EXHIBIT 2.4
EXECUTION COPY
THIS ESCROW AGREEMENT is dated as of February 13, 2004, (this escrow
agreement, including all annexes in each case, as amended from time to time, in
accordance with the terms hereof, the "Escrow Agreement"), among IONICS,
INCORPORATED, a Massachusetts corporation (the "Buyer"), the entities and
persons listed on Annex A hereto (each a "Seller" and collectively, the
"Sellers"), Lyman B. Dickerson and Douglas G. Dickerson (each a "Seller's
Representative" and collectively, the "Sellers' Representatives") and Citibank,
N.A., a national bank organized under the laws of the United States of America ,
and acting as escrow agent (the "Escrow Agent").
Buyer and Sellers entered into a Purchase Agreement dated as of
November 18, 2003 (the "Purchase Agreement"), pursuant to which Buyer has agreed
to purchase from Sellers and Sellers have agreed to sell to Buyer their
interests in Ecolochem, Inc., a Virginia corporation, Ecolochem International,
Inc., a Delaware corporation, Ecolochem S.A.R.L., a societe a responsabilite
limitee organized under the laws of France, and Moson Holdings, LLC, a Virginia
limited liability company. In accordance with Section 1.06 of the Purchase
Agreement, each of the Sellers appointed Sellers' Representatives to act on
their behalf under the terms and conditions of this Escrow Agreement.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given them in the Purchase Agreement. It is expressly
understood and agreed by the parties hereto that all references herein to the
Purchase Agreement are for the convenience of the parties hereto other than the
Escrow Agent and the Escrow Agent shall have no obligation or duties with
respect thereto.
In accordance with Section 1.03(a)(vi) of the Purchase Agreement, Buyer
is hereby depositing with the Escrow Agent the following:
(i) $20,000,000 in cash (the "Cash Amount"), which shall be allocated
among sub-accounts in the name of each Seller (each such sub-account, a
"Sub-Account") in the manner and amount set forth on Annex A hereto (such amount
of cash placed in a Seller's Sub-Account, together with any Interest (as defined
in Section 3) attributable thereto, less any amounts (A) distributed pursuant to
any Indemnification Claim or Judicial Claim (as such terms are defined below),
or (B) available to be distributed pursuant to any pending Indemnification Claim
(whether or not contested) or Judicial Claim, in each case in accordance with
the terms and conditions of this Escrow Agreement, a Seller's "Available Cash
Amount"), to be held and disposed of as herein provided; and
(ii) 490,566 shares of Common Stock of Ionics, Incorporated accompanied
by duly signed and signature-guaranteed attached stock transfer powers in blank
(the "Stock Amount"), which shares of Common Stock shall be allocated among the
Sub-Accounts in the manner and amount set forth on Annex B hereto (such amount
of shares of Common Stock placed in a Seller's Sub-Account, less any shares of
Common Stock (A) distributed pursuant to any Indemnification Claim or Judicial
Claim, or (B) available to be distributed pursuant to any pending
Indemnification Claim (whether or not contested) or Judicial Claim, in each case
in accordance with the terms and conditions of this Escrow Agreement, a Seller's
"Available Stock Amount" and, together with a Seller's Available Cash Amount,
such Seller's "Seller's Escrowed
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Funds"), to be held and disposed of as herein provided. The aggregate of all
Sellers' Available Cash Amounts and Available Stock Amounts are referred to
herein as the "Escrowed Funds."
SECTION 1. Deposit of the Escrowed Funds. At the Closing, Buyer shall,
in the case of the Cash Amount, deliver to the Escrow Agent by wire transfer of
immediately available funds and, in the case of the Stock Amount, deliver
certificates representing the Common Stock in the amounts and registered in the
name of the Sellers, each as set forth on Annex B (as well as with the
corresponding signed and signature-guaranteed stock powers (which shall be
delivered under separate cover)), to the Escrow Agent and the Escrow Agent shall
promptly, after receipt thereof, acknowledge receipt in writing of, the Cash
Amount and Stock Amount. The Escrow Agent shall allocate the Cash Amount and the
Stock Amount among the Sub-Accounts in the manner and amount set forth on Annex
A and Annex B hereto. Each Seller's Available Cash Amount shall be deposited
initially into the Goldman Sachs FS Prime Obligations Fund Administration Class
(463), and thereafter shall be invested and liquidated in accordance with
Section 3. The Escrow Agent has no obligation to solicit the deposit of any
Stock Amount or Cash Amount.
SECTION 2. Disposition of Escrowed Funds.
