EXHIBIT 10.20
ESCROW AGREEMENT
AGREEMENT made as of May 31, 1998, by and among Xxxxxx Xxxxxx
(the "Escrow Agent"), ADE Corporation, a Massachusetts corporation
("ADE") and the undersigned stockholders (the "Stockholders") of Phase
Shift Technology, Inc., an Arizona corporation.
WHEREAS, pursuant to that certain Agreement and Plan of Merger
dated March 8, 1998 (the "Merger Agreement") by and among ADE, Theta
Acquisition Corporation, an Arizona corporation, said Phase Shift
Technology, Inc. ("PST") and the Stockholders, a copy of which
agreement has been delivered to the Escrow Agent, the Stockholders are
exchanging all of the outstanding shares of common stock, no par
value, of PST for 2,000,000 shares in the aggregate of the common
stock, $.01 par value per share, of ADE ("ADE Common Stock").
WHEREAS, under the Merger Agreement, the Stockholders have agreed
to indemnify the ADE Indemnitees (as defined therein) against certain
Losses (as defined therein) suffered or incurred by the ADE
Indemnitees; and
WHEREAS, to provide a fund as a partial source of payment of
such indemnification, a portion of the shares of ADE Common Stock to
be issued to the Stockholders under the Merger Agreement is to be held
in escrow as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual promises
of the parties hereunder, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Establishment of Escrow Fund. The Stockholders have
herewith deposited with the Escrow Agent and the Escrow Agent
acknowledges receipt of Two Hundred Thousand (200,000) shares of ADE
Common Stock (the "Escrow Shares"), representing a portion of the
shares of ADE Common Stock issued pursuant to the Merger Agreement as
more particularly set forth on Schedule 1 annexed hereto. The Escrow
Shares and all capital distributions in respect thereof (that is, all
securities, cash or other property received by the Stockholders as a
result of stock dividends splits, recapitalization, liquidation,
merger, consolidation or otherwise, paid or distributed with respect
to said shares) are hereinafter referred to collectively as the
"Escrow Fund". The Escrow Fund shall be held by the Escrow Agent in
escrow subject to the terms and conditions set forth herein.
2. Investment of Escrow Fund. The Escrow Agent shall hold the
assets comprising the Escrow Fund in the form in which they are
received except that any portion of the Escrow Fund constituting cash
shall be deposited in one or more interest-bearing or daily money
market accounts (the "Escrow Account") of a bank or other financial
institution in the name of the Escrow Agent. Any interest or
dividends paid on amounts deposited in the Escrow Account shall become
a part of the Escrow Fund and shall be held hereunder upon the same
terms as the cash or other property with respect to which such
interest and dividends shall have been paid. Notwithstanding anything
herein elsewhere to the contrary, the Escrow Agent shall, at the
request of the Stockholders' Agent (as defined below), release any or
all of the Escrow Shares for sale by one or more of the Stockholders
in a public offering covered by an effective registration statement
filed by ADE under the Securities Act of 1933, as amended, provided
that arrangement is made, in each instance, reasonably satisfactory to
ADE, to substitute the proceeds of such sale or sales in the Escrow
Fund to be held in lieu of the Escrow Shares so sold.
3. Stockholders' Agent. Each of the Stockholders hereby
appoints Xxxxx Xxxxxxxxxxx ("Stockholders' Agent") as attorney in
fact, with full power of substitution, to act upon his, her or its
behalf with respect to all matters arising under this Agreement,
including
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without limitation to assume all the responsibilities imposed upon the
Stockholders hereunder, to waive compliance by ADE with any of the
terms hereof, to compromise or settle any claim against the Escrow
Fund hereunder and to execute and deliver any instrument evidencing
the entitlement of the ADE Indemnitees to payment from the Escrow
Fund. This power of attorney shall remain in effect until all
obligations of the parties hereunder have been discharged in full.
ADE and the Escrow Agent may rely and act upon the written
instructions of the Stockholders' Agent as to all matters encompassed
by this Agreement.
4. Claims Against Escrow Fund for Indemnification. The ADE
Indemnitees may make claims against the Escrow Fund for
indemnification pursuant to the Merger Agreement by notifying the
Stockholders' Agent and the Escrow Agent of each such claim and
specifying the amount and basis thereof with reasonable particularity.
If the Stockholders' Agent disputes any such claim, he shall give
written notice of such objection to the claimant and the Escrow Agent
within ten (10) days after receipt of notice of such claim; otherwise,
such claim shall be deemed to have been acknowledged to be payable in
the full amount thereof and shall be paid forthwith to the claimant
from the Escrow Fund which charge shall be allocated ratably against
each Stockholder's interest in the Escrow Fund as set forth in
Schedule 1. For purposes of valuing indemnification amounts recovered
by the ADE Indemnitees pursuant to this Agreement from shares of ADE
Common Stock held in the Escrow Fund, such shares of ADE Common Stock
will be valued at the last sale price for a share of such stock as
reported by Nasdaq on the day prior to the Effective Date of the
Merger.
