ESCROW AGREEMENT
EXECUTION
COPY
ESCROW
AGREEMENT
This
ESCROW AGREEMENT (this "Agreement") is made
as of December 19, 2008 (the "Closing Date") by and
among Vector Intersect Security Acquisition Corp., a Delaware corporation
("Parent"),
Cyalume Acquisition Corp. ("Purchaser"), GMS
Acquisition Partners Holdings, LLC ("Seller") and American
Stock Transfer & Trust Company, LLC, as escrow agent (the "Escrow
Agent").
WHEREAS
Parent, Purchaser, Cyalume Technologies, Inc. (the "Company") and Seller
are parties to that certain Stock Purchase Agreement, dated as of
February 14, 2008, as amended, (the "Stock Purchase
Agreement") relating to the acquisition by Purchaser of the entire
capital stock of the Company (each capitalized term which is used but not
otherwise defined in this Agreement has the meaning assigned to such term in the
Stock Purchase Agreement); and
WHEREAS,
the execution and delivery of this Agreement by Parent, Purchaser, Seller and
the Escrow Agent is a condition to each party's obligation to effect the Closing
pursuant to the Stock Purchase Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
whereof is hereby acknowledged, the parties hereby agree as
follows:
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1.
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Deposit of Escrowed
Shares. At the Closing, simultaneously with the
execution and delivery of this Agreement, Purchaser will deliver to the
Escrow Agent 1,505,646 shares of Parent Common Stock (the "Escrowed
Shares") pursuant to the terms and conditions of
Section 2.3(b) of the Stock Purchase Agreement, which shall be held
pursuant to this Agreement as security for any obligations of Seller and
the Members pursuant to, and in accordance with, Sections 2.4(e), 11.1 and
11.7 of the Stock Purchase Agreement. The Escrow Agent shall
not distribute or release the Escrowed Shares except in accordance with
the terms of this Agreement. All dividends or distributions in
respect of the Escrowed Shares (whether in the form of cash, securities or
other property) shall be paid promptly upon their receipt by the Escrow
Agent to Seller or, at the election of Seller, to the members of Seller
listed on Schedule 1
attached hereto (collectively, the “Members”).
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2.
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Escrow Agent's
Disbursements of the Escrowed Shares. The Escrow Agent
shall disburse the Escrowed Shares, or any portion thereof, only in
accordance with Sections 2(a),
2(b) and
2(c)
below.
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(a)
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Disbursement of the
Escrowed Shares Pursuant to Joint Instructions. The
Escrow Agent shall distribute the Escrowed Shares, or any portion thereof,
in accordance with the joint written instructions of Parent and Seller in
the form of Exhibit A
attached hereto.
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(b)
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Disbursement of
Escrowed Shares on the Initial Release Date. On the date
that is six (6) months after the Closing Date (the "Initial Release
Date"), at the written instruction of Seller, the Escrow Agent
shall disburse to Seller, or at the election of Seller to the Members, a
number of Escrowed Shares determined by dividing (i) $6,000,000 by (ii)
the Market Value. Seller's written instruction to the Escrow
Agent shall include the number of Escrowed Shares to be disbursed to
Seller or to each Member (as applicable) pursuant to this Section 2(b).
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| "Market Value" means the average per share closing price of Parent Common Stock (as quoted on the OTC Bulletin Board) for the twenty (20) consecutive trading days immediately prior to the Initial Release Date. | |
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(c)
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Disbursement of the
Escrowed Shares on the Final Release Date. On the date
that is eighteen (18) months after the Closing Date (the "Final Release
Date"), at the written instruction of Seller, the Escrow Agent
shall disburse to Seller, or at the election of Seller to the Members, all
of the remaining Escrowed Shares, unless one or more claims for
indemnification of the Parent Indemnitees in accordance with Section 11.1
of the Stock Purchase Agreement are pending as of such date, in which case
the Escrow Agent shall retain the Retained Amount and shall release the
Retained Amount only upon the joint written instruction of Seller and
Parent. If Seller has elected to disburse the Escrowed Shares
to the Members pursuant to this Section 2(c), Seller
shall include in its written instruction to the Escrow Agent the number of
Escrowed Shares to be disbursed to each
Member.
