Exhibit 99.2
ESCROW AGREEMENT
THIS AGREEMENT is made on the ___ day of October, 2002, by and among the
individuals whose names are set forth on the signature pages attached hereto
(collectively referred to as the "Shareholders," and each individually as a
"Shareholder"), including Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxxx as the
shareholder representatives of each of the Shareholders (collectively, the
"Shareholder Representatives"), Eastern Financial Systems, Inc., a Pennsylvania
corporation (the "Company"), Fidelity National Information Solutions, Inc., a
Delaware corporation ("Parent"), and Wachovia Bank, National Association,
Corporate Trust Group ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Shareholders, EFS Merger Sub, Inc., a Delaware corporation
("Newco"), Parent and the Company are parties to that certain Agreement and Plan
of Merger, dated October __, 2002 (the "Merger Agreement") (all capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Merger Agreement), providing for the merger of
Newco with and into the Company, with the Company as the surviving corporation
of the merger; and
WHEREAS, pursuant to Section 2.4(c) of the Merger Agreement, the parties
thereto agreed that at the Closing a portion of the Merger Consideration would
be deposited with the Escrow Agent to provide a source to satisfy the
Shareholders' obligations, if any, to Parent pursuant to the provisions of
Section 2.5(b), Section 2.5(c) and Article 9 of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound,
the parties hereto covenant and agree as follows:
1. Establishment of Escrow Fund.
1.1 The parties hereto hereby appoint the Escrow Agent to serve as
escrow agent under the terms of this Escrow Agreement, and the Escrow Agent
hereby accepts such appointment and agrees to carry out the provisions of this
Escrow Agreement to be performed by it. On the Closing Date and simultaneously
with the execution of this Agreement, Parent shall deliver to the Escrow Agent a
number of shares of Common Stock of Parent, par value $.0001 per share ("FNIS
Common Stock"), equal to [______], which number of shares of FNIS Common Stock
Parent and the Shareholders acknowledge and agree is equal to the product of the
Merger Consideration multiplied by .05, divided by the Per Share Value as of the
Effective Date (the "Escrow Shares"). The Escrow Shares, together with any
dividends declared and paid in FNIS Common Stock with respect to the Escrow
Shares are referred to hereinafter as the
"Escrow Fund." The Escrow Fund shall be held in escrow by the Escrow Agent in
accordance with the provisions of this Agreement.
1.2 The shares of FNIS Common Stock held in the Escrow Fund shall be
held in the name of the Escrow Agent or its nominee for the term hereof.
1.3 The Escrow Fund shall be held by the Escrow Agent subject to the
terms of this Agreement in separate subaccounts for each of the Shareholders and
the shares of FNIS Common Stock initially deposited hereunder shall be allocated
to such subaccounts in accordance with the percentages set forth on Exhibit A
hereto.
1.4 Except for dividends declared and paid in FNIS Common Stock with
respect to the Escrow Shares, which shall be treated as Escrow Shares pursuant
to Section 9.6(a) and Section 9.6(b) of the Merger Agreement, any cash
dividends, dividends payable in securities (other than FNIS Common Stock) or
other distributions of any kind made in respect of the Escrow Shares shall be
promptly distributed and paid to the Shareholders in accordance with the
percentages set forth on Exhibit A hereto.
1.5 With respect to any amount of cash in the Escrow Fund, Escrow Agent
shall invest such cash in a money market fund that is substantially invested
only in obligations of the United States, including any such money fund managed
by Escrow Agent and any of its affiliates.
2. Purpose of the Escrow Fund.
The purpose of the Escrow Fund is to provide a source for the payment to
Parent of any adjustment(s) to the Merger Consideration pursuant to the
provisions of Section 2.5(b) and Section 2.5(c) of the Merger Agreement and for
the payment of any indemnification obligations of the Shareholders under Article
9 of the Merger Agreement.
3. Term
3.1 The Escrow Fund shall be held in accordance with this Escrow
Agreement until the first anniversary of the date hereof (the "Escrow Term").
The date on which such first anniversary occurs is referred to hereinafter as
the "Escrow Termination Date." The Escrow Agent covenants and agrees to use good
faith efforts to send written notice of such Escrow Termination Date to Parent
and the Shareholders in the calendar month immediately prior to the Escrow
Termination Date; provided, however, that in no event will the failure to send
such written notice (i) impose any liability on the Escrow Agent, or (ii)
otherwise prevent or delay the release of the Escrow Shares pursuant to Section
4.1(d) herein.
