Exhibit 10.13
ESCROW AGREEMENT
This Escrow Agreement is entered into as of June 30, 1999 (the
"Agreement"), by and among Intrinsix Corp., a Massachusetts corporation (the
"Buyer"), Xxxxx Xxxxxxx and Xxxxx X. Xxxxxxxx (the "Securityholder Agents") and
State Street Bank and Trust Company (the "Escrow Agent").
WHEREAS, the Buyer and SEVA Technologies, Inc. (the "Company") have
entered into an Agreement and Plan of Merger, dated June 11, 1999 (the "Merger
Agreement"), by and among the Company, the Buyer and Intrinsix Merger Corp., a
subsidiary of the Buyer (the "Transitory Subsidiary"). The Company will be
merged into the Transitory Subsidiary.
WHEREAS, the Merger Agreement provides that an escrow account will be
established to secure the indemnification obligations of the stockholders of
record of the Company (the "Company Stockholders") to the Buyer (the
"Indemnified Person") under the Merger Agreement on the terms and conditions set
forth herein.
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Consent of Company Stockholders. By virtue of the Company Stockholders'
approval of the Merger Agreement, the Company Stockholders receiving shares of
common stock, no par value per share, of the Buyer (the "Buyer Common Stock")
pursuant to the Merger (the "Indemnifying Stockholders") have, without any
further act of any Company Stockholder, consented to: (a) the establishment of
this escrow to secure the Company Stockholders' indemnification obligations
under Article VI of the Merger Agreement in the manner set forth herein, (b) the
appointment of the Securityholder Agents as their representatives for purposes
of this Agreement and as attorneys-in-fact and agents for and on behalf of each
Indemnifying Stockholder, and the taking by the Securityholder Agents of any and
all actions and the making of any decisions required or permitted to be taken or
made by them under this Agreement and (c) all of the other terms, conditions and
limitations in this Agreement.
2. Securityholder Agents' Representations and Succession.
a. The Securityholder Agents represent and warrant to the Escrow
Agent that they have the irrevocable right, power and authority (i) to enter
into and perform this Agreement and bind all of the Indemnifying Stockholders to
its terms, (ii) to give and receive directions and notices hereunder; and (iii)
to make all determinations that may be required or that they deem appropriate
under this Agreement.
b. Until notified in writing by the Securityholder Agents that they
or either of them has resigned or been removed by a majority in interest of the
Indemnifying Stockholders,
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the Escrow Agent may act upon the directions, instructions and notices of the
Securityholder Agents who are original parties to this Escrow Agreement and,
thereafter, upon the directions, instructions and notices of any successor named
in a writing executed by a majority-in-interest of the Indemnifying Stockholders
filed with the Escrow Agent.
3. Escrow and Indemnification.
a. Escrow of Shares. On the date of the closing of the transactions
contemplated by the Merger Agreement (the "Closing Date"), the Buyer shall
deposit with the Escrow Agent a certificate for 49,995 shares of Buyer Common
Stock (the "Escrow Shares"), either issued in the name of the Escrow Agent or
accompanied by stock powers endorsed to transfer the shares to the Escrow Agent
or its nominee, with guaranteed signatures. The Buyer may from time to time
deposit a certificate for additional Escrow Shares, either issued in the name of
the Escrow Agent or accompanied by stock powers endorsed to transfer the shares
to the Escrow Agent or its nominee, with guaranteed signatures, with the Escrow
Agent pursuant to the final sentence of Section 1.7(a) of the Merger Agreement.
The Escrow Shares shall be held as a trust fund and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any creditor
of any party hereto. The Escrow Agent agrees to accept delivery of the Escrow
Shares and to hold the Escrow Shares in an escrow account (the "Escrow
Account"), subject to the terms and conditions of this Agreement.
b. Indemnification. The Indemnifying Stockholders have agreed in
Article VI of the Merger Agreement to indemnify and hold harmless the
Indemnified Person from and against specified Damages. For purposes of this
Agreement, "Damages" shall mean any and all debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies, losses and
expenses (including without limitation amounts paid in settlement, interest,
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) incurred or suffered by the Indemnified Person, the Transitory
Subsidiary or any Affiliate thereof, including the reasonable fees and expenses
of counsel incurred by the Indemnified Person in participating in the defense,
the control of which is assumed by the Securityholder Agents, of any action,
suit or proceeding relating to a third party claim (for which indemnification
may be sought pursuant to Article VI of the Merger Agreement) where the
Indemnified Person reasonably concludes that the indemnifying parties and the
Indemnified Person have conflicting interests or different defenses available.
