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EXHIBIT 10.25
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this 8th day of August,
2000, by and among Illinois Superconductor Corporation, a Delaware corporation
("Parent"), American National Bank and Trust Company of Chicago, as escrow agent
("Escrow Agent"), Xxxxxxx Xxxxx III (the "Stockholder Representative"), as
stockholder representative by and on behalf of Spectral Solutions, Inc., a
Colorado Corporation (the "Company") (collectively, the "Stockholders") as
designated on Schedule A hereto.
WHEREAS, the Company, Parent and SSI Acquisition Corp, a Colorado corporation
and a wholly-owned subsidiary of Parent ("Sub"), have entered into an Agreement
and Plan of Merger dated May 17, 2000 (the "Merger Agreement"), pursuant to
which Sub will be merged into Company (the "Merger") and Company will thereby
become a wholly-owned subsidiary of Parent; and
WHEREAS, the Stockholder Representative and certain other Stockholders
of the Company listed on Schedule B hereto (the "Option Stockholders") have
entered into an Option and Exclusive Dealing Agreement dated May 17, 2000 (the
"Option Agreement"), pursuant to which, among other things, such Stockholders
have granted to Parent an option to purchase (the "Option") and certain voting
rights with respect to the shares of the Preferred Stock, $.001 par value per
share ("Company Preferred Stock"), and Common Stock, $.001 par value per share
("Company Common Stock"), of Company owned by such Option Stockholders (the
"Acquired Shares"), which Acquired Shares are listed on Schedule B hereto (which
Schedule may be amended from time to time to reflect the acquisition of
additional shares of Company Preferred Stock or Company Common Stock by a
writing delivered to the Escrow Agent and executed by Parent and the Shareholder
Representative); and
WHEREAS, the Merger Agreement and the Option Agreement contain certain
indemnification provisions for the benefit of Parent; and
WHEREAS, as security for the performance of such indemnification
provisions, the Merger Agreement and the Option Agreement provide for the
execution and delivery of this Escrow Agreement; and
WHEREAS, a copy of each of the Merger Agreement and the Option
Agreement have been delivered to the Escrow Agent, and the Escrow Agent is
willing to act as the Escrow Agent hereunder;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants and agreements hereinafter set forth, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Terms. All terms defined in the Merger Agreement shall have the same
meanings when used herein.
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2. Delivery of Parent Common Stock and Cash Dividends to Escrow.
(a) Initial Delivery of Effective Time. In the event of the
consummation of the Merger, pursuant to Section 2.1(e) of the Merger Agreement,
at the Effective Time, Parent will deliver to the Escrow Agent written notice of
such consummation and transfer to the Escrow Agent 166,427 shares of Parent
Common Stock registered in the name of the Escrow Agent in the stock register
maintained by Parent and/or its transfer agent, being the required number of
shares of Parent Common Stock plus cash to be paid in lieu of delivery of a
fraction of a share of Parent Common Stock which shall be used by the Escrow
Agent to create a fund (the "Escrow Fund"), subject to the terms and conditions
of this Escrow Agreement.
(b) Initial Delivery at Option Closing Date. In the event of the valid
exercise of the Option pursuant to Section 8.4 of the Option Agreement, at the
Option Closing Date, Parent will deliver written notice to the Escrow Agent of
such exercise and transfer to the Escrow Agent 5% of the number of shares of
Parent Common Stock payable to the Option Stockholders pursuant to Section 8.1
of the Option Agreement, being the required number of shares of Parent Common
Stock plus cash to be paid in lieu of delivery of a fraction of a share of
Parent Common Stock which shall be used by the Escrow Agent to create the Escrow
Fund, subject to the terms and conditions of this Escrow Agreement. The shares
delivered pursuant to this Section 2(b) shall be registered in the name of the
Escrow Agent in the stock register maintained by Parent and/or its transfer
agent.
