Exhibit 2.2
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ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement") dated as of October 31, 2002 among Medical
Staffing Network, Inc., a Delaware corporation with Federal Taxpayer Id. No.
59-3489868 ("Buyer"), Health Search International, Inc., a Maryland corporation
with Federal Taxpayer Id. No. 52-1764754 ("HSI"), Clinical Resource Services,
Inc., a Maryland corporation with Federal Taxpayer Id. No. 52-1919290 ("CRS,"
and, together with HSI, "Sellers") and Silver, Freedman & Taff, L.L.P.("Escrow
Agent").
Recitals
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A. All capitalized terms not otherwise defined in this Agreement shall have
the meanings given them in the Asset Purchase Agreement (the "Asset Purchase
Agreement") dated October 31, 2002 by and among Buyer, Sellers, Stacy Birnbach
and Cheryl Rhodes.
B. Sellers, Buyer and the Shareholders have entered into the Asset Purchase
Agreement which provides for the purchase by Buyer from Sellers of certain of
the assets used in or relating to the operation of the Business.
C. Section 4(a)(2) of the Asset Purchase Agreement provides that at the
Closing the Buyer shall deliver to the Escrow Agent the sum of $2,063,403 to be
held in escrow in accordance with the terms of this Agreement.
D. Sellers and Buyer desire that the Escrow Agent hold and dispose of the
Escrow Fund (as defined in Section 2 below) in accordance with the terms and
conditions of this Agreement, and the Escrow Agent is willing to do so.
Agreement
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1. Appointment of Escrow Agent. The Escrow Agent is hereby constituted and
appointed as escrow agent, and hereby accepts its appointment and agrees to act
as escrow agent pursuant to the terms and conditions of this Agreement.
2. Escrow Deposit. Buyer hereby delivers to the Escrow Agent pursuant to
Section 4(a)(2) of the Asset Purchase Agreement the sum of $2,063,403, as the
same may be increased pursuant to Section 4(h) of the Asset Purchase Agreement
(the "Escrow Deposit"). The Escrow Deposit and any and all interest or other
income earned on the Escrow Deposit, less distributions made and other amounts
payable under this Agreement are referred to in this Agreement as the "Escrow
Fund." The Escrow Fund will be held by the Escrow Agent in a segregated account
as set forth in Section 4.3 until disbursed pursuant to the terms of this
Agreement. The Escrow Agent acknowledges receipt of the Escrow Deposit in the
amount of $2,063,403 and agrees to hold the Escrow Fund in escrow pursuant to
the terms of this Agreement.
3. Release of Escrow Fund.
3.1 If at any time from the date of this Agreement up to and including the
date which is 12 months after the Closing Date (the "Claims Expiration Date")
Buyer concludes that it is entitled to a release of Escrow Funds pursuant to
Sections 4(d) or 4(h) of the Asset Purchase Agreement or indemnification under
the Asset Purchase Agreement, Buyer shall deliver to the Escrow Agent a written
demand (the "Buyer Demand") stating (a) that the Buyer is entitled to all or a
portion of the Escrow Fund under Section 4(d) or 4(h) of the Asset Purchase
Agreement or in satisfaction of a claim of Buyer for indemnification by Sellers
under the applicable Section of the Asset Purchase Agreement, (b) the amount of
such claim (the "Claimed Escrow Amount") and (c) that Buyer has
contemporaneously delivered to Sellers a copy of the Buyer Demand. If, within 15
business days after Buyer sends a copy of the Buyer Demand to Sellers (the
"Dispute Period"), Sellers notify the Escrow Agent in writing that they dispute
Buyer's claim for payment (which notice shall specify in reasonable detail
Sellers' basis for objection), the Escrow Agent shall promptly (a) forward a
copy of Sellers' statement to Buyer and (b) continue to hold the Escrow Fund in
escrow until receipt of (i) a joint written instruction (the "Joint
Instruction") signed by Buyer and Sellers which sets forth the amount to be
disbursed to Buyer in satisfaction of the Buyer Demand or (ii) a certified copy
of an arbitrator's determination or a nonappealable final judgment of a court of
competent jurisdiction ("Final Judgment") specifying the amount to be disbursed
to Buyer in satisfaction of the Buyer Demand. If Sellers do not notify the
Escrow Agent within the Dispute Period that they dispute the Buyer Demand for
payment, within five business days after expiration of the Dispute Period,
Escrow Agent shall disburse to Buyer the amount set forth in the Buyer Demand,
but not in excess of the Escrow Fund less amounts due or reserved for taxes
under Section 3.5. After any disbursement to Buyer pursuant to (i) an undisputed
Buyer Demand, (ii) a Joint Instruction or (iii) a Final Judgment, Escrow Agent
shall continue to hold the Escrow Fund in accordance with the terms of this
Agreement.
