Exhibit (d)(7)
CONTINGENT PAYMENT AGREEMENT
This Contingent Payment Agreement ("Agreement") is entered into on August 8,
2002, among Xxxxxxxxx Xxxxxx ("Selling Stockholder"), Bureau Veritas Holdings,
Inc., a Delaware corporation and a wholly-owned subsidiary of Bureau Veritas,
S.A. ("BVHI"), and Voice Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of BVHI ("Purchaser").
RECITALS
A. Bureau Veritas, S.A., a societe anonyme organized under the laws of the
French Republic ("Parent"), Purchaser and U.S. Laboratories Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
dated the date hereof (the "Merger Agreement") providing for the acquisition of
the Company by Parent on the terms and subject to the conditions set forth
therein. Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Merger Agreement.
B. In order to induce Parent and Purchaser to enter into the Merger
Agreement, Selling Stockholder has agreed that, upon the consummation of the
Offer, a total of five million dollars ($5,000,000) of the aggregate purchase
price that otherwise would be payable to Selling Stockholder pursuant to the
Offer shall be deposited with Citibank, N.A., as escrow agent (the "Escrow
Agent"), to be held in escrow pursuant to an Escrow Agreement (as defined in
Section 4.3), to be disbursed as provided for in this Agreement and the Escrow
Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and provisions herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the terms listed below have the following
meanings.
1.1 Acquired Business. The business of the Company and its subsidiaries,
including any business acquired directly or indirectly by the Company on or
after the date hereof with the prior written consent of BVHI.
1.2 Change of Control. (a) The consummation of the acquisition by a third
party which is not an affiliate of the Company of more than 50% of the
outstanding voting securities of the Company (other than the acquisition
contemplated pursuant to the Merger Agreement), (b) the consummation of a
merger, consolidation or other reorganization of the Company (other than the
merger contemplated by the Merger Agreement or a simple reincorporation of the
Company in another jurisdiction) if after giving effect to such merger,
consolidation or other reorganization of the Company, the stockholders of the
Company immediately prior to such merger, consolidation or other reorganization
do not represent more than 50% of the voting
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securities (on a fully diluted basis) of the surviving or resulting entity
after such merger, consolidation or other reorganization, or (c) the sale of
all or substantially all of the assets of the Company to a third party which is
not an affiliate of the Company.
1.3 EBIT. The meaning assigned to such term in Article IV.
1.4 GAAP. United States generally accepted accounting principles applied
consistently with the preparation of the financial statements of the Company
and its subsidiaries for the two years ended December 31, 2001.
1.5 Stay Bonuses. Those certain bonuses and similar payments in an
aggregate amount not to exceed $1.865 million payable to those persons listed
in Schedule A hereto.
1.6 Transaction. The acquisition by BVHI of the Company pursuant to the
Merger Agreement.
ARTICLE II
DEPOSIT OF ESCROWED AMOUNT
2.1 Selling Stockholder agrees that, upon the consummation of the Offer,
the sum of five million dollars ($5,000,000) (the "Escrowed Amount") out of the
aggregate purchase price which otherwise would be payable to Selling
Stockholder pursuant to the Offer shall be deposited with the Escrow Agent to
be held in escrow pursuant to the terms of the Escrow Agreement and this
Agreement. Selling Stockholder hereby irrevocably waives any claims that
Selling Stockholder may have to receive payment of the Escrowed Amount upon
consummation of the Offer, including, without limitation, any claims under Rule
14d-10 under the Securities Exchange Act of 1934, as amended.
ARTICLE III
CONTINGENT PAYMENT
3.1 Amount. Selling Stockholder shall be entitled to that portion of the
Escrowed Amount set forth in the following table based upon the EBIT of the
Acquired Business for the year ending December 31, 2002 as provided for in such
table. The amount payable to Selling
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Stockholder pursuant to the preceding sentence is hereinafter referred to as
the "Payment Amount."
then the Payment
If EBIT of the Acquired Business for 2002 is: Amount shall equal:
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greater than $8.5 million $5.0 million
greater than $8.4 million but equal to or less than $8.5 million $4.5 million
greater than $8.3 million but equal to or less than $8.4 million $4.0 million
greater than $8.2 million but equal to or less than $8.3 million $3.0 million
greater than $8.1 million but equal to or less than $8.2 million $2.0 million
greater than $8.0 million but equal to or less than $8.1 million $1.0 million
If EBIT of the Acquired Business for 2002 is equal to or less than $8.0
million, the Payment Amount shall be zero ($0).
3.2 Change of Control If there is a Change of Control prior to January 1,
2003 or the employment of Selling Stockholder is terminated without Cause prior
to January 1, 2003 under that certain Employment Agreement between Selling
Stockholder and the Company, then the Payment Amount shall be $5 million.
3.3 Installment Sale Treatment; Gross Up Payment
(a) The parties to this Agreement intend that the escrow arrangement
established pursuant to this Agreement and the Escrow Agreement shall be
treated as an "installment obligation", and the payments of the Payment Amount
to Selling Stockholder shall be treated as installment payments on the sale of
stock of the Company eligible for deferral of gain recognition under the
"installment method" under Section 453(a) of the Internal Revenue Code, as
amended (the "Code") and corresponding provisions of state and local tax law,
and the Transaction, including the payments of the Payment Amount shall be so
reported on a consistent basis by the parties to this Agreement. Subject to the
provisions of Sections 3.3(b) and (c), if it is determined by the Internal
Revenue Service or other tax authority that the payment of the Payment Amount
(the "Payment") is not so eligible, resulting in federal, state, or local taxes
imposed on Selling Stockholder in excess of the taxes that would be imposed if
the Payment Amount were so eligible taking into account all tax years of
Selling Stockholder (such excess tax to be referred to as the "Additional
Tax"), then, provided that BVHI has exhausted its remedies pursuant to Sections
3.3(b) and (c), BVHI shall pay to Selling Stockholder an additional payment (a
"Gross Up Payment") in an amount such that after payment by Selling Stockholder
of all taxes and any benefits that result from the deductibility by Selling
Stockholder of such taxes, including
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any income taxes imposed upon the Gross Up Payment, Selling Stockholder retains
an amount of Gross Up Payment equal to the Additional Tax.
(b) Selling Stockholder shall notify BVHI in writing of any claim by the
Internal Revenue Service or other tax authority that, if successful, would
require the payment by BVHI of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after Selling
Stockholder is informed in writing of such claim and shall apprise BVHI of the
nature of such claim and the date on which such claim is requested to be paid.
