INDEMNITY ESCROW AGREEMENT
INDEMNITY ESCROW AGREEMENT (the "Escrow Agreement") dated as of the
30th day of June, 1999, by and among SunStar One, L.L.C., an Arizona limited
liability company (the "Seller"), Aquis Communications, Inc., a Delaware
corporation (the "Purchaser"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
(the "Escrow Agent").
R E C I T A L S :
A. Pursuant to the terms and provisions of that certain Stock Purchase
Agreement (the "Purchase Agreement"), dated as of June 15, 1999 by and among the
Seller, the Purchaser and SunStar Communications, Inc., an Arizona corporation
and a wholly-owned subsidiary of the Seller ("SunStar Inc."), the Seller has
agreed to sell to the Purchaser and the Purchaser has agreed to purchase from
the Seller all of the capital stock of SunStar Inc.
B. The Purchase Agreement provides that on the Aquis Shares Delivery Date
(as defined in the Purchase Agreement), the Purchaser shall deposit with the
Escrow Agent 200,000 shares of the common stock, $.01 par value per share, of
the Purchaser's parent company, Aquis Communications Group, Inc., a Delaware
corporation (the "Escrowed Shares"), constituting a portion of the consideration
payable from the Purchaser to the Seller under the Purchase Agreement, to be
held by the Escrow Agent pursuant to the terms and conditions hereof.
C. The Seller, the Purchaser and the Escrow Agent now wish to enter into
this Escrow Agreement providing for the appointment of an escrow agent to hold
the Escrowed Shares and to set forth the terms and conditions under which the
Escrowed Shares shall be disbursed.
NOW THEREFORE, for good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
1. Appointment of the Escrow Agent. The Purchaser and the Company
hereby jointly appoint the Escrow Agent as the escrow agent under this Escrow
Agreement and the Escrow Agent hereby accepts such appointment and agrees to
hold the Escrowed Shares pending their disposition in accordance with the terms
hereof and to perform its other duties hereunder.
2. Disposition of Escrowed Shares. The Escrow Agent shall disburse
the Escrowed Shares pursuant to the mutual written directions of the Purchaser
and the Seller, or, in the absence of such directions, pursuant to Sections 3
and 4 hereof.
3. Delivery of Escrowed Shares by the Escrow Agent.
(a) On the date which is 365 days after the closing date of
the Purchase Agreement (the "Escrow Termination Date"), the Escrow Agent shall
deliver to the Seller that portion of the Escrowed Shares which has neither been
disbursed prior to that date nor is subject to a pending Claim (as defined in
Section 3(b)).
(b) If the Escrow Agent receives from the Purchaser prior to
the Escrow Termination Date a Claim Notice (as defined in Section 4(a)) stating
that the Purchaser is entitled, pursuant to Section 19 of the Purchase
Agreement, to be indemnified by the Company from the Escrowed Shares (a
"Claim"), the Escrow Agent shall disburse or retain Escrowed Shares in the
amount of the Claim pursuant to Section 4.
4. Claims Procedures.
(a) If, prior to the Escrow Termination Date, the Purchaser
determines to assert a Claim, then the Purchaser shall give the Escrow Agent
written notice of the Claim, specifying in reasonable detail the basis therefor
and the amount and calculation thereof in accordance with the provisions of the
Purchase Agreement (a "Claim Notice"). The Escrow Agent shall deliver a copy of
such Claim to the Seller within five days after its receipt thereof. If the
Seller does not deliver to the Purchaser and the Escrow Agent written notice of
its objection to the Claim within ten (10) business days after receipt of the
Claim Notice relating thereto, the Escrow Agent shall, out of the Escrowed
Shares, promptly pay such amount to the Purchaser. If the Seller shall timely
deliver to the Purchaser and the Escrow Agent such written notice of objection,
then the Escrow Agent shall not make any payment to the Purchaser with respect
to such Claim until: (i) he has received written instructions signed by the
Purchaser and the Seller which refer to such Claim and direct the payment to the
Purchaser from the Escrowed Shares; or (ii) it has received a copy of a
judgment, decree or order of a court, or copy of an arbitration award,
adjudicating the dispute with respect to such Claim, whereupon the Escrow Agent
shall distribute from the Escrowed Shares to the Purchaser the amount of any
award to the Purchaser (not to exceed the amount of the Claim) specified therein
and, if the Escrow Termination Date shall have occurred prior to such date,
shall distribute from the Escrowed Shares to the Seller the amount, if any, by
which the amount of the Claim exceeds the amount of such award, if any.
(b) For the purposes of this Agreement, the value per share of
the Escrowed Shares shall equal the closing bid price of the common stock of
Aquis Communications Group, Inc. on the date hereof.
