EXHIBIT 2.2
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is made as of October 14,
2004, among Tekelec, a California corporation ("Parent"), and Strategic
Partners, Inc., Software Consolidations, Inc., The Beacon Group III - Focus
Value Fund, L.P., JAFCO Co., Ltd., U.S. Information Technology Investment
Enterprise Partnership, U.S. Information Technology No. 2 Investment Enterprise
Partnership, BancBoston Investments Inc., GMT Communications Partners II, L.P.,
GMT Communications Partners (Holland) II, L.P. and GMT Communications Partners
(Executive Fund) II, L.P. (together the "Escrow Stockholders"), Software
Consolidations, Inc. and The Beacon Group III - Focus Value Fund, L.P. (the "A-F
Representative") and GMT Communications Partners II, L.P. (the "G-H
Representative") as the representatives of the Escrow Stockholders (the
"Representatives") and U.S. Bank National Association (the "Escrow Agent").
RECITALS
A. Parent, Escrow Stockholders and certain other holders of the capital
stock of Steleus Group Inc., a New York corporation ("Company"), have entered
into an Agreement and Plan of Merger, dated as of August 19, 2004, and the
Amendment thereto dated October 1, 2004 (collectively the "Merger Agreement"),
pursuant to which, among other things, the parties thereto agreed to the merger
of a subsidiary of Parent with and into Company.
B. The transactions contemplated by the Merger Agreement are being closed
(the "Closing") contemporaneously with the execution of this Escrow Agreement.
C. Pursuant to the Merger Agreement, a certain portion of the Merger
Consideration is to be deposited in escrow, subject to the terms and conditions
of the Merger Agreement and this Escrow Agreement.
D. The Escrow Agent has agreed to hold the Escrow Deposit (as hereinafter
defined) and disburse and apply the same in accordance with the terms and
conditions of this Escrow Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
expressed herein and in the Merger Agreement, the parties hereto agree as
follows:
1. DEFINED TERMS. Unless otherwise defined herein, all capitalized terms
used herein shall have the meanings attributed to them in the Merger Agreement.
2. APPOINTMENT OF ESCROW AGENT. Parent, the Escrow Stockholders and the
Representatives hereby appoint the Escrow Agent to serve as escrow agent
hereunder, and the Escrow Agent hereby accepts such appointment and agrees to
act as escrow agent hereunder and to accept, hold and distribute the Escrow
Deposit in accordance with and subject to the terms and conditions hereof.
3. DEPOSIT OF ESCROW DEPOSIT. Pursuant to Section 1.11 of the Merger
Agreement, Parent has deposited with the Escrow Agent the cash amount of
$8,550,000 (the "Escrow Deposit") which represents a portion of the Initial Cash
Consideration under the Merger Agreement. The Escrow Agent hereby acknowledges
receipt of the Escrow Deposit.
3.1. The Escrow Deposit shall include any income earned thereon.
4. INVESTMENTS.
4.1. The Escrow Agent shall hold and safeguard the Escrow Deposit in
accordance with the terms of this Escrow Agreement and not as the property of
Parent, Company or any Escrow Stockholder.
4.2. The Escrow Agent shall cause any cash in the Escrow Deposit
from time to time to be invested and reinvested as directed in writing by the
Representatives. The Representatives covenant and agree that they shall direct
the Escrow Agent to invest the Escrow Deposit only in Authorized Investments
with appropriately blended maturities, with each individual investment mature
not more than 91 days from the date of investment or reinvestment. For the
purpose of this Escrow Agreement, "Authorized Investments" means (1) short term
interest bearing or discount debt obligations issued or guaranteed by the
Government of the United States and /or (2) money market funds rated AAA by
Standard and Poor's which invest in short term interest bearing or discount debt
obligations issued or guaranteed by the Government of the United States
including funds offered by Escrow Agent. Any direction by the Representatives to
the Escrow Agent as to investment or reinvestment of funds shall be in writing
and shall be provided to the Escrow Agent no later than 9:00 a.m. on the day on
which the investment is to be made. Any such direction received after 9:00 a.m.
or received on a non-Business Day shall be deemed to have been given prior to
9:00 a.m. the next Business Day. If a direction is not received, the Escrow
Agent shall not have any obligation to invest any cash included in the Escrow
Deposit in Authorized Investments and pending receipt of same shall be entitled
to hold such Escrow Deposit uninvested in its trust account. The Representatives
may from time to time designate in writing a single Representative to serve as
the Representative to direct investments.
4.3. All earnings, dividends or other property (including
securities) received in connection with the Escrow Deposit ("Escrow Income")
shall be converted into cash and invested as provided in this Section 4 and
segregated from the principal amount of the Escrow Deposit and payable (net of
any amounts owed by the Escrow Stockholders to the Escrow Agent under this
Escrow Agreement which the Escrow Agent will deduct prior to disbursement and
for which the Escrow Stockholders shall bear no obligation under Section 9 to
deposit into the escrow account) to the Escrow Stockholders in accordance with
paragraph 5 of Schedule 1 at the written direction of the Representatives to the
Escrow Agent; provided, however, that the Representatives shall be entitled to
reimbursement of any out-of-pocket costs incurred in connection with the
performance of their duties under the Merger Agreement or this Escrow Agreement
only out of the Escrow Income which reimbursement shall be made (to the extent
there are funds available therefore) at the written direction of the
Representatives. The Escrow Agent shall supply a written statement to Parent and
the Representatives monthly listing all transactions with respect to the Escrow
Deposit during each such period. The Escrow Income
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shall not be subject to claims made by any Parent Indemnified Person pursuant to
Sections 5.1 or 5.2 nor be subject to reserve pursuant to Section 6.
4.4. The Escrow Agent shall not be held liable for any losses
resulting from any investment, sale, transfer or other disposition of any funds
made pursuant to this Escrow Agreement provided that the Escrow Agent is not
grossly negligent or does not act willfully or in bad faith in connection with
such investments.
4.5. The Escrow Agent shall not be liable for the accuracy of any
calculations made by the Representatives for following the directions of the
Representatives. The Escrow Agent shall not be responsible for any action or
failure to take action on the part of any Representative.
