ESCROW AGREEMENT
ESCROW AGREEMENT dated as of October 20, 1998 among META Group, Inc., a
Delaware corporation ("META"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Stockholder
Representative"), as representative of stockholders of The Sentry Group, Inc.
listed on Exhibit A hereto (the "Stockholders") and the other stockholders of
The Sentry Group, Inc., and State Street Bank and Trust Company, as escrow agent
(the "Escrow Agent").
RECITALS
1. META and its wholly-owned subsidiary, MG Acquisition Corporation, a
Massachusetts corporation ("Merger Sub"), have executed a definitive Agreement
and Plan of Merger dated as of September 23, 1998 (the "Merger Agreement") with
The Sentry Group, Inc., a Massachusetts corporation ("SENTRY"), pursuant to
which Merger Sub will merge with and into SENTRY (the "Merger"). The
stockholders of SENTRY (including the Stockholders) have selected the
Stockholder Representative to act on their behalf in connection with the Merger,
though such stockholders are not a party to, and such stockholders (except for
the Stockholders) will have no rights under, this Escrow Agreement. Certain
defined terms used in this Escrow Agreement are defined in Section 6 of this
Escrow Agreement.
2. The Escrow Agent will establish an escrow account (the "Escrow
Account").
3. Pursuant to the Merger Agreement, at the Effective Time, META will
deliver to the Escrow Agent for deposit in the Escrow Account 44,965 shares of
META Common (the "Escrow Shares").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
Section 1. Establishment of Escrow Account.
(a) Pursuant to Section 1.8 of the Merger Agreement, simultaneously with
the Closing, META will deposit with the Escrow Agent a stock certificate in the
name of the Escrow Agent (or its nominee) representing the Escrow Shares, to be
held in an account designated as "META/SENTRY Escrow Account" or having a
similar designation and disbursed in accordance with the terms hereof. The
Escrow Agent agrees to accept the Escrow Shares and to hold and distribute them
in the manner provided herein. The Escrow Agent shall have no responsibility for
the genuineness, validity, market value or title for any intended purpose of the
Escrow Shares.
(b) All dividends and distributions (other than cash dividends and
distributions) made by META with respect to the Escrow Shares will be paid or
made to the Escrow Agent to be held in escrow with the other Escrow Shares as
provided herein as additional assets of the escrow to satisfy indemnification
claims in accordance with Article IX of the Merger Agreement. Such dividends and
distributions shall be deemed to be a part of the Escrow Shares to which they
relate. Cash dividends and distributions, if any, with respect to the Escrow
Shares will be made by META directly to the Stockholders of SENTRY for whose
account such shares are being held hereunder. If a meeting or written action of
stockholders of META occurs while this Escrow Agreement is still in effect, the
Escrow Agent shall promptly send to the Stockholder Representative copies of any
notices, proxies and proxy materials which it receives in connection with such
meeting or written action. The Escrow Agent shall vote the Escrow Shares in
accordance with the instructions set forth in any proxies returned to the Escrow
Agent by the Stockholder Representative and received by the Escrow Agent three
business days prior to the date of any such meeting or written action; provided,
however, that the Escrow Agent will use reasonable efforts to vote any proxies
received thereafter. If no proxy is received, the Escrow Agent shall not vote
such shares.
(c) Exhibit A hereto contains a list of all of the Stockholders whose
shares will be held in the Escrow Account, their addresses and the number of
Escrow Shares held for their account hereunder at the Effective Time of the
Merger. The number of Escrow Shares held for the account of a particular
Stockholder as of the date of this Escrow Agreement relative to the Escrow
Shares held for the account of all Stockholders as of the date of this Escrow
Agreement is referred to herein as such Stockholder's "Proportionate
Percentage." Upon any distribution of Escrow Shares to META in satisfaction of a
Notice of Claim (as defined below) the number of Escrow Shares held for the
account of each Stockholder will be reduced by its Proportionate Percentage,
except for any distribution of Escrow Shares to META in satisfaction of a Notice
of Claim that applies solely to a Major Stockholder with respect to the
Participation Agreement (as expressly set forth in such Notice of Claim), in
which case such distribution shall be applied in reduction of the Escrow Shares
held for the account of such Major Stockholder). In the event that any loss set
forth in a Notice of Claim becomes due in accordance with the provisions of
Section 2 hereof and exceeds any Stockholder's remaining number of Escrow Shares
(a "Deficiency"), then the other Stockholders shall be obligated to cover such
Deficiency according to each Stockholders' relative Proportionate Percentage.
