EXHIBIT 10.6
EXHIBIT D
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[AS AMENDED, PURSUANT TO AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT]
FORM OF INDEMNIFICATION ESCROW AGREEMENT
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This ESCROW AGREEMENT (the "Agreement") is made and entered into as of
_______________, 1998, by and among ▇▇▇▇▇▇▇ American Corporation (formerly known
as Monroe, Inc.), a Delaware corporation ("Buyer"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an
individual (the "Stockholders' Representative"), State Street Bank and Trust
Company (the "Escrow Agent"), and the parties identified as the ▇▇▇▇▇▇▇
Stockholders on the signature pages hereto (the "▇▇▇▇▇▇▇ Stockholders"), with
reference to the following facts:
A. Pursuant to the terms and conditions of a Stock Purchase Agreement
dated as of May 20, 1998, as amended as of November ___, 1998 (as so amended,
the "Purchase Agreement"), by and among Buyer, ▇▇▇▇▇▇▇ Enterprises, Inc., a
Massachusetts corporation, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Stockholders, Buyer
has agreed to acquire all of the issued and outstanding capital stock of ▇▇▇▇▇▇▇
Enterprises, Inc. Capitalized terms not otherwise defined herein have the
meanings set forth in the Purchase Agreement.
B. Under the terms of the Purchase Agreement, Buyer is entitled to
indemnification under certain circumstances as set forth in Section 10 of the
Purchase Agreement.
C. The purpose of this Agreement is to provide for the deposit into
escrow of cash and shares of Buyer's common stock, par value $.01 per share
("Buyer Common Stock"), pursuant to Section 1.9 of the Purchase Agreement to
secure, in part, the indemnification obligations of the ▇▇▇▇▇▇▇ Stockholders
under Section 10 of the Purchase Agreement.
NOW, THEREFORE, based on the above premises and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Appointment of Escrow Agent and Stockholders' Representative;
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Indemnification.
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1.1 Escrow Agent. The Escrow Agent is hereby appointed as escrow
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agent for the purposes set forth herein, and the Escrow Agent hereby accepts
such appointment on the terms set forth herein.
1.2 Stockholders' Representative. The Stockholders' Representative
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is hereby appointed as agent and representative of the ▇▇▇▇▇▇▇ Stockholders for
the purposes set
forth herein, and the Stockholders' Representative accepts such appointment on
the terms set forth herein.
1.3 Indemnification. The ▇▇▇▇▇▇▇ Stockholders have agreed to
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indemnify and hold harmless Buyer pursuant to Section 10 of the Purchase
Agreement. The ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed
Shares (as each such term is defined in Section 2.1 hereof) shall secure, in
part, the indemnification obligations of the ▇▇▇▇▇▇▇ Stockholders in the manner
provided in this Agreement.
2. Escrow Funds.
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2.1 Deposit; Proportionate Interest. In accordance with Section 1.9
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of the Purchase Agreement, on the Closing Date (which date shall be set forth in
a certificate of Buyer delivered to the Escrow Agent), Buyer, on behalf of the
▇▇▇▇▇▇▇ Stockholders, shall deposit with the Escrow Agent (a) cash in the
aggregate amount of $3,700,000 of which (i) $2,000,000 shall be held in a
designated separate account of Escrow Agent (inclusive of any earnings on the
same, the "▇▇▇▇▇▇▇ Escrow Fund") and (ii) $1,700,000 shall be held in a
designated separate account of Escrow Agent (inclusive of any earnings on the
same, the "General Escrow Fund") and (b) a number of shares of Buyer Common
Stock (rounded to the nearest whole share) equal to (i) $1,300,000 divided by
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(ii) the IPO Price (the "Escrowed Shares"). Each ▇▇▇▇▇▇▇ Stockholder shall
thereby contribute pro rata (A) to the ▇▇▇▇▇▇▇ Escrow Fund and the General
Escrow Fund an amount of cash, and (B) to the Escrowed Shares, a number of
shares of Buyer Common Stock, in each case, based upon the ratio that the number
of shares of common stock of ▇▇▇▇▇▇▇ Enterprises, Inc., par value $.01 per share
("▇▇▇▇▇▇▇ Common Stock") held by such ▇▇▇▇▇▇▇ Stockholder bears to the total
number of shares of ▇▇▇▇▇▇▇ Common Stock held by all ▇▇▇▇▇▇▇ Stockholders
immediately prior to the Closing. Such pro rata interest shall be referred to
as such ▇▇▇▇▇▇▇ Stockholder's "Proportionate Interest." Although the Escrowed
Shares shall be issued in the name of the Escrow Agent or its nominee, all
Escrowed Shares shall be held by the Escrow Agent for the benefit of the ▇▇▇▇▇▇▇
Stockholders. If during the term of this Agreement there is declared a stock
dividend or stock split, all securities thereby issuable with respect to the
Escrowed Shares shall be deposited hereunder and shall be deemed "Escrowed
Shares" for the purposes of this Agreement. If during the term of this
Agreement there is paid to the Escrow Agent any dividends in cash or other
property (other than securities) in respect of the Escrowed Shares, such
dividends shall be paid currently by the Escrow Agent to the ▇▇▇▇▇▇▇
Stockholders in accordance with each ▇▇▇▇▇▇▇ Stockholder's Proportionate
Interest. The Escrowed Shares shall be held for the benefit of the ▇▇▇▇▇▇▇
Stockholders and disbursed by the Escrow Agent in accordance with the terms of
this Agreement. The parties agree that for federal income tax purposes, the
▇▇▇▇▇▇▇ Stockholders will own the Escrowed Shares as of the Closing Date.
