REVENUE ESCROW AGREEMENT
Exhibit
10.2
THIS
REVENUE ESCROW AGREEMENT (this “Revenue
Escrow Agreement”)
made
as of December 17, 2007, by and among United Benefits & Pension Services,
Inc., a Delaware corporation (the “Parent”), Xxx Xxxxxx (“Stockholders’
Representative”,
and
together with Parent, sometimes referred to individually as “Party”
or collectively
as the “Parties”) and JPMorgan Chase Bank, N.A., as escrow agent (the
“Escrow
Agent”).
WITNESSETH
WHEREAS,
the Parent, the Merger Sub, Associated Third Party Administrators (the
“Company”)
and
the Principal Stockholders have entered into a certain Agreement and Plan of
Merger, dated as of November 30, 2007 (the “Merger
Agreement”)
(capitalized terms used but not otherwise defined herein shall have the meanings
attributed to them in the Merger Agreement); and
WHEREAS,
in order to secure the Parent against downward adjustments in the Purchase
Price
and certain liabilities that may arise under or by virtue of the breach by
the
Company or any of the Principal Stockholders of any of the representations
and
warranties made by the Company and/or the Principal Stockholders in the Merger
Agreement, the Merger Agreement requires that a portion of the Cash
Consideration payable to all Company Stockholders be delivered to the Escrow
Agent and held in escrow by the Escrow Agent in accordance with the provisions
hereof.
NOW,
THEREFORE, in consideration of the premises set forth herein and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Appointment
of Escrow Agent.
The
Escrow Agent is hereby appointed to act as Escrow Agent hereunder in accordance
with the terms set forth herein, and the Escrow Agent hereby agrees to accept
such
appointment.
2. Deposit
of Escrow Funds.
(a) On
the
date hereof, the Parent will deliver to the Escrow Agent an aggregate amount
of
One Million Dollars ($1,000,000) (the “Escrow
Deposit”)
by
wire transfer of immediately available funds to be held by the Escrow Agent
in
accordance with the terms set forth herein.
(b) During
the term of this Revenue Escrow Agreement, the Escrow Funds shall be invested
in
a trust account at JPMorgan Chase Bank, N.A. (“Trust Account”), segregated apart
from the general funds of JPMorgan Chase Bank, N.A. or which it deposits in
another institution to the credit of itself as trustee or other fiduciary,
unless otherwise instructed in writing by the Parties and as shall be acceptable
to the Escrow Agent
pending
disbursement pursuant to this Revenue Escrow Agreement. The
Escrow Agent will provide compensation on balances in the Escrow Funds at a
rate
determined by the Escrow Agent from time to time, which shall consist of
interest earned on the Escrow Funds held in the Trust Account. The Escrow Agent
shall not have any liability for any loss sustained as a result of any
investment made pursuant to the terms of this Revenue Escrow Agreement. The
Escrow Agent shall have the right to liquidate any investments held in order
to
provide funds necessary to make required payments under this Revenue Escrow
Agreement. For
purposes hereof, “Escrow
Funds”
means
all cash delivered to the Escrow Agent pursuant to Section 2(a), along with
all
interest accrued thereon.
-1-
3. Release
of
Escrow Funds.
Subject
to Section 22, the Escrow Funds shall be distributed by Escrow Agent as
follows:
(a) If
Parent
and the Stockholders’ Representative shall at any time jointly direct Escrow
Agent in writing to distribute some or all Escrow Funds, or if Escrow Agent
shall have received an order, decree or judgment of a court or arbitrator of
competent jurisdiction presented by Parent and/or the Stockholders’
Representative and certified to be final and non-appealable, and directing
Escrow Agent to distribute some or all Escrow Funds, Escrow Agent shall within
five (5) Business Days distribute the Escrow Funds as directed in such joint
written direction, order, decree or judgment.