(d) As set forth in the Merger Agreement and other materials, by virtue of
the Stockholders' approval of the Merger Agreement, the Stockholders have,
without any further actions required, consented to: (i) the establishment of the
escrow hereunder to secure the Stockholders' indemnification obligations under
Article IX of the Merger Agreement in the manner set forth herein, (ii) the
appointment of the Stockholder Representative as their representative for
purposes of this Escrow Agreement and as attorney-in-fact and agent for and on
behalf of each such Stockholder and the taking by the Stockholder Representative
of any and all actions and the making of any decisions required or permitted to
be taken or made by him under this Escrow Agreement and (iii) all of the other
terms, conditions and limitations in this Escrow Agreement.
Section 2. Payment by Escrow Agent with Respect to the Escrow Shares.
(a) (i) If META reasonably believes that it, or any other Indemnitee
entitled to indemnification under Section 9.2 of the Merger Agreement (the "META
Indemnitees") has or may suffer a loss that entitles or may entitle it to
indemnification under the Merger Agreement, META may deliver to the Escrow Agent
a written notice (a "Notice of Claim") setting forth in reasonable detail the
nature of the claim, an estimate of the aggregate amount at that time to which
META believes such META Indemnitee is, or may be, entitled to be paid pursuant
to the Merger Agreement, and the amount of Escrow Shares to be delivered to META
in satisfaction of such claim pursuant to Section 2(e) hereof. META shall
deliver a copy of each Notice of Claim to the Stockholder Representative no
later than the date on which such Notice of Claim was delivered to the Escrow
Agent. Each Notice of Claim delivered to the Escrow Agent shall include a
certification that META has delivered a copy of such Notice of Claim to the
Stockholder Representative.
(ii) The Escrow Agent shall deliver to META's transfer agent (as
identified in Section 4 of this Escrow Agreement) (the "Transfer Agent") the
stock certificate representing the Escrow Shares held in the Escrow Account in
exchange for a new stock certificate representing a number of shares of META
Common (which will remain Escrow Shares) equal to the number of Escrow Shares
previously held by the Escrow Agent, less the number of Escrow Shares having a
value (such value to be determined pursuant to Section 2(e) hereof) equal to the
amount set forth in such Notice of Claim as soon as practicable, but no earlier
than 20 business days following receipt by the Escrow Agent of such Notice of
Claim.
Notwithstanding the preceding paragraph, if within the period of 20
business days following receipt by the Escrow Agent of such Notice of Claim the
Escrow Agent shall have received from the Stockholder Representative a written
notice (a "Dispute Notice") stating that he or it disputes the validity or the
amount specified in such Notice of Claim or any portion thereof (a "Disputed
Amount"), the Escrow Agent shall not deliver the Escrow Shares as provided above
for any such disputed amount other than pursuant to Section 2(b).
Except as expressly provided in Section 1(c) hereof, upon any distribution
of Escrow Shares to META in satisfaction of a Notice of Claim by the Escrow
Agent the number of Escrow Shares held for the account of each Stockholder will
be reduced by its Proportionate Percentage of the Escrow Shares distributed to
satisfy the Notice of Claim, except that, with respect to the distribution of
Escrow Shares to META in satisfaction of a Notice of Claim that applies solely
to a Major Stockholder with respect to the Participation Agreement (as specified
in such Notice of Claim), the number of Escrow Shares held for the account of
such Major Stockholder will be reduced by such number of Escrow Shares so
distributed. Any fractional interests will be carried forward until the
distribution of Escrow Shares to the Stockholders, at which time fractional
interests will be rounded in the discretion of META. Within 10 business days
after any payment of a META Indemnitee claim, including a payment made at the
direction of an arbitration panel pursuant to Section 2(c), META will deliver to
the Escrow Agent and the Stockholder Representative a revised Exhibit A, which
will be attached hereto in lieu of the then existing Exhibit A. The Escrow Agent
may rely upon such revised Exhibit A unless and until the Stockholder
Representative delivers an objection thereto in writing to the Escrow Agent and
META. Any disputes regarding Exhibit A will be resolved in the manner provided
in Section 2(c) hereof. Without altering the Escrow Agent's obligations set
forth herein, the Stockholder Representative shall include in each Dispute
Notice, reasonable detail of the nature of the Stockholder Representative's
dispute. The Stockholder Representative shall send a copy of each Dispute Notice
to META no later than the date on which such Dispute Notice was sent to the
Escrow Agent. Each Dispute Notice delivered to the Escrow Agent shall include a
certification that the Stockholder Representative has sent a copy of such
Dispute Notice to META.