2.2 Voting of Escrowed Shares. The Escrowed Shares held by the
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Escrow Agent pursuant to this Agreement shall be deemed issued and outstanding,
shall appear as
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issued and outstanding on Buyer's balance sheet, and shall be legally
outstanding under applicable state law. With respect to any matter on which
stockholders of Buyer have a right to vote, the Escrow Agent, upon receipt of
written notices to such effect, on behalf of the ▇▇▇▇▇▇▇ Stockholders, acting at
the written direction of such stockholders, shall exercise the right to vote, or
not vote, all Escrowed Shares (or any portion thereof); provided, however, that
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the Escrow Agent shall at the expense of Buyer and the ▇▇▇▇▇▇▇ Stockholders
promptly forward, or cause to be forwarded, copies of any proxies, proxy
statements and other soliciting materials which it receives to the ▇▇▇▇▇▇▇
Stockholders, and shall vote the applicable portion of the Escrowed Shares in
accordance with any written instructions timely received by the Escrow Agent
from any ▇▇▇▇▇▇▇ Stockholder. Absent any such written instructions, the Escrow
Agent shall not vote any Escrowed Shares.
2.3 Amounts Earned on Escrow Funds; Tax Matters. The ▇▇▇▇▇▇▇ Escrow
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Fund and the General Escrow Fund shall be invested from time to time in Eligible
Investments (as defined in Section 15) pursuant to (and as specified in) the
written direction of the Stockholders' Representative received by the Escrow
Agent (which direction shall include maturity terms selected by the
Stockholders' Representative). The Escrow Agent shall be entitled to presume
that any maturity terms set forth in an investment instruction from the
Stockholders' Representative have been agreed to by Buyer. In no instance shall
the Escrow Agent have any liability for any loss on any such investment. All
amounts earned, paid or distributed with respect to the ▇▇▇▇▇▇▇ Escrow Fund or
the General Escrow Fund (whether interest, dividends or otherwise) shall become
a part of the ▇▇▇▇▇▇▇ Escrow Fund or the General Escrow Fund, as the case may
be, and shall be held hereunder upon the same terms as the original funds. The
parties agree that (i) for tax reporting purposes, and for any tax year, all
interest or other income earned from the investment of the ▇▇▇▇▇▇▇ Escrow Fund
and the General Escrow Fund shall be allocable to the ▇▇▇▇▇▇▇ Stockholders and
(ii) to the extent permitted by applicable law, including Section 468B(g) of the
Internal Revenue Code of 1986, as amended, the ▇▇▇▇▇▇▇ Stockholders will include
all amounts earned on the ▇▇▇▇▇▇▇ Escrow Fund or the General Escrow Fund in
their gross income for federal, state and local income tax (collectively,
"income tax") purposes and pay any income tax resulting therefrom. The parties
also agree for income tax purposes to treat all amounts distributed to the
▇▇▇▇▇▇▇ Stockholders from the ▇▇▇▇▇▇▇ Escrow Fund or the General Escrow Fund as
payments of purchase price received by the ▇▇▇▇▇▇▇ Stockholders on the date of
this Escrow Agreement. Each ▇▇▇▇▇▇▇ Stockholder agrees to provide the Escrow
Agent with a certified tax identification number by signing and returning a Form
W-9 to the Escrow Agent prior to the date on which interest or other income is
first earned by the ▇▇▇▇▇▇▇ Escrow Fund or the General Escrow Fund. The ▇▇▇▇▇▇▇
Stockholders understand that, in the event their tax identification numbers are
not certified to the Escrow Agent prior to the date on which interest or other
income is first earned on the ▇▇▇▇▇▇▇ Escrow Fund or the General Escrow Fund,
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 Fund or the General Escrow Fund.
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2.4 Escrowed Shares Nontransferable. The ▇▇▇▇▇▇▇ Stockholders'
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interest in this Agreement and the Escrowed Shares (prior to the disbursement
thereof) may not be transferred, except by operation of law, intestacy, devise
or descent.
