Escrow Agreement by and among BPO Management Services, Inc., Vision Opportunity Capital Management, LLC and Dated as of June 11, 2007
by
and
among
BPO
Management Services, Inc.,
Vision
Opportunity Capital Management, LLC
and
U.S.
Bank
National Association
Dated
as
of June 11, 2007
THIS
ESCROW AGREEMENT (this "Agreement") is dated as of the 11th day
of June, 2007, by and among BPO Management Services, Inc., a Delaware
corporation (the "Company"), Vision Opportunity Capital Management, LLC, a
Delaware limited liability company ("Vision"), and U.S. Bank National
Association, a national banking association (the "Escrow Agent"), as escrow
agent. Vision, the Purchasers (as defined in the Purchase Agreement) and the
Company are sometimes referred to herein, collectively, as the "Interested
Parties." Capitalized terms used but not defined herein shall have the meanings
set forth in the Purchase Agreement (as defined below).
WHEREAS,
the Purchasers will be purchasing from the Company shares of Series D
convertible preferred stock (the “Preferred Shares”), convertible into shares of
the Company’s common stock, par value $0.01 per share, and Series A Warrants,
Series B Warrants, Series J Warrants, Series C Warrants and Series D Warrants
(all such warrants and the Preferred Shares, the “Securities”) pursuant to a
Series D Convertible Preferred Stock Purchase Agreement dated as of June 12,
2007, by and among the Company and the Purchasers (the “Purchase Agreement”),
pursuant to which a portion of the Purchase Price has been withheld and is
to be
deposited in escrow as a source of payment for the Acquisitions pursuant to
Section 3.11 of the Purchase Agreement; and
WHEREAS,
Vision wishes to engage the Escrow Agent to act, and the Escrow Agent is willing
to act, as escrow agent hereunder and, in that capacity, to hold, administer
and
distribute the amounts deposited in escrow hereunder in accordance with, and
subject to, the terms of this Agreement;
NOW
THEREFORE, for valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
|
Section
1.
|
Deposit
of Escrow Funds.
|
On
the
date hereof, the Purchasers shall deposit with the Escrow Agent in immediately
available funds the amount of $14,000,000 (the "Escrow Funds," and together
with
any investment income or proceeds received by the Escrow Agent from the
investment thereof from time to time pursuant to Section 3 below, collectively,
the "Escrow Property"), and the Escrow Agent agrees to hold the Escrow Property
in an account established with the Escrow Agent (the "Escrow Account"), and
to
administer the Escrow Property in accordance with the terms of this
Agreement.
|
Section
2.
|
Release
from Escrow.
|
The
Escrow Property shall be released upon Closing in accordance with the
Disbursement Instructions attached hereto as Exhibit A.
|
Section
3.
|
Investment
of Funds.
|
(a) The
Escrow Agent shall invest the Escrow Property in the Escrow Agent's Insured
Money Market Account ("IMMA"). The Escrow Property and all investments thereof
shall be held and, if registrable, shall be registered in the name of the Escrow
Agent under "Escrow Agreement dated June 11, 2007 by and among BPO
Management Services, Inc., Vision Opportunity Capital Management, LLC, and
U.S.
Bank National Association, as escrow agent."
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(b) All
earnings received from the investment of the Escrow Funds shall be credited
to
the Company. The Escrow Agent shall have no liability for any investment losses,
including without limitation any market loss on any investment liquidated prior
to maturity in order to make a payment required hereunder.
(c) The
Interested Parties agree that, for tax reporting purposes, all interest and
other income earned from the investment of the Escrow Funds in any tax year
shall be reported by the Company.
