SECURITIES ESCROW AGREEMENT
SECURITIES ESCROW AGREEMENT, dated as of ______________, 2007 (the
"Agreement"), by and among Western United Financial Corporation., a Delaware
corporation (the "Company"), each of the holders of securities of the Company
set forth on Exhibit A, annexed hereto (collectively the "Initial Holders") and
Xxxxx Fargo Bank, National Association, a national banking association (the
"Escrow Agent").
WHEREAS, the Company has entered into an Underwriting Agreement, dated
_________, 2007 (the "Underwriting Agreement"), with Sandler X'Xxxxx & Partners,
L.P. ("Sandler X'Xxxxx") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, among other matters, the
Underwriters have agreed to purchase 10,000,000 units (the "Units") of the
Company. Each Unit consists of one share of the Company's common stock, par
value $.01 per share (the "Common Stock"), and one warrant (the "Warrant")
exercisable to purchase one share of Common Stock, all as more fully described
in the Company's final Prospectus, dated __________, 2007 comprising part of the
Company's Registration Statement on Form S-1 (File No. 333-138263) under the
Securities Act of 1933, as amended (the "Registration Statement"), declared
effective on _________, 2007 (the "Effective Date");
WHEREAS, certain of the Initial Holders (the "Common Holders") have
agreed as a condition of the Underwriters' purchase of the Units to deposit
their shares of Common Stock, as set forth opposite their respective names on
Exhibit A attached hereto (collectively, and as further defined in Section 4.2,
the "Escrow Common Shares"), in escrow as hereinafter provided;
WHEREAS, Western United Funding, LLC, a Delaware limited liability
company (the "Unit Holder"), has agreed as a condition of the Underwriters'
purchase of the Units to purchase 62,500 units for $8.00 per unit (the "Escrow
Units" and collectively with the Escrow Common Shares, the "Escrow Securities")
immediately prior to and subject to the date (the "Closing Date") of the closing
(the "Closing") of the Company's initial public offering (the "Offering") and to
deposit such Escrow Units in escrow as hereinafter provided; and
WHEREAS, the Company and the Initial Holders desire that the Escrow Agent
accept the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.
IT IS AGREED:
1. APPOINTMENT OF ESCROW AGENT. The Company and the Initial Holders hereby
appoint the Escrow Agent to act in accordance with and subject to the terms of
this Agreement and the Escrow Agent hereby accepts such appointment and agrees
to act in accordance with and subject to such terms.
2. DEPOSIT OF ESCROW SECURITIES.
2.1. Escrow Common Shares. On or before the Effective Date, each of the
Common Holders shall deliver to the Escrow Agent certificates representing his
respective Escrow Common Shares, as set forth opposite their respective names on
Exhibit A attached hereto, which certificates shall remain in the name of such
Common Holder, to be held and disbursed subject to the terms and conditions of
this Agreement. Each Common Holder acknowledges that the certificate
representing his Escrow Common Shares is legended to reflect the deposit of such
Escrow Common Shares under this Agreement.
2.2 Escrow Units. Promptly following the purchase of the Escrow Units,
the Unit Holder shall deliver to the Escrow Agent a certificate representing the
Escrow Units, as set forth opposite its name on Exhibit A attached hereto, which
certificates shall remain in the name of the Unit Holder, to be
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held and disbursed subject to the terms and conditions of this Agreement. The
Unit Holder acknowledges that the Escrow Units are legended to reflect the
deposit of the Escrow Units under this Agreement.