Selling Stockholder shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to BVHI (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If BVHI notifies Selling Stockholder in writing prior to
the expiration of such period that it desires to contest such claim, Selling
Stockholder shall:
(i) give BVHI any information reasonably requested by BVHI relating to
such claim;
(ii) take such action in connection with contesting such claim as BVHI
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by BVHI,
(iii) cooperate with BVHI in good faith in order effectively to contest
such claim, and
(iv) permit BVHI to participate in any proceedings relating to such
claim; provided, however, that BVHI shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Selling
Stockholder harmless, on an after-tax basis, for income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.3(b), BVHI shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Selling Stockholder to pay the
tax claimed and xxx for a refund or contest the claim in any permissible
manner, and Selling Stockholder agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as BVHI shall determine;
provided, however, that if BVHI directs Selling Stockholder to pay such
claim and xxx for a refund, BVHI shall advance the amount of such payment to
Selling Stockholder, on an interest-free basis and shall indemnify and hold
Selling Stockholder harmless, on an after-tax basis from any income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Selling
Stockholder with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, BVHI's control of
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Selling Stockholder shall be entitled
to
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settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(c) If, after the receipt by Selling Stockholder of an amount advanced by
BVHI pursuant to Section 3.3(a) or 3.3(b), Selling Stockholder becomes entitled
to receive any refund with respect to such claim, Selling Stockholder shall
(subject to BVHI's complying with the requirements of Section 3.3(b), if
applicable) promptly pay to BVHI the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by Selling Stockholder of an amount advanced by BVHI pursuant to
Section 3.3(b), a determination is made that Selling Stockholder is not
entitled to any refund with respect to such claim and BVHI does not notify
Selling Stockholder in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
ARTICLE IV.
DETERMINATION OF EBIT; ESCROW
4.1 Manner of Computation. For purposes of this Agreement, "EBIT" of the
Acquired Business shall mean the consolidated earnings of the Acquired Business
from operations before interest income and expense and corporate income taxes.
EBIT shall be determined in accordance with GAAP. In determining such EBIT:
(a) EBIT shall, except as otherwise provided for herein, be computed
without regard to "extraordinary items" of gain or loss, as that term is
defined in GAAP;
(b) EBIT shall not include any gains, losses or profits realized from
the sale of any assets other than in the ordinary course of business;
(c) No deduction shall be made for any corporate charges or their
equivalent charged by Parent or any of its subsidiaries or affiliates to the
Acquired Business;
(d) No deduction shall be made for any increased depreciation or
amortization resulting from the Transaction or any charge recorded by the
Company as a result of the adoption of FASB 142 or any change in GAAP
between the date hereof and December 31, 2002;
(e) No deduction shall be made for any expenses incurred or arising from
the Transaction, including financial advisory or finder fees, legal and
accounting fees, printing and transfer agent fees, the costs of any tail
director and officer insurance policy purchased in connection with the
Transaction and approved by Purchaser and accruals for the Stay Bonuses
(except to the extent provided for in clause (f) below;
(f) EBIT shall include an accrual for bonuses payable by the Company in
the ordinary course of business and consistent with past practice, whether
or not included in the Stay Bonuses;
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(g) In the case of acquisitions consummated after the date hereof and
approved in writing by Parent, EBIT shall include earnings before interest
income and expense and corporate income tax generated or incurred after the
date of consummation of such acquisition;
(h) EBIT shall include non-capitalized acquisition expenses for
completed acquisitions and expenses for failed acquisitions to the extent,
in each cae, required by GAAP to be expensed; and
(i) EBIT shall not include charges to the extent resulting from material
changes to the business made by Parent on or prior to December 31, 2002 that
adversely impact calculation of, or the ability of the Company to achieve,
the EBIT targets contemplated in Section 3.1.
4.2 Preparation of Balance Sheet and Income Statement; Determination of
EBIT.
(a) Not later than March 31, 2003 (or such later date as the parties may
agree in writing), BVHI shall, at its expense, cause to be prepared and
delivered to Selling Stockholder:
(i) a balance sheet (the "Balance Sheet") as at December 31, 2002
and income statement (the "Income Statement") for the year ending
December 31, 2002 for the Acquired Business, which Balance Sheet and
Income Statement shall: (a) be audited by PricewaterhouseCoopers LLP
(the "Auditors"), whose audit report therein shall be unqualified, (b)
be prepared in accordance with GAAP, and (c) include all year-end
accruals which would be required in accordance with financial statements
prepared in accordance with GAAP as of the end of a fiscal year;
(ii) a written report of the Auditors substantially in the form of
Exhibit 1 setting forth the determination of the amount of EBIT for the
Acquired Business for the year ending December 31, 2002 determined in
accordance with GAAP together with a written statement of the Auditors
that the EBIT amount has been determined in accordance with GAAP; and
(iii) a written statement of the Auditors setting forth the Payment
Amount agreed upon the amount of EBIT so determined calculated in
accordance with Article IV;
(b) The Balance Sheet and Income Statement delivered by BVHI to Selling
Stockholder and the determination of EBIT for the year ending December 31,
2002 and Payment Amount pursuant to Section 4.2(a) shall be the final
determination thereof and be binding and conclusive upon BVHI and Selling
Stockholder unless Selling Stockholder delivers to BVHI an objection thereto
in writing signed by Selling Stockholder specifying in reasonable detail the
nature and grounds for such objection within 30 days after the date of
delivery of such Balance Sheet and Income Statement to Selling Stockholder.
BVHI and Selling Stockholder shall promptly thereafter consult with one
another, in good faith, in an effort to resolve such dispute. If they fail
to resolve such objection within 30 days after the receipt of said
objection, such dispute shall be submitted within 7 days for resolution to
an internationally recognized firm of
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independent certified public accountants to be agreed between BVHI and
Selling Stockholder other than any firm which performs, or within the past
three years performed, audits for any of Parent, BVHI, the Company or
Selling Stockholder (such accounting firm being referred to herein as the
"Arbitrating Accountants"). The Arbitrating Accountants shall be instructed
to resolve such dispute within 45 days and their determination shall be
final and binding on the parties.
(c) If the Arbitrating Accountants determine that the EBIT has been
understated by three (3%) percent or more, then BVHI shall pay the
Arbitrating Accountants' fees, costs and expenses. If EBIT has not been
understated or has been understated by less than three (3%) percent, then
Selling Stockholder shall pay the Arbitrating Accountants' fees, costs and
expenses.
4.3 Escrow.
(a) Upon the consummation of the Offer, Parent, BVHI, Purchaser and
Selling Stockholder shall enter into an escrow agreement substantially in
the form of Exhibit 2 (the "Escrow Agreement"), and Purchaser shall deposit
the Escrowed Amount with the Escrow Agent.
