FORM OF ESCROW AGREEMENT
EXHIBIT 10.2
FORM OF
ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into as of
_____
_____, 2010 (the “Effective Date”), by and among United Western Bank, a federal savings bank
(“Buyer”), United Western Bancorp, Inc., a Colorado corporation and the sole stockholder of
Buyer (“Parent”), Legent Group, LLC, a Delaware limited liability company
(“Member”), and [Xxxxx Fargo Bank, National Association], as escrow agent (the “Escrow
Agent”).
WHEREAS, Buyer, Parent, Member and Xxxxx X. Xxxxxx, an individual and the controlling member
of Member (“Duques”), have entered into that certain Purchase Agreement, dated as of June
9, 2010 (the “Purchase Agreement”), pursuant to which, among other things, Buyer is
purchasing from Member all of the issued and outstanding units of membership interest of Legent
Clearing LLC, a Delaware limited liability company;
WHEREAS, the Purchase Agreement contemplates that Buyer will deposit a portion of the Cash
Purchase Price with the Escrow Agent in order to secure certain obligations of Member and Duques
under the Purchase Agreement, such amount to be held by the Escrow Agent in accordance with the
terms and conditions hereof; and
WHEREAS, capitalized terms used herein which are not otherwise defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
ESTABLISHMENT OF ESCROW
ESTABLISHMENT OF ESCROW
1.1 Upon execution hereof, Buyer hereby delivers to the Escrow Agent the amount of $6,000,000
(such amount, together with any interest, dividends and other income earned thereon, the
“Escrowed Funds”), in immediately available funds. The Escrow Agent hereby acknowledges
receipt of the Escrowed Funds.
1.2 Buyer, Parent and Member hereby appoint the Escrow Agent, and the Escrow Agent hereby
agrees to serve, as the escrow agent subject to the terms and conditions set forth herein. The
Escrow Agent agrees to hold the Escrowed Funds in a separate and distinct account (the “Escrow
Account”) in accordance with the terms and conditions of this Agreement. The Escrow Agent
shall not distribute or release any of the Escrowed Funds except in accordance with the express
terms and conditions of this Agreement.
ARTICLE II
INVESTMENT OF ESCROWED FUNDS
INVESTMENT OF ESCROWED FUNDS
2.1 The Escrow Agent shall accept, hold and safeguard the Escrowed Funds during the term of
this Agreement and shall invest the Escrowed Funds in [insert title of initial account/investment],
or in such other investment as Buyer and Member shall jointly instruct the Escrow Agent in writing
(the [insert title of initial account/investment] or such other investment, the “Permitted
Investment”). All income earned on the Escrowed Funds will accrue for the benefit of Member.
2.2 As and when any amount is needed for a distribution under this Agreement, the Escrow Agent
shall cause a sufficient amount of the Permitted Investment to be converted into cash. The Escrow
Agent shall not be liable for any loss or liability arising in respect of the Permitted Investment
except to the extent that such loss or liability arose from the Escrow Agent’s gross negligence,
willful misconduct or breach of this Agreement. The Escrow Agent is hereby authorized, in making
or disposing of any Permitted Investment, to deal with itself (in its individual capacity) or with
any one or more of its Affiliates, whether it or any such Affiliate is acting as agent of the
Escrow Agent or for any third person or dealing as principal for its own account.
2.3 The Escrow Agent shall mail to Buyer and Member a written accounting of all Permitted
Investments and other transactions relating to the Escrowed Funds not less frequently than
quarterly.
ARTICLE III
NON-CLAIM DISBURSEMENTS
NON-CLAIM DISBURSEMENTS
3.1 After the Final Cash Purchase Price is finally determined pursuant to Section 2.3 of the
Purchase Agreement, Buyer and Member shall, if the Final Cash Purchase Price is less than the
Estimated Cash Purchase Price, deliver to the Escrow Agent a joint written instruction authorizing
and directing the Escrow Agent to disburse to Buyer from the Escrowed Funds the amount set forth in
such instruction. As soon as practicable following receipt of such joint written instruction, but
in any event no later than five (5) business days thereafter, the Escrow
Agent shall disburse to Buyer, by wire transfer of immediately available funds, the amount set
forth therein; provided, however, that if the amount set forth therein exceeds
$350,000, then Member shall immediately remit to the Escrow Agent, in replenishment of a portion of
the Escrowed Funds disbursed to Buyer pursuant to this Section 3.1, cash in the amount by
which the amount set forth in such joint written instruction exceeds $350,000, in immediately
available funds, and the Escrow Agent shall deliver to Buyer and Member an acknowledgement of its
receipt of such payment from Member as promptly as practicable after receipt thereof.
