ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated as of the 31st day of
December, 1997 among TOUCH TONE AMERICA, INC., a California corporation (the
"Company"), ORIX GLOBAL COMMUNICATIONS, INC., a Nevada corporation ("Orix"),
INFINITY INVESTORS LIMITED, a Nevis West Indies corporation ("Purchaser") and
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as
escrow agent (the "Escrow Agent").
WHEREAS, pursuant to that certain Option Agreement dated as of the date
hereof between Purchaser and the Company (and agreed to by Orix) (the "Option
Agreement"), the Company has agreed to deposit with the Escrow Agent the
Convertible Instruments (as defined in the Option Agreement) for the purpose of
providing a mechanism for the transfer and assignment by Purchaser to the
Company of the UPC Securities (as defined in the Option Agreement) in exchange
for the issuance of the Convertible Instruments to Purchaser;
WHEREAS, Purchaser and the Company desire that the Escrow Agent receive,
hold and dispose of the Convertible Instruments in accordance with the terms,
conditions and provisions of this Escrow Agreement, and the Escrow Agent agrees
to act in such capacity.
NOW, THEREFORE, the parties agree as follows:
1. GENERAL. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to those terms in the Option
Agreement.
2. APPOINTMENT OF ESCROW AGENT; ESCROW PROPERTY.
(a) The Company and Purchaser hereby appoint the Escrow Agent, and
the Escrow Agent hereby agrees to act, as the agent of such parties in
performing the duties of the Escrow Agent hereunder. As compensation
for the Escrow Agent's services hereunder, the Escrow Agent shall
receive reimbursement of all reasonable expenses (if any) incurred by
the Escrow Agent in connection with the performance of its duties under
this Agreement, which shall be borne by the Company.
(b) On the date hereof, the Company shall cause to be deposited
with the Escrow Agent Debentures in the original principal amount of
$11,000,000 (and together with any interest accrued thereon or any
Series C Shares that may be deposited with the Escrow Agent after the
date hereof (including any dividends accrued thereon) in exchange for
the Debentures sometimes referred to herein as the "Escrow Property").
(c) The Escrow Property shall be held and distributed by the
Escrow Agent in accordance with the provisions hereof and the Option
Agreement.
-------------------------------------------------------------------------------
ESCROW AGREEMENT - Page 1
(d) In accordance with the Option Agreement, on the first Business
Day following the date of the Shareholder Ratification Event, the
Company shall deliver to the Escrow Agent certificates evidencing that
certain number of Series C Shares in an aggregate stated value (based
upon the liquidation preference per Series C Share as provided in the
Series C Certificate of Designation) equal to the aggregate outstanding
principal balance of the Debentures PLUS any accrued and unpaid interest
thereon, issued in the name of Purchaser, PROVIDED that no Event of
Default under the Option Agreement or the Debentures exists at such
time. The Escrow Agent shall deliver to the Company the Debentures for
cancellation. The Escrow Agent shall have the right to require joint
written notice from the Company and the Purchaser that so such Event of
Default then exists, and in the absence thereof, shall continue to hold
the Debentures.
3. DISBURSEMENT OF ESCROW PROPERTY.
(a) Upon exercise by Purchaser of the Option at any time prior to
the Termination Date (as hereinafter defined), Purchaser shall deliver
to the Escrow Agent written notice of its election specifying the
aggregate amount of UPC Securities to be assigned and conveyed to the
Company in accordance with the Option Agreement and the date, not
earlier that one Business Day and not later than three (3) Business
Days, on which the closing of the exchange of such securities shall
occur (the "Closing Date"). On the Closing Date, Purchaser shall
deliver to the Escrow Agent the applicable UPC Securities to be assigned
and conveyed to the Company.
(b) Upon receipt by the Escrow Agent of the UPC Securities, the
Escrow Agent shall deliver (i) to the Company the UPC Securities
received from Purchaser and (ii) to Purchaser at its address set forth
on the signature page hereto (unless a contrary address located outside
the United States is provided in the Option notice) all of the
Debentures (if the Shareholder Ratification Event has not occurred) or
all of the Series C
Shares (if the Shareholder Ratification Event has occurred), as
the case may be, held by the Escrow Agent notwithstanding the aggregate
amount of UPC Securities to be assigned and conveyed to the Company on
the Closing Date. The Escrow Agent shall date the Debentures as of the
Closing Date or the Series C Shares, as the case may be, to be issued to
Purchaser on the Closing Date prior to delivery of such securities to
Purchaser. From and after the Closing Date, Purchaser shall hold either
the Debentures or the Series C Shares, as the case may be, not exchanged
and issued to Purchaser on the Closing Date (if any) in accordance with
the terms of the Option Agreement. Upon delivery of all of the
Debentures or Series C Shares, as the case may be, by the Escrow Agent
to Purchaser, this Agreement and the obligations of the Escrow Agent
shall terminate.
4. TERMINATION. This Agreement shall terminate on the earlier to
occur of the following: (i) the date upon which all of the Escrow Property
has been delivered in accordance with the provision herewith, or (ii) five
(5) Business Days following the second anniversary of
Page 2
the date hereof (the "Termination Date"). On the Business Day following the
Termination Date, or as soon as practicable thereafter, the Escrow Agent
shall deliver to the Company any remaining Escrow Property, if any, PROVIDED
that if any Disputes (as hereinafter defined) between the Company and
Purchaser exist on such date, the Escrow Agent shall retain the Escrow
Property until such time as such Disputes have been resolved. Upon
termination of this Agreement, all obligations of the Escrow Agent shall
terminate and this Agreement shall have no further force and effect.
