CLIENT ESCROW AGREEMENT
Exhibit
10.1
THIS
CLIENT ESCROW AGREEMENT (this “Client
Escrow Agreement”)
made
as of December 17, 2007, by and among United Benefits & Pension Services,
Inc., a Delaware corporation (the “Parent”),
Xxx
Xxxxxx (“Stockholders’
Representative”,
and
together with Parent, sometimes referred to individually as “Party”
or collectively
as the “Parties”), and JPMorgan Chase Bank, N.A., as escrow agent (the
“Escrow
Agent”).
WITNESSETH
WHEREAS,
the Parent, the Merger Sub, Associated Third Party Administrators (the
“Company”)
and
the Principal Stockholders have entered into a certain Agreement and Plan of
Merger, dated as of November 30, 2007 (the “Merger
Agreement”)
(capitalized terms used but not otherwise defined herein shall have the meanings
attributed to them in the Merger Agreement); and
WHEREAS,
in order to secure the Parent against (i) losses caused by the termination
of
the Company’s services provided to any Key Client following the consummation of
the Merger; (ii) increases in costs to the Company following the consummation
of
the Merger as a result of the Company’s negotiation of collective bargaining
agreements with the Subject Unions; (iii) certain Damages as a result of the
UFCW Claim; (iv) Damages resulting from the claim (the “E&O
Claim”)
made
by the Western Conference of Teamsters Group Legal Services Fund based on claims
processing errors, to the extent damages exceed the Company’s errors and
omissions insurance policy deductible; and (v) certain liabilities that may
arise under or by virtue of the breach by the Company or any of the Principal
Stockholders of any of the representations and warranties made by the Company
and/or the Principal Stockholders in the Merger Agreement, the Merger Agreement
requires that a portion of the Cash Consideration payable to all Company
Stockholders be delivered to the Escrow Agent and held in escrow by the Escrow
Agent in accordance with the provisions hereof.
NOW,
THEREFORE, in consideration of the premises set forth herein and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Appointment
of Escrow Agent.
The
Escrow Agent is hereby appointed to act as Escrow Agent hereunder in accordance
with the terms set forth herein, and the Escrow Agent hereby agrees to accept
such
appointment.
2. Deposit
of Escrow Funds.
(a) On
the
date hereof, the Parent will deliver to the Escrow Agent an aggregate amount
of
Two Million Five Hundred Thousand Dollars ($2,500,000) (the “Escrow
Deposit”)
by (i)
wire transfer of immediately available funds and/or
(ii) delivery of an executed Secured Promissory Note and Pledge Agreement (in
substantially the form attached hereto as Exhibit A) (the “Escrow
Note”)
in a
principal amount equal to the difference between $2,500,000 and the amount
paid
pursuant to clause (i) above, in each case to be held by the Escrow Agent in
accordance with the terms set forth herein. In addition, on the date hereof,
in
accordance with and subject to the terms and provisions of the Escrow Note,
the
Parent will deliver to the Escrow Agent original stock certificate(s)
representing one million (1,000,000) shares of the Parent’s common stock, par
value $0.00001 per share (“Parent
Shares”)
issued
to the Escrow Agent, together with undated powers for such shares duly executed
in blank by the Parent. Pursuant to the Escrow Note, the Parent may prepay
the
Escrow Note from time to time, and the amount of such prepayments shall be
held
in escrow by the Escrow Agent and be treated as Escrow Funds for all purposes
of
this Client Escrow Agreement.
(b) During
the term of this Client Escrow Agreement, the Escrow Funds shall be invested
in
a trust account at JPMorgan Chase Bank, N.A. (“Trust Account”), segregated apart
from the general funds of JPMorgan Chase Bank, N.A. or which it deposits in
another institution to the credit of itself as trustee or other fiduciary,
unless otherwise instructed in writing by the Parties and as shall be acceptable
to the Escrow Agent, pending disbursement pursuant to this Escrow Agreement.
The
Escrow Agent will provide compensation on balances in the Escrow Funds at a
rate
determined by the Escrow Agent from time to time, which shall consist of
interest earned on the Escrow Funds held in the Trust Account. The Escrow Agent
shall not have any liability for any loss sustained as a result of any
investment made pursuant to the terms of this Client Escrow Agreement. The
Escrow Agent shall have the right to liquidate any investments held in order
to
provide funds necessary to make required payments under this Client Escrow
Agreement. For purposes hereof, “Escrow
Funds”
means
all cash portions of the Escrow Deposit delivered to the Escrow Agent pursuant
to Section 2(a)(i), along with all interest accrued thereon.
3. Release
of
Escrow Funds.