Subject to the limitations, and in the manner provided, in this Agreement, the
Escrow Shares shall be the sole and exclusive security for such indemnity
obligation of the Indemnifying Stockholders, and the aggregate liability of such
indemnity obligation shall not exceed the amount of the Escrow Shares; provided,
however, that the foregoing limitation shall not apply to liability for fraud.
c. Dividends, Etc. Any securities distributable to the Indemnifying
Stockholders in respect of or in exchange for any of the Escrow Shares, whether
by way of stock dividends, stock splits or otherwise, shall be delivered to the
Escrow Agent, who shall hold such securities in the Escrow Account. Such
securities shall either be issued in the name of the Escrow Agent or accompanied
by stock powers endorsed to transfer the shares to the Escrow
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Agent or its nominee, with guaranteed signatures, and shall be considered Escrow
Shares for purposes hereof. Any cash dividends or property (other than
securities) distributable to the Indemnifying Stockholders in respect of the
Escrow Shares shall be distributed to the Escrow Agent who shall hold such
securities in the Escrow Account.
d. Voting of Shares. The Securityholder Agents shall have the right,
in their sole discretion, on behalf of the Indemnifying Stockholders, to direct
the Escrow Agent in writing as to the exercise of any voting rights pertaining
to the Escrow Shares, and the Escrow Agent shall comply with any such written
instructions. In the absence of such instructions, the Escrow Agent shall not
vote any of the Escrow Shares. The Securityholder Agents shall have no
obligation to solicit consents or proxies from the Indemnifying Stockholders for
purposes of any such vote.
e. Transferability. The respective interests of the Indemnifying
Stockholders in the Escrow Shares shall not be assignable or transferable, other
than by operation of law. Notice of any such assignment or transfer by operation
of law shall be given to the Escrow Agent and the Buyer, and no such assignment
or transfer shall be valid until such notice is given.
4. Administration of Escrow Account. The Escrow Agent shall administer the
Escrow Account as follows:
a. The Escrow Agent shall hold and safeguard the Escrow Shares,
shall treat such fund as a trust fund in accordance with the terms of this
Agreement and not as property of the Buyer, and shall hold and dispose of the
Escrow Shares only in accordance with the terms hereof. The Escrow Agent shall
have no responsibility for the genuiness, validity, market value, title or
sufficiency for any intended purpose of any shares held by it in escrow under
this Agreement.
b. If an Indemnified Person has incurred or suffered Damages for
which it is entitled to indemnification under Article VI of the Merger
Agreement, the Indemnified Person shall, prior to the expiration of the
representation, warranty, covenant or agreement to which such claim relates,
give written notice of such claim (a "Claim Notice") to the Securityholder
Agents and the Escrow Agent. Each Claim Notice shall specify in reasonable
detail the individual Damages included in the amount so stated (the "Claimed
Amount"), the date each such item was paid or properly accrued and the nature of
the misrepresentation or breach to which it was related. For purposes of this
Agreement, the "Termination Date" shall mean the date on which all of the
representations and warranties, with the exception of the representations and
warranties contained in Section 2.9 and Section 2.21 of the Merger Agreement,
covenants and agreements of the Company expire, which shall be one year after
the Closing Date; provided, however, that those representations and warranties
of the Company and the Buyer that relate to contingencies that are subject to
resolution through the audit process shall only survive the execution and
delivery of the Merger Agreement and the Closing Date until the earlier of (i)
the public issuance of the first independent audit report on the Buyer following
the Closing Date which covers a period subsequent to the Closing Date, a copy of
which report the Buyer shall provide to the Escrow Agent as a form of notice of
termination of this Agreement, and (ii) the first anniversary of the Closing
Date.
