EXHIBIT 2.3
CASH ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of July 27, 2004, ("Escrow
Agreement") by and among Guardian Healthcare Systems UK Limited, , a company
organized under the laws of England and Wales ("Buyer"), Guardian Technologies
International, Inc., a Delaware corporation ("Parent"), Xxxxxx Xxxxxxxx and
Xxxxx Xxxxxxxx (each a "Seller" and collectively, the "Sellers"), and The
Business Bank of Virginia, (the "Escrow Agent") as escrow agent hereunder.
WHEREAS, Buyer, Parent, and Sellers are each a party to a Stock
Purchase Agreement (the "Purchase Agreement"), dated July 27, 2004 by and
between, Buyer, Sellers, Parent and Wise Systems Ltd. ("Target") with respect to
the purchase by Buyer from Sellers of all of the issued and outstanding shares
of capital stock of Wise Systems Ltd. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Purchase Agreement; and
WHEREAS, Buyer and Sellers have agreed to place in escrow One Million
Dollars ($1,000,000US) (together with all amounts earned from the investing
thereof while held by the Escrow Agent, the "Escrowed Amount") to be held in
escrow upon the terms and conditions set forth in this Cash Escrow Agreement;
and
WHEREAS, the Escrow Agent has agreed to hold the Escrowed Amount in
escrow pursuant to the terms hereof.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Appointment of the Escrow Agent. Buyer and Sellers hereby appoint
and designate the Escrow Agent as escrow agent for the purposes set forth
herein, and the Escrow Agent hereby accepts such appointment and designation,
subject to the terms and conditions contained herein.
2. Delivery of Escrowed Amount. Simultaneously with the execution of
this Escrow Agreement, the parties have delivered or caused to be delivered to
the Escrow Agent, the Escrowed Amount to be held by the Escrow Agent pursuant to
the terms and conditions of this Escrow Agreement. The Escrow Agent hereby
acknowledges receipt of the Escrowed Amount and agrees to hold and distribute
the Escrowed Amount as provided herein. The Escrowed Funds shall be deposited to
and held in a regular interest bearing account with the interest to be paid one
-half to Buyer and one-half to Sellers at the such time as the Escrowed Amount
is distributed hereunder.
3. Escrow of Escrowed Amount. The Escrow Agent hereby agrees to hold
the Escrowed Amount in escrow pursuant to the following terms and conditions:
(a) Term of Escrow. The Escrowed Amount will be held by the Escrow
Agent until all of the Escrowed Amount is paid out pursuant to the terms hereof
(the "Term").
(b) Purpose of Escrow. The Escrow Agent shall retain the Escrowed
Amount during the Term, to secure the performance by Buyer of its obligation to
pay Sellers One Million Dollars ($1,000,000US) ninety days after closing under
the Purchase Agreement, which obligation is evidenced by Buyer's promissory note
(the "Note") of even date herewith in the principal amount of One Million
Dollars ($1,000,000US).
4. Distributions of Escrowed Amount / Indemnification.
In addition to the purpose set forth in Section 3(b) above the Escrow
Agent shall retain the Escrowed Amount during the Term, to secure the
performance by Sellers of their obligations to indemnify Buyer under Article 6
of the Purchase Agreement, in accordance with the following provisions:
(a) Buyer may from time to time make demand of the Escrow
Agent for claims of indemnification or other obligations under the Purchase
Agreement by serving upon the Escrow Agent and Sellers a written notice
demanding payment of an indemnification or other claim arising under Article 6
of the Purchase Agreement (including, without limitation, claims for
indemnification against third party claims asserted against Buyer). Such notice
shall be in the formed required by Article 6 of the Purchase Agreement. Until
such time as a final determination is made with respect to any notice delivered
by Buyer to the Escrow Agent pursuant to Article 6 of the Purchase Agreement,
the Escrowed Amount sufficient to satisfy the claim set forth in the notice will
not be released by the Escrow Agent.
(b) Upon a final determination under Article 6 of the
Purchase Agreement that the Sellers, as the Indemnifying Party, have an
indemnification obligation to Buyer with respect to any Losses (as defined in
the Purchase Agreement) incurred by Buyer, then, at the election of the Buyer,
the Escrow Agent shall pay to Buyer the amount of the claim by releasing to
Buyer such cash from the Escrowed Amount as may be equal to the amount of the
Loss. For purpose of this paragraph, "final determination" means (i) a written
notice signed by Buyer and Sellers and delivered to the Escrow Agent stating the
indemnification obligation, or (ii) the Escrow Agent receives a certified copy
of a final decree, order or decision of a court of competent jurisdiction
constituting the final determination of any dispute between Buyer and Sellers
with respect to the indemnification obligation.
