SECURITIES ESCROW AGREEMENT
SECURITIES ESCROW AGREEMENT, dated as of ______________, 2007 (the
"Agreement"), by and among Western United Financial Corporation, a Delaware
corporation (the "Company"), each of the parties set forth on Exhibit A annexed
hereto (collectively the "Initial Holders") and Xxxxx Fargo Bank, National
Association, a national banking association (the "Escrow Agent").
WHEREAS, the Company has entered into an Underwriting Agreement, dated
_________, 2007 (the "Underwriting Agreement"), with Sandler X'Xxxxx & Partners,
L.P. ("Sandler X'Xxxxx") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, among other matters, the
Underwriters have agreed to purchase 6,250,000 units (the "Units") of the
Company. Each Unit consists of one share of the Company's common stock, par
value $.01 per share (the "Common Stock"), and one warrant (the "Warrant")
exercisable to purchase one share of Common Stock, all as more fully described
in the Company's final Prospectus, dated __________, 2007 comprising part of the
Company's Registration Statement on Form S-1 (File No. 333-138263) under the
Securities Act of 1933, as amended (the "Registration Statement"), declared
effective on _________, 2007 (the "Effective Date");
WHEREAS, certain of the Initial Holders (the "Common Holders") have agreed
as a condition of the Underwriters' purchase of the Units to deposit their
shares of Common Stock, as set forth opposite their respective names on Exhibit
A attached hereto (collectively, and as further defined in Section 4.2, the
"Initial Escrow Shares"), in escrow as hereinafter provided;
WHEREAS, Western United Funding, LLC, a Delaware limited liability company
("Funding"), has informed the Company that it intends to purchase 200,000 shares
of Common Stock (the "Funding Escrow Shares" and collectively with the Initial
Escrow Shares, the "Escrow Securities") in the Company's initial public offering
(the "Offering") and immediately after the closing thereof (the "Closing") to
deposit such Funding Escrow Shares in escrow as hereinafter provided; and
WHEREAS, the Company and the Initial Holders desire that the Escrow Agent
accept the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.
IT IS AGREED:
1. APPOINTMENT OF ESCROW AGENT. The Company and the Initial Holders hereby
appoint the Escrow Agent to act in accordance with and subject to the terms of
this Agreement and the Escrow Agent hereby accepts such appointment and agrees
to act in accordance with and subject to such terms.
2. DEPOSIT OF ESCROW SECURITIES.
2.1. Initial Escrow Shares. On or before the Effective Date, each of the
Common Holders shall deliver to the Escrow Agent certificates representing his
respective Initial Escrow Shares, as set forth opposite their respective names
on Exhibit A attached hereto, which certificates shall remain in the name of
such Common Holder, to be held and disbursed subject to the terms and conditions
of this Agreement. Each Common Holder acknowledges that the certificate
representing his Initial Escrow Shares bears a legend to reflect the deposit of
such Initial Escrow Shares under this Agreement.
2.2 Funding Escrow Shares. Promptly following the consummation of the
Offering, Funding shall deliver to the Escrow Agent a certificate representing
the Funding Escrow Shares, as set forth opposite its name on Exhibit A attached
hereto, which certificate shall remain in the name of Funding, to be held and
disbursed subject to the terms and conditions of this Agreement. Funding
acknowledges that the certificate representing the Funding Escrow Shares shall
bear a legend to reflect the deposit of the
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Funding Escrow Shares under this Agreement.
