Termination and Distribution of Escrow Fund. (a) Except as set forth in Section 7(d), this Escrow Agreement shall terminate upon the earlier of (i) September 30, 2008 or (ii) the date upon which the Escrow Agent shall have distributed all of the Escrow Fund as provided herein. (b) If, on or prior to September 30, 2008, LSI shall not have delivered to the Escrow Agent and Saco a Notice of Claim (as defined in Section 7(g)below), with respect to the Escrow Fund, the Escrow Fund shall be promptly released and delivered in its entirety to Saco by the Escrow Agent. (c) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to the Escrow Agent and Saco, and Saco shall not have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, the amount of the indemnity claim specified in LSI’s Notice of Claim shall promptly be released and delivered to LSI by the Escrow Agent. For purposes of determining the number of Escrow Shares to be released to LSI pursuant to this Section 7(c) in satisfaction of indemnity claims and the amount received by LSI in satisfaction of the indemnity claims, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or such other market where LSI Common Shares may then be traded) for the 5 trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Shares (or portion thereof) are released. The balance of the Escrow Fund not so released shall continue to be held in escrow by the Escrow Agent pursuant to the terms of this Escrow Agreement. (d) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to Saco and the Escrow Agent and Saco shall have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, the Escrow Agent shall retain that portion of the Escrow Fund equal to the amount of the indemnity claim specified in the Notice of Claim until the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Saco even if the resolution of the dispute occurs after September 30, 2008 and shall distribute the portion so retained either pursuant to joint written instructions from LSI and Saco or pursuant to such court order. For purposes of determining the number of Escrow Shares to be retained under this Section 7(d) and Section 7(e) by the Escrow Agent upon receipt of the Notice of Claim, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or other applicable market) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Agent receives notice from Saco that the Notice of Claim is being disputed. (e) On each of the dates set forth below, the Escrow Agent shall release such number of LSI Common Shares constituting Escrow Shares set forth opposite such date (each, a “Release Date”): September 30, 2006 419,355 September 30, 2007 500,000 September 30, 2008 500,000 ; provided, however, if a Notice of Claim has been delivered to the Escrow Agent prior to the applicable Release Date the Escrow Agent shall release only those number of Escrow Shares less (i) the number of Escrow Shares equal to the amount of indemnity claims specified in any and all Notice of Claims delivered to the Escrow Agent prior to the applicable Release Date and (ii) the number of Escrow Shares previously released to Saco pursuant to Section 7(f). Once the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Saco, the Escrow Agent shall distribute to Saco the portion of the Escrow Fund equal to the amount of indemnity claims specified in any and all Notice of Claims delivered to the Escrow Agent prior to the applicable Release Date, less the amount which is finally determined as due and owing to LSI. (f) Notwithstanding anything in this Escrow Agreement to the contrary, if at any time prior to September 30, 2008, LSI concludes, based on the determination of LSI’s Board of Directors, after consulting with legal counsel and other experts retained by LSI, that no claim for indemnification by any Indemnified LSI Party is likely to arise out of the Sellers’ or the Company’s infringement upon, misappropriation of, or conflict with the Intellectual Property rights of third parties, LSI shall give written notice to the Escrow Agent of such determination and authorize the release of the entire amount of the Escrow Fund, except for 290,000 LSI Common Shares which such amount shall remain subject to the terms of this Escrow Agreement until September 30, 2008. (g) For purposes of this Escrow Agreement, a “Notice of Claim” is a written notice by LSI to Escrow Agent, with a copy thereof to Saco, stating (i) that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Sellers and/or the Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) the nature of the claim, and (iii) LSI’s reasonable estimate of the amount of damages expected to be incurred in conjunction with the claim for which indemnification is available to LSI under the Purchase Agreement. (h) Any release or disbursement of Escrow Shares in accordance with this Section 7 shall be made by delivering the share certificates representing such Escrow Shares to the designated party. