Exhibit 2.2
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of January
__, 2002 by and among THE TITAN CORPORATION, a Delaware corporation ("PARENT"),
[____________], [A NATIONAL BANKING ASSOCIATION] [BANK ORGANIZED UNDER THE LAWS
OF __________________] (the "ESCROW AGENT") and [_____________], an individual
(the "COMPANY SHAREHOLDERS' REPRESENTATIVE"). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings given to them
in the Merger Agreement (as defined below).
RECITALS
WHEREAS, Parent, THUNDERBIRD ACQUISITION CORP., a California
corporation, and wholly owned subsidiary of Parent (the "MERGER SUB") and
JAYCOR, INC., a California corporation (the "COMPANY") have entered into an
Agreement and Plan of Merger and Reorganization dated as of January ___, 2002
(the "MERGER AGREEMENT") pursuant to which Merger Sub will cease to exist, and
the Company will become a wholly owned subsidiary of Parent.
WHEREAS, the Merger Agreement provides that an escrow account will be
established as collateral for certain indemnification obligation rights of
Parent and the other Indemnitees under the Merger Agreement.
WHEREAS, the Merger Agreement provides that an adjustment account will
be established for purposes of the working capital adjustments set forth in
Section 1.14 of the Merger Agreement.
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow account and such adjustment account
will be established and maintained.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. ESCROW ACCOUNT AND ADJUSTMENT ACCOUNT.
(a) ESCROW OF SHARES. On the date of the Closing (the "CLOSING
DATE," the exact date of which Escrow Agent will be notified by Parent),
Parent shall deliver to the Escrow Agent (i) a certificate issued in the name
of the Escrow Agent on behalf of the shareholders of the Company hereto
representing in the aggregate __________________ (_______) shares of Parent
Common Stock (the "ESCROW SHARES"), and (ii) a certificate issued in the name
of the Escrow Agent on behalf of the shareholders of the Company hereto
representing in the aggregate ________________________________ (_______)
shares of Parent Common Stock (the "ADJUSTMENT SHARES"). The Escrow Shares
and the Escrow Cash (as defined in Section 1(f) below) are hereinafter
referred to, collectively, as the "ESCROW FUND." The Adjustment Shares and
the Adjustment Cash (as defined in Section 1(f) below) are hereinafter
referred to, collectively, as the "ADJUSTMENT FUND." The Escrow Shares and
the Adjustment Shares are hereinafter referred to, collectively, as the
"SHARES." The Escrow Fund shall be held as security
1.
for the indemnification rights to which Parent and the other Indemnitees are
entitled pursuant to Section 9 of the Merger Agreement and as security for
any working capital adjustment in excess of the Adjustment Fund. The
Adjustment Fund shall be held as security for any working capital adjustments
made pursuant to Section 1.14 of the Merger Agreement. Neither the Escrow
Fund nor the Adjustment Fund shall 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. The Escrow Agent agrees to
accept delivery of the Adjustment Shares and to hold the Adjustment Shares in
a purchase price adjustment fund (the "ADJUSTMENT ACCOUNT") subject to the
terms and conditions of this Agreement.
(b) DIVIDENDS, INTEREST, ETC. Any securities distributable in
respect of or in exchange for any of the Shares, whether by way of stock
dividend, stock splits or otherwise, shall be delivered to the Escrow Agent, who
shall hold such securities in the Escrow Account or the Adjustment Account, as
applicable. Such securities shall be issued in the name of the Escrow Agent on
behalf of the Company's shareholders and shall be considered Escrow Shares or
Adjustment Shares, as appropriate, for all purposes hereof. If any additional
securities are delivered to the Escrow Agent subsequent to a sale of the Shares
pursuant to Section 1(f), such securities shall be sold as soon as practicable
after such delivery pursuant to Section 1(f), and the proceeds from such sale
shall be deposited in the Escrow Account or the Adjustment Account, as
appropriate. Such proceeds shall be invested by the Escrow Agent in accordance
with Section 2(f) and any interest earned thereon shall be deemed Escrow Cash or
Adjustment Cash, as appropriate. Any cash dividend or property (other than stock
dividends or distributions payable in securities which shall become part of the
Escrow Account and the Adjustment Account upon distribution and shall be deemed
Shares for all purposes of this Agreement) distributable to the shareholders of
the Company in respect of the Escrow Shares or the Adjustment Shares shall be
distributed by Parent to the Company Shareholders' Representative, on behalf of
the shareholders of the Company.