3.2 On the 15-month anniversary of the Effective Date (the “First Release Date”),
Buyer and Member shall deliver to the Escrow Agent a joint written instruction authorizing and
directing the Escrow Agent to disburse to Member from the Escrowed Funds an amount equal to: (a)
$1,000,000 minus (b) the sum of (i) all Escrowed Funds disbursed to Buyer on or prior to
the First Release Date pursuant to Article IV hereof plus (ii) all Escrowed Funds
reserved as of the First Release Date in connection with any Claim made pursuant to Article
IV hereof that is pending, unresolved or unpaid as of the First Release Date. As soon as
practicable following receipt of such joint written instruction, but in any event no later than
five (5) business days thereafter, the Escrow Agent shall disburse to Member, by wire transfer of
immediately available funds, the amount set forth therein.
2
3.3 On the second anniversary of the Effective Date (such second anniversary, the “Second
Release Date”), Buyer and Member shall deliver to the Escrow Agent a joint written instruction
authorizing and directing the Escrow Agent to disburse to Member from the Escrowed Funds an amount
equal to: (a) the remaining amount of the Escrowed Funds (including all income earned thereon)
minus (b) the sum of (i) an amount (the “Litigation Claims Amount”) determined by
Xxx X. Xxxxxx and Xxxxxxx X. XxXxxxxxx (or their respective successors in office if either of them
is no longer employed by Buyer or Parent at such time), acting in good faith but otherwise in their
sole discretion, that represents such individuals’ best estimate of the total amount for which
Member may be liable pursuant to Section 7.2 of the Purchase Agreement with respect to all
Litigation Claims existing as of the Second Release Date plus (ii) all Escrowed Funds
reserved as of the Second Release Date in connection with any Claim (other than Litigation Claims)
made pursuant to Article IV hereof that is pending, unresolved or unpaid as of the Second
Release Date (collectively, the “Final Pending Claims”). As soon as practicable following
receipt of such joint written instruction, but in any event no later than five (5) business days
thereafter, the Escrow Agent shall disburse to Member, by wire transfer of immediately available
funds, the amount set forth therein.
ARTICLE IV
CLAIM DISBURSEMENTS; DISPUTE OF CLAIMS
CLAIM DISBURSEMENTS; DISPUTE OF CLAIMS
4.1 If, and to the extent that, Buyer or Parent in good faith determines that Member or Duques
is under an indemnification obligation pursuant to Section 7.1 or 7.2 of the Purchase Agreement,
Buyer or Parent, as the case may be, shall deliver to each of the Escrow Agent and Member a notice
(each, a “Claim Notice”) of such claim (each, a “Claim”) against the Escrow
Account, stating the amount of such Claim and setting forth a brief description with reasonable
specificity of the facts upon which such Claim is based and a reference to the provision or
provisions of the Purchase Agreement under which such Claim is being made. Buyer or Parent, as the
case may be, shall also deliver to the Escrow Agent written proof of delivery to Member
of a copy of such Claim Notice (which proof may consist of the facsimile confirmation if sent
by facsimile, the signed receipt if delivered by hand or a photocopy of the overnight courier
receipt). In the event that a Claim Notice relates to a Litigation Claim, such Claim Notice shall
be accompanied by documentation showing with reasonable specificity the basis for the amount
specified in such Claim Notice. Unless the Escrow Agent receives a timely Objection Notice from
Member pursuant to Section 4.2(a) hereof, the Escrow Agent shall disburse to Buyer or
Parent, as the case may be, by wire transfer of immediately available funds, a portion of the
Escrowed Funds equal to the amount specified in the Claim Notice. If the Escrow Agent does receive
a timely Objection Notice from Member pursuant to Section 4.2(a) hereof, the Escrow Agent
shall disburse to Buyer or Parent, as the case may be, by wire transfer of immediately available
funds, a portion of the Escrowed Funds equal to the portion, if any, of the amount specified in the
Claim Notice that is not being contested by Member pursuant to the Objection Notice.