3. Application of Escrow Funds. The ▇▇▇▇▇▇▇ Escrow Fund and the General
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Escrow Fund shall be held in escrow under the terms of this Agreement and
released by the Escrow Agent upon the following terms:
3.1 Joint Instructions. Upon joint written notice and instruction
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from Buyer and the Stockholders' Representative that the ▇▇▇▇▇▇▇ Escrow Fund or
the General Escrow Fund, or any portion thereof, should be disbursed, the Escrow
Agent shall make such disbursement in accordance with the directions set forth
in such joint written notice and instruction.
3.2 Indemnification Claims.
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3.2.1 General Escrow Fund; Escrowed Shares. If at any time, or
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from time to time, on or before the later of (i) the first (lst) anniversary of
the Closing Date and (ii) the date on which the Escrow Agent receives a joint
written notice signed by Buyer and the Stockholders' Representative certifying
that full and final settlements with the IRS and the DOR of all matters relating
to the Audits have been reached (such later date, the "General Fund Termination
Date"), Buyer delivers to the Escrow Agent written notice (an "Indemnification
Notice") and a copy thereof pursuant to Section 4.1 hereof asserting that Buyer
is entitled to indemnification under Section 10 of the Purchase Agreement, which
Indemnification Notice shall state the basis and amount of such indemnification
claim, then the Escrow Agent shall disburse to Buyer from the General Escrow
Fund, on the thirtieth (30th) day following receipt by the Escrow Agent of such
Indemnification Notice, an amount equal to the value of such claim (a "General
Escrow Payout"). Any General Escrow Payout shall be disbursed from the General
Escrow Fund; provided, however, in the event that the General Escrow Fund is not
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sufficient to pay the value of any such claim, the Escrow Agent shall distribute
the entire balance of the General Escrow Fund, if any, and, in addition, shall
distribute a number of the Escrowed Shares equal to (a) the amount of such claim
which was not paid from the General Escrow Fund) divided by (b) the IPO Price
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(subject to appropriate adjustment after the Closing Date for any stock split or
stock dividend with respect to Buyer Common Stock, or any combination or
reclassification of Buyer Common Stock into a greater or smaller number of
shares), as certified by Buyer. Notwithstanding the foregoing, each Stockholder
may elect to pay in cash, in accordance with its respective Proportionate
Interest, the portion of any such indemnification claim which is being
satisfied, in whole or in part, by the Escrowed Shares (each, an "Electing
Stockholder"). In the event of any such election, Buyer and the Stockholder
Representative shall provide joint written notice and instructions to the Escrow
Agent to deliver to each Electing Stockholder a number of the Escrowed Shares,
equal to (x) the amount of the cash payment that was made directly by such
Electing
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Stockholder in respect of such claim divided by (y) the IPO Price (subject to
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appropriate adjustment after the Closing Date for any stock split or stock
dividend with respect to Buyer Common Stock, or any combination or
reclassification of the Buyer Common Stock into a greater or smaller number of
shares), as certified by Buyer (the "Cash Option"). Notwithstanding the
foregoing, any Indemnification Notice asserting that Buyer is entitled to
indemnification under Section 10.2(f) of the Purchase Agreement must be
delivered pursuant to Section 3.2.2 of this Agreement.
3.2.2 ▇▇▇▇▇▇▇ Escrow Fund. If at any time, or from time to
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time, on or before the later of the date on which the Escrow Agent receives a
joint written notice signed by Buyer and the Stockholders' Representative
certifying that the ABD/▇▇▇▇▇▇▇ Dispute has been fully and finally settled or
otherwise disposed of (the "▇▇▇▇▇▇▇ Fund Termination Date"), Buyer delivers to
the Escrow Agent an Indemnification Notice and a copy thereof pursuant to
Section 4.1 hereof asserting that Buyer is entitled to indemnification under
Section 10.2(f) of the Purchase Agreement, which Indemnification Notice shall
state the basis and amount of such indemnification claim, then the Escrow Agent
shall disburse to Buyer from the ▇▇▇▇▇▇▇ Escrow Fund, on the thirtieth (30th)
day following receipt by the Escrow Agent of such Indemnification Notice, an
amount equal to the value of such claim (a "▇▇▇▇▇▇▇ Escrow Payout").
Notwithstanding the foregoing provisions of this Section 3.2, if prior to
the thirtieth (30th) day following receipt by the Escrow Agent of an
Indemnification Notice the Escrow Agent receives written notice from the
Stockholders' Representative that a dispute exists with respect to any such
indemnification claims (a "Dispute Notice"), which Dispute Notice shall state
the basis of such dispute and the portion of the General Escrow Payout or the
▇▇▇▇▇▇▇ Escrow Payout, if any, as to which no dispute exists, the Escrow Agent
shall continue to hold the portion of the General Escrow Payout or the ▇▇▇▇▇▇▇
Escrow Payout, as the case may be, that is in dispute (but shall disburse to
Buyer the portion of the General Escrow Payout or the ▇▇▇▇▇▇▇ Escrow Payout, as
the case may be, as to which no dispute exists) until directed otherwise
pursuant to Section 3.3 hereof.
