Exhibit 10.9
INDEMNITY ESCROW AGREEMENT
This INDEMNITY ESCROW AGREEMENT (this "Agreement") is entered into and
effective as of this 15th day of December, 2004, by and among KANSAS CITY
SOUTHERN, a Delaware corporation ("KCS"), Caymex Transportation, Inc., a
Delaware corporation "Caymex"), KARA Sub, Inc., a Delaware corporation ("KARA"),
KCS Investment I, Ltd., a Delaware corporation ("KCS Investment") (KCS, Caymex,
KARA, and KCS Investment are sometimes collectively referred to herein as the
"KCS Purchasers"), GRUPO TMM, S.A., a SOCIEDAD ANONIMA organized under the laws
of the United Mexican States ("UMS") and TMM Multimodal, S.A. de C.V., a
SOCIEDAD ANONIMA DE CAPITAL VARIABLE organized under the laws of the UMS ("MM")
(MM and TMM, collectively with the KCS Purchasers, are collectively referred to
herein as the "Parties") and The Bank of Nova Scotia Trust Company of New York
(the "Escrow Agent").
WHEREAS, the Parties are parties to the Amended and Restated Acquisition
Agreement dated as of the date hereof among the KCS Purchasers, TMM, and the
other parties named therein (the "Acquisition Agreement"), pursuant to which the
TMM Parties will sell and the KCS Purchasers will purchase substantially all of
MM's interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. upon
the terms and conditions set forth in the Acquisition Agreement;
WHEREAS, a portion of the consideration for the Acquisition is to be
delivered to the Escrow Agent to be held in escrow pursuant to the terms of this
Agreement (the "Indemnity Escrow"), which escrow is being established to provide
available funds to satisfy the indemnity claims as provided herein;
WHEREAS, at the Closing (as defined in the Acquisition Agreement) the KCS
Purchasers will deposit with the Escrow Agent one or more promissory notes of
KCS in the aggregate principal amount of Forty-Seven Million Dollars
($47,000,000) (the "Indemnity Escrow Notes") to be held in the Indemnity Escrow,
and released only pursuant to the terms and conditions of this Agreement; and
WHEREAS, the Parties desire to appoint the Escrow Agent to hold the
Indemnity Escrow Notes on the terms and conditions set forth in this Agreement
and the Escrow Agent is willing to serve in that capacity.
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, it is hereby agreed
by and among the Parties and the Escrow Agent as follows:
1. The Parties hereby appoint the Escrow Agent to serve as escrow agent
hereunder. In accordance with and subject to the terms and provisions hereof,
the Escrow Agent hereby accepts such appointment and agrees to hold, reduce the
principal amount of, and deliver the Indemnity Escrow Notes in accordance with
the terms hereof.
2. (a) At the Closing, the KCS Purchasers shall deposit with the Escrow
Agent the Indemnity Escrow Notes to be held by the Escrow Agent in the
Indemnity Escrow and reduced and delivered only pursuant to the terms and
conditions of this Agreement.
(b) In the event that KCS exercises its option to convert any portion
of the Indemnity Escrow Notes to shares of KCS Common Stock ("Shares") in
accordance with the terms thereof, KCS shall deliver one or more
certificates representing such Shares to the Escrow Agent to be held by the
Escrow Agent in the Indemnity Escrow and delivered only pursuant to the
terms and conditions of this Agreement. In the event that the number of
Shares to be delivered to MM is reduced in accordance with Section 3 hereof
after delivery of such certificate or certificates, KCS shall substitute
one or more certificates representing the appropriate number of Shares to
be delivered on the Payment Date.
3. The principal amount of the Indemnity Escrow Notes, or number of Shares
held in the Indemnity Escrow, shall be reduced only upon the occurrence of any
of the following:
(a) If the Escrow Agent receives joint written instructions from KCS
and TMM to make such reduction, specifying the amount thereof;
(b) If the Escrow Agent receives written instructions from KCS to make
such reduction, specifying the amount thereof, simultaneously copied and
sent by same means to TMM, and the Escrow Agent does not receive written
objection from TMM to such instructions within ten (10) Business Days
(defined below) of the date of such instructions are received by the Escrow
Agent. As used herein, the term "Business Day" shall mean a day of the year
on which national banks in New York, New York, are not required or
permitted to be closed; or
(c) If the Escrow Agent receives a final order, decree or judgment of
a court of competent jurisdiction or arbitration tribunal (and in the case
of an arbitration tribunal, accompanied by a certificate signed by the
President or a Vice-President (each, an "Appropriate Officer") of KCS and
TMM stating that such arbitration was undertaken in accordance with Section
12.11 of the Acquisition Agreement), accompanied by an opinion of counsel
that such order, decree or judgment is final.