4.6. The Escrow Agent may rely and shall be protected in acting upon
or refraining from acting in good faith upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
verification, order, bond, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent undertakes to perform such duties and only such duties
as are specifically set forth in this Escrow Agreement.
5. APPLICATION OF ESCROW DEPOSIT TO CLAIMS OF PARENT.
5.1. If Parent claims that a Parent Indemnified Person has suffered
Indemnified Losses for which it is entitled to indemnification under Section 9.1
of the Merger Agreement at any time prior to 11:59 p.m. (California time) on
November 13, 2005 (the "Release Date"), Parent shall deliver the written notice
to the Representatives specifying the facts constituting the basis for such
claim and the amount, to the extent known, of the claim asserted (any notice
from Parent under this Section 5 shall be referred to as a "Release Notice") to
the Representatives and the Escrow Agent to release from the Escrow Deposit such
amount (the "Claimed Amount"). Within seven (7) days of receipt of a Release
Notice, the Representatives shall deliver a copy of the Release Notice to each
Escrow Stockholder. The parties acknowledge that there may be multiple Release
Notices given by Parent during the term hereof and that any Release Notice may
be amended by Parent from time to time in writing on or prior to the Release
Date (e.g., to increase or decrease the Claimed Amount stated therein), any such
amendment being effective as of and from the date of delivery thereof to the
Escrow Agent. The Claimed Amount shall be paid by the Escrow Agent out of the
Escrow Deposit to or at the direction of Parent in accordance with the Release
Notice unless the Escrow Agent receives written notice executed by at least one
Representative disputing the validity or amount of such claim by notifying
Parent and the Escrow Agent in a writing, containing a description in reasonable
detail of the basis for the dispute and the amount in dispute (a "Dispute
Notice"), within twenty-one (21) calendar days after Parent has provided the
Representatives with a Release Notice. If a Dispute Notice has not been
delivered to Parent and the Escrow Agent within the required twenty-one (21)
calendar day period, the Escrow Agent shall promptly disburse from the Escrow
Deposit to or at the direction of Parent the portion of the Escrow Deposit
specified in the Release Notice. The Representatives shall send a copy of any
Dispute Notice to all of the Escrow Stockholders at the time the Dispute Notice
is sent to the Escrow Agent.
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5.2. In the event that a Dispute Notice signed by any of the
Representatives has been provided to Parent and the Escrow Agent within the
required twenty-one (21) calendar day period, the Escrow Agent shall distribute
promptly to or at the direction of Parent the undisputed portion (if any) of the
amount set forth in the Release Notice, and withhold the amount in dispute (the
"Disputed Amount"), which amount shall continue to be held by the Escrow Agent
in accordance with this Section 5.2. The Disputed Amount shall be held by the
Escrow Agent in accordance with the terms hereof until the earlier to occur of
the following: (i) the Representatives and Parent jointly direct the
disbursement of the Disputed Amount by delivering written instruction to the
Escrow Agent, or (ii) the Escrow Agent receives a copy of a final nonappealable
judgment or order of a court of competent jurisdiction (a "Directive") with
respect to the Disputed Amount (which judgment or order shall also be delivered
by Parent to the Representatives or by the Representatives to Parent, as the
case may be). Upon receipt of such instructions or Directive, or as promptly as
practicable but in no event more than fifteen (15) calendar days after receipt
of such instructions or Directive, the Escrow Agent shall disburse or continue
to hold (as the case may be) the Disputed Amount, as required by such
instructions or Directive, as the case may be.
5.3. Except for any payments from the Escrow Deposit pursuant to a
Claimed Amount that are a result of an indemnity obligation arising under
Sections 9.1(b) (an "Individual Obligation Amount"), all payments made to any
Parent Indemnified Person pursuant to Sections 5.1 or 5.2 and all reserves of
any part or all of the Escrow Deposit made pursuant to Section 6 shall be
allocated in accordance with paragraph 8 of Schedule 1. In the case of an
Individual Obligation Amount, any such indemnity obligation shall be allocated
in accordance with paragraph 7 of Schedule 1 to the Escrow Stockholder whose
breach or violation gave rise to such indemnity obligation. All allocations
under this Section 5.3 shall be notified by the Representatives to the Escrow
Agent in writing in accordance with paragraphs 7 and 8 of Schedule 1.
6. DISBURSEMENT OF ESCROW DEPOSIT TO ESCROW STOCKHOLDERS.
6.1. Promptly following the Release Date, the Escrow Agent shall
release to the Escrow Stockholders, in accordance with paragraph 9 of Schedule 1
hereto, the amount remaining in the escrow account; provided, however, that the
Escrow Agent shall retain subject to the Escrow and not deliver to the Escrow
Stockholders such Escrow Deposit in the amount equal to the lesser of (a) the
sum of 120% of all Disputed Amounts outstanding on the Release Date which have
not been resolved in accordance with Section 5 plus all Claimed Amounts that
have not then been paid to Parent or disputed by the Representatives in
accordance with Section 5 hereof or (b) the balance of the Escrow Deposit
immediately prior to the Release Date; provided, however, if as of the Release
Date there has been no payment of Parent Indemnified Losses under the Merger
Agreement and this Escrow Agreement and the amount of 120% of the aggregate
amount of all then Disputed Amounts and Claimed Amounts that have not then been
paid to Parent or disputed by the Representatives in accordance with Section 5
is less than $570,000, the entire Escrow Deposit shall be released on the
Release Date. Following the resolution of any Disputed Amounts or Claimed
Amounts that have not then been paid to Parent or disputed by the
Representatives in accordance with Section 5, the Escrow Agent shall disburse
the Disputed Amounts and Claimed Amounts as provided in the Directive or in
written
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instructions from Parent and the Representatives, with any portion payable to
Escrow Stockholders distributed pursuant to Schedule 1.
