ESCROW AGREEMENT
Exhibit
I
EXECUTION
COPY
This
ESCROW AGREEMENT (this “Agreement”)
is made as of
September 18, 2007, by and among Universal American Financial Corp., a New
York
corporation (“Parent”),
MH Acquisition I Corp., a Delaware corporation and wholly owned subsidiary
of
Parent (the “Delaware Corp. Merger Sub”), MH Acquisition II LLC, a
Delaware limited liability company and wholly owned subsidiary of Parent
(the
“Delaware LLC Merger Sub” and, together with the Delaware Corp. Merger
Sub, collectively, the “Merger Subs”), MHRx LLC, a Delaware limited
liability company (“MHRx”), MemberHealth, Inc., an Ohio corporation and
wholly owned subsidiary of MHRx (the “Company”), Welsh, Carson, Xxxxxxxx
& Xxxxx IX, L.P., a Delaware limited partnership, as the “Shareholder
Representative” referred
to in
the Merger Agreement (as defined below) (the “Shareholder
Representative”; Parent, the Merger Subs, MHRx, the Company and the
Shareholder Representative are herein collectively referred to as the “Merger
Agreement Parties”), Xxx-Universal Holdings, LLC (“Xxx”), Welsh,
Carson, Xxxxxxxx & Xxxxx X, L.P. (“WCAS X”), Union Square Universal
Partners, L.P. (“Union Square”), Perry Partners, L.P., Perry Partners
International, Inc., Perry Private Opportunities Fund, L.P. and Perry Private
Opportunities Offshore Fund, L.P. (the afore-named Perry entities are referred
to herein collectively as “Perry”; Parent, Xxx, WCAS X, Union
Square and Perry are herein collectively referred to as the “SPA Parties”
and Xxx, WCAS X, Union Square and Perry are herein collectively referred
to as
the “SPA Investors”), Bank of America, N.A., in its capacity as
administrative agent (the “Administrative Agent”) for itself and certain
other lenders under the Credit Agreement dated as of the date hereof among
Parent, the Administrative Agent and the other lenders and agents from time
to
time party thereto (the “Credit Agreement”), and The Bank of New York, a
New York banking corporation, as escrow agent (the “Escrow
Agent”).
Recitals
WHEREAS,
the Merger Agreement Parties
have entered into that certain Agreement and Plan of Merger and Reorganization
dated as of May 7, 2007 (as the same may be amended from time to time, the
“Merger Agreement”);
WHEREAS,
the SPA Parties have entered
into that certain Securities Purchase Agreement dated as of May 7, 2007 (as
the
same may be amended from time to time, the “Securities Purchase
Agreement”);
WHEREAS,
the parties hereto desire to
establish an escrow mechanism for certain funds, certificates and documents;
and
WHEREAS,
the parties hereto desire to
appoint the Escrow Agent to act as escrow agent in the manner hereinafter
set
forth and the Escrow Agent is willing to act in such capacity;
Agreement
NOW,
THEREFORE, in consideration of the
premises and the mutual covenants and agreements set forth below and other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Appointment
of Agent. The parties hereto hereby appoint the Escrow Agent as
their agent to hold in escrow the Escrow Items (as defined below), and to
administer the disposition of the Escrow Items, in accordance with the terms
of
this Agreement, and the Escrow Agent hereby accepts such
appointment.
2. Establishment
of the Escrow Accounts.
(a) Concurrent
with the execution and delivery of this Agreement, (i) the Merger Agreement
Parties are herewith delivering to the Escrow Agent duly executed originals
or
copies of the documents described on Schedule I hereto (the “Merger
Escrow Documents”); (ii) MHRx is delivering duly executed original
certificates representing all of the outstanding shares of common stock of
the
Company (the “Company Escrow Shares”); (iii) Parent is delivering duly
executed original certificates representing the initial stock merger
consideration to be issued under the Merger Agreement (which shares are
registered in the names of the persons and in the amounts listed on Schedule
VII hereto) (collectively, the “Merger Consideration Escrow Shares”);
and (iv) the Merger Subs and the Company are delivering duly executed originals
or copies of the certificates of merger to be filed pursuant to the Merger
Agreement (the “Certificates of Merger”).
