ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement") made as of this 29th day of May,
1998 by and among Investors Financial Services Corp., a corporation organized
under the laws of Delaware (the "Parent"), Xxxx X. Xxxxxx and Xxxxx X. Xxxxxxx
(the "Company Shareholders"), being all the stockholders of record of AMT
Capital Services, Inc. ("Capital Services") and AMT Capital Advisers, Inc.
("Capital Advisers"), both Delaware corporations (Capital Services and Capital
Advisers sometimes referred to herein individually as a "Company" and
collectively as the "Companies"), and The First National Bank of Chicago, as
escrow agent (the "Escrow Agent").
WHEREAS, the Parent and the Shareholders have entered into an Agreement
and Plan of Merger dated as of May 12, 1998 (the "Merger Agreement") pursuant to
which all of the outstanding capital stock of the Companies will be exchanged
for 194,006 shares of Parent's common stock, par value $.01 per share (the
"Parent Stock");
WHEREAS, pursuant to Section 3.02 of the Merger Agreement, the Parent
and the Company Shareholders have agreed that the Parent shall deliver 18,938
shares of Parent's Stock to the Escrow Agent on behalf of the Company
Shareholders to be held in escrow pursuant to the Merger Agreement and this
Agreement (such shares as are initially deposited with the Escrow Agent and
continue to be held pursuant to this Agreement hereinafter being referred to as
the "Escrowed Shares") as security for the indemnification obligations of the
Company Shareholders pursuant to Section 11.02(a) of the Merger Agreement; and
WHEREAS, pursuant to Sections 10.02 and 10.03 of the Merger Agreement,
it is a condition to each party's obligations under the Merger Agreement that
the other execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not
defined herein shall have the meaning assigned thereto in the Merger Agreement.
2. Appointment. The Parent and the Company Shareholders hereby appoint
The First National Bank of Chicago to act as the Escrow Agent and The First
National Bank of Chicago accepts such appointment.
3. Escrow. Contemporaneously with the execution hereof, the Parent, on
behalf of the Company Shareholders and as if such shares were delivered to the
Company Shareholders and then delivered by the Company Shareholders to the
Escrow Agent, has delivered to the Escrow Agent (and the Escrow Agent hereby
acknowledges receipt of) the Escrowed Shares, which shall be held in escrow by
the Escrow Agent, pursuant to the terms and conditions of this Agreement.
4. Claims Against Escrowed Shares. At any time or times prior to the
Escrow Termination Date (as defined in Section 5(b)), Parent may make claims
against the Escrowed Shares as set forth in Section 11.04 of the Merger
Agreement. Parent shall notify the Company Shareholders and the Escrow Agent of
each such claim and deliver a Certificate in respect thereof. Thereafter, the
relevant matter shall
be resolved by Parent and the Company Shareholders in accordance with the
procedures set forth in Article XI of the Merger Agreement.
5. Release of Escrowed Shares. Except as otherwise expressly provided
in this Agreement, the Escrowed Shares shall be released by the Escrow Agent
only as follows:
(a) If Parent suffers any Loss or Losses which become an
Agreed Claim under the Merger Agreement, Parent shall present evidence of such
Agreed Claim to the Escrow Agent. Evidence of an Agreed Claim shall be (a) a
copy of a Certificate accompanied by a certification signed by the Parent
stating that the Parent delivered the Certificate to the Company Shareholders at
least 30 days prior to the date of the certification and that the Parent has
received no written objection to the Certificate from either Company
Shareholder; (b) a memorandum of agreement executed by the Parent and the
Company Shareholders; or (c) a copy of a final order of judicial determination
from a court of competent jurisdiction, for which the time for appeal for any
such final order has expired without any appeal being made. Upon receipt of such
properly evidenced Agreed Claim, the Escrow Agent shall immediately release to
the Parent a number of Escrowed Shares equal to the amount of the Agreed Claim
divided by the Closing Market Value ($52.80625), rounded to the nearest whole
number of Escrowed Shares.
(b) On the earlier to occur of (i) February 28, 1999 and (ii)
the Escrow Agent's receipt of notice of the Parent's first public announcement
of earnings following completion by the Parent's independent public accountants
of the first full-year audit of the Parent's financial statements following the
Closing Date (the "Escrow Termination Date"), the Escrow Agent shall immediately
release to the Company Shareholders, in accordance with the ratio of ownership
set forth in Schedule A hereto, all of the Escrowed Shares; provided, however,
that the Escrow Agent shall not distribute, and shall continue to hold in escrow
pursuant to this Agreement, a number of Escrowed Shares equal to (x) the
aggregate amount of all claims for Losses for which the Escrow Agent has
received a Certificate or Certificates which have not become an Agreed Claim and
paid out pursuant to Section 5(a) above divided by (y) the Closing Market Value
($52.80625), rounded to the nearest whole number of Escrowed Shares. Such notice
of Parent's first public announcement of earnings shall include such
announcement of earnings and may be delivered by Parent or either Company
Shareholder.
