CLOSING AND INDEMNIFICATION ESCROW AGREEMENT
THIS CLOSING AND INDEMNIFICATION ESCROW AGREEMENT ("Agreement") is made
as of July 21, 1997, by SI TECHNOLOGIES INC., a Delaware corporation ("SI"),
AeroGo, Inc., a Washington corporation ("Surviving Corporation"), Xxxx Xxxxx
and Xxxxxxx X. XxXxxxxx as representatives of the Shareholders of the
Surviving Corporation ("SA") and FIRST TRUST National Association, as the
Escrow Agent hereunder (the "Escrow Agent").
RECITALS
A. SI, SI Acquisition Corp., a Washington corporation, which is a
wholly-owned subsidiary of SI and AeroGo, Inc., a Washington corporation
("Surviving Corporation") entered into an Acquisition Agreement including a
Plan of Merger, dated as of July 21, 1997, as amended (the "Merger
Agreement").
B. A true copy of the Merger Agreement has been delivered to the Escrow
Agent.
C. Terms used herein and defined in the Merger Agreement shall wherever
capitalized in this Agreement have the same meanings as in the Merger
Agreement, except as otherwise defined herein or where the context clearly
requires otherwise.
D. The Merger Agreement provides that as soon as practical after
Closing, but no later than July 22, 1997, SF shall pay to Escrow Agent
sufficient funds to cover the payments to the Surviving Corporation's
shareholders provided for in the Merger Agreement, which funds are to be held
and disbursed by the Escrow Agent in accordance with this Agreement.
E. Section 7.3 of the Merger Agreement provides that, at the Effective
Time, $750,000 withheld from the amounts payable to the holders of Surviving
Corporation Stock shall be deposited into escrow and shall be held and
disbursed by the Escrow Agent in accordance with the indemnification
provisions of this Escrow Agreement. SCHEDULE 1 hereto contains a list of
each such holder of Surviving Corporation Stock, setting forth for each such
holder (hereinafter "Shareholder") the amount deposited (the "Shareholder
Deposit"), such Shareholder's percentage share of the aggregate Shareholder
Deposits ("Percentage Share"), and the address of each Shareholder as shown
on Surviving Corporation's stock records, and the amount of each payment to
be distributed to each Shareholder, subject to adjustment for indemnification
claims pursuant to Section 7 of the Merger Agreement.
F. The purpose of this Agreement is to provide for the payment of the
merger consideration provided for in the Merger Agreement and to secure any
claims that SI may have against the Surviving Corporation after Closing for
which SI is entitled to indemnification pursuant to Article 7 of the Merger
Agreement.
1
G. Pursuant to the Merger Agreement, SA is appointed the representative
of the Shareholders for the purposes of this Escrow Agreement.
THEREFORE, in consideration of the mutual covenants contained in this
Agreement and in the Merger Agreement, the parties hereby agree as follows:
1. ESTABLISHMENT OF FUND.
1.1 As soon as practical after Closing, but no later than the
Effective Time of the Merger, SI will deliver to Escrow Agent Six Million
Dollars ($6,000,000) as the Merger Consideration to cover the payments
provided in the Merger Agreement (the "Funds"), in immediately available
funds by electronic bank fund transfer to:
First Bank N.A.
ABA #000000000
Beneficiary: First Trust
Credit Account #180121167365
For further Credit to Account 00000000
Re: SI Technologies, Inc.
Attn: Seattle Office/(Xxxxx Xxxxxxx 461-4105)
to be disbursed, in accordance with the Merger Agreement and this Agreement.
1.2 By executing this Agreement, (i) Escrow Agent agrees to receive,
hold and disburse the Escrowed Funds, subject to the terms and conditions of
this Agreement; and (ii) SA agrees to act as representative of the
Shareholders subject to the terms and conditions of this Agreement.
2. INVESTMENT OF FUNDS. The Escrow Agent shall establish an account in
the name of itself as Escrow Agent.
