ESCROW AGREEMENT
Exhibit 4.3
THIS ESCROW AGREEMENT (this “Agreement”), dated as of March 26, 2010, is by and among
Safeguard Scientifics, Inc. (the “Company”), as depositor, U.S. Bank National Association, as
trustee under the Indenture referred to below (the “Trustee”), and U.S. Bank National Association,
in its capacity as escrow agent (the “Escrow Agent”).
RECITALS
WHEREAS, the Company and the Trustee have entered into an Indenture dated as of March 26, 2010
(as the same may be supplemented and amended from time to time, the “Indenture”) pursuant to which
the Company will issue $46,936,000 in aggregate principal amount of its 10.125% Convertible Senior
Debentures due 2014 (the “Notes”); and
WHEREAS, the Company desires to establish an escrow account with the Escrow Agent into which
certain sums, as fully described in Section 2(a) below, will be, simultaneously with the original
issuance of the Notes, deposited by the Company to be held and distributed in accordance with the
terms and conditions set forth herein, and the Escrow Agent is willing to establish such an account
and to accept such funds in accordance with the terms hereinafter set forth.
Capitalized terms used but not defined herein shall have the meanings assigned to such terms
in the Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Establishment of Escrow Account. The Escrow Agent shall establish on the date
hereof and maintain in the Trustee’s name a “securities account” (within the meaning of Article 8
of the Uniform Commercial Code of the State of New York as in effect from time to time (the “New
York UCC”)) identified as ABA Number: 000000000; Account Number: 136564000; Account Name :
Safeguard Secured Interest Acct (the “Escrow Account”) to which there shall be immediately credited
and held amounts received by the Escrow Agent from the Company in accordance with Section 3 hereof.
The funds credited to the Escrow Account shall be applied and disbursed only as provided herein.
The Escrow Agent shall segregate the funds credited to the Escrow Account from its other funds held
as an agent or in trust. The Escrow Agent shall treat all property held by it in the Escrow Account
as “financial assets” (as defined in Section 8-l02(a)(9) of the New York UCC) in accordance with
Section 8-501 (or successor section) of the New York UCC.
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SECTION 2 Deposit to the Escrow Account; Investments.
(a) Deposit of Funds.
(i) Simultaneously with the original issuance of the Notes, the Company shall deliver
to the Escrow Agent for deposit in the Escrow Account cash in the amount of $19,009,080 (the
“Escrow Funds”).
(ii) All amounts to be deposited with the Escrow Agent shall be transferred by wire
transfer of immediately available funds to the following account:
U.S. Bank National Association
ABA No.: 000000000
Account No.: 173103781816
Acct Name: USBANK PA & NJ CT WIRE CL
Attn: Xxxxxx X. Xxxxxx/Safeguard Secured Interest Acct
ABA No.: 000000000
Account No.: 173103781816
Acct Name: USBANK PA & NJ CT WIRE CL
Attn: Xxxxxx X. Xxxxxx/Safeguard Secured Interest Acct
(iii) The Escrow Agent may assume without inquiry that all amounts deposited by the
Company under this Section 2 have been correctly computed in accordance with the
requirements of the Indenture, that no additional amounts are required to be so delivered
and that the Escrow Agent is not required under the Indenture to hold in the Escrow Account
any additional amounts other than income earned on investments made in accordance with this
Section 2.
(b) Investment of Funds. To the extent immediately available funds are deposited in
the Escrow Account, promptly following the deposit of any such funds into the Escrow Account, the
Company, after consulting with the Initial Purchasers, shall provide written instructions to the
Escrow Agent as to the specific Permitted Securities in which funds are to be invested and until
such instructions are given by the Company, the Escrow Agent shall not invest such funds. For
purposes of this Agreement, “Permitted Securities” shall mean “Money Market Securities,”
“Government Securities” and/or “U.S. Bank Certificates of Deposit.” “Money Market Securities”
shall mean money market securities issued by Money Market Funds. “Money Market Fund” means any
registered investment company that meets the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of
Rule 2a-7 under the Investment Company Act of 1940, as amended, that invests exclusively in
securities of the U.S. government, securities of government-sponsored enterprises created by the
U.S. Congress and commercial paper that have been rated by at least one “nationally recognized
statistical rating organization” (as that term is used in Section 15E of the Securities Exchange
Act of 1934, as amended) and received the highest credit rating (as of the date hereof, A1 in the
case of Standard & Poor’s Ratings Service and P1 in the case of Xxxxx’x Investor Service, Inc.)
from each nationally recognized statistical rating organization that has rated them. “Government
Securities” shall mean noncallable direct obligations of, or noncallable obligations the payment of
principal of and interest on which are unconditionally guaranteed by, the United States of America.
