EXHIBIT 10.1
ESCROW AGREEMENT
FOR
THE MAJOR STOCKHOLDERS
OF
NETWORK LONG DISTANCE, INC.
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BE IT KNOWN that effective this 7 day of March, 1994, before me, the
undersigned Notary Public, personally came and appeared:
XXXXXXX X. XXXX, of the full age of majority and
domiciled in the Parish of East Baton Rouge, Louisiana,
whose permanent mailing address is declared to be Xxxx
Xxxxxx Xxx 00000, Xxxxx Xxxxx, Xxxxxxxxx 00000
("Xxxx");
XXXX X. XXXXXX, of the full age of majority and
domiciled in the Parish of East Baton Rouge, Louisiana,
whose permanent mailing address is declared to be Xxxx
Xxxxxx Xxx 00000, Xxxxx Xxxxx, Xxxxxxxxx 00000
("Xxxxxx");
NETWORK LONG DISTANCE, INC., a foreign corporation
organized and existing under the laws of the State of
Delaware, authorized to do and doing business in the
State of Louisiana and appearing herein through its
duly authorized undersigned agent and representative
("Company");
R. XXXX XXXXXX, of the full age of majority and
domiciled in the Parish of East Baton Rouge, Louisiana,
whose permanent mailing address is declared to be Xxxx
Xxxxxx Xxx 00000, Xxxxx Xxxxx, Xxxxxxxxx 00000-0000
("Escrow Agent");
who, after being duly sworn, deposed and stated that they have this day
entered into the following agreement and contract, to-wit:
WITNESSETH:
WHEREAS, by virtue of a Private Placement Memorandum of September 1,
1993, the Company offered 60,000 shares of Series B Convertible Preferred
Stock at the price of $5.00 per share for a total offering of 60,000 shares
offered in reliance upon the availability of an exemption from the
registration provisions of the Securities Act of 1933, as amended, and by
virtue of which the Company intends to comply with the provisions of
Section 4(2) of the aforementioned Act and Rule 506 of Regulation D adopted
under said Act; and
WHEREAS, as part of the aforementioned Private Placement memorandum,
the Company has provided prospective purchasers with a July 2, 1993 Letter
of Intent issued by Xxxxxx Xxxxx Securities, Inc., ("Xxxxxx Xxxxx") and by
virtue of which Xxxxxx Xxxxx has agreed pursuant to the terms and
conditions more particularly set forth in the aforementioned Letter of
Intent of July 2, 1993 to prepare and to propose a Secondary Offering of the
aforementioned Company securities; and
WHEREAS, among other terms and conditions of the aforementioned Letter
of Intent of July 2, 1993 is the representation that the Company will take
all necessary and required corporate actions to promptly prepare and file
under the aforementioned Act a Registration Statement on Form S(1) or Form
SB-2, if available, with respect to the securities being offered as more
particularly set forth hereinabove; and
WHEREAS, by virtue of the aforementioned Letter of Intent, in general,
and the provisions set forth at Article 29 thereof, in
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particular, the Company, through its management, (Xxxxxx and Xxxx) have
agreed to transfer, place and deposit 626,691 shares of the Company's
common stock owned by Xxxxxx and Xxxx into an Escrow Account with an
independent Escrow Agent, to be released pursuant to the terms and
conditions of the aforementioned Article 29, in particular; and
WHEREAS, it is therefore the desire and the intention of the appearers
by these presents to memorialize the creation, establishment and execution
of the aforementioned Escrow Agreement, by virtue of which there will be
transferred to the Escrow Account the aforementioned shares of the
Company's common stock pursuant to the terms and conditions more
particularly set forth hereinafter.
NOW THEREFORE IT IS CONTRACTED, COVENANTED AND AGREED THAT:
1. Designation of the Escrow Agent
1.1 The Company, Xxxx, and Xxxxxx do by these presents hereby
nominate, designate and appoint R. Xxxx Xxxxxx as the Escrow Agent and do
otherwise designate, nominate and appoint him as their attorney-in-fact
with all power and authority necessary to fully comport with all of the
terms and conditions of this Agreement.