(c) VOTING OF SHARES. On any matter brought before the stockholders
of Parent for a vote, each shareholder of the Company shall deliver written
notice to the Escrow Agent ("VOTING NOTICE") setting forth the manner in which
the Escrow Agent shall vote such shareholder's portion of the Shares, which
shall equal the proportionate share of such shareholder's ownership of the
Company stock as set forth on SCHEDULE I attached hereto. Each shareholder of
the Company shall deliver such Voting Notice to the Escrow Agent at least five
(5) days prior to the date of the taking of any vote of the stockholders of
Parent (the "VOTING NOTICE DATE"). The Escrow Agent shall vote the Shares in
proportion to the votes cast by the shareholders of the Company with respect to
the Shares. The Escrow Agent shall have no obligation to vote any of the Shares
if no Voting Notice is received prior to the Voting Notice Date or if such
notice does not clearly set forth the manner in which the Escrow Agent shall
vote the Shares.
(d) TRANSFERABILITY. The interests of the shareholders of the
Company in the Shares shall not be assignable, pledgeable or transferable, other
than by operation of law; PROVIDED HOWEVER, that notwithstanding the foregoing,
the Shares may be sold in whole or in part pursuant to Section 1(f).
2.
(e) ESCROW AGENT'S POWER TO TRANSFER. The Escrow Agent is hereby
granted the power to effect any transfer of the Escrow Cash (as defined below),
the Escrow Shares, the Adjustment Cash or the Adjustment Shares permitted under
the terms of this Agreement.
(f) ELECTION TO SELL SHARES BY COMPANY SHAREHOLDERS' REPRESENTATIVE.
The Company Shareholders' Representative has informed Parent that he intends to
direct the sale of some or all of the Shares within a short period following the
Closing. If the Company Shareholders' Representative elects to sell any of the
Shares in one or more transactions, he or she shall (i) instruct the Escrow
Agent to sell the Shares specifying the number of Shares to be sold, (ii)
instruct the Escrow Agent as to any limitations on the price at which such
Shares are to be sold and any limitations on the brokerage and other fees
incurred in connection with the sale of such Shares, as determined by the
Company Shareholders' Representative in his discretion, in a manner intended to
maximize the net proceeds from such sale based on then current market
conditions, and (iii) provide notice to the Parent of such election. The Escrow
Agent shall cause the sale of the Shares strictly in accordance with the written
instructions of the Company Shareholders' Representative. The proceeds received
from such sale of the Escrow Shares and the Adjustment Shares, net of any
documented commissions or brokerage fees and expenses reasonably incurred in the
sale of the Shares, shall be deposited into the Escrow Account and the
Adjustment Account, respectively, and shall be available to (i) satisfy any
Damages with respect to which an Indemnitee may be entitled to indemnification
under the Merger Agreement, and/or (ii) any working capital adjustments pursuant
to Section 1.14 of the Merger Agreement, respectively. For purposes hereof, all
consideration received from such sale of Escrow Shares and Adjustment Shares
(together with any interest thereon), respectively, shall be referred to herein
collectively in each case as "ESCROW CASH" and "ADJUSTMENT CASH," respectively.
2. ADMINISTRATION OF ESCROW ACCOUNT. The Escrow Agent shall
administer the Escrow Account as follows:
(a) DELIVERY OF CLAIM NOTICE. If, in the good faith belief of such
Indemnitee, any Indemnitee has incurred or suffered any Damages resulting from,
arising out of, relating to, in the nature of, or caused by any of the
circumstances set forth in Section 9 of the Merger Agreement for which such
Indemnitee is or may be entitled to indemnification under the Merger Agreement,
the Parent shall, on behalf of such Indemnitee and on or prior to the
Termination Date (as defined below), give written notice of such claim (a "CLAIM
NOTICE") to the Company Shareholders' Representative and the Escrow Agent. Each
Claim Notice shall state (i) the basis for such claim, (ii) the amount of
Damages incurred or suffered by such Indemnitee (the "CLAIMED AMOUNT"), (iii)
the amount of Escrow Cash and/or number of Escrow Shares (valued at Fair Market
Value (as defined in Section 6) required to satisfy such Damages, and (iv)
delivery instructions for any distribution of Escrow Cash or the name under
which such Escrow Shares shall be issued. No Indemnitee shall make any claim for
Damages after 11:59 p.m. Pacific Time on April 15, 2003 (the "TERMINATION
DATE"). Attached hereto as ATTACHMENT A are the names, titles and specimen
signatures of each of the persons who are authorized, on behalf of Parent to
execute and deliver written notices and directions to the Escrow Agent.
