ESCROW AGREEMENT
Exhibit
10.1
This
Escrow Agreement is entered into as of May _____, 2007, by and among Modigene
Inc. (formerly known as LDG, Inc.), a Nevada corporation (the “Parent”), Xxxxxxx
Xxxxxx (“Xxxxxx”) and Xxxx Xxxxx (“Xxxxx”) (Xxxxxx and Xxxxx shall be referred
to individually as an “Indemnification Representative” and collectively as the
“Indemnification Representatives”) and Gottbetter & Partners, LLP (the
“Escrow Agent”).
WHEREAS,
the Parent has entered into an Agreement and Plan of Merger and Reorganization
(the “Merger Agreement”) with Modigene Inc., a Delaware corporation (the
“Company”), dated as of the date of this Agreement, (i) pursuant to which a
wholly-owned subsidiary of the Parent will merge with and into the Company,
with
the Company surviving the merger and (ii) as a result of which the Company
will
become a wholly-owned subsidiary of the Parent (capitalized terms used in this
Agreement without definition shall have the respective meanings given them
in
the Merger Agreement);
WHEREAS,
the Merger Agreement provides that an escrow account will be established to
secure the indemnification obligations of the Company Stockholders
(collectively, and including the permitted assigns of the Company Stockholders,
the “Indemnifying Stockholders”) to the Parent; and
WHEREAS,
the parties hereto desire to establish the terms and conditions pursuant to
which such escrow account will be established and maintained;
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1. Consent
of Company Stockholders.
The
Indemnifying Stockholders have, by virtue of their approval of the Merger
Agreement consented to: (a) the establishment of this escrow to secure the
Indemnifying Stockholders’ indemnification obligations under Article 6 of the
Merger Agreement in the manner set forth herein, (b) the appointment of the
Indemnification Representative as their representatives for purposes of this
Agreement and as attorneys-in-fact and agents for and on behalf of each
Indemnifying Stockholder, and the taking by the Indemnification Representative
of any and all actions and the making of any decisions required or permitted
to
be taken or made by them under this Agreement and (c) all of the other
terms, conditions and limitations in this Agreement.
2. Escrow
and Indemnification.
(a) Escrow
of Shares.
Simultaneously with the execution of this Agreement, the Parent shall deposit
with the Escrow Agent a certificate for 679,428 shares of common stock of the
Parent, as determined pursuant to Section 1.5(b) of the Merger Agreement,
issued in the name of the Escrow Agent or its nominee. The Escrow Agent hereby
acknowledges receipt of such stock certificate. The shares deposited with the
Escrow Agent pursuant to the first sentence of this Section 2(a) are
referred to herein as the “Escrow Shares.” The Escrow Shares shall be held as a
trust fund and shall not be subject to any lien, attachment, trustee process
or
any other judicial process of any creditor of any party hereto. The Escrow
Agent
agrees to hold the Escrow Shares in an escrow account (the “Escrow Account”),
subject to the terms and conditions of this Agreement.
(b) Indemnification.
The
Indemnifying Stockholders have agreed in Section 6.1 of the Merger Agreement
to
indemnify and hold harmless the Parent from and against specified Damages (as
defined in Section 6.1 of the Merger Agreement). The Escrow Shares shall be
security for such indemnity obligation of the Indemnifying Stockholders, subject
to the limitations, and in the manner provided, in this Agreement and in the
Merger Agreement.
(c) Dividends,
Etc.
Any
securities distributed in respect of or in exchange for any of the Escrow
Shares, whether by way of stock dividends, stock splits or otherwise, shall
be
issued in the name of the Escrow Agent or its nominee, and shall be delivered
to
the Escrow Agent, who shall hold such securities in the Escrow Account. Such
securities shall be considered Escrow Shares for purposes hereof. Any cash
dividends or property (other than securities) distributed in respect of the
Escrow Shares shall promptly be distributed by the Escrow Agent to the
Indemnifying Stockholders in accordance with Section 3(c).
(d) Voting
of Shares.
