predecessor
Escrow Agent hereunder.
ARTICLE V
MISCELLANEOUS
5.1 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Company
Stockholders (by and through the Stockholders' Representative),
Acquiror, Merger Sub and the Escrow Agent, and their respective
successors and assigns, whether so expressed or not.
5.2 Modification; Waiver. This Agreement may be
amended, modified, superseded or canceled, and any of the terms
or conditions hereof may be waived, only by a written instrument
executed by each party hereto, or in the case of a waiver, by the
party waiving compliance. No failure or delay on the part of any
party hereto in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the parties
hereunder are cumulative and not exclusive of any rights or
remedies which they would otherwise have. No modification or
waiver of any provision of this Agreement, nor consent to any
departure by any party therefrom, shall in any event be effective
unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any party
in any case shall entitle such party to any other or further
notice or demand in similar or other circumstances.
5.3 Captions. The Article and Section captions used
herein are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
5.4 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date delivered,
mailed or transmitted, and shall be effective upon receipt, if
delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
If to Acquiror, to:
Hagler Bailly, Inc.
1530 Wilson Boulevard
Arlington, Virginia 22209
Telecopier No.: (703) 351-0352
Attention: Stephen V.R. Whitman, Esq.
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Telecopier No.: (202) 637-5910
Attention: David B.H. Martin, Jr., Esq.
If to the Escrow Agent, to:
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Telecopier No.: (617) 664-5365
Attention: Hagler Bailly/Apogee Research Escrow
If to the Stockholders' Representative, to:
Apogee Research, Inc.
4350 East West Highway
Bethesda, Maryland 20814
Telecopier No.: (301) 654-9355
Attention: Richard R. Mudge
with a copy (which shall not constitute notice) to:
Holland & Knight, LLP
2100 Pennsylvania Avenue, N.W.
Washington, D.C. 20037
Telecopier No.: (202) 955-5564
Attention: David P. Metzger, Esq.
5.5 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one
and the same agreement and each of which shall be deemed an
original.
5.6 Governing Law. The interpretation and
construction of this Agreement, and all matters relating thereto,
shall be governed by the laws of the Commonwealth of
Massachusetts, without regard to the choice of law provisions
thereof. The non-prevailing party in any dispute arising
hereunder shall bear and pay the costs and expenses (including
without limitation reasonable attorneys' fees and expenses)
incurred by the prevailing party or parties in connection with
resolving such dispute.
5.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
5.8 No Right of Set-Off. The Escrow Agent agrees that
it will not assert any right of set-off or similar right it may
have with respect to the Escrow Stock or any portion thereof.
5.9 Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties in respect to
this escrow transaction and supersedes all prior agreements,
arrangements and understandings relating to the subject matter
hereof.
5.10 Force Majeure. The Escrow Agent shall not be
responsible for delays or failures in performance resulting from
acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war,
epidemics, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power
failures, earthquakes or other disasters.
IN WITNESS WHEREOF, each of the parties hereto has
executed and delivered this Escrow Agreement, or caused this
Escrow Agreement to be duly executed and delivered in its name
and on its behalf, as of the day and year first hereinabove set
forth.
HAGLER BAILLY, INC.
By: /s/ Henri-Claude Bailly
Name: Henri-Claude Bailly
Title: President and Chief Executive Officer
HAGLER BAILLY ACQUISITION CORP.
1997-1
By:
Name: Daniel M. Rouse
Title: President
SCHEDULE 2.4
EXCLUDED MATTERS
The matters set forth below shall not be subject to any
indemnification for the amounts set forth below:
$149,515 - write-off of investment (loan) in Apogee
Capital
$86,842 - indirect rate variance for prior years
$15,849 - write-off of accounts receivable
$11,980 - additional depreciation
$30,000 - estimated costs in excess of billings for
1997
$53,000 - self-insurance reserve
$82,225 - unallowables, rate variance, prior American Expense charges
$153,000 - for fourth quarter expenses related to Apogee
employee bonuses
- reasonable attorney's and accountant's fees for
transaction
SCHEDULE A
SCHEDULE B
DISPUTES RESOLUTION
(a) In the event any dispute arises under or in
connection with this Agreement which cannot be resolved between
the parties, the dispute will be immediately referred to
Executive Negotiation. Executive Negotiation is a process
whereby the President of the Company and the President of
Acquiror (or their delegates) will confer and negotiate in good
faith to seek to resolve the dispute. In the event that either
party's representative is not available within forty-eight (48)
hours of notice of the dispute, an alternate executive will be
specified for the negotiations by that party.
(b) In the event the parties agree the dispute cannot
be resolved by Executive Negotiation, or the dispute is not
resolved within thirty (30) days after notice of the dispute,
the parties shall attempt to resolve the dispute through
Mediation. Either party may avoid Mediation, however, if it
determines in its sole discretion that Mediation is futile to
resolution of the dispute. Mediation shall involve submission of
the dispute to a single third party individual, selected by
mutual consent of the parties, and the cost of whom is borne
equally by the parties. The parties may submit their dispute
orally or in writing to the mediator. The mediator shall confer
with the parties, either in person or by electronic means, as
agreed to by the parties. The parties shall submit this clause
to the mediator, and the mediator shall deliver his/her decision
either orally or in writing no later than five (5) calendar days
after the conference. Such decision is binding on the parties if
the decision does not become the subject of arbitration.
(c) Executive Negotiation and Mediation, as provided
above, shall be a condition precedent to the filing of any
arbitration demand under this Agreement by either party, unless
a party in its sole discretion serves notice of its belief that
Executive Negotiation and/or Mediation is futile to resolution
of the dispute. No arbitration demand may be filed until thirty
(30) days after one party has notified the other of its desire
to enter into Executive Negotiation or Mediation, provided,
however, that such condition precedent shall not apply if either
party refuses to continue Executive Negotiation and/or
Mediation. In the event Executive Negotiation and/or Mediation
are pursued, the combined Executive Negotiation and/or Mediation
period shall be deemed to be sixty (60) days from the date of
receipt of a request for Executive Negotiations, after which
either party may file an arbitration demand.
(d) In the event that Executive Negotiation and/or
Mediation does not resolve the dispute, the parties shall submit
the dispute to arbitration, in accordance with this paragraph.
Any dispute between the parties arising under this Agreement,
including, without limitation, the termination thereof, but not
including any commercial tort, shall be resolved by binding
arbitration under the auspices of and according to the commercial
rules of the American Arbitration Association. Any arbitration
under this provision shall be held in the Commonwealth of
Virginia unless the parties mutually agree to another location.
The parties further agree that the above dispute or controversy
be submitted to one (1) arbitrator selected from the panel of
arbitrators of the American Arbitration Association. In selecting
an arbitrator, the aggrieved party shall obtain a list of
arbitrators from the AAA, strike one name and send it to the
other party. The parties shall alternatively strike names until
an arbitrator is selected. The parties to any such dispute shall
pay their own incurred costs, including, without limitation,
reasonable attorneys' fees, and shall split evenly the
arbitration costs and arbitrator's fees. Judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
SCHEDULE C
STATE STREET
SCHEDULE OF FEES
ESCROW SERVICE
FOR HAGLER BAILLY, INC.
ACQUISITION OF
APOGEE RESEARCH, INC.
Acceptance Fee: Waived
Administrative Fee: $2,500.00 per year or
part thereof, plus $35.00 per
selling stockholder
Out-of-Pocket Expenses: At Cost
Legal Fees (Peabody & Arnold): At Cost
November 24, 1997