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c. Within 20 days after delivery of a Claim Notice the
Securityholder Agents shall provide to the Indemnified Person, with a copy to
the Escrow Agent, a written response (the "Response Notice") in which the
Securityholder Agents shall: (i) agree that Escrow Shares having a Fair Market
Value (as specified in Section 6) equal to the full Claimed Amount may be
released from the Escrow Account to the Indemnified Person, (ii) agree that
Escrow Shares having a Fair Market Value equal to part, but not all, of the
Claimed Amount (the "Agreed Amount") may be released from the Escrow Account to
the Indemnified Person or (iii) contest that any of the Escrow Shares may be
released from the Escrow Account to the Indemnified Person. The Securityholder
Agents may contest the release of Escrow Shares having a Fair Market Value equal
to all or a portion of the Claimed Amount only based upon a good faith belief
that all or such portion of the Claimed Amount does not constitute Damages for
which the Indemnified Person is entitled to indemnification under Article VI of
the Merger Agreement. If no Response Notice is delivered by the Securityholder
Agents within such 20-day period, the Securityholder Agents shall be deemed to
have agreed that Escrow Shares having a Fair Market Value equal to all of the
Claimed Amount may be released to the Indemnified Person from the Escrow
Account.
d. If the Securityholder Agents in the Response Notice agree (or are
deemed to have agreed) that Escrow Shares having a Fair Market Value equal to
all of the Claimed Amount may be released from the Escrow Account to the
Indemnified Person, the Escrow Agent shall, after two business days from the
earlier of (i) the required delivery date for the Response Notice or (ii) the
delivery of the Response Notice, transfer, deliver and assign to the Indemnified
Person such number of Escrow Shares held in the Escrow Account which have a Fair
Market Value equal to the Claimed Amount (or such lesser number of Escrow Shares
as is then held in the Escrow Account).
e. If the Securityholder Agents in the Response Notice agree that
Escrow Shares having a Fair Market Value equal to part, but not all, of the
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, the Escrow Agent shall, after two business days from the delivery of the
Response Notice, transfer, deliver and assign to the Indemnified Person such
number of Escrow Shares held in the Escrow Account which have a Fair Market
Value equal to the Agreed Amount (or such lesser number of Escrow Shares as is
then held in the Escrow Account).
f. If the Securityholder Agents in the Response Notice contest the
release of Escrow Shares having a Fair Market Value equal to all or part of the
Claimed Amount (the "Contested Amount"), the matter shall be settled by binding
arbitration in Boston, Massachusetts. All claims shall be settled by three
arbitrators in accordance with the Commercial Arbitration Rules then in effect
of the American Arbitration Association (the "AAA Rules"). The Securityholder
Agents and the Indemnified Person shall each designate one arbitrator within 15
days of the delivery of the Securityholder Agents' Response Notice contesting
the Claimed Amount. The Securityholder Agents and the Indemnified Person shall
cause such designated arbitrators mutually to agree upon and designate a third
arbitrator; provided, however, that (i) failing such agreement within 45 days of
delivery of the Securityholder Agents' Response Notice, the third arbitrator
shall be appointed in accordance with the AAA Rules and (ii) if either the
Securityholder Agents or the Indemnified Person fail to
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timely designate an arbitrator, the dispute shall be resolved by the one
arbitrator timely designated. The Indemnifying Stockholders and the Indemnified
Person shall pay the fees and expenses of their respectively designated
arbitrators and shall bear equally the fees and expenses of the third
arbitrator. The Securityholder Agents and the Indemnified Person shall cause the
arbitrators to decide the matter to be arbitrated pursuant hereto within 60 days
after the appointment of the last arbitrator. The arbitrators' decision shall
relate solely to whether the Indemnified Person is entitled to receive the
Contested Amount (or a portion thereof) pursuant to the applicable terms of the
Merger Agreement and this Agreement. The final decision of the majority of the
arbitrators shall be furnished to the Securityholder Agents, the Indemnified
Person and the Escrow Agent in writing and shall constitute a conclusive
determination of the issue in question, binding upon the Securityholder Agents,
the Indemnifying Stockholders, the Indemnified Person and the Escrow Agent, and
shall not be contested by any of them. The Escrow Agent shall be required to act
in accordance with any arbitrator's decision so long as the Securityholder
Agents and the Indemnified Person shall provide notice to the Escrow Agent of
the names and addresses of the arbitrators appointed. Such decision may be used
in a court of law only for the purpose of seeking enforcement of the
arbitrators' award. After delivery of a Response Notice that the Claimed Amount
is contested by the Securityholder Agents, the Escrow Agent shall continue to
hold in the Escrow Account a number of Escrow Shares having a Fair Market Value
sufficient to cover the Contested Amount (up to the number of Escrow Shares then
available in the Escrow Account), notwithstanding the occurrence of the
Termination Date, until (i) delivery of a copy of a settlement agreement
executed by the Indemnified Person and the Securityholder Agents setting forth
instructions to the Escrow Agent as to the release of Escrow Shares, if any,
that shall be made with respect to the Contested Amount or (ii) delivery of a
copy of the final award of the majority of the arbitrators setting forth
instructions to the Escrow Agent as to the release of Escrow Shares, if any,
that shall be made with respect to the Contested Amount. The Escrow Agent shall
thereupon release Escrow Shares from the Escrow Account (to the extent Escrow
Shares are then held in the Escrow Account) in accordance with such agreement or
instructions.