2.1 Funds will be invested in First American Managed Mutual Funds
Treasury Obligations Fund. Parties hereto acknowledge their receipt of the
prospectus for the fund. Interest earned in the escrow account will be
reinvested. All entities entitled to receive interest from the escrow
account will provide Escrow Agent with a W-9 or W-8 IRS tax form prior to the
disbursement of interest. SA will be entitled to exercise all voting rights
for the funds.
2.2 Escrow Agent shall hold any income, interest or accretion with
respect to the Funds as part of the Funds to be disposed of in such manner as
the principal amount of the Funds. For the purposes of this Agreement, the
term "Funds" includes all the funds held hereunder, including the principal
amount of the Funds and any income, interest or accretion with respect to
such Funds.
2
3. ALLOCATION OF MERGER CONSIDERATION. The Merger Agreement provides
that the Merger Consideration shall be $6,000,000. The Merger Agreement
further provides that each share of common stock, $.25 par value, of
Surviving Corporation ("Surviving Corporation Common Stock") that is issued
and outstanding immediately prior to the Effective Time shall be entitled to
receive, upon tender of the certificate representing such share, the amounts
set forth on the attached Payment Schedule.
4. RELEASE OF FUNDS. The Escrow Agent shall hold the Funds and any
interest earned thereon and make disbursements as follows:
4.1 PAYMENT TO SHAREHOLDERS. SI shall, immediately after the Closing
Date, send to each holder of shares of Surviving Corporation Common Stock a
transmittal letter satisfactory to SI and Escrow Agent instructing such
holder how to tender such holder's shares after the Effective Time. During
the period commencing with the first business day following the Effective
Time and continuing for six months after the Effective Time (the "Surrender
Period"), each such holder of shares of Surviving Corporation Common Stock
shall have the right to surrender for cancellation the certificate or
certificates representing such shares to the Escrow Agent. Attached hereto
as SCHEDULE 1 (based on the Payment Schedule and approved by SI, SA and
Surviving Corporation) is a list of all holders of Surviving Corporation
Common Stock showing the certificate number, the number of Shares represented
by such certificate, each holder's share of the Escrowed Funds, the amount of
tax to be withheld, if any, and the net amount payable to each such holder.
Upon surrender of any such certificate or certificates, such holder shall
have the right to receive payment of the cash consideration for such shares
in the amount set forth on the Payment Schedule, less amounts to be held in
the Escrow subject to Article 7 of the Merger Agreement (the "Indemnification
Funds"). If any cash consideration is to be paid to a person other than the
person to whom the certificate surrendered in exchange therefor is
registered, it shall be a condition of the payment that the certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, and that the person requesting such exchange pay to Escrow Agent
any applicable transfer or other taxes required by reason of the transfer.
The Escrow Agent shall accept, in lieu of the surrender of certificates
representing shares of Surviving Corporation Common Stock as provided above,
affidavits of the holders of any such shares that such certificates were
lost, stolen or mutilated, together with such documentation and
indemnification from such holders substantially in the form attached hereto
as EXHIBIT A. Upon delivery of the appropriate documents as provided above
to the Escrow Agent, the Escrow Agent shall, as soon as practicable, but no
later than August 22, 1997 (or, if delivery is made on or after August 22,
1997, the next business day after delivery or the second business day
following delivery of Schedule 1, whichever is later), deposit in the U.S.
mails addressed to the appropriate payee (as provided above) the cash
consideration provided for above.
4.2 The Indemnification Funds are held in Escrow hereunder as
security for the indemnity obligations of Surviving Corporation under Article
7 of the Merger Agreement. Payment for any amounts determined to be payable
to SI shall be made out of the Indemnification Funds. Upon Proper
Authorization (as defined in Subsection 4.6 below)
3
advising Escrow Agent that SI is entitled to an indemnification payment in
accordance with Article 7 of the Merger Agreement, and PROVIDED THAT Escrow
Agent has not received a written objection to such disbursement from SA
within 30 days after SA's receipt of Proper Authorization, Escrow Agent shall
on the following business day disburse from the Indemnification Funds the
amount of such payment in accordance with disbursement instructions furnished
by SI. If Escrow Agent receives timely written objection to such
disbursement from SA, Escrow Agent (1) will pay SI the portion of the
disbursement not contested by SA and (2) will hold the remaining amounts
pending resolution pursuant to Subsection 4.7.