“U.S. Bank Certificates of Deposit” shall mean certificates of deposit, or interest-bearing time
deposits, issued by the Escrow Agent or any Affiliate of the Escrow Agent, in each case which shall
be a bank or trust company organized under the laws of the United States or any state thereof
having undivided capital and surplus of at
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least $100,000,000, the general unsecured short-term obligations (or in the case of the principal
bank holding company, short-term obligations of the bank holding company) of which are rated not
lower than “A-1” by S&P and “P-1” by Moody’s and the long-term debt obligations (or in the case of
the principal bank holding company, debt obligations of the bank holding company) of which are
rated not lower than “AA-” by S&P or “Aa3” by Moody’s; provided, that if the issuer of any such
certificates of deposit or interest-bearing time deposits held in the Escrow Account shall fail at
any time after the time of purchase to meet such criteria, the Escrow Agent will promptly notify
the Company of such, and the Company may promptly instruct the Escrow Agent to reinvest all funds
represented by such certificates of deposit or interest-bearing time deposits to be reinvested in
another Permitted Security. All such amounts shall remain so invested until the close of business
on the Business Day prior to any withdrawal by the Escrow Agent pursuant to Section 4 hereof. All
interest accrued on the Escrow Funds shall be added to the Escrow Account and be part of the Escrow
Account for all purposes hereunder. The Escrow Agent shall not be liable for any loss incurred by
the actions of third parties or for any loss arising by error, failure or delay in the making of an
investment or reinvestment, and the Escrow Agent shall not be liable for any loss of principal or
income in connection therewith, unless such error, failure or delay results from the Escrow Agent’s
gross negligence or willful misconduct. As and when the Escrow Funds and any interest or income
thereon is to be released under this Agreement, the Escrow Agent shall cause the Permitted
Securities to be converted into cash in accordance with its customary procedures and shall not be
liable for any loss of principal or income in connection therewith. The Escrow Agent shall not be
liable for any loss of principal or income due to the choice of Permitted Securities as investments
or the choice of Permitted Securities converted into cash pursuant to this Section 2. All
Permitted Securities from time to time credited to the Escrow Account constituting a “security
entitlement” as defined in Section 8-102(a)(17) of the New York UCC shall be held in the name of
the Trustee or the Escrow Agent (or either of their nominee names) and in no event shall the
Company be or be deemed to be the “entitlement holder” (as such term is defined in Section
8-102(a)(7) of the New York UCC) with respect thereto.
SECTION 3. Security Interest.
(a) Pledge and Assignment. As security for the Secured Obligations (as defined
below), the Company hereby irrevocably pledges, assigns and grants to the Trustee, for the equal
and ratable benefit of the Holders of the Notes, a first priority continuing security interest in,
and control of, all of the Company’s right, title and interest in and to all of the following
whether now owned or existing or hereafter acquired or created (collectively, the “Collateral”):
(i) the Escrow Account, all security entitlements from time to time carried in the
Escrow Account, all funds from time to time held in the Escrow Account, including, without
limitation, the Escrow Funds and all certificates and instruments, if any, from time to
time, representing or evidencing the Escrow Account or the Escrow Funds;
(ii) all investments of funds in the Escrow Account, all of which shall constitute
Permitted Securities, and whether held by or registered in the name of the Escrow Agent or
any nominee, all certificates and instruments, if any, from time to time
representing or evidencing any such Permitted Securities and all security entitlements to
such Permitted Securities;
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(iii) all promissory notes, certificates of deposit, deposit accounts, checks and other
instruments evidencing Permitted Securities from time to time hereafter delivered to or
otherwise possessed by the Escrow Agent, for or on behalf of the Company, in substitution
for or in addition to any or all of the then existing Collateral;
(iv) all interest, dividends, cash, instruments, securities and other properties from
time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Collateral; and
(v) all proceeds of the foregoing.
The Trustee hereby appoints the Escrow Agent to act as the Trustee’s agent, on behalf of the
Holders of the Notes, for purposes of perfecting the foregoing pledge, assignment and security
interest in the Collateral, and the Escrow Agent hereby accepts such appointment. For so long as
the foregoing pledge, assignment and security interest remains in effect, the Escrow Agent hereby
waives any right of set off or banker’s lien that it, in its individual capacity or in its capacity
as an agent for Persons other than the Trustee and the Holders of the Notes, may have with respect
to any or all of the Collateral.
(b) Secured Obligations. This Agreement secures the due and punctual payment and
performance of all obligations of the Company, whether now or hereafter existing, under the Notes,
the Indenture and this Agreement, including, without limitation, interest and premium, if any,
accrued on the Notes after the commencement of a bankruptcy, reorganization or similar proceeding
involving the Company to the extent permitted by applicable law (collectively, the “Secured
Obligations”).
