Escrow Agreement - Optimum Group Inc., Electing Small Business Trust, Inmark Enterprises Inc. and Kronish, Lieb, Weiner & Hellman LLP
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of March 31, 1998 (this
"Agreement"), by and among OG HOLDING CORPORATION, formerly known as Optimum
Group, Inc., an Ohio corporation ("Seller"), ELECTING SMALL BUSINESS TRUST F/B/O
JAMES H. FERGUSON, an Ohio small business trust ("Ferguson" or a "Shareholder"),
ELECTING SMALL BUSINESS TRUST F/B/O MICHAEL J. HALLORAN, an Ohio small business
trust ("Halloran" or a "Shareholder"), ELECTING SMALL BUSINESS TRUST F/B/O
CHRISTINA M. HEILE, an Ohio small business trust ("Heile" or a "Shareholder"),
ELECTING SMALL BUSINESS TRUST F/B/O DAVID E. HUDDLESTON, an Ohio small business
trust ("Huddleston" or a "Shareholder"), ELECTING SMALL BUSINESS TRUST F/B/O
THOMAS E. LACHENMAN, an Ohio small business trust ("Lachenman" or a
"Shareholder"), ELECTING SMALL BUSINESS TRUST F/B/O RODERICK S. TAYLOR, an Ohio
small business trust ("Taylor" or a "Shareholder"), ELECTING SMALL BUSINESS
TRUST F/B/O THOMAS L. WESSLING, an Ohio small business trust ("Wessling" or a
"Shareholder"), STEVEN CLEMENTS, an individual residing at 643 Devonshire
Circle, Florence, Kentucky 41402 (a "Shareholder"), KIMBERLY LONGSHORE, an
individual residing at 127 Hunters Hill, Alexandria, Kentucky 41001 (a
"Shareholder"), TERRY STEDING, an individual residing at 3367 Citrus Lane,
Cincinnati, Ohio 45239 (a "Shareholder", and together with the other nine
Shareholders, the "Shareholders"), OPTIMUM GROUP, INC., formerly known as OG
Acquisition Corp., an Ohio corporation ("Purchaser"), INMARK ENTERPRISES, INC.,
a Delaware corporation ("Inmark"), and KRONISH, LIEB, WEINER & HELLMAN LLP, a
New York limited liability partnership (the "Escrow Agent").
R E C I T A L S :
Seller, Ferguson, Halloran, Heile, Huddleston,
Lachenman, Taylor, Wessling, Purchaser and Inmark have entered
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into an Asset Purchase Agreement, dated as of December 8, 1997, as amended by
Amendment No. 1, dated as of March 31, 1998 (as amended, the "Purchase
Agreement"), pursuant to which, among other things, (i) Seller agreed to sell to
Purchaser and Purchaser agreed to purchase from Seller, all of Seller's right,
title and interest in and to the Purchased Assets, and (ii) the parties agreed
to deposit into escrow, upon the closing under the Purchase Agreement, (a)
565,385 shares of Inmark Common Stock registered in the name of Seller and
represented by Certificate Number IE0083 (the "Escrow Stock"), (b) stock powers
relating to the Escrow Stock, in form and substance satisfactory to the Escrow
Agent and duly executed in blank by Seller with signature guaranteed (the "Stock
Powers"), (c) certified resolutions of each of Seller, Purchaser and Inmark
authorizing the Escrow Agent to act as escrow agent in accordance with the terms
and conditions of this Agreement (the "Resolutions"), and (d) the 9%
Subordinated Note Due March 31, 2003 in the principal amount of $2,500,000
payable by Inmark to Seller (the "Escrow Note"), each to be held and delivered
by the Escrow Agent in accordance with this Agreement. Except as otherwise
provided herein, capitalized terms used in this Agreement have the meanings
assigned to them in the Purchase Agreement. This is the Escrow Agreement
referred to in the Purchase Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Appointment and Deposit.
(a) Seller, the Shareholders, Purchaser and Inmark hereby
appoint the Escrow Agent to act as escrow agent, and the Escrow Agent hereby
accepts such appointment, all on the terms and subject to the conditions
contained in this Agreement.
(b) Concurrently with the execution and delivery of this
Agreement, Seller and the Shareholders are delivering to the
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Escrow Agent (and hereby instruct the Purchaser and Inmark to deliver to the
Escrow Agent) the Escrow Stock (together with the Stock Powers) and the Escrow
Note, and each of Seller, Purchaser and Inmark have delivered to the Escrow
Agent certified Resolutions executed by such party. The Escrow Stock, together
with the Stock Powers and with any and all dividends and other distributions and
payments, payable in cash or in securities or other property, upon the Escrow
Stock and any and all cash proceeds realized upon the sale of any and all Escrow
Stock pursuant to Section 5 hereof (such dividends, distributions, payments and
proceeds collectively, the "Stock Proceeds"), and the Escrow Note, together with
any and all cash amounts paid into escrow pursuant to Section 3 hereof on
account of payments due and payable under the Escrow Note (the "Note Proceeds"),
are hereinafter collectively referred to as the "Escrow Fund".
