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Exhibit 2.3
ESCROW AGREEMENT
This Escrow Agreement (this "ESCROW AGREEMENT") is made and entered
into as of November 23, 1999 (the "EFFECTIVE TIME") by and among SIPEX
Corporation, a Massachusetts corporation ("PARENT"); Calogic, a California
corporation ("CALOGIC"); the undersigned security holders of Calogic
(collectively the "HOLDERS"); ▇▇▇▇▇▇ Del Arroz, as the representative of the
Holders (the "INDEMNIFICATION REPRESENTATIVE"); and State Street Bank and Trust
Company , as escrow agent for the Escrow Shares (as defined below) (the "ESCROW
AGENT").
A. CAT Acquisition Corporation I, a Delaware corporation and wholly
owned subsidiary of Parent ("MERGER SUB"), Calogic, and certain stockholders of
Calogic (the "HOLDERS") have entered into an Agreement and Plan of
Reorganization and a Holders Agreement each dated as of October 21, 1999
(collectively, the "MERGER AGREEMENT") setting forth certain terms and
conditions pursuant to which Merger Sub is being merged into Calogic (the
"MERGER").
B. Pursuant to Section 2.1 of the Merger Agreement, Parent Merger
Shares (as defined therein) are to be issued to the Holders.
C. The Merger Agreement provides that three hundred and thirty thousand
(the "ESCROW AMOUNT") of the Parent Merger Shares issued for Outstanding Calogic
Shares pursuant to the Merger will be placed in an escrow account to secure
certain indemnification obligations of the Holders to Parent under the Merger
Agreement on the terms and conditions set forth therein and herein.
D. Unless otherwise indicated herein, all terms used herein without
definition shall have the same meaning as set forth in the Merger Agreement.
NOW THEREFORE, for and in consideration of the foregoing and the mutual
covenants and agreements contained in the Merger Agreement and in this Escrow
Agreement, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT
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1.1 DEPOSIT OF SHARES. Parent shall deposit as soon as
practicable on the Holders' behalf with the Escrow Agent stock certificates
representing the Escrow Shares issued pursuant to the Merger registered in the
respective names of the Holders and in the relative amounts set forth on EXHIBIT
1.1 hereto (the "INITIAL ESCROW SHARES"), together with stock transfer powers
signed in blank with guaranteed signatures. Any shares of Parent capital stock
that result from any share dividend, reclassification, stock split, subdivision
or combination of shares, recapitalization, merger or other events made with
respect to any Escrow Shares held in escrow under this Escrow Agreement
("ADDITIONAL SHARES") shall be delivered to the Escrow Agent and shall be held
by the Escrow Agent in accordance with this Escrow Agreement. Unless otherwise
indicated, as used in this Escrow Agreement, the term "ESCROW SHARES" includes
the Initial Escrow Shares and any Additional Shares. The Escrow Agent agrees to
accept delivery of the Escrow Shares and to hold such Escrow Shares in escrow in
accordance with this Escrow Agreement and to release the Escrow Shares, and all
related stock transfer powers out of escrow as provided in this Escrow
Agreement. The Escrow Agent shall be under no obligation to preserve, protect or
exercise rights in the Escrow Shares and shall be responsible only for the
taking of reasonable measures to maintain the physical safekeeping thereof.
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The Escrow Agent shall have no responsibility for the genuineness, validity,
market value, title or sufficiency for any intended purposes of the Escrow
Property.
1.2 DIVIDENDS; VOTING AND RIGHTS OF OWNERSHIP. Any cash
dividends, dividends payable in property or other distributions of any kind
(except for Additional Shares) made in respect of the Escrow Shares shall be
distributed currently by Parent directly to the Holders on a pro rata basis.
Each Holder shall have the right to vote the Escrow Shares held in escrow for
the account of such Holder so long as such Escrow Shares are held in escrow, and
Parent and the Escrow Agent shall take all steps necessary to allow the exercise
of such rights. While the Escrow Shares remain in the Escrow Agent's possession
pursuant to this Escrow Agreement, the Holders shall retain and shall be able to
exercise all other incidents of ownership of the Escrow Shares that are not
inconsistent with the terms and conditions hereof. Any income tax reporting
required with respect to dividends paid on the Escrow Shares shall be the
responsibility of Parent.
1.3 NO ENCUMBRANCE. None of the Escrow Shares or any
beneficial interest therein may be pledged, sold, assigned or transferred,
including by operation of law or by a Holder, or may be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of a
Holder, prior to the delivery of the Escrow Shares by the Escrow Agent or Parent
to such Holder pursuant to this Escrow Agreement.
1.4 POWER TO TRANSFER ESCROW SHARES. The Escrow Agent is
hereby granted the power to effect any transfer of the Escrow Shares provided
for in this Escrow Agreement.
