ESCROW AGREEMENT
This Escrow Agreement is made and entered into as of this 10th day of July,
1997, by and among Claremont Technology Group, Inc., an Oregon corporation
("Claremont"), First Trust National Association, as escrow agent (the "Escrow
Agent"), and Michael L. Johnson in his capacity as the Shareholder
Representative (the "Shareholder Representative").
WHEREAS, Claremont, Claremont Acquisition Corporation, an Oregon
corporation and a wholly-owned subsidiary of Claremont ("Subsidiary"), OpTex,
Inc., an Ohio corporation ("OpTex"), Michael L. Johnson, Michael A. Guider, Juli
A. Shivley, Richard E. Brown, Laura Henderson and Michael Lininger are parties
to an Agreement and Plan of Merger dated as of July 10, 1997 (the "Merger
Agreement"); and
WHEREAS, the Merger Agreement provides, among other things, that the
Escrowed Merger Consideration (as defined in the Merger Agreement) shall be held
in escrow upon the terms and conditions set forth herein; and
WHEREAS, First Trust National Association is willing to serve as Escrow
Agent pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by each party hereto, it is hereby agreed by and
among Claremont, the Escrow Agent and the Shareholder Representative as follows:
1. ESCROW AMOUNT.
Promptly after the date hereof, Claremont shall deliver to the Escrow Agent
120,000 shares of Claremont common stock, no par value per share, in four (4)
certificates (the "Escrow Fund"). The certificates shall be in the names and
denominations as set forth on the attached Exhibit A. In addition, Claremont
shall deliver to the Escrow Agent a stock power endorsed in blank with respect
to each of the certificates constituting the Escrow Fund. The Escrow Fund shall
also be deemed to include any substitute certificates received by the Escrow
Agent in accordance with an Escrow Release Letter (as hereinafter defined). The
Escrow Agent shall have no responsibility to determine whether any shares or
certificate(s) so delivered are sufficient under or in compliance with the
foregoing terms, and shall be entitled to presume the genuineness of all
certificate(s) so delivered, and the authority and genuineness of any signatures
appearing thereon. Any distributions or dividends paid on the shares of stock
constituting the Escrow Fund (other than cash dividends paid, which shall be
paid to the beneficial owners of the shares) shall be held in and deemed to be a
part of the Escrow Fund. The Escrow Agent shall not be required to inquire into
the propriety of the Escrow Fund deposited hereunder nor shall the Escrow Agent
be required to investigate any other matter or arrangement among Claremont,
Subsidiary, OpTex or the Shareholder Representative, including the Merger
Agreement.
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1 - ESCROW AGREEMENT
2. DISBURSEMENT OF ESCROW FUND.
(a) The Escrow Agent shall release all or a portion of the Escrow
Fund ONLY upon receipt by the Escrow Agent of a letter (the "Escrow Release
Letter"), in the form of attached Exhibit B, executed by Claremont and the
Shareholder Representative, or upon receipt of a court order, and then ONLY in
the amount and in accordance with the instructions contained in the Escrow
Release Letter or such court order. The Escrow Agent shall submit the
certificate(s) representing the Escrow Fund to the transfer agent specified by
Claremont for exchange, as and to the extent necessary to comply with any such
Escrow Release Letter, and shall not be responsible for any delay, action or
omission by the transfer agent in that connection. The Escrow Agent shall
tender all fractional shares of Claremont common stock resulting from the
instructions in the Escrow Release Letter to Claremont who shall itself
repurchase those shares at then-current market value, and shall, upon receipt of
the purchase price from Claremont for such fractional shares, disburse their
value in cash to those individuals listed on the attached Exhibit B who would
have received the fractional share. In no event shall the Escrow Agent have any
liability for any failure or refusal by Claremont to repurchase (as provided
above), or to determine whether the price offered and paid by Claremont is the
then-current market value. Any cash held in the Escrow Fund shall likewise be
disbursed among those listed on Exhibit A, in the proportions there shown in
accordance with the instructions contained in an Escrow Release Letter or court
order. In case of any questions concerning the proper final distribution of the
Escrow Fund (as to which no claim has been made by Claremont under the Merger
Agreement (each a "Claim")), Escrow Agent shall present those questions to
Claremont and the Shareholder Representative in writing, and shall be entitled
to rely entirely upon the joint written instructions of Claremont and the
Shareholder Representative in resolving those questions. The individuals set
forth on Exhibit A shall have no direct right to enforce or dispute the terms of
this Agreement, but may only act as a group through the Shareholder
Representative.
