"TENDER" ESCROW AGREEMENT
"TENDER" ESCROW AGREEMENT dated as of June 11, 1997, among
First of Michigan Capital Corporation, a Delaware corporation (the "Company"),
FMCC Acquisition Corp., a Delaware corporation ("Buyer"), and The Bank of New
York, as escrow agent (the "Escrow Agent").
WHEREAS, pursuant to the Tender Offer Agreement dated as of
June 11, 1997 (the "Tender Offer Agreement"), among the Company, Sellers (as
defined below) and Buyer, Buyer has agreed to commence a tender offer (the
"Offer") for all the shares of Common Stock, par value $0.10 per share (the
"Common Stock"), of the Company;
WHEREAS, a Securities Purchase Agreement dated as of June 11,
1997 (the "Purchase Agreement"), has been entered into between 1888 Limited
Partnership and DST Systems, Inc. (collectively, "Sellers") and Buyer.
WHEREAS, pursuant to the terms of this Agreement, Buyer shall
deposit cash in the amount of $16,724,735 into escrow, for the purpose of
purchasing shares of Common Stock subject to the Offer other than the Securities
(as defined in the Purchase Agreement); and
WHEREAS, in connection with the Offer, Buyer shall enter into
a depositary agreement with a financial institution (the "Depositary"), pursuant
to which the Depositary will receive and make payment for, on behalf of Buyer,
shares of Common Stock tendered pursuant to the terms of the Offer.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements and understandings contained herein and of other
good and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, the parties hereto agree as follows:
Section 1. Deposits. (a) Subject to the deposit by Sellers of
the Securities pursuant to the "Sellers" Escrow Agreement of even date herewith,
among Buyer, Sellers and The Bank of New York, as escrow agent, at or prior to
5:00 p.m. (New York City time) on June 13, 1997, Buyer will deposit with the
Escrow Agent (and thereafter the Escrow Agent will acknowledge in writing
receipt of) cash in the amount of $16,724,735 (together with all interest earned
thereon and any additions, substitutions or other property in which the same may
be invested or for which the same may be exchanged, the "Deposit").
(b) The Deposit to be so deposited with the Escrow Agent
pursuant to this Section 1 is sometimes referred to in this Agreement as the
"Escrowed Property".
(c) The Escrow Agent shall hold the Escrowed Property solely
for the purposes and upon the terms and conditions set forth in this Agreement
and it shall not be released and delivered from escrow except in accordance with
Section 2.
(d) Buyer represents and warrants to the Escrow Agent that
Buyer has full legal, right, power and authority to enter into this Agreement
and to deposit the Deposit in the manner provided in this Agreement.
Section 2. Delivery by the Escrow Agent. The Escrow Agent
shall hold, deliver and otherwise deal with the Escrowed Property as follows:
(a) Upon receipt of a certificate in the form of Exhibit A
hereto, signed by Buyer and the Company, the Escrow Agent promptly shall release
and deliver: (i) from the Deposit to an account(s) of the Depositary specified
in such certificate, by wire transfer of immediately available funds, the amount
specified in such certificate; and (ii) the balance of the Deposit to an account
specified by Buyer, by wire transfer of immediately available funds.
(b) Upon receipt of a certificate in the form of Exhibit B
hereto, signed by the Company, the Escrow Agent promptly shall notify Buyer of
its intent to release and deliver the Deposit to Buyer. If Buyer does not object
in writing to Escrow Agent to such intent within five days after receiving
notice thereof, the Escrow Agent shall release and deliver the Deposit to an
account specified by Buyer, by wire transfer of immediately available funds.
(c) Upon receipt of a certificate in the form of Exhibit C
hereto, signed by Buyer, the Escrow Agent promptly shall notify the Company of
its intent to release and deliver the Deposit to Buyer. If the Company does not
object in writing to Escrow Agent to such intent within five days after
receiving notice thereof, the Escrow Agent shall release and deliver the Deposit
to an account specified by Buyer, by wire transfer of immediately available
funds.