(iii) If the Escrow Agent shall not have actually received a Dispute
Notice with respect to the validity or amount specified in a Notice of Claim, or
a portion thereof, within the period of 20 business days following its receipt
of such Notice of Claim, the Stockholder Representative shall be forever barred
and precluded from contesting in any manner or forum whatsoever the distribution
of Escrow Shares on account of such amount not so disputed.
(b) Upon receipt by the Escrow Agent of a notice (a "Resolution Notice")
from META and/or the Stockholder Representative with respect to a Disputed
Amount specifying the amount of such Disputed Amount to which any META
Indemnitee is entitled, accompanied by (A) a written agreement between META and
the Stockholder Representative with respect to such Disputed Amount, or (B) a
final order from an arbitrator pursuant to Section 2(c) of this Escrow Agreement
determining that META is entitled to indemnification, the Escrow Agent shall
cause to be delivered to such META Indemnitee the Escrow Shares having a value
equal to the amount to which such META Indemnitee, or any other META Indemnitee
is entitled, if any, in each case such Escrow Share amount to be specified in
such written agreement or final order, as applicable. META and the Stockholder
Representative agree that the only methods for resolving a Disputed Amount will
be through negotiations between themselves or through use of an arbitrator
pursuant to Section 2(c).
(c) In the event of a Disputed Amount, a dispute regarding revisions to
Exhibit A, or any other dispute regarding this Escrow Agreement, META and the
Stockholder Representative shall in good faith negotiate to settle such dispute.
If no resolution is reached within 30 days after delivery of the Dispute Notice,
a revised Exhibit A or any other written dispute notice regarding this Escrow
Agreement to the Escrow Agent, either party may commence an arbitration
proceeding (a "Proceeding") by submitting the Disputed Amount or other disputed
matters to arbitration within 60 days after the date of delivery of the Dispute
Notice, the revised Exhibit A or other written dispute notice to the Escrow
Agent. Any such arbitration shall be before an arbitral tribunal composed of
three arbitrators; one selected by META, one selected by the Stockholder
Representative and one selected by mutual agreement of the parties (the
"Panel"). If the parties are unable to agree on such third arbitrator, the
arbitrator shall be selected by the American Arbitration Association (the "AAA")
in accordance with its Commercial Arbitration Rules. The Panel will resolve the
Disputed Amount in accordance with the rules of the AAA. The venue for the
arbitration shall be Stamford, Connecticut or such other venue mutually agreed
to by META and the Stockholder Representative. The Panel's award or order shall
be final and binding on META, the Stockholder Representative and the
Stockholders and all costs of such proceeding shall be borne as specified in the
award or order. The provisions of this Section may be enforced in any court
having jurisdiction over the award or any of the Stockholders and META and or
any of their respective assets, and judgment on the award (including without
limitation equitable remedies) granted in any arbitration hereunder may be
entered in any such court. Nothing contained in this Section shall prevent any
party from seeking interim measures of protection in the form of pre-award
attachment of assets or preliminary or temporary equitable relief.
(d) (i) Within 20 business days after the First Termination Date (as
defined below), the Escrow Agent shall deliver the stock certificate
representing the Escrow Shares to the Transfer Agent in exchange for:
(A) stock certificates for and in the name of each Stockholder
with respect to 2,045 of the Escrow Shares minus (1) the number of Escrow
Shares previously released to META in connection with resolved Notices of
Claim (without duplication with respect to Section 2(d)(ii)) other than
any Notices of Claim made by META under Section 9.2(vi) of the Merger
Agreement, (2) the number of Escrow Shares previously released to META in
connection with resolved Notices of Claim (without duplication with
respect to Section 2(d)(ii)) made by META under Section 9.2(vi) of the
Merger Agreement in excess of 42,920, (3) the number of Escrow Shares
subject to any outstanding and unresolved Notices of Claim other than any
outstanding and unresolved Notices of Claim made by META under Section
9.2(vi) of the Merger Agreement and (4) the number of Escrow Shares
subject to any outstanding and unresolved Notices of Claim made by META
under Section 9.2(vi) of the Merger Agreement in excess of 42,920, in the
case of each of subclauses (1)-(4) of this Section 2(d)(i) based on the
amounts set forth in the Notice of Claim, whether or not a Dispute Notice
has been delivered with respect thereto, unless such dispute has been
subsequently resolved; and
(B) a new stock certificate in the name of the Escrow Agent
representing, in the aggregate, the number of Escrow Shares determined
pursuant to Section 2(d)(i)(A)(3), Section 2(d)(i)(A)(4) above and Section
2(d)(ii)(A) below. The "First Termination Date" shall mean October 31,
2000.