3.3 Dispute of Indemnification Claim. If the Escrow Agent timely
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receives a Dispute Notice, the Escrow Agent shall retain the portion of the
▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and/or the Escrowed Shares, as the
case may be, in dispute until the first to occur of the following:
3.3.1 the date on which the Escrow Agent receives joint written
instructions from Buyer and the Stockholders' Representative, in which case the
Escrow Agent shall disburse the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund
and/or the Escrowed Shares, as the case may be (or applicable portions thereof)
as set forth in such joint written instructions;
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3.3.2 the date on which the Escrow Agent receives a final order
of a court of competent jurisdiction (the "Indemnity Award") resolving the
dispute, in which case the Escrow Agent shall disburse the ▇▇▇▇▇▇▇ Escrow Fund,
the General Escrow Fund and/or the Escrowed Shares, as the case may be (or
applicable portions thereof) as set forth in the Indemnity Award; or
3.3.3 the date which is four years and 364 days after the
Closing Date.
3.4 Automatic Disbursement on Termination Date.
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3.4.1 General Escrow Fund. If, on the General Fund Termination
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Date, there is any amount of the General Escrow Fund remaining undisbursed and
not subject to an Indemnification Notice received by the Escrow Agent, the
Escrow Agent shall disburse (a) (upon receipt of proper stock certificates from
Buyer's transfer agent) Escrowed Shares to the ▇▇▇▇▇▇▇ Stockholders in
accordance with each ▇▇▇▇▇▇▇ Stockholder's Proportionate Interest (rounded to
the nearest whole share) and (b) the General Escrow Fund, if any, to the
▇▇▇▇▇▇▇ Stockholders in accordance with each ▇▇▇▇▇▇▇ Stockholder's Proportionate
Interest (rounded to the nearest whole cent).
3.4.2 ▇▇▇▇▇▇▇ Escrow Fund. If, on the ▇▇▇▇▇▇▇ Fund Termination
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Date, there is any amount of the ▇▇▇▇▇▇▇ Escrow Fund remaining undisbursed and
not subject to an Indemnification Notice received by the Escrow Agent, the
Escrow Agent shall disburse such ▇▇▇▇▇▇▇ Escrow Fund to the ▇▇▇▇▇▇▇ Stockholders
in accordance with each ▇▇▇▇▇▇▇ Stockholder's Proportionate Interest (rounded to
the nearest whole cent).
3.5 Fractional Shares. No fractional shares shall be issued under
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this Agreement to any of the ▇▇▇▇▇▇▇ Stockholders. Any payment which would
result in the disbursement of a fractional share of Buyer Common Stock shall be
rounded to the nearest whole share.
3.6 Payment of Indemnification Claims; Valuation of Buyer Common
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Stock. Whenever this Agreement provides that the Escrow Agent may or shall
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disburse Escrowed Shares to Buyer, the Escrow Agent shall deliver to the
transfer agent for the Escrowed Shares the stock certificate representing such
Escrowed Shares and the transfer agent shall deliver to the Escrow Agent one
stock certificate representing the number of shares to be delivered to Buyer and
another stock certificate representing the balance of Escrowed Shares remaining.
The Escrow Agent shall then deliver to Buyer a stock certificate representing
the appropriate number of Escrowed Shares determined in accordance with the next
sentence. The number of Escrowed Shares disbursed to satisfy an indemnification
claim by Buyer shall be equal to the number of Escrowed Shares (rounded to the
nearest whole share) determined as follows: (i) the amount of Losses with
respect to which Buyer is entitled to indemnification under Section 10 of the
Purchase Agreement and as to which the Escrow Agent has received an
Indemnification
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Notice for which a Dispute Notice is not timely delivered or, if so delivered,
the dispute has been resolved in accordance with Section 3.3 hereof divided by
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(ii) the IPO Price, subject to appropriate adjustment after the Closing Date for
any stock split or stock dividend with respect to Buyer Common Stock, or any
combination or reclassification of Buyer Common Stock into a greater or smaller
number of shares, as certified by Buyer. Except as set forth in Section 3.2.1
with respect to the Cash Option, the ▇▇▇▇▇▇▇ Stockholders shall not have the
right to substitute other property for the Escrowed Shares with respect to the
satisfaction of any indemnification claims secured hereby.
4. Communications with Stockholders' Representative.
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4.1 Notice of Indemnification Claims. Buyer shall provide a copy of
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any Indemnification Notice to the Stockholders' Representative concurrently with
the delivery thereof to the Escrow Agent.
4.2 Additional Information Regarding Indemnification Claims. Within
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five (5) business days after receiving a request therefor from the Stockholders'
Representative, Buyer shall furnish the Stockholders' Representative with such
additional information relating to any claim made in an Indemnification Notice
as he may reasonably request from time to time for the purpose of evaluating the
merits of the claim for indemnification.