3. DISBURSEMENT OF THE ESCROW SECURITIES.
3.1. Escrow Common Shares. The Escrow Agent shall hold the Escrow
Common Shares until the first anniversary of the consummation of the acquisition
by the Company of one or more banks, thrifts and their respective holding
companies and other financial services organizations through a merger, capital
stock exchange, asset acquisition, exchangeable share transaction, stock
purchase or other similar business combination (the "Business Combination")
(such period, the "Escrow Share Period"). The Company shall promptly provide
notice of the consummation of any Business Combination to the Escrow Agent. On
such first anniversary, the Escrow Agent shall, upon written instructions from
each Common Holder, disburse each Common Holder's Escrow Common Shares to such
Common Holder; provided, however, that in the event that the Closing does not
occur, then the Escrow Agent shall promptly release the Escrow Common Shares to
the Common Holders; provided further, however, that if a Common Holder does not
provide written instructions within ninety days after the first anniversary of
the consummation of a Business Combination, then the Escrow Agent shall deliver
such Common Holder's Escrow Common Shares to the care of the Company; provided
further, however, that if the Escrow Agent is notified by the Company pursuant
to Section 6.6 hereof that the Company has been liquidated at any time during
the Escrow Share Period, then the Escrow Agent shall promptly destroy the
certificates representing the Escrow Common Shares; provided further, however,
that if the consummation of a Business Combination takes the form of a merger,
stock exchange or other similar transaction which results in any of the security
holders of the Company having the right to exchange their securities for other
securities, then the Escrow Agent shall, upon receipt of a certificate in form
reasonably acceptable to the Escrow Agent, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, release the Escrow Common
Shares to the Common Holders immediately prior and subject to consummation of
the Business Combination so that they can similarly participate, and upon
receipt thereof, the Common Holders shall deposit such securities into escrow
with the Escrow Agent for the remainder of the Escrow Share Period; and provided
further, however, that if, after the Company consummates a Business Combination
and the Company or the surviving entity of such Business Combination
subsequently consummates a liquidation, merger, stock exchange or other similar
transaction which results in any of the security holders of the Company or such
entity having the right to exchange their securities for cash, securities or
other property, then the Escrow Agent shall, upon receipt of a certificate in
form reasonably acceptable to the Escrow Agent, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, that such transaction is then
being consummated, release the Escrow Common Shares to the Common Holders
immediately prior and subject to consummation of the transaction so that they
can similarly participate. The Escrow Agent shall act as soon as reasonably
possible following the receipt of the certificate, and shall not be held liable
for any delay in sending the Escrow Common Shares caused by the late receipt of
the certificate. The Escrow Agent shall have no further duties hereunder with
respect to the Escrow Common Shares after the disbursement or destruction of the
Escrow Common Shares in accordance with this Section 3.1.
3.2. Escrow Units. The Escrow Agent shall hold the Escrow Units, the
shares of Common Stock that are part of the Escrow Units, the Warrants that are
part of the Escrow Units, and any shares of Common Stock issued upon exercise of
the Warrants that are part of the Escrow Units until the date which is ninety
(90) days following the consummation of a Business Combination (such period, the
"Escrow Unit Period"). On such 90th day, the Escrow Agent shall, upon written
instructions from the Unit Holder, disburse the Unit Holder's Escrow Units (or
shares of Common Stock issued upon exercise thereof, if any) to the Unit Holder;
provided, however, that if the Escrow Agent is notified by the Company pursuant
to Section 6.6 hereof that the Company has been liquidated at any time during
the Escrow Warrant Period, then the Escrow Agent shall promptly destroy the
Escrow Units (and the
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certificates representing the shares of Common Stock issued upon exercise
thereof, if any); provided further, however, that if the Unit Holder does not
provide written instructions, then the Escrow Agent shall deliver the Unit
Holder's Escrow Units to the care of the Company; provided further, however,
that if the consummation of a Business Combination takes the form of a merger,
stock exchange or other similar transaction which results in any of the security
holders of the Company having the right to exchange their securities for other
securities, then the Escrow Agent shall, upon receipt of a certificate in form
reasonably acceptable to the Escrow Agent, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, release the Escrow Units to
the Unit Holder immediately prior and subject to consummation of the Business
Combination so that it can similarly participate, and upon receipt thereof, the
Unit Holder shall deposit such securities into escrow with the Escrow Agent for
the remainder of the Escrow Unit Period; and provided further, however, that if,
after the Company consummates a Business Combination and the Company or the
surviving entity of such Business Combination subsequently consummates a
liquidation, merger, stock exchange or other similar transaction which results
in any of the security holders of the Company or such entity having the rights
to exchange their securities for cash, securities or other property, then the
Escrow Agent will, upon receipt of a certificate, in form reasonably acceptable
to the Escrow Agent, executed by the Chief Executive Officer or Chief Financial
Officer of the Company, that such transaction is then being consummated, release
the Escrow Units (and the shares of Common Stock issued upon exercise thereof,
if any) to the Unit Holder immediately prior and subject to consummation of the
transaction so that it can similarly participate. The Escrow Agent shall act as
soon as reasonably possible following the receipt of the certificate, and shall
not be held liable for any delay in sending the Escrow Common Shares caused by
the late receipt of the certificate. The Escrow Agent shall have no further
duties hereunder with respect to the Escrow Units or shares of Common Stock
issued upon exercise thereof, if any, after the disbursement or destruction of
the Escrow Units and/or such shares in accordance with this Section 3.2.
