ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated July 9, 1998 is entered into
by and among ATC Communications Group, Inc., a Delaware corporation ("Buyer"),
Xxxxxx Equity Investors III, L.P. (the "Representative"), as representative of
the shareholders ("Shareholders") of IQI, Inc. (the "Company") and Xxxxxx Trust
and Savings Bank as escrow agent hereunder (the "Escrow Agent").
RECITALS:
Pursuant to that certain Agreement and Plan of Merger dated as of April 7,
1998 by and among Buyer, the Company and ATC Merger Sub, Inc. (the "Merger
Agreement"), the Company is merging with ATC Merger Sub, Inc. and becoming a
wholly-owned subsidiary of Buyer, and in connection with the merger, the
Shareholders are receiving common stock of the Company.
The Merger Agreement provides that an escrow fund comprised of shares of
Buyer Common Stock to be issued to the Shareholders in the merger shall be
established to secure the Shareholders' obligation to indemnify Buyer (and its
officers, directors, employees and agents) against certain Damages under ARTICLE
X of the Merger Agreement. For purposes of this Agreement, Buyer and such other
parties entitled to indemnification under ARTICLE X are collectively referred to
as "Buyer."
Accordingly, Buyer, Shareholders and the Escrow Agent have agreed to enter
into this Agreement relating to the Escrowed Shares (as defined below). For
convenience, the Shareholders have named the Representative as their
representative and have given the Representative the authority to take certain
actions on their behalf with respect to the Escrowed Shares and the matters
referred to in this Agreement.
NOW, THEREFORE, for good, valid and binding consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby, agree as follows:
1. Except as otherwise defined herein, the capitalized terms used in this
Agreement shall have the meanings ascribed to them in the Merger Agreement.
2. Pursuant to the terms and conditions of the Merger Agreement,
1,506,092 shares of Buyer Common Stock issued in the name of the Escrow Agent
have been delivered to the Escrow Agent to secure the Shareholders'
indemnification obligations under ARTICLE X of the Merger Agreement (the
"Escrowed Shares"). The Escrowed Shares shall be held by the Escrow Agent upon
the terms and conditions contained herein and shall be released by the Escrow
Agent in accordance with this Agreement. The Escrow Agent agrees that it does
not and shall not have any right of set-off or other rights or claims with
respect to the Escrowed Shares, except as set forth specifically in this
Agreement.
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3. (a) The Escrow Agent, upon receipt of a certificate from Buyer in
substantially the form of EXHIBIT I attached hereto (a "Certificate of
Instruction"), shall, not later than the business day next following its receipt
of such Certificate of Instruction, give written notice to the Representative of
its receipt, together with a copy, of such Certificate of Instruction.
Concurrent with the delivery of the Certificate of Instruction to the Escrow
Agent, Buyer shall deliver to the Representative written notice setting forth in
reasonable detail the facts giving rise to the claim contained in the
Certificate of Instruction.
(b) If the Escrow Agent (i) shall not, within twenty (20) days after it
shall have given such notice to the Representative, have received from the
Representative a certificate in substantially the form of EXHIBIT II attached
hereto (an "Objection Certificate") in respect of the Certificate of Instruction
to which such notice relates or (ii) shall have received such an Objection
Certificate within such twenty (20) days and shall thereafter have received a
copy of a joint notice signed by the Representative, and by Buyer, or an award
of an arbitrator pursuant to SECTION 3(c) of this Agreement to the effect that
the Owed Amount (as defined in the Certificate of Instruction) referred to in
such Certificate of Instruction or a specified portion thereof, constitutes
Damages against which Buyer may apply all or a portion of the Escrowed Shares
(valued, for this purpose, at $1.78125 per share (the "Share Price")), then the
Escrow Agent shall, on the business day next following the expiration of such
twenty (20) days or the receipt by the Escrow Agent of such award, as
applicable, release to Buyer from the Escrowed Shares a number of shares of
Buyer Common Stock equal to the applicable Owed Amount (or portion thereof)
divided by the Share Price.
