EXHIBIT 99.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of July
15, 2003, by and among The Ultimate Software Group, Inc., a corporation
incorporated under the laws of Delaware (the "Company"), the purchasers
signatory hereto (each an "Purchaser" and together the "Purchasers"), and
Xxxxxxx Xxxxxxxxx LLP, with an address for notice at 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, Attn: Xxxxxx X. Xxxxxxx, Fax: (000) 000 0000, Tel:
(000) 000-0000 (the "Escrow Agent"). CAPITALIZED TERMS USED BUT NOT DEFINED
HEREIN SHALL HAVE THE MEANINGS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT
REFERRED TO IN THE FIRST RECITAL.
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing from the Company,
in the aggregate, up to 2,200,000 shares of Common Stock on the Closing Date as
set forth in the Securities Purchase Agreement (the "PURCHASE AGREEMENT") dated
the date hereof between the Purchasers and the Company, which will be issued
under the terms contained herein and in the Purchase Agreement; and
WHEREAS, it is intended that the purchase of the securities be
consummated in accordance with the requirements set forth in Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Purchasers have requested that
the Escrow Agent hold the Subscription Amounts with respect to the Closing in
escrow until the Escrow Agent has received the Release Notice in the form
attached hereto from the Company and each Purchaser;
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
2,200,000 shares of Common Stock and certain documentation on the Closing as
contemplated by the Purchase Agreement.
1.2. Upon the Escrow Agent's receipt of the aggregate Subscription
Amounts in the aggregate amount of $11,660,000 for the Closing into its master
escrow account, together with counterparts of this Agreement, the Non-Disclosure
Agreement, the Purchase Agreement and the Registration Rights Agreement and the
Release Notice in the form attached hereto as EXHIBIT X,
1
each duly executed by each Purchaser, it shall advise the Company, or the
Company's designated attorney or agent, in writing, of the amount of funds it
has received into its master escrow account.
1.3. Wire transfers to the Escrow Agent shall be made as follows:
STERLING NATIONAL BANK
000 0XX XXXXXX
XXX XXXX, XX 00000
Account Name: Xxxxxxx Xxxxxxxxx LLP
ABA ROUTING NO: 000000000
ACCT NO: 0000000000
Remark: ulti/[FUND NAME]
1.4 The Company, promptly following being advised in writing by the
Escrow Agent that the Escrow Agent has received the Subscription Amounts
aggregating $11,660,000 for the Closing and the other items contemplated by
Section 1.2, shall deliver or cause its transfer agent to deliver to the Escrow
Agent the certificates representing the certificates evidencing the Securities
to be issued to each Purchaser at the Closing together with:
(a) a copy of the Company's executed counterpart of the
Purchase Agreement;
(b) a copy of the Company's executed counterpart of the
Registration Rights Agreement;
(c) a copy of the executed opinion of Xxxxx Xxxxxxxxxx LLP in
the form of Exhibit C to the Purchase Agreement;
(d) a copy of the Company's executed counterpart of the
Non-Disclosure Agreement; and
(e) a copy of the Company's original executed counterpart of
this Escrow Agreement.
1.5 In the event that the foregoing items are not in the Escrow Agent's
possession within five (5) Trading Days of the Escrow Agent notifying the
Company as contemplated by Section 1.4 hereof, then each Purchaser shall have
the right to demand the return of their portion of the Subscription Amount.
1.6 Once the Escrow Agent receives a Release Notice in the form
attached hereto as Exhibit X executed by the Company and each Purchaser, it
shall wire $11,000,000 to the Company's account listed in Section 1.7 below and
the remaining $660,000 per the written instructions of Xxxx.
2
1.7 Wire transfers to the Company shall be made as follows:
Account Name: The Ultimate Software Group, Inc.
0000 Xxxxxxxx Xxx
Xxxxxx, XX 00000
Account Number: 3300292100
Bank Name: Silicon Valley Bank
Santa Clara, CA
Routing Number: 000000000
1.8 Once the funds (as set forth above) have been sent per the
Company's instructions, the Escrow Agent shall then arrange to have the Shares,
the Purchase Agreement, the Registration Rights Agreement, the Escrow Agreement,
the Non-Disclosure Agreements and the opinion of counsel delivered to the
appropriate parties.
ARTICLE II
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement
except that the address for notice for the Escrow Agent shall be as set forth
above in the first paragraph of this Escrow Agreement.
2.3 This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.
2.4 This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.5 Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if all parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.
2.6 The parties hereto expressly agree that this Escrow Agreement shall
be governed by, interpreted under and construed and enforced in accordance with
the laws of the State of New York without regard to the conflicts of laws rules
of such state. Any action to enforce,
3
arising out of, or relating in any way to, any provisions of this Escrow
Agreement shall only be brought in a state or Federal court sitting in New York
City.
2.7 The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Purchaser and
the Escrow Agent.