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI an appropriate Stock Transfer Power, completed with the amount of Escrow Shares being disbursed to LSI. Upon receipt thereof, LSI shall deliver to the Escrow Agent, as soon as practicable thereafter, new share certificates relating to the balance of Escrow Shares remaining in the hands of the Escrow Agent. Saco hereby appoints the Escrow Agent, as Saco’s attorney-in-fact to act, in the name, place and stead of Saco to (i) execute and complete additional Stock Transfer Powers, (ii) to take any actions or exercising any rights, powers or privileges that Saco is entitled or required to take or exercise under the terms of any of this Escrow Agreement and (iii) to do or cause to be done any or all things necessary or, in the determination of the Escrow Agent, desirable to observe or perform the terms, conditions, covenants and agreements to be observed or performed by Saco to transfer Saco’s right, title and interest in and to the LSI Common Shares. Notwithstanding anything to the contrary, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the share certificates, be valid and shall have full force and effect even in the absence of delivery of Stock Transfer Powers to LSI. Any disbursement of Escrow Shares to LSI shall be deemed to be a redemption of such Escrow Shares. (i) If LSI at any time or from time to time effects a stock-split, reclassification, reorganization, reverse reclassification, or other change in the number of outstanding number of LSI Common Shares into a larger or smaller number of shares, the number of Escrow Shares to be released pursuant to Section 7 shall be proportionately adjusted. (j) Notwithstanding any obligation of the Escrow Agent to disburse Escrow Shares to LSI pursuant to this Escrow Agreement, the Escrow Agent is hereby authorized by Saco and LSI to sell any Escrow Shares to any third party on commercially reasonable terms and conditions and remit to the LSI, instead of the Escrow Shares to which LSI is entitled, the consideration received by the Escrow Agent with respect to such shares; provided that the Escrow Agent shall have received from counsel to LSI a legal opinion providing that such sale is registered or exempt from registration under applicable securities laws. (k) The parties hereto acknowledge and agree that the delivery of the proceeds of the sale of Escrow Shares is subject to the sale and final settlement of such Escrow Shares. Proceeds of a sale of Escrow Shares will be delivered on the business day on which the sale of such Shares is settled. If written instructions to sell Escrow Shares are received by the Escrow Agent pursuant to Section 2 after the applicable deadline on a Business Day, such Escrow Shares will be sold (to the extent commercially reasonable) on the next succeeding Business Day. The Escrow Agent shall not be responsible for any losses incurred due to market price fluctuations occurring between the time of receipt by the Escrow Agent of a written instruction to sell Escrow Shares and the time of the actual sale of such Escrow Shares, provided that such sale takes place within a reasonable time.
Appears in 1 contract
Termination and Distribution of Escrow Fund. (a) Except as set forth in Section 7(d)) and in Section 8, this Escrow Agreement shall terminate upon the earlier of (i) September 30, 2008 the Termination Date or (ii) the date upon which the Escrow Agent shall have distributed or released all of the Escrow Fund as provided herein.
(b) If, on or prior to September 30, 2008the Termination Date, LSI shall has not have delivered to the Escrow Agent and Saco the Shareholders a Notice of Claim (as defined in Section 7(g)below), 7(f) below) with respect to the Escrow Fund, the Escrow Fund shall be promptly released and delivered in its entirety to Saco the Shareholders by the Escrow Agent, it being agreed that to the extent the Escrow Fund includes LSI Common Shares such release and delivery shall be accompanied by the return to each Shareholder of such Shareholder’s original stock certificates for LSI Common Shares registered in such Shareholder’s name and, in the case of any other property held by the Escrow Agent in the Escrow Fund, the distribution shall be made to each Shareholder in accordance with his Percentage Interest.
