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Exhibit 2.2
ESCROW AGREEMENT
This Escrow Agreement is entered into as of September 8, 1999 (the
"Closing Date") by and among OneSource Information Services, Inc., a Delaware
corporation (the "Parent"), Corporate Technology Information Services, Inc., a
Delaware corporation (the "Company"), on behalf of its stockholders, Andrew
Campbell (the "Stockholders' Representative") and Citizens Bank of Massachusetts
(the "Escrow Agent").
WHEREAS, the Parent and the Company have entered into an Agreement and
Plan of Merger dated of even date herewith (the "Merger Agreement"), pursuant to
which the Acquisition Subsidiary of the Parent will merge with the Company as
specified in the Merger Agreement;
WHEREAS, the Merger Agreement provides that an escrow fund be
established to secure certain obligations, representations and warranties of the
Company to the Parent under the Merger Agreement on the terms and conditions set
forth herein;
WHEREAS, the Board of Directors of the Company has appointed a
Stockholders' Representative, who shall represent the interests of said
stockholders after the Effective Date, as such term is defined in the Merger
Agreement; and
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow fund will be established and
maintained.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the respective meanings given them in the Merger
Agreement.
2. ESCROW; INDEMNIFICATION.
(a) ESCROW FUND. At the Closing, the Parent shall deposit with
the Escrow Agent, by wire transfer or delivery of a certified check of the
Parent payable to the Escrow Agent, the Merger Price. On the Effective Date, and
upon notice by the Parent and the Stockholders' Representative, the Escrow Agent
shall release to the Stockholders' Representative the Merger Price, less One
Million Dollars ($1,000,000.00). Said One Million Dollars, together with
interest thereon, is referred to herein as the "Escrow Fund". The Escrow Fund
shall be held in an account designated as "CorpTech Stockholders Escrow Fund" or
in an account having another similar designation. The Escrow Agent agrees to
accept delivery of the Escrow Fund and to hold such Escrow Fund in escrow
subject to the terms and conditions of this Agreement.
(b) INDEMNIFICATION. The Company, on behalf of its
stockholders and acting through the Stockholders' Representative, has agreed in
Section 7.2 of the Merger
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Agreement to indemnify and hold harmless the Parent, Acquisition Subsidiary and
the Surviving Corporation from and against Parent Claims. The Escrow Fund shall
be security for the indemnity obligation of the Company under said Section 7.2,
subject to the limitations and in the manner provided in this Agreement and the
Merger Agreement.
3. STOCKHOLDERS' REPRESENTATIVE AS ATTORNEY-IN-FACT. The Company shall
cause the stockholders of the Company to ratify the Stockholders' Representative
as the attorney-in-fact of the stockholders of the Company for the purpose of
carrying out the provisions of this Agreement and the Merger Agreement and
taking any action and executing or completing any instruments that the
Stockholders' Representative may deem necessary or advisable to accomplish said
purposes, which appointment as attorney-in-fact is irrevocable and coupled with
an interest. In the event the Stockholders' Representative shall, at any time,
be unwilling or unable to act as such attorney-in-fact, then a replacement for
such person shall be designated by the stockholders of the Company owning a
majority interest in the Escrow Funds. The Parent shall assume that the
Stockholders' Representative is acting as attorney-in-fact, unless it receives
written notice signed by stockholders of the Company owning a majority interest
in the Escrow Funds that another attorney-in-fact has been appointed. All action
taken by the Stockholders' Representative shall, in order to be effective, be in
writing and signed by the Stockholders' Representative. In addition, the Parent
shall be entitled to rely upon, and to treat as duly authorized and approved by
the stockholders of the Company and the Stockholders' Representative, any and
all instructions, directions, letters, paper, documents or other notices
believed by Parent to be genuine and to have been signed by the Stockholders'
Representative.
4. ADMINISTRATION OF ESCROW FUND. Claims for payment of Parent Claims
from the Escrow Fund made by the Parent pursuant to Section 7.2 of the Merger
Agreement shall be made in accordance with the procedures set forth in this
Section 4.
(a) The Parent shall promptly give written notice of such
claim (a "Claim Notice") including, when known, the facts constituting the basis
for such claim and the amount or an estimate of the amount of the claimed Parent
Claims (the "Claimed Amount") to the Stockholders' Representative and the Escrow
Agent.