(a) Each of Buyer and Sellers' Representatives shall only make claims
for payment out of a Seller's Escrowed Funds, and the Escrow Agent shall only
make payment out of a Seller's Escrowed Funds, in accordance with the following
procedures and under the following circumstances:
(i) In the event that Buyer determines, from time to time, that a
Buyer Indemnified Party (as defined in Section 8(b)) is entitled to
indemnification pursuant to Sections 10.01, 10.02 or 10.03 of the Purchase
Agreement, Buyer shall, if such indemnification is pursuant to Section 10.03 of
the Purchase Agreement (other than Section 10.03(a)(iii) or (iv) of the Purchase
Agreement), and may, if such indemnification is pursuant to Sections 10.01,
10.02 or 10.03(a)(iii) or (iv) of the Purchase Agreement, deliver simultaneously
to the Escrow Agent and Sellers' Representatives a written notice signed by
Buyer (A) certifying that a Buyer Indemnified Party is entitled to
indemnification pursuant to the Purchase Agreement, (B) indicating the amount of
indemnification to which such Buyer Indemnified Party is entitled, (C)
indicating the Sub-Accounts, and the allocation thereof, from which payment
should be made, (D) indicating the account of such Buyer Indemnified Party to
which payment shall be made and (E) directing the Escrow Agent to deliver
payment to the Buyer Indemnified Party from the applicable Seller's Escrowed
Funds (an "Indemnification Claim" (and shall contain a statement to that
effect)). The notice of claim shall only be based on a good faith belief that
such claim is valid and shall provide reasonable detail as to the nature of such
claim and the facts that serve as a basis therefor. All Indemnification Claims
shall be allocated to each Sub-Account in the amounts indicated in subsection
(C). Each Indemnification Claim shall be allocated pro rata among all of the
Sub-Accounts, unless the Indemnification Claim arises out of Section 10.02 of
the Purchase Agreement, in which case the Indemnification Claim shall be
allocated to the Sub-Account or pro rata among the Sub-Accounts of the person or
persons whose breach of the Purchase Agreement gave rise to the Indemnification
Claim. In no event shall the Escrow Agent
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remove from a Sub-Account any amounts in excess of the amount allocated thereto
pursuant to the previous sentence.
(ii)
(A) Upon the receipt by the Escrow Agent of an
Indemnification Claim (the "Claim Receipt Date"), the Escrow Agent
shall promptly thereafter deliver to Buyer from the Escrowed Funds
the amount set forth in such Indemnification Claim, unless:
(1) prior to the expiration of 40 days after the Claim
Receipt Date, the Escrow Agent shall have received written notice
from the Sellers' Representatives, a copy of which shall be
forwarded by the Sellers' Representatives to the Buyer
simultaneously with the forwarding thereof to the Escrow Agent,
that Sellers' Representatives elect to contest all or a portion of
such Indemnification Claim; or
(2) prior to the expiration of 40 days after the Claim
Receipt Date, the Escrow Agent shall have received written notice
from the Buyer that such Indemnification Claim has been satisfied
other than through operation of this Escrow Agreement (at which
point the amounts identified in the Indemnification Claim will no
longer be subtracted from the amount of the Cash Account in
calculating the Available Cash Amount).
(B) If Sellers' Representatives have filed with the Escrow
Agent a written notification pursuant to Section 2(a)(ii)(A)(1)
hereof, then the Escrow Agent shall thereafter deliver to Buyer (1)
any uncontested amount set forth in such Indemnification Claim from
the Escrowed Funds in accordance with the provisions of Section
2(a)(iii) and Section 2(a)(iv), and (2) the contested amount set
forth in such Indemnification Claim from the Escrowed Funds, in
each case only in accordance with either: (i) joint written
instructions signed by Buyer and Sellers' Representatives and
received by the Escrow Agent; or (ii) the provisions of Section
2(a)(vi) below.
(iii) Subject to the provisions of Sections 2(a)(i) and 2(a)(ii),
the Escrow Agent shall make payment in respect of an Indemnification Claim from
the applicable Seller's Escrowed Funds in the following amounts and in the
following order of priority:
(A) first, from such Seller's Available Cash Amount, cash in
an amount equal to the lesser of (x) the amount allocated to such
Seller's Sub-Account in accordance with the last two sentences of
Section 2(a)(i) and (y) such Seller's Available Cash Amount; and
(B) second, if and to the extent such Indemnification Claim
is not satisfied in its entirety by the payment out of such
Seller's Available Cash Amount pursuant to clause (A) of this
Section 2(a)(iii), from such Seller's Available Stock Amount, that
number of shares of Common Stock having a value (based on the
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Agreed Price, as defined below) equal to the lesser of (x) the
amount allocated to such Seller's Sub-Account in accordance with
the last two sentences of Section 2(a)(i) less any amount paid out
of such Seller's Available Cash Amount pursuant to clause (A) of
Section 2(a)(iii), and (y) the value of such Seller's Available
Stock Amount (based on the Agreed Price). For the avoidance of
doubt, the Escrow Agent shall not be authorized to make payment to
Buyer from a Seller's Available Stock Amount until no funds remain
available in a Seller's Available Cash Amount.
(iv) Payments made by the Escrow Agent in cash from a Seller's
Available Cash Amount pursuant to Section 2(a)(iii)(A) or Section 2(a)(vi) shall
be made in the form of a wire transfer to the account of the Buyer Indemnified
Party specified in the Indemnification Claim, or the Enforcing Party (as defined
below) specified in the Judicial Claim (as defined below), to which such payment
relates. Payments made by the Escrow Agent in stock from a Seller's Available
Stock Amount pursuant to Section 2(a)(iii)(B) or Section 2(a)(vi) shall be made
by (A) Buyer's receipt of the applicable deposited certificates for the
Available Stock Amount, (B) Buyer's presenting to the Escrow Agent replacement
certificates for each Seller's remaining Available Stock Amount and (C) Buyer's
stock transfer to the account of, and in the name of, the Buyer Indemnified
Party specified in the Indemnification Claim, or the Enforcing Party specified
in the Judicial Claim, to which such payment relates.
