Document:

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                                                                    Exhibit 10.2

                    ADMINISTRATION AND LIQUIDATION AGREEMENT

                  THIS ADMINISTRATION AND LIQUIDATION AGREEMENT (this
"Agreement") is entered into as of August [ ], 2000 by and between Calypso
Management LLC, a Delaware limited liability company ("Calypso"), and Harbor
Global Company Ltd., a Bermuda limited duration company (the "Company").

         WHEREAS, prior to the consummation of the transaction contemplated by
the Agreement and Plan of Merger (the "Merger Agreement") dated as of May 14,
2000 by and between UniCredito Italiano S.p.A. and The Pioneer Group, Inc.
("Parent"), Parent intends to distribute to its stockholders all of the
outstanding shares of the Company (the "Distribution"); and

         WHEREAS, as of the date of the Distribution, Parent will have
transferred the assets (the "Assets") described in Section 5.1 of the
Distribution Agreement by and among Parent, the Company and Harbor Global II
Ltd. attached as Exhibit A to the Merger Agreement (the "Distribution
Agreement"), which Assets the Company intends operate until they are sold or
otherwise liquidated and the proceeds distributed to its stockholders; and

         WHEREAS, the officers and employees of Calypso are specially skilled in
the management, operation and disposition of the Assets and have previously
performed those functions with respect to the Assets as employees of Parent; and

         WHEREAS, following the Distribution the Company will require Calypso's
special skills in connection with the liquidation of the Assets and the
operation of the Assets prior to their liquidation; and

         WHEREAS, Calypso is willing to make such skills available and to
provide such services to the Company on the terms and conditions hereinafter set
forth.

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, and for other good and valuable
consideration, the Company and Calypso, intending to be legally bound, do hereby
agree as follows:

                  Section 1. Engagement. The Company hereby engages Calypso for
the Term (as hereinafter defined) and upon the terms and conditions herein set
forth to manage the sale or liquidation of the Assets and the operation of the
Assets as going concern businesses pending their sale or liquidation in
accordance with the directions of the Board of Directors of the Company (the
"Board"), to conduct all

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other aspects of the day to day operations of the Company, to provide the
services of certain of its employees or members to serve as officers and
employees of the Company (as described herein) and to perform other duties
related to the operation of the Company as may be reasonably requested by the
Board (collectively, the "Services"). In consideration of the compensation to
Calypso specified herein, Calypso accepts such engagement and agrees to perform
the Services.

                  Section 2. Term. Except as otherwise provided in Section 8,
the engagement hereunder shall be for a term commencing as of the "Time of
Distribution" (as such term is defined in the Distribution Agreement) and
expiring upon the date the Company is liquidated (the "Term").

                  Section 3. Services of Messrs. Kasnet and Hunter. During the
Term, Calypso shall provide the services of Stephen G. Kasnet to serve as the
President and Chief Executive Officer of the Company and of Donald H. Hunter to
serve as the Chief Operating Officer and Chief Financial Officer of the Company.
The services of Messrs. Kasnet and Hunter shall be provided to the Company on a
full-time basis, and Calypso shall not permit Mr. Kasnet or Mr. Hunter to render
services to, or be otherwise engaged by, other persons or entities, without the
express written consent of the Board. In addition, prior to the second
anniversary of the Time of Distribution, Calypso shall not terminate the
employment of Mr. Kasnet or Mr. Hunter without the express written consent of
the Board. As compensation for the provision of such services, the Company will
pay to Calypso an amount sufficient to pay Stephen G. Kasnet an annual base
salary of $325,000 plus provide an annual bonus opportunity of up to $325,000
and an amount sufficient to pay Donald H. Hunter an annual base salary of
$250,000 plus provide an annual bonus opportunity of up to $250,000, payable by
the Company in accordance with Section 6, provided, however, that amounts will
be paid to Calypso with respect to the bonuses described in the preceding
sentence only to the extent such bonuses are actually earned. The annual bonus
payments de scribed in the preceding sentence will be based upon the achievement
of performance goals, which will be established by the Board in consultation
with Mr. Kasnet.

                  Section 4. Services to be Performed; Exclusivity. Calypso
shall perform the Services through its members, employees or agents. Calypso
acknowledges that its provision of the Services to the Company shall be
exclusive and that Calypso will not render services to, or be otherwise engaged
by, other persons or entities without the express prior written consent of the
Board. Notwithstanding the foregoing, it shall not be a violation of Section 3,
this Section 4 or Section 5(b) for Mr. Kasnet to engage in the activities
described on Exhibit A hereto in a manner consistent with the performance of his
duties hereunder.

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                  Section 5. Confidentiality; Non-Competition.