2. RESOLUTION OF CLAIMS
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2.1 INDEMNIFICATION OBLIGATIONS. The Escrow Shares shall serve
as the first source, but not the sole source, of payment for the indemnity
obligations of the Holders under the Merger Agreement. For the purposes of this
Escrow Agreement, those obligations shall continue in accordance with the Merger
Agreement, notwithstanding the merger of Merger Sub into Calogic pursuant to the
Merger Agreement. Payment for any amount determined as provided below to be
owing to Parent under such indemnity obligations under the Merger Agreement
("DAMAGES") and any award of attorneys' fees and charges owing to Parent
pursuant to Section 2.3(c)(iv) or 11.2 of this Agreement (a "PREVAILING PARTY
AWARD") shall be made by the release of Escrow Shares to Parent (each such
payment, an "ESCROW ADJUSTMENT"), subject to the limitations set forth in
Section 10.4 of the Merger Agreement. By the execution of this Escrow Agreement,
each of the Holders agrees to be bound by the indemnification provisions set
forth in the Merger Agreement and confirms that the issuance of the Escrow
Amount of the Parent Merger Shares pursuant to the Merger Agreement is subject
to this Escrow Agreement. Notwithstanding anything to the contrary herein,
Parent shall not be entitled to receive payment of any portion of a Prevailing
Party Award which is already a part of Damages (i.e., there shall be no double
payment of legal fees). Any Escrow Adjustments and corresponding release to
Parent of Escrow Shares shall be made in proportion to each of the Holders'
interest in the Escrow Shares as of the date or dates specified and the manner
provided for in this Escrow Agreement. Each Escrow Adjustment to the Escrow
Shares shall be made by the release to Parent of Escrow Shares having an
aggregate value equal to the Damages and any Prevailing Party Award, with the
per share value of such shares being based, for all purposes under this Escrow
Agreement on the Parent Average Closing Price (adjusted for any share dividend,
reclassification, stock split, subdivision or combination of shares,
recapitalization, merger or other events) notwithstanding any changes in market
value of Parent Common Shares. In lieu of releasing any
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fractional Escrow Shares, any fraction of a released Escrow Share that would
otherwise be released shall be rounded to the nearest whole Escrow Share.
2.2 NOTICE OF CLAIMS. Promptly after the receipt by Parent of
notice or discovery of any claim, damage, or legal action or proceeding giving
rise to indemnification rights under the Merger Agreement, after giving effect
to the Threshold Amount (as defined in the Merger Agreement) (a "CLAIM") Parent
shall give the Indemnification Representative written notice of such Claim and
shall provide a copy of such notice to the Escrow Agent. Each notice of a Claim
by Parent (a "NOTICE OF CLAIM") shall be in writing and shall be delivered on or
before the Release Date (as defined in Section 3.1 below). Notice of any Claim
shall include the Parent Average Closing Price and in no event shall the Bank be
obligated to determine such price.
2.3 RESOLUTION OF CLAIMS. Any Notice of Claim received by the
Indemnification Representative and the Escrow Agent pursuant to Section 2.2
above shall be resolved as follows:
(a) UNCONTESTED CLAIMS. In the event that the
Indemnification Representative does not contest a Notice of Claim (an
"UNCONTESTED CLAIM") in writing within thirty (30) calendar days, as provided
below in Section 2.3(b), Parent may deliver to the Escrow Agent, with a copy to
the Indemnification Representative, a written demand by Parent (a "PARENT
DEMAND") stating that a Notice of Claim has been given as required in this
Escrow Agreement and that no notice of contest has been received from the
Indemnification Representative during the period specified in this Escrow
Agreement and further setting forth the proposed Escrow Adjustments to be made
in accordance with this Section 2.3(a). It is provided, however, that within
thirty (30) calendar days after receipt of the Parent Demand, the
Indemnification Representative may object in a written notice delivered to
Parent and the Escrow Agent to the computations or other administrative matters
relating to the proposed Escrow Adjustments (but may not object to the validity
or amount of the Claim previously disclosed in the Notice of Claim), whereupon
neither the Escrow Agent nor Parent shall make any of the Escrow Adjustments
until either: (i) Parent and the Indemnification Representative shall have given
the Escrow Agent written notice setting forth agreed Escrow Adjustments, or (ii)
the matter is resolved as provided in Sections 2.3(b) and 2.3(c). Upon
satisfaction of the foregoing, the Escrow Agent, as directed in writing by
Parent, and Parent shall promptly take all steps to implement the final Escrow
Adjustments.