4. Distribution of the Escrow Fund.
4.1 The Escrow Fund shall be disbursed by the Escrow Agent as follows:
(a) If during the Escrow Term, the Escrow Agent receives from Parent
a Claim Notice (as hereinafter defined) directing the Escrow Agent to disburse
all or a portion of
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the Escrow Fund to Parent, the Escrow Agent shall promptly forward a copy of
such Claim Notice to the Shareholder Representatives.
(i) If the Escrow Agent has not received from the Shareholder
Representatives an Objection Notice (as hereinafter defined) within thirty (30)
calendar days following receipt by the Shareholder Representatives of such Claim
Notice from the Escrow Agent, the Escrow Agent shall promptly thereafter
disburse from the Escrow Fund the amount claimed in accordance with such Claim
Notice, and the Shareholder Representatives shall be precluded from asserting
objections to such Claim Notice thereafter.
(ii) If the Escrow Agent receives within thirty (30) calendar
days following receipt by the Shareholder Representatives of a copy of the Claim
Notice, an Objection Notice from the Shareholder Representatives, the Escrow
Agent shall refrain from acting upon the disbursement direction (except as to
the portion, if any, to which the Objection Notice by its terms does not apply)
but shall continue to hold an amount equal to the amount claimed in the Claim
Notice, together with interest thereon (i) until the Escrow Agent receives
notice in accordance with Section 4.1(b) below, or (ii) until such time as
Escrow Agent receives a certified copy of a court order or judgment from a court
of competent jurisdiction which has become final and non-appealable with respect
to payment of the claim(s) set forth in the Claim Notice, in which case the
Escrow Agent shall promptly thereafter disburse all or a portion of the Escrow
Fund in accordance with such order or judgment. In the event Parent fails to
respond to the Objection Notice within thirty (30) days of receipt of such
Objection Notice, the claims asserted in the Claim Notice will be of no further
force or effect, and Parent shall be precluded from asserting such claims
thereafter.
(iii) As used herein, "Claim Notice" shall mean a written notice
setting forth with reasonable specificity, (i) the amount and nature of the
claim, (ii) the section or sections of the Merger Agreement pursuant to which
such claim is being made and (iii) the date on which such claim properly accrued
or arose, which notice shall be certified by a duly authorized officer of
Parent. As used herein, "Objection Notice" means a written notice objecting to
the disbursement to Parent of the amount, or any portion thereof, set forth in a
Claim Notice and specifying in reasonable detail the reasons therefor.
(iv) For purposes of determining the number of shares of FNIS
Common Stock that must be distributed by the Escrow Agent to Parent in
accordance with the provision of this Escrow Agreement and in connection with a
Claim Notice, each share of FNIS Common Stock in the Escrow Fund shall be deemed
to have a value equal to the Per Share Value as of the Effective Date.
(b) Upon the delivery to the Escrow Agent by Parent and the
Shareholder Representatives of a joint written notice directing the Escrow Agent
to disburse all or a portion of the Escrow Fund, the Escrow Agent shall promptly
disburse all or a portion of the Escrow Fund in accordance with such joint
written notice.
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(c) Amounts of the Escrow Fund distributed from time to time
hereunder shall include, in addition to the amount otherwise distributable, an
allocated portion of the interest, dividends and earnings thereon to date on the
Escrow Fund subject to the distribution of cash dividends, dividends payable in
securities (other than FNIS Common Stock) or other distributions pursuant to
Section 1.4 hereof. Such interest, dividends and earnings shall be determined on
an accrual basis.
(d) Within three (3) Business Days after the Escrow Termination
Date, the Escrow Agent shall pay to the Shareholders the current balances in
each of their subaccounts less any amount as to which Parent has made a claim
hereunder prior to the expiration of the Escrow Period but which has not yet
been resolved by agreement of the parties or by a final non-appealable order or
judgment of a court of competent jurisdiction. With respect to any amount as to
which Parent has made a claim hereunder prior to the expiration of the Escrow
Period but which has not yet been resolved by agreement of the parties or by a
final non-appealable order or judgment of a court of competent jurisdiction, the
Escrow Agent shall continue to hold an amount equal to the claim by Parent, or
portion thereof which Shareholder Representatives disputes, if less,
indefinitely until the Escrow Agent receives either (i) a joint certificate from
the Shareholder Representatives and Parent regarding the distribution of the
amount in dispute, or (ii) a certified copy of a final non-appealable order or
judgment from a court of competent jurisdiction.