(b) RESPONSE NOTICE; UNCONTESTED CLAIMS. Within 10 days of the date
a Claim Notice is delivered (the "RESPONSE DATE") in accordance with Section 10,
the Company
3.
Shareholders' Representative shall provide to Parent and to the Escrow Agent a
written response (the "RESPONSE NOTICE") in which the Company Shareholders'
Representative shall: (i) agree that the Escrow Cash and/or Escrow Shares
(valued at Fair Market Value) equal to the full Claimed Amount may be released
from the Escrow Account to the Indemnitee, (ii) agree that the Escrow Cash
and/or Escrow Shares (valued at 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 Indemnitee, or (iii) contest that any of the Escrow Cash or
Escrow Shares may be released from the Escrow Account to the Indemnitee. The
Company Shareholders' Representative may contest the release of Escrow Cash
and/or Escrow Shares (valued at Fair Market Value) equal to all or a portion of
a 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 Indemnitee is
entitled to indemnification under the Merger Agreement. If no Response Notice is
delivered by the Company Shareholders' Representative to the Escrow Agent by the
Response Date, the Company Shareholders' Representative shall be deemed to have
agreed that Escrow Cash and/or Escrow Shares (valued at Fair Market Value) equal
to the entire Claimed Amount may be released from the Escrow Account to the
Indemnitee.
(c) UNCONTESTED CLAIM. If the Company Shareholders' Representative
in the Response Notice agrees or is deemed to have agreed that the Escrow Cash
and/or Escrow Shares (valued at Fair Market Value) equal to the Claimed Amount
may be released from the Escrow Account to the Indemnitee, the Escrow Agent
shall, no later than ten (10) days after receipt or deemed receipt of the
Response Notice, transfer, deliver, and assign to such Indemnitee such amount of
the Escrow Cash and/or such number of Escrow Shares (valued at Fair Market
Value) equal to the Claimed Amount as provided in the Claim Notice plus interest
as of the date of distribution attributable to the portion of the Escrow Cash
distributed to the Indemnitee with respect to such Claimed Amount (or such
lesser amount of Escrow Cash and number of Escrow Shares as is then held in the
Escrow Account).
(d) PARTIALLY CONTESTED CLAIMS. If the Company Shareholders'
Representative in the Response Notice agrees that Escrow Cash and/or Escrow
Shares (valued at Fair Market Value) equal to part, but not all, of the Claimed
Amount may be released from the Escrow Account to such Indemnitee, the Escrow
Agent shall, no later than ten (10) days after receipt of the Response Notice,
transfer, deliver, and assign to such Indemnitee such amount of the Escrow Cash
and/or number of Escrow Shares (valued at Fair Market Value) equal to the Agreed
Amount plus interest as of the date of distribution attributable to the portion
of the Escrow Cash distributed to the Indemnitee with respect to such Agreed
Amount (or such lesser amount of Escrow Cash and/or number of Escrow Shares as
is then held in the Escrow Account) and subject to reduction pursuant to Section
2(e).
(e) CONTESTED CLAIMS. If the Company Shareholders' Representative in
the Response Notice contests all or any part of any claim in a Claims Notice (a
"CONTESTED CLAIM"), then the Contested Claim shall be first presented for
resolution to the Company Shareholders' Representative and the Chief Financial
Officer of Parent by consultation for a period not to exceed 10 business days,
and, if not resolved within such period, shall be then adjudicated in accordance
with Section 12(a) of this Agreement. After the Escrow Termination Date and
until the Escrow Agent receives (x) delivery of a copy of a settlement agreement
executed by Company Shareholders' Representative and the Parent instructing the
Escrow Agent as to the
4.
resolution of such Contested Claim and the disbursement of Escrow Cash and/or
Escrow Shares retained in respect of such Contested Claim or (y) delivery of a
copy of the final non-appealable award of a court of competent jurisdiction
resolving the Contested Claim, the Escrow Agent shall continue to hold in the
Escrow Account the cash and funds required to be retained in accordance with
Section 4(a) of this Agreement.