(b) Concurrent
with the execution and delivery of this Agreement, (i) the SPA Parties are
herewith delivering to the Escrow Agent duly executed originals or copies
of the
documents described on Schedule II hereto (the “Securities Purchase
Agreement Escrow Documents” and together with the Merger Escrow Documents,
the “Escrow Documents”); (ii) each of the SPA Investors (or their
co-investors) are delivering to the Escrow Agent cash in the amount set forth
opposite its name on Schedule III hereto (the “SPA Cash”); and
(iii) Parent is delivering duly executed original certificates representing
the
shares of Parent preferred stock (the “Convertible Shares”) being
purchased by the SPA Investors (and their co-investors) under the Securities
Purchase Agreement, which shares are registered in the names of the persons,
and
in the amounts listed on Schedule IV hereto (collectively, the “SPA
Escrow Shares” and, together with the Merger Consideration Escrow Shares and
the Company Escrow Shares, the “Escrow Shares”).
(c) Concurrent
with the execution and delivery of this Agreement, Parent is borrowing under
the
Credit Agreement and, at the request of Parent, the Administrative Agent
is
depositing with the Escrow Agent cash in the aggregate amount of $257,399,174.16
(the “Borrowed Cash”), of which $96,500,000 is referred to herein as the
“Merger Consideration Cash” and $160,899,174.16 is referred to herein as
the “Surplus Cash” (such Borrowed Cash, together with the SPA Cash, in
each case, exclusive of any and all interest, profits and other income thereon,
from time to time held by the Escrow Agent pursuant to the terms hereof,
the
“Escrow Cash”). For the avoidance of doubt, it is acknowledged
and agreed that Parent shall be the owner of the Borrowed Cash and the SPA
Investors and their co-investors (as set forth on Schedule III) shall be
the owners of the SPA Cash until the Escrow Release Date.
-2-
(d) The
Escrow Documents, the Escrow Cash, the Escrow Shares and the Certificates
of
Merger are referred to collectively herein as the “Escrow
Items”). The Escrow Agent hereby agrees to hold and invest the
Escrow Cash in two separate accounts (the “Cash Escrow Accounts”) as
provided in this Agreement. One Cash Escrow Account shall hold the
Surplus Cash and the other Cash Escrow Account shall hold the Merger
Consideration Cash and the SPA Cash. The Escrow Agent hereby agrees
to hold the Escrow Documents, the Escrow Shares and the Certificates of Merger
in a separate account (the “Non-Cash Escrow Account” and together with
the Cash Escrow Accounts, the “Escrow Accounts”). The purpose
of each Escrow Account is to hold in escrow the Escrow Items pending the
consummation of the transactions contemplated by the Merger Agreement and
the
Securities Purchase Agreement.
(e) Any
shares of Parent’s or the Company’s equity securities (including shares issued
upon a stock split, stock dividend or other similar event) (“New Shares”)
issued or distributed by Parent or the Company in respect of the Escrow Shares
as well as any other dividends or distributions on the Escrow Shares shall
be
added to the Non-Cash Escrow Account or Cash Escrow Account, as the case
may
be.
(f) Neither
the parties in whose names the SPA Escrow Shares or Merger Consideration
Escrow
Shares are registered nor any other party hereto shall have the ability to
vote
or direct the voting of the SPA Escrow Shares or Merger Consideration Escrow
Shares contributed to the Non-Cash Escrow Account (and on any New Shares
issued
in respect thereof) so long as such shares are held in the Non-Cash Escrow
Account and neither the parties in whose names such SPA Escrow Shares or
Merger
Consideration Escrow Shares are registered nor any other party hereto shall
be
entitled to direct the disposition of any such shares in the event of any
tender
offer or exchange offer made in respect of such Escrow Shares (provided that
the
proceeds thereof shall be added to the Escrow Items and held in the Escrow
Accounts as part thereof) so long as such shares are held in the Non-Cash
Escrow
Account.
3. No
Interest in the Escrow Accounts or Escrow Items. The Escrow Agent
does not own or have any interest in the Escrow Accounts or the Escrow Items
but
is serving as escrow holder, having only possession thereof and agreeing
to hold
and distribute the Escrow Items in accordance with the terms and conditions
hereinafter set forth.
4. Investment
of Escrow Cash.