4.2 Upon the resolution of all disputed claims for indemnification by
Parent, the Escrow Agent shall as soon as practicable thereafter pay the
subaccount balances of the Escrow Fund to each of the Shareholders.
4.3 The Shareholders, and each of them, hereby designate and appoint the
Shareholder Representatives as their representatives and agents to receive and
give notices and to take all other actions required of Shareholders under this
Escrow Agreement, and the Shareholders, and each of them, agree that Parent and
the Escrow Agent may conclusively rely upon any notice or certificate delivered
or any action taken by the Shareholder Representatives in connection with or
pursuant to this Escrow Agreement.
5. Escrow Agent.
5.1 The Escrow Agent shall not in any way be bound or affected by a
notice of modification or cancellation of this Escrow Agreement unless notice
thereof is given to the Escrow Agent by the Shareholder Representatives and
Parent, nor shall the Escrow Agent be bound by any modification of its
obligations hereunder unless the same shall be consented to by the Escrow Agent
in writing.
5.2 The Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing delivered to it hereunder without being
required to determine the authenticity or the correctness of any facts stated
therein, the propriety or validity of the service thereof, or the jurisdiction
of any court issuing any judgment or order.
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5.3 The Escrow Agent shall not be under any duty to give the Escrow Fund
any greater care than it gives its own similar property.
5.4 The Escrow Agent may act in reliance upon any instrument or
signature reasonably believed by it to be genuine, and it may assume that any
person purporting to give any notice or to make any statement in connection with
the provisions hereof has been duly authorized to do so.
5.5 The Escrow Agent may act in reliance upon advice of counsel with
respect to any matter connected herewith, and shall not be liable for any action
taken or omitted in accordance with such advice.
5.6 The Escrow Agent shall not have any responsibility for the payment
of taxes except with funds furnished to the Escrow Agent for that purpose. The
parties hereto will provide the Escrow Agent with appropriate forms for tax
identification number certification.
5.7 This Escrow Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. Except as
otherwise expressly provided herein, the Escrow Agent shall not refer to, and
shall not be bound by, the provisions of any other agreement.
5.8 The Escrow Agent shall not be liable for any act or omission taken
or made in good faith by Escrow Agent in the performance of its duties
hereunder, except for its own bad faith, gross negligence, fraud or willful
misconduct, and, except with respect to claims based upon such bad faith, gross
negligence, fraud or willful misconduct that are successfully asserted against
the Escrow Agent. The Shareholders and Parent shall jointly and severally
indemnify and hold the Escrow Agent, and each director, officer, employee,
attorney, agent and affiliate of the Escrow Agent, harmless from any and all
loss, liability, cost or expense, including reasonable attorneys' fees and costs
of suit, arising out of or in connection with its duties hereunder, except as
caused by the Escrow Agent's bad faith, gross negligence, fraud or willful
misconduct.
5.9 The Escrow Agent shall not be required to institute or defend any
action involving any matters referred to herein or which affect it or its duties
or liabilities hereunder, unless and until requested to do so by any party to
this Escrow Agreement and then only upon receiving full indemnity, in character
reasonably satisfactory to the Escrow Agent, against any and all claims,
liabilities and expenses, including reasonable attorneys' fees and costs of
suit, in relation thereto.
5.10 The Escrow Agent agrees that the Shareholder Representatives and
Parent may, by mutual agreement at any time, remove it as Escrow Agent
hereunder, and substitute an individual or a bank or trust company for it, in
which event the Escrow Agent, upon receipt of written notice thereof, shall
account for and deliver to such substituted escrow agent all shares of FNIS
Common Stock or such stock or other securities, funds and obligations held by
it, less any amounts then due and unpaid to it for fees and expenses as herein
provided for, and the Escrow Agent shall thereafter be discharged from all
liability hereunder.