Subject
to Section 3(g) and Section 22 below, the Escrow Funds shall be distributed
by
Escrow Agent as follows:
(a) If
Parent
and the Stockholders’ Representatives shall at any time jointly direct Escrow
Agent in writing to distribute some or all Escrow Funds, or if Escrow Agent
shall have received an order, decree or judgment of a court or arbitrator of
competent jurisdiction, presented by Parent and/or the Stockholders’
Representative and certified to be final and non-appealable, and directing
Escrow Agent to distribute some or all Escrow Funds, Escrow Agent shall within
five (5) Business Days distribute the Escrow Funds as directed in such joint
written direction, order, decree or judgment.
(b) At
any
time during the period commencing on the date of this Client Escrow Agreement
and terminating at 5:00 p.m. EST on (y) the second anniversary of the date
hereof, or (z) in the event that the Parent exercises its right to extend the
term of this Client Escrow Agreement pursuant to Section 3(d), the third
anniversary of the date hereof, Parent may give to the Stockholders’
Representative and the Escrow Agent a Claim Notice in substantially the form
of
Exhibit 1 describing in reasonable detail the facts giving rise to a claim
for
the release of the Escrow Funds (or any portion thereof) pursuant to Subsections
2.5(b), (c), and/or (d) of the Merger Agreement and/or Section 10.4(b) of the
Merger Agreement, which shall include the amount and the method of computation
of the amount of such claim, and a reference to the provision of the Merger
Agreement upon which such claim is based. In the event that the Stockholders’
Representative shall fail, within ten (10) Business Days after the receipt
by
him of any Claim Notice, to deliver to the Parent and the Escrow Agent a written
notice (the “Objection
Notice”)
denying that the claim stated in the Claim Notice, or any portion thereof,
is
due and payable to Parent and setting forth in reasonable detail the reasons
for
such denial, the Escrow Agent shall, on the twelfth (12th)
Business Day after receipt by the Escrow Agent of such Claim Notice,
automatically withdraw from the Escrow Funds and transfer to the Parent the
amount set forth in the Claim Notice. In the event that the Stockholders’
Representative shall, within ten (10) Business Days after the receipt by it
of a
Claim Notice, deliver an Objection Notice to the Parent and the Escrow Agent,
the Escrow Agent shall retain as Escrow Funds the amount set forth in the
Objection Notice (the “Disputed
Amount”)
until
otherwise directed by a written instrument signed by the Stockholders’
Representative and the Parent or by an order, decree or judgment of a court
or
arbitrator of competent jurisdiction, presented by the prevailing party and
certified to be final and non-appealable. In the event that the Parent becomes
entitled to receive any amount of the Escrow Funds in satisfaction of a claim
set forth in a Claim Notice, the Escrow Agent shall promptly transfer to the
Parent the amount then held in the Escrow Funds sufficient (to the extent such
funds are available in the Escrow Fund for distribution) to comprise the amount
necessary to satisfy such claim.
-2-
(c) On
the
second anniversary of the date hereof, or in the event that Parent shall have
exercised its right to extend the term of this Client Escrow Agreement pursuant
to Section 3(d), the earlier to occur of (i) the third anniversary of the date
hereof, or (ii) the fifteenth day after receipt by the Escrow Agent of a Claim
Notice (during the Extension Term, as hereinafter defined) pursuant to Section
3(b) of this Client Escrow Agreement, the Escrow Agent shall automatically,
without further action or notice from or by the Parent or the Stockholders’
Representative, distribute the then-current balance of the Escrow Funds, less
all Disputed Amounts (if any), which the Escrow Agent shall continue to hold
in
accordance with the provisions of this Client Escrow Agreement, to Xxxxxxx
and
the Company Stockholders, as the case may be, provided,
however,
that if
the Escrow Agent receives a Term Extension Notice (as hereinafter defined),
within ten (10) days before the second anniversary of the date hereof, the
Escrow Agent shall continue to hold the Escrow Funds in accordance with the
provisions of this Client Escrow Agreement.
(d) In
the
event that the E&O Claim shall not have been fully and finally resolved
before the second anniversary of the date hereof, the Parent shall have the
sole
right to extend the term of this Escrow Agreement until the earlier to occur
of
(i) the third anniversary of the date hereof or (ii) the date on which the
Escrow Agent shall have received written notice from Parent and the
Stockholders’ Representative stating that the E&O Claim has been fully and
finally resolved (such period being the “Extension
Term”),
by
giving notice (the “Term
Extension Notice”)
in
substantially the form of Exhibit 2 to the Stockholders’ Representative and the
Escrow Agent stating that the term of this Escrow Agreement shall be extended
and describing in reasonable detail the grounds for such extension. For purposes
of this Section 3, the E&O Claim shall have been “fully and finally
resolved” upon (y) (A) the entry of an order, decree or judgment of a court or
arbitrator of competent jurisdiction with respect to the E&O Claim and the
facts and circumstances giving rise thereto, or (B) the execution and delivery
by the Company and the Western Conference of Teamsters Group Legal Services
Fund, its successors or assigns, of a settlement agreement and release with
respect to any the E&O Claim and the facts and circumstances giving rise
thereto; and (z) the acceptance or denial by Chubb Group of Insurance Companies
of the Company’s insurance claim (or any portion thereof) with respect to
E&O Claim under the Company’s errors and omissions insurance
policy.