5. Scope of Undertaking. The Escrow Agent shall have no responsibility
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or obligation of any kind in connection with this Agreement, the ▇▇▇▇▇▇▇ Escrow
Fund, the General Escrow Fund and the Escrowed Shares, and shall not be required
to deliver the same or any part thereof or take any action with respect to any
matters that might arise in connection therewith, other than to receive, hold,
and make delivery of the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the
Escrowed Shares, as herein expressly provided or by reason of a judgment or
order of a court of competent jurisdiction.
6. Knowledge and Sufficiency of Documents. The Escrow Agent shall not be
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bound by or have any responsibility with respect to compliance with any
agreement between any of the other parties hereto, including the Purchase
Agreement, irrespective of whether the Escrow Agent has knowledge of the
existence of any such agreement or terms and provisions thereof, the Escrow
Agent's only duty, liability, and responsibility being to receive, hold and
deliver the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares
as herein provided. The Escrow Agent shall not be required in any way to
determine the validity or sufficiency, whether in form or in substance, of the
▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares or the
validity, sufficiency, genuineness or accuracy of any instrument, document,
certificate, statement or notice referred to in this Agreement or contemplated
hereby, or the adequacy of any security interest created hereunder; or the
identity or authority of the persons executing the same, and it shall be
sufficient if any writing purporting to be such instrument, document,
certificate statement or notice is delivered to the
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Escrow Agent and purports on its face to be correct in form and signed or
otherwise executed by the party or parties required to sign or execute the same
under this Agreement.
7. Right of Interpleader. Should any controversy arise between Buyer, on
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one hand, and the Stockholders' Representative, on the other, or any other
person, firm or entity, with respect to this Agreement, the ▇▇▇▇▇▇▇ Escrow Fund,
the General Escrow Fund and the Escrowed Shares, or any part thereof, or the
right of any party or other person to receive the ▇▇▇▇▇▇▇ Escrow Fund, the
General Escrow Fund and the Escrowed Shares, or should such parties fail to
designate another Escrow Agent as provided in Section 12 hereof, or if the
Escrow Agent should be in doubt as to what action to take, the Escrow Agent
shall have the right (but not the obligation) to (i) withhold delivery of the
▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares until the
controversy is resolved as provided in Section 3.3 hereof or (ii) institute a
▇▇▇▇ of interpleader in any court of competent jurisdiction to determine the
rights of the parties hereto (the right of the Escrow Agent to institute such
▇▇▇▇ of interpleader, however, shall not be deemed to modify the manner in which
the Escrow Agent is entitled to make disbursements of the ▇▇▇▇▇▇▇ Escrow Fund,
the General Escrow Fund and the Escrowed Shares as hereinabove set forth, other
than to tender the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed
Shares into the registry of such court). Should a ▇▇▇▇ of interpleader be
instituted, or should the Escrow Agent be threatened with litigation or become
involved in litigation in any manner whatsoever on account of this Agreement or
the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares, then
as between themselves and the Escrow Agent, Buyer and the ▇▇▇▇▇▇▇ Stockholders,
jointly and severally, hereby bind and obligate themselves, their successors,
heirs, executors and assigns to pay the Escrow Agent its reasonable attorneys'
fees and any and all other disbursements, expenses, losses, costs and damages of
the Escrow Agent in connection with or resulting from such threatened or actual
litigation. Notwithstanding the foregoing, as between themselves, Buyer and the
▇▇▇▇▇▇▇ Stockholders shall each pay one-half of all amounts payable to the
Escrow Agent pursuant to this Section 7.
8. Scope of Duties and Errors in Judgment. It is expressly understood
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and agreed that the Escrow Agent shall be under no duty or obligation to give
any notice, or to do or to omit the doing of any action or anything with respect
to the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares,
except to hold the same and to make disbursements in accordance with the terms
of this Agreement. Without limiting the generality of the foregoing, it is
acknowledged and agreed that (i) no implied duties shall be read into this
Agreement on the part of the Escrow Agent, and (ii) the Escrow Agent shall not
be obligated to take any legal or remedial action which might in its judgment
involve it in any expense or liability for which it has not been furnished
acceptable indemnification. The Escrow Agent, its directors, officers and
employees shall not be liable for any error in judgment or any act or steps
taken or permitted to be taken in good faith, or for any mistake of law or fact,
or for anything it may do or refrain from doing in connection herewith, except
for its own willful misconduct or gross negligence.
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9. Indemnity. As between themselves and the Escrow Agent, Buyer and the
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▇▇▇▇▇▇▇ Stockholders, jointly and severally, agree to indemnify the Escrow Agent
against and hold the Escrow Agent and its officers, employees and directors
harmless from any and all losses, costs, damages, expenses, claims, and
attorney's fees and expenses suffered or incurred by the Escrow Agent as a
result of, in connection with or arising from or out of the acts or omissions of
the Escrow Agent in performance of or pursuant to this Agreement, except such
acts or omissions as may result from the Escrow Agent's willful misconduct or
gross negligence. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damages.
