* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
ESCROW AGREEMENT, dated as
of May 27, 1999, among GHS, INC., a
Delaware corporation ("PARENT"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "STOCKHOLDER"
and together with Parent referred to
herein as "INTERESTED PARTIES") and
State Street Bank and Trust Company,
in its capacity as Escrow Agent
hereunder (the "ESCROW AGENT", which
term shall also include any
successor escrow agent appointed in
accordance with Section 9(d)
hereof).
Reference is made to the Agreement and Plan of Reorganization dated as
of the date hereof (the "REORGANIZATION AGREEMENT"), among Parent, Concept
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent ("ACQUISITION SUB"), Concept Development, Inc., a Delaware corporation
(the "COMPANY"), the Stockholder and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (together with the
Stockholder, the "FOUNDERS") providing for, among other things, the merger (the
"MERGER") of Acquisition Sub with and into the Company, with the Company
surviving the Merger as a wholly-owned subsidiary of Parent and the Stockholder
is receiving shares of preferred stock of Parent ("PARENT PREFERRED STOCK") in
exchange for shares of capital stock of the Company, in the manner provided in
the Reorganization Agreement and the Agreement of Merger. As used herein, the
term "Reorganization Agreement" shall be deemed to mean and include the
Reorganization Agreement and the Agreement of Merger executed and delivered in
connection therewith.
Reference is also made to the Repurchase Agreement dated as of the date
hereof (the "REPURCHASE AGREEMENT") between Parent and the Stockholder providing
for the repurchase by Parent of the Parent Preferred Stock in order to provide
an incentive to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Stockholder's husband, to exercise his best
efforts on behalf of Parent or any subsidiaries or affiliates of Parent.
This Agreement is designed to implement the provisions of the
Reorganization Agreement and the Repurchase Agreement pursuant to which Parent,
on behalf of the Stockholder, is depositing with the Escrow Agent that number of
shares of Parent Preferred Stock listed on SCHEDULE I hereto issued in the
Merger to the Stockholder as security for the satisfaction of (i) the
indemnification obligations of the Stockholder pursuant to Article VIII of the
Reorganization Agreement and (ii) the repurchase obligations of the Stockholder
pursuant to the Repurchase Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations and warranties and agreements contained herein, the parties
hereto agree as follows:
1. DEFINITIONS. As used herein the following capitalized terms shall have
the following meanings:
(a) "ESCROW SHARES" shall mean the Parent Common Stock and the Parent
Preferred Stock held by the Escrow Agent hereunder.
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
(b) "INDEMNIFIED PERSONS" shall mean and include Parent, Acquisition
Sub and the Company and their respective affiliates, successors and assigns, and
the respective officers and directors of each of the foregoing.
(c) "INDEMNITY ESCROW SHARES" shall mean [*] (of the total of [*])
shares of Parent Preferred Stock issued to the Stockholder pursuant to the
Reorganization Agreement (including, without limitation, any shares issued
pursuant to any stock dividend, stock split, reverse stock split, combination or
reclassification thereof), and any shares of common stock of Parent ("PARENT
COMMON STOCK") issued upon conversion thereof (including, without limitation,
any shares issued pursuant to any stock dividend, stock split, reverse stock
split, combination or reclassification thereof).
(d) "REPURCHASE ESCROW SHARES" shall mean [*] shares of Parent
Preferred Stock issued to the Stockholder pursuant to the Reorganization
Agreement (including, without limitation, any shares issued pursuant to any
conversion, stock dividend, stock split, reverse stock split, combination or
reclassification thereof), and any shares of Parent Common Stock issued upon
conversion thereof (including, without limitation, any shares issued pursuant to
any conversion, stock dividend, stock split, reverse stock split, combination or
reclassification thereof).