(c) If Escrow Agent does not receive notice of a dispute,
then on October 27, 2004 Escrow Agent shall pay to Sellers by wire transfer One
Million Dollars ($1,000,000US) plus one-half of the interest earned on the
Escrowed amount pursuant to Section 2 hereof.
(d) Notwithstanding any provision of this Escrow Agreement
to the contrary, if at any time the Escrow Agent shall receive written
instructions signed by Buyer and Sellers with respect to delivery of all or part
of the Escrowed Amount, the Escrow Agent shall deliver such Escrowed Amount in
accordance with such written instructions.
5. Termination of Agreement. When all of the Escrowed Amount has been
distributed pursuant to the provisions of this Escrow Agreement, this Escrow
Agreement, except for the provisions of Sections 6(b) and 6(e) hereof, shall
terminate, and be of no further force or effect.
6. Escrow Agent.
(a) Duties and Responsibilities. (i) The duties and responsibilities
of the Escrow Agent hereunder shall be limited to those expressly set forth in
this Escrow Agreement, and the Escrow Agent shall not be bound in any way by any
other contract or agreement between the parties hereto, whether or not the
Escrow Agent has knowledge of any such contract or agreement or of the terms or
conditions thereof. In the event that the Escrow Agent shall be uncertain as to
any duties or responsibilities hereunder or shall receive instructions from
either of the parties hereto with respect to the Escrowed Amount which in the
Escrow Agent's belief are in conflict with any of the provisions of this Escrow
Agreement, the Escrow Agent shall be entitled to refrain from taking any action
until it shall be directed to do so in writing by both parties hereto or by
order of a court of competent jurisdiction in proceedings which the Escrow Agent
or any other party hereto shall be entitled to commence. The Escrow Agent may
act upon the advice of its counsel in taking or refraining from taking any
action hereunder and may act upon any instrument or other writing believed in
good faith to be genuine and to be signed and presented by the proper person or
persons.
(ii) The Escrow Agent shall not be responsible for the
genuineness of any signature or document presented to it pursuant to this Escrow
Agreement and may rely conclusively upon and shall be protected in acting upon
any list, advice, judicial order or decree, certificate, notice, request,
consent, statement, instruction or other instrument believed by it in good faith
to be genuine or to be signed or presented by the proper person hereunder, or
duly authorized by such person or properly made. The Escrow Agent shall not be
responsible for any of the agreements contained herein except the performance of
its duties as expressly set forth herein. The duties and obligations of the
Escrow Agent hereunder shall be governed solely by the provisions of this Escrow
Agreement and the Escrow Agent shall have no duties other than the duties
expressly imposed herein and shall not be required to take any action other than
in accordance with the terms hereof. The Escrow Agent shall not be bound by any
notice of, or demand with respect to, any waiver, modification, amendment,
termination, cancellation, rescission or restatement of this Escrow Agreement ,
unless in writing and signed by Buyer and Sellers, and, if the duties of the
Escrow Agent are affected thereby, unless Escrow Agent shall have given its
prior written consent thereto.
(b) Liability. The Escrow Agent shall not be liable to anyone for any
damage, loss or expense incurred as a result of any act or omission of the
Escrow Agent, unless such damage, loss or expense is caused by the Escrow
Agent's willful default or gross negligence. Accordingly, and without limiting
the foregoing, the Escrow Agent shall not incur any such liability with respect
to (i) any action taken or omitted under this Agreement, or (ii) any action
taken or omitted in reliance upon any instrument, including any written notice
or instruction provided for herein, not only as to its due execution by an
authorized person and as to the validity and effectiveness of such instrument,
but also as to the truth and accuracy of any information contained therein.
Should any issue arise with respect to the delivery or ownership of the Escrowed
Amount, the Escrow Agent shall have no liability to any party hereto for
retaining dominion and control over the Escrowed Amount until such issue is
resolved by (i) mutual agreement of the parties; or (ii) final order, decree or
judgment by a court of competent jurisdiction . In no event shall the Escrow
Agent be under any duty whatsoever to institute or defend such proceeding. The
Escrowed Amount will be FDIC Insured only up to $100,000.00 in accordance with
Federal Deposit Insurance Corporation rules.