(b) If and when the Payment Amount is finally determined, then either
BVHI or Selling Stockholder shall provide written notice of such
determination (including a copy of such determination) to the Escrow
Agreement and the other party. The Escrowed Amount shall then be disbursed
as provided for in the Escrow Agreement.
ARTICLE V.
MISCELLANEOUS
5.1 Benefit of Parties. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns. This Agreement shall not be
assignable by Selling Stockholder, other than to his legal representatives
pursuant to the laws of descent and distribution.
5.2 Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings between the parties with respect thereto.
5.3 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service, (c) on the sixth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid or (d) if sent by
facsimile
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transmission between the hours of 9:00 a.m. and 5:00 p.m. in the recipient
party's time zone, with a copy mailed on the same day in the manner provided in
(a) or (b) above, when transmitted. All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to BVHI or Purchaser to:
c/o Bureau Veritas, S.A.
00 xxx, Xxxxx des Reflets
La Defense 2
00000 Xxxxxxxxxx, Xxxxxx
Attention: Francois Tardan and Xxxx-France Saugnac
Fax: 000-000-0000-0000
With a copy to:
Xxxxxx Xxxx & Priest LLP
00 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
(b) if to Selling Stockholder, to:
Xxxxxxxxx Xxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
O'Melveny & Xxxxx LLP
Suite 100
114 Pacifica
Xxxxxx, Xxxxxxxxxx 00000
Attn: J. Xxx Xxxxxx
Fax: (000) 000-0000
5.5 Captions. The captions of the Articles and Sections of this Agreement
are solely for convenient reference and shall not be deemed to affect the
meaning or interpretation of any Article or Section hereof.
5.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to
the conflict of laws principles thereof.
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IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed in multiple original counterparts as of the date set forth above.
BUREAU VERITAS HOLDINGS, INC.
By: /s/ XXXXX XXXXXXXXXXX
-----------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board
and President
VOICE ACQUISITION CORP.
By: /s/ XXXXX XXXXXXXXXXX
-----------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board
and President
/s/ XXXXXXXXX XXXXXX
-----------------------------
Xxxxxxxxx Xxxxxx
EXHIBIT 1
Issued by the Auditors
Report of Independent Accountants
To the Management of BVHI
To Xx. Xxxxxxxxx Xxxxxx
We have audited the accompanying special-purpose consolidated balance sheet
of U.S. Laboratories Inc. and subsidiaries as of December 31, 2002 and related
income statement of U.S. Laboratories Inc. and subsidiaries for the year ended
December 31, 2002. This financial statement is the responsibility of U.S.
Laboratories Inc.'s management; our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit of this statement in accordance with generally
accepted auditing standards, which require that we plan and perform the audit
to obtain reasonable assurance about whether the statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts in the statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
presentation of the statement. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying special-purpose financial statement was prepared for the
purpose of determining EBIT of the Acquired Business for the year ended
December 31, 2002 and the Payment Amount as provided for in Section 3.1 of the
Contingent Payment Agreement (the "Agreement") dated August 8, 2002 among
Bureau Veritas Holdings, Inc., a Delaware corporation ("BVHI"), Xxxxxxxxx
Xxxxxx and Voice Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of BVHI.
In our opinion, the special-purpose financial statement referred to above
and the accompanying statements of EBIT of the Acquired Business for the year
ended December 31, 2002 and Payment Amount present fairly, in all material
respects, the consolidated financial position of the Acquired Business at, and
for the year ended, December 31, 2002 in accordance with the terms of the
Agreement described in the preceding paragraph.
This report is intended solely for the information and use of the management
of BVHI and Xxxxxxxxx Xxxxxx and should not be used for any other purpose.
Auditor Signature
, 2003
Exhibit 2
---------
Citibank Custody & Advisor Services
Agreement
among
Citibank, N.A.
as "Escrow Agent"
and
Bureau Veritas, S.A.,
---------------------
("Parent")
Bureau Veritas Holdings, Inc.,
------------------------------
("BVHI")
Voice Acquisition Corp.,
------------------------
("Purchaser")
and
Xxxxxxxxx Xxxxxx
----------------
("Selling Stockholder")
361085
------------------------------
(Account Number)
Citibank Escrow Agent Custody Account
THIS ESCROW AGREEMENT is made this day of , 2002 (the "Escrow
--- ------
Agreement") among Bureau Veritas, S.A., a French societe anonyme ("Parent"),
Bureau Veritas Holdings, Inc., a Delaware corporation and subsidiary of Parent
("BVHI"), Voice Acquisition Corp., a Delaware corporation and subsidiary of BVHI
("Purchaser"), Xxxxxxxxx Xxxxxx, a resident of California ("Selling
Stockholder"), and CITIBANK, N.A. (the "Escrow Agent" herein).
The above-named parties appoint said Escrow Agent with the duties and
responsibilities and upon the terms and conditions provided in Schedule A
annexed hereto and made a part hereof.
ARTICLE FIRST: The above-named parties agree that the following provisions
shall control with respect to the rights, duties, liabilities, privileges and
immunities of the Escrow Agent:
a) The Escrow Agent shall neither be responsible for or under, nor
chargeable with knowledge of, the terms and conditions of any other
agreement, instrument or document executed between/among the parties
hereto, except as may be specifically provided in Schedule A annexed
hereto. This Agreement sets forth all of the obligations of the Escrow
Agent, and no additional obligations shall be implied from the terms of
this Agreement or any other agreement, instrument or document.
b) The Escrow Agent may act in reliance upon any instructions,
notice, certification, demand, consent, authorization, receipt, power of
attorney or other writing delivered to it by any other party and believed
by the Escrow Agent to be genuine without being required to determine the
authenticity or validity thereof or the correctness of any fact stated
therein, the propriety or validity of the service thereof, or the
jurisdiction of the court issuing any judgment or order. The Escrow Agent
may act in reliance upon any signature believed by it to be genuine, and
may assume that such person has been properly authorized to do so.
c) Each of BVHI and Selling Stockholder, jointly and severally,
agrees to reimburse the Escrow Agent on demand for, and to indemnify and
hold the Escrow Agent harmless against and with respect to, any and all
loss, liability, damage or expense (including, but without limitation,
attorneys' fees, costs and disbursements) that the Escrow Agent may suffer
or incur in connection with this Agreement and its performance hereunder
or in connection herewith, except to the extent such loss, liability,
damage or expense arises from its willful misconduct or gross negligence
as adjudicated by a court of competent jurisdiction. The Escrow Agent
shall have the further right at any time and from time to time to charge,
and reimburse itself from, the property held in escrow hereunder in order
to recover fees payable to Escrow Agent hereunder.
