EXHIBIT 2
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is made and entered into as of
this fourth day of December, 2000 by and among Optibase Ltd., an Israeli
corporation ("Parent"), John Krooss, a representative of the shareholders
("Shareholders") of Viewgraphics, Incorporated, a California subchapter S
corporation ("Viewgraphics") and American Stock Transfer & Trust Company as
Escrow Agent and Transfer Agent (in either capacity, the "Agent").
RECITALS
A. Parent is acquiring all of the capital stock of Viewgraphics pursuant to
an Agreement and Plan of Reorganization by and among Parent, Vodka Acquisition
Corp. ("Sub"), a Delaware corporation and a wholly-owned subsidiary of Optibase
Inc., which in turn is a wholly-owned subsidiary of Parent, Viewgraphics, John
Krooss, an individual ("Principal Shareholder"), and the Krooss 2000 Children's
Trust, a California trust for the benefit of the Principal Shareholder's
children, of which Anne Libbin is trustee, dated as of December 1, 2000 (the
"Merger Agreement").
B. Parent shall pay ten million dollars (US $10,000,000) for all of the
intellectual property assets of Viewgraphics pursuant to an Asset Acquisition
Agreement dated as of December 1, 2000, among Parent, Viewgraphics and the
Principal Shareholder (the "Asset Acquisition Agreement").
C. The Merger Agreement and the Asset Acquisition Agreement, provides that
the Agent shall be appointed as the Transfer Agent for the distribution in
connection with the Merger; that an escrow shall be established to protect the
interest of Parent and ensure the performance of certain obligations by
Viewgraphics, Principal Shareholder and other Shareholders of Viewgraphics,
including employment-related and indemnification obligations as set forth in the
Merger Agreement and that the Escrow Agent shall be appointed for such purposes.
D. A material condition to the consummation of the transactions
contemplated by the Merger Agreement, is that the parties hereto enter into this
Agreement.
E. Pursuant to Section 2.6(b) of the Merger Agreement, Parent will cause
the Agent to make distribution of the Cash Consideration and the Merger Shares
and will transfer to the Agent 1,036,443 ordinary shares of Parent (the "Escrow
Shares") and an additional 319,489 ordinary shares of Parent (the "Additional
Escrow Shares") distributable to the Principal Shareholder to be held in
separate escrow accounts. The Escrow Shares and Additional Escrow Shares will be
maintained by the Agent and distributed to the Shareholders pursuant to the
terms of this Agreement.
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E. This Escrow Agreement sets forth the basis on which the Agent will
receive and hold, and make distributions and disbursements in connection with
the Merger and the duties for which the Agent will be responsible.
AGREEMENT
NOW THEREFORE, as a material inducement to Parent to acquire all
outstanding capital stock of Viewgraphics, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereby agree as follows:
1. Defined Terms. Capitalized terms used herein without definition shall
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have the meanings ascribed to them in the Merger Agreement.
2. Consent of Viewgraphics Shareholders. The Merger Agreement provides for,
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among other things: (a) the appointment of the Agent; (b) the distribution in
connection with the Merger; (c) the establishment of this escrow to secure the
Shareholders' indemnification, employment-related and other obligations under
the Merger Agreement in the manner set forth herein, (d) the appointment of the
Representative as representative of the Shareholders for purposes of this
Agreement and as attorney-in-fact and agent for and on behalf of each
Shareholder, and the taking by the Representative of any and all actions and the
making of any decisions required or permitted to be taken or made by him, her or
it under this Agreement, and (e) the approval of this Agreement and any and all
arrangements relating thereto with respect to the Escrow Shares and Additional
Escrow Shares by virtue of the Shareholders' approval of the Merger, Merger
Agreement and the employment agreements contemplated by the Merger Agreement.