                  (a) Calypso will hold in confidence, and will cause its
members, employees, consultants and agents (including, without limitation,
Stephen G. Kasnet and Donald H. Hunter) to hold in confidence, all proprietary
and confidential information of the Company which comes into their possession
or knowledge as a result of their performance of the Services (the "Confidential
Information"). Calypso will use, and will cause its members, employees
consultants and agents to use, such Confidential Information only in connection
with performance of the Services.

                  (b) Subject to Sections 3 and 4, and until the earlier of (i)
two years following the termination of this Agreement or (ii) the sale of Assets
representing substantially all of the value of the Assets (as determined by the
Board in good faith), Calypso shall not, directly or indirectly, and will not
permit Stephen G. Kasnet and Donald H. Hunter to, directly or indirectly, in any
capacity, (x) provide services with respect to assets substantially similar to
Assets held by the Company at the time in question or (y) provide services with
respect to any Asset sold by the Company for two years following such
disposition, in each case without the express prior written consent of the
Board, which consent with respect to Mr. Kasnet and Mr. Hunter shall not be
unreasonably withheld, delayed or conditioned.

                  Section 6. Expenses; Reporting. As soon as practicable
following the Time of Distribution, and annually thereafter during the Term,
Calypso shall present the Board with an annual business plan, budget request and
estimate of the aggregate amount of proceeds expected to be received by the
Company in connection with disposition of Assets in such year (the "Annual
Plan"), which Annual Plan shall be provided in such form, and with such
contents, as may be reasonably requested by the Board. Without limiting the
generality of the foregoing, the Annual Plan shall set forth with specificity
the amount of funds expected to be required in order to fund the operating
expenses (including the compensation payable with respect to Messrs. Kasnet and
Hunter pursuant to Section 3 and salaries and other remuneration of employees of
Manager, the "Operating Expenses") of the Company during the applicable calendar
year. Each Annual Plan following the initial Annual Plan shall account with
specificity for the expenditure of any such Operating Expenses provided to
Calypso by the Company with respect to the immediately preceding year. The Board
may modify the applicable Annual Plan, and Calypso shall take all reasonable
steps to timely comply with such modification. Calypso shall provide the Company
with quarterly updates to the Annual Plan during the course of the Term. The
Company shall reimburse Calypso, as incurred and in accordance with the Annual
Plan, for expenses incurred in the performance of the Services (including the
compensation payable with respect to Messrs. Kasnet and Hunter pursuant to
Section

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3 and salaries and other remuneration of employees of Manager serving with the
Company and, to the extent earned, including the Signing and Retention Bonus (as
defined in the employment agreement dated as of the date hereof by and between
Calypso and Mr. Kasnet (the "Employment Agreement")). Calypso shall submit for
the approval of the Board each transaction with a value of $2.5 million or more
and otherwise as the Board shall direct.

Calypso shall not permit any person or entity who does not provide or ceases to
provide services to Harbor Global on a full-time basis, whether pursuant to
this Agreement or otherwise, to (1) acquire or beneficially own any equity
interest, or any interest convertible or exchangeable into any equity interest,
in Calypso, or (2) receive or otherwise be entitled to receive any portion of
any Allocation (as defined below), except as provided by Mr. Kasnet's
Employment Agreement and the employment agreement dated the date hereof by and
between Calypso and Mr. Hunter.

                  Section 7. Allocation of Proceeds. Subject to Section 8,
Calypso shall receive a portion (each such portion an "Allocation") of the
amount of proceeds realized from the disposition of the Assets that are
ultimately distributed to the Company's stockholders (the "Distributable
Amounts"), as set forth in this Section 7. For purposes of this Agreement,
"Distributable Amounts" shall mean the net amount of any proceeds received from
the sale, exchange or other disposition of the Assets, after deducting any
applicable taxes, fees or other expenses incurred in connection with the
disposition of such Asset, as determined in good faith by the Board, and
excluding the distribution to stockholders of the unexpended portion of the $25
million contributed by Parent to the Company pursuant to the Distribution Agree-
ment (which amount shall be separately accounted for by the Company). For
purposes of the calculations set forth in this Section 7, no deduction shall be
made from the Distributable Amounts to reflect any Allocation to Calypso.
Calypso shall be deemed to be a stockholder of the Company for purposes of
Allocations, and each Allocation to Calypso shall reduce, dollar for dollar, the
amount of the Distributable Amounts to be distributed to the stockholders of the
Company. Calypso shall be entitled to Allocations according to the following
schedule:

                  (i) with respect to distributions to stockholders of the first
                  $36 mil lion in Distributable Amounts (or any lesser amount,
                  if the aggregate amount of available Distributable Amounts
                  does not exceed $36 million), Calypso shall receive an
                  Allocation equal to 10% of such Distributable Amounts;

                  (ii) with respect to distributions to stockholders of the next
                  $72 million in Distributable Amounts (if any), Calypso shall
                  receive an Allocation equal to 7.5% of such Distributable
                  Amounts; and

                  (iii) with respect to distributions to stockholders of any
                  additional Distributable Amounts, Calypso shall receive an
                  Allocation equal to 10% of such Distributable Amounts.

