Exhibit 2.2
ESCROW AGREEMENT
PARTIES:
INVISION TECHNOLOGIES, INC., a Delaware corporation (Parent)
INVISION ACQUISITION CORP., a Delaware corporation, (Merger Sub)
XXXXXX XXXXX, ALA BAZZAZ, XXXXXXX XXXXXXXX and XXXXX XXXXXX, (each, a
Shareholder and collectively the Shareholders)
GREATER BAY TRUST COMPANY (Escrow Agent)
RECITALS:
A. This Agreement is being executed pursuant to an Agreement and Plan
of Merger and Reorganization dated February 23, 2000 (the Merger Agreement),
providing for the acquisition by Parent of Inovec, Inc. (Inovec), pursuant to a
merger of Merger Sub and Inovec (the Merger). Section 1.7 of the Merger
Agreement provides for the payment of certain Earn-Out Payments (as such term is
defined in the Merger Agreement) to the Shareholders in the amounts as
calculated in the Merger Agreement.
B. Shareholders have agreed to indemnify Parent under certain
circumstances as described in Section 9 of the Merger Agreement. Parent has
certain rights to offset amounts due from the Shareholders under the Merger
Agreement against the Earn-Out Payments.
C. In connection with the Merger, each of the Shareholders, except
Xxxxxx Xxxxx, is entering into an Employment Agreement (collectively, the
Employment Agreements) with Parent and Merger Sub. The Employment Agreements
provide for the payment by a Shareholder to Parent of certain liquidated damages
equal to the amount of installments of the Earn-Out Payments not yet paid upon
termination of a Shareholder's employment for Cause (as defined in the
Employment Agreements) or by a Shareholder's voluntary termination.
D. The parties desire to establish and maintain an escrow fund (the
Escrow Fund) to fund the payment of any amounts which may become due pursuant to
the Employment Agreement or the Merger Agreement.
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AGREEMENTS:
1. DEPOSIT OF FUNDS. On the date Parent is required to deliver each
installment of the Earn-Out Payments (each, an Installment Delivery Date),
Parent shall deliver that number of shares of Parent Stock issuable, registered
in the names of the Shareholders as set forth on the attached EXHIBIT A, and
that amount of cash payable in that installment of the Earn-Out Payments, to the
Escrow Agent as the Escrow Fund. The Escrow Agent will hold the Escrow Fund in
escrow upon the terms and conditions set forth in this Agreement.
2. PLEDGE OF PARENT STOCK. Each Shareholder pledges for the benefit
of Parent, and grants Parent a security interest in, the Parent Stock deposited
upon each installment. Each Shareholder has delivered to the Escrow Agent stock
powers endorsed in blank, which may be used with respect to the Parent Stock
registered in that Shareholder's name prior to disbursement of that installment
of Parent Stock to the Shareholder.
3. PURPOSE OF THE ESCROW FUND. The purpose of the Escrow Fund is (a)
to provide funds for payment of liquidated damages, if any, which may become due
under the Employment Agreements upon termination of a Shareholder's employment
for Cause or a Shareholder's voluntary termination; and (b) to provide funds to
offset any amounts which may become due from the Shareholders pursuant to their
indemnification obligations under the Merger Agreement.
4. DISBURSEMENT OF ESCROW FUND. Each Shareholder, or such
Shareholder's estate, if applicable, shall be entitled to receive his portion
of the most recent installment of the Earn-Out Payments, as determined in
accordance with EXHIBIT A (each, a Pro Rata Installment Payment), if (a) such
Shareholder (other than Xxxxxx Xxxxx) is employed by Merger Sub on the
Installment Delivery Date, or if Shareholder was not employed by Merger Sub on
the Installment Delivery Date for any reason other than Shareholder's voluntary
termination or termination by Merger Sub for Cause and (b) there are no amounts
payable to Parent from the Shareholders pursuant to the Shareholders'
indemnification obligations under the Merger Agreement. The Escrow Agent shall
disburse the Escrow Fund after each installment of the Earn-Out Payments is
made, as follows:
4.1. INDEMNIFICATION CLAIM.
4.1.1. Parent may assert a claim for indemnification under
Section 9 of the Merger Agreement in accordance with Section 9.6 of the Merger
Agreement (Indemnification Claim) by promptly giving written notice of such
claim (an Indemnification Notice), including a copy of such claim and/or process
and all legal pleadings in connection therewith, to the Shareholders' Agent, as
defined in Section 10.1 of the Merger Agreement, and to the Escrow Agent. Each
Indemnification Notice shall state the amount of the claim and liabilities for
which indemnity is sought (the Claimed Indemnification Amount) and the basis for
such claim. Parent shall assert any such Indemnification Claim promptly
following the discovery of the facts giving rise to such claim and in no event
more than 60 days after such discovery. If the Escrow Agent does not receive an
Indemnification Notice or a Termination Notice (as defined in Section 4.2.1 of
this Agreement) within five business days
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after an Installment Delivery Date, the Escrow Agent shall disburse the
entire Escrow Fund by delivering to each Shareholder his Pro Rata Installment
Payment.
4.1.2. If Parent delivers an Indemnification Notice in
accordance with Section 4.1.1 of this Agreement, the Escrow Agent shall retain
that portion of the Escrow Fund equal to the Claimed Indemnification Amount and
disburse the balance of the Escrow Fund, if any, to the Shareholders (subject to
any additional holdbacks required by Section 4.2 hereof). The Shareholders'
Agent shall have 30 days after the date of receipt of the Indemnification Notice
to deliver to Parent a written response (the Response Notice), with a copy to
the Escrow Agent, in which the Shareholders' Agent shall do one of the
following:
(a) agree to the payment in full of the Claimed
Indemnification Amount and request that the Escrow Agent
disburse to Parent the Claimed Indemnification Amount;
(b) agree to the payment of a portion of the Claimed
Indemnification Amount (the Satisfaction Amount) and
request that the Escrow Agent disburse to Parent that
portion of the Claimed Indemnification Amount equal to
the Satisfaction Amount; or
(c) contest the Indemnification Claim. The Shareholders'
Agent may only contest an Indemnification Claim based
upon a good faith belief that all or such portion of
the Claimed Indemnification Amount does not
constitute claims for which Parent is entitled to
indemnification under section 9.2 of the Merger
Agreement.
4.1.3. If no Response Notice is delivered by the Shareholders'
Agent within such 30 day period, then the Shareholders' Agent shall be deemed to
have agreed that the full Claimed Indemnification Amount is due and payable.
Escrow Agent may then disburse the Claimed Indemnification Amount to Parent. In
the case of 4.1.2 (b), if the Escrow Agent does not receive a written notice
from Parent within five business days of Escrow Agent's receipt of the Response
Notice (a Response Denial Notice), Parent shall be deemed to have agreed to
accept the Satisfaction Amount in full satisfaction of the Indemnification Claim
and shall be deemed to have waived all further claims related to such
Indemnification Claim. The Escrow Agent shall disburse the Satisfaction Amount
to Parent and the balance of the Claimed Indemnification Amount to the
Shareholders within five business days thereafter. If Parent delivers a Response
Denial Notice within the time period provided, or if the Shareholders' Agent
delivers the Response Notice described in 4.1.2 (c), the parties shall be
subject to the provisions of Section 4.3 below.
4.2. EMPLOYMENT AGREEMENT CLAIM.
4.2.1. Parent shall have five business days after each
Installment Delivery Date to deliver a written notice to the Escrow Agent
(Termination Notice), with a copy to Escrow
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Agent, that a Shareholder or Shareholders is not entitled to disbursement of
his Pro Rata Installment Payment due to his voluntary termination of
employment or termination for Cause, naming the Shareholder(s) (each, a
Terminated Shareholder), the amount in dispute (the Termination Amount) and
the basis for such claim. If, within five business days after each
Installment Delivery Date, the Escrow Agent has not received a Termination
Notice or an Indemnification Notice from Parent, the Escrow Agent shall
disburse the entire Escrow Fund by delivering to each Shareholder his Pro
Rata Installment Payment.