6.2. Notwithstanding any other term or condition of this Escrow
Agreement, if at the time of any distribution by the Escrow Agent of the Escrow
Deposit to the Escrow Stockholders, any Claimed Amount or Disputed Amount
represents an amount that Parent has claimed it is entitled to as a result of an
indemnity obligation under Section 9.1(b) of the Merger Agreement (an
"Individual Obligation Disputed Amount"), then (i) all such Escrow Deposit other
than any Individual Obligation Disputed Amounts shall be distributed by the
Escrow Agent to the Escrow Stockholders, with each Escrow Stockholder being
entitled to receive its distribution as determined in accordance with paragraph
9 of Schedule 1, except that the Escrow Stockholder or Escrow Stockholders whose
alleged breach or violation is at issue with respect to any such Individual
Obligation Disputed Amount shall only be entitled to receive the difference
between the distribution the Escrow Stockholder would receive absent any
Individual Obligation Disputed Amount attributable to such Escrow Stockholder
and the Individual Obligation Disputed Amount attributable to such Escrow
Stockholder and (ii) all such Individual Obligation Disputed Amounts shall
continue to be held by the Escrow Agent until such time as the disputes with
respect to such amounts have been resolved in accordance with the terms hereof,
at which time such Individual Obligation Disputed Amounts shall be distributed
by the Escrow Agent in accordance with the terms hereof as if such resolution
had been known at the time of the initial distribution of such Escrow Deposit.
In no event shall an Individual Obligation Amount or an Individual Obligation
Disputed Amount reduce the amount to be distributed to any Escrow Stockholder
other than the Escrow Stockholder whose breach or violation gave rise to the
indemnity obligation or Disputed Amount.
6.3. The Representatives shall be responsible for all calculations
and allocations under Sections 6.1 and 6.2 and shall deliver to the Escrow
Stockholders, Parent and the Escrow Agent, in connection with each distribution
hereunder, a statement showing the calculation of the amounts so distributed.
7. CERTAIN COVENANTS. Parent and the Escrow Stockholders, hereby agree
that all taxes payable with respect to the interest earnings on the Escrow
Deposit shall be the responsibility of the Escrow Stockholders as the parties
entitled to such interest earnings. Parent and the Representatives agree that
the Escrow Agent shall report the interest earnings to the Escrow Stockholders
on the appropriate tax forms and, to the extent required by the Code, withhold
the appropriate tax. The Representatives agree that they will use their
reasonable efforts to timely provide to the Escrow Agent all documents and
information necessary to satisfy the reporting obligations with respect to the
interest earnings, including the aggregate amount of interest earnings allocable
to each Escrow Stockholder (or the aggregate amount includible in gross income
of each Escrow Stockholder), the name, address and taxpayer identification
number of each Escrow Stockholder, and such other information as may be required
by the tax forms. In addition, the Escrow Stockholders agree that they will
cooperate with the Escrow Agent to obtain each Escrow Stockholder's
Certification of Taxpayer Identification Number on Substitute Form W-9 or
Substitute Form W-8BEN from each Escrow Stockholder. In addition, Parent and the
Representatives hereby agree that they will make all reasonable efforts to
resolve as quickly as possible any claims still pending pursuant to Sections 5
or Section 6 at the time a
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disbursement is required to be made hereunder. Representatives also covenant and
agree to perform the duties and actions set forth in Schedule 1 attached hereto,
as if such duties and actions were set forth herein.
8. JOINT WRITTEN INSTRUCTIONS AND DIRECTIONS; DISBURSEMENTS.
Notwithstanding any other provisions of this Escrow Agreement, the Escrow Agent
shall deal with the Escrow Deposit, or any part thereof, at any time in
accordance with any directions given in an undisputed Release Notice or jointly
given in writing by Parent and the Representatives to the Escrow Agent or in a
Directive. The parties hereto agree that all disbursements required to be made
hereunder shall be made at the direction of the receiving party, by wire
transfer or check and to or at the direction of the receiving party by wire
transfer of immediately available funds in accordance with the wire transfer
instructions provided by the receiving party. All directions, notices and other
actions given by the Representatives pursuant to this Escrow Agreement shall be
executed by a majority of the Representatives except for a Dispute Notice, which
may be executed by any Representative.
9. PROVISIONS CONCERNING THE ESCROW AGENT.
9.1. This Escrow Agreement sets forth, exclusively, the duties of
the Escrow Agent and no additional duties or obligations shall be inferred
herefrom or implied hereby.
9.2. The Escrow Agent shall not be responsible for the validity of
any documents or other property delivered to it pursuant hereto, may act and
rely conclusively upon any instrument or signature believed by it to be genuine
and may assume that any person purporting to give any notice or instructions
hereunder, believed by the Escrow Agent to be authorized, has been duly
authorized so to do.
9.3. The Escrow Agent shall not be liable for any error of judgment,
or for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may in good faith do or refrain
from doing in connection herewith, except to the extent that any act or omission
constitutes gross negligence or willful misconduct. In no event shall the Escrow
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Escrow Agent has been advised of such loss or damage and regardless of the form
of action.
9.4. The Escrow Agent may consult with, and obtain advice from,
legal counsel in the event of any dispute or question as to the construction of
any of the provisions hereof or its duties hereunder, and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the advice of such counsel.
9.5. The Escrow Agent shall not be bound by any modification of this
Escrow Agreement unless it shall have specifically consented thereto in writing.
9.6. Subject to Section 4.3, the Escrow Stockholders, on the one
hand, and Parent, on the other hand, shall each upon demand pay to the Escrow
Agent 50% of the amount of all reasonable expenses, including the reasonable
fees and expenses of counsel, which
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the Escrow Agent may incur, and its normal fees for all services rendered, in
each case in connection with the discharge of its duties, and the exercise or
enforcement of the rights of the parties hereunder. The Escrow Agent may deduct
any unpaid fees from the Escrow Deposit. In the event Escrow Agent deducts any
unpaid fees for which Parent is responsible hereunder from the Escrow Deposit,
Parent shall promptly deposit into the escrow account, Parent's portion of such
unpaid fees and in the event Escrow Agent deducts any unpaid fees for which the
Representatives are responsible hereunder from the Escrow Deposit (other than as
provided in Section 4.3), the Representatives shall promptly deposit into the
escrow account their portion of such unpaid fees.