(c) Stock Dividends and Splits. In the event of any stock dividend,
stock split or similar recapitalization with respect to the shares of Parent
Common Stock which becomes effective while shares of Parent Common Stock are
held in the Escrow Fund, the additional shares of Parent Common Stock issued
shall be added to the Escrow Fund and shall be subject to the terms and
conditions of this Escrow Agreement as if such shares were initially delivered
at the Effective Time or the Option Closing Date, as the case may be.
(d) Cash Dividends. All cash dividends with respect to the shares of
Parent Common Stock held in the Escrow shall be paid and delivered to the Escrow
Agent for deposit into the Escrow Fund.
3. Escrow Fund Income. The Escrow Agent shall invest any cash contained
in the Escrow Fund and any and all cash dividends or other cash income produced
by the shares of Parent Common Stock and other investments held in the Escrow
Fund ("Profits") in marketable obligations issued or guaranteed by the United
States of America or its agencies or instrumentalities and having maturities not
exceeding 90 days, as the Stockholder Representative (with the written consent
of Parent, which will not be unreasonably withheld or delayed) may from time to
time direct. In the absence of such investment instructions, all moneys on
deposit in the Escrow Fund shall be invested by the Escrow Agent in the One
Group Prime Money Market Fund or a similar or successor fund offered by the
Escrow Agent. The Profits and any shares of Parent Common Stock delivered to the
Escrow Agent in respect of the initial shares of Parent Common Stock delivered
into the Escrow shall constitute part of the Escrow Fund.
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4. Claims.
(a) Notice of Claims. Upon determination by Parent that it has a claim
for indemnification under Section 11.2 or Section 11.3 of the Merger Agreement
or Section 3.6 of the Option Agreement, as the case may be, Parent shall notify
the Stockholder Representative in writing of the claim and shall deliver a copy
of such notice to the Escrow Agent (with additional copies as provided in
Section 8(h) of this Escrow Agreement). The Escrow Agent shall pay to Parent
from the Escrow Fund only, in the manner specified in Section 4(b) below: (i)
the amount of such claim by Parent if thirty (30) days shall have expired since
the Parent delivered to the Escrow Agent and the Stockholder Representative a
copy of the written notice of the amount claimed and the Escrow Agent shall not
have received written notice within such time from any Stockholder
Representative that the amount of the claim is being contested; (ii) the amount
of any claim, or portion thereof, directed to be so paid in any written notice
received by the Escrow Agent from the Stockholder Representative; or (iii) the
amount of any claim, or portion thereof, directed to be paid in any written
notice received by the Escrow Agent from the Arbitrators (as defined below).
(b) Payment for Claims. All claims of Parent against the Escrow Fund
shall be paid to Parent out of the assets held in the Escrow Fund in the
following order of priority: (A) first, to the extent of any cash held in the
Escrow Fund; (B) second, to the extent of any assets other than cash and shares
of Parent Common Stock which are to be sold or liquidated for the purpose of
paying such claims; and (C) third, shares of Parent Common Stock, which shares
for such purposes shall be valued at the average closing price per share of
Parent Common Stock as reported on the Nasdaq Stock Market (or the NASD's
electronic bulletin board, for any day that Parent Common Stock is not eligible
for trading on the Nasdaq Stock Market) for the ten trading days immediately
preceding the third business day prior to the date of such withdrawal from the
Escrow (the "Average Closing Price") (which per share price shall be adjusted
for any stock dividend or stock split or similar recapitalization); provided,
however, that in the event that the Average Closing Price is unavailable or can
not be so calculated, the value of any shares of Parent Common Stock shall be
determined by the mutual agreement of Parent and the Stockholder Representative,
and in the event such an agreement can not be reached, by arbitration in
accordance with Section 4(c) hereof . In the event that assets other than cash
and shares of Parent Common Stock are required to be sold to pay a claim of
Parent in the amount and at the date determined in accordance with this Section
4, the Escrow Agent shall so notify both Parent and the Stockholder
Representative and Parent shall have twenty (20) days from the time the Escrow
Agent delivers notice thereof to instruct the Escrow Agent as to which non-cash
assets of the Escrow Fund are to be sold or liquidated for the purpose of paying
the claim.
