EXHIBIT 2.2
ESCROW AND MINORITY INVESTMENT AGREEMENT
This ESCROW AND MINORITY INVESTMENT AGREEMENT (this "Agreement") is made
and entered into as of August 31, 1998 among Clarus Corporation, former known as
SQL Financials International, Inc., a Delaware corporation ("SFI"), Elekom
Corporation, a Washington corporation ("Elekom"), and US Bank Trust National
Association (together with its successors and assigns, the "Escrow Agent").
RECITALS
A. SFI has entered into an Agreement and Plan of Reorganization dated as
of August 31, 1998 (the "Merger Agreement") with Elekom pursuant to which SFI
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will acquire all of the stock and going business of Elekom pursuant to a forward
triangular merger (the "Merger");
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B. Pursuant to Section 10.3 of the Merger Agreement, SFI has agreed to
deposit with the Escrow Agent $2 million to be distributed to Elekom or to be
returned to SFI in each case in accordance with this Agreement.
D. The execution and delivery of this Agreement by Elekom is a condition
precedent to the obligations of SFI under the Merger Agreement.
E. The Escrow Agent is willing to act as escrow agent hereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 SPECIFIC DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated below.
"Claim Amount," with respect to any Notice of Claim, means Two Million
Dollars ($2,000,000) due to Elekom pursuant to Section 10.3 of the Merger
Agreement.
"Contesting Direction" means a written direction from SFI, which direction
contests an Elekom Direction. Each Contesting Direction must be delivered to
the Escrow Agent in the manner set forth in Section 7 hereof, and copies of such
direction must be delivered in like manner to Elekom.
"Elekom Direction" means a written direction from Elekom specifying that a
claim referred to in Section 10.3 of the Merger Agreement and covered by a
Notice of Claim has been made, and further specifying the Claim Amount. Each
Elekom Direction must be delivered to the Escrow Agent in the manner set forth
in Section 7 hereof, and copies of such direction must be delivered in like
manner to SFI.
"Escrow Fund" has the meaning ascribed to such term in Section 3 hereof.
"Escrow Termination Date" means the earlier of (i) the date of the Closing
of the transactions contemplated by the Merger Agreement, (ii) the date of
termination of the Merger Agreement for any reason other than an item specified
in Section 10.3 of the Merger Agreement which provides for release of the Escrow
Funds as set forth herein, and (iii) November 15, 1998.
"Holdback" has the meaning ascribed to such term in Section 4.1 hereof.
"Joint Direction" means a written direction relating to (i) a Notice of
Claim, (ii) the investment of the Escrow Fund or, (iii) removal of the Escrow
Agent in accordance with Section 5.8 hereof, in each case executed by Elekom and
SFI, and delivered to the Escrow Agent in the manner set forth in Section 7
hereof.
"Notice of Claim" means a written notice from Elekom delivered to the
Escrow Agent and SFI in the manner set forth in Section 7 hereof on or before
the Escrow Termination Date, specifying that facts exist which may give rise to
a claim under Section 10.3 of the Merger Agreement, also specifying the Claim
Amount and describing in reasonable detail the nature of the matter or matters
covered by the Notice of Claim.
1.2 GENERALLY
Capitalized terms used but not defined herein shall have the meanings set
forth in the Merger Agreement.
1.3 NOT A PARTY TO OTHER AGREEMENTS
The Escrow Agent is not a party to, and is not bound by or obligated to
take any notice of, any agreement out of which this escrow may arise, including,
but not limited to, the Merger Agreement.
2. APPOINTMENT OF ESCROW AGENT
Elekom and SFI hereby appoint US Bank Trust National Association, __ as
Escrow Agent, and US Bank Trust National Association hereby agrees to serve as
Escrow Agent upon the terms and conditions set forth herein.
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3. ESCROW FUND
3.1 DEPOSIT; ESTABLISHMENT OF ESCROW FUND
On the date hereof, SFI has deposited with the Escrow Agent funds in the
aggregate amount of $2,000,000, which the Escrow Agent shall promptly deposit in
a fully segregated escrow account and invest in accordance with the instructions
given in Section 3.2 below (the "Escrow Fund") for the purpose of holding such
amounts in trust for the benefit of Elekom and SFI and which funds will be
retained, managed and disbursed by the Escrow Agent subject to the terms and
conditions hereof. Any and all interest which may be earned and received on the
Escrow Fund shall be for the account of SFI and shall not constitute part of the
Escrow Funds.