Upon receipt of such stock certificates from the Transfer Agent, the
Escrow Agent will promptly deliver such stock certificates for and in the name
of the Stockholders in accordance with Exhibit A to them at such addresses as
the Stockholder Representative shall direct in writing, and the Escrow Agent
will retain the new stock certificate in its name as provided in Section
2(d)(ii) and pending resolution of all outstanding and unresolved claims.
Within 10 business days after the First Termination Date, META will
deliver to the Escrow Agent and the Stockholder Representative a letter (the
"First Release Letter") confirming for the Escrow Agent the name of each
Stockholder, the number of Escrow Shares each such Stockholder will receive
pursuant to Section 2(d)(i)(A) above, and the number of Escrow Shares delivered
to the Escrow Agent pursuant to Section 2(d)(i)(B) above. The Escrow Agent may
rely upon the First Release Letter unless and until the Stockholder
Representative delivers an objection thereto in writing to the Escrow Agent and
META. The Escrow Agent shall have no responsibility for any of the calculations
required by this Section 2(d)(i). Any disputes regarding the First Release
Letter will be resolved in the manner provided in Section 2(c) hereof.
(ii) Within 20 business days after the Final Termination Date (as
defined below), the Escrow Agent shall deliver the stock certificate
representing the Escrow Shares to the Transfer Agent in exchange for:
(A) stock certificates for and in the name of each Stockholder
with respect to 42,920 of the Escrow Shares plus the number of Escrow
Shares determined pursuant to Section 2(d)(i)(A)(3) and Section
2(d)(i)(A)(4) above) minus the number of Escrow Shares previously released
to META in connection with resolved Notices of Claim without duplication
with respect to Section 2(d)(i); provided, however, that the Escrow Agent
shall exclude from such number of Escrow Shares a number of Escrow Shares
equal to the number of Escrow Shares subject to any outstanding and
unresolved Notices of Claim (based on the amounts set forth in the Notice
of Claim, whether or not a Dispute Notice has been delivered with respect
thereto, unless such dispute has been subsequently resolved) and as
provided in the Final Release Letter (as hereinafter defined); and
(B) if applicable, a new stock certificate in the name of the
Escrow Agent representing the aggregate number of Escrow Shares as to
which Notices of Claim are outstanding and not resolved.
In the event that on the Final Termination Date all the matters set forth
in any previously delivered Notice of Claim have not been finally resolved, then
a number of Escrow Shares shall be withheld from the distributions described
above in Sections 2(d)(i) and (ii) in order to provide for the remaining
indemnification obligations of the Stockholders of SENTRY. The "Final
Termination Date" shall mean April 30, 2001.
Upon receipt of such stock certificates from the Transfer Agent, the
Escrow Agent will promptly deliver such stock certificates for and in the name
of the Stockholders in accordance with Exhibit A to them at such addresses as
the Stockholder Representative shall direct in writing, and the Escrow Agent
will retain the new stock certificate in its name pending resolution of all
outstanding and unresolved claims.
Within 10 business days after the Final Termination Date, META will
deliver to the Escrow Agent and the Stockholder Representative a letter (the
"Final Release Letter") confirming for the Escrow Agent the name of each
Stockholder, the number of Escrow Shares each such Stockholder will receive
pursuant to Section 2(d)(ii)(A) above, and, if applicable, the number of Escrow
Shares delivered to the Escrow Agent pursuant to Section 2(d)(ii)(B) above. The
Escrow Agent may rely upon the Final Release Letter unless and until the
Stockholder Representative delivers an objection thereto in writing to the
Escrow Agent and META. The Escrow Agent shall have no responsibility for any of
the calculations required by this Section 2(d)(ii). Any disputes regarding the
Final Release Letter will be resolved in the manner provided in Section 2(c)
hereof.