(a) If
the Escrow Agent will have received specific written investment instruction
from
MHRx (which instructions will include instruction as to term to maturity,
if
applicable), on a timely basis, the Escrow Agent will invest the Merger
Consideration Cash and the SPA Cash in any combination of the following
investments; provided, however, that the Escrow Agent will not
invest the Merger Consideration Cash or the SPA Cash in any way in which
either
the Merger Consideration Cash or the SPA Cash would not be available for
distribution upon the Escrow Release Date:
-3-
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(i)
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marketable
obligations of, or fully and directly guaranteed by, the United
States,
which obligations have a maturity of not more than ninety (90)
days;
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(ii)
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money
market funds registered under the Investment Company Act of 1940,
as
amended from time to time, the portfolios of which are limited
to
Government Securities (as defined therein);
or
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(iii)
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such
other investments as MHRx may authorize the Escrow Agent to make
from time
to time; provided, however, that such investments are rated
at least “AA” or higher by at least one nationally recognized rating
agency, or, if such investments are in short term commercial paper,
are
rated at least “A1” or “P1” by such an
agency.
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Absent
its timely receipt of such specific written investment instruction from MHRx,
the Escrow Agent will invest all of the Merger Consideration Cash and the
SPA
Cash as provided on Part A of Schedule VIII until such investment
instruction is received.
(b) If
the Escrow Agent will have received specific written investment instruction
from
Parent (which instructions will include instruction as to term to maturity,
if
applicable), on a timely basis, the Escrow Agent will invest the Surplus
Cash in
any combination of the following investments; provided, however,
that the Escrow Agent will not invest the Surplus Cash in any way in which
the
Surplus Cash would not be available for distribution upon the Escrow Release
Date:
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(i)
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marketable
obligations of, or fully and directly guaranteed by, the United
States,
which obligations have a maturity of not more than ninety (90)
days;
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(ii)
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money
market funds registered under the Investment Company Act of 1940,
as
amended from time to time, the portfolios of which are limited
to
Government Securities (as defined therein);
or
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(iii)
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such
other investments as Parent may authorize the Escrow Agent to make
from
time to time; provided, however, that such investments are
rated at least “AA” or higher by at least one nationally recognized rating
agency, or, if such investments are in short term commercial paper,
are
rated at least “A1” or “P1” by such an
agency.
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Absent
its timely receipt of such specific written investment instruction from Parent,
the Escrow Agent will invest all of the Surplus Cash as provided on Part
B of Schedule VIII until such investment instruction is
received.
5. Disposition
of Escrow Items. The Escrow Agent will hold the Escrow Items in
its possession in the Escrow Accounts until authorized hereunder to deliver
such
Escrow Items as follows:
-4-
(a) On
October 15, 2007, or on an earlier date in the month of October, 2007 which
is
specified in a certificate signed by each of Parent and MHRx (the “Escrow
Release Certificate”) and is received by the Escrow Agent prior to October
15, 2007, the Escrow Agent will promptly deliver and release the Escrow Items
as
follows (the date of the following distributions shall be known as the
“Escrow Release Date”); provided, however, that any Escrow
Release Certificate delivered to the Escrow Agent must be delivered by 5:00
PM
(New York City time) at least one day prior to any proposed Escrow Release
Date
occurring earlier than October 15, 2007:
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(i)
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By
no later than 9:00 AM (New York City time) on the Escrow Release
Date, the
Escrow Agent shall deliver each of the Escrow Documents to the
Closing
Room (as defined below) and distribute each such Escrow
Document to the party or parties whose names are set forth opposite
the
description of such Escrow Document on Schedule I and/or
Schedule II, as applicable;
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(ii)
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As