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(d)
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Taxes.
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(i)
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Seller
is required to prepare and file any and all income or other tax returns
applicable to the Escrowed Shares in accordance with applicable
laws.
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(ii)
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Neither
the Escrow Agent nor the Parent shall have any responsibility for the
preparation and/or filing of any tax or information return with respect to
the Escrowed Shares or any transaction, whether or not related to this
Agreement (or a related agreement).
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(iii)
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Each
of Purchaser, Parent and Seller shall furnish the Escrow Agent with any
forms reasonably required by the Escrow
Agent.
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3.
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Liability and Duties
of Escrow Agent. The Escrow Agent's duties and
obligations under this Agreement shall be determined solely by the express
provisions of this Agreement. The Escrow Agent shall be under
no obligation to refer to any documents other than this Agreement and the
instructions and requests delivered to the Escrow Agent
hereunder. The Escrow Agent shall not have any duties or
responsibilities except as expressly provided in this
Agreement. The Escrow Agent shall not be obligated to
recognize, and shall not have any liability or responsibility arising
under, any agreement to which the Escrow Agent is not a party, even though
reference thereto may be made herein. With respect to the
Escrow Agent's responsibility, Purchaser, Parent and Seller further agree
that:
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(a)
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The
Escrow Agent, including its officers, directors, employees and agents,
shall not be liable to anyone whomsoever by reason of any error of
judgment or for any act done or step taken or omitted by the Escrow Agent,
or for any mistake of fact or law or anything which the Escrow Agent may
do or refrain from doing in connection herewith, unless caused by or
arising out of the Escrow Agent's fraud, gross negligence, bad faith or
willful misconduct. The Escrow Agent may consult with counsel
of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by the Escrow Agent hereunder
in good faith and in accordance with the opinion of such
counsel. Purchaser, Seller and Parent shall jointly and
severally indemnify and hold the Escrow Agent and its officers, directors,
employees and agents harmless from and against any and all liability and
expense which may arise out of its acceptance of the Escrowed Shares or
any action taken or omitted by the Escrow Agent in accordance with this
Agreement, except for such liability and expenses which results from the
Escrow Agent's fraud, gross negligence, bad faith or willful misconduct.
Such indemnification shall survive the Escrow Agent's resignation or
removal, or the termination of this Agreement until extinguished by any
applicable statute of limitations.
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(b)
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Each
of Purchaser, Parent and Seller may examine the Escrowed Shares and the
records pertaining thereto at any time during normal business hours at the
Escrow Agent's office upon 24 hours prior notice and pursuant to the
reasonable regulations of the Escrow
Agent.
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(c)
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This
Agreement is a personal one, the Escrow Agent's duties hereunder being
only to Purchaser, Parent and Seller, their successors, permitted assigns,
heirs and legal representatives, and to no other person
whomsoever.
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(d)
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No
succession to, or assignment of, the interest of Purchaser, Parent or
Seller shall be binding upon the Escrow Agent unless and until written
evidence of such succession or assignment, in form reasonably satisfactory
to the Escrow Agent, has been filed with and accepted by the Escrow
Agent.
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(e)
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The
Escrow Agent may rely or act upon joint written instructions signed by
Parent and Seller or bearing a signature or signatures reasonably believed
by the Escrow Agent to be genuine of Parent and
Seller.