9.7. The Escrow Agent may resign by giving written notice in writing
to Parent and the Representatives of such resignation, specifying a date which
such resignation shall take effect, which shall in no event be earlier than
sixty (60) days after the giving of such notice, and shall be discharged from
its duties and obligations upon the appointment of a successor Escrow Agent as
hereafter provided and the delivery to such successor of the Escrow Deposit.
Immediately upon receipt of such notice, Parent and the Representatives shall
appoint a successor Escrow Agent who shall be mutually acceptable to them. Any
such successor Escrow Agent shall deliver to Parent and the Representatives and
to the resigning Escrow Agent a written instrument accepting such appointment
hereunder, and thereupon it shall succeed to all the rights and duties of the
Escrow Agent hereunder, and shall be entitled to receive the Escrow Deposit. In
the event that a successor Escrow Agent shall not be so appointed by the date of
resignation specified by the Escrow Agent, the Escrow Agent shall have the right
to appoint as a successor Escrow Agent any national bank, and the parties hereto
agree to accept any such successor Escrow Agent appointed by the Escrow Agent.
9.8. In the event of any dispute between Parent or the
Representatives or the Escrow Stockholders, or between the Escrow Agent and any
one or more of the other parties hereto, with regard to the Escrow Agent or its
duties, or any other matter concerning the disposition of the Escrow Deposit or
in the event that the Escrow Agent, in good faith, is in doubt as to what action
it should take hereunder, the Escrow Agent may deposit the Escrow Deposit with
any court described in Section 11.10 of the Merger Agreement pending the
decision of such court, and the Escrow Agent shall be entitled to refrain from
action pending, and rely upon, the decision of such court. The rights of the
Escrow Agent under this Section 9.8 are cumulative of all other rights which it
may have by law or otherwise.
9.9. The Escrow Stockholders and Parent hereby agree that the Escrow
Agent shall be indemnified from and against any loss, liability or expense
reasonably incurred, without gross negligence, willful misconduct or bad faith
on its part, arising out of or in connection with the Escrow Agreement,
including the expense of defending itself against any claim or liability arising
therefrom. Any payment required to be made pursuant to this Section 9.9 shall be
paid from the Escrow Deposit. The Escrow Agent shall not be required to give any
bond or surety or report to any court despite any statute, custom or rule to the
contrary. Notwithstanding the foregoing, Parent and the Representatives agree
that any payment required to be made pursuant to this Section 9.9 shall be paid
50% by Parent and 50% by the Escrow Stockholders (subject to Section 4.3). The
Escrow Agent may deduct any unpaid amounts from the Escrow Deposit. In the event
Escrow Agent deducts any unpaid amounts for which Parent is
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responsible under this Section 9.9 from the Escrow Deposit, Parent shall
promptly deposit into the escrow account Parent's portion of such unpaid amounts
and in the event Escrow Agent deducts any unpaid amounts for which the
Representatives are responsible hereunder from the Escrow Deposit (subject to
Section 4.3), the Representatives shall promptly deposit into the escrow account
their portion of such unpaid amounts.
9.10. Parent and the Representatives together may terminate the
appointment of the Escrow Agent hereunder upon written notice specifying the
date upon which such termination shall take effect. In the event of such
termination, Parent and the Representatives shall before the date of such
termination jointly appoint a successor Escrow Agent, and the Escrow Agent shall
deliver the remaining Escrow Deposit to such successor Escrow Agent.
10. PROVISIONS CONCERNING THE REPRESENTATIVES.
10.1. Until the later of the Release Date or the date on which no
Escrow Deposit remains held in escrow hereunder, the Representatives shall, and
shall have full power and authority to, exclusively act on behalf of each Escrow
Stockholder in connection with all matters relating to this Escrow Agreement and
the Merger Agreement. The Representatives shall also have full power and
authority to give and receive notices by or on behalf of each Escrow
Stockholder.
10.2. The Representatives shall be entitled to reimbursement from
the Escrow Stockholders of all reasonable expenses incurred in the performance
of their duties as Representatives under this Escrow Agreement and the Merger
Agreement and any deposits made by the Representatives into the escrow account
pursuant to Sections 9.6 and 9.9, which reimbursement obligations shall be
allocated amongst the Escrow Stockholders as an expense pursuant to paragraph 6
of Schedule 1. To the extent that expenses of the Representatives remain
unreimbursed by the Escrow Stockholders and Escrow Deposit remains in the escrow
account on the Release Date, the Representatives shall direct Escrow Agent in
writing and Escrow Agent shall pay from the Escrow Deposit (less, in either
case, any Disputed Amounts and Claimed Amounts) the reimbursement obligations
contained in this Section 10.2. Any such reimbursement shall be allocated in the
same manner as the payment of a Claimed Amount pursuant to the terms set forth
in Schedule 1.
10.3. By giving notice to the Representatives in the manner provided
by Section 11, a party shall be deemed to have given notice to all of the Escrow
Stockholders and any action taken by the Representatives may be considered by
any other party to be the action of each such Escrow Stockholder for all
purposes, including for all purposes of this Escrow Agreement and the Merger
Agreement. In addition, the parties hereto acknowledge and agree that (i) none
of the Escrow Stockholders shall be entitled to individually take any action
which the Representatives are authorized hereunder to take on behalf of such
Escrow Stockholders and (ii) the failure of the Representatives to take any
action they are permitted or authorized to take hereunder on behalf of the
Escrow Stockholders during the applicable time period in which such action is
permitted to have been taken by the Representatives, including, without
limitation, providing any Dispute Notice hereunder, shall be deemed for all
purposes to constitute a complete waiver and release by each Escrow Stockholder
of the right to individually take any
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such action. Notwithstanding the foregoing, nothing in this Escrow Agreement
shall be construed in any way to create any obligation of the Representatives
(other than any indemnification obligations incurred by reason of being an
Escrow Stockholder) with respect to the indemnification obligations of the
Escrow Stockholders under Article 9 of the Merger Agreement.
10.4. In the event that an A-F Representative is unable or refuses
to serve, the A-F Preferred Stockholders may appoint a new representative. If
the G-H Representative is unable or refuses to serve, the G-H Preferred
Stockholders shall appoint a new representative. Upon the appointment of a new
representative, the A-F Preferred Stockholders or the G-H Preferred
Stockholders, as applicable, shall provide written notice of such appointment,
including the notice address for such new representative, to the Escrow Agent.