5. Release of Escrow Shares.
a. Promptly after the Termination Date, the Escrow Agent shall
distribute to the Indemnifying Stockholders all of the Escrow Shares then held
in escrow. Notwithstanding the foregoing, if an Indemnified Person has
previously given a Claim Notice which has not then been resolved in accordance
with Section 4, the Escrow Agent shall retain in the Escrow Account after the
Termination Date a number of Escrow Shares having a Fair Market Value equal to
the Claimed Amount covered by any Claim Notice which has not then been resolved.
Any funds so retained in escrow shall be disbursed in accordance with the terms
of the resolution of such claims.
b. Any distribution of all or a portion of the Escrow Shares to the
Indemnifying Stockholders shall be made in accordance with the percentages set
forth opposite such holders' respective names on Attachment A attached hereto;
provided, however, that the Escrow Agent shall withhold the distribution of the
portion of the Escrow Shares otherwise distributable to Indemnifying
Stockholders who have not, according to written notice provided by the Buyer to
the Escrow Agent, prior to such distribution, surrendered their respective
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certificates representing shares of Company Common Stock (the "Certificates")
pursuant to the terms and conditions of the Merger Agreement; and provided
further that such Attachment A shall be appropriately revised in the event the
Buyer deposits additional Escrow Shares with the Escrow Agent pursuant to the
final sentence of Section 1.6(a) of the Merger Agreement following the date of
this Agreement. Any such withheld shares shall be delivered to the Buyer
promptly after the Termination Date, and shall be delivered by the Buyer to the
Indemnifying Stockholders to whom such shares would have otherwise been
distributed upon surrender of their respective Certificates. Distributions to
the Indemnifying Stockholders shall be made by mailing stock certificates to
such holders at their respective addresses shown on Attachment A (or such other
address as may be provided in writing to the Escrow Agent by any such holder).
No fractional Escrow Shares shall be distributed to Indemnifying Stockholders
pursuant to this Agreement. Instead, the number of shares that each Indemnifying
Stockholder shall receive shall be rounded up or down to the nearest whole
number (provided that the Securityholder Agents shall have the authority to
effect such rounding in such a manner that the total number of whole Escrow
Shares to be distributed equals the number of Escrow Shares then held in the
Escrow Account).
6. Valuation of Escrow Shares. For the purposes of this Agreement, the
Fair Market Value of the Escrow Shares shall be $2.40 per share.
7. Concerning the Escrow Agent.
a. Each of the Buyer and the Securityholder Agents (the "Interested
Parties") acknowledges and agrees that the Escrow Agent (i) shall not be
responsible for any of the 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, (ii) shall be
obligated only for the performance of such duties as are expressly and
specifically set forth in this Escrow Agreement on its part to be performed,
each of which is ministerial (and shall not be construed to be fiduciary) in
nature, and no implied duties or obligations of any kind shall be read into this
Agreement against or on the part of the Escrow Agent, (iii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve or cause it to incur any expense or liability unless it shall
have been furnished with acceptable indemnification, (iv) may rely on and shall
be protected in acting or refraining from acting upon any written notice,
instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument,
statement, certificate, request or other document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility for determining the accuracy thereof,
and (v) may consult counsel satisfactory to it, including in-house counsel, and
the opinion or advice of such counsel in any instance shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or advice of
such counsel.
b. The Escrow Agent shall not be liable to anyone for any action
taken or omitted to be taken by it hereunder except in the case of the Escrow
Agent's gross negligence or wilful misconduct in breach of the terms of this
Agreement. In no event shall the Escrow Agent
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be liable for indirect, punitive, special or consequential damage or loss
(including but not limited to lost profits) whatsoever, even if the Escrow Agent
has been informed of the likelihood of such loss or damage and regardless of the
form of action.
c. 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
securities intermediary employed by the Escrow Agent than any such book-entry
depository or securities intermediary has to the Escrow Agent, except to the
extent that such action or omission of any book-entry depository or securities
intermediary was caused by the Escrow Agent's own gross negligence, bad faith or
wilful misconduct in breach of this Agreement.
