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As filed with the Securities and Exchange Commission on February 12, 1998
Registration No. 333-8935
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 4
TO THE FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
HEARTLAND COMMUNICATIONS & MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 2721 54-1799019
- ---------------- -------------------------- --------------
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Classification Identification
Incorporation or Number) Number)
Organization)
----------------------
1320 Old Chain Bridge Road -- Suite 220
McLean, Virginia 22101
(703) 883-1836
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
----------------------
Copy To:
Carl N. Duncan, Esq.
Duncan, Blum & Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
(301) 263-0200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
Registration Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x].
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Item 16. Financial Statements and Exhibits
(a) Financial Statements and Exhibits -- Included in Prospectus and/or
Pre-Effective Amendments No. 1, 2, 3 or 4:
(b) Exhibits:
* 1.1 Managing Placement Agent Agreement between the Registrant
and Northridge Capital Corporation.
* 1.2 Form of Selected Dealer Agreement between Northridge Capital
Corporation and certain Additional Selling Agents.
* 3.1 Certificate of Incorporation.
* 3.2 Amendments to Certificate of Incorporation.
* 3.3 Bylaws of Registrant
* 3.4 Form of stock certificate
* 3.5 Subscription Agreement and Power of Attorney (attached to
the Prospectus as Exhibit A).
* 5.1 Opinion of Counsel as to the legality of the Shares.
* 10.1 Executed Escrow Agreement among the Registrant, the Selling
Agent and George Mason Bank, McLean, Virginia (the Escrow
Agent).
* 10.2 Employment Agreement between Registrant and Gerald Garcia.
(No longer applicable since Mr. Garcia is no longer Chairman
and President and the terms of his employment have
materially changed; see Exhibit 10.68.)
* 10.3 Employment Agreement between Registrant and Michael L.
Foudy.
* 10.4 Employment Agreement between Registrant and Bradford W.
Baker.
* 10.5 Employment Agreement between Registrant and Bradley B.
Niemcek.
* 10.6 Assignment Agreement between Registrant and Heartland
Capital Corporation.
* 10.61 Amended and Restated Teen Magazine Venture Agreement
between Heartland Capital Corporation and Xpress
Ventures, Inc.
* 10.611 License Agreement between Xpress Ventures, Inc. and Gerald
Garcia and Bradford W. Baker.
S-1-1
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* 10.62 Amended and Restated National Sports Magazine Venture
Agreement between Heartland Capital Corporation and Xpress
Ventures, Inc.
* 10.63 Representation Agreement between Heartland Capital
Corporation and ATB Productions, L.L.C.
* 10.64 Amended and Restated Agreement between Registrant and Alvery
Bartlett Fund Management Co. (no longer applicable since
such funding agreement has been terminated -- see Exhibit
10.67).
* 10.65 Revised Supplemental Solicitation Materials.
* 10.66 Credit Agreement between Heartland Capital Corporation and
ATB Productions, L.L.C.
* 10.67 Termination Agreement between Alvery Bartlett Fund
Management and Heartland Capital Corporation.
* 10.68 Employment Agreement between Registrant and Gerald Garcia
(replacing the former Agreement, Exhibit 10.2).
* 10.69 Barter Trade Agreement between ICON International, Inc. and
Registrant.
10.70 Promotional Share Escrow Agreement between George Mason Bank
and Registrant.
24.1 Consent of Counsel.
* 24.2 Consent of Independent Certified Public Accountants.
* 24.3 Consent of Independent Valuation Experts
* These exhibits were filed in the July 26, 1996 Registration Statement
and/or Pre-effective Amendments No. 1 and/or No. 2 thereto filed respectively
July 28, 1997 and December 4, 1997 and, since changes thereto have not been
made, are not filed herewith and are hereby incorporated by reference.
S-1-2
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Pre-Effective
Amendment No. 4 to the Registration Statement to be signed on its behalf by the
Undersigned, thereunto duly authorized, in the City of McLean, and State of
Virginia, on the 10th day of February, 1998.
HEARTLAND COMMUNICATIONS & MANAGEMENT, INC.
