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EXHIBIT 2.2
ESCROW AGREEMENT
This Escrow Agreement, dated as of August 18, 2000 (hereinafter
referred to as "Agreement"), by and between ADD Acquisition Corp., a subsidiary
of Dauphin Technology, Inc. (hereinafter collectively referred to as "Buyer"), T
& B Design, Inc. f/k/a Advanced Digital Designs, Inc., an Illinois corporation
("Company"), Xxxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxx Xxxxxxx ("Xxxxxxx") (Company,
Xxxxxxx and Karsten are hereinafter collectively referred to as "Seller"), and
National City Bank of Michigan/Illinois (hereinafter referred to as "Escrow
Agent").
WITNESSETH:
WHEREAS, pursuant to an Asset Purchase Agreement between Buyer and
Seller, dated August 18, 2000, Buyer has agreed to purchase from Seller all of
the assets of Company, in consideration of the payments by Buyer provided in the
Agreement, including the payment of THREE MILLION DOLLARS ($3,000,000) to the
Escrow Agent to be held and disposed of by it on the terms set forth in this
Agreement; and
WHEREAS, Buyer and Seller desire the Escrow Agent to hold and dispose
of the Escrow Fund (as defined herein), and the Escrow Agent is willing to do so
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the transactions contemplated by
the Asset Purchase Agreement, and of the promises and the mutual agreements
hereinafter set forth, the parties hereto do hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Asset Purchase Agreement.
2. ESCROW. In accordance with the terms of the Asset Purchase Agreement,
Buyer will deposit on August 18, 2000 with the Escrow Agent THREE MILLION
DOLLARS ($3,000,000) to be held and disposed of as provided in this Escrow
Agreement. The funds and property held by the Escrow Agent hereunder are
hereinafter referred to as the "Escrow Fund."
3. LIABILITY SECURED BY THE ESCROW FUND. Subject to the provisions of
Paragraph (2.1) of the Asset Purchase Agreement, the Escrow Fund shall be held
as a trust fund and shall not be subject to lien or attachment of any creditor
of any party hereto and shall be used solely for the purposes and subject to the
conditions set forth herein.
4. ESCROW FUNDS. Escrow Agent shall pay to each of Xxxxxxx and Xxxxxxx
ONE HUNDRED EIGHTY SEVEN THOUSAND FIVE HUNDRED DOLLARS ($187,500) on the last
day of November, February, May and August through August 18, 2002, provided that
each of Xxxxxxx and Karsten are not in violation of their Employment Agreement
with Buyer, or any other agreement with Buyer and have not been discharged for
Just Cause or submitted a Voluntary Resignation, as those terms are defined in
the Escrow Agreement by and between each of Xxxxxxx and Xxxxxxx with Buyer.
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5. TERMINATION/PAYMENT OF FUNDS. Except as provided in this Paragraph 5,
on the second anniversary of the closing date of the underlying acquisition
(hereinafter referred to as "Termination Date"), the Escrow Agent shall pay and
deliver to Buyer, any undistributed net income earned and held in the Escrow
account, in accordance with written instructions signed by Buyer, and pay and
deliver to Seller, any remaining payment of principal, held in the Escrow Fund;
provided that, if before such time, Seller(s) shall have asserted one or more
claims that it is entitled to receive a payment under this Agreement, and shall
have provided a Notice of Claim to the Escrow Agent and to Buyer, that portion
of the Escrow Fund equal to the amount of Notice of Claim shall not be paid and
delivered as aforesaid until the amount or amounts due (if any) to Seller(s), in
respect of all such claims shall have been determined by delivery to the Escrow
Agent of one or more Determinations in the forms described in Paragraph 6 hereof
and such amount or amounts (if any) have been paid to the party entitled hereto.
In the event any Third-Party Claim shall not have been settled or a final
judgment with respect thereto shall not have been reached, no portion of the
Escrow Fund in excess of the liabilities claimed on the Notice of Claim relating
thereto shall be paid or delivered until a Determination with respect to such
claim required by Paragraph 5 hereof has been delivered to the Escrow Agent.