(c) Arbitration. Any dispute as to the amount of a claim by Parent
against the Escrow Fund for indemnification under Section 11.2 or Section 11.3
of the Merger Agreement or Section 3.6 of the Option Agreement, as the case may
be, shall be determined by arbitration and shall be settled by three arbitrators
(the "Arbitrators"), one of whom shall be appointed by Parent, one by the
Stockholder Representative and the third of whom shall be appointed by the first
two arbitrators. If either party fails to appoint an arbitrator within 10 days
of a request in writing by the other party to do so or if the first two
arbitrators cannot agree on the appointment of a third arbitrator within 10
days, then such arbitrator shall be appointed by the American Arbitration
Association. Except as to the selection of arbitrators which shall be as set
forth
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above, the arbitration shall be conducted promptly and expeditiously in
Chicago, Illinois or such other place agreed to between Parent and the
Stockholder Representative in accordance with the rules of the American
Arbitration Association then in effect so as to enable the arbitrators to
determine the amount of such claim within 45 days of the commencement of the
arbitration proceedings. Each party shall bear the expenses of its arbitrator
and shall jointly and equally share with the other the expenses of the third
arbitrator and the arbitration. Any decision of the Arbitrators shall be final,
conclusive and binding upon the parties hereto and the Stockholders.
5. Distribution and Termination.
(a) Fund Distribution.
(i) As soon as practicable after the first to occur of (i) March 31,
2001 and (ii) thirty days after delivery to Parent by its auditors of audited
financial statements of the Surviving Corporation for the calendar year 2000
(with notice of such delivery to be promptly provided by the Parent to the
Escrow Agent) (the "Distribution Date"), and subject to the other provisions of
this Section 5, the Escrow Agent shall distribute the Escrow Fund, as provided
below, to those who are (a) in the case of consummation of the merger, the
Stockholders of the Company immediately prior to the Effective Time designated
on Schedule A hereto in accordance with their interests as set forth in Schedule
A hereto and (b) in the case of exercise of the Option, the Option Stockholders
in accordance with their pro rata share of the number of Acquired Shares
purchased by Parent from all Option Stockholders. The pro rata portion (the "Pro
Rata Portion") shall be based upon the percent of which the number of shares of
Acquired Shares owned by each Option Stockholder bears to the total number of
shares of Acquired Shares owned by all Option Stockholders and purchased by
Parent.
(ii) Notwithstanding the above, however, if any claims for indemnity
under the Merger Agreement or the Option Agreement, as the case may be, (of
which the Stockholder Representative and the Escrow Agent have received written
notice on or before the Distribution Date) remain pending on the Distribution
Date, the Escrow Agent shall withhold in the Escrow Fund an amount equal to such
pending claims.
(iii) Subject to Sections 6 and 7 hereof, all amounts in the Escrow
Fund on the Distribution Date in excess of all pending claims shall be
immediately distributed (a) in the case of the consummation of the Merger, to
the Stockholders in accordance with their interests as set forth in Schedule A
attached hereto and (b) in the case of the exercise of the Option, to the Option
Stockholders in accordance with their Pro Rata Portion.
(iv) For purposes of determining the number of shares of Parent Common
Stock or the amount of cash to be delivered to the Stockholders in the case of
the consummation of the Merger or the Option Stockholders in the case of the
exercise of the Option, as the case may be, and retained in the Escrow Fund
following the Distribution Date, all shares of Parent Common Stock held in the
Escrow Fund shall be valued at the Average Closing Price per share as determined
pursuant to Section 4(b) above (which per share price shall be adjusted for any
stock dividend or stock split or similar recapitalization) and all other assets
shall be valued at their fair market value as of such date.
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(v) On the Distribution Date the assets held in the Escrow Fund
available to be distributed to the Stockholders in the case of the consummation
of the Merger or the Option Stockholders in the case of the exercise of the
Option shall be distributed in the following order of priority: (A) first, to
the extent of any cash held in the Escrow Fund; (B) second, to the extent of any
assets other than cash and shares of Parent Common Stock which are to be sold or
liquidated for the purpose of making such distribution; and (C) third, shares of
Parent Common Stock.