(v) The shares of Common Stock placed in escrow hereunder shall,
for all purposes of this Escrow Agreement, be valued at $26.50 per share (the
"Agreed Price"). For the avoidance of doubt, to the extent a claim is made
against a Seller's Available Stock Amount, the amount of shares to be withdrawn
from such Available Stock Amount by any Buyer Indemnified Party will be
determined on the basis that one share of Common Stock has a value equal to the
Agreed Price. In the event that upon the application of the Agreed Price to the
Available Stock Amount hereunder, a fractional number of shares are to be so
transferred, the number of shares to be so transferred will be determined by
rounding down to the next whole number of shares to be withdrawn from such
Available Stock Amount.
(vi) In the event a court of competent jurisdiction has issued a
final and nonappealable award or order requiring payment of all or any portion
of a Seller's Escrowed Funds to a Seller or a Buyer Indemnified Party, the party
hereto entitled to enforce such award or order (the "Enforcing Party") shall
promptly deliver to the Escrow Agent and the other parties hereto a written
notice (A) attaching such award or order, (B) indicating the account of the
Enforcing Party to which payment shall be made, (C) indicating the Sub-Accounts
from which the court has ordered that payment shall be made, and (D) directing
the Escrow Agent to deliver payment to the Enforcing Party from the Escrowed
Funds (a "Judicial Claim"). All Judicial Claims shall be allocated to each
Sub-Account as set forth in the court's order; provided that if no allocation is
set forth in the court order made with respect to a Judicial Claim, such
Judicial Claim shall be allocated pro rata (based on relative values of the
Sub-Accounts at the time of the establishment of the escrow under this Escrow
Agreement) among all of the Sub-Accounts, unless the Judicial Claim arises out
of Section 10.02 of the Purchase Agreement, in which case the Judicial Claim
shall be allocated to the Sub-Account or pro rata (based on relative values of
the Sub-Accounts at the time of the establishment of the escrow under this
Escrow Agreement)
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among the Sub-Accounts of the person or persons whose breach of the Purchase
Agreement gave rise to the Judicial Claim. In no event shall the Escrow Agent
remove from a Sub-Account any amounts in excess of the amount allocated thereto
pursuant to the previous sentence. The Escrow Agent shall as promptly as
reasonably practicable after the receipt of a Judicial Claim (but in no event
later than five business days after such receipt) make payment to the Enforcing
Party from the applicable Seller's Escrowed Funds in the priority described in
Section 2(a)(iii) and in accordance with the provisions of Section 2(a)(iv),
except that if a Seller is an Enforcing Party, Buyer shall present to the Escrow
Agent all necessary replacement certificates including certificates deliverable
to any Seller as an Enforcing Party.
(vii) Unless otherwise directed in a writing jointly signed by
Sellers' Representatives and Buyer or by a court of competent jurisdiction, as
promptly as reasonably practicable after the day that is 12 months after the
date hereof, but in no event later than five business days after the day that is
12 months after the date hereof, the Escrow Agent shall deliver to Sellers'
Representatives an aggregate amount that is equal to the excess, if any, of (A)
all Available Cash Amounts plus all Available Stock Amounts (valued on a per
share basis at the Agreed Price), over (B) 50% of the Cash Amount plus 50% of
the Stock Amount (valued on a per share basis at the Agreed Price). Payment
under this Section 2(a)(vii) shall be made by (x) a wire transfer to the
accounts designated in writing by Sellers' Representatives of the cash to be
withdrawn from all Available Cash Amounts and (y) delivery of the shares of
Common Stock to be withdrawn from all Available Stock Amounts to, and in the
name of, the persons designated in writing by Sellers' Representatives.
(viii) Unless otherwise directed, in each case prior to the Cut-Off
Time (as defined below) in a writing signed by Sellers' Representatives and
Buyer in the case of an Indemnification Claim, or by the Enforcing Party in the
event of a Judicial Claim, as promptly as reasonably practicable after the
Cut-Off Time, but in no event later than five business days after the Cut-Off
Time, the Escrow Agent shall deliver to Sellers' Representatives an aggregate
amount (the "Cut-Off Payment") equal to all Available Cash Amounts and all
Available Stock Amounts. Payment under this Section 2(a)(viii) shall be made by
(x) a wire transfer to the accounts designated in writing by Sellers'
Representatives of the cash to be withdrawn from all Sellers' Available Cash
Amounts and (y) delivery of an amount of shares of Common Stock to be withdrawn
from all Available Stock Amounts to, and in the name of, the persons designated
in writing by Sellers' Representatives.
(ix) The Buyer Indemnified Parties may not seek directly from
Sellers any portion of an unsatisfied Indemnification Claim resulting from the
market price of the Common Stock being below the Agreed Price. Without limiting
the foregoing, as a condition precedent to Buyer making any Indemnification
Claim hereunder for the indemnification of any Buyer Indemnified Party other
than the Buyer and its subsidiaries, such Buyer Indemnified Party shall agree in
writing to be bound by the foregoing sentence.
(x) Notwithstanding the foregoing, the Escrow Agent shall not make
any payment in respect of an Indemnification Claim or Judicial Claim that it
receives after 5:00 p.m. New York City time on the day that is 24 months after
the date hereof, if such day is a business
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day, or if such day is not a business day, the next business day thereafter
(such time, the "Cut-Off Time").