The Escrow Agent shall mark on Schedule A to each of the Indemnity Escrow
Notes the amount of each reduction in the principal amount thereof as provided
in this Section 3.
4. The Parties agree that any dispute between the Parties arising under
this Agreement shall be resolved in accordance with the dispute resolution
procedures set forth in Sections 10.5(e) or 12.11, as appropriate, of the
Acquisition Agreement.
5. On June 1, 2007 (the "Payment Date"), the Escrow Agent shall deliver to
MM the Indemnity Escrow Notes, as reduced pursuant to Section 3 hereof, and, if
any part of the
Indemnity Escrow Notes have been converted to Shares, any such Shares then held
by it in the Indemnity Escrow. In the event that there is an unresolved
objection from TMM pursuant to Section 3(b) with respect to any claim for
reduction of the principal amount of the Indemnity Escrow Notes (or Shares) on
the Payment Date, the Escrow Agent shall deliver that portion of the Indemnity
Escrow Notes (or Shares) to MM which is not subject to such unresolved
objection, if any, and shall deliver the balance of such Indemnity Escrow Notes
or Shares, as the case may be, as directed by joint written instructions from
KCS and TMM, or a final order, decree, or judgment of a court or arbitration
tribunal of competent jurisdiction (and in the case of an arbitration tribunal,
accompanied by a certificate signed by an Appropriate Officer of KCS and TMM
stating that such arbitration was undertaken in accordance with Section 12.11 of
the Acquisition Agreement), accompanied by an opinion of counsel that such
order, decree or judgment is final. KCS shall provide to the Escrow Agent one or
more Indemnity Escrow Notes or stock certificates in the appropriate
denominations for delivery pursuant to this Section 5.
6. (a) The Escrow Agent may act or refrain from acting in reliance upon
any instructions, notice, certification, demand, consent, authorization,
receipt, power of attorney or other writing delivered to it by any other
party and believed by the Escrow Agent to be genuine without being required
to determine the authenticity or validity thereof or the correctness of any
facts stated therein. The Escrow Agent may act or refrain from acting in
reliance upon any signature believed by it to be genuine, and may assume
that any such person has been properly authorized to do so.
(b) KCS and TMM, jointly and severally, agree to reimburse the Escrow
Agent on demand for, and to indemnify and hold the Escrow Agent harmless
against and with respect to, any and all loss, liability, damage or expense
(including, without limitation, reasonable attorneys' fees, costs and
disbursements) that the Escrow Agent may suffer or incur in connection with
this Escrow Agreement in its performance hereunder or in connection
herewith, except to the extent such loss, liability, damage or expense
arises in the Escrow Agent's willful misconduct or gross negligence as
adjudicated by a court of competent jurisdiction. The Escrow Agent shall
have the right to apply the Indemnity Escrow Notes or Shares held by it in
escrow hereunder, and any proceeds thereof, to the payment of any amounts
owing to it by TMM or KCS hereunder upon one (1) business days' notice to
TMM and KCS.
(c) As between themselves, TMM and KCS agree that in the event that
the Escrow Agent exercises its right to apply funds from the Indemnity
Escrow Notes or Shares to the payment of any amounts owing to it hereunder
("Escrow Agent Receivable") as a result of the failure of one of KCS or TMM
to make payment in full of 50% of the Escrow Agent Receivable in accordance
with Section 11 hereof, such non-paying Party shall promptly transfer to
the account of the other Party in accordance with such other Party's
instructions in immediately available funds an amount equal to the
difference between 50% of the Escrow Agent Receivable and the amount, if
any, actually paid by the non-paying Party to the Escrow Agent in respect
of the Escrow Agent Receivable. In the event that the Escrow Agent
exercises its right to apply
funds from the Indemnity Escrow Notes or Shares to the payment of the
Escrow Agent Receivable as a result of the failure of both of KCS and TMM
to make payment in full of 50% of the Escrow Agent Receivable in accordance
with Section 11 hereof, each such non-paying Party shall promptly transfer
to the account of the other Party in accordance with such other Party's
instructions in immediately available funds an amount equal to the
difference between 50% of the Escrow Agent Receivable and the amount, if
any, actually paid by the non-paying Party to the Escrow Agent in respect
of the Escrow Agent Receivable.