The
Indemnification Representative shall have the right, in its sole discretion,
on
behalf of the Indemnifying Stockholders, to direct the Escrow Agent in writing
as to the exercise of any voting rights pertaining to the Escrow Shares, and
the
Escrow Agent shall comply with any such written instructions. In the absence
of
such instructions, the Escrow Agent shall not vote any of the Escrow Shares.
The
Indemnification Representative shall have no obligation to solicit consents
or
proxies from the Indemnifying Stockholders for purposes of any such
vote.
(e) Transferability.
The
respective interests of the Indemnifying Stockholders in the Escrow Shares
shall
not be assignable or transferable, other than by operation of law. Notice of
any
such assignment or transfer by operation of law shall be given to the Escrow
Agent and the Parent, and no such assignment or transfer shall be valid until
such notice is given.
3. Distribution
of Escrow Shares.
(a) The
Escrow Agent shall distribute the Escrow Shares only in accordance with (i)
a
written instrument delivered to the Escrow Agent that is executed by both the
Parent and the Indemnification Representative and that instructs the Escrow
Agent as to the distribution of some or all of the Escrow Shares, (ii) an
order of a court of competent jurisdiction, a copy of which is delivered to
the
Escrow Agent by either the Parent or the Indemnification Representative, that
instructs the Escrow Agent as to the distribution of some or all of the Escrow
Shares, or (iii) the provisions of Section 3(b) hereof.
(b) Within
five business days after May ____, 2009 (the “Termination Date”), the Escrow
Agent shall distribute to the Indemnifying Stockholders all of the Escrow Shares
then held in escrow, registered in the name of the Indemnifying Stockholders
(subject to the provisions of Section 3(e)). Notwithstanding the foregoing,
if
the Parent has previously delivered to the Escrow Agent a copy of a Claim Notice
and the Escrow Agent has not received written notice of the resolution of the
claim covered thereby, or if the Parent has previously delivered to the Escrow
Agent a copy of an Expected Claim Notice, and the Escrow Agent has not received
written notice of the resolution of the anticipated claim covered thereby,
the
Escrow Agent shall retain in escrow after the Termination Date such number
of
Escrow Shares as have a Value (as defined in Section 6.3(c) of the Merger
Agreement) equal to the Claimed Amount covered by such Claim Notice or equal
to
the estimated amount of Damages set forth in such Expected Claim Notice, as
the
case may be. Any Escrow Shares so retained in escrow shall be distributed only
in accordance with the terms of clauses (i) or (ii) of Section 3(a) of
this Agreement.
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(c) Any
distribution of all or a portion of the Escrow Shares (or cash or other property
pursuant to Section 2(c)) to the Indemnifying Stockholders shall be made by
delivery of stock certificates issued in the name of the Indemnifying
Stockholders covering such percentage of the Escrow Shares being distributed
as
is calculated in accordance with the percentages set forth opposite such
holders’ respective names on Attachment A
attached
hereto. Distributions to the Indemnifying Stockholders shall be made by mailing
stock certificates to such holders at their respective addresses shown on
Attachment A
(or such
other address as may be provided in writing to the Escrow Agent by any such
holder). No fractional Escrow Shares shall be distributed to Indemnifying
Stockholders pursuant to this Agreement. Instead, the number of shares that
each
Indemnifying Stockholder shall receive shall be rounded to the nearest whole
number (with 0.5 shares rounded to the nearest whole number; provided,
that the
Indemnification Representative shall have the authority to effect such rounding
in such a manner that the total number of whole Escrow Shares to be distributed
equals the number of Escrow Shares then held in the Escrow Account).
(d) The
Parent shall include in any Expected Claim Notice delivered under the Merger
Agreement the Parent’s estimate of the amount of Damages reasonably anticipated
to be incurred in connection therewith. If the legal proceeding or written
claim
with respect to which an Expected Claim Notice has been given is definitively
withdrawn or resolved in favor of the Parent, the Parent shall promptly so
notify the Company Stockholders; and if the Parent has delivered a copy of
the
Expected Claim Notice to the Escrow Agent and Escrow Shares have been retained
in escrow after the Termination Date with respect to such Expected Claim Notice,
the Company Stockholders and the Parent shall promptly deliver to the Escrow
Agent a written notice executed by both parties instructing the Escrow Agent
to
distribute such retained Escrow Shares to the Company Stockholders in accordance
with the terms of the Escrow Agreement.