5. ESCROW AGENTS RIGHTS AND RESPONSIBILITIES.
(a) The Escrow Agent shall have no duties or obligations hereunder
except those specifically set forth herein and such duties and
obligations shall be determined solely by the express provisions of this
Escrow Agreement. In connection with its duties hereunder, the Escrow
Agent shall be protected in acting or refraining from acting upon any
written notice, request, consent, certificate, order, affidavit, letter,
telegram or other document furnished to it hereunder and believed by it
to be genuine and to have been signed or sent by the proper party or
parties. The Escrow Agent shall not be liable for anything it may do or
refrain from doing in connection with its duties hereunder, except as a
result of its own gross negligence or willful misconduct. Further, the
Escrow Agent shall not be liable for the loss of any Debentures or
Series C Shares during the period such securities are held in escrow.
The Company agrees that in the event any Debentures or Series C Shares
are lost, stolen, mislaid or destroyed, the Company will promptly
replace such securities in like tenor and forward them to the Escrow
Agent to be held in accordance with the provisions of this Agreement and
the Option Agreement.
(b) In the event the Escrow Agent shall be uncertain as to its
duties or rights under this Escrow Agreement or shall receive any
instruction, claim or demand which, in the opinion of the Escrow Agent,
is in conflict with the provisions of this Escrow Agreement (any of the
foregoing, a "Dispute"), the Escrow Agent shall be entitled to refrain
from taking any action with respect to such Dispute until it shall be
directed otherwise by an instrument in writing signed by the Company and
Purchaser, or if such an instrument shall not be provided to the Escrow
Agent within thirty (30) days of its request of the parties, the Escrow
Agent may apply for instructions from a competent court pursuant to an
interpleader proceeding.
6. RESIGNATION. The Escrow Agent may resign at any time by giving at
least thirty (30) days prior written notice to the Company and Purchaser,
such resignation to be effective upon the acceptance of appointment by the
successor Escrow Agent as hereinafter provided. The resigning Escrow Agent
may appoint a successor Escrow Agent, reasonably acceptable to the Company
and Purchaser, or Purchaser may appoint a successor Escrow Agent, reasonably
acceptable to the Company. If a successor Escrow Agent shall not have been
appointed within twenty (20) days after such notice of resignation, either
the Company or Purchaser may apply to any court of competent jurisdiction to
appoint a successor Escrow Agent. Any successor Escrow
Page 3
Agent however appointed, shall execute and deliver to the predecessor Escrow
Agent an instrument accepting such appointment, and thereupon such successor
Escrow Agent shall, without further act, become fully vested with all the
rights, powers, obligations and duties of the predecessor Escrow Agent with
respect to the Escrow Property with the same effect as if originally named
the Escrow Agent.
7. REPRESENTATION OF PURCHASER. The Company acknowledges that the
Escrow Agent represents Purchaser on a day to day basis with respect to
various legal matters, including without limitation, the Option Agreement and
the transactions contemplated thereby. The Company further acknowledges and
agrees that the Escrow Agent will continue to represent Purchaser (including,
without limitation, with respect to matters under the Option Agreement)
notwithstanding its appointment as the Escrow Agent hereunder, and that such
representation by the Escrow Agent shall not be deemed to conflict with the
Escrow Agent's duties hereunder. To the extent applicable, the Company and
Orix hereby waive any conflict associated with such continued representation.
8. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or by telefax (receipt confirmed) or four (4) Business Days after
mailing by certified mail, postage paid, return receipt requested, to the
parties or their successors in interest at their respective addresses set
forth on the signature page hereto and to the Escrow Agent as set forth
below, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
9. GOVERNING LAW. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD TO ANY CONFLICTS
OR CHOICE OF LAW RULES OR ANY PRESUMPTION OR CONSTRUCTION AGAINST THE PARTY
CAUSING THIS AGREEMENT TO BE DRAFTED.
10. SUCCESSORS AND ASSIGNS. This Escrow Agreement shall not be
assigned by any party hereto. This Escrow Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
11. ENTIRE AGREEMENT. This Agreement, the Option Agreement, the
Debentures, the Series C Certificate of Designation and the other instruments
and agreements referred to in such documents embody the entire agreement
between the parties as to the subject matter hereof and
Page 4
there have been no agreements, representations or warranties, oral or
written, between the parties other than those set forth or provided for in
such agreements.
12. AMENDMENTS. This Agreement may not be added, modified, changed or
waived, in whole or in part, except in an instrument in writing signed by
each of the parties hereto.
13. COUNTERPARTS. This Agreement may be executed by facsimile
signature in any number of counterparts, each such counterpart to be deemed
an original, and all such counterparts taken together to constitute one and
the same instrument.
[SIGNATURE PAGES FOLLOW]
Page 5
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date and year first above written.
TOUCH TONE AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INFINITY INVESTORS LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title:
-------------------------------------
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Partner
Page 6
ORIX GLOBAL COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title: President
-------------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Page 7
