EXHIBIT 2.2
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Escrow Agreement") is dated the 28th day of.
May, 2004, by and between ePlus Technology, Inc., a Virginia corporation (the
"Buyer"), Manchester Technologies, Inc., a New York corporation ("Seller"), and
Xxxx Xxxxxxxx (the "Escrow Agent"), as escrow agent. The Buyer and Seller are
sometimes referred to herein, collectively, as the "Interested Parties."
WHEREAS, the Buyer and Seller have entered into an agreement dated May 28
, 2004, (the "Agreement") pursuant to which certain amounts have been withheld
are to be placed in escrow as a source of the payment for any claims that may
arise pursuant to such Agreement; and
WHEREAS, the Interested Parties wish to engage the Escrow Agent to act,
and the Escrow Agent is willing to act, as escrow agent hereunder and, in that
capacity, to hold, administer and distribute the amounts deposited in escrow
hereunder in accordance with, and subject to, the terms of this Escrow
Agreement;
NOW THEREFORE, for valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.1 "Business Day" means any day on which the Escrow Agent is open for
business at its principal offices.
1.2 "Claim Notice" means a written certification from an officer of Buyer
to the Escrow Agent which certifies (a) the occurrence of a Claim, (b) The
Portion of the Escrow Property, as such term is defined herein, or part thereof.
Buyer reasonably and in good faith believes may be owed to Buyer as a result of
the occurrence of a Claim, and (c) that a copy of such certification has been
sent simultaneously to Seller.
1.3 "Certification for Release" means a written certification from an
officer of Seller to the Escrow Agent which certifies (a) the occurrence of a
Release Event, (b) the Portion of the Escrow Property, as such term is defined
herein, or part thereof Seller reasonably and in good faith believes maybe owed
to Seller as a result of the occurrence of a Release Event, and (c) that a copy
of such affidavit has been sent simultaneously to Buyer.
1.4 "Release Event" and "Claim" and the "Portion of the Escrow Property"
related to such Release Event and Claim are as follows:
a. A portion of the Purchase Price equal to $250,000.00 shall remain
in escrow until Buyer receives the Seller Financial Statements required under
ss.8.9 of the Agreement. Upon their receipt, Buyer shall so certify in writing
to the Escrow Agent by facsimile.
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1.5 "Buyer Dispute Notice" means a written certification from an officer
of Buyer that (a) Buyer disputes the Release Affidavit and (b) that a copy of
such certification has been sent simultaneously to Seller.
1.6 "Seller Dispute Notice" means a written certification from an officer
of Seller that (a) Seller disputes the Claim Notice and (b) that a copy of such
certification has been sent simultaneously to Buyer.
Section 2. Deposit at Escrow Funds or Property.
Upon closing under the Agreement, the Buyer shall deposit with the Escrow
Agent in immediately available funds $250,000.00 (the "Escrow Deposit", and
together with any investment income or proceeds received by the Escrow Agent
from the investment thereof from time to time pursuant to Section 4 below,
collectively, the "Escrow Property"), and the Escrow Agent agrees to hold the
Escrow Property in an account established with the Escrow Agent (the "Escrow
Account"), and to administer the Escrow Property in accordance with the terms of
this Escrow Agreement.
Section 3. Claims and Payment; Release from Escrow; Termination
Within five (5) Business Days of the date of a Certification for Release,
Escrow Agent shall deliver to Seller the Portion of the Escrow Property set
forth in such Release Affidavit, unless during such five (5) Business Day
period, Buyer delivers to Escrow Agent a Buyer Dispute Notice. In such event,
Escrow Agent shall not deliver to Seller that Portion of the Escrow Property
identified in the Certification for Release until such dispute is resolved as
provided in Section 9 hereof and notice of such resolution has been given to the
Escrow Agent.
Within five (5) Business Days of the date of a Claim Notice, Escrow Agent
shall deliver, to Buyer the Portion of the Escrow Property set forth in such
Claim Notice, unless during such five (5) Business Day period, Seller delivers
to Escrow Agent a Seller Dispute Notice In such event, Escrow Agent shall not
deliver to Buyer that Portion of the Escrow Property identified in the Claim
Notice until such dispute is resolved as provided in Section 9 hereof and notice
of such resolution has been given to the Escrow Agent.