Notwithstanding the foregoing schedule of Allocations, to the extent that any
proceeds received by the Company are attributable to the Purchase Agreement
described in Section 6.8 of the Distribution Agreement (the "Ashanti
Receivable"), (A) for purposes of clause (B) hereof, the Distributable Amounts
attributable to the

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Ashanti Receivable shall be reduced by any applicable taxes, fees or other
expenses incurred in connection with the Ashanti Receivable, including any
indemnification payments under the Purchase Agreement and the payment to Parent
required by Section 6.8 of the Distribution Agreement, (B) Calypso's Allocation
shall equal 5% of such Distributable Amounts, and (C) the distribution of such
Distributable Amounts shall be ignored for purposes of the application of
clauses (i) through (iii) of this Section 7.

The Company shall pay to Calypso each Allocation at the time at which the Com-
pany makes a distribution to its shareholders with respect to any Distributable
Amounts; however, any Allocation which otherwise would have been paid during the
two year period commencing at the Time of Distribution (each such Allocation,
hereinafter, a "Deferred Allocation") shall be paid on the second anniversary of
the Time of Distribution.

                  Section 8. Termination.

                      (a) Termination Events. Notwithstanding the provisions of
Section 2, this Agreement may be terminated as described in this Section 8(a):

                  (i) the Agreement may be terminated by the Company following
                  any termination of the employment of Stephen G. Kasnet with
                  Calypso or upon the disability of Mr. Kasnet (as defined in
                  the Employment Agreement);

                  (ii) the Agreement may be terminated by the Company following
                  any failure by Calypso to follow a reasonable direction of the
                  Board or a material breach of the Employment Agreement by Mr.
                  Kasnet, which is not cured by Calypso or Mr. Kasnet, as the
                  case may be, within 75 days following receipt by Calypso of
                  written notice from a director of the Company which describes
                  with specificity any such failure (such period, the "Cure
                  Period");

                  (iii) the Agreement may be terminated by the Company following
                  any act by Calypso in connection with the performance of the
                  Services constituting bad faith, fraud or willful misconduct;

                  (iv) following the second anniversary of the Time of
                  Distribution, the Agreement may be terminated by Calypso upon
                  not less than 120 days notice to the Company; or

                  (v) the Agreement may be terminated by the Company following
                  the second anniversary of the Time of Distribution upon not
                  less than 120

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                  days notice to Calypso, provided, however, that if, on or
                  prior to such second anniversary, Mr. Kasnet commits (in a
                  manner reasonably satisfactory to the Board) to continue his
                  employment with the Company pursuant to this Agreement and
                  the Employment Agreement for either (A) an additional one year
                  period or (B) such period in excess of one year which Mr.
                  Kasnet and the Board agree is necessary to sell substantially
                  all of the Company's assets (such period, the "Additional
                  Period"), then during the Additional Period, the Company may
                  not terminate this Agreement pursuant to this Section 8(a)(v).

                    (b) Termination Upon Full Disposition of Assets. This
Agreement shall terminate immediately upon a resolution by the Board confirming
the sale or other disposition by the Company of all of the Assets.

                    (c) Effect of Termination. The Company will cease to pay the
Operating Expenses to Calypso as of the Termination Date (as defined below),
provided, however, that in the event of a termination pursuant to Section
8(a)(ii) hereof, the Company will cease to pay the Operating Expenses as of the
expiration of the Cure Period (if no cure has occurred). Within sixty days
following the Termination Date, Calypso shall provide the Company with a final
accounting and report, in such form the Board may reasonably request.

                  (i) In the event of a termination pursuant to Section 8(a),
                  Calypso shall forfeit its right to any Allocation which occurs
                  following the Termination Date (including any Allocation which
                  would have been a Deferred Allocation); provided, however,
                  that if the termination occurs on account of the death or
                  disability of Stephen G. Kasnet, Calypso shall not forfeit its
                  right to any Deferred Allocation with respect to which there
                  has been a distribution to the Company's stockholders prior to
                  the Termination Date, which Deferred Allocation (if any)
                  shall be paid to Calypso within 30 days of the Termination
                  Date (as defined below).

                  (ii) Upon any termination of this Agreement pursuant to
                  Section 8(b), any Deferred Allocations shall be promptly paid
                  to Calypso, and Calypso shall receive any other unpaid
                  Allocation with respect to the disposition of any Asset at the
                  time proceeds from the sale of such Asset are distributed to
                  the Company's stockholders.