(d) Each
of
the Interested Parties agrees to provide the Escrow Agent with a certified
tax
identification number by signing and returning a Form W-9 (or Form W-8
BEN, in case of non-U.S. persons) to the Escrow Agent upon the execution and
delivery of this Agreement. The Interested Parties understand that, in the
event
their tax identification numbers are not certified to the Escrow Agent, the
Internal Revenue Code, as amended from time to time, may require withholding
of
a portion of any interest or other income earned on the investment from the
Escrow Funds. The Interested Parties agree to instruct the Escrow Agent in
writing with respect to the Escrow Agent's responsibility for withholding and
other taxes, assessments or other governmental charges, and to instruct the
Escrow Agent with respect to any certifications and governmental reporting
that
may be required under any laws or regulations that may be applicable in
connection with its acting as Escrow Agent under this Agreement.
|
Section
4.
|
Intentionally
Omitted.
|
|
Section
5.
|
Concerning
the Escrow Agent.
|
(a) Each
Interested Party acknowledges and agrees that the Escrow Agent (i) shall
not be responsible for any of the agreements referred to or described herein
(including, without limitation the Purchase Agreement), or for determining
or
compelling compliance therewith, and shall not otherwise be bound thereby,
(ii) shall be obligated only for the performance of such duties as are
expressly and specifically set forth in this Agreement on its part to be
performed, each of which is ministerial (and shall not be construed to be
fiduciary) in nature, and no implied duties or obligations of any kind shall
be
read into this Agreement against or on the part of the Escrow Agent,
(iii) shall not be obligated to take any legal or other action hereunder
which might in its judgment involve or cause it to incur any expense or
liability unless it shall have been furnished with acceptable indemnification,
(iv) may rely on and shall be protected in acting or refraining from acting
upon any written notice, instruction (including, without limitation, wire
transfer instructions, whether incorporated herein or provided in a separate
written instruction), instrument, statement, certificate, request or other
document furnished to it hereunder and believed by it in good faith to be
genuine and to have been signed or presented by the proper person, and shall
have no responsibility or duty to make inquiry as to or to determine the
genuineness, accuracy or validity thereof (or any signature appearing thereon),
or of the authority of the person signing or presenting the same, and (v) may
consult counsel satisfactory to it, including in-house counsel, and the opinion
or advice of such counsel in any instance shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or advice
of
such counsel.
(b) The
Escrow Agent shall not be liable to anyone for any action taken or omitted
to be
taken by it hereunder except in the case of the Escrow Agent's gross negligence
or willful misconduct in breach of the terms of this Agreement. In no event
shall the Escrow Agent be liable for indirect, punitive, special or
consequential damage or loss (including but not limited
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to
lost
profits) whatsoever, even if the Escrow Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action, unless
due to the Escrow Agent's willful misconduct or fraud.
(c) The
Escrow Agent shall have no more or less responsibility or liability on account
of any action or omission of any book-entry depository, securities intermediary
or other subescrow agent employed by the Escrow Agent than any such book-entry
depository, securities intermediary or other subescrow agent has to the Escrow
Agent, except to the extent that such action or omission of any book-entry
depository, securities intermediary or other subescrow agent was caused by
the
Escrow Agent's own gross negligence or willful misconduct in breach of this
Agreement.
(d) The
Escrow Agent is hereby authorized, in making or disposing of any investment
permitted by this Agreement, to deal with itself (in its individual capacity)
or
with any one or more of its affiliates, whether it or such affiliate is acting
as a subagent of the Escrow Agent or for any third person or dealing as
principal for its own account.
(e) Notwithstanding
any term appearing in this Agreement to the contrary, in no instance shall
the
Escrow Agent be required or obligated to distribute any Escrow Property (or
take
other action that may be called for hereunder to be taken by the Escrow Agent)
sooner than two (2) Business Days after (i) it has received the
applicable documents required under this Agreement in good form, or
(ii) passage of the applicable time period (or both, as applicable under
the terms of this Agreement), as the case may be.
|
Section
6.
|
Compensation,
Expense Reimbursement and
Indemnification.
|
(a) The
Company agrees to pay the Escrow Agent's fees and expenses hereunder in
accordance with the fee schedule attached hereto as Schedule 1
and made
a part hereof, which may be subject to change hereafter by the Escrow Agent
on
an annual basis.