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5.11 The Escrow Agent may at any time resign as such by delivering
written notice of resignation to the other parties hereto. If the Shareholder
Representatives and Parent jointly designate a successor escrow agent, then the
Escrow Agent shall deliver the Escrow Fund to such successor escrow agent,
whereupon the Escrow Agent shall be discharged of any liability or
responsibility with respect thereto arising thereafter. If, within 30 days after
receipt of such notice of resignation, the Shareholders and Parent have not
jointly designated a successor escrow agent, the Escrow Agent may deposit the
Escrow Fund into a court of competent jurisdiction in the State of Delaware, and
upon such deposit, the Escrow Agent shall be relieved of any liability or
responsibility with respect thereto arising thereafter.
5.12 Upon termination of this Escrow Agreement, the Escrow Agent may
request from any and all of the parties hereto such additional assurances,
certificates, satisfactions, releases and/or other documents as it may
reasonably deem appropriate to evidence the termination of this Escrow
Agreement.
5.13 If any controversy arises between or among Parent and the
Shareholder Representatives, or any other person, firm or entity, with respect
to this Escrow Agreement or the Escrow Fund, or the Escrow Agent is in doubt as
to what action to take, the Escrow Agent will (a) withhold delivery of the
Escrow Fund until the controversy is resolved by a court of competent
jurisdiction, or until receipt of a joint written notice from Parent and
Shareholder Representatives as to distribution of the Escrow Fund, or (b)
institute a xxxx of interpleader in a court in the State of Delaware to
determine the rights of the parties (in which case the Escrow Agent will
withhold delivery of the Escrow Fund until paid into the court in accordance
with the laws of the State of Delaware). If a xxxx of interpleader is
instituted, or if the Escrow Agent is threatened with litigation or becomes
involved in litigation in any manner whatsoever on account of this Agreement or
the Escrow Fund, as between themselves and the Escrow Agent, Parent and the
Shareholders, jointly and severally, will pay the Escrow Agent its reasonable
attorneys' fees and nay other disbursements, expenses, losses, costs and damages
of the Escrow Agent in connection with or resulting from such threatened or
actual litigation. All costs and expenses of such controversy will be charged to
the non-prevailing party in such controversy.
5.14 Compensation for the services of the Escrow Agreement shall be
based upon the fee schedule attached hereto as Exhibit B. In the event the
Escrow Agent is called upon to perform extraordinary services, for example in
the event of a dispute among the parties or with a third party, it shall be
entitled to such additional compensation as shall be reasonable under the
circumstances. The fees and expenses of the Escrow Agent shall be paid by
Parent.
6. Notices.
Any notice, direction, request, instruction, legal process or other
instrument to be given or served hereunder shall be in writing and shall be
deemed to be duly given (i) when personally delivered, (ii) when five days have
elapsed after its transmittal by registered or certified United States mail,
return receipt requested, postage prepaid, (iii) upon delivery by overnight
carrier provided such overnight carrier can furnish evidence of receipt by the
addressee, or (iv) upon receipt by legible facsimile telecopy if the sender
received the answer back of the addressee. Notices of address change shall be
effective only upon receipt notwithstanding the provisions of
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the foregoing sentence. The foregoing shall be sufficient if given to all
parties at the following address:
(i) if to Parent to:
Fidelity National Information Solutions, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Telecopy: (000) 000-0000
(ii) if to Shareholder Representatives, to:
Xxxxxx X. Xxxxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
and
Xxxxxx X. Xxxxxxxxx
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
(iii) with a copy to:
Xxxxxxxx Xxxxxxxxx
Professional Corporation
One Oxford Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
Telecopy: (000) 000-0000
(iv) to the Escrow Agent:
Wachovia Bank, National Association
Corporate Trust Group
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Assistant Vice President
Telecopy: (000) 000-0000
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7. Miscellaneous.
7.1 The parties hereto agree that this Escrow Agreement shall be
governed and construed in accordance with the laws of the State of Delaware
without regard to its conflicts of laws provisions.
7.2 The parties irrevocably consent and submit to the exclusive
jurisdiction of the Courts of the State of Delaware, and the Federal Courts of
the United States of America located in Delaware) over any suit, or action. The
parties hereto further agree that service of process in any such suit, action or
proceeding may be made in any manner set forth in Section 6 hereof for the
giving of notices and the same shall constitute valid personal service for all
purposes, each party expressly waiving personal service by other means.
7.3 The parties hereto agree to execute and deliver any and all
documents and to take such further action as shall be reasonably required to
effectuate the provisions of this Escrow Agreement.
