ESCROW AGREEMENT
Exhibit 99.1
This Escrow Agreement (“Agreement”) is made and entered into as of April 17, 2007 by and among
VERSO TECHNOLOGIES, INC., a Minnesota corporation (“PURCHASER”), SUNTRUST BANK, a Georgia banking
corporation (the “Escrow Agent”), and XXXXX XXXXXX (the “Stockholders’ Agent”) for and on behalf of
the holders (the “Stockholders”) of Outstanding TARGET Series E-3 Shares and the Management Members
(as such terms are defined in that certain Agreement and Plan of Merger dated as of April 4, 2007
(the “Merger Agreement”) by and among PURCHASER, SN ACQUISITION CORPORATION, a Delaware corporation
and a wholly-owned subsidiary of PURCHASER (“MERGER SUB”), Sentito Networks, Inc., a Delaware
corporation (“TARGET”), and the Stockholders’ Agent (as defined in the Merger Agreement)).
W
I
T N E S S E T H:
WHEREAS, pursuant to the Merger Agreement, PURCHASER will issue to the Stockholders and
Management Members shares of PURCHASER Common Stock in connection with the merger (the “Merger”) of
MERGER SUB with and into TARGET; and
WHEREAS, pursuant to Article 12 of the Merger Agreement, the Stockholders and Management
Members have agreed to make available to PURCHASER and certain of its affiliates an escrow fund to
compensate such parties for certain damages incurred by them and in the event certain prepayments
are not received by PURCHASER, each as permitted therein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual obligations herein,
the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions shall have the
meanings specified in the Merger Agreement.
2. Escrow Arrangements. Except as otherwise expressly set forth herein, all matters
pertaining to the Escrow Fund and the Escrow Shares (each as hereinafter defined) shall, as between
the parties hereto other than the Escrow Agent, be governed by the provisions of Article 12 of the
Merger Agreement; provided, however, that if any express provision of this Agreement conflicts with
the provisions of Article 12 of the Merger Agreement, the provisions of Article 12 of the Merger
Agreement shall control, as between the parties hereto other than the Escrow Agent. The Escrow
Agent shall only be governed by the provisions of this Agreement.
3. Establishment of Escrow Fund. Within five (5) business days after the date of this
Agreement, PURCHASER shall cause its transfer agent to deliver to the Escrow Agent for deposit into
escrow a certificate representing the aggregate number of 984,721 shares of PURCHASER Common Stock
constituting the Indemnification Escrow Shares pursuant to Section 3.1(g) of the Merger Agreement
and 1,230,902 shares of PURCHASER Common Stock constituting the Primo Escrow Shares pursuant to
Section 3.1(h) of the Merger Agreement
(collectively, the “Escrow Shares”), with such deposit and any Additional Escrow Shares (which
shall be treated as Escrow Shares hereunder) to constitute the escrow fund (the “Escrow Fund”).
4. Administration of Escrow Fund. The Escrow Agent shall administer the Escrow Fund
as set forth in Annex A.
5. Maintenance of the Escrow Fund. The Escrow Agent shall establish, for record
keeping purposes, a separate account for each Stockholder and Management Member (collectively, the
“TARGET Indemnifying Persons”) showing the number of Escrow Shares held in the Escrow Fund for such
Stockholder and Management Member as set forth in Annex B attached hereto, which sets forth the
name of each Stockholder and Management Member and the calculation of each such Stockholder’s and
Management Member’s Proportionate Share of the Indemnification Escrow Shares and the Primo Escrow
Shares based upon (i) each Stockholder’s Pro-Rata Share of the Holder Initial Merger Consideration
(which is calculated based on each Stockholder’s ownership of TARGET Capital Stock) and (ii) each
Management Member’s Member Percentage of the Management Initial Merger Consideration. The Escrow
Agent shall maintain records showing each Stockholder’s and Management Member’s Proportionate Share
of the Escrow Fund and shall adjust each Stockholder’s and Management Member’s account to reflect
distributions from, and additions or substitutions to, the property held for the account of such
Stockholder or Management Member in the Escrow Fund. The Escrow Agent is hereby granted the power
to effect any transfer of Escrow Shares required by this Agreement. PURCHASER shall cooperate with
the Escrow Agent in promptly issuing, or causing its transfer agent to promptly issue, such stock
certificates as shall be required to effect such transfers. All Escrow Shares held in the Escrow
Fund shall be registered in the name of the Escrow Agent or its nominee on behalf of the
Stockholders and Management Members in the respective amounts set forth on Annex B.