All capitalized terms in this paragraph shall have the same meaning as in the
Merger Agreement.
10.5. As between the Parent, the Representatives and the Escrow
Stockholders, the provisions contained in this Section 10 are in addition to,
and not in limitation of, the Merger Agreement, and to the extent any conflict
or contradiction exists between this Section 10 and the Merger Agreement, then
the provisions of the Merger Agreement shall control; provided that Section 10.4
shall control the matters addressed therein regarding this Escrow Agreement.
11. NOTICES AND WRITTEN DIRECTIONS. All notices, requests, demands, and
other communications required or permitted under this Escrow Agreement shall be
in writing and shall be deemed to have been duly given and made upon being
delivered either by courier or fax delivery to the party for whom it is intended
and by depositing such notice, postage prepaid, certified or registered mail,
return receipt requested, in the United States mail, bearing the address shown
in this Section 11 for, or such other address as may be designated in writing
hereafter by, such party; provided, however, that notices to the Escrow Agent
shall be effective only upon actual receipt thereof by the Escrow Agent:
If to Parent:
Tekelec
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile No.:(000) 000-0000
and
Xxxxxx X. Xxxxxx
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxxxxxx X. Xxxxxx
Xxxxx Xxxx LLP
000 Xxxxxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
If to the Representatives:
Software Consolidations, Inc.
00 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxxxxxxxxxx 00000
Attention: President
and
The Beacon Group III - Focus Value Fund, L.P.
1211 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director
and
GMT Communications Partners II, L.P.
c/o GMT Communications Partners Limited
Xxxxxxxxx Xxxxx
00 Xxxxxxxxx
Xxxxxx, XXX ODR
United Kingdom
Attention: Managing Partner
If to the Escrow Stockholders:
Software Consolidations, Inc.
Strategic Partners, Inc.
00 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxxxxxxxxxx 00000
Attention: President
and
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The Beacon Group III - Focus Value Fund, L.P.
1211 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director
and
GMT Communications Partners II, L.P.
GMT Communications Partners (Holland) II, L.P.
GMT Communications Partners (Executive Fund) II, L.P.
c/o GMT Communications Partners Limited
Xxxxxxxxx Xxxxx
00 Xxxxxxxxx
Xxxxxx, XXX ODR
United Kingdom
Attention: Managing Partner
and
JAFCO Co., Ltd.
U.S. Information Technology Investment Enterprise Partnership
U.S. Information Technology No. 2 Investment Enterprise Partnership
c/o JAFCO America Ventures, Inc.
000 Xxxxxxxx Xxx.
Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
and
BancBoston Investments Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxx
XX0X XXX
Xxxxxx Xxxxxxx
Attention: Xxxxx Xxxxxxx
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If to the Escrow Agent:
U.S. Bank National Association
One U.S. Bank Plaza
Mail Code: SL-MO-T6CT
Xx. Xxxxx, Xxxxxxxx 00000
Attention : Xxxxx X. Xxxxxx
Facsimile No. : (000) 000-0000
12. TRANSFER OF INTERESTS. The interests of the Escrow Stockholders
or the Representatives in the Escrow Deposit and the rights and obligations of
the parties hereunder may not be transferred except by operation of law, and
will not be represented by any certificate or instrument; provided, however,
that, notwithstanding anything to the contrary contained in this Escrow
Agreement, Parent may assign its rights hereunder to any of its lenders without
consent. Neither the Representatives nor the Escrow Stockholders shall be
entitled to withdraw the Escrow Deposit except as provided hereunder or to
substitute any other property therefore.
13. RIGHTS TO ESCROW DEPOSIT. Neither Parent nor any Escrow
Stockholder shall be deemed to have any right, title or interest in or
possession of the Escrow Deposit and therefore shall not have the ability to
pledge, convey, hypothecate or grant as security any portion of the Escrow
Deposit unless and until such deposit has been disbursed or is required to be
disbursed to Parent or the Representatives pursuant to Sections 5 or 6.
Accordingly, the Escrow Agent will not act as a custodian of either Parent or
any Escrow Stockholder for the purposes of perfecting a security interest
therein, no creditor of Parent or any Escrow Stockholder shall have any right to
have or to hold any portion of the Escrow Deposit as collateral for any
obligation and shall not be able to obtain a security interest in any assets
(tangible or intangible) contained in or relating to the Escrow Deposit.
14. LIABILITIES OF PARENT, REPRESENTATIVES AND ESCROW STOCKHOLDERS.
Neither the depositing hereunder of the Escrow Deposit nor any of the other
provisions of this Escrow Agreement shall directly or indirectly limit or expand
any of the liabilities or obligations of the Parent, the Representatives or the
Escrow Stockholders under the Merger Agreement.
15. COUNTERPARTS. Counterpart copies of this Escrow Agreement may be
signed by all parties and signature pages exchanged by fax or otherwise. The
parties intend that counterpart copies signed and exchanged as provided in the
preceding sentence shall be fully binding. Counterpart originals of this Escrow
Agreement shall be exchanged by U.S. mail or overnight courier service at the
earliest reasonable date following the exchange of signature pages by fax.
16. AMENDMENT; WAIVER; TERMINATION. No modification, amendment or
waiver of any provision of this Escrow Agreement will be effective unless such
modification, amendment or waiver is approved in writing by Parent, the
Representatives, and the Escrow Agent The approval of the Escrow Stockholders
shall not be required for any modification, amendment or waiver of any provision
of this Escrow Agreement. The failure of any party to enforce any of the
provisions of this Escrow Agreement will in no way be construed as a waiver
12
of such provisions and will not affect the right of such party thereafter to
enforce each and every provision of this Escrow Agreement in accordance with its
terms. This Escrow Agreement shall terminate when all transfers required to be
made by the Escrow Agent under the provisions hereof have been made.
17. BINDING EFFECT; ASSIGNMENT. This Escrow Agreement shall be
binding upon and inure to the benefit of the respective successors and permitted
assigns of the parties hereto.