(b) CONTESTED CLAIMS. In the event that the
Indemnification Representative gives written notice to Parent and the Escrow
Agent contesting all or a portion of a Notice of Claim (a "CONTESTED Claim")
within the 30-day period provided above, matters that are subject to third party
claims against Parent or Calogic in a litigation or arbitration shall await the
final decision, award or settlement of such litigation or arbitration, while
matters that arise between Parent on the one hand and Calogic and/or the Holders
on the other hand, including any disputes regarding performance or
nonperformance of a party's obligations under this Escrow Agreement ("ARBITRABLE
CLAIMS") shall be settled in accordance with Section 2.3(c) below. Any portion
of a Notice of Claim that is not contested or is subsequently settled by Parent
and the Indemnification Representative shall be resolved as set forth above in
Section 2.3(a), provided that in the case of a settlement the value of Escrow
Shares shall equal the Parent Average Closing Price notwithstanding any change
in the market value of Parent Common Shares. If written notice is received by
the Escrow Agent that a Notice of Claim is contested by the Indemnification
Representative, then the Escrow Agent shall hold hereunder after what would
otherwise be the Release Date (as defined in Section 3.1 below), the number of
Escrow Shares specified in the Release Notice or as otherwise provided in
Section 3.1, until the earlier of: (i) receipt of a settlement agreement
executed by Parent and the Indemnification Representative setting forth a
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resolution of the Notice of Claim and the Escrow Adjustments; (ii) receipt of a
written notice from Parent (a "PARENT DISTRIBUTION NOTICE") attaching a copy of
the final award or decision of the arbitrator and setting forth the Escrow
Adjustments (Parent shall at the same time provide a copy of the Parent
Distribution Notice to the Indemnification Representative); or (iii) receipt of
a written notice from the Indemnification Representative (a "REPRESENTATIVE
DISTRIBUTION NOTICE") attaching a copy of the final award or decision of the
arbitrator that no Escrow Adjustments are to be made as a result of such award
(the Indemnification Representative shall at the same time provide a copy of the
Representative Distribution Notice to Parent). If the earliest of the three
events described in the preceding sentence is (i) or (ii), the Escrow Agent
shall, within twenty (20) calendar days of receipt of the settlement agreement
or the Parent Distribution Notice, as applicable, (a) release to Parent the
number of Escrow Shares specified in the Escrow Adjustments and (b) if the
Release Date has occurred, and there are no remaining unresolved Contested
Claims, release to the Holders the balance of the Escrow Shares and the related
stock transfer powers. If the earliest of the three events described above is
(iii) and the Release Date has occurred, and there are no remaining unresolved
Contested Claims, the Escrow Agent shall, within twenty (20) calendar days of
receipt of the Representative Distribution Notice, release to the Holders the
Retained Escrow (as defined in Section 3.1), in accordance with the Holders'
interests therein, provided that if the Release Date has not occurred the Escrow
Shares shall continue to be held pursuant to the terms of this Agreement. If the
award or decision of the arbitrator concludes that Escrow Shares are to be
released to Parent either in satisfaction of Damages or as Prevailing Party
Awards, the arbitrator shall specify the number of Escrow Shares to be so
released to Parent either in the arbitrator's final award or decision or a
supplementary report or finding. In the event that the Escrow Agent institutes
an action for interpleader in accordance with Section 4.6 of this Escrow
Agreement as a result of a dispute between the parties, the parties hereby agree
to jointly seek to stay such interpleader action pending the resolution of any
arbitration commenced by the parties or any dispute pursuant to this Section
2.3(b) and Section 2.3(c).
(c) ARBITRATION.
(i) ARBITRATION RULES. Any Arbitrable Claim,
and any dispute between the Holders and Parent under this Escrow Agreement,
shall be submitted to final and binding arbitration before a single arbitrator
in Boston, Massachusetts in accordance with the commercial arbitration rules of
the American Arbitration Association.
(ii) BINDING EFFECT. The final decision of
the arbitrator shall be furnished in writing to the Escrow Agent, the
Indemnification Representative, the Holders and Parent and will constitute a
conclusive determination of the issue in question, binding upon the Holders, the
Indemnification Representative and Parent. The arbitrator shall have the
authority to grant any equitable and legal remedies that would be available in
any judicial proceeding instituted to resolve an Arbitrable Claim. Any judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction over the subject matter thereof.
(iii) COMPENSATION OF ARBITRATOR. The
arbitrator will be compensated for his or her services, as provided below in
Section 2.3(c)(iv), in accordance with the commercial arbitration rules of the
American Arbitration Association.
(iv) PAYMENT OF COSTS. Subject to the
limitations in the Merger Agreement, the substantially prevailing party in any
arbitration shall be entitled to an award of attorneys' fees and costs, and all
costs of arbitration, including those provided for above, will be paid by the
losing party, subject in each case to a determination by the arbitrator as to
which party is the
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substantially prevailing party and the amount of such fees and costs to be
allocated to such party and subject to the terms of Section 2.3(c)(iii). Any
amounts payable to Parent by or on account of the Holders under this subsection
will be reimbursed as if the amount of such awarded fees and expenses were an
Uncontested Claim.
(v) TERMS OF ARBITRATION. The arbitrator
chosen in accordance with these provisions shall not have the power to alter,
amend or otherwise affect the terms of these arbitration provisions or the
provisions of this Escrow Agreement, the Merger Agreement or any other documents
that are executed in connection therewith.