6. Term of Escrow Agreement. This Agreement shall terminate upon the termination of
the Escrow Period, as set forth in Paragraph 1 of Annex A, and the distribution by the Escrow Agent
of all property held in the Escrow Fund. All property held by the Escrow Agent under this
Agreement shall be disbursed by the Escrow Agent in accordance with the provisions of Annex A
hereto, which is incorporated by reference and made a part hereof.
7. Fees of the Escrow Agent. The fees of the Escrow Agent, including (i) the normal
costs of administering the Escrow Fund and the Escrow Agent’s right to reimbursement as set forth
on the Fee Schedule attached hereto as Annex C, and (ii) all fees and costs associated with the
Escrow Agent’s administration of claims made upon the Escrow Fund, shall be paid by PURCHASER and
not out of the Escrow Fund. In the event that the Escrow Agent renders any service hereunder not
provided for herein or there is any assignment of any interest in the subject matter of the Escrow
Fund or modification hereof, the Escrow Agent shall be reasonably compensated for such
extraordinary services by the party that is responsible for or requests such services and not out
of the Escrow Fund.
8. Liability of the Escrow Agent. In performing any of its duties under this
Agreement, the Escrow Agent shall not be liable to any party for damages, losses or expenses,
except in the event of gross negligence or willful misconduct on the part of the Escrow Agent.
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The Escrow Agent shall not incur any such liability for (i) any act or failure to act made or
omitted in good faith or (ii) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement, that the Escrow Agent
shall in good faith believe to be genuine; nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations or determining the scope of any agent’s authority. In addition,
the Escrow Agent, at the expense of PURCHASER, may consult with legal counsel in connection with
its duties under this Agreement and shall be fully protected in any act taken, suffered or
permitted by it in good faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or purporting to act
on behalf of any party to this Agreement. In no event shall the Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages. The Escrow Agent shall have no
implied duties or obligations under the terms of this Agreement or otherwise. The Escrow Agent
shall not be charged with or be deemed to have any knowledge or notice of any notice, fact or
circumstance not specifically set forth in this Agreement or furnished to the Escrow Agent in
notices provided to the Escrow Agent in writing and strictly in accordance with the notice
provisions of this Agreement. The Escrow Agent shall not be required to take notice of any
agreement or understanding, including, but not limited to, the Merger Agreement, among the parties
hereto, other than this Agreement and shall have no duty or responsibility to take any action
pursuant to the terms thereof. The Escrow Agent shall not be obligated to take any legal action or
to commence any proceedings in connection with this Agreement or any funds held hereunder or to
appear in, prosecute or defend in any such legal action or proceedings.
9. Controversies. If any dispute or controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of the Escrow Fund, its
terms or conditions, the Escrow Agent will not be required to determine the controversy or to take
any action regarding it. The Escrow Agent may hold all documents and funds and may wait for
settlement of any such controversy by final appropriate legal proceedings or other means as, in the
Escrow Agent’s discretion, it may require, despite what may be set forth elsewhere in this
Agreement. In such event, the Escrow Agent will not be liable for interest or damage.
Furthermore, the Escrow Agent may at its option, file an action of interpleader requiring the
parties to answer and litigate any claims and rights among themselves. In the event of any
dispute or disagreement as described above, the Escrow Agent shall have the right, in addition to
the rights described above and at the election of the Escrow Agent, to tender into the registry or
custody of any court having jurisdiction, all money and property held under this Agreement and may
take such other legal action as may be appropriate or necessary, in the opinion of the Escrow
Agent. Upon such tender, the parties hereto agree that the Escrow Agent shall be discharged from
all further duties under this Agreement; provided, however, that the filing of any such legal
proceedings shall not deprive the Escrow Agent of its compensation hereunder earned prior to such
filing and discharge of the Escrow Agent of its duties hereunder.
10. Indemnification of Escrow Agent. PURCHASER and its successors and assigns
agree jointly and severally to indemnify and hold the Escrow Agent and each of its officers,
directors, agents and employees harmless from and against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation, counsel fees,
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including allocated costs of in-house counsel, and disbursements that may be imposed on the
Escrow Agent or any such persons, or incurred by it or them directly or indirectly in connection
with this Agreement or the performance of its duties under this Agreement, including but not
limited to, any arbitration or litigation arising from this Agreement or involving its subject
matter, unless such loss, claim, damage, liability or expense shall be caused by the gross
negligence or willful misconduct on the part of the Escrow Agent. Nothing contained in this
Section 10 shall impair the rights of the Stockholders and Management Members, on the one hand, and
PURCHASER, on the other hand, as between themselves.