(c) Delivery of Collateral. All certificates or instruments, if any, representing or
evidencing all or any portion of the Collateral shall be held by the Escrow Agent on behalf of the
Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignments in blank, all in form and
substance sufficient to convey a valid security interest in such Collateral to the Trustee. All
securities in uncertificated or book-entry form and all security entitlements, if any, in each case
representing or evidencing the Collateral shall be registered in the name of the Trustee (or any of
its nominees) as the registered owner thereof, by book-entry or as otherwise appropriate so as to
properly identify the interest of the Trustee therein. In addition, the Escrow Agent shall have
the right, at any time following the occurrence of an Event of Default, to transfer to or to
register in the name of the Trustee or any of its nominees any or all of the other Collateral.
Except as otherwise provided herein, all Collateral shall be deposited and held in the Escrow
Account. The Escrow Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing all or any portion of the Collateral for certificates or instruments of
smaller or larger denominations in the same aggregate amount.
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(d) Maintaining the Escrow Account. So long as this Agreement is in full force and
effect:
(i) subject to the other terms and conditions of this Agreement, all Collateral held by
the Escrow Agent pursuant to this Agreement shall be held in the Escrow Account, which shall
be subject to the exclusive dominion and control of the Trustee for the benefit of the
Trustee and the equal and ratable benefit of the Holders of the Notes;
(ii) the Escrow Account and all Collateral from time to time therein shall remain
segregated from all other funds or other property otherwise held by the Trustee or the
Escrow Agent, as applicable;
(iii) all amounts (including, without limitation, any Escrow Funds or interest on or
other proceeds of the Escrow Funds or any Permitted Securities held in the Escrow Account)
shall remain on deposit in the Escrow Account until withdrawn in accordance with this
Agreement;
(iv) the parties intend that the Trustee is the holder or entitlement holder (as the
case may be) of all of the Collateral and that either the Trustee for the equal and ratable
benefit of the Holders of the Notes or, to the extent required by applicable law, the Escrow
Agent, for the benefit of the Trustee and the equal and ratable benefit of the Holders of
the Notes, is the holder or entitlement holder of all Permitted Securities and other
uncertificated securities on the books of the applicable Federal Reserve Bank or other
applicable securities intermediary; and
(v) notwithstanding anything to the contrary herein, the Escrow Agent shall comply with
all instructions from the Trustee with respect to the Escrow Account and the security
entitlements carried therein without further consent from the Company.
(e) Further Assurances. The Company shall, at the Company’s expense, execute and
deliver to the Trustee or its designee such other instruments and documents, and take all further
action as the Trustee deems reasonably necessary or advisable or may reasonably request to confirm
or perfect the security interest of the Trustee granted or purported to be granted hereby or to
enable the Trustee to exercise and enforce its rights and remedies hereunder with respect to any
Collateral, and the Company shall take all necessary action to preserve and protect the security
interest created hereby as a first priority, perfected lien and encumbrance upon the Collateral.
SECTION 4. Distributions from Escrow Account. Assets on deposit in the Escrow Account shall
be withdrawn by the Escrow Agent and transferred only in accordance with this Section 4:
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(a) Event of Default.
(i) For so long as an Event of Default has occurred and is continuing under the
Indenture, no amounts shall be disbursed from the Escrow Account, except as provided in
Section 4(a)(ii) below.
(ii) If any Event of Default has occurred and is continuing under Section 6.01 of the
Indenture:
(1) The Trustee may, without notice to the Company except as required by
applicable law and at any time or from time to time, direct the Escrow Agent to
redeem or sell all Collateral and transfer all proceeds thereof to the Paying Agent
to apply such funds in accordance with Section 6.03 of the Indenture.
(2) If requested by the Holders of the Securities pursuant to Section 6.07 of
the Indenture, the Trustee (and/or the Escrow Agent at its direction and on its
behalf) may also, in addition to the other rights and remedies provided for herein,
exercise in respect of the Collateral all the rights and remedies of a secured party
upon default under the New York UCC, and may also, without notice except as specified
below, redeem or sell the Collateral or any part thereof in one or more parcels at
public or private sales, at any of the Trustee’s or the Escrow Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. The Company agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days’ notice to the
Company of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Trustee and the
Escrow Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Trustee (or the Escrow Agent on its behalf) may
adjourn any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(3) Any cash held by the Escrow Agent as Collateral and all net cash proceeds
received by the Trustee or the Escrow Agent in respect of any sale or liquidation of,
collection from, or other realization upon all or any part of the Collateral may, in
the discretion of the Trustee, be held by the Trustee or the Escrow Agent as
collateral for, and then or at any time thereafter be applied (after payment of any
costs and expenses incurred in connection with any redemption, sale, liquidation or
disposition of or realization upon the Collateral and the payment of any amounts
payable to the Trustee or the Escrow Agent) in whole or in part by the Trustee for
the equal and ratable benefit of the Holders of the Notes against all or any part of
the Secured Obligations in such order as described in Section 5.03 of the Indenture.