(xi) The Escrow Agent shall continue to hold and administer,
pursuant to the terms hereof, any of the Escrowed Funds retained by the Escrow
Agent following payment of the Cut-Off Payment until the final disposition of
all pending Indemnification Claims and Judicial Claims in accordance with
Section 2 of this Agreement. Upon final disposition of all such pending
Indemnification Claims and Judicial Claims pursuant to Section 2, the Escrow
Agent shall then distribute to Sellers the remainder of the Escrow Funds
pursuant to Section 2(a)(viii) hereof.
SECTION 3. Investments; Disposition of Income.
At the written direction of Sellers' Representative, the Escrow Agent shall
invest the Escrowed Funds within two (2) business days after receipt of such
written direction in (i) United States' government securities or securities of
agencies of the United States government which are guaranteed by the United
States government and which mature nine months or less from the date of
investment, in each case as directed by Sellers' Representative, (ii) debt
securities (including certificates of deposit) issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof having capital and surplus aggregating in excess of $500 million and
whose long-term debt securities have a rating of "A" or higher by Standard and
Poor's Rating Service and which mature nine months or less from the date of
investment, in each case as directed by Sellers' Representative, (iii) Money
market funds having a rating in the highest investment category granted thereby
by a recognized credit rating agency, including any fund for which the Escrow
Agent or an Affiliate of the Escrow Agent serves as an investment advisor,
administrator, shareholder servicing agent, custodian or sub-custodian,
notwithstanding that (A) the Escrow Agent or an affiliate of the Escrow Agent
charges and collects fees and expenses from such funds for services rendered
(provided that such charges, fees and expenses are on terms consistent with
terms negotiated at arm's length) and (B) the Escrow Agent charges and collects
fees and expenses for services rendered, pursuant to this Escrow Agreement, or
(iv) any other instrument as Buyer and Sellers' Representatives, from time to
time, shall jointly designate in writing. Any income received by the Escrow
Agent from investments of the Escrowed Funds pursuant to this Section 3 (such
income being referred to as "Interest") shall be added to the Escrowed Funds,
shall be invested in the Goldman Sachs FS Prime Obligations Fund Administration
Class (463) at the instruction of Seller's Representative and distributed as
provided in this Escrow Agreement. Periodic statements will be provided to
Sellers' Representatives and Buyer reflecting transactions executed in
connection with the Escrowed Funds.
(a) In the event that the Escrow Agent is required to distribute a
Seller's Available Cash Amount under Section 2, the Escrow Agent shall sell or
liquidate the investments made under Section 3(a) in respect thereto as and to
the extent necessary to fund such distribution. The Escrow Agent shall sell or
liquidate such investments in accordance with instructions as to priority from
Sellers' Representatives. Such sales or liquidations shall be made as promptly
as practicable after the Escrow Agent becomes obligated to make such
distribution, but in no event later than one business day thereafter.
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(b) Upon the sale, liquidation or maturity of an investment of Escrowed
Funds, the proceeds shall be deposited into the Goldman Sachs FS Prime
Obligations Fund Administration Class (463) pending distribution pursuant to
Section 2.
(c) Any investment direction contained herein or provided in accordance
with the terms hereof may be executed through an affiliated broker of the Escrow
Agent and such broker shall be entitled to usual and customary fees.
SECTION 4. Concerning the Escrow Agent.
(a) The Escrow Agent shall not be under any duty to give the Escrowed
Funds held by it hereunder any greater degree of care than it gives its own
similar property. The Escrow Agent shall not be required to invest any funds
held hereunder except as directed pursuant to Section 1 and Section 3 of this
Escrow Agreement. Uninvested funds held hereunder shall not earn or accrue
interest.
(b) 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 with respect to the subject matter
hereof except this Escrow Agreement. The Escrow Agent's duties are ministerial
in nature. Except as expressly set forth herein, Escrow Agent shall not be
required to expend or risk any of its own funds or otherwise incur any financial
or other liability in the performance of its duties hereunder.
(c) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct in taking any actions or failing to take any
actions hereunder. 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 indemnify and
hold harmless the Escrow Agent (and any successor Escrow Agent) from and against
any and all losses, liabilities, claims, actions, taxes (not including any taxes
of the Escrow Agent measured by or imposed upon income, and not including any
franchise or excise taxes), damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of or in connection with this
Escrow Agreement including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance hereunder.
Without limiting the foregoing, the Escrow Agent shall in no event be liable (i)
in connection with its investment or reinvestment of any cash held by it
hereunder in accordance with the terms hereof, or as a result of any liquidation
of any such investment prior to its maturity, including any liability for any
delays (not resulting from its gross negligence or willful misconduct) in the
investment, reinvestment or liquidation of the Escrowed Funds, (ii) for any
indirect, consequential, punitive or special damages, regardless of the form of
action and whether or not any such damages were foreseeable or contemplated, or
(iii) for an amount in excess of the value of the Escrowed Funds, valued as of
the date of the deposit, but only to the extent of direct money damages. Without
limiting the joint and several nature of the obligation of Sellers'
Representatives and Buyer vis-a-vis the Escrow Agent pursuant to this Section
4(c), as between themselves, the Sellers' Representatives and Buyer agree that
they shall each share 50% of all
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losses, liabilities, claims, actions, taxes, damages and expenses for which the
Escrow Agent is entitled to indemnification hereunder, which, in case of
Sellers, shall be satisfied first from the Available Cash Amount and second from
the Available Stock Amount. The terms of this Section 4(c) shall survive
termination of this Escrow Agreement and the resignation or removal of the
Escrow Agent.