promptly as possible on the Escrow Release Date, the Escrow Agent
shall
distribute the Escrow Cash by wire transfer of immediately available
funds
to the persons and accounts provided on Schedule
VI;
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(iii)
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Concurrently
with the distribution of the Escrow Documents on the Escrow Release
Date,
the Escrow Agent shall distribute the Merger Consideration Escrow
Shares
listed under the heading “MHRx Distributed Shares” on Schedule VII
to the Closing Room, care of MHRx. MHRx shall further
distribute such Merger Consideration Escrow Shares to its
members. Furthermore, the Escrow Agent shall distribute the
Merger Consideration Escrow Shares listed under the heading “Escrow Agent
Shares” on Schedule VII to The Bank of New York, as escrow agent
under the Escrow Agreement, dated September 17, 2007, by and among
WCAS
IX, as the “Shareholder Representative” referred to in the Merger
Agreement, Parent and The Bank of New York, as escrow
agent;
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(iv)
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Concurrently
with the distribution of the Escrow Documents on the Escrow Release
Date,
the Escrow Agent shall distribute the SPA Escrow Shares to the
SPA
Investors as provided on Schedule
IV;
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(v)
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Concurrently
with the distribution of the Escrow Documents on the Escrow Release
Date,
the Escrow Agent shall deliver the Company Escrow Shares to Parent;
and
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(vi)
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Concurrently
with the distribution of the Escrow Documents on the Escrow Release
Date,
the Escrow Agent shall deliver the Certificates of Merger to counsel
for
Parent (Dechert LLP) and the Company (Squire, Xxxxxxx & Xxxxxxx LLP)
and Parent and the Company shall cause such counsel to (A) file
on the
Escrow Release Date the Certificate of Merger relating to the merger
of
the Delaware Corp. Merger Sub with and into the Company (the “First
Merger”) with the Secretary of State of Ohio and the Secretary of
State of Delaware and (B) immediately following the Effective Time
of the
First Merger, file on the Escrow Release Date the Certificate of
Merger
relating to the merger of the surviving corporation of the First
Merger
with and into the Delaware LLC Merger Sub with the Secretary of
State of
Ohio and the Secretary of State of Delaware. If it is not possible
to
complete such filings as a result of any of any of such certificates
not
being in proper form for filing, Parent and MHRx shall promptly
provide
substitute Certificates of Merger that are consistent with the
terms of
the Merger Agreement and in proper form for filing to such counsel
and
cause such counsel to promptly file such substitute Certificates
of Merger
with such offices.
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As
used
above the term “Closing Room” means a room to be located at the offices
of Ropes & Xxxx LLP, 1211 Avenue of the Americas, New York, New York or
Dechert LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, which is specifically
identified in writing to the Escrow Agent prior to the Escrow Release
Date. In connection with the release and delivery of all
documentation and certificates on the Escrow Release Date as herein
contemplated, the Escrow Agent shall be entitled to receive and rely on joint
written instructions of Parent and MHRx identifying the appropriate
representatives of the various persons entitled to take possession of such
documentation and certificates and to retain such documentation and certificates
in its possession until satisfactory instructions are received. If
any person entitled to receive documentation or certificates on the Escrow
Release Date is not represented in person at the Closing Room by counsel
or
other representatives so identified by Parent and MHRx, Parent and MHRx shall
provide joint written instructions to the Escrow Agent directing the Escrow
Agent to deliver such items to such persons via deposit with a nationally
recognized overnight courier on the Escrow Release Date. In the event
that any Closing Items remain undistributed as of the close of business on
the
Escrow Release Date the Escrow Agent shall be required to deliver those Closing
Items into the joint custody of Parent and MHRx and Parent and MHRx shall
promptly deliver such items to the appropriate parties as provided
above.
(b) All
interest or other income received on investment and reinvestment of the Merger
Consideration Cash and SPA Cash will be held separate and apart from the
Escrow
Cash and, subject to Section 5(c) below, be delivered to MHRx on the Escrow
Release Date. All interest or other income received on investment and
reinvestment of the Surplus Cash will be held separate and apart from the
Escrow
Cash and, subject to Section 5(c) below, be delivered to Parent on the Escrow
Release Date.
