EXHIBIT 10.3
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into as of this 31st day of
July, 1995, by and between the undersigned shareholders (collectively, the
"Shareholders") of Valley-Hi Investment Company ("Valley-Hi"), Norwest
Corporation ("Norwest") and Norwest Bank Minnesota, National Association
("Escrow Agent").
WHEREAS, Valley-Hi and Norwest are parties to that certain Agreement and
Plan of Reorganization dated March 21, 1995 (the "Reorganization Agreement")
under which it is contemplated that a wholly-owned subsidiary of Norwest will
merge with and into Valley-Hi and as a result the Shareholders will receive in
exchange for each share of common stock of Valley-Hi, no par value ("Valley-Hi
Common Stock") owned by such Shareholder immediately prior to the Effective Time
of the Merger (as defined in the Reorganization Agreement), a number of shares
of common stock of Norwest, par value $1-2/3 per share ("Norwest Common Stock")
as more specifically set forth in the Reorganization Agreement, and
WHEREAS, the Shareholders will derive substantial benefit from the
transactions contemplated by the Reorganization Agreement, and
WHEREAS, the Shareholders and Norwest have entered into a Tax
Indemnification Agreement of even date herewith pursuant to which Shareholders
have agreed to indemnify Norwest for certain matters (the "Tax Indemnification
Agreement"); and
WHEREAS, the Reorganization Agreement and Tax Indemnification Agreement
provide that a number of shares of Norwest Common Stock will be held in escrow
pursuant to the terms of an escrow agreement as more specifically set forth in
the Reorganization Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Deposit of Shares. Immediately following the Effective Time of the
Merger Norwest shall deposit 23,000 shares (the "Escrow Shares") of Norwest
Common Stock (or such other number of shares as may result from Norwest Common
Stock adjustments made pursuant to paragraph 1(b) of the Reorganization
Agreement) with the Escrow Agent. The Escrow Shares shall be deposited in the
form of four (4) separate certificates, in the names, denominations and
proportions set forth below:
Escrow
Shareholder Shares Percentage
----------- ------ ----------
Xxx Xxxxxxx Trust Number 1
19,578 85.12
Xxxx Xxxxxxx
1,472 6.40
Xxxx Xxxxxxx
975 4.24
Xxxx Xxxxxxxx
975 4.24
TOTAL 23,000 100.00
Because the Escrow Shares will be registered in the names of the respective
Shareholders, cash dividends will be paid directly to the Shareholders.
2. Disbursement.
(a) The Escrow Agent shall distribute the Escrow Shares to Norwest and the
Shareholders:
(i) on March 15, 1999 unless the Escrow Agent has received written
notice from Norwest or Shareholders' Representative set forth in
Section 2(g) hereof ("Shareholders' Representative") on or prior
to such date that a Tax Claim (as defined in the Tax
Indemnification Agreement) with respect to a Tax Loss (as defined
in the Tax Indemnification Agreement) has occurred; or
(ii) upon a joint written notice from Norwest and the Shareholders'
Representative to the Escrow Agent pursuant to Section 5 below,
indicating that one of the following events has occurred:
(A) A Final Determination (as defined in the Tax
Indemnification Agreement) with respect to such Tax Claim
has occurred; or
(B) Valley-Hi has failed to timely file and claim a Deduction
(as defined in the Tax Indemnification Agreement) on its
federal income tax return for the tax year ending on the
Closing Date for [$1,505,991] under Section 162 and Section
83(h) of the Code relating to the issuance by Valley-Hi to
certain of its employees of 26,250 shares of Valley-Hi
Common Stock, no par value per share; or
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(C) The Shareholders have waived their rights to receive the
Escrow Shares; or
(D) Upon such other circumstances as Norwest and the
Shareholders' Representative shall jointly agree in such
notice.
(b) If the Escrow Shares are distributed pursuant to a notice given under
Sections 2(a)(i) or 2(a)(ii)(B) above, the Escrow Agent shall distribute
all Escrow Shares (subject to adjustment as provided in Section 7) to
Shareholders.