d) The Escrow Agent may consult with legal counsel of its selection
in the event of any dispute or question as to the meaning or construction
of any of the provisions hereof or its duties hereunder, and it shall
incur no liability and shall be fully protected in acting in accordance
with the opinion and instructions of such counsel. Each of BVHI and
Selling Stockholder, jointly and severally, agrees to reimburse the Escrow
Agent on demand for reasonable legal fees, disbursements and expenses so
incurred and in addition, the Escrow Agent shall have the right to
reimburse itself for such fees, disbursements and expenses from the
property held in escrow hereunder.
e) The Escrow Agent shall be under no duty to give the property held
in escrow by it hereunder any greater degree of care than it gives its own
similar property.
f) The Escrow Agent shall invest the property held in escrow in such
a manner as directed in Schedule A annexed hereto, which may include
deposits in Citibank and mutual funds advised, serviced or made available
by Citibank or its affiliates even though Citibank or its affiliates may
receive a benefit or profit therefrom.
The parties to this agreement acknowledge that non-deposit investment
products are not obligations of, or guaranteed, by Citibank/Citicorp
nor any of its affiliates; are not FDIC insured; and are subject to
investment risks, including the possible loss of principal amount
invested. Only deposits in the United States are subject to FDIC
insurance.
g) In the event of any disagreement between/among any of the parties
to this Agreement, or between/among them or either or any of them and any
other person, resulting in adverse claims or demands being made in
connection with the subject matter of the Escrow Fund, or in the event
that the Escrow Agent, in good faith, is in doubt as to what action it
should take hereunder, the Escrow Agent may, at its option, refuse to
comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt
exists, and in any such event, the Escrow Agent shall not become liable in
any way or to any person for its failure or refusal to act, and the Escrow
Agent shall be entitled to continue so to refrain from acting until (i)
the rights of all parties shall have been fully and finally adjudicated by
a court of competent jurisdiction, or (ii) all differences shall have been
adjusted and all doubt resolved by agreement among all of the interested
persons, and the Escrow Agent shall have been notified thereof in writing
signed by all such persons. The Escrow Agent shall have the option, after
30 calendar days' notice to the other parties of its intention to do so,
to file an action in interpleader requiring the parties to answer and
litigate any claims and rights among themselves. The rights of the Escrow
Agent under this paragraph are cumulative of all other rights which it may
have by law or otherwise.
h) The Escrow Agent is authorized, for any securities at any time
held hereunder, to register such securities in the name of its nominee(s)
or the nominees of any securities depository, and such nominee(s) may sign
the name of any of the parties hereto to whom or to which such securities
belong and guarantee such signature in order to transfer securities or
certify ownership thereof to tax or other governmental authorities.
i) Notice to the parties shall be given as provided in Schedule A
annexed hereto. Whenever under the terms hereof the time for giving a
notice or performing an act falls upon a Saturday, Sunday, or a banking
holiday in New York, such time shall be extended to the next day on which
the Escrow Agent is open for business.
ARTICLE SECOND: The Escrow Agent shall make payments of income earned on
the escrowed property as provided in Schedule A annexed hereto. Each such payee
shall provide to the Escrow Agent an appropriate W-9 form for tax identification
number certification or a W-8 form for non-resident alien certification. The
Escrow Agent shall be responsible only for income reporting to the Internal
Revenue Service with respect to income earned on the escrowed property.
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ARTICLE THIRD: The Escrow Agent may, in its sole discretion, resign and
terminate its position hereunder at any time following 30 calendar days written
notice to the parties to the Escrow Agreement herein. Any such resignation shall
terminate all obligations and duties of the Escrow Agent hereunder, but only
effective upon the appointment of a successor escrow agent. On the effective
date of such resignation, the Escrow Agent shall deliver this Escrow Agreement
together with any and all related instruments or documents and the entire Escrow
Fund to any successor Escrow Agent that Parent and Selling Stockholder agree in
writing with a copy of such material forwarded to the resigning Escrow Agent. If
a successor Escrow Agent has not been appointed prior to the expiration of 30
calendar days following the date of the notice of such resignation, the then
acting Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent, or other appropriate relief. Any such
resulting appointment shall be binding upon all of the parties to this
Agreement.
ARTICLE FOURTH: Parent and Selling Stockholder may, by mutual written
agreement, with a copy of such agreement forwarded to the Escrow Agent, at any
time substitute a new Escrow Agent by giving ten days' notice thereof to the
current Escrow Agent then acting and paying all fees and expenses of the current
Escrow Agent. Any such substitution shall terminate all obligations and duties
of the Escrow Agent hereunder, but only effective upon the appointment of a
successor escrow agent. On the effective date of such substitution, the Escrow
Agent shall deliver this Escrow Agreement together with any and all related
instruments or documents and the entire Escrow Fund to a successor Escrow Agent
that Parent and Selling Stockholder agree in writing. If a successor Escrow
Agent has not been appointed prior to the expiration of 30 calendar days
following the date of the notice of such resignation, the then acting Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent, or other appropriate relief. Any such resulting
appointment shall be binding upon all of the parties to this Agreement.
ARTICLE FIFTH: The Escrow Agent shall receive the fees provided in
Schedule B annexed hereto. In the event that such fees, expenses or costs
incurred by, or any obligation owed to the Escrow Agent or its counsel, are not
paid within 30 calendar days from the date the party responsible for such fees
as set forth in said Schedule B has received the Escrow Agent's invoice, then
the Escrow Agent may pay itself such fees from the property held in escrow
hereunder.
ARTICLE SIXTH: Any modification of this Agreement or any additional
obligations assumed by any party hereto shall be binding only if evidenced by a
writing signed by each of the parties hereto.
ARTICLE SEVENTH: In the event funds transfer instructions are given (other
than in writing at the time of execution of this Agreement), whether in writing,
by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call back to the person or persons designated
in Schedule A annexed hereto, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated. To
assure accuracy of the instructions it receives, the Escrow Agent may record
such call backs. If the Escrow Agent is unable to verify the instructions, or is
not satisfied with the verification it receives, it will not execute the
instruction until all issues have been resolved. The persons and telephone
numbers for call backs may be changed only in writing actually received and
acknowledged by the Escrow Agent. The parties agree to notify the Escrow Agent
of any errors, delays or other problems within 30 calendar days after receiving
notification that a transaction has been executed. If it is determined that the
transaction was delayed or erroneously executed as a result of the Escrow
Agent's error, the Escrow Agent's sole obligation is to pay or refund such
amounts as may be required by applicable
3
law. In no event shall the Escrow Agent be responsible for any incidental or
consequential damages or expenses in connection with the instruction. Any claim
for interest payable will be at the Escrow Agent's published savings rate in
effect in New York, New York.