(b) Within fifteen (15) calendar days after delivery of a
Claim Notice, the Stockholders' Representative shall provide to the Parent, with
a copy to the Escrow Agent, a written response (the "Response Notice") in which
the Stockholders' Representative shall: (i) agree that all of the Claimed Amount
may be released from the Escrow Fund to the Parent; (ii) agree that part, but
not all, of the Claimed Amount (the "Partial Amount") may be released from the
Escrow Fund to the Parent; or (iii) contest the release of the entire Claimed
Amount from the Escrow Fund to the Parent. The Stockholders' Representative may
contest the release from escrow of all or a portion of the Claimed Amount only
based upon its good faith belief that all or such portion of the Claimed Amount
does not constitute Parent Claims for which the Parent is entitled to
indemnification under Section 7.2 of the Merger Agreement. The Escrow Agent
shall have
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no duty to determine whether the Parent's claim is valid, to verify such good
faith belief of the Company or to inquire into the factual basis of any claim or
response. If no Response Notice is delivered by the Stockholders' Representative
within such 15-day period, the Stockholders' Representative shall be deemed to
have agreed that all of the Claimed Amount may be released to the Parent from
the Escrow Fund.
(c) If the Stockholders' Representative in the Response Notice
agrees (or is deemed to have agreed) that all of the Claimed Amount may be
released from the Escrow Fund to the Parent, the Escrow Agent shall, promptly
following the earlier of the required delivery date for the Response Notice or
the delivery of the Response Notice, disburse to the Parent from the Escrow Fund
an amount equal to the Claimed Amount (or such lesser amount as is then held in
the Escrow Fund).
(d) If the Stockholders' Representative in the Response Notice
states that the Partial Amount may be released from the Escrow Fund to the
Parent, the Escrow Agent shall promptly following the delivery of the Response
Notice disburse to the Parent from the Escrow Fund an amount equal to the
Partial Amount set forth in such Response Notice (or such lesser amount as is
then held in the Escrow Fund).
(e) If the Stockholders' Representative in the Response Notice
contests the release of all or part of the Claimed Amount (the "Contested
Amount"), the Escrow Agent shall continue to hold in the Escrow Fund an amount
sufficient to cover the Contested Amount (up to the amount then available in the
Escrow Fund), notwithstanding the occurrence of the Preliminary Termination Date
(as defined in Section 5(d)), until delivery to the Escrow Agent of (i) a copy
of a settlement agreement executed by the Parent and the Stockholders'
Representative setting forth instructions to the Escrow Agent as to the
disbursements, if any, that shall be made with respect to the Contested Amount
or (ii) a copy of a final order, decree or judgment by a board of arbitration
convened under the rules of the American Arbitration Association or court of
competent jurisdiction with respect to the disbursement of the Contested Amount,
the time for perfection of an appeal of such order, decree or judgment having
expired or having been waived by the parties. The Escrow Agent shall thereupon
disburse amounts from the Escrow Fund (to the extent such amounts are then held
in the Escrow Fund) to the Parent in accordance with such settlement agreement
or order, decree or judgment.
5. RELEASE OF ESCROW FUND.
(a) Promptly after the first anniversary of the Closing Date,
the Escrow Agent shall distribute to the Stockholders' Representative the amount
necessary to reduce the Escrow Fund to the greater of the following amounts: (x)
Seven Hundred Fifty Thousand Dollars ($750,000.00); or (y) the amount sufficient
to cover all Claimed Amounts relating to Claim Notices given on or prior to such
first anniversary and remaining unresolved on such first anniversary. If a Claim
is reduced, cancelled or withdrawn after the first anniversary of the Closing
Date, amounts over Seven Hundred
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Fifty Thousand Dollars ($750,000.00) shall be immediately distributed to the
extent of the amount of the reduced, cancelled or withdrawn Claim.
(b) Promptly after the date that is eighteen (18) months
following the Closing Date (the "18-Month Date"), the Escrow Agent shall
distribute to the Stockholders' Representative the amount necessary to reduce
the Escrow Fund to the greater of: (x) Five Hundred Thousand Dollars
($500,000.00); or (y) the amount sufficient to cover all Claimed Amounts
relating to Claim Notices given on or prior to the 18-Month Date and remaining
unresolved on the 18-Month Date. If a Claim is reduced, cancelled or withdrawn
after the 18-Month Date, amounts over Five Hundred Thousand Dollars
($500,000.00) shall be immediately distributed to the extent of the amount of
the reduced, cancelled or withdrawn Claim.
(c) Promptly after the second anniversary of the Closing Date,
the Escrow Agent shall distribute to the Stockholders' Representative an amount
equal to the excess, if any, of the amount then held in the Escrow Fund over the
amount sufficient to cover all Claimed Amounts relating to Claim Notices given
on or prior to such anniversary and remaining unresolved on such anniversary.
