SECOND AMENDMENT TO AGREEMENT AND PLAN OF EXCHANGE
THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF EXCHANGE (this
"Amendment"), made as of the 11th day of February, 1998, by and among ADVANCED
COMMUNICATIONS GROUP, INC., a Delaware corporation organized in September 1997,
ADVANCED COMMUNICATIONS CORP. (formerly named Advanced Communications Group,
Inc.), a Delaware corporation organized in June 1996, ACG ACQUISITION CORP., a
Delaware corporation, VALU-LINE OF LONGVIEW, INC., a Texas corporation, and
XXXXX X. XXXXXXXX, XXX XXXXXX, XXXXXXX XXXXX, XXXX XXXXX and XXXXXXXX XXXXX,
amends the Agreement and Plan of Exchange dated as of October 6, 1997, as
amended by the First Amendment to Agreement and Plan of Exchange dated January
8, 1998, among the parties (the "Restated Agreement"; and as amended hereby,
the "Agreement").
RECITALS
WHEREAS, capitalized terms not otherwise defined in this
Amendment have the meanings set forth in the Restated Agreement or, if
not defined therein, in the Escrow Agreement attached hereto as Annex
III; and
WHEREAS, the parties wish to escrow a portion of the shares
of Parent Stock described in Section 2 of the Agreement for the
purposes described herein;
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by all parties, the parties
hereby agree as follows:
AMENDMENT OF SECTION 1.
1.1 Class Action Claims. The following is added to Section 1 between
the definitions of "Charter Documents" and "Closing":
"Class Action Claims" means any claim or assertion by any Person that
the Company, at any time prior to the Closing, did one or more of the
following: (a) invoiced one or more of its customers for long distance
services that were never rendered; (b) invoiced its customers at long
distance rates above the rates which the customers contracted for; (c)
overstated in its customer invoice(s) the time of long distance
telephone calls made (rounded to the nearest billing increment); or
(d) utilized software that caused the Company to record or invoice
more time per long distance call than the properly chargeable time
(rounded to the nearest billing increment).
1.2 Excluded Litigation. The following is added to Section 1 between
the definitions of "ERISA" and "Founding Companies":
"Excluded Litigation" means all allegations, claims, actions,
investigations, or other proceedings by the Federal Communications
Commission, the Office of the Attorney General of the State of Texas,
or the Public Utility Commission of Texas proximately arising from or
connected with any complaint filed by Xxxxxx Xxxx with said office or
agency.
1.3 Litigation. The following is added to Section 1 between the
definitions of "Liens" and "Material Adverse Effect":
"Litigation" means: (i) the purported class action filed against the
Company on January 29, 1998, the settlement agreement executed
February 6, 1998 in connection therewith, and all proceedings,
actions, and claims brought from time to time against the Company
pursuant thereto, in connection therewith or by one or more of the
plaintiffs in that action; (ii) all allegations, claims, complaints,
investigations, or similar matters brought by any Person from time to
time making Class Action Claims; and (iii) any litigation,
arbitration, settlement or administrative, investigation or other
proceeding arising from or in connection with any Class Action Claim
or Litigation; provided, however, that "Litigation" shall not include
"Excluded Litigation."
1.4 Person. The following is added to Section 1 between the
definitions of "Qualified Plans" and "Registerable Securities":
"Person" means an individual, partnership, corporation, limited
liability partnership, limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof or any
trustee, receiver, custodian or similar official; other than the
Parent, the Company and any of their respective subsidiaries,
affiliates, successors and assigns.
1.5 Published Price. The following is added to Section 1 between the
definitions of "Prospectus" and "Qualified Plans":
"Published Price" means the closing price per share of the Escrowed
Shares as reflected in the Wall Street Journal on the date immediately
prior to the date the Stockholders and Parent execute written
instructions to the Escrow Agent as provided herein (or if such price
was not published on that date, then the price printed in the Wall
Street Journal which was then most recently published, but if that
price was published more than seven days prior to the date such
written instructions are executed by the Stockholders and Parent, then
the Published Price shall be the fair market value as agreed between
the Board of Directors of Parent and the Stockholders in good faith).
2. AMENDMENT OF SECTION 2.
The first sentence of Section 2 is deleted and is replaced by the
following:
Pursuant to the terms of this Agreement, at the Closing, (x)
Stockholders will transfer, convey, assign and deliver to
Parent the Shares, together with stock powers duly endorsed
by Stockholders so that the Shares may be duly registered in
Parent's name, and (y) Parent will acquire the Shares from
Stockholders for an aggregate consideration of (i) $6.6
million in immediately available funds, (ii) such number of
shares of Parent Stock (rounded to the nearest whole share)
as shall be determined by dividing $3.92 million by the IPO
Price ("Stock Component") and (iii) subject to the terms of
the escrow agreement in the form attached hereto as Annex III
(the "Escrow Agreement") and the other provisions of this
Amendment, (a) a number of shares of Parent Stock (rounded to
the nearest whole
share) as shall be determined by dividing $280,000 by the IPO
Price (the "Arkansas Escrowed Shares") and (b) a number of
shares of Parent Stock (rounded to the nearest whole share)
as shall be determined by dividing $1,000,000 by the IPO
Price (the "Litigation Escrowed Shares"). The parties agree
that at or prior to the Closing, Parent, the Stockholders and
an institution selected by Stockholders and reasonably
acceptable to Parent will enter into the Escrow Agreement and
that Parent will in connection with the Closing deposit with
such institution, as escrow agent (the "Escrow Agent"), a
certificate representing the Arkansas Escrowed Shares and a
certificate representing the Litigation Escrowed Shares
(collectively, the "Escrowed Shares"). The Escrowed Shares
shall be registered in the name of the Escrow Agent and be
maintained and disbursed strictly in accordance with the
terms of the Escrow Agreement.