-3-
(e) Any
funds
payable to the Company Stockholders pursuant to this Escrow Agreement shall
(i)
first be paid by the Escrow Agent to Xxxx Xxxxxxx (“Xxxxxxx”)
in the
amount specified in the Xxxxxxx Allocation Instructions (as hereinafter
defined); and (ii) be paid by the Escrow Agent to the Company Stockholders
by
check for immediate payment to the order of the recipient; provided,
that
prior to making any such payment, the Escrow Agent shall have received written
instructions (the “Xxxxxxx
Allocation Instructions”)
from
the Stockholders’ Representative specifying the amount of such payment to be
paid to Xxxxxxx and/or the Company Stockholders, respectively, it being
acknowledged and agreed that the Stockholders’ Representative shall not
designate any funds for payment to the Company Stockholders until the Company’s
indebtedness (including the principal amount and all interest accrued thereon)
under that certain Promissory Note (the “Xxxxxxx
Note”),
dated
as of the date hereof, by the Company in favor of Xxxxxxx, including interest,
shall have been satisfied in full. Any and all payments to the Company
Stockholders shall be in the proportions and to the addresses set forth on
Schedule
1
hereto,
less such amounts as the Stockholders’ Representative, by written notice to the
Escrow Agent, shall direct to be paid to BKR International Mergers &
Acquisitions Group, LLC, in payment of its fees payable by the Company
Stockholders in connection with the Merger. Any and all payments to the Parent
shall be paid directly to Parent at the account listed on Schedule
2
hereto,
or to such other account as the Parent (or its successors) may designate. Any
and all payments to Xxxxxxx shall be paid directly to Xxxxxxx at the account
listed on Schedule
3
hereto,
or to such other account as the Stockholder Representative may
designate.
(f) Any
Claim
Notice or other written instruction which directs the Escrow Agent to disburse
all or a portion of the Escrow Funds shall specify the amount of such
disbursement to be paid out of the Escrow Deposit and the amount of such
disbursement to be paid out of the interest or other income earned on the Escrow
Deposit, it being acknowledged and agreed that all payments made pursuant to
this Client Escrow Agreement shall first be deducted from the Escrow
Deposit.
(g) In
the
event that the Escrow Agent is required or directed to make a payment to either
the Parent or the Company Stockholders hereunder and, at the time of such
payment, any amounts remain outstanding under the Escrow Note, then such
payments shall be made as follows:
(i) In
the
event of a payment to Parent, the amount of such payment shall be paid (A)
first, by reduction of any accrued and unpaid interest pursuant to the Escrow
Note, (B) second, by reduction of any outstanding principal amount due pursuant
to the Escrow Note and (C) thereafter, by payment of Escrow Funds in accordance
with the terms hereof.
(ii)
In
the
event of a payment to the Company Stockholders, the amount of such payment
shall
be paid (A) first, by payment of Escrow Funds in accordance with the terms
hereof, (B) second, from any accrued and unpaid interest pursuant to the Escrow
Note and (C) thereafter, from any outstanding principal amount due pursuant
to
the Escrow Note.
-4-
(iii)
In the
event that Parent defaults on its obligation to make timely payment to the
Escrow Agent pursuant to the Escrow Note of any amounts due pursuant to clauses
(B) and/or (C) of Section 3(g)(ii) above, and the Stockholders’ Representative
exercises its rights to foreclose upon the shares of Parent’s common stock, par
value $0.00001 per share, (“Parent Shares”) in accordance with the terms of the
Escrow Note, following such foreclosure the Stockholders’ Representative shall
have the right to direct the Escrow Agent to distribute such Parent Shares
to
the Company Stockholders in the proportions set forth herein with respect to
the
distribution of Escrow Funds. Escrow Agent shall have the right to rely on
such
letter of instructions from Stockholders’ Representative and shall not be
responsible for the allocation of the Parent Shares amongst the Company
Stockholders.
(h) In
the
event of (i) any prepayments of the Escrow Note by Parent pursuant to the Escrow
Note or (ii) any reductions of the principal amount due pursuant to the Escrow
Note in accordance with Section 3(g) above, the Escrow Agent shall release
and
return to Parent a number of Parent Shares as determined and instructed jointly
by the Parties, all which shall be in accordance with the Escrow
Note.
(i) Any
distribution of Parent Shares hereunder shall be made by the Escrow Agent
delivering to Purchaser or Stockholders’ Representative the applicable number of
shares as set forth in such written notice delivered to the Escrow Agent by
the
Parties. When the Escrow Agent is directed to make a release of Parent Shares
pursuant to the terms of this Agreement, the Escrow Agent shall deliver such
Parent Shares to Parent with a request to break such shares into the appropriate
denominations and registration as directed in the written notice delivered
by
Parties to the Escrow Agent. The Escrow Agent shall not be responsible for
the
disposition of the Parent Shares while such Parent Shares are being held outside
of JPMorgan Chase Bank, N.A. The Escrow Agent shall not be responsible for
the
calculation or determination of the number of Escrow Shares be distributed
to
Purchaser or the Company Stockholders under this Agreement.
