Exhibit 2.2
ESCROW AGREEMENT
This ESCROW AGREEMENT is made this March 1, 2000 by and among Rimage
Corporation, a Minnesota corporation ("Rimage"), and John Kubinski as the
Shareholder Agent (the "Shareholder Agent") of all of the shareholders
("Shareholders") of Cedar Technologies, Inc., a Minnesota corporation
("Company") and U.S. Bank Trust National Association, a national banking
association, as the Escrow Agent (the "Escrow Agent").
INTRODUCTION
A. Rimage, the Company and certain of the Shareholders are parties to
and the Shareholders have approved in accordance with Minnesota law, an
Agreement and Plan of Merger dated February 25, 2000 (the "Agreement") under the
terms of which CDR Acquisition Inc. will be merged with and into Company
("Merger Subsidiary") and all of the shares of Common Stock held by Shareholders
will be exchanged for shares of Common Stock, $.01 par value, of Rimage ("Rimage
Common"). The Agreement provides for the execution and delivery at the Effective
Time thereunder of an escrow agreement, to provide security for certain
indemnifications, as specified in the Agreement. Rimage, the Company and the
Shareholder Agent on behalf of the Shareholders have agreed that the execution
and delivery of this Escrow Agreement and the establishment of the Escrow Fund
provided for herein shall satisfy the obligations of the parties to execute and
deliver such escrow agreement. As hereafter provided, the Escrow Fund hereunder
shall initially fund and secure the indemnification obligations of the Company
and the Shareholders contemplated by Section 9.2 of the Agreement (the "Escrow
Fund Indemnities"). All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Agreement.
B. Pursuant to the Agreement, Rimage and the Shareholders have agreed
that the Shareholders shall transfer to the Escrow Agent 33,661 shares of Rimage
Common (representing 10% (rounded up to the nearest whole share) of the number
of shares of Rimage Common received by each such Shareholders for the common
stock of the Company) to be deposited at the Effective Time in escrow with the
Escrow Agent and held in accordance with the terms of this Escrow Agreement (the
"Rimage Escrowed Stock").
In consideration of the foregoing recitals, the transactions
contemplated by the Agreement, the covenants and agreements herein set forth,
and for other valuable consideration the receipt of which is hereby acknowledged
the parties further agree as follows:
1. APPOINTMENT AND AGREEMENT OF THE ESCROW AGENT. Rimage, the Company
and the Shareholder Agent, on behalf of the Shareholders, hereby appoint U.S.
Bank Trust National Association, as the Escrow Agent, and U.S. Bank Trust
National Association agrees to perform the duties of the Escrow Agent under this
Agreement. This Escrow Agreement shall be administered at and the Rimage
Escrowed Stock held in St. Paul, Minnesota, by the Escrow Agent at the address
set forth in 10.2.
2. AGREEMENT NOT LIMITED BY THIS ESCROW AGREEMENT. This Escrow
Agreement and the deposit of the Rimage Escrowed Stock are without prejudice to
and are not in limitation of (i) any obligations of Shareholders to Rimage in
respect of the indemnity and of any of the covenants, representations or
warranties of the Shareholders and the Company, contained in the Agreement and
(ii) any obligations of Rimage and Merger Subsidiary to Shareholders in respect
of the indemnity and of any of
the covenants, representations or warranties of Rimage and Merger Subsidiary,
contained in the Agreement.
3. ESTABLISHMENT OF ESCROW.
3.1. DELIVERY OF PROPERTY. (a) Simultaneously with the
execution of this Escrow Agreement, Rimage has deposited with the
Escrow Agent certificates in negotiable form representing the Rimage
Escrowed Stock.
(b) Together with the certificates of Rimage Escrowed Stock
transferred to the Escrow Agent, Shareholder Agent, in accordance with
the power of attorney contained in Section 9.5(a) of the Agreement, has
delivered to the Escrow Agent duly executed stock powers (endorsed in
blank) with respect thereto with signatures medallion guaranteed.
(c) The Escrow Fund shall be held and used only for and in
respect of those purposes specified under the heading "Introduction."