3. ADDITION OF SECTION 7.11.
The following is added as Section 7.11 of the Agreement:
7.11. Arkansas Liability. Stockholders and the Company will
continue to make good faith efforts to obtain authority from the
Arkansas Public Service Commission for the Company to conduct
telecommunications business in Arkansas and to settle liabilities that
may arise or may have arisen from the Company's (i) failure to have
such authority from the Arkansas Public Service Commission or (ii)
failure to make contributions to the common carrier line fund,
including any penalties, fines, interest, and other charges directly
associated with the foregoing matters. Prior to the Closing, the
Stockholders will pay (or will cause the Company to pay from cash
otherwise distributable by the Company to the Stockholders pursuant to
this Agreement), all expenses, attorneys' fees (other than attorneys'
fees accrued through January 13, 1998 from services rended by
Bourland, Smith, Wall & Xxxxxx), and other costs payable to third
parties which the Company or the Stockholders accrued or incurred at
any time prior to the Closing in connection with such efforts.
ADDITION OF SECTION 7.12.
The following is added as Section 7.12 of the Agreement:
7.12. Settlement of Litigation. With respect to the action
filed January 29, 1998 against the Company (the "January Litigation"),
the parties agree that Parent will pay $8,750 of the amounts owing
under the settlement agreement memorialized on or about February 6,
1998 plus 25% of the Company's legal fees and costs in connection with
that settlement. The balance of the settlement, inclusive of all
incidental fees, costs and attorneys' fees incurred by the Company
that are associated directly or indirectly with the action, shall be
paid by the Company prior to the Closing from funds otherwise
distributable to the Stockholders pursuant to Section 10.4 of the
Agreement.
5. ADDITION OF SECTION 8.11.
The following is added as Section 8.11 of the Agreement:
8.11. Delivery of Escrow Agreement. Parent and the Escrow
Agent shall have executed and delivered to Stockholders an agreement
in the form attached hereto as Annex III.
6. ADDITION OF SECTION 9.14.
The following is added as Section 9.14 of the Agreement:
9.14. Settlement of Pending Litigation. The settlement
reached on or about February 6, 1998 with respect to the January
Litigation has been memorialized and executed and has not been
repudiated in any substantial respect by any party thereto.
7. ADDITION OF SECTION 9.15.
The following is added as Section 9.15 of the Agreement:
9.15. Delivery of Escrow Agreement. The Stockholders and the
Escrow Agent shall have executed and delivered to Parent an agreement
in the form attached hereto as Annex III. Stockholders agree that,
notwithstanding any term in this
Agreement to the contrary, their payment obligations under
Section 7.12 and Section 7.11 shall survive the Closing for a period
of six months.
8. MODIFICATION OF SECTION 17.6.
The following sentence is appended to Section 17.6 of the Restated
Agreement: "The foregoing provisions of this Section 17.6 are subject to and
qualified by the terms of Section 7.11, Section 9.14, and the provisions of the
Escrow Agreement."
9. CHANGE OF ADDRESS.
For purposes of Section 17.7, the address of Advanced Communications
Group, Inc. and Advanced Communications Corp. is changed, effective as of the
Closing Date, to 000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000, Xx. Xxxxx, XX 00000,
Attn: Xxxxxxx X. Xxxxxxx.
10. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
The following provisions are added as Section 18 of the Agreement:
18.1 Estimate of Intrastate Revenues. Each Stockholder
severally represents and warrants that, to his or her knowledge, the
January 9, 1998 letter from N. M. Norton to the Arkansas Public
Service Commission sets forth an approximate, but materially accurate,
calculation of the intrastate revenues (exclusive of revenues
attributable to 800 services) described therein.
18.2 Settlement of Arkansas Liability. The parties understand
that obtaining authorization to provide telecommunications services in
Arkansas and establishing a positive working relationship with the
Arkansas regulatory authorities is of great practical importance to
the Company and Parent. Consequently, after the Closing, the Company
may take actions it determines in good faith are necessary or
advisable in connection with the resolution of the liabilities
described in Section 7.11. The Company shall have the sole power and
authority to litigate, negotiate and resolve, by settlement or
otherwise, the foregoing matters and, in connection therewith, shall
consult regularly with the Stockholders and their counsel. The Company
agrees that any negotiated settlement of such liabilities is subject
to the Stockholders' prior written approval, which shall not be
unreasonably withheld or delayed.
11. INDEMNITY.
The following provisions are added as Section 19 of the Agreement:
19. LITIGATION INDEMNITY.
19.1 Indemnity. Subject to the limitations in Sections 19.2
and 19.3 below, each Stockholder severally hereby agrees to indemnify
and hold harmless Parent, the Company and all of their respective
subsidiaries, successors, and assigns (collectively, the "Indemnitees"
and individually, an "Indemnitee") from and against any and all
losses, claims, liabilities, damages, fines, penalties and other
expenses (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred, and any and all amounts
paid in settlement as provided below; but excluding amounts owing or
paid with respect to any claims that directly and proximately arise
from the Company's actions or omissions having a nature substantially
similar to Class Action Claims that occur after the Closing Date)
which any Indemnitee incurs, pays, or becomes liable for to a Person
arise out of, relate to or are based upon Litigation (collectively,
the "Litigation Liabilities").
