ESCROW AGREEMENT
AGREEMENT, dated as of March 10, 1997, among each of the several
purchasers whose names appear on the signature pages hereof (each a "Purchaser"
and collectively, the "Purchasers"), Xx. Xxxxxx Xxxxxxxx ("Xxxxxxxx") and Marine
Midland Bank, as Escrow Agent (the "Escrow Agent"). Capitalized terms used
herein without definition shall have the meaning set forth in the Stock Purchase
Agreement described in the recitals below.
W I T N E S S E T H:
WHEREAS, Borislow is the owner beneficially and of record of
19,860,000 shares of common stock, par value $.01 per share (the "Common Stock")
of Tel-Save Holdings, Inc., a Delaware corporation ("Holdings");
WHEREAS, Borislow desires to (i) sell, in the aggregate, 3,911,000
shares of Common Stock (the "Firm Shares") to the several Purchasers in
accordance with their respective Purchase Commitments and (ii) to place an
additional 1,564,400 of shares of Common Stock in escrow (the "Escrow Shares")
for the benefit of the several Purchasers, in proportion to their Purchase
Commitments, for distribution to the several Purchasers under the terms of the
Stock Purchase Agreement, dated the date hereof, among Borislow and the
Purchasers (the "Stock Purchase Agreement") and this Agreement; and
WHEREAS, the Escrow Agent has agreed to hold in escrow the Escrow
Shares pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of the material covenants and
agreements herein contained, the parties hereto agree as follows:
1. Escrow Agent. Borislow and Purchasers hereby appoint and
designate the Escrow Agent as escrow agent for the purposes set forth herein,
and the Escrow Agent hereby accepts such appointment under the terms and
conditions set forth herein.
2. Escrow Deposit. (a) At the Closing, Borislow shall deliver to
the Escrow Agent certificates for the Escrow Shares, together with stock powers
executed by Borislow in blank. For purposes of this
Agreement, the term "Escrow Shares" includes any securities issued with respect
to such Shares and constituting Registrable Securities under the Registration
Rights Agreement. At any time securities that constitute Registrable Securities
are received by Borislow, Borislow shall deliver such additional Escrow Shares
to the Escrow Agent.
(b) The Escrow Agent shall hold and dispose of all of the Shares in
the Escrow Deposit (as defined below) in accordance with Section 3 of this
Agreement, and shall act as Escrow Agent in accordance with the terms and
provisions of this Agreement.
(c) Subject to the provisions hereof, the Escrow Agent agrees to
hold such amount (including any dividends or other distributions issued on such
Escrow Shares during such period, which dividends and other distributions shall
be distributed to the Escrow Agent for further distribution in accordance with
this Agreement) in a separate and distinct account (the "Escrow Deposit").
Neither Borislow nor any of the Purchasers shall permit the Escrow Deposit to be
subject to any Lien or attachment of any creditor of any party hereto and shall
take all action to ensure that it be used solely for the purposes and subject to
the conditions set forth in this Agreement and the Stock Purchase Agreement.
(d) Borislow shall remain the beneficial owner of the Escrow Shares
until the Determination Date and shall be entitled to all of the benefits of
beneficial ownership including any cash dividends or similar distributions
(other than securities constituting Registrable Securities). Borislow shall have
the right to vote the Escrow Shares during the period of time in which such
Shares are held by the Escrow Agent.
3. Release of the Escrow Deposit
3.1. Notice of Claim. On the Determination Date, the Purchasers and
Borislow shall calculate the number of Escrow Shares that each of the Purchasers
is entitled to receive, if any, in accordance with Section 8 of the Stock
Purchase Agreement. Such amount and the calculation used in determining such
amount shall be set forth in a Notice of Claim, which Notice shall be delivered
to the Escrow Agent by the Purchasers and Borislow prior to the Escrow
Settlement Date.
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3.2. Dispute of Escrow Shares. (a) Subject to paragraph (b) below,
on the Escrow Settlement Date, the Escrow Agent shall deliver the amount of the
Escrow Shares, if any, as set forth in such Notice of Claim to each of the
Purchasers.
