ESCROW AGREEMENT
This
Escrow Agreement (this “Agreement”), dated as
of December 10, 2008 (the “Effective Date”), is
entered into by and between Centurion Credit Group Master Fund L.P., a Delaware
limited partnership (the “Lender”), Vector
Investment Fund LLC, a Delaware limited liability company (the “Borrower”), Vector
Intersect Security Acquisition Corp., a Delaware corporation (the “Company”), and
Collateral Agents, LLC, a New York limited liability company (the “Escrow
Agent”).
WITNESSETH:
WHEREAS, the Company is a
blank check company that was formed to acquire, through merger, capital stock
exchange, asset acquisition or other similar business combination, one or more
businesses, and, as such, the Company entered into a stock purchase agreement,
dated February 14, 2008, as amended, by and among the Company, Cyalume
Technologies, Inc. (“Cyalume”), Cyalume
Acquisition Corp. and GMS Acquisition Partners Holdings, LLC, the sole
stockholder of Cyalume, pursuant to which Cyalume will become a wholly owned
subsidiary of the Company (the “Acquisition”);
WHEREAS, on or before December
26, 2008, the Company will hold a special stockholders’ meeting (the “Stockholders’
Meeting”) to vote on the Acquisition, at which meeting a majority of the
shares of Common Stock must be voted to authorize the Acquisition, and Public
Stockholders owning less than 20% of the aggregate shares of Common Stock
exercise their redemption rights (the “Redemption Rights”),
as provided for in the Company’s Fourth Amended and Restated Certificate of
Incorporation;
WHEREAS, the Company, the
Borrower, an entity controlled by an affiliate of the Company, and the Lender
are parties to a Note Purchase Agreement, dated of even date herewith (as
amended, modified or supplemented, the “Purchase Agreement”),
pursuant to which the Lender will provide a loan to the Borrower in the
principal amount of up to Twelve Million Dollars (US$12,000,000) (the “Note”) to purchase
Note Shares from no more than ten (10) holders of Common Stock (the “Sellers”) on a
privately negotiated basis at a gross price (inclusive of commissions and
charges) of no greater than $8.03 per share, which shares are to be held in
escrow pursuant to this Agreement (the “Note
Shares”);
WHEREAS, in the event that a
majority of stockholders of the Company vote against the Acquisition or Public
Stockholders owning 20% or more of the Common Stock exercise their Redemption
Rights, upon the dissolution and liquidation of the Company, all funds held in
the Trust Fund, plus interest (subject to certain exclusions), will be
distributed to the Company’s Public Stockholders with the funds received by
Borrower to be held in escrow pursuant to this Agreement (the “Borrower’s Liquidation
Proceeds”);
WHEREAS, if the Acquisition is
consummated, the funds in the Trust Fund will be distributed by the Trustee to
or for the benefit of the Company and pursuant to an irrevocable letter of
instruction, a copy of which is annexed hereto as Exhibit
A (“Irrevocable
Instruction Letter”) to be given by the Company to the Trust Fund, the
initial disbursement from the Trust Fund by the Trustee will be the payment of
an amount of principal (“Buyout Price”) and
interest outstanding on the Note to Escrow Agent, with the Buyout Price
reflecting the Purchase Price of the Note Shares to be purchased by the Company
from Borrower and the balance reflecting other amounts payable by the Company
pursuant to a certain letter agreement (“Letter Agreement”), a
copy of which is annexed hereto as Exhibit
B; and
WHEREAS, the Purchase
Agreement contemplates the execution and delivery of this Agreement at the
closing of the transactions contemplated by the Purchase Agreement.
Upper
case terms employed herein shall have the definitions ascribed to them in the
Purchase Agreement, Note and Stock Pledge Agreement, as
appropriate.
NOW THEREFORE, in
consideration of the foregoing and of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Escrow
Agent.
The
Lender and the Borrower hereby appoint Collateral Agents, LLC as escrow agent
for the purposes set forth herein, and Collateral Agents, LLC accepts such
appointment under the terms and conditions set forth in this
Agreement.
2. Deposit of Borrower’s
Liquidation Proceeds and Note Shares.