(b) Withheld Assets. Any assets withheld pursuant to this Section shall
be retained by the Escrow Agent in the Escrow Fund until (i) thirty (30) days
shall have expired since the Parent delivered to the Escrow Agent and the
Stockholder Representative a copy of the written notice of the amount claimed
and the Escrow Agent shall not have received written notice within such time
from the Stockholder Representative that the Stockholder Representative contests
the amount of the claim, at which time the Escrow Agent shall pay the Parent the
amount of such claim, (ii) the Escrow Agent receives written direction from
Parent and the Stockholder Representative directing the Escrow Agent to disburse
assets, in which case disbursement shall be made in accordance with such
direction, (iii) the Escrow Agent receives a written notice from the Stockholder
Representative directing that any pending claim, or any portion thereof, be
paid, in which case payment of such pending claim or portion thereof shall be
made in accordance with such notice, or (iv) the Escrow Agent receives a written
notice from the Arbitrators directing that a pending claim, or any portion
thereof, be paid, in which case payment of such pending claim or portion thereof
shall be made in accordance with such notice. At such time as any claim pending
on the Distribution Date is no longer pending, the Escrow Agent shall distribute
(a) to the Stockholders in accordance with Schedule A hereto in the case of
consummation of the Merger or (b) to the Option Stockholders in their Pro Rata
Portion, any balance of the assets withheld in respect of that claim remaining
after disposition of that claim.
(c) Disposition of Pending Claims. A claim shall be considered disposed
of and no longer pending when (x) an event set forth in Section 4(a)(i) or (ii)
or Section 5(b)(i), (ii) or (iii) of this Escrow Agreement has occurred (unless
there are amounts still under claim after giving effect to the amounts paid) or
(y) the Escrow Agent has received a written notice from the Arbitrators
directing that a pending claim or any portion thereof, be paid and the Escrow
Agent has distributed to Parent any amount required pursuant to Section
4(a)(iii) or Section 5(b)(iv) of this Escrow Agreement.
(d) Termination. When the entire Escrow Fund has been distributed in
accordance with Section 4 and/or this Section 5, this Escrow Agreement shall
terminate.
(e) Distribution of Parent Common Stock. In connection with any
distribution of shares of Parent Common Stock under this Section 5, Escrow Agent
shall forward the existing stock certificate to the transfer agent for the
Parent Common Stock with instructions that such certificate be cancelled in
exchange for new stock certificates issued in the names of the Stockholders or
the Option Stockholders, as the case may be, or, pursuant to the written
direction of such stockholder, to his or her assignee, with any balance of
Parent Common Stock to be returned to the Escrow Agent and Parent hereby agrees
that it will direct the transfer agent to so issue the new certificates and
deliver such certificates to the Escrow Agent for redelivery to the Stockholders
or the Option Stockholders, as the case may be.
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6. Stockholder Representative. By the execution and delivery of this
Agreement, the Stockholders hereby irrevocably constitute and appoint Xxxxxxx
Xxxxx III as the true and lawful agent and attorney-in-fact of the Stockholders
with full power of substitution to act in the name, place and stead of the
Stockholders with respect to the escrow arrangements contemplated by this
Agreement, and to act on behalf of the Stockholders in any dispute, claim,
litigation or arbitration involving this Agreement, to do or refrain from doing
all such further acts and things, and to execute all such documents as the
Stockholder Representative shall deem necessary or appropriate in connection
with the transactions contemplated by this Agreement and Xxxxxxx Xxxxx III
hereby accepts appointment as Stockholder Representative. If Xxxxxxx Xxxxx III
dies or otherwise becomes incapacitated and unable to serve as Stockholder
Representative, Xxxxxx Xxxxx shall serve as the new Stockholder Representative.