(c) If, on or prior to September 30, 2008the Termination Date, LSI shall have has delivered a Notice of Claim to the Escrow Agent and Sacothe Shareholders, and Saco shall the Shareholders have not have disputed the such Notice of Claim in a writing addressed to the Escrow Agent and LSI within 15 fifteen (15) business days after its receipt of the Notice of Claimreceipt, the amount of the indemnity claim specified in LSI’s the Notice of Claim shall promptly be released and delivered to LSI by the Escrow Agent. For purposes of determining the number of Escrow Shares to be released to LSI pursuant to this Section 7(c) in satisfaction of indemnity claims and the amount received by LSI in satisfaction of the indemnity claims, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or such other market where LSI Common Shares may then be traded) for the 5 five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Shares (or portion thereof) are released. The balance of the Escrow Fund not so released shall continue to be held in escrow by the Escrow Agent pursuant to the terms of this Escrow Agreement.
(d) If, on or prior to September 30, 2008the Termination Date, LSI shall have has delivered a Notice of Claim to Saco the Shareholders and the Escrow Agent and Saco shall the Shareholders have disputed the Notice of Claim in a writing delivered to the Escrow Agent and LSI within 15 fifteen (15) business days after its receipt of the Notice of Claimreceipt, the Escrow Agent shall retain that portion of the Escrow Fund equal to the amount of the indemnity claim specified in the Notice of Claim until the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Saco the Shareholders, even if the resolution of the dispute occurs after September 30the Termination Date, 2008 and shall distribute the portion so retained either pursuant to joint written instructions from LSI and Saco the Shareholders or pursuant to such court order. For purposes of determining the number of Escrow Shares to be retained under this Section 7(d) and Section 7(e) by the Escrow Agent upon receipt of the a Notice of Claim, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or other applicable market) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Agent receives notice from Saco the Shareholders that the Notice of Claim is being disputed.
(e) On each of At 5:00 pm Eastern Time on January 22, 2011 or, if such day is not a Business Day at 5:00 pm Eastern Time on the dates set forth belownext Business Day thereafter (the “Interim Release Date”), the Escrow Agent shall release such number of LSI Common Shares constituting Six Hundred Eighty Six Thousand Thirty One (686,031) Escrow Shares set forth opposite such date (each, a the “Interim Release DateShares”): September 30, 2006 419,355 September 30, 2007 500,000 September 30, 2008 500,000 ) to the Shareholders in accordance with their Percentage Interests; provided, however, that if a Notice of Claim has been delivered to the Escrow Agent by LSI prior to the applicable Interim Release Date Date, the Escrow Agent shall release only those number all of Escrow the Interim Release Shares less (i) the number of Escrow Shares having a value (as determined in accordance with Section 7(c)) as of the Interim Release Date equal to the amount of the indemnity claims claim specified in any and all the Notice of Claims delivered to Claim or, if the Escrow Agent prior to the applicable Release Date Notice of Claim was disputed and (ii) later resolved for a lesser value, then less the number of Escrow Shares previously released having such lesser value as determined in accordance with Section 7(c) as of the Interim Release Date. If a dispute exists with respect to Saco pursuant an indemnification claim referred to Section 7(f). Once in a Notice of Claim delivered prior to the Interim Release Date, once the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Sacothe Shareholders, the Escrow Agent shall promptly distribute to Saco the Shareholders the portion of the Escrow Fund equal to the lesser of: (i) the amount of indemnity claims claim specified in any and all the disputed Notice of Claims delivered to the Escrow Agent prior to the applicable Release Date, Claim less the amount which is finally determined as due and owing to LSILSI (which amount shall be released to LSI by the Escrow Agent), or (ii) the Interim Release Shares.
(f) Notwithstanding anything in this Escrow Agreement to the contrary, if at any time prior to September 30, 2008, LSI concludes, based on the determination of LSI’s Board of Directors, after consulting with legal counsel and other experts retained by LSI, that no claim for indemnification by any Indemnified LSI Party is likely to arise out of the Sellers’ or the Company’s infringement upon, misappropriation of, or conflict with the Intellectual Property rights of third parties, LSI shall give written notice to the Escrow Agent of such determination and authorize the release of the entire amount of the Escrow Fund, except for 290,000 LSI Common Shares which such amount shall remain subject to the terms of this Escrow Agreement until September 30, 2008.