(b) At
any
time during the term of this Revenue Escrow Agreement prior to the distribution
of the Escrow Funds pursuant to Section 3(d), Parent may give a Claim Notice
in
substantially the form of Exhibit 1 to the Stockholders’ Representative and the
Escrow Agent In the event that the Stockholders’ Representative shall fail,
within ten (10) Business Days after the receipt by him of any Claim Notice,
to
deliver to the Parent and the Escrow Agent a written notice (the “Objection
Notice”)
denying that the claim stated in the Claim Notice, or any portion thereof,
is
due and payable to Parent and setting forth in reasonable detail the reasons
for
such denial, the Escrow Agent shall, on the twelfth (12th)
Business Day after receipt by the Escrow Agent of such Claim Notice,
automatically withdraw from the Escrow Funds and transfer to the Parent the
amount set forth in the Claim Notice. In the event that the Stockholders’
Representative shall, within ten (10) Business Days after the receipt by it
of a
Claim Notice, deliver an Objection Notice to the Parent and the Escrow Agent,
the Escrow Agent shall retain as Escrow Funds the amount set forth in the
Objection Notice (the “Disputed
Amount”)
until
otherwise directed by a written instrument signed by the Stockholders’
Representative and the Parent or by an order, decree or judgment of a court
or
arbitrator of competent jurisdiction presented by the prevailing party and
certified to be final and non-appealable. In the event that the Parent becomes
entitled to receive any amount of the Escrow Funds in satisfaction of a claim
set forth in a Claim Notice, the Escrow Agent shall promptly transfer to the
Parent the amount then held in the Escrow Funds sufficient (to the extent such
funds are available in the Escrow Fund for distribution) to comprise the amount
necessary to satisfy such claim.
(c) The
Escrow Agent shall, subject to Section 3(e) and Section 22, distribute to the
Company Stockholders $250,000 of the Escrow Deposit (to the extent, and only
to
the extent, that the Escrow Deposit, less any Disputed Amounts and any amounts
with respect to which the Escrow Agent shall have received a Claim Notice
pursuant to which the Parent may be entitled to receive a portion of the Escrow
Funds, exceed $250,000) on Xxxxx 00, 0000.
-0-
(x) Xxxxxxxx
to Section 2.4 of the Merger Agreement, promptly following the date on which
the
calculation of Fiscal 2008 Revenues becomes final and binding on the parties,
Parent and the Stockholders’ Representative shall deliver joint written
instructions (including the amount of any Escrow Funds to be disbursed) (the
“Revenue
Notice”)
to the
Escrow Agent to disburse the Escrow Funds to the appropriate parties, and the
Escrow Agent shall, within five (5) Business Days after the Escrow Agent’s
receipt thereof, withdraw from the then-current balance of the Escrow Funds
on
such date, less all Disputed Amounts (if any), the amount set forth in such
Revenue Notice (to the extent such funds are available in the Escrow Fund for
distribution) and transfer such amount to the parties set forth therein. The
Escrow Agent shall continue to hold such Disputed Amounts in accordance with
the
provisions of this Revenue Escrow Agreement.
(e) Any
funds
payable to the Company Stockholders shall be paid by the Escrow Agent by check
mailed via first class mail for immediate payment to the order of the recipient.
Any and all payments to the Company Stockholders shall be in the proportions
and
to the addresses set forth on Schedule
1
hereto,
less such amounts as the Stockholders’ Representative, by written notice to the
Escrow Agent, shall direct to be paid to BKR International Mergers &
Acquisitions Group, LLC, in payment of its fees payable to the Company
Stockholders in connection with the Merger. Any and all payments to the Parent
shall be paid directly to Parent at the account listed on Schedule
2
hereto,
or to such other account as the Parent (or its successors) may
designate.
(f) Any
Claim
Notice or Revenue Notice or other written instruction which directs the Escrow
Agent to disburse all or a portion of the Escrow Funds shall specify the amount
of such disbursement to be paid out of the Escrow Deposit and the amount of
such
disbursement to be paid out of the interest or other income earned on the Escrow
Deposit, it being acknowledged and agreed that all payments made pursuant to
this Client Escrow Agreement shall first be deducted from the Escrow
Deposit.
4. Escrow
Agent.
