INDEMNIFICATION ESCROW AGREEMENT
THIS INDEMNIFICATION ESCROW AGREEMENT ("Escrow Agreement") is entered
into effective as of May 17, 1999 ("Effective Date"), by and among (i) MOLECULAR
DEVICES CORPORATION., a corporation organized and existing under the laws of
State of Delaware, United States of America ("Purchaser"); (ii) HELGE SKARE AND
WIEL SKARE individuals and residents of Norway (collectively, the "Principal
Stockholders"); and (iii) GREATER BAY TRUST COMPANY ("Escrow Agent"), with
reference to the following facts:
RECITALS
A. The Purchaser and the Selling Stockholders have entered into a Stock
and Asset Purchase Agreement and related agreements dated as of May 17, 1999
(collectively, the "Stock and Asset Purchase Agreement"), pursuant to which the
Purchaser has agreed to purchase from the Selling Stockholders, and the Selling
Stockholders have agreed to sell, convey, transfer, assign and deliver, 314,400
shares of the capital stock of Skatron Instruments AS, a Norwegian company,
representing one hundred percent (100%) of the issued and outstanding shares of
capital stock of that company.
B. Pursuant to Section 1.2(c) of the Stock and Asset Purchase
Agreement, the Purchaser has agreed to deposit with the Escrow Agent an amount
(the "Escrow Amount"), to be held and applied by the Escrow Agent as provided in
this Escrow Agreement, equal to Six Hundred Thousand United States Dollars
(US$600,000).
C. The parties desire that the Escrow Amount shall be held in escrow by
the Escrow Agent and distributed in accordance with the provisions of this
Escrow Agreement and the Stock and Asset Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
Capitalized terms used in this Escrow Agreement without definition
shall have the respective meanings given to them in the Stock and Asset Purchase
Agreement.
2. APPOINTMENT OF THE ESCROW AGENT
The Purchaser and the Principal Stockholders hereby appoint the Escrow
Agent as escrow agent hereunder on the terms and conditions set forth herein,
and the Escrow Agent hereby accepts such appointment on such terms and
conditions.
3. ESTABLISHMENT OF ESCROW
3.1 Deposit of Escrow Amount. Pursuant to Section 1.2(c) of the Stock
and Asset Purchase Agreement, the Purchaser is depositing the Escrow Amount with
the Escrow Agent in immediately available funds. The Escrow Agent shall maintain
the Escrow Amount, as it may be reduced from time to
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time in accordance with the terms of this Agreement, in an account maintained by
it (the "Escrow Account") until disbursed by the Escrow Agent in accordance with
the terms of this Agreement.
3.2 Acceptance of Appointment. The Escrow Agent hereby agrees to act as
escrow agent and to hold, safeguard and disburse the Escrow Amount pursuant to
the terms and conditions hereof.
4. INVESTMENT OF FUNDS
Except as the Purchaser and the Principal Stockholders may from time to
time jointly instruct the Escrow Agent in writing, the Escrow Amount shall be
invested from time to time, to the extent possible, in an interest bearing
investment account approved by the Purchasers and the Principal Stockholders
with the Escrow Agent, until disbursement of the entire Escrow Amount. The
Escrow Agent is authorized to liquidate in accordance with its customary
procedures any portion of the Escrow Amount consisting of investments to provide
for payments required to be made under this Escrow Agreement. All profit derived
from any investment of any part of the Escrow Amount, together with all interest
earned on the Escrow Amount, shall be included within the definition of the term
"Escrow Amount" for purposes of this Escrow Agreement.
5. RETENTION OF ESCROW AMOUNT
The Escrow Agent shall hold the Escrow Amount in escrow to secure the
obligations of the Principal Stockholders set forth in the Stock and Asset
Purchase Agreement and shall release the Escrow Amount, and any part thereof,
only in accordance with the provisions of this Escrow Agreement.
6. NOTICE AND PAYMENT OF CLAIMS: RETENTION AND RELEASE OF AMOUNTS IN
ESCROW
6.1 Purchaser's Notice. At any time during the period commencing on the
date hereof and ending six (6) months thereafter (the "Holdback Period"), the
Purchasers may deliver a notice signed by an officer of the Purchaser (a
"Notice") to the Principal Stockholders and the Escrow Agent (i) stating that
the Principal Stockholders are obligated to make a payment to the Purchaser
pursuant to Section 5 of the Stock and Asset Purchase Agreement in respect of
any loss, damage, deficiency, liability or obligation included within the
definition of "Damages" or otherwise the subject of Section 5 of the Stock and
Asset Purchase Agreement (each, a "Damage"), and identifying which of those
Sections gives rise to the Principal Stockholders' obligation; (ii) specifying
in reasonable detail the nature, the underlying facts, and, to the extent
determinable at the time of such Notice, the dollar amount or a good faith
approximation thereof; together with the Purchaser's calculations with respect
thereto (a "Claim Amount") of any claim for indemnification (a "Claim") it may
have under Section 5 of the Stock and Asset Purchase Agreement; and (iii)
confirming that such Claim is not subject to the limitations on the Principal
Stockholders' indemnification obligations set forth in Section 5.3 of the Stock
and Asset Purchase Agreement. The Purchasers may make more than one claim with
respect to any underlying state of facts, but shall only be entitled to a single
recovery in respect of any single Damage or amount which is the subject of
Section 5 of the Stock and Asset Purchase Agreement. The Escrow Agent shall not
inquire into or consider whether a Claim complies with the requirements of the
Stock and Asset Purchase Agreement.