(iii) If at any time after the First Termination Date with respect
to Section 2(d)(i)(B) or after the Final Termination Date, as the case may be,
there are Escrow Shares in excess of outstanding Notices of Claim due to the
resolution of such outstanding claims either META or the Stockholder
Representative may deliver a certificate to that effect to the Escrow Agent with
a copy to the other party, which certificate will specify the amount of Escrow
Shares to be released by the Escrow Agent. If no written objection has been
delivered within 10 business days by the other party, a distribution will be
effected, as provided in Section 2(d)(i) or Section 2(d)(ii), as applicable. If
a written objection has been delivered within such time period, the controversy
will be resolved pursuant to Section 2(c) hereof. Notwithstanding anything
herein to the contrary, at any time and from time to time by mutual agreement
META and the Stockholder Representative may deliver a certificate signed by both
of them to the Escrow Agent, which certificate will specify the amount of Escrow
Shares to be released by the Escrow Agent, directing it to release Escrow Shares
by the distribution method in Section 2(d)(i) and/or Section 2(d)(ii).
(e) For purposes of this Section 2, Escrow Shares shall be valued at the
Final META Stock Price. The Escrow Agent shall be under no duty or
responsibility with regard to the valuation of the Escrow Shares or the
calculation of the amounts of Escrow Shares to be released or delivered
hereunder.
(f) (i) No Stockholder will offer, sell, assign, pledge, hypothecate,
transfer or otherwise dispose of any Escrow Shares until released from the
Escrow Account.
(ii) META and the Stockholder Representative shall have the right to
inspect and obtain copies of the records of the Escrow Agent upon reasonable
notice and during reasonable business hours and to receive monthly reports of
the status of the Escrow Shares.
Section 3. Concerning the Escrow Agent.
(a) The Escrow Agent will have no duties or obligations other than those
specifically set forth in or contemplated by this Escrow Agreement, each of
which is ministerial (and shall not be construed as fiduciary) and the Escrow
Agent will not be responsible for any of the agreements referred to herein,
including the Merger Agreement.
(b) The Escrow Agent will be fully protected in acting on and relying upon
any written notice, direction, request, waiver, consent, receipt or other paper
or document which the Escrow Agent in good faith believes to have been signed or
presented by the proper party or parties, but will not act on oral instructions
alone of any party.
(c) The Escrow Agent will not be obligated to take any action hereunder
which might in its reasonable judgment involve any extraordinary expense or
liability, unless the payment of such expense or liability is provided for in a
manner satisfactory to the Escrow Agent.
(d) The Escrow Agent and its directors, officers or employees will not be
liable for any error of judgment, or for any act done or step taken or omitted
by it in good faith or for any mistake in fact or law, or for anything which it
may do or refrain from doing in connection with this Escrow Agreement, except
for its own gross negligence, willful misconduct or act of bad faith.
(e) The Escrow Agent may seek the advice of legal counsel, including
in-house counsel, in the event of any dispute or question as to the construction
of any of the provisions of this Escrow Agreement or its duties hereunder, and
it will incur no liability and will be fully protected in respect of any action
taken, omitted or suffered by it in good faith in accordance with the opinion of
such counsel.
(f) The Escrow Agent will be compensated on the basis of its regular fees
as set forth on Exhibit B, plus reasonable out-of-pocket expenses, including the
reasonable fees and costs of attorneys or agents in connection with the
preparation of this Escrow Agreement or which it may find necessary to engage in
performing its duties under this Escrow Agreement (the "Escrow Fees") which will
be invoiced to META. META will be responsible for all of such Escrow Fees.
(g) The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository or
subescrow agent employed by the Escrow Agent than any such book-entry depository
or subescrow agent has to the Escrow Agent, except to the extent that such
action or omission of any book-entry depository or subescrow agent was caused by
the Escrow Agent's own gross negligence, bad faith or willful misconduct.