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(b) Scheduled Interest Payments. Pursuant to the Notes, the Company is obligated to
make payments of interest (excluding any Additional Interest, Reserve Interest and Qualifying
Tender Offer Interest, if applicable) on the Notes on each of September 15, 2010, March 15, 2011,
September 15, 2011, March 15, 2012, September 15, 2012, March 15, 2013, September 15, 2013 and
March 15, 2014 (each, a “Scheduled Interest Payment”). The Scheduled Interest Payments due on the
Notes are to be made, at the election of the Company, from (1) amounts held in the Escrow Account
in accordance with the procedures set forth in Section 4(b)(i) below or (2) other sources of funds
available to the Company, as anticipated in Section 4(b)(ii) below, or from any combination of (1)
and (2) above; provided, however, that nothing herein shall be construed as limiting the Company’s
obligation to make all interest payments due on the Notes at the times and in the amounts required
by the Notes, which obligation shall be absolute and unconditional.
(i) If the Company elects to cause a Scheduled Interest Payment to be made using funds
held in the Escrow Account, then, not later than five (5) Business Days prior to the date of
the applicable Scheduled Interest Payment, the Company shall direct the Escrow Agent in
writing pursuant to the form of notice attached hereto as Exhibit A (upon which the
Escrow Agent may conclusively rely) to transfer from the Escrow Account to the Trustee funds
(or Permitted Securities that are scheduled to mature or that can be liquidated on or before
the date of the applicable Scheduled Interest Payment) in a specified amount necessary to
provide for payment in full (or, if the Company intends to make a portion of such interest
payment with funds or Permitted Securities in the Escrow Account and the remainder of such
interest payment with funds other than those in the Escrow Account, such portion) of the
next Scheduled Interest Payment on the Notes. At or prior to 1:00 p.m., New York City time,
on the day that is no later than one (1) Business Day following receipt of such notice, the
Escrow Agent shall transfer such funds (or such Permitted Securities, as applicable) to the
Paying Agent as set forth in Section 4(d)(ii) hereof, and shall notify the Company in
writing that it has made such transfer to the Paying Agent. If the Company does not intend
to utilize the funds (or Permitted Securities) in the Escrow Account to make any such
Scheduled Interest Payment in full, or does not direct the Escrow Agent in writing to make
any such Scheduled Interest Payment, then the Company shall make the Scheduled Interest
Payment from Company Funds (as defined in Section 4(b)(ii) below).
(ii) If the Company makes any Scheduled Interest Payment or a portion of any Scheduled
Interest Payment from a source of funds other than the Escrow Account (“Company Funds “),
the Company may, after payment in full of such Scheduled Interest Payment and upon at least
five (5) Business Days’ prior notice, direct the Escrow Agent in writing pursuant to the
form of notice attached hereto as Exhibit A (upon which the Escrow Agent may
conclusively rely), so long as no Event of Default has occurred and is continuing, to
release to the Company (or at the direction of the Company, to release to a designated third
party) an amount of funds or Permitted Securities from the Escrow Account, the sum of the
cumulative interest payments which is less than or equal to the amount of Company Funds so
expended in making the Scheduled Interest Payment. Upon receipt of such notice, the Escrow
Agent shall pay over or transfer to the Company the requested amount.
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(c) Excess Escrow Funds. If, (x) in the course of funding the Escrow Account pursuant
to Section 2(a) hereof, the Company either elects or is required to deposit in the Escrow Account
funds in an amount greater than that which is required to fund the payment of the sum of (A) all
remaining Scheduled Interest Payments and (B) any Additional Interest, Reserve Interest and
Qualifying Tender Interest, if applicable, in respect of all outstanding Notes (such sum, the
“Remaining Interest Payments”) (in order to permit the Escrow Agent to purchase an amount of
Permitted Securities equal to or greater than that which is required to fund the payment of the
Remaining Interest Payments or otherwise) or (y) the balance of the Escrow Account exceeds the
Remaining Interest Payments as a result of cumulative interest payments on the Permitted Securities
held in the Escrow Account (any such excess amounts under clauses (x) and (y) being hereinafter
referred to as “ Excess Escrow Funds “), the Company may, upon at least five (5) Business Days’
prior written notice pursuant to the form of notice attached hereto as Exhibit A (upon
which the Escrow Agent may conclusively rely), direct the Escrow Agent, so long as no Event of
Default has occurred and is continuing, to release to the Company (or at the direction of the
Company, to release to a designated third party) an amount of funds or Permitted Securities from
the Escrow Account, the sum of which (including aggregate principal amount of such Permitted
Securities) is less than or equal to the amount of the Excess Escrow Funds. Upon receipt of such
notice, the Escrow Agent shall pay over or transfer to the Company (or its designated third party,
as the case may be) the requested amount or Permitted Securities.