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(f)
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In
case any property held by the Escrow Agent shall be attached, garnished or
levied upon under a court order, or the delivery thereof shall be stayed
or enjoined by a court order, or any writ, order, judgment or decree shall
be made or entered by any court, or any order, judgment or decree shall be
made or entered by any court affecting the property deposited under this
Agreement or any part thereof, the Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs,
orders, judgments or decrees so entered or issued, whether with or without
jurisdiction, and in the event that the Escrow Agent obeys or complies
with any such writ, order, judgment or decree, the Escrow Agent shall not
be liable to Purchaser, Parent, Seller or to any other person by reason of
such compliance in connection with such litigation, and Purchaser, Seller
and Parent agree to pay to the Escrow Agent on demand its reasonable
costs, attorneys' fees, charges, disbursements and expenses in connection
with such litigation.
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(g)
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The
Escrow Agent reserves the right to resign at any time by giving written
notice of resignation to Purchaser, Parent and Seller specifying the
effective date thereof. Within thirty (30) days after receiving
such notice, Purchaser, Parent and Seller jointly shall appoint a
successor escrow agent to which the Escrow Agent shall distribute the
property then held under this Agreement, whereupon the Escrow Agent shall
upon such distribution to a successor escrow agent, be discharged of and
from any and all further obligations arising in connection with this
Agreement, except for such liability and expenses which results from the
Escrow Agent's fraud, gross negligence, bad faith or willful misconduct.
If a successor escrow agent has not been appointed or has not accepted
such appointment by the end of such thirty-day period, the Escrow Agent
may apply to a court of competent jurisdiction for the appointment of a
successor escrow agent, and Parent shall pay all of the costs, expenses
and reasonable attorneys' fees which are incurred in connection with such
proceeding. Until a successor escrow agent has accepted such
appointment and the Escrow Agent has transferred the Escrowed Shares to
such successor escrow agent, the Escrow Agent shall continue to retain and
safeguard the Escrowed Shares until receipt of (A) a joint written
instruction by Parent and Seller, or (B) an order of a court of competent
jurisdiction.
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(h)
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In
the event of any disagreement between Purchaser, Parent and Seller
resulting in conflicting claims or demands being made in connection with
the Escrowed Shares or in the event that the Escrow Agent is in doubt as
to what action it should take hereunder, the Escrow Agent shall be
entitled to interplead all of the assets held hereunder into a court of
competent jurisdiction, and thereafter be fully relieved from any and all
liability or obligation with respect to such interpleaded assets and to
retain the Escrowed Shares until the Escrow Agent shall have received (A)
an order of a court of competent jurisdiction directing delivery of the
Escrowed Shares, or (B) a joint written instruction executed by Parent and
Seller directing delivery of the Escrowed Shares, at which time the Escrow
Agent shall disburse the Escrowed Shares in accordance with such court
order or joint written instruction. The parties hereto other
than the Escrow Agent further agree to pursue any redress or recourse in
connection with such a dispute, without making the Escrow Agent a party to
same, if possible.
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(i)
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The
Escrow Agent does not have any interest (ownership or otherwise) in the
Escrowed Shares but is serving as escrow holder only and has only
possession thereof. If any payments of income from the Escrowed
Shares shall be subject to withholding regulations then in force with
respect to United States or other taxes, Parent, Purchaser and Seller
agree to provide the Escrow Agent with appropriate forms for or with
respect to such withholding.
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4.
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Compensation of Escrow
Agent. The Escrow Agent shall be entitled to fees and
reimbursement for expenses including, but not by way of limitation, the
fees and costs of attorneys or agents which it finds necessary to engage
in performance of its duties hereunder, in accordance with the fee
schedule attached hereto as Exhibit B. All
of such fees and expenses due at Closing shall be paid at the Closing by
Parent.
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5.