(h) META and the Stockholder Representative agree to treat the Escrow
established hereunder either as (i) a "grantor trust" or (ii) an agency or
custody arrangement for all tax purposes, and META and the Stockholder
Representative will be responsible for all tax and other filings with respect to
the Escrow Shares. The Escrow Agent shall have no obligation to prepare, sign or
file any federal, state or local tax returns and shall not be deemed to be a
trustee or fiduciary on account of the foregoing. Furthermore, META and the
Stockholder Representative shall instruct the Escrow Agent in writing as to the
identity of the grantor and the trustee under the grantor trust (if META and the
Stockholder Representative agree to treat the Escrow established hereunder as a
grantor trust) or as to the principal of the agency or custody arrangement (if
META and the Stockholder Representative agree to treat the Escrow established
hereunder as an agency or custody arrangement), and with respect to the Escrow
Agent's responsibility for withholding and other taxes, assessments or other
governmental charges, and shall instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under any laws or
regulations that may be applicable in connection with its acting as Escrow Agent
under this Agreement; provided however, that such written instructions shall be
reasonably acceptable to the Escrow Agent. Except as provided below, neither
META, the Stockholder Representative nor the Escrow Agent shall have any
liability to any person on account of taxes, assessments, additions for late
payment, interest, penalties, expenses and other governmental charges that may
be assessed or asserted against META, the Stockholder Representative or the
Escrow Agent in connection with or relating to any payment made or other
activities performed under the terms of this Agreement, including, without
limitation, any liability for the withholding or deduction of (or the failure to
withhold or deduct) the same, and any liability for failure to obtain proper
certifications or to report properly to governmental authorities in connection
with this Agreement, including costs and expenses (including reasonable legal
fees and expenses), interest and penalties (individually, a "Tax Liability").
Notwithstanding the foregoing, META shall indemnify and hold the Escrow Agent
harmless from any Tax Liability. The Escrow Agent hereby agrees to act in
accordance with the written instructions delivered to the Escrow Agent by META
and the Stockholder Representative in accordance with this Section 3(h); and
notwithstanding the foregoing, if the Escrow Agent is grossly negligent in
failing to comply with such written instructions, the immediately preceding
sentence shall not apply to the Escrow Agent, and the Escrow Agent shall not be
entitled to the limitation on Tax Liability provided in the fourth sentence of
this Section 3(h). The Stockholder Representative acknowledges and agrees with
META that the Stockholders shall contribute to the amount paid or payable by
META as a result of any indemnification obligation or other liability (including
reasonable legal fees and expenses) to which META may become subject under or in
connection with this Section 3(h) in such proportion as is appropriate to
reflect, as between META and the Stockholders, the party responsible for the
payment of any such Tax Liability.
(i) The Escrow Agent will be, and hereby is, indemnified and saved
harmless by META and the Stockholder Representative, jointly and severally, from
all liabilities, losses, costs and expenses (including reasonable attorneys'
fees and expenses) which may be incurred by it as a result of or arising out of
this Escrow Agreement, including its involvement in any arbitration or
litigation arising from performance of its duties under this Escrow Agreement,
other than litigation or arbitration resulting from or with respect to any
action taken or omitted by the Escrow Agent for which it will have been adjudged
grossly negligent or guilty of willful misconduct or bad faith. Such
indemnifications in Sections 3(h) and (i) hereof will survive termination of
this Escrow Agreement.
(j) The Escrow Agent may at any time resign as Escrow Agent hereunder by
giving thirty (30) days prior written notice of resignation to META and the
Stockholder Representative. Prior to the effective date of the resignation as
specified in such notice, META will issue to the Escrow Agent a written
instruction authorizing redelivery of the Escrow Shares to a bank or trust
company that it selects. Such bank or trust company shall have capital, surplus
and undivided profits in excess of $100,000,000. If, however, META shall fail to
name a successor escrow agent within twenty (20) days after the notice of
resignation from the Escrow Agent, the Stockholder Representative shall be
entitled to name such successor escrow agent. If no successor escrow agent is
named by META or the Stockholder Representative, the Escrow Agent may apply to a
court of competent jurisdiction for appointment of a successor escrow agent.
(k) If a controversy arises between one or more of the parties to this
Escrow Agreement, as to whether or not the Escrow Agent will distribute any of
the Escrow Shares, or as to any other matter arising out of or relating to this
Escrow Agreement or the Escrow Shares, the Escrow Agent will not be required to
determine the controversy and need not make any distribution of the Escrow
Shares but may retain the same without liability to any party until the rights
of the parties to the dispute will have finally been determined by an
arbitration panel as provided for in Section 2(c) of this Escrow Agreement or
until it receives joint written instructions with respect thereto from the
Stockholder Representative and META. If a controversy of the type referred to in
this Section 3 arises, the Escrow Agent may, but shall be under no duty
whatsoever to, request that the parties commence arbitration proceedings as
provided in Section 2(c) of this Escrow Agreement for determination of the
controversy, and the parties will promptly comply with such request.
Section 4. Miscellaneous Provisions.