3.2 If the HSI/CRS Division (as defined below) of Buyer attains earnings
before interest, taxes, depreciation and amortization for the 12-month period
following the Closing Date ("Post-Closing EBITDA") equal to or greater than
AEBITDA (as defined in the Asset Purchase Agreement) for the 12-month period
ending June 30, 2002 (the "EBITDA Target"), Sellers shall be entitled to receive
an amount equal to (a) the Escrow Fund then held by the Escrow Agent less (b)
the aggregate of (i) amounts due or reserved for taxes under Section 3.5 and
(ii) the amount of any Claimed Escrow Amounts from all Buyer Demands delivered
to the Escrow Agent on or prior to the Claims Expiration Date that have not been
satisfied in full (the "Remaining Claimed Escrow Amounts") (unless such
calculation results in a negative number, in which case no part of the Escrow
Fund shall be disbursed at that time). If the HSI/CRS Division of Buyer fails to
attain the EBITDA Target, Buyer shall be entitled to receive an amount equal to
the Escrow Fund then held by the Escrow Agent less (x) amounts due or reserved
for taxes under Section 3.5 and (y) the Remaining Claimed Escrow Amounts (unless
such calculation results in a negative number, in which case no part of the
Escrow Fund shall be disbursed at that time). Post-Closing EBITDA shall be
calculated in accordance with procedures set forth on Schedule 4(b) of the Asset
Purchase Agreement.
3.3 Within a 90-day accounting period from the anniversary of the Closing
Date, Buyer shall deliver to the Escrow Agent a statement (the "EBITDA
Statement") stating (a)
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the calculation of Post-Closing EBITDA, (b) the amount to be released from
escrow using the formula described in the preceding subsection, (c) to whom such
amount shall be released and (d) that Buyer has contemporaneously delivered to
Sellers a copy of the EBITDA Statement. If, within 15 business days after Buyer
sends a copy of the EBITDA Statement to Sellers, Sellers notify the Escrow Agent
in writing that they dispute the information set forth in the EBITDA Statement
(which notice shall specify in reasonable detail Sellers' basis for objection),
the Escrow Agent shall promptly (a) forward a copy of Sellers' statement to
Buyer and (b) continue to hold the Escrow Fund in escrow until (i) receipt of a
Joint Instruction or a Final Judgment specifying the amount to be disbursed and
to whom such disbursement shall be made. Upon receipt of a Joint Instruction or
Final Judgment, Escrow Agent shall (a) disburse to the amount set forth in the
Joint Instruction or Final Judgment to the party specified, but not to exceed
the Escrow Fund less any taxes due or reserved under Section 3.5 and (b) if
applicable, continue to hold the Remaining Claimed Escrow Amounts until the
Escrow Agent receives a Joint Instruction or Final Judgment specifying which
party is entitled to the Remaining Claimed Escrow Amounts less taxes due or
reserved under Section 3.5. If Sellers do not provide notice to the Escrow Agent
within such 15-day period that they dispute the EBITDA Statement, the EBITDA
Statement shall be deemed accepted and Escrow Agent shall (a) disburse the
amount set forth in the EBITDA Statement to the party specified as entitled to
receive such amount but not to exceed the Escrow Fund less any taxes due or
reserved under Section 3.5 and (b) if applicable, continue to hold the Remaining
Claimed Escrow Amounts until the Escrow Agent receives a Joint Instruction or
Final Judgment specifying which party is entitled to the Remaining Claimed
Escrow Amounts.
3.4 For purposes of this Agreement, "HSI/CRS Division" shall mean the
Business of Sellers acquired by Buyer pursuant to the Asset Purchase Agreement
as the same is operated as a separate division of Buyer.
3.5 The Escrow Fund shall be treated as a separate tax-paying trust under
the name "CRS/HSI Acquisition Trust" for purposes of paying federal and state
income taxes on all net income and gains arising from Permissible Investments
(as defined below) and the Escrow Agent will file appropriate tax returns
following the end of each calendar year and pay the necessary taxes thereon for
such year and shall be permitted to withdraw the amount of the related taxes
from the Escrow Fund. The Escrow Agent may pay or reserve for taxes on an
estimated basis. The payment or reserve for taxes under this Section 3.5 shall
have a priority over all other disbursements under this Agreement.