6.2 Principal Stockholders' Counter Notice. Within ninety (90) days of
receipt of a Notice, the Principal Stockholders may deliver to the Purchasers
and to the Escrow Agent a notice (a "Counter Notice") signed by each Principal
Stockholder delivering such Counter Notice (i) setting forth their acquiescence
to or rejection of the Claim in its totality, or of their partial acceptance of
the Claim; (ii) specifying that part of the Claim to which acquiescence is made
and that part which is rejected; (iii) as to each part of the Claim which is
rejected, specifying whether the Principal Stockholders reject their
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obligation to indemnify the Purchasers in respect thereof, whether the Principal
Stockholders accept their obligation to indemnify the Purchasers in respect
thereof but reject the amount of the Claim or both; provided, however, that if
the Principal Stockholders have waived their right to dispute their obligation
to indemnify the Purchasers in respect of any Claim under the terms of the Stock
and Asset Purchase Agreement, they shall not have the right to reject any Claim
on the basis of any such asserted waiver; and (iv) setting forth in reasonable
detail the nature of and the facts underlying their rejection of any part of the
Claim.
6.3 Accepted Claims. Any Claim or portion of any Claim which is not
disputed in a Counter Notice timely delivered by the Principal Stockholders
shall be referred to as "Accepted." Failure by the Principal Stockholders timely
to deliver a Counter Notice in response to any Notice shall be deemed to be an
acceptance of the validity of the Claim set forth in such Notice and a waiver of
any right to contest the validity or amount of such Claim, and the amount of the
entire Claim shall be deemed "Accepted."
6.4 Unresolved Claims. Any Claim or portion of a Claim which is
disputed in a Counter Notice shall be resolved in accordance with Section 7,
and, pending such resolution, shall be referred to as "Unresolved." The entire
amount of any Claim shall be deemed "Unresolved" between the date of the Notice
setting forth such Claim, and (i) the date on which a Counter Notice is
delivered in respect of such Claim, and (ii) the last date on which a Counter
Notice may be delivered in respect of such Claim under Section 6.2, whichever is
earlier.
6.5 Retention of Escrow Amount. Except as set forth in Section 6.6, the
Escrow Agent shall retain a portion of the Escrow Amount sufficient to pay the
amount of all Unresolved Claims.
6.6 Release of Escrow Amounts. The Escrow Agent shall: (i) pay to the
Purchasers, on the ninety-fifth (95th) day after receipt of any Notice, the
Accepted amount of the Claim set forth in such Notice; (ii) make such payments
to the Purchasers or the Principal Stockholders as required under Section 7; and
(iii) release to the Principal Stockholders at the termination of the Holdback
Period the Escrow Amount, if any, in excess of the aggregate amount of any
Claims which are then Unresolved.
7. UNRESOLVED CLAIMS
The Escrow Agent shall not pay any amounts in respect of any Claim or
portion thereof which is Unresolved except in accordance with the following:
7.1 Joint or Counterpart Instructions for Payment of Unresolved Claims.
If the Purchasers and the Principal Stockholders resolve their differences by
negotiation as to the portion of any Claim which is Unresolved, they shall
deliver joint or counterpart instructions to the Escrow Agent setting forth the
agreement between them. The Escrow Agent shall be entitled to rely on any such
joint or counterpart instructions and shall promptly pay amounts to the
Purchasers or to the Principal Stockholders as set forth in the joint or
counterpart instructions.