3. Appointment of Representative and Agent.
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(a) John Krooss is hereby irrevocably appointed as agent and
attorney-in-fact (the "Representative") of the Shareholders for all actions or
decisions hereunder, and any action taken by the Representative shall be binding
and conclusive on the Shareholders and may be relied upon by Parent and the
Agent. In the event of (i) the death or permanent disability of the
Representative, (ii) his resignation as Representative, or (iii) removal of the
Representative by Shareholders entitled to receive a majority of the Escrow
Shares (based on the number of Escrow Shares then remaining in Escrow, if any),
a successor Representative shall be elected by Shareholders entitled to receive
a majority of the Escrow Shares (based on the number of Escrow Shares then
remaining in Escrow, if any). Each successor Representative shall have all of
the power, authority, rights and privileges conferred by this Agreement upon the
original Representative, and the term "Representative" as used herein shall be
deemed to include successor Representative. The Representative shall not be
liable to the Shareholders for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith, and in the exercise of its
own best judgment.
(b) Robert DeFeo is hereby irrevocably appointed as agent and
attorney-in-fact (the "Parent's Agent") of Parent for all actions or decisions
hereunder, and any action taken by
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the Parent's Agent shall be binding and conclusive on Parent and may be
relied upon by the other parties hereto. In the event of the death or
incapacity of the Parent's Agent, the Parent's Agent shall be such other person
as shall be designated by the Secretary or Assistant Secretary of Parent.
Upon such designation, Parent shall forthwith inform the Agent of the new
Parent Agent. The Parent's Agent shall not be liable to Parent for any action
taken or omitted by it, or any action suffered by it to be taken or omitted,
in good faith, and in the exercise of its own best judgment.
4. Appointment of Agent. The Agent is hereby appointed as the Transfer
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Agent and Escrow Agent, and, in each such capacity, the Agent is hereby
authorized to act as agent for the Shareholders for the purpose of receiving
cash and the Parent Shares (and cash in lieu of fractional shares) to be issued
in exchange for shares of Viewgraphics Common Stock and transmitting the same to
the Shareholders upon satisfaction of the conditions set forth herein and in the
Merger Agreement. In connection with the appointment, the Parent has provided a
copy of the Merger Agreement and board resolutions authoring the Merger and the
appointment of the Agent. The Agent's duties, liabilities and rights as the
Transfer and Escrow Agent are as set forth herein and will be governed, in
addition, by the applicable terms of the Merger Agreement.
5. Distribution in Connection with the Merger.
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(a) Attached hereto as Schedule A is a list of Shareholders showing
names, addresses and the number of Viewgraphics Common Stock held by each
Shareholder immediately prior to the Effective Time, the stock certificate
relating thereto (including certificate numbers), and the amount of distribution
of the pro rata proceeds from the Asset Acquisition Agreement (the "Asset
Amount"), Cash Consideration and Merger Shares distributable to each such
Shareholder. Parent shall provide the Agent (i) the amount of cash sufficient to
make all payments for the Cash Consideration and for fractional shares, and (ii)
the Merger Shares for distribution.
(b) As soon as practicable after the Effective Time, the Agent will mail
or cause to deliver to each Shareholder (a) a notice advising such Shareholder
of the effectiveness of the Merger and the applicable terms of the exchange
effected thereby, (b) a Letter of Transmittal with instructions, (c) a
self-addressed return envelope, (d) tax certification guidelines, and (e) any
other material deemed appropriate by the Parent. The Agent shall examine the
Letters of Transmittal upon receipt and shall take necessary actions to ensure
that the Letters of Transmittal or other documents have been properly completed
and executed by the Shareholders.
(c) As soon as practicable after the Effective Time and after surrender
to the Agent of all certificates for shares of Viewgraphics Common Stock
registered to a particular record holder or holders (and only after surrender of
all such certificates) and the return of a properly completed and signed Letter
of Transmittal relating thereto, the Agent shall cause to be issued and
distributed to the holder(s) in whose name such certificates were registered (or
such other person as shall have been specified pursuant to the terms hereof) (i)
a check in the amount of the portion of Cash Consideration distributable
pursuant to the Merger Agreement, the Asset Amount distributable pursuant to the
Asset Acquisition Agreement, and cash in lieu of any fractional shares, less any
amounts owed by the Shareholder to Viewgraphics shown on Schedule
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A (together, "Cash Amount"), and (ii) the whole number of Parent Shares issuable
pursuant to the Merger Agreement, registered in the name of such holder(s).
