Exhibit 2.3
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of November 9, 1998,
is by and among Micrel, Incorporated, a California corporation ("Micrel"),
Xxxx X. Xxxxxxxx (the "Synergy Representative"), and Bank of the West, a
California banking corporation (the "Escrow Agent").
RECITALS
A. Micrel, MISYN Acquisition Corp., a Delaware corporation and wholly-
owned subsidiary of Micrel ("Merger Sub"), and Synergy Semiconductor
Corporation, a California corporation ("Synergy") have entered into a Merger
Agreement, dated as of October 21, 1998 (the "Merger Agreement"). All
capitalized terms used herein but not defined shall have the meanings
ascribed to such terms in the Merger Agreement.
B. Pursuant to the Merger Agreement, Merger Sub will merge with and
into Synergy with Synergy being the survivor. As a result of the Merger, all
outstanding shares of capital stock of Synergy will automatically be
converted into the right to receive cash comprising the Consideration, upon
the terms and conditions set forth in the Merger Agreement.
C. Pursuant to the terms of the Merger Agreement, Micrel is required
to deposit the portion of the Consideration comprising the "Escrowed Cash"
into an escrow (the "Escrow") with Escrow Agent to be applied against and to
secure the payment to Micrel of any reduction in the Purchase Price due to
the Final Adjustment and any and all Micrel's Damages.
D. In furtherance of the transactions contemplated by the Merger
Agreement, the parties hereto have agreed to enter into this Agreement to set
forth the parties' understanding with respect to the Escrow and the deposit
and distribution of the Escrowed Cash.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Synergy Representative, Micrel and Escrow Agent hereby agree as
follows:
AGREEMENT
1. Appointment and Agreement of Escrow Agent. Micrel and the Synergy
Representative hereby appoint Escrow Agent as escrow agent for the Escrow.
Subject to the terms and conditions herein stated, Escrow Agent hereby
accepts such appointment and hereby agrees to perform the duties of Escrow
Agent under this Agreement.
2. Deposit of Escrowed Cash; Period of Escrow. Micrel and the Synergy
Representative agree and acknowledge that, in accordance with Section 2.2.3
of the Merger Agreement, Micrel has deposited with the Escrow Agent the
Escrowed Cash ($1,980,000) required to be deposited on the Closing Date,
receipt of which is hereby acknowledged by Escrow Agent. Should Micrel be
required to deposit additional Escrowed Cash with the Escrow Agent as a
result of the Final Adjustment, the Escrow Agent will acknowledge the receipt
of such funds to Micrel and the Synergy Representative as soon as practicable
following their deposit with the Escrow Agent. The term of the Escrow shall
commence on the date hereof and expire on the date that all of the Escrowed
Cash is distributed in accordance with Section 3 below.
3. Distribution of Escrowed Cash. Distribution of the Escrowed Cash
shall be made as follows:
(a) Upon receipt by Escrow Agent of (i) a certificate signed by
each of Micrel and the Synergy Representative, or (ii) a copy of the final
written determination of the arbitrators pursuant to Section 12.18 of the
Merger Agreement, in either case setting forth the amount of the reduction in
the Purchase Price as the result of the Final Adjustment pursuant to Section
2.1.5 of the Merger Agreement, if any, Escrow Agent shall immediately deliver
Escrowed Cash to Micrel in the amount indicated in such certificate or such
written determination, as applicable.
(b) Upon receipt by the Escrow Agent and the Synergy
Representative, at anytime from the Closing Date through and including the
date that is 180 days after the Closing Date, of a certificate signed by
Micrel and directing the Escrow Agent to distribute from the Escrowed Cash
amounts in satisfaction of Micrel's Damages which certificate shall identify
the amount claimed, the provision of the Merger Agreement pursuant to which
Micrel is entitled to receive such Micrel's Damages, reasonable detail
supporting the claim, and the date that such certificate was delivered to the
Escrow Agent and the Synergy Representative (the "Notice Date"), and provided
that the Escrow Agent does not receive a certificate signed by the Synergy
Representative (a copy of which shall be concurrently delivered to Micrel)
within a period of ten (10) business days (the "Notice Period") following the
Notice Date set forth in the certificate from Micrel, objecting to the
payment requested in the certificate from Micrel and specifying in reasonable
detail the basis for the objection, Escrow Agent shall immediately deliver
Escrowed Cash to Micrel in the amount indicated in the certificate from
Micrel. If Escrow Agent receives a certificate from Synergy within the
Notice Period, Escrow Agent shall not make the distribution requested in the
certificate from Micrel unless and until Escrow Agent receives (i) written
instructions executed jointly by Micrel and the Synergy Representative
directing Escrow Agent to distribute all or a portion of the Escrowed Cash
requested in the certificate from Micrel, or (ii) a copy of the final written
determination of the arbitrators pursuant to Section 12.18 of the Merger
Agreement ordering the payment of all or a portion of the Escrowed Cash
claimed in the certificate from Micrel. Escrow Agent shall deliver to the
Synergy Representative prompt written notice of any distribution of Escrowed
Cash to Micrel made pursuant to this Section 3(b).