(c) Disputes. In the event of a dispute between any of the parties
hereto sufficient in the discretion of the Escrow Agent to justify its
initiation of legal proceedings, or in the event that the Escrow Agent is joined
as a party to a lawsuit by virtue of the fact that it is holding the Escrowed
Amount, the Escrow Agent may, at its option, either (i) tender the Escrowed
Amount into the registry or custody of the court of competent jurisdiction
before which such lawsuit is pending, and thereupon be discharged from all
further duties and liabilities under this Escrow Agreement with respect to the
Escrowed Amount to the extent so tendered or (ii) deliver the Escrowed Amount in
accordance with the court's interlocutory orders or ultimate disposition of such
lawsuit. Any legal action initiated by the Escrow Agent may be brought in any
court as the Escrow Agent shall determine to have jurisdiction with respect to
such matter. Buyer, Parent and Sellers hereby jointly and severally indemnify
and hold the Escrow Agent harmless from and against any damage, losses or
expense suffered or incurred by the Escrow Agent in connection with the exercise
by Escrow Agent of the options authorized in this paragraph, including but not
limited to, reasonable attorneys' fees and costs and court costs at all trial
and appellate levels.
(d) Legal Action. The Escrow Agent shall have no duty to incur any
out-of-pocket expenses or to take any legal action in connection with this
Escrow Agreement or towards its enforcement, or to appear in, prosecute or
defend any action or legal proceeding that would result in or might require it
to incur any cost, expense, loss, or liability, unless and until it shall
receive confirmation and at its option, security, with respect to
indemnification in accordance with Paragraph 6(e) of this Escrow Agreement.
(e) Indemnification. Without determining or limiting any rights as
between Buyer, Parent and Sellers, which rights shall exist outside this Escrow
Agreement and not be prejudiced hereby, Buyer, Parent and Sellers jointly and
severally hereby agree to indemnify and hold harmless the Escrow Agent from and
against any and all cost, loss, damage, disbursement, liability, and expense,
including reasonable attorneys' fees and costs, which may be imposed upon or
incurred by the Escrow Agent hereunder, or in connection with the performance of
its duties hereunder, including any litigation arising out of this Escrow
Agreement, or involving the subject matter hereof, except only costs, losses,
claims, damages, disbursements, liabilities and expenses arising out of the
Escrow Agent's acts or omissions for which the Escrow Agent is adjudged
willfully malfeasant or grossly negligent by a final decree, order or judgment
of a court of competent jurisdiction from which no appeal is taken within the
applicable appeals period.
(f) Resignation. The Escrow Agent, or the Escrow Agent's successor
hereinafter appointed, may at any time resign by giving notice in writing to
Buyer and Sellers, and shall be discharged of all further duties hereunder upon
the appointment of a successor escrow agent which shall be appointed by mutual
agreement of Buyer and Sellers; provided, however, that such resigning Escrow
Agent shall remain entitled to indemnification hereunder pursuant to Paragraph
6(e) hereof. If Buyer and Sellers are unable to agree on a successor escrow
agent, either of such parties may petition a court of competent jurisdiction to
appoint one. From the date upon which the Escrow Agent sends notice of any
resignation until the acceptance by a successor escrow agent appointed as
provided herein, the Escrow Agent's sole obligation hereunder shall be to hold
the Escrowed Amount delivered to it in accordance with this Agreement. Any such
successor escrow agent shall deliver to Buyer and Sellers a written certificate
accepting such appointment hereunder, and thereupon it shall succeed to all the
rights and duties of the escrow agent hereunder and shall be entitled to receive
the benefit of the provisions set forth herein.
(g) Law Firm Escrow Agent. Buyer, Parent and Sellers each
acknowledge and agree that nothing contained herein shall be deemed to prevent
any law firm serving as the Escrow Agent, or as a successor escrow agent, from
acting as counsel for Buyer, Parent or Sellers, or any of their respective
stockholders, or any of their respective affiliates, or any other party in any
matter, including resolution of disputes and claims subject to, arising under or
related to the Purchase Agreement or this Stock Escrow Agreement, or acting as
an escrow agent on behalf of others.
7. Escrow Agent Fees and Expenses. Parent and Sellers shall pay a
one-time, lump sum fee of One Thousand dollars ($1,000.00) plus a wire transfer
fee of Fifteen dollars ($15.00) to the Escrow Agent as compensation for its
services hereunder as Escrow Agent. The above-referenced fee shall be shared
equally by Parent and Sellers and will be paid to Escrow Agent at the time of
the deposit of the Escrowed Amount.
