Nicor Inc.
Form 10-Q
Exhibit 10.3
BNY MIDWEST
TRUST
COMPANY
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ESCROW AGREEMENT
between
NICOR INC. and the parties listed as
INDIVIDUAL INSUREDS on the Signature Pages hereto
and
BNY MIDWEST TRUST COMPANY
Dated as of April 23, 2004
ACCOUNT NUMBER(S) 268664
SHORT TITLE OF ACCOUNT: Nicor Insured Escrow Account
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ESCROW AGREEMENT
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This ESCROW AGREEMENT, dated as of April 23, 2004 (this "Agreement"),
is by and among Nicor Inc., an Illinois corporation ("Nicor"), the other parties
listed as Individual Insureds on the signature pages hereto (the "Individual
Insureds" and together with Nicor, the "Insureds"), and BNY Midwest Trust
Company, an Illinois trust company, as escrow agent ("Escrow Agent").
WHEREAS, the Individual Insureds are or formerly were directors or
officers of Nicor;
WHEREAS, the Individual Insureds are insureds under Nicor's Directors
and Officers Liability Insurance Policy with [***] ("[***]"), Policy Number
[***] (the "Policy");
WHEREAS, the Insureds and [***] have entered into the Agreement and
Mutual Release (the "[***] Agreement") dated concurrently herewith, providing
for the settlement for any and all claims under the Policy by the Insureds in
exchange for a payment by [***] of twenty nine million dollars ($29,000,000)
(the "Coverage Amount").
WHEREAS, a condition to the Individual Insureds' execution of the
[***] Agreement is that the Coverage Amount be available to the Individual
Insureds to pay claims which would otherwise have been payable under the Policy
("Covered Claims");
WHEREAS, the Insureds desire to establish an escrow fund with the
funds representing the Coverage Amount to be available for Covered Claims.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
I. INSTRUCTIONS
1. Escrow Property. The Insureds hereby agree to direct [***] to
deposit the Coverage Amount of twenty nine million dollars ($29,000,000) with
Escrow Agent to be held in accordance with the terms hereof (the "Escrow
Property"). Escrow Agent shall accept the amounts so deposited and agrees to
establish and maintain the Escrow Property in the manner provided herein.
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2. Purpose of Escrow. The Escrow Property established and maintained
by Escrow Agent hereunder is for the sole purpose of providing coverage to the
Individual Insureds for Covered Claims.
3. Investment of Escrow Property. Upon written directions from Nicor
and two-thirds (2/3) of the Individual Insureds, Escrow Agent shall invest or
reinvest Escrow Property without distinction between principal and income, in
the following:
One or more short-term market instruments including but not limited
to marketable obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, bank instruments,
corporate debt securities issued by U.S. or foreign companies,
commercial paper, demand instruments, adjustable rate obligations,
asset- backed securities, restricted securities, fully collateralized
repurchase agreements or money market funds subject to the
requirements of the Investment Company Act of 1940, as amended,
invested in any one or more of the aforementioned types of
instruments.
Escrow Agent shall have no liability for any loss arising from or
related to any such investment other than in accordance with paragraph 4 of the
Terms and Conditions.
4. Distributions. Upon the final settlement and/or adjudication of
any Covered Claim for which the Individual Insureds are not otherwise
indemnified, Nicor shall deliver written notice to Escrow Agent and the
Individual Insureds of such settlement or judgment and such notice shall include
the amount to be paid, the party or parties to receive payment and the dates
such payment is to be made (the "Payment Notice"). Unless two-thirds (2/3) or
more of the Individual Insureds object within five (5) business days after
receiving the Payment Notice, Escrow Agent shall pay the amounts out of the
Escrow Property as indicated in the Payment Notice. If more than two-thirds
(2/3) of the Individual Insureds object to the payment or payments described in
the Payment Notice, no payment shall be made without the subsequent consent of
Nicor and two-thirds (2/3) of the Individual Insureds or upon the order of a
court of competent jurisdiction. Within ten (10) business days after the final
settlement and/or adjudication of the litigation entitled In Re Nicor, Inc.
