Exhibit 99.2
[Exhibit A to Escrow Agreement]
CUSTODIAN AND PAYING AGENT AGREEMENT
This Custodian and Paying Agent Agreement (the "Agreement") is
entered into as of July 2, 2002 by and among Xxxxxx Group Inc., a Delaware
corporation ("Xxxxxx"), Xxxxxx & Company Limited, a U.K. limited company
("Xxxxxx UK"), Investment Technology Group, Inc., a Delaware corporation
("ITG"), The Bank of New York, a New York banking corporation, as custodian
and paying agent (the "Agent"), and Xxxxxxx X. Xxxxxxxxxx and Xxxx X.
Xxxxxx, as members of the Contingent Payment Rights Committee (the
"Committee").
Reference is made to the Escrow Agreement dated as of even date
herewith (the "Escrow Agreement") by and among Xxxxxx, Xxxxxx UK, ITG and
the Committee. This is the Agreement referred to therein. Capitalized terms
used without definition herein have the meanings given to them in the
Escrow Agreement.
This Agreement sets forth the basis on which the Agent will hold,
and make disbursements from, the Escrow and distribute the Contingent
Payment, if any, to Holders and the duties for which the Agent will be
responsible.
In consideration of the foregoing premises (which constitute an
integral part of this Agreement) and mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
ESCROW ACCOUNT
Section 1.01. Appointment and Agreement of Agent. Xxxxxx, Xxxxxx
UK, ITG, and the Committee hereby appoint and designate The Bank of New
York as the Agent, and The Bank of New York hereby accepts such appointment
and agrees to perform the duties of the Agent under the terms and
conditions set forth herein.
Section 1.02. Establishment of Escrow Account. Simultaneously with
the execution and delivery hereof, the Agent shall establish an account
(the "Escrow Account") at its office located in New York, New York. The
Agent shall maintain the Escrow Account in accordance with this Agreement.
All funds delivered to, accepted or held by the Agent shall be held in the
Escrow Account (and shall be deemed part thereof) in accordance with this
Agreement, until released in accordance with the terms hereof.
Section 1.03. Initial Funding. Simultaneously with the execution
and delivery hereof, Xxxxxx UK shall deliver $2,365,000 in cash (the
"Initial Funding") to the Agent for deposit into the Escrow Account in
accordance with this Agreement.
Section 1.04. Investment. The Committee will direct the Agent, in
writing, to invest the Escrow Assets solely in the following: (i)
obligations issued or guaranteed by the United States of America or any
agency or instrumentality thereof with a maturity of not more than 365 days
and (ii) money market funds substantially all of whose funds are invested
in the foregoing. All earnings and gains on Escrow Assets, including
interest and dividends, shall be paid into the Escrow Account and shall
constitute Escrow Assets. If at any time the Committee deems it necessary
that some or all of the investments constituting Escrow Assets be redeemed
or sold in order to raise money necessary to comply with the provisions of
the Escrow Agreement, the Committee shall direct the Agent, in writing, to
effect such redemption or sale, in such manner and at such time as the
Committee directs.
Section 1.05. Disbursements. From time to time as the Committee
shall direct the Agent in writing, the Agent shall disburse such portion of
the Escrow Assets as the Committee so directs to pay Escrow Expenses. The
Agent shall keep a record of such disbursements.
Section 1.06. Quarterly Statements. As soon as practicable
following each March 31, June 30, September 30 and December 31, until the
termination of this Agreement, the Agent shall deliver to the Committee a
statement (a "Quarterly Statement") setting forth: (a) the amount of the
Escrow Assets; (b) the amount of income or interest earned or accrued with
respect to the Escrow Assets, if any, during the period covered by such
Quarterly Statement; and (c) the amount of Escrow Expenses paid during such
period.