(d) If any party makes a timely objection to the release and
delivery of the Escrowed Property (or portion thereof), the Escrow Agent shall
continue to hold the Escrowed Property in its possession until directed to
disburse the same in accordance with (i) the joint written instructions of Buyer
and the Company, or (ii) a final unappealable judgment of a court of competent
jurisdiction. In lieu of the foregoing, the Escrow Agent may deposit the
disputed Escrowed Property with a court of competent jurisdiction and commence
an action of interpleader between the parties in dispute.
(e) At the time of release and delivery by the Escrow Agent of
all the Escrowed Property in accordance with this Section 2, the Escrow Agent
shall be released from all further liability under this Agreement with respect
to the Escrowed Property or otherwise.
Section 3. Investments. Moneys from time to time comprising
the Deposit shall be held in a separate account (the "Escrow Account") and
invested and reinvested by the Escrow Agent in accordance with the specific
written directions of the Buyer, but only in Permitted Investments.
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As used herein, "Permitted Investments" means the following
kinds of instruments with a maturity not later than the day preceding the
Closing Date: (a) obligations of the United States of America, or fully
guaranteed as to payment to interest and principal by the United States of
America; (b) commercial paper that, at the time of the investment therein
pursuant to this Section, has the highest credit ratings from ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P") and the
issuers of which have outstanding long-term unsecured debt obligations (other
than any such obligations whose ratings are based on the credit of a person
other than such issuers), at the time of such investment therein, having the
highest credit ratings from Moody's and S&P; and (c) demand or time deposits in
Permitted Banks (as defined below), or certificates of deposit of, or bankers'
acceptances issued by, Permitted Banks.
As used herein, "Permitted Bank" means a depository
institution or trust company organized under the laws of the United States of
America, any State thereof or the District of Columbia, having a combined
capital and surplus of at least $100,000,000, if the commercial paper (if any)
and the long-term unsecured debt obligations (other than such obligations whose
ratings are based on the credit of a person other than such institution or trust
company) of such depository institution or trust company, at the time of an
investment therein pursuant to this Section, have the highest credit ratings
from Duff & ▇▇▇▇▇▇.
Section 4. Rights of Action. Each of Buyer, the Company and
the Escrow Agent, as the case may be, without the consent of the other parties,
may, in its own behalf and for its own benefit, institute or maintain any suit,
action or proceeding, at law or in equity, against the other parties in order to
enforce or preserve its rights hereunder.
Section 5. Termination. This Agreement shall automatically
terminate upon the release and delivery by the Escrow Agent to Buyer or
otherwise pursuant to Section 2 (and in compliance with all the provisions of
such Section) of all the Escrowed Property.
Section 6. Concerning the Escrow Agent. (a) The Escrow Agent
hereby accepts the agency established by this Agreement and shall perform the
same upon the terms and conditions herein set forth, by all of which Buyer and
the Company shall be bound. The duties of the Escrow Agent hereunder shall be
purely ministerial. The Escrow Agent shall not have any duties or
responsibilities except those expressly set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the Escrow
Agent, whose duties and obligations shall be determined solely by the express
provisions hereof.
(b) The Escrow Agent shall not (i) be liable for any action
taken or suffered or omitted to be taken by it in good faith in the belief that
any documents or any signatures are genuine or properly authorized, (ii) be
responsible for any failure on the part of the Company or Buyer or any
predecessor Escrow Agent to comply with any of its representations, warranties,
covenants or agreements contained in this Agreement, or (iii) be liable for any
act or omission in connection with this Agreement, except in each case for its
own gross negligence or willful misconduct. The Escrow Agent is hereby
irrevocably authorized to, and shall, (A) act in accordance with this Agreement,
and (B) make the
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releases and deliveries as provided in Section 2. Subject to the foregoing, the
Escrow Agent hereby is authorized to accept instructions with respect to the
performance of its duties hereunder from Buyer and the Company, and the Escrow
Agent shall not be liable for any action taken or suffered or omitted to be
taken by it in good faith in accordance with the instructions of Buyer and the
Company, except for its own gross negligence or willful misconduct. However, if
Escrow Agent incurs reasonable legal fees and other costs in connection with its
successful defense of a claim of gross negligence or willful misconduct, the
Escrow Agent shall be indemnified for such fees.