(d) The Escrow Agent shall be entitled to rely in good faith 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 or
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 any person purporting
to give notice or receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.
(e) The Escrow Agent may act pursuant to the advice of counsel
reasonably acceptable to both Sellers' Representative and Buyer (Patterson,
Belknap, Webb and Tyler, LLP being acceptable to both Sellers' Representative
and Buyer) with respect to any matter relating to this Escrow Agreement and
shall not be liable for any action taken or omitted in accordance with such
advice.
(f) The Escrow Agent does not have any interest in any Escrowed Funds
deposited hereunder but is serving as escrow agent only and having only
possession thereof. Any payments of income from this Escrow Agreement shall be
subject to withholding regulations then in force with respect to United States
taxes. Sellers' Representatives shall provide to the Escrow Agent concurrently
with execution of this Escrow Agreement, appropriate W-9 or other certification
forms for tax identification number certification, or W-8 or other nonresident
alien certifications with respect to each of the Sellers. Buyer shall provide a
duly completed W-9 to the Escrow Agent concurrently with execution of Escrow
Agreement. As between Buyer and Sellers, Sellers agree to pay the taxes
applicable to such income
(g) The Escrow Agent makes no representation and shall not be
responsible as to the validity, value, genuineness or the collectability of any
security or other documents or instrument held by or delivered to it.
(h) Each of the monthly statements identifying transactions hereunder
to be provided by the Escrow Agent shall be deemed to be correct and final upon
receipt thereof by the Buyer and the Sellers' Representatives unless the Buyer
or the Sellers' Representatives notifies the Escrow Agent in writing to the
contrary within thirty (30) business days of the date of such statement.
(i) The Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(j) Sellers' Representatives and Buyer may jointly remove the Escrow
Agent and terminate this Escrow Agreement upon ten (10) days prior written
notice signed by both parties.
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Upon such removal and termination, all then existing Escrowed Funds (including
all investments) shall be transferred in accordance with the joint written
instructions of Sellers' Representatives and Buyer. The Escrow Agent may resign
at any time upon giving thirty (30) days prior notice of resignation to Buyer
and Sellers' Representatives. Upon receiving such notice of resignation, the
Buyer, Sellers, and Sellers' Representatives shall cause a successor escrow
agent to be appointed within thirty (30) days after receipt of such notice of
resignation received by Buyer and Sellers' Representatives. Upon receiving
notice of the appointment of a successor escrow agent, the Escrow Agent shall
transfer any and all Escrowed Funds then held hereunder to the successor Escrow
Agent. If no successor escrow agent has been appointed within thirty (30) days
after receipt of notice of resignation by Buyer and Sellers' Representatives,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor escrow agent or for other appropriate relief and,
pending the appointment of a successor escrow agent, the Escrow Agent shall not,
after the expiration of thirty (30) days after receipt by Buyer and Sellers'
Representatives of the Escrow Agent's notice of resignation have any further
duties, responsibilities, or obligations to perform any services hereunder other
than to (i) safekeep the Escrowed Funds and (ii) deliver the Escrowed Funds to
the successor escrow agent duly appointed hereunder.
(k) The Escrow Agent shall have no responsibility for the contents of
any court order and may conclusively rely without any liability upon the
contents thereof. If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrowed Funds (including
but not limited to orders of attachment or garnishment or other forms of levies
or injunctions or stays relating to the transfer of the Escrowed Funds), the
Escrow Agent is authorized to comply therewith in any manner it or legal counsel
of its own choosing deems appropriate; and if the Escrow Agent complies with any
such judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
(l) The Escrow Agent shall be paid and reimbursed, as applicable, by
Buyer the fees and expenses for the acceptance and administration of this Escrow
Agreement set forth in Annex C attached hereto. All fees shall be paid in United
States currency and payable in the United States at the office of the Escrow
Agent. Notwithstanding anything in this Escrow Agreement to the contrary, at any
time that the Escrow Agent is authorized or directed or otherwise required to
make a disbursement or distribution from the Escrowed Funds (A) to the Sellers'
Representatives or Sellers, the Escrow Agent may refrain from making such
disbursement or distribution from the Escrowed Funds, without liability, if and
to the extent that there are fees or expenses or any amounts then due to the
Escrow Agent from the Sellers pursuant to Section 4(c) or then due to the Escrow
Agent from the Sellers' Representatives pursuant to this Section 4(l); or (B) to
Buyer, the Escrow Agent may refrain from making such disbursement or
distribution from the Escrowed Funds, without liability, if and to the extent
that there are any amounts then due to the Escrow Agent from the Buyer pursuant
to Section 4(c) hereof. Upon receipt of payment for such fees or expenses, the
Escrow Agent shall promptly make such disbursements or distributions to Buyer.
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The terms of this Section 4(l) shall survive termination of this Escrow
Agreement and resignation or removal of the Escrow Agent.
(m) Escrow Agent shall not incur any liability for not performing any
act or fulfilling any duty, obligation or responsibility hereunder by reason of
any occurrence beyond the control of Escrow Agent (including but not limited to
any act or provision of any present or future law or regulation or governmental
authority, any act of God, war or terrorism, or the unavailability of the
Federal Reserve Bank wire or facsimile or other wire or communication facility).