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Notices. All
notices, demands or other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and shall
be given when delivered personally, mailed by certified or registered
mail, return receipt requested and postage prepaid, or sent via a
nationally recognized overnight courier, or sent via facsimile to the
recipient with telephonic confirmation by the sending
party. All such notices, demands or other communications shall
be deemed to have been received: (i) in the case of sending by personal
delivery or via a nationally recognized overnight courier, upon delivery;
(ii) in the case of transmittal by facsimile, upon the completion of the
transmission by facsimile; or (iii) in the case of sending by certified or
registered mail, return receipt requested and postage prepaid, five (5)
business days following the day of deposit with the United States Postal
Service. Such notices, demands and other communications will be
sent to the address indicated
below:
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Seller:
GMS
Acquisition Partners Holdings, LLC
c/o
Columbus Nova
000 Xxxx
00xx Xxxxxx
Xxx Xxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxx
Xxxxxxx and Xxxxxx Flyer
with a
copy to (which shall not constitute notice to Seller):
Xxxxxxxx &
Xxxxx LLP
000 Xxxx
00xx Xxxxxx
Xxx Xxxx,
XX 00000-0000
Facsimile: (000)
000-0000
Attention: Xxx
Xxxxxxx
Purchaser or
Parent:
c/o
Vector Intersect Security Acquisition Corp.
00
Xxxxxxxxxx Xxxx
Xxxxxxxxxx
Xxxx, Xxx Xxxxxx
Facsimile:
(000) 000-0000
Attention: Xxxxx
Xxxxx
5
with a
copy to (which shall not constitute notice to Parent or Purchaser):
Loeb
& Loeb LLP
000 Xxxx
Xxxxxx
Xxx Xxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxxx
X. Xxxxxxxx and Xxxxxx X. Xxxxxxxxxx
Escrow
Agent:
American
Stock Transfer & Trust Company, LLC
000 Xxxxx
Xxxxx Xxxxxx, 00xx Xxxxx
XX0000
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxx
Facsimile
No.: (000) 000-0000
with a
copy to:
American
Stock Transfer & Trust Company, LLC
0000
Xxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxxx
Facsimile
No.: (000) 000-0000
Any party
may change the address to which notices are to be delivered by giving the other
parties hereto notice in the manner provided in this Section
5.
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6.
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Binding Effect;
Assignment. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted
assigns.
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7.
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Severability. If
any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term of
this Agreement, such provision shall be fully severable; this Agreement
shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this
Agreement.
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8.
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No Strict
Construction. The language used in this Agreement will
be deemed to be the language chosen by Parent, Purchaser and Seller to
express their mutual intent, and no rule of strict construction will be
applied against any person.
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9.
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Headings. The
headings used in this Agreement are for convenience of reference only and
do not constitute a part of this Agreement and will not be deemed to
limit, characterize or in any way affect any provision of this Agreement,
and all provisions of this Agreement will be enforced and construed as if
no heading had been used in this
Agreement.
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10.
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Counterparts. This
Agreement may be executed in one or more counterparts, any one of which
need not contain the signatures of more than one person, but all such
counterparts taken together will constitute one and the same
instrument.
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11.
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Governing Law.
All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of New York.
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12.
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Amendment. This
Agreement may not be amended or modified, except by a written instrument
executed by Parent, Purchaser, Seller and the Escrow
Agent.
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13.
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Termination. This
Agreement shall remain in effect unless and until (i) the Escrowed Shares
are distributed in full or (ii) terminated in a written instrument
executed by Parent, Purchaser and Seller, in which event such termination
shall take effect no later than ten (10) days after notice to the Escrow
Agent of such termination. Termination of this Agreement shall
not impair the obligations of (i) Parent and Purchaser set forth in Sections 3(a), 3(f), and 4 or (ii)
Seller set forth in Sections 3(a) and
3(f),
which such obligations shall
survive.
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14.
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Merger or
Consolidation. Any banking association or corporation
into which the Escrow Agent (or substantially all of its corporate trust
business) may be merged, converted or with which the Escrow Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, shall succeed to
all the Escrow Agent's rights, obligations and immunities hereunder
without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
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15.
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Entire
Agreement. This Agreement and the Stock Purchase
Agreement contain the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such
subject matter in any way.
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16.
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No Third-Party
Beneficiaries. Subject to the immediately following
sentence, this Agreement is for the sole benefit of the parties hereto and
their permitted successors and assigns and nothing herein expressed or
implied shall give or be construed to give any Person, other than the
parties hereto and such permitted successors and assigns, any legal or
equitable rights hereunder. Notwithstanding anything herein to
the contrary, the Parent Indemnitees and the Members are the intended
third-party beneficiaries of this
Agreement.