Upon
Borrower’s delivery to Escrow Agent and Lender of a Drawing Notice describing
the details of a sale of Note Shares by a Public Stockholder to Borrower,
including the identity of the seller, the amount of Note Shares to be purchased,
the per share price and the aggregate gross purchase price of such
shares. Lender agrees to deposit such gross purchase price amount
into the Escrow Agent’s stock trading account maintained at Xxxxxx Xxxxxxx LLC
(“Broker”)
identified on Exhibit C
hereto (“Escrow Agent
Trading Account”) pursuant to the wire transfer instructions set forth on
Schedule C
hereto. Upon receipt of such funds in the Escrow Agent Trading
Account, Borrower will instruct Broker to purchase the Note Shares described in
the Drawing Notice, payment of which will be made with the funds deposited by
Lender in the Escrow Agent Trading Account. In the event the Escrow
Agent Trading Account is not credited with such shares in Escrow Agent’s name on
or before the Business Day following the deposit of the funds into the Escrow
Agent Trading Account, the Escrow Agent is instructed to and will promptly
return to Lender the amount of funds corresponding to the amount of Note Shares
not purchased. All funds to be delivered to the Lender will be sent
by wire transfer to the Lender’s account identified on Exhibit D.
3. Release of Escrow
Amount.
(a) In
the event the Acquisition is not approved and the Trust Fund is required to be
distributed to the Public Stockholders, then the Escrow Agent is appointed
attorney-in-fact on behalf of Borrower and instructed to promptly take all
action necessary to obtain Borrower’s Liquidation Proceeds, release the Note
Shares as appropriate in order to obtain such Borrower’s Liquidation Proceeds
and to immediately deliver such funds to Lender. The funds so
released to Lender will be credited against the Obligations.
(b) In
the event the Acquisition is consummated and the Trustee delivers the Buyout
Price to the Escrow Agent, the Escrow Agent is instructed to immediately deliver
such funds to Lender and thereafter deliver the corresponding Note Shares as the
Company directs. The funds so released to Lender will be credited
against the Obligations.
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
(“Joint
Instructions”) signed by the Borrower and Lender it shall deliver the
Escrow Amount in accordance with the terms of the Joint
Instructions.
(d) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a “Court Order”), the
Escrow Agent shall deliver the Escrow Amount in accordance with the Court
Order. Any Court Order shall be accompanied by an opinion of counsel
for the party presenting the Court Order to the Escrow Agent (which opinion
shall be satisfactory to the Escrow Agent) to the effect that the court issuing
the Court Order has competent jurisdiction and that the Court Order is final and
non-appealable.
4. Rights of the Borrower and
the Lender in Note Shares.
(a) Until
the release of the Borrower’s Liquidation Proceeds or the Note Shares (the
“Escrow
Amount”) pursuant to Section 3 and except as herein provided, or in the
Stock Pledge Agreement, the Borrower shall retain all of its rights as a
stockholder of the Company, including, without limitation, the right to vote
such shares. Borrower represents to Lender that Borrower will vote
such shares in favor of liquidation of the Company and distribution of the Trust
Fund to Public Shareholders in the event the Acquisition is not approved by the
Company’s Stockholders on or before December 26, 2008.
(b) Until
the release of the release of the Escrow Amount pursuant to Section 3, all
dividends or distributions of any kind payable in cash, stock or other non-cash
property with respect to the Note Shares shall be paid and/or delivered to the
Escrow Agent to hold in accordance with the terms hereof. As used herein, the
term “Note Shares” shall be deemed to include any such dividends or
distributions distributed thereon, if any.
(c) Except
as set forth in Section 3, no redemption, sale, transfer or other disposition
may be made of any or all of the Note Shares. Until the release of the Escrow
Amount pursuant to Section 3, the Borrower shall not pledge or grant a security
interest in the Note Shares or grant a security interest in their rights under
this Agreement.
(d) In
the event of a conflict between the terms of this Agreement and the Stock Pledge
Agreement, the conflict shall be decided as determined by Lender in Lender’s
absolute discretion.
5. Concerning the Escrow
Agent.
(a) The
Escrow Agent shall not have any liability to any of the parties to this
Agreement or to any third party arising out of its services as Escrow Agent
under this Agreement, except for damages directly resulting from the Escrow
Agent’s gross negligence or willful misconduct.