(b) If Escrow Agent has, on or before the First Issue Date (as
hereinafter defined), received one or more written notices, in the form of
attached Exhibit C, from Claremont which (i) specify a particular Claim
Claremont has against the Escrow Fund; (ii) identify a particular number of
Claremont shares that the Escrow Agent shall retain until further notice against
the Escrow Fund, and (iii) confirm that such Claim(s) have not been withdrawn
before the First Issue Date, then Escrow Agent shall withhold from final
distribution, pending receipt of an Escrow Release Letter or court order, the
number of shares specified in all such written notices of Claim(s) together (but
not exceeding the entire remainder of the Escrow Fund). "First Issue Date"
means that day which is 60 days after the first anniversary of the date on which
the Articles of Merger are filed in accordance with the Oregon Business
Corporation Act and the Certificate of Merger is filed in accordance with the
Ohio Revised Code and accepted by the Secretary of State of Oregon and the
Secretary of State of Ohio (which date will be certified in writing to the
Escrow Agent by Claremont). In no event shall the Escrow Agent have any duty to
investigate, monitor or recalculate any information set forth in any such Claim
notice. The Escrow Agent shall have no obligation to act in accordance with the
instructions of Claremont (i) to the extent that such instructions request that
the Escrow Agent determine the fair market value or actual value of the shares
held in escrow, or to determine the amount or value of any Claim or otherwise
perform any obligation or duty other
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2 - ESCROW AGREEMENT
than those expressly set forth in this Agreement, or (ii) to the extent the
Escrow Agent has received conflicting or contradictory notices or instructions,
which are in conflict with or inconsistent with this Agreement.
(c) Except as provided in this Section 2 or as otherwise agreed upon
in writing by Claremont and the Shareholder Representative or as otherwise
provided in Section 3(f) or Section 4 hereof, the Escrow Agent shall not release
all or any portion of the Escrow Fund.
3. DUTIES AND RESPONSIBILITIES OF ESCROW AGENT.
(a) Claremont and the Shareholder Representative acknowledge and
agree that the Escrow Agent (i) shall not be responsible for any of the
agreements among other parties referred to herein, including the Merger
Agreement, and shall be obligated only for the performance of such duties as are
specifically set forth in this Agreement; (ii) shall not be obligated to take
any legal or other action hereunder which might in its judgment involve any
expense or liability unless it shall have been furnished with acceptable
indemnification; and (iii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and reasonably believed
by it to be genuine and to have been signed or presented by the proper person,
and shall have no responsibility for determining the accuracy thereof.
(b) Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken or omitted to be taken
by it or any of its directors, officers or employees hereunder except in the
case of gross negligence, willful misconduct or bad faith on the part of the
Escrow Agent (or such director, officer or employee, as the case may be).
Claremont and the Shareholder Representative covenant and agree to indemnify the
Escrow Agent and any of its employees and hold it harmless without limitation
from and against any loss, liability or expense of any nature incurred by the
Escrow Agent and any of its employees arising out of or in connection with this
Agreement or with the administration of its duties hereunder, including but not
limited to legal fees and other costs and expenses of defending or preparing to
defend against any claim or liability in the premises, or incurred in carrying
out its duties, powers or rights hereunder, unless such loss, liability or
expense shall be caused by the Escrow Agent's (or its employees') willful
misconduct, gross negligence or bad faith. In no event shall the Escrow Agent
be liable for indirect, punitive, special or consequential damages. The Escrow
Agent's duty is to the parties to the Escrow Agreement and to no other persons
whomsoever.
(c) Claremont and the Shareholder Representative agree to assume any
and all obligations imposed now or hereafter by any applicable tax law with
respect to the payment of the Escrow Fund under this Agreement, and to indemnify
and hold the Escrow Agent harmless from and against any taxes, additions for
late payment, interest, penalties and other expenses, that may be assessed
against the Escrow Agent on any such payment or other activities under this
Agreement. Claremont and the Shareholder Representative undertake to instruct
the Escrow Agent in writing with respect to the Escrow Agent's responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
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3 - ESCROW AGREEMENT
escrow agent under this Agreement. Claremont and the Shareholder Representative
agree to indemnify and hold the Escrow Agent harmless from any liability on
account of taxes, assessments or other governmental charges, including without
limitation the withholding or deduction or the failure to withhold or deduct
same, and any liability for failure to obtain proper certifications or to
properly report to governmental authorities, to which the Escrow Agent may be or
become subject in connection with or which arises out of this Agreement,
including costs and expenses (including reasonable legal fees and expenses),
interest and penalties. Notwithstanding the foregoing, no distributions will be
made unless the Escrow Agent is supplied, if necessary, with an original, signed
W-9 form or its equivalent prior to distribution.