3.2. RECEIPT. The Escrow Agent hereby acknowledges receipt of
the Rimage Escrowed Stock and agrees to hold and disburse the Escrow
Fund in accordance with the terms and conditions of this Escrow
Agreement for the uses and purposes stated herein.
3.3. VOTING RIGHTS OF RIMAGE ESCROWED STOCK. All voting rights
with respect to Rimage Escrowed Stock shall be exercised by the
Shareholders in accordance with their proportionate interests therein,
and the Escrow Agent shall from time to time execute and deliver to
Shareholders such proxies, consents or other documents a may be
necessary to enable the respective Shareholders to exercise such
rights. The Shareholders shall be entitled to any dividends or
distributions paid on the Rimage Escrowed Stock.
4. LIABILITIES ETC. COVERED. This Escrow Agreement has been executed
and the deposit of the Rimage Escrowed Stock hereunder has been made pursuant to
Section 2.5(b) of the Agreement. The deposit of the Rimage Escrowed Stock in the
Escrow Fund has been made for the purpose of funding and securing, to the extent
of the Escrow Fund, the Escrow Fund Indemnities until the first anniversary of
the date hereof.
5. PROCEDURES FOR DISBURSEMENT OF THE ESCROW FUND.
5.1. DISBURSEMENT OF THE ESCROW FUND. The Escrow Agent shall
distribute the Rimage Escrowed Stock whenever there shall be delivered
to the Escrow Agent (a) a certificate signed by Rimage and the
Shareholder Agent certifying, or (b) a certified copy of a judgment of
a court of competent jurisdiction determining, that an amount is due
from Shareholders pursuant to Section 9.2 of the Agreement; provided,
however, that the Escrow Agent shall not be required to make such
distribution more than once per month. The Escrow Agent shall, to the
extent that the amount of Rimage Escrowed Stock then held by it in the
Escrow Fund shall be sufficient for such purpose, cause certificates of
shares of the Rimage Escrowed Stock (in each Shareholders' name in
proportion to their respective holdings) having a value (based upon the
average of the last sale prices of Rimage Common as quoted on the
Nasdaq on the five trading days ending on the date preceding
distribution of the Rimage Escrowed Stock) equal to such amount, and
duly executed stock powers with respect to such certificates, with
signatures guaranteed by a bank or trust
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company or by a member firm of the National Association of Securities
Dealers, Inc., to be delivered to Rimage.
5.2. NO FRACTIONAL SHARES. In the event of any disbursement of
Rimage Escrowed Stock pursuant to subparagraph 5.1, no fractional
shares shall be delivered, but rather the Escrow Agent shall adjust the
amount of Rimage Escrowed Stock to be delivered to Rimage by rounding
to the nearest whole share.
6. TERMINATION OF ESCROW. (a) On the first anniversary of the date
hereof (the "Termination Date"), and provided that there are no pending Claims,
or litigation that would give rise to Claims, for Losses (as defined in the
Agreement), the Escrow Agent shall deliver to the Shareholders the Rimage
Escrowed Stock (plus all interest or other income attributable thereto and not
previously distributed) then held hereunder in the Escrow Fund.
(b) This Escrow Agreement shall automatically terminate if and when all
the Rimage Escrowed Stock (plus all interest or other income attributable
thereto and not previously distributed) shall have been distributed by the
Escrow Agent in accordance with the terms of this Escrow Agreement.