On September 15, 2004, (the "Release Date"), Escrow Agent shall
automatically deliver the Portion of the Escrow Property set forth in Section
1.3 corresponding to the escrow reference identified in Section 1.4 to Seller
unless Escrow Agent has previously received a Claim Notice, a Certification for
Release, a Buyer Dispute Notice or a Seller Dispute Notice and has not yet
delivered to Buyer or Seller the Portion of the Escrow Property referenced in
such Claim Notice or Certification for Release. Seller shall not be required to
deliver a Certification for Release to Escrow Agent certifying the occurrence of
a Release Date.
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On the last date that Escrow Agent pays any Portion of the Escrow Property
to Buyer or Seller pursuant to the terms and conditions hereof, Escrow Agent
shall pay any remaining portion of the Escrow Property to Seller and upon the
date of payment of such remaining Escrow Property this Escrow Agreement shall
terminate.
3.a Xxxxxxx Authorization
Anything to the contrary notwithstanding the escrow release shall require
Xxxxxxx Xxxxxxx'x written authorization and Xxxxxxx Xxxxxxx shall provide such
authorization in accordance with the terms and conditions hereof as if he were a
co-escrow agent. This provision shall not subject Xxxxxxx Xxxxxxx to
disqualification from any future representation of Buyer.
Section 4. Investment of Funds.
If the Escrow Agent shall have received specific written investment
instruction from Seller (which shall include instruction as to term to maturity,
if applicable), on a timely basis, the Escrow Agent shall invest the Escrow
Property in Eligible Investments, pursuant to and as directed in such
instruction. Any investment income or proceeds received by the Escrow Agent from
the investment of the Escrow Deposit shall be paid to Seller on the date of
termination of this Escrow Agreement.
"Eligible Investments" shall mean (i) obligations issued or guaranteed by
the United States of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof); (ii) obligations (including certificates of deposit arid banker's
acceptances) of any domestic commercial bank having capital and surplus in
excess of $500,000,000; (iii) repurchase obligations for underlying securities
of the type described in clause (i); (iv) investment in the Escrow Agent's
"Insured Money Market Fund" (]MMA). If otherwise qualified, obligations of the
Escrow Agent or any of its affiliates shall qualify as Eligible Investments.
Escrow Agent Not Responsible For Investment Decisions. Absent its timely
receipt of such specific written investment instruction from Seller, the Escrow
Agent shall have no obligation or duty to invest (or otherwise pay Interest on)
the Escrow Property, provided, however, that m the event the Escrow Agent shall
not have received such written investment instruction, the Escrow Agent shall be
authorized to invest any of the Escrow Property in the Escrow Agent's "Insured
Money Market Fund" (IMMA) until such investment instruction is received. All
earnings received from the investment of the Escrow Property shall be credited
to, and shall become a part of, the Escrow (and any losses on such investments
shall be debited to the Escrow Account), but shall in no event be paid by Escrow
Agent to Buyer pursuant to a Claim Notice. The Escrow Agent shall have no
liability for any investment losses, including without limitation any market
loss on any investment liquidated prior to maturity in order to make a payment
required hereunder.
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Tax Reporting. The Interested Parties agree that, for tax reporting
purposes, all interest or other income earned from the investment of the Escrow
Property in any tax year shall (i) to the extent such interest or other income
is distributed by the Escrow Agent to Seller pursuant to the terms of this
Escrow Agreement during such tax year, be reported as allocated to Seller, and
(ii) otherwise shall be reported as allocated to Seller.
Certification of Taxpayer Identification Number. The Interested Parties
hereto agree to provide the Escrow Agent with a certified tax identification
number by signing and returning a Form W-9 to the Escrow Agent upon the
execution and delivery of this Escrow Agreement. The Interested Parties
understand that, in the event their tax identification numbers are not certified
to the Escrow Agent, the Internal Revenue Code, as amended from time to time,
may require withholding of a portion of any interest or other income earned on
the investment of the Escrow Property.
Section 5. Concerning the Escrow Agent.
(a) Each Interested Party acknowledges and agrees that the Escrow Agent
(i) shall not be responsible for any of the agreements referred to or described
herein (including without limitation the Agreement), or for determining or
compelling compliance therewith, and shall not otherwise be bound thereby, (ii)
shall be obligated only for the performance of such duties as are expressly and
specifically set forth in this Escrow Agreement on its part to be performed,
each of which is ministerial (and shall not be construed to be fiduciary) in
nature, and no implied duties or obligations of any kind shall be read into this
Escrow Agreement against or on the part of the Escrow Agent, (iii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve or cause it to incur any expense or liability unless it shall
have been furnished with acceptable indemnification, (iv) may rely on and shall
be protected in acting or refraining from acting upon any written notice,
instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument,
statement, certificate, request or other document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility or duty to make inquiry as to or to
determine the genuineness, accuracy or validity thereof (or any signature
appearing thereon), or of the authority of the person signing or presenting the
same, and (v) may consult counsel satisfactory to it, including in-house
counsel, and the opinion or advice of such counsel in any instance shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
opinion or advice of such counsel.