(c) The Escrow Agent hereby acknowledges receipt of the Escrow
Stock, the Stock Powers, the Resolutions and the Escrow Note and agrees to act
as Escrow Agent and to receive, hold and deliver the Escrow Fund pursuant to the
terms and conditions hereof.
2. Delivery and Release of the Escrow Fund.
(a) If Seller delivers to the Escrow Agent (i) a copy of a
letter issued by the Division of Corporation Finance (the "Division") of the
Securities and Exchange Commission (the "Commission") stating that the Division
will not recommend enforcement action if Seller transfers to its former
employees shares of Inmark Common Stock that have not been registered under the
Securities Act of 1933, as amended (the "No-Action Letter"), (ii) a certificate
executed by an authorized officer of Seller specifying the number of shares of
Escrow Stock, not to exceed the lesser of 65,385 or such smaller number as shall
be permitted by the No-Action Letter, that Seller wishes to transfer to its
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former employees, the names, addresses and social security numbers of the former
employees to whom Seller wishes to transfer Escrow Stock and the number of
shares of Escrow Stock to be transferred to each such former employee, and (iii)
stock powers relating to each such transfer of Escrow Stock, in form and
substance satisfactory to the Escrow Agent and duly executed by Seller with
signature guaranteed, then the Escrow Agent shall, within 20 days after receipt
of the No-Action Letter and certificate and in accordance with Section 7 hereof,
deliver certificates representing such number of shares of Escrow Stock, not to
exceed the lesser of 65,385 or such smaller number as shall be permitted by the
No-Action Letter, to Seller's former employees as specified in Seller's
certificate; provided, however, that such delivery of certificates shall be made
against receipt of (x) certificates representing the number of shares of Escrow
Stock reduced by the shares transferred pursuant to this Section 2(a) (the
"Remainder Certificates") and (y) stock powers relating to the Remainder
Certificates in form and substance satisfactory to the Escrow Agent and duly
executed in blank by Seller with signature guaranteed. Within 20 days after
delivery of certificates representing such shares of Escrow Stock to Seller's
former employees, the Escrow Agent shall send to each of Purchaser and Inmark a
copy of the No-Action Letter and shall send to each of Purchaser, Inmark and
Seller a notice specifying the parties to whom the certificates were delivered
and the number of shares of Escrow Stock transferred to each such party.
(b) If the Escrow Agent receives a written notice from
Purchaser and/or Inmark (an "Indemnification Notice"): (i) stating that they
and/or it is entitled to indemnification pursuant to the Purchase Agreement and
the reasons therefor (including references to the specific representations,
warranties or covenants which Purchaser and/or Inmark claims have been breached
by Seller and/or any of the Shareholders and stating the nature of the breach),
and (ii) setting forth the amount of any
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Damages for which Purchaser and/or Inmark asserts a right to indemnification
under the Purchase Agreement (the "Indemnification Amount") and the method by
which the Indemnification Amount was calculated, then the Escrow Agent shall
promptly send a copy of the Indemnification Notice to Seller by overnight
courier service. If within thirty days after the Escrow Agent sends a copy of
the Indemnification Notice to Seller and the Shareholders, the Escrow Agent does
not actually receive a written notice from Seller or any Shareholder challenging
Purchaser's and/or Inmark's entitlement to the Indemnification Amount (a
"Counter Notice"), the Escrow Agent shall deliver to Purchaser and/or Inmark
such portion of the Escrow Fund as equals the Indemnification Amount.