7.2 Arbitral or Judicial Decision with Respect to Unresolved Claims. If
the Purchasers and the Principal Stockholders are not able to resolve their
differences as to the portion of any Claim which is Unresolved within fifteen
(15) days of receipt by the Purchasers of the Counter Notice identifying such
Unresolved Claim amount, either of the Purchasers or the Principal Stockholders
may initiate arbitration to resolve those differences under Section 13. The
Escrow Agent shall pay amounts in respect of any such Unresolved Claim only upon
receipt of (i) joint or counterpart instructions setting forth an agreement
between the Purchasers and the Principal Stockholders with respect to the
payment of such Unresolved Claim or part thereof, or (ii) an arbitration
decision or a final non-appealable judgment or court order presented by the
Purchasers or the Principal Stockholders stating whether the Principal
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Stockholders have an obligation to indemnify the Purchasers and specifying the
dollar amount of such indemnity obligation. The Escrow Agent shall promptly
provide written notice to the non-presenting party of such arbitration decision
or court judgment or order upon receipt thereof, and five (5) Business Days
thereafter shall pay amounts to the Purchasers or to the Principal Stockholders
as set forth in the arbitration decision or final non-appealable judgment or
court order, unless otherwise enjoined from so doing. Any arbitration decision
or court order shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to the Escrow Agent to the effect that the
arbitration decision or order is final and non-appealable. The Escrow Agent
shall act on such arbitration decision or court order and legal opinion as
provided herein without further question.
8. TERMINATION OF ESCROW
This Escrow Agreement shall terminate when the entire Escrow Amount has
been distributed in accordance with the provisions of this Escrow Agreement.
9. DUTIES OF THE ESCROW AGENT
9.1 The Escrow Agent shall not be under any duty to give the Escrow
Amount held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
9.2 The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
as to 50% each indemnify and hold harmless the Escrow Agent (and any successor
to the Escrow Agent) from and against any and all losses, liabilities, claims,
actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Agreement. Without
limiting the foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it hereunder
in good faith, in accordance with the terms hereof, including, without
limitation, any liability for any delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Amount, or any loss of interest incident to any such delays.
9.3 The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. The
Escrow Agent may conclusively presume that the undersigned representative of any
party hereto which is an entity other than a natural person has full power and
authority to instruct the Escrow Agent on behalf of that party unless written
notice to the contrary is delivered to the Escrow Agent.
9.4 The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to t. his Escrow Agreement and shall not be
liable for any action taken or omitted by it in good faith in accordance with
such advice.
9.5 The Escrow Agent does not have any interest in the Escrow Amount
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from the Escrow Amount shall be
subject to withholding regulations then in force with respect to United States
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Taxes. The parties hereto will provide the Escrow Agent with appropriate
Internal Revenue Service Forms W-9 for tax identification number certification
or Forms W-8 for foreign status certification. This Section 9.5 and Section 9.2
shall survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
9.6 The Escrow Agent (and any successor to the Escrow Agent) may at any
time resign as such by delivering the Escrow Amount to any successor to the
Escrow Agent jointly designated by the other parties hereto in writing, or to
any court, whereupon the Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Agreement. The
resignation of the Escrow Agent will take effect on the earlier of (i) the
appointment of a successor escrow agent (which may include a court of law) or
(ii) the day which is sixty (60) days after the date of delivery of its written
notice of resignation to the other parties hereto. If at that time the Escrow
Agent has not received a designation of a successor escrow agent, the Escrow
Agent's sole responsibility after that time shall be to retain and safeguard the
Escrow Amount until receipt of a designation of successor escrow agent or a
joint written disposition instruction by the other parties hereto or a final
non-appealable order of a court of law.
9.7 In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Amount, or any portion thereof, 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 retain such portion of the Escrow Amount corresponding to such
adverse claims or as to which it is in doubt as to what action it should take
(the "Amount in Question") until it has received (i) joint or counterpart
instructions setting forth an agreement between the Purchasers and the Principal
Stockholders with respect to the disposition of the Amount in Question, or (ii)
an arbitration decision or a final non-appealable judgment or court order
presented by the Purchasers or the Principal Stockholders setting forth the
disposition of the Amount in Question. The Escrow Agent shall promptly provide
written notice to the non-presenting party of any arbitration decision or final
non-appealable judgment or court order upon receipt thereof, and five (5)
Business Days thereafter shall pay amounts to the Purchasers or to the Principal
Stockholders as set forth in the arbitration decision or final non-appealable
judgment or court order, unless otherwise enjoined from so doing. Any
arbitration decision or court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that the arbitration decision or order is final and non-appealable. The Escrow
Agent shall act on such arbitration decision or court order and legal opinion as
provided herein without further question.
9.8 The Escrow Agent's fees and expenses for acting as the Escrow Agent
hereunder are set forth in Schedule A hereto. Except as may be provided
elsewhere in this Escrow Agreement, the Escrow Agent's fees and expenses shall
be shared equally by the Purchasers and the Principal Stockholders.
