ESCROW AGREEMENT
THIS AGREEMENT made this 19th day of December, 1997.
AMONG:
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
and RESEARCH CORPORATION TECHNOLOGIES,
INC.
(hereinafter jointly and severally called the "Security
Holders")
OF THE FIRST PART
- and -
CIBC MELLON TRUST COMPANY
(hereinafter called the "Trustee")
OF THE SECOND PART
- and -
IDS INTELLIGENT DETECTION SYSTEMS INC.
(hereinafter called the "Issuer")
OF THE THIRD PART
WHEREAS the Security Holders presently own or are about to receive additional
securities of the Issuer;
AND WHEREAS in furtherance of complying with the requirements of The
Toronto Stock Exchange (the "Exchange"), the Security Holders are desirous of
depositing in escrow certain securities of the Issuer owned and/or to be
received by them;
AND WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions hereof;
AND WHEREAS the foregoing statements of fact and recitals are made by the
parties hereto except the Trustee;
NOW THEREFORE this agreement witnesseth that in consideration of the
aforesaid agreements, and of the sum of one dollar ($1.00) now paid by the
parties hereto, each to the other (receipt of which sum the parties do hereby
respectively acknowledge each to the other) the Security Holders covenant and
agree with the Issuer and with the Trustee and the Issuer and the Trustee
covenant and agree each with the other and with the Security Holders as follows:
1. Each of the Security Holders hereby places and deposits in escrow those of
its securities of the Issuer which are represented by the certificates described
or referred to in Schedule "A" hereto (the "Deposited Securities") with the
Trustee and hereby undertakes and agrees forthwith to deliver those certificates
(including any replacement securities or certificates if and when such are
issued or allotted) to the Trustee for deposit in escrow.
2. The parties hereby agree that the securities and the beneficial ownership of
or any interest in Deposited Securities and the certificates representing them
(including any replacement certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within escrow, or
otherwise in any manner dealt with, without the express consent, order or
direction in writing of the Exchange and the Quebec Securities Commission being
first had and obtained or except:
(i) as may be required by reason of the death or bankruptcy of
any Security Holder, in which cases the Trustee shall hold the
said certificates subject to this agreement, for whatsoever
person, firm or corporation shall be legally entitled to be or
become the registered owner thereof; or
(ii) in circumstances where one or more persons or companies,
each being at arm's length (as such term is defined in the
Income Tax Act (Canada)) to the Security Holders, (the
"Offeror") makes either (A) a bona fide take-over bid by way
of circular (as contemplated by the Ontario Securities Act) or
(B) a bona fide take-over bid (as contemplated under the rules
of the Exchange) through the facilities of the Exchange, to
acquire all the common shares of the Issuer and to all holders
of common shares on the same terms, the Trustee may upon
receiving written direction from the each Security Holder
tender to any such take-over bid the share certificates
representing the number of Deposited Securities the Security
Holder desires to have deposited under such take-over bid (the
"Bid Securities") provided that the Trustee receives from the
Offeror either before or concurrently with the tendering of
the Bid Securities a certificate of an authorized signing
officer of the Offeror to the effect that the terms and
conditions of the take-over bid have been met or satisfied and
that the
Offeror is irrevocably obligated to, and will, take up and pay
for all securities deposited under the take-over bid; however,
for greater certainty, the Trustee shall take appropriate
steps to ensure that if all the terms and conditions of the
take-over bid are not met or satisfied or all the securities
duly deposited thereunder are not taken up and paid for, the
Bid Securities shall not be taken up or paid for and shall
remain in escrow subject to the terms and provisions of this
agreement.
It is understood that the Exchange and the Quebec Securities Commission
consent to release from escrow and the Trustee shall, without the need to obtain
prior consent of the parties hereto, automatically release from escrow the
Securities held by the Trustee to each Security Holder on a pro rata basis as
follows:
a. forthwith after the date which is twelve (12) months following the
date that the Exchange lists the Issuer's Common Shares (hereinafter
referred to as the "First Release Date"), 25% of the Deposited
Securities;
b. forthwith after the date which is the first, second and third
anniversaries of the First Release Date, on each such date 25% of the
Deposited Securities; and
c. any release of Deposited Securities, other than in accordance with
the provisions of this section, shall be effected only with the written
consent of the Exchange and the Quebec Securities Commission, and
otherwise upon request of the Security Holders.
3. The Security Holders hereby direct the Trustee to retain their respective
securities and the certificates (including any replacement securities or
certificates) representing the same and not to do or cause anything to be done
to release the same from escrow or to allow any transfer, hypothecation or
alienation thereof except with and as directed by the written consent, order or
direction of the Exchange and the Quebec Securities Commission or except in
accordance with Section 2 of this agreement. The Trustee hereby accepts the
responsibilities placed on it hereby and agrees to perform the same in
accordance with the terms hereof and the written consents, orders or directions
of the Exchange.
4. So long as any of the Deposited Securities remain on deposit with the Trustee
pursuant to this agreement:
a. the Security Holders shall have the right to exercise all voting
rights attached to the Deposited Securities deposited by the Security
Holders hereunder and the Trustee or its nominee shall from time to
time execute and deliver to the Security Holders or their nominees
suitable authorities or proxies to permit the Security Holders to
exercise such voting rights;
b. the Security Holders shall have the right to receive all amounts
paid or distributed in cash or in specie by way of dividend or
redemption by the Issuer or other distribution on or in respect of the
Deposited Securities deposited by the Security Holders, and upon
receipt of such amounts or property, the Trustee shall cause them (less
any tax required to be withheld) to be paid to the Security Holders;
and
c. upon receipt by the Trustee of any warrant or other document
evidencing rights to subscribe for Shares or any other security of the
Issuer convertible or exchangeable into Shares granted in respect of
the Deposited Securities, the Trustee shall give timely notice of such
receipt to the Security Holders and shall carry out their instructions
in connection with such warrant or rights.