(c) The amount delivered pursuant to Section 2(b) shall
consist of Stock Proceeds, Note Proceeds and Escrow Stock in the following
combinations and in the following order of priority: (i) first, such cash
portion of the Stock Proceeds as shall equal the Indemnification Amount; (ii)
second, if the Stock Proceeds delivered pursuant to clause (i) are less than the
Indemnification Amount, such portion of the Note Proceeds, which, together with
the Stock Proceeds delivered pursuant to clause (i), shall equal the
Indemnification Amount; (iii) third, if the total value of the Stock Proceeds
and the Note Proceeds delivered pursuant to clauses (i) and (ii) is less than
the Indemnification Amount, such number of shares of Escrow Stock, the value of
which, determined in accordance with the provisions hereof and added to the
Stock Proceeds and the Note Proceeds delivered pursuant to clauses (i) and (ii),
most closely equals the Indemnification Amount; and (iv) fourth, if the total
value of the Stock Proceeds, Note Proceeds and Escrow Stock delivered pursuant
to clauses (i), (ii) and (iii) is less than the Indemnification Amount, such
portion of the non-cash Stock Proceeds, the value of which, determined in
accordance with the provisions hereof and added to the Stock Proceeds, Note
Proceeds
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and Escrow Stock delivered pursuant to clauses (i), (ii) and (iii), most closely
equals the Indemnification Amount. If the total value of the Stock Proceeds,
Note Proceeds and Escrow Stock delivered pursuant to clauses (i), (ii), (iii)
and (iv) is less than the Indemnification Amount (such difference in value, the
"Indemnification Balance"), then, in addition to delivering the Stock Proceeds,
Note Proceeds and Escrow Stock, and provided that Inmark shall simultaneously
deliver to the Escrow Agent a substitute subordinated note payable to Seller, in
an original principal amount equal to $2,500,000 less the sum of the
Indemnification Balance and any principal payments previously made thereon and
in the same form as the Escrow Note (with the exception of the original
principal amount), the Escrow Agent shall deliver to Inmark the Escrow Note
marked "canceled". Upon delivery, such substitute subordinated note shall be the
"Escrow Note" for purposes of this Agreement.
(d) Anything herein to the contrary notwithstanding, the
Escrow Stock and the Stock Proceeds shall not be used to satisfy claims in
excess of (i) $3,675,003 less (ii) the sum of (A) $6.50 multiplied by the number
of shares delivered from escrow pursuant to Section 2(a) hereof and (B) the
value of the Escrow Stock and Stock Proceeds previously released from escrow in
satisfaction of Purchaser's and Inmark's claims for indemnification.
(e) In the event the Escrow Agent receives a Counter Notice,
the Escrow Agent shall continue to hold the Indemnification Amount or such
portion thereof that Seller has challenged in the Counter Notice (but in either
case only to the extent of the Escrow Fund then held by it) until the Escrow
Agent is otherwise directed by either (i) joint written instructions from
Seller, on the one hand, and Purchaser and/or Inmark, on the other hand, or (ii)
a final, non-appealable order of a court of competent jurisdiction which is
binding on Seller, Purchaser
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and/or Inmark and the Escrow Agent; provided, however, that the Escrow Agent
shall have the right at any time (whether before or after receipt of an
Indemnification Notice or a Counter Notice) to deposit the Indemnification
Amount or all of the Escrow Fund with any federal or state court of competent
jurisdiction. The Escrow Agent shall give written notice of any such deposit to
Seller, Purchaser and Inmark. Upon such deposit or other delivery in accordance
with the provisions of this Section 2(e), the Escrow Agent shall be relieved and
discharged of all further obligations with respect to the Indemnification Amount
or the Escrow Fund so deposited or delivered.
(f) In the event that (i) any Escrow Stock or Stock Proceeds
shall remain held by the Escrow Agent two years after the Closing Date, or (ii)
Purchaser and Inmark, collectively, shall have received the maximum amount with
respect thereto under Section 2(d) hereof, the Escrow Agent shall deliver to
Seller the portion, if any, of the Escrow Stock and Stock Proceeds then held by
the Escrow Agent to the extent in excess of the aggregate of claims under all
Indemnification Notices theretofore actually received by the Escrow Agent and
with respect to which such portion of the Escrow Fund in the amount of such
claims has not been released on or prior to such date or such claims have not
been otherwise fully satisfied or settled as reasonably evidenced to the Escrow
Agent by a writing signed by (i) Seller or all of the Shareholders, (ii)
Purchaser and (iii) Inmark. In the event that the Escrow Note or Note Proceeds
shall remain held by the Escrow Agent five years after the Closing Date, the
Escrow Agent shall deliver to Seller the portion, if any, of the Escrow Note and
Note Proceeds then held by the Escrow Agent to the extent in excess of the
aggregate of claims under all Indemnification Notices theretofore actually
received by the Escrow Agent and with respect to which such portion of the
Escrow Fund in the amount of such claims has not been released on or prior to
such date or such claims have not been otherwise fully satisfied or
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settled as reasonably evidenced to the Escrow Agent by a writing signed by (x)
Seller or all of the Shareholders, (y) Purchaser and (z) Inmark.
(g) Upon joint written instructions from Seller, Purchaser and
Inmark to the Escrow Agent, the Escrow Agent shall deliver the Escrow Fund in
accordance with such instructions.
(h) In the event that the Escrow Agent shall deliver any
Escrow Stock to Purchaser and/or Inmark pursuant to Section 2(b) hereof or to
Seller pursuant to Section 2(f) hereof, the Escrow Stock delivered to Purchaser
and/or Inmark or the Escrow Stock retained by the Escrow Agent, as the case may
be, shall be valued at an amount equal to the average of the high and low trade
prices as reported by NASDAQ for shares of Inmark Common Stock for the three
trading days prior to the date of the delivery of such Escrow Stock to Purchaser
and/or Inmark or Seller, as the case may be.
