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Exhibit 2.17
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is dated as of the 31st day
of August 1999 among KENDLE U.K. INC., an Ohio corporation with a mailing
address of 441 Vine Street, Suite 700, Cincinnati, Ohio 45202, Attention: Paul
F. Ritter, Esq., General Counsel ("Kendle"), and PAUL MARTIN of 38 Wellington
Business Park, Crowthorne, Berkshire, RG45 6LS (the "Seller"), and FIFTH THIRD
BANK with a mailing address of 38 Fountain Square Plaza, Cincinnati, Ohio 45263,
as the escrow agent hereunder ("Escrow Agent").
BACKGROUND
A. Effective as of August 31, 1999 Kendle and the Seller entered into a
Share Purchase Agreement (the "Purchase Agreement"). Pursuant to the terms of
said Purchase Agreement, Kendle (or its assignee) will purchase from the Seller
all of the issued and outstanding capital stock of Specialist Monitoring
Services Limited ("SMS").
B. The parties desire to enter into this Escrow Agreement to provide
for an escrow of seventy one thousand three hundred and twenty seven pounds
((pound)71,327) in cash (the "Cash") and ninety seven thousand and sixty six
(97,066) shares of common stock, no par value per share, of Kendle International
Inc. (the " Kendle Shares").
NOW, THEREFORE, in consideration of the mutual covenants set forth
below and other good and valuable consideration, the parties hereto agree as
follows:
1. DESIGNATION AND DELIVERY. Kendle and Seller hereby designate Fifth
Third Bank as "Escrow Agent" under this Escrow Agreement. Kendle and Seller
hereby deliver to the Escrow Agent a copy of the Purchase Agreement, which
agreement is attached hereto as Exhibit "A." Kendle, in accordance with the
Purchase Agreement, hereby delivers to the Escrow Agent, and the Escrow Agent
hereby acknowledges receipt of, the Cash and a certificate or certificates, each
duly endorsed in blank or with stock powers duly endorsed in blank evidencing
the ninety seven thousand and sixty six (97,066) Kendle Shares (the Cash and the
Kendle Shares together being the "Deposit").
2. CONVERSION AND INVESTMENT OF THE DEPOSIT; DIVIDENDS AND
DISTRIBUTIONS WITH RESPECT TO THE DEPOSIT. The Escrow Agent is hereby directed
to convert all cash deposits delivered in non-U.S. currency to U.S. Dollars at
prevailing rates and authorized to invest the Cash and any other cash in the
Escrow Fund (as defined hereinafter) in money market funds, including the Fifth
Third U.S. Treasury Obligations Fund sponsored by the Escrow Agent's affiliate,
Fifth Third Funds. The Escrow Agent shall cause all dividends, distributions
(including shares distributed in a stock split), proceeds from any sale or
liquidation, or other income earned
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on or with respect to the Deposit to be added to the Deposit. Such deposited
dividends, distributions or other income shall, together with the Deposit,
constitute the "Escrow Fund" to be distributed as provided in Section 5 hereof.
The Seller shall be entitled to exercise all voting rights with respect to the
Kendle Shares and any other securities held from time to time as part of the
Escrow Fund until such time as any such securities are distributed to Kendle in
accordance with Section 5 hereof.
3. ESCROW AGENT AS CUSTODIAN; EXPENSES. The Escrow Agent shall, for all
purposes of this Escrow Agreement, be treated as and considered legally a
custodian. The Escrow Agent shall be entitled to rely conclusively upon the
written notice provided in Section 5 and may assume the genuineness of all
signatures and documents and the authority of all signatories. The Escrow Agent
shall have no liability except for gross negligence or willful misconduct in the
performance of its duties under this Escrow Agreement. Kendle shall assume and
pay all costs and expenses of the Escrow Agent incurred in its capacity as the
Escrow Agent under this Escrow Agreement. The fees of the Escrow Agent are set
forth on Exhibit "B" attached hereto and incorporated herein.
4. RESIGNATION; DISAGREEMENTS.
(a) Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrow Fund to any successor
Escrow Agent designated by the other parties hereto in writing, or to
any court of competent jurisdiction as provided below. The resignation
of Escrow Agent will take effect on the earlier of (a) the appointment
of a successor (including a court of competent jurisdiction), or (b)
the day which is thirty (30) days after the date of delivery of its
written notice of resignation to the other parties hereto. If at that
time Escrow Agent has not received a designation of a successor Escrow
Agent, Escrow Agent's sole responsibility after that time shall be to
retain and safeguard the Escrow Fund 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
competent jurisdiction.