(c) Upon receipt of an Objection Certificate, the Escrow Agent shall, not
later than the business day next following receipt thereof, give written notice
to Buyer of its receipt together with a copy of said Objection Certificate. In
the event that the Representative and Buyer are unable to informally resolve any
dispute with respect to all or a specified portion of an Owed Amount through
discussion and negotiation within thirty (30) days after the date of the
Objection Certificate, such dispute for all or a specified portion, as
applicable, of an Owed Amount shall be referred by Buyer to binding arbitration
in accordance with SECTION 11.08 of the Merger Agreement. If the Buyer and the
Shareholders engage in arbitration, the Escrow Agent shall have no duty or
obligation with respect to such arbitration other than to retain the Escrowed
Shares in safekeeping until it receives a copy of the arbitration award. All of
Escrow Agent's reasonable fees and expenses incurred, if any, in connection with
any such dispute resolution process or arbitration shall be paid by the parties
in the same manner as the arbitrator's fees and expenses as set forth in SECTION
11.08 of the Merger Agreement.
(d) Upon receipt by the Escrow Agent of a copy of a joint notice from
Buyer and the Representative, or an award of an arbitrator to the effect that
the Owed Amount (or a specified portion thereof) referred to in a Certificate of
Instruction in respect of which the Escrow Agent had received an Objection
Certificate is not an amount properly payable as Damages against which the
Escrowed Shares may be applied, such Certificate of Instruction (or such
specified portion of the Owed Amount set forth therein) shall be deemed
canceled. Escrow Agent shall have no duty to determine if the arbitrator's
award is final or binding, but may act in accordance therewith.
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(e) Upon determining that it has no claim or has released its claim with
respect to an Owed Amount referred to in a Certificate of Instruction or a
specified portion of the Owed Amount set forth therein, Buyer shall promptly
give notice in writing to the Escrow Agent to cancel such Certificate of
Instruction (or such specified portion).
4. As soon as practicable after the 60th day following delivery of the
audit opinion and audited consolidated financial statements of Buyer and the
Company for the fiscal year ending December 31, 1998, the Escrow Agent shall
upon receipt of the written instructions of the Representative release to
Shareholders any remaining Escrowed Shares in accordance with such instructions
of the Representative; PROVIDED, HOWEVER, that if Buyer has notified the
Representative on or prior to the Expiration Date of Damages sustained or the
assertion of any claim or the commencement of any action or proceeding with
respect to which Damages are expected to occur, Buyer and the Representative
shall notify the Escrow Agent with a Certificate of Claim (in substantially the
same form as EXHIBIT III attached hereto), and the Escrow Agent shall retain a
number of Escrowed Shares that, based on the good faith estimate of the
Representative and Buyer of the maximum amount that is reasonably likely to
become such Damages, would be adequate to recompense Buyer if such Damages were
incurred, all as set forth in the Certificate of Claim (which Certificate of
Claim shall not constitute an acknowledgment of the Representative that the
amount set forth therein represents Damages actually incurred by Buyer). Any
dispute regarding the amount necessary to recompense Buyer shall be resolved as
set forth in SECTION 3(c) hereof. When the amount of such Damages is paid,
payment is provided for or the claim is otherwise resolved and the Escrow Agent
has been given notice thereof, any remaining Escrowed Shares still held in
escrow in respect of such Damages shall be released promptly to Shareholders in
accordance with the written instructions of the Representative. Upon the
release by the Escrow Agent to Shareholders of the balance remaining of the
Escrowed Shares, this Agreement shall automatically terminate, except for the
provisions of the Agreement affecting the reimbursement of expenses, indemnity
and fees of Escrow Agent. Cash dividends distributable in respect of the
escrowed shares, if any, shall be promptly distributed by the Escrow Agent to
Shareholders in accordance with the written instructions of the Representative.
5. The duties and obligations of the Escrow Agent shall be determined
solely by the provisions of this Agreement, and the Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement and there are no implied duties herein.