(c) After the Escrow Termination Date, each Company
Shareholder may from time to time request in writing that the Parent notify the
Escrow Agent of the amount, if any, by which the value of the Escrowed Shares
then retained by the Escrow Agent (valued at the Closing Market Value) exceeds
the aggregate of all claims for Losses subject to any unresolved Certificates
(the "Excess Value"). Upon receipt of such a request, the Parent shall promptly
notify the Escrow Agent and the Company Shareholders in writing of the Excess
Value, if any, (a "Release Notice"). Upon receipt of a Release Notice, the
Escrow Agent shall immediately deliver to the Company Shareholders a number of
Escrowed Shares equal to the Excess Value divided by the Closing Market Value
($52.80625), rounded to the nearest whole number of Escrowed Shares. Upon
delivery of the last Escrowed Share pursuant to this Section 5, this Escrow
Agreement shall terminate.
6. Dividends and Other Distributions. Except as otherwise set forth in
this Section 6, all cash dividends, non-cash dividends and distributions
declared by Parent with respect to the Parent Stock shall be payable to the
Company Shareholders, in accordance with the ratio of ownership set forth in
Schedule A hereto, as if no shares had been placed into escrow under this
Agreement (subject to reduction to reflect the delivery of Escrowed Shares to
Parent under this Agreement). All dividends in the form of Parent's Common Stock
shall be distributed directly to the Escrow Agent, to be held by the Escrow
Agent as additional Escrowed Shares hereunder.
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7. Additional Remedies. The distribution of any Escrowed Shares to the
Parent provided for in Section 5 hereof shall be in addition to, and not in lieu
of, any other remedy which may be available to the Parent pursuant to the Merger
Agreement.
8. Exercise of Rights by the Company Shareholders. For so long as the
Escrowed Shares are held hereunder, and except as otherwise set forth herein,
the Company Shareholders shall be entitled to exercise all voting and consensual
powers and all other rights pertaining to the Escrowed Shares.
9. Interest in Escrowed Shares. The Company Shareholders severally
agree that they will not assign or transfer their interest in the Escrowed
Shares (until released to them hereunder) and such interest shall be
transferable only by operation of law, unless the Parent, in its sole
discretion, consents in writing otherwise and the Company Shareholders and any
transferee execute such documents as the Parent may request.
10. Matters Relating to the Escrow Agent.
(a) The duties and obligations of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Agreement and no
implied duties or obligations shall be read into this Agreement against the
Escrow Agent, and under no circumstance shall the Escrow Agent be deemed to be a
fiduciary with respect to any of the parties hereto. 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 FAILURE TO EXERCISE REASONABLE CARE IN PERFORMING ITS
DUTIES, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES . Except as specifically
provided herein, the Escrow Agent shall be under no obligation to refer to any
other documents between or among the parties related in any way to this Escrow
Agreement.
(b) The Escrow Agent shall not be liable to anyone by reason
of any error of judgment, or for any act done or step taken or omitted by it in
good faith, or for any mistake of fact or law, or for any thing which it may do
or refrain from doing in connection herewith, unless caused by or arising out of
its own negligence or bad faith.
(c) The Escrow Agent shall be entitled to rely and shall be
protected in acting in reliance upon any writing furnished to it by any party
hereto in accordance with the terms hereof, and shall be entitled to treat as
genuine, and as the document it purports to be, any letter, paper or other
document furnished to it by any party and believed by the Escrow Agent to be
genuine and to have been signed by the proper party.
(d) The Escrow Agent may consult with independent counsel,
including counsel who are employees of the Escrow Agent, with respect to any
question relating to its duties or responsibilities hereunder and shall not be
liable for any action taken or omitted in good faith on advice of such counsel.
(e) In the event of any disagreement or dispute between or
among the Company Shareholders, the Parent, the Companies or any of their
Affiliates concerning the rights and obligations of the Escrow Agent, the Escrow
Agent shall be entitled, at its option, to refuse to comply with the claims or
demands of any party hereto until such disagreement or dispute is finally
resolved by a court of
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competent jurisdiction (in proceedings which it or any other party may initiate)
and the time for appeal of any such final order shall have expired without an
appeal being made, and in so doing the Escrow Agent shall not be or become
liable to any party.