(g) For purposes of this Escrow Agreement, a “Notice of Claim” is a written notice by LSI to the Escrow Agent, with a copy copies thereof to Sacoeach Shareholder, stating (i) stating that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Sellers and/or the Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) containing a reasonably detailed description of the nature and basis of the claimall such claims, and (iii) setting forth in reasonable detail and with reasonable specificity LSI’s reasonable estimate of the amount of monetary damages reasonably expected to be incurred in conjunction with the claim such claims for which indemnification is available to LSI under the Purchase AgreementAgreement (taking into consideration, among other limitations, to the extent applicable, the effect of the Threshold and the Indemnification Cap).
(hg) Any release or disbursement of Escrow Shares in accordance with this Section 7 shall be made by delivering the original share certificates representing such Escrow Shares to the designated partyparty or parties. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI an appropriate Stock Transfer PowerPowers, each completed with the amount of Escrow Shares being disbursed to LSILSI by each Shareholder in accordance with his Percentage Interests. Upon receipt thereof, LSI shall deliver to the Escrow Agent, as soon as practicable thereafter, new share certificates relating to the balance of Escrow Shares remaining in the hands of the Escrow AgentAgent with respect to each Shareholder in accordance with his Percentage Interests. Saco Each Shareholder hereby appoints the Escrow Agent, Agent as Sacosuch Shareholder’s attorney-in-fact to act, in the name, place and stead of Saco such Shareholder, to (i) execute and complete additional Stock Transfer Powers, (ii) to take any actions or exercising any rights, powers or privileges that Saco such Shareholder is entitled or required to take or exercise under the terms of any of provisions of this Escrow Agreement and (iii) to do or cause to be done any or all things necessary or, in the determination of the Escrow Agent, desirable to observe or perform the terms, conditions, covenants and agreements to be observed or performed by Saco the Shareholders to transfer Saco’s righttheir respective rights, title and interest interests in and to the LSI Common SharesShares held in escrow in accordance with this Escrow Agreement. Notwithstanding anything to the contrarycontrary in this Escrow Agreement, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the original share certificates, be valid and shall have full force and effect even in the absence of delivery of Stock Transfer Powers to LSI. Any disbursement of Escrow Shares to LSI shall be deemed to be a redemption of such Escrow Shares.
(ih) If LSI at any time or from time to time effects a stock-split, reclassification, reorganization, reverse reclassification, or other change in the number of outstanding number of LSI Common Shares into a larger or smaller number of shares, the number of Escrow Shares to be released pursuant to Section 7 shall be proportionately adjusted.
(j) Notwithstanding any obligation of the Escrow Agent to disburse Escrow Shares to LSI pursuant to this Escrow Agreement, the Escrow Agent is hereby authorized by Saco and LSI to sell any Escrow Shares to any third party on commercially reasonable terms and conditions and remit to the LSI, instead of the Escrow Shares to which LSI is entitled, the consideration received by the Escrow Agent with respect to such shares; provided that the Escrow Agent shall have received from counsel to LSI a legal opinion providing that such sale is registered or exempt from registration under applicable securities laws.
(k) The parties hereto acknowledge and agree that the delivery of the proceeds of the sale of Escrow Shares is subject to the sale and final settlement of such Escrow Shares. Proceeds of a sale of Escrow Shares will be delivered on the business day on which the sale of such Shares is settled. If written instructions to sell Escrow Shares are received by the Escrow Agent pursuant to Section 2 after the applicable deadline on a Business Day, such Escrow Shares will be sold (to the extent commercially reasonable) on the next succeeding Business Day. The Escrow Agent shall not be responsible for any losses incurred due to market price fluctuations occurring between the time of receipt by the Escrow Agent of a written instruction to sell Escrow Shares and the time of the actual sale of such Escrow Shares, provided that such sale takes place within a reasonable time.
Appears in 1 contract
Termination and Distribution of Escrow Fund. (a) Except as set forth in Section 7(d), this Escrow Agreement shall terminate upon the earlier of (i) September 30, 2008 or (ii) the date upon which the Escrow Agent shall have distributed all of the Escrow Fund as provided herein.