The appointment of the Stockholder Representative shall be deemed coupled with
an interest and shall be irrevocable, and Parent, the Escrow Agent, and any
other person may conclusively and absolutely rely, without inquiry, upon any
action of the Stockholder Representative in all matters referred to herein. All
payments and notices made or delivered by Escrow Agent or Parent to the
Stockholder Representative for the benefit of the Stockholders shall discharge
in full all liabilities and obligations of Escrow Agent or Parent to the
Stockholders with respect thereto. The Stockholders hereby confirm all that the
Stockholder Representative shall do or cause to be done by virtue of his
appointment as the Stockholder Representative of the Stockholders.
7. Stockholder Representatives Liability. The Stockholder
Representative shall not be personally liable to any of the Stockholders or the
Parent for any act which he may do or omit to do under this Escrow Agreement in
good faith and in the exercise of his own best judgment. Any act done or omitted
by the Stockholder Representative in the absence of gross negligence or willful
misconduct shall be deemed conclusively to have been performed or omitted in
good faith by the Stockholder Representative.
8. Miscellaneous.
(a) Escrow Agent Obligations. The obligations and duties of the Escrow
Agent are confined to those specifically enumerated in this Escrow Agreement.
The Escrow Agent shall not be subject to, nor be under any obligation to
ascertain or construe the terms and conditions of any other instrument,
including without limitation the Merger Agreement and the Option Agreement,
whether or not now or hereafter deposited with or delivered to the Escrow Agent
or referred to in this Escrow Agreement, nor shall the Escrow Agent be obliged
to inquire as to the form, execution, sufficiency, or validity of any such
instrument as to the identity, authority, or rights of the person or persons
executing or delivering the same, including successor Stockholder
Representatives.
(b) Escrow Agent Liability. The Escrow Agent shall not be personally
liable for any act which it may do or omit to do hereunder in good faith and in
the exercise of its own best judgment. Any act done or omitted by the Escrow
Agent in the absence of gross negligence or willful misconduct shall be deemed
conclusively to have been performed or omitted in good faith by the Escrow
Agent. The Escrow Agent shall not be held liable for any losses that may occur
as the result of the investment or reinvestment of the Escrow Fund.
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(c) Conflicts. If the Escrow Agent should receive or become aware of
any conflicting demands or claims with respect to this Escrow Agreement, or the
rights of any of the parties hereto, or any money, property, or instruments
deposited herein or affected hereby, the Escrow Agent shall have the right in
its sole discretion, without liability for interest or damages, to discontinue
any or all further acts on its part until such conflict is resolved to its
satisfaction and/or to commence or defend any action or proceeding for the
determination of such conflict.
(d) Indemnification of Escrow Agent. Subject to the provisions of
Section 8(b) hereof, Parent and the Stockholders, jointly and severally, hereby
agree to indemnify and hold harmless the Escrow Agent from and against all
costs, damages, judgments, attorney's fees (whether such attorneys shall be
regularly retained or specially employed), expenses, obligations, and
liabilities of every kind and nature which the Escrow Agent may incur, sustain,
or be required to pay in connection with or arising out of this Escrow
Agreement, and all such costs, damages, judgments, attorney's fees, expenses,
obligations, and liabilities shall be paid equally by Parent and Stockholders.
The obligations of the Parent and the Stockholders hereunder shall survive the
termination of this Agreement and the resignation or removal of the Escrow
Agent.
(e) Escrow Agent's Conduct; Fees. In performing its duties hereunder,
the Escrow Agent may rely on statements furnished to it by an officer of the
Parent or by the Stockholder Representative, or on any other evidence deemed by
the Escrow Agent to be reliable. The Escrow Agent shall be entitled to the
payment of an annual fee in the amount of $3,500 payable in advance of each
year's service, which shall be paid by Parent.
(f) Voting of Parent Common Stock. The Stockholder Representative shall
have the right to exercise all voting rights with respect to the shares of
Parent Common Stock held in the Escrow Fund.
(g) Successors. This Escrow Agreement shall be binding on and inure to
the benefit of the Stockholders, Stockholder Representative, Parent and Escrow
Agent and their respective successors and permitted assigns (but not the heirs
of the Stockholder Representative in such Stockholder's capacity as Stockholder
Representative).