(e) "SALE TRANSACTION" shall mean the merger or consolidation of the
Company into or with another corporation or other entity, or the sale of all or
substantially all the assets or the sale of all of the outstanding capital stock
of the Company, in each case under circumstances in which the holders of the
outstanding capital stock of the Company immediately prior to the Transaction,
own less than a majority in voting power of the outstanding capital stock of the
Company or the surviving or resulting company or acquiror, as the case may be,
immediately following such transaction.
(f) "STIPULATED PRICE" shall mean (i) in the event that the Parent
Preferred Stock has not been converted into Parent Common Stock, the product of
(x) (A) the closing price of the Parent Common Stock on any securities exchange,
the Nasdaq National Market or (B) if actively traded over-the-counter, the
average of the closing bid or sale prices (whichever is applicable), on the date
hereof TIMES (y) ten (10) or (ii) in the event that the Parent Preferred Stock
has been converted into Parent Common Stock, the closing price per share of the
Parent Common Stock on any securities exchange, the Nasdaq National Market or
OTC Bulletin Board on the date hereof, all as calculated and/or ascertained by
the Parent and communicated to the Escrow Agent in writing.
2. APPOINTMENT OF ESCROW AGENT; ESCROW ACCOUNT. The Escrow Agent is hereby
appointed to act as escrow agent hereunder and the Escrow Agent agrees to act as
such.
3. ESCROW FUND AND ESCROW ACCOUNT. (a) Parent shall deliver to the Escrow
Agent, within a reasonable time from the date hereof, certificates registered in
the name of the Stockholder representing the Indemnity Escrow Shares and the
Repurchase Escrow Shares (in each case, with stock powers executed in blank by
the Stockholder attached thereto) and the
2
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
Escrow Agent shall accept such certificates in escrow for the benefit of (i)
Parent, and the Indemnified Persons and (ii) the Stockholder, pursuant and
subject to the provisions of this Agreement. The shares of Parent Preferred
Stock to be delivered to the Escrow Agent pursuant to this Section 3(a),
together with any stock dividends or stock distributions or any securities of
Parent issued in respect thereof (including, without limitation, any shares
issued pursuant to any conversion, stock dividend, stock split, reverse stock
split, combination or reclassification thereof) shall become part of, and are
hereinafter referred to collectively as, the "ESCROW FUND". The Escrow Agent
shall have no responsibility for the genuineness, validity, market value, title
or sufficiency for any intended purpose of the Parent Preferred Stock to be
delivered to it under this Agreement.
(b) The Escrow Agent shall establish a segregated account (the "ESCROW
ACCOUNT") at its office located at its address set forth on SCHEDULE II in which
to hold the Escrow Fund.
4. RIGHTS TO THE ESCROW FUND. The Escrow Fund shall be for the exclusive
benefit of the Parent and the Indemnified Persons and their respective
successors and assigns, as provided herein, in the Repurchase Agreement and in
the Reorganization Agreement, and no other person or entity shall have any
right, title or interest therein other than the Stockholder's underlying
ownership interests in the property constituting the Escrow Fund.