The Escrow Agent shall also be entitled to reimbursement for its out
of pocket costs and expenses and payment of any amounts to which the Escrow
Agent is entitled under the indemnification provisions contained herein. The
costs and expenses of the Escrow Agent, including reasonable attorneys' fees and
costs, shall be borne jointly and severally by Buyer, Parent, and Sellers and
any amounts owed by Buyer, Parent or Sellers to the Escrow Agent, whether joint
or several, must be paid to the Escrow Agent before the Escrow Agent is
obligated to release the Escrowed Amount.
8. Miscellaneous.
(a) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid.
If to Buyer:
Guardian Healthcare Systems UK Limited
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, CEO
If to Parent:
Guardian Technologies International, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, CEO
In either case with a copy to:
Xxxxxxx X. XxXxxxxx, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
If to Sellers:
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxxxx Burnfoot Farm
Morebattle
Xxxxx
Roxburghshire
Scotland
TD5 8AG
With a copy to:
Xxxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxx Xxxxxxx LLP
0000 Xxxxxxxx
Xxxxxxx, XX 00000
If to Target:
Wise Systems Limited
0 Xxxx Xxxxxx
Xxxxxxxxx XX00 0XX
Xxxxxx Xxxxxxx
Attn: Director
If to the
Escrow Agent:
The Business Bank of Xxxxxxxx
Xxxxx'x Corner
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, President
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
(b) Entire Agreement. This Escrow Agreement embodies the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings between and among the parties relating to the subject matter
hereof. No statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in this Escrow Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Escrow Agreement.
(c) Amendments, Waivers and Consents. Except as otherwise expressly
provided herein, the terms and provisions of this Escrow Agreement may be
modified or amended only by written agreement executed by all parties hereto.
The terms and provisions of this Escrow Agreement may be waived, or consent for
the departure therefrom granted, only by a written document signed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent with respect to
any other terms or provisions of this Escrow Agreement, whether or not similar.
Each such waiver or consent shall be effective only in the specific instance and
for the purpose for which it was given, and shall not constitute a continuing
waiver or consent.
(e) Assignment. The rights and obligations under this Escrow
Agreement may not be assigned by any of the parties hereto without the prior
written consent of the other parties.
(f) Benefit, Binding Effect; Third Party Beneficiaries. All
statements, representations, warranties, covenants and agreements in this Escrow
Agreement shall be binding on the parties hereto and shall inure to the benefit
of the respective successors and permitted assigns of each party hereto.
(g) Governing Law. This Escrow Agreement and the rights and
obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without giving effect
to the conflict of law principles thereof.
(h) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Escrow Agreement shall be unenforceable or invalid in any
respect, then such provision shall be deemed limited to the extent that such
court deems it valid or enforceable, and as so limited shall remain in full
force and effect. In the event that such court shall deem any such provision,
partially or wholly unenforceable, the remaining provisions of this Escrow
Agreement shall nevertheless remain in full force and effect.
(i) Expenses. Except for the fees and expenses of the Escrow Agent
which shall be paid as provided in Section 7, each of the parties hereto shall
pay its own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Escrow
Agreement and the transactions contemplated hereby, whether or not the
transactions contemplated in this Escrow Agreement or in the Purchase Agreement
are consummated.
(i) Headings and Captions. The headings and captions contained in
this Escrow Agreement are for convenience only and shall not affect the meaning
or interpretation of this Escrow Agreement or of any of its terms or provisions.
(j) Interpretation. The parties hereto acknowledge and agree that
they have participated jointly in the negotiation and drafting of this Escrow
Agreement, have each been represented by counsel in such negotiation and
drafting, and that in the event an ambiguity or question of intent or
interpretation arises, this Escrow Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Escrow Agreement.
(j) Counterparts. This Escrow Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[The reminder of this page is intentionally blank. Signature Pages appear on the
next page.]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement under seal as of the day and year first above written.
BUYER
Guardian Healthcare Systems UK Limited
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx, Director
PARENT
Guardian Technologies International, Inc.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
SELLERS
/s/ Xxxxxx Xxxxxxxx
------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
------------------------
Xxxxx Xxxxxxxx
ESCROW AGENT
The Business Bank of Virginia
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx, President
------------------------------
(Print Name and Title)