Derivative Litigation, any and all amounts remaining in the Escrow Property
shall be paid to Nicor. For purposes of this Agreement, final settlement and/or
adjudication shall mean an executed, enforceable and court approved settlement
or non-appealable judgment by a court of competent jurisdiction.
5. Termination of Escrow Agreement. This Agreement shall terminate
upon payment or distribution of all Escrow Property, including all undistributed
interest or income earned or accrued with respect thereto in accordance with
Section 3.
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6. Compensation.
(a) At the time of execution of this Escrow Agreement, Nicor
shall pay Escrow Agent an acceptance fee of $0.00. In addition, Nicor shall pay
Escrow Agent an annual fee of $0.00, payable upon execution of this Agreement
and thereafter on each anniversary date of this Agreement. The annual fee shall
not be pro-rated for any portion of a year.
(b) Nicor shall pay all activity charges as per Escrow Agent's
current fee schedule.
(c) Nicor shall be responsible for and shall reimburse Escrow
Agent upon demand for all expenses, disbursements and advances incurred or made
by Escrow Agent in connection with this Agreement.
7. Notices. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (c) the expiration of three (3)
Business Days after the day when mailed by registered or certified mail (postage
prepaid, return receipt requested), addressed to the respective parties at the
following addresses (or such other address for a party as shall he specified by
like notice):
(a) if to the Purchaser, to:
Nicor Inc.
1844 Ferry Road
Naperville, IL 60563-9600
Telecopy: (630) 983-9328
Attention: Dave Shurr
with copies to:
Nicor, Inc.
1844 Ferry Road
Naperville, IL 60563-9600
Telecopy: (630) 983-3559
Attention: Paul Gracey
(b) if to any Individual Insured, to it at the address(es)
set forth on the signature pages hereof
(c) If to Escrow Agent, to:
2 N. LaSalle Street
Suite 1020
Chicago, IL 60602
Telecopy: (312) 827-8542
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Attention: Corporate Trust
II. TERMS AND CONDITIONS:
1. The duties, responsibilities and obligations of Escrow Agent shall
be limited to those expressly set forth herein and no duties, responsibilities
or obligations shall be inferred or implied. Escrow Agent shall not be subject
to, nor required to comply with, any other agreement between or among any or all
of the Insureds or to which any Insured is a party, even though reference
thereto may be made herein, or to comply with any direction or instruction
(other than those contained herein or delivered in accordance with this Escrow
Agreement) from any Insured or any entity acting on its behalf. Escrow Agent
shall not be required to, and shall not, expend or risk any of its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder.
2. This Agreement is for the exclusive benefit of the parties hereto
and their respective successors hereunder, and shall not be deemed to give,
either express or implied, any legal or equitable right, remedy, or claim to any
other entity or person whatsoever.
3. If at any time Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects Escrow Property (including but
not limited to orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of Escrow Property), Escrow Agent
is authorized to comply therewith in any manner as it or its legal counsel of
its own choosing deems appropriate; and if Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, Escrow Agent shall not be liable to any of
the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
4. (a) Escrow Agent shall not be liable for any action taken or
omitted or for any loss or injury resulting from its actions or its performance
or lack of performance of its duties hereunder in the absence of gross
negligence or willful misconduct on its part. In no event shall Escrow Agent be
liable (i) for acting in accordance with or relying upon any instruction,
notice, demand, certificate or document from any Insured or any entity acting on
behalf of any Insured, (ii) for any consequential, punitive or special damages,
(iii) for the acts or omissions of its nominees, correspondents, designees,
subagents or subcustodians, or (iv) for an amount in excess of the value of the
Escrow Property, valued as of the date of deposit.