Until so surrendered, each certificate which immediately prior to the
Effective Time represented outstanding shares of Viewgraphics Common Stock
shall, at and after the Effective Time, entitle the holder(s) thereof only
to receive, upon surrender of it and all other identically registered
certificates, the Cash Amount and the certificates representing Parent Shares
contemplated by the this paragraph.
(d) Checks and stock certificates to be delivered by mail shall be
forwarded by [first class mail] under the Agent's blanket surety bond, which
Viewgraphics, Representative and Parent understand protects Viewgraphics and
Parent and the Agent from loss or liability arising by virtue of the non-receipt
or non-delivery of such cash or certificates. It is understood that the market
value of the securities in any one shipment sent by first class mail will not be
in excess of $250,000.00. In the event the market value shall exceed
$250,000.00, the envelope shall be mailed by registered mail and shall be
insured separately for the replacement value of its contents at the time of
mailing.
(e) The Agent shall arrange to comply with all requirements under the
tax laws of the United States, including those relating to missing tax
identification numbers, and shall file any appropriate reports with the Internal
Revenue Service ("IRS") (e.g., 1099, 1099B, etc.). The Agent may be required to
deduct 31% from cash paid in lieu of fractional shares to holders who have not
supplied their correct taxpayer identification number or require certification.
Such funds will be turned over to the IRS by the Agent.
(f) Unless otherwise instructed by the Parent, each of the share
certificate representing Parent Shares issuable to any of the Shareholders bear
a legend in substantially the form as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE ISSUER THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AGREEMENT DATED DECEMBER
__, 2000, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
ISSUER. NO REGISTRATION OR TRANSFER OF SUCH SECURITIES WILL BE MADE ON
THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE
BEEN COMPLIED WITH."
6. Establishment of Escrow and Commencement of Duties.
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(a) Escrow Shares. Immediately following the Closing Date, Parent will
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transfer the Escrow Shares to the Agent and deliver a schedule of the Escrow
Shares in the form of Schedule B attached hereto, setting forth, among other
things, (i) the names of the Shareholders and their respective number of Escrow
Shares, (ii) whether, in addition to being subject to the general
indemnification obligations as set forth in Section 8 of the Merger Agreement,
the Escrow Shares are subject to additional obligations under individual
Employment Agreements, and (iii) each Shareholder's percentage of the Aggregate
Consideration (and number of Escrow Shares equal to such percentage interest)
which is the limit on such Shareholder's indemnification liability.
(b) Additional Escrow Shares. Immediately following the Closing Date,
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Parent will transfer the Additional Escrow Shares to the Agent, such Additional
Escrow Shares being subject solely to the indemnification obligation of
Principal Shareholder arising from any breach of the representation contained in
Section 3.9(b)(17) of the Merger Agreement as set forth in Section 8 of the
Merger Agreement.
(c) Escrow. Upon deposit of the Escrow Shares and the Additional Escrow
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Shares, the receipt of which will be acknowledged to Parent and the
Representative by the Agent, the Escrow Shares and Additional Escrow Shares will
be accepted by the Agent as escrow agent hereunder. The Escrow Shares and
Additional Escrow Shares shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party hereto. The
Agent agrees to hold the Escrow Shares and Additional Escrow Shares in the
Escrow accounts, subject to the express terms and conditions of this Agreement.
7. Management of Escrow Shares and Additional Escrow Shares. Upon receipt
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of the Escrow Shares and Additional Escrow Shares, the Agent shall hold the
Escrow Shares and Additional Escrow Shares in escrow pursuant to the terms of
this Agreement.
(a) Dividends, Etc. Any securities distributed in respect of or in
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exchange for any of the Escrow Shares or Additional Escrow Shares, whether by
way of share dividends, share splits or otherwise, shall be issued in the name
of the Agent or its nominee, and shall be delivered to the Agent, who shall hold
such securities in the Escrow Account. Such securities shall be considered
Escrow Shares or Additional Escrow Shares, as the case may be, for all purposes
hereof. Cash dividends in respect of the Escrow Shares shall not be deposited in
the Escrow Account but shall be distributed to the Shareholders based on each
Shareholder's portion of the Escrow Shares. Cash dividends in respect of the
Additional Escrow Shares shall be distributed to the Principal Shareholder.