4.2.2. If Parent delivers a Termination Notice in accordance
with Section 4.2.1. above, the Escrow Agent shall retain the Termination Amount
and disburse the balance of the Escrow Fund to the Shareholders not named in the
Termination Notice (subject to any additional holdbacks required under Section
4.1 hereof). If the Terminated Shareholder(s) do not deliver a written objection
(Objection) to the Escrow Agent, with a copy to Parent, within ten business days
from the date of the Terminated Shareholder's receipt of a Notice, the Escrow
Agent shall deliver the Disputed Amount to Parent within five business days
thereafter.
4.3. DISPUTE RESOLUTION. If a Terminated Shareholder delivers
an Objection, Parent delivers a Response Denial Notice, or Shareholders' Agent
delivers a Response Notice contesting the Indemnification Claim (each a Dispute
Notice), the parties shall have 30 days from the date of the addressee's receipt
of such Dispute Notice to resolve the dispute. Upon resolution, the parties
shall deliver to the Escrow Agent further instructions signed by Parent, Merger
Sub and the Shareholders' Agent (in the case of an Indemnification Claim) or the
Terminated Shareholder(s) (in the case of a Termination Claim), which
instructions shall be binding on all parties. If the parties are unable to reach
such resolution within 30 days, Parent, in the case of an Indemnification Claim,
or the Terminated Shareholder(s), in the case of a Termination Claim, shall have
an additional 30 days to commence legal proceedings and deliver written notice
regarding such commencement to the Escrow Agent. If legal proceedings are
commenced, the Escrow Agent shall retain the Claimed Indemnification Amount or
the Termination Amount, as applicable, until final adjudication of the dispute
by a court of competent jurisdiction or receipt of further written instructions
signed by all parties. The Escrow Agent shall disburse the Escrow Fund within
five business days of notification of such final adjudication or instructions.
If legal proceedings are not commenced within the required time frame, Parent
shall be deemed to have agreed that the Shareholders are not liable for the
Claimed Indemnification Amount and to have waived all claims related to such
Indemnification Claim or the Terminated Shareholder(s) shall be deemed to have
agreed to Parent's claim to the Termination Amount and to have waived all claims
related thereto. Accordingly, within five business days thereafter, the Escrow
Agent shall disburse the Claimed Indemnification Amount to the Shareholders
and/or the Termination Amount to Parent.
5. TERM. This Agreement shall continue in effect until disbursement by
Escrow Agent, in accordance with the terms of this Agreement, of the final
installment of the Earn-Out Payments payable pursuant to Section 1.7 of the
Merger Agreement.
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6. CONCERNING THE ESCROW AGENT.
6.1. The Escrow Agent may resign at any time by giving notice
to Parent and Shareholders specifying a date when the resignation shall take
effect. Upon such notice, a successor Escrow Agent shall be appointed with
the unanimous consent of Parent and the Shareholder Agent. If Parent and the
Shareholder Agent are unable to agree upon a successor Escrow Agent within 30
days after such notice, the Escrow Agent shall be entitled to appoint its
successor. The Escrow Agent shall continue to serve until its successor
accepts the appointment and receives the Escrow Fund. Parent and the
Shareholder Agent shall have the right at any time, upon their mutual
consent, to substitute a new Escrow Agent by giving notice to the Escrow
Agent then acting.
6.2. The Escrow Agent shall perform those duties specifically
set forth in this Agreement and may conclusively rely, and shall be protected
in acting or refraining from acting, on any written notice, instrument or
signature believed by it to be genuine and to have been signed or presented
by the proper party or parties authorized to do so. The Escrow Agent shall
have no responsibility for the contents of any writing contemplated in this
Agreement and may rely on its contents without any liability.
6.3. The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized by this
Agreement or within the rights or powers conferred upon it under this
Agreement, or for action taken or omitted by it in good faith, and in
accordance with advice of counsel (which counsel may be of the Escrow Agent's
own choosing), and shall not be liable for any mistake or fact or error of
judgment or for any acts or omissions of any kind unless caused by willful
misconduct or negligence.
6.4. Each party shall indemnify the Escrow Agent and hold it
harmless from and against all liabilities incurred by the Escrow Agent under
this Agreement as a consequence of that party's action, and the parties shall
jointly indemnify the Escrow Agent and hold it harmless from and against all
liabilities incurred by the Escrow Agent under this Agreement that are not a
consequence of any party's action, except in either case for liabilities
incurred by the Escrow Agent resulting from its own willful misconduct or
negligence.