(f) From the date hereof until the final disbursement from the
Escrow Fund pursuant to Section 5.1 of this Escrow Agreement, the Escrow Agent
is authorized and directed to invest and reinvest the Escrow Cash and/or the
Adjustment Cash in any of the following investments (each a "PERMITTED
INVESTMENT") in each case pursuant to written instructions of the Company
Shareholders' Representative, with the consent of the Parent, which consent
shall not be unreasonably withheld: (i) readily marketable obligations maturing
within six (6) months after the date of acquisition thereof issued by the United
States of America or any agency or instrumentality thereof; (ii) readily
marketable obligations maturing within six (6) months after the date of
acquisition thereof issued by any state or municipality within the United States
of America, or any political subdivision, agency or instrumentality thereof,
rated "A" or better by either Standard & Poor's Corporation or Xxxxx'x Investors
Service Inc.; (iii) readily marketable commercial paper maturing within one
hundred eighty (180) days after the date of issuance thereof which has the
highest credit rating of either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.; or (iv) six (6) month certificates of deposit issued by
any bank incorporated and doing business pursuant to the laws of the United
States of America or any state thereof having combined capital and surplus of at
least $500,000,000. In the event the Escrow Agent does not receive written
instructions from the Company Shareholders' Representative to invest or reinvest
the Escrow Cash and/or the Adjustment Cash, the Escrow Agent agrees to invest
and reinvest the Escrow Cash and the Adjustment Cash in a money market fund
agreed to by Parent and the Shareholder Representative in writing, which invests
in direct obligations of, or obligations fully guaranteed as to principal and
interest by the United States Government and repurchase agreements with respect
to such securities. Permitted Investments and interest accruing on, and any
profit resulting from, such investments shall be added to, and become a part of,
the Escrow Cash or the Adjustment Cash, as applicable, pursuant to this Escrow
Agreement. For purposes of this Escrow Agreement, "interest" on the Escrow Cash
and the Adjustment Cash shall include all proceeds thereof and investment
earnings with respect thereto. All Permitted Investments shall be registered in
the name of the Escrow Agent. The Escrow Agent shall have full power and
authority to sell any and all Permitted Investments held by it under this Escrow
Agreement as necessary to make disbursements under this Escrow Agreement. The
Escrow Agent, Parent, the Surviving Corporation and the Shareholder
Representative shall not be responsible for any unrealized profit or realized
loss realized on such investments.
3. ADMINISTRATION OF ADJUSTMENT ACCOUNT. The Escrow Agent shall
administer the Adjustment Account as follows:
(a) If Parent is obligated to issue and deposit with the Escrow
Agent in the Adjustment Fund for the benefit of the Company's shareholders any
additional shares of Parent Common Stock pursuant to Section 1.14(b) of the
Merger Agreement, Parent shall deliver a certificate representing such
additional shares to the Escrow Agent as soon as administratively practicable,
and in no event later than five days after (i) the issuance of the written
statement delivered by the Neutral Auditor (as defined in the Merger Agreement),
or (ii) if any dispute is
5.
resolved in the Initial Resolution Period (as defined in the Merger Agreement),
the agreement by the parties upon the final Closing Report (as defined in the
Merger Agreement). The Escrow Agent shall deposit such additional shares into
the Adjustment Account as soon as administratively practicable after the receipt
of such certificate from the Parent. If a sale of all of the Shares has been
made pursuant to Section 1(f) prior to such adjustment, the additional shares
shall be sold pursuant to Section 1(f) as soon as administratively practicable
after the additional shares are deposited into the Adjustment Account. If a sale
of less than all of the Shares has occurred, the Shareholders' Representative
shall be entitled to sell the additional Shares described above pursuant to
Section 1(f).