(d) The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository or
subescrow agent employed by the Escrow Agent than any such book-entry depository
or subescrow agent has to the Escrow Agent, except to the extent that such
action or omission of any book-entry depository or subescrow agent was caused by
the Escrow Agent's own willful misconduct, gross negligence or bad faith.
(e) Claremont agrees to pay the fees of, and to reimburse all
expenses incurred by, the Escrow Agent in entering into this Agreement and
performing its normal services hereunder in accordance with the fee schedule
attached hereto as Exhibit D, which may be subject to change hereafter on an
annual basis. The Escrow Agent shall also be entitled to reimbursement on
demand for, and Claremont agrees to pay, all reasonable costs and expenses
incurred in connection with the administration of this Agreement (including
without limitation liquidation of shares as contemplated by Section 2(a)) or the
escrow created hereby which are in excess of its compensation for normal
services hereunder, including any fees or expenses incurred prior to trial, at
trial or on appeal, or in any bankruptcy or arbitration proceeding.
(f) The Escrow Agent may at any time resign as escrow agent hereunder
by giving thirty (30) days' prior written notice of resignation to Claremont and
the Shareholder Representative. Prior to the effective date of the resignation
as specified in such notice, Claremont and the Shareholder Representative will
issue to the Escrow Agent joint written instructions authorizing redelivery of
the Escrow Fund to a bank or trust company that they mutually select as
successor to the Escrow Agent hereunder. Such bank or trust company shall have
an office in Portland, Oregon, and shall have capital, surplus and undivided
profits in excess of $10,000,000. If no successor escrow agent is named by
Claremont, the Escrow Agent may apply to a court of competent jurisdiction for
appointment of a successor escrow agent. The provisions of Sections 3(b) and
3(c) shall survive any resignation by the Escrow Agent. Any entity which
becomes a successor to the Escrow Agent whether by merger, or by acquisition of
all or substantially all of the stock, assets or corporate trust business of the
Escrow Agent, shall automatically be deemed to be the Escrow Agent hereunder
without further action by any party to this Escrow Agreement.
(g) The Escrow Agent does not have and will not have any interest in
the Escrow Fund, but is serving only as escrow holder, having only possession
thereof. The Escrow Agent shall not be liable for any loss resulting from the
making or retention of any investment in accordance with this Agreement.
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4 - ESCROW AGREEMENT
(h) Except as may be required by law, the Escrow Agent will make
reasonable efforts not to disclose to any person the existence of this Agreement
or the transactions contemplated hereby, except that it shall not be a violation
or breach of this Section 3(h) if this Agreement, the existence hereof or the
transactions contemplated hereby are disclosed to any regulatory authority or
auditor, to the Escrow Agent's legal counsel (which may include outside counsel)
or similar advisors in connection with the administration hereof, to any person
in connection with the defense of any claim (whether or not a legal proceeding
is commenced) brought against the Escrow Agent, to any person who has already
become aware of such information by disclosure by one of the other parties or
because such information has otherwise become publicly available, or pursuant to
the order of any governmental, regulatory or judicial authority of competent
jurisdiction.
(i) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(j) The Escrow Agent shall have no duty or obligation to vote or take
any other similar action in connection with the shares held hereunder (whether
pursuant to a consent solicitation or meeting of shareholders or otherwise), or
otherwise to take any action to preserve, protect, enforce or exercise rights in
such shares.
4. DISPUTE RESOLUTION.
It is understood and agreed that should any dispute arise with respect to
the delivery, ownership, right of possession, and/or disposition of the Escrow
Fund, or should any claim be made upon the Escrow Fund by a third party (or if
the Escrow Agent shall receive contradictory instructions from the other parties
inconsistent with or contrary to the terms of this Agreement), the Escrow Agent
upon receipt of written notice of such dispute or claim by the parties hereto or
by a third party, is authorized and directed to retain in its possession without
liability to anyone, all or any of the Escrow Fund until such dispute shall have
been settled either by the mutual agreement of the parties involved or by a
final order, decree or judgment of a court of competent jurisdiction in the
United States of America, the time for perfection of an appeal of such order,
decree or judgment having expired. The Escrow Agent may, but shall be under no
duty whatsoever to, institute or defend any legal proceedings which relate to
the Escrow Fund. The Escrow Agent shall have the right to retain counsel,
including in-house counsel, in case it becomes involved in any disagreement,
dispute or litigation on account of this Agreement or otherwise determines that
it is necessary to consult counsel.