7. FEES OF ESCROW AGENT. All fees, if any, of the Escrow Agent for
service under this Agreement shall be shared equally among Parent and the
Shareholders.
8. MISCELLANEOUS PROVISIONS.
8.1. NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party notified; or (b) three days after deposit in
the U.S. mail, by registered or certified mail, postage prepaid, return
receipt requested; in either case addressed to the party to be notified at
the address indicated below, or at such other address as that party may
indicate by 10 days' advance written notice to the other party:
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To Shareholders: Xxxxxx Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxx 00000
Ala Bazzaz
0000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxxxxxx
X.X. Xxx 000
Xxxxxxxx Xxxx, XX 00000
Xxxxx Xxxxxx
00000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
To Parent: InVision Technologies, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attn: Chief Financial Officer
To Escrow Agent: Greater Bay Trust Company
000 Xxxxxxx Xxxxxx, XX Xxx 0000
Xxxx Xxxx, XX 00000
8.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective heirs,
legal representatives, successors and assigns.
8.3. ATTORNEYS' FEES. In the event suit or action is commenced
by any party to enforce or interpret any provision of this Agreement, the
prevailing party shall be entitled to recover its reasonable costs and
attorneys' fees at trial and on any appeal, in addition to the costs and
disbursements allowed by law.
8.4. CUMULATIVE RIGHTS. The rights, powers and remedies of the
parties under this Agreement shall be in addition to all rights, powers and
remedies given to the parties by virtue of any statute or rule of law, or any
other agreement, all of which shall be cumulative and may be exercised
concurrently. Nothing herein shall be construed to require a party to pursue or
exhaust its remedies under this Escrow Agreement as a condition to or
concurrently with the pursuit of any other rights, powers or remedies enjoyed by
a party by virtue of any statute or rule of law. Except as specifically set
forth herein, the rights, powers and remedies arising hereunder shall not be
deemed sole or exclusive.
8.5. WAIVER. Except as specifically set forth herein, any
waiver, forbearance, failure or delay by a party in exercising, or the exercise
or beginning of exercise by a party of, any
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right, power or remedy, simultaneous or later, shall not preclude the
further, simultaneous or later exercise, and every right, power or remedy of
a party shall continue in full force and effect until it is specifically
waived in a writing executed by a party.
8.6. ENTIRE AGREEMENT. This Agreement and the exhibits
referred to in this Agreement embody the parties' entire agreement and
understanding with respect to the transactions contemplated by this Agreement
and supersede all prior agreements and understandings, written or oral, relating
to matters provided for in this Agreement.
8.7. COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement may
be executed in more than one counterpart, each of which shall be deemed an
original and all of which together constitute one and the same agreement.
Delivery of an executed copy of this Agreement by telecopy, telex or other means
of electronic communication producing a printed copy will be deemed to be an
execution and delivery of this Agreement on the date of such communication by
the parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this Agreement to
the other parties within one week of the date of delivery of the copy sent via
electronic communication.
8.8. TIME OF ESSENCE. Time is of the essence with respect to
all date and time periods set forth or referred to in this Agreement.
8.9. VALUE OF PARENT STOCK. For purposes of calculating the
number of shares to be disbursed to satisfy claims of Parent hereunder, the
Parent Stock shall be deemed to have a value per share equal to the greater of
the price per share of such Parent Stock as determined in accordance with
Section 1.6(d) of the Merger Agreement on the Share Price Calculation Date with
respect to the original issuance of such share or the weighted average closing
market price per share of the Parent Stock on the NASDAQ National Market for the
ten trading days prior to the date of transfer to Parent.
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8.10. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed in all respects by, the intended laws of the State
of California (without giving effect to principles of conflicts of laws).
DATED: February 23, 2000.
INVISION TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: CEO
INVISION ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title:
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
/s/ Ala Bazzaz
----------------------------------------
Ala Bazzaz
/s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
GREATER BAY TRUST COMPANY
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
Title: Assistant Vice President and Trust
Officer
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