Escrow Agreement

EXHIBIT 99.3


MEDIQ INCORPORATED,


MEDIQ INVESTMENT SERVICES, INC.


and


FIRST FIDELITY BANK, N.A. PENNSYLVANIA,


as Escrow Agent


ESCROW AGREEMENT


July 30, 1993


7 1/2% Exchangeable Subordinated Debentures Due 2003


Escrow Agent and its successors as such, the Company, MIS and the Escrow Agent hereby agree as follows:


SECTION 1. Deposit.


The Company, simultaneously with the execution and delivery of this Agreement, is delivering to the Escrow Agent, irrevocably except as provided in Section 7 hereof, to be held by the Escrow Agent hereunder certificates, registered in the name of the Escrow Agent or its agent or nominee, representing 2,254,902 shares of NutraMax Common Stock. The Company and MIS represent and warrant that MIS has good and lawful title to such shares, that such shares are fully paid and non-assessable, and that such shares are delivered free and clear of any liens, claims, charges and encumbrances. The Escrow Agent hereby acknowledges receipt of such certificates for 2,254,902 shares of NutraMax Common Shares and further acknowledges that it holds and will hold the NutraMax Common Stock and the proceeds thereof pursuant to and in accordance with the terms hereof and of the Indenture.


The Company and the Escrow Agent recognize that the holders of the Debentures have an interest in the powers conferred on the Escrow Agent under this Agreement, and, except as provided in Section 8 hereof, such powers may not be revoked, amended or modified without the consent of the holders of at least a majority in principal amount of the Debentures at the time outstanding; provided that no revocation, amendment or modification shall affect adversely the right to exchange any Debentures for NutraMax Common Shares and other Escrowed Property (as defined below) at the then effective Exchange Rate and upon the terms set forth in Article Eleven of the Indebenture or reduce the aforesaid percentage of Debenture the holders of which are required to consent to any revocation, amendment or modification, without the consent of all the holders of all Debentures then outstanding.


The shares of NutraMax Common Stock received by the Escrow Agent and retained for the benefit of the holders of the Debentures, together with such other securities, cash and other property as may be held by the Company for delivery to the Escrow Agent or delivered to the Escrow Agent in accordance with the Agreement and the Indenture, are herein sometimes referred to as the "Escrowed Property."


SECTION 2. Covenant by Escrow Agent.


The Escrow Agent covenants and agrees to hold the Escrowed Property received by it pursuant to this Agreement for the purposes and upon the terms and conditions set forth in the Indenture and this Agreement.


SECTION 3. Notification of Adjustment of Exchange Rate;
Exchange of Debentures.


The Company will notify the Escrow Agent in writing forthwith upon any adjustment of the Exchange Rate, and will, upon request, notify the Escrow Agent in writing of the Market Price (as defined in the Indenture) of the NutraMax Common Stock (or per unit Market Price of any other securities or property which is part of the Escrowed Property) as of any relevant date for the purpose of computing cash adjustments in respect of fractional interests. The Escrow Agent shall be under no duty or responsibility with respect to any such notice except to exhibit such notice from time to time to any holder of Debentures requesting inspection thereof.


Upon surrender to the Escrow Agent of any Debenture (or a principal portion thereof which is an integral multiple of $1,000) for exchange in accordance with the terms thereof and of the Indenture, the Escrow Agent shall promptly (i) cause to be delivered, to or on the written order of the person for whose account such Debenture (or portion thereof) was to surrender for exchange, a certificate or certificates representing the number of shares of NutraMax Common Stock (or such other securities, property or cash as shall be added to such shares of NutraMax Common Stock or as such Nutramax Common Stock shall have been changed into as provided in Article 11 of the Indenture) deliverable upon the exchange of any such Debenture (or portion thereof), the property (other than securities or cash), if any, apportioned thereto, a check for any cash apportioned thereto and for any fractional interest in NutraMax Common Stock or other securities or property), (ii) deliver to the Trustee the Debenture so exchanged marked cancelled, and (iii) if only a portion of said Debenture is exchanged, obtain from the Trustee and deliver to or on the order of the person for whose account the Debenture was surrendered for exchange a new Debenture or Debentures for the principal amount thereof not exchanged; provided that if the Company elects to make a cash payment in lieu of exchange of NutraMax, Common Stock pursuant to Section 11.14 of the Indenture and if immediately available funds are simultaneously deposited with the Escrow Agent by the Company, the Escrow Agent shall pay to the holder of the Debentures so surrendered an amount in cash equal to the value of the NutraMax Common Stock for which such Debentures are exchangeable (based on the Market Price was defined in the Indenture) on the date of receipt by the Escrow Agent of the notice of exchange delivered by the holder of Debentures pursuant to Section 11.02 of the Indenture) and as set forth in Section 12 hereof, the Escrow Agent shall deliver to the Company such shares of NutraMax Common Stock which otherwise would have been delivered upon exchange to the holder.