Section 1.07. Maintenance of Register of Holders. The Agent shall
maintain a register of the Holders (the "Register") at its office in New
York, New York. The initial Register shall be provided to the Agent by
Xxxxxx immediately prior to the Effective Time. The Agent shall record any
transfers of Contingent Payment Rights in the Register to the extent
transfers of Contingent Payment Rights are permissible under the terms of
the Merger Agreement and the Escrow Agreement; provided that the Agent
shall be entitled to rely solely on the Committee in determining whether or
not any transfer is permitted. The Committee and the Agent may treat the
person or entity in whose name any Contingent Payment Right is listed on
the Register as the Holder thereof for the purposes of receiving the
distribution of the Contingent Payment and for all other purposes.
ARTICLE II
TERMINATION AND DISTRIBUTION
Section 2.01. Termination of Merger Agreement. In the event that
the Merger Agreement is terminated under Section 7.1 thereof prior to the
Effective Time, the Committee shall direct the Agent to immediately pay all
Escrow Expenses, if any, that have been incurred and have not been paid,
and to deliver the remaining Escrow Assets to Xxxxxx UK, and this Agreement
and the Escrow shall terminate.
Section 2.02. Delivery of Escrow Assets to Xxxxxx UK; Termination
of the Escrow. Pursuant to the Escrow Agreement, following the earliest of
(i) the final settlement or other final resolution of the Claims, (ii) a
final determination by the Committee to cease Pursuit of all Claims and
(iii) the fourth anniversary of the Effective Time (which date shall be
extended in the event of any outstanding claims of indemnification or
reimbursement under Section 3.09, 5.01, 5.05 or 6.02 of the Escrow
Agreement), the Committee shall discharge all of the Escrow's obligations,
including by directing the Agent to pay the Escrow Expenses and reserve for
the payment of such costs and expenses of distributing the Contingent
Payments pursuant to Section 2.03 hereof. Following such discharge, the
Committee shall direct the Agent to liquidate all remaining Escrow Assets,
if any, and to deliver the proceeds in cash to Xxxxxx UK. Following such
delivery to Xxxxxx UK, the Escrow shall terminate. At no time shall there
be any distribution of Escrow Assets to the Holders.
Section 2.03. Delivery of Contingent Payment to Agent;
Distribution to Holders. Promptly following the termination of the Escrow
pursuant to Section 2.02 hereof, ITG shall deliver to the Agent cash in an
amount equal to the lesser of (i) the amount of cash, if any, delivered to
Xxxxxx UK by the Agent pursuant to Section 2.02 hereof, plus the amount of
any Recoveries that were not deposited in the Escrow Account net of any
amounts deducted therefrom pursuant to Section 6.02 of the Escrow
Agreement, and (ii) $12,465,000 minus the Escrow Reduction Amount, if any.
The Agent shall distribute the amount so received by it from ITG to the
Holders, without interest, pro rata based on the number of Contingent
Payment Rights allocated to each such Holder on the Register. At no time
shall there be any distribution of the Contingent Payment except pursuant
to the preceding sentence. Following such distribution by the Agent, this
Agreement shall terminate. The distribution of any Contingent Payment shall
be in compliance with applicable laws.
SECTION 2.04. Pre-Closing Recoveries. Notwithstanding anything to
the contrary in the third sentence of Section 2.03 hereof, if any
Recoveries are received prior to the Effective Time, the Committee shall be
entitled to direct the Agent to withdraw from the Escrow Account (i) the
amount of such Recoveries less Escrow Expenses incurred prior to the
Effective Time plus (ii) such portion of the Initial Funding as the
Committee determines (provided that in no event shall such amount be in
excess of the amount that would leave $500,000 in the Escrow Account prior
to the Effective Time) (the sum of clauses (i) and (ii), the "Escrow
Reduction Amount"), and deliver the Escrow Reduction Amount in cash to
Xxxxxx UK prior to the Effective Time.