3. DISBURSEMENT OF THE ESCROW SECURITIES. The Escrow Agent shall hold the Escrow
Securities until the first anniversary of the consummation of the acquisition by
the Company of one or more banks, thrifts and their respective holding companies
and other financial services organizations through a merger, capital stock
exchange, asset acquisition, exchangeable share transaction, stock purchase or
other similar business combination (the "Business Combination") (such period,
the "Escrow Period"). The Company shall promptly provide notice of the
consummation of any Business Combination to the Escrow Agent. On such first
anniversary, the Escrow Agent shall, upon written instructions from each Initial
Holder, disburse each Initial Holder's Escrow Securities to such Initial Holder;
provided, however, that in the event that the Closing does not occur, then the
Escrow Agent shall promptly release the Escrow Securities to the Initial
Holders; provided further, however, that if an Initial Holder does not provide
written instructions within ninety days after the first anniversary of the
consummation of a Business Combination, then the Escrow Agent shall deliver such
Initial Holder's Escrow Securities to the care of the Company; provided further,
however, that if the Escrow Agent is notified by the Company pursuant to Section
6.6 hereof that the Company has been liquidated at any time during the Escrow
Period, then the Escrow Agent shall promptly destroy the certificates
representing the Escrow Securities; provided further, however, that if the
consummation of a Business Combination takes the form of a merger, stock
exchange or other similar transaction which results in any of the security
holders of the Company having the right to exchange their securities for other
securities, then the Escrow Agent shall, upon receipt of a certificate in form
reasonably acceptable to the Escrow Agent, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, release the Escrow Securities
to the Initial Holders immediately prior and subject to consummation of the
Business Combination so that they can similarly participate, and upon receipt
thereof, the Initial Holders shall deposit such securities into escrow with the
Escrow Agent for the remainder of the Escrow Period; and provided further,
however, that if, after the Company consummates a Business Combination and the
Company or the surviving entity of such Business Combination subsequently
consummates a liquidation, merger, stock exchange or other similar transaction
which results in any of the security holders of the Company or such entity
having the right to exchange their securities for cash, securities or other
property, then the Escrow Agent shall, upon receipt of a certificate in form
reasonably acceptable to the Escrow Agent, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, that such transaction is then
being consummated, release the Escrow Securities to the Initial Holders
immediately prior and subject to consummation of the transaction so that they
can similarly participate. The Escrow Agent shall act as soon as reasonably
possible following the receipt of the certificate, and shall not be held liable
for any delay in sending the Initial Escrow Shares caused by the late receipt of
the certificate. The Escrow Agent shall have no further duties hereunder with
respect to the Escrow Securities after the disbursement or destruction of the
Escrow Securities in accordance with this Section 3.
4. RIGHTS OF INITIAL HOLDERS IN ESCROW SECURITIES.
4.1. Rights as a Security Holder. Subject to the terms of their respective
Insider Letters as described in Section 4.4 hereof and except as herein
provided, each Initial Holder shall retain all of its rights as a stockholder of
the Company during the Escrow Period, including without limitation, the right to
vote Common Stock. The Escrow Agent shall have no responsibility to determine or
verify the contents or limitations of the Insider Letters and shall be bound
only by the terms of this Agreement.
4.2. Dividends and other Distributions in Respect of the Escrow
Securities. During the Escrow Period with respect to the Escrow Securities, all
dividends payable in cash with respect to the Escrow Securities shall be paid to
the Common Holders, but all dividends payable in stock or other non-cash
property (the "Non-Cash Dividends") shall be delivered to the Escrow Agent to
hold in accordance with the terms hereof. As used herein, the terms "Escrow
Securities" shall be deemed to include the Non-
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Cash Dividends distributed thereon, if any.
4.3. Restrictions on Transfer. During the Escrow Period, no sale, transfer
or other disposition (a "Transfer") may be made of any or all of the Escrow
Securities by an Initial Holder except (i) by gift to a member of the Initial
Holder's immediate family for estate planning purposes or to a trust, the
beneficiary of which is the Initial Holder or a member of the Initial Holder's
immediate family, (ii) by virtue of the laws of descent and distribution upon
death of the Initial Holder, or (iii) pursuant to a qualified domestic relations
order; provided, however, that such permitted Transfers may be implemented only
upon the respective transferee's written agreement to be bound by the terms and
conditions of this Agreement and of the Insider Letter signed by the Initial
Holder transferring the Escrow Securities. During the Escrow Period, no Initial
Holder shall pledge or grant a security interest in his or its Escrow Securities
or grant a security interest in his or its rights under this Agreement.
4.4. Insider Letters. Each of the Initial Holders has executed a letter
agreement with the Company, dated as indicated on Exhibit A hereto, and which is
filed as an exhibit to the Registration Statement (the "Insider Letter"),
respecting the rights and obligations of such Initial Holders in certain events,
including but not limited to the liquidation of the Company.