(e) The
Parent will, or will cause its transfer agent to, provide the Escrow Agent
with
share certificates registered in the name of the Indemnifying Stockholders
so as
to permit the Escrow Agent to satisfy its obligation to distribute stock
certificates under Section 3(b) and deliver stock certificates under Section
3(c).
4. [Intentionally
omitted]
5. Expenses
of Escrow Agent.
The
Parent shall pay all of the reasonable expenses of the Escrow Agent incurred
in
connection with the services to be rendered by the Escrow Agent under this
Agreement, promptly upon presentation of an invoice and supporting documentation
in connection therewith.
6. Limitation
of Escrow Agent’s Liability.
(a) The
Escrow Agent shall incur no liability with respect to any action taken or
suffered by it in reliance upon any notice, direction, instruction, consent,
statement or other documents believed by it to be genuine and duly authorized,
nor for other action or inaction except its own willful misconduct or gross
negligence. The Escrow Agent shall not be responsible for the validity or
sufficiency of this Agreement. In all questions arising under the Escrow
Agreement, the Escrow Agent may rely on the advice of counsel, and the Escrow
Agent shall not be liable to anyone for anything done, omitted or suffered
in
good faith by the Escrow Agent based on such advice. 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. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damages.
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(b) The
Parent will indemnify the Escrow Agent for, and hold it harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with
its
carrying out of its duties hereunder.
7. Liability
and Authority of Indemnification Representative; Successors and
Assignees.
(a) The
Indemnification Representative shall not incur any liability to the Parent,
the
Escrow Agent or the Indemnifying Stockholders with respect to any action taken
or suffered by them in reliance upon any note, direction, instruction, consent,
statement or other documents believed by them to be genuinely and duly
authorized, nor for other action or inaction except his own willful misconduct
or gross negligence. The Indemnification Representative may, in all questions
arising under the Escrow Agreement, rely on the advice of counsel and the
Indemnification Representative shall not be liable to the Parent, the Escrow
Agent or the Indemnifying Stockholders for anything done, omitted or suffered
in
good faith by the Indemnification Representative based on such
advice.
(b) In
the
event of the death or permanent disability of the Indemnification
Representative, or any resignation as an Indemnification Representative, a
successor Indemnification Representative shall be appointed by the other person
comprising the Indemnification Representative or, absent its appointment, a
successor Indemnification Representative shall be elected by a majority vote
of
the Indemnifying Stockholders, with each such Indemnifying Stockholder (or
his,
her or its successors or assigns) to be given a vote equal to the number of
votes represented by the shares of stock of the Company held by such
Indemnifying Stockholder immediately prior to the effective time of the share
purchase under the Merger Agreement. Each successor Indemnification
Representative shall have all of the power, authority, rights and privileges
conferred by this Agreement upon the original Indemnification Representative,
and the term “Indemnification Representative” as used herein shall be deemed to
include successor Indemnification Representative.
(c) The
Indemnification Representative shall have full power and authority to represent
the Indemnifying Stockholders, and their successors, with respect to all matters
arising under this Agreement and all actions taken by the Indemnification
Representative hereunder shall be binding upon the Indemnifying Stockholders,
and their successors, as if expressly confirmed and ratified in writing by
each
of them. Without limiting the generality of the foregoing, the Indemnification
Representative shall have full power and authority to interpret all of the
terms
and provisions of this Agreement and Article VI of the Merger Agreement, to
compromise any claims asserted hereunder or under Article VI of the Merger
Agreement and to authorize any release of the Escrow Shares to be made with
respect thereto, on behalf of the Indemnifying Stockholders and their
successors.
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(d) The
Escrow Agent may rely on the Indemnification Representative as the exclusive
agent of the Indemnifying Stockholders under this Agreement and shall incur
no
liability to any party with respect to any action taken or suffered by it in
good faith reliance thereon.
8. [Intentionally
omitted]
9. Termination.
This
Agreement shall terminate upon the distribution by the Escrow Agent of all
of
the Escrow Shares in accordance with this Agreement; provided that the
provisions of Sections 6 and 7 shall survive such termination.