11. Resignation of Escrow Agent. The Escrow Agent may resign at any time upon giving
at least 30 days written notice to the other parties hereto; provided, however, that no such
resignation shall become effective until the appointment of a successor Escrow Agent which shall be
accomplished as follows: PURCHASER and the Stockholders’ Agent shall use their best efforts to
agree on a successor Escrow Agent within 30 days after receiving such notice. If the parties fail
to agree on a successor Escrow Agent within such time, then the Escrow Agent shall have the right
to appoint a successor Escrow Agent authorized to do business in the State of Georgia, provided
that the successor so chosen shall have capital, surplus and undivided profits of at least
$200,000,000. The successor Escrow Agent shall execute and deliver to the Escrow Agent an
instrument accepting such appointment, and the successor Escrow Agent shall, without further acts,
be vested with all the estates, property rights, powers and duties of the predecessor Escrow Agent
as if originally named as Escrow Agent herein. The predecessor Escrow Agent then shall be
discharged from any further duties and liability under this Agreement. Notwithstanding anything
to the contrary herein provided, in the event no
successor escrow agent has been appointed
on or prior to the sixtieth (60th) day following the date
any such resignation of the
Escrow Agent is to become effective, the Escrow Agent shall be entitled to tender into the custody
of any court of competent jurisdiction all funds and other property then held by it hereunder and
shall thereupon be relieved of all further duties and obligations under this Agreement. Escrow
Agent shall have no responsibility for the appointment of a successor escrow agent hereunder.
12. Miscellaneous.
(a) Assignment; Binding upon Successors and Assigns. None of the parties hereto may
assign any of its rights or obligations hereunder without the prior written consent of the other
parties. This Agreement will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(b) Severability. If any provision of this Agreement, or the application thereof,
shall for any reason and to any extent be held to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to other persons or circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto. The parties further
agree to replace such invalid or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic, business and other
purposes of the invalid or unenforceable provision.
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(c) Entire Agreement. This Agreement, the Annexes hereto, and as to the parties
hereto other than the Escrow Agent, the Merger Agreement, the documents referenced therein and the
exhibits thereto, constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and thereto. The express terms hereof control and thereof
supersede any course of performance or usage of the trade inconsistent with any of the terms hereof
and thereof.
(d) Notices. All notices and other communications hereunder shall be in writing and
shall be deemed duly delivered if delivered personally (upon receipt), or three business days after
being mailed by registered or certified mail, postage prepaid (return receipt requested), or one
business day after it is sent by reputable nationwide overnight courier service, or upon
transmission, if sent via facsimile (with confirmation of receipt) to the parties at the following
address (or at such other address for a party as shall be specified by like notice);
provided, however, that notwithstanding anything to the contrary herein provided, the Escrow
Agent shall not be deemed to have received any notice hereunder prior to its actual receipt
thereof :
(i) if to PURCHASER, to:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Hussle, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Hussle, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(ii) if
to Escrow Agent, to:
SunTrust Bank
Corporate Agency Services
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Group Vice President
Facsimile: (000) 000-0000
Corporate Agency Services
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Group Vice President
Facsimile: (000) 000-0000
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Telephone: (000) 000-0000
(iii) if to Stockholders’ Agent, to:
Xxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: ( )
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: ( )
with a copy to (which shall not constitute notice):
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(e) Other Remedies. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party shall be deemed cumulative with and not exclusive of any other
remedy conferred hereby or by law on such party, and the exercise of any one remedy shall not
preclude the exercise of any other.
(f) Amendment and Waivers. Any term or provision of this Agreement may be amended,
and the observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a writing signed by the party to be
bound thereby. The waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any
other default or any succeeding breach or default.
(g) Further Assurances. Each party agrees to cooperate fully with the other parties
and to execute such further instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement.
(h) Absence of Third Party Beneficiary Rights. Except as expressly provided herein,
no provisions of this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client, customer, affiliate,
shareholder, partner of any party hereto or any other person or entity unless specifically provided
otherwise herein and except for the Stockholders and Management Members, and, except as so
provided, all provisions hereof shall be solely between the parties to this Agreement.