By: /s/ Michael L. Foudy
----------------------------
Michael L. Foudy, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in his
respective capacity as officer and/or director of the Registrant on the date
indicated.
Signatures Title Date
/s/ Michael L. Foudy President, CEO February 10, 1998
-------------------- and Director
Michael L. Foudy
/s/Bradford W. Baker Treasurer February 10, 1998
--------------------
Bradford W. Baker
/s/Linda G. Moore Assistant Treasurer February 10, 1998
-------------------- and Chief Financial and
Linda G. Moore Accounting Officer
/s/ Ron Alexenburg Director February 10, 1998
--------------------
Ron Alexenburg
/s/ Thomas Burgum Director February 10, 1998
--------------------
Thomas Burgum
/s/ Kirby Ralston Director February 10, 1998
--------------------
Kirby Ralston
/s/ B. Eric Sivertsen Director February 10, 1998
--------------------
B. Eric Sivertsen
S-1-3
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STOCK ESCROW AGREEMENT
Heartland Communications & Management, Inc. (hereinafter called the
"Company"), George Mason Bank Trust (and administered by its Asset
Management Group) (hereinafter called the "Escrow Agent") and certain of
the SHAREHOLDERS (specifically officers, directors and 10% or greater
shareholders) of the Company (hereinafter called the "Shareholders"), whose
names are set forth in the attached Exhibit A (which is incorporated herein
for all purposes), have made and entered into this stock Escrow Agreement
(hereinafter called the "Agreement").
WHEREAS, the Shareholders are beneficial owners of shares of Common
Stock, $.001 par value of the Company and/or options or warrants or
conversion rights to acquire such shares of the Company as set forth in the
attached Exhibit A. All of the foregoing shares, options or warrants or
conversion rights to acquire such shares of the Company are collectively
referred to herein as the "Common Stock"; and
WHEREAS, the Company desires to make a public offering of the Company
(hereinafter called the "Offering") of 2,500,000 shares of its securities
at $ 5.00 per share pursuant to an application for registration filed with,
among other states, the Securities Commissioner of Texas (hereinafter
called the "Commissioner"); and
WHEREAS, as a condition of registration the Commissioner and certain
other states have required that the Shareholders place in escrow those
shares of Common Stock of the Company set forth in Exhibit A; and
WHEREAS, the Company, the Shareholders and the Escrow Agent desire to
enter into a Stock Escrow Agreement with respect to the escrow of such
Common Stock of the Company.
NOW, THEREFORE, in consideration of the foregoing and the covenants
herein contained, it is agreed as follows:
1. The effective date of this Agreement shall be the date upon which
the Offering is registered for sale with the SEC and certain states,
including Texas, (hereinafter called the "Effective Date") as contained in
the Issuer's Permit to be issued by the Texas Commissioner. The public
offering price referred to in this Agreement is Five Dollars ($ 5.00) per
share of Common Stock (hereinafter called the "Public Offering Price").
2. The securities subject to escrow under this Agreement shall
include: (a) all of those shares of Common Stock as set forth in the
attached Exhibit A; (b) all of the contingent
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shares subject to the February 28, 1997 Share Escrow Agreement between the
Company and GWG Escrow Company and set forth in the attached Exhibit B;
(c) all of the shares subject to warrants (contingent and non-contingent)
issuable by the Company as set forth in the attached Exhibit C; (d) any
stock or cash dividends that may be paid thereon during the term of this
Agreement; (e) any additional securities issued through, or by reason
of, any stock split, exchange of shares, merger, consolidation,
recapitalization, reorganization or similar business combination or
subdivision in substitution for, or in lieu of, any of the securities
subject to this Agreement at the time; and (f) any other dividends or
distributions of any kind with respect to the securities subject to escrow
under this Agreement. All of the foregoing is collectively referred to
herein as the "Escrow Securities".
Any dividends or distributions of any kind with respect to the
Escrowed Securities that may be paid during the term of this Agreement
shall be paid to the Escrow Agent and held pursuant to the terms hereof.
Such dividends or distribution of any kind with respect to the Escrowed
Securities shall be treated as assets of the Company available for
distribution in accordance with the provisions of paragraph 11 hereof. The
Escrow Agent shall place all cash dividends in an interest-bearing account.