8. Compensation, Expenses Reimbursement and Indemnification.
a. The Buyer shall (i) pay or reimburse the Escrow Agent for its
attorney's fees and expenses incurred in connection with the preparation of this
Agreement and (ii) pay the Escrow Agent's compensation for its normal services
hereunder in accordance with the fee schedule attached hereto as Attachment B,
which may be subject to change hereafter on an annual basis. The Buyer shall pay
the Escrow Agent's annual service fee for the first year of service under this
Agreement at the time this Agreement is executed, and its fee for each
subsequent year of service shall be due and payable in advance on the
anniversary of the date hereof.
b. The Buyer and the Indemnifying Stockholders agree, jointly and
severally, to reimburse the Escrow Agent on demand for all costs and expenses
incurred in connection with the administration of this Agreement or the escrow
created hereby or the performance or observance of its duties hereunder which
are in excess of its compensation for normal services hereunder, including
without limitation, payment of any legal fees and expenses incurred by the
Escrow Agent in connection with resolution of any claim by any party hereunder.
c. The Buyer and the Indemnifying Stockholders covenant and agree,
jointly and severally, to indemnify the Escrow Agent (and its directors,
officers and employees) and hold it (and such directors, officers and employees)
harmless from and against any loss, liability, damage, cost and expense of any
nature incurred by the Escrow Agent arising out of or in connection with this
Agreement or with the administration of its duties hereunder, including but not
limited to attorney's fees and other costs and expenses of defending or
preparing to defend against any claim of liability unless and except to the
extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent's gross negligence, bad faith, or willful misconduct. The foregoing
indemnification and agreement to hold harmless shall survive the termination of
this Agreement and the resignation of the Escrow Agent.
d. Without altering or limiting the joint and several liability of
any of the Buyer and Indemnifying Stockholders to the Escrow Agent hereunder and
with the exception of the amounts payable by the Buyer to the Escrow Agent
pursuant to Section 8(a), the Buyer, on the one hand, and the Indemnifying
Stockholders, on the other hand, shall each be liable for one-half of all
amounts payable to the Escrow Agent pursuant to this Section 8.
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9. Tax-Related Terms.
a. Tax Reporting. The Buyer and the Indemnifying Stockholders agree
that, for tax reporting purposes, all interest or other income earned from the
investment of the Escrow Funds in any tax year shall (i) to the extent such
interest or other income is distributed by the Escrow Agent to any person or
entity pursuant to the terms of this Agreement during such tax year, be
allocated to such person or entity, and (ii) otherwise shall be allocated to the
Buyer and the Indemnifying Stockholders, one-half each.
b. Certification of Tax Identification Number. The Buyer and the
Indemnifying Stockholders agree to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W-9 (or Form W-8, in case
of non-U.S. persons) to the Escrow Agent promptly after the execution of this
Agreement but in no event later than thirty days after execution. The Interested
Parties understand that in the event their tax identification numbers are not
certified to the Escrow Agent, the Internal Revenue Code, as amended from time
to time, may require withholding of a portion of any interest or other income
earned on the investment of the Escrow Funds.
c. Tax Indemnification. The Buyer and the Indemnifying Stockholders
agree, jointly and severally, (i) to assume any and all obligations imposed now
or hereafter by any applicable tax law with respect to any payment or
distribution of the Escrow Shares or performance of other activities under this
Agreement, (ii) to instruct the Escrow Agent in writing with respect to the
Escrow Agent's responsibility for withholding and other taxes, assessments or
other governmental charges, and to 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, and (iii) to indemnify and hold the Escrow Agent harmless
from any liability or obligation on account of taxes, assessments, additions for
late payment, interest, penalties, expenses and other governmental charges that
may be assessed or asserted against 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.
The foregoing indemnification and agreement to hold harmless shall survive the
termination of this Agreement and the resignation of the Escrow Agent.