4.3 As provided in Article 7 of the Merger Agreement, pursuant to a
Proper Authorization delivered by SI pursuant to Subsection 4.2 above prior
to such anniversary, the Shareholders are entitled to receive $200,000 of the
Escrowed Funds on the first anniversary of the Closing Date ("the First
Payment Date") and $250,000 on the second anniversary of the Closing Date
("the Second Payment Date"), which amounts shall be reduced by the following:
(i) any amounts paid prior to such anniversary pursuant to Subsection 4.2
above; and (ii) any amounts subject to pending resolution on such anniversary
pursuant to Subsection 4.7 below. On the business day following the First or
Second Payment Date, upon Proper Authorization advising Escrow Agent that the
Shareholders are entitled to the amount determined in this Subsection 4.3,
and PROVIDED THAT Escrow Agent has not received a written objection to such
disbursement from SI within 30 days after SI's receipt of Proper
Authorization, Escrow Agent shall disburse such amount to the Shareholders in
accordance with disbursement instructions furnished by SA. All disbursements
to the Shareholders shall be made in proportion to their Percentage Share, as
set forth on the Payment Schedule. If Escrow Agent receives timely written
objection to such disbursement from SI, Escrow Agent (1) will pay to the
Shareholders, in accordance with disbursement instructions furnished by SA,
the portion of the disbursement not contested by SI and (2) will hold the
remaining amounts pending resolution of the objection pursuant to Subsection
4.7.
4.4 As provided in Article 7 of the Merger Agreement, the
Shareholders are entitled to all the Funds remaining in Escrow, less any
unresolved tax deficiencies or assessments and less any amounts subject to
pending resolution pursuant to Subsection 4.7, on a date jointly specified in
writing to the Escrow Agent by SI and SA (the "Final Payment Date"). The
Final Payment Date shall be no later than the earlier of (a) the date on
which the statute of limitations shall have expired with respect to the
Surviving Corporation's federal income tax return for the period ending July
31, 1997, including any extensions or suspensions of such assessment period,
or (b) 90 days after the Internal Revenue Service has given the Surviving
Corporation notice of a deficiency in taxes reported on the later of the
federal income tax return for the Surviving Corporations (i) tax year ended
April 30, 1997, and (ii) the period ended July 31, 1997. On the business day
following the Final Payment Date, upon a Proper Authorization delivered to it
by SI pursuant to Subsection 4.2 advising the Escrow Agent that the
Shareholders are entitled to disbursement of all remaining Funds, except
amounts reserved for unresolved taxes and other matters, in accordance with
Section 7 of the Merger Agreement, and PROVIDED THAT Escrow Agent has not
received a written objection to such disbursement from SI within 30 days
after SI's receipt of Proper Authorization, Escrow Agent shall disburse such
4
amount to the Shareholders in accordance with disbursement instructions
furnished by SA. All disbursements to the Shareholders shall be made in
proportion to their Percentage Share, as set forth on the Payment Schedule.
If Escrow Agent receives timely written objection to such disbursement from
SI, Escrow Agent (1) will pay SA the portion of the disbursement not
contested by SI and (2) will hold the remaining amounts pending resolution of
the objection pursuant to Subsection 4.7.
4.5 When all Funds have been disbursed in accordance herewith, this
Agreement shall terminate (except for any amounts then owed to Escrow Agent
under the indemnification set forth in Section 9) and the Escrow shall be
closed.