7. RETENTION OF RIMAGE ESCROWED STOCK FOLLOWING THE TERMINATION DATE.
In the event that at the Termination Date claims for indemnification shall have
been made pursuant to Section 9.2 of the Agreement, then Rimage may in good
faith, at any time, prior to the Termination Date notify the Escrow Agent to
such effect in writing, which written notice shall describe briefly the nature
of each such claim, the facts and circumstances which give rise to each such
claim, and the estimated amount of each such claim, and the provisions of the
Agreement or this Escrow Agreement on which each such claim is based. Rimage
shall promptly deliver to Shareholder Agent a copy of such written notice. The
Escrow Agent shall have no obligation to verify that delivery of such notice has
been made by Rimage to Shareholder Agent, but agrees to forward to Shareholder
Agent, promptly, by messenger, a copy of the notice received by it. Certificates
representing shares of the Rimage Escrowed Stock having a value (based upon the
average of the last sale prices of Rimage Common Stock as quoted on the Nasdaq
on the five trading days ending on the date preceding the Termination Date)
equal to one hundred and twenty-five percent (125%) of the total of the amounts
set forth in such written notice with respect to the claim or claims described
therein shall be set aside and retained (to the extent available in the then
remaining Escrow Fund) by the Escrow Agent as a reserve to cover such claim or
claims and all dividends, interest and other amounts with respect to such shares
then held in the Escrow Fund shall also be set aside and retained (such
certificates and such other amounts so set aside and reserved being herein
called the "Escrow Fund Reserved Amount").
8. NO TRANSFER OF RIMAGE ESCROWED STOCK. While any Rimage Escrowed
Stock shall continue to be held by the Escrow Agent, no Shareholder will
transfer, sell, pledge, create a security interest in or otherwise dispose of
their rights to any dividends or distributions with respect to the Rimage
Escrowed Stock.
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9. THE ESCROW AGENT.
9.1. INDEMNIFICATION OF THE ESCROW AGENT. Rimage and
Shareholders, jointly but not severally, agree to indemnify and hold
the Escrow Agent and its directors, officers and employees harmless
from and against any and all costs, charges, damages, and attorneys'
fees which the Escrow Agent in good faith may incur or suffer in
connection with or arising out of this Escrow Agreement.
9.2. DUTIES OF THE ESCROW AGENT. The Escrow Agent shall have
no duties other than those expressly imposed on it herein and shall not
be liable for any act or omission except for its own negligence or
willful misconduct.
9.3. FEES OF THE ESCROW AGENT. The fees and charges of the
Escrow Agent with respect to this Agreement shall be paid by Rimage in
accordance with the Escrow Agent's fees as set forth on Schedule A
hereto.
9.4. THE ESCROW AGENT TO FOLLOW INSTRUCTION OF RIMAGE AND
SHAREHOLDERS. Any provision herein contained to the contrary
notwithstanding, the Escrow Agent shall at any time and from time to
time take such action hereunder with respect to the Rimage Escrowed
Stock as shall be agreed to in writing by Rimage and Shareholder Agent.
9.5. RESIGNATION OF THE ESCROW AGENT. The Escrow Agent may
resign at any time by providing Rimage and Shareholders with thirty
(30) days' written notice of its intention to do so. Upon receiving
such notice, Rimage and Shareholders shall endeavor to appoint a
mutually agreeable successor the Escrow Agent. If Rimage and
Shareholders are unable to appoint a successor the Escrow Agent within
thirty (30) days of receipt by each of them of the Escrow Agent's
notice of its intention to resign, the Escrow Agent may petition a
court of competent jurisdiction to appoint a successor. The Escrow
Agent's resignation shall be effective upon delivery of the Rimage
Escrowed Stock to the successor Escrow Agent and the successor assuming
the obligations, rights and duties of the Escrow Agent hereunder.
10. OTHER PROVISIONS.
10.1. SECURITY INTEREST. (a) The Shareholder Agent, on behalf
of each of the Shareholders, hereby grants to Rimage a first priority
perfected security interest in the Rimage Escrowed Stock to secure the
performance of the contingent obligations and indemnification
obligations of Shareholders under the Agreement and the performance of
their obligations to Rimage under this Escrow Agreement. This Escrow
Agreement shall constitute a security agreement under applicable law.
(b) The parties agree that this security interest shall attach
as of the execution of this Escrow Agreement. The parties agree that,
for the purpose of perfecting Rimage's security interest in the above
designated Rimage Escrowed Stock held by the Escrow Agent pursuant to
this Escrow Agreement, Rimage designates the Escrow Agent to acquire
and maintain possession of the Rimage Escrowed Stock and act as bailee
for Rimage with notice of Rimage' security interest in said property
under the Uniform Commercial Code and that possession of the Rimage
Escrowed Stock by the Escrow Agent acknowledges that it holds the
Rimage Escrowed Stock for Rimage for purposes of perfecting the
security interest. All bank or deposit accounts holding cash
constituting
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part of the Escrow Fund shall be maintained in the name of the Escrow
Agent as bailee for Rimage, as secured party, under this Escrow
Agreement and the Escrow Agent shall have sole dominion and control
over such accounts. Shareholders and the Escrow Agent shall take all
other actions requested by Rimage to maintain the perfection and
priority of the security interest in the Escrow Fund.