(b) Voting of Shares. The Representative shall have the sole right, on
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behalf of, and pursuant to instructions from, the Shareholders, to vote all of
the Escrow Shares.
(c) Transferability. The respective interests of the Shareholders in the
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Escrow Shares shall not be assignable or transferable, other than by operation
of law. Notice of any such assignment or transfer by operation of law shall be
given to the Agent, the Parent and the Representative, and no such assignment or
transfer shall be valid until such notice is given.
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8. Delivery and Distributions of the Escrow Shares and Additional Escrow
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Shares.
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(a) Delivery to Parent Based on Third Parties Claims.
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(i) Pursuant to the terms of Section 8.2 of the Merger Agreement,
Parent may have a claim against the Escrow Shares following the Closing Date
under certain circumstances (a "Parent Indemnity Claim," which also includes any
"Third Party Claim" defined in Section 8.2 of the Merger Agreement). The
Agent need not inquire into or consider whether a Parent Indemnity Claim
complies with the requirements of the Merger Agreement; provided, however
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that the notice provisions and claim procedures as set forth herein shall be
complied with.
(ii) From time to time on or before the date twelve (12) months
after the Closing Date (or the first business day thereafter) (the
"Indemnification Termination Date"), Parent may give a notice (a "Notice") to
the Representative and Agent specifying in reasonable detail the nature and
dollar amount (to the extent ascertainable at the time) of any Parent
Indemnity Claim it may have under Section 8.2 of the Merger. Parent may make
more than one Parent Indemnity Claim with respect to any underlying statement of
facts. If the Representative gives a notice to Parent and the Agent disputing
any Parent Indemnity Claim (a "Counter Notice") within fifteen (15) days
following receipt by the Agent of the Notice regarding such Parent Indemnity
Claim, the Agent shall proceed as provided in Section 7(a)(iii) hereof. If
no Counter Notice is received by Agent within such fifteen (15) day period with
respect to a Parent Indemnity Claim on the Escrow Shares, then any dollar
amount of Damages claimed by Parent as set forth in its Notice shall be deemed
established for purposes of this Escrow Agreement and the Merger Agreement,
and at the end of such fifteen (15) day period, in lieu of the amount of Damage,
the Agent shall deliver to the Parent a number of Escrow Shares calculated
pursuant to Section 7(a)(iv) below.
(iii) If a Counter Notice is given with respect to a Parent
Indemnity Claim, the Agent shall make payment with respect thereto only in
accordance with (i) joint written instructions of Parent and the
Representative, (ii) a final non-appealable order from a court of competent
jurisdiction or (iii) a final non-appealable order from binding arbitration
(an "Order"). Any such Order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Agent to the
effect that the Order is final and non-appealable. The Agent shall act
on such Order and legal opinion without further question.
(iv) The number of Escrow Shares to be returned to Parent
pursuant to this subsection (a) shall be calculated by dividing the aggregate
dollar amount of Damage to be paid to Parent by the average of the closing
prices on the Nasdaq National Market of the Parent Shares for the fifteen (15)
trading days ending on the second day prior to the Closing Date (the "Closing
Stock Price"). Each Shareholder's claim to the Escrow Shares shall be reduced
pro rata based on the Parent Shares issued to such Shareholder under the Merger
Agreement.
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(b) Delivery to Parent Based on Forfeiture under Employment Agreements.
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(i) Pursuant to the terms of Section 2.7 of the Merger Agreement and
pursuant to the provisions of individual Employment Agreements, Parent may have
a claim against the Escrow Shares following the Closing Date under certain
circumstances (a "Forfeiture Claim"). The Agent need not inquire into or
consider whether a Forfeiture Claim complies with the requirements of the Merger
Agreement; provided, however, that the notice provisions and claim procedures as
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set forth herein shall be complied with.