(d) Wire Transfer.
(i) All funds distributed from the Escrow Account to the Company shall be transferred
by wire transfer of immediately available funds to the following account:
Account Name:
|
Safeguard Scientifics, Inc. | |
Account No.:
|
3300657158 | |
Routing No.:
|
000000000 | |
Bank Name:
|
Silicon Valley Bank |
(ii) All funds (or Permitted Securities that are scheduled to mature or that can be
liquidated on or before the date of the applicable Scheduled Interest Payment) distributed
from the Escrow Account to the Paying Agent for payment on the Notes shall be transferred by
an account-to-account transfer of immediately available funds to the following account:
U.S. Bank National Association
ABA No.: 000000000
Account No.: 173103781618
Acct Name: USB Debt Service
Attn: Xxxxxx XxXxxxx/Safeguard Debt Service Interest
ABA No.: 000000000
Account No.: 173103781618
Acct Name: USB Debt Service
Attn: Xxxxxx XxXxxxx/Safeguard Debt Service Interest
(e) Written Instructions; Certificates. The Company shall, upon request by the Escrow
Agent, execute and deliver to the Escrow Agent such additional written instructions and
certificates hereunder as may be reasonably required by the Escrow Agent to give effect to this
Section 4.
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SECTION 5. Termination of Security Interest. Upon payment in full of the Scheduled Interest
Payments, the security interest evidenced by this Agreement in any Collateral remaining in the
Escrow Account shall automatically terminate and be of no further force and effect. Furthermore,
upon the release of any Collateral from the Escrow Account in accordance with the terms of this
Agreement, whether upon release of such Collateral to Holders of Notes as payment of interest on
the Notes or to the Company pursuant to Sections 4(b)(ii) or 4(c), the security interest evidenced
by this Agreement in such Collateral so released shall automatically terminate and be of no further
force and effect. The Trustee and the Escrow Agent shall, upon request by the Company, execute and
deliver to the Company such additional written instructions and certificates hereunder as may be
reasonably required by the Company to give effect to this Section 5.
SECTION 6. Attorneys-in-Fact. The Company hereby irrevocably appoints each of the Trustee and
the Escrow Agent as the Company’s attorney-in-fact, coupled with an interest, with full authority
in the place and stead of the Company and in the name of the Company or otherwise, from time to
time to take any action and to execute any instrument that may be necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Company representing any interest payment, dividend or
other distribution in respect of the Collateral or any part thereof and to give full discharge for
the same, and the expenses of the Trustee and the Escrow Agent incurred in connection therewith
shall be payable by the Company; provided that neither the Trustee nor the Escrow Agent is under
any obligation or duty to exercise any authority under this Section 6.
SECTION 7. Trustee or Escrow Agent May Perform. Without limiting the authority granted under
Section 6 hereof, if the Company fails to perform any agreement contained herein, the Trustee or
the Escrow Agent may, but shall not be obligated to, itself perform, or cause
performance of, such agreement, and the expenses of the Trustee or the Escrow Agent incurred in
connection therewith shall be payable by the Company and shall be secured by the Collateral.
SECTION 8. Representations, Warranties and Agreements.
(a) Company Representations and Warranties. The Company represents and warrants that:
(i) The execution, delivery and performance by the Company of this Agreement are within
its corporate power, have been duly authorized by all necessary corporate action of the
Company, and do not contravene, or constitute a default under, any provision of applicable
law or regulation or of any judgment, injunction or order or of any material agreement or
other material instrument binding upon the Company or of the certificate of incorporation or
by-laws of the Company or result in the creation or imposition of any Lien on any assets of
the Company other than the Lien contemplated hereby.
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(ii) The Company (A) is duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, (B) has full corporate power and authority to
enter into this Agreement and (C) has the right to pledge and grant a security interest in
the Collateral as provided by this Agreement.
(iii) This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws
affecting creditors’ rights generally and by general principles of equity.
(iv) Upon the execution and delivery of this Agreement by the parties hereto and the
delivery to the Escrow Agent of the Collateral, the pledge of the Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest in the
Collateral, securing the payment of the Secured Obligations for the benefit of the Trustee,
the Escrow Agent and the Holders of the Notes, enforceable as such against all creditors of
the Company and any persons purporting to purchase any of the Collateral from each of them.
(v) Other than the filing of a UCC financing statement in respect of the security
interest granted hereunder, no consent of any other person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (A) for the pledge by the Company of the Collateral
pursuant to this Agreement or for the execution, delivery or performance of this Agreement
by the Company or (B) for the exercise by the Trustee or the Escrow Agent of the remedies in
respect of the Collateral pursuant to this Agreement.
(vi) No litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the best knowledge of the Company, threatened by or
against the Company or against any of its properties or revenues with respect to this
Agreement or any of the transactions contemplated hereby.