(d) For purposes of this Agreement, the "Preliminary
Termination Date" shall be the second anniversary of the Closing Date. If any
amounts remain in the Escrow Fund following the Preliminary Termination Date,
such amounts, plus interest earned thereon, shall be retained by the Escrow
Agent in the Escrow Fund as provided in Section 4(e) hereof.
6. INVESTMENT OF ESCROW FUND.
(a) Between the Closing and Effective date, the money
representing the Merger Price held by the Escrow Agent shall be invested by the
Escrow Agent, to the extent permitted by law and as directed in writing by the
Parent, in (i) obligations issued or guaranteed by the United States of America
or any agency or instrumentality thereof, (ii) obligations (including
certificates of deposit and bankers' acceptances) of banks, including those of
the Escrow Agent in its commercial capacity, which at the date of their last
public reporting had total assets in excess of $500,000,000, (iii) commercial
paper rated at least A-1 or P-1 or, if not rated, issued by companies having
outstanding debt rated at least AA or Aa and (iv) money market mutual funds
invested exclusively in some or all of the securities described in the foregoing
clauses (i), (ii) and (iii).
(b) Any monies held in the Escrow Fund shall be invested by
the Escrow Agent, to the extent permitted by law and as directed in writing by
the Stockholders' Representative, in (i) obligations issued or guaranteed by the
United States of America or any agency or instrumentality thereof, (ii)
obligations (including certificates of deposit and bankers' acceptances) of
banks, including those of the Escrow Agent in its commercial capacity, which at
the date of their last public reporting had total assets in excess of
$500,000,000, (iii) commercial paper rated at least A-1 or P-1 or, if not rated,
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issued by companies having outstanding debt rated at least AA or Aa and (iv)
money market mutual funds invested exclusively in some or all of the securities
described in the foregoing clauses (i), (ii) and (iii).
(c) Between the Closing Date and the Effective Date, one-half
of any interest that has been earned on the funds held pursuant to this
Agreement shall become part of the Escrow Account and be distributed pursuant to
the terms of this Agreement in the same manner as other funds in the Escrow
Account, whereas the remaining one-half shall be paid to the Parent promptly
after the Effective Date. After the Effective Date, any interest that has been
earned on any portion of the Escrow Fund shall become part of the Escrow Account
and be distributed pursuant to the terms of this Agreement in the same manner as
other funds in the Escrow Account.
7. FEES AND EXPENSES. The Parent shall be liable for all costs
associated with the administration of the Escrow Fund, including but not limited
to the fees of the Escrow Agent, reasonable legal fees and expenses for the
services rendered by the Escrow Agent hereunder. The Escrow Agent shall be
entitled to reimbursement on demand for all expenses incurred in connection with
the administration of the escrow created hereby that are in excess of its
compensation for normal services hereunder, including without limitation payment
of any legal fees and expenses incurred by the Escrow Agent in connection with
the resolution of any claim by any party hereunder or in the determination of
any other matter arising hereunder. As between them, the Parent, on the one
hand, and the stockholders of the Company, on the other, shall each be liable
for reimbursement of one-half of such expenses; provided, however, that the
obligation of the stockholders of the Company may only be satisfied from the
amounts held in the Escrow Fund at the time such reimbursement is sought.
8. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) Neither the Escrow Agent nor any of its directors,
officers or employees shall incur liability with respect to any action taken or
suffered by it in reliance upon any notice, certificate, direction, instruction,
consent, statement or other document reasonably believed by it to be genuine and
duly authorized, nor for other action or inaction except its own willful
misconduct or gross negligence. The Escrow Agent shall not be responsible for
the validity or sufficiency of this Agreement and shall not be responsible for
any of the agreements referred to herein, including the Merger Agreement, but
shall be obligated only for the performance of such duties as are specifically
set forth in this Agreement. In all questions arising under this Agreement, the
Escrow Agent may rely on the advice of counsel, including in-house counsel, and
for anything done, omitted or suffered in good faith by the Escrow Agent based
on such advice the Escrow Agent shall not be liable to anyone. The Escrow Agent
shall not be required to take any action hereunder involving any expense unless
the payment of such expense is made or provided for in a manner reasonably
satisfactory to it. The Escrow Agent shall not be liable for any losses
resulting from the investments made in accordance with this Agreement (excepting
losses upon its obligations). In no event shall the Escrow Agent be liable for
indirect,
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punitive, special or consequential Parent Claims or claim by the Company, its
shareholders or the Shareholders' Representative.