(ii) From time to time on or before the Indemnification Termination
Date, Parent may give a Notice of Forfeiture Claim to the Representative and
Agent specifying in reasonable detail the name of the Shareholder and the
particular Employment Agreement under which such Forfeiture Claim is being
brought, and the number of Escrow Shares it claims pursuant to such Employment
Agreement. If the Representative gives a Counter Notice to Parent and the Agent
disputing any Forfeiture Claim within fifteen (15) days, the Agent shall proceed
as provided in Section 7(b)(iii) hereof. If no Counter Notice is received by the
Agent within such fifteen (15) day period with respect to a Forfeiture Claim,
then the number of Escrow Shares claimed by Parent as set forth in its Notice
shall be deemed established for purposes of this Escrow Agreement, the Merger
Agreement and the Employment Agreement, and at the end of such fifteen (15) day
period, the Agent shall return to Parent the Escrow Shares so specified in the
Notice, with such individual Shareholder's claim on the Escrow Shares being
terminated.
(iii) If a Counter Notice is given with respect to a Forfeiture
Claim, the Agent shall return the Escrow Shares to the Parent with respect
thereto only in accordance with (i) joint written instructions of Parent and the
Representative or (ii) a final non-appealable order from binding arbitration (a
"Final Order"). Any such Final Order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Agent to the effect that
the Final Order is final and non-appealable. The Agent shall act on such Final
Order and legal opinion without further question.
(c) Delivery to Parent Based on Claims relating to Certain Tax
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Representation.
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(i) Pursuant to the terms of Section 8.2 of the Merger
Agreement, Parent may have a claim against the Additional Escrow Shares
following the Closing Date which arises as a result of the breach of the
representation contained in Section 3.9(b)(17) of the Merger Agreement (an
"Additional Tax Claim"). The Agent need not inquire into or consider whether
an Additional Tax Claim complies with the requirements of the Merger Agreement;
provided, however, that the notice provisions and claim procedures as set
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forth herein shall be complied with.
(ii) From time to time on or before the date that is the third
anniversary of the later of (i) the date on which the filing of Viewgraphics'
(or the Surviving Company's) next income tax return is due and (ii) the date on
which such return is actually filed (or the first business day thereafter) (the
"Additional Tax Escrow Termination Date"), Parent may give a Notice to the
Representative and agent specifying in reasonable detail the nature and dollar
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amount (to the extent ascertainable at the time) of any Additional Tax
Claim it may have under Section 8.2 of the Merger. Parent may make more than
one Additional Tax Claim with respect to any underlying statement of facts. If
the Representative gives a Counter Notice to Parent and the Agent disputing any
Additional Tax Claim within fifteen (15) days, the Agent shall proceed as
provided in Section 7(c)(iii) below. If no Counter Notice is received by the
Agent within such fifteen (15) day period with respect to an Additional Tax
Claim on the Additional Escrow Shares, then any dollar amount of Damages
claimed by Parent as set forth in its Notice shall be deemed established for
purposes of this Escrow Agreement and the Merger Agreement, and at the end of
such fifteen (15) day period, in lieu of the amount of Damage, the Agent shall
deliver to the Parent a number of Additional Escrow Shares calculated pursuant
to Section 7(c)(iv) below.
(iii) If an Additional Escrow Counter Notice is given with respect to
an Additional Tax Claim, the Agent shall return Additional Escrow Shares to the
Parent with respect thereto only in accordance with (i) joint written
instructions of Parent and the Representative or (ii) an Order. Any such
Additional Escrow Order shall be accompanied by a legal opinion by counsel for
the presenting party satisfactory to the Agent to the effect that the Additional
Escrow Order is final and non-appealable. The Agent shall act on such Additional
Escrow Order and legal opinion without further question.
(iv) The number of Additional Escrow Shares to be returned to the
Parent pursuant to this subsection (c) shall be calculated by dividing the
aggregate dollar amount of Damage to be paid to Parent by the Closing Stock
Price.
(d) Delivery to Parent Based on Claims relating to Audited Financials.