5. DISTRIBUTION OF THE INDEMNITY ESCROW SHARES IN CONNECTION WITH
INDEMNITY CLAIMS. The Escrow Agent shall continue to hold the Indemnity Escrow
Shares in its possession until authorized hereunder to distribute the Indemnity
Escrow Shares or any part thereof. The Escrow Agent shall distribute the
Indemnity Escrow Shares as follows:
(a) INDEMNIFICATION. In the event any Indemnified Person (the "CLAIMING
PERSON") asserts a right of indemnity against the Stockholder under Section 8 of
the Reorganization Agreement, Parent shall execute and deliver to the Escrow
Agent a written notice to such effect (a "NOTICE OF CLAIM"; and the right of
indemnity asserted in a Notice of Claim being hereinafter referred to as a
"CLAIM"), which Notice of Claim shall instruct the Escrow Agent to deliver that
portion of the Indemnity Escrow Shares the Fair Market Value (as defined in
Section 8 hereof) of which shall equal the amount of the Claim (or, if the
amount of the Claim shall be greater than the Fair Market Value of the Indemnity
Escrow Shares, the balance of the Indemnity Escrow Shares) to such Claiming
Person, and the following shall apply:
(i) a Notice of Claim delivered to the Escrow Agent pursuant to
this Section 5(a) shall set forth the name of the Claiming Person, the
nature and details of such Claim (to the extent known), and a
calculation setting forth the amount thereof (or if not ascertainable,
a reasonable good faith estimate of the maximum amount thereof); and
(ii) if within 10 business days after the Escrow Agent's receipt
of any Notice of Claim pursuant to this Section 5(a), the Escrow Agent
has not received a notification (a "NOTICE OF DISPUTE") from the
Stockholder that the Claim, or the amount thereof, is disputed, the
Escrow Agent shall, within 5 business days after the expiration of such
10-day period, deliver to the Claiming Person that portion of the
Indemnity Escrow Shares the Fair
3
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
Market Value of which shall equal the amount of the Claim as set
forth in such Notice of Claim (or, if the amount of the Claim shall
be greater than the Fair Market Value of the aggregate Indemnity
Escrow Shares as of such date, the balance of the Indemnity Escrow
Shares) (the date of any such delivery being referred to herein as a
"RELEASE DATE"). If the Escrow Agent does receive a Notice of
Dispute within such 10-day period (a copy of the Notice of Dispute
being simultaneously sent to Parent by the Stockholder), the Escrow
Agent shall not deliver such amount to such Claiming Person until 5
business days after such dispute has been settled as provided in
Section 17 hereof and written notice of such settlement and of the
amount, if any, to be paid in respect of the disputed Claim has been
received by the Escrow Agent from the Parent.
(b) Anything contained herein to the contrary notwithstanding, if the
Escrow Agent is authorized, at any time pursuant to Section 5(a) hereof, to
deliver all or any portion of the Indemnity Escrow Shares to a Claiming Person
with respect to a Claim or Claims, then (i) such delivery shall be made
regardless of the Escrow Agent's prior or subsequent receipt of any Notice of
Claim or Notice of Dispute with respect to any other Claim or Claims and (ii)
the Escrow Agent shall (A) deliver to the transfer agent for the Parent
Preferred Stock (who shall be identified to the Escrow Agent in writing by
Parent) on behalf of the Stockholder the certificate registered in such
Stockholder's name representing the Escrow Shares, together with a completed
stock power transferring to such Claiming Person that number of shares of Parent
Preferred Stock being delivered to such Claiming Person and (B) instruct such
transfer agent to issue and deliver to the Escrow Agent for retention hereunder
as part of the Escrow Fund a certificate of like tenor, registered in the name
of the Stockholder representing the balance of the shares of Parent Preferred
Stock represented thereby, if any. Parent and the Stockholder shall take all
such actions and execute and deliver all such documents as are necessary to
effectuate the intent and purpose of this Section 5(b).
6. DISTRIBUTION OF THE REPURCHASE ESCROW SHARES IN CONNECTION WITH EXERCISE OF
THE REPURCHASE OPTION.
(a) In the event Parent and/or any assignee of Parent shall elect to
exercise the Purchase Option set forth in the Repurchase Agreement, Parent shall
execute and deliver to the Escrow Agent and the Stockholder a written notice (a
"REPURCHASE NOTICE") specifying (i) the number of shares of (A) Parent Preferred
Stock or (B) upon conversion of the Parent Preferred Stock, Parent Common Stock,
which Parent is entitled to repurchase, (ii) the number of Repurchase Escrow
Shares as to which it is exercising the Repurchase Option, (iii) the purchase
price and the calculation thereof and (iv) the time for a closing thereunder at
the principal office of Parent (the "REPURCHASE CLOSING"). Said Repurchase
Notice shall be given no sooner than five (5) business days before the
Repurchase Closing.