(b) If any fees, expenses or costs incurred by, or any
obligations owed to, Escrow Agent hereunder are not promptly paid when due,
Escrow Agent may reimburse itself therefor from the Escrow Property and may
sell, convey or otherwise dispose of any Escrow Property for such purpose.
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(c) As security for the due and punctual performance of any and
all of Insureds' obligations to Escrow Agent hereunder, now or hereafter
arising, Insureds, individually and collectively, hereby pledge, assign and
grant to Escrow Agent a continuing security interest in, and a lien on, the
Escrow Property and all Distributions thereon or additions thereto (whether such
additions are the result of deposits by the Insureds or the investment of Escrow
Property). The security interest of Escrow Agent shall at all times be valid,
perfected and enforceable by Escrow Agent against the Insureds and all third
parties in accordance with the terms of this Escrow Agreement.
(d) Escrow Agent may consult with legal counsel at the expense
of the Insureds as to any matter relating to this Escrow Agreement, and Escrow
Agent shall not incur any liability in acting in good faith in accordance with
any advice from such counsel.
(e) Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of Escrow Agent
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).
5. Unless otherwise specifically set forth herein, Escrow Agent shall
proceed as soon as practicable to collect any checks or other collection items
at any time deposited hereunder. All such collections shall be subject to Escrow
Agent's usual collection practices or terms regarding items received by Escrow
Agent for deposit or collection. Escrow Agent shall not be required, or have any
duty, to notify anyone of any payment or maturity under the terms of any
instrument deposited hereunder, nor to take any legal action to enforce payment
of any check, note or security deposited hereunder or to exercise any right or
privilege which may be afforded to the holder of any such security.
6. Escrow Agent shall provide to Insureds monthly statements
identifying transactions, transfers or holdings of Escrow Property and each such
statement shall be deemed to be correct and final upon receipt thereof by the
Insureds unless Escrow Agent is notified in writing to the contrary within
thirty (30) business days of the date of such statement.
7. Escrow Agent shall not be responsible in any respect for the form,
execution, validity, value or genuineness of documents or securities deposited
hereunder, or for any description therein, or for the identity, authority or
rights of persons executing or delivering or purporting to execute or deliver
any such document, security or endorsement.
8. Notices, instructions or other communications shall be in writing
and shall be given to the address set forth in the "Notices" provision herein
(or to such other address as may be substituted therefor by written notification
to Escrow Agent or Insureds). Notices to Escrow Agent shall be deemed to be
given when actually received
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by Escrow Agent's Corporate Trust Division. Escrow Agent is authorized to
comply with and rely upon any notices, instructions or other communications
believed by it to have been sent or given by Insureds or by a person or persons
authorized by Insureds. Whenever under the terms hereof the time for giving a
notice or performing an act falls upon a Saturday, Sunday, or banking holiday,
such time shall be extended to the next day on which Escrow Agent is open for
business.
9. Nicor shall be liable for and shall reimburse and indemnify Escrow
Agent and hold Escrow Agent harmless from and against any and all claims,
losses, liabilities, costs, damages or expenses (including reasonable attorneys'
fees and expenses) (collectively, "Losses") arising from or in connection with
or related to this Escrow Agreement or being Escrow Agent hereunder (including
but not limited to Losses incurred by Escrow Agent in connection with its
successful defense, in whole or in part, of any claim of gross negligence or
willful misconduct on its part), provided, however, that nothing contained
herein shall require Escrow Agent to be indemnified for Losses caused by its
gross negligence or willful misconduct.
10. (a) Insureds may remove Escrow Agent at any time by giving to
Escrow Agent thirty (30) calendar days' prior notice in writing signed by Nicor
and two-thirds (2/3) of the Insureds. Escrow Agent may resign at any time by
giving to the Insureds thirty (30) calendar days' prior written notice thereof.