(vii) The pledge of the Collateral pursuant to this Agreement is not prohibited by any
applicable law or governmental regulation, release, interpretation or opinion of the Board
of Governors of the Federal Reserve System or other regulatory agency (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System).
(viii) All information set forth herein relating to the Collateral is accurate and
complete in all material respects.
(b) Company Covenants. The Company covenants and agrees that:
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(i) it will not (and will not purport to) (A) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option or warrant with respect to, any of
the Collateral nor (B) create or permit to exist any Lien upon or with respect to any of the
Collateral (except for the liens and security interests granted under this Agreement) and at
all times will have the right to pledge the Collateral, free and clear of any Lien or
adverse claims (except for the liens and security interests granted under this Agreement);
(ii) it will not (A) enter into any agreement or understanding (other than the
Indenture) that restricts or inhibits or purports to restrict or inhibit the Trustee’s or
the Escrow Agent’s rights or remedies hereunder, including, without limitation, their right
to sell or otherwise dispose of the Collateral or (B) fail to pay or discharge any tax,
assessment or levy of any nature with respect to the Collateral not later than three
Business Days prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with respect to the Collateral; and
(iii) it will not change its jurisdiction of incorporation without 30 days’ prior
written notice to the Trustee.
(c) Escrow Agent Representations and Warranties. The Escrow Agent represents and
warrants that it is a bank with trust powers that in the ordinary course of its business maintains
securities accounts for others and is acting solely in such capacity in respect of the Escrow
Account. The Escrow Agent further represents and warrants that it is a “securities intermediary”
within the meaning of Section 8-102(a)(14) of the New York UCC.
(d) Certain Definition. For purposes of this Section, “Lien” means, with respect to
any asset, any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in, on or of such asset.
SECTION 9. Fees and Expenses of Escrow Agent.
(a) Fees Due to Escrow Agent. The Company agrees to pay the Escrow Agent its
agreed-upon compensation for its services as Escrow Agent hereunder promptly upon request therefor,
and to reimburse the Escrow Agent for all reasonable and documented expenses of or disbursements
incurred by the Escrow Agent in the performance of its duties hereunder, including the reasonable
fees, expenses and disbursements of legal counsel to the Escrow Agent, all as provided in the Fee
Schedule attached as Annex A hereto.
(b) Lien of Escrow Agent. The Escrow Agent shall have a lien upon any investment
income on deposit in the Escrow Account solely for any costs, expenses and fees that may arise
hereunder and may retain that portion of the investment income in the Escrow Account equal to such
unpaid amounts, until all such costs, expenses and fees have been paid.
SECTION 10. Rights, Duties and Immunities of Escrow Agent. Acceptance by the Escrow Agent of
its duties under this Agreement is subject to the following terms and conditions, which all parties
to this Agreement hereby agree shall govern and control the rights, duties and immunities of the
Escrow Agent:
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(a) Duties and Obligations of Escrow Agent. The duties and obligations of the Escrow
Agent shall be determined solely by the express provisions of this Agreement and the Escrow Agent
shall not be liable except for the performance of such duties and obligations as are specifically
set out in this Agreement. The Escrow Agent shall not be required to inquire as to the performance
or observation of any obligation, term or condition under any agreement or arrangement between the
Company and the Trustee. The Escrow Agent is not a party to, and is not bound by, any agreement or
other document out of which this Agreement may arise. The Escrow Agent shall be under no liability
to any party hereto by reason of any failure on the part of any party hereto (other than the Escrow
Agent) or any maker, guarantor, endorser or other signatory of any document or any other person to
perform such person’s obligations under any such document. The Escrow Agent shall not be bound by
any waiver, modification, termination or rescission of this Agreement or any of the terms hereof,
unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties
and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior
written consent thereto. This Agreement shall not be deemed to create a fiduciary relationship
between the parties hereto under state or federal law.
(b) Limitation of Obligations. The Escrow Agent shall not be responsible in any
manner for the validity or sufficiency of this Agreement or of any property delivered hereunder, or
for the value or collectibility of any note, check or other instrument, if any, so delivered, or
for any representations made or obligations assumed by any party other than the Escrow Agent.
Nothing herein contained shall be deemed to obligate the Escrow Agent to deliver any cash,
instruments, documents or any other property referred to herein, unless the same shall have first
been received by the Escrow Agent pursuant to this Agreement.
(c) Reimbursement and Indemnification. The Company shall reimburse and indemnify the
Escrow Agent for, and hold it harmless against, any loss, liability or expense, including but not
limited to reasonable legal counsel fees, incurred without bad faith, gross negligence or willful
misconduct on the part of the Escrow Agent, arising out of or in conjunction with its acceptance
of, or the performance of its duties and obligations under, this Agreement, as well as the costs
and expenses of defending against any claim or liability arising out of or relating to this
Agreement.