(b) Stockholder and Parent hereby irrevocably authorize and direct the
Escrow Agent to deliver to the Parent the number of shares of Parent Preferred
Stock or Parent Common Stock, as applicable, to close the transaction
contemplated by such Repurchase Notice in accordance with the terms of said
Repurchase Notice. Subject to the provisions of the ▇▇▇▇▇▇▇▇▇▇
▇
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
Agreement and Section 6(b) hereof, the Escrow Agent shall deliver to the
Stockholder the number of shares equal to the difference between (x) the total
number of Repurchase Escrow Shares held by the Escrow Agent on the date of
delivery of the Repurchase Notice MINUS (y) the number of Repurchase Escrow
Shares for which the Purchase Option has been exercised.
(c) If the Escrow Agent has not received from Parent a Repurchase
Notice to the Escrow Agent, or has exercised the Purchase Option with respect to
less than all of the then remaining Repurchase Escrow Shares, prior to the
applicable date set forth on the table below, the Escrow Agent shall deliver to
the Stockholder, subject to payment of escrow fees and expenses by the Company
as required herein, within five (5) business days after the dates set forth
below the number of Repurchase Escrow Shares equal to the Vested Shares (as set
forth below):
5
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
VESTED SHARES (IF THE PARENT VESTED SHARES (IF THE PARENT
PREFERREDSTOCK HAS NOT PREFERRED STOCK HAS
BEEN CONVERTED TO PARENT BEEN CONVERTED TO PARENT
DATE COMMON STOCK) COMMON STOCK)
September 1, 1999 [*] [*]
December 1, 1999 [*] [*]
March 1, 2000 [*] [*]
June 1, 2000 [*] [*]
September 1, 2000 [*] [*]
December 1, 2000 [*] [*]
March 1, 2001 [*] [*]
June 1, 2001 [*] [*]
September 1, 2001 [*] [*]
December 1, 2001 [*] [*]
March 1, 2002 [*] [*]
June 1, 2002 [*] [*]
(d) SALE TRANSACTION. Subject to Section 7 hereof and anything
contained herein to the contrary notwithstanding, upon the consummation of a
Sale Transaction, Parent shall deliver a notice to the Escrow Agent (the "SALE
TRANSACTION NOTICE") and Escrow Agent shall thereafter deliver the Repurchase
Escrow Shares (including, without limitation, any shares issued pursuant to any
stock split, reverse stock split, combination or reclassification thereof) to
the Stockholder within five (5) business days after receipt of the Sale
Transaction Notice, subject to the following:
(i) if the Sale Transaction Notice is received by the Escrow
Agent before the first anniversary of the date hereof (the "FIRST
ANNIVERSARY"), the Escrow Agent shall not distribute to the
Stockholder, and the Escrow Agent shall hold and retain in Escrow, the
balance of the Indemnity Escrow Shares (including, without limitation,
any shares issued pursuant to any stock split, reverse stock split,
combination or reclassification thereof) and on and after the First
Anniversary the Escrow Agent shall distribute to the Stockholder within
five (5) business days after the First Anniversary the balance of the
Indemnity Escrow Shares; PROVIDED, HOWEVER, that, regardless of whether
the Sale Transaction Notice is received before, on or after the First
Anniversary, the Escrow Agent shall NOT distribute to the Stockholder,
and the Escrow Agent shall hold and retain in Escrow, the number of
Indemnity Escrow shares specified in all Notices of Claim which, prior
to the First Anniversary, have been received by the Escrow Agent but
which have not been paid to Parent or otherwise discharged pursuant to
this Section 6. Any portion of the Indemnity Escrow Shares which shall
continue to be held by the Escrow Agent pursuant to the preceding
sentence shall be so held until such time as all disputed Claims
6
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
hereunder have been settled as provided in Section 17 and written
notice of such settlement or settlements setting forth the amounts to
be paid to Parent, on the one hand, and the Stockholder, on the other
hand, have been received by the Escrow Agent.