4. RIGHTS OF INITIAL HOLDERS IN ESCROW COMMON SHARES AND ESCROW UNITS.
4.1. Rights as a Security Holder. Subject to the terms of their
respective Insider Letters as described in Section 4.4 hereof and except as
herein provided, (i) each Common Holder shall retain all of its rights as a
stockholder of the Company during the Escrow Share Period, including without
limitation, the right to vote Common Stock and (ii) each Unit Holder shall
retain its rights under the Unit, including without limitation, the right to
vote Common Stock that is part of the Unit, but shall have no rights as a
stockholder of the Company with respect to Common Stock issuable upon exercise
of the warrant that is part of the Unit prior to exercise of the Warrant. The
Escrow Agent shall have no responsibility to determine or verify the contents or
limitations of the Insider Letters and shall be bound only by the terms of this
Agreement.
4.2. Dividends and other Distributions in Respect of the Escrow Common
Shares. During the Escrow Share Period with respect to the Escrow Common Shares,
all dividends payable in cash with respect to the Escrow Common Shares shall be
paid to the Common Holders, but all dividends payable in stock or other non-cash
property (the "Non-Cash Dividends") shall be delivered to the Escrow Agent to
hold in accordance with the terms hereof. As used herein, the terms "Escrow
Common Shares" shall be deemed to include the Non-Cash Dividends distributed
thereon, if any.
4.3. Restrictions on Transfer. During the Escrow Share Period, no sale,
transfer or other disposition (a "Transfer") may be made of any or all of the
Escrow Common Shares, and during the Escrow Unit Period, no Transfer may be made
of any or all of the Escrow Units, in each case by an Initial Holder except (i)
by gift to a member of the Initial Holder's immediate family for estate planning
purposes or to a trust, the beneficiary of which is the Initial Holder or a
member of the Initial Holder's immediate family, (ii) by virtue of the laws of
descent and distribution upon death of the Initial Holder, or (iii) pursuant to
a qualified domestic relations order; PROVIDED, HOWEVER, that such permitted
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Transfers may be implemented only upon the respective transferee's written
agreement to be bound by the terms and conditions of this Agreement and of the
Insider Letter signed by the Initial Holder transferring the Escrow Securities.
During: (A) the Escrow Share Period, no Common Holder shall pledge or grant a
security interest in his or its Escrow Common Shares or grant a security
interest in his or its rights under this Agreement; and (B) the Escrow Unit
Period, the Unit Holder shall not pledge or grant a security interest in the
Escrow Units or grant a security interest in its rights under this Agreement.
4.4. Insider Letters. Each of the Initial Holders has executed a letter
agreement with the Company, dated as indicated on Exhibit A hereto, and which is
filed as an exhibit to the Registration Statement (the "Insider Letter"),
respecting the rights and obligations of such Initial Holders in certain events,
including but not limited to the liquidation of the Company.
5. CONCERNING THE ESCROW AGENT.
5.1. Good Faith Reliance. The Escrow Agent shall be protected and shall
not be liable for any action taken or omitted by it in good faith and in the
exercise of its own best judgment, and may rely conclusively and may act upon
any order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Escrow Agent), statement, instrument, report or other
paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is believed by the Escrow Agent to be
genuine and to be signed or presented by the proper person or persons. The
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are affected, unless it shall have
given its prior written consent thereto.