19.2 Limitation on Indemnity. Except as provided in Section
19.4, each Stockholder's maximum liability from time to time for
Litigation Liabilities is limited to the value at such time of his or
her interest in the Litigation Escrowed Shares that are held by the
Escrow Agent or its successor, and no Stockholder shall have any
obligation to fund any Litigation Liabilities other than from its
Litigation Escrowed Shares. For these purposes, a Stockholder shall be
deemed to have an interest in the Litigation Escrowed Shares (and the
proceeds thereof, if any) that is proportional to his or her
percentage of ownership of the Company's common stock immediately
prior to the Closing.
19.3 Notices of Claim. After an Indemnitee becomes aware that
Litigation has arisen or is likely to arise or is threatened
(collectively, a "Claim"), the Indemnitee shall notify Xxxxx Xxxxxxxx,
or any successive designee which the Stockholders shall jointly
appoint for this purpose, or all the Stockholders, in writing of the
Claim and that indemnification will be required pursuant to this
Agreement (the "Notice of Claim"). The Notice of Claim shall describe
in reasonable detail, to the extent then known by the Indemnitee, the
amount of the Claim, its nature, the events giving rise to it, and the
identity of the claimant. The Stockholders shall have no obligation to
indemnify an Indemnitee or hold it harmless from any Litigation with
respect to a Claim for which an Indemnitee has not given a Notice of
Claim in accordance with this Section on or prior to the date
occurring six months after the
Closing Date (the "Cut-Off Date"). All notices described in this
Amendment shall be deemed given when dispatched by fax, telegram,
overnight delivery service, or postal service, with postage pre-paid
as required, properly addressed to their intended recipient. Any
Litigation which is brought after the Cut-Off Date, if brought by a
Person identified in a Notice of Claim that was delivered on or prior
to the Cut-Off Date, shall be deemed to be a continuation of such
Claim and subject to indemnification under Section 19.1.
19.4 Settlement of Disputes.
a. The Company shall have the sole power and authority to
litigate, negotiate and resolve, by settlement or otherwise, any
Litigation with counsel reasonably satisfactory to the Stockholders
and shall conduct such litigation, negotiation, or resolution in good
faith. In connection therewith, the Company shall consult regularly
with the Stockholders and their counsel. The Company agrees not to
enter into to any settlement of Litigation subject to the
indemnification provided herein without the Stockholders' prior
written approval, which shall not be unreasonably withheld or delayed.
b. If (i) the Stockholders withhold approval with respect to
any bona fide proposed negotiated settlement of Litigation agreeable
to the claimants therein, (ii) at the time such approval is withheld,
such settlement could have been satisfied either (a) out of the
Litigation Escrowed Shares or (b) out of the Litigation Escrowed
Shares plus any amounts the Company declares at the time it would be
willing to contribute toward the settlement without seeking
indemnification for such contribution under Section 19.1, (iii) upon
final disposition, the Litigation results in a binding and
unappealable judgment, award or order granting the claimant or
claimants relief having a value exceeding the amount of such bona fide
negotiated settlement amount, and (iv) the judgment, award or order
cannot be satisfied out of the Litigation Escrowed Shares, then the
Stockholders severally shall pay on demand to the Company an amount of
cash equal to the difference between the amount of the bona fide
negotiated settlement amount and the judgment, award or order. The
several obligations of the Stockholders in the previous sentence shall
be in addition to any other obligation under this Section 19 and is
not subject to the limitation with respect to the Litigation Escrowed
Shares in Section 19.2.
c. If (i) the claimants in any Litigation make the Company a
bona fide settlement offer and the Stockholders notify the Company in
writing that the Stockholders wish the Company to settle the
Litigation on such terms and (ii) the cost of the settlement,
inclusive of accrued attorneys' fees and incidental costs, does not
exceed the value of the Litigation Escrowed Shares plus any additional
amounts the Stockholders have offered to contribute toward the
settlement and (iii) the Company refuses to settle the Litigation on
such terms and pursues the matter to final and binding resolution,
judicially or otherwise and (iv) the amounts payable upon that
resolution to the claimants exceeds the amount of the bona fide
settlement offer, then the Company shall pay, without seeking
indemnification under Section 19 therefor, the difference referenced
in (iv) of this sentence.
19.5 Payment of Billing Liabilities.
a. From time to time, Parent may request indemnification
pursuant to Section 19.1 by delivering a written notice to the
Stockholders that (i) states that a right to indemnification has
accrued, matured, and is payable under Section 19.1, (ii) sets forth
the dollar amount of the indemnification claim and (iii) describes in
reasonable detail relevant information supporting the claim ("Payment
Notice"). If the Stockholders agree with the Payment Notice, the
Stockholders shall then pay their respective indemnification
obligations by causing the Escrow Agent, or any third party having
custody or possession of the Litigation Escrowed Shares or its
proceeds, to convey to Parent, pursuant to both the terms of the
Escrow Agreement and written instructions executed by the Stockholder
and Parent, an amount of Litigation Escrowed Shares and proceeds
thereof, if any, sufficient to satisfy the amount of the claim
asserted in the Payment Notice. The Litigation Escrowed Shares so
conveyed shall be valued at the Published Price.
b. If the Parent and the Shareholders disagree as to the
extent of the claim or whether indemnification is owed therefor
pursuant to this Agreement, they shall negotiate for a period of 60
days to resolve their differences. If the parties are unable to agree
within this period, they shall jointly instruct the Escrow Agent to
interplead pursuant to the Agreement an amount of Litigation Escrowed
Shares and other property that have a Published Price equal to the
amounts requested in the Payment Notice. The interpleader of such
Litigation Escrowed Shares and other property shall not prejudice
Parent's indemnification rights should the Litigation Escrowed Shares
have a Published Price, at the time of their distribution to Parent,
that does not exceed the amounts properly requested in the Payment
Notice. Any interplead Litigation Escrowed Shares which the court
determines are not payable to Parent shall be returned to the Escrow
Agent and shall be subject, in all respects, to the terms of this
Agreement and the Escrow Agreement.