(b) If, on or prior to September 30, 2008, LSI shall not have delivered to the Escrow Agent and Saco a Notice of Claim (as defined in Section 7(g)below), with respect to the Escrow Fund, the The Escrow Fund shall be promptly released and delivered in its entirety to Saco by terminate on the Escrow Agent.
(c) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to the Escrow Agent and Saco, and Saco shall not have disputed the Notice of Claim in writing within 15 business days after its receipt first anniversary of the Notice of Claim, the amount of the indemnity claim specified in LSI’s Notice of Claim shall promptly be released and delivered to LSI by the Escrow Agent. For purposes of determining the number of Escrow Shares to be released to LSI pursuant to this Section 7(c) in satisfaction of indemnity claims and the amount received by LSI in satisfaction of the indemnity claims, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or such other market where LSI Common Shares may then be traded) for the 5 trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Shares (or portion thereof) are released. The balance of the Escrow Fund not so released shall continue to be held in escrow by the Escrow Agent pursuant to the terms of this Escrow Agreement.
(d) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to Saco and the Escrow Agent and Saco shall have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, the Escrow Agent shall retain that portion of the Escrow Fund equal to the amount of the indemnity claim specified in the Notice of Claim until the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Saco even if the resolution of the dispute occurs after September 30, 2008 and shall distribute the portion so retained either pursuant to joint written instructions from LSI and Saco or pursuant to such court order. For purposes of determining the number of Escrow Shares to be retained under this Section 7(d) and Section 7(e) by the Escrow Agent upon receipt of the Notice of Claim, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or other applicable market) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Agent receives notice from Saco that the Notice of Claim is being disputed.
(e) On each of the dates set forth below, the Escrow Agent shall release such number of LSI Common Shares constituting Escrow Shares set forth opposite such date (each, a “Release Date”): September 30, 2006 419,355 September 30, 2007 500,000 September 30, 2008 500,000 Effective Time; provided, however, if a Notice that such portion of Claim has been the Escrow Fund, which in the reasonable judgment of Parent (subject to the good faith reasonable objection of the Company Agent and the final determination of the matter in the manner provided in Section 7.2(g) hereof) is necessary to cover any unsatisfied Losses specified in any Officer’s Certificate delivered to the Escrow Agent prior to termination of the applicable Release Date Escrow, shall remain in the Escrow Agent Fund (and the Escrow Fund shall release only those number of remain in existence) until such claims have been resolved. In making any disbursements to Parent from the Escrow Shares less Fund to cover Losses pursuant to this Article VII: (i) the number of Escrow Shares equal to the amount of indemnity claims specified in any and all Notice of Claims delivered to the Escrow Agent prior to the applicable Release Date and (ii) the number of Escrow Shares previously released to Saco pursuant to Section 7(f). Once the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Sacofirst, the Escrow Agent shall distribute make disbursements to Saco Parent to cover such Losses out of the cash comprising the Common Stock Escrow Amount until such time as the entire Common Stock Escrow Amount has been depleted in its entirety and (ii) second, the Escrow Agent shall make disbursements to Parent to cover such Losses out of the cash comprising the Preferred Escrow Stock Amount. As soon as all claims for Losses have been resolved, the Escrow Agent shall deliver the remaining portion of the Escrow Fund to the parties on whose behalf such Escrow Funds were deposited (first, to the former holders of the Series A Preferred and the Series B Preferred and thereafter to the former holders of the Search123 Common Stock), in accordance with their respective Proportionate Interests therein, subject to the following tax obligations:
(A) Parent shall appropriately report any taxable income in respect of any interest income earned on cash amounts in the Escrow Fund; and
(B) immediately prior to any distribution of monies remaining in the Escrow Fund, if any, Parent shall receive a distribution out of the Escrow Fund equal to 40% (or the amount of indemnity claims specified combined maximum federal and California tax rate then in any and all Notice of Claims delivered to the Escrow Agent prior to the applicable Release Date, less the amount which is finally determined as due and owing to LSI.