5.2. Indemnification. The Escrow Agent shall be indemnified and held
harmless by the Company from and against any expenses, including counsel fees
and disbursements, or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim which in any way, directly
or indirectly, arises out of or relates to this Agreement, the services of the
Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other
than expenses or losses arising from the gross negligence or willful misconduct
of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall notify the other parties hereto in writing. In the event of
the receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court to
determine ownership or disposition of the Escrow Securities or it may deposit
the Escrow Securities with the clerk of any appropriate court or it may retain
the Escrow Securities pending receipt of a final, non-appealable order of a
court having jurisdiction over all of the parties hereto directing to whom and
under what circumstances the Escrow Securities are to be disbursed and
delivered. The provisions of Sections 5.2 and 5.7 shall survive in the event the
Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.
5.3. Compensation. The Escrow Agent shall be entitled to compensation
from the Company in accordance with Schedule I hereto for all services rendered
by it hereunder.
5.4. Further Assurances. From time to time on and after the date
hereof, the Company and the Initial Holders shall deliver or cause to be
delivered to the Escrow Agent such further documents and instruments and shall
do or cause to be done such further acts as the Escrow Agent shall reasonably
request to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected in acting hereunder.
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5.5. Resignation. The Escrow Agent may resign at any time and be
discharged from its duties as escrow agent hereunder by its giving the other
parties hereto written notice and such resignation shall become effective at
such time that the Escrow Agent shall turn over to a successor escrow agent
appointed by the Company, the Escrow Securities held hereunder. If no new escrow
agent is so appointed within the sixty (60) day period following the giving of
such notice of resignation, the Escrow Agent may submit an application to
deposit the Escrow Securities with the United States District Court for the
Southern District of New York, provided the Escrow Agent provides notice of such
deposit to the Company and the Initial Holders in accordance with Section 6.6
hereof.
5.6. Discharge of Escrow Agent. The Escrow Agent shall resign and be
discharged from its duties as escrow agent hereunder if so requested in writing
at any time by the other parties hereto, jointly, provided, however, that such
resignation shall become effective only upon acceptance of appointment by a
successor escrow agent as provided in Section 5.5.
5.7. Liability. Notwithstanding anything herein to the contrary, the
Escrow Agent shall not be relieved from liability hereunder for its own gross
negligence or its own willful misconduct.
5.8. Waiver. The Escrow Agent hereby waives any and all right, title,
interest or claim of any kind ("Claim") in or to any distribution of the Trust
Account (as defined in that certain Investment Management Trust Agreement, dated
as of the date hereof, by and between the Company and the Escrow Agent as
trustee thereunder), and hereby agrees not to seek recourse, reimbursement,
payment or satisfaction for any Claim against the Trust Account for any reason
whatsoever.
5.9. Standard of Care. The Escrow Agent shall be obligated only to
perform the duties specifically set forth in this Escrow Agreement, which shall
be deemed purely ministerial in nature, and the Escrow Agent shall under no
circumstances be deemed to be a fiduciary to any party hereto or any other
person. The parties hereto agree that the Escrow Agent shall not assume any
responsibility for the failure of the parties hereto to perform in accordance
with this Escrow Agreement or any other agreement or document. This Escrow
Agreement sets forth all matters pertinent to the escrow contemplated hereunder,
and no additional obligations of the Escrow Agent shall be inferred from the
terms of this Escrow Agreement or any other agreement or document. IN NO EVENT
SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES OR
EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES
WHICH RESULT FROM THE ESCROW AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR
(II) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
6. MISCELLANEOUS.
6.1. Governing Law and Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State,
including, without limitation, Sections 5-1401 and 5-1402 of the New York
General Obligations Law and the New York Civil Practice Laws and Rules 327(b).