5. CONCERNING THE ESCROW AGENT.
5.1. Good Faith Reliance. The Escrow Agent shall be protected and shall
not be liable for any action taken or omitted by it in good faith and in the
exercise of its own best judgment, and may rely conclusively and may act upon
any order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Escrow Agent), statement, instrument, report or other
paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is believed by the Escrow Agent to be
genuine and to be signed or presented by the proper person or persons. The
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are affected, unless it shall have
given its prior written consent thereto.
5.2. Indemnification. The Escrow Agent shall be indemnified and held
harmless by the Company from and against any expenses, including counsel fees
and disbursements, or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim which in any way, directly
or indirectly, arises out of or relates to this Agreement, the services of the
Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other
than expenses or losses arising from the gross negligence or willful misconduct
of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall notify the other parties hereto in writing. In the event of
the receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court to
determine ownership or disposition of the Escrow Securities or it may deposit
the Escrow Securities with the clerk of any appropriate court or it may retain
the Escrow Securities pending receipt of a final, non-appealable order of a
court having jurisdiction over all of the parties hereto directing to whom and
under what circumstances the Escrow Securities are to be disbursed and
delivered. The provisions of Sections 5.2 and 5.7 shall survive in the event the
Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.
5.3. Compensation. The Escrow Agent shall be entitled to compensation from
the Company in accordance with Schedule I hereto for all services rendered by it
hereunder.
5.4. Further Assurances. From time to time on and after the date hereof,
the Company and the
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Initial Holders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
5.5. Resignation. The Escrow Agent may resign at any time and be
discharged from its duties as escrow agent hereunder by its giving the other
parties hereto written notice and such resignation shall become effective at
such time that the Escrow Agent shall turn over to a successor escrow agent
appointed by the Company, the Escrow Securities held hereunder. If no new escrow
agent is so appointed within the sixty (60) day period following the giving of
such notice of resignation, the Escrow Agent may submit an application to
deposit the Escrow Securities with the United States District Court for the
Southern District of New York, provided the Escrow Agent provides notice of such
deposit to the Company and the Initial Holders in accordance with Section 6.6
hereof.
5.6. Discharge of Escrow Agent. The Escrow Agent shall resign and be
discharged from its duties as escrow agent hereunder if so requested in writing
at any time by the other parties hereto, jointly, provided, however, that such
resignation shall become effective only upon acceptance of appointment by a
successor escrow agent as provided in Section 5.5.
5.7. Liability. Notwithstanding anything herein to the contrary, the
Escrow Agent shall not be relieved from liability hereunder for its own gross
negligence or its own willful misconduct.
5.8. Waiver. The Escrow Agent hereby waives any and all right, title,
interest or claim of any kind ("Claim") in or to any distribution of the Trust
Account (as defined in that certain Investment Management Trust Agreement, dated
as of the date hereof, by and between the Company and the Escrow Agent as
trustee thereunder), and hereby agrees not to seek recourse, reimbursement,
payment or satisfaction for any Claim against the Trust Account for any reason
whatsoever.
5.9. Standard of Care. The Escrow Agent shall be obligated only to perform
the duties specifically set forth in this Escrow Agreement, which shall be
deemed purely ministerial in nature, and the Escrow Agent shall under no
circumstances be deemed to be a fiduciary to any party hereto or any other
person. The parties hereto agree that the Escrow Agent shall not assume any
responsibility for the failure of the parties hereto to perform in accordance
with this Escrow Agreement or any other agreement or document. This Escrow
Agreement sets forth all matters pertinent to the escrow contemplated hereunder,
and no additional obligations of the Escrow Agent shall be inferred from the
terms of this Escrow Agreement or any other agreement or document. IN NO EVENT
SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES OR
EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES
WHICH RESULT FROM THE ESCROW AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR
(II) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
6. MISCELLANEOUS.
6.1. Governing Law and Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State,
including, without limitation, Sections 5-1401 and 5-1402 of the New York
General Obligations Law and the New York Civil Practice Laws and Rules 327(b).
The parties hereto agree that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced in
the courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submit to such jurisdiction,
which
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jurisdiction shall be exclusive. The parties hereby waive any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum.
6.2. Third Party Beneficiaries. Each of the Initial Holders hereby
acknowledges that the Underwriters are third party beneficiaries of this
Agreement and this Agreement may not be modified or changed without the prior
written consent of Sandler X'Xxxxx.