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17.
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Waiver
of Jury Trial. Each of the
parties hereto waives any right it may have to trial by jury in respect of
any litigation based on, arising out of, under or in connection with this
Agreement or any course of conduct, course of dealing, verbal or written
statement or action of any party
hereto.
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18.
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Jurisdiction. Each
of the parties hereto submits to the jurisdiction of any state or federal
court sitting in the State of New York in any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect
of the action or proceeding may be heard and determined in any such court
and hereby expressly submits to the personal jurisdiction and venue of
such court for the purposes hereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient
forum. Each of the parties hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit,
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to its address set forth in Section 5.
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IN
WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement on the
day and year first above written.
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PURCHASER:
CYALUME
ACQUISITION CORP.
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By:
/s/ Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
Title: CEO and
President
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PARENT:
VECTOR
INTERSECT SECURITY ACQUISITION CORP.
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By:/s/ Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
Title: CEO
and President
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SELLER:
GMS
ACQUISITION PARTNERS HOLDINGS, LLC
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By:
/s/ Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title:
CEO
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ESCROW AGENT:
AMERICAN
STOCK TRANSFER & TRUST
COMPANY,
LLC
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By:
/s/ Xxxx X.
Xxxx
Name: Xxxx X.
Xxxx
Title:
V.P.
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Signature Page
to
Schedule
1
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Name
of Member
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Cova
Small Cap Holdings LLC
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Xxxxx
Xxxxxx Pacific, L.P.
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Xxxxxxx
Xxxxxxxx
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The
Xxxxx Revocable Trust
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Xxxxx
Xxxxxx Pacific Friends Fund, LLC
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Xxx
Xxxxxxxxx
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Xxxxxx
X. Xxxxx
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The
Xxxxxxxx X. Xxxxx 2003 Irrevocable Trust
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The
Xxxxxx Xxxxxx Xxxxx 2004 Irrevocable Trust
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Xxxxx
Xxxxx
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Xxxxxxx
Schlumberger
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Xxxx
Xxxxxx Living Trust
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Xxxxxx
Xxxxxxxx
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Xxxx
Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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Xxx
XxXxxxxx
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Xxxx
Xxxxxx
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Xxxx
Challenger
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Xxxxxx
Xxxxx
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EXHIBIT
A
JOINT NOTICE OF INSTRUCTION
TO RELEASE ESCROWED SHARES
FROM ESCROW
ACCOUNT
___________,
______
American
Stock Transfer & Trust Company, LLC
0000
Xxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn: Corporate
Trust Department
Facsimile
No.: (000) 000-0000
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Re:
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Escrow
Agreement dated as of December [19], 2008 (the "Escrow
Agreement"), by and among Cyalume Acquisition Corp., Vector
Intersect Security Acquisition Corp., GMS Acquisition Partners Holdings,
LLC and American Stock Transfer & Trust Company, LLC, as escrow
agent
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Ladies
and Gentlemen:
Please be
advised that distribution equal to the number of _________ shares of Parent
Common Stock is required to be made to Purchaser. Accordingly, each
of the undersigned irrevocably instructs you to promptly distribute such number
of Escrowed Shares to Purchaser. Capitalized terms used but not
defined herein have the meanings given to them in the Escrow
Agreement.
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Very
truly yours,
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VECTOR
INTERSECT SECURITY ACQUISITION CORP.,
a
Delaware corporation
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GMS
ACQUISITION PARTNERS HOLDINGS, LLC,
a
Delaware limited liability company
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By:__________________________
Name: _______________________
Title: ________________________
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By: ______________________
Name: ____________________
Title: _____________________
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EXHIBIT
B
ESCROW AGENT
FEES
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Initial
Set-up Fee
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$1,000
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Annual
Administration Fee
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$2,500
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