                    (d) Termination Date. The effective date of any termination
of this Agreement (the "Termination Date") shall be:

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                  (i) in the event of a termination pursuant to Sections 8(a)(i)
                  through (iii), the date set forth in the notice of termination
                  with respect to any termination of this Agreement by the
                  Company following the occurrence of an event described in
                  Sections 8(a)(i) through (iii), which date, in the case of a
                  termination pursuant to Section 8(a)(ii) shall be 75 days
                  following the expiration of the Cure Period;

                  (ii) in the event of a termination pursuant to Section
                  8(a)(iv) or 8(a)(v) hereof, the date which is 120 days
                  following delivery of a notice of termination, provided,
                  however, in the event of such a termination by Calypso
                  pursuant to Section 8(a)(iv) hereof, the Company may, in its
                  sole discretion, choose to waive some or all of such notice
                  period (which waiver shall cause the Agreement to terminate on
                  such earlier date specified by the Company, and such earlier
                  date shall be the Termination Date); or

                  (iii) with respect to any termination of this Agreement
                  pursuant to Section 8(b) hereof, the date of the resolution by
                  the Board confirming the sale or other disposition by the
                  Company of all of the Assets.

                  Section 9. Notice. All notices hereunder, to be effective,
shall be in writing and shall be mailed by first class certified mail, postage
prepaid or sent via facsimile (with confirmation of receipt), as follows:

                  (i)  If to Calypso, addressed to it at:

                           Calypso Management LLC
                           60 State Street
                           Boston, Massachusetts 02109-1820
                           Attn: Stephen G. Kasnet

                      with a copy to:

                           Hill & Barlow
                           One International Place
                           Boston, Massachusetts 02110
                           Attn: Valerie Andrews
                           Facsimile: (617) 428-3500

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                  (ii) If to the Company:

                           Harbor Global Company Ltd.
                           60 State Street
                           16th Floor
                           Boston, Massachusetts 02109-1820
                           Attention: General Counsel

                      with a copy to:

                           Skadden, Arps, Slate, Meagher & Flom LLP
                           One Beacon Street
                           Boston, Massachusetts 02108-3194
                           Attn: Louis Goodman
                           Facsimile: (617) 573-4822

Notices sent in accordance with this Section 9 shall be deemed delivered (i)
four business days after deposit in the mail or (ii) on the date of confirmation
of the telecopy facsimile.

                  Section 10. Modifications. This Agreement together with the
Employment Agreement and the escrow agreement dated as of the date hereof by and
among Calypso, the Company, Mr. Kasnet and State Street Bank and Trust Company
executed by the parties as of the date hereof constitute the entire agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements whether written or oral. This Agreement
may not be amended or revised except by a writing signed by both Calypso and by
the Company, which writing shall be duly authorized by the Company's Board.

                  Section 11. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns but may not be assigned by any party without the prior
written consent of the other party.

                  Section 12. Dispute Resolution. Any dispute, controversy or
claim arising out of or relating to this Agreement, or the breach, termination
or validity hereof, shall be finally settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect, as modified herein (the "Rules"). The place of arbitration shall be
Boston, Massachusetts. There shall be one arbitrator, who shall be appointed by
agreement of the parties within thirty days of receipt by the respondent(s) of
the Demand for Arbitration. If such arbitrator is not appointed within the time
limit provided herein, such arbitrator shall

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be appointed by the American Arbitration Association (the "AAA") in accordance
with the striking and ranking procedure contained in the Rules. Any arbitrator
appointed by the AAA shall be a retired judge or a practicing attorney with no
less than fifteen years of experience and an experienced arbitrator. The
arbitrator shall be required to follow the law of The Commonwealth of
Massachusetts. The arbitrator is not empowered to award damages in excess of
compensatory damages, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any dispute. Any
arbitration proceedings, decision or award rendered hereunder and the validity,
effect and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq. Any award rendered hereunder
shall be final and binding on the parties and judgment upon such award may be
entered in any court of competent jurisdiction. Notwithstanding anything to the
contrary contained herein, the provisions of this Section 12 shall not govern
any action for equitable relief hereunder.

                  Section 13. Captions. Captions have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision and shall not affect the validity of any other
provision.

                  Section 14. Governing Law. This Agreement shall be construed
under and governed by the laws of The Commonwealth of Massachusetts, without
giving effect to the provisions thereof relating to conflict of laws.

                  Section 15. Effectiveness. In the event that the transactions
contemplated by the Distribution Agreement are not consummated, this Agreement
shall be void and of no further force and effect.

                  Section 16. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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                  IN WITNESS WHEREOF, the parties have duly executed this
Agreement as a sealed instrument as of the date first above written.

                                 HARBOR GLOBAL COMPANY LTD.