ARTICLE EIGHTH: This Agreement shall be governed by the laws of the State
of New York in all respects. The parties hereto irrevocably and unconditionally
submit to the jurisdiction of a federal or state court located in New York, New
York in connection with any proceedings commenced regarding this Escrow
Agreement, including but not limited to, any interpleader proceeding or
proceeding for the appointment of a successor escrow agent the Escrow Agent may
commence pursuant to this Agreement, and all parties irrevocably submit to the
jurisdiction of such courts for the determination of all issues in such
proceedings, without regard to any principles of conflicts of laws, and
irrevocably waive any objection to venue or inconvenient forum.
ARTICLE NINTH: This Agreement may be executed in one or more counterparts,
each of which counterparts shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
4
In witness whereof, the parties have executed this Agreement as of the date
first above written.
CITIBANK, N.A.
as Escrow Agent
By
-----------------------------------
(Signature)
Print Name
-----------------------------------
Title
-----------------------------------
BUREAU VERITAS, S.A.
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: President and Chief Executive Officer
BUREAU VERITAS HOLDINGS, INC.
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board and President
VOICE ACQUISITION CORP.
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board and President
----------------------------------------
Xxxxxxxxx Xxxxxx
STATE OF )
--------------------------------
:ss:
COUNTY OF )
-------------------------------
I, , a Notary Public in and for said County, in the
------------------------
State aforesaid, DO HEREBY CERTIFY that XXXXXXXXX XXXXXX personally came before
me and is the same person whose name is subscribed to the foregoing agreement,
who, has appeared before me this day in person and acknowledged that s/he signed
and delivered the said agreement as his/her own free and voluntary act for the
uses and purposes therein set forth.
Given under my hand and Notarial Seal this day of _, 2002.
------- --------
-------------------------------
Notary Public
My commission expires:
------------------------
Schedule A
----------
1. Escrow Agreement. This Escrow Agreement is the escrow agreement
----------------
contemplated pursuant to Section 4.3 of that certain Contingent Payment
Agreement ("CP Agreement") dated August 8, 2002 among BVHI, Selling Stockholder
and Purchaser. Capitalized terms used herein and not otherwise defined shall
have the respective meanings assigned to them in the CP Agreement.
2. Establishment of Escrow. Upon consummation of the Offer, as such term
-----------------------
is defined in that certain Merger Agreement among Parent, Purchaser and Hoboken,
a Delaware corporation (the "Company"), Parent shall cause Purchaser to, and
Purchaser shall, deliver to Escrow Agent the sum of US$5,000,000 (the "Escrowed
Amount") and, upon Escrow Agent's receipt of the Escrowed Amount, the Escrow
Agent shall accept such amount (as increased by any income earned thereon as
deposited from time to time and as reduced by any disbursements pursuant to
Section 5, amounts withdrawn as contemplated in Schedule B or losses on
investments, the "Escrow Fund") for deposit in escrow and, as soon as possible,
invest the Escrowed Amount in accordance with the terms hereof. Escrow Agent
shall immediately notify Selling Stockholder of its receipt of the Escrow
Amount. Escrow Agent shall have no duty to solicit the Escrowed Amount.
3. Investment of Escrow Amount. Except as Selling Stockholder and Parent
---------------------------
may from time to time jointly instruct Escrow Agent in writing, the Escrow Fund
shall be invested in the [To Be Determined] until disbursement of the entire
Escrow Fund. Escrow Agent is authorized upon receipt of joint written
instructions of Selling Stockholder and Parent to liquidate in accordance with
its customary procedures any portion of the Escrow Fund necessary to provide for
payments required to be made as indicated in such written instructions received
by the Escrow Agent in accordance with this Agreement.
4. Reporting of Interest. The parties hereto agree that, for tax reporting
---------------------
purposes, all interest, gains and other income ("Escrow Earnings") in any
calendar year shall (a) to the extent such Escrow Earnings are distributed by
the Escrow Agent to any person or entity pursuant to the terms of this Agreement
during such calendar year, be allocated to such person or entity, and (b)
otherwise be allocated to BVHI. If at any time BVHI (x) certifies in writing to
the Escrow Agent pursuant to a Tax Distribution Amount Payment Instruction in
the form of Exhibit I with a copy to Selling Stockholder: (i) that BVHI is
required to pay taxes with respect to a portion of Escrow Earnings that are
allocated to BVHI pursuant to clause (b) of the preceding sentence of this
Section 4 with respect to a calendar year, (ii) the amount of such allocated
Escrow Earnings, and (iii) that such tax payment is due within thirty (30)
calendar days of the date of such certification, and (y) directs the Escrow
Agent to distribute to BVHI an amount equal to the amount of such allocated
Escrow Earnings multiplied by 50 percent (the "Tax Distribution Amount"), then
the Escrow Agent shall promptly distribute to BVHI such Tax Distribution Amount,
or if less the then remaining balance of the Escrow Fund, from such allocated
Escrow Earnings and Escrow Agent shall provide to Selling Stockholder notice of
such distribution in accordance with Section 9. Any distributions made by Escrow
Agent pursuant to this Agreement shall be subject to withholding regulations
then in force with respect to United States taxes. Selling Stockholder and BVHI
will timely forward to the Escrow Agent all information required to enable the
Escrow Agent to comply with any applicable reporting, withholding or backup
withholding requirements. The parties hereto understand that, if the applicable
tax identification
2
numbers are not certified, or the applicable forms are not provided, to the
Escrow Agent, the Internal Revenue Code, as amended from time to time, may
require withholding of a portion of Escrow Earnings. The parties agree that this
Section 4 will be consistently adhered to by the parties and is intended to
satisfy Proposed Treasury Regulation Section 1.468B-8(h)(2). This Section 4
shall survive notwithstanding any termination of this Agreement or the
resignation of the Escrow Agent.
5. Rights in the Escrow. Parent, BVHI, Purchaser and Selling Stockholder
--------------------
agree that the Escrow Fund held in escrow pursuant hereto shall be for the
exclusive benefit of BVHI, Purchaser, Selling Stockholder and their respective
successors and assigns, and, except as otherwise required by court order, no
other person or entity shall have any right, title or interest therein, and,
except as required by any such court order, any claim of any person to the
Escrow Fund, or any part thereof, shall be subject and subordinated to the prior
right thereto of BVHI, Purchaser and Selling Stockholder.