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(i) Pursuant to Section 2.7(d) of the Merger Agreement, Parent may
have a claim against the Escrow Shares in the event Viewgraphics fails to obtain
and deliver to Patent by December 31, 2000 the Audited Financial Statements (as
defined in Section 5.4 thereof) for $2 million payable by January 31, 2001 (an
"Audit Claim"). The Agent need not inquire into or consider whether an Audit
Claim complies with the requirements of the Merger Agreement; provided, however,
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that the notice provisions and claim procedures as set forth herein shall be
complied with.
(ii) Upon receipt of a Notice by the Parent of the Audit Claim,
(unless the Representative gives a Counter Notice to Parent and the Agent
disputing such Audit Claim within five (5) days, in which event the Agent shall
proceed as provided in Section 7(d)(iii) hereof), then the dollar amount claimed
by Parent as set forth in its Notice shall be deemed established for purposes of
this Escrow Agreement and the Merger Agreement, and on or immediately prior to
January 31, 2001, in lieu of the amount of Damage, the Agent shall deliver to
the Parent a number of Escrow Shares calculated pursuant to Section 7(d)(iv)
below.
(iii) If a Counter Notice is given with respect to the Audit Claim,
the Agent shall make payment with respect thereto only in accordance with (i)
joint written instructions of Parent and the Representative, or (ii) an Order.
Any such Order shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to the Agent to
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the effect that the Order is final and non-appealable. The Agent shall act on
such Order and legal opinion without further question.
(iv) The number of Escrow Shares to be returned to Parent pursuant to
this subsection (a) shall be calculated by dividing the aggregate dollar amount
of Damage to be paid to Parent by the Closing Stock Price. Each Shareholder's
claim to the Escrow Shares shall be reduced pro rata based on the Parent Shares
issued to such Shareholder under the Merger Agreement.
(e) Payment Method. Notwithstanding paragraphs (a), (c) and (d), the
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Representative may elect the payment method by notifying the Agent whether any
indemnification amount payable pursuant to paragraphs (a), (c) and (d) shall be
satisfied by the return of Escrow Shares/Additional Escrow Shares or in cash. In
the event the Representative elects to satisfy the claims by cash, prior to the
date of any required payment, or the payment of any cash deposited by the
Representative, the Representative shall contribute cash at the Closing Stock
Price per share to the appropriate Escrow account in lieu of specific Escrow
Shares which otherwise would be returned to Parent (and such Escrow Shares would
no longer be subject to indemnification or forfeiture claims hereunder and shall
be released at the Indemnification Termination Date).
(f) Termination of Escrow and Release of the Escrow Shares and
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Additional Escrow Shares.
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(i) Within ten (10) business days after the Indemnification
Termination Date and upon receipt of an instruction from the Parent and the
Representative, the Agent shall distribute to the Shareholders all of the Escrow
Shares then held in Escrow, registered in the name of the Shareholders.
(ii) Within ten (10) business days after the Additional Escrow
Termination Date and upon receipt of an instruction from the Parent and the
Principal Shareholder, the Agent shall distribute to the Principal Shareholder
all of the Additional Escrow Shares then held in Escrow, registered in the name
of the Principal Shareholder.
(iii) Notwithstanding the foregoing, if Parent has previously
delivered to the Agent a copy of a Notice on the day of or prior to the
Indemnification Termination Date or the Additional Escrow Termination Date and
the Agent has not received written notice of the resolution of the claim covered
thereby, the Agent shall retain in escrow after the Indemnification Termination
Date or the Additional Tax Escrow Termination Date, as applicable, such number
of Escrow Shares or Additional Escrow Shares as have a value equal to the
claimed amount covered by such Notice. Any Escrow Shares or Additional Escrow
Shares so retained in escrow shall be distributed only in accordance with the
terms of Sections 7(a), (b), (c), (d) and (e) above.