(a) The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no duties shall be implied. The Escrow Agent shall have no liability
under and no duty to inquire as to the provisions of any agreement other than
this Revenue Escrow Agreement. The
Escrow Agent shall neither be responsible for, nor chargeable with, knowledge
of, nor have any requirements to comply with, the terms and conditions of any
other agreement, instrument or document between the Parties, in connection
herewith, if any, including without limitation the Merger Agreement
(the
“Underlying
Agreement”),
nor
shall the Escrow Agent be required to determine if any person or entity has
complied with any such agreements, nor shall any additional obligations of
the
Escrow Agent be inferred from the terms
of such
agreements, even though reference
thereto may be made in this Revenue Escrow Agreement. In the event of any
conflict between the terms and provisions of this Revenue Escrow Agreement,
those of the
Underlying Agreement,
any
schedule or exhibit attached to the Revenue Escrow Agreement, or any other
agreement among the Parties, the terms and conditions of this Revenue Escrow
Agreement shall control.
-3-
(b) The
Escrow Agent may rely upon and shall not be liable for acting or refraining
from
acting upon any written notice, instruction or request furnished to it hereunder
and reasonably believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall be under no duty to
inquire into or investigate the validity, accuracy or content of any such
document. The Escrow Agent shall have no duty to solicit any payments which
may
be due it or the Escrow Funds.
(c) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the primary
cause of any loss to the Parent or the Company Stockholders. The Escrow Agent
may execute any of its powers and perform any of its duties hereunder directly
or through agents or attorneys (and shall be liable only for the careful
selection of any such agent or attorney) and may consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in
good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. In the event that the Escrow Agent shall
be uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto which, in its opinion, conflict with any
of the provisions of this Revenue Escrow Agreement, it shall be entitled to
refrain from taking any action and its sole obligation shall be to hold safely
all the Escrow Funds until it shall be directed otherwise in writing by the
Parent and the Stockholders’ Representative jointly or by a final order or
judgment of a court of competent jurisdiction. The Parties agree to pursue
any
redress or recourse in connection with any dispute without making the Escrow
Agent a party to the same, except where the Escrow Agent is a necessary party
or
is otherwise required by law to be a party to such dispute.
(d) Anything
in this Revenue Escrow Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss
or
damage of any kind whatsoever (including but not limited to lost profits),
even
if the Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.
5. Succession.
The
Escrow Agent may resign and be discharged from its duties or obligations
hereunder by giving 30 days advance notice in writing of such resignation to
the
Parent and the Stockholders’ Representative specifying a date when such
resignation shall take effect. The Parent and the Stockholders’ Representative
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice 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 escrow agent.
If
the
Parties have failed to appoint a successor escrow agent prior to the expiration
of thirty
(30) days following receipt of the notice of resignation, the Escrow Agent
may
petition any court of competent jurisdiction for the appointment of a successor
escrow agent or for other appropriate relief, and any such resulting appointment
shall be binding upon all of the parties hereto. Escrow Agent’s sole
responsibility after such thirty (30) day notice period expires shall be to
hold
the Escrow Funds (without any obligation to reinvest the same) and to deliver
the same to a designated substitute escrow agent, if any, or in accordance
with
the directions of a final order or judgment of a court of competent
jurisdiction, at which time of delivery Escrow Agent’s obligations hereunder
shall cease and terminate, subject to the provisions of Sections 7 and 8
hereunder. The Escrow Agent shall have the right to withhold an amount equal
to
any amount due and owing to the Escrow Agent, plus any costs and expenses the
Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in
connection with the termination of the Revenue Escrow Agreement. Any corporation
or association into which the Escrow Agent may be merged or converted or with
which it may be consolidated, or any corporation or association to which all
or
substantially all the escrow business of the Escrow Agent’s line of business may
be transferred, shall be the Escrow Agent under this Revenue Escrow Agreement
without further act.
-4-
6. Fees.
The
Parent and the Stockholders’ Representative agree jointly and severally to (i)
pay the Escrow Agent upon execution of this Revenue Escrow Agreement and from
time to time thereafter reasonable compensation for the services to be rendered
hereunder, which unless otherwise agreed in writing shall be as described in
Schedule
3
attached
hereto, and (ii) pay or reimburse the Escrow Agent upon request for all
expenses, disbursements and advances, including reasonable attorney's fees
and
expenses, incurred or made by it in connection with the preparation, execution,
performance, delivery, modification and termination of this Revenue Escrow
Agreement. The Escrow Agent is hereby authorized to withdraw such compensation
and reimbursable amounts directly from the Escrow Funds.