18. HEADINGS. The headings of the various sections of this Escrow
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Escrow Agreement.
19. SEVERABILITY. If any provision of this Escrow Agreement shall be
determined to be illegal or unenforceable, the remaining provisions of this
Escrow Agreement shall remain in full force and effect, and this Escrow
Agreement shall be construed as if the illegal or unenforceable provision were
not a part hereof, so long as the remaining provisions of this Escrow Agreement
shall be sufficient to carry out the overall intent of the parties as expressed
herein.
20. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of law doctrine.
21. FURTHER ASSURANCES. Each party hereto shall perform all other
acts and execute and deliver all other documents as may be necessary or
appropriate to carry out the purposes and intent of this Escrow Agreement.
22. THIRD PARTY BENEFICIARY.23. Nothing set forth in this Escrow
Agreement shall be construed to confer any benefit to any third party who is not
a party to this Escrow Agreement.
23. VENUE AND JURISDICTION. Any disputes arising out of, in
connection with or with respect to this Escrow Agreement, the subject matter
hereof, the performance or non-performance of any obligation hereunder, or any
of the transactions contemplated hereby shall be adjudicated as set forth in
Section 11.10 of the Merger Agreement.
24. ENTIRE AGREEMENT. This Escrow Agreement embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements and
understandings relative to such subject matter; provided, however, that the
Merger Agreement embodies certain related agreements and understandings of the
Parent, the Representatives and the Escrow Stockholders and, as provided in
Section 10.5 hereof, controls over the terms of this Escrow Agreement in the
case of certain conflicts between such documents.
*****
13
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first set forth above.
PARENT:
TEKELEC
By: /s/ Xxxxxxxxx X. Xxx
-------------------------------------------
Xxxxxxxxx X. Xxx
President and Chief Executive Officer
ESCROW AGENT:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
ESCROW STOCKHOLDERS:
STRATEGIC PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SOFTWARE CONSOLIDATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
[SIGNATURES CONTINUE ON NEXT PAGE]
THE BEACON GROUP III - FOCUS VALUE FUND, L.P.
By: Beacon Focus Value Investors, LLC,
Its general partner
By: Focus Value GP, Inc.,
a Member
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
JAFCO CO., LTD.
By: JAFCO America Ventures, Inc.,
its Attorney-in-Fact
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Financial Officer, JAFCO America
Ventures, Inc., Attorney-in-Fact
U.S. INFORMATION TECHNOLOGY
INVESTMENT ENTERPRISE PARTNERSHIP
By: JAFCO America Ventures, Inc.,
its executive partner
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Financial Officer
U.S. INFORMATION TECHNOLOGY NO. 2
INVESTMENT ENTERPRISE PARTNERSHIP
By: JAFCO America Ventures, Inc.,
its executive partner
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Financial Officer
BANCBOSTON INVESTMENTS INC.
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Director
GMT COMMUNICATIONS PARTNERS II, L.P.
By: /s/ Xxxxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxxxxx
Managing Partner
For and on behalf of
GMT COMMUNICATIONS
PARTNERS II, L.P.
acting by its Manager
GMT Communications Partners Limited
GMT COMMUNICATIONS PARTNERS
(HOLLAND) II, L.P.
By: /s/ Xxxxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxxxxx
Managing Partner
For and on behalf of
GMT COMMUNICATIONS
PARTNERS (HOLLAND) II, L.P.
acting by its Manager
GMT Communications Partners Limited
GMT COMMUNICATIONS PARTNERS
(EXECUTIVE FUND) II, L.P.
By: /s/ Xxxxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxxxxx
Managing Partner
For and on behalf of
GMT COMMUNICATIONS PARTNERS
(EXECUTIVE FUND) II, L.P.
acting by its Manager
GMT Communications Partners Limited
SCHEDULE 1
PRIORITY; ALLOCATION OF CLAIMS, ESCROW INCOME AND ESCROW
EXPENSES; ALLOCATION OF DISTRIBUTIONS OF ESCROW DEPOSIT
(1) Series A-F Preferred Stock.
(a) The Initial Dollar Amount for each Series A-F Preferred
Stockholder is as follows:
PREFERRED STOCKHOLDER INITIAL DOLLAR AMOUNT
------------------------------------------------------------------- -----------------------
Strategic Partners, Inc. $ 167,342.59
Software Consolidations, Inc. $ 2,330,520.73
The Beacon Group III - Focus Value Fund, L.P. $ 2,782,378.99
JAFCO Co., Ltd. $ 218,292.51
U.S. Information Technology Investment Enterprise Partnership $ 678,799.98
U.S. Information Technology No. 2 Investment Enterprise Partnership $ 194,356.38
(b) Series A-F Initial Total Dollar Amount. The Series A-F
Preferred Stock Initial Total Dollar Amount is $6,371,691.18.
2. Series G Preferred Stock:
(a) The Initial Dollar Amount for each Series G Preferred
Stockholder is as follows:
PREFERRED STOCKHOLDER INITIAL DOLLAR AMOUNT
------------------------------------------------------------------- -----------------------
Software Consolidations, Inc. $ 272,288.60
The Beacon Group III - Focus Value Fund, L.P. $ 272,288.60
BancBoston Investments, Inc. $ 816,865.81
GMT Communications Partners II, L.P. $ 747,965.64
GMT Communications Partners (Holland) II, L.P. $ 55,963.75
GMT Communications Partners (Executive Fund) II, L.P. $ 12,936.42
(b) Series G Initial Total Dollar Amount. The Series G Preferred
Stock Initial Total Dollar Amount is $2,178,308.82.
i
3. Definitions.
(a) "Dollar Amount" shall mean the amount of the Escrow Deposit
allocated to an Escrow Stockholder, which shall initially be equal to the
Initial Dollar Amount set forth in paragraphs 1 and 2 above. The Dollar Amount
of each Escrow Stockholder may be increased or reduced by reason of allocations
made pursuant to paragraphs 0, 0, 0, 0 xxx 0 xxxxx.