(g) Any distribution of all or a portion of the Escrow Shares or the
Additional Escrow Shares to the Shareholders shall be made by delivery of stock
certificates issued in the name of the Shareholders. Distributions to the
Shareholders shall be made by mailing such stock
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certificates to the holders at their respective addresses shown on Schedule A
(or such other address as may be provided in writing to the Agent by any such
holder). No fractional Escrow Shares or Additional Escrow Shares shall be
distributed to Shareholders pursuant to this Agreement. Instead, the number of
shares that each Shareholder shall receive shall be rounded up or down to the
nearest whole number (provided that the Representative shall have the
authority to effect such rounding in such a manner that the total number of
whole Escrow Shares or Additional Escrow Shares to be distributed equals the
number of Escrow Shares or the Additional Escrow Shares then held in the Escrow
Account).
9. Agent's Fee. The Agent's fees shall be as set forth on Schedule C
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hereto, payable by Parent.
10. Duties of the Agent. The Agent shall have no duties or responsibilities
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other than those expressly set forth in this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Agent. The Agent shall
have no duty to enforce any obligation of any person or entity, other than as
provided herein. The Agent shall be under no liability to anyone by reason of
any failure on the part of any party hereto or any maker, endorser or other
signatory of any document or any other person to perform such person's
obligations under any such document. If the Agent should have any question or
doubt as to what action it shall take hereunder, the Agent may request written
direction from the Representative and the Parent as to such action to be taken,
and the Agent shall be fully protected and shall incur no liability in
refraining from taking any action unless and until it has received such written
direction from the Representative and the Parent.
11. Liability of the Agent; Withdrawal.
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(a) The Agent may resign at any time upon giving at least thirty (30)
days' written notice to the parties hereto; provided, however, that no such
resignation shall become effective until the appointment of a successor escrow
agent which shall be accomplished as follows: Parent and the Representative
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice. If Parent and the
Representative fail to agree upon a successor escrow agent within such time, the
Agent shall have the right to appoint a successor escrow agent authorized to do
business in the State of California. The successor escrow agent shall execute
and deliver an instrument accepting such appointment and it shall, without
further acts, be vested with all the estates, properties, rights, powers, and
duties of the predecessor escrow agent as if originally named as escrow agent.
The Agent shall be discharged from any further duties and liabilities under this
Agreement.
(b) The Agent shall incur no liability with respect to any action taken
or suffered by it in reliance upon any notice, direction, instruction, consent,
statement or other documents believed by it to be genuine and duly authorized,
nor for other action or inaction except its own willful misconduct or gross
negligence. The Agent shall not be responsible for the validity or sufficiency
of this Agreement. In all questions arising under this Agreement, the Agent may
rely on the advice of counsel, and the Agent shall not be liable to anyone for
anything done, omitted or suffered in good faith by the Agent based on such
advice. The Agent shall not
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be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it. In no event shall the Agent be liable for indirect,
punitive, special or consequential damages.
(c) Parent and the Shareholders hereby, jointly and severally, agree to
indemnify the Agent for, and hold it harmless against, any loss, liability or
expense incurred without gross negligence or willful misconduct on the part of
the Agent, arising out of or in connection with its carrying out of its duties
hereunder. Parent, on the one hand, and the Shareholders, on the other hand,
shall each be liable for one-half of such amounts.
12. Reliance on Representative. The Agent may rely on the Representative as
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the exclusive agent of the Shareholders under this Agreement and shall incur no
liability to any party with respect to any action taken or suffered by it in
reliance thereon.
13. Termination of Escrow. Upon the final distribution of all of the Escrow
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Shares and Additional Escrow Shares in accordance with the terms of this
Agreement, this Agreement shall terminate, provided that Section 11(c) and any
payment obligation owed to the Agent under Section 9 shall survive the
termination.
14. Maintenance of Records; Inspection; Reports. The Agent shall keep and
-------------------------------------------
maintain complete and accurate ledgers showing all distribution, all shares
exchanged and payments made. All Escrow Shares or other property held as part of
the escrow shall at all times be clearly identified as being held by the Agent
hereunder. Any party hereto may at any time during the Agent's business hours
(with reasonable notice) reasonably request copies of any records or reports
relating to the Escrow Shares or the Additional Escrow Shares. Upon the request
of Parent or the Representative, the Agent shall furnish reports showing the
status of distribution and number of Escrow Shares.