(b) Upon
any delivery or deposit with a court or successor escrow agent of the Escrow
Amount and related stock powers in accordance with this Agreement, the Escrow
Agent shall be fully and forever released and discharged from any liability for
serving as Escrow Agent and from any further obligation under this
Agreement.
(c) The
Escrow Agent shall be entitled to reasonable compensation from the Company for
all services rendered by it hereunder. The Company shall pay the
Escrow Agent’s fee of $7,500 on the Closing Date. If such fee is not
paid on the Closing Date, Escrow Agent is not required to take any action
hereunder. The Escrow Agent shall also be entitled to reimbursement from the
Company for all expenses paid or incurred by it in the administration of its
duties hereunder including, but not limited to, all counsel, advisors’ and
agents’ fees and disbursements and all taxes or other governmental charges,
charges in connection with the Escrow Agent Trading Account, wire transfer
charges, brokerage commissions and in connection with and filings made with the
SEC.
(d) The
Company, the Borrower and the Lender jointly and severally shall indemnify the
Escrow Agent and hold it harmless against any loss, liability, damage or expense
(including reasonable attorneys’ fees) that the Escrow Agent may incur as a
result of acting as escrow agent under this Agreement, except for any loss,
liability, damage or expense arising from its own gross negligence or willful
misconduct. For this purpose, the term “attorneys’ fees”
includes out-of-pocket fees payable to any counsel retained by the Escrow Agent
in connection with its services under this Agreement (other than fees incurred
in connection with the drafting and negotiation of this Agreement) and, with
respect to any matter arising under this Agreement as to which the Escrow Agent
performs legal services (other than fees incurred in connection with the
drafting and negotiation of this Agreement), its standard hourly rates and
charges then in effect.
(e) The
Escrow Agent shall be entitled to rely upon any judgment, notice, instrument or
other writing delivered to it under this Agreement without being required to
determine the authenticity of, or the correctness of any fact stated in, that
document and irrespective of any facts the Escrow Agent may know or be deemed to
know in any other capacity. The Escrow Agent may act in reliance upon
any instrument or signature believed by it to be genuine and may assume that any
person purporting to give any notice or receipt or advice or make any statement
or execute any document in connection with this Agreement has been duly
authorized to do so.
(f) The
Escrow Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement. The Escrow Agent shall not have any
obligations arising out of or be bound by the provisions of any other agreement,
written or oral, including, but not limited to, the Purchase
Agreement.
(g) All
of the Escrow Agent’s rights of indemnification provided for in this Agreement
shall survive the resignation of the Escrow Agent, its replacement by a
successor Escrow Agent, its delivery or deposit of the Escrow Amount in
accordance with this Agreement, the termination of this Agreement, and any other
event that occurs after the Effective Date.
(h) If
any dispute arises in connection with this Agreement, the Escrow Agent may at
any time commence an action in the nature of interpleader or other legal
proceedings and may deposit the Escrow Amount with the clerk of the
court.
(i) The
Escrow Agent shall have no responsibility with respect to the sufficiency of the
arrangements contemplated by this Escrow Agreement to accomplish the intentions
of the parties.
(j) The
Escrow Agent shall not be liable for any loss resulting from the failure of
Broker or of a FDIC insured banking institution holding the Borrower’s
Liquidation Proceeds.
(k) Escrow
Agent may generally engage in any kind of business with the Company, the
Borrower or the Lender or any subsidiary or affiliate thereof as if it had not
entered into this Agreement. Escrow Agent and its affiliates and their officers,
directors, employees, and agents (including legal counsel) may now or hereafter
be engaged in one or more transactions with either the Company, the Borrower or
Lender, act as trustee, agent or representative of either the Company, the
Lender or Borrower, or otherwise be engaged in other transactions with such
parties (collectively, the “Other
Activities”). Without limiting the forgoing, Escrow Agent and
its affiliates and their officers, directors, employees, and agents (including
legal counsel) shall not be responsible to account to the Company, the Lender or
Borrower for such other activities.
(l) The
Escrow Agent shall not be required to take any action hereunder involving any
expense unless the payment of such expense is made or provided for in a manner
satisfactory to Escrow Agent.