19.6 Release from Escrow. If, immediately after the Cut-Off
Date no Notice of Claim has been given, then the parties shall jointly
instruct the Escrow
Agent to release the Litigation Escrowed Shares to the Stockholders in
proportion to their interests therein. If, however, one or more
Notices of Claim have been given in accordance with Section 19, the
Litigation Escrowed Shares shall be held in escrow subject to the
terms of the Escrow Agreement and the provisions of this Section 19
shall apply for so long as the Litigation matters on which all such
Notices of Claim are based remain unresolved or, if resolved, for so
long as all payments required pursuant to this Section 19 have not
been made. If, upon the final resolution of all Litigation underlying
all Notices of Claim and payment in full for all indemnification
liabilities owing pursuant to this Section 19 any Litigation Escrowed
Shares are held by the Escrow Agent, they shall be distributed to the
Stockholders, in proportion to their interests therein, upon the joint
written instructions of the parties.
12. ADDITION OF ANNEX III.
12.1 Annex III hereto is hereby added as Annex III to the Restated
Agreement.
13. MISCELLANEOUS
13.1 Counterparts. For the convenience of the parties, any number of
counterparts of this Amendment may be executed by any one or more parties
hereto, and each such executed counterpart shall be, and shall be deemed to be,
an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument. A facsimile copy
of a signature page to this Amendment shall be accorded the same force and
effect as a manually executed original counterpart of a signature page to this
Amendment.
13.2 Integration Clause. The Restated Agreement, as modified by this
Amendment, represents the final agreement among the parties relating to its
subject matter and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements
between the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
ADVANCED COMMUNICATIONS GROUP, INC.
BY:
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NAME: XXXXXXX X. XXXXXXX
TITLE: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ADVANCED COMMUNICATIONS CORP.
BY:
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NAME: XXX X. XXXXXXXXX
TITLE: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ACG ACQUISITION CORP.
BY:
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NAME: XXXX X. XXXXXXXXX
TITLE: PRESIDENT
VALU-LINE OF LONGVIEW, INC.
BY:
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NAME:
TITLE:
STOCKHOLDERS:
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XXXXX X. XXXXXXXX
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XXX XXXXXX
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XXXX XXXXX
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XXXXXXX XXXXX
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XXXXXXXX XXXXX
ANNEX III
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is made and
entered into as of February 18, 1998 by and among ADVANCED COMMUNICATIONS,
GROUP, INC., a Delaware corporation formed in September 1997 ("Parent"); XXXXX
X. XXXXXXXX, XXX XXXXXX, XXXX XXXXX, XXXXXXX XXXXX and XXXXXXXX XXXXX
(individually, a "Stockholder", and, collectively, the "Stockholders"); and
Longview Bank & Trust, a ________________________ bank with offices in
Longview, Texas (the "Bank").
W I T N E S S E T H :
WHEREAS, Parent, Stockholders, Valu-Line of Longview, Inc.,
and others have entered into an Agreement and Plan of Exchange dated as of
October 6, 1997, as amended as of January 8, 1998 and February 11, 1998
(collectively, the "Restated Agreement");
WHEREAS, pursuant to Section 2 of the Restated Agreement,
Parent is required to deliver to the Escrow Agent (as defined below) at the
Closing a number of shares of common stock, $.0001 par value, of the Parent,
that is equal to $1,280,000 divided by the IPO Price, to be maintained and
disbursed pursuant to this Escrow Agreement and the terms of the Restated
Agreement; and
WHEREAS, Parent and Stockholders have requested Bank to act
in the capacity of escrow agent under this Escrow Agreement, and Bank, subject
to the terms and provisions hereof, has agreed so to do; and
WHEREAS, capitalized terms used herein without definition
shall have the meanings ascribed to them in the Restated Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
1. Nature of Agreement; Definitions.
(a) Good Title. The Stockholders agree and understand that
this Escrow Agreement is intended to function as a security arrangement with
respect to the Arkansas Liability
and the Litigation Liabilities and that Parent has relied upon this arrangement
by consummating the Closing. Therefore, to ensure the availability of the
Escrowed Shares for this purpose, the Stockholders, severally and not jointly,
represent, warrant and covenant that, except as otherwise provided herein, the
Arkansas Escrowed Shares and the Litigation Escrowed Shares are and shall
remain, during the term of the Escrow Agreement applicable to the same, free
and clear of all security interests, pledges, liens, encumbrances and other
claims of ownership rights in favor of any third party (other than Parent)
which either were granted by such Stockholder or secure any obligation of such
Stockholder. In addition, each Stockholder shall hold Parent harmless from all
claims asserting such an interest.
(b) Definitions.
(1) "Arkansas Deposit" means the Arkansas Escrowed
Shares, together with any dividends thereon and other distributions with
respect thereto, whether in cash, capital stock or other property, and the
proceeds thereof.