(b) If Parent is entitled to reduce the number of Adjustment Shares
deposited with the Escrow Agent in the Adjustment Fund for the benefit of the
Company's shareholders pursuant to Section 1.14(c) of the Merger Agreement, the
Parent and the Company Shareholders' Representative shall jointly instruct
(unless the amount of the Parent Adjustment Amount is determined by a Neutral
Auditor (as defined in the Merger Agreement) in which case, only the
instructions of Parent, with a copy of the decision of the Neutral Auditor shall
be required) the Escrow Agent to (i) reduce the number of Adjustment Shares held
in the Adjustment Account for the benefit of the Company's shareholders by an
amount equal to the Parent Adjustment Amount (as defined in the Merger
Agreement) divided by the Parent Average Trading Price (as defined in the Merger
Agreement) or (ii) reduce the amount of Adjustment Cash held in the Adjustment
Account by an amount equal to the Parent Adjustment Amount plus any interest as
of the date of distribution attributable to the portion of the Adjustment Cash
distributed to Parent with respect to the Parent Adjustment Amount. The Escrow
Agent shall then reduce the number of Adjustment Shares or the Amount of
Adjustment Cash, as applicable, by such amount, and shall issue a stock
certificate or cash, as appropriate, to Parent, equal to such amount. If Parent
is entitled to a distribution pursuant to this Section 3(b) and the Parent
Adjustment Amount exceeds the value of the funds then available in the
Adjustment Account (such excess, the "EXCESS ADJUSTMENT AMOUNT"), the Excess
Adjustment Amount shall be distributed to Parent out of the Escrow Fund in the
manner set forth in Section 2(c) as if the entire Excess Adjustment Amount is a
Claimed Amount (but without any further right on the part of the Company
Shareholders' Representative to further contest the Claimed Amount or the
disbursement).
6.
4. RELEASE OF ESCROW FUND AND ADJUSTMENT FUND.
(a) RELEASES OF FUNDS.
(1) RELEASE OF ESCROW CASH AND/OR ESCROW SHARES. Within 15 days
after the Termination Date, the Escrow Agent shall distribute to the Company
Shareholders' Representative, on behalf of each of the shareholders of the
Company, (i) all of the Escrow Shares, including any shares received pursuant to
stock splits, dividends or otherwise, and (ii) all of the Escrow Cash, including
any interest earned thereon not otherwise distributed to the Indemnitees
pursuant to Section 2 or retained in the Escrow Account pursuant to the next
sentence of this Section 4(a)(1). Notwithstanding the foregoing, if any Claim
Notice has been given and such claim has not yet been resolved, the Escrow Agent
shall retain in the Escrow Account after the Termination Date an amount of the
Escrow Cash and/or a number of Escrow Shares (valued at Fair Market Value on the
Termination Date) equal in the aggregate to the Claimed Amount in a Claims
Notice or Contested Claim, as the case may be plus interest attributable to the
portion of the Escrow Cash retained with respect to such Claimed Amount or
Contested Amount, in each case without regard to any potential insurance
payments related thereto (as well as any amounts the Escrow Agent reasonably
determines are necessary to satisfy the fees and expenses contemplated by
Section 7(a)), which has not then been resolved, upon the terms set forth in
Section 2.
(2) RELEASE OF ADJUSTMENT CASH AND/OR ADJUSTMENT SHARES. As soon
as practicable, but in no event later than five (5) days after (i) the issuance
of the written statement delivered by the Neutral Auditor (as defined in the
Merger Agreement), or (ii) if any dispute is resolved in the Initial Resolution
Period (as defined in the Merger Agreement), the agreement by the parties upon
the final Closing Report (as defined in the Merger Agreement), Parent and the
Company Shareholders' Representative shall instruct the Escrow Agent to
distribute to the Company Shareholders' Representative, on behalf of each of the
shareholders of the Company, all of the Adjustment Shares, including any shares
received pursuant to stock splits, dividends or otherwise, and all of the
Adjustment Cash, including any interest earned thereon not otherwise distributed
to the Parent pursuant to Section 3.
(b) DISTRIBUTIONS. Any distribution of all or a portion of the
Escrow Cash, Escrow Shares, Adjustment Cash and/or Adjustment Shares to the
Company Shareholders' Representative, on behalf of the shareholders of the
Company, shall be made as follows: (i) each shareholder shall receive a PRO RATA
share of the distribution based on the proportionate share of such shareholder's
ownership of the Company as set forth on SCHEDULE I attached hereto, (ii) all
Escrow Cash will be distributed before any Escrow Shares are distributed, and
(iii) all Adjustment Cash will be distributed before any Adjustment Shares are
distributed; PROVIDED, that the Escrow Agent shall withhold the distribution of
the portion of the Escrow Shares and the Adjustment Shares otherwise
distributable to the Company Shareholders' Representative, on behalf of any
Company shareholders who have not, according to written notice provided by
Parent to the Escrow Agent, prior to such distribution, surrendered their
respective Company Stock Certificates in accordance with Section 1.8(a) of the
Merger Agreement. Any such Escrow Cash and/or Escrow Shares so withheld shall be
delivered to Parent promptly after the Termination Date, and any such Adjustment
Cash and/or Adjustment Shares so withheld shall be delivered to Parent promptly
after (i) the issuance of the written statement delivered by the
7.