In furtherance and not in limitation of the foregoing:
(i) the Escrow Agent shall be fully protected in relying in good
faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other document that the Escrow Agent
believes to be genuine and duly authorized, executed and delivered;
(ii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection therewith, including its own mere negligence; PROVIDED,
HOWEVER, that notwithstanding any other provision of this Agreement, the
Escrow Agent shall be liable for its willful misconduct, recklessness or
gross negligence;
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Shareholders, and Buyer, jointly and severally agree to indemnify Escrow
Agent for, and to hold it harmless against, any damages, liability or
expense (including, without limitation, reasonable attorneys' fees)
incurred by it without gross negligence, recklessness or willful
misconduct on its part arising out of or in connection with its entering
into this Agreement and the carrying out of its duties hereunder,
including the costs and expenses of defending itself against any claim
of liability arising out of this Agreement, it being the express intent
to indemnify and hold the Escrow Agent harmless against its own mere
negligence. The costs and expenses of enforcing the right of
indemnification shall also be paid by Buyer and Shareholders, jointly
and severally. This right of indemnification shall survive the
termination of this Escrow Agreement, and the removal or resignation of
the Escrow Agent;
(iii) the Escrow Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the
provisions of this Agreement or its duties hereunder, and it shall incur
no liability and shall be fully protected in respect of any action
taken, omitted or suffered by it in good faith in accordance with the
opinion of such counsel;
(iv) in the event that the Escrow Agent shall in any instance in
good faith be uncertain as to its duties or rights hereunder, it shall
be entitled to refrain from taking any action in that instance and its
sole obligation, subject to those of its duties hereunder as to which
there is no such uncertainty, shall be to keep safely all property held
in escrow until it shall be directed otherwise in writing by the
Representative and Buyer or by a final order or judgment of a court of
competent jurisdiction which shall be accompanied by a legal opinion of
the presenting party satisfactory to the Escrow Agent to the effect that
such opinion or judgment is final and enforceable and is not subject to
further appeal;
(v) the Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to initiate or defend
any legal proceedings which may be instituted against it in respect of
the subject matter of these instructions; PROVIDED, HOWEVER, in the
event of any conflicting or inconsistent claims or demands being made in
connection with the subject matter of this Agreement, or in the event
that Escrow Agent is in doubt as to what action it should take
hereunder, Escrow Agent is hereby authorized to petition any court of
competent jurisdiction for instructions or to interplead the funds or
assets so held into such court. The parties agree to the jurisdiction of
such court over their persons as well as the Escrowed Shares, waive
personal service of process, and agree that service of process by
certified or registered mail, return receipt requested, to the business
addresses set forth in this Agreement shall constitute adequate service.
Shareholders, on the one hand, and Buyer, on the other hand, jointly
and severally agree to indemnify and hold Escrow Agent harmless from any
liability or damages occasioned thereby and to pay any and all of its
cost, expenses, and reasonable attorneys' fees incurred in any such
action and agree that, upon the filing of such petition or interpleader
action, Escrow Agent, its servants, agents, employees or officers will
be relieved of further liability; and
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(vi) it is strictly understood that Escrow Agent has no duty to
disburse any Escrowed Shares to any person until such Escrowed Shares
have been received by Escrow Agent and those Escrowed Shares are
available for disbursement. All parties acknowledge and agree that
Escrow Agent is acting solely and exclusively as a custodian hereunder.
6. Escrow Agent is entitled to its reasonable fees and costs, including
reasonable attorneys' fees, as set forth in ATTACHMENT A. Fees are payable in
advance as compensation for the ordinary administrative services to be rendered
hereunder and the Buyer and Shareholders agree to pay all fees and expenses,
jointly and severally. To the extent such fees and expenses are not paid by the
undersigned, the Buyer and Representative hereby jointly instruct the Escrow
Agent to sell a portion of the Escrowed Shares at their fair market value in an
amount sufficient to pay any such fees or expenses. The Escrow Agent shall
provide prior written notice to Buyer and the Representative of any such sale.
7. The Representative and Buyer severally agree to provide to the Escrow
Agent all instruments and documents within their respective powers to provide
which may be necessary for the Escrow Agent to perform its duties and
responsibilities hereunder.
8. Any notices or other communication required or permitted under this
Agreement shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Notices shall not be deemed to be given until actually received.
(a) If to Buyer to:
ATC Communications Group, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (telecopy)
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
(000) 000-0000 (telephone)
(000) 000-0000 (telecopy)
Attention: Xxxxxxx X. Xxxxxx
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(b) If to the Representative as follows:
Xxxxxx Equity Investors III, L.P.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx Xxxxxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (telecopy)
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Twenty-Third Floor
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X Xxxxxx, Xx.
(000) 000-0000 (telephone)
(000) 000-0000 (telecopy)
(c) If to Escrow Agent to:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(000)000-0000 (telephone)
(000)000-0000 (telecopy)
Attention: Escrow Division / Xxxxxxxx Xxxxxxxxx
Any party may by notice given in accordance with this SECTION 8 to the other
parties designate another address or person for receipt of notices hereunder.