4. Escrow
Agent.
(a) The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no duties shall be implied. The Escrow Agent shall have no liability
under and no duty to inquire as to the provisions of any agreement other than
this Client Escrow Agreement. The
Escrow Agent shall neither be responsible for, nor chargeable with, knowledge
of, nor have any requirements to comply with, the terms and conditions of any
other agreement, instrument or document between the Parties, in connection
herewith, if any, including without limitation the Merger Agreement
(the
“Underlying
Agreement”),
nor
shall the Escrow Agent be required to determine if any person or entity has
complied with any such agreements, nor shall any additional obligations of
the
Escrow Agent be inferred from the terms of such agreements, even though
reference thereto may be made in this Client Escrow Agreement. In the event
of
any conflict between the terms and provisions of this Client Escrow Agreement,
those of the
Underlying Agreement,
any
schedule or exhibit attached to the Client Escrow Agreement, or any other
agreement among the Parties, the terms and conditions of this Client Escrow
Agreement shall control.
-5-
(b) The
Escrow Agent may rely upon and shall not be liable for acting or refraining
from
acting upon any written notice, instruction or request furnished to it hereunder
and reasonably believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall be under no duty to
inquire into or investigate the validity, accuracy or content of any such
document. The Escrow Agent shall have no duty to solicit any payments which
may
be due it or the Escrow Funds.
(c) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the primary
cause of any loss to the Parent, Xxxxxxx or the Company Stockholders. The Escrow
Agent may execute any of its powers and perform any of its duties hereunder
directly or through agents or attorneys (and shall be liable only for the
careful selection of any such agent or attorney) and may consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in
good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. In the event that the Escrow Agent shall
be uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto which, in its opinion, conflict with
any
of the provisions of this Client Escrow Agreement, it shall be entitled to
refrain from taking any action and its sole obligation shall be to hold safely
all the Escrow Funds until it shall be directed otherwise in writing by the
Parent and the Stockholders’ Representative jointly or by a final order or
judgment of a court of competent jurisdiction. The
Parties agree to pursue any redress or recourse in connection with any dispute
without making the Escrow Agent a party to the same, except where the Escrow
Agent is a necessary party or is otherwise required by law to be a party to
such
dispute.
(d) Anything
in this Client Escrow Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss
or
damage of any kind whatsoever (including but not limited to lost profits),
even
if the Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.
-6-
5. Succession.
The
Escrow Agent may resign and be discharged from its duties or obligations
hereunder by giving 30 days advance notice in writing of such resignation to
the
Parent and the Stockholders’ Representative specifying a date when such
resignation shall take effect. The Parent and the Stockholders’ Representative
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice. The
successor escrow agent shall execute and deliver an instrument accepting such
appointment and it shall, without further acts, be vested with all the estates,
properties, rights, powers and duties of the predecessor escrow agent as if
originally named escrow agent. If
the
Parties have failed to appoint a successor escrow agent prior to the expiration
of thirty
(30)
days
following receipt of the notice of resignation, the Escrow Agent may petition
any court of competent jurisdiction for the appointment of a successor escrow
agent or for other appropriate relief, and any such resulting appointment shall
be binding upon all of the parties hereto. Escrow Agent’s sole responsibility
after such thirty (30) day notice period expires shall be to hold the Escrow
Funds (without any obligation to reinvest the same) and, if applicable, the
Escrow Note, and to deliver the same to a designated substitute escrow agent,
if
any, or in accordance with the directions of a final order or judgment of a
court of competent jurisdiction, at which time of delivery Escrow
Agent’s obligations hereunder shall cease and terminate, subject to the
provisions of Sections 7 and 8
hereunder.
The
Escrow Agent shall have the right to withhold an amount equal to any amount
due
and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent
shall reasonably believe may be incurred by the Escrow Agent in connection
with
the termination of the Client Escrow Agreement. Any corporation or association
into which the Escrow Agent may be merged or converted or with which it may
be
consolidated, or any corporation or association to which all or substantially
all the escrow business of the Escrow Agent’s line of business may be
transferred, shall be the Escrow Agent under this Client Escrow Agreement
without further act.
6. Fees.
The
Parent and the Stockholders’ Representative agree jointly and severally to (i)
pay the Escrow Agent upon execution of this Client Escrow Agreement and from
time to time thereafter reasonable compensation for the services to be rendered
hereunder, which unless otherwise agreed in writing shall be as described in
Schedule
3
attached
hereto, and (ii) pay or reimburse the Escrow Agent upon request for all
expenses, disbursements and advances, including reasonable attorney's fees
and
expenses, incurred or made by it in connection with the preparation, execution,
performance, delivery, modification and termination of this Client Escrow
Agreement. The Escrow Agent is hereby authorized to withdraw such compensation
and reimbursable amounts directly from the Escrow Funds.