(x) "Total Dollar Amount" shall mean the amount of the Escrow
Deposit allocated either to of the Series A-F Preferred Stockholders,
collectively, or to the Series G Preferred Stockholders, collectively. Total
Dollar Amount shall initially be equal to the Initial Total Dollar Amounts set
forth in paragraphs 1 and 2 above. The Total Dollar Amounts may be increased or
reduced by reason of allocations made pursuant to paragraphs 4, 5, 6, 7 and 8
below.
(c) "Series A-F Group Percentage" shall mean the Series A-F Total
Dollar Amount, as such may be from time to time, divided by the sum of the
Series A-F Total Dollar Amount and the Series G Total Dollar Amount, as such may
be from time to time, multiplied by 100%.
(d) "Series G Group Percentage" shall mean the Series G Total Dollar
Amount, as such may be from time to time, divided by the sum of the Series A-F
Total Dollar Amount and the Series G Total Dollar Amount, as such may be from
time to time, multiplied by 100%.
(e) "Series A-F Preferred Stockholder Percentage" shall mean a
Series A-F Preferred Stockholder's Dollar Amount, as such may be from time to
time, divided by the Series A-F Total Dollar Amount, as such may be from time to
time, multiplied by 100%.
(f) "Series G Preferred Stockholder Percentage" shall mean a Series
G Preferred Stockholder's Dollar Amount, as such may be from time to time,
divided by the Series G Total Dollar Amount, as such may be from time to time,
multiplied by 100%.
(g) "Income/Expense Percentage" shall mean a Series A-F Preferred
Stockholder's or Series G Preferred Stockholder's Dollar Amount, as such may be
from time to time, divided by the sum of the Series A-F Total Dollar Amount plus
the Series G Total Dollar Amount, as such may be from time to time, multiplied
by 100%.
4. Working Capital Adjustment.
(a) The amount of the Working Capital Adjustment retained from the
Holdback, if any, pursuant to the Merger Agreement, shall be considered a
reduction in the amount of Merger Consideration the Series A-F Preferred
Stockholders have in the Escrow Deposit, and thereby a reduction in the Dollar
Amount of each Series A-F Preferred Stockholder and a reduction in the Series
A-F Total Dollar Amount, and an increase in the amount of Merger Consideration
the Series G Preferred Stockholders have in the Escrow Deposit, and thereby an
increase in the Dollar Amount of each Series G Preferred Stockholder and an
increase in the Series G Total Dollar Amount. The reduction in the Dollar Amount
of each Series A-F Preferred Stockholder shall be allocated by multiplying the
amount of the reduction by each Series A-F Preferred Stockholder's Series A-F
Preferred Stockholder Percentage and subtracting the amount
ii
so determined from the respective Series A-F Preferred Stockholder's Dollar
Amount. The increase in the Dollar Amount of each Series G Preferred Stockholder
shall be allocated by multiplying the amount of the reduction by each Series G
Preferred Stockholder's Series G Preferred Stockholder Percentage and adding the
amount so determined to the respective Series G Preferred Stockholder's Dollar
Amount.
(b) Within ten (10) days of the determination of the Working Capital
Adjustment, the Representatives shall provide written instructions to the Escrow
Agent for the adjustments in the Dollar Amounts for each Escrow Stockholder
provided for in this paragraph. Such instructions shall include a restatement
and update of paragraphs 1 and 2 of this Schedule 1, provided that the term
"Initial Dollar Amount" will replaced by the term "Dollar Amount as of [insert
date of reallocation]".
5. Allocation of Escrow Income.
(a) Subject to Section 4.3 of the Escrow Agreement, Escrow Income
shall be paid out to the Escrow Stockholders upon the written direction of the
Representatives to the Escrow Agent and, in any event, all Escrow Income shall
be paid out to the Escrow Stockholders no later than April 1st of the year
subsequent to the receipt of the Escrow Income by the Escrow Agent (or, if
applicable, within sixty (60) days after the final release of the Escrow Deposit
from escrow). Escrow Income shall be payable as accrued through the end of a
calendar year or, if applicable, the date of the final release of the Escrow
Deposit from escrow.
(b) The proportionate share of each Escrow Stockholder in and to the
Escrow Income shall be determined by averaging the Income/Expense Percentage of
each Escrow Stockholder on the last day of the four (4) calendar quarters
immediately prior to the date of the distribution of Escrow Income and
multiplying this averaged percentage by the amount of Escrow Income being
distributed. Any calendar quarter ending prior to the deposit of the Escrow
Deposit with the Escrow Agent shall be ignored for purposes of this calculation.
(c) Any distribution of Escrow Income shall be made by delivery of
the funds by the Escrow Agent to any one of the Representatives (or to a
specific Representative designated in writing by the Representatives to be the
recipient of such funds). The Representatives shall be responsible for paying
the distributed Escrow Income to the Escrow Stockholders, which payment shall be
made within three (3) days of receipt of the funds by the Representatives.
6. Allocation of Expenses.
(a) In the event that a deposit into the escrow account is required
from the Escrow Stockholders pursuant to Sections 9.6 or 9.9 of the Escrow
Agreement, the proportionate share of each Escrow Stockholder shall be
determined by multiplying the respective Escrow Stockholder's Income/Expense
Percentage on the date that the obligation to deposit funds into the escrow
account is incurred by the Escrow Stockholders by the total amount of the
required deposit.
iii
(b) The Representatives shall be responsible for the calculation of
the amount of the deposit required from each Escrow Stockholder and shall inform
the Escrow Agent in writing of each such calculation.
(c) In the event that such expenses are charged against the Escrow
Deposit as a result of Escrow Stockholder's failure to contribute the expenses,
such payments shall be deducted from an Escrow Stockholder's Dollar Amount. The
terms of this subparagraph shall be in addition to and shall not supersede or
substitute for any other remedy which the Representatives or the other Escrow
Stockholders may have against the Escrow Stockholder.
(d) In the event that an Escrow Stockholder fails to make a payment
to the Representatives that is required pursuant to Section 10.2 of the Escrow
Agreement, such payments shall be deducted from the Escrow Stockholder's Dollar
Amount and shall be added to the Representative's Dollar Amount. The terms of
this subparagraph shall be in addition to and shall not supersede or substitute
for any other remedy which the Representatives may have against the Escrow
Stockholder.