4.6 For purposes of this Agreement, "Proper Authorization" means:
(i) with respect to disbursements to SI under Subsection 4.2,
an assignment of any relevant insurance coverage, and a written statement
signed by SI specifying (a) that SI is entitled to an indemnification payment
in accordance with Article 7 of the Merger Agreement, (b) the amount thereof
and the party to which such disbursement is to be made, (c) setting forth in
reasonable detail the basis of the claim of indemnity and the basis and
manner of calculating the amount thereof, in accordance with Article 7 of the
Merger Agreement, and (d) that SI has delivered or is concurrently delivering
to SA (specifying the manner and date of delivery) a copy of the written
statement submitted to Escrow Agent and specifying the date on which such
copies shall be deemed to be received by SA in accordance with Subsection
12.1. SI shall deliver Proper Authorization for disbursement under
Subsection 4.2 as promptly as practicable whenever an SI Indemnified Party
shall have determined there are facts or circumstances that give rise to
indemnification rights under Article 7 of the Merger Agreement (a "Claim");
provided, however, that the failure to give a timely notice of a Claim for
indemnification shall not limit the indemnification obligations hereunder
except to the extent that the delay in giving such notice materially
adversely affects the ability of SA on behalf of the Surviving Corporation
and the Shareholders to either defend against a Third Party Claim or mitigate
Damages with respect to any Claim. No Proper Authorization given by SI after
the Final Payment Date shall be effective. In the event of any Claim
involving an action by a third party, SI, Surviving Corporation and SA shall
cooperate in the prosecution or defense of the action in accordance with the
provisions set forth in Article 7 of the Merger Agreement, and SI shall
notify SA of the progress of any such Claim, shall permit SA to participate
in such prosecution or defense as provided in Article 7 of the Merger
Agreement and shall provide SA with reasonable access to all relevant
information and documentation relating to the Claim and SI's and Surviving
Corporation's prosecution or defense thereof.
(ii) with respect to a disbursement to Shareholders under
Subsections 4.3 or 4.4 hereof, a written statement by SA specifying (a) the
Shareholders are entitled to a release of a certain portion of the
Indemnification Funds in accordance with Section 7 of the Merger Agreement;
(b) the amount of the release to which the Shareholders are entitled; and (c)
that SA has delivered or is concurrently delivering to SI (specifying the
manner and date of
5
delivery) a copy of the written statement submitted to Escrow Agent and
specifying the date on which such copies shall be deemed to be received by SI
in accordance with Subsection 12.1;
(iii) with respect to any other disbursement or otherwise,
written instructions signed on behalf of SI and SA authorizing Escrow Agent
to undertake an action (and in the case of a disbursement, specifying the
amount thereof and the party to which a disbursement is to be made), or a
certified copy of an arbitration award or judgment of a court of competent
jurisdiction in any action or proceeding arising out of Article 7 of the
Merger Agreement or this Agreement.
4.7 In the event that an objection to disbursement under
Subsections 4.2, 4.3 or 4.4 hereof is timely made as provided therein, the
parties will negotiate in good faith to resolve the controversy that is the
subject of the objection. If, within 30 days after an objection was received
by SI or SA, as the case may be, SI and SA (on behalf of the Shareholders)
have not arrived at a settlement agreement, SI and SA (on behalf of the
Shareholders) shall promptly submit the dispute to binding, final and
unappealable arbitration, to be held in Seattle, Washington, as follows:
(i) SI shall select one arbitrator, SA shall select one
arbitrator and SI and SA together shall select a third arbitrator. (If SI
and SA cannot select a third arbitrator within five business days, the two
arbitrators individually chosen by SI and SA shall select promptly the third
arbitrator.) Provided, however, that no arbitrator shall have rendered
services, or shall be associated with any accounting firm, law firm or other
company that has rendered services within the last three years to SI or to
any Shareholder;
(ii) The arbitration shall be resolved in accordance with the
Commercial Arbitration Rules of the American Arbitration Association;
(iii) Judgment may be rendered upon the award rendered by the
arbitrators in any court having jurisdiction thereof;
(iv) Within 10 business days of receiving notice of an
arbitration award, together with certified copies of the arbitration award and
the judgment rendered thereon, unless restrained by court order, Escrow Agent
shall act according to the mandate of such arbitration award, without liability
to SI or SA.