Buyer and the ▇▇▇▇▇▇▇ Stockholders, jointly and severally, agree to assume
any and all obligations imposed now or hereafter by any applicable tax law with
respect to the distribution of the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund
and the Escrowed Shares under this Agreement, and to indemnify and hold the
Escrow Agent harmless from and against any taxes, additions for late payment,
interest, penalties and other expenses, that may be assessed against the Escrow
Agent in any such distribution or other activities under this Agreement. Buyer
and the Stockholders' Representative undertake 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, certifications and
governmental reporting in connection with its acting as Escrow Agent under this
Agreement. Buyer and the ▇▇▇▇▇▇▇ Stockholders, jointly and severally, agree to
indemnify and hold the Escrow Agent harmless from any liability on account of
taxes, assessments or other governmental charges, including without limitation
the withholding or deduction or the failure to withhold or deduct the same, and
any liability for failure to obtain proper certifications or to properly report
to governmental authorities, to which the Escrow Agent may be or become subject
in connection with or which arises out of this Agreement, including costs and
expenses (including reasonable legal fees and expenses), interest and penalties.
Notwithstanding the foregoing, as between themselves, Buyer and the ▇▇▇▇▇▇▇
Stockholders shall each pay one-half of all amounts payable to the Escrow Agent
pursuant to this Section 9.
10. Consultation with Legal Counsel. The Escrow Agent may consult with
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its in-house counsel or other counsel satisfactory to it in respect to questions
relating to its duties or responsibilities hereunder or otherwise in connection
herewith and shall not be liable for any action taken, suffered, or omitted by
the Escrow Agent in good faith upon the advice of such counsel. The Escrow
Agent may act through its officers, employees, agents and attorneys.
11. Reimbursement of Expenses of the Escrow Agent. The Escrow Agent shall
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be entitled to reimbursement from Buyer and the ▇▇▇▇▇▇▇ Stockholders of all its
reasonable costs and expenses, including reasonable fees and expenses of legal
counsel incurred by it in connection with the preparation, operating,
administration and enforcement of this Agreement.
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The Escrow Agent shall be entitled to reimbursement on demand for all expenses
incurred in connection with the administration of this Agreement or the escrow
created hereby 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. Notwithstanding the foregoing, as between themselves, Buyer and
the ▇▇▇▇▇▇▇ Stockholders shall each pay one-half of all amounts payable to the
Escrow Agent pursuant to this Section 11.
12. Resignation. The Escrow Agent may resign upon 10 days' prior written
-----------
notice to Buyer and the Stockholders' Representative, and upon written
instruction to Buyer and the Stockholders' Representative, the Escrow Agent
shall deliver the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed
Shares to any designated substitute Escrow Agent mutually agreeable to such
parties. If Buyer and the Stockholders' Representative fail to designate a
substitute Escrow Agent within 10 days, the Escrow Agent, in its sole discretion
and its sole option, either may (i) continue to hold the ▇▇▇▇▇▇▇ Escrow Fund,
the General Escrow Fund and the Escrowed Shares or (ii) institute a ▇▇▇▇ of
interpleader as contemplated by Section 7 hereof.
13. Compensation. Buyer and the ▇▇▇▇▇▇▇ Stockholders covenant and agree,
------------
jointly and severally, to pay to the Escrow Agent the fee determined by the
Escrow Agent, from time to time, to be applicable to this escrow and bear all
costs and expenses incurred by the Escrow Agent in connection therewith. The
Escrow Agent's fees, as in effect on the date hereof, are attached hereto as
Schedule A. Without altering or limiting the joint and several liability of
----------
Buyer and the ▇▇▇▇▇▇▇ Stockholders hereunder, as between themselves, Buyer and
the ▇▇▇▇▇▇▇ Stockholders agree that they shall each pay one-half of all amounts
payable to the Escrow Agent pursuant to this Section 13.
14. Responsibilities of the Stockholders' Representative.
----------------------------------------------------
14.1 General. The Stockholders' Representative has been designated
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by the ▇▇▇▇▇▇▇ Stockholders to represent the ▇▇▇▇▇▇▇ Stockholders with respect
to the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed Shares
pursuant to the terms of this Agreement. The duties of the Stockholders'
Representative hereunder shall be limited to the observance of the express
provisions of this Agreement. The Stockholders' Representative shall not be
subject to, or be obliged to recognize, any other agreement between the parties
hereto or directions or instructions not specifically set forth or provided for
herein or in the Purchase Agreement.
14.2 Reimbursement of Expenses of the Stockholders' Representative.
-------------------------------------------------------------
The ▇▇▇▇▇▇▇ Stockholders shall reimburse the Stockholders' Representative for
reasonable out-of-pocket expenses incurred by the Stockholders' Representative
in the performance of his duties hereunder. During the period the Escrow Find
is held in escrow under this Agreement, the
10
reimbursement provided under this Section 14.2 shall be from sources of funds
other than the ▇▇▇▇▇▇▇ Escrow Fund, the General Escrow Fund and the Escrowed
Shares.