3
4.2 (a) Member shall have the right to dispute any Claim against the Escrow Account within 15
business days following receipt by Member of a copy of a Claim Notice by delivering to the Escrow
Agent and Buyer or Parent, as the case may be, written notice (an “Objection Notice”) that
Member disputes the matter or matters underlying such Claim Notice either with respect to the
validity or the amount of the Claim (or both); provided, however, that Member shall
not be entitled to dispute any Litigation Claim if the applicable Claim Notice is accompanied by
documentation showing with reasonable specificity the basis for the amount specified in such Claim
Notice. Each Objection Notice shall include the basis of the objection and a description of the
portion of the Claim that is being contested by Member.
(b) Upon timely receipt of an Objection Notice, the Escrow Agent shall not make any delivery
of the contested portion of the applicable Claim, except upon receipt of (i) a joint written
instruction from Buyer or Parent, as the case may be, and Member authorizing the release to Buyer
or Parent, as the case may be, of the contested portion of the applicable Claim or (ii) a Final
Order (as defined below); provided, however, that the Escrow Agent shall reserve a
portion of the Escrowed Funds equal to the amount of the contested portion of the applicable Claim
until such time as it receives such joint written instruction or Final Order. As soon as
practicable following receipt of such joint written instruction or Final Order, but in any event no
later than five (5) business days thereafter, the Escrow Agent shall disburse, by wire transfer of
immediately available funds, the amount or amounts set forth therein to the recipient or recipients
set forth therein. Buyer, Parent and Member agree to negotiate in good faith to resolve as
promptly as practicable any Claim or portion thereof that is the subject of an Objection Notice.
4.3 (a) For purposes of this Agreement, a “Final Order” shall mean a final judgment
of a court of competent jurisdiction having the authority to determine the amount of, and liability
with respect to, any Claim, and the denial of, or expiration of all rights to, an appeal related
thereto.
(b) The Escrow Agent shall be entitled to receive and may conclusively rely upon an opinion of
counsel from Buyer’s, Parent’s or Member’s respective legal counsel accompanying each Final Order,
to the effect that the relevant court had authority to determine the amount and liability with
respect to the Claim and that such court has rendered a final judgment for which all
related rights to appeal have been denied or expired. In the event that Buyer’s, Parent’s or
Member’s respective legal counsel disagree on the existence of a Final Order, the Escrow Agent
shall be entitled to rely upon the decision of a court of competent jurisdiction.
ARTICLE V
COMPENSATION; EXPENSES
COMPENSATION; EXPENSES
In consideration for its services as Escrow Agent, the Escrow Agent shall be entitled to
receive the compensation set forth in Exhibit A attached hereto, as well as the
reimbursement of all reasonable out-of-pocket costs and expenses actually incurred by the Escrow
Agent in the performance of its duties hereunder. Such compensation and expenses shall be paid 50%
by Buyer and 50% by Member (via disbursement from the Escrowed Funds).
4
ARTICLE VI
EXCULPATION AND INDEMNIFICATION
EXCULPATION AND INDEMNIFICATION
6.1 The obligations and duties of the Escrow Agent are confined to those specifically set
forth in this Agreement. In the event that any of the terms and provisions of any other agreement
between any of the parties hereto conflict or are inconsistent with any of the terms and provisions
of this Agreement, the terms and provisions of this Agreement shall govern and control in all
respects. The Escrow Agent shall not be subject to, nor be under any obligation to ascertain or
construe the terms and conditions of, any other instrument, whether or not now or hereafter
deposited with or delivered to the Escrow Agent or referred to in this Agreement, nor shall the
Escrow Agent be obligated to inquire as to the form, execution, sufficiency or validity of any such
instrument nor to inquire as to the identity, authority or rights of the person or persons
executing or delivering same.
6.2 The Escrow Agent shall not be personally liable for any act that it may do or omit to do
hereunder in good faith and in the exercise of its own best judgment. Any act done or omitted to
be done by the Escrow Agent pursuant to the advice of its attorneys shall be deemed conclusively to
have been performed or omitted in good faith by the Escrow Agent.