(2) "Arkansas Escrowed Shares" means the Arkansas
Escrowed Shares, as defined in the Restated Agreement, plus any securities of
the Parent received by the Escrow Agent with respect to such shares, whether by
stock split, merger, recapitalization or otherwise.
(3) "Arkansas Liability" means any and all costs,
liabilities, forfeiture amounts, fines, penalties, debts, claims, demands,
damages, liabilities, attorneys' fees, court costs, and other expenses paid by
Parent or the Company (or any subsidiary, affiliate, director, officer,
employee, agent, attorney, successor, or assign of either of them) to third
parties, contingent or matured, that arise, during the one year period
commencing on the Closing Date, directly or indirectly from this Escrow
Agreement, from the Company's failure to have obtained the requisite authority
to conduct its business in Arkansas, from the Company's unlicensed furnishing
of telecommunications services in Arkansas or to Arkansas residents, or from
nonpayment of amounts due with respect to the common carrier line fund that are
accrued and unpaid as of the Closing; provided, however, that Arkansas
Liability shall not include incidental expenses to third parties incurred by
the Company in excess of $5,000 after the Closing in connection with preparing,
printing, and mailing notices to customers which regulatory authorities may
require in connection with the settlement of the Arkansas Liability.
(4) "Deposit" means the Arkansas Deposit and the
Litigation Deposit collectively.
(5) "Litigation Deposit" means the Litigation Escrowed
Shares, together with any dividends thereon and other distributions with
respect thereto, whether in cash, capital stock or other property, and the
proceeds thereof.
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(6) "Litigation Escrowed Shares" means the Litigation
Escrowed Shares, as defined in the Restated Agreement, plus any securities of
the Parent received by the Escrow Agent with respect to such shares, whether by
stock split, merger, recapitalization or otherwise.
2. Appointment of Escrow Agent. Parent and Stockholders
hereby appoint the Bank as the escrow agent under this Escrow Agreement (the
Bank in such capacity, the "Escrow Agent"), and Escrow Agent hereby accepts
such appointment.
3. Deposit. At Closing, Parent will deliver to the Escrow
Agent two certificates registered in the name of the Escrow Agent representing
the maximum number of Arkansas Escrowed Shares and Litigation Escrowed Shares
issuable to all Stockholders pursuant to the Restated Agreement, as more
particularly described in Schedule 1 attached hereto. The Escrow Agent shall
hold the Deposit in accordance with the terms of this Escrow Agreement. Subject
to and in accordance with the terms and conditions hereof, the Escrow Agent
agrees that it shall receive, hold in escrow, invest and reinvest (to the
extent noted below) and release or distribute the Deposit. It is hereby
expressly stipulated and agreed that all interest and other earnings on any
cash portion of the Arkansas Deposit or the Litigation Deposit, as applicable,
shall become a part of the respective Deposit for all purposes and that, for
purposes of Section 19 of the Restated Agreement, a Stockholder's interest in
the Litigation Deposit shall be deemed to be proportional to the distribution
percentage set forth on Schedule 1 hereto. It is the express intent of the
parties that the Arkansas Deposit and the Litigation Deposit shall be separate
and distinct escrow deposits. The Arkansas Deposit shall only be used to
satisfy obligations of the Stockholders, if any, related to the Arkansas
Liability, and the Litigation Deposit shall only be used to satisfy indemnity
obligations of the Stockholders, if any, related to the Litigation Liabilities.
4. Investment of Cash Portion of the Deposit. Escrow Agent
shall invest any cash portion of the Arkansas Deposit and the Litigation
Deposit in certificates of deposit or money market accounts as may be
instructed in writing by Parent and Stockholders. Such written instructions
referred to in the foregoing sentence shall specify the type and identity of
the investments to be purchased and/or sold, any particular settlement
procedures required, if any (which settlement procedures shall be consistent
with industry standards and practices), and such other information as Escrow
Agent may require. Escrow Agent shall not be liable for failure to invest or
reinvest funds absent sufficient written direction. Unless Escrow Agent is
otherwise directed in such written instructions, Escrow Agent may use a
broker-dealer of its own selection, including a broker-dealer owned by or
affiliated with Escrow Agent or any of its affiliates. It is expressly agreed
and understood by the parties hereto that Escrow Agent shall not in any way
whatsoever be liable for losses on any investments, including, but not limited
to, losses from market risks due to premature liquidation or resulting from
other actions taken or not taken pursuant to this Escrow Agreement.
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Receipt, investment and reinvestment, if any, of any cash
portion of the Arkansas Deposit and the Litigation Deposit shall be confirmed
by Escrow Agent as soon as practicable by account statement delivered to Parent
and Stockholders, and any discrepancies in any such account statement shall be
noted by either of Parent or Stockholders to Escrow Agent within 30 calendar
days after receipt thereof. Failure to inform Escrow Agent in writing of any
discrepancies in any such account statement within said 30-day period shall
conclusively be deemed confirmation of such account statement in its entirety.
For purposes of this paragraph, (a) each account statement shall be deemed to
have been received by the party to whom directed on the earlier to occur of (i)
actual receipt thereof and (ii) three "Business Days" (hereinafter defined)
after the deposit thereof in the United States Mail, postage prepaid and (b)
the term "Business Day" shall mean any day of the year, excluding Saturday,
Sunday and any other day on which banks are required or authorized to close in
Houston, Texas.