(n) 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 or 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 any person purporting
to give receipt or advice to make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
(o) All instructions required or permitted hereunder to be delivered by
Buyer will need to be delivered to the Escrow Agent in writing, in either
original or facsimile form, executed by a person designated by Buyer as
authorized to give such notices, requests, permissions, waivers, instructions
and communications hereunder. A list of persons designated as authorized to act
on Buyer's behalf hereunder is attached hereto as Annex D. The list attached
hereto as Annex D will remain in effect until Buyer notifies the Escrow Agent of
any change. Buyer shall from time to time deliver to the Escrow Agent a
certified list of such Buyer authorized persons. In its capacity as Escrow
Agent, the Escrow Agent will accept all instructions and documents complying
with the above under the indemnities provided hereunder, and reserves the right
to refuse to accept any instructions or documents which fail, or appear to fail,
to comply. Further to this procedure, the Escrow Agent reserves the right to
telephone an authorized person of Buyer to confirm the details of such
instructions or documents if they are not already on file with the Escrow Agent
as standing instructions. The Escrow Agent and the Buyer agree that the above
constitutes a commercially reasonable security procedure. In addition, when the
Escrow Agent acts on any information, instructions, communications, (including,
but not limited to communications with respect to delivery of securities or the
wire transfer of funds) sent by facsimile, the Escrow Agent, absent gross
negligence or willful misconduct, shall not be responsible or liable in the
event such communication is not an authorized or authentic communication of the
Buyer or is not in the form the Buyer sent or intended to send (whether due to
fraud, distortion or otherwise). Buyer shall indemnify the Escrow Agent against
any loss, liability, claim or expense (including legal fees and expenses) it may
incur with its acting in accordance with any such communication. The terms of
this Section 4(o) shall survive termination of this Escrow Agreement and the
resignation or removal of Escrow Agent.
(p) All instructions required or permitted hereunder to be delivered by
Seller's Representatives will need to be delivered to the Escrow Agent in
writing, in either original or facsimile form, executed by Sellers'
Representatives as authorized to give such notices, requests, permissions,
waivers, instructions and communications on behalf of the Sellers hereunder. In
its
10
capacity as Escrow Agent, the Escrow Agent will accept all instructions and
documents complying with the above under the indemnities provided hereunder, and
reserves the right to refuse to accept any instructions or documents which fail,
or appear to fail, to comply. Instructions to invest or reinvest that are
received from the Sellers' Representatives after 11:00 a.m. (E.S.T.) will be
treated as if received on the following business day in New York. Further to
this procedure, the Escrow Agent reserves the right to telephone Sellers'
Representatives to confirm the details of such instructions or documents if they
are not already on file with the Escrow Agent as standing instructions. The
Escrow Agent and Sellers' Representatives agree that the above constitutes a
commercially reasonable security procedure. In addition, when the Escrow Agent
acts on any information, instructions, communications, (including, but not
limited to communications with respect to delivery of securities or the wire
transfer of funds) sent by facsimile, the Escrow Agent, absent gross negligence
or willful misconduct, shall not be responsible or liable in the event such
communication is not an authorized or authentic communication of the Sellers'
Representatives or is not in the form the Sellers' Representatives sent or
intended to send (whether due to fraud, distortion or otherwise). Sellers'
Representatives shall indemnify the Escrow Agent against any loss, liability,
claim or expense (including legal fees and expenses) it may incur with its
acting in accordance with any such communication. The terms of this Section 4(p)
shall survive termination of this Escrow Agreement and the resignation or
removal of Escrow Agent.
(q) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any
action other than retaining possession of the Escrowed Funds, unless the Escrow
Agent receives written instructions, signed by Buyer and Sellers'
Representatives, which eliminates such ambiguity or uncertainty.
(r) In the event of any dispute between or conflicting claims by or
among the Buyer, Seller, the Sellers' Representatives, and/or any other person
or entity with respect to any Escrowed Funds, the Escrow Agent shall be
entitled, in its sole discretion, to refuse to comply with any and all claims,
demands or instructions with respect to such Escrowed Funds so long as such
dispute or conflict shall continue, and the Escrow Agent shall not be or become
liable in any way for failure or refusal to comply with such conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until, in its sole discretion, either (i) such conflicting or adverse claims or
demands shall have been determined by an order, judgment or decree of a court of
competent jurisdiction, whether or not such order, judgment or decree is subject
to appeal, or settled by agreement between the conflicting parties as evidenced
in a writing satisfactory to the Escrow Agent or (ii) the Escrow Agent shall
have received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all losses which it may incur by reason of so
acting. The Escrow Agent shall be authorized to act, and shall not incur any
liability for acting, on any order, judgment or decree of a court of competent
jurisdiction without further question (whether or not such order is subject to
appeal). The Escrow Agent may, in addition, elect, in its sole discretion, to
commence an interpleader action or seek other judicial relief or orders as it
may deem, in its sole discretion, necessary. The costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with such
proceeding shall be paid by, and shall be deemed a joint and several obligation
of, the Buyer and Sellers' Representatives.
11
(s) Buyer and Sellers' Representatives shall pay or reimburse the
Escrow Agent upon request for any transfer taxes or other taxes relating to the
Escrowed Funds incurred in connection hereunder and shall indemnify and hold
harmless the Escrow Agent from any amounts that it is obligated to pay in the
way of such taxes. The terms of this Section 4(s) shall survive termination of
this Escrow Agreement and the resignation or removal of Escrow Agent.