3.2 INVESTMENT OF FUNDS
During the term of this Agreement, the Escrow Agent shall invest and
reinvest any funds on deposit in the Escrow Fund in (i) an interest-bearing
account or other investment vehicle specified by SFI with a maturity not greater
than thirty (30) days and which is limited to investments backed by the United
States Government or such financial institutions insured by the Federal Deposit
Insurance Corporation, having a net worth of not less than US One Hundred
Million Dollars ($100,000,000) or (ii) such other securities as are set forth in
a Joint Direction, until such time as the entire amount of the Escrow Fund is
released from escrow and paid out by the Escrow Agent in accordance with the
terms of this Agreement. The record owner of any securities or other
investments in which the assets of the Escrow Fund are from time to time
invested or reinvested shall be the Escrow Agent or its nominee. In no event
shall any part of the Escrow Fund be commingled with any other funds held by the
Escrow Agent or any of its parents, subsidiaries or affiliates. The Escrow
Agent shall, promptly following the end of each calendar month, send to each of
SFI and Elekom with respect to the Escrow Fund a statement of holdings and
transactions in form and substance customarily provided to clients, which
statement shall include, without limitation, interest or other income received
during such calendar month in respect of the Escrow Fund, which shall be paid
over to SFI on a monthly basis.
All entities entitled to receive interest from the escrow agent will
provide Escrow Agent with a W-9 or W-8 IRS tax form prior to the disbursement of
interest. A statement of citizenship will be provided if requested by Escrow
Agent.
Parties hereto may elect to request transfer of funds by Fedwire from time
to time, subject to the conditions stated herein. Parties hereto agree that the
wire transfer security procedures identified on the attached Exhibit A to this
agreement are commercially reasonable. Parties hereto further agree that Escrow
Agent should use these procedures to detect unauthorized wire transfer payment
requests prior to executing such requests and further agree that any request
acted upon by the Escrow Agent in compliance with these security procedures,
whether or not authorized, shall be treated as an authorized request. Parties
hereto agree that the Escrow Agent has the right to change the wire transfer
security procedures from time to time and that use of any changed procedures
evidences the acceptance of the commercial reasonability of such change by the
parties hereto.
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4. ADMINISTRATION OF ESCROW FUND
4.1 CLAIMS AGAINST ESCROW FUND
If, on or before the Escrow Termination Date, the Escrow Agent receives a
Notice of Claim from Elekom, then, the Escrow Agent shall, from and after its
receipt of that Notice of Claim, hold the Escrow Fund (the "Holdback") until
such time (whether before or after the Escrow Termination Date) as the
conditions of Section 4.2 hereof have been complied with as to such Notice of
Claim.
4.2 DISTRIBUTIONS
4.2.1 DISTRIBUTIONS ON JOINT DIRECTION
If at any time, or from time to time, prior to, or on the Escrow
Termination Date, the Escrow Agent receives a Joint Direction regarding a Notice
of Claim, the Escrow Agent shall comply with such Joint Direction.
4.2.2 DISTRIBUTION ON ELEKOM DIRECTION
(a) If at any time, or from time to time, prior to, or on the Escrow
Termination Date, the Escrow Agent receives an Elekom Direction, and if the
Escrow Agent does not within 20 days after the date of its receipt of that
Elekom Direction receive a related Contesting Direction, then the Escrow Agent
shall, within 3 days after such 20th day and after confirmation with Elekom of
the amount, pay to Elekom the Claim Amount, as specified in the Elekom
Direction, or the remainder of the Escrow Fund should it be less than the Claim
Amount. Elekom hereby agrees that such funds shall constitute a bridge loan
pursuant to section 10.3 of the Merger Agreement.