(f) Each other party hereto, jointly and severally, agrees to
indemnify and hold harmless the Escrow Agent against all legal fees, costs,
liabilities and other expenses, including the Escrow Agent's fees (the "Escrow
Expenses") incurred by the Escrow Agent in connection with or as a result of any
disagreement between or among the Company Shareholders, the Parent, the Company,
or any of their Affiliates or in connection with the performance or enforcement
of this Agreement, and such indemnification shall survive the Escrow Agent's
resignation or removal and the termination of this Agreement.
(g) The Escrow Agent and successor escrow agent, as the case
may be, may resign its duties and be discharged from all other further duties
and obligations hereunder at any time upon giving thirty (30) days' prior
written notice to the Company Shareholders and the Parent. The Parent shall
thereupon designate a successor escrow agent hereunder within said thirty-day
period, which successor shall be a commercial bank with net assets in excess of
$500 million and which is not an Affiliate of Parent, to whom the Escrow Agent
shall deliver the Escrowed Shares. If the parties hereto are unable to agree
upon a successor, or shall have failed to appoint a successor prior to the
expiration of thirty (30) days following receipt of the notice of resignation or
removal, the Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor escrow agent or for other appropriate relief, and
any such resulting appointment shall be binding upon all of the parties hereto.
(h) The Escrow Agent shall have the right to perform any of
its duties hereunder through agents, attorneys, custodians, or nominees.
(i) The Escrow Agent shall not be required by any provision of
this Agreement to expend or risk its own funds in the performance of its duties
if it shall have reasonable grounds for believing that repayment of such funds
is not reasonably assured to it.
(j) Any banking association or corporation into which the
Escrow Agent (or substantially all of its corporate trust business) may be
merger, converted or with which the Escrow Agent may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent shall be a party, succeed to all the Escrow Agent's rights,
obligations and immunities hereunder 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.
11. Tax Matters. Any tax returns required to be prepared and filed in
connection with the Escrowed Shares will be prepared and filed by the Parent or
the Company Shareholders, as appropriate. The Escrow Agent shall have no
responsibility for the preparation and/or filing of any tax return with respect
to any earnings in connection with the Escrowed Shares.
12. Fees. The Parent, on the one hand, and the Company Shareholders,
jointly and severally on the other hand, will each pay half of the Escrow
Expenses of the Escrow Agent.
13. Notices. Any notice or other communication required or permitted
hereunder shall be in writing, and shall be given by registered mail (postage
prepaid), personal delivery, telecopier (confirmed by mail as aforesaid) or
courier service (such as Federal Express) addressed as follows:
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If to the Parent:
Xxxx X. Xxxxx
General Counsel
Investors Financial Services Corp.
000 Xxxxxxxxx Xxxxxx
XX Xxx 0000
Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
If to the Company Shareholders:
Xxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxxx
0000 Xxxx Xxx
Xxx Xxxx, XX 00000
If to Escrow Agent:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Corporate Trust Administration
Telecopy: 000-000-0000
Each of the parties hereto shall be entitled to specify a different address by
giving notice as aforesaid. Such notices and communications shall be deemed
effective (i) three business days after being sent, if sent by registered mail
(postage prepaid) from one location in the United States to another location
therein, (ii) seven business days after being sent if sent by international
registered airmail (postage prepaid), or (iii) on the date delivered, if
delivered personally, transmitted by telecopier or delivered by courier service
such as Federal Express.
14. Headings. Section headings are not to be considered part of this
Agreement, are included solely for convenience of reference and are not intended
to be full or accurate descriptions of the contents of Sections to which they
relate.
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15. Governing Law. The validity, construction and interpretation of
this Agreement shall be governed by the laws of The Commonwealth of
Massachusetts applicable to contracts made and to be performed wholly within
that commonwealth.
16. Termination. This Agreement shall terminate automatically upon the
distribution of all of the Escrowed Shares in accordance with the terms of this
Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
18. Amendments. This Agreement may only be amended by an instrument in
writing signed by each of the parties hereto.
[SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
INVESTORS FINANCIAL SERVICES CORP.
By:/s/Xxxxx X. Xxxxxxx
-------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
SELLERS
/s/Xxxx X. Xxxxxx
-----------------
Xxxx X. Xxxxxx
/s/Xxxxx X. Xxxxxxx
-------------------
Xxxxx X. Xxxxxxx
ESCROW AGENT
The First National Bank of Chicago
By:/s/Xxxxxx X. Xxxxxx
-------------------
Name: Xxxxxx X. Xxxxxx
Title: Trust Officer
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SCHEDULE A
RATIO OF OWNERSHIP
Xxxx X. Xxxxxx 89.15%
Xxxxx X. Xxxxxxx 10.85%
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