(t) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions
"Citibank, N.A." by name or the rights, powers, or duties of the Escrow Agent
under this Escrow Agreement shall be issued by any other parties hereto, or on
such party's behalf, without the prior written consent of Escrow Agent, except
that the parties under this Escrow Agreement may make reference to "Citibank,
N.A." in its capacity as Escrow Agent in any filings made with the Securities
and Exchange Commission in respect of the transactions contemplated herein.
SECTION 5. Sellers' Assets.
(a) Buyer acknowledges and agrees that, solely with respect to
indemnification claims under Section 10.03 of the Purchase Agreement (other than
indemnification claims under Section 10.03(a)(iii) or (iv) of the Purchase
Agreement), the Buyer Indemnified Parties must first proceed against the
Escrowed Funds prior to proceeding directly against Sellers with respect
thereto.
(b) The parties agree that Escrowed Funds are assets of Sellers (and
not Buyer or its subsidiaries or any Buyer Indemnified Party) and are placed in
escrow solely to secure Sellers' indemnification obligations under the Purchase
Agreement. No other person or entity shall have any right, title or interest in
or to the Escrowed Funds.
SECTION 6. Notices. All notices, requests, permissions, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given (a) when delivery is acknowledged if sent by registered or
certified mail, postage prepaid, (b) when received (as identified by the fax
transmittal confirmation), if sent by facsimile; provided that the facsimile
transmission is promptly confirmed by telephone, (c) when delivered, if
delivered personally to the intended recipient and (d) when actually delivered,
if sent by overnight delivery via a national courier service and, in each case,
addressed to a party at the following address for such party (or such other
address as such party may in writing have designated to the other parties prior
to such date):
(a) if to Buyer, to:
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02459
Fax: (617) 926-3760
Tel: (617) 926-2000
Attention: Stephen Korn, Esq.
Vice President and General Counsel
12
with copies to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Fax: (617) 248-7100
Tel: (617) 248-7292
Attention: Mark H. Burnett, Esq.
(b) if to Sellers' Representatives or any Seller, to:
Williams Mullen
222 Central Park Avenue, Suite 1700
Virginia Beach, Virginia 23462
Fax: (757) 473-0395
Tel: (757) 499-8800
Attention: Frederick T. Stant
with copies to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Fax: (212) 474-3700
Tel: (212) 474-1000
Attention: Alan Stephenson, Esq.
(c) if to the Escrow Agent, to:
Citibank, N.A. - Escrow Services
111 Wall Street (14th Floor)
New York, New York 10043
Fax: (212) 657-2762
Tel: (212) 657-6015
Attention: Camille Tomao
with copies to:
Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas, Suite 2200
New York, New York 100036-6710
Fax: (212) 336-2222
Tel: (212) 336-2301
Attention: Herman H. Raspe, Esq.
13
All written notices, requests, permissions, waivers,
instructions and communications from Buyer to the Escrow Agent shall be signed
by a person designated by Buyer as authorized to give such notices, requests,
permissions, waivers, instructions and communications hereunder. A list of
persons designated as authorized to act on its behalf hereunder is attached
hereto as Annex D. Buyer shall from time to time deliver to Escrow Agent a
certified list of such Buyer authorized persons.
SECTION 7. Termination. This Escrow Agreement shall automatically
terminate upon the complete distribution of all Cash Amounts and all Stock
Amounts in accordance with the terms hereof.
SECTION 8. Miscellaneous.
(a) This Escrow Agreement and the rights and obligations hereunder
shall not be assignable or transferable by any party without the prior written
consent of the other parties hereto. Any attempted violation of this Section
8(a) shall be void.
(b) As used herein the term "Buyer Indemnified Party" shall refer to
each of Buyer and its affiliates (including the Companies and their
subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives.
(c) This Escrow Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement. This Escrow
Agreement shall become effective when each party hereto shall have received a
counterpart, or facsimile of a counterpart, of this Escrow Agreement, each
signed by the other party or parties hereto or thereto.
(d) This Escrow Agreement is for the sole benefit of the parties hereto
and their permitted assigns and nothing herein expressed or implied shall give
or be construed to give to any person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder. This Escrow Agreement contains
the entire agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(e) THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF THE STATE OF NEW YORK.
(f) Each of the parties irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out
of this Escrow Agreement, or any transaction contemplated hereby. Each of the
parties must commence any action, suit or proceeding relating hereto either in
the United States District Court for the Southern District of New York, or, if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the City of New York, New York.
Service of any process, summons, notice or
14
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in such court with respect to any matters to which it has submitted to
jurisdiction in this paragraph. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement in the United States District Court
for the Southern District of New York or the Supreme Court of the City of New
York, New York and further irrevocably and unconditionally waives and shall not
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
(g) Each party waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect to any litigation
directly or indirectly arising out of, under or in connection with this
Agreement or disputes relating hereto or thereto. Each party (i) certifies that
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it
and the other parties have been induced to enter into this Escrow Agreement by,
among other things, the mutual waivers and certifications in this paragraph.
(h) This Escrow Agreement may be amended in writing by the parties.
This Escrow Agreement may not be amended except by an instrument in writing
signed on behalf of all of the parties. In the case of the Sellers the
provisions of Section 8(j) will apply.