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(c) Notwithstanding
anything to the contrary contained herein, if Parent or the Administrative
Agent
provides to the Escrow Agent a written notice (a “Bankruptcy Notice”)
informing the Escrow Agent that a case under the Bankruptcy Reform Act
of 1978
has been commenced by or against Parent, and not withdrawn, stayed or dismissed
before the Escrow Release Date, the Escrow Agent shall release the Escrow
Items
as follows:
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(i)
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The
Escrow Documents shall be of no force or effect, and shall be returned
to
the parties which delivered such Escrow Documents to the Escrow
Agent
pursuant to Sections 2(a) and (b) or destroyed, in either case,
pursuant
to joint written instructions provided by Parent and MHRx to the
Escrow
Agent (it being agreed that the Escrow Agent shall be entitled
to retain
the Escrow Documents pending receipt of such instructions and,
if no such
instructions have been received by it prior to the 180th day following
the
delivery of such Bankruptcy Notice, to destroy such
documents);
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(ii)
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The
Escrow Cash shall be distributed by means of wire transfer of immediately
available funds to the accounts set forth on Schedule IX
to the applicable parties which delivered such Escrow Cash to the
Escrow
Agent pursuant to Sections 2(b) and(c) (it being understood that
all
interest, profits and other income earned on the SPA Cash shall
be added
to the SPA Cash being returned to the SPA Investors and their co-investors
and distributed pro rata to them based on the amounts they
contributed as set forth on Schedule III and all interest, profits
and other income earned on the Borrowed Cash shall be added to
the
Borrowed Cash and be returned to the Administrative
Agent);
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(iii)
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The
Escrow Shares shall be returned to Parent by overnight courier
service to
its address set forth below; provided, however, that the Company
Escrow
Shares shall be returned to MHRx by overnight courier service to
its
address set forth below; and
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(iv)
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The
Certificates of Merger shall be of no force or effect, and shall
be
returned to MHRx by overnight courier service to its address set
forth
below.
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6. Monthly
Statement. The Escrow Agent will provide the parties hereto with
a monthly account statement for each Escrow Account.
7. Escrow
Agent.
(a) The
Escrow Agent will have no duties or responsibilities except those expressly
set
forth herein. Except for this Escrow Agreement, the Escrow Agent is
not a party to, or bound by, any agreement that may be required under, evidenced
by, or arise out of the Merger Agreement or the Securities Purchase
Agreement.
-7-
(b) If
the Escrow Agent will be uncertain as to its duties or rights hereunder or
will
receive instructions from any of the undersigned with respect to the Escrow
Accounts, that, in its opinion, are in conflict with any of the provisions
of
this Escrow Agreement, it will be entitled to refrain from taking any action
until it will be directed otherwise in writing collectively by the parties
hereto or by a final nonappealable order of a court of competent
jurisdiction.
(c) The
Escrow Agent will not be liable for any error or judgment or for any act
done or
step taken or omitted by it in good faith or for any mistake of fact or law,
or
for anything that it may do or refrain from doing in connection herewith,
except
its own bad faith, gross negligence or willful misconduct, and the Escrow
Agent
will have no duties to anyone except the parties hereto.
(d) The
Escrow Agent may consult legal counsel in the event of any dispute or question
as to the construction of this Escrow Agreement, or the Escrow Agent’s duties
hereunder, and the Escrow Agent will incur no liability and will be fully
protected with respect to any action taken or omitted in good faith in
accordance with the opinion and instructions of such counsel.
(e) In
the event of any disagreement between the undersigned or any of them, and/or
any
other person, resulting in adverse claims and demands being made in connection
with or for the Escrow Items, the Escrow Agent will be entitled at its option
to
refuse to comply with any such claim or demand, so long as such disagreement
will continue, and in so doing the Escrow Agent will not be or become liable
for
damages or interest to the undersigned or any of them or to any person named
herein for its failure or refusal to comply with such conflicting or adverse
demands. The Escrow Agent will be entitled to continue so to refrain
and refuse so to act until all differences with respect thereto will have
been
resolved by agreement of the parties hereto and the Escrow Agent will have
been
notified thereof in writing signed by the parties hereto. In the
event of such disagreement that continues for sixty (60) days or more, the
Escrow Agent in its discretion may file a suit in interpleader for the purpose
of having the respective rights of the claimants adjudicated, if the Escrow
Agent determines such action to be appropriate under the circumstances, and
may
deposit with the court all documents and property held
hereunder. Parent agrees to pay all reasonable out-of-pocket costs
and expenses incurred by the Escrow Agent in such action, including reasonable
attorney’s fees.
(f) The
Parent shall be liable for and shall reimburse and indemnify Escrow Agent
and
hold Escrow Agent harmless from and against any and all claims, losses,
liabilities, costs, damages or expenses (including reasonable attorneys’ fees
and expenses) (collectively, “Losses”) arising from or in connection with
or related to this Escrow Agreement or being Escrow Agent hereunder (including
but not limited to Losses incurred by Escrow Agent in connection with its
successful defense, in whole or in part, of any claim of gross negligence
or
willful misconduct on its part), provided, however, that nothing contained
herein shall require Escrow Agent to be indemnified for Losses caused by
its
gross negligence or willful misconduct. Such indemnification (i) will be
borne
by Parent and (ii) will survive termination of this Escrow Agreement and
resignation or removal of the Escrow Agent until extinguished by any applicable
statute of limitations.