7. Indemnity.
The
Parent and the Stockholders’ Representative shall jointly and severally
indemnify, defend and save harmless the Escrow Agent
and its
directors, officers, agents and employees from all loss, liability or expense
(including the fees and expenses of in house or outside counsel) arising out
of
or in connection with (i) the Escrow Agent's execution and performance of this
Revenue Escrow Agreement, except in the case of any indemnitee to the extent
that such loss, liability or expense is finally adjudicated by a court of
competent jurisdiction to have been primarily caused by the gross negligence
or
willful misconduct of such indemnitee, or (ii) its following any instructions
or
other directions from the Parent or the Stockholders’ Representative, except to
the extent that its following any such instruction or direction is expressly
forbidden by the terms hereof. The parties hereto acknowledge that the foregoing
indemnities shall survive the resignation or removal of the Escrow Agent or
the
termination of this Revenue Escrow Agreement. The Parent and the Stockholders’
Representative hereby grant the Escrow Agent a lien on, right of set-off against
and security interest in the Escrow Fund for the payment of any claim for
indemnification, compensation, expenses and amounts due hereunder.
-5-
8. Security
Procedures.
In the
event funds transfer instructions are given (other than in writing at the time
of execution of this Revenue Escrow Agreement, as indicated in Schedule
1
and
Schedule
2
attached
hereto), whether in writing or by telecopier, the Escrow Agent is authorized
to
seek confirmation of such instructions by telephone call-back to the person
or
persons designated on Schedule
4
hereto
(each an “Authorized
Representative”,
collectively, the “Authorized
Representatives”),
and
the Escrow Agent may rely upon the confirmation of anyone purporting to be
the
person or persons so designated. Each funds transfer instruction shall be
executed by an authorized signatory. The undersigned is authorized to certify
that the Authorized Representatives are authorized signatories. The Authorized
Representatives and telephone numbers for call-backs may be changed only in
a
writing actually received and acknowledged by the Escrow Agent. If the Escrow
Agent is unable to contact any of the Authorized Representatives, the Escrow
Agent is hereby authorized to seek confirmation of such instructions by
telephone call-back to the Stockholders’ Representative or any one or more of
the managers of the Parent (the “Executive
Officers”)
as the
Escrow Agent may select. Such Executive Officers shall deliver to the Escrow
Agent a fully executed Incumbency Certificate, and the Escrow Agent may rely
upon the confirmation of anyone purporting to be any such officer. The Escrow
Agent and the beneficiary's bank in any funds transfer may rely solely upon
any
account numbers or similar identifying numbers provided by the Parent or the
Stockholders’ Representative to identify (i) the beneficiary, (ii) the
beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply
any of the Escrow Funds for any payment order it executes using any such
identifying number, even when its use may result in a person other than the
beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary's bank or an intermediary bank designated. The parties to this
Revenue Escrow Agreement acknowledge that these security procedures are
commercially reasonable.
9. Termination.
This
Revenue Escrow Agreement shall automatically, without any action by the Parent
or the Stockholders’ Representative, be terminated upon the disbursement by the
Escrow Agent of all the Escrow Funds pursuant to the terms herein.
10. Notices.
(a) All
communications hereunder shall be in writing and shall be deemed to be duly
given and received:
(i)
upon
delivery if delivered personally or upon confirmed transmittal if by
facsimile;
(ii)
on
the next Business Day (as hereinafter defined) if sent by overnight courier;
or
(iii)
four (4) Business Days after mailing if mailed by prepaid registered mail,
return receipt requested, to the appropriate notice address set forth below
or
at such other address as any party hereto may have furnished to the other
parties in writing by registered mail, return receipt requested.
(b) Notwithstanding
the above, in the case of communications delivered to the Escrow Agent pursuant
to (ii) and (iii) of this Section 8, such communications shall be deemed to
have
been given on the date received by the Escrow Agent. In the event that the
Escrow Agent, in its sole discretion, shall determine that an emergency exists,
the Escrow Agent may use such other means of communication as the Escrow Agent
reasonably deems appropriate.
(c) "Business
Day" shall mean any day other than a Saturday, Sunday or any other day on which
the Escrow Agent located at the notice address set forth below is authorized
or
required by law or executive order to remain closed.
(d) All
communications under this Revenue Escrow Agreement shall be delivered to the
following address:
-6-
If
to the
Parent:
United
Benefits & Pension Services, Inc.