(a) All notices, consents and other communications under this Escrow
Agreement shall be in writing and shall, except as otherwise provided herein, be
deemed to have been duly given when (i) delivered by hand, (ii) sent by telex or
telecopier (with receipt confirmed), provided that a copy is mailed by certified
mail, return receipt requested, and actually received by the addressee or (iii)
when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (receipt requested), in each case, at the
appropriate addresses, telex numbers and telecopier numbers as set forth below:
If to Escrow Agent, to:
State Street Bank & Trust Company
Corporate Trust Department, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ - META/SENTRY Escrow Agreement
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Transfer Agent, to:
ChaseMellon Shareholder Services, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Shareholder Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to META, to:
META Group, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Stockholder Representative, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Safeguard Scientifics, Inc.
800 The Safeguard Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ DeN. Cope
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(or to such other addresses, telex numbers and telecopier numbers as a party may
designate as to itself by written notice to the other parties). Notwithstanding
any of the foregoing, no notice or instructions to the Escrow Agent or
Stockholder Representative shall be deemed to have been received by it prior to
actual receipt, no notice to the Escrow Agent or Stockholder Representative
shall be deemed effective until such receipt by it, and any computation of a
time period which is to begin after receipt of a notice by the Escrow Agent
shall run from the date of such receipt by it.
(b) Nothing in this Escrow Agreement shall be construed to limit the right
of META or any other META Indemnitee under any provision of the Merger
Agreement.
(c) This Escrow Agreement shall be governed by, and construed in
accordance with, the laws (other than the choice or conflicts of laws rules and
provisions) of the Commonwealth of Massachusetts. META and the Stockholder
Representative hereby absolutely and irrevocably consent and submit to the
jurisdiction of the courts in the Commonwealth of Massachusetts and of any
Federal court located in said Commonwealth in connection with any actions or
proceedings brought against them (or each of them) by the Escrow Agent arising
out of or relating to this Escrow Agreement. In any such action or proceeding,
META and the Stockholder Representative hereby absolutely and irrevocably (i)
waive any objection to jurisdiction or venue, (ii) waive personal service of any
summons, complaint, declaration or other process, and (iii) agree that the
service thereof may be made by certified or registered first-class mail directed
to such party, as the case may be, at their respective addresses in accordance
with Section 4(a) hereof.
(d) This Escrow Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original instrument and all of which
together shall constitute a single agreement.
(e) Neither META nor the Stockholders Representative nor the Escrow Agent
shall 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.
(f) This Escrow Agreement shall be binding upon the respective parties
hereto and their heirs, executors, successors and assigns.
(g) This Escrow Agreement may not be altered or modified without the
express written consent of META, the Stockholder Representative and the Escrow
Agent. No course or conduct shall constitute a waiver of any of the terms and
conditions of this Escrow Agreement, unless such waiver is specified in writing,
and then only to the extent so specified. A waiver of any of the terms and
conditions of this Escrow Agreement on one occasion shall not constitute a
waiver of the other terms of this Escrow Agreement, or of such terms and
conditions on any other occasion.
(h) This Escrow Agreement and all documents relating thereto, including,
without limitation, (i) consents, waivers and modifications which may hereafter
be executed, and (b) certificates and other information previously or hereafter
furnished, may be reproduced by an 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 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.
Section 5. The Stockholder Representative.
(a) As long as there are Escrow Shares held in escrow pursuant to this
Escrow Agreement, the Stockholders, and each of them, will be represented by the
Stockholder Representative, who is empowered to receive any notice under this
Escrow Agreement for the Stockholders, and each of them, and to give any and all
notices and instructions and take any and all action for and on behalf of the
Stockholders, and each of them, under this Escrow Agreement. The Stockholders
will have the right to remove the Stockholder Representative and, upon such
removal or, in the event of the Stockholder Representative's death or
resignation, to appoint as the new Stockholder Representative any former
stockholder of SENTRY at any time and from time to time during the period when
any shares are held in escrow, by a vote of at least three Stockholders holding
in the aggregate a majority interest in the Escrow Shares held in escrow at such
time evidenced by a writing executed by such Stockholders. The appointment of a
new Stockholder Representative will be of no force or effect whatsoever upon
META or the Escrow Agent or otherwise under this Escrow Agreement until three
days after the date when both META and the Escrow Agent have received written
notice of such appointment, which notice must include at least: (i) the identity
and address of the new Stockholder Representative and a statement that such
Stockholder Representative has been appointed by a vote of at least three
Stockholders holding in the aggregate a majority interest in the Escrow Shares
then held in escrow; (ii) the duly acknowledged signatures of each of the
Stockholders voting for the new Stockholder Representative;(iii) a statement
that any non-signing Stockholder has been notified in writing of the appointment
of the new Stockholder Representative and (iv) a statement by the new
Stockholder Representative that it agrees to accept and assume its duties and
obligations under this Escrow Agreement, including any indemnification
obligations. META and the Escrow Agent will be entitled to rely on any notice
received in such form without conducting an investigation of the contents
thereof. Any notice given to the Stockholder Representative will constitute
notice to each and all of the Stockholders at the time notice is given to the
Stockholder Representative. Any action taken by, or notice or instruction
received from, the Stockholder Representative will be deemed to be action by, or
notice or instruction from, each and all of the Stockholders. META may and the
Escrow Agent will disregard any notice or instruction received from any
Stockholder other than the then acting Stockholder Representative with regard to
this Escrow Agreement.