(b) If the Escrow Agent does receive a Contesting Direction within such 20-
day period, then it shall continue to hold any Holdback amount necessary to
cover any disputed portion of the Claim Amount until such time as the Escrow
Agent receives either a Joint Direction, or a notice from Elekom or SFI
directing the Escrow Agent with respect to the disbursement, release or any
other disposition of the amount of the Holdback accompanied by a copy of the
final order, judgment or decree from a court of competent jurisdiction with
respect to such claim, and the Escrow Agent has received an opinion of legal
counsel (the reasonable fees and cost for which shall be an additional Loss
hereunder) acceptable to the Escrow Agent that as to such order, judgment or
decree all rights of appeal have expired or been waived. Within 5 days of the
receipt by the Escrow Agent of such Joint Direction or such notice and legal
opinion contemplated by the immediately preceding sentence, the Escrow Agent
shall distribute to Elekom or SFI (as specified in such Joint Direction or such
notice) the Claim Amount specified in such Joint Direction or the amount
contemplated by such notice, as the case may be, or the remainder of the Escrow
Fund should it be less. If payment is to be made to Elekom pursuant to this
Section 4.2.2, such payment must be made in the manner set forth in Section 4.3
hereof.
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4.2.3 DISTRIBUTIONS ON ESCROW TERMINATION DATE
On the Escrow Termination Date, without further notice or request, the
Escrow Agent shall distribute to SFI in the manner set forth in Section 4.3
hereof any amounts remaining in the Escrow Fund which are not subject to
Holdback. Amounts remaining in the Escrow Fund which are subject to Holdback
will be distributed when, and only when, the conditions of Section 4.2.2 hereof
are satisfied.
4.3 DISTRIBUTIONS TO SFI AND ELEKOM
In the event that the Escrow Agent is required to distribute any part of
the Escrow Fund to Elekom or SFI, the Escrow Agent will make payment by issuance
of its check, delivered by first class or overnight mail to the address set
forth in Section 7 hereof, representing an amount equal to the total amount then
to be distributed from the Escrow Fund.
5. ESCROW AGENT
5.1 PAYMENTS TO ESCROW AGENT
Escrow Agent shall be paid for services hereunder in accordance with the
attached fee schedule and shall be reimbursed for its out of pocket expenses for
fees of counsel in setting up the escrow. Payments of all fees shall be the
responsibility of Elekom and may, to the extent of unpaid fees and expenses, be
deducted from any property placed within the escrow with Escrow Agent. In the
event that Escrow Agent is made a party to litigation with respect to the
property held hereunder, or brings an action in interpleader or in the event
that the conditions of this escrow are not promptly fulfilled, or Escrow Agent
is required to render any service not provided for in this agreement and fee
schedule, or there is any assignment of the interest of this escrow or any
modification hereof, Escrow Agent shall be entitled to reasonable compensation
for such extraordinary services and reimbursement for all fees, costs, liability
and expenses, including attorney fees. The Escrow Agent may amend its fee
schedule from time to time on 60 days prior written notice to the parties.
If any controversy arises between the parties hereto or with any third
person, Escrow Agent shall not be required to resolve the same or to take any
action to do so but may, at its discretion, institute such interpleader or other
proceedings as it deems proper. Escrow Agent may rely on any joint written
instructions as to the disposition of funds, assets, documents, or other held in
escrow.
5.2 INDEMNIFICATION OF ESCROW AGENT
The Escrow Agent will be indemnified and held harmless by Elekom and SFI
from and against any and all reasonable and necessary fees and expenses arising
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out of or relating to the execution or performance by the Escrow Agent of its
duties under this Agreement, including reasonable and necessary attorneys' fees,
expenses and disbursements, including without limitation fees and expenses
incurred prior to trial, at trial, and on appeal and in any bankruptcy or
arbitration proceeding, or losses suffered by the Escrow Agent hereunder;
provided, however, that the Escrow Agent will not be indemnified and held
harmless with respect to such fees and expenses or losses which result from or
arise out of the Escrow Agent's gross negligence, willful misconduct or bad
faith.
5.3 ESCROW AGREEMENT GOVERNS
The duties and obligations of the Escrow Agent will be determined solely by
the express provisions of this Agreement, and the Escrow Agent will not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement.
5.4 RELIANCE ON DOCUMENTS, INSTRUMENTS, SIGNATURES
In the performance of its duties hereunder, the Escrow Agent will be
entitled to rely upon any document, instrument or signature believed by it in
good faith to be genuine and signed by any party hereto or an authorized officer
or agent thereof, and will not be required to investigate the truth or accuracy
of any statement contained in any such document or instrument, or whether or not
the document, instrument or notice has been delivered to any party other than
the Escrow Agent, or whether or not a Notice of Claim contains "reasonable
detail" of the issue underlying the amount claimed or the reason for the claim.
The Escrow Agent may assume that any person purporting to give any notice in
accordance with the provisions hereof has been duly authorized to do so.