7. ESCROW FEES. Notwithstanding anything herein to the contrary, at any
time that the Escrow Agent is authorized or directed or otherwise required to
make a disbursement or distribution from the Escrow Fund, the Escrow Agent may
refrain from making such disbursement or distribution from the Escrow Fund,
without liability, if and to the extent that there are any fees or expenses then
due to the Escrow Agent pursuant to Sections 11, 12, 13 and/or Schedule II.
8. VALUATION. For all purposes of this Agreement, the "FAIR MARKET VALUE"
of any property (other than cash and shares of Parent Preferred Stock or Parent
Common Stock) contained in the Escrow Fund as of any date shall be the fair
market value of such property as of such date as determined by the Board of
Directors of Parent in the good faith exercise of its reasonable business
judgment, which determination shall be evidenced by a certificate executed by
the Secretary of Parent and delivered to the Escrow Agent and the Stockholder,
and the "FAIR MARKET VALUE" per share of Parent Preferred Stock and/or Parent
Common Stock, as applicable, shall be the lesser of (i) the Stipulated Price and
(ii) (A) if such shares are traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the closing price of the
securities on such exchange on the date of delivery of the Notice of Claim or
Repurchase Notice or (B) if actively traded over-the-counter, the value shall be
deemed to be the closing bid or sale prices (whichever is applicable) on the
date of delivery of the Notice of Claim or Repurchase Notice, as calculated
and/or ascertained by the Parent and provided to the Escrow Agent in writing.
9. STOCKHOLDER RIGHTS. (a) Except as expressly provided otherwise herein,
the Stockholder shall at all times retain and have the full and absolute right
to exercise all rights and indicia of ownership with respect to the Escrow
Shares owned by such Stockholder, including, without limitation, voting and
consensual rights; provided, HOWEVER, that the Stockholder shall have no right
to transfer, pledge or encumber or otherwise dispose in any manner whatsoever
any Escrow Shares that are held in Escrow Account. In accordance with Section
3(a), all dividends or distributions or proceeds in stock or other property
issued (other than cash) in respect of the Escrow Shares shall be deposited into
the Escrow Account and become part of the Escrow Fund so long as the Escrow
Agent is authorized to retain such shares hereunder. If any such shares of
Parent Preferred Stock are transferred to a Claiming Person pursuant to Section
5 hereof in satisfaction of a Claim or Claims, all rights and indicia of
ownership with respect to such shares shall thereupon reside with such Claiming
Person or any subsequent holder thereof.
(b) The Escrow Agent shall be under no duty to preserve, protect or
exercise rights in the Escrow Shares, and shall be responsible only for
reasonable measures to maintain the physical safekeeping thereof, and otherwise
to perform such duties on its part as are expressly set forth in this Agreement.
The Escrow Agent will not be responsible for authenticating the right of the
Stockholder to exercise voting or consent-giving authority in respect of shares
of Parent Preferred
7
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
Stock held by it hereunder. The Escrow Agent shall not be responsible for
forwarding to, or notifying any party, or taking any other action with respect
to any notice, solicitation or other document or information, written or oral,
received by the Escrow Agent from an issuer or other person with respect to
Escrow Shares held by the Escrow Agent hereunder, including, without limitation,
any proxy material, tenders, options, the pendency of calls and maturities and
the expiration of rights.
10. TERMINATION. This Agreement may be terminated at any time by and upon
the receipt by the Escrow Agent of 10 days' prior written notice of termination
executed by Parent and the Stockholder directing the distribution of all
property then held by the Escrow Agent under and pursuant to the distribution
provisions of Section 5(c) of this Agreement and such termination notice. This
Agreement shall automatically terminate if and when all amounts in the Escrow
Account (including all the securities in which any funds, if any, contained in
the Escrow Account shall have been invested) shall have been distributed by the
Escrow Agent in accordance with the terms of this Agreement and all amounts
payable to the Escrow Agent pursuant to Sections 11, 12 or 13 have been paid.