(b) The
Company agrees to reimburse the Escrow Agent on demand for all costs and
expenses incurred in connection with the administration of this Agreement or
the
escrow created hereby or the performance or observance of its duties hereunder
which are in excess of its compensation for normal services hereunder, including
without limitation, payment of any legal fees and expenses incurred by the
Escrow Agent in connection with resolution of any claim by any party
hereunder.
(c) The
Company agrees to indemnify the Escrow Agent (and its directors, officers and
employees) and hold it (and such directors, officers and employees) harmless
from and against any loss, liability, damage, cost and expense of any nature
incurred by the Escrow Agent arising out of or in connection with this Agreement
or with the administration of its duties hereunder, including but not limited
to
attorney's fees and other costs and expenses of defending or preparing to defend
against any claim of liability (collectively, "Losses"), unless and except
to
the extent such Losses are caused by the Escrow Agent's gross negligence, or
willful misconduct.
(d) The
foregoing indemnification and agreement to hold harmless shall survive the
termination of this Agreement.
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| Section 7. |
Termination.
|
This
Agreement, and the escrow created hereunder, shall terminate upon the release
and/or distribution of all amounts comprising the Escrow Property, as provided
herein, and the fulfillment of all of the Escrow Agent's obligations
hereunder.
|
Section
8.
|
Tax
Indemnification.
|
The
Company agrees (i) to assume any and all obligations imposed now or hereafter
by
any applicable tax law with respect to any payment or distribution of the Escrow
Property or performance of other activities under this Agreement, (ii) to
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for withholding and other taxes, assessments or other
governmental charges, and to instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under any laws
or
regulations that may be applicable in connection with its acting as Escrow
Agent
under this Agreement, and (iii) to indemnify and hold the Escrow Agent
harmless from any liability or obligation on account of taxes, assessments,
additions for late payment, interest, penalties, expenses and other governmental
charges that may be assessed or asserted against the Escrow Agent in connection
with, on account of or relating to the Escrow Property, the management
established hereby, any payment or distribution of or from the Escrow Property
pursuant to the terms hereof or other activities performed under the terms
of
this Agreement, including without limitation any liability for the withholding
or deduction of (or the failure to withhold or deduct) the same, and any
liability for failure to obtain proper certifications or to report properly
to
governmental authorities in connection with this Agreement, including costs
and
expenses (including reasonable legal fees and expenses), interest and penalties.
The foregoing indemnification and agreement to hold harmless shall survive
the
termination of this Agreement.
|
Section
9.
|
Resignation.
|
The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving
thirty (30) days' prior written notice of resignation to each of the
Interested Parties. Prior to the effective date of the resignation as specified
in such notice, Vision will issue to the Escrow Agent a written instruction
authorizing redelivery of the Escrow Property to a bank or trust company that
it
selects as successor to the Escrow Agent hereunder.
|
Section
10.
|
Dispute
Resolution.
|
It
is
understood and agreed that, should any dispute arise with respect to the
delivery, ownership, right of possession, and/or disposition of the Escrow
Property, or should any claim be made upon the Escrow Agent or the Escrow
Property by a third party, the Escrow Agent upon receipt of notice of such
dispute or claim is authorized and shall be entitled (at its sole option and
election) to retain in its possession without liability to anyone, all or any
of
the Escrow Property until such dispute shall have been settled either by the
mutual written agreement of the parties involved or by a final order, decree
or
judgment of a court of competent jurisdiction in the United States of America,
the time for perfection of an appeal of such order, decree or judgment having
expired. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to the Escrow
Property.