5.5 REMOVAL AND RESIGNATION
The Escrow Agent may at any time be removed by a Joint Direction upon 30
days' notice. The Escrow Agent or any successor to it as Escrow Agent hereunder
appointed may at any time resign and be discharged of the duties imposed
hereunder by giving 30 days' notice to each of SFI and Elekom. Such removal or
resignation shall take effect upon a successor escrow agent's acceptance of such
appointment. Any such successor will be jointly appointed by SFI and Elekom.
5.6 MERGER
Any corporation into which the Escrow Agent may be merged or with which it
may be consolidated, or to which it may sell substantially all of its corporate
trust business, or any corporation resulting from any merger or consolidation or
conversion to which it shall be a party, shall in fact be the successor to the
Escrow Agent without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
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6. TERM AND EFFECT
This Agreement will take effect immediately upon receipt by the Escrow
Agent of the Escrow Fund and will terminate when the Escrow Agent has
distributed all amounts contained in the Escrow Fund.
7. NOTICES
All notices, demands and other communications required or permitted
hereunder shall be in writing and may be telexed or telecopied, which shall be
followed forthwith by letter, and such notice, request, demand or other
communication shall be deemed to have been received on the next business day
following dispatch and acknowledgment of receipt by the recipient's telex or
telecopy machine. In addition, notices hereunder may be delivered by hand, in
which event the notice shall be deemed effective when delivered, or by overnight
courier, in which event the notice shall be deemed to have been received on the
next business day following delivery to such courier. Notices, requests,
demands and other communications may not be given by regular or certified mail.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:(or such other address for a party as
shall be specified by like notice):
If to Company:
Elekom Corporation
Pacific First Plaza, Eighth Floor
000 - 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, President and CEO
Facsimile: (000) 000-0000
Telephone: (000)-000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxx Coie LLP
000 - 000xx Xxxxxx X.X.
Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
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If to SFI:
SQL Financials International, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President and CEO
Facsimile: (000) 000-0000
Telephone: _____________________
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: G. Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(c) If to Escrow Agent:
US Bank Trust National Association
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 16.
8. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
9. APPLICABLE LAW
This Agreement will be governed by and construed and enforced in accordance
with the internal laws of the State of Georgia without regard to any rules
governing conflicts of laws. The exclusive jurisdiction for any action by any
of the parties hereto with respect to this Agreement or the Escrow Funds shall
be the state and federal courts situated in Hennepin County, Minnesota.
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10. ASSIGNMENT
This Agreement will inure to the benefit of, and be binding upon, SFI and
Elekom and their successors and assigns. This Agreement and the rights and
obligations hereunder of the Escrow Agent may be assigned by it only to a
successor to the Escrow Agent's entire corporate trust department.
11. ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS
This Agreement contains the entire agreement among the parties pertaining
to the subject matter hereof and supersedes all prior and contemporaneous
agreements, negotiations, discussions, arrangements or understandings with
respect thereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
12. EXPENSES
Except as otherwise provided for herein, each party shall be responsible
for its own costs and expenses with respect to matters involving this Agreement.
13. HEADINGS
The headings in this Agreement shall be solely for convenience of reference
and shall in no way define, limit or describe the scope or intent of any
provisions of sections of this Agreement.
14. SEVERABILITY
If any provision of this Agreement, or any covenant, obligation or
agreement contained herein is determined by a court to be invalid or
unenforceable, such determination shall not affect any other provision,
covenant, obligation or agreement, each of which shall be construed and enforced
as if such invalid or unenforceable portion were not contained therein. Such
invalidity or unenforceability shall not affect any valid and enforceable
application thereof, and each such provision, covenant, obligation or agreement
shall be deemed to be effective, operative, made, entered into or taken in the
manner and to the full extent permitted by law.
15. COVENANT REGARDING USE OF US BANK TRUST NATIONAL ASSOCIATION NAME
The parties hereto hereby agree not to use the name of U.S. BANK TRUST
NATIONAL ASSOCIATION to imply an association with the transaction other than
that of a legal escrow agent.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CLARUS CORPORATION, formerly known as SQL
Financials International, Inc.
By:
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Xxxxxxx X. Xxxxxxx, President and CEO
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ELEKOM CORPORATION
By:
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Xxxxxx Xxxxx, President and CEO
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Its:
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ESCROW AGENT
By: /s/
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Its:
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