3. Payments into Escrow of Amounts Due Under the Escrow Note.
Prior to Purchaser's or Inmark's delivery of an Indemnification Notice to the
Escrow Agent, Inmark shall pay all amounts due and payable under the Escrow Note
to Seller in accordance with and subject to the terms and conditions of the
Escrow Note but still subject to Inmark's right to set-off against such amounts
as set forth in the Escrow Note and in Section 9.5 of the Asset Purchase
Agreement which right shall be paramount to and unaffected by any of the
provisions of this Agreement. After delivery of an Indemnification Notice to the
Escrow Agent, subject to Inmark's right of set-off set forth in the Escrow Note
and in Section 9.5 of the Asset Purchase Agreement as aforesaid, Inmark shall
pay all amounts due and payable under the Escrow Note to the Escrow Agent, who
shall maintain such amounts as part of the Escrow Fund in accordance with the
terms and conditions of this Agreement.
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4. Dissolution of Seller.
(a) In the event that the Shareholders shall adopt a
resolution of dissolution for Seller in accordance with Ohio General Corporation
Law ss. 1701.86 (the "Dissolution Resolution"), Seller shall have the right to
transfer its rights under this Agreement and to the Escrow Fund (including,
without limitation, the Escrow Stock and the Escrow Note) to a Liquidating
Trustee, subject to the escrow provisions of this Agreement. In such event,
Seller shall deliver to the Escrow Agent: (i) a certificate executed by an
authorized officer of Seller stating that the Shareholders have adopted the
Dissolution Resolution in accordance with Ohio General Corporation Law ss.
1701.86 and specifying the date on which the Dissolution Resolution was adopted;
(ii) a copy of the Dissolution Resolution, certified as true and correct by an
authorized officer of Seller; (iii) a notice specifying (A) the name, address
and taxpayer identification number of the Liquidating Trustee, (B) stock powers
relating to such transfer of the Escrow Stock to the Liquidating Trustee and an
endorsement, without representation or recourse of the Escrow Note to the
Liquidating Trustee, in each case in form and substance satisfactory to the
Escrow Agent and duly executed by Seller with signature guaranteed.
(b) Within 20 days after receipt of the items listed in
Section 4(a) hereof, the Escrow Agent shall cause to be issued to the
Liquidating Trustee (as specified in Seller's notice) by delivering the same
into escrow hereunder (i) a certificate representing the shares of Escrow Stock
in the name of the Liquidating Trustee and (ii) a substitute subordinated note
payable to the Liquidating Trustee, in the same form as the Escrow Note;
provided, however, that issuance of a stock certificate to the Liquidating
Trustee shall be made against receipt of stock powers relating to such new
certificate in form and substance satisfactory to the Escrow Agent and duly
executed
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in blank by the Liquidating Trustee, with signature guaranteed.
5. Right to Sell Escrow Stock and Substitute Stock
Proceeds.
(a) In the event that any Shareholder is permitted to transfer
his or her shares of Escrow Stock pursuant to Section 11.3 of the Purchase
Agreement, such Shareholder shall be permitted to sell such shares of Escrow
Stock hereunder provided that such shares are sold for no less than Fair Market
Value (as hereinafter defined), such Shareholder shall pay any fees incurred and
any taxes payable in connection with such sale from sources other than the
proceeds of such sale, and the entire proceeds of such sale are paid to the
Escrow Agent in substitution for such shares.
(b) In the event of any sale made in accordance with Section
5(a) hereof, certified as having been so made by the Liquidating Trustee, the
Escrow Agent shall deliver certificates evidencing such shares in accordance
with Section 7 hereof against receipt of certificates representing the number of
shares of Escrow Stock reduced by the shares so sold accompanied by stock powers
relating to such certificates in form and substance satisfactory to the Escrow
Agent and duly executed in blank by Seller with signature guaranteed. Upon
receipt of the proceeds of such sale, the Escrow Agent shall maintain such
proceeds as part of the Escrow Fund.
(c) For purposes of this Section 5, the term "Fair Market
Value" shall mean an amount equal to 95% of the average of the high and low
trade prices as reported by NASDAQ for shares of Inmark Common Stock for the
three trading days prior to the date of sale pursuant to this Section 5.
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6. Voting Rights; Dividends.
(a) Whichever of Seller or the Shareholders shall be the
registered owner of the Escrow Stock may (i) exercise any and all voting and
other consensual rights pertaining to any of the Escrow Stock and (ii) act, or
refrain from acting, in any manner which such registered owner may deem
necessary or advisable with respect to the Escrow Stock until such Escrow Stock
is transferred to Purchaser, Inmark or any other party; provided, however, that
in no event shall clause (i) or (ii) above authorize or permit Seller or the
Shareholders to act, or fail to act, in any manner which would violate or be
inconsistent with any of the terms of this Agreement or the Purchase Agreement.