-5-
| Section 11. |
Governing
Law; Submission to Jurisdiction.
|
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California applicable to agreements made and to be performed entirely
within such state. Each party hereby irrevocably and unconditionally consents
to
submit to the exclusive jurisdiction of the courts of the State of California
or
the courts of the United States of America located in Los Angeles for any
actions, suits, or proceedings arising out of or relating to this Agreement
(and
the parties agree not to commence any action, suit, or proceeding relating
thereto except in such courts), and further agrees that service of any process,
summons, notice, or document by U.S. registered mail to the respective addresses
set forth above shall be effective service of process for any action, suit,
or
proceeding brought against the parties in any such court. Each party hereby
irrevocably and unconditionally waives any objection to the laying of venue
of
any action, suit, or proceeding arising out of this Agreement, in the courts
of
the State of California or the United States of America located in Los Angeles,
and hereby further irrevocably and unconditionally waives its right and agrees
not to plead or claim in any such court that any such action, suit, or
proceeding brought in any such court has been brought in an inconvenient
forum.
|
Section
12.
|
Waiver
of Jury Trial.
|
THE
ESCROW AGENT AND THE INTERESTED PARTIES HEREBY WAIVE A TRIAL BY JURY OF ANY
AND
ALL ISSUES ARISING IN ANY ACTION OR PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS
OR ASSIGNS, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF ITS PROVISIONS
OR ANY NEGOTIATIONS IN CONNECTION HEREWITH.
|
Section
13.
|
Force
Majeure.
|
The
Escrow Agent shall not be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other
disasters.
|
Section
14.
|
Notices;
Wiring Instructions.
|
(a) Notice
Addresses.
Any
notice permitted or required hereunder shall be in writing, and shall be sent
(i) by personal delivery, overnight delivery by a recognized courier or
delivery service, or (ii) mailed by registered or certified mail, return
receipt requested, postage prepaid, or (iii) by confirmed telecopy
accompanied by mailing of the original on the same day by first class mail,
postage prepaid, in each case the parties at their address set forth below
(or
to such other address as any such party may hereafter designate by written
notice to the other parties).
If
to
Vision:
Vision
Opportunity Capital Management, LLC
00
X.
00xx Xxxxxx, 0xx xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx Xxxxxxxx and Antti Uusiheimala
-6-
With
a
copy to (which copy shall not constitute notice):
Sheppard,
Mullin, Xxxxxxx & Hampton LLP
000
Xxxxx
Xxxx Xxxxxx
Xxxxx-Xxxxxx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to The
Company:
BPO
Management Services, Inc.
0000
X.
Xxxxxxx, Xxx 000
Xxxxxxx,
XX 00000
Attention:
Chief Executive Officer
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
With
a
copy to (which copy shall not constitute notice):
Xxxxx
Xxxx LLP
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxx, Esq.
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
and
Xxxxxxx
& Xxxxxx
00000
XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxx, Esq.
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
If
to
Escrow Agent:
U.S.
Bank
National Association
Corporate
Trust Services
000
Xxxx
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxx X. Xxxxxxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Notwithstanding
the foregoing, notices addressed to the Escrow Agent shall be effective only
upon receipt. If any notice or document is required to be delivered to the
Escrow Agent and
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any
other
person, the Escrow Agent may assume without inquiry that each notice or document
was received by such other person when it is received by the Escrow
Agent.
(b) Wiring
Instructions.
Any
funds to be paid by the Escrow Agent to the Company, or to the Purchasers,
or to
be paid to the Escrow Agent hereunder, shall be sent by wire transfer pursuant
to such instruction as may have been given in advance and in writing to or
by
the Company, Vision or the Escrow Agent, as applicable.
|
Section
15.
|
Miscellaneous.
|
(a) Binding
Effect; Successors.
This
Agreement shall be binding upon the respective parties hereto and their heirs,
executors, successors and assigns. If the Escrow Agent consolidates, merges
or
converts into, or transfers all or substantially all of its corporate trust
business (including the escrow contemplated by this Agreement) to, another
corporation, the successor corporation without any further act shall be the
successor Escrow Agent.
(b) Modifications.