(c) The Escrow Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its officers, agents or employees, and the Escrow Agent
shall not be answerable or accountable for any action taken, default, neglect or
misconduct of any such officer, agent or employee, except for the gross
negligence or willful misconduct of the Escrow Agent or any of them. The Escrow
Agent shall not be under any obligation or duty to institute, appear in, or
defend any action, suit or proceeding in respect hereof, unless first
indemnified to its reasonable satisfaction, but this provision shall not affect
the power of the Escrow Agent to take such action as the Escrow Agent may
consider proper, whether with or without such indemnity. Notwithstanding
anything in this Agreement that may be to the contrary, the Escrow Agent shall
have no liability hereunder to any of the other parties for complying in good
faith with any judgment or order of a court of competent jurisdiction. The
Escrow Agent shall notify Buyer and the Company of any claim made or action,
suit or proceeding instituted against it arising out of or in connection with
this Agreement.
(d) Buyer and the Company from time to time shall perform,
execute, acknowledge and deliver, or cause to be performed, executed,
acknowledged and delivered, all such further acts, instruments and assurances as
may be reasonably required by the Escrow Agent in order to enable it to carry
out or perform its duties under this Agreement.
(e) The Company and Buyer jointly and severally agree to
reimburse the Escrow Agent for its reasonable expenses, including taxes and
governmental charges of any kind and nature, incurred by the Escrow Agent
hereunder; and further jointly and severally agree to indemnify the Escrow Agent
and save it harmless against any and all losses, liabilities, damages and
expenses and for anything done, suffered or omitted by the Escrow Agent in the
execution of its duties and powers hereunder, except as a result of the Escrow
Agent's gross negligence or willful misconduct. As between the Company and
Buyer, any amounts payable to the Escrow Agent pursuant to the preceding
sentence shall be payable by Buyer.
(f) The Escrow Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Escrow Agent's own gross negligence or willful misconduct),
after giving prior notice to the Company and Buyer, such resignation and
discharge to be effective as hereinafter provided. With the prior consent of the
Company (which consent shall not be unreasonably withheld or delayed), Buyer may
remove the Escrow Agent upon at least 10 days' prior notice, and the
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Escrow Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder (except as aforesaid), such removal and
discharge to be effective as hereinafter provided. No such resignation or
removal shall take effect until a new escrow agent which Buyer and the Company
shall have approved in writing (such approval not to be unreasonably withheld or
delayed) shall have been appointed and shall have agreed to assume the Escrow
Agent's duties hereunder, as hereinafter provided. After such a new escrow agent
shall accept such appointment in writing, such new escrow agent shall be vested
with the same powers, rights, property, duties and responsibilities as if it had
been originally named herein as Escrow Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done and shall be legally and validly executed and delivered
by the resigning or removed Escrow Agent.
(g) Notwithstanding anything in this Agreement that may be to
the contrary: (i) if the Escrow Agent shall receive notice advising that
litigation in connection with the Escrowed Property, the Tender Offer Agreement
or this Agreement has been commenced, the Escrow Agent may deposit the Escrowed
Property with the Clerk of the Court in which said litigation is pending; or
(ii) the Escrow Agent may deposit the Escrowed Property in a court of competent
jurisdiction and commence an action for interpleader, the costs thereof to be
borne jointly and severally by Buyer and the Company. Upon the occurrence of any
of the foregoing events set forth in the preceding sentence, the Escrow Agent
shall be automatically released of and from all liability hereunder.
(h) Nothing herein shall preclude the Escrow Agent from acting
in any other capacity for Buyer, the Company or any of their respective
affiliates.
(i) Escrow Agent may consult with outside legal counsel at the
reasonable expense of [Buyer] as to any matter relating to this Agreement.