Neutral Auditor (as defined in the Merger Agreement), or (ii) if any dispute is
resolved in the Initial Resolution Period (as defined in the Merger Agreement),
the agreement by the parties upon the final Closing Report (as defined in the
Merger Agreement). Such withheld amounts shall in each case be delivered by
Parent to the Company Shareholders' Representative, on behalf of the
shareholders of the Company to whom such shares would have otherwise been
distributed upon surrender of their respective Company Stock Certificates.
Distributions to the Company Shareholders' Representative, on behalf of the
shareholders of the Company, shall be made by mailing stock certificates in the
names of such holders to the address of the Company Shareholders' Representative
provided in Section 10 (or such other address as may be provided in writing to
the Escrow Agent and Parent by the Company Shareholders' Representative). Upon
receipt of the stock certificates, the Company Shareholders' Representative
shall promptly mail such certificates to each Company shareholder.
(c) No fractional shares of Parent Common Stock shall be distributed
to the shareholders of the Company pursuant to this Agreement. In lieu of any
fractional shares to which such Company shareholder would otherwise be entitled,
after combining any fractional interests of such holder into as many whole
shares as is possible, such Company shareholder shall be paid in cash an amount
equal to the sum of the dollar amount (rounded to the nearest whole cent)
determined by multiplying Fair Market Value by the fraction of a share of Parent
Common Stock that would otherwise be deliverable to such Company shareholder
hereunder.
5. PRO RATA PAYMENTS AND DISTRIBUTIONS. At any time that a payment,
distribution or holdback is required to be made pursuant to this Agreement, the
payment, distribution or holdback shall be from or to each shareholder of the
Company in the same proportion as such shareholder's proportionate ownership of
the Company as set forth on SCHEDULE I attached hereto. Any such PRO RATA
payment, distribution or holdback shall be made by the Escrow Agent only in
accordance with written instructions from the Company Shareholders'
Representative setting forth the exact amount of any PRO RATA payment required
to be made pursuant to this Agreement. Notwithstanding anything herein to the
contrary, the Escrow Agent shall have no obligation to file or prepare any tax
returns or to prepare any other reports for any taxing authorities concerning
the matters covered by this Agreement.
6. VALUATION OF ESCROW SHARES. For purposes of this Agreement, the
"FAIR MARKET VALUE" of the Shares shall be determined based upon the closing
price of Parent Common Stock on the New York Stock Exchange on the business day
immediately preceding the date on which a distribution is made pursuant to the
terms of this Agreement.
7. FEES AND EXPENSES OF ESCROW AGENT.
(a) Upon execution of this Agreement and initial deposit of the
Escrow Shares and the Adjustment Shares, an Administrative Fee of $[________]
([_________]) will be payable to the Escrow Agent. This administrative fee will
cover the administration of the Adjustment Account until the Termination Date.
If the period which the Escrow Agent is required to maintain the Escrow Account
continues beyond the Termination Date pursuant to Section 4(a), fees will be
payable in accordance with the Escrow Agent's fee schedules in effect from time
to time. The Escrow Agent will also be entitled to reimbursement for
extraordinary expenses incurred in performance of its duties hereunder.
8.
(b) Parent shall pay the fees and expenses of the Escrow Agent for
the services to be rendered by the Escrow Agent hereunder including those set
forth in Section 7(a) hereof.
(c) All reasonable expenses (including attorneys' fees) incurred by
the Company Shareholders' Representative in connection with the performance of
its duties hereunder shall be paid by the shareholders of the Company. The
Company Shareholder Representative may retain any Escrow Cash and/or Escrow
Shares distributed to the Company Shareholder's Representative hereunder and use
such Escrow Cash and/or the proceeds from the sale of such Escrow Shares to pay
such expenses. Parent shall have no liability whatsoever for any fees, costs, or
other expenses incurred by the Company Shareholders' Representative. Any
payments by the shareholders of the Company hereunder shall be made
proportionately based upon such shareholder's proportionate ownership of the
Company as set forth on Schedule I attached hereto, with any payment being made
first from any Escrow Cash and then from any Escrow Shares. The Company
Shareholders' Representative shall be entitled to receive distributions of
Escrow Cash or Escrow Shares, valued at Fair Market Value, to the extent his
reasonable expenses exceed the amount of the Escrow Cash or Escrow Shares
distributed to him that he has not subsequently distributed to the Shareholders;
PROVIDED HOWEVER, that the aggregate amount of distributions to the Company
Shareholders' Representative pursuant to this sentence shall not exceed the
Permitted Reimbursement Amount.