5. Disputed Claims for Indemnification. If the Stockholders'
Agent shall dispute an indemnification claim as above provided, the
Escrow Agent shall set aside a portion of the
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Escrow Fund sufficient to pay such claim in full together with
interest accrued from the date of such claim at the rate of 8% per
annum. The amount so set aside shall be held by the Escrow Agent
pending receipt of either (i) written instructions with respect
thereto signed by the claimant and the Stockholders' Agent or (ii) the
order of a court of competent jurisdiction.
6. Termination. This Agreement shall terminate on the two
hundred seventieth (270th) day following the date hereof if there are
no outstanding indemnification claims on that date (the "Preliminary
Termination Date"), otherwise when all indemnification claims made
prior to said date shall have been disposed of (the "Final Termination
Date"). On the Preliminary Termination Date, the Escrow Agent shall
distribute to the Stockholders, in the proportions set forth in
Schedule 1, all shares of ADE Common Stock then held in the Escrow
Fund but not then claimed against under Sections 4 or 5 hereof. On
the Final Termination Date, the Escrow Agent shall distribute the
remaining Escrow Fund to the Stockholders in accordance with said
Schedule 1. No fractional shares of ADE Common Stock shall be
distributed. ADE shall purchase any such fractional shares to which
any Stockholder otherwise would be entitled at the price per share
specified in the last sentence of Section 4 hereof.
7. Authority to Act. The Escrow Agent may act upon any
instrument or signature believed to be genuine and may assume that any
person purporting to give any notice or instruction hereunder,
believed to be authorized, has been duly authorized to do so. In case
of any uncertainty on the part of the Escrow Agent as to the proper
course of action, he or it may decline to act unless and until
appropriately indemnified by the party requesting such action.
8. Fees and Expenses. The Escrow Agent shall have the right to
receive a reasonable fee for his or its services hereunder and to be
reimbursed for all reasonable expenses incurred in connection with
such services. Such fees and expenses shall be paid one-half by the
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Stockholders and one-half by ADE and if they are not so paid, they
shall be paid from the Escrow Fund in which event ADE and the
Stockholders shall make an appropriate adjustment as between
themselves in order that the burden of such fees and expenses may be
borne equally. The Escrow Agent shall have no responsibility to
undertake or defend any litigation arising in connection with this
Agreement unless and until indemnified to the Escrow Agent's
reasonable satisfaction by ADE or the Stockholders or otherwise.
9. Liability of the Escrow Agent. The Escrow Agent shall have
no liability for acts or omissions hereunder except for his or its own
gross negligence or willful misconduct.
10. Resignation or Removal of Escrow Agent. The Escrow Agent
may resign at any time without cause by giving at least 30 days' prior
written notice to ADE and the Stockholders, such resignation to be
effective upon the acceptance of appointment by his successor (the
"Successor Escrow Agent"). In addition, ADE and the Stockholders may
at any time remove the Escrow Agent without cause by a notice in
writing signed by ADE and the Stockholders and delivered to the Escrow
Agent, such removal to be effective upon the acceptance of appointment
by the Successor Escrow Agent. If a Successor Escrow Agent shall not
have been appointed within 30 days after such notice of resignation or
removal, the Escrow Agent, ADE or the Stockholders may apply to any
court of competent jurisdiction to appoint a Successor Escrow Agent to
act until such time, if any, that a Successor Escrow Agent of ADE and
the Stockholders' choosing shall have accepted appointment. Any
Successor Escrow Agent shall be deemed to have accepted appointment
upon his, her or its execution and delivery of a counterpart of this
Agreement to ADE and the Stockholders.
11. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns, heirs and personal
representatives of the parties hereto and also the ADE
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Indemnitees. Notices hereunder shall be given to ADE and the
Stockholders in accordance with Section 13.4 of the Merger Agreement
and to the Escrow Agent at the following address:
Judge Xxxxxx Xxxxxx
P.O. Box 85280
Xxxxxx, XX 00000
or at such other addresses as any party may notify the other parties
of in writing and in the manner described in Section 13 of the Merger
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement or
caused the same to be executed by their duly authorized
representatives as of the date first set forth above.
ESCROW AGENT: /s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx
STOCKHOLDERS: /s/ Xxxxx Xxxxxxxxxxx
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Xxxxx Xxxxxxxxxxx
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
ADE: ADE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Vice President and Chief
Financial Officer
Schedule 1 -- Escrow Shares
Xxxxx Xxxxxxxxxxx 133,400 shares (66.7%)
Xxxxx Xxxxxx 66,600 shares (33.3%)