(c) If the Escrow Shares are distributed pursuant to a notice given under
Section 2(a)(ii)(A), the Escrow Agent shall distribute to Norwest a portion
of the Escrow Shares determined by dividing the Tax Loss by $23, and
rounding to the nearest full share. The shares distributed to Norwest
shall be taken from the shares registered in the names of the respective
Shareholders in as close to the proportions set forth in paragraph 1 above
as possible, rounded to the nearest full share. The Escrow Agent shall
distribute the balance, if any, of the Escrow Shares (subject to adjustment
as provided in Section 7), standing in the name of each respective
Shareholder to the respective Shareholder.
(d) If the Escrow Shares are distributed pursuant to Section 2(a)(ii)(C),
then the Escrow Agent shall transfer the Escrow Shares to Norwest.
(e) If the Escrow Shares are distributed pursuant to Section 2(a)(ii)(D),
the Escrow Agent shall distribute the Escrow Shares in the manner
prescribed in such notice.
(f) Norwest and Shareholders hereby agree to give any notice required by
Section 2(a) above within thirty (30) days after the occurrence of the
events described in Sections 2(a)(i) and 2(a)(ii). Any notice given
pursuant to Section 2(a)(ii)(A) shall specify the aggregate dollar amount
of a Tax Loss.
(g) For purposes of this Section 2, "Shareholders' Representative" shall
mean (i) any two of Xxxxxx X. Xxxxxxxx, X. Xxxxx Xxxxxx or Xxxxxx Xxxxxxx,
or in the event only one of such individuals is then living, then such
individual or (ii) any other successor representative or representatives as
may be designated in writing by all the Shareholders to Norwest.
3. Duty of the Escrow Agent. The only duties of the Escrow Agent under
this Escrow Agreement shall be those described herein, and Escrow Agent shall be
under no obligation to determine whether the other parties hereto are complying
with any requirements of law or the terms and conditions of any other agreement
among the parties. Escrow Agent may conclusively rely upon, and shall be
protected in acting upon, any notice, consent, order or other document believed
by it in good faith to be genuine and to
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have been signed or presented by the proper party, consistent with the
reasonable use of due diligence on the part of the Escrow Agent. Escrow Agent
shall have no other duty or liability to verify any such notice, consent, order
or other document, and its sole responsibility shall be to act as expressly set
forth in this Escrow Agreement. If any dispute arises with respect to the
disbursement of the Escrow Shares, or any portion thereof, Escrow Agent may
continue to hold the same or, in the alternative, file an interpleader action in
the State District Court in Hennepin or Xxxxxx Counties, Minnesota and deposit
therein all Escrow Shares in the possession of Escrow Agent pursuant hereto and
shall have no further duties or responsibilities under this Escrow Agreement.
4. Indemnity. The Shareholders (except with respect to a claim, other
than an interpleader or similar action, brought against the Escrow Agent by
Norwest) severally in proportion to their percentage interest in the Escrow
Shares and Norwest each hereby indemnify and hold harmless the Escrow Agent from
and against any and all loss, liability, cost, damage and expense including,
without limitation, reasonable attorneys' fees, which the Escrow Agent may
suffer or incur by reason of any action, claim or proceeding brought against the
Escrow Agent arising out of or relating in any way to this Escrow Agreement or
any transaction to which this Escrow Agreement relates unless such action, claim
or proceeding is the result of gross negligence of the Escrow Agent. The Escrow
Agent may consult legal counsel in respect of any question arising under this
Escrow Agreement, and the Escrow Agent shall not be liable for any action taken
or omitted in good faith upon advice of such counsel.
5. Notices. Any notices or consents required or permitted by this Escrow
Agreement shall be in writing and shall be deemed delivered, if sent by First
Class Mail postage prepaid, delivered in person or sent by certified mail,
postage prepaid, return receipt requested, as follows, unless such address is
changed by written notice hereunder:
If to the Escrow Agent:
Norwest Bank Minnesota, N. A.