(b) All dividends and distributions on the Escrow Stock,
payable in cash, securities or other property (including, without limitation,
pursuant to any stock split, reverse stock split, stock combination or
reclassification of Inmark Common Stock or any merger, consolidation or
combination of Inmark with any other entity or entities), shall become part of
the Escrow Fund and shall be held in escrow in accordance with the terms of this
Agreement; provided, however, that whichever of Seller and the Shareholders
shall be the registered owner of the Escrow Stock shall include such dividends
and distributions in its taxable income and shall pay all taxes arising
therefrom. Seller and the Shareholders agree that if they receive any such
dividends or distributions, they shall hold such dividends or distributions in
trust for Seller, Purchaser and Inmark under this Agreement, and shall forthwith
deliver the same to the Escrow Agent.
7. Transfer of Shares. Whenever the Escrow Agent shall be
required to (a) deliver shares of Escrow Stock from escrow to any party hereto,
to any party in connection with any transfer described in Section 2(a) hereof,
or to any party in
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connection with any sale permitted pursuant to Section 5 hereof, or (b) transfer
shares of Escrow Stock to the Shareholders upon dissolution but still subject to
escrow, the Escrow Agent shall deliver appropriate stock certificate(s),
together with the relevant Stock Powers and Resolutions, to Inmark's transfer
agent with instructions (i) to cancel such certificate(s) and issue new
certificate(s) evidencing the appropriate number of shares in the name of the
party to whom the shares of Escrow Stock shall be required to be delivered
(which may also include the Escrow Agent as specified in Section 10(c) hereof)
and (ii) in the event the shares of Escrow Stock evidenced by such certificate
shall no longer be held in escrow, to issue the new certificates without the
legend required by Section 8(a) hereof. Each of Seller, the Shareholders,
Purchaser and Inmark hereby irrevocably appoints the Escrow Agent as its
attorney-in-fact, with full power and authority to execute and deliver in such
party's name, any and all documentation reasonably necessary to transfer shares
of Escrow Stock of record. In addition, Inmark shall take all steps necessary to
cause its transfer agent to follow the directions of the Escrow Agent.
8. Legend on Escrow Stock Certificates and the Escrow
Note.
(a) All certificates evidencing shares of Escrow Stock shall
bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED,
SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISTRIBUTED
OR DISPOSED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THAT
CERTAIN ESCROW AGREEMENT, DATED AS OF MARCH 31, 1998, BY AND
AMONG OG HOLDING CORPORATION (FORMERLY KNOWN AS OPTIMUM GROUP,
INC.), THE SHAREHOLDERS NAMED THEREIN, OPTIMUM GROUP, INC.
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(FORMERLY KNOWN AS OG ACQUISITION CORP.), INMARK
ENTERPRISES, INC., AND KRONISH, LIEB, WEINER & HELLMAN
LLP.
(b) The Escrow Note shall bear the following legend:
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED,
TRANSFERRED OR OTHERWISE DISTRIBUTED OR DISPOSED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF THAT CERTAIN ESCROW
AGREEMENT, DATED AS OF MARCH 31, 1998, BY AND AMONG OG HOLDING
CORPORATION (FORMERLY KNOWN AS OPTIMUM GROUP, INC.), THE
SHAREHOLDERS NAMED THEREIN, OPTIMUM GROUP, INC. (FORMERLY
KNOWN AS OG ACQUISITION CORP.), INMARK ENTERPRISES, INC., AND
KRONISH, LIEB, WEINER & HELLMAN LLP.
(c) Notwithstanding the foregoing, the Escrow Agent shall not
be responsible for placing legends on certificates delivered to the Escrow Agent
or the Escrow Note or for changing the legends on the certificates delivered to
the Escrow Agent or the Escrow Note.
9. Reliance by Escrow Agent. The Escrow Agent may rely, and
shall be protected in acting or refraining from acting, upon any written notice,
instruction, consent or request furnished to it hereunder and believed by it to
be genuine and to have been signed or presented by the proper party or parties,
and the Escrow Agent may assume that the person signing the same holds the
office indicated and is duly authorized to act on behalf of the party for whom
he or she is acting. In performing its obligations hereunder, the Escrow Agent
may conclusively presume that any officer of any party hereto (as specified in
the incumbency certificate of such party delivered pursuant to Article 7 of the
Asset Purchase Agreement or otherwise) has full
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power and authority to instruct the Escrow Agent on behalf of that party, unless
written notice to the contrary is delivered to the Escrow Agent prior to its
reliance on such presumption. The Escrow Agent may rely upon any order,
judgment, certification, demand or other writing delivered to it without being
required to determine the propriety or validity of the service thereof or the
jurisdiction of any court. In the event of any dispute or doubt as to the
genuineness of any document or signature, the Escrow Agent may, at its election,
continue to hold the Escrow Fund until otherwise directed by either (i) joint
written instructions from Seller, Purchaser and Inmark or (ii) a final,
non-appealable order of a court of competent jurisdiction which is binding on
Seller, Purchaser and/or Inmark and the Escrow Agent.