7. (a) The Escrow Agent may consult legal counsel of its selection in the
event of any dispute or question as to the meaning or construction of any
of the provisions of this Agreement or its duties hereunder, including,
without limitation, the validity of any order of any court or arbitration
tribunal, and it shall incur no liability and shall be fully protected in
acting or refraining from acting in accordance with the opinion and
instructions of such counsel.
(b) Each of the Parties acknowledges and agrees that the Escrow Agent
(i) shall not be deemed to have knowledge of the terms of, or be
responsible for, any of the agreements referred to or described herein
(including, without limitation, the Acquisition Agreement, but excluding
this Agreement) or for determining compliance therewith and shall not
otherwise be bound thereby and (ii) shall be obligated only for the
performance of such duties as are specifically set forth in this Agreement
on its part to be performed and no implied duties or obligations of any
kind shall be read into this Agreement against the Escrow Agent.
8. In the event of any disagreement between any of the Parties to this
Agreement, any adverse claims or demands being made in connection with the
subject matter of the escrow, or in the event that the Escrow Agent, in good
faith, is in doubt as to what action it should take hereunder, the Escrow Agent
may, at its sole option, refuse to comply with any claims and demands on it and
retain in its possession without liability to anyone all or any of the property
held by it hereunder, or refuse to take any other action hereunder, so long as
such disagreement continues or such doubt exists. The Escrow Agent shall not
become liable in any way or to any person for its failure or refusal to act in
such event, and the Escrow Agent shall be entitled to continue to refrain from
acting until (i) the rights of all parties shall have been fully and finally
adjudicated by a court of competent jurisdiction or arbitration tribunal of
competent jurisdiction (and in the case of an arbitration tribunal, accompanied
by a certificate signed by an Appropriate Officer of KCS and TMM stating that
such arbitration was undertaken in accordance with Section 12.11 of the
Acquisition Agreement), accompanied by an opinion of counsel that such order,
decree or judgment is final, or (ii) all differences shall have been resolved by
agreement among all the interested persons, and Escrow Agent shall have been
notified thereof in writing signed by all such persons. Escrow Agent shall have
the option, after thirty (30) calendar days notice to the Parties, of its
intention to do so, to file an action in interpleader requiring the Parties to
answer and litigate any claims and rights among themselves. The rights of the
Escrow Agent under this paragraph are cumulative of all other rights which it
may have by law or otherwise.
9. Notice to the Parties and to the Escrow Agents shall be given as
provided below. Whenever under the terms hereof the time for giving a notice or
performing an act falls upon a Saturday, a Sunday or a banking holiday in New
York, such time shall be extended to the next day on which the Escrow Agent is
open for business.
10. The Escrow Agent may, in its sole discretion, resign and terminate its
position hereunder at any time following thirty (30) calendar days written
notice to the other Parties to the Escrow Agreement. Prior to the effective date
of resignation specified in such notice, the Parties will jointly appoint a
successor escrow agent. On the effective date of such appointment, the Escrow
Agent shall deliver this Escrow Agreement together with any and all related
instruments or documents and all of the funds, securities, documents and other
assets held in escrow hereunder to any successor escrow agent selected in
writing by Parties to this Agreement. If a successor escrow agent has not been
appointed prior to the expiration of thirty (30) calendar days following the
date of notice of such resignation, then (i) the Escrow Agent's sole
responsibility after that time shall be to safekeep the property held in escrow
by it hereunder until receipt by it of designation of a successor escrow agent
and (ii) the Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor escrow agent, or other appropriate relief. Any
such resulting appointment shall be binding upon all the Parties to this
Agreement.
11. The Parties to this Agreement may by mutual written agreement, with a
copy of such agreement forwarded to the Escrow Agent, at any time substitute a
new escrow agent by giving ten (10) days notice thereof to the Escrow Agent and
paying all fees and expenses due to the Escrow Agent. Any such substitution
shall terminate all obligations and duties of the Escrow Agent hereunder. On the
effective date of such substitution, the Escrow Agent shall deliver this
Agreement together with any and all related instruments or documents and all of
the funds, securities, documents and other assets held in escrow hereunder to a
successor escrow agent that the Parties have selected in writing.