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(i) Governing Law. It is the intention of the parties hereto that the internal laws
of the State of Georgia (irrespective of its choice of law principles) shall govern the validity of
this agreement, the construction of its terms, and the interpretation and enforcement of the rights
and duties of the parties hereto.
(j) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall constitute an original and all of which together shall constitute one and the same
instrument. Counterparts may be delivered by facsimile.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date first set
forth above.
| VERSO TECHNOLOGIES, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| Title: | CFO | |||||
| FEIN: 00-0000000 | ||||||
| /s/ Xxxxx Xxxxxx | ||||||
| XXXXX XXXXXX, as | ||||||
| STOCKHOLDERS’ AGENT | ||||||
| SSN: [Provided under separate cover] | ||||||
| SUNTRUST BANK, | ||||||
| AS ESCROW AGENT | ||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| Its: | Group Vice President | |||||
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ANNEX A
ADMINISTRATION OF ESCROW FUND
ANNEX
A
1. Escrow Period; Release of Indemnification Escrow Shares From Escrow.
(a)The escrow period with respect to the Indemnification Escrow Shares shall terminate upon the twelve
(12) month anniversary of the date of the Escrow Agreement (the “Escrow Period”); provided, however, that the number
of Indemnification Escrow Shares, which, in the reasonable judgment of PURCHASER, subject to the objection of the
Stockholders’ Agent and the subsequent arbitration of the matter in the manner provided in Paragraph 5 hereof, necessary
to satisfy any unsatisfied claims specified in any Officer’s Certificate (as defined in Paragraph 2 below) theretofore
delivered to the Escrow Agent in writing by PURCHASER prior to termination of the Escrow Period with respect to facts and circumstances existing prior to expiration of the Escrow Period, shall remain in the Escrow Fund until such claims have been resolved.
(b)Within five (5) business days after the end of the Escrow Period (the “Release Date”), the Escrow Agent shall release
from escrow to the TARGET Indemnifying Persons (which such persons are as identified on Annex B) each such person’s
Proportionate Share of the Indemnification Escrow Shares and Additional Escrow Shares relating thereto (if any) less,
with respect to each such person, the number of Indemnification Escrow Shares and such Additional Escrow Shares relating
thereto with a value (as determined pursuant to Paragraph 2 hereof) equal to (A) such person’s Proportionate Share of
any liability delivered to PURCHASER in accordance with Paragraph 2 hereof in satisfaction of indemnification claims
by PURCHASER and (B) such person’s Proportionate Share of any liability subject to delivery to PURCHASER in accordance
with Paragraph 1(a) with respect to any pending but unresolved indemnification claims of PURCHASER. Any Indemnification
Escrow Shares and Additional Escrow Shares relating thereto held as a result of clause (B) shall be released to such
person or released to PURCHASER (as appropriate) promptly upon joint written notice to the Escrow Agent by PURCHASER
and the Stockholders’ Agent of resolution of each specific indemnification claim involved. Indemnification Escrow
Shares and Additional Escrow Shares relating thereto shall be released to the TARGET Indemnifying Persons based on
each such person’s Proportionate Share thereof. PURCHASER will take such action as may be necessary to cause such
certificates to be issued in the names of the appropriate persons. Certificates representing Indemnification Escrow
Shares and Additional Escrow Shares relating thereto so issued that are subject to resale restrictions under applicable
Securities Laws will bear a legend to that effect.
(c)The Stockholders’ Agent will provide written notice to the Escrow Agent of any change in the Proportionate Share of any TARGET Indemnifying Person.
2. Claims Upon Escrow Fund. Upon receipt by the Escrow Agent on or before the Release Date of
a certificate signed by any officer of PURCHASER (an “Officer’s Certificate”) stating that with respect
to the indemnification obligations of the TARGET Indemnifying Persons set forth in Section 12.2 of the
Merger Agreement, Damages exist and specifying in reasonable detail the individual items of such Damages
included in the amount so stated, the date each such item was paid, or properly accrued or arose,
and the nature of the misrepresentation, breach of warranty, covenant or claim to which such item is
related, the Escrow Agent shall, subject to the provisions of this Annex A, deliver to PURCHASER out of
the portion of the
Escrow Fund which constitutes Indemnification Escrow Shares or Additional Escrow Shares
relating thereto (if any), as promptly as practicable, PURCHASER Common Stock or other assets held in such
portion of the Escrow Fund having a value equal to such Damages. For the purpose of compensating PURCHASER
for its Damages pursuant to this Annex A and the Merger Agreement, the PURCHASER Common Stock in the Escrow
Fund shall be valued at the Average Stock Price (which will be set forth in the Officer’s Certificate).