000
Xxxxx
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxxxxx 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
With
a
simultaneous copy to:
Xxxxxx
Xxxxxx Xxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
If
to the
Stockholders’ Representative:
Xxx
Xxxxxx (CONFIDENTIAL)
0000
Xxxxxx Xxxx Xxxxxx
Xxx
Xxxxx, XX 00000
Telephone: (000)
000-0000
with
copies to:
Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx LLP
0000
X.
Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
If
to the
Escrow Agent:
JPMorgan
Chase Bank
Worldwide
Securities Services
0
Xxx
Xxxx Xxxxx – 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx Xxxxx/Xxxxxx XxXxxxx
Facsimile:
000-000-0000
Telephone:
000-000-0000
-7-
11. Amendments
and Waivers.
Any
term of this Revenue Escrow Agreement may be amended with the written consent
of
the parties or their respective successors and assigns. Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon the
parties and their respective successors and assigns.
12. Successors
and Assigns.
The
terms and conditions of this Revenue Escrow Agreement shall inure to the benefit
of and be binding upon the parties and their successors and assigns.
Parent
shall have the absolute right to assign (by express assignment, merger or
otherwise) its rights and obligations hereunder to [the Public Shell
Corporation] without the consent of the Escrow Agent, the Stockholders’
Representative or any of the Company Stockholders, provided
that the
Parent shall notify the Escrow Agent and the Stockholders’ Representative of
such assignment promptly after the occurrence of such assignment. The
term
“Escrow Agent” as used herein shall also refer to the successors and assigns of
Escrow Agent, including, without limitation, a receiver, trustee, custodian
or
debtor-in-possession.
13. Titles
and Subtitles.
The
titles and subtitles used in this Revenue Escrow Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Revenue Escrow Agreement.
14. Severability.
If one
or more provisions of this Revenue Escrow Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (i) such provision shall
be excluded from this Revenue Escrow Agreement, (ii) the balance of this
Revenue Escrow Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of this Revenue Escrow Agreement shall be
enforceable in accordance with its terms.
15. Entire
Agreement.
This
Revenue Escrow Agreement and the documents referred to herein are the product
of
all of the parties hereto, constitute the entire agreement between such parties
pertaining to the subject matter hereof and thereof, and merge all prior
negotiations and drafts of the parties with regard to the transactions
contemplated herein and therein. Any and all other written or oral agreements
existing among the parties hereto regarding such transactions are expressly
canceled.
16. Counterparts.
This
Revenue Escrow Agreement may be executed in a number of identical counterparts
but all counterparts shall constitute one agreement. All signatures of the
parties to this Revenue Escrow Agreement may be transmitted by facsimile, and
such facsimile will, for all purposes, be deemed to be the original signature
of
such party whose signature it reproduces and will be binding upon such
party.
17. Governing
Law.
This
Revenue Escrow Agreement and all acts and transactions pursuant hereto and
the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law.
-8-
18. Consent
to Jurisdiction; Waiver of Jury Trial.
Each of
the parties hereto hereby irrevocably consents to the exclusive jurisdiction
of
the courts of the State of New York and the United States District Court for
the
Southern District of New York and waives trial by jury in any action or
proceeding with respect to this Revenue Escrow Agreement.
19. Miscellaneous.
No
party to this Revenue Escrow Agreement is liable to any other party for losses
due to, or if it is unable to perform its obligations under the terms of this
Revenue Escrow Agreement because of, acts of God, fire, war, terrorism, floods,
strikes, electrical outages, equipment or transmission failure, or other causes
reasonably beyond its control. Receipt
and release of the Escrow Funds shall be confirmed by Escrow Agent as soon
as
practicable by account statement, and any discrepancies in any such account
statement shall be noted by the Parent and the Stockholders’ Representative
within 30 calendar days after receipt thereof. Failure to inform Escrow Agent
in
writing of any discrepancies in any such account statement within said 30-day
period shall conclusively be deemed confirmation of such account statement
in
its entirety.
20. Compliance
with Court Orders.