1.2 R. Xxxx Xxxxxx does by these presents hereby accept the
nomination, designation and appointment as Escrow Agent and contracts,
covenants and agrees to discharge all of the duties and obligations
incumbent upon him by virtue of this appointment.
2. Designation of the Escrow Shares
2.1 The appearers do by these presents hereby designate as the Escrow
Shares 626,691 shares of the Company's common stock evidenced by the
following Stock Certificates:
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NAME OF HOLDER
NUMBER OF SHARES AND OWNER OF
STOCK CERTIFICATE NO. EVIDENCE BY CERTIFICATE STOCK CERTIFICATE
309 104,448 Xxxx X. Xxxxxx
310 104,448 Xxxx X. Xxxxxx
311 104,448 Xxxx X. Xxxxxx
314 104,448 Xxxxxxx X. Xxxx
315 104,448 Xxxxxxx X. Xxxx
316 104,448 Xxxxxxx X. Xxxx
2.2 The Company, Xxxx and Xxxxxx do further by these presents
declare, acknowledge and certify that each of the aforementioned
stockholders and shareholders is, in fact, the owner of each of the
aforementioned Stock Certificates, each representing the applicable number
of shares of the Company's common stock, that none of the aforementioned
Stock Certificates or corresponding shares have been loaned, pledged,
alienated, mortgaged or otherwise encumbered and that each of the
aforementioned designated stockholders is, indeed, the full and complete
owner of each of the aforementioned Stock Certificates and the
corresponding shares and that each has the power and authority to enter
into this Escrow Agreement without limitation or impediment.
3.
Transfer to the Escrow Agent
3.1 Xxxxxx does by these presents hereby transfer and deliver to the
Escrow Agent Stock Certificates 309, 310 and 311 to be held by the Escrow
Agent pursuant to, but only pursuant to, the terms and conditions of this
Agreement.
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3.2 Xxxx does by these presents hereby transfer and deliver to the
Escrow Agent Stock Certificates 314, 315 and 316 to be held by the Escrow
Agent pursuant to, but only pursuant to, the terms and conditions of this
Agreement.
3.3 The Escrow Agent does by these presents acknowledge that he has
this day received the aforementioned Stock Certificates and that the
aforementioned Stock Certificates will be held by the Escrow Agent pursuant
to the terms and conditions of this Agreement.
4. Term
4.1 This Escrow Agreement will terminate at midnight on the 105th day
after the end of the 2000 fiscal year-end (January 27, 2000) and, at that
time, all of the escrowed shares that have not otherwise been released
pursuant to the provisions of Article 5, below, and that are otherwise
still held in the Escrow Account will be transferred and delivered by the
Escrow Agent to the Treasurer of the Company to be canceled on the books of
the corporation and to return to the Company's treasury as capital
contribution.
5. Release
5.1 All of the Escrow Shares shall remain in the Escrow Account until
either (1) released pursuant to the terms and conditions of this Article or
(2) transferred and delivered to the Company by the Escrow Agent pursuant
to Article 4, above.
5.2 The Escrow Agent shall, but only on written request of Xxxx and
Xxxxxx, immediately release and return to the shareholder of record the
Escrow Shares if the Company's net income (following
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an audit by the Company's Independent Public Accountants, the "minimum net
income") amounts to at least the amount set forth below on a fully-diluted
per share basis, to-wit:
FISCAL MINIMUM NET INCOME PER AMOUNT OF SHARES TO BE
YEAR END SHARE (FULLY-DILUTED) RELEASED FROM ESCROW
March 31, 1995 $ .375 per share 208,896 shares
March 31, 1996 $ .60 per share 208,896 shares
March 31, 1997 $1.00 per share 208,896 shares
5.2.1 In order to achieve the release to which reference is made in
5.2 above, the Escrow Agent is by these presents hereby authorized,
empowered and directed to transfer and deliver free and clear of any and
all encumbrances otherwise created by this Escrow Agreement each of the
aforementioned Escrowed Shares to the stockholder of record within fifteen
(15) days following his receipt of the aforementioned audit and provided,
however, that the aforementioned audit reflects the Company's minimum net
income at the per share (fully-diluted) amounts more particularly set forth
hereinabove in 5.2.