14. Duties. The ▇▇▇▇▇▇▇ Stockholders hereby authorize and direct the
------
Stockholders' Representative to take all action necessary in connection with the
implementation of this Agreement on behalf of the ▇▇▇▇▇▇▇ Stockholders,
including, without limitation, giving and receiving all notices required to be
given under this Agreement, settling any dispute arising hereunder and executing
all such documents as the Stockholders' Representative shall deem necessary or
appropriate in connection with the transactions contemplated by this Agreement.
All decisions and actions by the Stockholders' Representative shall be binding
upon all of the ▇▇▇▇▇▇▇ Stockholders, and no ▇▇▇▇▇▇▇ Stockholder shall have the
right to object, dissent, protest or otherwise contest the same.
14. Reliance. By their execution of this Agreement, the ▇▇▇▇▇▇▇
--------
Stockholders agree that (i) Buyer and the Escrow Agent shall be able to rely
conclusively on the instructions and decisions of the Stockholders'
Representative as to any actions required or permitted to be taken by the
▇▇▇▇▇▇▇ Stockholders or the Stockholders' Representative hereunder, and no party
hereto shall have any cause of action against any other for any action taken in
reliance upon the instructions or decisions of the Stockholders' Representative,
(ii) all actions, decisions and instructions of the Stockholders' Representative
shall be conclusive and binding upon all of the ▇▇▇▇▇▇▇ Stockholders and no
▇▇▇▇▇▇▇ Stockholder shall have any cause of action against the Stockholders'
Representative or any other person for any action taken, decision made or
instruction given by the Stockholders' Representative under this Agreement,
except for gross negligence, breach of fiduciary duties owed to the ▇▇▇▇▇▇▇
Stockholders, fraud or willful breach of this Agreement by the Stockholders'
Representative and (iii) the provisions of this Section 14 are independent and
severable, shall constitute an irrevocable power of attorney, coupled with an
interest and surviving death, granted by the ▇▇▇▇▇▇▇ Stockholders to the
Stockholders' Representative and shall be binding upon the executors, heirs,
legal representatives and successors of each ▇▇▇▇▇▇▇ Stockholder.
15. Investment. Subject to Section 2.3 of this Agreement, the available
----------
uninvested portion of the ▇▇▇▇▇▇▇ Escrow Fund and the General Escrow Fund shall
be invested (and reinvested, as the case may be) from time to time by the Escrow
Agent in any of the following investments (collectively, "Eligible
Investments"):
(i) Short term obligations issued or guaranteed by The United States
of America or any agency or instrumentality thereof; or
(ii) Certificates of deposit of or interest bearing accounts with
national banks or corporations endowed with trust powers, including the
Escrow Agent, having capital and surplus in excess of $100,000,000; or
11
(iii) Insured Money Market Account short term investments with
national banks or corporations endowed with trust powers, including Escrow
Agent, having capital and surplus in excess of $100,000,000; or
(iv) Corporate bond funds with a rating of at least A+ or the
equivalent thereof by Standard & Poor's Corporation, at least A+ or thereof
by ▇▇▇▇▇'▇ Investors Service, Inc. or an equivalent rating by another
nationally recognized rating agency.
Investments pursuant to such investment instructions described above shall
in all instances be subject to availability (including any time-of-day
requirements). In no instance shall the Escrow Agent have any obligation to
provide investment advice of any kind. The Escrow Agent shall not be required
to invest any funds held hereunder except as expressly provided in written
instructions received from the Stockholders' Representative pursuant to Section
2 hereof, and shall not be obligated to pay interest on uninvested funds. All
amounts received by the Escrow Agent (and any credits to the ▇▇▇▇▇▇▇ Escrow Fund
and the General Escrow Fund) shall be conditional upon collection (and actual
receipt by the Escrow Agent of final payment). In no event shall the Escrow
Agent have any obligation to advance funds.
The Escrow Agent may be authorized at all times and from time to time to
liquidate any investment of the ▇▇▇▇▇▇▇ Escrow Fund and the General Escrow Fund
as may be necessary to provide available cash to make any release, disbursement
or payment called for under the terms of this Agreement. The Escrow Agent shall
have no responsibility or liability for any losses resulting from liquidation of
the ▇▇▇▇▇▇▇ Escrow Fund and the General Escrow Fund (such as liquidation prior
to maturity).
16. Change in the Stockholders' Representative. The Stockholders'
------------------------------------------
Representative may be removed and a successor named in accordance with the terms
of the Purchase Agreement. The Escrow Agent shall be promptly notified in
writing of any such change in the Stockholders' Representative.