3.6 Subject to utilization of after-tax earnings on the Escrow Fund to
satisfy Claimed Escrow Amounts under Section 3.1 and the provisions of Section
3.7, (i) in the event the Post-Closing EBITDA is equal to or greater than the
AEBITDA Target, Sellers shall be entitled to the after-tax earnings on the
Escrow Fund and (ii) in the event Post-Closing EBITDA is less that the AEBITDA
Target, Buyer shall be entitled to the after-tax earnings on the Escrow Fund.
3.7 At any time after the date of this Agreement, the Escrow Agent may be
advised by Sellers and Buyer to pay all or a portion of the Escrow Fund pursuant
to a Joint Instruction or a Final Judgment. Upon receipt of a Joint Instruction
or a Final Judgment, the
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Escrow Agent shall pay the Escrow Fund, or a portion thereof, in the manner
provided in the Joint Instruction or Final Judgment.
3.8 The Escrow Agent shall hold the Escrow Fund in accordance with the
terms of this Agreement until it (or a portion of it) is required to be
disbursed pursuant to this Section. Upon disbursement of the entire Escrow Fund
by the Escrow Agent pursuant to this Section, this Escrow Agreement shall
terminate.
4. Duties of Escrow Agent.
4.1 In General. It is agreed that the duties of the Escrow Agent are only
those that are specifically provided in this Agreement, and are purely
ministerial in nature. The Escrow Agent shall incur no liability, except for
liability arising from the Escrow Agent's willful misconduct or gross
negligence, provided the Escrow Agent acts in good faith. The Escrow Agent has
no responsibility in respect of the Escrow Fund deposited with it, other than to
use due care in holding the Escrow Fund and faithfully to follow the
instructions relating to it contained in this Agreement. The Escrow Agent may
consult with counsel and shall be fully protected from liability arising from
actions taken in good faith in accordance with the advice of counsel.
4.2 Legal Proceedings; Indemnification. The Escrow Agent shall not be
required to institute legal proceedings of any kind. If any action is threatened
or instituted against the Escrow Agent, it may interplead the parties to this
Escrow Agreement and may deposit the Escrow Fund with the court. In this event,
the Escrow Agent shall be relieved of and discharged from all further
obligations and liabilities under this Escrow Agreement. Sellers and Buyer
jointly and severally agree to indemnify the Escrow Agent from and against all
claims, actions, losses, liabilities, damages, deficiencies, costs and expenses
(including interest, penalties and reasonable attorneys' fees and disbursements)
in acting in accordance with any written instruction from them, individually or
collectively.
4.3 Deposit of Funds. All funds received by Escrow Agent shall be invested
or deposited in (i) obligations issued and guaranteed by the United States of
America or any agency or instrumentality thereof, (ii) obligations (including
certificates of deposit and banker's acceptances) of any domestic commercial
banking institution having capital and surplus in excess of $500,000,000 or
(iii) money market accounts of any domestic commercial banking institution
having capital and surplus in excess of $500,000,000 (collectively, "Permissible
Investments") until they are disbursed in accordance with the terms of this
Escrow Agreement. Buyer and Sellers agree that if any early withdrawal penalty
or similar fee is assessed based on withdrawals made to disburse all or a
portion of the Escrow Fund to Buyer under this Agreement, such penalties and
fees shall be borne by Seller.
4.4 Waiver of Conflict. The parties agree that nothing contained in this
Agreement nor Escrow Agent's performance of any duties under this Agreement
shall impair or affect Escrow Agent's ability and authority to continue to
represent the Sellers and Shareholder in connection with any matter (including,
without limitation, any interpleader action arising under this Agreement)
whether or not related to the subject matter of this Agreement, nor shall
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Escrow Agent's role create any impropriety or conflict of interest in connection
with the representation of Sellers or any Shareholder.
5. Expenses. The Escrow Agent shall be entitled to be reimbursed for all
reasonable expenses, disbursements and advances, including tax return
preparation fees and reasonable attorneys' fees incurred or made by the Escrow
Agent in connection with the carrying out of its duties under this Agreement.
The Escrow Agent's expenses, disbursements and advances shall be paid directly
to the Escrow Agent and shall be borne fifty percent (50%) by Sellers and fifty
percent (50%) by Buyer.