(d) Reliance by Escrow Agent. The Escrow Agent shall be fully protected in acting on
and relying upon any written notice, direction, request, waiver, consent, receipt or other paper or
document which the Escrow Agent in good faith believes to have been signed and presented by the
Company.
(e) No Liability. 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 in act or law, or
for anything which it may do or refrain from doing in connection herewith, except its own bad
faith, gross negligence or willful misconduct.
(f) Right to Counsel. The Escrow Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the provisions of this Agreement
or its duties hereunder, and except for its own bad faith, gross negligence or willful misconduct
it
shall incur no liability and shall be fully protected in respect of any action taken, omitted or
suffered by it in good faith in accordance with the advice or opinion of such counsel.
Page 12
(g) Resignation or Removal. The agreements set forth in this Section 10 shall survive
the resignation or removal of the Escrow Agent, the termination of this Agreement and the payment
of all amounts hereunder.
SECTION 11. Miscellaneous.
(a) Waiver. No waiver of any provision of this Agreement nor consent to any departure
by any party therefrom shall in any event be effective unless the same shall be in writing and
signed by each of the non-breaching parties and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(b) Severability. If, for any reason whatsoever, any one or more of the provisions of
this Agreement shall be held or deemed to be inoperative, unenforceable or invalid in a particular
case or in all cases, such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so as to effectuate, to
the maximum extent possible, the parties’ intent.
(c) Binding Effect. This Agreement shall inure to and be binding upon the parties and
their respective successors and permitted assigns; provided, however, that the Company may not
assign its rights or obligations hereunder without the express prior written consent of the
Trustee.
(d) Choice of Law. The existence, validity, construction, operation and effect of any
and all terms and provisions of this Agreement shall be determined in accordance with and governed
by the internal laws of the State of New York, including without limitation the New York UCC,
without giving effect to the conflicts of law principles of such State. The securities
intermediary’s jurisdiction for purposes of Section 8-110 of the New York UCC shall be the State of
New York.
(e) Entire Agreement. This Agreement, the Purchase Agreement, the Notes and the
Indenture contain the entire agreement among the parties with respect to the subject matter hereof
and supersede any and all prior agreements, understandings and commitments with respect thereto,
whether oral or written; provided, however, that this Agreement is executed and accepted by the
Trustee and the Escrow Agent subject to all terms and conditions of its acceptance of the trust
under the Indenture, as fully as if said terms and conditions were set forth at length herein.
(f) Amendments. This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties. The Trustee and the Escrow Agent may execute an
amendment to this Agreement only if the consent of each of the Holders of the Notes required by
Section 8.02 of the Indenture has been obtained or is not required pursuant to the terms thereof.
Page 13
(g) Notices. All notices, requests, instructions, orders and other communications
required or permitted to be given or made under this Agreement to any party hereto shall be
delivered in writing by hand delivery or overnight delivery, or shall be delivered by facsimile
with machine confirmation of full delivery not more than 24 hours following such facsimile notice.
A notice given in accordance with the preceding sentence shall be deemed to have been duly given
upon the sending thereof Notices should be addressed as follows:
To the Company:
Safeguard Scientifics, Inc.
000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile number: (000) 000-0000
000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile number: (000) 000-0000
To the Trustee or the Escrow Agent:
U.S. Bank National Association
Corporate Trust Services
Two Liberty Place
00 X. 00xx Xxxxxx, Xxxxx 0000, Xxxx Xxxxxxx: EX-PA-WBSP
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
Corporate Trust Services
Two Liberty Place
00 X. 00xx Xxxxxx, Xxxxx 0000, Xxxx Xxxxxxx: EX-PA-WBSP
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
or at such other address or facsimile number as the specified entity most recently may have
designated in writing in accordance with this paragraph to the other parties. Notwithstanding the
foregoing, notices to the Escrow Agent shall be effective only upon receipt.
(h) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this Agreement.
(i) Interpretation. The headings of the sections contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or interpretation of this
Agreement.
(j) Tax Matters. The parties acknowledge that, for tax reporting purposes, all
interest attributable to the Escrow Funds shall be allocable to the Company. The Company agrees to
provide the Escrow Agent with certified tax identification numbers by furnishing appropriate Form
W-9 (or Form W-8, in the case of non-U.S. persons) and other forms and documents that the Escrow
Agent may reasonably request. The Company acknowledges that failure to supply such information may
obligate the Escrow Agent to withhold a portion of any payments made to the Company pursuant to
this Agreement under the applicable provisions of the Internal Revenue Code of 1986, as amended
from time to time.