The dividends and interest thereon will be disbursed in proportion to the
number of shares released from the escrow in accordance with the terms of
this Agreement, provided that such dividends and interest thereon are not
first distributed in accordance with paragraph 11 hereof.
3. Shares subject to this Agreement are required to be delivered to
the Escrow Agent as outlined below:
(a) Except for the warrants and contingent shares set forth in
Exhibits B and C, the Shareholders shall promptly deliver to the
Escrow Agent certificates of Common Stock in the Company
evidencing the number of shares of Common Stock (or if pertinent,
documents evidencing the right to acquire the shares which are
set forth opposite their names in Exhibit A), as well as any
certificates evidencing any additional shares subject to escrow
(including dividends or distributions of any kind with respect to
the Escrowed Securities) as set forth in Paragraph 2 hereof, for
deposit pursuant to the terms hereof. The Escrow Agent shall
furnish each depositing Shareholder a safekeeping receipt or
other similar instrument reflecting the name and address of the
Shareholder, the number of shares deposited and respective stock
certificate number(s), list of documents evidencing the right to
acquire the shares, and the amount of any cash distributions
deposited in escrow. A copy of any such safekeeping receipt or
similar instrument reflecting such deposit shall be furnished by
the Escrow Agent to the Commissioner for his information at the
same time such receipt or instrument is furnished to the
depositing shareholders. The Escrow Agent shall have no
obligation to solicit the delivery of any cash or distributions
of any kind with respect to the Escrowed Securities, or any
certificates of stock representing any such Escrowed Securities
or any document evidencing the right to acquire any such Escrowed
Securities.
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(b) With regard to the contingent shares set forth in Exhibit B, GWG
Escrow Company (or its successor) (the "Earn-Out" Escrow Agent)
agrees (as acknowledged below) that any shares otherwise subject
to "earn-out" and associated release as to the parties named in
Exhibit B, for the period of time this Agreement continues, will
be submitted to the Escrow Agent under the Agreement.
Thereafter, the shares are no longer contingent in character and,
from that time forward during the term of this Agreement, will be
subject to the escrow terms of this Agreement. Upon receipt from
the Earn-out Escrow Agent of certificates being released, the
Escrow Agent shall furnish each depositing Shareholder a
safekeeping receipt or other similar instrument reflecting the
name and address of the Shareholder, the number of shares
deposited and respective stock certificate number(s), list of
documents evidencing the right to acquire the shares and the
amount of any cash distribution deposited in escrow. A copy of
any such safekeeping receipt or similar instrument reflecting
such deposit shall be furnished by the Escrow Agent to the
Commissioner for his information at the same time such receipt or
instrument is furnished to the depositing Shareholders. The
Escrow Agent shall have no obligation to solicit the delivery of
any cash or distribution of any kind with respect to the Escrowed
Securities, or any certificates of stock representing any such
Escrowed Securities or any document evidencing the right to
acquire any such Escrowed Securities.
(c) With regard to the warrants (contingent and
non-contingent) set forth in Exhibit C, the Company agrees
that any shares otherwise issuable as to the parties named in
Exhibit C pursuant to such warrants, for the period of time
the Agreement continues, will be submitted to the Escrow Agent
under this Agreement. Thereafter, any shares so issued
pursuant to the contingent and non-contingent warrants set
forth in Exhibit C, from that time forward during the term of
this Agreement, will be subject to the escrow terms of this
Agreement. Upon receipt from the Company of certificates
being released, the Escrow Agent shall furnish each depositing
Shareholder a safekeeping receipt or other similar instrument
reflecting the name and address of the Shareholder, the number
of shares deposited and respective stock certificate
number(s), list of documents evidencing the right to acquire
the shares and the amount of any cash distributions deposited
in escrow. A copy of any such safekeeping receipt or similar
instrument reflecting such deposit shall be furnished by the
Escrow Agent to the Commissioner for his information at the
same time such receipt or instrument is furnished to the
depositing Shareholders. The Escrow Agent shall have no
obligation to solicit the delivery of any cash or
distributions of any kind with respect to the Escrowed
Securities, or any certificates of stock representing any such
Escrowed Securities or any documents evidencing the right to
acquire any such Escrowed Securities.