ARTICLE III
MATTERS CONCERNING AGENT
Section 3.01. Indemnification of Agent. Xxxxxx (if prior to the
Effective Time) or ITG (if after the Effective Time) shall indemnify the
Agent and hold the Agent harmless from and against, and shall promptly
advance to the Agent or its Advisors all funds necessary with respect to,
any and all claims, demands, obligations, liabilities, costs and expenses,
including amounts paid in satisfaction of judgments, in compromise (so long
as Xxxxxx or ITG, as applicable, has approved such compromise, with such
approval not to be unreasonably withheld or delayed), or fines or
penalties, and counsel or other Advisor fees (collectively, "Losses")
incurred in connection with the performance of the Agent's duties under
this Agreement, except to the extent caused by the Agent's willful
misconduct or gross negligence. Notwithstanding the foregoing, all Losses
indemnified pursuant to the foregoing shall be paid out of the Escrow
Assets until such time as the Escrow Assets are exhausted or the Escrow is
terminated pursuant to Section 2.02 before ITG shall be obligated to make
any payments pursuant to the foregoing. The obligations of Xxxxxx and ITG
set forth in this Section 3.01 shall survive the termination of this
Agreement and the removal or resignation of the Agent.
Section 3.02. Agent Not Liable. The Agent, in the performance of
its duties hereunder, shall not be liable or responsible for anything done
or omitted to be done hereunder in good faith as herein provided, except
for its own willful misconduct or gross negligence. The Agent shall be
fully protected in relying upon any notice, certificate or other written
communication, including, without limitation, any written notice delivered
by the Committee to the Agent instructing the Agent to take any action or
refrain from taking any action, believed by the Agent to be genuine and
purported to be signed or given by any person or persons purporting to have
authority to act on behalf of any party hereto. The Agent shall have the
right, but not the obligation, to consult with counsel of its choice and
shall not be liable for action taken or omitted to be taken by the Agent in
accordance with the advice of such counsel. The Agent shall have no
responsibility or liability for any diminution in value of any assets held
hereunder which may result from any investments or reinvestment made in
accordance with this Agreement.
Section 3.03. Resignation; Successor Agent. The Agent or any
successor Agent, as the case may be, may resign its duties and be
discharged from all further duties or obligations hereunder at any time
upon giving twenty (20) Business Days' prior written notice to the parties
hereto. Xxxxxx (if such resignation occurs prior to the Effective Time) or
the Committee (if such resignation occurs after the Effective Time) will
designate a successor Agent hereunder within said twenty (20) Business Day
period.
Section 3.04. Compensation. The Agent shall be entitled to
compensation for its services hereunder as set forth in Schedule A hereto,
which is made a part hereof, and for reimbursement of its reasonable and
documented out-of-pocket expenses, including the fees and expenses of
attorneys or agents which it may find necessary to engage in the
performance of its duties hereunder, all to be paid out of the Escrow
Assets, and the Agent shall have, and is hereby granted, a prior lien upon
any property, cash, or assets of the Escrow Account with respect to its
unpaid fees and nonreimbursed expenses superior to the interests of any
other persons or entities. The provisions of this Section 3.04 shall
survive any termination, satisfaction or discharge of this Agreement, as
well as the resignation or removal of the Agent.
Section 3.05. Limited Duties of Agent. The Agent shall have only
those duties as are specifically provided herein, which shall be deemed
purely ministerial in nature, and shall under no circumstance be deemed a
fiduciary for any of the parties to this Agreement. The Agent shall neither
be responsible for, nor chargeable with, knowledge of the terms and
conditions of any other agreement, instrument or document between the other
parties hereto, in connection herewith, including, without limitation, the
Merger Agreement and the Escrow Agreement. This Agreement sets forth all
matters pertinent to the Escrow contemplated hereunder, and no additional
obligations of the Agent shall be inferred from the terms of this
Agreement, the Escrow Agreement or any other agreement.
Section 3.06. Merger of Agent. Any entity into which the Agent may
be merged or converted or with which the Agent may be consolidated, or any
entity resulting from any merger, conversion or consolidation to which the
Agent shall be a party, or any entity to which all or substantially all of
the business of the Agent shall be transferred, shall succeed to all the
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.