7. Indemnity.
The
Parent and the Stockholders’ Representative shall jointly and severally
indemnify, defend and save harmless the Escrow Agent
and its
directors, officers, agents and employees from all loss, liability or expense
(including the fees and expenses of in house or outside counsel) arising out
of
or in connection with (i) the Escrow Agent's execution and performance of this
Client Escrow Agreement, except in the case of any indemnitee to the extent
that
such loss, liability or expense is finally adjudicated by a court of competent
jurisdiction to have been primarily caused by the gross negligence or willful
misconduct of such indemnitee, or (ii) its following any instructions or other
directions from the Parent or the Stockholders’ Representative, except to the
extent that its following any such instruction or direction is expressly
forbidden by the terms hereof. The parties hereto acknowledge that the foregoing
indemnities shall survive the resignation or removal of the Escrow Agent or
the
termination of this Client Escrow Agreement. The Parent and the Stockholders’
Representative hereby grant the Escrow Agent a lien on, right of set-off against
and security interest in the Escrow Fund and the Escrow Note for the payment
of
any claim for indemnification, compensation, expenses and amounts due
hereunder.
-7-
8. Security
Procedures.
In the
event funds transfer instructions are given (other than in writing at the time
of execution of this Client Escrow Agreement, as indicated in Schedule
1,
Schedule
2
and
Schedule
3
attached
hereto), whether in writing or by telecopier, the Escrow Agent is authorized
to
seek confirmation of such instructions by telephone call-back to the person
or
persons designated on Schedule
4
hereto
(each an “Authorized
Representative”,
collectively, the “Authorized
Representatives”),
and
the Escrow Agent may rely upon the confirmation of anyone purporting to be
the
person or persons so designated. Each funds transfer instruction shall be
executed by an authorized signatory. The undersigned is authorized to certify
that the Authorized Representatives are authorized signatories. The Authorized
Representatives and telephone numbers for call-backs may be changed only in
a
writing actually received and acknowledged by the Escrow Agent. If the Escrow
Agent is unable to contact any of the Authorized Representatives, the Escrow
Agent is hereby authorized to seek confirmation of such instructions by
telephone call-back to the Stockholders’ Representative or any one or more of
the managers of the Parent (the “Executive
Officers”)
as the
Escrow Agent may select. Such Executive Officers shall deliver to the Escrow
Agent a fully executed Incumbency Certificate, and the Escrow Agent may rely
upon the confirmation of anyone purporting to be any such officer. The Escrow
Agent and the beneficiary's bank in any funds transfer may rely solely upon
any
account numbers or similar identifying numbers provided by the Parent or the
Stockholders’ Representative to identify (i) the beneficiary, (ii) the
beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply
any of the Escrow Funds for any payment order it executes using any such
identifying number, even when its use may result in a person other than the
beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary's bank or an intermediary bank designated. The parties to this
Client Escrow Agreement acknowledge that these security procedures are
commercially reasonable.
9. Termination.
This
Client Escrow Agreement shall automatically, without any action by the Parent
or
the Stockholders’ Representative, be terminated upon the disbursement by the
Escrow Agent of all the Escrow Funds pursuant to the terms herein.
10. Notices.
(a) All
communications hereunder shall be in writing and shall be deemed to be duly
given and received:
(i)
upon
delivery if delivered personally or upon confirmed transmittal if by
facsimile;
(ii)
on
the next Business Day (as hereinafter defined) if sent by overnight courier;
or
(iii)
four (4) Business Days after mailing if mailed by prepaid registered mail,
return receipt requested, to the appropriate notice address set forth below
or
at such other address as any party hereto may have furnished to the other
parties in writing by registered mail, return receipt requested.
(b) Notwithstanding
the above, in the case of communications delivered to the Escrow Agent pursuant
to (ii) and (iii) of this Section 8, such communications shall be deemed to
have
been given on the date received by the Escrow Agent. In the event that the
Escrow Agent, in its sole discretion, shall determine that an emergency exists,
the Escrow Agent may use such other means of communication as the Escrow Agent
reasonably deems appropriate.
-8-
(c) "Business
Day" shall mean any day other than a Saturday, Sunday or any other day on which
the Escrow Agent located at the notice address set forth below is authorized
or
required by law or executive order to remain closed.