(f) Notwithstanding anything in this Escrow Agreement to the contraryeffect, if at any time prior to September 30, 2008, LSI concludes, based on the determination of LSI’s Board of Directors, after consulting with legal counsel and other experts retained by LSI, that no claim for indemnification by any Indemnified LSI Party is likely to arise out lower) of the Sellers’ or the Company’s infringement upon, misappropriation of, or conflict with the Intellectual Property rights of third parties, LSI shall give written notice to the Escrow Agent of such determination and authorize the release of the entire amount of the Escrow Fund, except for 290,000 LSI Common Shares which such amount shall remain subject to the terms of this Escrow Agreement until September 30, 2008.
(g) For purposes of this Escrow Agreement, a “Notice of Claim” is a written notice by LSI to Escrow Agent, with a copy thereof to Saco, stating (i) that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Sellers and/or the Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) the nature of the claim, and (iii) LSI’s reasonable estimate of the amount of damages expected to be incurred in conjunction with the claim for which indemnification is available to LSI under the Purchase Agreement.
(h) Any release or disbursement of Escrow Shares in accordance with this Section 7 shall be made by delivering the share certificates representing such Escrow Shares to the designated party. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI an appropriate Stock Transfer Power, completed with the amount of Escrow Shares being disbursed to LSI. Upon receipt thereof, LSI shall deliver to the Escrow Agent, as soon as practicable thereafter, new share certificates relating to the balance of Escrow Shares remaining in the hands of the Escrow Agent. Saco hereby appoints the Escrow Agent, as Saco’s attorney-in-fact to act, in the name, place and stead of Saco to (i) execute and complete additional Stock Transfer Powers, (ii) to take any actions or exercising any rights, powers or privileges that Saco is entitled or required to take or exercise under the terms of any of this Escrow Agreement and (iii) to do or cause to be done any or all things necessary or, in the determination of the Escrow Agent, desirable to observe or perform the terms, conditions, covenants and agreements to be observed or performed by Saco to transfer Saco’s right, title and interest in and to the LSI Common Shares. Notwithstanding anything to the contrary, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the share certificates, be valid and shall have full force and effect even in the absence of delivery of Stock Transfer Powers to LSI. Any disbursement of Escrow Shares to LSI shall be deemed to be a redemption taxable income of such Escrow SharesFund attributed or charged to Parent.
(i) If LSI at any time or from time to time effects a stock-split, reclassification, reorganization, reverse reclassification, or other change in the number of outstanding number of LSI Common Shares into a larger or smaller number of shares, the number of Escrow Shares to be released pursuant to Section 7 shall be proportionately adjusted.
(j) Notwithstanding any obligation of the Escrow Agent to disburse Escrow Shares to LSI pursuant to this Escrow Agreement, the Escrow Agent is hereby authorized by Saco and LSI to sell any Escrow Shares to any third party on commercially reasonable terms and conditions and remit to the LSI, instead of the Escrow Shares to which LSI is entitled, the consideration received by the Escrow Agent with respect to such shares; provided that the Escrow Agent shall have received from counsel to LSI a legal opinion providing that such sale is registered or exempt from registration under applicable securities laws.
(k) The parties hereto acknowledge and agree that the delivery of the proceeds of the sale of Escrow Shares is subject to the sale and final settlement of such Escrow Shares. Proceeds of a sale of Escrow Shares will be delivered on the business day on which the sale of such Shares is settled. If written instructions to sell Escrow Shares are received by the Escrow Agent pursuant to Section 2 after the applicable deadline on a Business Day, such Escrow Shares will be sold (to the extent commercially reasonable) on the next succeeding Business Day. The Escrow Agent shall not be responsible for any losses incurred due to market price fluctuations occurring between the time of receipt by the Escrow Agent of a written instruction to sell Escrow Shares and the time of the actual sale of such Escrow Shares, provided that such sale takes place within a reasonable time.