(c) On or prior to a date which is 190 days following the Closing
Date, Micrel shall deliver a certificate to the Escrow Agent and the Synergy
Representative setting forth the portion of the Escrowed Cash, if any, to be
retained by the Escrow Agent pursuant to clauses (b) and/or (c) of Section
2.2.3 of the Merger Agreement (the "Retained Escrowed Cash"), which
certificate shall be binding upon the Synergy Representative. Promptly after
receipt of such certificate by the Escrow Agent, Escrow Agent shall
distribute to the Synergy Representative all remaining portions of the
2
Escrowed Cash, other the Retained Escrowed Cash and any amounts distributed
to or requested by Micrel pursuant to Section 3(b).
(d) With respect to the Retained Escrowed Cash, upon receipt by
the Escrow Agent and the Synergy Representative of a certificate signed by
Micrel and directing the Escrow Agent to distribute from the Retained
Escrowed Cash amounts in satisfaction of Micrel's Damages pursuant to clauses
(b) or (c) of Section 2.1.6 of the Merger Agreement, which certificate shall
identify the amount claimed, the provision of the Merger Agreement pursuant
to which Micrel is entitled to receive such Micrel's Damages, reasonable
detail supporting the claim, and the Notice Date, and provided that the
Escrow Agent does not receive a certificate signed by the Synergy
Representative (a copy of which shall be concurrently delivered to Micrel)
within the Notice Period following the Notice Date set forth in the
certificate from Micrel, objecting to the payment requested in the
certificate from Micrel and specifying in reasonable detail the basis for the
objection, Escrow Agent shall immediately deliver Retained Escrowed Cash to
Micrel in the amount indicated in the certificate from Micrel. If Escrow
Agent receives a certificate from Synergy within the Notice Period, Escrow
Agent shall not make the distribution requested in the certificate from
Micrel unless and until Escrow Agent receives (i) written instructions
executed jointly by Micrel and the Synergy Representative directing Escrow
Agent to distribute all or a portion of the Retained Escrowed Cash requested
in the certificate from Micrel, or (ii) a copy of the final written
determination of the arbitrators pursuant to Section 12.18 of the Merger
Agreement ordering the payment of all or a portion of the Retained Escrowed
Cash claimed in the certificate from Micrel. Escrow Agent shall deliver to
the Synergy Representative prompt written notice of any distribution of
Retained Escrowed Cash to Micrel made pursuant to this Section 3(d).
(e) Upon Escrow Agent's receipt of (i) written instructions
executed jointly by Micrel and the Synergy Representative, or (ii) a copy of
the final written determination of the arbitrators pursuant to Section 12.18
of the Merger Agreement ordering the payment of all remaining portions of the
Retained Escrowed Cash, Escrow Agent shall immediately deliver Retained
Escrowed Cash to the Synergy Representative in the amount indicated in the
instructions or determination, other than any portion thereof paid to or
requested by Micrel pursuant to Section 3(d).
4. Investment of Escrowed Funds. The Escrow Agent shall invest the
escrowed cash as directed in writing by the Synergy Representative in one or
more money market funds listed on Exhibit B attached hereto.
5. Provisions Concerning the Escrow Agent. The following provisions
will control the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
(a) The Escrow Agent is not a party to, and is not bound by nor
(except as specifically provided herein) charged with notice of, any
agreement between any one or more parties hereto, out of which this escrow
may arise. The Escrow Agent does not assume any responsibility or liability
3
for any transactions between Micrel and the Synergy Representative other than
this Escrow Agreement.
(b) The duties of the Escrow Agent hereunder are only such as are
herein specifically provided, being purely ministerial in nature, and the
Escrow Agent shall have no implied duties or obligations nor any
responsibility in respect of any of the cash, property or items deposited
with it other than to faithfully follow the instructions contained herein or
given to it as provided herein.
(c) The Escrow Agent acts hereunder as a depository. All
deposits are warranted by the depositing party to be valid deposits. The
Escrow Agent is not responsible for or liable in any manner whatever for the
sufficiency, correctness, genuiness and validity of any cash deposit,
security, document, or other item, which is a part of the Escrowed Cash or
for any claim or action by any person, firm, corporation or trustee
concerning the right or power of any depositor to make any transfer or the
validity of the transfer of any part of the Escrowed Cash to Escrow Agent or
for the value, validity, collectibility or marketability of any investment of
the Escrowed Cash.
(d) The Escrow Agent in acting hereunder may assume the
genuineness of any written notice, request, waiver, consent, certificate,
receipt, authorization, power of attorney, or other paper or document which
the Escrow Agent in good faith believes to be genuine and what it purports to
be.