5. INVESTMENT OF ESCROW FUND.
The Escrow Agent shall invest any cash distributions paid on shares of
Claremont common stock held in the Escrow Fund as directed jointly in writing by
Claremont and the Shareholder Representative in any of the following:
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5 - ESCROW AGREEMENT
(i) obligations issued or guaranteed by The United States of
America or any agency or instrumentality thereof;
(ii) FDIC insured certificates of deposit of or interest bearing
accounts with national banks or corporations endowed with trust powers,
including the Escrow Agent, having capital and surplus in excess of
$100,000,000;
(iii) commercial paper that at the time of investment is rated A-1
by Standard & Poor's Corporation or Prime-1 by Moody's Investor Service, Inc.;
(iv) repurchase agreements with any bank or corporation described
in clause (ii), or international banks with domestic United States operations
having capital and surplus in excess of $100,000,000, fully secured by
obligations described in clause (i); and
(v) money market funds invested in instruments described in
clause (i) and clause (iv) above.
The Escrow Agent shall have no obligation to give investment advice, and no
liability therefor. The Escrow Agent may make any investment permitted
hereunder through its own trust or investment departments, or through any of its
subsidiaries or affiliates. The Escrow Agent may act as principal or agent in
making or disposing of any investment. Claremont acknowledges that, to the
extent regulations of the Comptroller of the Currency or of any other applicable
regulatory agency grant the right to receive brokerage confirmations of security
transactions, Claremont hereby waives receipt of such confirmations. The Escrow
Agent shall provide to Claremont and the Shareholder Representative periodic
statements of account which include all details of investments. Any losses
incurred on any investment shall be charged against the Escrow Fund. The Escrow
Agent shall be authorized to liquidate any investments as and when necessary to
make any payment or release under or pursuant to the terms of this Agreement,
and shall have no liability (other than in respect of its willful misconduct,
gross negligence or bad faith) for any loss incurred on any such liquidation
(such as any liquidation prior to maturity). Absent joint written instructions
from Claremont and the Shareholder Representative as provided above, the Escrow
Agent shall have no duty to invest, or otherwise to pay any interest on, any
funds held by it hereunder.
6. CONSENT TO JURISDICTION AND SERVICE.
Claremont and the Shareholder Representative hereby absolutely and
irrevocably consent and submit to the jurisdiction of the state courts of the
State of Oregon and of the United States District Court for the District of
Oregon in connection with any actions or proceedings brought against Claremont
by the Escrow Agent arising out of or relating to this Agreement. In any such
action or proceeding, Claremont and the Shareholder Representative hereby
absolutely and irrevocably waive personal service of any summons, complaint,
declaration or other process and hereby absolutely and irrevocably agree that
the service thereof may be made by certified or registered first-class mail
directed to Claremont and the Shareholder Representative, as the case may be, at
their respective addresses in accordance with Section 8 hereof.
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6 - ESCROW AGREEMENT
7. FORCE MAJEURE.
The Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include but
not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
8. NOTICES.
Any notices or other communications required or permitted to be given under
this Agreement shall be in writing and shall be considered to have been duly
given on the date sent by certified or registered United States mail, postage
prepaid, addressed as follows or by telecopy to the number below with a copy to
follow by first-class mail:
If to Claremont:
Claremont Technology Group, Inc.
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
Attention: Dennis M. Goett, Chief Financial Officer
With a copy to:
Claremont Technology Group, Inc.
One Elm Square
Andover, Massachusetts 01810
Attention: Elise P. Caffrey, Vice President
And to:
Ater Wynne Hewitt Dodson & Skerritt, LLP
Suite 1800
222 S.W. Columbia
Portland, OR 97201-6618
Attention: Brenda L. Meltebeke, Esquire
If to the Shareholder Representative:
Michael L. Johnson
6065 Glenbarr Place
Dublin, OH 43017
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7 - ESCROW AGREEMENT
If to the Escrow Agent:
First Trust National Association
1000 S.W. Broadway
Suite 1750
Portland, OR 97205
Attention: Lawrence J. Bell
9. BINDING EFFECT.
This Agreement shall be binding upon the respective parties hereto and
their respective successors and assigns.
10. CONSTRUCTION.
This Agreement shall be construed under and governed by the internal laws
of the State of Oregon without regard to principles of conflict of laws.