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In any case in which Section 11.04 of the Indenture shall require that an adjustment of the Exchange Rate be made immediately following a record date, the Escrow Agent may defer delivering to the holder of any Debenture surrendered for exchange after such record date the additional securities and other property deliverable upon such exchange: as a result of such adjustment until such additional securities and other property have been delivered to the Escrow Agent; and, in lieu of the additional securities and other property the delivery of which is so deferred, the Escrow Agent shall deliver to such holder due bills or other appropriate evidence (determined in the sole discretion of the Escrow Agent) of the right to receive such additional securities and other property.


SECTION 4. Division of Certificates; Payment of Taxes, Fees
and Charges, and Cash Adjustments; Payment of
Fractional Interest.


The Company shall make, execute and deliver or cause to be made, executed and delivered any and all such instruments end assurances, and take all such further action, as may be reasonably necessary or proper to carry out the intention of or to facilitate the performance of the terms of this Agreement or to secure the rights and remedies hereunder of the holders of the Debentures. The Company shall pay (i) any and all documentary, stamp, transfer or similar taxes that may be payable in respect of the deposit of the shares of NutraMax Common Stock and the transfer or delivery of the Escrowed Property to holders of Debentures upon exchange thereof; (ii) any income or other taxes incurred by the Escrow Agent in its capacity as such for any reason (except for payment or accrual of its own fees); (iii) all out-of-pocket fees or charges of the Escrow Agent in connection with or arising out of the Agreement, the Indenture or any exchange of Debentures in accordance with the terms hereof and thereof; (iv) all cash adjustments in respect of fractions of shares of NutraMax Common Stock or other fractional units of property or other securities which the holders of Debentures may be entitled to receive upon exchange thereof (after giving effect to moneys received by the Escrow Agent from the sale of Escrowed Property for the purpose of paying for such fractional interests); and (v) cash in an amount equal to any losses on investments made pursuant to Section 6 of this Agreement to the extent necessary to maintain on deposit with the Escrow Agent funds equal from time to time to the aggregate amount of cash apportioned to all NutraMax Common Stock at each such time deliverable upon exchange of all Debentures then outstanding. Notwithstanding the foregoing, the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the delivery, upon an exchange of Debentures, of Escrowed Property in a name other than that in which the Debentures so exchanged were registered, and no such transfer or delivery shall be made unless and until the person requesting


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such transfer has paid to the Company or the Escrow Agent the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.


The Escrow Agent shall be authorized to, and, at the Company's direction, shall, sell any shares of NutraMax Common Stock or other securities or property which are part of the Escrowed Property held by it in order to obtain the funds necessary, or anticipated by it to be necessary, for payment of fractional interests with respect to Debentures delivered to it for exchange; provided that after any such sale, the number of shares of NutraMax Common Stock and any such other securities or property remaining on deposit with the Escrow Agent shall be sufficient to allow the exchange of all the then outstanding Debentures for shares of NutraMax Common Stock and other Escrowed Property on the basis of the then applicable Exchange Rate. If a sale of shares of NutraMax Common Stock to make cash payments for fractional shares is not permitted or if the funds obtained from such a sale are insufficient, then the Company shall furnish additional moneys to permit such payment in accordance with Section 11.03 of the Indenture.


SECTION 5. Voting of Escrowed Property.


The Company shall have the full and unqualified right and power to exercise any rights to vote, or to give consents to take any other action in respect of, its shares of the NutraMax Common Stock or other securities which are part of the Escrowed Property, and the Escrow Agent shall have no duty to exercise any rights.


The Escrow Agent or its nominee shall from time to time deliver, or cause to be delivered, to the Company in a timely fashion such proxies as may be necessary or appropriate to permit the Company to vote on each matter submitted to the holders of shares of NutraMax Common Stock of other securities which are part of the Escrowed Property.


SECTION 6. Investment of Cash.


All cash received and retained by the Escrow Agent under Section 11.05 of the Indenture and Section 13 hereof shall be invested at the direction of the Company in a money market account of a domestic commercial bank, which may include the Trustee, having capital and surplus in exccess of $250 million or in securities issued or guaranteed by the United States of America or any agency or instrumentality thereof, provided that such obligations sha ...