5. The Trustee:
a. shall have no responsibility in respect of any of the Deposited
Securities deposited with it pursuant hereto, except to deal with them
in accordance with the provisions of this agreement and shall have no
liability or responsibility arising under any other agreement including
any agreement referred to in this agreement, to which the Trustee is
not a party;
b. may retain and act on the advice of legal counsel (who may be
counsel for any of the parties hereto) and advisors and shall be fully
protected in acting and relying in accordance with such advice. The
Issuer shall pay or reimburse the Trustee for reasonable expenses and
disbursements of such counsel or advisors;
c. shall not be required to defend any legal proceedings which may be
instituted against it in respect of or arising out of anything herein
contained unless requested so to do by a party hereto and indemnified
to its reasonable satisfaction against the cost and expense of such
defence;
d. shall have no responsibility for the genuineness or validity of any
securities, documents or other things deposited with it and shall be
fully protected in acting and relying in accordance with any written
instructions given to it hereunder and
reasonably believed by it to have been signed by the proper person, party or
parties; and
e. except for its acts of negligence or misconduct, shall not be liable
for any act done or step taken or omitted by it in good faith, or for
any mistake of fact or law and the Issuer and the Security Holders,
jointly and severally, agree to indemnify and save harmless the Trustee
from and against all claims, demands, actions, suits or other
proceedings by whomsoever made, prosecuted or brought and from all
loss, costs, damages and expenses in any manner based upon, occasioned
by or attributable to any act of the Trustee in the execution of its
duties hereunder. This provision shall survive the resignation or
removal of the Trustee or the termination of this agreement.
6. The Issuer hereby acknowledges the terms and conditions of this agreement and
agrees to take all reasonable steps to facilitate its performance.
The Issuer agrees to pay in advance the Trustee's fees as may be agreed
from time to time with the Issuer, together with the Trustee's expenses and
disbursements. Notwithstanding any provision contained in this agreement the
Issuer and the Security Holders agree that if any of the Trustee's fees,
expenses and disbursements remain unpaid, the Trustee may withhold the release
of any Deposited Securities until such fees, expenses and disbursements are paid
in full.
7. If the Trustee should wish to resign, it shall give at least sixty (60) days
notice to the Issuer, which may, with the written consent of the Exchange, by
writing appoint another Trustee in its place and such appointment shall be
binding on the Security Holders and the new Trustee shall assume and be bound by
the obligations of the Trustee hereunder.
Upon the effective date (the "Effective Date") of resignation, if the
Exchange has not appointed a successor Trustee, the Security Holders may appoint
a successor Trustee. Failing such appointment by the Security Holders within
thirty (30) days from the Effective Date, the Trustee shall return the
Securities to the Issuer to be held in trust for the Security Holders and the
duties and obligations of the Trustee shall cease immediately.
8. The written consent, order or direction of the Exchange as to a release from
escrow of all or part of the said securities shall terminate this agreement only
in respect to those securities so released. For greater certainty, this clause
does not apply to securities transferred within escrow.
9. If the Issuer is delisted by the Exchange, thereafter any consent, order or
direction of the Exchange herein required will, instead, require the consent,
order or direction of the Ontario Securities Commission and the Quebec
Securities Commission.
10. This agreement may be executed by facsimile and/or in several parts in the
same form and such parts as so executed shall together form one original
agreement, and such parts if more than one shall be read together and construed
as if all the signing parties hereto had executed one copy of this agreement.
11. Wherever the singular or masculine are used throughout this agreement, the
same shall be construed as being the plural or feminine or neuter where the
context so requires.
12. Any notice, direction or other communication hereunder shall be in writing
and shall be made by delivery or telecopy,
if to the Issuer addressed to:
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Attention: Chief Financial Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ addressed to:
c/o ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇ ▇▇▇▇▇▇ addressed to:
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▇.▇.▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Research Corporation Technologies, Inc. addressed to:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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U.S.A.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee addressed to:
CIBC Mellon Trust Company
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Attention: VP - Client Services
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
13. This agreement shall enure to the benefit of and be binding upon the parties
hereto, their and each of their heirs, executors, administrators, successors and
assigns. Any corporation with which the Trustee may be merged or consolidated or
amalgamated, or any corporation succeeding to the business of the Trustee shall
be successor to the Trustee hereunder without any further act on its part or of
any of the parties hereto.
H:\USERS\▇▇▇▇▇▇\IDS\EXHIBITS\ESCROWAG.WPD
14. This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.
IN WITNESS whereof the parties hereto have executed these presents the
day and year first above written.
Signed, Sealed and Delivered )
in the presence of )
) "signed"
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)
)
) "signed"
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RESEARCH CORPORATION
TECHNOLOGIES, INC.
"signed"
Per:
"signed"
Per:
CIBC MELLON TRUST COMPANY
"signed"
Per:
"signed"
Per:
IDS INTELLIGENT DETECTION
SYSTEMS INC.
"signed"
Per:
SCHEDULE "A"
Name of Beneficial Number of Certificate
Security Holder Owner Securities Number
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 2,152,973 74
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 2,152,973 75
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1,845,405 76
Research Corporation Research Corporation 1,690,333 77
Technologies, Inc. Technologies, Inc.