(c) If there is a dispute between the Seller and the Purchaser
with regard to the payment of a Claim from the Escrowed Shares, the reasonable
legal fees, expenses and other costs incurred by the Escrow Agent in connection
with the adjudication of such dispute and such fees, expenses and costs incurred
by the party awarded the majority of the disputed amount of the Escrowed Shares
shall be paid by the other party. If the Purchaser is the party entitled to have
its legal fees, expenses and other costs paid by the Seller, it shall be
entitled to have the amount of such legal fees, expenses and other costs
distributed to it out of the Escrowed Shares.
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5. Resignation and Removal of the Escrow Agent. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving not
less than ten (10) business days' prior written notice to the Seller and the
Purchaser or may be removed, with or without cause, by the Seller and the
Purchaser jointly giving not less than ten (10) business days' prior written
notice to the Escrow Agent. Such resignation or removal shall take effect upon
the appointment of a successor Escrow Agent as provided below. Upon any such
notice of resignation or removal, the Purchaser shall appoint a successor Escrow
Agent hereunder, subject to reasonable approval by the Seller. Upon the
acceptance in writing of any appointment as Escrow Agent hereunder by a
successor Escrow Agent, such successor Escrow Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations under this Escrow Agreement, but shall not be
discharged from any liability for actions taken as Escrow Agent hereunder prior
to such succession. After any retiring Escrow Agent's resignation or removal,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. The retiring Escrow Agent shall transmit all records
pertaining to the Escrowed Shares and shall deliver the Escrowed Shares to the
successor Escrow Agent, after making copies of such records as the retiring
Escrow Agent deems advisable and after deduction and payment to the retiring
Escrow Agent of all fees and expenses (including court costs and reasonable
attorneys' fees) payable to, incurred by, or expected to be incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder.
6. Liability of the Escrow Agent; Indemnification.
(a) The Escrow Agent shall have no liability or obligation
with respect to the Escrowed Shares except for the Escrow Agent's willful
misconduct or gross negligence. The Escrow Agent's sole responsibility shall be
for the safekeeping and disbursement of the Escrowed Shares in accordance with
the terms of this Escrow Agreement. The Escrow Agent shall have no implied
duties or obligations and shall not be charged with knowledge or notice of any
fact or circumstance not specifically set forth herein. The Escrow Agent may
rely upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, which the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by the person or parties purporting to
sign the same and to conform to the provisions of this Escrow Agreement. In no
event shall the Escrow Agent be liable for incidental, indirect, special,
consequential or punitive damages. The Escrow Agent shall not be obligated to
take any legal action or commence any proceeding in connection with the Escrowed
Shares. This Escrow Agreement or the Purchase Agreement, or to appear in,
prosecute or defend any such legal action or proceeding. The Escrow Agent may
consult legal counsel selected by them in the event of any dispute or question
as to the construction of any of the provisions hereof or of any other agreement
related hereto or of its duties hereunder, or relating to any dispute involving
any party hereto, and shall incur no liability and shall be fully indemnified
from any liability whatsoever in acting in accordance with the opinion or
instruction of such counsel. The Seller and the Purchaser, jointly and
severally, shall promptly pay, upon demand, the reasonable fees and expenses of
any such counsel.