5.2.2 In the event the Company fails to achieve the minimum net income
for either (or both) of the first two fiscal years as set forth in 5.2,
above (and except as otherwise extended by Article 7, below), the Escrow
Shares shall nevertheless remain in the Escrow Account and Xxxxxx and Xxxx
together with the Company shall have until the end of the following fiscal
year in order to achieve the minimum net income per share (fully-diluted)
of one dollar per share and the Escrow Agent shall not transfer or deliver
to the Treasurer of the Company for cancellation the Escrowed
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Shares until such time as the Company has failed to achieve a minimum net
income per share of one dollar during the last fiscal year-end as
established in 5.2, above (or as otherwise extended by Article 7, below).
5.2.2.1 In the event the Company fails to achieve the minimum net
income for either of the first two fiscal years as set forth in 5.2, above
(and except as otherwise extended by Article 7, below), but in fact does
achieve the minimum net income in a subsequent fiscal year, then, and in
such event, the Escrow Agent shall not only release to Xxxxxx and Xxxx the
Escrow Shares for the fiscal year in which the minimum net income was
earned but shall also release to Xxxxxx and Xxxx the Escrow Shares for the
preceding year(s) in which such minimum net income was not earned.
5.2.3 If in any of the aforementioned years, (fiscal years ending
March 31, 1995, March 31, 1996 and March 31, 1997) or as otherwise extended
by Article 7, below, the Company should achieve a minimum net income per
share that either equals or exceeds the minimum net income per share level
for any subsequent fiscal year-end, then, and in such event, the Escrow
Agent shall, as otherwise provided for in 5.2.1, above, release to Xxxxxx
and Xxxx not only the Escrow Shares for the current year but shall also
release to Xxxxxx and Xxxx the Escrow Shares for the subsequent fiscal
year(s). Lest there be any doubt, and for purposes of illustration only,
in the event that the Company should achieve the minimum net income per
share of one dollar during fiscal year ending March 31, 1995, then, and in
such event, the Escrow Agent shall release all
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(626,688) of the Escrow Shares to Xxxxxx and Xxxx as is otherwise provided
for in 5.2.1, above.
6. Minimum Net Income
6.1 For all purposes cognizable under this Escrow Agreement, the term
"minimum net income" shall mean and shall be defined as being the
consolidated net income but without giving affect to charges to income, if
any arising from the release of the Escrow Shares in the manner more
particularly set forth in the Article 5.2, hereinabove, and as reasonably
determined under generally accepted accounting principles. The "minimum
net income" per share (fully-diluted) shall be calculated without giving
affect to 200,000 shares of common capital stock in the Corporation.
6.2 Furthermore, and not withstanding anything to the contrary
otherwise contained in 6.1, above, in the event that additional common
stock is issued by the Company (a) through sale, the minimum net income
shall increase, proportionately, so that the minimum net income per
share (fully-diluted) shall remain unchanged, and (b) in the event the
Company should issue additional common stock by virtue of a stock split,
(including the aforementioned 200,000 shares) stock dividend or otherwise,
then and in such event there shall likewise be a PRO RATA adjustment as
reasonable determined by the Company's independent certified public
accounts in order that the appropriate minimum net income per share
(fully-diluted) is achieved.
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7. Additional Offering
In the event, after completion of this proposed secondary offering,
the Company completes another offering pursuant to which the Company
obtains at least $5,000,000 in equity financing at a minimum price of
$10.00 per share of common stock, the fiscal year ending periods referred
to in Article 5.2, above, shall be adjusted by extending each such fiscal
year-end period for one additional year, so that, for example, March 31, 1997
shall become March 31, 1998.
8. Acquisitions and Mergers
In the event the Company is acquired or merged into another entity
prior to March 31, 1997, or prior to such later date as the fiscal year
ending periods referred to in Article 5.2, above, have been adjusted by
virtue of the provisions of Article 7, hereinabove, at a price equivalent
to at least $10.00 per share, all of the escrowed shares shall be released
from escrow. Alternatively, in the event the Company is acquired or merged
into another entity prior to March 31, 1997, or prior to such later date as
the fiscal year ending periods referred to in Article 5.2, above, have been
adjusted by virtue of the provisions of Article 7, hereinabove, at a price
equivalent of less than $10.00 per share, all of the escrowed shares still
remaining in escrow at the time of any such acquisition or merger shall be
forfeited and all such shares shall be placed in the Company's treasury for
cancellation thereof as a contribution of capital.