12. The Escrow Agent shall receive the fees provided in Appendix A hereto.
Except as provided in Section 6(b), the Escrow Agent shall not be permitted to
utilize the Escrow Fund to cover any of its fees or expenses. TMM and KCS agree
that as between themselves, all fees and expenses of the Escrow Agent shall be
paid equally (50% by KCS and 50% by TMM).
13. Any modification of this Agreement or any additional obligations
assumed by any party hereto shall be binding only if evidenced by a writing
signed by each of the parties hereto. Upon the earlier to occur of (i) the
reduction of the Indemnity Escrow Notes in full principal amount, or (ii) the
delivery of the Indemnity Escrow Notes or Shares to MM, this Agreement shall be
thereupon terminated and of no further force or effect; provided that the
provisions of Sections 6(b) and 12 (for the period prior to such termination,
resignation or substitution) shall survive the termination of this Agreement and
the resignation or substitution of the Escrow Agent.
14. This Agreement shall be governed by the laws of the state of New York
in all respects. The Parties hereto irrevocably and unconditionally submit to
the jurisdiction of a federal or state court located in New York, New York in
connection with any proceedings commenced regarding this Agreement including but
not limited to a interpleader proceeding or a proceeding for the employment of a
successor escrow agent. The Parties irrevocably submit to the jurisdiction of
such courts for the determination of all issues in such proceedings, without
regard to any principles of conflicts of laws, and irrevocably waive any
objection to venue or inconvenient forum.
15. This Agreement may be executed in one or more counterparts, each of
which counterpart shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same Agreement.
16. Unless otherwise provided herein, all notices and other communications
hereunder shall be in writing and shall be deemed given if (a) delivered in
person, (b) transmitted by facsimile (with written confirmation), (c) mailed by
certified or registered mail (return receipt requested) (in which case such
notice shall be deemed given on the third day after such mailing) or (d)
delivered by an express courier (with written confirmation) to the Parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
If to Grupo TMM:
Grupo TMM, S.A.
Avenida de la Cuspide, No. 4755
Colonia Parques del Pedregal
14010 Mexico, D.F.
Attention: Corporate Secretary
CT Corporation
1209 Orange Street
Wilmington, Delaware 19801
With a copy (which shall not constitute notice) to:
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
Attention: Thomas C. Janson, Esq.
If to the KCS Purchasers:
By U.S. Mail:
Kansas City Southern
P.O. Box 219335
Kansas City, MO 64121-9335
Attention: Senior Vice President and General Counsel
By Delivery Service:
Kansas City Southern
427 West 12th Street
Kansas City, MO 64105
Attention: Senior Vice President and General Counsel
With a copy (which shall not constitute notice) to:
Sonnenschein Nath & Rosenthal LLP
4520 Main Street, Suite 1100
Kansas City, MO 64111
Attention: John F. Marvin, Esq.
If to the Escrow Agent:
The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza
New York, NY 10006
Attention John Neylan
With a copy to (which shall not constitute notice) to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
Attention: Helen Doo
Any party hereto may from time to time change its address for notices under this
Section 16 giving at least ten (10) days' notice of such changed address to the
other parties hereto.
SIGNATURE PAGES FOLLOWING
IN WITNESS WHEREOF, the Parties and the Escrow Agent have executed this
Agreement as of the date first above written.
KANSAS CITY SOUTHERN
By: /s/ Michael R. Haverty
--------------------------------------
Name: Michael R. Haverty
Title: Chairman, President & CEO
Caymex Transportation, Inc.
By: /s/ Jay M. Nadlman
--------------------------------------
Name: Jay M. Nadlman
Title: Vice President & Secretary
KARA Sub, Inc.
By: /s/ Ronald G. Russ
--------------------------------------
Name: Ronald G. Russ
Title: Vice President
KCS Investment I, Ltd.
By: /s/ Ronald G. Russ
--------------------------------------
Name: Ronald G. Russ
Title: Vice President
GRUPO TMM, S.A.
By: /s/ Jose F. Serrano Segovia
--------------------------------------
Name: Jose F. Serrano Segovia
Title: Attorney in Fact
By: Javier Segovia Serrano
--------------------------------------
Name: Javier Segovia Serrano
Title: Attorney in Fact
The Bank of Nova Scotia Trust Company of New York
By: /s/ Andrew Bicker
--------------------------------------
Name: Andrew Bicker
Title: Associate Director
APPENDIX A
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