17. Confidentiality. All of the information provided by the parties to
---------------
this Agreement pursuant to this Agreement shall be deemed "Confidential
Information" except to the extent that such information (i) was known to the
receiving party prior to its receipt from the disclosing party, (ii) is or
becomes part of the public domain through no fault of any party hereto or (iii)
is disclosed by a party hereto to a third party that is legally free to disclose
such information. Each of the parties to this Agreement agrees that, without
the express written consent of the other parties hereto, it will (i) not use the
Confidential Information for any purpose except as required to discharge its
responsibilities under this Agreement; (ii) use reasonable efforts to prevent
the disclosure or other dissemination of the Confidential Information in its
possession to any third party; and (iii) upon discharging its responsibilities
12
under this Agreement, return or destroy any document in its possession
containing any Confidential Information supplied by the other parties to this
Agreement.
18. Miscellaneous.
-------------
18.1 Complete Agreement. This Agreement and any documents referred
------------------
to herein (including, without limitation, the Purchase Agreement) or executed
contemporaneously herewith constitute the parties' entire agreement with respect
to the subject matter hereof and supersede all agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof. This Agreement shall be binding upon
the respective parties hereto and their heirs, executors, successors and
assigns.
18.2 Amendments and Waivers. This Agreement may be amended, modified
----------------------
and supplemented, and compliance with any provision hereof may be waived, only
by a writing signed by Buyer, the Escrow Agent and the Stockholders'
Representative.
18.3 Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of Buyer, the Escrow Agent, the ▇▇▇▇▇▇▇ Stockholders and the
Stockholders' Representative and their respective successors and permitted
assigns. Except as expressly provided in this Agreement, none of the parties
may assign any of his or its rights or obligations under this Agreement without
the prior written consent of the other parties; provided, however, that Buyer
-------- -------
may assign its rights under this Agreement in connection with a merger,
consolidation or sale of substantially all of the assets of Buyer.
18.4 Waivers Strictly Construed. With regard to any power, remedy or
--------------------------
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
18.5 Severability. In case any one or more of the provisions
------------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
18.6 Termination. Upon the final distribution of the ▇▇▇▇▇▇▇ Escrow
-----------
Fund, the General Escrow Fund and the Escrowed Shares pursuant to Section 3
hereof, this Agreement shall terminate. Anything contained herein to the
contrary notwithstanding, the provisions of Sections 7, 9 and 17 shall remain in
full force and effect following the termination of this Agreement.
13
18.7 Notices. All notices under this Agreement will be in writing
-------
and will be delivered by personal service or facsimile or certified mail (or, if
certified mail is not available, then by first class mail), postage prepaid, to
such address as may be designated from time to time by the relevant party, and
which will initially be as set forth below. Copies of all notices shall be given
to Buyer, the Stockholders' Representative and the Escrow Agent; provided,
however, that the failure to give copies of such notice shall not render the
notice invalid or unenforceable. Any notice sent by certified mail will be
deemed to have been given three (3) days after the date on which it is mailed.
Any notice transmitted by facsimile will be deemed given upon confirmation of
receipt. All other notices will be deemed given when received. No objection may
be made to the manner of delivery of any notice actually received in writing by
an authorized agent of a party. Notices will be addressed as follows or to such
other address as the party to whom the same is directed will have specified in
conformity with the foregoing:
(a) If to Buyer:
▇▇▇▇▇▇▇ American Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Stockholders' Representative:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
14
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Escrow Agent:
State Street Bank and Trust Company
Financial Markets Group
Corporate Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Peabody & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
18.8 Governing Law. The rights and liabilities of the parties under
-------------
this Agreement shall be governed by the laws of The Commonwealth of
Massachusetts, regardless of the choice of laws provisions of such state or any
other jurisdiction. Any litigation between the parties shall be conducted
exclusively in the state or federal courts of Massachusetts, and each party
consents to the exclusive jurisdiction of such courts for such purposes.
18.9 Headings. The headings in this Agreement are inserted only as
--------
a matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
18.10 Force Majeure. Neither Buyer, the Stockholders' Representative
-------------
nor the Escrow Agent shall be responsible for delays or failures in performance
resulting from acts beyond their 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, earthquakes or other disasters.
15
18.11 Reproduction of Documents. This Agreement and all documents
-------------------------
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and 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.
18.12 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[Remainder of page intentionally left blank]
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
▇▇▇▇▇▇▇ AMERICAN CORPORATION
________________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
STATE STREET BANK AND TRUST COMPANY,
as Escrow Agent
By:_____________________________________________
Name:
Title:
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Stockholders' Representative
▇▇▇▇▇▇▇ STOCKHOLDERS:
________________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1984 REVOCABLE
TRUST
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1991 CHARITABLE
REMAINDER UNITRUST
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇ ENTERPRISES, INC. EMPLOYEE
STOCK OWNERSHIP TRUST
________________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, as Trustee
and not individually
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Schedule A
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ESCROW AGENT FEES
-----------------