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4. The escrow period shall begin on the Effective Date of this
Agreement and shall terminate as provided herein. The securities deposited
in escrow under this Agreement shall be held in such escrow until the
earliest occurrence of any one of the following:
(a) When the Company in each of any two consecutive fiscal years has
achieved fully diluted net earnings per share for each fiscal
year, computed under generally accepted accounting principles, at
least equal to 10% of the Public Offering Price per share. Such
earnings shall include net income per share after deducting
provisions for any current and deferred income taxes for such
fiscal year and shall not take into consideration any
extraordinary items of income or expense, results of discontinued
operations or credit for tax-loss carry-forward. The amount of
the fully diluted net earnings per share required for the
termination of the Escrow shall be adjusted proportionately to
account for any stock dividends, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation,
reorganization, liquidation or similar combination or subdivision
of the Common Stock of the Company. In the event of merger or
consolidation, the net income per share will be computed upon
earnings of the resulting entity for any fiscal year subsequent
to such merger or consolidation upon the basis of the total
shares of the resulting entity outstanding.
(b) When the Company (during any five consecutive fiscal years) has
accumulated fully diluted net earnings per share, computed under
generally accepted accounting principles, at least equal to 30%
of the Public Offering Price per share. Such earnings shall
include net income per share after deducting provisions for any
current and deferred income taxes for such fiscal year and shall
not take into consideration any extraordinary items of income or
expense, results of discontinued operations or credit for
tax-loss carry-forward. The amount of the fully diluted net
earnings per share required for the termination of the Escrow
shall be adjusted proportionately to account for any stock
dividends, stock split, share combination, exchange of shares,
recapitalization, merger, consolidation, reorganization,
liquidation or similar combination or subdivision of the Common
Stock of the Company. In the event of merger or consolidation,
the net income per share will be computed upon earnings of the
resulting entity for any fiscal year subsequent to such merger or
consolidation upon the basis of the total shares of the resulting
entity outstanding.
(c) When the shares of the Company's Common Stock have traded in a
reliable public market (e.g., either the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market System)
at a price per share of at least one hundred seventy-five percent
(175%) of the Public Offering Price per share of Common Stock for
a period of at least ninety (90) consecutive trading days after
at least one year from the Effective Date.
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(d) (i) When a tender offer or an offer to merge or otherwise
acquire the Company's Common Stock is made pursuant to which all
public shareholders of the Company will receive either cash in
the amount of at least two times the Public Offering Price per
share of Common Stock, or securities listed or to be listed, or
qualified in all respects for listing, on the New York Stock
Exchange, the American Stock Exchange or the National Market
System of the National Association of Security Dealers Automated
Quotation System (NASDAQ), and having a market value at the
effective date of the tender offer, merger or other acquisition
of at least two times the Public Offering Price per share of
Common Stock, if the tender offer, merger or other acquisition is
made and accepted not less than eighteen months nor more than two
years after the Effective Date or (ii) in the event such tender
offer, merger or other acquisition is made and accepted more that
two years after the Effective Date, the public shareholders of
the Company shall be entitled to receive either cash in the
amount of, or such securities equal in value to, at least one and
one-half times the Public Offering price per share of Common
Stock.
(e) If not sooner released pursuant to paragraphs (a), (b), (c) or
(d) of this Section 4, then twenty percent (20%) of the total Escrowed
Securities owned by each shareholder (or by any Permitted Transferees
as hereinafter defined) and deposited in escrow under this Agreement
shall be released by the Escrow Agent to each respective Shareholder
(or Permitted Transferees) each year, commencing on the sixth
anniversary of the Effective Date of this Agreement and on each
anniversary thereafter, with the final twenty percent (20%) of the
Escrowed Securities remaining in escrow to be released to each
respective Shareholder (or Permitted Transferees) on the tenth
anniversary of the Effective Date.