8. DUTIES OF ESCROW AGENT.
(a) The Escrow Agent shall be entitled to rely upon any order,
judgment, certificate, demand, notice, instrument or other writing delivered to
it hereunder without being required to investigate the validity, accuracy or
content thereof nor shall the Escrow Agent be responsible for the validity or
sufficiency of this Agreement. In all questions arising under this Agreement,
the Escrow Agent may rely on the advice of counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based on such advice, the
Escrow Agent shall not be liable to anyone. In connection with any sales of
Shares pursuant to Section 1(f) of this Agreement, the Escrow Agent shall issue
or cause to be issued a Form 1099 to each beneficial owner of Shares properly
reflecting such beneficial owner's pro rata portion of all proceeds from the
sale of Shares. The Escrow Agent shall not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner reasonably satisfactory to it.
(b) In the event conflicting demands are made or conflicting notices
are served upon the Escrow Agent with respect to the Escrow Cash, the Escrow
Shares, the Adjustment Cash or the Adjustment Shares, the Escrow Agent will have
the absolute right, at the Escrow Agent's election, to do either or both of the
following: (i) resign as Escrow Agent so a successor can be appointed pursuant
to clause (e) of this Section 8, or (ii) file a suit in interpleader and obtain
an order from a court of competent jurisdiction requiring the parties to
interplead and litigate in such court their several claims and rights among
themselves. In the event such interpleader suit is brought, the Escrow Agent
will thereby be fully released and discharged from all further obligations
imposed upon it under this Agreement, and Parent will pay the Escrow Agent all
costs, expenses and reasonable attorneys' fees expended or incurred by the
Escrow Agent pursuant to the exercise of the Escrow Agent's rights under this
Section 8(b)
9.
(such costs, fees and expenses will be treated as extraordinary fees and
expenses for the purposes of Section 7 hereof).
(c) The Escrow Agent, its corporate parent, its subsidiary
corporations or any of its related companies, its employees, agents, officers,
and directors, shall be indemnified, jointly and severally, and held harmless by
the Parent, from and against any and all liability, including all expenses
reasonably incurred in its defense, to which the Escrow Agent shall be subject
by reason of any action taken or omitted or any investment or disbursement of
any part of the Escrow Account and/or the Adjustment Account made by the Escrow
Agent pursuant to this Escrow Agreement, except as a result of the Escrow
Agent's own gross negligence or willful misconduct. The costs and expenses of
enforcing this right of indemnification also shall be paid by the Parent. This
right of indemnification shall survive the termination of this Escrow Agreement,
and the removal or resignation of the Escrow Agent.
(d) The Escrow Agent shall have no interest in the Escrow Cash, the
Escrow Shares, the Adjustment Cash or the Adjustment Shares, but is serving as
escrow holder only and having only possession thereof.
(e) The Escrow Agent may resign as Escrow Agent at any time and for
any reason whatsoever. In the event the Escrow Agent desires to resign as Escrow
Agent under this Agreement, the Escrow Agent shall deliver a notice to Parent
and the Company Shareholders' Representative stating the date upon which such
resignation shall be effective; PROVIDED, HOWEVER, that any such resignation
shall not be effective until at least the 30th day after Parent and the Company
Shareholders' Representative receive such notice. Upon the receipt of any such
notice from the Escrow Agent, Parent may appoint a successor escrow agent
without the consent of the Company Shareholders' Representative so long as such
successor is a bank or trust company with assets of at least $500 million, and
may appoint any other successor escrow agent with the consent of the Company
Shareholders' Representative, which consent shall not be unreasonably withheld.