(b) Within ten (10) calendar days after giving the foregoing
notice of removal to Escrow Agent or receiving the foregoing notice of
resignation from Escrow Agent, Nicor and two-thirds (2/3) of the Individual
Insureds shall jointly agree on and appoint a successor Escrow Agent. If a
successor Escrow Agent has not accepted such appointment by the end of such
10-day period, Escrow Agent may, in its sole discretion, apply to a court of
competent jurisdiction for the appointment of a successor Escrow Agent or for
other appropriate relief. The costs and expenses (including reasonable
attorneys' fees and expenses) incurred by Escrow Agent in connection with such
proceeding shall be paid by, and be deemed an obligation of, Nicor.
(c) Upon receipt of the identity of the successor Escrow Agent,
Escrow Agent shall either deliver the Escrow Property then held hereunder to the
successor Escrow Agent, less Escrow Agent's fees, costs and expenses or other
obligations owed to Escrow Agent, or hold such Escrow Property (or any portion
thereof), pending distribution, until all such fees, costs and expenses or other
obligations are paid.
(d) Upon delivery of the Escrow Property to successor Escrow
Agent, Escrow Agent shall have no further duties, responsibilities or
obligations hereunder.
11. (a) In the event of any ambiguity or uncertainty hereunder or
in any notice, instruction or other communication received by Escrow Agent
hereunder, Escrow Agent may, in its sole discretion, refrain from taking any
action other than retain possession of the Escrow Property, unless Escrow Agent
receives written instructions,
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signed by all Insureds, which eliminates such ambiguity or uncertainty.
(b) In the event of any dispute between or conflicting claims by
or among the Insureds and/or any other person or entity with respect to any
Escrow Property, Escrow Agent shall be entitled, in its sole discretion, to
refuse to comply with any and all claims, demands or instructions with respect
to such Escrow Property so long as such dispute or conflict shall continue, and
Escrow Agent shall not be or become liable in any way to the Insureds for
failure or refusal to comply with such conflicting claims, demands or
instructions. Escrow Agent shall be entitled to refuse to act until, in its sole
discretion, either (i) such conflicting or adverse claims or demands shall have
been determined by a final order, judgment or decree of a court of competent
jurisdiction, which order, judgment or decree is not subject to appeal, or
settled by agreement between the conflicting parties as evidenced in a writing
satisfactory to Escrow Agent or (ii) Escrow Agent shall have received security
or an indemnity satisfactory to it sufficient to hold it harmless from and
against any and all Losses which it may incur by reason of so acting. Escrow
Agent may, in addition, elect, in its sole discretion, to commence an
interpleader action or seek other judicial relief or orders as it may deem, in
its sole discretion, necessary. The costs and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with such proceeding shall
be paid by, and shall be deemed a joint and several obligation of, the Insureds.
12. This Agreement shall be interpreted, construed, enforced and
administered in accordance with the internal substantive laws (and not the
choice of law rules) of the State of New York. Each of the Insureds hereby
submits to the personal jurisdiction of and each agrees that all proceedings
relating hereto shall be brought in courts located within the City and State of
New York or elsewhere as Escrow Agent may select. Each of the Insureds hereby
waives the right to trial by jury and to assert counterclaims in any such
proceedings. To the extent that in any jurisdiction any Insured may be entitled
to claim, for itself or its assets, immunity from suit, execution, attachment
(whether before or after judgment) or other legal process, each hereby
irrevocably agrees not to claim, and hereby waives, such immunity. Each Insured
waives personal service of process and consents to service of process by
certified or registered mail, return receipt requested, directed to it at the
address last specified for notices hereunder, and such service shall be deemed
completed ten (10) calendar days after the same is so mailed.
13. Except as otherwise permitted herein, this Escrow Agreement may
be modified only by a written amendment signed by all the parties hereto, and no
waiver of any provision hereof shall be effective unless expressed in a writing
signed by the party to be charged.
14. The rights and remedies conferred upon the parties hereto shall
be cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy hereunder shall not preclude the subsequent
exercise of such right or remedy.