5. Disbursement of Deposit.
(a) Except as otherwise provided herein, the Escrow Agent is
hereby authorized and instructed to make, and shall make, disbursements of the
Arkansas Deposit and the Litigation Deposit from time to time only upon receipt
of written instructions signed by both Parent and all of the Stockholders (or
duly appointed agent) which are otherwise, in form and substance, satisfactory
to Escrow Agent and such disbursements shall be made strictly in accordance
with such instructions.
(b) Regarding the Arkansas Escrowed Shares, Parent, the
Escrow Agent and the Stockholders agree to take the following action as
promptly as all the relevant information is available (but in any event no
later than the one year anniversary of February 18, 1998, in which case the
parties' best estimate shall be utilized):
(i) Calculate the "Market Price" of the Arkansas
Deposit on the date on which the instructions are given; and
for this purpose, "Market Price" means (x) with respect to
Arkansas Escrowed Shares, the closing price per share as
reflected in the previous day's Wall Street Journal (or if
such price was not published on that date, then the price
printed in the Wall Street Journal which was then most
recently published, but if that price was published more than
seven days prior to the date on which the instructions are
given, then the Market Price shall be its fair market value
as agreed between the Board of Directors of Parent and the
Stockholders in good faith) plus (y) with respect to portions
of the Arkansas Deposit which are not Arkansas Escrowed
Shares, their fair market value;
(ii) Calculate the Arkansas Liability (and for the
purposes of such calculation, any settlements or arrangements
which Parent or the Company may
-4-
reach in good faith with the State of Arkansas in accordance
with the Restated Agreement shall be presumed reasonable);
(iii) If the Arkansas Liability exceeds the Market
Price of the Arkansas Deposit, as calculated pursuant to the
provisions above, then the Escrow Agent shall transfer to
Parent the components of the Arkansas Deposit that are not
Arkansas Escrowed Shares and, with respect to Arkansas
Escrowed Shares, tender the certificate(s) representing the
Arkansas Escrowed Shares and a stock power or stock powers
indorsed in blank, together with its signature thereon
guaranteed by a national or state chartered bank or other
financial institution; further, all right, title and interest
of the Stockholders in the Arkansas Deposit shall be
transferred to Parent. Each Stockholder's maximum liability
for the Arkansas Liability from time to time is limted to the
value at such time of his or her interests in the Arkansas
Deposit that are either held by the Escrow Agent or its
successor or interplead pursuant to this Escrow Agreement,
and no Stockholder shall have any obligation to Parent or the
Company to fund any Arkansas Liability other than from his or
her interests in the Arkansas Deposit.
(iv) If the Market Price of the Arkansas Deposit
exceeds the Arkansas Liability, as calculated pursuant to the
provisions above, then the Escrow Agent shall deliver to
Parent the certificate(s) representing the Arkansas Escrowed
Shares and a stock power indorsed in blank, together with its
signature thereon guaranteed by a national or state chartered
bank or other financial institution, together with all other
components of the Arkansas Deposit, for issuance of
certificates representing shares of Parent Stock registered
in the names of the Stockholders. Each Stockholder shall
receive a certificate representing a number of shares of
Parent Stock (with fractional shares being eliminated in each
case by rounding up or down to the nearest whole share )
having a calculated Market Price equal to his or her
Distribution Percentage (as set forth on Schedule 1 hereto)
of the difference between the calculated Market Price of the
Arkansas Deposit and the calculated Arkansas Liability. The
balance of the Arkansas Escrowed Shares, if any, evidenced by
such certificate shall be registered in the Parent's name as
treasury shares, and all right, title and interest of the
Stockholders therein and in the remainder of the Arkansas
Deposit shall be transferred to Parent.
(c) The Escrow Agent shall make distributions with respect to
the Litigation Deposit in accordance with the terms of Section 19 of the
Restated Agreement and only upon written instructions executed by the
Stockholders and Parent.
-5-
6. Tax Matters.
(a) Each of Parent and Stockholders shall provide Escrow
Agent with their taxpayer identification numbers documented by an appropriate
Form W-9 upon or as soon as practicable after execution of this Escrow
Agreement. Failure so to provide such forms may prevent or delay disbursements
from the Deposit and may also result in the assessment of a penalty and Escrow
Agent's being required to withhold tax on any interest or other income earned
on the Deposit. Any payments of income shall be subject to applicable
withholding regulations then in force in the United States or any other
jurisdiction, as applicable.
(b) With respect to any fiscal year in which any portion of
the Deposit is disbursed, the party or parties receiving the Deposit agrees to
report and pay the applicable taxes on the portion of the Deposit disbursed to
such party respecting that fiscal year.
7. Scope of Undertaking. Escrow Agent's duties and
responsibilities in connection with this Escrow Agreement shall be purely
ministerial and shall be limited to those expressly set forth in this Escrow
Agreement. Escrow Agent is not a principal, participant or beneficiary in any
transaction underlying this Escrow Agreement and shall have no duty to inquire
beyond the terms and provisions hereof. Escrow Agent shall have no
responsibility or obligation of any kind in connection with this Escrow
Agreement or the Deposit and shall not be required to deliver the Deposit or
any part thereof or take any action with respect to any matters that might
arise in connection therewith, other than to receive, hold, invest, reinvest
and deliver the Deposit as herein provided. Without limiting the generality of
the foregoing, it is hereby expressly agreed and stipulated by the parties
hereto that Escrow Agent shall not be required to exercise any discretion
hereunder and shall have no investment or management responsibility and,
accordingly, shall have no duty to, or liability for its failure to, provide
investment recommendations or investment advice to the other parties hereto or
any of them. Escrow Agent shall not be liable for any error in judgment, any
act or omission, any mistake of law or fact, or for anything it may do or
refrain from doing in connection herewith, except for, subject to Section 8
hereinbelow, its own willful misconduct or gross negligence. It is the
intention of the parties hereto that Escrow Agent shall never be required to
use, advance or risk its own funds or otherwise incur financial liability in
the performance of any of its duties or the exercise of any of its rights and
powers hereunder.