3. Objections to Claims.
(a)At the time of delivery of any Officer’s Certificate to the Escrow Agent, a duplicate copy of such Officer’s Certificate shall be delivered to the Stockholders’ Agent by PURCHASER and for a period of thirty (30) days after such delivery, the Escrow Agent shall make no delivery of PURCHASER Common Stock or other property pursuant to
Paragraph 2 hereof unless the Escrow Agent shall have received written authorization from the Stockholders’ Agent to make such delivery. After the expiration of such thirty (30) day period, the Escrow Agent shall make delivery of the PURCHASER Common Stock or other property in the Escrow Fund in accordance with Paragraph 2 hereof, provided that no such payment or delivery may be made if the Stockholders’ Agent shall object in a written statement to the claim made in the Officer’s Certificate, and such statement shall have been delivered to the Escrow
Agent and to PURCHASER prior to the expiration of such thirty (30) day period
(b)In case the Stockholders’ Agent shall so object in writing to any claim or claims by PURCHASER made in any Officer’s Certificate, PURCHASER shall have thirty (30) days to respond in a written statement to the objection of the Stockholders’ Agent (receipt of which objection must be acknowledged in writing by the Stockholders’ Agent). If after such thirty (30) day period there remains a dispute as to any
claims, then the Stockholders’ Agent and PURCHASER shall attempt in good faith for sixty (60) days to agree upon the rights of the respective parties with respect to each of such claims. If the Stockholders’ Agent and PURCHASER should so agree, a memorandum setting forth such agreement shall be prepared and jointly signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and shall distribute the PURCH
ASER Common Stock or other property from the Escrow Fund in accordance with the terms thereof.
(c)The Escrow Agent shall be entitled to conclusively assume (without any inquiry) that any certificate or notice required to be delivered under this Paragraph 3 to the Escrow Agent and PURCHASER or Stockholders’ Agent (as the case may be) was received by such other party concurrent with the Escrow Agent’s receipt of such certificate or notice.
4. Primo Escrow Shares.
(a)If, prior to the six (6) month anniversary of the date of the Escrow Agreement (the “Primo Period”),
PURCHASER (or any of its Affiliates) receives, directly or indirectly, from Primo Telekom or any of its
Affiliates one or more cash prepayments which collectively aggregate at least ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS ($1,750,000) with respect to the sale, license or other disposition of TARGET Products or
PURCHASER Products pursuant to the Primo Contract, (collectively, the “Primo Prepayment”), then the Escrow
Agent shall promptly release from the Escrow Fund to the holders, immediately
prior to the Effective Time,
of Outstanding TARGET Series E-3 Shares and to the Management Members (which persons are identified on Annex B)
pursuant to this Paragraph 4 each such person’s Proportionate Share of the Primo Escrow Shares and the Additional
Escrow Shares relating thereto (if any). If PURCHASER does not receive the Primo Prepayment during the
Primo Period, then the Escrow Agent shall release from the Escrow Fund to PURCHASER pursuant to this Paragraph
4 all of the Primo Escrow Shares and Additional Escrow Shares relating thereto (if any).
(b)The Escrow Agent shall release the Primo Escrow Shares and the Additional Escrow Shares related thereto (if any) in accordance with Paragraph 4(a) hereof no later than thirty (30) days after PURCHASER delivers to the Escrow Agent and the Stockholders’ Agent a written notice which states whether PURCHASER has received the Primo Prepayment during the Primo Period, which notice
PURCHASER shall deliver promptly after receipt of the Primo Prepayment (if so received) or promptly after the end of the Primo Period (if the Primo Prepayment is not received). Notwithstanding the foregoing, no release of PURCHASER Common Stock or other property may be made by the Escrow Agent to PURCHASER pursuant to this Paragraph 4 if the Stockholders’ Agent shall object in a written statement to PURCHASER‘s notice, which statement sets forth in reasonable detail the basis for such objection and such statement shall have been delivered to the Escrow Agent and to PURCHASER prior to the expiration of such thirty (30) day period. In case the Stockholders’ Agent shall so object in writing to PURCHASER‘s notice, PURCHASER shall have thirty (30) days to respond in a written statement to the objection of the Stockholders’ Agent. If after such thirty (30) day period there remains a dispute as to such notice, then the Stockholders’ Agent and PURCHASER shall
attempt in good faith for sixty (60) days to resolve such dispute. If the Stockholders’ Agent and PURCHASER should so agree, a memorandum setting forth such agreement shall be prepared and jointly signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and shall distribute the PURCHASER Common Stock or other property from the Escrow Fund in accordance with the terms thereof. If such agreement between PURCHASER and the Stockholders’ Agent can not be reached, then the matter shall be arbitrated in the manner set forth in Paragraph 5 hereof.