10. Liability and Authority of Securityholder Agents; Successors and
Assignees.
a. The Securityholder Agents shall incur no liability to the
Indemnifying Stockholders with respect to any action taken or suffered by them
in reliance upon any note, direction, instruction, consent, statement or other
documents believed by them to be genuinely and duly authorized, nor for other
action or inaction except their own willful misconduct or gross negligence. The
Securityholder Agents may, in all questions arising under the Escrow Agreement,
rely on the advice of counsel and for anything done, omitted or suffered in good
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faith by the Securityholder Agents based on such advice, the Securityholder
Agents shall not be liable to the Indemnifying Stockholders.
b. In the event of the death or permanent disability of either
Securityholder Agents, or his resignation as a Securityholder Agent, a successor
Securityholder Agent shall be appointed by the other Securityholder Agent or,
absent its appointment, a successor Securityholder Agents shall be elected by a
majority vote of the Indemnifying Stockholders, with each such Indemnifying
Stockholder (or his or her successors or assigns) to be given a vote equal to
the number of votes represented by the shares of Company Common Stock held by
such Indemnifying Stockholder immediately prior to the Effective Time. Each
successor Securityholder Agents shall have all of the power, authority, rights
and privileges conferred by this Agreement upon the original Securityholder
Agents, and the term "Securityholder Agents" as used herein shall be deemed to
include successor Securityholder Agents.
c. The Securityholder Agents, acting jointly but not singly, shall
have full power and authority to represent the Indemnifying Stockholders, and
their successors, with respect to all matters arising under this Agreement and
all actions taken by any Securityholder Agent hereunder shall be binding upon
the Indemnifying Stockholders, and their successors, as if expressly confirmed
and ratified in writing by each of them. Without limiting the generality of the
foregoing, the Securityholder Agents, acting jointly but not singly, shall have
full power and authority to interpret all of the terms and provisions of this
Agreement, to compromise any claims asserted hereunder and to authorize payments
to be made with respect thereto, on behalf of the Indemnifying Stockholders and
their successors. All actions to be taken by the Securityholder Agents hereunder
shall be evidenced by, and taken upon, the written direction of a majority
thereof.
11. Amounts Payable by Indemnifying Stockholders.
a. The amounts payable by the Indemnifying Stockholders under this
Agreement (i.e., the fees and expenses of arbitrators payable pursuant to
Section 4(e) and the indemnification obligations pursuant to Section 8 and
Section 9(c)) shall be payable solely as follows. The Securityholder Agents
shall notify the Escrow Agent of any such amount payable by the Indemnifying
Stockholders as soon as they become aware that any such amount is payable, with
a copy of such notice to the Buyer. On the sixth business day after the delivery
of such notice, the Escrow Agent shall sell such number of Escrow Shares, valued
at $2.40 per share, (up to the number of Escrow Shares then available in the
Escrow Account), subject to compliance with all applicable securities laws,
equal to such amount, and shall disburse such proceeds to the party to whom such
amount is owed in accordance with the instructions of the Securityholder Agents;
provided that if the Buyer delivers to the Escrow Agent (with a copy to the
Securityholder Agents), within five business days after delivery of such notice
by the Securityholder Agents, a written notice contesting the legitimacy or
reasonableness of such amount, then the Escrow Agent shall not sell Escrow
Shares to raise the disputed portion of such claimed amount, and such dispute
shall be resolved by the Buyer and the Securityholder Agents in accordance with
the procedures set forth in Section 4(e).
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b. In connection with any sale of the Escrow Shares pursuant to
Section 11(a) of this Agreement, the Escrow Agent shall be entitled to receive
and rely upon, prior to taking action in that regard, written direction from the
Securityholder Agents as to the manner and method to be undertaken in carrying
out such sale, including without limitation written direction (i) identifying
the number of shares to be sold, (ii) identifying the brokerage firm the
Securityholder Agents requests to be used or instruct the Escrow Agent to use
its affiliated brokerage service, and (iii) setting forth any necessary or
special instructions with respect to the sale (including any stop loss or
minimum price per share instruction); and the Securityholder Agents shall
execute and deliver any instruments reasonably required by the Escrow Agent in
order to carry out such sale or liquidation.
c. The Escrow Agent shall have no responsibility in connection with
such sale other than to make delivery of the Escrow Shares to the selected
brokerage firm, with instruction (including any special instruction provided by
the Securityholder Agents), and to receive and deposit into the Escrow Account
(to be administered and distributed in accordance with this Agreement) any net
sale proceeds received therefrom. The Escrow Agent shall have no liability for
any actions or omissions of any such brokerage firm, and shall have no liability
for the price or execution achieved. Without limiting the generality of the
foregoing, the Securityholder Agents expressly acknowledge that (a) the Escrow
Shares may need to be sent to a transfer agent to be reissued in saleable form,
(b) the Escrow Shares may contain or be subject to transfer restrictions that
may limit their marketability and impose restrictions upon the number of types
of purchasers to whom they can be offered or sold, and (c) the Escrow Agent
shall have no liability for any failure or delay (or any price change during any
such delay) on the part of the Securityholder Agents or any transfer agent, or
caused by any necessary registration or delivery procedures, or compliance with
any applicable transfer restrictions, involved in the transfer of such Escrow
Shares.