(d) All
communications under this Client Escrow Agreement shall be delivered to the
following address:
|
If
to the Parent:
|
|
|
United
Benefits & Pension Services, Inc.
|
|
|
000
Xxxxx Xxxxxxx Xxxx, Xxxxx 000
|
|
|
Xxxxxxxxx,
Xxxxxxxxxxx 00000
|
|
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Facsimile:
|
(000)
000-0000
|
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Telephone:
|
(000)
000-0000
|
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With
a simultaneous copy to:
|
|
|
Xxxxxx
Xxxxxx Xxxxxxxx LLP
|
|
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000
Xxxxxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Xxxxxx X. Xxxxxx, Esq.
|
|
|
|
Xxxxx
X. Xxxx, Esq.
|
|
Facsimile:
|
(000)
000-0000
|
|
Telephone:
|
(000)
000-0000
|
|
If
to the Stockholders’ Representative:
|
|
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Xxx
Xxxxxx (CONFIDENTIAL)
|
|
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0000
Xxxxxx Xxxx Xxxxxx
|
|
|
Xxx
Xxxxx, XX 00000]
|
|
|
Telephone:
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(000)
000-0000
|
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with
copies to:
|
|
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Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx LLP
|
|
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0000
X. Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
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Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
|
|
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Attention:
Xxxx X. Xxxx, Esq.
|
|
|
|
Xxxxxx
X. Xxxxxxx, Esq.
|
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Facsimile:
|
(000)
000-0000
|
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Telephone:
|
(000)
000-0000
|
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If
to the Escrow Agent:
|
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JPMorgan
Chase Bank, N.A.
|
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Worldwide
Securities Services
|
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4
New York Plaza – 00xx
Xxxxx
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-0-
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Xxx
Xxxx, XX 00000
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Attention:
Xxxxxx Xxxxx/Xxxxxx XxXxxxx
|
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Facsimile:
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(000)000-0000
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Telephone:
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000-000-0000/6742
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11. Amendments
and Waivers.
Any
term of this Client Escrow Agreement may be amended with the written consent
of
the parties or their respective successors and assigns. Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon the
parties and their respective successors and assigns.
12. Successors
and Assigns.
The
terms and conditions of this Client Escrow Agreement shall inure to the benefit
of and be binding upon the parties and their successors and assigns.
Nothing
in this Client Escrow Agreement, express or implied, is intended to confer
upon
any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by
reason of this Client Escrow Agreement, except as expressly provided in this
Escrow Agreement. The term “Escrow Agent” as used herein shall also refer to the
successors and assigns of Escrow Agent, including, without limitation, a
receiver, trustee, custodian or debtor-in-possession. No party to this Client
Escrow Agreement may assign any of its rights or obligations under this Client
Escrow Agreement without the written consent of the other parties.
13. Titles
and Subtitles.
The
titles and subtitles used in this Client Escrow Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Client Escrow Agreement.
14. Severability.
If one
or more provisions of this Client Escrow Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (i) such provision shall
be excluded from this Escrow Agreement, (ii) the balance of this Client
Escrow Agreement shall be interpreted as if such provision were so excluded
and
(iii) the balance of this Client Escrow Agreement shall be enforceable in
accordance with its terms.
15. Entire
Agreement.
This
Client Escrow Agreement and the documents referred to herein are the product
of
all of the parties hereto, constitute the entire agreement between such parties
pertaining to the subject matter hereof and thereof, and merge all prior
negotiations and drafts of the parties with regard to the transactions
contemplated herein and therein. Any and all other written or oral agreements
existing among the parties hereto regarding such transactions are expressly
canceled. For avoidance of doubt, notwithstanding the provisions of this Section
15, the Revenue Escrow Agreement shall not be merged with or cancelled by this
Agreement.
16. Counterparts.
This
Client Escrow Agreement may be executed in a number of identical counterparts
but all counterparts shall constitute one agreement. All signatures of the
parties to this Client Escrow Agreement may be transmitted by facsimile, and
such facsimile will, for all purposes, be deemed to be the original signature
of
such party whose signature it reproduces, and will be binding upon such
party.
-10-
17. Governing
Law.
This
Client Escrow Agreement and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law.
18. Consent
to Jurisdiction; Waiver of Jury Trial.
Each of
the parties hereto hereby irrevocably consents to the exclusive jurisdiction
of
the courts of the State of New York and the United States District Court for
the
Southern District of New York and waives trial by jury in any action or
proceeding with respect to this Escrow Agreement.
19. Miscellaneous.
No
party to this Client Escrow Agreement is liable to any other party for losses
due to, or if it is unable to perform its obligations under the terms of this
Escrow Agreement because of, acts of God, fire, war, terrorism, floods, strikes,
electrical outages, equipment or transmission failure, or other causes
reasonably beyond its control. Receipt
and release of the Escrow Funds shall be confirmed by Escrow Agent as soon
as
practicable by account statement, and any discrepancies in any such account
statement shall be noted by the Parent and the Stockholders’ Representative
within 30 calendar days after receipt thereof. Failure to inform Escrow Agent
in
writing of any discrepancies in any such account statement within said 30-day
period shall conclusively be deemed confirmation of such account statement
in
its entirety.
20. Compliance
with Court Orders.