(i) The Sellers' Representatives, on behalf of each of the Sellers,
acknowledge and agree that each Seller will provide its correct Taxpayer
Identification Number to the Escrow Agent. The Sellers and the Buyer agree that
the Escrow Agent will report (at the end of the applicable calendar year and
without regard for the distribution or lack of distribution thereof) on the
applicable forms 1099 (and corresponding IRS reports) all Interest earned under
this Escrow Agreement as taxable income of the Sellers (allocated to each of the
Sellers based on the proportionate Sellers' allocations specified in Annex B
hereto) to the Internal Revenue Service or other Taxing Authority (as defined in
the Purchase Agreement). The Escrow Agent (or Buyer, if Buyer is the withholding
agent) shall be permitted to report and withhold any required Taxes as it
determines it may be required by any law or regulation in effect, and remit such
Taxes to the appropriate Taxing Authorities, and the Sellers' Representatives,
on behalf of each of the Sellers, acknowledge and agree that the Sellers will
hold the Escrow Agent (and Buyer, if Buyer is the withholding agent) harmless
from and against any such Taxes.
(j) The Sellers' Representatives have been duly appointed by each of
the Seller to act as their agent/power of attorney in all respects with respect
to this Escrow Agreement and the Escrow Agent may rely on such authority for all
purposes hereunder until such time the Escrow Agent receives written notice to
the contrary from one or more of the Sellers in form acceptable to the Escrow
Agent and with such supporting documentation that is reasonably necessary.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
[Escrow Agreement Signature Page]
THE LYMAN B. DICKERSON REVOCABLE
TRUST DATED SEPTEMBER 9, 1996, OR ANY
SUCCESSOR TRUSTEE, AS AMENDED
By: /s/ Lyman B. Dickerson
----------------------------------
LYMAN B. DICKERSON, Trustee
February 13, 2004
Date Signed
THE DOUGLAS G. DICKERSON REVOCABLE
TRUST DATED JUNE 22, 1988, OR ANY
SUCCESSOR TRUSTEE, AS AMENDED
By: /s/ Douglas G. Dickerson
----------------------------------
DOUGLAS G. DICKERSON, Trustee
February 13, 2004
Date Signed
THE RICHARD DICKERSON REVOCABLE
TRUST DATED MARCH 5, 1993, OR ANY
SUCCESSOR TRUSTEE, AS AMENDED
By: /s/ Douglas G. Dickerson
----------------------------------
DOUGLAS G. DICKERSON, Co-Trustee
February 13, 2004
Date Signed
By: /s/ Marguerite W. Dickerson
----------------------------------
MARGUERITE W. DICKERSON, Co-
Trustee
February 13, 2004
Date Signed
16
[Escrow Agreement Signature Page]
THE LYMAN DICKERSON IRREVOCABLE
TRUST, DATED JULY 1, 1991
By: /s/ Lyman B. Dickerson-
----------------------------------
LYMAN B. DICKERSON, Trustee
February 13, 2004
Date Signed
By: /s/ Charles C. Kline
----------------------------------
CHARLES C. KLINE, Independent
Trustee
February 13, 2004
Date Signed
THE DOUGLAS DICKERSON IRREVOCABLE
TRUST NO. 3, DATED JULY 1, 1991
By: /s/ Douglas G. Dickerson
----------------------------------
DOUGLAS G. DICKERSON, Trustee
February 13, 2004
Date Signed
By: /s/ Frederick T. Stant
----------------------------------
FREDERICK T. STANT, III,
Independent Trustee
February 13, 2004
Date Signed
17
[Escrow Agreement Signature Page]
THE RICHARD DICKERSON IRREVOCABLE
TRUST NO. 3, DATED JULY 1, 1991
By: /s/ Douglas G. Dickerson
----------------------------------
DOUGLAS G. DICKERSON, Trustee
February 13, 2004
Date Signed
By: /s/ Marguerite W. Dickerson
----------------------------------
MARGUERITE W. DICKERSON, Co-
Trustee
February 13, 2004
Date Signed
By: /s/ Frederick T. Stant
----------------------------------
FREDERICK T. STANT, III,
Independent Trustee
February 13, 2004
Date Signed
18
[Escrow Agreement Signature Page]
/s/ Lyman B. Dickerson
-------------------------------------
LYMAN B. DICKERSON
February 13, 2004
Date Signed
/s/ Douglas G. Dickerson
-------------------------------------
DOUGLAS G. DICKERSON
February 13, 2004
Date Signed
THE ESTATE OF RICHARD C. DICKERSON
By: /s/ Douglas G. Dickerson
----------------------------------
DOUGLAS G. DICKERSON, Co-Executor
February 13, 2004
Date Signed
By: /s/ Marguerite W. Dickerson
----------------------------------
MARGUERITE W. DICKERSON,
Co-Executor
February 13, 2004
Date Signed
19
IONICS, INCORPORATED
By: /s/ Stephen Korn
----------------------------------
Stephen Korn
Vice President and General
Counsel
CITIBANK, N.A., AS ESCROW AGENT
By: /s/ Camille Tomao
----------------------------------
Camille Tomao
Vice President
20
Schedules and Exhibits Omitted in Accordance With Item 601(b)(2) of Regulation
S-K
Annex A-Allocation among Sub-Accounts win regards to the Cash Amount
Annex B-Allocation among Sub-Accounts with regards to the Stock Amount
Annex C-Schedule of Fees
Annex D-Ionics Authorized Person Information
Ionics will furnish supplementally a copy of any omitted schedule or exhibit to
the Securities and Exchange Commission upon request, provided however that
Ionics may request confidential treatment pursuant to Rule 24-2 of the Exchange
Act for any schedule or exhibit so furnished.