2.8 The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. In acting hereunder the Escrow Agent shall act
in good faith, and the fact that the Escrow Agent is serving as counsel to Xxxx
Capital Partners, LLC in connection with the transactions contemplated by the
Purchase Agreement shall in no way effect the performance of its duties
hereunder. The Escrow Agent shall not be personally liable for any act the
Escrow Agent may do or omit to do hereunder as the Escrow Agent while acting in
good faith and in the absence of gross negligence, fraud and willful misconduct,
and any act done or omitted by the Escrow Agent pursuant to the advice of the
Escrow Agent's attorneys-at-law shall be conclusive evidence of such good faith,
in the absence of gross negligence, fraud and willful misconduct.
2.9 The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized and instructed to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any such
order, judgment or decree, the Escrow Agent shall, in the absence of gross
negligence, fraud and willful misconduct, not be liable to any of the parties
hereto or to any other person, firm or corporation by reason of such decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.
2.10 The Escrow Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.
2.11 The Escrow Agent shall be entitled to employ such legal counsel
and other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation; provided that the costs of such compensation shall be borne by the
Escrow Agent. THE ESCROW AGENT HAS ACTED AS LEGAL COUNSEL FOR XXXX CAPITAL
PARTNERS, LLP, AND MAY CONTINUE TO ACT AS LEGAL COUNSEL FOR XXXX FROM TIME TO
TIME, NOTWITHSTANDING ITS DUTIES AS THE ESCROW AGENT HEREUNDER. THE COMPANY AND
THE PURCHASERS CONSENT TO THE ESCROW AGENT ACTING IN SUCH CAPACITY AS LEGAL
COUNSEL FOR XXXX AND WAIVES ANY CLAIM THAT SUCH REPRESENTATION REPRESENTS A
CONFLICT OF INTEREST ON THE PART OF THE ESCROW AGENT. THE COMPANY UNDERSTANDS
THAT THE ESCROW AGENT IS RELYING EXPLICITLY ON THE FOREGOING PROVISION IN
ENTERING INTO THIS ESCROW AGREEMENT.
4
2.12 The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by giving written notice to the
Company and the Purchasers. In the event of any such resignation, the Purchasers
and the Company shall appoint a successor Escrow Agent and the Escrow Agent
shall deliver to such successor Escrow Agent any escrow funds and other
documents held by the Escrow Agent.
2.13 If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
2.14 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned or by a final order,
decree or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedures of such courts.
2.15 The Company and each Purchaser agree severally and not jointly to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence, fraud or
willful misconduct of the Escrow Agent.
2.16 The Escrow Agent shall serve hereunder without compensation.
************************
5
IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement as of date first written above.
THE ULTIMATE SOFTWARE GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: EVP, Chief Financial Officer
& Investor Relations
ESCROW AGENT:
XXXXXXX XXXXXXXXX LLP
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Partner
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
6
[PURCHASER SIGNATURE PAGES TO ESCROW]
JANUS INVESTMENT FUND,
On behalf of its Series Janus Venture Fund
By: /s/ Xxxxx Xxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxx
Title: V.P. and Assistant General Counsel
[PURCHASER SIGNATURE PAGES FOLLOW]
7
[PURCHASER SIGNATURE PAGES TO ESCROW]
TRUSCO CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
Exhibit X to
Escrow Agreement (Exhibit 99.3)
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of
July 15, 2003, among The Ultimate Software Group, Inc., the Purchasers signatory
thereto and Xxxxxxx Xxxxxxxxx LLP, as Escrow Agent (the "Escrow Agreement";
capitalized terms used herein and not defined shall have the meaning ascribed to
such terms in the Escrow Agreement and/or the Purchase Agreement), hereby
notifies the Escrow Agent that each of the conditions precedent to the purchase
and sale of the Shares set forth in the Securities Purchase Agreement have been
satisfied. The Company and the undersigned Purchaser hereby confirm that all of
their respective representations and warranties contained in the Purchase
Agreement remain true and correct except insofar as the failure to be true and
correct is not reasonably likely to have a Material Adverse Effect and authorize
the release by the Escrow Agent of the funds and documents to be released at the
Closing as described in the Escrow Agreement. This Release Notice shall not be
effective until executed by the Company and the Purchasers.
This Release Notice may be signed in one or more counterparts,
each of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release
Notice to be duly executed and delivered as of this 15th day of July, 2003.
THE ULTIMATE SOFTWARE GROUP, INC.
By:
-------------------------------
Name:
Title:
[PURCHASER SIGNATURE PAGE FOLLOW]
8
[PURCHASER SIGNATURE PAGES TO RELEASE]
JANUS INVESTMENT FUND,
On behalf of its Series Janus Venture Fund
By: __________________________
Name:
Title:
[PURCHASER SIGNATURE PAGES FOLLOW]
9
[PURCHASER SIGNATURE PAGES TO RELEASE]
TRUSCO CAPITAL MANAGEMENT, INC.
By: _________________________________
Name:
Title:
10