(vi) EXCLUSIVE REMEDY. Arbitration or
mediation under this Section 2.3(c) shall be the sole and exclusive remedy of
the parties for any Arbitrable Claim arising out of this Escrow Agreement.
3. RELEASE FROM ESCROW
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3.1 RELEASE OF ESCROW SHARES. The Escrow Shares and all
related stock transfer powers shall be released by the Escrow Agent and Parent
as soon as practicable, taking into account the notices to be delivered under
this Section 3.1, after the publication of Parent's audited financial results
for the year ended December 31, 1999 (the "RELEASE DATE") LESS: (a) any Escrow
Shares delivered to or deliverable to Parent in satisfaction of Uncontested
Claims or Contested Claims which have been settled by the parties hereto, and
(b) any of the Escrow Shares subject to delivery to Parent in accordance with
Section 2.3(b) with respect to any then pending Contested Claims. Parent shall
give written notice to the Indemnification Representative and the Escrow Agent
of the publication of Parent's audited financial results for the year ended
December 31, 1999. Promptly, and no later than seven (7) of the Escrow Agent's
business days ("BUSINESS DAYS") after the Release Date, Parent and the
Indemnification Representative shall deliver to the Escrow Agent a written
notice (a "RELEASE NOTICE") setting forth the number of Escrow Shares to be
released by the Escrow Agent and Parent (the "RELEASED ESCROW") including the
number of Escrow Shares to be released to each Holder and the number of Escrow
Shares to be retained as provided in this Section 3.1 (the "RETAINED ESCROW")
Parent and the Indemnification Representative shall make a good faith effort to
agree on a reasonable portion of the Escrow Shares to retain for pending
Contested Claims and Prevailing Party Awards and related expenses. Until such
agreement is reached, or a determination is made in accordance with Section
2.3(c), the remaining Escrow Shares shall be the Retained Escrow. The Released
Escrow shall be released to the Holders in proportion to their respective
interests in the Initial Escrow Shares. In lieu of releasing any fractional
Escrow Shares, any fraction of a released Escrow Share that would otherwise be
released shall be rounded to the nearest whole Escrow Share. The Release Notice
shall instruct the Escrow Agent to deliver (by registered mail or overnight
courier service) to each Holder evidence of ownership of the number of Escrow
Shares in the names of the appropriate Holders. The Escrow Agent shall not be
required to take such action until the Escrow Agent has received the Release
Notice executed by Parent and the Indemnification Representative or, in the
event Parent and the Indemnification Representative fail to execute and deliver
a jointly approved Release Notice, a final award or decision which specifies the
distribution of the Escrow Shares.
3.2 RELEASE OF RETAINED ESCROW. Upon the resolution of
Contested Claims as provided for in Section 2.3(b), the Retained Escrow shall be
subject to release by the Escrow Agent to Parent and/or to the Holders in
accordance with Section 2.3(b), this Section and as otherwise provided for in
this Escrow Agreement. The Escrow Agent, Parent and the Indemnification
Representative shall cause the transfer agent to transfer to Parent the number
of Escrow Shares to be released to Parent
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pursuant to Section 2.3(b) and transfer the number of Escrow Shares that are to
be either distributed to the Holders pursuant to Section 3.1 or further retained
by the Escrow Agent pending the resolution of Contested Claims and/or Prevailing
Party Awards. Any Escrow Shares released from escrow to Parent shall be subject
to cancellation by Parent without requiring Parent to pay any consideration
whatsoever in receipt thereof to Calogic or any of the Holders.
3.3 EXPENSES OF INDEMNIFICATION REPRESENTATIVE. The
Indemnification Representative shall be entitled to be reimbursed his reasonable
out-of-pocket expenses and the reasonable fees and disbursements of counsel
retained by him. Such reimbursements shall be treated as an Uncontested Claim on
a pro rata basis among the contributors to the Escrow Shares (based on the
percentages set forth on EXHIBIT 1.1), for all services performed pursuant to
the Merger Agreement and this Escrow Agreement; provided, however, that payment
of any Escrow Adjustment shall take priority over payments to the
Indemnification Representative, as provided herein. The Escrow Agent shall
follow the joint written instructions of the Indemnification Representative and
Parent concerning the release of Escrow Shares relating to the reimbursement of
the Indemnification Representative. If upon termination of this Agreement, the
Indemnification Representative shall not have received the reimbursements to
which he is entitled hereunder, then the Indemnification Representative shall be
entitled to reimbursement from the Holders on a joint and several basis.
4. ESCROW AGENT
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4.1 DUTIES. The duties and responsibilities of the Escrow
Agent hereunder shall be entirely administrative and not fiduciary or
discretionary in nature and shall be determined solely by the express provisions
of this Escrow Agreement and no duties shall be implied. The Escrow Agent shall
be obligated to act only in accordance with written instructions received by it
as provided in this Escrow Agreement and is authorized hereby to comply with any
orders, judgments, or decrees of any court with or without jurisdiction and
shall not be liable as a result of its compliance with the same. Parent, Calogic
and the Holders agree that, notwithstanding anything to the contrary herein, the
Escrow Agent shall not be responsible for any of the other agreements referred
to or described herein (including, without limitation, the Merger Agreement) or
for determining or compelling compliance therewith, and shall not otherwise be
bound thereby.