Upon receipt by the Escrow Agent of appropriate proof (pursuant to
Paragraph 5 below) of the occurrence of any one of the events referred to
in subparagraphs (a), (b), (c) or (d) of this paragraph 4, this Agreement
shall automatically terminate and the Escrowed Securities shall be released
immediately by the Escrow Agent and delivered to the respective
Shareholders (or their Permitted Transferees). Upon such delivery to the
Shareholders (or their Permitted Transferees), the Escrow Agent shall be
relieved of all responsibility hereunder.
5. (a) For purposes of this Agreement, the Company shall be deemed
to have satisfied the earnings requirements of subparagraph (a) of
Paragraph 4 at such time as an independent certified public accountant
certifies the Company's Statements of Operations which show the required
10% fully diluted earnings per share of Common Stock of the Company in any
two consecutive fiscal years, as described in said subparagraph. Upon
receipt by the Escrow Agent of a copy of such certified Statements of
Operations, the Escrow Agent shall release the Escrowed Securities to the
respective Shareholders (or their Permitted
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Transferees). A copy of such certified Statements of Operations shall be
furnished to the Commissioner for his information at the same time they are
furnished to the Escrow Agent.
(b) For purposes of this Agreement, the Company shall be deemed to
have satisfied the earnings requirements of subparagraph (b) of Paragraph 4
above at such time as an independent certified public accountant certifies
the Company's Statements of Operations which show the required 30%
accumulated fully diluted net earnings per share of outstanding Common
Stock of the Company in any five consecutive fiscal years as described in
said subparagraph. Upon receipt by the Escrow Agent of copies of such
certified Statements of Operations, the Escrow Agent shall release the
Escrowed Securities to the respective Shareholders (or their Permitted
Transferees). A copy of such certified Statements of Operations shall be
furnished to the Commissioner for his information at the same time they are
furnished to the Escrow Agent.
(c) For purposes of this Agreement, the Company's Common Stock shall
be deemed to have satisfied the trading price requirements of subparagraph
(c) of Paragraph 4 at such time as the Escrow Agent shall have received an
affidavit of an executive officer of the Company stating that such
requirement has been met, and including with such affidavit, a copy of the
relevant trading statistics. Upon receipt of such proof, the Escrow Agent
shall release the Escrowed Securities to the respective Shareholders (or
their Permitted Transferees). A copy of any document or documents
constituting proof that such trading requirements have been met shall be
furnished to the Commissioner for his information at the same time they are
furnished to the Escrow Agent.
(d) For purposes of this Agreement, the Company's Common Stock shall
be deemed to have satisfied the tender offer/acquisition price requirement
of subparagraph (d) of Paragraph 4 at such time as the Escrow Agent shall
have received an affidavit of an executive officer of the Company stating
that such requirement has been met. Upon receipt of such proof, the Escrow
Agent shall release the Escrowed Securities to the respective Shareholders
(or their Permitted Transferees). A copy of any document or documents
constituting proof that such price requirements have been met shall be
furnished to the Commissioner for his information at the same time they are
furnished to the Escrow Agent.
6. During the existence of this Agreement, the Shareholders and all
Permitted Transferees agree that the securities subject to escrow, or any
interest therein, may not in any way be offered for sale, sold, pledged,
hypothecated, transferred, assigned or in any other manner disposed of
(except by laws of inheritance or by will) by or for the account of any of
the Shareholders or Permitted Transferees except as otherwise provided in
this Agreement.
7. The Shareholders may transfer any Escrowed Securities among
themselves or among related individuals (as hereinafter defined), with or
without consideration. Any securities so transferred under this Paragraph
7 shall remain subject to all of the terms and provisions of this
Agreement. As a condition precedent to any such transfer, any transferees
not previously a party to this Agreement shall execute in duplicate a
declaration in the form
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attached hereto as Exhibit D and deliver one copy to the Escrow Agent and
one copy to the Commissioner at the time of such transfer. For the
purposes of this Paragraph 7, the term "related individual" means the
spouse, brothers, sisters, ancestors, lineal descendants or spouses of
lineal descendant of any Shareholders who are parties to this Agreement,
including a trustee or trustees under a written agreement for the benefit
of any such related individuals.
8. This Agreement shall inure to the benefit of and shall be binding
upon the Company, and its successors and assigns, and the Shareholders and
their respective heirs, personal representatives and assigns.