7.4 This Escrow Agreement contains the entire understandings of the
parties hereto with respect to the subject matter herein contained and shall not
be modified except by a writing signed by all the parties hereto.
7.5 This Escrow Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors and assigns.
7.6 This Escrow Agreement may be executed in one or more counterparts,
all of which when taken together shall comprise one instrument.
7.7 Pursuant to Section 10.15(b) of the Merger Agreement the Shareholder
Representatives shall not be liable to the Shareholders for any act or omission
taken or made in good faith by the Shareholder Representatives in his
performance hereunder, except for his own bad faith, gross negligence, fraud or
willful misconduct. The Shareholders shall jointly and severally indemnify and
hold the Shareholder Representatives harmless from any and all loss, liability,
cost or expense, including reasonable attorneys' fees and costs of suit, arising
out of or in connection with its duties hereunder, except as caused by
Shareholder Representatives' bad faith, gross negligence, fraud or willful
misconduct.
[Remainder of page intentionally left blank; Signature pages follow.]
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[FIRST OF TWO SIGNATURE PAGES FOR ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement the day and year first above written.
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Xxxxxx X. Xxxxxxx
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Xxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, individually and as Custodian
for Xxxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxx
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Xxxx Xxxx
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Xxxxxx Xxxxxx
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Xxxxxx X. Xxxxxxxx
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Xx. Xxxx Xxxxxxxx
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Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxx
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[SECOND OF TWO SIGNATURE PAGES FOR ESCROW AGREEMENT]
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Xxxx Xxxxxxxxxx
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Xxxxx X. Xxxxx
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Xxxxxx X. Xxxxxxxx
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Darton X. Xxxx
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Xxxxxxx Xxxxxxxx
EASTERN FINANCIAL SYSTEMS, INC., a
Pennsylvania corporation
By:
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Name:
------------------------------------------
Title:
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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC., a
Delaware corporation
By:
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Name:
------------------------------------------
Title:
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WACHOVIA BANK, NATIONAL
ASSOCIATION, CORPORATE TRUST GROUP
By:
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Name: Xxxxx X. Xxxxx
Title: Assistant Vice President
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EXHIBIT A
PERCENTAGES FOR DISTRIBUTION OF
ESCROW FUND TO SHAREHOLDERS
Xxxxxx X. Xxxxxxx 46.25%
Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx, 4.46%
(Jointly)
Xxxxxxx X. Xxxxxx 4.46%
(As Custodian for Xxxxxxxx X. Xxxxxx)
Xxxxxxx X. Xxxxxx 4.46%
(As Custodian for Xxxxxx X. Xxxxxx)
Xxxxxx X. Xxxxxxxxx 1.22%
Xxxxxxx X. Xxxxxx 6.09%
Xxxx Xxxx 6.09%
Xxxxxx Xxxxxx 5.48%
Xxxxxx X. Xxxxxxxx 2.43%
Xx. Xxxx Xxxxxxxx 6.09%
Xxxxxxx Xxxxxx 2.43%
Xxxxxxx Xxxxx 1.22%
Xxxx Xxxxxxxxxx 1.22%
Xxxxx X. Xxxxx 2.50%
Xxxxxx X. Xxxxxxxx 2.50%
Darton X. Xxxx 2.50%
Xxxxxxx Xxxxxxxx 0.61%
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100.00%
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EXHIBIT B
ESCROW AGENT FEES AND EXPENSES
I. INITIAL SET-UP FEE $1,000
II. ANNUAL ADMINISTRATION FEE $3,000
Out-of-pocket expenses incurred in rendering any service covered by this Exhibit
B are in addition to the fee quoted. Expenses for which the Escrow Agent is
normally reimbursed include, but are not limited to: counsel fees, travel
expenses, express mailing, publication, printing costs, postage and courier
charges.
The Initial Fee and the Annual Administration Fees are payable at the closing of
this transaction. Thereafter, the Annual Administration Fee and any
out-of-pocket expenses will be billed on the anniversary date of the closing.
The fees quoted are intended to cover the Escrow Agent's standard fees and are
subject to change if the circumstances attending a particular account warrant.
Services not included in this fee schedule but deemed necessary by the trust
officer will be billed at the prevailing rate at the time such special service
may be required.