9.9 Except as required by law, no printed or other matter in any
language (including, without limitation, prospectuses, notices, reports and
promotional material) that mentions the Escrow Agent's name or the rights,
powers, or duties of the Escrow Agent shall be issued by the other parties
hereto or on such parties' behalf unless the Escrow Agent shall first have given
its specific written consent thereto.
10. LIMITED RESPONSIBILITY
This Escrow Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Agent.
The Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Escrow Agreement.
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11. OWNERSHIP FOR TAX PURPOSES
The Principal Stockholders and the Purchasers agree that, for purposes
of any Taxes based on income, the Principal Stockholders shall be treated as the
owner of the Escrow Amount, and that the Principal Stockholders will report all
income, if any, that is earned on, or derived from, the Escrow Amount as income
in the taxable year or years in which such income is properly includible and pay
any taxes attributable thereto.
12. NOTICES
All notices, requests, demands or other communications provided herein
shall be made in writing and shall be deemed to have been duly delivered (i) if
delivered personally overnight, including by reputable international courier
service five (5) Business Days after delivery to the courier or, if earlier,
upon delivery against a signed receipt therefor or (ii) upon transmission by
facsimile or telecopier, which transmission is confirmed, in either case
addressed to the party to be notified at the address set forth below or at such
other address as such party shall have notified the other Party hereto, by
notice given in conformity with this Section 12.
if to the Purchasers: Molecular Devices Corporation
1311 Orleans Drive
Sunnyvale, CA 94089
Attn: President
Facsimile: 408-747-3601
with required copies to: Cooley Godward llp
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Thomas M. Shoesmith
Facsimile: 650-857-0663
if to the Principal Stockholders: Helge Skare
Weil Skare
Tord Pedersens gt 38
3014 Drammen
Norway
with required copies to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94306
Attn: Roger E. George
Facsimile: 650-845-5000
if to the Escrow Agent: Greater Bay Trust Company
P.O. Box 1740
Palo Alto, CA 94302
Attn: Anna Paiva
Fax: 650-473-1326
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13. DISPUTE RESOLUTION AND ARBITRATION
Any dispute, controversy or claim between the Purchaser and the
Principal Stockholders arising out of or relating to this Escrow Agreement or
the performance, breach or termination thereof will be settled in accordance
with the process described in Sections 6.3 and 6.4 of the Stock and Asset
Purchase Agreement.
14. JURISDICTION; SERVICE OF PROCESS
This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of California (without giving
effect to principles of conflicts of laws). Subject to the provisions of Section
13, any dispute between the parties connected with this Agreement shall be
submitted to the sole jurisdiction of the courts of the State of California,
County of Santa Clara, or, if it has or can acquire jurisdiction, in the United
States District Court for the Northern District of California. Each of the
parties consent to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
15. COUNTERPARTS
This Escrow Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original and all of, which, when taken
together, will be deemed to constitute one and the same.
16. SECTION HEADINGS
The headings of sections in this Escrow Agreement are provided for
convenience only and will not affect its construction or interpretation.
17. WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Escrow Agreement or the
documents referred to in this Escrow Agreement will operate as a waiver of, such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (i) no claim or right arising
out of this Escrow Agreement or the documents referred to in this Escrow
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of, the claim or right unless in writing signed by the other party;
(ii) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (iii) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of, the party giving such notice or demand to take further action without
notice or demand as provided in this Escrow Agreement or the documents referred
to in this Escrow Agreement.
18. EXCLUSIVE AGREEMENT AND MODIFICATION; NONASSIGNABILITY
This Escrow Agreement, together with the Stock and Asset Purchase
Agreement, supersedes all prior agreements among the parties with respect to the
subject matter thereof and those agreements constitute (along with the documents
referred to therein), a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Escrow
Agreement may not
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be amended except by a written agreement executed by the Purchasers, the
Principal Stockholders and the Escrow Agent. This Escrow Agreement may not be
assigned by any of the Purchasers or the Principal Stockholders, except by will,
the laws of intestacy, or by other operation of law.
19. SUCCESSORS AND ASSIGNS
The provisions of this Escrow Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
MOLECULAR DEVICES CORPORATION: THE PRINCIPAL STOCKHOLDERS:
By: /s/ Joseph D. Keegan By: /s/Helge Skare
Its: Chief Executive Officer -------------------------------
Helge Skare
By: /s/Wiel Skare
-------------------------------
Wiel Skare
ESCROW AGENT:
Greater Bay Trust Co.
By: /s/Anna Paiva
------------------------------------
Its: Vice President and Trust Officer
[SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT]
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SCHEDULE "A"
Schedule of Fees of Escrow Agent
Annual Fee: $2,500.00
Fee per disbursement: $ 25.00
Note: additional fees may be required in the event of unusual occurrences or
requests for assistance on the part of Greater Bay Trust Company.
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