Page 14
(k) USA Patriot Act Information. To help the government fight the funding of
terrorism and money laundering activities, federal law requires all financial institutions to
obtain,
verify and record information that identifies each person who opens an account. For a
non-individual person such as a business entity, a charity, a trust or other legal entity the
Escrow Agent will ask for documentation to verify its formation and existence as a legal entity.
The Escrow Agent may also ask to see financial statements, licenses, identification and
authorization documents from individuals claiming authority to represent the entity or other
relevant documentation. The Company agrees to provide all such information and documentation as
requested by Escrow Agent to ensure compliance with United States federal law.
[Signature Page Follows]
Page 15
IN WITNESS WHEREOF, the undersigned have affixed their signatures and hereby adopt as part of
this instrument Schedules I, II, and III, which are incorporated by reference.
DEPOSITOR:
| SAFEGUARD SCIENTIFICS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Senior Vice President and General Counsel | |||
TRUSTEE:
| U.S. BANK NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
ESCROW AGENT:
| U.S. BANK NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
[ESCROW AGREEMENT SIGNATURE PAGE]
EXHIBIT A
[Safeguard Letterhead]
U.S. Bank National Association |
||
ATTENTION: (Safeguard Secured Interest Account)
| RE: | Escrow Agreement dated March 26, 2010 among Safeguard Scientifics, Inc., U.S.
Bank National Association as Trustee under the Indenture and U.S. Bank National
Association as Escrow Agent under the Escrow Agreement |
Ladies and Gentlemen:
Reference is made to Section 2 of the Escrow Agreement. The Company hereby directs the Escrow
Agent to make the following disbursements:
Section 4(b)(i) $
Section 4(b)(ii) $
Section 4(c) $
The Company hereby certifies to the Escrow Agent (and for the benefit of the Trustee under the
Indenture), that such any disbursement made by the Escrow Agent in reliance on this direction is
permitted by and complies with the Escrow Agreement.
| SAFEGUARD SCIENTIFICS, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
ANNEX A
FEE SCHEDULE
U.S. Bank Corporate Trust Services
00 X. 00xx Xxxxxx
XX-XX-XXXX
Xxxxxxxxxxxx, XX 00000
Tel. (000) 000-0000
Fax (000) 000-0000
00 X. 00xx Xxxxxx
XX-XX-XXXX
Xxxxxxxxxxxx, XX 00000
Tel. (000) 000-0000
Fax (000) 000-0000
Escrow Agent Fees for:
Issuer: Safeguard Scientifics, Inc.
Issue: Convertible Senior Debentures
Series: 10.125% due 2014
Issuer: Safeguard Scientifics, Inc.
Issue: Convertible Senior Debentures
Series: 10.125% due 2014
Schedule of Fees |
||
Acceptance Fee:
|
$WAIVED | |
Annual Administration Fee:
|
$1,500.00 Annually, in Advance | |
Legal Fees and Expensesi:
|
N/A Part of Legal Fee for Trustee Services |
Counsel:
Xxxxxx X. X’Xxxxx, Esq./Partner
Lamb XxXxxxxx, PC
00 Xxxx Xxxxxx Xxxxxx, XX Xxx 000
Xxxx Xxxxxxx, XX 00000
Tel. 000-000-0000
Fax: 000-000-0000
xxxxxxx@xxxxxxxxx.xxx
Lamb XxXxxxxx, PC
00 Xxxx Xxxxxx Xxxxxx, XX Xxx 000
Xxxx Xxxxxxx, XX 00000
Tel. 000-000-0000
Fax: 000-000-0000
xxxxxxx@xxxxxxxxx.xxx
The Annual Administration Fee will be billed at closing. Thereafter, the Annual Administration
Fee and any out of pocket expenses will be billed on the one year anniversary of debt issuance.
The Annual Administration Fee will not be pro-rated.
The above-mentioned Fee is a basic charge and does not include out-of-pocket expenses, which
will be billed in addition to the regular charge as required. Out-of-pocket expenses shall
include, but are not limited to: telephone tolls, stationery, travel and postage expenses.
Charges for performing extraordinary or other services not contemplated at the time of the
execution of the transaction or not specifically covered elsewhere in this schedule will be
determined by appraisal in amounts commensurate with the service to be provided.
In the event of default we will charge an hourly rate for performing extraordinary services in
addition to the services covered by our Annual Administration Fee. The hourly rates charged
will be those that are published in the Fee Section of our Bond Administration Policy then in
effect.
To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify and record information that identifies each
person who opens an account. For a non-individual person such as a business entity, a charity, a
Trust or other legal entity we will ask for documentation to verify its formation and existence as
a legal entity. We may also ask to see financial statements, licenses, identification and
authorization documents from individuals claiming authority to represent the entity or other
relevant documentation.
Our proposal is subject in all aspects to our review and acceptance of the final documents,
which set forth our duties and responsibilities, and the approval of this new business by our
New Business Acceptance Committee.