-8-
(g) The
Escrow Agent does not own or have any interest in the Escrow Accounts or
in the
Escrow Items deposited hereunder but is serving as escrow holder only and
having
only possession thereof and agreeing to hold and distribute the Escrow Items
in
accordance with the terms and conditions of this Agreement. This
paragraph will survive notwithstanding any termination of this Escrow Agreement
or the resignation or removal of the Escrow Agent.
(h) The
Escrow Agent (and any successor Escrow Agent) may at any time resign as such
by
delivering the Escrow Items to (i) any banking corporation or trust company
organized under the laws of the United States or of any state that is jointly
designated by the other parties hereto in writing as successor escrow agent
and
consents in writing to act as successor escrow agent or (ii) any court of
competent jurisdiction; whereupon the Escrow Agent will be discharged of
and
from any and all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent will take effect on
the earlier of (x) the appointment of a successor escrow agent by
designation by the other parties hereto and delivery of the Escrow Items
to such
successor escrow agent (or delivery of the Escrow Items to any court of
competent jurisdiction) or (y) the day that is sixty (60) days after
the date of delivery of its written notice of resignation to the other
parties. If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent’s sole responsibility
after that time will be to safekeep the Escrow Items until receipt of a
designation of successor Escrow Agent, or a joint written instruction as
to
disposition of the Escrow Items by the other parties, or a final order of
a
court of competent jurisdiction mandating disposition of the Escrow
Items.
(i) The
Escrow Agent hereby accepts its appointment and agrees to act as escrow agent
under the terms and conditions of this Escrow Agreement and acknowledges
receipt
of the Escrow Items. Parent will pay to the Escrow Agent as payment
in full for its services hereunder the Escrow Agent’s compensation set forth in
Schedule V hereto. Parent further agree to reimburse the
Escrow Agent for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Escrow Agent in the performance of its duties
hereunder (including reasonable fees, and out-of-pocket expenses and
disbursements, of its counsel).
8. Tax
Provisions; Other Deliverables. For all income tax purposes,
including tax reporting purposes, the person to whom the Escrow Items are
delivered pursuant to Section 5 hereof will be treated as the owners of the
income on the Escrow Items and all interest earned from the investment of
the
Escrow Items, or any portion thereof, will be allocable to such
person. The parties hereto receiving Escrow Shares or Escrow Cash
shall provide (and MHRx hereby agrees to use its reasonable best efforts
to
cause the persons receiving Merger Consideration Cash and Merger Consideration
Escrow Shares to provide) the Escrow Agent a Form W-9, a substitute Form
W-9 or
a Form W-8BEN for each such person upon or promptly following the execution
and
delivery of this Agreement. In addition, on the date hereof, each of
Parent and MHRx agrees to provide the Escrow Agent with an incumbency
certificate for such person setting forth the name, title and signature of
each
person permitted to authorize documents on their behalf pursuant to this
Agreement.
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9. Notices. All
notices, requests, demands, claims and other communications required or
permitted hereunder will be in writing and will be sent by facsimile, nationally
recognized overnight courier, registered mail or certified mail. Any
notice, request, demand, claim, or other communication required or permitted
hereunder will be deemed duly given, as applicable, (a) when so delivered
by
facsimile, (b) one (1) Business Day following the date sent when sent by
overnight delivery or (c) five (5) Business Days following the date mailed
when
mailed by registered or certified mail return receipt requested and postage
prepaid to the following address:
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(i)
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If
to Parent or either of the Merger Subs
to:
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Universal
American Financial Corp.
0
Xxxxxxxxxxxxx Xxxxx
Xxx
Xxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx
Xxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
with
a
required copy to (which shall not constitute notice):
Dechert
LLP
00
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxx
Xxxxx, Esq.