(h) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon the earlier of delivery thereof if by
hand or upon receipt if sent by mail (registered or certified mail, postage
prepaid, return receipt requested) or on the second next business day after
deposit if sent by a recognized overnight delivery service or upon transmission
if sent by telecopy or delivery service or upon transmission if sent by telecopy
or facsimile transmission (with request of assurance of receipt in a manner
customary for communication of such type) as follows:
To the Stockholder
Representative:
Xxxxxxx Xxxxx III
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx
Telecopy:
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With copies to:
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Gelt, Xxxxxxxx & Xxxx, P.C.
000 X. 00xx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
To Parent:
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Illinois Superconductor Corporation
000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
and
Illinois Superconductor Corporation
C/x Xxxxxxx Associates
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
With a copy to
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Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
8000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
To the Escrow Agent:
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American National Bank and Trust Company of Chicago
000 X. XxXxxxx Xxxxxx
4th Floor
Mail Code IL1-1250
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telecopy (000) 000-0000
(i) New Escrow Agent. The Escrow Agent may resign as such following the
giving of forty-five (45) days prior written notice to the other parties hereto.
If the Escrow Agent shall decline or cease to act as Escrow Agent, the Parent
and the Stockholder Representative
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shall appoint a successor. In the event Parent and the Stockholder
Representative cannot agree on a successor, the matter shall be submitted to
binding arbitration through the American Arbitration Association. Parent and the
Stockholder Representative shall split the costs of such arbitration equally and
shall each pay their own expenses related thereto. If the other parties hereto
or an arbitrator shall have failed to appoint a successor prior to the
expiration of forty-five (45) days following receipt of the notice of the Escrow
Agent's resignation, the Escrow Agent may appoint a successor or petition any
court of competent jurisdiction for the appointment of a successor escrow agent
or for other appropriate relief, and any such resulting appointment shall be
binding upon all of the parties hereto.
(k) Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
the conflicts-of-laws rules thereof.
(l) Jurisdiction and Venue. Each party covenants and agrees (i) that
any state or federal court within Xxxx County, Illinois shall have exclusive
jurisdiction of any action or proceeding relating to, or arising under or in
connection with this Agreement and Parent, each Stockholder, Stockholder
Representative, Company and Escrow Agent consent to personal jurisdiction of
such courts and waives any objection to such courts' jurisdiction, and (ii)
servicer of any summons and complaint may be made by: (A) personally delivering
a copy of such summon sand complaint to (if a natural person) the individual to
be served, (B) leaving a copy of such summons and complaint at the individual's
usual place of abode with any person over the age of 18 who is a member of such
individual's family, (C) leaving a copy of such summons and complaint at the
individual's usual place of business with the individual's assistant or
secretary, (D) delivering a copy to an agent authorized by appointment or law to
accept service of process, or (E) any other method authorized under applicable
law.
(m) Amendment or Modification. The terms of this Escrow Agreement may
be altered, amended, modified or revoked by writing only, signed by Parent, the
Escrow Agent and the Stockholder Representative.
(n) Reports from Escrow Agent. The Escrow Agent shall furnish to the
Parent and the Stockholder Representative quarterly reports listing each
transaction made by the Escrow Agent during such quarter with respect to this
Escrow Agreement.
(o) Counterparts. This Escrow 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 agreement.
(p) Headings. The article and section headings contained in this Escrow
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of
this Escrow Agreement.
(q) Waiver of Compliance; Consents. Any failure of the parties hereto
to comply with any obligation, covenant, agreement or condition contained herein
may be waived in writing by the other parties hereto, respectively, but such
waiver or failure to insist upon strict
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compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any other failure.
(r) Validity. The invalidity or unenforceability of any provision of
this Escrow Agreement shall not affect the validity or enforceability of any
other provisions of this Escrow Agreement, which shall remain in full force and
effect.