This
Agreement may not be altered or modified without the express written consent
of
the parties hereto. No course of conduct shall constitute a waiver of any of
the
terms and conditions of this Escrow Agreement, unless such waiver is specified
in writing, and then only to the extent so specified. A waiver of any of the
terms and conditions of this Escrow Agreement on one occasion shall not
constitute a waiver of the other terms of this Escrow Agreement, or of such
terms and conditions on any other occasion. Notwithstanding any other provision
hereof, consent to an alteration or modification of this Agreement may not
be
signed by means of an e-mail address.
(c) Reproduction
of Documents.
This
Agreement and all documents relating thereto, 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.
(d) Counterparts
and Facsimile Execution.
This
Escrow Agreement may be executed in several counterparts, each of which shall
be
deemed to be one and the same instrument. The exchange of copies of this
Agreement and of signature pages by facsimile transmission shall constitute
effective execution and delivery of this Agreement as to the parties and may
be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes.
(e) Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
(e) U.S.A.
Patriot Act Compliance Information.
Vision,
the Purchasers and the Company each shall provide to the Escrow Agent such
information as the Escrow Agent may reasonably require to permit the Escrow
Agent to comply with its obligations under the federal U.S.A. Patriot Act.
The Escrow Agent shall not credit any amount of interest or
investment
-8-
proceeds
earned on the Escrow Funds, or make any payment of all or a portion of the
Escrow Funds, to any person unless and until such person has provided to the
Escrow Agent such documents as the Escrow Agent may require to permit the Escrow
Agent to comply with its obligations under such Act.
[Signature
Pages to Follow]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
11th day of June, 2007.
|
BPO
Management Services, Inc.
By:
/s/ Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
Chairman and CEO
|
|
|
ESCROW
AGENT:
|
|
|
U.S.
Bank National Association, as Escrow Agent
|
|
|
By:
/s/ Xxxx Xxxxxxxxxx
Name:
Xxxx Xxxxxxxxxx
Title:
Vice President
|
[Company
and Escrow Agent Signature Page to Escrow Agreement]
-10-
Vision
Opportunity Capital Management, LLC
By:
/s/ Xxxx Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Managing Manager
[Purchaser
Signature Page to Escrow Agreement]
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SCHEDULE
1
Initial
Fees
|
The
acceptance fee includes the administrative review of all documents,
initial set-up of the account, and other reasonably required services
up
to and including the closing. This is a one-time fee, payable at
closing.
U.S.
Bank Corporate Trust Services reserve the right to refer any and
all
escrow documents for legal review before execution. Legal fees (billed
on
an hourly basis) and expenses for this service will be billed to,
and paid
by, the customer. If appropriate and upon request by the customer,
U.S.
Bank Corporate Trust Service will provide advance estimates of these
legal
fees.
|
$1,000.00
|
|
Counsel
Fee
Payable
at closing, this Includes fees and expenses of legal counsel as well
as
the rendering of standard legal opinion, if required. Xxxxxx X. Xxxxx,
Esq. of Xxxxxxx & Xxxxxxx LLP will serve as Trustee’s
counsel.
|
At
Cost
|
|
Escrow
Agent
Annual
Administration fee for performance of the routine duties of the escrow
agent associated with the management of the account. Administration
Fees
are payable in advance
|
$3,000.00
|
|
Incidental
Expenses
Charge
for miscellaneous expenses such as fax; messenger service, overnight
mail,
telephone, stationary and postage. This charge is a percent of total
Administration Fees charged in advance
|
0%
|
Direct
Out of Pocket Expenses
| Reimbursement of expenses associated with the performance of our duties, including but not limited to publications, legal counsel after the initial close, travel expenses and filing fees. |
At
Cost
|
|
Extraordinary
Services
| Extraordinary services are duties or responsibilities of an unusual nature, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the service and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect. Examples include:taxpayer ID number solicitationclaim distributionsexecution of amendments/supplement agreements | ||
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EXHIBIT
A
DISBURSEMENT
INSTRUCTIONS