(v) The prevailing party shall be entitled to receive its
reasonable attorneys' fees in any such arbitration, and the non-prevailing
party shall pay (or reimburse the prevailing party its portion of) the fees
of the arbitrators, all as the arbitrators shall decide. Any such award
against SA shall be satisfied only out of the Indemnification Funds available
for distribution to the Shareholders pursuant to Section 3.3, and not by SA
individually acting in such role.
6
4.8 To the extent deemed necessary by the Escrow Agent, all parties
to whom a distribution may be made shall have submitted to Escrow Agent a
properly completed current Form W-9 or Form W-8 or Escrow Agent shall make
appropriate withholdings.
4.9 UNCLAIMED FUNDS AND INTEREST. All interest earned on the Funds
shall become Indemnification Funds attributable to the shareholders as to which
Funds had been deposited under this Agreement in proportion to the amounts of
their respective deposits and shall be held and disbursed in the same manner as
other Indemnification Funds under this Agreement. Any Funds that remain
unclaimed within six months after the Effective Time shall be similarly
allocated to the shareholders.
4.10 DISBURSEMENT BY WIRE TRANSFER. Parties hereto may elect to
request transfer of funds by Fedwire from time to time, subject to the
conditions stated herein. Parties hereto agree that the wire transfer
security procedures identified on the attached Exhibit A-4.10 to this
agreement are commercially reasonable. Parties hereto further agree that
Escrow Agent should use these procedures to detect unauthorized wire transfer
payment requests prior to executing such requests and further agree that any
request acted upon by the Escrow Agent in compliance with these security
procedures, whether or not authorized, shall be treated as an authorized
request. Parties hereto agree that the Escrow Agent has the right to change
the wire transfer security procedures from time to time and that use of any
changed procedures evidences the acceptance of the commercial reasonability
of such change by the parties hereto.
5. TERM. This Agreement shall terminate upon the disbursement of all the
Funds provided that the indemnification set forth in Section 10 shall survive
termination of this Agreement.
6. INSPECTION OF RECORDS. SI or SA may, at any time, during normal
business hours after reasonable notice to Escrow Agent, inspect the records
of the Escrow Agent, insofar as they solely relate to this Agreement, for the
purpose of determining compliance with and conformance to the provisions of
this Agreement.
7. DUTY AND LIABILITY OF THE ESCROW AGENT.
7.1 The duties and obligations of the Escrow Agent shall be limited
to and determined solely by the express provisions of this Agreement and no
implied duties or obligations shall be read into this Agreement against the
Escrow Agent. The sole duty of the Escrow Agent, other than as herein
specified, shall be to receive the Funds and hold them, subject to release in
accordance with the terms of this Agreement.
7.2 SI and SA may from time to time prepare, execute and deliver to
the Escrow Agent joint supplemental escrow instructions containing such terms
and conditions not inconsistent with this Escrow Agreement as the Escrow
Agent may reasonably require, which escrow instructions shall be binding upon
the parties.
7
7.3 The Escrow Agent shall not be responsible for or be required to
enforce any of the terms or conditions of any agreement between SI and SA.
7.4 The Escrow Agent shall not be responsible or liable in any manner
whatsoever for the performance or compliance of or by any party of their
respective obligations under this Agreement, nor shall the Escrow Agent be
responsible or liable in any manner whatsoever for the failure of any third
party to honor any of the provisions of this Agreement.
7.5 The Escrow Agent is not bound by and is under no duty to
inquire into the terms or validity of any other agreements or documents,
including any agreements or documents which may be related to, referred to in
or deposited with the Escrow Agent in connection with this Agreement.
7.6 The Escrow Agent shall be entitled to rely upon and shall be
protected in acting in reliance upon any instruction, notice, information,
certificate, instrument, or other document which is submitted to it in
connection with its duties under this Agreement and which the Escrow Agent in
good faith believes to have been signed or presented by the proper party or
parties. The Escrow Agent may assume that any person purporting to give any
notice or make any statement in connection with the provisions hereof has
been duly authorized to do so. The Escrow Agent shall have no liability with
respect to the form, execution, validity or authenticity thereof.