(b) The Parent and the stockholders of the Company jointly and
severally hereby agree to indemnify the Escrow Agent for, and hold it harmless
against, any loss, liability or expense (including reasonable attorneys' fees
and expenses) incurred without gross negligence or willful misconduct on the
part of the Escrow Agent, arising out of or in connection with its carrying out
of its duties hereunder. As between them, the Parent, on the one hand, and the
stockholders of the Company, on the other, shall each be liable for one-half of
the foregoing indemnification obligation to the Escrow Agent; provided, however,
that the obligation of the stockholders of the Company may only be satisfied
from the amounts held in the Escrow Fund at the time such indemnification is
sought.
(c) The Parent and the stockholders of the Company jointly and
severally hereby agree to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of amounts held
in the Escrow Fund under this Agreement, and to indemnify and hold the Escrow
Agent harmless:
(i) from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be assessed against
the Escrow Agent in respect of any such payment or other activities under this
Agreement; and
(ii) from any liability on account of taxes,
assessments or other governmental charges, including without limitation the
withholding or deduction or the failure to withhold or deduct the same, and any
liability for failure to obtain proper certifications or to properly report to
governmental authorities, to which the Escrow Agent may be or become subject in
connection with or which arises out of this Agreement, including costs and
expenses (including reasonable legal fees and expenses), interest and penalties.
As between them, the Parent, on the one hand, and the stockholders of the
Company, on the other, shall each be liable for one-half of the foregoing
indemnification obligation to the Escrow Agent; provided, however, that the
obligation of the stockholders of the Company may only be satisfied from the
amounts held in the Escrow Fund at the time such indemnification is sought. The
Parent and the Stockholders' Representative shall undertake to instruct the
Escrow Agent in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. However, the Stockholders' Representative
shall be responsible for all tax reporting related to funds distributed to him
by the Escrow Agent. The parties hereto agree that, for tax reporting purposes,
all interest or other income earned in the Escrow Fund shall be allocable to the
Stockholders, except as otherwise contemplated in Section 6(c). Notwithstanding
anything to the contrary in this Section 8(c) the Escrow
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Agent shall be solely responsible for all taxes (and any related interest,
penalties and other expenses) in the nature of income taxes on the Escrow
Agent's net income.
9. LIMITATION OF THE PARTIES' LIABILITY. Neither Parent, Company,
Shareholders nor Shareholders' Representative shall be liable to any of the
others for liabilities or claims related to losses due to the investments of the
Escrow Fund or interest thereon.
10. TERMINATION. This Agreement shall terminate upon the later of the
Preliminary Termination Date or the disbursement by the Escrow Agent of the
Escrow Funds in accordance with this Agreement; provided that the provisions of
Section 8 shall survive such termination.
11. NOTICES. Any notices, instructions or other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or other communication shall be sent either (i) by registered or
certified mail, return receipt requested, postage pre-paid, or (ii) via a
reputable nationwide overnight courier service, in each case to the address set
forth below. Any such notice, instruction or communication shall be deemed to
have been delivered four business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service.
If to the Parent: OneSource Information Services, Inc.
300 Baker Avenue
Concord, MA 01742
Attention: Daniel Schimmel, President & CEO
With a copy to: OneSource Information Services, Inc.
300 Baker Avenue
Concord, MA 01742
Attention: Legal Department
If to the Company: Corporate Technology Information Services, Inc.
12 Alfred Street, #200
Woburn, MA 01801
Attention: Andrew Campbell
Telephone: (781) 932-3100
Facsimile: (781) 938-7511
E-mail: acampbell@corptech.com
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with a copy to: Jager, Smith & Stetler, P.C.
One Financial Center
Boston, MA 02111
Attention: Edward Gerard Jager
Telephone: (617) 951-0500
Facsimile: (617) 951-2414
E-mail: ejager@jssboston.com
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If to the Stockholders' Andrew Campbell
Representative: 243 East Main Street
Gloucester, Massachusetts 01930
with a copy to: Jager, Smith & Stetler, P.C.
One Financial Center
Boston, MA 02111
Attention: Edward Gerard Jager
Telephone: (617) 951-0500
Facsimile: (617) 951-2414
E-mail: ejager@jssboston.com
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If to the Escrow Agent: Citizens Bank
Corporate Trust Department
1 Citizens Plaza
Providence, RI 02903
Attention: Kathleen Taddei
Telephone: (401) 456-7684
Facsimile: (401) 455-5268
E-mail: Kathleen.Taddei@citizensbank.com
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Any party may change the address to which notices, instructions or
communications are to be delivered by giving the other parties to this Agreement
notice thereof in the manner set forth in this Section 11.
12. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity hereunder, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Agreement, not less than 60
days' prior to the date when such resignation shall take effect. The Parent may
appoint a successor Escrow Agent without the consent of (but with notice to) the
Stockholders' Representative so long as such successor is a bank with assets of
at least $500 million, and may appoint any other successor Escrow Agent with the
consent of the Stockholders' Representative, which consent shall not be
unreasonably withheld or delayed. If, within such notice period, the Parent
provides to the Escrow Agent written instructions with respect to the
appointment of a successor Escrow Agent and directions for the transfer of any
Escrow Fund then held
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by the Escrow Agent to such successor, the Escrow Agent shall act in accordance
with such instructions and promptly transfer such Escrow Fund to such designated
successor. If the Parent names no successor escrow agent within such notice
period, the Escrow Agent may apply to a court of competent jurisdiction for
appointment of a successor escrow agent.
13. GENERAL.
(a) GOVERNING LAW. This Agreement shall be governed by,
enforced under and construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to conflict-of-law principles.
(b) COUNTERPARTS. This Agreement may be executed in two or
more counterparts (all of which need not be signed by all of the parties
hereto), each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
(c) ENTIRE AGREEMENT. This Agreement, together with the Merger
Agreement (with respect to the Parent, the Company and the Stockholders'
Representative only), constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements or understandings, written or oral between the parties with respect
to the subject matter hereof.
(d) WAIVERS. No waiver by any party hereto of any condition or
of any breach of any provision of this Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) AMENDMENT. This Agreement may be amended only by a written
instrument signed by the Parent, the Escrow Agent and the Company (or the
Stockholders' Representative, as the case may be).
(f) DISPUTE RESOLUTION. It is understood and agreed that
should any dispute arise with respect to the delivery, ownership, right of
possession, and/or disposition of the Escrow Fund, or should any claim be made
upon the Escrow Fund by a third party, the Escrow Agent upon receipt of written
notice of such dispute or claim by the parties hereto or by a third party, is
authorized and directed to retain in its possession without liability to anyone,
all or any of the Escrow Fund until such dispute shall have been settled either
by the mutual written agreement of the parties involved, by a board of
arbitration convened under the rules of the American Arbitration Association or
by a final order, decree or judgment of a court in the United States of America,
the time for perfection of an appeal of such order, decree or judgment having
expired or having been waived by the parties. The Escrow Agent may, but shall be
under no duty whatsoever to, institute or defend any legal proceedings that
relate to the Escrow Fund.
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(g) CONSENT TO JURISDICTION AND SERVICE. The Parent and the
Company, on behalf of itself and the Stockholders' Representative, hereby
absolutely and irrevocably consent and submit to a board of arbitration convened
under the rules of the American Arbitration Association to take place in Boston,
Massachusetts or the jurisdiction of the courts in the Commonwealth of
Massachusetts and of any federal court located in the Commonwealth of
Massachusetts in connection with any actions or proceedings brought against the
Parent or the Company by the Escrow Agent arising out of or relating to this
Agreement. In any such action or proceeding, the Parent and the Company, on
behalf of itself and the Stockholders' Representative, hereby absolutely and
irrevocably waive personal service of any summons, complaint, declaration or
other process and hereby absolutely and irrevocably agree that the service
thereof may be made in accordance with the notice provisions of Section 11
hereof, directed to the Parent or the Company or the Stockholders'
Representative, as the case may be, at their respective addresses set forth in
Section 11 hereof.
(h) FORCE MAJEURE. None of the Parent, the Company, the
Stockholders' Representative or the Escrow Agent shall be responsible for delays
or failures in performance resulting from acts beyond its or his control. Such
acts shall include but not be limited to acts of God, strikes, lockouts, riots,
acts of wars, epidemics, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power failures, earthquakes
or other disasters.
(i) BINDING EFFECT; ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective parties hereto and their heirs,
executors, successors and assigns.
(j) REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (i) consents, waivers
and modifications which may hereafter be executed, and (ii) certificates and
other information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ONESOURCE INFORMATION
SERVICES, INC.
By: /s/ Daniel Schimmel
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Daniel Schimmel
President & CEO
CORPORATE TECHNOLOGY
INFORMATION SERVICES, INC.
By: /s/ Andrew Campbell
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Andrew Campbell
President
/s/ Andrew Campbell
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Andrew Campbell,
as Stockholders' Representative
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Kathleen Coldwell Taddei
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Name: Kathleen Coldwell Taddei
Title: Senior Vice President