6. Cooperation. The parties agree to execute, acknowledge, deliver and
file, or cause to be executed, acknowledged, delivered and filed, all further
instruments, agreements or documents as may be necessary to consummate the
transactions provided for in this Agreement and to do all further acts necessary
to carry out the purpose and intent of this Agreement.
7. Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with the waiver or estoppel. No written waiver shall be deemed a continuing
waiver unless specifically stated therein, and each waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
the term or condition for the future or as to any act other than that
specifically waived. The waiver by any party of any other party's breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach, and the failure of any party to exercise any right or remedy
shall not operate or be construed as a waiver or bar to the exercise of such
right or remedy upon the occurrence of any subsequent breach. No delay on the
part of a party in exercising a right, power or privilege hereunder shall
operate as a waiver thereof. No waiver on the part of a party of a right, power
or privilege, or a single or partial exercise of a right, power or privilege,
shall preclude further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies of this Agreement are cumulative and
are not exclusive of the rights or remedies that a party may otherwise have at
law or in equity.
8. Governing Law; Venue and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the District of Columbia without
reference to its conflicts of law principles. Venue and jurisdiction of all
actions relating to the performance or interpretation of this Agreement may be
brought only in the courts of the District of Columbia or in the United States
District Court for the District of Columbia. The parties consent to personal
jurisdiction in the courts described in this Section for the purpose of all
actions, and waive all objections to venue and the right to assert that a court
chosen under this Section is improper based on the doctrine of forum non
conveniens.
9. Attorneys' Fees. If litigation is brought concerning this Agreement, the
prevailing party shall be entitled to receive from the non-prevailing party, and
the non-prevailing party shall upon final judgment and expiration of all appeals
immediately pay upon demand all reasonable attorneys' fees and expenses of the
prevailing party incurred in trial, bankruptcy and appeal.
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10. Notices. Notices required or permitted to be given under this Agreement
shall be in writing and effective upon delivery in person or by certified mail,
return receipt requested, to the parties at the addresses below or to another
address as either party shall direct by notice to the other parties as provided
in this Section.
(a) If to the Buyer, to:
Medical Staffing Network, Inc.
901 Yamato Road, Suite 110
Boca Raton, FL 33431
Attention: President
with a copy to:
Steel Hector & Davis LLP
1900 Phillips Point West
777 South Flagler Drive
West Palm Beach, FL 33401-6198
Attention: Kim A. Hines, Esq.
(b) If to Sellers, to:
Stacy Birnbach
Clinical Resource Services, Inc. &
Health Search International, Inc.
6110 Executive Boulevard, Suite 903
Rockville, MD 20852
and
Cheryl Rhodes
14021 Welland Terrace
North Potomac, MD 20878
with a copy to:
Silver, Freedman & Taff, L.L.P.
1700 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Attention: Barry P. Taff, P.C.
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(c) If to the Escrow Agent, to:
Silver, Freedman & Taff, L.L.P.
1700 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Attention: Barry P. Taff, P.C.
11. Entire Agreement; Amendment. This Agreement and the Asset Purchase
Agreement constitute the entire understanding of the parties with respect to the
Escrow Fund and supersede all prior discussions, negotiations, agreements and
understandings, whether oral or written, with respect to their subject matter.
This Agreement may be modified only by a written instrument properly executed by
all of the parties.
12. Severability. If any one or more of the provisions of this Agreement is
held invalid, illegal or unenforceable, the remaining provisions of this
Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision which comes closest to the intent of the parties.
13. Successors and Assigns. This Agreement shall be for the benefit of, and
shall be binding upon, the parties and their respective heirs, personal
representatives, executors, legal representatives, successors and assigns.
14. Payment of Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own legal fees and disbursements and other expenses
incurred in connection with this Agreement.
15. Counterparts. This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
[Remainder of page intentionally left blank. Next page is signature page.]
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The parties have executed this Escrow Agreement effective as of the day
and year first written above.
BUYER:
MEDICAL STAFFING NETWORK, INC.
By:
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Robert J. Adamson, President
SELLERS:
HEALTH SEARCH INTERNATIONAL, INC.
By:
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Stacy Birnbach, its President
CLINICAL RESOURCE SERVICES, INC.
By:
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Cheryl Rhodes, its President
ESCROW AGENT:
SILVER, FREEDMAN & TAFF, L.L.P.
By:
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Name:
Title:
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