                                 ----------------------------------
                                 By:
                                 Title:

                                 CALYPSO MANAGEMENT LLC

                                 ----------------------------------
                                 By: Stephen G. Kasnet
                                 Title: President and Chief Executive Officer

                        Signature Page to Administration
                            and Liquidation Agreement

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                                    EXHIBIT A

Non-Executive Chairman of the Board of Directors, Warren Bancorp and Warren
Five Cents Savings Bank

Director, Bradley Real Estate, Inc. (or its successor)

                                       11<PAGE>   1
                                                                    Exhibit 10.3

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT ("Agreement"), dated as of [____________], 2000,
is made by and among Harbor Global Company Ltd., a Bermuda limited duration
company ("Harbor Global"), Calypso Management LLC, a Delaware limited liability
company ("Calypso"), Stephen G. Kasnet ("Kasnet") and State Street Bank and
Trust Company, as escrow agent ("Escrow Agent").

         This is the Escrow Agreement referred to in the Administration and
Liquidation Agreement of even date herewith by and between Harbor Global and
Calypso (the "Administration Agreement"), and the Employment Agreement of even
date herewith by and between Calypso and Kasnet, (the "Employment Agreement").
Capitalized terms used without specific definition herein shall have the
meanings ascribed to them in the Administration Agreement, a copy of which is
attached hereto.

         The parties, intending to be legally bound, hereby agree as follows:

1.  Establishment of Escrow

         (a) As soon as practicable following the Time of Distribution, Harbor
Global shall deposit with Escrow Agent an amount equal to US$1,800,000 in
immediately available funds (as increased by any earnings thereon and as reduced
by any disbursements hereunder or losses on investments, the "Escrow Fund"),
together with a written notice to Escrow Agent (i) identifying such amount as
the deposit being made under this Agreement and (ii) identifying the date of the
Time of Distribution. Escrow Agent promptly shall acknowledge receipt thereof.

         (b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.

2.  Investment of Escrow Fund

         The Escrow Fund shall be invested in accordance with the written
direction of Harbor Global and Kasnet and Escrow Agent shall not be responsible
or liable for any loss accruing from any investment made in accordance
therewith. Escrow Agent is authorized to liquidate in accordance with its
customary procedures any portion of the Escrow Fund consisting of investments to
provide for payments required to be made

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under this Agreement. Absent its timely receipt of such specific written
investment instruction from Harbor Global and Kasnet, Escrow Agent shall invest
the Escrow Fund in United States Treasury Bills with a maturity of no more than
[ ] days. All earnings received from the investment of the Escrow Fund shall be
credited to, and shall become a part of, the Escrow Fund (and any losses on such
investments shall be debited to the Escrow Fund). Escrow Agent shall have no
liability for any investment losses where such investments were made in
accordance with this Agreement, including any losses on any investment required
to be liquidated prior to maturity in order to make a payment required
hereunder.

3.  Termination of Kasnet Employment

         (a) If by or before the second anniversary of the Time of Distribution
(as certified to Escrow Agent pursuant to Section 1(a) above), Harbor Global
gives a written notice (a "Notice") to Escrow Agent, Kasnet and Calypso stating
that there has been an Employment Termination Event (as defined below), Escrow
Agent shall pay and distribute to Harbor Global the entire balance of the Escrow
Fund at the end of the 30-day period following its receipt of such a Notice,
unless prior to such time Kasnet or Calypso gives a notice to Harbor Global and
Escrow Agent disputing such Employment Termination Event (a "Counter Notice").
If a Counter Notice is received by Escrow Agent within thirty days of its
receipt of a Notice of an Employment Termination Event, Escrow Agent shall
distribute the Escrow Fund only (i) in accordance with joint written
instructions of Harbor Global and Kasnet, (ii) to Kasnet's estate as provided in
Section 3(c) below, upon receipt by Escrow Agent of a certificate described in
Section 3(c), together with an official certificate of the death of Kasnet,
(iii) following and in accordance with a final determination by an arbitrator
(made as provided in Section 6 hereof) determining whether or not there has been
an Employment Termination Event, or (iv) in accordance with Section 4 below
(whichever is soonest to occur). Any such final determination by an arbitrator
shall be evidenced by written notice to Escrow Agent from either Kasnet or
Harbor Global certifying that there has been such a final determination
(accompanied by a copy of a final order, decree or judgment of a court in the
United States of America, if requested by Escrow Agent as provided in Section
6), together with a written legal opinion of counsel for the presenting party to
the effect that the order is final. Escrow Agent shall be authorized to act on
such final determination and legal opinion without further question. Except as
provided in Section 5 hereof, upon payment and distribution of the Escrow Fund
in accordance with this Section 3, this Agreement shall be terminated. Upon its
receipt of any Notice or Counter Notice, Escrow Agent shall be entitled to
presume that a copy likewise has been received by Kasnet and Calypso, but shall
notify Kasnet and Calypso no less than seven days prior to any distribution
pursuant to a Notice of the date of such intended distribution.