In the
event that any escrow property shall be attached, garnished or levied upon
by
any court order, or the delivery thereof shall be stayed or enjoined by an
order
of a court, or any order, judgment or decree shall be made or entered by any
court order affecting the property deposited under this Client Escrow Agreement,
the Escrow Agent is hereby expressly authorized to obey and comply with all
writs, orders or decrees so entered or issued, which it is advised by legal
counsel is binding upon it, and in the event that the Escrow Agent obeys or
complies with any such writ, order or decree it shall not be liable to any
of
the parties hereto or to any other person, firm or corporation, by reason of
such compliance notwithstanding such writ, order or decree be subsequently
reversed, modified, annulled, set aside or vacated.
21. Patriot
Act Disclosure/Taxpayer Identification Number/Tax Reporting.
Section
326 of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (“USA
PATRIOT Act”)
requires the Escrow Agent to implement reasonable procedures to verify the
identity of any person that opens a new account with it. Accordingly, the
Parties acknowledge that Section 326 of the USA PATRIOT Act and the Escrow
Agent’s identity verification procedures require the Escrow Agent to obtain
information which may be used to confirm the Parties’ identities including
without limitation name, address and organizational documents (“Identifying
Information”).
The
Parties agree to provide the Escrow Agent with and consent to the Escrow Agent
obtaining from third parties any such Identifying Information required as a
condition of opening an account with or using any service provided by the Escrow
Agent.
-11-
22. Tax
Reporting.
Prior
to execution of this Client Escrow Agreement, Parent, Stockholders’
Representative, for itself and each Stockholder, shall provide the Escrow Agent
with a fully executed W-8 or W-9 Internal Revenue Service form, which shall
include their Tax Identification Number (TIN) as assigned by the Internal
Revenue Service.
The
Parent and Stockholders’ Representative further represent to the Escrow Agent
that the transaction memorialized in the Merger Agreement does not constitute
an
installment sale requiring any tax reporting or withholding of imputed interest
or original issue discount to the IRS or other taxing authority.
To
the
extent that any portion of the principal amount of the Escrow Deposit represents
part or all of the purchase price for shares of stock under the Merger
Agreement, Stockholders’ Representative shall provide on or before the effective
date of the Client Escrow Agreement and at appropriate times thereafter,
including prior to any disbursement, all information required for Escrow Agent
to perform tax reporting on IRS Form 1099-B, to the extent required by law.
Unless otherwise directed in a joint written instruction executed by the Parent
and Stockholders’ Representative, Escrow Agent shall report to the IRS and as
appropriate withhold and remit taxes to the IRS, or any other taxing authority
as required by law, based upon the information and documentation so provided.
Escrow Agent shall be entitled to rely on such information and documentation
and
shall not be responsible for and shall be indemnified by Stockholders’
Representative for any additional tax, interest, penalty or withholding arising
from the inaccuracy or late receipt of such information or documentation.
In
addition, prior or at the time of any distribution of income from the Escrow
Funds, the Parties shall provide to the Escrow Agent a detailed schedule
indicating the allocation of disbursed interest or other income earned under
the
Escrow Agreement which shall be reported by the Escrow Agent to the IRS, or
any
other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form)
as
income earned from the Escrow, to the extent required by law.
Any
other tax returns required to be filed will be prepared and filed by Parent
and
/or Stockholders’ Representative with the IRS and any other taxing authority as
required by law. The Parties acknowledge and agree that Escrow Agent shall
have
no responsibility for the preparation and/or filing of any income, franchise
or
any other tax forms with respect to the Fund or any income earned by the Escrow
Deposit. The Parties further acknowledge and agree that any taxes payable from
the income earned on the investment of any sums held in the Escrow Deposit
shall
be paid by the recipient thereof. Escrow Agent shall withhold any taxes it
deems
appropriate, including but not limited to required withholding in the absence
of
proper tax documentation, and shall remit such taxes to the appropriate
authorities.
[signature
page to follow]
-12-
IN
WITNESS WHEREOF, the parties have duly executed this Client Escrow Agreement
as
of the date first hereinabove stated.
|
Escrow
Agent:
|
|
|
JPMORGAN
CHASE BANK, N. A.
|
|
|
By:
|
/s/
Xxxxx X. XxXxxxx
|
|
|
Xxxxx
X Xxxxxxx
|
|
Vice
President
|
|
|
Parent:
|
|
|
UNITED
BENEFITS & PENSION SERVICES, INC.
|
|
|
By:
|
/s/
Xxxxxxx Xxxxxxxxx
|
|
Xxxxxxx
Xxxxxxxxx
|
|
|
Chief
Executive Officer & President
|
|
|
Stockholders’
Representative:
|
|
| /s/ Xxx Xxxxxx | |
[Signature
page to Client Escrow Agreement]
-13-
Schedule
1
|
Stockholder
|
Address
|
Percentage
|
|||
-14-
Schedule
2
Account
Name: United Benefits & Pension Services, Inc.