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9. Voting Rights
At all times throughout the terms of this Escrow Agreement the owners
of the Escrow Shares as more particularly set forth in Article 2.1, above,
shall have full and unrestricted voting rights with respect to all such
shares and certificates of stock, as if this Escrow Agreement had never
been confected.
10. Assignment and Transferability
Throughout the term of this Escrow Agreement, the Escrow Shares shall
neither be assignable nor transferable, except as otherwise more
particularly set forth in Article 5 and 8, above, and the Escrow Agent
shall hold and maintain said Escrow Shares in escrow pursuant to the terms
and conditions of this Agreement.
11. Dividends
Dividends, if any, paid on the Escrowed Shares shall be paid to the
Escrow Agent by check of company made payable to the Escrow Agent with a
notation of this Agreement thereon, and any such dividends shall be held
pursuant to the terms of this Agreement. The Escrow Agent shall place any
such dividends in an interest bearing account. The dividends and interest
earned thereon will be disbursed in proportion to the number of Escrowed
Shares released from the escrow at the time the shares are released
pursuant to paragraph 5, above, and to the extent so released shall
disburse such amounts to Company.
12. Stock Dividends or Splits
Stock dividends on, and shares resulting from stock splits of, the
Escrowed Shares shall be delivered to Escrow Agent and shall be
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held pursuant to this Agreement as if they were original shares of the
Escrowed Shares deposited hereunder.
13. Reliance by Escrow Agent
The Escrow Agent may conclusively rely on, and shall be protected,
when he acts in good faith, upon any statement, certificate, notice,
request, consent order or the document which he believes to be genuine and
signed by the proper party. The Escrow agent shall have no duty or
liability to verify any such statement, certificate, notice, request,
consent, order or other document and their sole responsibility shall be
only to be under no obligation to institute or defend any action, suit or
proceeding in connection with this Agreement once it is indemnified to its
satisfaction. The Escrow Agent may consult counsel with respect to any
question arising under this Agreement and the Escrow Agent shall not be
liable for any action taken or omitted in good faith upon advice of
counsel. In performing any of their duties hereunder, the Escrow Agent
shall not incur any liability to anyone for any damages, losses or expenses
except for willful default or gross negligence, and they shall accordingly
not incur any such liability with respect to any action taken or omitted in
good faith upon advice of their counsel or counsel for Company given with
respect to any questions relating to the duties and responsibilities of the
Escrow Agent under this Agreement, or any action taken or omitted in
reliance upon any instrument, including written advice provided for herein,
not only as to execution and validity of the effectiveness of its
provisions but also as to the
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truth and accuracy of any information contained therein, which the Escrow
Agents shall in good faith believe to be genuine, to be signed or presented
by a proper person or persons, and to conform with the provisions of the
Agreement. All Escrowed Shares and funds held pursuant to this Agreement
shall constitute trust property the Escrow Agent shall not be liable for
any interest on the Escrowed Shares.
THIS DONE AND SIGNED in Baton Rouge, Louisiana effective on the date
first above given after a reading of the whole in the presence of the
hereinafter subscribing witnesses and me, Notary Public.
WITNESSES:
/s/ /s/ Xxxxxxx X. Xxxx
---------------------------- -------------------------------
XXXXXXX X. XXXX
/s/ /s/ Xxxx X. Xxxxxx
---------------------------- -------------------------------
XXXX X. XXXXXX
NETWORK LONG DISTANCE, INC.
/s/ By: /s/ Xxxx X. Xxxxxx
---------------------------- -------------------------------
/s/ By: /s/ R. Xxxx Xxxxxx
---------------------------- -------------------------------
R. XXXX XXXXXX (Escrow Agent)
/s/
-------------------------------------
NOTARY PUBLIC
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