(c) Rimage shall release the security interest herein granted
and the security interest shall be terminated to the extent of any
disbursement of Escrow Fund hereunder by the Escrow Agent in accordance
with the terms of this Escrow Agreement. Upon final disbursement of any
Escrow Fund to Shareholders, Rimage shall do all acts and things
reasonably necessary to release and extinguish such security interest.
Shareholders and Rimage hereby specifically agree and acknowledge that
the grant of this security interest pursuant to this Paragraph 10.1
shall not in any way modify either the procedures Shareholders and/or
Rimage must follow in order to obtain possession of any of the Escrow
Fund from those procedures and rights expressly provided for in this
Escrow Agreement or in the Agreement.
10.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be sufficiently given if made by hand
delivery, by telex, by telecopier, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be
specified by it by like notice):
(a) If to Rimage:
Rimage Corporation
ATTN: Bernie Aldrich, Chief Executive Officer
7725 Washington Avenue South
Minneapolis, Minnesota 55439
With a copy to:
Dorsey & Whitney LLP
ATTN: Thomas O. Martin
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
telephone number: (612) 340-8706
Fax number:(612) 340-8738
(b) If to Shareholder Agent (on behalf of the Shareholders):
John Kubinski
2720 Nevada Avenue North
New Hope, Minnesota 55427
(c) If to the Escrow Agent:
U.S. Bank Trust National Association
U.S. Bank Trust Center - SPFT0210
5
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Thomas M. Gronlund
Facsimile: (651) 244-0089
10.3. BENEFIT AND ASSIGNMENT. Except to the extent the
Agreement is freely assignable by Rimage, the rights and obligations of
each party under this Escrow Agreement may not be assigned without the
prior written consent of all other parties. This Escrow Agreement shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Nothing in this Escrow
Agreement, expressed or implied, is intended to or shall (i) confer on
any person other than the parties hereto, or their respective
successors or assigns, any rights, remedies, obligations or liabilities
under or by reason of this Escrow Agreement, or (ii) constitute the
parties hereto as partners or participants in a joint venture. The
Escrow Agent shall not be obligated to recognize any such succession or
assignment until satisfactory written evidence thereof shall have been
received by it.
10.4. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement and
the Agreement contains all the terms agreed upon by the parties with
respect to the subject matter hereof. This Escrow Agreement may be
amended only by a written instrument signed by the party against which
enforcement of any waiver, change, modification, extension or discharge
is sought.
10.5. HEADINGS. The headings of the section and subsections of
this Escrow Agreement are for ease of reference only and shall not be
deemed to evidence or affect the meaning or construction of any of the
provisions hereof.
10.6. GOVERNING LAW. This Escrow Agreement shall be construed,
as to both validity and performance, enforced in accordance with and
interpreted and governed by the laws of the State of Minnesota.
10.7. ATTORNEYS' FEES. Should any litigation be commenced
between Rimage and Shareholders concerning this Escrow Agreement or the
rights and duties of any party in relation thereto, the party
prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum as and for such
party's attorneys' fees in such litigation which, shall be determined
by the court in such litigation or in a separate action brought for
that purpose.
10.8. COUNTERPARTS. This Escrow Agreement may be executed in
multiple counterparts, all of which taken together shall constitute one
instrument.
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IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed on the date first written above by their respective officers duly
authorized.
SHAREHOLDER AGENT RIMAGE CORPORATION
- --------------------------------- ---------------------------------
John Kubinski Bernard P. Aldrich
Chief Executive Officer
U.S. BANK TRUST NATIONAL
ASSOCIATION
By:
--------------------------------
Its:
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