10. Escrow Agent's Role; Indemnification; Successor
Escrow Agent.
(a) The parties acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and convenience and that in
such capacity it shall not be deemed to be an agent of either of the parties.
The Escrow Agent shall have no duties or obligations hereunder except as
expressly set forth herein, shall be responsible only for the performance of
such duties and obligations, shall not be required to take any action otherwise
than in accordance with the terms hereof and shall not be in any manner liable
or responsible for any loss or damage arising by reason of any act or omission
to act by it hereunder or in connection with any of the transactions
contemplated hereby, including but not limited to any loss that may occur by
reason of forgery, any error in judgment or any mistake of fact or law or for
any other reason, except for its gross negligence or willful misconduct.
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(b) In the event of any controversy or dispute
arising hereunder or with respect to the construction hereof or any action to be
taken by the Escrow Agent hereunder, the Escrow Agent shall incur no liability
for any action or omission to act by it undertaken in good faith.
(c) Seller and the Shareholders, on the one hand,
and Purchaser and Inmark, on the other hand, shall jointly and severally
indemnify and hold the Escrow Agent harmless from and against all judgments,
costs, claims, losses, liability and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred in connection with the
performance of the Escrow Agent's duties hereunder or resulting from any dispute
or litigation arising out of or concerning the Escrow Agent's services
hereunder, except for those resulting from the Escrow Agent's gross negligence
or willful misconduct. Without limiting the Escrow Agent's other rights and
remedies against any of the parties hereto, the Escrow Agent shall be entitled
to satisfy all or part of such indemnity obligations of the parties by releasing
to itself all or a portion of the Escrow Fund (and shall promptly notify the
parties in such event). This indemnity includes, without limitation,
disbursements and reasonable attorneys' fees either paid to retain attorneys or
representing the fair value of legal services rendered to the Escrow Agent by
the Escrow Agent itself.
(d) The Escrow Agent may act or refrain from
action in respect of any matter referred to herein in full reliance upon and
with the advice of counsel which may be selected by the Escrow Agent (including
any member of the Escrow Agent's firm) and shall be fully protected in so acting
or refraining from action upon the advice of such counsel.
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(e) The Escrow Agent may resign and be discharged
from its duties or obligations hereunder by giving notice in writing of such
resignation specifying a date upon which such resignation shall take effect. The
Escrow Agent may be removed and discharged from its duties or obligations
hereunder by an agreement (i) which is in writing and signed by Inmark and
Purchaser, (ii) which specifies a date upon which such removal shall take
effect, and (iii) a copy of which is delivered to the Escrow Agent. If the
Escrow Agent shall resign or be removed, a successor escrow agent (the
"Successor Escrow Agent"), which shall be a bank or trust company selected by
the Escrow Agent, Purchaser, Inmark or a court of competent jurisdiction and
having its principal executive offices in New York and assets in excess of $1
billion or which shall be appointed by Purchaser and Inmark (subject to the
approval of Seller, not to be unreasonably withheld or delayed) by written
instrument executed by Purchaser, Inmark and Seller and delivered to the Escrow
Agent and to the Successor Escrow Agent. Upon delivery of such notice, the
resignation or removal of the Escrow Agent shall become effective and the
Successor Escrow Agent, without any further act, deed or conveyance, shall
become vested with all right, title and interest to all cash and property held
hereunder of the Escrow Agent. The Escrow Agent shall, on the written request of
Purchaser, Inmark, Seller or the Successor Escrow Agent, deliver the Escrow Fund
to the Successor Escrow Agent and shall execute and deliver to the Successor
Escrow Agent any instrument reasonably satisfactory to Escrow Agent transferring
the rights of the Escrow Agent hereunder to the Successor Escrow Agent. If no
Successor Escrow Agent shall have been appointed within 20 days of a notice of
resignation by the Escrow Agent, the Escrow Agent's sole responsibility shall
thereafter be to hold the Escrow Fund until the earlier of receipt of
designation of the Successor Escrow Agent, a joint written instruction by
Purchaser,
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Inmark and Seller and termination of this Agreement in accordance with its
terms.