11. MODIFICATION; WAIVER.
This Agreement may not be altered, amended, modified or revoked without the
written consent of the parties hereto, except that if Michael L. Johnson dies or
resigns as the Shareholder Representative, then the Escrow Agent shall receive a
notice signed by a majority of the interests represented on Exhibit B
designating for all purposes hereunder a substitute Shareholder Representative
(the "Notice of Substitution"). The Escrow Agent shall be entitled to rely
conclusively upon any such Notice of Substitution after the resignation or death
of Michael L. Johnson without further investigation or inquiry of any kind, and
notwithstanding any notice to the contrary, and shall have no liability for
actions taken in reliance thereon. A Notice of Substitution shall contain the
name and notice address of the substitute Shareholder Representative. No
conduct shall constitute a waiver of any of the terms and conditions of this
Agreement, unless such waiver is specified in writing, and then only to the
extent so specified. A waiver of any of the terms and conditions of this
Agreement on one occasion shall not constitute a waiver of the other terms of
this Agreement, or of such terms and conditions on any other occasion.
12. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, and (ii) certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
optical disk, micro-card, miniature photographic or other similar process. The
parties agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such
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8 - ESCROW AGREEMENT
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
13. JUDGMENTS.
The Escrow Agent is hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court of competent jurisdiction. In case
the Escrow Agent obeys or complies with any such order, judgment or decree of
any such court, the Escrow Agent shall not be liable to any of the parties
hereto or to any other person, firm, corporation or entity by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
15. TERMINATION OF ESCROW.
This Agreement shall terminate and the Escrow Agent shall have no further
duties hereunder upon the distribution of all of the Escrow Fund, which
distribution shall occur no later than the tenth anniversary of the date of this
Agreement. The provisions of Sections 3(b) and 3(c) shall survive the
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
CLAREMONT TECHNOLOGY GROUP, INC.
SHAREHOLDER REPRESENTATIVE:
By:--------------------------------
Its Vice President --------------------------------
MICHAEL L. JOHNSON
ESCROW AGENT:
FIRST TRUST NATIONAL ASSOCIATION
as Escrow Agent
By:--------------------------------
Name: Lawrence J. Bell
Title: Vice President
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EXHIBIT A
Percentage Number
of Escrow of Shares
---------- ---------
Michael L. Johnson 88% 105,600
Juli A. Shivley 5% 6,000
Laura Henderson 5% 6,000
Michael Lininger 2% 2,400
Total 100% 120,000
EXHIBIT A
EXHIBIT B
[Date]
Lawrence J. Bell
Vice President
First Trust National Association
1000 S.W. Broadway
Suite 1750
Portland, Oregon 97205
RE: Escrow of shares of common stock of Claremont Technology Group, Inc.
(the "Company")
Dear Mr. Bell:
The undersigned hereby request that you release _____________ shares of the
common stock, no par value per share, of the Company, held by you as escrow
agent pursuant to that certain Escrow Agreement dated as of July ___, 1997, by
and among the Company, First Trust National Association and Michael L. Johnson
in his capacity as Shareholder Representative, in accordance with the following
instructions:
SHAREHOLDER REPRESENTATIVE CLAREMONT TECHNOLOGY GROUP, INC.
By:
- -------------------------- ----------------------------------------------
MICHAEL L. JOHNSON Its:
----------------------------------------------
EXHIBIT B
EXHIBIT C
Notice of Claim
Pursuant to Section 2(b) of the Escrow Agreement dated as of July __,
1997, by and among Claremont Technology Group, Inc. (the "Company"), OpTex, Inc.
and Michael L. Johnson, in his capacity as the Shareholder Representative, the
Company hereby provides notice of a claim(s) as follows:
1. Claim:
2. Number of shares of the common stock, no par value, of Claremont
Technology Group, Inc. to be retained in escrow until further notice:
3. Claim has not been withdrawn.
CLAREMONT TECHNOLOGY GROUP, INC.
By:
-----------------------------------------
Its:
-----------------------------------------
Date:
----------------------------------------
EXHIBIT C
EXHIBIT D
ESCROW AGENT
FEE SCHEDULE
Acceptance Fee $ 1,000.00
Annual Fee: for period up to first anniversary of execution 1,500.00
of Agreement. If the account is open beyond the first
anniversary, an additional Annual Fee will be due and
payable
Transactional Fees:
Investments $37.50
per buy, sale
or maturity
No charge for deposits or withdrawals from First American Fund money market
funds.
EXHIBIT D