7.7 The Escrow Agent shall not be liable for any act which the
Escrow Agent may do or omit to do hereunder, or for any mistake of fact or
law, or for any error of judgment, or for the misconduct of any employee,
agent or attorney appointed by it, while acting in good faith, unless caused
by or arising from its own gross negligence or willful misconduct.
7.8 The Escrow Agent shall be entitled to consult with counsel of
its own selection and the opinion of such counsel shall be full and complete
authorization and protection to the Escrow Agent in respect of any action
taken or omitted by the Escrow Agent hereunder in good faith and in
accordance with the opinion of such counsel.
7.9 So long as Escrow Agent acts consistent with its duties and
liabilities specified in this Agreement, Escrow Agent shall not be
responsible or liable for any losses resulting from the investment of the
Funds or for obtaining any specific level or percentage of earnings on such
investment.
7.10 The Escrow Agent shall have no responsibility for the tax
consequences of this Agreement. The Escrow Agent hereby advises each party
to this Agreement to consult with independent legal counsel concerning the
tax ramifications of this transaction.
8. RESIGNATION AND TERMINATION OF ESCROW AGENT. Escrow Agent may, upon
providing fifteen (15) days' written notice, resign its position and
terminate its liabilities and obligations hereunder. In the event Escrow
Agent is not notified within fifteen days of the
8
Successor Escrow Agent, Escrow Agent shall be entitled to transfer all funds
and assets to a court of competent jurisdiction with a request to have a
successor appointed. Upon filing such action and delivering such assets,
Escrow Agent's obligations and responsibilities shall cease. Similarly, SA &
SI may also jointly terminate Escrow Agent and appoint a Successor Escrow
Agent by providing fifteen (15) days written notice to Escrow Agent.
9. ESCROW AGENT'S FEE. Escrow Agent shall be paid for services
hereunder in accordance with the attached fee schedule and shall be
reimbursed for its out of pocket expenses for fees of counsel in setting up
the escrow. Payments of all fees shall be the joint and several
responsibility of SI and the Shareholders and may, to the extent of unpaid
fees and expenses, be deducted from any property placed within the escrow
with Escrow Agent. In the event that Escrow Agent is made a party to
litigation with respect to the property held hereunder, or brings an action
in interpleader or in the event that the conditions of this escrow are not
promptly fulfilled, or Escrow Agent is required to render any service not
provided for in this agreement and fee schedule, or there is any assignment
of the interest of this escrow or any modification hereof, Escrow Agent shall
be entitled to reasonable compensation for such extraordinary services and
reimbursement for all fees, costs, liability and expenses, including attorney
fees. The Escrow Agent may amend its fee schedule from time to time on 60
days prior written notice to the parties.
9.1 INDEMNIFICATION.
9.2 SI agrees to indemnify and hold the Escrow Agent harmless from
and against any and all liabilities, causes of action, claims, demands,
judgments, damages, costs and expenses (including reasonable attorneys fees
and expenses) whether foreseen or unforeseen, whether known or unknown,
whether liquidated or unliquidated, that at any time may arise out of or in
connection with the Escrow Agent's acceptance of or performance of its duties
and obligations under this Agreement.
9.3 The Escrow Agent shall be under no duty to institute any suit,
or to take any remedial procedures under this Agreement, or to enter any
appearance or in any way defend any suit in which it be made a defendant
hereunder until it shall be indemnified as provided above.
10. DISPUTES WITH RESPECT TO INSTRUCTIONS.
10.1 In the event that the instructions provided herein fail to
address any unforeseen circumstance, resulting in ambiguity of the Agreement,
or the Escrow Agent shall receive instructions with respect to the Funds
which, in its discretion, are in conflict either with other instructions
received by it or with any provision of this Agreement, the Escrow Agent
shall continue to hold the Funds, until new instructions executed by SI and
SA are delivered to the Escrow Agent, PROVIDED HOWEVER that the Escrow Agent
may suspend further performance under this Agreement (except for the
safekeeping of any Funds) until the resolution of such unforeseen
9
circumstance to the Escrow Agent's sole satisfaction by final judgment of a
court of competent jurisdiction or otherwise.