6.3 If the Escrow Agent is notified of any dispute, disagreement or legal action involving
Buyer, Parent, Member, Duques or any other Person relating to or arising in connection with the
Escrow Account, the Escrowed Funds or the performance of the Escrow Agent’s duties under this
Agreement, the Escrow Agent will not be required to determine the controversy or to take any action
regarding it. The Escrow Agent may hold all documents and funds and may wait for settlement of any
such controversy by final appropriate legal proceedings, arbitration, or other means as, in the
Escrow Agent’s discretion, it may require. In such event, the Escrow Agent will not be liable for
interest (other than as provided in this Agreement) or damages resulting therefrom.
6.4 Buyer and Member hereby agree, jointly and severally, to indemnify and hold the Escrow
Agent harmless from and against all out-of-pocket costs, damages, judgments, reasonable attorneys’
fees, expenses, obligations and liabilities of every kind and nature which the Escrow Agent may
incur, sustain or be required to pay in connection with or arising out of this Agreement, unless
the aforementioned results from the Escrow Agent’s gross negligence,
willful misconduct or breach of this Agreement, and to pay the Escrow Agent on demand the
amount of all such costs, damages, judgments, reasonable attorneys’ fees, expenses, obligations and
liabilities. The costs and expenses of enforcing this right of indemnification also shall be paid
50% by Buyer and 50% by Member (via disbursement from the Escrowed Funds). The foregoing
indemnities in this paragraph shall survive the resignation or substitution of the Escrow Agent or
the termination of this Agreement.
6.5 If the Escrowed Funds are at any time attached, garnished or levied upon under any court
order or in case the payment of any such Escrowed Funds is stayed or enjoined by any court order,
or in case any order, judgment or decree is made or entered by any court affecting such Escrowed
Funds or any portion thereof, then in any of such events, the Escrow Agent is authorized, in its
sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is
advised by legal counsel is binding upon it. If the Escrow Agent complies with any such order,
writ, judgment or decree, it will not be liable to any of the parties to this Agreement or to any
other Person by reason of such compliance even though such order, writ, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated.
5
6.6 No provision of this Agreement shall require the Escrow Agent to risk or advance its own
funds or otherwise incur any financial liability or potential financial liability in the
performance of its duties or the exercise of its rights hereunder.
ARTICLE VII
TAXES AND REPORTS
TAXES AND REPORTS
7.1 The parties hereto agree that, for tax reporting purposes, the investment earnings,
including interest, dividends and other income, from the investment of the Escrowed Funds
(collectively, the “Escrow Earnings”) shall, as of the end of each calendar year and to the
extent required by the Internal Revenue Service (the “IRS”), be reported as having been
earned by Member. The parties hereto further agree that (a) all parties hereto shall file all Tax
Returns consistent with the foregoing treatment and (b) the Escrow Agent will report income,
including, without limitation, the filing of Form 1099 with the IRS, consistent with such
treatment.
7.2 In order to permit Member to satisfy its tax obligations hereunder, as soon as practicable
following the end of each calendar quarter and upon the Termination Date, the Escrow Agent shall
provide a report to Member indicating the amount of taxable income or gain realized on the Escrowed
Funds during such calendar quarter or the period from the most recent calendar quarter to the
Termination Date, as applicable.
7.3 The Escrow Agent shall be responsible only for income reporting to the IRS with respect to
income earned on the Escrowed Funds, including, without limitation, filing Form 1099 with the IRS.
The Escrow Agent shall have no other duties or responsibilities with respect to administering tax
withholding, payments or reporting for any Person receiving distributions pursuant to this
Agreement.
7.4 Unless Member shall otherwise provide in writing to the Escrow Agent prior to the end of
any calendar year, as soon as practicable following the end of each calendar year, the Escrow Agent
shall distribute to Member an amount of cash equal to forty percent (40%) of the
Escrow Earnings, in addition to and regardless of any required IRS back-up withholding or
non-resident alien withholding that the Escrow Agent has already performed for Member in accordance
with the Internal Revenue Code of 1986, as amended.
7.5 Each of the parties hereby agrees to provide the Escrow Agent with executed IRS Form W-9
or W-8 and such other forms and documents that the Escrow Agent may reasonably request.