15. Each Insured hereby represents and warrants (a) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes
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its legal, valid and binding obligation and (b) that the execution, delivery
and performance of this Escrow Agreement by Insured do not and will not
violate any applicable law or regulation.
16. The invalidity, illegality or unenforceability of any provision
of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision; and if any provision is held to be
enforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
17. This Agreement shall constitute the entire agreement of the
parties with respect to the subject matter and supersedes all prior oral or
written agreements in regard thereto.
18. This Agreement shall terminate upon the distribution of all
Escrow Property from the Account. The provisions of these Terms and Conditions
shall survive termination of this Escrow Agreement and/or the resignation or
removal of Escrow Agent.
19. Except as may be required by law, legal or civil administrative
process or stock exchange rule, no printed or other material in any language,
including prospectuses, notices, reports, and promotional material which
mentions "BNY Midwest Trust Company" by name or the rights, powers, or duties of
Escrow Agent under this Agreement shall be issued by any other parties hereto,
or on such party's behalf, without the prior written consent of Escrow Agent.
20. The headings contained in this Agreement are for convenience of
reference only and shall have no effect on the interpretation or operation
hereof.
21. This Escrow Agreement may be executed by each of the parties
hereto in any number of counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all such
counterparts shall together constitute one and the same agreement.
22. Escrow Agent does not have any interest in the Escrowed Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Nicor shall pay or reimburse the Escrow Agent upon request
for any transfer taxes or other taxes relating to the Escrowed Property incurred
in connection herewith and shall indemnify and hold harmless the Escrow Agent
any amounts that it is obligated to pay in the way of such taxes. Any payments
of income from this Escrow Property shall be subject to withholding regulations
then in force with respect to United States taxes. The parties hereto will
provide the Escrow Agent with appropriate W-9 forms for tax I.D., number
certifications, or W-8 forms for non-resident alien certifications. It is
understood that the Escrow Agent shall be responsible for income reporting only
with respect to income earned on investment of funds which are a part of the
Escrowed Property and is not responsible for any other reporting. This paragraph
and paragraph (9) shall survive notwithstanding any termination of this Escrow
Agreement or the resignation of Escrow Agent.
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IN WITNESS WHEREOF, Nicor, the Individual Insureds and Escrow Agent
have caused this Agreement to be executed on their behalf by their officers
thereunto duly authorized, as of the date first above written.
NICOR INC.
By: /s/ Russ M. Strobel
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Name: Russ M. Strobel
Title: President
INDIVIDUAL INSUREDS:
/s/ Thomas L. Fisher
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Name: Thomas L. Fisher
Address: [***]
/s/ Kathleen L. Halloran
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Name: Kathleen L. Halloran
Address: [***]
/s/ George M. Behrens
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Name: George M. Behrens
Address: [***]
/s/ Phillip S. Cali
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Name: Philip S. Cali
Address: [***]
/s/ Robert M. Beavers
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Name: Robert M. Beavers
Address: [***]
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/s/ Patricia A. Wier
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Name: Patricia A. Wier
Address: [***]
/s/ John H. Birdsall, III
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Name: John H. Birdsall, III
Address: [***]
/s/ Bruce P. Bickner
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Name: Bruce P. Bickner
Address: [***]
/s/ Dennis J. Keller
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Name: Dennis J. Keller
Address: [***]
/s/ John E. Jones
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Name: John E. Jones
Address: [***]
/s/ William A. Osborn
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Name: William A. Osborn
Address: [***]
/s/ Thomas A. Donahoe
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Name: Thomas A. Donahoe
Address: [***]
/s/ John Rau
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Name: John Rau
Address: [***]
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/s/ John F. Riordan
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Name: John F. Riordan
Address: [***]
ESCROW AGENT
BNY MIDWEST TRUST COMPANY
By: /s/ D.G. Donovan
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Name: D.G. Donovan
Title: Vice President
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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