(b) The Escrow Agent shall not be liable to anyone for any action taken or
omitted to be taken by it hereunder except in the case of the Escrow Agent's
gross negligence or willful misconduct in breach of the terms of this Escrow
Agreement. In no event shall the Escrow Agent be liable for indirect, punitive,
special or consequential damage or loss (including but not limited to lost
profits) whatsoever, even, if the Escrow Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action.
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(c) The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository,
securities intermediary or other subescrow agent employed by the Escrow Agent
than any such book-entry depository, securities intermediary or other subescrow
agent has to the Escrow Agent, except to the extent that such action or omission
of any book-entry depository, securities intermediary or other subescrow agent
was caused by the Escrow Agent's own gross negligence or willful misconduct in
breach of this Escrow Agreement.
(d) The Escrow Agent is hereby authorized, in making or disposing of any
investment permitted by this Escrow Agreement, to deal with itself (in its
individual capacity) or with any one or more of its affiliates, whether it or
such affiliate is acting as a subagent of the Escrow Agent or for any third
person or dealing as principal for its own account.
(e) Notwithstanding any term appearing in this Escrow Agreement to the
contrary, in no instance shall the Escrow Agent be required or obligated to
distribute any Escrow Property (or take other action that may be called for
hereunder to be taken by the Escrow Agent) sooner than two (2) Business Days
after (i) it has received the applicable documents required under this Escrow
Agreement in good form, or (ii) passage of the applicable time period (or both,
as applicable under the terms of this Escrow Agreement), as the case may be
(f) Unless and except to the extent otherwise expressly set forth herein,
all deposits and payments hereunder, or pursuant to the terms hereof (including
without limitation all payments to the Escrow Agent pursuant to Section 6
hereof), shall be in U.S. dollars.
Section 6. Compensation, Expense Reimbursement and Indemnification.
(a) Each of the Interested Parties agrees, jointly and severally (i) to
pay or reimburse the Escrow Agent for its attorney's fees and expenses incurred
in connection with the preparation of this Escrow Agreement and (ii) to pay the
Escrow Agent's compensation for its normal services hereunder in accordance with
the fee schedule attached hereto as Exhibit A and made a part hereof, which may
be subject to change hereafter by the Escrow Agent on an annual basis.
(b) Each of the Interested Parties agrees, jointly and severally, to
reimburse the Escrow Agent on demand for all costs and expenses incurred in
connection with the administration of this Escrow Agreement or the escrow
created hereby or the performance or observance of its duties hereunder which
are in excess of its compensation for normal services hereunder, including
without limitation, payment of any legal fees and expenses incurred by the
Escrow Agent in connection with resolution of any claim by any party hereunder.
(c) Each of the Interested Parties covenants and agrees, jointly and
severally, to indemnify the Escrow Agent (and its directors, officers and
employees) and hold it (and such directors, officers and employees) harmless
from and against any loss, liability, damage, cost and expense of any nature
incurred by the Escrow Agent arising out of or in connection with this
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Escrow Agreement or with the administration of its duties hereunder, including
but not limited to attorney's fees and other costs and expenses of defending, or
preparing to defend against any claim of liability unless and except to the
extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent's gross negligence or willful misconduct. The foregoing
indemnification and agreement to hold harmless, shall survive the termination of
this Escrow Agreement.
(d) Notwithstanding anything herein to the contrary, the Escrow Agent
shall have and is hereby granted a possessory Lien on and security interest in
the Escrow Property, and all proceeds thereof, to secure payment of all amounts
owing to it from time to time hereunder, whether now existing or hereafter
arising. The Escrow Agent shall have the right to deduct from the Escrow
Property, and proceeds thereof, any such sums, upon one (1) Business Day's
notice to the Interested Parties of its intent to do so
(e) Without altering or limiting the joint and several liability of any of
the Interested Parties to the Escrow Agent hereunder, each of the Interested
Parties agrees as between themselves that they shall share, fifty percent (50%)
each, all amounts payable to the Escrow Agent pursuant to this Section 6(e). If
Escrow Agent exercises any or all of its rights under Section 6(d) due to any
failure by Buyer to pay amounts to Escrow Agent pursuant to this Agreement,
without prejudice to any other remedy, Buyer agrees that Seller may terminate
the MSA, if such agreement is still in force and effect; provided Seller gives
Buyer fifteen (15) days prior written notice of its intention to terminate the
MSA, during which time Buyer may prevent termination of the MSA by paying to
Seller the amount of any deduction made by the Escrow Agent.