ARTICLE VIII
TERMINATION OF AGREEMENT
TERMINATION OF AGREEMENT
This Agreement shall terminate on the earlier of (a) the date on which all amounts held in the
Escrow Account have been disbursed according to the terms hereof or (b) the date on which
Litigation Claims existing as of the Second Release Date and all Final Pending Claims have been
finally resolved and the Escrow Agent has paid all amounts relating thereto in accordance with the
provisions of Article IV hereof (such earlier date, the “Termination Date”). The
Escrow Agent shall, on the business day next succeeding the Termination Date, disburse to Member
any remaining amount of the Escrowed Funds (including all income earned thereon). The rights and
obligations of the parties hereto shall survive the termination hereof.
6
ARTICLE IX
RESIGNATION OF ESCROW AGENT
RESIGNATION OF ESCROW AGENT
The Escrow Agent may resign at any time upon giving at least thirty (30) days’ prior written
notice to Member, Buyer and Parent; provided, however, that no such resignation
shall become effective until the appointment of a successor escrow agent which shall be
accomplished as follows. Member and Buyer shall use their respective reasonable best efforts to
select a successor escrow agent within thirty (30) days after receiving such notice. If Member and
Buyer fail to appoint a successor escrow agent within such time, the Escrow Agent shall have the
right to appoint a successor escrow agent. 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 as escrow agent. Upon delivery of such instrument, the Escrow Agent shall be discharged from
any further duties and liability under this Agreement. The Escrow Agent shall be paid any
outstanding fees and expenses prior to transferring assets to a successor escrow agent.
ARTICLE X
NOTICES
NOTICES
10.1 All notices required by this Agreement shall be in writing and shall be deemed to have
been received (a) the same business day if sent by facsimile transmission (with a confirming copy
sent the same business day by registered or certified mail), or by hand delivery (with signed
return receipt), or (b) the next business day if sent by nationally recognized overnight courier,
in any case to the respective addresses as follows:
If to Member:
Legent Group, LLC
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
7
(with a copy to)
Sidley Austin LLP
0 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
0 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
If to Buyer or Parent:
United Western Bank
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
(with a copy to)
Hunton & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Facsimile: (000) 000-0000
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Facsimile: (000) 000-0000
If to the Escrow Agent:
Attention:
Facsimile:
or to such other Person or address as any party hereto may furnish to the other parties hereto in
writing.
ARTICLE XI
GOVERNING LAW
GOVERNING LAW
This Agreement, and all disputes between the parties under or relating to this Agreement or
the facts and circumstances leading to its execution, whether in contract, tort or otherwise, shall
be construed and interpreted according to the internal laws of the State of Delaware, excluding any
choice of law rule or principle that may result in the application of the laws of another
jurisdiction.
8
ARTICLE XII
AUTOMATIC SUCCESSION
AUTOMATIC SUCCESSION
Any bank or corporation into which the Escrow Agent may be merged or with which it may be
consolidated, or any bank or corporation to whom the Escrow Agent may transfer all or substantially
all of its escrow business, shall be the successor to the Escrow Agent without the execution or
filing of any paper or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
ARTICLE XIII
MISCELLANEOUS
MISCELLANEOUS
13.1 Member, Buyer, Parent and the Escrow Agent may amend, modify and/or supplement this
Agreement as they may mutually agree in writing.
13.2 This Agreement may be executed in one or more counterparts (including, without
limitation, by facsimile or portable document format (PDF)), each of which shall be deemed an
original, but all of which together shall constitute but one and the same Agreement.
13.3 Except as expressly provided herein, the rights and obligations of a party hereunder may
not be assigned, transferred or encumbered without the prior written consent of the other parties.
Subject to the foregoing, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the respective successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any third party any right or remedy under or by
reason of this Agreement.
13.4 The headings used in this Agreement are for convenience only and shall not constitute a
part of this Agreement.
13.5 The parties agree that if any provision of this Agreement shall under any circumstances
be deemed invalid or inoperative this Agreement shall be construed with the
invalid or inoperative provisions deleted and the rights and obligations of the parties shall
be construed and enforced accordingly.
[Remainder of page intentionally left blank; signature page follows.]
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of
the day and year first written above.
| BUYER: UNITED WESTERN BANK |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| PARENT: UNITED WESTERN BANCORP, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| MEMBER: LEGENT GROUP, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| THE ESCROW AGENT: [XXXXX FARGO BANK, NATIONAL ASSOCIATION] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to Escrow Agreement]
EXHIBIT A
ESCROW AGENT COMPENSATION
[To be provided by Escrow Agent]