6. Representations.
Each of
the Company, the Lender, the Borrower and the Escrow Agent severally represents
and warrants as to itself or herself (as applicable) that: (a) it or
she (as applicable) has full power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement by it or her (as
applicable) was duly authorized by all necessary corporate, partnership or other
action; and (c) this Agreement is enforceable against it or her (as applicable)
in accordance with its terms.
7. Resignation; Successor
Escrow Agent.
The
Escrow Agent (and any successor escrow agent) may at any time resign as such
upon 30 days’ prior notice to each of the other parties. Upon receipt
of a notice of resignation, each of the Company, the Lender and the Borrower
shall use its best efforts to select a successor agent within 30 days, but if
within that 30-day period the Escrow Agent has not received a notice signed by
both the Company, the Lender and the Borrower appointing a successor escrow
agent and setting forth its name and address, the Escrow Agent may (but shall
not be obligated to) select on behalf of the Company, the Lender and the
Borrower a bank or trust company to act as successor escrow agent, for such
compensation as that bank or trust company customarily charges and on such terms
and conditions not inconsistent with this Agreement as that bank or trust
company reasonably requires. The fees and charges of any successor
escrow agent shall be paid by the Company, the Lender and the
Borrower. A successor escrow agent selected by the resigning Escrow
Agent may become the successor escrow agent by confirming in writing its
acceptance of the position. The Company, the Lender and the Borrower shall sign
such other documents as the successor escrow agent reasonably requests in
connection with its appointment, and each of them hereby irrevocably appoints
the Escrow Agent as its attorney-in-fact to sign all such documents in its name
and place. The Escrow Agent may deliver the Escrow Amount to the
successor escrow agent selected pursuant to this provision and, upon such
delivery, the successor escrow agent shall become the Escrow Agent for all
purposes under this Agreement and shall have all of the rights and obligations
of the Escrow Agent under this Agreement and the resigning Escrow Agent shall
have no further responsibilities or obligations under this
Agreement. If no successor Escrow Agent is named by either (i) the
Company, Borrower and Lender or (ii) the Escrow Agent, then the Escrow Agent may
apply to a court of competent jurisdiction in the State of New York for
appointment of a successor Escrow Agent, and to deposit the Escrow Amount with
the clerk of any such court.
8. Notices.
Any
notice or other communication under this Agreement shall be in writing and shall
be considered given when (i) when received, (ii) when delivered personally,
(iii) one (1) Business Day (as defined in the Note) after being delivered by
facsimile (with receipt of appropriate confirmation), (iv) one (1) Business Day
after being deposited with an overnight courier service of recognized standing,
or (v) four (4) days after being deposited in the registered mail, with postage
prepaid:
If to the
Company:
00
Xxxxxxxxxx Xxxx
Xxxxxxxxxx
Xxxx, XX 00000
Attention: Xxxxx
Xxxxx
Facsimile:
(000) 000-0000
If to the
Borrower:
Vector
Investment Fund LLC
00 Xxxxx
Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Xx. Xxxxx Xxxxx
Facsimile: (000)
000-0000
If to the
Lender:
Centurion
Credit Group Master Fund L.P.
000 Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attention:
Mr. Xxxxx Xxxx
Facsimile: (000)
000-0000
With an
additional copy by fax only to:
Grushko
& Xxxxxxx, P.C.
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
XX 00000
Attention:
Xxxxxx Xxxxxxx, Esq.
Facsimile: (000)
000-0000
If to
Escrow Agent:
Collateral
Agents, LLC
000 Xxxx
00xx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
XX 00000
Attention: General
Counsel
Facsimile: (000)
000-0000
9. Miscellaneous.
(a) All
fees and expenses of the Escrow Agent shall be borne by the Company; provided
however, in the event the Escrow Agent’s fees and expenses are not timely paid,
the Escrow Agent is authorized and instructed to draw its fees and expenses out
of the Escrow Amount, subject to a maximum of One Thousand Dollars ($1,000) in
the aggregate.