(e) The Escrow Agent shall not be liable for consequential or
special damages. The Escrow Agent will not be liable for anything which it
may do or refrain from doing in connection herewith, except to the extent
held by a final unappealable judgment of a court of competent jurisdiction to
be the direct result of its own gross negligence or willful misconduct.
(f) The Escrow Agent may consult with legal counsel (including
in-house 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
will incur no liability if it acts in good faith and in accordance with the
reasonable opinion and instructions of such counsel as to such matters. The
Escrow Agent shall not be required to institute or defend any action
(including interpleader) or lawsuit brought in connection with Escrowed Cash.
In the event of its participation in any such legal proceeding, the Escrow
Agent shall receive full indemnity and shall be compensated for its services
and reimbursed for its expenses associated therewith.
(g) In the event of any disagreement between any of the parties
to this Agreement, or between them or any of them and any other person or
entity resulting in adverse claims or demands being made in connection with
the subject of this Agreement, 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 refuse to take any action hereunder so long as such disagreement
continues or such doubt exists, and in any such event, the Escrow Agent will
not be or become liable in any way or to any person or entity for its failure
or refusal to act, and the Escrow Agent will be entitled either to: (i)
continue to refrain from acting until the rights of all parties have been
determined by a final and unappealable order of the court of competent
4
jurisdiction, or all differences have been adjusted and all doubt resolved by
agreement among all the interested persons or entities, and the Escrow Agent
has been notified thereof in writing signed by all such persons or entities,
or (ii) file an interpleader action in any court of competent jurisdiction,
in which event all costs and expenses will be borne by Micrel and the Synergy
Representative.
(h) The Escrow Agent may resign at any time upon thirty (30) days
written notice to Micrel and the Synergy Representative. In the event of
such notice of resignation, prior to the expiration of such notice, Micrel
and the Synergy Representative shall designate a successor escrow agent.
Such successor escrow agent shall have accepted such designation and will
serve as escrow agent on the same terms and conditions as set forth herein or
on such other terms and conditions as are agreeable to Micrel and the Synergy
Representative. Upon written notice to the Escrow Agent of such designation,
the Escrow Agent shall deliver all relevant funds deposited hereunder to the
successor escrow agent, whereupon all the Escrow Agent's duties and
obligations hereunder shall cease and terminate.
(i) Upon termination of this Agreement or the resignation of the
Escrow Agent, the Escrow Agent may request, and Micrel and the Synergy
Representative shall deliver to the Escrow Agent, a release satisfactory to
the Escrow Agent releasing the Escrow Agent from all liability under this
Agreement.
(j) The Escrow Agent's fees for its services hereunder shall be
as set forth on Exhibit A hereto. In addition to such fees, the Escrow agent
shall be reimbursed for the reasonable fees and expenses of its legal counsel
and other reasonable out-of-pocket expenses reasonably incurred by it for so
long as any portion of the Escrowed Cash is held by the Escrow Agent
hereunder. All such fees shall be borne by Micrel and the Synergy
Representative. Payment for the first twelve (12) months of service shall be
paid to the Escrow Agent upon the establishment of the Escrow by check in the
amount of $5,500. In addition, Micrel and Synergy Representative shall pay
$5,000 to the Escrow Agent to be held as a cash reserve for future fees
("Cash Reserve"). After the initial twelve (12) months of service, the
Escrow Agent shall deduct its monthly fees from the Cash Reserve. In the
event the Cash Reserve is exhausted, service shall be billed on a month to
month basis by the Escrow Agent to Micrel and the Synergy Representative, and
shall be paid by Micrel and Synergy Representative upon receipt of such
monthly xxxx. Escrow Agent shall have a lien or right of set-off on all fund
and property held hereunder to secure its rights hereunder to be indemnified
and held harmless and to be reimbursed for all of its expenses arising out of
or in connection with this Escrow Agreement.
6. Payment of Escrow Agent's Fees and Taxes. Micrel will pay one-half
and the Synergy Representative will pay one-half of all of the Escrow Agent's
fees for services rendered by the Escrow Agent pursuant to the provisions of
this Agreement and each will reimburse the Escrow Agent for one-half of its
reasonable expenses incurred in connection with the performance by it of such
services. The Synergy Representative shall be responsible for any taxes
owing in respect to the earnings on the Escrowed Cash and each of the Synergy
Representative and Micrel shall provide the Escrow Agent with executed W-9
forms.