Norwest Center
Corporate Custody Services, 0xx Xxxxx
Xxxxx xxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxx Xxxx
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If to the Shareholders:
Xxxx X. Xxxxxxx
X.X. Xxx 0000
Xxx Xxxxxxx, Xxxxx 00000
and
Xxxxxx X. Xxxxxxxx, Trustee
000 Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
with copies to:
Xxxxx X. Xxxxx, Xx.
Xxxxxxxx & Xxxxxxxxx, P.C.
One Alamo Center
000 Xxxxx Xx. Xxxx'x, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
and
T. Xxxx Xxxxxxxx,
Cauthorn, Hale, Hornberger, Fuller, Xxxxxxx & Xxxxxx, Inc.
Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
If to Norwest:
Norwest Corporation
Sixth and Marquette
Xxxxxxxxxxx, XX 00000-0000
Attention: Secretary
6. Miscellaneous.
a. This Escrow Agreement shall be construed, performed and enforced
in accordance with the laws of the State of Minnesota without giving effect
to the principles of conflicts of laws therein.
b. This Escrow Agreement and the Tax Indemnification Agreement
contains the entire understanding of the parties hereto with respect to the
escrow contemplated hereby and supersedes and replaces all prior and
contemporaneous agreements and understandings, oral or written, with regard
to such escrow.
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c. This Escrow Agreement may be amended or modified only by written
instrument executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. Any waiver of any condition or breach of any
provision contained in this Escrow Agreement in any one or more instances
shall not be deemed or construed as a further or continuing waiver of any
such condition or breach of provision of this Escrow Agreement.
d. This Escrow Agreement shall inure to the benefit of and shall be
binding upon the respective successors and assigns of the parties hereto;
however, the Escrow Agent shall not be permitted to assign its obligations
hereunder without the prior written consent of the Shareholders and
Norwest.
7. Escrow Fee. Norwest, on the one hand, and Shareholders severally, on
the other hand, agree that each shall be liable for 50 percent of the fees and
expenses of Escrow Agent which Norwest agrees to pay to the Escrow Agent on
behalf of Norwest and Shareholders in an amount equal to $1,100 per annum.
Shareholders will promptly reimburse Norwest for their allocable portion of the
Escrow Fee. If Shareholders do not so reimburse Norwest, the amount of the
unpaid escrow fee shall be subtracted from the Escrow Shares otherwise to be
distributed to Shareholders.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the date set forth above.
SHAREHOLDERS
Xxx Xxxxxxx Trust Number 1
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
As Trustee
By: /s/ X. Xxxxx Xxxxxx
----- ---------------
As Trustee
By: /s/ Xxxxxx Xxxxxxx
--------------------
As Trustee
/s/ Xxxx Xxxxxxx
------------------
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
------------------
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
-------------------
Xxxx Xxxxxxxx
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NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxx
--------------------
Its: Assistant Vice President
------------------------
NORWEST CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Its: Executive Vice President
------------------------
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State of Texas )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by X. Xxxxx
Xxxxxx, as Trustee of Xxx Xxxxxxx Trust Number 1.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The State of Texas
State of Texas )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by Xxxxxx X.
Xxxxxxxx as Trustee of Xxx Xxxxxxx Trust Number 1.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The State of Texas
State of Texas )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by Xxxxxx
Xxxxxxx, as Trustee of Xxx Xxxxxxx Trust Number 1.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The Xxxxx xx Xxxxx
0
Xxxxx xx Xxxxx )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by Xxxx
Xxxxxxx.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The State of Texas
State of Texas )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by Xxxx
Xxxxxxx.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The State of Texas
State of Texas )
)
County of Bexar )
This instrument was acknowledged before me on July 25, 1995 by Xxxx
Xxxxxxxx.
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Notary Public in and for
The State of Texas
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