d. The Escrow Agent shall be entitled to contract with any brokerage
firm (which may be selected by the Escrow Agent without liability on its part,
taking into consideration any brokerage firm requested by the Securityholder
Agents, as provided above), which may be affiliated with the Escrow Agent, and
may enter into any such contract on a basis which provides that such brokerage
firm shall use its "best efforts" to effect such sale. The Escrow Agent shall be
indemnified hereunder for any costs, expense and risks associated therewith or
arising thereunder (other than resulting from its own gross negligence or wilful
misconduct), and the proceeds of sale to which the Indemnifying Stockholders
shall be entitled shall be net of all brokerage commissions and charges.
e. The net sale proceeds of any such sale of Escrow Shares received
by the Escrow Agent shall be apportioned among the Indemnifying Stockholders on
a pro rata basis as set forth in Attachment A less a $35.00 per Indemnifying
Stockholder fee for the proration of the net sales price and individual 1099-B
(the "Sales Administration Fee"). The Sales Administration fee shall be assessed
each day a sale is effected until the total number of shares specified in such
written direction from the Securityholder Agents are sold.
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12. Termination. This Agreement shall terminate upon the later of the
Termination Date or the distribution by the Escrow Agent of all of the Escrow
Shares in accordance with this Agreement; provided that the provisions of
Sections 8, 9 and 10 shall survive such termination.
13. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent by (i) registered or certified mail,
return receipt requested, postage prepaid, (ii) a reputable nationwide overnight
courier service, (iii) hand delivery, or (iv) telecopy, in each case to the
address set forth below. Any such notice, instruction or communication shall be
deemed to have been delivered (1) two business days after it is sent by
registered or certified
mail, return receipt requested, postage prepaid, (2) one business day after it
is sent via a reputable nationwide overnight courier service, (3) when received
by the Escrow Agent if it is sent by hand delivery, or (4) when a confirmation
copy is provided the same day by regular mail to the Escrow Agent if it is sent
by telecopy.
If to the Buyer: Copy to:
Intrinsix Corp. Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx 00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, President Attention: Xxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
If to the Securityholder Agents:
Xxxxx Xxxxxxx Xxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx Xx. 00000 Xxxxxxxx Xxx.
Xxx Xxxx, XX 00000 Xxx Xxxxx, XX 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
If to the Escrow Agent:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Corporate Trust Dept., Ref: Intrinsix Escrow
Telecopy: (000) 000-0000
Any funds to be paid to or by the parties hereto pursuant to this Agreement
shall be sent by (i) wire transfer (in the case of the Escrow Agent and Buyer)
pursuant to the following instructions or (ii) check (in the case of the
Indemnifying Stockholders) to addresses set forth on Attachment A hereto, (or by
such method of payment and in accordance with such instructions as may have been
given in advance in writing to or by the parties hereto, in accordance with this
Section 13):
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If to the Escrow Agent:
State Street Bank and Trust Company
ABA # 0110 0002 8
Account # 0000-000-0
Attn: Corporate Trust Department
Ref.: Intrinsix Escrow
If to the Buyer:
Bank: BankBoston, N.A.
ABA # 000000000
Account # 00000000
Account Name: Intrinsix Corp.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including ordinary mail), but no such
notice, instruction or communication shall be deemed to have been delivered
unless and until it is actually received by the party to whom it was sent. Any
party may change the address to which notices, instructions or communications
are to be delivered by giving the other parties to this Agreement notice thereof
in the manner set forth in this Section 13.
14. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Escrow Agreement, not less than
30 days prior to the date when such resignation shall take effect. The Buyer may
appoint a successor Escrow Agent without the consent of the Securityholder
Agents so long as such successor is a bank with assets of at least $500 million
and may appoint any other successor Escrow Agent with the consent of the
Securityholder Agents, which shall not be unreasonably withheld; provided
however, that if the Interested Parties fail to so appoint within 20 days of
such resignation, the Escrow Agent may either appoint a successor or apply to
court for appointment of a successor. If, within such notice period, the Buyer
provides to the Escrow Agent written instructions with respect to the
appointment of a successor Escrow Agent and directions for the transfer of any
Escrow Shares then held by the Escrow Agent to such successor, the Escrow Agent
shall act in accordance with such instructions and promptly transfer such Escrow
Shares to such designated successor.