Section 7. Tax Indemnification.
Each of the Interested Parties agrees, jointly and severally, (i) to
assume any and all obligations imposed now or hereafter by any applicable tax
law with respect to any payment or distribution of the Escrow Property or
performance of other activities under this Escrow Agreement, (ii) to instruct
the Escrow Agent in writing with respect to the Escrow Agent's responsibility
for withholding and other taxes, assessments or other governmental charges, and
to instruct the Escrow Agent with respect to any certifications and governmental
reporting that may be required under any laws or regulations that maybe
applicable in connection with its acting as Escrow Agent under this Escrow
Agreement, and (iii) to indemnify and hold the Escrow Agent harmless from any
liability or obligation on account of taxes, assessments, additions for late
payment, interest, penalties, expenses and other governmental charges, that may
be assessed or asserted against the Escrow Agent in connection with, on account
for relating to the Escrow Property, the management established hereby, any
payment or distribution of or from the Escrow Property pursuant to the terms
hereof or other activities performed under the terms of this Escrow Agreement,
including without limitation any liability for the withholding or deduction of
(or the failure to withhold or deduct) the same, and any liability for failure
to obtain proper certifications or to report properly to governmental
authorities in connection with this Escrow Agreement, including costs and
expenses (including reasonable legal fees and expenses),
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interest and penalties. The foregoing indemnification and agreement to hold
harmless shall survive the termination of this Escrow Agreement.
Section 8. Resignation.
The Escrow Agent may at any time resign as Escrow Agent hereunder by
giving thirty (30) days' prior written notice of resignation to Buyer and
Seller. Prior to the effective date of the resignation as specified in such
notice, Seller will issue to the Escrow Agent a written Instruction authorizing
redelivery of the Escrow Property to a bank or trust company that it selects as
successor to the Escrow Agent hereunder subject to the consent of Buyer (which
consent shall not be unreasonably withheld or delayed). If, however, Seller
shall fail to name such a successor escrow agent within twenty (20) days after
the notice of resignation from the Escrow Agent, the Buyer shall be entitled to
name such successor escrow agent. If no successor escrow agent is named by Buyer
or Seller, the Escrow Agent may apply to a court of competent jurisdiction for
appointment of a successor escrow agent.
Section 9. Dispute Resolution.
It is understood and agreed that, should any dispute arise with respect to
the delivery, ownership, right of possession, and/or disposition of the Escrow
Property, or should any claim be made upon the Escrow Agent or the Escrow
Property by a third party, the Escrow Agent upon receipt of notice of such
dispute or clam is authorized and shall be entitled (at its sole option and
election) to retain in its possession without liability to anyone, all or any of
said Escrow Property until such dispute shall have been settled either by the
mutual written agreement of the parties involved or by a final order, decree or
judgment of a court in the United States of America, the time for perfection of
an appeal of such order, decree or judgment having expired. The Escrow Agent
may, but shall be under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Escrow Property. The lawfirm of Kressel,
Rothlein, Xxxxx & Xxxx, LLC shall not be subject to disqualification from
representation of Seller by reason of its service as or to Escrow Agent;
Section 10. Consent to Jurisdiction and Service.
Each of the Interested Parties hereby absolutely and irrevocably consents
and submits to the exclusive jurisdiction of the courts in The Commonwealth of
Virginia and New York State and of any Federal court located in said
Commonwealth or State in connection with any actions or proceedings brought
against the Interested Parties (or any of them) by the Escrow Agent arising out
of or relating to this Escrow Agreement. In any such action or proceeding, the
interested Parties' each hereby absolutely and irrevocably (i) waives any
objection to jurisdiction or venue, (ii) waives personal service of any summons,
complaint, declaration or other process, and (iii) agrees that the service
thereof may be made by certified or registered first-class mail
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directed to such party; as the case may be, at their respective addresses in
accordance with Section 13 hereof.
Section 11. Waiver of Jury Trial.