5
7. Indemnification of Escrow Agent. In consideration of its
acceptance of the appointment as escrow agent, Micrel and Synergy
Representative agree to indemnify the Escrow Agent against and hold the
Escrow Agent harmless from all claims, liabilities, losses, actions, suits
and proceedings incurred by it or to which it is made a party by reason of
its having accepted the same or in carrying out any of the terms hereof, or
otherwise relating to this agreement and to indemnify the Escrow Agent
against and reimburse the Escrow Agent for all its expenses, including among
other things, counsel feels and court costs, incurred by reason of its
position hereunder or actions taken or omitted in good faith pursuant hereto
unless such loss, liability or expense shall be caused by the Escrow Agent's
gross negligence. Micrel and Synergy Representative agree that the Escrow
Agent shall not be liable to either of them for any actions taken by the
Escrow Agent pursuant to the terms hereof. In no event shall the Escrow
Agent be liable for any incidental, special or consequential damages.
8. Merger Agreement Not Limited by this Agreement. This Agreement and
the deposit of the Escrowed Cash hereunder are without prejudice to, and are
not in limitation of, any obligations of Micrel or the Synergy Representative
in respect of any of the covenants, representations or warranties contained
in the Merger Agreement. The Escrow Agent is not in any respect bound by the
terms of the Merger Agreement.
9. Notices and Distributions. Any notice, request or other document
to be given hereunder to any party hereto shall be effective upon receipt and
shall be in writing and delivered personally or sent by telecopy or
registered or certified mail, postage prepaid as follows:
(a) if to the Synergy Representative, addressed to:
Xxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
(b) if to Micrel, addressed to:
Micrel, Incorporated
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
6
(c) if to Escrow Agent, addressed to:
Bank of the West
Trust and Investment Services
00 X. Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention:
10. The Escrowed Cash shall be delivered by the Escrow Agent in the
manner and to the location requested by the intended recipient thereof, as
specified in writing to the Escrow Agent. Any address for notice specified
above may be changed by written notice given to the other parties in the
manner specified in this Section 9.
11. No Rights Conferred Upon Third Parties. This Agreement is for the
benefit of the parties hereto and nothing contained herein shall be construed
to give any third party any benefits or rights hereunder.
12. Successors. The obligations imposed and the rights conferred by
this Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of Micrel, the Synergy Representative and
the Escrow Agent.
13. Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of California.
14. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated
herein.
15. Amendment. This Agreement cannot be terminated, altered or
amended except pursuant to an instrument in writing signed by Micrel, the
Synergy Representative and the Escrow Agent.
16. Attorneys' Fees. Subject to other rights of indemnity and
reimbursement set forth in the Merger Agreement, should any litigation be
commenced between Micrel and the Synergy Representative concerning this
Agreement or the rights and duties of any party in relation thereto, the
party prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum as and for such party's
attorneys' fees in such litigation which shall be determined by the court in
such litigation or in a separate action brought for such purpose.
7
17. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such
counterpart were upon the same instrument.
18. Termination. This agreement shall terminate upon the earlier of
(i) final disbursement of the Escrowed Cash by the Escrow Agent in accordance
with the terms of this Agreement, or (ii) written mutual consent signed by
the parties hereto. This Agreement shall not be otherwise terminated. The
indemnification of the Escrow Agent provided herein shall survive the
termination of this Agreement and the resignation of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
MICREL, INCORPORATED:
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxx X. Xxxx
Title: President
SYNERGY REPRESENTATIVE:
/s/ Xxxx X. Xxxxxxxx
---------------------------
Xxxx X. Xxxxxxxx
ESCROW AGENT:
Bank of the West
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President and
Trust Officer
By: /s/ Xxxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and
Trust Officer
8
EXHIBIT A
ESCROW AGENCY ACCOUNT
FEE AGREEMENT
Set up Fee:
$500 - payable in advance
Minimum Annual Fee, including General Service Fee:
$5,000 per year from date of Escrow document, payable in advance and
non-refundable
Extraordinary Fee Deposit:
$5,000 - unused portion refundable with accrued interest
Extraordinary Fees:
Other extraordinary services such as, but not limited to, tax statements
and returns, legal fees, and special services will be charged based on
review and analysis of the nature and complexity of the transaction or
event and maintenance of appropriate records.
MICREL, INCORPORATED:
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxx X. Xxxx
Title: President
SYNERGY REPRESENTATIVE:
/s/ Xxxx X. Xxxxxxxx
---------------------------
Xxxx X. Xxxxxxxx
ESCROW AGENT:
Bank of the West
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President and
Trust Officer
By: /s/ Xxxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and
Trust Officer
EXHIBIT B
INVESTMENT OF ESCROWED FUNDS
Listed below are money market funds available for the escrowed cash.
- Bank of the West (with FDIC insurance to $100,000);
- Chase Manhattan Bank (with FDIC insurance to $100,000);
- Federated Trust for Government Cash Reserve (#54);
- Federated Master Trust (#18);
- Provident Fed Fund; and
- Federated Government Obligation (#5).
Appropriate annual reports or prospectuses for the above funds have been
provided to the Synergy Representative.