-6-
8. Reliance; Liability. Escrow Agent may rely on, and shall
not be liable for following the instructions contained in any written notice,
instruction or request or other paper furnished to it hereunder or pursuant
hereto and believed by it to have been signed or presented by the proper party
or parties. Escrow Agent shall be responsible for holding, investing,
reinvesting and disbursing the Deposit pursuant to this Escrow Agreement;
provided, however, that in no event shall Escrow Agent be liable for any lost
profits, lost savings or other special, exemplary, consequential or incidental
damages in excess of Escrow Agent's fee hereunder and provided, further, that
Escrow Agent shall have no liability for any loss arising from any cause beyond
its control, including, but not limited to, the following: (a) acts of God,
force majeure, including, without limitation, war (whether or not declared or
existing), revolution, insurrection, riot, civil commotion, accident, fire,
explosion, stoppage of labor, strikes and other differences with employees; (b)
the act, failure or neglect of any other party hereto or any agent or
correspondent or any other person selected by Escrow Agent; (c) any delay,
error, omission or default of any mail, courier, telegraph, cable or wireless
agency or operator; or (d) the acts or edicts of any government or governmental
agency or other group or entity exercising governmental powers. Escrow Agent is
not responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of the subject matter of this Escrow
Agreement or any part hereof or for the transaction or transactions requiring
or underlying the execution of this Escrow Agreement, the form or execution
hereof or for the identity or authority of any person executing this Escrow
Agreement or any part hereof or depositing the Deposit.
9. Right of Interpleader. Should any controversy arise
involving the parties hereto or any of them or any other person, firm or entity
with respect to this Escrow Agreement or the Deposit, or should a substitute
escrow agent fail to be designated as provided in Section 16 hereof, or if
Escrow Agent should be in doubt as to what action to take, Escrow Agent shall
have the right, but not the obligation, either to (a) withhold delivery of the
Deposit until the controversy is resolved, the conflicting demands are
withdrawn or its doubt is resolved, or (b) institute a petition for
interpleader in any court of competent jurisdiction to determine the rights of
the parties hereto. In the event Escrow Agent is a party to any dispute, Escrow
Agent shall have the additional right to refer such controversy to binding
arbitration. Should a petition for interpleader be instituted, or should Escrow
Agent be threatened with litigation or become involved in litigation or binding
arbitration in any manner whatsoever in connection with this Escrow Agreement
or the Deposit, then, as between (a) the other parties hereto on the one hand
and (b) Escrow Agent on the other, such other parties hereby jointly and
severally agree to reimburse Escrow Agent for its attorneys' fees and any and
all other expenses, losses, costs and damages incurred by Escrow Agent in
connection with or resulting from such threatened or actual litigation or
arbitration prior to any disbursement hereunder. The parties agree that upon
any interpleader of the Arkansas Deposit or the Litigation Deposit, or any
portion thereof, such assets shall remain subject to this Escrow Agreement,
mutatis mutandis, notwithstanding the fact that the Escrow Agent is no longer
in possession of them.
-7-
10. Indemnification. The other parties hereto hereby jointly
and severally indemnify Escrow Agent, its officers, directors, partners,
employees and agents (each herein called an "Indemnified Party") against, and
hold each Indemnified Party harmless from, any and all expenses, including,
without limitation, attorneys' fees and court costs, losses, costs, damages and
claims, including, but not limited to, costs of investigation, litigation and
arbitration, tax liability and loss on investments suffered or incurred by any
Indemnified Party in connection with or arising from or out of this Escrow
Agreement, except such acts or omissions as may result from the willful
misconduct or gross negligence of such Indemnified Party.
11. Compensation and Reimbursement of Expenses. Parent agrees
to pay Escrow Agent the fees for its services hereunder in accordance with the
fee schedules attached hereto by Escrow Agent and to pay all expenses incurred
by Escrow Agent in connection with the performance of its duties and
enforcement of its rights hereunder and otherwise in connection with the
preparation, operation, administration and enforcement of this Escrow
Agreement, including, without limitation, attorneys' fees, brokerage costs and
related expenses incurred by Escrow Agent.
12. Lien. Each of the parties hereto other than the Escrow
Agent hereby grants to Escrow Agent a lien upon, and security interest in, all
its right, title and interest in and to all of the Deposit as security for the
payment and performance of its obligations owing to Escrow Agent hereunder,
including, without limitation, its obligations of payment, indemnity and
reimbursement provided for hereunder, which lien and security interest may be
enforced by Escrow Agent without notice by charging, and setting-off and paying
from, the Deposit any and all amounts then owing to it pursuant to this Escrow
Agreement or by appropriate foreclosure proceedings.
13. Notices. Any notice or other communication required or
permitted to be given under this Escrow Agreement by any party hereto to any
other party hereto shall be considered as properly given if in writing and (a)
delivered against receipt therefor, (b) mailed by registered or certified mail,
return receipt requested and postage prepaid or (c) sent by telex, telefax
machine or prepaid telegram, in each case addressed as follows:
If to Escrow Agent:
Longview Bank & Trust, N.A.
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
-8-
If to Parent:
Advanced Communications Group, Inc.