(b) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection
with the Escrow Fund or in the event that Escrow Agent is in doubt as
to what action it should take hereunder, Escrow Agent shall be entitled
to retain the Escrow Fund until Escrow Agent shall have received (i) a
final non-appealable order of a court of competent jurisdiction
directing delivery of the Escrow Fund, or (ii) a written agreement
executed by the other parties hereto directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and
non-appealable. Escrow Agent shall act on such court order and legal
opinion without further question.
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5. TERMINATION AND DISTRIBUTION OF ESCROW.
(a) Except as provided in Section 5(f), this Escrow Agreement
shall terminate upon the earlier of (i) August 31, 2001, or (ii) the
date upon which the Escrow Agent shall have distributed the Escrow Fund
as provided herein;
(b) If, on or prior to August 31, 2000, the date that is the
first anniversary of the closing of the transactions contemplated by
the Purchase Agreement (the "Anniversary Date"), Kendle shall not have
delivered to the Escrow Agent and Seller a notice of claim with respect
to the Escrow Fund based on breaches by the Seller of warranties or
representations contained in the Purchase Agreement ("Notice of
Claim"), one half (1/2) of the Cash and one half (1/2) of the Kendle
Shares, plus all dividends, distributions and other income earned
thereupon, shall promptly be released to Seller by the Escrow Agent;
(c) If, on or prior to the Anniversary Date, Kendle shall have
delivered a Notice of Claim to the Escrow Agent and Seller and Seller
shall not have disputed the Notice of Claim within ten (10) business
days after their receipt of the Notice of Claim, the Cash and the
Kendle Shares, plus all dividends, distributions and other income
earned thereupon, (or such lesser amount as may be specified in
Kendle's Notice of Claim), shall promptly be released to Kendle by the
Escrow Agent;
(d) If, on or prior to August 31, 2001, the date that is the
second anniversary of the closing of the transactions contemplated by
the Purchase Agreement (the "Second Anniversary Date"), Kendle shall
not have delivered to the Escrow Agent and Seller a Notice of Claim,
one half (1/2) of the Cash and one half (1/2) of the Kendle Shares,
plus all dividends, distributions and other income earned thereupon,
shall be promptly released to Seller by the Escrow Agent;
(e) If, on or prior to the Second Anniversary Date, Kendle
shall have delivered a Notice of Claim to the Escrow Agent and Seller,
and Seller shall not have disputed the Notice of Claim within ten (10)
business days after their receipt of the Notice of Claim, the remainder
of the Cash and the Kendle Shares, plus all dividends, distributions
and other income earned thereupon, (or such lesser amount as may be
specified in Kendle's Notice of Claim), shall promptly be released to
Kendle by the Escrow Agent; and,
(f) If, on or prior to the Second Anniversary, Kendle shall
have delivered a Notice of Claim or multiple Notices of Claim to the
Escrow Agent and Seller which is or are timely disputed by Seller, the
Escrow Agent shall hold the Cash and the Kendle Shares, plus all
dividends, distributions and other income earned thereupon, until the
dispute or disputes is or are resolved by a court of competent
jurisdiction, even if resolution of the disputes occurs after August
31, 2001, and shall distribute the Cash and
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the Kendle Shares, plus all dividends, distributions and other income
earned thereupon, either pursuant to joint written instructions from
Kendle and Seller or pursuant to court order.
(g) The value of any Kendle Shares released to Kendle pursuant
to this Section 5 shall be determined by reference to the average
closing bid price for shares of Kendle common stock on the NASDAQ
National Market System during the twenty (20) trading days prior to
either the date of a disputed claim is finally determined or, if a
claim is not disputed, the date of release.
6. DUTIES OF ESCROW AGENT. The duties of the Escrow Agent under this
Escrow Agreement shall be entirely administrative and the Escrow Agent shall not
be liable to any third party as a result of any action or omission taken or made
by it, if taken in good faith, except for gross negligence or willful misconduct
in performing its duties. In the event of disagreement or dispute between Kendle
and Seller with respect to disposition of the Escrow Fund, the Escrow Agent
shall promptly initiate an appropriate legal proceeding to obtain a judicial
determination of the respective parties' rights to the Escrow Fund. No rights
are intended to be granted to any third party hereunder. Kendle and Seller shall
severally (each being responsible for fifty percent (50%) of the indemnity
account) indemnify, defend and hold harmless the Escrow Agent and reimburse the
Escrow Agent from and for any and all liability, costs and expenses, including
reasonable attorneys' fees, the Escrow Agent may suffer or incur by reason of
its execution and performance of this Escrow Agreement. The Escrow Agent shall
have no duties except those which are expressly set forth herein, and it shall
not be bound by any notice of a claim, or demand with respect thereto, or any
waiver, modification, amendment, termination or recision of this Escrow
Agreement, unless in writing received by it and signed by Kendle and/or Seller.