6. Reporting of Accrued Interest and Fees of the Escrow Agent. At the
----------------------------------------------------------
request of either Parent or Selling Stockholder made prior to a contemplated
distribution from the Escrow Fund or at such other times, not more frequently
than once a month, Escrow Agent shall report to the requesting party for its
review the amount of accrued interest earned to date on the Payment Amount, as
such term is defined in the CP Agreement, and credited to the escrow account.
7. Distribution from Escrow. The Escrow Agent shall continue to hold the
------------------------
Escrow Fund in escrow until authorized under this Escrow Agreement to distribute
the Escrow Fund. The Escrow Agent shall distribute all or a portion of the
Escrow Fund as follows:
7.1 If and when the Payment Amount is finally determined pursuant to
the CP Agreement, then either BVHI or Selling Stockholder ("Notifying
Party") may provide written notice of such determination ("Notice of
Determination") to Escrow Agent and the other party hereto ("Recipient").
The Notice of Determination shall be substantially in the form of Exhibit
II, shall set forth the amount of EBIT of the Acquired Business for 2002
and the Payment Amount, and shall include a copy of the Balance Sheet and
Income Statement, the report of the Auditors or Arbitrating Accountants,
as the case may be, setting forth their written report of the
determination, in accordance with the CP Agreement, of the amount of EBIT
for the Acquired Business for the year ending December 31, 2002 and the
Payment Amount. The Escrow Agent shall have no duty to validate or verify
any of the information contained within the Notice of Determination.
7.2 If Recipient does not notify the Escrow Agent in writing (with a
copy to Notifying Party) within 30 calendar days after the Notice of
Determination is given by Notifying Party that Recipient objects to
disbursement of all or a portion of the Escrowed Fund, as provided for in
the Notice of Determination, then the Escrow Agent shall as soon as
practicable disburse from the Escrow Fund to Selling Stockholder:
7.2.1. the Payment Amount,
7.2.2. plus interest accrued on the Payment Amount from the date
of deposit of the Escrowed Amount with the Escrow Agent until the date of
disbursement less any portion of the Tax Distribution Amount paid to BVHI
allocable to such interest.
3
Concurrent with the disbursement of such funds to Selling Stockholder, Escrow
Agent shall disburse the remainder of the Escrow Fund, less any unpaid fees owed
to the Escrow Agent, to BVHI.
7.3 If Recipient notifies the Escrow Agent in writing (with a copy to
Notifying Party) within 30 calendar days after the Notice of Determination
is given by Notifying Party that Recipient objects to the proposed
disbursement of Escrow Funds, then the Escrow Agent shall disburse Escrow
Funds as soon as practicable only if, and to the extent (i) that BVHI and
Selling Stockholder provide joint written instructions to the Escrow Agent
or (ii) as determined by the final order, decree or judgment of a court of
competent jurisdiction in New York, New York (the time for appeal having
expired with no appeal being taken) in a proceeding to which BVHI and
Selling Stockholder are parties as forwarded to the Escrow Agent by the
prevailing party with a copy to the non-prevailing party.
7.4 The Escrow Agent shall distribute all or a portion of the Escrow
Fund as BVHI and Selling Stockholder may by joint written instruction
direct the Escrow Agent.
8. Termination of Escrow. The escrow and the respective rights and
---------------------
obligations of Parent, BVHI, Purchaser, Selling Stockholder and the Escrow Agent
with respect thereto and with respect to the Escrow Fund shall terminate upon
the payment by the Escrow Agent of the entire Escrow Fund in accordance with
Section 7. Notwithstanding any termination pursuant to this Section 8, the
provisions of Article First shall survive such termination and remain in full
force and effect.
9. Notices. All notices, consents, waivers, and other communications under
-------
this Agreement must be in writing in English and be given by one of the means
specified in this Section 9 and shall be deemed to have been duly given (a) if
delivered by hand, then upon delivery; (b) if sent by telecopier (with written
confirmation of receipt), then upon transmission; (c) if mailed by certified
mail, return receipt requested, then five business days after deposit with the
postal service with first class postage and charges prepaid; and (d) if sent by
a nationally recognized overnight delivery service (fee paid and receipt
requested), then on the business day specified for delivery on the waybill
therefor (or if no date is specified in such waybill, then on the second
business day after the date of the waybill), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
If to Selling Stockholder:
Xxxxxxxxx Xxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(See Schedule C for Wire Instructions)
----------
4
with a copy to:
O'Melveny & Xxxxx LLP
Suite 100
114 Pacifica
Xxxxxx, Xxxxxxxxxx 00000
Attn: J. Xxx Xxxxxx
Fax: (000) 000-0000
If to Parent, BVHI or Purchaser:
c/o Bureau Veritas, S.A.
00 xxx, Xxxxx des Reflets
La Defense 2
00000 Xxxxxxxxxx, Xxxxxx
Attention: Francois Tardan and Xxxx-France Saugnac
Telecopier: 011-33-1-42915488
Telephone: 000-00-0-00000000
(See Schedule C for Wire Instructions)
----------
with a copy to:
Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000, X.X.X.
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
If to Escrow Agent, to:
The Citigroup Private Bank
000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
10. Benefit of Parties. All of the terms and provisions of this Agreement
------------------
shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns. This Agreement shall not be
assignable by Selling Stockholder, other than to his legal representatives
pursuant to the laws of descent and distribution.
11. Entire Agreement. This Agreement contains the entire understanding of
----------------
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings between the parties with respect thereto.
12. Facsimile Signatures. Facsimile signatures hereto shall be deemed to
--------------------
have the same effect as original signatures.
5
13. Captions. The captions of the Articles and Sections of this Agreement
--------
are solely for convenient reference and shall not be deemed to affect the
meaning or interpretation of any Article or Section hereof.
14. Fees and Expenses of the Escrow Agent. The fees and expenses of the
---------------------------------------
Escrow Agent as outlined in the attached Schedule B shall be payable by BVHI.
6
[GRAPHIC] CITIBANK
Schedule B
----------
SCHEDULE OF FEES FOR SERVICES AS
ESCROW AGENT
, 2002
---------
Acceptance Fee
--------------
To cover the acceptance of the Escrow Agency appointment, the study of the
Escrow Agreement, and supporting documents submitted in connection with the
execution and delivery thereof, communication with other members of the working
group:
Waived
Flat Annual Administration Fee
------------------------------
To cover maintenance of accounts including safekeeping of assets, normal
administrative functions of the Escrow Agent, including maintenance of the
Escrow Agent's records, follow-up of the Escrow Agreement's provisions, and any
other duties required by the Escrow Agent under the terms of the Escrow
Agreement:
Accounts (1): $6,000 per Annum
Transaction Fee
---------------
$100 per investment Waived if funds are invested
in the Citifunds Premium Liquid Reserves
(onshore and offshore versions) money market
mutual fund. Please note that fund
administration charges, inclusive of
Shareholder servicing fees, are built in to
the net yields provided by each fund.