7. Allocation of Individual Obligation Amounts.
(a) Any Individual Obligation Amount shall be allocated in full to
the Escrow Stockholder whose breach or violation gave rise to the indemnity
obligation and shall reduce the respective Escrow Stockholder's Dollar Amount.
(b) In the event that the Escrow Stockholder receiving an allocation
pursuant to this paragraph 7 is both a Series A-F Preferred Stockholder and a
Series G Preferred Stockholder, any Individual Obligation Amount shall first be
allocated to reduce the Escrow Stockholder's Series G Dollar Amount until the
Escrow Stockholder's Series G Dollar Amount has been reduced to zero dollars
($0), after which the remainder of the Individual Obligation Amount, if any,
shall be allocated to reduce the Escrow Stockholder's Series A-F Dollar Amount.
(c) Subject to Section 6.2 of the Escrow Agreement, any Individual
Obligation Disputed Amount shall be allocated in full to the Escrow Stockholder
whose breach or violation gave rise to the indemnity obligation and shall reduce
the respective Escrow Stockholder's Dollar Amount.
(d) The Representatives shall deliver written instructions to the
Escrow Agent providing for the allocations set forth in this paragraph 7. Such
instructions shall include a restatement and update of paragraphs 1 and 2 of
this Schedule 1, provided that the term "Initial Dollar Amount" will replaced by
the term "Dollar Amount as of [insert date of reallocation]".
8. Other Payments to Parent Indemnified Persons.
(a) Other than as set forth in paragraph 7 above, any and all
payments from the Escrow Deposit to any Parent Indemnified Person pursuant to
Sections 5.1 or 5.2 of the Escrow Agreement or any reserve of any part or all of
the Escrow Deposit pursuant to Section 5.2 of the Escrow Agreement shall first
be allocated to the Series A-F Preferred Stockholders, up to the Series A-F
Total Dollar Amount, as such may be from time to time. The allocation shall
iv
be made by multiplying each Series A-F Preferred Stockholder's Series A-F
Preferred Stockholder's Percentage by the total amount to be allocated to the
Series A-F Preferred Stockholders, and the amount so determined shall be
subtracted from the respective Series A-F Preferred Stockholder's Dollar Amount.
(b) Other than as set forth in paragraph 7 above, unless and until
the Series A-F Total Dollar Amount has been reduced to zero dollars ($0), no
allocation of any payments from the Escrow Deposit to any Parent Indemnified
Person pursuant to Sections 5.1 or 5.2 of the Escrow Agreement or any reserve of
any part or all of the Escrow Deposit pursuant to Section 5.2 of the Escrow
Agreement shall be made to the Series G Preferred Stockholders.
(c) Other than as set forth in paragraph 7 above, after the Series
A-F Total Dollar Amount has been reduced to zero dollars ($0), subsequent
allocations of payments from the Escrow Deposit to any Parent Indemnified Person
pursuant to Section 5.1 or 5.2 of the Escrow Agreement or any reserve of any
part or all of the Escrow Deposit pursuant to Section 5.2 of the Escrow
Agreement shall be made to the Series G Preferred Stockholders, up to the Series
G Total Dollar Amount, as such may be from time to time. The allocation shall be
made by multiplying each Series G Preferred Stockholder's Series G Preferred
Stockholder's Percentage by the total amount to be allocated to the Series G
Preferred Stockholders, and the amount so determined shall be subtracted from
the respective Series G Preferred Stockholder's Dollar Amount.
(d) The Representatives shall be responsible for making all
allocations provided for in this paragraph 8 and shall provide written
statements to the Escrow Agent setting forth all allocations made pursuant to
this paragraph 8. Such instructions shall include a restatement and update of
paragraphs 1 and 2 of this Schedule 1, provided that the term "Initial Dollar
Amount" will replaced by the term "Dollar Amount as of [insert date of
reallocation]".
9. Distributions of Escrow Deposit.
(a) Any distribution from the Escrow Deposit shall first be divided
between the Series A-F Preferred Stockholders and the Series G Preferred
Stockholders by multiplying the amount to be distributed by the Series G Group
Percentage and allocating the amount so determined to the Series G Preferred
Stockholders (the "Series G Distribution Amount") and allocating any remaining
amount to the Series A-F Preferred Stockholders (the "Series A-F Distribution
Amount").
(b) The allocation of the Series G Distribution Amount amongst the
Series G Preferred Stockholders shall be made by multiplying the Series G
Distribution Amount by the respective Series G Preferred Stockholder Percentage.
The amount so determined for each Series G Preferred Stockholder shall be the
amount to be distributed to that Series G Preferred Stockholder.
(c) The allocation of any Series A-F Distribution Amount amongst the
Series A-F Preferred Stockholders shall be made by multiplying the Series A-F
Distribution Amount by the respective Series A-F Preferred Stockholder
Percentage. The amount so determined for each
v
Series A-F Preferred Stockholder shall be the amount to be distributed to that
Series A-F Preferred Stockholder.
(d) The Representatives shall be responsible for making all
allocations provided for in this paragraph 9 and shall provide written
statements to the Escrow Agent setting forth all allocations made pursuant to
this paragraph 9. Such instructions shall include a restatement and update of
paragraphs 1 and 2 of this Schedule 1, provided that the term "Initial Dollar
Amount" will replaced by the term "Dollar Amount as of [insert date of
reallocation]".
(e) Any distribution of Escrow Deposit shall be made by delivery of
the funds by the Escrow Agent to any one of the Representatives (or to a
specific Representative designated in writing by the Representatives to be the
recipient of such funds). The Representatives shall be responsible for paying
the distributed Escrow Deposit to the Escrow Stockholders, which payment shall
be made within three (3) days of receipt of the funds by the Representatives.
10. Responsibility for Allocations. Notwithstanding anything to the
contrary in the Escrow Agreement or in this Schedule 1, the Representatives
shall be solely responsible for all allocations made pursuant to this Schedule 1
or Sections 5 and 6 of the Escrow Agreement.
vi