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         (b) For purposes hereof, "Employment Termination Event" shall mean the
termination of the Administration Agreement by Harbor Global before the two-year
anniversary of the Time of Distribution as a result of (A) Mr. Kasnet's death,
(B) Mr. Kasnet's disability (as set forth in Section 4 of the Employment
Agreement), (C) a voluntary termination of employment with Calypso or Harbor
Global by Mr. Kasnet, (D) an act by Mr. Kasnet in connection with the
performance of his services with Calypso or Harbor Global constituting bad
faith, fraud or willful misconduct or (E) a willful failure by Mr. Kasnet to
carry out a vote of the Board of Directors of Harbor Global resulting in
material economic harm to Harbor Global.

         (c) If on the death of Kasnet, Kasnet's estate does not receive
$1,800,000 in life insurance because Harbor Global has not reimbursed Calypso
for the life insurance premium referenced in Section 3(b) of the Employment
Agreement, the executor of the estate of Kasnet shall be entitled to present a
written notice to Escrow Agent (i) certifying that the death of Kasnet has
occurred and that the person giving such notice is the executor of the estate of
Kasnet, (ii) certifying that Kasnet's estate has not received such amount of
life insurance for the reason described in this Section 3(c), (iii) confirming
that enclosed therewith is (or that such executor has otherwise caused to be
provided to Escrow Agent) an official certificate of the death of Kasnet, and
(iv) instructing Escrow Agent to make payment from the Escrow Fund of the amount
of $1,800,000 to the estate of Kasnet (in accordance with payment instructions
set forth therein). Upon Escrow Agent's receipt of such certificate, together
with an official certificate of the death of Kasnet (and provided the Escrow
Fund has not sooner been distributed pursuant to the terms of this Agreement),
Escrow Agent shall distribute $1,800,000 of the Escrow Fund (or the amount of
the Escrow Fund then remaining, if less) to the estate of Kasnet in accordance
with such certificate.

4.  Payments from and Termination of Escrow

         (a) If, on or before the second anniversary of the Time of Distribution
(as certified to Escrow Agent pursuant to Section 1(a)), Escrow Agent has not
received a Notice of an Employment Termination Event, Escrow Agent shall pay and
distribute from the Escrow Fund (A) the lesser of (i) $1,800,000 or (ii) the
entire Escrow Fund to Kasnet and (B) 100% of any remaining balance of the Escrow
Fund to Harbor Global, in accordance with the payment instructions provided by
each party entitled to a distribution hereunder.

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         (b) If, as of the second anniversary of the Time of Distribution (as
certified to the Escrow pursuant to section 1(a)), a Notice of an Employment
Termination Event has been received by Escrow Agent, the Escrow Fund shall be
distributed only in accordance with Section 3 above; provided, however, that if
a Counter Notice has been received by Escrow Agent (within the 30-day period
described in Section 3) with respect to such Notice, and Escrow Agent
subsequently receives written notice (from or on behalf of Harbor Global, Kasnet
or Calypso) that an arbitrator has made a final determination that there has not
been an Employment Termination Event (accompanied by an opinion of counsel to
the effect that such determination is final; and, if requested by Escrow Agent,
accompanied by a copy of a final order, decree or judgment of a court in the
United States of America), then Escrow Agent shall administer and distribute the
Escrow Fund in accordance with Section 4(a) above as though such Notice of
Employment Termination Event has not been received.

5.  Agreements Relating to Escrow Agent

         (a) Harbor Global, Calypso and Kasnet acknowledge and agree that Escrow
Agent (i) shall not be responsible for any of the agreements referred to herein
(including, without limitation, the Administration Agreement or the Employment
Agreement) but shall be obligated only for the performance of such duties as are
specifically set forth in this Agreement, each of which is ministerial (and
shall not be construed to be fiduciary) in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or on the
part of Escrow Agent; (ii) shall not be obligated to take any legal or other
action hereunder which might in its judgment involve expense or liability unless
it shall have been furnished with indemnity acceptable to it; (iii) may rely on
and shall be protected in acting or refraining from acting upon any written
notice, instruction (including, without limitation, wire transfer instructions,
whether incorporated herein or provided in a separate written instruction),
instrument, statement, request or document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility for determining the accuracy thereof;
and (iv) may consult counsel satisfactory to it, including in-house counsel, and
the advice or opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.

         (b) Neither Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken or omitted to be taken
by it or any of its directors, officers or employees hereunder except in the
case of gross negligence, bad faith or willful misconduct. Harbor Global, on one
hand, and Calypso and Kasnet on the other, jointly and severally, covenant and
agree to indemnify Escrow Agent and hold it harmless

                                       4
<PAGE>   5

without limitation from and against any loss, liability or expense of any nature
incurred by Escrow Agent arising out of or in connection with this Agreement or
with the administration of its duties hereunder, including, but not limited to,
legal fees and expenses and other costs and expenses of defending or preparing
to defend against any claim of liability in the premises, unless such loss,
liability or expense shall be caused by Escrow Agent's gross negligence, bad
faith or willful misconduct. In no event shall Escrow Agent be liable for
indirect, punitive, special or consequential damages.