Legal Fee
---------
To cover review of legal documents by Citibank's outside counsel on behalf of
Citigroup's Private Bank Custody & Advisor Services:
AT COST (if necessary)
Other Fees
----------
$2,500 per amendment when necessary
--------------------------------------------------------------------------------
7
[GRAPHIC] CITIBANK
Assumptions:
-----------
o Funds to be invested in Citifunds Premium Liquid Reserves (onshore and
offshore);
o Governing law to be New York.
o BVHI shall be responsible for the foregoing fees.
--------------------------------------------------------------------------------
The above schedule of fees does not include charges for out-of-pocket expenses
or for any services of an extraordinary nature that we or our legal counsel may
be called upon from time to time to perform in either an agency or fiduciary
capacity, nor does it include the fees of our legal counsel. Fees are also
subject to satisfactory review of the documentation, and we reserve the right to
modify them should the characteristics of the transaction change. Our
participation in this program is subject to internal approval of the third party
depositing monies into the escrow account. The acceptance fee is payable upon
execution of the documents. Should this schedule of fees be accepted and agreed
upon and work commenced on this program but subsequently halted and the program
is not brought to market, the Acceptance Fee and legal fees incurred, if any,
will still be payable in full. This Fee Schedule is offered for, and applicable
to the program cited on page one only, and is guaranteed for thirty calendar
days from the date on this proposal. After thirty calendar days, this offer can
be extended in writing only by an authorized representative of Citibank, N.A.
8
Schedule C
----------
A) Selling Stockholder
-------------------
BANK ROUTING
------------
--------------------------------------------------------------------
ABA NO.:
--------------------------------------------------------------------
BANK NAME:
--------------------------------------------------------------------
ACCOUNT NUMBER:
--------------------------------------------------------------------
ACCOUNT NAME:
--------------------------------------------------------------------
A/C#:
--------------------------------------------------------------------
NOTES: Please contact to
---------------------------------------
notify them that the transfer is being made.
--------------------------------------------------------------------
--------------------------------------------------------------------
B) BVHI
----
BANK ROUTING
------------
--------------------------------------------------------------------
ABA NO.: 021 000 089
--------------------------------------------------------------------
BANK NAME: Citibank, 000 Xxxx 00xx Xx., Xxx Xxxx, XX 00000
--------------------------------------------------------------------
ACCOUNT NUMBER:00000000
--------------------------------------------------------------------
ACCOUNT NAME: Xxxxxx Xxxx & Priest LLP Attorney Special Account
- FBO Bureau Veritas, S.A.
--------------------------------------------------------------------
NOTES: Please contact Xxxxxx Xxxxxxxxxx at (000) 000-0000 to notify
them that the transfer is being made.
--------------------------------------------------------------------
--------------------------------------------------------------------
9
Schedules A, B and C are agreed to as above:
BUREAU VERITAS, S.A.:
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: President and Chief Executive Officer
BUREAU VERITAS HOLDINGS, INC.:
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board and President
VOICE ACQUISITION CORP.:
By
-------------------------------------
(Signature)
Print Name: Xxxxx Xxxxxxxxxxx
Title: Chairman of the Board and President
----------------------------------------
Xxxxxxxxx Xxxxxx
CITIBANK, N.A.
By:
-------------------------------------
Citibank Escrow Agreement
Exhibit I
FORM OF TAX DISTRIBUTION AMOUNT
PAYMENT INSTRUCTION
, 2003
--------------
The Citigroup Private Bank
000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Ladies and Gentlemen:
This Tax Distribution Amount Payment Instruction (this "Tax Distribution
Notice") is being given pursuant to Section 4 of that certain Escrow Agreement
(the "Escrow Agreement") dated as of , 2002, among Bureau Veritas,
----------
S.A., a French societe anonyme ("Parent"), Bureau Veritas Holdings, Inc., a
Delaware corporation and wholly-owned subsidiary of Parent ("BVHI"), Voice
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of BVHI
("Purchaser"), Xxxxxxxxx Xxxxxx, a resident of California ("Selling
Stockholder"), and Citibank, N.A., a national banking association (the "Escrow
Agent") and that certain Contingent Payment Agreement (the "CP Agreement") dated
as of August 8, 2002 among Selling Stockholder, BVHI and Purchaser. Capitalized
terms used herein but not otherwise defined shall have the meanings ascribed to
them in the Escrow Agreement.
BVHI hereby notifies the Escrow Agent as follows:
1. BVHI is required to pay taxes with respect to a portion of the Escrow
Earnings that is allocated to BVHI pursuant to Section 4 of the Escrow
Agreement.
2. The amount of the Escrow Earnings allocated to BVHI is $ .
----------
3. The tax payment is due within 30 calendar days of the date of this Tax
Distribution Notice.
4. BVHI hereby directs the Escrow Agent immediately to distribute to BVHI
$ , being an amount equal to the amount of the allocated Escrow
----------
Earnings ($ ) multiplied by 50% or, if less, the remaining balance of the
-----
Escrow Fund. Escrow Agent is hereby directed to distribute such amount to the
account of BVHI as follows:
Bank Name:
ABA Number:
Account Name: BVHI
Please contact at to notify them that the transfer has
------- --------
been made.
5. A copy of this Tax Distribution Notice has been sent to Selling
Stockholder at his address as set forth in Section 2.6 of the Escrow Agreement.
Very truly yours,
BVHI
By:
------------------
Name
-------------
Title:
--------------
cc: Xxxxxxxxx Xxxxxx
J. Xxx Xxxxxx
11
Exhibit II
Version A
NOTICE OF DETERMINATION
[IF DETERMINED BY AUDITOR]
, 2003
--------------
The Citigroup Private Bank
000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Re: Escrow Account No. 361085
------
Ladies and Gentlemen:
This Notice of Determination (this "Notice of Determination") is being
given pursuant to Section 7 of that certain Escrow Agreement (the "Escrow
Agreement") dated as of , 2002, among Bureau Veritas, S.A. a French
----------
societe anonyme ("Parent"), Bureau Veritas Holdings, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("BVHI"), Voice Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of BVHI ("Purchaser"),
Xxxxxxxxx Xxxxxx, a resident of California ("Selling Stockholder"), and
Citibank, N.A., a national banking association (the "Escrow Agent") and that
certain Contingent Payment Agreement (the "CP Agreement") dated as of August 8,
2002 among Selling Stockholder, BVHI and Purchaser. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to them in the
CP Agreement.