Section 3.07. Judgments, Etc. In the event that any Escrow
property shall be attached, garnished or levied upon by any court order
(including by bankruptcy), or the delivery thereof shall be stayed or
enjoined by an order of a court, or any order, judgment or decree shall be
made or entered by any court order affecting the property deposited under
this Agreement, the Agent is hereby expressly authorized, in its sole
discretion, to obey and comply with all writs, orders or decrees so entered
or issued, which it is advised by legal counsel of its own choosing is
binding upon it, whether with or without jurisdiction, and in the event
that the Agent obeys or complies with any such writ, order or decree it
shall not be liable to any of the parties hereto or to any other person,
firm or entity by reason of such compliance, notwithstanding such writ,
order or decree be subsequently reversed, modified, annulled, set aside or
vacated.
Section 3.08. Tax Filings. The Agent shall report to Xxxxxx UK, as
of the end of each fiscal quarter, all income earned from the investment of
the Escrow Assets.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, or by telecopy upon confirmation
of receipt, (b) on the first business day following the date of dispatch if
delivered by a nationally recognized next-day courier service, or (c) on
the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid.
All notices hereunder shall be delivered as set forth below, or pursuant to
such other instructions as may be designated in writing by the party to
receive such notice.
(a) if to ITG or to Xxxxxx or Xxxxxx UK after the Effective Time,
to:
Investment Technology Group, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Xxxxxx or Xxxxxx UK prior to the Effective Time, to:
Xxxxxx Group Inc.
0 Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(c) if to the Agent, to:
Prior to July 6, 2002:
The Bank of New York
Insurance Trust and Escrow Unit
0 Xxxx Xxxxx -00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
On or after July 8, 2002:
The Bank of New York
Insurance Trust and Escrow Xxxx
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(d) if to the Committee or any Member, to it, him or her:
c/x Xxxxxx Group Inc.
0 Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(e) if to the Holders, then to them at their respective addresses
set forth in the Register.
Section 4.02. Counterparts. This Agreement may be executed in
counterparts, each of which shall be considered one and the same agreement
and shall become effective when both counterparts have been signed by each
of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
Section 4.03. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (b) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
Section 4.04. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
Section 4.05. Waiver of Jury Trial. Each of the parties hereto
hereby irrevocably waives any and all right to trial by jury in any legal
proceeding arising out of or related to this Agreement or the transactions
contemplated hereby.
Section 4.06. Assignment. Except as set forth in Section 3.06
hereof, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of the other parties, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and assigns.
Section 4.07. Headings. Sections, subheadings and other headings
used in this Agreement are for convenience only and shall not affect the
construction of this Agreement.
Section 4.08. Amendment and Modification. This Agreement may be
amended or modified only by a subsequent writing signed by each of the
Members, ITG, Xxxxxx and Xxxxxx UK; provided, that if any amendment or
modification shall effect the rights or obligations of the Agent hereunder,
any such amendment or modification must be signed by the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers thereunto duty authorized
as of the day and year first above written.
XXXXXX GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman and CEO
XXXXXX & COMPANY LIMITED
By: /s/ Xxxx X. Xxxxxx
_______________________________
Name: Xxxx X. Xxxxxx
Title: Director
INVESTMENT TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx Xx.
_______________________________
Name: Xxxxxxx X. Xxxxxxx Xx.
Title: Chairman
THE BANK OF NEW YORK,
as Custodian and Paying Agent
By: /s/ Aldrin X. X. Xxxxx
_______________________________
Name: Aldrin X. X. Xxxxx
Title: Assistant Treasurer
MEMBERS OF THE CONTINGENT PAYMENT
RIGHTS COMMITTEE:
/s/ Xxxxxxx X. Xxxxxxxxxx
___________________________________
Name: Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxx X. Xxxxxx
___________________________________
Name: Xxxx X. Xxxxxx