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 two business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service.
If
to the
Parent:
0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
Xx. 22182
Attn:
Xxxxxxx Xxxxxx, Chief Executive Officer
Facsimile:
703-288-0070
If
to the
Indemnification Representatives:
Xxxxxxx
Xxxxxx
Xxxx
Xxxxx
0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
Xx. 00000
Facsimile:
000-000-0000
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With
a
copy (in the case of either a notice to the Parent or the Indemnification
Representatives) to:
If
before
or on May 29, 2007:
Barack
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLP
000
Xxxx
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
After
May
29, 2007:
Barack
Xxxxxxxxxx Xxxxxxxxxx & Xxxxxxxxx LLP
000
Xxxx
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
If
to the
Escrow Agent:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000)
000-0000
Any
party
may give any notice, instruction or communication in connection with this
Agreement using any other means (including personal delivery, telecopy 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 this
Section 10.
11. Successor
Escrow Agent.
In the
event the Escrow Agent becomes unavailable or unwilling to continue in its
capacity herewith, the Escrow Agent may resign and be discharged from its duties
or obligations hereunder by delivering a resignation to the parties to this
Escrow Agreement, not less than 60 days prior to the date when such
resignation shall take effect. The Parent may appoint a successor Escrow Agent
without the consent of the Indemnification Representative so long as such
successor is a bank with assets of at least $500 million, and may appoint any
other successor Escrow Agent with the consent of the Indemnification
Representative, which shall not be unreasonably withheld. If, within such notice
period, the Parent provides to the Escrow Agent written instructions with
respect to the appointment of a successor Escrow Agent and directions for the
transfer of any Escrow Shares then held by the Escrow Agent to such successor,
the Escrow Agent shall act in accordance with such instructions and promptly
transfer such Escrow Shares to such designated successor. If no successor Escrow
Agent is named as provided in this Section 11 prior to the date on which the
resignation of the Escrow Agent is to properly take effect, the Escrow Agent
may
apply to a court of competent jurisdiction for appointment of a successor Escrow
Agent.
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12. General.
(a) Governing
Law; Assigns.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to conflict-of-law principles
and
shall be binding upon, and inure to the benefit of, the parties hereto and
their
respective successors and assigns.
(b) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
(c) Entire
Agreement.
Except
for those provisions of the Merger Agreement referenced herein, this Agreement
constitutes the entire understanding and agreement of the parties with respect
to the subject matter of this Agreement and supersedes all prior agreements
or
understandings, written or oral, between the parties with respect to the subject
matter hereof.
(d) Waivers.
No
waiver by any party hereto of any condition or of any breach of any provision
of
this Agreement shall be effective unless in writing. No waiver by any party
of
any such condition or breach, in any one instance, shall be deemed to be a
further or continuing waiver of any such condition or breach or a waiver of
any
other condition or breach of any other provision contained herein.
(e) Amendment.
This
Agreement may be amended only with the written consent of the Parent, the Escrow
Agent and the Indemnification Representative.
(f) Consent
to Jurisdiction and Service.
The
parties hereby absolutely and irrevocably consent and submit to the jurisdiction
of the courts in the State of New York and of any Federal court located in
said
State in connection with any actions or proceedings brought against any party
hereto by the Escrow Agent arising out of or relating to this Escrow Agreement.
In any such action or proceeding, the parties hereby absolutely and irrevocably
waive personal service of any summons, complaint, declaration or other process
and hereby absolutely and irrevocably agree that the service thereof may be
made
by certified or registered first-class mail directed to such party, at their
respective addresses in accordance with Section 10 hereof.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and
year first above written.
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| By: | ||
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Name: Xxxxx
X. Xxxxx
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Title: President
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Xxxxxxx
Xxxxxx, in his capacity as an
Indemnification
Representative
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Xxxx
Xxxxx, in his capacity as an
Indemnification
Representative
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GOTTBETTER
& PARTNERS, LLP
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| By: | ||
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Name: Xxxx
X. Xxxxxxxxxx, Esq.
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Title: Partner
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ATTACHMENT
A
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Indemnifying
Stockholder
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Percentage
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[to
come]
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