(b) The Stockholder 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 gross negligence or willful misconduct. The
Stockholder Representative may consult with counsel in connection with his
duties hereunder and shall be fully protected by any act taken, suffered,
permitted, or omitted in good faith in accordance with the advice of counsel.
The Stockholder 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 thereof 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 Stockholder
Representative shall be fully protected in relying upon any written notice
demand, certificate or document which he in good faith believes to be genuine.
(c) The Stockholder Representative shall be entitled to employ such legal
counsel and other experts as he may deem necessary to advise him properly with
respect to his rights and obligations hereunder and to evaluate claims and to
pursue challenges to claims or to defend third party claims. The expenses and
fees of such counsel and experts, and any out of pocket expenses which the
Stockholder Representative incurs under Sections 2 or 3 hereunder in relation to
evaluating, challenging or contesting claims, shall be reimbursed by the
Stockholders in accordance with the Proportionate Percentages.
(d) The Stockholder Representative hereby agrees to do such acts, and
execute further documents, as shall be necessary to carry out the provisions of
this Escrow Agreement or to transfer any Escrow Shares pursuant to the terms
hereof.
Section 6. Certain Defined Terms. For purposes of this Escrow
Agreement, the following terms shall have the meanings set forth below:
(a) "Effective Time" means the time of filing of the executed articles of
merger to effectuate the Merger with the Secretary of the Commonwealth of the
Commonwealth of Massachusetts pursuant to Section 78 of the Massachusetts
Business Corporation Law.
(b) "Final META Stock Price" means the average closing price of META
Common (rounded to the nearest ▇▇▇▇▇) for the five (5) trading days ending on
and including the second-to-last trading day which immediately precedes the date
on which a payment is made pursuant to Section 9.5 of the Merger Agreement or a
valuation is made of Escrow Shares for any other reason provided for in the
Merger Agreement, as the case may be, in each case calculated on the basis of
the last reported sales price of META Common on the Nasdaq National Market, and
as certified to the Escrow Agent in the First Release Letter, the Final Release
Letter or Notice of Claim.
(c) "Indemnitee" means each of META and its officers, directors,
shareholders and employees and, effective at and as of the Effective Time,
without duplication, Sentry (as the surviving corporation) and its officers,
directors, shareholders and employees and each of their respective subsidiaries
and affiliates.
(d) "Major Stockholders" means Safeguard Scientifics (Delaware), Inc.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. Root, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(e) "META Common" means shares of Common Stock, par value $.01 per share,
of META.
(f) "Participation Agreement" means that certain Participation Agreement
dated as of September 23, 1998, by and between META and the Major Stockholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement as
of the date first written above.
STATE STREET BANK AND TRUST COMPANY,
as Escrow Agent
By:/s/▇. ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
META GROUP, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:CFO, SVP-Finance, Secretary and
Treasurer
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, as Stockholder
Representative
Exhibit A
---------
Stockholders Escrow Shares Proportionate Percentage
------------ ------------- -----------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 2,028 4.510%
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 1,521 3.383
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇. 8,112 18.041
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 2,293 5.100
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Safeguard Scientifics 27,349 60.822
(Delaware), Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 1,691 3.761
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 314 0.698
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Root, ▇▇▇▇▇▇▇ ▇. 314 0.698
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Stockholders Escrow Shares Proportionate Percentage
------------ ------------- ------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 101 0.225
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ounsworth, ▇▇▇▇▇ ▇. 233 0.518
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇. 233 0.518
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 53 0.118
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Miles, ▇▇▇▇▇▇▇ ▇. 174 0.387
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 174 0.387
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 152 0.338
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 152 0.338
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 71 0.158
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------
Totals: 44,965 100.000%