4.2 LEGAL OPINIONS. As to any questions arising in connection
with the administration of this Escrow Agreement, the Escrow Agent may rely
absolutely upon the joint instruction of Parent and the Indemnification
Representative or the opinions given to the Escrow Agent by its outside counsel
and shall be free of liability for acting or refraining from acting in reliance
on such opinions.
4.3 SIGNATURES. The Escrow Agent may rely absolutely upon the
genuineness and authorization of the signature and purported signature of any
party upon any instruction, notice, release, receipt or other document delivered
to it pursuant to this Escrow Agreement.
4.4 RECEIPTS AND RELEASES. The Escrow Agent may, as a
condition to the release or disposition of securities as provided herein,
require from the payee or recipient a receipt therefor and, upon final payment
or disposition, a release of the Escrow Agent from any liability arising out of
its execution or performance of this Escrow Agreement, such release to be in a
form reasonably satisfactory to the Escrow Agent.
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4.5 REFRAIN FROM ACTION. The Escrow Agent shall be entitled to
refrain from taking any legal or other action contemplated by this Escrow
Agreement in the event it becomes aware of any dispute between Calogic, the
Holders and Parent as to any material facts or as to the happening of any event
precedent to such action and the Escrow Agent shall be entitled to refrain from
taking any action that might in its judgement involve or cause it to incur any
expense or liability unless it shall first have been furnished with acceptable
indemnification.
4.6 INTERPLEADER. If any controversy arises between the
parties hereto or with any third person, the Escrow Agent shall not be required
to determine the same or to take any action, but the Escrow Agent in its
discretion may institute such interpleader or other proceedings in connection
therewith as the Escrow Agent may deem proper, and in following either course,
the Escrow Agent shall not be liable.
4.7 OTHER PROVISIONS. The Escrow Agent may rely upon and shall
be protected in acting or refraining from acting upon any written notice,
instruction 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. The
Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any such document. The Escrow Agent shall be not be
liable for any action taken or omitted by it in good faith unless a court of
competent jurisdiction determines that the Escrow Agent's willful misconduct was
the primary cause of a loss to the Parent, the Indemnification Representative,
or the Holders. In the administration of this Escrow Agreement, the Escrow Agent
may execute any of its powers and perform its duties hereunder directly or
through agents or attorneys and may, consult with counsel, accountants and other
skilled persons to be selected and retained by it. The Escrow Agent shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other skilled
persons.
4.8 Sale of Escrow Shares. Notwithstanding anything herein to
the contrary, the Escrow Agent shall have no duty to sell the Escrow Shares
hereunder.
5. INDEMNIFICATION
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5.1 WAIVER AND INDEMNIFICATION. Parent, Calogic, the
Indemnification Representative and the Holders agree to and hereby do waive any
suit, claim, demand or cause of action of any kind which they may have or may
assert against the Escrow Agent arising out of or relating to the execution or
performance by the Escrow Agent of this Escrow Agreement, unless such suit,
claim, demand or cause of action is based upon the willful neglect, gross
negligence or bad faith of the Escrow Agent. Parent, Calogic and the Holders
further agree, jointly and severally, to indemnify and hold Escrow Agent and its
directors, officers, agents and employees (collectively, the "INDEMNITEES")
harmless from and against any and all claims, liabilities, losses, damages,
fines, penalties, and expenses, including out-of-pocket, incidental expenses,
reasonable legal fees and expenses (including the reasonable fees and expenses
of not more than one outside counsel), and the allocated costs and expenses of
in-house counsel and legal staff ("LOSSES") that may be imposed on, incurred by,
or asserted against, the Indemnitees or any of them for following any
instructions or other directions upon which the Escrow Agent is authorized to
rely pursuant to the terms of this Escrow Agreement, provided the Escrow Agent
has not acted with gross negligence, willful neglect or bad faith. In addition,
to and not in limitation of the immediately preceding sentence, Parent, Calogic
and the Holders also agree, jointly and severally, to indemnify and hold the
Indemnitees and each of them harmless from and against any and all Losses that
may be imposed on, incurred by, or asserted against the Indemnitees or any of
them in connection with or arising out of the Escrow Agent's performance
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under this Escrow Agreement, provided the Escrow Agent has not acted with gross
negligence, willful neglect or bad faith. The provisions of this Section 5.1
shall survive the termination of this Escrow Agreement and the resignation or
removal of the Escrow Agent for any reason. Anything in this Escrow Agreement to
the contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect, punitive or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow Agent
has been advised of such loss or damage and regardless of the form of action.