15. Notices. All notices, requests, demands or other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given, (i)
on the date of delivery if delivered in person or by commercial courier, (ii) on
the second business day after being sent by fax, provided that the successful
transmission of the fax has been confirmed through a confirmation function sheet
provided by the fax machine used for such transmission and a true and correct
copy thereof is sent by first class mail to the party to which the fax was sent
within one (1) business day; or (iii) on the third business day following the
deposit thereof in the United States Mails, provided it is mailed by certified
mail, return-receipt requested and postage prepaid and properly addressed, as
set forth below. Any party hereto may from time to time, by written notice to
the other parties, designate a different address, which shall be substituted for
the one specified below.
11
<PAGE>
(a) If to the Shareholders or the Representative:
John Krooss
750 Linden Avenue
Los Altos, CA 94022
Telephone No.: (650) 949-4526
with a copy to:
Pillsbury Madison & Sutro LLP
50 Fremont Street
San Francisco, CA 94104
Attention: Linda C. Williams, Esq.
Telephone No.: (415) 983-7334
Facsimile No.: (415) 983-1200
(b) If to Parent or Parent's Agent:
Optibase, Ltd.
7 Shenkar St., P.O. Box 2170
Herzlia, 46120 Israel
Attention: Ran Eisenberg
Telephone No.: 972-9-970-9200
Facsimile No.: 972-9-958-6099
Optibase, Inc.
3031 Tisch Way
Plaza West, Suite 1
San Jose, CA 95128
Attention: Robert DeFeo
Telephone No.: (408) 260-6773
Facsimile No.: (408) 244-0545
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: John T. Sheridan
Facsimile No.: (650) 496-4088
(c) If to the Agent:
American Stock Transfer & Trust Company
6201 15th Avenue, 3rd Floor
12
<PAGE>
Brooklyn, NY 11219
Attention: [Karen Lazar]
Telephone No.: (718) 921-8360
Facsimile No.: (718) 921-8310
16. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of California without regard to the
principles of conflicts of law; provided, however, that all provisions regarding
the rights, duties and obligations of the Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
17. Binding Effect; Benefit. This Agreement shall be binding upon and inure
-----------------------
to the benefit of the successors and assigns of the parties hereto.
18. Modification. This Agreement may be amended or modified at any time by
------------
a writing executed by the Shareholders, Parent and the Agent.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
20. Headings. The section headings contained in this Agreement are inserted
--------
for convenience only, and shall not affect in any way, the meaning or
interpretation of this Agreement.
21. Entire Agreement. Except for those provisions of the Merger Agreement
----------------
referenced herein, this Agreement constitutes the entire agreement among the
parties and supersedes all prior and contemporaneous agreements and undertakings
of the parties on connection herewith.
22. Waiver. No failure or delay of the Agent in exercising any right, power
------
or remedy may be, or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right, power or remedy preclude any other or further
exercise of any right, power or remedy.
23. Severability. In the event that any one or more of the provisions
------------
contained in this Agreement, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted by
law, such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement.
24. Further Assurance. Each of the parties hereto shall, at the request of
-----------------
the other party, deliver to the requesting party all further documents or other
assurances as may reasonably be necessary or desirable in connection with this
Agreement.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
OPTIBASE, LTD.
By: -------------------------------------------
Name: Ran Eisenberg
Title: Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: -------------------------------------------
Name: -----------------------------------------
Title:-----------------------------------------
VIEWGRAPHICS INCORPORATED
By: -------------------------------------------
Name: John Krooss
Title: Chief Executive Officer
"SHAREHOLDERS"
By: -------------------------------------------
John Krooss, as the Representative
14
<PAGE>
SCHEDULE A
LIST OF SHAREHOLDERS
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B
ESCROW SHARES
<S> <C> <C> <C>
Stockholder's Name Address Number of Escrow Portion of Aggregate
Shares Consideration
------------------------------- --------------------------------------- -------------------- -------------------------
</TABLE>
2
<PAGE>
SCHEDULE C
ESCROW AGENT FEES AND EXPENSES
3