Appears in 1 contract
Samples: Merger Agreement (Valueclick Inc/Ca)
Termination and Distribution of Escrow Fund. (a) Except as set forth in Section 7(d), this Escrow Agreement shall terminate upon On the earlier of (i) September 30, 2008 or (ii) the date upon which the Escrow Agent shall have distributed all 12-month anniversary of the Escrow Fund as provided herein.
(b) If, on or prior to September 30, 2008, LSI shall not have delivered to the Escrow Agent and Saco a Notice of Claim (as defined in Section 7(g)below), with respect to the Escrow FundClosing, the Escrow Fund shall be promptly released and delivered in its entirety to Saco by the Escrow Agent.
(c) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to the Escrow Agent and Saco, and Saco shall not have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, the amount of the indemnity claim specified in LSI’s Notice of Claim shall promptly be released and delivered to LSI by the Escrow Agent. For purposes of determining the number of Escrow Shares to be released to LSI pursuant to this Section 7(c) in satisfaction of indemnity claims and the amount received by LSI in satisfaction of the indemnity claims, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or such other market where LSI Common Shares may then be traded) for the 5 trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Shares (or portion thereof) are released. The balance of the Escrow Fund not so released shall continue to be held in escrow by the Escrow Agent pursuant to the terms of this Escrow Agreement.
(d) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to Saco and the Escrow Agent and Saco shall have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, the Escrow Agent shall retain that portion of the Escrow Fund equal to the amount of the indemnity claim specified in the Notice of Claim until the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and Saco even if the resolution of the dispute occurs after September 30, 2008 and shall distribute the portion so retained either pursuant to joint written instructions from LSI and Saco or pursuant to such court order. For purposes of determining the number of Escrow Shares to be retained under this Section 7(d) and Section 7(e) by the Escrow Agent upon receipt of the Notice of Claim, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or other applicable market) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Agent receives notice from Saco that the Notice of Claim is being disputed.
(e) On each of the dates set forth below, the Escrow Agent shall release such number of LSI Common Shares constituting Escrow Shares set forth opposite such date (each, a “Release Date”): September 30, 2006 419,355 September 30, 2007 500,000 September 30, 2008 500,000 terminate; provided, however, if a Notice that such portion of Claim has been the Escrow, which, in the reasonable good faith judgment of Parent, subject to the objection of the Company Stockholders Agent and the subsequent arbitration of the matter in the manner provided in Section 7.2(g) hereof, is necessary to satisfy any unsatisfied Losses specified in any Officer's Certificate theretofore delivered in good faith to the Escrow Agent prior to termination of the applicable Release Escrow, shall remain in the Escrow (and the Escrow shall remain in existence) until such claims have been resolved. In addition, notwithstanding the foregoing, if any litigation shall have been filed or claim threatened prior to the twelve-month anniversary of the Closing Date which could reasonably be expected to result in an Identified Litigation Loss (i) Parent will notify the Escrow Agent shall release only those number of Escrow Shares less (i) and the number of Escrow Shares equal to the amount of indemnity claims specified in any and all Notice of Claims delivered to the Escrow Company Stockholders' Agent prior to the applicable Release Date such anniversary and (ii) $200,000 of cash or Parent Common Stock (based on the number Escrow Price (defined below)) (less any amounts previously paid from the Escrow Fund in respect of Identified Litigation Losses) shall remain in the Escrow Shares previously released to Saco pursuant to Section 7(f)until any such litigation or claim shall have been resolved. Once the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and SacoAs soon as all such claims have been resolved, the Escrow Agent shall distribute deliver to Saco the appropriate security holders of the Company the remaining portion of the Escrow Fund equal not required to satisfy such claims. Deliveries of Escrow Amounts to Company Stockholders and, if the amount Merger Consideration consists of indemnity claims specified in any and all Notice cash, holders of Claims delivered Vested Company Options pursuant to this Section 7.2(c) shall be made according to each individual's Proportionate Escrow Interest as certified to the Escrow Agent prior to by the applicable Release Date, less the amount which is finally determined Company Stockholders' Agent (as due and owing to LSI.