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: _________________
If to Stockholders:
Xxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx, Xxxxx 00000
Facsimile No.: ____________
with a copy to:
Bourland, Smith, Wall & Xxxxxx, P.C.
000 Xxxxxxxx Xxxxxx
City Center Tower II
Xxxxx 0000
Xxxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
Delivery of any communication given in accordance herewith shall be effective
only upon actual receipt thereof by the party or parties to whom such
communication is directed. Any party to this Escrow Agreement may change the
address to which communications hereunder are to be directed by giving written
notice to the other party or parties hereto in the manner provided in this
section.
14. Consultation with Legal Counsel. Escrow Agent may consult
with its counsel or other counsel satisfactory to it concerning any question
relating to its duties or responsibilities hereunder or otherwise in connection
herewith and shall not be liable for any action taken, suffered or omitted by
it in good faith upon the advice of such counsel.
15. Choice of Laws; Cumulative Rights. This Escrow Agreement
shall be construed under, and governed by, the laws of the State of Texas,
excluding, however, its choice of law rules. All of Escrow Agent's rights
hereunder are cumulative of any other rights it may have at
-9-
law, in equity or otherwise. The parties hereto agree that the forum for
resolution of any dispute arising under this Escrow Agreement shall be Xxxxxx
County, Texas, and each of the parties hereto hereby consents, and submits
himself or itself, to the jurisdiction of any state or federal court sitting in
Xxxxxx County, Texas.
16. Resignation. Escrow Agent may resign hereunder upon ten
(10) days' prior notice to Parent and Stockholders. Upon the effective date of
such resignation, Escrow Agent shall deliver the Deposit to any substitute
escrow agent designated jointly by Parent and Stockholders in writing. If
Parent and Stockholders fail to designate a substitute escrow agent within ten
(10) days after the giving of such notice, Escrow Agent may institute a
petition for interpleader. Escrow Agent's sole responsibility after such 10-day
notice period expires shall be to hold the Deposit (without any obligation to
reinvest the same) and to deliver the same to a designated substitute escrow
agent, if any, or in accordance with the directions of a final order or
judgment of a court of competent jurisdiction, at which time of delivery Escrow
Agent's obligations hereunder shall cease and terminate.
17. Assignment. This Escrow Agreement shall not be assigned
by any of the other parties hereto without the prior written consent of Escrow
Agent (such assigns of such other parties to which Escrow Agent consents, if
any, and Escrow Agent's assigns being hereinafter referred to collectively as
"Permitted Assigns").
18. Severability. If one or more of the provisions hereof
shall for any reason be held to be invalid, illegal or unenforceable in any
respect under applicable law, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, and this Escrow Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein, and the remaining provisions hereof shall be given full
force and effect.
19. Termination. This Escrow Agreement shall terminate upon
(a) disbursement of all the Deposit in accordance with Section 5 hereof, and
(b) unless Escrow Agent shall otherwise elect, full and final payment of all
amounts required to be paid to the Escrow Agent hereunder (whether fees,
expenses, costs or otherwise); provided, however, that in the event all such
amounts required to be paid to Escrow Agent hereunder are not fully and finally
paid prior to termination, the provisions of Section 11 hereof shall survive
the termination hereof and, provided further, that Section 9 hereof and the
provisions of Section 10 hereof shall, in any event, survive the termination
hereof.
20. General. The section headings contained in this Escrow
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement. This Escrow Agreement and
any affidavit, certificate, instrument, agreement or other document required to
be provided hereunder may be executed in two or more counterparts, each of
-10-
which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument. Unless the context shall otherwise
require, the singular shall include the plural and vice versa, and each pronoun
in any gender shall include all other genders. The terms and provisions of this
Escrow Agreement constitute the entire agreement among the parties hereto in
respect of the subject matter hereof. This Escrow Agreement or any provision
hereof may be amended, modified, waived or terminated only by written
instrument duly signed by the Escrow Agent, Parent and Stockholders. This
Escrow Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors, trustees, receivers and
Permitted Assigns. This Escrow Agreement is for the sole and exclusive benefit
of the parties hereto, and nothing in this Escrow Agreement, express or
implied, is intended to confer or shall be construed as conferring upon any
other person any rights, remedies or any other type or types of benefits.
-11-
IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement to be effective as of the date first above written.
"PARENT"
ADVANCED COMMUNICATIONS
GROUP, INC.
BY:
-------------------------------------------
NAME: XXXXXXX X. XXXXXXX
TITLE: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
"STOCKHOLDERS"
----------------------------------------------
XXXXX X. XXXXXXXX
----------------------------------------------
XXX XXXXXX
----------------------------------------------
XXXX XXXXX
----------------------------------------------
XXXXXXX XXXXX
----------------------------------------------
XXXXXXXX XXXXX
-12-
"ESCROW AGENT"
LONGVIEW BANK & TRUST
BY:
-----------------------
NAME:
---------------------
TITLE:
--------------------
-13-
SCHEDULE 1
COLUMN I COLUMN II COLUMN III COLUMN IV
----------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
NAME OF STOCKHOLDER ARKANSAS ESCROWED SHARES LITIGATION ESCROWED SHARES DISTRIBUTION PERCENTAGE
----------------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxxx 50%
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Xxx Xxxxxx 30%
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Xxxx Xxxxx 5%
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Xxxxxxx Xxxxx 5%
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Xxxxxxxx Xxxxx 10%
----------------------------------------------------------------------------------------------------------------------------
TOTAL 100%
----------------------------------------------------------------------------------------------------------------------------
-14-