6. RESOLUTION OF DISPUTED CLAIMS. Any dispute regarding whether Buyer is
entitled to receive a payment out of the Escrow Fund as provided in this
Agreement, or as to the amount thereof, or as to the right of Buyer or Seller to
receive all or any part of the cash or obligation held by the Escrow Agent
hereunder, shall be first submitted to Buyer and Seller. In the event that a
Determination has not been delivered to the Escrow Agent within thirty (30) days
after Seller has received a Notice of Claim as set forth in Paragraph 5 hereof,
such dispute shall be submitted by either Buyer or Seller, to, and settled by,
arbitration. Such arbitration shall be effected by arbitrators selected as
hereinafter provided and shall be conducted in accordance with the rules,
existing at the date thereof, of the American Arbitration Association in
Chicago, Illinois. Such arbitration shall be final and binding upon the parties
hereto. The dispute shall be submitted to three (3) arbitrators, one arbitrator
being selected by Seller, one arbitrator being selected by Buyer, and the third,
by the American Arbitration Association. In the event that either party, within
twenty (20) days after any notification made to it of the demand for arbitration
by the other party, shall not have selected its arbitrator and given notice
thereof by registered mail to the other party, such arbitrator shall be selected
by the American Arbitration Association. The validity, construction, performance
or termination of any agreement by and between the parties submitted to
arbitration shall be determined on the basis of the contractual obligations of
the parties and the law governing such obligations. The arbitrators shall
determine their jurisdiction over person and subject matter if such jurisdiction
is challenged by one of the parties. The award of the arbitrators shall be: (a)
rendered in writing, not more than forty-five (45) days after the selection of
such arbitrator and shall state the grounds on which the arbitrators reached
their decision; (b) dated and notified to the parties by registered mail, return
receipt requested; and (c) final and not subject to appeal before any court, nor
other jurisdiction, nor any authority. Each party shall bear its own expenses,
and the expenses of the arbitrators shall be shared equally.
7. QUALIFIED INVESTMENTS. (a) At the written request of Buyer, delivered
to the Escrow Agent, all or any part of the Escrow Fund shall be invested by the
Escrow Agent for the account and risk of Buyer, in any one or more "Qualified
Investments." As used herein, "Qualified Investments" shall mean: (i) cash; (ii)
obligations of, or fully guaranteed as to timely payment of principal and
interest by, the United States of America with a maturity date of one year or
less from the date of investment; (iii) investment companies registered as such
under the investment Company Act of 1940, as amended, which value their assets
in accordance with Rule 2a-7 (or any successor rule) under such Act; (iv)
certificates of deposit with any bank or trust company organized under the laws
of the United States of America or the laws of any state
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thereof which has a long term debt rating from Xxxxx'x Investor's Service, Inc.
(hereinafter referred to as "Xxxxx'x") or by Standard & Poor's Corporation
(hereinafter referred to as "S&P"), both of New York, New York, or their
successors, of at least an "AAA" rating or as to which Buyer shall have
otherwise given its prior consent; and (v) municipal or corporate bonds with a
maturity date of one year or less from the date of investment and rated "AAA" by
S&P or "AAA" by Xxxxx'x or as to which Buyer shall have otherwise given its
prior consent. The Escrow Agent shall be, and hereby is, fully empowered to sell
any one of the "Qualified Investments" purchased by it pursuant to this
Paragraph 7 to provide cash to make payment required or permitted to be made
hereunder by the Escrow Agent. The Escrow Agent shall not be liable for any loss
due to fluctuations in market rates resulting from a sale of "Qualified
Investments" in accordance with the previous sentence or penalties incurred
because of early redemption. The Escrow Agent will hold any of the "Qualified
Investments" purchased by it hereunder without any responsibility other than for
the safekeeping thereof. (b) Interest or other income received by the Escrow
Agent with respect to the Escrow Fund, shall be distributed to Buyer on the
termination of this Agreement.
8. ESCROW AGENT. National City Bank of Michigan/Illinois hereby agrees
to act as Escrow Agent under this Agreement.
9. RELIANCE ON DOCUMENTS. The Escrow Agent may act upon any instrument
or other writing believed by it in good faith to be genuine, and to be signed or
presented by the proper person, and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions of this Agreement,
except for its own willful misfeasance, negligence, or breach by it of the
express terms of this Agreement.
10. ESCROW AGENT COMPENSATION. Seller hereby agrees to: (i) pay the
Escrow Agent, upon execution of this Agreement, reasonable compensation for the
services to be rendered hereunder, as described in the Schedule attached hereto;
and (ii) pay or reimburse the Escrow Agent upon request for all expenses,
disbursements and advances, including reasonable attorneys' fees, incurred or
made by it in connection with carrying out its duties hereunder. Payment of said
compensation and expenses shall be disbursed form the Escrow account after
receiving written approval from Seller.