In the
event that any escrow property shall be attached, garnished or levied upon
by
any court order, or the delivery thereof shall be stayed or enjoined by an
order
of a court, or any order, judgment or decree shall be made or entered by any
court order affecting the property deposited under this Revenue Escrow
Agreement, the Escrow Agent is hereby expressly authorized to obey and comply
with all writs, orders or decrees so entered or issued, which it is advised
by
legal counsel is binding upon it, and in the event that the Escrow Agent obeys
or complies with any such writ, order or decree it shall not be liable to any
of
the parties hereto or to any other person, firm or corporation, by reason of
such compliance notwithstanding such writ, order or decree be subsequently
reversed, modified, annulled, set aside or vacated.
21. Patriot
Act Disclosure/Taxpayer Identification Number/Tax Reporting. Section 326 of
the
Uniting
and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Escrow Agent to implement
reasonable procedures to verify the identity of any person that opens a new
account with it. Accordingly, the Parties acknowledge that Section 326 of the
USA PATRIOT Act and the Escrow Agent’s identity verification procedures require
the Escrow Agent to obtain information which may be used to confirm the Parties’
identities including without limitation name, address and organizational
documents (“Identifying Information”).
The
Parties agree to provide the Escrow Agent with and consent to the Escrow Agent
obtaining from third parties any such Identifying Information required as a
condition of opening an account with or using any service provided by the Escrow
Agent.
22. Tax
Reporting.
Prior
to execution of this Revenue Escrow Agreement, Parent, Stockholders’
Representative for itself and each Stockholder, shall provide the Escrow Agent
with a fully executed W-8 or W-9 Internal Revenue Service form, which shall
include their Tax Identification Number (TIN) as assigned by the Internal
Revenue Service.
-9-
The
Parent and Stockholders’ Representative further represent to the Escrow Agent
that the transaction memorialized in the Merger Agreement does not constitute
an
installment sale requiring any tax reporting or withholding of imputed interest
or original issue discount to the IRS or other taxing authority.
To
the
extent that any portion of the principal amount of the Escrow Deposit represents
part or all of the purchase price for shares of stock under the Merger
Agreement, the Stockholders’ Representative shall provide on or before the
effective date of the Revenue Escrow Agreement and at appropriate times
thereafter, including prior to any disbursement, all information required for
Escrow Agent to perform tax reporting on IRS Form 1099-B, to the extent required
by law. Unless otherwise directed in a joint written instruction executed by
the
Parent and the Stockholders’ Representative, Escrow Agent shall report to the
IRS and as appropriate withhold and remit taxes to the IRS, or any other taxing
authority as required by law, based upon the information and documentation
so
provided. Escrow Agent shall be entitled to rely on such information and
documentation and shall not be responsible for and shall be indemnified by
the
Stockholders’ Representative for any additional tax, interest, penalty or
withholding arising from the inaccuracy or late receipt of such information
or
documentation.
In
addition, prior or at the time of any distribution of income from the Escrow
Funds, the Parties shall provide to the Escrow Agent a detailed schedule
indicating the allocation of disbursed interest or other income earned under
the
Escrow Agreement which shall be reported by the Escrow Agent to the IRS, or
any
other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form)
as
income earned from the Escrow, to the extent required by law.
Any
other
tax forms required to be filed will be prepared and filed by Parent and/or
the
Stockholders’ Representative with the IRS and any other taxing authority as
required by law. The Parties acknowledge and agree that Escrow Agent shall
have
no responsibility for the preparation and/or filing of any income, franchise
or
any other tax return with respect to the Fund or any income earned by the Escrow
Deposit. The Parties further acknowledge and agree that any taxes payable from
the income earned on the investment of any sums held in the Escrow Deposit
shall
be paid by the recipient thereof. Escrow Agent shall withhold any taxes it
deems
appropriate, including but not limited to required withholding in the absence
of
proper tax documentation, and shall remit such taxes to the appropriate
authorities.