The parties hereto agree that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced in
the courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submit to such jurisdiction,
which jurisdiction shall be exclusive. The parties hereby waive any objection to
such exclusive jurisdiction and that such courts represent an inconvenient
forum.
6.2. Third Party Beneficiaries. Each of the Initial Holders hereby
acknowledges that the Underwriters are third party beneficiaries of this
Agreement and this Agreement may not be modified or changed without the prior
written consent of Sandler X'Xxxxx.
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6.3. Entire Agreement. This Agreement and the Insider Letters and
Warrants as referenced herein contain the entire agreement of the Company and
the Initial Holders with respect to the subject matter hereof, and this
Agreement contains the entire agreement as it pertains to the Escrow Agent and
the other parties hereto and, except as expressly provided herein, may not be
changed or modified except by an instrument in writing signed by all parties to
this Agreement. The Agreement may be executed in several original or facsimile
counterparts, each one of which shall constitute an original, and together shall
constitute but one instrument.
6.4. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation hereof.
6.5. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the respective parties hereto and their legal representatives,
successors and permitted assigns. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor escrow agent under this Escrow Agreement and shall have and
succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.
6.6. Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and either be delivered personally or be
mailed, certified or registered mail, or by private national courier service,
return receipt requested, postage prepaid, and shall be deemed given when so
delivered personally, if mailed, two days after the date of mailing, or if sent
by national courier service, one business day after being sent, in each case as
follows:
If to the Company, to:
Western United Financial Corporation
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: V. Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
If to an Initial Holder, to his address set forth in Exhibit A.
If to the Escrow Agent, to:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxxxxxxx, 17th Floor
MAC X0000-000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxx
Fax: (000) 000-0000
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A copy of any notice sent hereunder shall be sent to each of:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Jenkens & Xxxxxxxxx, A Professional Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: T. Xxxxx XxXxxxxxx, Esq.
Fax: (000) 000-0000
Sandler X'Xxxxx & Partners, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Syndicate Manager
Fax: (000) 000-0000
The parties may change the persons and addresses to which the notices or
other communications are to be sent by giving written notice to any such change
in the manner provided herein for giving notice.
6.7. Liquidation of the Company. The Company shall give the Escrow
Agent written notification of the liquidation and dissolution of the Company in
the event that the Company fails to consummate a Business Combination within the
time period(s) specified in the Registration Statement.
6.8 Disputes. If any disagreement or dispute arises among the Company
and the Initial Holders concerning the meaning or validity of any provision
hereunder or concerning any other matter relating to this Escrow Agreement, the
Escrow Agent shall be under no obligation to act, except (i) with joint written
instruction of the Company and the Initial Holders, or (ii) under process or
order of court, and shall sustain no liability for its failure to act pending
such process or court order.
6.9 Termination. This Agreement shall terminate on the final
distribution of all of the Escrow Securities in accordance with the terms of
this Agreement.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, the parties have duly executed this Security Escrow
Agreement as of the date first written above.
WESTERN UNITED FINANCIAL
CORPORATION
By:
----------------------------------------
Name: V. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
ESCROW AGENT
By:
----------------------------------------
Name:
Title:
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INITIAL HOLDERS:
WESTERN UNITED FUNDING, LLC
By:
----------------------------------------
Name:
Title:
--------------------------------------------
Name: V. Xxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
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EXHIBIT A
Number of Shares of Stock Certificate
Name and Address of Common Holder Common Stock Number
V. Xxxxxxx Xxxxxxx 1,137,500 1
c/o Western United Management, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
612,500 2
Xxxxxxx Xxxxxx
62,500 3
Xxxxxx Xxxxxx
62,500 4
Xxxxxxx X. Xxxxxxxx
62,500 5
Xxxxx X. Xxxxxx
62,500 6
Xxxxxxx X. Xxxxxxx
Name and Address of Unit Holder Number of Units
Western United Funding, LLC 62,500
c/o Western United Management, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
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SCHEDULE I - ESCROW AGENT FEES FOR ESCROW SERVICES
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SCHEDULE II - AUTHORIZED SIGNATORIES
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