(s) Assignment. This Escrow Agreement shall not be assigned other than
by operation of law, except that it may be assigned by Parent to one or more of
its affiliates who agree in writing to be bound by the provisions hereof;
provided, that Parent remains obligated under this Escrow Agreement. No
assignment of the interest of any of the parties hereto shall be binding upon
the Escrow Agent unless and until written evidence of such assignment in form
satisfactory to the Escrow Agent shall be filed with and accepted by the Escrow
Agent.
(t) Investments. The Escrow Agent is hereby authorized to execute
purchases and sales of investments through the facilities of its own trading or
capital markets operations or those of any affiliated entity. Although the
Parent and the Stockholders recognize that they may obtain a broker confirmation
or written statement containing comparable information at not additional cost,
they hereby agree that confirmations of investment are not required to be issued
by the Escrow Agent for each quarter in which a quarterly statement is rendered.
The Escrow Agent shall have no responsibility or liability for any diminution in
value of any assets held hereunder which may result from any investments or
reinvestments made in accordance with the provisions hereof.
(u) Damages. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE DIRECTLY OR
INDIRECTLY FOR ANY (I) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED
HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT'S FAILURE TO
ACT IN ACCORDANCE WITH THE REASONABLE COMMERCIAL STANDARDS OF THE BANKING
BUSINESS, OR (II) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESROW AGENT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(v) Advice of Counsel; Agents. The Escrow Agent shall have the right,
but not the obligation, to consult with counsel of choice and shall not be
liable for action taken or omitted to be taken by Escrow Agent either in
accordance with the advice of such counsel or in accordance with any opinion of
counsel to the Parent or the Stockholders addressed and delivered to the Escrow
Agent. The Escrow Agent shall have the right to perform any of its duties
hereunder through agents, attorneys, custodians or nominees.
(w) Successor Escrow Agent. Any banking association or corporation into
which the Escrow Agent may be merged, converted or with which the Escrow Agent
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any banking
association or corporation to which all or substantially all of the corporate
trust business of the Escrow Agent shall be transferred, shall succeed to all
the Escrow Agent's rights, obligations and immunities hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
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(x) Attachment of Escrow Fund. In the event that any escrow property
shall be attached, garnished or levied upon by any court order, or the delivery
thereof shall be stayed or enjoined by an order of a court, or any order,
judgment or decree shall be made or entered by any court affecting the property
deposited under this Agreement, the Escrow Agent is hereby expressly authorized,
in its sole discretion, to obey and comply with all writs, orders or decrees so
entered or issued, which it is advised by legal counsel of its own choosing is
binding upon it, whether with or without jurisdiction, and in the event that the
Escrow Agent obeys or complies with any such writ, order or decree it shall not
be liable to any of the parties hereto or to any other person, firm or
corporation, by reason of such compliance notwithstanding that such writ, order
or decree may be subsequently reversed modified, annulled, set aside or vacated.
(y) Tax Matters. The Escrow Agent shall report to the Internal Revenue
Service , as of each calendar year-end, all income earned from the investment of
any sum held in the escrow agent against the Stockholder, in the event deposits
are made pursuant to Section 2(a), in the percentages set forth in Schedule A or
the Option Stockholders, in the event deposits are made pursuant to Section
2(b), in their respective Pro Rata Portions, whether or not such income has been
distributed during such year, as and to the extent required by law. The Escrow
Agent shall have no responsibility for the preparation and/or filing of any tax
return with respect to any income earned by the Escrow Account, nor for any
withholding or the payment of any taxes or estimated taxes.
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IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as
of the date first above written.
Parent:
ILLINOIS SUPERCONDUCTOR CORPORATION
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chief Executive Officer
Escrow Agent:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, as escrow agent
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Assistant Vice President
Stockholder Representative:
XXXXXXX XXXXX III
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Xxxxxxx Xxxxx III
-12-
13
SCHEDULE A
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Percentage Interest in Address or Account for
Name of Stockholder Distribution Distribution *
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* Subject to change upon written notice to Escrow Agent and Stockholder
Representatives
-13-
14
SCHEDULE B
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Address or Account for
Name of Option Stockholder Acquired Shares Distribution *
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* Subject to change upon written notice to Escrow Agent and Stockholder
Representatives
-14-