The undersigned hereby notifies the Escrow Agent as follows:
1. Auditors have determined that EBIT for the Acquired Business for 2002
is in excess of $ million.
-----
2. Auditors have determined that the Payment Amount, as determined in
accordance with Section 3.1 of the CP Agreement, is $ .
-----
3. The determination of the Payment Amount is the final and binding
determination of such amount because [Select as appropriate from the following]
[BVHI and Selling Stockholder have accepted the written report of
Auditors, a copy of which is attached hereto as Exhibit A.]
[On 2003, BVHI delivered to Selling Stockholder the Balance
--------
Sheet, Income Statement and a written report of the Auditor, a copy of which is
attached, setting forth EBIT for the Acquired Business for the year ended
December 31, 2002 and Payment Amount and BVHI did not receive written objection
from Selling Stockholder within 30 calendar days after the date of delivery of
such materials to Selling Stockholder.]
[BVHI and Selling Stockholder have, after consultation with one another,
agreed upon the Payment Amount and BVHI and Selling Stockholder have jointly
issued this Notice of Determination as evidenced by the authorized signatures
below.]
12
4. The undersigned hereby instructs the Escrow Agent to pay $ ,
----
calculated as set forth below, from the Escrow Fund to Selling Stockholder in
accordance with the wire transfer instructions set forth in Part A of
Schedule C.
Payment Amount $
------------
plus interest earned on the Payment Amount less any
portion of the Tax Distribution Amount paid to BVHI
allocable to such interest +$
============
Amount Payable to Selling Stockholder $
============
5. The undersigned hereby instructs the Escrow Agent to pay to BVHI the
remaining portion of the Escrow Fund, less any unpaid fees of Escrow Agent, as
provided for in Part B of Schedule C.
Very truly yours,
[BVHI
By: ]
------------------
or/and [as appropriate]
[-----------------------]
Xxxxxxxxx Xxxxxx
xx: J. Xxx Xxxxxx
Xxxxxx X. Xxxxxx
[BVHI] or [Xxxxxxxxx Xxxxxx]
13
EXHIBIT A
Issued by the Auditors
Report of Independent Accountants
To the Management of BVHI
To Xx. Xxxxxxxxx Xxxxxx
We have audited the accompanying special-purpose consolidated balance
sheet of U.S. Laboratories Inc. and subsidiaries as of December 31, 2002 and
related income statement of U.S. Laboratories Inc. and subsidiaries for the year
ended December 31, 2002. This financial statement is the responsibility of U.S.
Laboratories Inc.'s management; our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit of this statement in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts in the statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
presentation of the statement. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying special-purpose financial statement was prepared for the
purpose of determining EBIT of the Acquired Business for the year ended December
31, 2002 and the Payment Amount as provided for in Section 3.1 of the Contingent
Payment Agreement (the "Agreement") dated August 8, 2002 among Bureau Veritas
Holdings, Inc., a Delaware corporation ("BVHI"), Xxxxxxxxx Xxxxxx and Voice
Acquisition Corp., a Delaware corporation and indirect wholly-owned subsidiary
of Parent.
In our opinion, the special-purpose financial statement referred to above
and the accompanying statements of EBIT of the Acquired Business for the year
ended December 31, 2002 and Payment Amount present fairly, in all material
respects, the consolidated financial position of the Acquired Business at, and
for the year ended, December 31, 2002 in accordance with the terms of the
Agreement described in the preceding paragraph.
This report is intended solely for the information and use of the
management of BVHI and Xxxxxxxxx Xxxxxx and should not be used for any other
purpose.
Auditor Signature
, 2003
--------------------
14
Exhibit II
Version B
NOTICE OF DETERMINATION
[IF DETERMINED BY ARBITRATING ACCOUNTANT]
, 2003
--------------
Citigroup Private Bank
000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Re: Escrow Account No. 361085
------
Ladies and Gentlemen:
This Notice of Determination (this "Notice of Determination") is being
given pursuant to Section 7 of that certain Escrow Agreement (the "Escrow
Agreement") dated as of , 2002, among Bureau Veritas, S.A. a French
----------
societe anonyme ("Parent"), Bureau Veritas Holdings, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("BVHI"), Voice Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of BVHI ("Purchaser"),
Xxxxxxxxx Xxxxxx, a resident of California ("Selling Stockholder"), and
Citibank, N.A., a national banking association (the "Escrow Agent") and that
certain Contingent Payment Agreement (the "CP Agreement") dated as of August 8,
2002 among Selling Stockholder, BVHI and Purchaser. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to them in the
CP Agreement.
The undersigned hereby notifies the Escrow Agent as follows:
1. is the Arbitrating Accountant agreed upon by BVHI and
-------------
Selling Stockholder.
2. Arbitrating Accountant has determined that:
2.1 EBIT for the Acquired Business for 2002 is in excess of $
-----
million;
2.2. The Payment Amount is $ ;
-----
2.3 The fees, costs and expenses of the Arbitrating Accountant are
$ ;
--------
2.4 EBIT has [has not] been understated by three percent or more and
therefore [BVHI] [Selling Stockholder] shall pay the fees of the
Arbitrating Accountant.
3. The determinations set forth in Section 2 above are the final
determinations of the Arbitrating Accountant.
4. Attached as Exhibit A is the report of the Arbitrating Accountant
setting forth such determination. Such report has been prepared in accordance
with Section 4.2 of the CP Agreement.
15
5. The undersigned hereby instructs the Escrow Agent to pay $ ,
----
calculated as set forth below, from the Escrow Fund to Selling Stockholder in
accordance with the wire transfer instructions set forth in Part A of
Schedule C.
Payment Amount $
------------
plus interest earned on the Payment Amount less any
portion of the Tax Distribution Amount paid to BVHI
allocable to such interest +$
-----------
less the fees, costs and expenses of the Arbitrating
Accountant [if applicable] -$
-----------
Amount Payable to Selling Stockholder $
===========
6. The undersigned hereby instructs the Escrow Agent to pay to BVHI the
remaining portion of the Escrow Fund, less any unpaid fees of the Escrow Agent,
as provided for in Part B of Schedule C.
Very truly yours,
[BVHI
By: ]
------------------
or [as appropriate]
[-----------------------]
Xxxxxxxxx Xxxxxx
xx: J. Xxx Xxxxxx
Xxxxxx X. Xxxxxx
[BVHI] or [Xxxxxxxxx Xxxxxx]
16