(c)The Escrow Agent shall be entitled to conclusively assume (without any inquiry) that any certificate or notice required to be delivered under this Paragraph 4 to the Escrow Agent and PURCHASER or Stockholders’ Agent (as the case may be) was received by such other party concurrent with the Escrow Agent’s receipt of such certificate or notice.
5. Resolution of Conflicts and Arbitration. If no agreement can be reached after good faith negotiation between PURCHASER and the Stockholders’ Agent pursuant to Paragraph 3 or Paragraph 4 hereof, as applicable, either PURCHASER or the Stockholders’ Agent may, by written notice to the other, demand arbitration of the matter in accordance with Section 12.6 of the Merger Agreement. The decision of
the arbitrator shall be binding and conclusive upon the parties to the Merger Agreement, and notwithstanding anything in this Annex A, the Escrow Agent and the parties shall be entitled to act in accordance with such decision and the Escrow Agent shall be entitled to make or withhold payments out of the Escrow Fund in accordance therewith.
6.
Stockholders’ Agent.
(a)The identity of the Stockholders’ Agent may be changed by TARGET Indemnifying Persons holding a majority in interest of the Escrow Fund from time to time upon not less than ten (10) days’ prior written notice to PURCHASER and the Escrow Agent. A duplicate copy of such notice shall be delivered to the Escrow Agent.
(a)The identity of the Stockholders’ Agent may be changed by TARGET Indemnifying Persons holding a majority in interest of the Escrow Fund from time to time upon not less than ten (10) days’ prior written notice to PURCHASER and the Escrow Agent. A duplicate copy of such notice shall be delivered to the Escrow Agent.
(b)A decision, act, consent or instruction of the Stockholders’ Agent shall constitute a decision of all TARGET Indemnifying Persons and shall be final, binding and conclusive upon each such TARGET stockholder or Management Member, and the Escrow Agent and PURCHASER may rely upon any decision, act, consent or instruction of the Stockholders’ Agent as being the decision, act, consent or instruction of each and every such TARGET stockholder or Management Member. The Escrow Agent and PURCHASER are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of the Stockholders’ Agent.
ANNEX B
STOCKHOLDERS AND MANAGEMENT MEMBERS
AND
CALCULATION OF PROPORTIONATE SHARE
AND
CALCULATION OF PROPORTIONATE SHARE
[Intentionally
Omitted.]
ANNEX C
SCHEDULE OF FEES
FOR ESCROW AGENT SERVICES
FOR ESCROW AGENT SERVICES
SunTrust Bank, as Escrow Agent
Verso Technologies, Inc.
SCHEDULE OF FEES
The annual fee of $2,500.00 for administering this Escrow Agreement is payable in advance
at the time of closing and thereafter, until termination of the escrow. The PURCHASER
appropriate parties shall be invoiced within thirty (30) days of the time the Escrow Fund
is established and if applicable, will be invoiced each year on the anniversary date of the
closing of the Escrow Agreement. In addition, to the agent’s schedule of fees a one-time
$500.00 legal review fee is payable in advance at the time of closing.
Out of pocket expenses such as, but not limited to postage, courier, overnight mail,
insurance, money wire transfer, long distance telephone charges, facsimile, stationery,
travel, legal or accounting, etc., will be billed at cost.
These fees do not include extraordinary services which will be priced according to time and
scope of duties. The fees shall be deemed earned in full upon receipt by the Escrow Agent,
and no portion shall be refundable for any reason, including without limitation,
termination of the Escrow Agreement.
It is acknowledged that the schedule of fees shown above is acceptable for the services
mutually agreed upon and the undersigned authorizes SunTrust Bank to perform said services.