5.2 CONDITIONS TO INDEMNIFICATION. In case any litigation is
brought against the Escrow Agent in respect of which indemnification may be
sought hereunder, the Escrow Agent shall give prompt notice of that litigation
to the parties hereto, and the parties upon receipt of that notice shall have
the obligation and the right to assume the defense of such litigation with
counsel reasonably satisfactory to the Escrow Agent; provided that failure of
the Escrow Agent to give that notice shall not relieve the parties hereto from
any of their obligations under this Section 5 unless that failure prejudices the
defense of such litigation by said parties. At its own expense, the Escrow Agent
may employ separate counsel and participate in the defense. The parties hereto
shall not be liable for any settlement without their respective consents.
6. ACKNOWLEDGMENT BY THE ESCROW AGENT
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By execution and delivery of this Escrow Agreement, the Escrow Agent
acknowledges that the terms and provisions of this Escrow Agreement are
acceptable and it agrees to carry out the provisions of this Escrow Agreement on
its part.
7. RESIGNATION OR REMOVAL OF ESCROW AGENT; SUCCESSOR
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7.1 RESIGNATION AND REMOVAL.
7.1.1 NOTICE. The Escrow Agent may resign as such
following the giving of thirty (30) days' prior written notice to the other
parties hereto. Similarly, the Escrow Agent may be removed and replaced
following the giving of thirty (30) days' prior written notice to be given to
the Escrow Agent jointly by the Indemnification Representative and Parent. In
either event, the duties of the Escrow Agent shall terminate thirty (30) days
after the date of such notice (or as of such earlier date as may be mutually
agreeable), and the Escrow Agent shall then deliver the balance of the Escrow
Shares, and all related stock transfer powers then in its possession to a
successor Escrow Agent as shall be appointed by the other parties hereto as
evidenced by a written notice filed with the Escrow Agent.
7.1.2 COURT APPOINTMENT. If the parties hereto are
unable to agree upon a successor or shall have failed to appoint a successor
prior to the expiration of thirty (30) days following the date of the notice of
resignation or removal, then the acting Escrow Agent, at the expense of the
Holders and Parent, may petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent or other appropriate relief, and any
such resulting appointment shall be binding upon all of the parties hereto.
7.2 SUCCESSORS. Every successor appointed hereunder shall
execute, acknowledge and deliver to its predecessor, and also to the
Indemnification Representative and Parent, an instrument in writing accepting
such appointment hereunder, and thereupon such successor, without any further
act, shall become fully vested with all the duties, responsibilities and
obligations of its predecessor; but such predecessor shall, nevertheless, on the
written request of its successor or any of the parties hereto,
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execute and deliver an instrument or instruments transferring to such successor
all the rights of such predecessor hereunder, and shall duly assign, transfer
and deliver all property, securities and monies held by it pursuant to this
Escrow Agreement to its successor. Should any instrument be required by any
successor for more fully vesting in such successor the duties, responsibilities,
and obligations hereby vested or intended to be vested in the predecessor, any
and all such instruments in writing shall, on the request of any of the other
parties hereto, be executed, acknowledged, and delivered by the predecessor.
7.3 NEW ESCROW AGENT. In the event of an appointment of a
successor, the predecessor shall cease to be escrow agent of any funds,
securities or other assets and records it may hold pursuant to this Escrow
Agreement, and the successor shall become such escrow agent.
7.4 RELEASE. Upon acknowledgment by any successor Escrow Agent
of the receipt of the then remaining balance of the Escrow Shares, the then
acting Escrow Agent shall be fully released and relieved of all duties,
responsibilities and obligations under this Escrow Agreement that may arise and
accrue thereafter.
7.5 SUCCESSORS. Any corporation or association into which the
Escrow Agent in its individual capacity may be merged or converted or with which
it may be consolidated, or any corporation or association resulting from any
merger, conversion or consolidation to which the Escrow Agent in its individual
capacity shall be a party, or any corporation or association to which all or
substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be sold or otherwise transferred, shall be the Escrow
Agent hereunder without further act.
8. FEE
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The Escrow Agent will be paid by Parent as billed for services and
expenses hereunder in accordance with the fee schedule attached hereto as
EXHIBIT 8, (which fee schedule is subject to change on an annual basis at the
same rate at which the Escrow Agent changes its rates generally for comparable
services provided to its other customers). Without limiting the foregoing,
Parent will reimburse the Escrow Agent for reasonable costs and expenses
incurred in the preparation and administration of this Agreement in the manner
contemplated by this Agreement, all in accordance with the fee schedule attached
hereto as EXHIBIT 8. In the event that the Escrow Agent is made a party to
litigation with respect to the property held hereunder, or brings an action in
interpleader, or in the event that the conditions to this Escrow Agreement are
not promptly fulfilled, or the Escrow Agent is required to render any service
not provided for in this Escrow Agreement and fee schedule, or there is any
assignment of the interests of this Escrow Agreement or any modification hereof,
the Escrow Agent shall be entitled to reasonable compensation from Parent for
such extraordinary services and reimbursement for all fees, costs, liability,
and expenses, including attorneys fees and expenses.