11. CONCERNING THE ESCROW AGENT. (a) Seller and Buyer hereby agree to
jointly and severally indemnify the Escrow Agent for, and to hold it harmless
against any loss, liability or expense incurred without negligence or bad faith
on the part of the Escrow Agent, arising out or in connection with its entering
into this Agreement and carrying out its duties hereunder, including the costs
and expenses of defending itself against any claim of liability; (b) Each party
hereto, except the Escrow Agent, shall provide the Escrow Agent with tax
Identification Number (TIN) as assigned by the Internal Revenue Service. All
interest or other income earned under this Agreement shall be allocated and paid
as provided herein and reported by the recipient to the Internal Revenue Service
as having been so allocated and paid; and (c) the duties and responsibilities of
the Escrow Agent hereunder shall be determined solely by the express provisions
of this Agreement, and no other or further duties or responsibilities shall be
implied.
12. RESIGNATION OF ESCROW AGENT/APPOINTMENT OF SUCCESSOR. The Escrow
Agent acting at any time hereunder may resign at any time by giving ninety (90)
days prior written notice of resignation to Buyer and Seller, such resignation
to be effective on the date specified in such notice. Seller shall appoint a
bank or trust company with minimum assets of $50 billion or as to which Buyer
has given its prior consent by a written instrument delivered to and executed by
such successor Escrow Agent and Seller, and consented to by Buyer which onset
shall not be
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unreasonably withheld, whereupon such successor Escrow Agent shall succeed to
all the rights and obligations of the resigning Escrow Agent as of the effective
date of resignation as if originally named herein and the resigning Escrow Agent
shall duly transfer and deliver the Escrow Fund at the time held by the
resigning Escrow Agent; provided if no successor Escrow Agent shall have been
appointed on the effective date of resignation of the resigning Escrow Agent
hereunder, the resigning Escrow Agent may pay the Escrow Fund into a court of
competent jurisdiction.
13. NOTICE. Any and all notices or other instruments or papers to be
sent to any party hereto by any other party hereto pursuant to this Agreement
shall be in writing and delivered personally or sent by registered mail, postage
prepaid.
(a) If to Seller to: Advanced Digital Design, Inc.
Xx. Xxxxxxx Xxxxxxx
Xx. Xxxxx Xxxxxxx
000 X. Xxxx Xxxxx Xx.
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: 000.000.0000
Fax: 000.000.0000
With a copy to: Xx. Xxxxxx X. Xxxxxxx
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: 000.000.0000
Fax: 000.000.0000
(b) If to Buyer to: Xx. Xxxxxxxxxxx Xxxxx, Executive Vice President
ADD Acquisition Corp.
Dauphin Technology, Inc.
000 Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx and Xxxxxx, P.C.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
(c) If to Escrow Agent: National City Bank of Michigan/Illinois
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
or in each case, at such other address as may be specified in writing.
14. ASSIGNMENT. Neither Buyer nor Seller shall sell, assign, transfer, or
encumber, or in any other manner anticipate or dispose of any amount on deposit
with the Escrow Agent until
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the same shall be actually paid over to and received by Buyer or Seller, as the
case may be pursuant to the terms hereof.
15. BINDING EFFECT AND BENEFIT. The provisions hereof shall be binding
upon, and shall inure to the benefit of; the parties and their respective heirs,
executors, administrators, successors, and assigns.
16. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Illinois as to all matters including, but not limited to, matters of
validity, construction, effect, performance and remedies, and, as partial
consideration for the other party's execution and performance hereunder each
party waives personal service of any and all process upon it, to the extent
permitted by law, and consents that all such service of process be made by upon
such party at the address and in the manner set forth in Paragraph 13 of this
Agreement and service so made shall be deemed to be completed upon the earlier
of actual receipt or three days after the same shall have been posted to such
party's address.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. HEADINGS. The headings of the several paragraphs continued herein
are for convenience only and do not define, limit, or construe the contents of
such paragraphs.
19. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the day and year first above written.
DAUPHIN TECHNOLOGY, INC., ADVANCED DIGITAL DESIGNS, INC.,
an Illinois corporation an Illinois corporation
By: /s/ Xxxxxxxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxxx
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Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxx, President
Executive Vice President
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
ADD ACQUISITION CORP., /s/ Xxxxx Xxxxxxx
an Illinois corporation -------------------------------
Xxxxx Xxxxxxx
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Xxxxxxxxxxx Xxxxx,
Executive Vice President
National City Bank of Michigan/Illinois
By: /s/ Xxxxx X. Xxxxxxx
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Escrow Agent