THE ESCROW AGENT AND THE INTERESTED PARTIES HEREBY WAIVE A TRIAL BY JURY
OF ANY AND ALL ISSUES ARISING IN ANY ACTION OR PROCEEDING BETWEEN THEM OR THEIR
SUCCESSORS OR ASSIGNS, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF ITS
PROVISIONS OR ANY NEGOTIATIONS IN CONNECTION HEREWITH.
Section 12. Force Majeure.
The Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include but
not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, terrorist acts, earthquakes or other
disasters.
Section 13. Notices: Wiring Instructions.
(a) Notice Addresses. Any notice permitted or required hereunder shall be
in writing, and shall be sent (i) by personal delivery, overnight delivery by a
recognized courier or delivery service, or (ii) mailed by registered or
certified mail, return receipt requested, postage prepaid, or (iii) by confirmed
telecopy accompanied by mailing of the original on the same day by first class
mail, postage prepaid, in each case the parties at their address set forth below
(or to such other address as any such party may hereafter designate by written
notice to the other parties); provided however, that no notice to the Escrow
Agent shall be deemed duly given or made until actually received by the Escrow
Agent.
If to Buyer:
ePlus Technology, Inc.
000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Fax: 000-000-0000
Tel., with extension: 000-000-0000
If to Seller:
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Manchester Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
Fax: 000-000-0000
Tel., with extension: 000-000-0000
If to Escrow Agent:
by first class mail, to:
Xxxx Xxxxxxxx, Esq.
Kressel, Rothlein, Xxxxx & Xxxx, LLC
000 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
if by fax, addressed as above and
sent to the following telecopy number:
Fax: (000) 000-0000
if by hand, certified or registered mail
or overnight courier or delivery, to:
Xxxx Xxxxxxxx, Esq.
Kressel, Rothlein, Xxxxx & Xxxx, LLC
000 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
(b) Wiring Instructions As per Seller's payment instruction letter
dated May 28, 2004..
Section 14. Miscellaneous.
(a) Binding Effect; Successors. This Escrow Agreement shall be binding
upon the respective parties hereto and their heirs, executors, successors and
assigns. If the Escrow Agent consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Escrow Agent.
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(b) Modifications. This Escrow Agreement may not be altered or modified
without the express written consent of the parties hereto. No course of conduct
shall constitute a waiver of any of the terms and conditions of this Escrow
Agreement, unless such waiver is specified in writing, and then only to the
extent so specified. A waiver of any of the terms and conditions of this Escrow
Agreement on one occasion shall not constitute a waiver of the other terms of
this Escrow Agreement, or of such terms and conditions on any other occasion.
Notwithstanding any other provision hereof, consent to an alteration or
modification of this Escrow Agreement may not be signed by means of an e-mail
address.
(c) Governing Law. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(d) Reproduction of Documents. This Escrow Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates arid other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro- card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(e) Counterparts. This Escrow Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement
to be duly executed and delivered in its name and on its behalf as of the 28th
day of May, 2004.
ePlus Technology, Inc.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Manchester Technologies, Inc.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Name: Xxxx Xxxxxxxx
Title: Escrow Agent
As to Section 3.a
-----------------------------------
Xxxxxxx Xxxxxxx
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Exhibit A
Fee Schedule
Schedule of Fees
Escrow Service
WIRE FEE: cost per wire
OUT-OF-POCKET EXPENSES at cost
LEGAL FEES: at cost
EXTRAORDINARY ADMINISTRATIVE EXPENSES
Fees for services not specifically set forth in this schedule will be
determined by appraisal Such services may include, but not be limited to,
additional responsibilities and services incurred in connection with amendments
or extensions of the governing documents, unusual cash and/or investment
transactions, calculations, reports or notices, or in case of litigation.
OUT-OF-POCKET EXPENSES
Any out-of-pocket expenses incurred by us will be billed at cost. These
items will include, but not be limited to, legal costs, travel expenses,
document duplication and facsimiles, courier services, etc.
ESCROW AGENT'S COUNSEL
At cost.
BILLING AND PAYMENTS
The Acceptance Fee and first year Annual Fee will be payable at closing.
Subsequent Annual Fees will be payable in advance at each anniversary of
closing. Other fees, charges and reimbursements will be billed as incurred.
Annual fees are not pro-rated for less than a year.
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GOOD FUNDS AVAILABILITY
Funds to make any payments must be on deposit in sufficient time to avoid
Daylight Overdrafts under Fed Guidelines.
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