Citibank
000
Xxxx
Xxxx Xxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Account
Number: 0000000000
ABA
Number: 000000000
-15-
Schedule
3
Fees
|
Administrative
Fee
|
$
|
2,,000.00
|
||
|
Payable
Upon Account Opening and in Advance each year in which JPMorgan Chase
Bank, N.A. acts as Escrow Agent, without proration for partial
year
|
||||
-16-
Schedule
4
Telephone
Numbers for Call-Backs and
Persons
Designated to Instruct and Confirm Funds Transfer Instructions
|
If
to the Parent:
|
||||
|
Name
|
Telephone
Number
|
Signature
|
||
|
Xxxxxxx
X. Xxxxxxxxx
|
(000)
000-0000
|
_______________________
|
||
|
If
to the Stockholders’ Representative:
|
||||
|
Name
|
Telephone
Number
|
Signature
|
||
|
_______________________
|
||||
|
_______________________
|
Telephone
call backs shall be made to both Parent and Stockholders’ Representative if
joint instructions are required pursuant to the agreement. All
funds
transfer instructions must include the signature of the person(s) authorizing
said funds transfer.
Periodically,
you may issue payment orders to us to transfer funds by federal funds wire.
We
review the orders to determine compliance with the governing documentation
and
to confirm signature by the appropriate party, in accordance with the above
list. Bank policy requires that, where practicable, we undertake callbacks
to a
party other than the individual who signed the payment order to verify the
authenticity of the payment order.
Inasmuch
as you are the only employee in your office who can confirm wire transfers,
we
will call you to confirm any federal funds wire transfer payment order
purportedly issued by you. Your continued issuance of payment orders to us
and
confirmation in accordance with this procedure will constitute your agreement
(1) to the callback security procedure outlined herein and (2) that the security
procedure outlined herein constitutes a commercially reasonable method of
verifying the authenticity of payment orders. Moreover, you agree to accept
any
risk associated with a deviation from this bank policy.
-17-
Exhibit
1
Claim
Notice
[insert
date]
Stockholder
Representative
JPMorgan
Chase Bank
Worldwide
Securities Services
0
Xxx
Xxxx Xxxxx – 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx/Xxxxxx XxXxxxx
Dear
Sir/Madam,
This
Claim Notice is being delivered pursuant to Section 3(b) of the CLIENT ESCROW
AGREEMENT (this “Escrow
Agreement”)
made
as of ____ ____, 2007, by and among United Benefits & Pension Services,
Inc., a Delaware corporation (the “Parent”), Xxx Xxxxxx (“Stockholders’
Representative”,
and
together with Parent, sometimes referred to individually as “Party”
or collectively
as the “Parties”), and JPMorgan Chase Bank, N.A., as escrow agent (the
“Escrow
Agent”).
Parent
hereby gives notice of a Claim in the amount of $[insert amount].
The
facts
giving rise to a claim for the release of the Escrow Funds (or any portion
thereof) pursuant to Subsections 2.5(b), (c), and/or (d) of the Merger Agreement
and/or Section 10.4 of the Merger Agreement are as follows:
[insert
details]
The
method of computation of the amount of such claim is as follows:
[insert
details]
In
the
event that the Stockholders’ Representative shall fail, within ten (10) Business
Days after the receipt of this Claim Notice, to deliver to the Parent and the
Escrow Agent a written notice (the “Objection
Notice”)
denying that the claim stated herein, or any portion thereof, is due and payable
to Parent and setting forth in reasonable detail the reasons for such denial,
the Escrow Agent shall, on the twelfth (12th)
Business Day after receipt by the Escrow Agent of such Claim pay the amount
of
the Claim to Parent.
|
Sincerely,
|
|
|
UNITED
BENEFITS & PENSION SERVICES, INC.
|
|
|
By:
|
|
-18-
Exhibit
2
Term
Extension Notice
[insert
date]
Stockholder
Representative
JPMorgan
Chase Bank
Worldwide
Securities Services
0
Xxx
Xxxx Xxxxx - 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxx/Xxxxxx XxXxxxx
Dear
Sir/Madam,
This
Term
Extension Notice is being delivered pursuant to Section 3(d) of the CLIENT
ESCROW AGREEMENT (this “Escrow
Agreement”)
made
as of ____ ____, 2007, by and among United Benefits & Pension Services,
Inc., a Delaware corporation (the “Parent”), Xxx Xxxxxx (“Stockholders’
Representative”,
and
together with Parent, sometimes referred to individually as “Party”
or collectively
as the “Parties”), and JPMorgan Chase Bank, N.A., as escrow agent (the
“Escrow
Agent”).
Parent
hereby gives notice that the term of this Escrow Agreement shall be extended
until the earlier to occur of (i) [insert date] or (ii) the date on which the
E&O Claim is fully and finally resolved as per written notification from
Parent.
The
grounds for such extension are as follows: [insert details]
|
UNITED
BENEFITS & PENSION SERVICES, INC.
|
|
|
By:
|
|
-19-
EXHIBIT
A
SECURED
PROMISSORY NOTE AND PLEDGE AGREEMENT
-20-