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
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(ii)
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If
to MHRx, the Company or the Shareholder Representative,
to:
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x/x
Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx
000
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
X. Xxxxxxx
with
a
required copy to (which shall not constitute notice):
Ropes
& Xxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
Number: (000) 000-0000
Facsimile
Number: (000) 000-0000
Attn: Xxxxx
X. Xxxxxxx, Esq. and Xxxxxxxxxxx X. Xxxx, Esq.
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(iii)
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If
to the Escrow Agent, to:
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The
Bank
of New York
000
Xxxxxxx Xxxxxx – 0xx Xxxxx Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
Number: (000) 000-0000
Facsimile
Number: (000) 000-0000
Attention:
Xxxxxx X. Xxxxxx
(iv) If
to WCAS X, to:
Welsh,
Carson, Xxxxxxxx & Xxxxx
000
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
X. Xxxxxxx
with
required copies (which shall not constitute notice) to:
Ropes
& Xxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxx
X. Xxxxxxx, Esq. and Xxxxxxxxxxx X. Xxxx, Esq.
-
and-
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
(v) If
to Xxx:
Xxx
Equity Partners
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
Xxxxxxx/Xxxxxxxx Xxxxxxxx
-11-
with
required copies (which shall not constitute notice) to:
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
(vi) If
to Perry:
Perry
Capital, LLC
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
X. Xxxx
with
required copies (which shall not constitute notice) to:
Cravath,
Swaine & Xxxxx LLP
000
Xxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
Xxxxxx, Esq.
-
and -
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
(vii)
If to Union Square:
Union
Square Partners
000
Xxxx
Xxxxxx Xxxxx, 00xx xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxx
Spass/Xxxx Xxxxxxxx
-12-
with
required copies (which shall not constitute notice) to:
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
(viii) If
to the Administrative Agent:
Bank
of
America, N.A.
000
Xxxxx
Xxxxx Xxxxxx
XXX-000-00-00
Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attention: Xxxxx
Xxxxxx
10. Termination. This
Agreement will automatically terminate upon the final distribution of the
Escrow
Items in accordance with the terms hereof.
11. Successors
and Assigns; No Third Party Beneficiaries. This Agreement will be
binding upon and inure to the benefit of the respective successors and permitted
assigns of the parties, provided that no rights or obligations arising
under this Agreement may be assigned by any party without the prior written
consent of the other parties and any purported assignment without such consent
shall be of no force or effect. This Agreement shall be for the sole
benefit of the parties to this Agreement and their respective heirs, successors,
permitted assigns and legal representatives and is not intended, nor shall
be
construed, to give any person, other than the parties hereto and their
respective heirs, successors, permitted assigns and legal representatives,
any
legal or equitable right, remedy or claim hereunder.
12. Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or under public policy, all other
conditions and provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
13. Entire
Agreement. This Agreement, together with any documents,
instruments and certificates explicitly referred to herein, constitutes the
entire agreement among the parties and supersedes any and all prior
communications, agreements and understandings, written and oral, with respect
to
the subject matter hereof.
14. Amendments. This
Agreement may not be amended or modified at any time except by a written
instrument executed by each of the parties hereto and the Escrow Agent (or
any
successor escrow agent designated in accordance with the provisions of Section
7
above).
-13-
15. Waiver. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein,
nor will any single or partial exercise of any such right preclude any other
or
further exercise thereof or of any other right. No waiver by any
party will be effective unless such waiver is specifically contained in a
writing signed by such waiving party.
16. Headings. The
headings contained in this Agreement are inserted only for reference as a
matter
of convenience and in no way define, limit, or describe the scope or intent
of
this Agreement, and will not affect in any way the meaning or interpretation
of
this Agreement.
17. Governing
Law. This Agreement, and all claims arising in whole or in part
out of, related to, based upon, or in connection herewith or the subject
matter
hereof will be governed by and construed in accordance with the domestic
substantive laws of the State of New York, without giving effect to any choice
or conflict of law provision or rule that would cause the application of
the
laws of any other jurisdiction.
18. Jurisdiction
and Venue; Waiver of Jury Trial. Each of the parties submits to
the exclusive jurisdiction of any state or federal court sitting in New York,
New York, in any action or proceeding arising out of or relating to this
Agreement, agrees that all claims in respect of the action or proceeding
may be
heard and determined in any such court and agrees not to bring any action
or
proceeding arising out of or relating to this Agreement in any other
court. Each of the parties waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any
bond,
surety or other security that might be required of any other party with respect
thereto. Each party agrees that service of summons and complaint or
any other process that might be served in any action or proceeding may be
made
on such party by sending or delivering a copy of the process to the party
to be
served at the address of the party and in the manner provided for the giving
of
notices in Section 9. Nothing in this Section 18, however, shall
affect the right of any party to serve legal process in any other manner
permitted by law. Each party agrees that a final, non-appealable
judgment in any action or proceeding so brought shall be conclusive and may
be
enforced by suit on the judgment or in any other manner provided by
law. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT.