Section 7. Parties in Interest; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
Section 8. Notices. All notices, consents, requests, waivers
or other communications required or permitted under this Agreement (each a
"Notice") shall be in writing and shall be sufficiently given (a) if hand
delivered, (b) if sent by nationally recognized overnight courier, or (c) if
sent by registered or certified mail, postage prepaid, return receipt requested,
and in each case addressed as follows:
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If to Buyer:
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c/o Fahnestock & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Breed ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: Richard Crystal, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
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First of Michigan Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att: Chairman
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (313)
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Agent:
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The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Floor 12E)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Insurance Trust and Escrow
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified in a Notice. Any
Notice shall be effective and deemed given upon receipt.
Section 9. Miscellaneous. (a) This Agreement constitutes the
entire agreement between the parties hereto in respect of the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto with respect to such subject matter.
(b) This Agreement is not intended to confer upon any other
person any rights or remedies hereunder.
(c) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ITS CONFLICT OF LAW RULES.
(d) This Agreement may be executed by the parties hereto
(including by facsimile transmission) with counterpart signature pages or in
several counterparts, each of which shall be deemed an original but all of which
together shall constitute but one agreement.
(e) The descriptive headings contained herein are for
convenience only and shall not affect in any way the meanings or interpretation
of this Agreement.
Section 10. Agreement to Take Necessary and Desirable Actions.
Buyer and the Company agree to execute and deliver such other documents,
certifications, agreements and other writings and to take such other actions as
may be necessary and desirable in order to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable.
Section 11. Partial Invalidity. Any provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
provisions of this Agreement or affecting the validity or enforceability of any
of the provisions of this Agreement in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 12. Amendments. This Agreement may not be amended or
supplemented except upon the execution and delivery of a written agreement
executed by all the parties hereto.
Section 13. Consent to Jurisdiction. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts
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of the State of New York or the United States of America located in the State of
New York for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby and agrees not to
commence any action, suit or proceeding relating hereto except in such courts,
and further agrees that service of any process, summons, notice or document by
United States registered or certified mail in accordance with Section 8 shall be
effective service of process for any action, suit or proceeding brought in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to personal jurisdiction and the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby, in the courts of the State of New York or the United States
of America located in the State of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives, as of the day
and year first above written.
The Company:
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FIRST OF MICHIGAN CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman of the Board
Buyer:
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FMCC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and CEO
Escrow Agent:
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THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
Exhibit A to
Escrow Agreement
FORM OF FUNDING CERTIFICATE
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Floor 12E)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(a) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer for the shares of Common Stock has expired and
Buyer has accepted for payment all shares of Common Stock validly tendered in
the Offer.
Accordingly, you are hereby directed to release and deliver (i) to the
account of [name of financial institution], as depositary for the Offer, listed
on the attached Schedule A, the amount of $[ ], and (ii) to the account
listed opposite Buyer's name on the attached Schedule A the balance of Deposit,
by wire transfer of immediately available funds.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Funding
Certificate to be delivered to you in accordance with the terms of the Escrow
Agreement.
The Company:
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FIRST OF MICHIGAN CAPITAL
CORPORATION
By:_________________________
Name:
Title:
Buyer:
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FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
Exhibit B to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Floor 12E)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(b) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer has terminated.
Accordingly, you are hereby directed (i) to notify Buyer (the "Notice")
of your intent to release and deliver the Deposit to Buyer, and (ii) to release
and deliver the Deposit to Buyer to an account specified by Buyer, by wire
transfer of immediately available funds, if Buyer does not provide you with a
written objection within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the Company hereto has duly caused this Termination
Notice Certificate to be delivered to you in accordance with the terms of the
Escrow Agreement.
Company:
--------
FIRST OF MICHIGAN CAPITAL
CORPORATION
By:_________________________
Name:
Title:
Exhibit C to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Floor 12E)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(c) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer has terminated.
Accordingly, you are hereby directed (i) to notify the Company (the
"Notice") of your intent to release and deliver the Deposit to Buyer, and (ii)
to release and deliver the Deposit to Buyer to an account specified by Buyer, by
wire transfer of immediately available funds, if the Company does not provide
you with a written objection within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, Buyer hereto has duly caused this Termination
Notice Certificate to be delivered to you in accordance with the terms of the
Escrow Agreement.
Buyer:
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FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