6.3. Entire Agreement. This Agreement and the Insider Letters and Warrants
as referenced herein contain the entire agreement of the Company and the Initial
Holders with respect to the subject matter hereof, and this Agreement contains
the entire agreement as it pertains to the Escrow Agent and the other parties
hereto and, except as expressly provided herein, may not be changed or modified
except by an instrument in writing signed by all parties to this Agreement. The
Agreement may be executed in several original or facsimile counterparts, each
one of which shall constitute an original, and together shall constitute but one
instrument.
6.4. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
hereof.
6.5. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives,
successors and permitted assigns. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor escrow agent under this Escrow Agreement and shall have and
succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.
6.6. Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered personally or be
mailed, certified or registered mail, or by private national courier service,
return receipt requested, postage prepaid, and shall be deemed given when so
delivered personally, if mailed, two days after the date of mailing, or if sent
by national courier service, one business day after being sent, in each case as
follows:
If to the Company, to:
Western United Financial Corporation
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: V. Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
If to an Initial Holder, to his address set forth in Exhibit A.
If to the Escrow Agent, to:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxxxxxxx, 17th Floor
MAC X0000-000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxx
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Fax: (000) 000-0000
A copy of any notice sent hereunder shall be sent to each of:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Jenkens & Xxxxxxxxx, A Professional Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: T. Xxxxx XxXxxxxxx, Esq.
Fax: (000) 000-0000
Sandler X'Xxxxx & Partners, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Syndicate Manager
Fax: (000) 000-0000
The parties may change the persons and addresses to which the notices or
other communications are to be sent by giving written notice to any such change
in the manner provided herein for giving notice.
6.7. Liquidation of the Company. The Company shall give the Escrow Agent
written notification of the liquidation and dissolution of the Company in the
event that the Company fails to consummate a Business Combination within the
time period(s) specified in the Registration Statement.
6.8 Disputes. If any disagreement or dispute arises among the Company and
the Initial Holders concerning the meaning or validity of any provision
hereunder or concerning any other matter relating to this Escrow Agreement, the
Escrow Agent shall be under no obligation to act, except (i) with joint written
instruction of the Company and the Initial Holders, or (ii) under process or
order of court, and shall sustain no liability for its failure to act pending
such process or court order.
6.9 Termination. This Agreement shall terminate on the final distribution
of all of the Escrow Securities in accordance with the terms of this Agreement.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, the parties have duly executed this Security Escrow
Agreement as of the date first written above.
WESTERN UNITED FINANCIAL
CORPORATION
By: ____________________________________
Name: V. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
ESCROW AGENT
By: ____________________________________
Name:
Title:
[Escrow Agreement]
INITIAL HOLDERS:
WESTERN UNITED FUNDING, LLC
By: ____________________________________
Name: V. Xxxxxxx Xxxxxxx
Title: Managing Member
________________________________________
Name: V. Xxxxxxx Xxxxxxx
________________________________________
Name: Xxxxxxx Xxxxxx
________________________________________
Name: Xxxxxxx X. Xxxxxxxx
________________________________________
Name: Xxxxx X. Xxxxxx
________________________________________
Name: Xxxxxxx X. Xxxxxxx
________________________________________
Name: Xxxxxx Xxxxxx
[Escrow Agreement]
EXHIBIT A
Number of Shares of
Name and Address of Common Holder Common Stock Stock Certificate Number
V. Xxxxxxx Xxxxxxx 739,375 7
c/o Western United Management, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Xxxxxxx Xxxxxx 398,125 8
Xxxxxx Xxxxxx 40,625 9
Xxxxxxx X. Xxxxxxxx 40,625 10
Xxxxx X. Xxxxxx 40,625 11
Xxxxxxx X. Xxxxxxx 40,625 12
Number of Shares of
Name and Address of Funding Common Stock
Western United Funding, LLC 200,000
c/o Western United Management, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
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SCHEDULE I - ESCROW AGENT FEES FOR ESCROW SERVICES
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SCHEDULE II - AUTHORIZED SIGNATORIES
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INDIVIDUAL'S NAME TITLE SIGNATURE
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V. XXXXXXX XXXXXXX CHAIRPERSON, PRESIDENT,
CHIEF EXECUTIVE OFFICER
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XXXXXXX XXXXXX CHIEF FINANCIAL
OFFICER, TREASURER, AND
SECRETARY
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