         (c) Harbor Global, on one hand, and Calypso and Kasnet, on the other,
jointly and severally, agree to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of Escrow Funds
under this Agreement, and to indemnify and hold Escrow Agent harmless from and
against any taxes, additions for late payment, interest, penalties and other
expenses, that may be assessed against Escrow Agent on any such payment or other
activities under this Agreement. Harbor Global, Calypso and Kasnet undertake to
instruct Escrow Agent in writing with respect to 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. Harbor Global, on one hand, and Calypso and
Kasnet, on the other, jointly and severally, agree to indemnify and hold Escrow
Agent harmless 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 same, and any liability for failure to
obtain proper certifications or to properly report to governmental authorities,
to which Escrow Agent may be or become subject in connection with or which
arises out of this Escrow Agreement, including costs and expenses (including
reasonable legal fees and expenses), interest and penalties. Notwithstanding
anything to the contrary contained in Section 5(b) or (c) hereof, the
non-prevailing party in any dispute hereunder shall be primarily responsible for
the indemnification of Escrow Agent described in such sections.

         (d) Harbor Global agrees to pay or reimburse Escrow Agent for any legal
fees and expenses incurred in connection with the preparation of this Agreement
and to pay Escrow Agent's reasonable compensation for its normal services
hereunder, both in accordance with the attached fee schedule, which may be
subject to change on an annual basis. If Escrow Agent incurs expenses in
connection with the administration of the escrow created hereby which are in
excess of its compensation for normal services hereunder, including without
limitation, payment of any legal fees and expenses incurred by Escrow Agent in
connection with the resolution of any claim by any party hereunder, Escrow Agent
shall be reimbursed for such expenses, as appropriate, by either (i) the
non-prevailing party in connection with the resolution of any claim by any party
hereunder or

                                       5
<PAGE>   6

(ii) the party requesting Escrow Agent to perform services in excess of its
normal services hereunder.

         (e) Escrow Agent may at any time resign as Escrow Agent hereunder by
giving thirty (30) days prior written notice of resignation to the other parties
hereto. Prior to the effective date of the resignation as specified in such
notice, Harbor Global and Kasnet will issue a joint written instruction to
Escrow Agent authorizing redelivery of the Escrow Funds to a successor escrow
agent that it selects. Such successor escrow agent shall be a bank or trust
company, organized and existing under the laws of the United States or any state
thereof, subject to examination by state or federal authorities, and have
capital and surplus in excess of $50,000,000. If no successor escrow agent is
named by Harbor Global and Kasnet within such time periods, Escrow Agent may
appoint a successor escrow agent. The provisions of this Section 5 with respect
to the protection of Escrow Agent shall survive the resignation or removal of
Escrow Agent or the termination of this Escrow Agreement.

6.  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 such Escrow Fund by a third party,
Escrow Agent upon receipt of a written notice of such dispute or claim by the
parties hereto or a third party, is authorized and entitled to retain in its
possession without liability to anyone, all or any of said Escrow Fund until
such dispute shall have been settled either by the mutual agreement of the
parties involved or by a final determination of an arbitrator in the manner
provided in Section 10 of the Employment Agreement, as evidenced (if Escrow
Agent so requests) 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. Escrow Agent may, but shall be under no duty whatsoever
to, institute or defend any legal proceeding which relates to the Escrow Fund.

7.  Force Majeure

         Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include, but
not be limited to, acts of God, strikes, lockouts, riots, acts of war,
epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, computer viruses, power failures, earthquakes or
other disasters.

                                       6
<PAGE>   7

8.  Notices

         Any notice permitted or required hereunder shall be deemed to have been
duly given if delivered personally, if delivered by courier, if mailed certified
or registered mail, postage prepaid, or if transmitted by confirmed telecopy
accompanied by mailing of the original on the same day by first class mail,
postage prepaid, to the parties at their addresses set forth below (or such
other address as any such party may have notified the others by advance written
notice), provided, however, that in no instance shall any notice to Escrow Agent
be deemed to have been received by it unless and until received by it:

         (a)      If to the Company:

                  Harbor Global Company Ltd.
                  60 State Street
                  16th Floor
                  Boston, MA  02109-1820
                  Attention:  General Counsel

                  with a copy to:

                  Skadden, Arps, Slate, Meagher & Flom LLP
                  One Beacon Street
                  Boston, MA  02108-3194
                  Attention:  Louis Goodman
                  Facsimile:  (617) 573-4822

         (b)      If to Calypso:

                  Calypso Management LLC
                  60 State Street
                  Boston, MA  02109-1820
                  Attention:  Stephen G. Kasnet

                  with a copy to:

                  Hill & Barlow
                  One International Place
                  Boston, MA  02110
                  Attention:  Valerie Andrews
                  Facsimile:  (617) 428-3500

                                       7
<PAGE>   8

         (c)      If to Kasnet:

                  Stephen G. Kasnet
                  1 University Lane
                  Manchester, MA  01944
                  Facsimile:  (978) 526-1456

                  with a copy to:

                  Hill & Barlow
                  One International Place
                  Boston, MA  02110
                  Attention:  Valerie Andrews
                  Facsimile:  (617) 428-3500

         (d)      If to Escrow Agent:

                  if by mail, to:

                  State Street Bank and Trust Company
                  Global Investors Services Group
                  Corporate Trust Department
                  P.O. Box 778
                  Boston, Massachusetts  02102-0778
                  Attention:  Harbor Global/Calypso Escrow
                  Facsimile:  (617) 662-1466

                  if by hand delivery or by courier to:

                  State Street Bank and Trust Company
                  Global Investors Services Group
                  Corporate Trust Department
                  2 Avenue De Lafayette
                  Boston, Massachusetts  02111-1724
                  Attention:  Harbor Global/Calypso Escrow

                                       8
<PAGE>   9

9.  Binding Effect

         This Agreement shall be binding upon the respective parties hereto and
their heirs, executors, successors and permitted assigns.

10.  Governing Law

         This Agreement shall be governed by and construed under the laws of The
Commonwealth of Massachusetts.

11.  Reproduction of Documents

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, and (b) 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 hereto 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 shall likewise be admissible in evidence.

12.  Counterparts:  Delivery

         This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same. This Agreement may be delivered
by fax.

13.  Section Headings

         The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.

14.  Waiver

         Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to in this
Agreement will operate, as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the

                                       9
<PAGE>   10

maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the party to be bound; (b) no waiver that may be given by a
party will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

15.  Exclusive Agreement and Modification

         This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by Harbor Global,
Calypso, Kasnet and Escrow Agent.

16.   Tax Reporting; Certification of Taxpayer Identification Numbers

         (a) The parties agree that, for tax reporting purposes, all interest
(or other income earned from the investment of the Escrow Fund in any tax year)
shall (i) to the extent such interest or other income is distributed by Escrow
Agent to any person or entity pursuant to the terms of this Agreement during
such tax year, be reported as allocated to such person or entity, and (ii)
otherwise shall be reported as allocated to Harbor Global.

         (b) Each of Harbor Global and Kasnet agree to provide Escrow Agent with
a certified tax identification number by signing and returning a Form W-9 (or
Form W-8, in case of non-U.S. persons) to Escrow Agent prior to the date on
which any income earned on the investment of the Escrow Fund is credited to the
Escrow Fund. The parties understand that, in the event their tax identification
numbers are not certified to Escrow Agent, the Internal Revenue Code, as amended
from time to time, may require withholding of a portion of any interest or
other income earned on the investment of the Escrow Fund.

                      [Signature page immediately follows.]

                                       10
<PAGE>   11

                  IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as an instrument under seal as of the date first written above.

                                        -----------------------------------
                                        STEPHEN G. KASNET

                                        CALYPSO MANAGEMENT LLC

                                        -----------------------------------
                                        By: Donald H. Hunter
                                        Chief Financial Officer

                                        HARBOR GLOBAL COMPANY LTD.

                                        -----------------------------------
                                        By:
                                        Title:

                                        STATE STREET BANK AND TRUST
                                        COMPANY, as Escrow Agent

                                        -----------------------------------
                                        By:
                                        Title:

                                       11
<PAGE>   12

                                  FEE SCHEDULE

  ACCEPTANCE FEE

         Waived.

  ANNUAL ESCROW FEE

         An annual fee for ordinary services shall be payable in the amount of
$3,500.00 per year or any part of a year (the "Annual Fee"). The Annual Fee
shall be due and payable in advance, upon signing of the Escrow Agreement;
thereafter upon each anniversary date. The Annual Fee shall be subject to
adjustment by the Escrow Agent annually, upon notice.

  INVESTMENT TRANSACTION FEE; WIRE TRANSFER FEES

         An investment charge to cover the purchase and sale of investments held
in escrow account under administration shall be charged as follows: (i) 40 basis
points (.4%) per annum of the average daily net assets, with respect to
investment in SSgA or other selected money market funds, and (ii) with respect
to other investments, $65.00 per buy/sell. A wire transfer fee of $20.00 per
wire shall be charged for each outgoing wire transfer.

  EXTRAORDINARY ADMINISTRATIVE EXPENSES

         In addition to the Annual Fee, fees for extraordinary services will be
determined and charged by appraisal. Such services may include, but are not
limited to, additional responsibilities and services incurred in case of
default, or dispute or third party claim upon the Escrowed Funds or Escrowed
Property.

  OUT OF POCKET EXPENSES

         Out-of-pocket expenses, such as but not limited to counsel fees and
expenses, telephone, postage, insurance, shipping charges, outside investment
charges and supplies, will be charged at cost.

                                       12

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