11. CONCERNING THE ESCROW AGENT.
(a) Each 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 Reorganization 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 that 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, if so requested, refraining from acting) upon and in
accordance with 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 to be genuine and to
have been signed or presented by the proper person, and shall have no
responsibility for determining the accuracy thereof, 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 to
8
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
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.
(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 or
securities intermediary employed by the Escrow Agent than any such book-entry
depository or securities intermediary has to the Escrow Agent, except to the
extent that such action or omission of any book-entry depository or securities
intermediary was caused by the Escrow Agent's own gross negligence or willful
misconduct in breach of this Agreement.
(d) The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving at least 30 days' prior written notice of such
resignation to Parent and the Stockholder specifying a date upon which such
resignation shall take effect; PROVIDED, HOWEVER, that the Escrow Agent shall
continue to serve until its successor accepts the Escrow Fund. Upon receipt of
such notice, a successor escrow agent shall be appointed by Parent and the
Stockholder, such successor escrow agent to become the Escrow Agent hereunder on
the resignation date specified in such notice. If a written instrument of
acceptance by a successor escrow agent shall not have been received by the
Escrow Agent within 40 days after the giving of such notice of resignation, the
resigning Escrow Agent may at the expense of Parent petition any court of
competent jurisdiction for the appointment of a successor escrow agent. Parent
and the Stockholder acting jointly, may at any time substitute a new escrow
agent by giving 10 days' prior written notice thereof to the Escrow Agent then
acting and by Parent paying all fees and expenses of such Escrow Agent.
12. INDEMNIFICATION. Each of the Interested Parties covenant and agree, jointly
and severally, 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
reasonable attorney's fees and other costs and expenses of defending or
preparing to defend against any claim of liability unless and except to the
extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent's gross negligence or willful misconduct. The foregoing
indemnification and agreement to hold harmless shall survive the termination of
this Agreement and the resignation of the Escrow Agent.
13. FEES OF ESCROW AGENT. For its services hereunder, the Escrow Agent shall be
entitled to the fees set forth on SCHEDULE II attached hereto. The annual
Administrative Fee shall be subject to adjustment annually, upon notice. Such
fees shall be paid by Parent. In addition, the Parent and the Stockholder
jointly and severally agree to pay equally the cost of reimbursing the Escrow
Agent, and shall 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 reasonable legal fees and expenses incurred
by the Escrow Agent in connection with resolution of any claim by any
9
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
party hereunder ("EXTRAORDINARY ADMINISTRATIVE EXPENSES"). The Escrow Agent
shall periodically ▇▇▇▇ Parent and the Stockholder for such out of pocket fees
and expenses. The Escrow Fund shall not be available to, and shall not be used
by, the Escrow Agent to set off any obligations of any party hereto owing the
Escrow Agent in any capacity. Without altering or limiting the joint and several
liability of any of the Interested Parties to the Escrow Agent hereunder, each
of the Interested Parties agrees as between themselves that they shall share,
one half each, all amounts payable to the Escrow Agent for Extraordinary
Administrative Expenses pursuant to this Section 13.
14. CERTIFICATION OF TAX IDENTIFICATION NUMBER. The Interested Parties hereto
agree to provide the Escrow Agent with a certified tax identification number by
signing and returning a Form W-9 (or Form W-8, in case of non-U.S. persons) to
the Escrow Agent prior to the date on which any income earned on the Escrow Fund
is credited to the Escrow Fund. 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 income earned on the Escrow Fund.
15. TAX REPORTING. The interested Parties agree that, for tax reporting
purposes, all income earned on the Escrow Fund in any tax year shall (i) to the
extent such income is distributed by the Escrow Agent to any person or entity
pursuant to the terms of this Agreement during such tax year, to be allocated to
such person or entity, and (ii) otherwise shall be allocated to the Stockholder.