10.2 In the event that any controversy arises between one or more of
the parties hereto or any other party with respect to this Agreement, the
Merger Agreement or the Funds, the Escrow Agent shall not be required to
determine the proper resolution of such controversy or the proper disposition
of the Funds and shall have the absolute right, in its discretion, to deposit
the Funds with the Clerk of a court of competent jurisdiction, file suit and
obtain an order from the court requiring all parties involved to litigate in
such court their respective claims arising out of or in connection with the
Funds. Upon the deposit by the Escrow Agent of the Funds with the clerk of a
court of competent jurisdiction in accordance with this provision, the Escrow
Agent shall be relieved of all further obligations and released from all
liability hereunder.
11. SA.
11.1 SA is appointed the representative of the Shareholders pursuant
to the Merger Agreement as their exclusive agent and attorney-in-fact on
behalf of each of them in respect to all matters which are the subject of
this Agreement, including, without limitation, (i) receiving or giving all
notices, instructions, communications, consents or agreements that may be
necessary, required or given under this Agreement and (ii) asserting,
settling, compromising, defending or determining not to assert, settle,
compromise or defend any claims that SI may assert or have the right to
assert under this Agreement. SA shall have unlimited authority and power to
act on behalf of each Shareholder with respect to this Agreement and the
disposition and other handling of all claims, rights or obligations under
this Agreement so long as all Shareholders are treated in the same manner.
The Shareholders shall be bound by all actions taken by SA in connection with
this Agreement, and SI and Escrow Agent shall be entitled to rely on any
action or decision of SA. SA shall not be liable to any Shareholders for any
act or failure to act, or for any mistake of fact or law, or for any error of
judgment, or for the misconduct of any employee, agent or attorney appointed
by SA, while acting in good faith, unless caused by SA's willful misconduct.
The duties and obligations of SA shall be limited to and determined solely by
the express provisions of this Agreement and no implied duties or obligations
shall be read into this Agreement against SA. SA shall be entitled to
consult with counsel of SA's own selection and the opinion of such counsel
shall be full and complete authorization and protection to SA in respect to
any action taken or omitted by SA hereunder in good faith and in accordance
with the opinion of such counsel. Xxxx Xxxxx and Xxxxxxx X. XxXxxxxx hereby
accept such authorization and appointment.
11.2 SUBSTITUTION. Either Xx. Xxxxx or Xx. XxXxxxxx may resign as
SA, effective upon a new SA appointed to act as SA by the written consent of
Shareholders who hold at least a majority of the Percentage Shares (a
"Majority Consent"). Such person who is acting as SA shall cease being the
SA upon such person's death or disability, in such event the Shareholders
shall appoint a substitute SA by Majority Consent. In addition, a person may
be substituted as SA by Majority Consent. The term "SA" as used herein
refers to Xxxx Xxxxx and
10
Xxxxxxx X. XxXxxxxx, acting together, or, if any person is substituted in
accordance herewith as SA in place of either of them, to such persons acting
together. Upon written notice to Escrow Agent by the substitute SA, Escrow
Agent shall be entitled to rely on the authority of the substitute SA to act
as SA hereunder.
11.3 SA shall not be entitled to receive any compensation for
performing SA's duties under this Agreement. SA shall be reimbursed out of the
Escrowed Funds for any out-of-pocket costs and expenses reasonably incurred by
SA in connection with actions taken pursuant to the terms of this Agreement.
12. MISCELLANEOUS.
12.1 NOTICE. All notices, requests and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given (i) when delivered by hand to a party; (ii)
the next business day following facsimile transmission to the party to whom
addressed (with evidence of receipt thereof) to the facsimile number shown
below; or (iii) three business days after delivery into the United States
mail, postage prepaid, as certified mail, return receipt requested, to the
party to whom addressed at the address shown below:
If to SI, to:
SI Technologies, Inc.
0000 Xxxxx 000xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, President and CEO
(000) 000-0000
with a copy to
Xxxxxxxx X. Xxxxxxxx
Xxxxxx & Xxxxx LLP/Xxxxxxx Xxxxxxxx X.X.