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(b) The Escrow Agent is authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrowed Shares, without determination by the Escrow Agent of such court's
jurisdiction in the matter. If any portion of the Escrowed Shares is at any time
attached, garnished or levied under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel selected by it is binding upon it
without the need for appeal or other action; and if the Escrow Agent complies
with any such order, writ, judgment or decree, it shall not be liable to any of
the parties hereto or to any other person or entity by reason of such compliance
even though such order, writ, judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
(c) From and at all times after the date of this Escrow
Agreement, the Purchaser and the Seller, jointly and severally, shall, to the
fullest extent permitted by law and to the extent provided herein, indemnify and
hold harmless the Escrow Agent and each partner, employee, agent and affiliate
of the Escrow Agent (collectively, the "Indemnified Parties") against any and
all actions, claims (whether or not valid), losses, damages, liabilities, costs
and expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action or proceeding (including any inquiry or
investigation) by any person, including without limitation the Purchaser or the
Seller, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Escrow Agreement or any transactions contemplated herein, whether or not
any such Indemnified Party is a party to any such action, proceeding, suit or
the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability finally determined by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnified
Party or the Escrow Agent. If any such action or claim shall be brought or
asserted against any Indemnified Party, such Indemnified Party shall promptly
notify the Purchaser and the Seller in writing, and the Purchaser and the Seller
shall assume the defense thereof, including the employment of counsel and the
payment of all reasonable expenses. Such Indemnified Party shall, in its sole
discretion, have the right to employ separate counsel (who may be selected by
such Indemnified Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party, except that the Seller and/or the
Purchaser shall be required to pay such fees and expenses if (i) the Seller
and/or the Purchaser agree to pay such fees and expenses, or (ii) the Seller
and/or the Purchaser shall fail to assume the defense of such action or
proceeding or shall fail to employ counsel reasonably satisfactory to the
Indemnified Party in any such action or proceeding, (iii) the Seller or the
Purchaser is the plaintiff in any such action or proceeding or (iv) the named or
potential parties to any such action or proceeding (including any potentially
impleaded parties) include both
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Indemnified Party and the Seller and/or the Purchaser, and Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Seller or Purchaser. The Seller and Purchaser shall be jointly and severally
liable to pay reasonable fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (i) shall apply only to
the party so agreeing. All such fees and expenses payable by the Seller and/or
the Purchaser pursuant to the foregoing sentence shall be paid from time to time
as incurred, both in advance of and after the final disposition of such action
or claim. All of the foregoing losses, damages, costs and expenses of the
Indemnified Parties shall be payable by the Seller and the Purchaser, jointly
and severally, upon demand by such Indemnified Party. The obligations of the
Purchaser and the Seller under this Section 8(c) shall survive any termination
of this Escrow Agreement, and the resignation or removal of Escrow Agent shall
be independent of any obligation of the Escrow Agent. The parties hereto agree
that neither the payment by the Seller or the Purchaser of any claim by the
Escrow Agent for indemnification hereunder nor the disbursement of any amounts
to the Escrow Agent from the Escrowed Shares in respect of a claim by the Escrow
Agent for indemnification shall impair, limit, modify, or affect, as between the
Purchaser and the Seller, the respective rights and obligations of the
Purchaser, on the one hand, and the Seller, on the other hand, under the
Purchase Agreement.
7. Arbitration. In the event that there shall be a dispute among the
parties arising out of or relating to this Agreement, or the breach thereof, the
parties agree that such dispute shall be resolved by final and binding
arbitration before one arbitrator in New York, New York administered by the
American Arbitration Association ("AAA"), in accordance with AAA's commercial
rules of practice then in effect. Any award issued as a result of such
arbitration shall be final and binding between the parties thereto, and shall be
enforceable by any court having jurisdiction over the party against whom
enforcement is sought. The arbitrator shall have the authority in his or her
discretion to award to the prevailing party the fees and expenses of such
arbitration (including reasonable attorneys' fees) or any action to enforce an
arbitration award.
8. Notices. All notices and instructions ("Notices") provided for or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally (including delivery by an express delivery service or by facsimile
transmission) or mailed, by certified or registered mail, return receipt
requested, with postage prepaid, and addressed to the parties as follows:
(a) If to the Seller:
SunStar One L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Telephone:
Fax:
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with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Purchaser, addressed to:
Aquis Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone : (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Escrow Agent:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any such Notice shall be effective upon receipt. Any party may change its
address and facsimile number for the purpose of notice by giving notice in
accordance with the provisions of this Section 8.
9. Entire Agreement and Modification. This Escrow Agreement
constitutes the entire agreement among the parties hereto with respect to the
matters contemplated herein and supersedes all prior agreements and
understandings with respect thereto. Any amendment, modification, or waiver of
this Escrow Agreement shall not be effective unless in writing. Neither the
failure nor any delay on the part of any party to exercise
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any right, remedy, power, or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power, or privilege with respect to any occurrence be construed
as a waiver of any right, remedy, power, or privilege with respect to any other
occurrence.
10. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
11. Counterparts. This Escrow Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall be deemed to constitute but one and the same
agreement.
12. Further Assurances. Each of the parties hereto shall execute
such further instruments and take such other actions as any other party shall
reasonably request in order to effectuate the purposes of this Escrow Agreement.
13. Binding Effect. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, executors, and administrators. If any provision of this Escrow
Agreement shall be or become illegal or unenforceable in whole or in part for
any reason whatsoever, the remaining provisions shall nevertheless be deemed
valid, binding and subsisting.
14. Definitions. Capitalized terms used in this Escrow Agreement but
not otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.
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IN WITNESS WHEREOF, this Indemnity Escrow Agreement has been
executed as of the date and year first above written.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
& BALLON LLP
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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a partner
AQUIS COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name:
I.R.S. Tax I.D. No.__________
SUNSTAR ONE, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name:
I.R.S. Tax I.D. No. _________
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