In the case of the appointment of any successor escrow agent requiring the
consent of the Company Shareholders' Representative as set forth in the
preceding sentence, Parent and the Company Shareholders' Representative shall
deliver a written notice to the Escrow Agent designating the successor escrow
agent. Upon the effectiveness of the resignation of the Escrow Agent, the Escrow
Agent shall deliver all Escrow Cash, Escrow Shares, Adjustment Cash and
Adjustment Shares to any successor escrow agent properly designated hereunder,
whereupon the Escrow Agent shall be discharged from any and all further
obligations arising hereunder. The Escrow Agent shall be paid any outstanding
fees and expenses prior to transferring the Escrow Cash, the Escrow Shares, the
Adjustment Cash and the Adjustment Shares to a successor escrow agent. If upon
the effective date of resignation of the Escrow Agent a successor escrow agent
has not been duly designated, the Escrow Agent's sole responsibility after that
time shall be to retain and safeguard the Escrow Cash, the Escrow Shares, the
Adjustment Cash and the Adjustment Shares until receipt of a designation of
successor escrow agent or a final nonappealable order of a court of competent
jurisdiction.
9. TERMINATION. This Agreement shall terminate upon the later of the
Termination Date or the release by the Escrow Agent of all of the Escrow Cash,
the Escrow Shares, the Adjustment Cash and the Adjustment Shares in accordance
with this Agreement.
10.
10. 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 either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service, except
that notice to the Escrow Agent shall only be deemed given when received by the
Escrow Agent.
If to Parent: __________________
__________________
Attn:
Fax:
With a copy to (which copy shall THE TITAN CORPORATION
not constitute notice): 0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxx, Esq.
XXXXXX GODWARD LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Company Shareholders'
Representative: __________________
__________________
__________________
With a copy to: __________________
__________________
__________________
If to the Escrow Agent: __________________
__________________
__________________
11. Any party may give any notice, instruction or communication in
connection with this Agreement using any other means (including personal
delivery, facsimile or 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 Section 10.
12. GENERAL.
11.
(a) GOVERNING LAW. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the laws
of the State of California without regard to principles of conflicts of laws.
Any legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement shall be brought or otherwise
commenced exclusively in any state or federal court located in the County of San
Diego, State of California. Each party hereto: (i) expressly and irrevocably
consents and submits to the jurisdiction of each state and federal court located
in the County of San Diego, State of California (and each appellate court
located in the State of California), in connection with any legal proceeding;
(ii) agrees that service of any process, summons, notice or document by U.S.
mail addressed to him at the address set forth in Section 10 shall constitute
effective service of such process, summons, notice or document for purposes of
any such legal proceeding; (iii) agrees that each state and federal court
located in the County of San Diego, State of California, shall be deemed to be a
convenient forum; and (iv) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of San Diego, State of California, any claim by
either party hereto that it is not subject personally to the jurisdiction of
such court, that such legal proceeding has been brought in an inconvenient
forum, that the venue of such proceeding is improper or that this Agreement or
the subject matter of this Agreement may not be enforced in or by such court.
(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) SUCCESSOR ESCROW AGENT. If the Escrow Agent consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business or assets to, another corporation or banking association, the
resulting surviving or transferee corporation without any further act shall be
the successor Escrow Agent, provided that such corporation be eligible under
this Agreement.
(d) ENTIRE AGREEMENT. Except as set forth in the Merger Agreement,
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.
(e) WAIVERS. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
12.
(f) AMENDMENT. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
13.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
PARENT: THE TITAN CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
COMPANY SHAREHOLDERS' REPRESENTATIVE:
------------------------------------------
ESCROW AGENT: [_______________________]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[SIGNATURE PAGE TO ESCROW AGREEMENT]
ATTACHMENT A
AUTHORIZED SIGNATORIES
FOR THE TITAN CORPORATION ("PARENT") THE FOLLOWING NAMED PERSONS WITH TITLE AND
SPECIMEN SIGNATURE SHOWN BELOW:
---------------------------------------- -------------------------------------- --------------------------------------
NAME TITLE SIGNATURE
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---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
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SCHEDULE I
SHAREHOLDERS' ESCROW SHARES, ADJUSTMENT SHARES AND
PROPORTIONATE OWNERSHIP
------------------------------- ---------------------------- ------------------------------ --------------------------
Number of Escrow Number of Adjustment
Shares Deposited Shares Deposited Proportionate
Name Hereunder Hereunder Ownership
------------------------------- ---------------------------- ------------------------------ --------------------------
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