In the event that the Escrow Agent shall find it necessary to
consult with counsel of its own choosing in connection with this Escrow
Agreement, the Escrow Agent shall not incur any liability for any action taken
in good faith in accordance with such advice. Kendle and Seller, jointly and
severally, shall indemnify and hold harmless the Escrow Agent for any liability,
loss, claim or damage incurred by the Escrow Agent in connection with this
Escrow except for any such liability, costs, expenses (including reasonable
attorneys' fees), loss, claims or damage which is a result of Escrow Agent's own
gross negligence or willful misconduct. This indemnification shall survive
termination of this Escrow Agreement. Kendle and Seller agree that Kendle, on
the one hand, and Seller, collectively, on the other hand, shall each assume and
pay fifty percent (50%) of all amounts due to Escrow Agent as a result of this
indemnification.
Escrow Agent is not a party to, and is not bound by, any
agreement which may be evidenced by, or arise out, the foregoing instruction,
other than as expressly set forth herein. In the event that any of the terms and
provisions of any other agreement (excluding any amendment to this Escrow
Agreement) between any of the parties hereto, conflict or are inconsistent with
any of the provisions of this Escrow Agreement, the terms and provisions of this
Escrow Agreement shall govern and control in all respects.
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7. NOTICES. All notices, consents or other communications required or
permitted to be given under this Escrow Agreement shall be in writing and shall
be deemed to have been duly given:
(a) when delivered personally,
(b) five (5) business day after being sent by an overnight
delivery service, postage or delivery charges prepaid, or
(c) on the date on which a telegram or facsimile is
transmitted to the parties at their respective addresses stated above.
Any party may change its address for notice and the address to which copies must
be sent by giving notice of the new addresses to the other parties in accordance
with this Section 7, except that any such change of address notice shall not be
effective unless and until received.
8. AMENDMENT. No amendment or modification of this Escrow Agreement
shall be effective unless in writing and signed by the parties.
9. PARTIES IN INTEREST. This Escrow Agreement shall bind, benefit, and
be enforceable by and against each party hereto and their successors, assigns,
heirs and personal representatives. No party shall in any manner assign any of
its rights or obligations under this Escrow Agreement without the express prior
written consent of the other parties.
10. NO WAIVERS. No waiver with respect to this Escrow Agreement shall
be enforceable unless in writing and signed by the party against whom
enforcement is sought. Except as otherwise expressly provided herein, no failure
to exercise, delay in exercising, or single or partial exercise of any right,
power or remedy by any party, and no course of dealing between or among any of
the parties, shall constitute a waiver of, or shall preclude any other or
further exercise of the same or any other right, power or remedy.
11. SEVERABILITY. If any provision of this Escrow Agreement is
construed to be invalid, illegal or unenforceable, then the remaining provisions
hereof shall not be affected thereby and shall be enforceable without regard
thereto.
12. COUNTERPARTS. This Escrow Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall constitute
an original hereof, and it shall not be necessary in making proof of this Escrow
Agreement to produce or account for more than one original counterpart hereof.
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13. CONTROLLING LAW. This Escrow Agreement is made under, and shall be
construed and enforced in accordance with, the laws of the State of Ohio
applicable to agreements made and to be performed solely therein, without giving
effect to principles of conflicts of law.
14. DEFINITIONS. To the extent not specifically defined herein, all
terms used herein shall have the meanings ascribed to them in the Purchase
Agreement.
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IN WITNESS WHEREOF, the parties have executed, or caused their
duly authorized representatives to execute, this Escrow Agreement on the
date first written above.
KENDLE U.K. INC.
By:/s/NIGEL PAGE
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Name: Nigel Page
Title: Vice President, European Operations
/s/PAUL MARTIN
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PAUL MARTIN
Received and accepted:
FIFTH THIRD BANK
Escrow Agent
By: /s/ FRED T. OVERBECK
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Name: Fred T. Overbeck
Title: Assistant Vice President
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EXHIBIT "A"
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PURCHASE AGREEMENT
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EXHIBIT "B"
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ESCROW AGENT FEES
Closing and Acceptance Fees...........................................$4,800.00
Annual Administrative Fee.............................................$1,500.00
The fees listed above relate specifically to duties described in the Escrow
Agreement dated August 31, 1999, between Fifth Third Bank, Kendle U.K. Inc. and
Paul Martin. Extraordinary services or services not specifically contemplated
therein may be additional. All out of pocket expenses including and not limited
to postage, insurance, stationary, travel expenses, wire fees, legal fees, etc.
will be passed along over and above the fees stated.
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