9. INDEMNIFICATION REPRESENTATIVE
------------------------------
9.1 APPOINTMENT AND AUTHORITY. For purposes of this Escrow
Agreement, the Holders have, by the execution of this Escrow Agreement,
irrevocably consented to the appointment of ▇▇▇▇▇▇ Del Arroz as the
Indemnification Representative as representative of the Holders and as the
attorney-in-fact for and on behalf of each Holder, and, subject to the express
limitations set forth below, the taking by the Indemnification Representative of
any and all actions and the making of any decisions required or permitted to be
taken by him under this Escrow Agreement, including but not limited to the
exercise of the power to: (i) authorize delivery to Parent of the Escrow Shares,
or any
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portion thereof, in satisfaction of Claims otherwise in connection with an
Escrow Adjustment, (ii) agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such Claims, (iii) resolve any Claims, and
(iv) take all actions necessary in the judgment of the Indemnification
Representative for the accomplishment of the foregoing and all of the other
terms, conditions, and limitations of this Escrow Agreement. Any notice given to
the Indemnification Representative will constitute notice to each and all of the
Holders at the time notice is given to the Indemnification Representative. Any
action taken by, or notice or instruction received from, the Indemnification
Representative will be deemed to be an action by, or notice or instruction from,
each and all of the Holders. Parent and the Escrow Agent will disregard any
notice or instruction received from any Holder other than the Indemnification
Representative with regard to this Escrow Agreement. The Indemnification
Representative shall have unlimited authority and power to act on behalf of each
Holder with respect to this Escrow Agreement and the disposition, settlement, or
other handling of all Claims, notices, rights, or obligations arising under this
Escrow Agreement so long as all Holders are treated in the same manner (in
respect of their proportional interests in the Escrow Shares). Until notified in
writing by the Indemnification Representative that such Indemnification
Representative has resigned or by a majority in interest of the Holders that the
Indemnification Representative has been removed, the Escrow Agent may act upon
the directions, instructions and notices of the Indemnification Representative
named herein or any successor named in a writing signed by a
majority-in-interest of the Holders and filed with the Escrow Agent.
9.2 INDEMNIFICATION. The Indemnification Representative shall
not suffer any liability or loss for any act performed or omitted to be
performed by him under this Escrow Agreement in the absence of adjudicated gross
negligence, bad faith or willful misconduct. The Indemnification Representative
may consult with counsel and other experts as may be reasonably necessary to
advise him with respect to his rights and obligations hereunder and shall be
fully protected by any act taken, suffered, permitted, or omitted in good faith
in accordance with the advice of such counsel and experts. The Indemnification
Representative shall not be responsible for the sufficiency or accuracy of the
form, execution, validity, or genuineness of documents or securities now or
hereafter deposited hereunder, or of any endorsement thereof or for any lack of
endorsement thereon, or for any description therein, nor shall he be responsible
or liable in any respect on account of the identity, authority or rights of the
persons executing or delivering or purporting to execute or deliver any such
document, security or endorsement, and the Indemnification Representative shall
be fully protected in relying upon any written notice, demand, certificate or
document which he in good faith believes to be genuine.
9.3 DEATH OR DISABILITY; SUCCESSORS. In the event of the death
or permanent disability of the Indemnification Representative, or his
resignation as the Indemnification Representative, a successor Indemnification
Representative shall be elected by a majority vote of the Holders, with each
Holder to be given a vote equal to his proportionate share of the Escrow Shares.
The Holders shall cause to be delivered to Parent and the Escrow Agent prompt
written notice of such election of a successor Indemnification Representative.
Each successor Indemnification Representative shall have all of the power,
authority, rights, and privileges conferred by this Agreement upon the original
Indemnification Representative, and the term, "INDEMNIFICATION REPRESENTATIVE"
as used herein shall be deemed to include any successor Indemnification
Representative.
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10. TERMINATION; DEFICIENCY CLAIMS
------------------------------
This Escrow Agreement and the escrow created hereby shall
terminate following Escrow Agent's delivery, and Parent's release of all
remaining Escrow Shares, and all related stock transfer powers to the Holders
and/or Parent pursuant to Section 2 or 3. In the event that upon the termination
of this Escrow Agreement, the value of the Escrow Shares released to Parent
pursuant to the provisions of this Escrow Agreement is insufficient to pay in
full to Parent the total amount of the Damages and Prevailing Party Awards to
which it is entitled, then, subject to the limitations in Article X of the
Merger Agreement, Parent shall be entitled to pursue its remedies for any such
deficiency under the Merger Agreement; provided, however, that no party hereto
in connection with any such action may contest any Uncontested Claim or any
Contested Claim that has been resolved in accordance with the provisions of this
Escrow Agreement.
11. MISCELLANEOUS PROVISIONS
------------------------
11.1 PARTIES IN INTEREST. This Escrow Agreement is not
intended, nor shall it be construed, to confer any enforceable rights on any
Person not a party hereto. All of the terms and provisions of this Escrow
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.