11. Conflicts. The parties acknowledge and consent that the
Escrow Agent has acted as counsel to Purchaser and Inmark in connection with
this Agreement, the Purchase Agreement and other matters, and that in the event
of any dispute with respect to this Agreement, the Escrow Agent shall be
entitled to continue to act as counsel to Purchaser and Inmark and their
subsidiaries and affiliates including, without limitation, with respect to any
dispute arising under or related to the Purchase Agreement or this Agreement or
any of the transactions contemplated thereby or hereby or under any of the
instruments or agreements executed or delivered in connection therewith or
herewith, regardless of any conflicts which this may present with respect to its
acting as the Escrow Agent.
12. Investment of the Escrow Fund. Until such time as all of
the Escrow Fund shall have been delivered by the Escrow Agent pursuant to this
Agreement, the Escrow Agent shall from time to time invest the cash portion of
the Escrow Fund, if any, held by the Escrow Agent in short-term U.S. Government
securities, securities issued or guaranteed by the U.S. Government, repurchase
agreements secured by such securities or certificates of deposit or time or
demand deposits or money market accounts in commercial banks having a net worth
of $50,000,000 or more (unless all amounts held in such banks are insured, in
which case a bank with a lower net worth may be used). No investment of cash
held in the Escrow Fund shall have a maturity date of greater than thirty days
without the prior written consent of Seller, Purchaser and Inmark. The Escrow
Agent shall present for redemption any obligation so purchased or sell any such
obligation, in every case upon the written direction of Purchaser and Inmark or
as may be necessary in order
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to fulfill the provisions of this Agreement. Any interest or other earnings on
Stock Proceeds shall be deemed a part of the Escrow Stock and any interest or
other earnings on Note Proceeds shall be deemed a part of the Escrow Note.
Seller shall include such earnings in its taxable income and shall pay all taxes
arising therefrom. Seller represents and warrants to the Escrow Agent that its
Internal Revenue Service Employer Identification Number is 31-0961840. The
Escrow Agent shall not have any liability to any party for any loss suffered as
the result of any investment made in accordance with this Section 12.
13. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
13):
(a) if to Seller:
OG Holding Corporation,
f/k/a Optimum Group, Inc.
9745 Mangham Drive
Cincinnati, Ohio 45215-2350
Telecopy: (513) 577-7081
Attention: Thomas E. Lachenman
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with a copy to:
Wood & Lamping
2500 Cincinnati Commerce Center
600 Vine Street
Cincinnati, Ohio 45202
Telecopy: (513) 651-6087
Attention: James B. Harrison, Esq.
(b) if to any Shareholder, to the attention of such
Shareholder:
c/o Optimum Group, Inc.
9745 Mangham Drive
Cincinnati, Ohio 45215-2350
Telecopy: (513) 577-7081
with a copy to:
Wood & Lamping
2500 Cincinnati Commerce Center
600 Vine Street
Cincinnati, Ohio 45202
Telecopy: (513) 651-6087
Attention: James B. Harrison, Esq.
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(c) if to Purchaser:
Optimum Group Inc.,
f/k/a OG Acquisition Corp.
c/o Inmark Enterprises, Inc.
One Plaza Road
Greenvale, New York 11548
Telecopy: (516) 625-3573
Attention: Donald A. Bernard
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 479-6275
Attention: Joseph S. Hellman, Esq.
(d) if to Inmark:
Inmark Enterprises, Inc.
One Plaza Road
Greenvale, New York 11548
Telecopy: (516) 625-3573
Attention: John P. Benfield
with a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 479-6275
Attention: Joseph S. Hellman, Esq.
20
<PAGE>
(e) if to the Escrow Agent, to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 479-6275
Attention: Joseph S. Hellman, Esq.
14. Termination. Upon the release from escrow of all
of the Escrow Fund, all duties of the Escrow Agent hereunder
shall be terminated.
15. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
16. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
Seller, the Shareholders, Purchaser, Inmark and Escrow Agent with respect to the
subject matter hereof except for the Purchase Agreement, which shall continue in
full force and effect in accordance with its terms.
17. No Third Party Beneficiaries. All provisions of this
Agreement shall be binding upon, and inure to the benefit of and be enforceable
by and against the respective heirs, executors, administrators, personal
representatives, successors and assigns of the parties. Nothing herein, express
or implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
21
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18. Amendment or Termination. No agreement shall be effective
to change, modify, waive, release, amend, terminate, discharge or effect an
abandonment of this Agreement, in whole or in part, unless such agreement is in
writing, refers expressly to this Agreement and is signed by all of the parties
hereto.
19. Governing Law. The validity and construction of this
Agreement shall be governed by the internal laws (and not the principles of
conflict of laws) of the state of New York.
20. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, as of the date first written above, each
of the Shareholders has executed this Agreement and each of Seller, Purchaser
and the Escrow Agent has caused this Agreement to be executed by its respective
officer or partner thereunto duly authorized.
OG HOLDING CORPORATION,
formerly known as Optimum
Group, Inc.