(f) Notwithstanding anything defined in this Escrow Agreement to the contrary, if at any time prior to September 30, 2008, LSI concludes, based on the determination of LSI’s Board of Directors, after consulting with legal counsel and other experts retained by LSI, that no claim for indemnification by any Indemnified LSI Party is likely to arise out of the Sellers’ or the Company’s infringement upon, misappropriation of, or conflict with the Intellectual Property rights of third parties, LSI shall give written notice to the Escrow Agent of such determination and authorize the release of the entire amount of the Escrow Fund, except for 290,000 LSI Common Shares which such amount shall remain subject to the terms of this Escrow Agreement until September 30, 2008.
(g) For purposes of this Escrow Agreement, a “Notice of Claim” is a written notice by LSI to Escrow Agent, with a copy thereof to Saco, stating (i) that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Sellers and/or the Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) the nature of the claim, and (iii) LSI’s reasonable estimate of the amount of damages expected to be incurred in conjunction with the claim for which indemnification is available to LSI under the Purchase Agreement.
Section 7.2 (h) Any release or disbursement of Escrow Shares in accordance with this Section 7 shall be made by delivering the share certificates representing such Escrow Shares to the designated party. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI an appropriate Stock Transfer Power, completed with the amount of Escrow Shares being disbursed to LSI. Upon receipt thereof, LSI shall deliver to the Escrow Agent, as soon as practicable thereafter, new share certificates relating to the balance of Escrow Shares remaining in the hands of the Escrow Agent. Saco hereby appoints the Escrow Agent, as Saco’s attorney-in-fact to act, in the name, place and stead of Saco to (i) execute and complete additional Stock Transfer Powers, (ii) to take any actions or exercising any rights, powers or privileges that Saco is entitled or required to take or exercise under the terms of any of this Escrow Agreement and (iii) to do or cause to be done any or all things necessary or, in the determination of the Escrow Agent, desirable to observe or perform the terms, conditions, covenants and agreements to be observed or performed by Saco to transfer Saco’s right, title and interest in and to the LSI Common Shares. Notwithstanding anything to the contrary, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the share certificates, be valid and shall have full force and effect even in the absence of delivery of Stock Transfer Powers to LSI. Any disbursement of Escrow Shares to LSI shall be deemed to be a redemption of such Escrow Sharesbelow).
(i) If LSI at any time or from time to time effects a stock-split, reclassification, reorganization, reverse reclassification, or other change in the number of outstanding number of LSI Common Shares into a larger or smaller number of shares, the number of Escrow Shares to be released pursuant to Section 7 shall be proportionately adjusted.
(j) Notwithstanding any obligation of the Escrow Agent to disburse Escrow Shares to LSI pursuant to this Escrow Agreement, the Escrow Agent is hereby authorized by Saco and LSI to sell any Escrow Shares to any third party on commercially reasonable terms and conditions and remit to the LSI, instead of the Escrow Shares to which LSI is entitled, the consideration received by the Escrow Agent with respect to such shares; provided that the Escrow Agent shall have received from counsel to LSI a legal opinion providing that such sale is registered or exempt from registration under applicable securities laws.
(k) The parties hereto acknowledge and agree that the delivery of the proceeds of the sale of Escrow Shares is subject to the sale and final settlement of such Escrow Shares. Proceeds of a sale of Escrow Shares will be delivered on the business day on which the sale of such Shares is settled. If written instructions to sell Escrow Shares are received by the Escrow Agent pursuant to Section 2 after the applicable deadline on a Business Day, such Escrow Shares will be sold (to the extent commercially reasonable) on the next succeeding Business Day. The Escrow Agent shall not be responsible for any losses incurred due to market price fluctuations occurring between the time of receipt by the Escrow Agent of a written instruction to sell Escrow Shares and the time of the actual sale of such Escrow Shares, provided that such sale takes place within a reasonable time.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Network Associates Inc)