11.2 ATTORNEYS' FEES. In the event of any action to enforce
any provision of this Escrow Agreement, or on account of any default under or
breach of this Escrow Agreement with regard to Parent, Calogic and/or the
Holders, the substantially prevailing party in such action shall be entitled to
recover, in addition to all other relief, from the other party all attorneys'
fees incurred by the substantially prevailing party in connection with such
action (including, but not limited to, any appeal thereof).
11.3 ENTIRE AGREEMENT. This Escrow Agreement constitutes the
final and entire agreement among the parties with respect to the subject matter
hereof and supersedes all prior arrangements or understandings.
11.4 NOTICES. All notices, requests, demands or other
communications which are required or may be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed to have been duly given: (i)
on the date of delivery if personally delivered by hand, (ii) upon the third day
after such notice is deposited in the United States mail, if mailed by
registered or certified mail, postage prepaid, return receipt requested, (iii)
upon the date scheduled for delivery after such notice is sent by a nationally
recognized overnight express courier or (iv) by fax upon written confirmation
(including the automatic confirmation that is received from the recipient's fax
machine) of receipt by the recipient of such notice:
IF TO PARENT: Sipex Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
-▇▇-
▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO PARENT'S Boston Equiserve
TRANSFER AGENT: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Sipex Representative
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE INDEMNIFICATION ▇▇▇▇▇▇ Del Arroz
REPRESENTATIVE: c/o Calogic
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
Cooley Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE ESCROW AGENT: State Street Bank and Trust Company
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Trust Department, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Sipex/Calogic Escrow Agent
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 11.4.
11.5 CHANGES. The terms of this Escrow Agreement may not be
modified or amended, or any provisions hereof waived, temporarily or
permanently, except pursuant to the written agreement of Parent, the
Indemnification Representative and the Escrow Agent.
11.6 SEVERABILITY. If any term or provision of this Escrow
Agreement or the application thereof as to any Person or circumstance shall to
any extent be invalid or unenforceable, the remaining terms and provisions of
this Escrow Agreement or the application of such term or
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provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby and each term and
provision of this Escrow Agreement shall be valid and enforceable to the fullest
extent permitted by law.
11.7 COUNTERPARTS. This Escrow Agreement may be executed in
two or more partially or fully executed counterparts, each of which shall be
deemed an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument. The execution and delivery of a
Signature Page to Escrow Agreement in the form annexed to this Escrow Agreement
by any party hereto who shall have been furnished the final form of this Escrow
Agreement shall constitute the execution and delivery of this Escrow Agreement
by such party.
11.8 HEADINGS. The headings of the various sections of this
Escrow Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Escrow Agreement.
11.9 GOVERNING LAW JURISDICTION. This Escrow Agreement shall
be construed and controlled by the laws of the Commonwealth of Massachusetts
without regard to the principles of conflicts of laws. Parent, Calogic, the
Holders and the Indemnification Representative hereby irrevocably consent and
submit to the jurisdiction of the courts in the Commonwealth of Massachusetts
sitting in Suffolk County and of the Untied States District Court for the
District of Massachusetts, sitting in Boston, in connection with any actions or
proceedings brought against any of Parent, Calogic, the Holders and the
Indemnification Representative (or each of them) by the Escrow Agent, or brought
against the Escrow Agent by any of such parties, arising out of or relating to
this Escrow Agreement. In any such action or proceeding, each of the parties
hereby absolutely and irrevocably (i) waives any objection to jurisdiction or
venue, (ii) waives personal service of any summons, complaint, declaration or
other process, and (iii) agrees that the service thereof may be made by
certified or registered first-class mail directed to such party, as the case may
be, at the party's addresses given in or provided under Section 11.4.
11.10 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.
11.11 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, and (b) certificates and
other information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
11.12 BINDING EFFECT. This Escrow Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
affiliates, successors and assigns.
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11.13 COUNTERPARTS. This Agreement may be executed in two or
more partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will constitute
one and the same instrument
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Signature Page to Escrow Agreement
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the day and year first above written.
SIPEX CORPORATION CALOGIC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ Del Arroz
-------------------------------- ----------------------------------
Name: Name: Manny Del Arroz
Title: Title: CEO/President
STATE STREET BANK AND TRUST COMPANY, INDEMNIFICATION REPRESENTATIVE
As Escrow Agent
By: /s/ Chi C. Ma By: /s/ ▇▇▇▇▇▇ Del Arroz
-------------------------------- ----------------------------------
Name: Chi C. Ma Name: ▇▇▇▇▇▇ Del Arroz
Title: Vice President
Holders: /s/ ▇▇▇▇▇▇ Del Arroz
---------------------------
▇▇▇▇▇▇ Del Arroz
/s/ ▇▇▇▇▇▇ Del Arroz
---------------------------
▇▇▇▇▇▇ Del Arroz
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
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