19. Force
Majeure. No party to this 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
Escrow Agreement because of, acts of God, fire, floods, strikes, equipment
or
transmission failure, or other causes reasonably beyond its
control.
20. Counterparts. This
Agreement may be executed in any number of counterparts, and by the different
parties hereto in separate counterparts, each of which will be deemed an
original for all purposes and all of which together will constitute one and
the
same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by electronic means, such as facsimile or portable
document format, shall be as effective as delivery of a manually executed
counterpart of this Agreement.
[The
remainder of this page is intentionally left blank. Signatures
follow.]
-14-
IN
WITNESS WHEREOF, the undersigned
have executed this Escrow Agreement as of the date first above
written.
| THE ESCROW AGENT: | THE BANK OF NEW YORK | ||
|
|
By:
|
/s/ Xxxxxx Xxxxxx | |
| Name: Xxxxxx Xxxxxx | |||
| Title: Vice President | |||
| UNIVERSAL AMERICAN FINANCIAL CORP. | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxxxx | |
| Name: Xxxxxx X. Xxxxxxxxx | |||
| Title: Executive Vice President and Chief Financial Officer | |||
| WELSH, CARSON, XXXXXXXX & XXXXX IX, L.P., as Shareholder Representative | |||
| By: | WCAS IX ASSOCIATES LLC, its General Partner | ||
|
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
| Name: Xxxx X. Xxxxxxx | |||
| Title: Managing Member | |||
| MH ACQUSIITION I CORP. | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxxxx | |
| Name: Xxxxxx X. Xxxxxxxxx | |||
| Title: Executive Vice President and Chief Financial Officer | |||
| MH ACQUSIITION II LLC | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxxxx | |
| Name: Xxxxxx X. Xxxxxxxxx | |||
| Title: President | |||
| MEMBERHEALTH, INC. | |||
|
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxx | |
| Name: Xxxxxxx X. Xxxxxxxx | |||
| Title: Chief Executive Officer | |||
| MHRx LLC | |||
|
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
| Name: Xxxx X. Xxxxxxx | |||
|
Title:
Member
|
|||
| XXX-UNIVERSAL HOLDINGS, LLC | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx | |||
| Title: CFO | |||
| WELSH, CARSON, XXXXXXXX & XXXXX X, L.P. | |||
| By: | WCAS X ASSOCIATES LLC, its General Partner | ||
|
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
| Name: Xxxx X. Xxxxxxx | |||
| Title: Managing Member | |||
| UNION SQUARE UNIVERSAL PARTNERS, L.P. | |||
| By: | Union Square Universal GP, LLC, its General Partner | ||
|
|
By:
|
/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Authorized Signatory | |||
| PERRY PARTNERS, L.P., | |||
| By: | Perry Corp., its General Partner | ||
|
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
| Name: Xxxxxxx X. Xxxx | |||
| Title: General Counsel | |||
| PERRY PARTNERS INTERNATIONAL, INC., | |||
| By: | Perry Corp., its Investment Manager | ||
|
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
| Name: Xxxxxxx X. Xxxx | |||
| Title: General Counsel | |||
| PERRY PRIVATE OPPORTUNITIES OFFSHORE FUND, L.P. | |||
| By: | PERRY PRIVATE OPPORTUNITIES OFFSHORE FUND (CAYMAN) GP, L.L.C., its General Partner, | ||
| By: | PERRY CORP., its Managing Member | ||
|
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
| Name: Xxxxxxx X. Xxxx | |||
| Title: General Counsel | |||
| PERRY PRIVATE OPPORTUNITIES FUND, L.P. | |||
| By: | PERRY PRIVATE OPPORTUNITIES FUND GP, L.L.C., its General Partner, | ||
| By: | PERRY CORP., its Managing Member | ||
|
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
| Name: Xxxxxxx X. Xxxx | |||
| Title: General Counsel | |||
| BANK OF AMERICA, N.A., as Administrative Agent | |||
|
|
By:
|
/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