(b) If the Escrow Agent shall have received a written objection
from any of the Purchasers or Borislow to the amount of Escrow Shares set forth
in any of the Notices of Claim, the Escrow Agent shall not make such delivery of
Escrow Shares until otherwise directed pursuant to either: (i) a written
instruction signed by Borislow and the relevant Purchaser; or (ii) a
nonappealable final order, decree or judgment by a court of competent
jurisdiction determining whether and to what extent such Purchaser is entitled
to the amount set forth in the Notice of Claim.
3.3. Borislow Entitled to Escrow Shares. The Escrow Agent shall
deliver to Borislow any of the Escrow Shares remaining after distribution of the
Escrow Shares to the Purchasers under clauses (i) and (ii) of Section 8(a) of
the Stock Purchase Agreement. If the Escrow Agent determines that the Purchasers
are not entitled to receive any of the Escrow Shares pursuant to clause (iii) of
Section 8(a) of the Stock Purchase Agreement, the Escrow Agent shall deliver to
Borislow the total number of Escrow Shares in the Escrow Deposit.
4. Responsibilities of the Escrow Agent. The Escrow Agent's
acceptance of its duties under this Agreement is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to its rights, duties, liabilities and immunities:
(a) except as to the due execution and delivery by the
Escrow Agent of this Agreement, it makes no representation and has
no responsibility as to the validity of this Agreement or of any
other instrument referred to herein, or as to the correctness of
any statement contained herein, and it shall not be required to
inquire as to the performance of any obligation under the Stock
Purchase Agreement;
(b) the Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to
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the truth of any information therein contained, which it in good
faith believes to be genuine and what it purports to be;
(c) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in
good faith, or for any mistake of fact or law, or for anything
which it may do or refrain from doing in connection therewith,
except its own negligence or misconduct;
(d) the Escrow Agent may consult with competent and
responsible legal counsel selected by it and it shall not be liable
for any action taken or omitted by it in good faith in accordance
with the advice of such counsel;
(e) the Escrow Agent shall have no duties or
responsibilities except those expressly set forth herein, and it
shall not be bound by any modification of this Agreement unless
such modification is in writing and signed by the other parties
hereto and, if its duties as Escrow Agent hereunder are affected,
unless it shall have given written consent thereto.
5. Amendment and Termination. This Agreement may be amended or
terminated only by the written agreement of the parties hereto.
6. Fees of Escrow Agent. Borislow agrees to pay the Escrow Agent
its agreed upon compensation, as set forth in a separate agreement, for its
services as Escrow Agent hereunder promptly upon request therefor, and to
reimburse the Escrow Agent for all expenses incurred by it in connection with
its duties hereunder (including reasonable fees, expenses and disbursements of
counsel to the Escrow Agent) and Borislow shall indemnify it against and hold it
harmless from any and all claims, liabilities, costs, payments and expenses,
including fees of counsel (who may be selected by the Escrow Agent), for
anything done or omitted by it in the performance of this Agreement, except as a
result of its own negligence or misconduct.
7. Notices. All notices and other communications hereunder shall be
delivered or mailed by first-class registered or certified mail, postage
prepaid, or by facsimile with telephonic confirmation at the address specified
for each as follows:
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(a) If to Borislow or the Purchasers, at
their respective addresses as set forth
in the Stock Purchase Agreement.
(b) If to the Escrow Agent:
Marine Midland Bank
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
(c) If to Borislow:
Tel-Save Holdings, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
8. Governing Law. This Agreement shall be construed, performed and
enforced in accordance with the laws of the State of New York, without reference
to or application of rules or principles of conflicts of law.
9. Third Parties. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns.
10. Headings. The headings in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original but all of which together shall
constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
XXXXXX XXXXXXXX
MARINE MIDLAND BANK
By:
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Name:
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Title:
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CONSECO CAPITAL MANAGEMENT
By:
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Name:
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Title:
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XXXXXX OTC EMERGING GROWTH
FUND
By:
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Name:
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Title:
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MASSACHUSETTS FINANCIAL
SERVICES
By:
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Name:
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Title:
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MFS/SUN LIFE SERIES TRUST on
behalf of CAPITAL APPRECIATION
SERIES
By:
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Name:
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Title:
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SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.) on behalf of
CAPITAL APPRECIATION VARIABLE
ACCOUNT, a separate account
By:
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Name:
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Title:
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MFS GROWTH OPPORTUNITES FUND
By:
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Name:
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Title:
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MFS SERIES TRUST II on behalf
of MFS EMERGING GROWTH FUND
By:
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Name:
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Title:
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