9. The Escrow Agent may at any time resign hereunder by giving written
notice of its resignation to the parties hereto at their addresses set forth in
this Agreement, at least 10 business days prior to the date specified for such
resignation to take effect. Upon the effective date of such resignation, all
property then held by the Escrow Agent hereunder shall be delivered by it to
such person as may be designated in writing by each of the other parties hereto
(and the parties shall use reasonable best efforts to name a successor escrow
agent prior to the date specified for the Escrow Agent's resignation to take
effect), whereupon all the Escrow Agent's obligations hereunder shall, except as
hereinafter provided, cease and terminate. If no such person shall have been so
designated by such date, all obligations of the Escrow Agent hereunder shall
nevertheless, except as hereinafter provided, cease and terminate. The Escrow
Agent's sole responsibility thereafter shall be to keep safely all property then
held by it and to deliver the same to a person designated by each of the other
parties hereto or in accordance with the directions of a final order or judgment
or a court of competent jurisdiction. A termination under this paragraph shall
in no
6
way discharge the provisions of this Agreement affecting the reimbursement
of expenses, indemnity and fees of Escrow Agent.
10. The Representative shall have the right, in its sole discretion, on
behalf of, and as directed by, the Shareholders, to direct the Escrow Agent in
writing as to the exercise of any voting rights pertaining to the Escrowed
Shares, and the Escrow Agent shall comply with any such written instructions.
(a) Except as expressly provided herein and to the extent created under
the Merger Agreement, neither Shareholders nor Buyer shall have any legal or
equitable right, title or interest, either actual or contingent, in or to the
Escrowed Shares, and the Escrowed Shares shall not constitute the legal or
equitable property of either Shareholders or Buyer. Neither Shareholders nor
Buyer shall have the right or ability to transfer, pledge, convey, hypothecate
or grant, either outright or as security, the Escrowed Shares except as
expressly provided herein. If either Shareholders or Buyer is determined to
have any right, title or interest in or to the Escrowed Shares, Shareholders' or
Buyer's, as applicable, right, title and interest shall be limited to, at most,
bare legal title to the Escrowed Shares; provided, further, that in the event of
the commencement of a bankruptcy case or cases wherein a Shareholder or Buyer is
the debtor, the applicable Escrowed Shares shall not constitute property of the
debtor's estate within the meaning of 11 U.S.C. Section 541. No creditor of
either Shareholders or Buyer shall have any right to have or to hold the
Escrowed Shares in satisfaction of any claim or as collateral for any
obligation, and shall not be able to obtain a security interest in the Escrowed
Shares.
(b) Solely in the event that Shareholders are deemed to have any right,
title or interest in or to the Escrowed Shares, Shareholders hereby grant to
Buyer a security interest in (i) Shareholders' right, title or interest in or to
the Escrowed Shares, and (ii) Shareholders' right, title or interest in or under
this Agreement. Solely in the event that Buyer is deemed to have any right,
title or interest in or to the Escrowed Shares, Buyer hereby grants to
Shareholders a security interest in (y) Buyer's right, title or interest in or
to the Escrowed Shares, and (z) Buyer's right, title or interest in or under
this Agreement. Buyer and Shareholders may perfect the security interest so
granted herein, and each shall cooperate with any reasonable request of the
other in connection therewith. Notwithstanding the foregoing, the Escrow Agent
shall not be obligated to agree to anything concerning perfection which modifies
this Agreement or increases its duties hereunder without its express written
consent.
11. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE SUBSTANTIVE LAWS (BUT NOT THE CHOICE OF LAW PROVISIONS) OF THE STATE OF NEW
YORK.
12. The obligations of the parties hereto (including the Escrow Agent) are
unique in that time is of the essence, and any delay in performance hereunder by
any party will result in irreparable harm to the other parties hereto.
Accordingly, any party may seek specific performance and/or injunctive relief
before any court of competent jurisdiction in order to enforce this Agreement or
to prevent violations of the provisions hereof, and no party shall object to
specific performance or injunctive relief as an appropriate remedy. The Escrow
Agent
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acknowledges that its obligations, as well as the obligations of the
Representative and Buyer hereunder, are subject to the equitable remedy of
specific performance and/or injunctive relief.
13. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
executed by the parties, or in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power, or privilege.
No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
14. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns and legal
representatives. Neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties. No person or entity shall be deemed
a third party beneficiary of this Agreement and the Escrow Agent shall have no
duties or obligations to any such person, and Escrow Agent may disregard any
instruction from such person.
15. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Counterpart signature pages may be executed and delivered pursuant to facsimile
transmission.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
day and year first above written.
ATC COMMUNICATIONS GROUP, INC.
By:
---------------------------------
Its:
--------------------------------
XXXXXX EQUITY INVESTORS III, L.P.
By:
---------------------------------
Its:
--------------------------------
XXXXXX TRUST AND SAVINGS BANK
By:
---------------------------------
Its:
--------------------------------
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ATTACHMENT A
FEES AND COSTS OF XXXXXX TRUST AND SAVINGS BANK
EXHIBIT I
CERTIFICATE OF INSTRUCTION
TO
XXXXXX TRUST AND SAVINGS BANK,
AS ESCROW AGENT
The undersigned, Aegis Communications Group, Inc., a Delaware corporation
f/k/a ATC Communications Group, Inc. ("Buyer"), pursuant to SECTION 3 of the
Escrow Agreement dated as of July 9, 1998 (the "Escrow Agreement"), by and among
Buyer, the Representative and you as the Escrow Agent (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby:
(a) certifies that (i) $_______ (the "Owed Amount") has been
incurred by Buyer as Damages against which Buyer may apply the Escrowed
Shares pursuant to the Escrow Agreement and (ii) Buyer has given the
Representative written notice thereof and its intent to apply the Escrowed
Shares against such Damages, which written notice sets forth in reasonable
detail the facts giving rise to the liability for such payment; and
(b) instructs you to release to Buyer from the Escrowed Shares a
number of Shares of Buyer Common Stock equal to the Owed Amount divided by
the Share Price as provided in Section 3 of the Escrow Agreement.
AEGIS COMMUNICATIONS GROUP, INC.
By:
---------------------------------
Its:
--------------------------------
Dated:
----------------
EXHIBIT I
SCHEDULE OF FEES
SCHEDULE
EXHIBIT II
OBJECTION CERTIFICATE
TO
XXXXXX TRUST AND SAVINGS BANK,
AS ESCROW AGENT
The undersigned, Xxxxxx Equity Investors III, L.P., pursuant to SECTION 3
of the Escrow Agreement dated as of July 9, 1998 (the "Escrow Agreement"), by
and among ATC Communications Group, Inc., the Representative, and you as the
Escrow Agent (terms defined in the Escrow Agreement have the same meanings when
used herein), hereby:
(a) certifies that (i) the [Owed Amount/$___________ of the Owed
Amount] referred to in the certificate to you of Buyer dated ___________,
19__, is not Damages against which Buyer may apply the Escrowed Shares in
accordance with the Escrow Agreement and (ii) the undersigned has
delivered to Buyer a written statement dated ____________, 19__ , setting
forth in reasonable detail the facts supporting the statement contained in
clause (i) above; and
(b) object to your making payment to Buyer of the [Owed Amount/
$_______ of the Owed Amount] as provided in such certificate of Buyer.
Dated:
-----------------
XXXXXX EQUITY INVESTORS III, L.P.
By:
---------------------------------
Its:
--------------------------------
EXHIBIT II
EXHIBIT III
CERTIFICATE OF CLAIM
TO
XXXXXX TRUST AND SAVINGS BANK,
AS ESCROW AGENT
Each of the undersigned, Aegis Communications Group, Inc. f/k/a ATC
Communications Group, Inc., a Delaware corporation ("Buyer"), and the
Representative, pursuant to the Escrow Agreement dated as of July 9, 1998 (the
"Escrow Agreement"), by and among the Representative, Buyer and you as the
Escrow Agent (terms defined in the Escrow Agreement have the same meanings when
used herein) hereby:
(a) certifies that Buyer has given a written notice dated
____________, 19__, to the Representative setting forth in reasonable
detail facts which in Buyer's good faith judgment are reasonably likely to
result in Buyer incurring Damages against which Buyer may apply the
Escrowed Shares in accordance with the Escrow Agreement, and
(b) the Representative's and Buyer's good faith estimate of the
maximum amount that is reasonably likely to become such Damages as a
result of the foregoing claim is $___________.
XXXXXX EQUITY INVESTORS III, L.P.
By:
---------------------------------
Its:
--------------------------------
AEGIS COMMUNICATIONS GROUP, INC.
By:
---------------------------------
Its:
--------------------------------
Dated:
-----------------
EXHIBIT III