15. General.
a. Governing Law, Assigns. This Agreement shall be governed by and
construed in accordance with the internal laws of The Commonwealth of
Massachusetts without regard to conflict-of-law principles and shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns.
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b. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
c. Entire Agreement. Except for those provisions of the Merger
Agreement referenced herein, this Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
d. Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Escrow Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
e. Amendment. This Agreement may be amended only with the written
consent of the Buyer, the Escrow Agent and the Securityholder Agents.
f. Dispute Resolution. It is understood and agreed that should any
dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the securities or funds held by the Escrow Agent, or
should any claim be made upon the Escrow Agent or such securities or funds by a
third party, the Escrow Agent upon receipt or notice of such dispute or claim is
authorized and shall be entitled to retain in its possession without liability
to anyone, all or any of the securities and funds until such dispute shall have
been settled either by the mutual written agreement of the parties involved or
by a final award of an arbitrator, as provided in this Agreement. The Escrow
Agent may, but shall be under no duty whatsoever to, institute or defend any
legal proceedings which relate to escrowed securities or funds.
g. Consent to Jurisdiction and Service. Each of the Interested
Parties hereby absolutely and irrevocable consents and submits to the
jurisdiction of the courts in The Commonwealth of Massachusetts, sitting in
Suffolk County and of the United States District Court for the District of
Massachusetts, sitting in Boston, as the exclusive jurisdiction and venue for
any actions or proceedings brought against any of the Interested Parties by the
Escrow Agent or brought by any Interested Party against the Escrow Agent,
arising out of or relating to this Escrow Agreement. In any such action or
proceeding, each of the Interested Parties hereby absolutely and irrevocably (i)
waives any objection to jurisdiction or venue in such courts, (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 their respective
addresses in accordance with Section 13 hereof.
h. 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.
-13-
i. 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 as 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.
[The remainder of this page has intentionally been left blank.]
-14-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
INTRINSIX CORP.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx, Securityholder Agent
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx, Securityholder Agent
STATE STREET BANK AND TRUST
COMPANY
By: /s/ CM
-----------------------------
Chi C. Ma
Assistant Vice President
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ATTACHMENT A
------------
Indemnifying Stockholder Percentage
------------------------ ----------
Xxxxx Xxxxxxx 49.3%
0000 Xxxxxx Xxxxx Xx.
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxxxx 49.3%
00000 Xxxxxxxx Xxx.
Xxx Xxxxx, XX 00000
Xxxxxx Xxxxx 1.3%
000 Xxxxxxx Xxx Xxxx
Xxxxxxx, XX 00000
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ATTACHMENT B
------------
June 7, 1999
Mr. Xxxxx Xxxxx
CFO
Intrinsix Corporation
00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
RE: Intrinsix Corp. Escrow
Dear Xx. Xxxxx:
On behalf of State Street Bank and Trust Company, I am pleased to provide our
fee schedule to act as Escrow Agent for the above-referenced transaction. Our
fees are outlined below:
FEES AND EXPENSES:
------------------
ACCEPTANCE FEE: Waived
$3,500.00 per year or any part
ANNUAL FEE: thereof
INVESTMENT FEE: $ 65.00 per buy/sell
(direct investments in treasuries,
C/D's CP, Repo's, etc.) or
--
SWEEP FEE:
(SSgA or selected other Money Market 40 basis points per annum of
Funds) the average daily net assets
WIRE FEE: $20.00 per wire
OUT-OF-POCKET EXPENSES: At Cost
LEGAL FEE: At Cost
(State Street will use Xxx Xxxxxxxx at Peabody & Xxxxxx as counsel)
The transaction underlying this proposal, and all related legal documentation,
is subject to review and acceptance by State Street in accordance with its
policies and procedures. Should the actual transaction materially differ from
the assumptions used herein, State Street reserves the right to modify this
proposal. In the event that the subject transaction fails to close for reasons
beyond the control of State Street, the party requesting these services agrees
to pay State Street's acceptance fees, legal fees and out-of-pocket expenses.
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Please do not hesitate to call me at (000) 000-0000 with any questions. We look
forward to working with you.
Sincerely,
/s/ Xxxx X. Xxxxxx, Xx.
JFS:lm
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