16. TAX INDEMNIFICATION. Each of the Interested Parties agree, jointly and
severally, (i) to assume any and all obligations now or hereafter arising under
any applicable tax law with respect to any payment or distribution of the Escrow
Fund to, or performance of other activities under this Agreement by, such
Interested Party, (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 action 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 or relating to any payment made 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, to the extent that it relates to such individual
Interested Party. The foregoing indemnification and agreement to hold harmless
shall survive the termination of this Agreement and the resignation of the
Escrow Agent.
10
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
17. DISPUTES. If any dispute should arise with respect to the payment or
ownership or right of possession of the Escrow Fund, or the duties of the Escrow
Agent hereunder or should any claim be made upon the Escrow Agent or the Escrow
Fund by any third party, the Escrow Agent is authorized and directed to retain
in its possession, without liability to anyone, any part of the Escrow Fund in
dispute until such dispute shall have been settled either by mutual agreement of
Parent and the Stockholder (evidenced by appropriate instructions in writing to
the Escrow Agent signed by Parent and the Stockholder) or by the final order,
decree or judgment, received by the Escrow Agent, of a court of competent
jurisdiction in the United States of America (the time for appeal having expired
with no appeal having been taken) in a proceeding to which Parent and the
Stockholder are parties, but the Escrow Agent shall be under no duty whatsoever
to institute or defend any such proceedings.
18. MISCELLANEOUS.
(a) All notices or other communications which are required or permitted
hereunder shall be in writing and shall be deemed given (i) when received by the
addressee if delivered personally or sent by nationally-recognized overnight
courier (ii) when received by the addressee if sent by registered or certified
mail, return receipt requested and postage prepaid, or (iii) when sent by
telecopier, provided that a confirmation copy thereof is sent the same day by
postage prepaid U.S. mail. Notwithstanding the foregoing, no notice nor other
communication shall be deemed given to the Escrow Agent until the Escrow Agent's
actual receipt thereof. Notices shall be sent to the addresses given below for
the parties, or to such other address for any party notice of which, complying
with these requirements, is given by that party to all others.
(i) if to the Stockholder then to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Parent, to:
GHS, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇; and
if to the Escrow Agent, to the address set forth on
SCHEDULE II hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith.
(b) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(c) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the domestic laws of the Commonwealth of Massachusetts without
giving effect to any choice of law or conflicting provision or rule.
(d) PARTIES IN INTEREST. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns. Anything contained herein to the contrary
notwithstanding, this Agreement shall not be assigned by any party hereto
without the consent of the other parties hereto.
(e) AMENDMENTS. This Agreement may be amended only by a written
instrument duly executed by 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 terms of this Escrow
Agreement, or of such terms and conditions on any other occasion.
(f) HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) ENTIRE AGREEMENT. This Agreement and, with respect to the
Interested Parties only, the Reorganization Agreement, contain the entire
agreement among the parties hereto with respect to the transactions contemplated
hereby and supersedes all prior agreements or understandings, written or oral,
among the parties identified above with respect thereto; PROVIDED, that anything
contained herein to the contrary notwithstanding, the parties hereto agree that
the Escrow Agent shall perform its obligations under this Agreement solely by
reference to this Agreement.
(h) FORCE MAJEURE. The Escrow Agent will not be responsible for delays
or failures in performing its duties resulting from acts beyond its control such
as, but not limited to, acts of God, strikes, lockouts, riots, acts of war,
epidemics, governmental regulations superimposed after
12
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
the fact, fire, communication line failures, computer viruses, power failures,
earthquakes or other disasters.
(i) REPRODUCTION OF AGREEMENT. This Agreement and all documents
relating hereto, including, without limitation, (1) consents, waivers and
modifications that may hereafter be executed, and (2) 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. It is agreed 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 the 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.
(j) INVESTMENT OF CASH. Should the Escrow Agent hold any cash in the
Escrow fund, the Escrow Agent shall be under no obligation to invest (or
otherwise pay interest on) such cash.