By: /s/ Thomas E. Lachenman
Thomas E. Lachenman
President
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
JAMES H. FERGUSON
/s/ James H. Ferguson By: /s/ James H. Ferguson
James H. Ferguson James H. Ferguson, Trustee
22
<PAGE>
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
MICHAEL J. HALLORAN
/s/ Michael J. Halloran By: /s/ Michael J. Halloran
Michael J. Halloran Michael J. Halloran, Trustee
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
CHRISTINA M. HEILE
/s/ Christina M. Heile By: /s/ Thomas L. Wessling
Christina M. Heile Thomas L. Wessling, Trustee
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
DAVID E. HUDDLESTON
/s/ David M. Huddleston By: /s/ David E. Huddleston
David M. Huddleston David E. Huddleston, Trustee
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
THOMAS E. LACHENMAN
/s/ Thomas E. Lachenman By: /s/ Thomas L. Wessling
Thomas E. Lachenman Thomas L. Wessling, Trustee
23
<PAGE>
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
RODERICK S. TAYLOR
/s/ Roderick S. Taylor By: /s/ Roderick S. Taylor
Roderick S. Taylor Roderick S. Taylor, Trustee
Consented to: ELECTING SMALL BUSINESS TRUST F/B/O
THOMAS L. WESSLING
/s/ Thomas L. Wessling By: /s/ Thomas L. Wessling
Thomas L. Wessling Thomas L. Wessling, Trustee
/s/ Steven Clements
Steven Clements
/s/ Kimberly Longshore
Kimberly Longshore
/s/ Terry Steding
Terry Steding
OPTIMUM GROUP, INC.,
formerly known as OG
Acquisition Corp.
By: /s/ John P. Benfield
Name: John P. Benfield
Title: Chief Executive
Officer and President
24
<PAGE>
INMARK ENTERPRISES, INC.
By: /s/ John P. Benfield
Name: John P. Benfield
Title: Chief Executive
Officer and President
KRONISH, LIEB, WEINER & HELLMAN LLP
By: /s/ Joseph S. Hellman
Name: Joseph S. Hellman
Title: Partner
25
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On this 26th day of March, 1998, before me personally came THOMAS E.
LACHENMAN, to me known, who, being by me duly sworn, did depose and say that he
resides at 7788 White Road, Rising Sun, Indiana 47040, that he is the President
of OG HOLDING CORPORATION, formerly known as Optimum Group, Inc., an Ohio
corporation, the corporation described in, and which executed, the above
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Douglas L. Westendorf
Notary Public
26
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 27th day of March, 1998, before me personally came
JAMES H. FERGUSON, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 27th day of March, 1998, before me personally came
JAMES H. FERGUSON, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
27
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
MICHAEL J. HALLORAN, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
MICHAEL J. HALLORAN, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
28
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
THOMAS L. WESSLING, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
CHRISTINA M. HEILE, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
29
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
DAVID E. HUDDLESTON, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
DAVID M. HUDDLESTON, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
30
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
THOMAS L. WESSLING, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March 1998, before me personally came
THOMAS E. LACHENMAN, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
31
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
RODERICK S. TAYLOR, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
RODERICK S. TAYLOR, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
32
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
THOMAS L. WESSLING, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his capacity as
Trustee, and that by his signature on the instrument, the entity upon behalf of
which the person acted, executed the instrument.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
THOMAS L. WESSLING, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
33
<PAGE>
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
STEVEN CLEMENTS, to me known to be the individual described in, and who executed
the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
KIMBERLY LONGSHORE, to me known to be the individual described in, and who
executed the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
STATE OF OHIO )
: ss.:
COUNTY OF HAMILTON )
On the 26th day of March, 1998, before me personally came
TERRY STEDING, to me known to be the individual described in, and who executed
the above instrument, and acknowledged that he executed the same.
/s/ Douglas L. Westendorf
Notary Public
34
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF ESSEX )
On this 30th day of March, 1998, before me personally came John P.
Benfield, to me known, who, being by me duly sworn, did depose and say that he
resides at 63 Murray Avenue, Port Washington, New York 11050, that he is the
Chief Executive Officer and President of OPTIMUM GROUP, INC., formerly known as
OG Acquisition Corp., an Ohio corporation, the corporation described in, and
which executed, the above instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
/s/ Barbara Slota
Notary Public
STATE OF NEW JERSEY )
: ss.:
COUNTY OF ESSEX )
On this 30th day of March, 1998, before me personally came John P.
Benfield, to me known, who, being by me duly sworn, did depose and say that he
resides at 63 Murray Avenue, Port Washington, New York 11050, that he is a Chief
Executive Officer and President of INMARK ENTERPRISES, INC., a Delaware
corporation, the corporation described in, and which executed, the above
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Barbara Slota
Notary Public
35