[signature
page to follow]
-10-
IN
WITNESS WHEREOF, the parties have duly executed this Revenue Escrow Agreement
as
of the date first hereinabove stated.
|
Escrow
Agent:
|
||||
|
JPMORGAN
CHASE BANK, N. A.
|
||||
|
By:
|
/s/
Xxxxx X. XxXxxxx
|
|||
|
Xxxxx
X. XxXxxxx
|
||||
|
Vice
President
|
||||
|
Parent:
|
||||
|
UNITED
BENEFITS & PENSION SERVICES, INC.
|
||||
|
By:
|
/s/
Xxxxxxx Xxxxxxxxx
|
|||
|
Xxxxxxx
Xxxxxxxxx
|
||||
|
Chief
Executive Officer & President
|
||||
|
Stockholders’
Representative
|
||||
|
/s/
Xxx Xxxxxx
|
||||
|
Xxx
Xxxxxx
|
||||
[Signature
page to Revenue Escrow Agreement]
11
Schedule
1
|
Stockholder
|
Address
|
Taxpayer
Identification
Number
|
Percentage
|
|||
12
Schedule
2
Account
Name: United Benefits & Pension Services, Inc.
Citibank
000
Xxxx
Xxxx Xxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Account
Number: 0000000000
ABA
Number: 000000000
13
Schedule
3
Fees
Administrative
Fee
. . . .
. . . . . . . . . . . . . . . . .$2,,000.00
Payable
Upon Account Opening and in Advance each year in which JPMorgan Chase Bank,
N.A.
acts as Escrow Agent, without proration for partial year
14
Schedule
4
Telephone
Numbers for Call-Backs and
Persons
Designated to Instruct and Confirm Funds Transfer Instructions
If
to the Parent:
|
Name
|
Telephone
Number
|
Signature
|
||
|
Xxxxxxx
X. Xxxxxxxxx
|
(000)
000-0000
|
|
If
to Weston:
|
Name
|
Telephone
Number
|
Signature
|
||
|
|
||||
|
|
Telephone
call backs shall be made to both Parent and Stockholders’ Representative if
joint instructions are required pursuant to the agreement. All
funds
transfer instructions must include the signature of the person(s) authorizing
said funds transfer.
Periodically,
you may issue payment orders to us to transfer funds by federal funds wire.
We
review the orders to determine compliance with the governing documentation
and
to confirm signature by the appropriate party, in accordance with the above
list. Bank policy requires that, where practicable, we undertake callbacks
to a
party other than the individual who signed the payment order to verify the
authenticity of the payment order.
Inasmuch
as you are the only employee in your office who can confirm wire transfers,
we
will call you to confirm any federal funds wire transfer payment order
purportedly issued by you. Your continued issuance of payment orders to us
and
confirmation in accordance with this procedure will constitute your agreement
(1) to the callback security procedure outlined herein and (2) that the security
procedure outlined herein constitutes a commercially reasonable method of
verifying the authenticity of payment orders. Moreover, you agree to accept
any
risk associated with a deviation from this bank policy.
15
Exhibit
1
Claim
Notice
[insert
date]
Stockholder
Representative
JPMorgan
Chase Bank
Worldwide
Securities Services
0
Xxx
Xxxx Xxxxx – 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx/Xxxxxx XxXxxxx
Dear
Sir/Madam,
This
Claim Notice is being delivered pursuant to Section 3(b) of the REVENUE ESCROW
AGREEMENT (this “Escrow
Agreement”)
made
as of December __, 2007, by and among United Benefits & Pension Services,
Inc., a Delaware corporation (the “Parent”), Xxx Xxxxxx (“Stockholders’
Representative”,
and
together with Parent, sometimes referred to individually as “Party”
or collectively
as the “Parties”), and JPMorgan Chase Bank, N.A., as escrow agent (the
“Escrow
Agent”).
Parent
hereby gives notice of a Claim in the amount of $[insert amount].
The
facts
giving rise to a claim for the release of the Escrow Funds (or any portion
thereof) pursuant to Subsections 2.4(b) (c) or (d) of the Merger Agreement
and/or Section 10.4 of the Merger Agreement are as follows:
[insert
details]
The
method of computation of the amount of such claim is as follows:
[insert
details]
In
the
event that Weston shall fail, within ten (10) Business Days after the receipt
of
this Claim Notice, to deliver to the Parent and the Escrow Agent a written
notice (the “Objection
Notice”)
denying that the claim stated herein, or any portion thereof, is due and payable
to Parent and setting forth in reasonable detail the reasons for such denial,
the Escrow Agent shall, on the twelfth (12th)
Business Day after receipt by the Escrow Agent of such Claim pay the amount
of
the Claim to Parent.
Sincerely,
UNITED
BENEFITS & PENSION SERVICES, INC.
16