(K) CONSENT TO JURISDICTION AND SERVICE. Each of the Interested Parties
hereby absolutely and irrevocably consents and submits to the jurisdiction of
the courts in the Commonwealth of Massachusetts and of any Federal court located
in said Commonwealth in connection with any actions or proceedings brought
against any of the Interested Parties (or each of them) by the Escrow Agent
arising out of or relating to this Escrow Agreement. In any such action or
proceeding, the Interested Parties each hereby absolutely and irrevocably (i)
waives any objection to jurisdiction or venue, (ii) waives personal service of
any summons, complaint, declaration or other process, and (iii) agrees that the
service thereof may be made by certified or registered first-class mail directed
to such party, as the case may be, at their respective addresses in accordance
Section 16(a) hereof.
(L) CERTAIN DISTRIBUTIONS OF ESCROW SHARES. Notwithstanding anything herein
to the contrary, if the Escrow Agent is required to distribute Escrow Shares
pursuant hereto to a particular recipient or recipients (an "Intended
Recipient"), and the Escrow Agent has sufficient Parent Common Stock or Parent
Preferred Stock, as the case may be, to satisfy such distribution, but the stock
certificates in the Escrow Agent's possession are in such denominations that the
Escrow Agent is not able to distribute the exact number of Escrow Shares so
required to be distributed (the "Required Amount"), the Escrow Agent shall
deliver to the Parent such number of Parent Common Stock and/or Parent Preferred
Stock, as the case may be, as may exceed the Required Amount, and the Parent
shall promptly deliver to the Escrow Agent a certificate representing the number
of such shares in excess of the Required Amount (the "Excess Shares") for the
Escrow Agent to retain in escrow pursuant to the terms hereof. The Parent shall,
to the extent necessary, deliver a certificate representing the Required Amount
of the Parent Common Stock or Parent Preferred Stock, as the case may be, to the
Intended Recipient. The Escrow Agent shall not be responsible for safekeeping
the Excess Shares until received by the Escrow Agent from the Parent, and the
Escrow Agent shall not be responsible for its failure to perform hereunder
resulting from the failure of the Escrow Agent to receive such Excess Shares
from the Parent.
13
* Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Commission.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed and delivered on the date first above written.
GHS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: President
STOCKHOLDER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Accepted and Agreed to
as of the Date First Above Written:
STATE STREET BANK AND TRUST COMPANY,
AS ESCROW AGENT:
By: /s/
--------------------------
Name:
Title:
15
SCHEDULE I
ESCROW SHARES
-------------------------------------------------------------------------------
STOCKHOLDER ESCROW SHARES
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ [*] Parent Preferred Stock and all shares of Parent
Common Stock issued upon conversion thereof.
-------------------------------------------------------------------------------
16
SCHEDULE II
FEES OF ESCROW AGENT
ESCROW AGENT:
State Street Bank and Trust Company
Financial Markets Group
Corporate Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: GHS/▇▇▇▇▇▇▇ Escrow
Wire Transfer Information:
State Street Bank and Trust Company
ABA#: 011 000 028
DDA: 99039901
FFC: 122299-010
Attn: Corporate Trust Dept
Ref: GHS/▇▇▇▇▇▇▇ Escrow
FEES AND EXPENSES:
-------------------
ACCEPTANCE FEE: $1,000.00
ADMINISTRATIVE FEE: 3,500.00 per year or any part thereof
INVESTMENT FEE: $65.00 per buy/sell
SWEEP FEE: 40 basis points per annum of the
average daily net assets
WIRE FEE: $20 per wire
OUT OF POCKET EXPENSES: At Cost
LEGAL FEES: At Cost, including attorney's fees
incurred in the preparation of this
Escrow Agreement
EXTRAORDINARY ADMINISTRATIVE EXPENSES As billed as per Section 13
17