0000 0xx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
(000) 000-0000
If to the Escrow Agent, to:
First Trust National Association
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
11
If to the Shareholder Representative, to:
Xxxx Xxxxx
c/o AeroGo, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
and
Xxxxxxx X. XxXxxxxx
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
With a copy to
Xxxxxxx X. Xxxxxxxx
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
or such other address(es) or facsimile number(s) as any party may designate by
written notice given in accordance with this paragraph.
12.2 SUCCESSORS AND ASSIGNS. All the terms and conditions of this
Agreement shall be binding upon, and inure to the benefit of and be
enforceable by, the parties and their respective successors, assigns, heirs
and legal representatives. No person, firm or corporation will be recognized
by Escrow Agent as a successor, heir or personal representative of any party
until there shall be presented to Escrow Agent evidence reasonably
satisfactory to it of such succession.
12.3 ATTORNEYS' FEES. If suit or action is filed by any party to
enforce the provisions of this Agreement or otherwise with respect to the
subject matter of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees as fixed by the trial court and, if any
appeal is taken from any decision of the trial court, reasonable attorneys'
fees as fixed by the appellate court.
12.4 GOVERNING LAW. The laws of the State of Washington shall
govern the validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties.
12.5 HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12
12.6 GENDER. All personal pronouns used in this Agreement shall
include the other gender, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
and as often as may be appropriate.
12.7 SEVERABILITY. Each provision of this Agreement is intended to
be severable. In the event that any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect any other provisions of this
Agreement, but this Agreement shall be construed as if such invalid, illegal
or unenforceable provisions had never been contained in this Agreement.
12.8 INTEGRATED AGREEMENT. This Agreement and the Merger Agreement
constitute the entire understanding and agreement among the parties with
respect to the subject matter of this Agreement, and there are no agreements,
understandings, restrictions, representations or warranties among the parties
other than those set forth or provided for in this Agreement and the Merger
Agreement.
12.9 BINDING AGREEMENT. This Agreement shall be binding upon the
assigns, successors, personal representatives and heirs of the parties, and
shall be effective as of the day accepted by Escrow Agent.
12.10 MERGER OR CONSOLIDATION. Any company into which Escrow Agent
may be merged or converted or with which it may be consolidated or any
company resulting from any merger conversion or consolidation to which it
shall be a party or any company to which Escrow Agent may sell or transfer
all or substantially all of its corporate trust business, provided such
company shall be a bank or trust company organized under the laws of any
state of the United States of America or a national banking association and
shall be authorized by law to perform all the duties imposed upon it by this
Agreement, shall be the successor to Escrow Agent without the execution or
filling of any paper or the performance of any further act.
12.11 DISCLOSURE. The parties hereto hereby agree not to use the
name of FIRST TRUST NATIONAL ASSOCIATION to imply an association with the
transaction other than that of a legal escrow agent.
12.12 BROKERAGE CONFIRMATIONS. The parties acknowledge that to the
extent regulations of the Comptroller of Currency or other applicable
regulatory entity grant a right to receive brokerage confirmations of
security transactions of the escrow, the parties waive receipt of such
confirmations, to the extent permitted by law. The Escrow Agent shall
furnish a statement of security transactions on its regular monthly reports.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
AEROGO, INC., A WASHINGTON FIRST TRUST NATIONAL
CORPORATION ASSOCIATION, AS ESCROW AGENT
By: XXXX X. XXXXX By:
------------------------------- --------------------------------
Its: CHAIRMAN
------------------------------- Title:
------------------------------
XXXX XXXXX
---------------------------------- By:
Xxxx Xxxxx -------------------------------
Title:
Xxxxxxx X. XxXxxxxx -------------------------------
----------------------------------
Xxxxxxx X. XxXxxxxx
SI TECHNOLOGIES, INC., A
DELAWARE CORPORATION
By: XXXX XXXXX
-------------------------------
Xxxx Xxxxx
Title: President and Chief Executive
Officer
14