(b) If
any provision of this Agreement is determined by any court of competent
jurisdiction to be invalid or unenforceable in any jurisdiction, the remaining
provisions of this Agreement shall not be affected thereby, and the invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction. It is
understood, however, that the parties intend each provision of this Agreement to
be valid and enforceable and each of them waives all rights to object to any
provision of this Agreement.
(c) This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors and permitted assigns, and shall not be
enforceable by or inure to the benefit of any third party. Subject to
the assignment rights of the Escrow Agent set forth in Section 7 herein, no
party may assign its rights or obligations under this Agreement or any interest
in the Escrow Amount without the written consent of the other parties, and any
other purported assignment shall be void. In no event shall the
Escrow Agent be required to act upon, or be bound by, any notice, instruction,
objection or other communication given by a person other than, nor shall the
Escrow Agent be required to deliver the Escrow Amount to any person other than
the Company, the Lender or the Borrower.
(d) This
Agreement shall be governed by and construed in accordance with the law of the
State of New York applicable to agreements made and to be performed in New
York.
(e) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles that would
result in the application of the substantive laws of another
jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the
State and county of New York. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Agreement. Nothing contained herein shall be deemed or operate to preclude the
Lender from bringing suit or taking other legal action against the Borrower in
any other jurisdiction to collect on the Borrower's obligations to Lender, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other decision in favor of the Lender. This
Agreement shall be deemed an unconditional obligation of Borrower for the
payment of money and, without limitation to any other remedies of Lender, may be
enforced against Borrower by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought. For purposes of such rule
or statute, any other document or agreement to which Lender and Borrower are
parties or which Borrower delivered to Lender, which may be convenient or
necessary to determine Lender’s rights hereunder or Borrower’s obligations to
Lender are deemed a part of this Agreement, whether or not such other document
or agreement was delivered together herewith or was executed apart from this
Agreement..
(f) This
Agreement and the agreements referred to herein contains a complete statement of
the arrangements among the parties with respect to the subject matter hereof and
cannot be changed or terminated orally. Any waiver must be in
writing.
(g) This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. Facsimile copies or other electronic
transmissions of signed signature pages will be deemed binding
originals.
(h) The
section headings used herein are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. Words importing the
singular number include the plural and vice versa; words importing the masculine
gender include the feminine and neuter genders. The word “person”
includes an individual, body corporate, partnership, trustee or trust or
unincorporated association, executor, administrator or legal
representative.
(i) Borrower,
Company and Escrow Agent acknowledge that the Lender is not the beneficial owner
of the Note Shares and is not required to make any filings with the SEC in
connection therewith, and Lender is entitled to receive, as circumstances
require, the Borrower’s Liquidation Proceeds or Buyout Price.
(j) Borrower
and Company agree to apply best efforts to timely make all filings required to
be made by them with the SEC and any state authorities in connection with the
Transaction Documents. Borrower is deemed the beneficial owner of the
Note Shares and agrees to identify itself as such in filings to be made with the
SEC. The Escrow Agent may make any filings with the SEC it deems
advisable.
(k) The
Escrow Agent does not have and will not have any interest in the Escrow Amount,
but is serving only as escrow agent, having only possession
thereof. Any and all taxes or such similar expenses incurred in
connection with the Borrower’s Liquidation Proceeds or Buyout Price, or any
interest shall be the responsibility and obligation of the
Borrower. Exhibit
E is a W-9 fully executed by Borrower.
(l) The
provisions of Sections 5 through 9 shall survive the resignation of the Escrow
Agent or the termination of this Agreement.
(Signature
pages follows.)
IN WITNESS WHEREOF, the
parties to this Agreement have executed, or caused to be executed on their
behalf, this Agreement as of the date first above written.
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Borrower:
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VECTOR
INVESTMENT FUND LLC
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By:
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Name: Xxxxx
Xxxxx
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Title: Sole
Member
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Company:
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VECTOR
INTERSECT SECURITY
ACQUISITION
CORP.
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By:
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Name: Xxxxx
Xxxxx
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Title: Chief
Executive Officer
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Lender:
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CENTURION
CREDIT GROUP
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MASTER
FUND L.P.
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By:
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Name: Xxxxx
Xxxx
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Title:
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Escrow
Agent:
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COLLATERAL
AGENTS, LLC
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By:
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Name:
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Title:
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