9. If, during the term of this Agreement, there is any merger,
consolidation, reorganization, or similar exchange of shares by the
Company, the Escrow Agent shall, upon receipt of written instructions from
the Company, transfer the Escrowed Securities to the designee named in such
instruction letter in exchange for stock certificates evidencing the new
securities issued in lieu thereof. The new securities shall remain in
escrow under this Agreement and shall be accorded the same treatment under
this Agreement as the securities surrendered, and all earnings and value
tests provided in this Agreement shall be adjusted to confirm to the
exchange ratio of the new securities for the surrendered securities.
10. During the term of this Agreement, each Shareholder and Permitted
Transferee shall retain their right to vote (in person, by proxy or
otherwise) their respective securities deposited in escrow, to the same
extent as if such securities were not escrowed.
11. During the existence of this Agreement, the Shareholders and
Permitted
Transferees agree that in the event of dissolution or liquidation of the
Company, either voluntary or involuntary, their right to receive any
dividends or distribution of assets in liquidation with respect to the
Escrowed Securities shall be subordinated, and that no payments in
liquidation shall be made on the Escrowed Securities until such time as the
holders of the shares sold in the Offering shall have received an amount at
least equal to at least one hundred (100%) of the Public Offering Price per
share, adjusted for any subsequent stock dividends, stock splits or
combinations.
12. During the term of this Agreement, the Company shall cause a
summary of the terms of this Agreement to be set out in any registration
statement, annual report, prospectus, proxy statement or other similar
materials used by shareholders or investors in making informed decisions
concerning the Company and in order to provide full disclosure.
13. The Escrow Agent is authorized to act in reliance upon the
sufficiency, correctness, genuineness or validity of any instrument or
document or other writing submitted to it hereunder and shall have no
liability with respect to said matters. The Escrow Agent shall not be
responsible for the marketability of any title. The Escrow Agent shall not
be liable for any error in judgment or for any act done or omitted by it in
good faith.
14. The Shareholders, jointly and severally, agree to indemnify and
hold harmless
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the Escrow Agent from any costs, damages, expenses, losses or claims,
including reasonable attorney's fees, which the Escrow Agent may incur or
sustain as a result of or arising out of this Agreement or the Escrow
Agent's duties relating thereto, except as caused by the Escrow Agent's
gross negligence or willful misconduct, and the Shareholders, jointly and
severally, agree to pay such costs, damages, expenses, losses or claims to
the Escrow Agent on demand.
15. In the event of any disagreement or the presentation of adverse
claims or demands in connection with the Escrowed Securities or any other
funds or documents held hereunder, the Escrow Agent shall, at its option,
be entitled to refuse to comply with any such claims or demands during the
continuance of such disagreements and may refrain from delivering any item
affected thereby, and in so doing, the Escrow Agent shall not become liable
to the Shareholders or their Permitted Transferees, or to any other person,
due to its failure to comply with any such adverse claim or demand. The
Escrow Agent shall be entitled to continue, without liability, to refrain
and refuse to act:
(a) Until all the rights of the adverse claimants have been finally
adjudicated by a court having jurisdiction of the parties and the items
affected thereby, after which time the Escrow Agent shall be entitled to
act in conformity with such adjudication; or
(b) Until all differences shall have been adjusted by agreement and
the Escrow Agent shall have been notified thereof and shall have been
directed in writing signed jointly or in counterpart by the Shareholders
and/or their Permitted Transferees and by all persons making adverse claims
or demands, at which time the Escrow Agent shall be protected in acting in
compliance therewith.
16. The Shareholders and/or the Company, jointly and severally, agree
to pay any and all fees and expenses, including reasonable attorney's fees,
incurred by the Escrow Agent as a result of the escrow of the Escrowed
Securities subject to this Agreement, including, but not limited to, the
Escrow Agent's annual fee for the performance of its duties hereunder. The
Company may not pay any fees or expenses associated with the escrow under
this Agreement.
17. The Escrow Agent agrees to administer this Agreement in strict
compliance with all of the terms and conditions contained herein, the
Company agrees to provide the Escrow Agent with all information necessary
to facilitate the administration of the Agreement.
18. The Escrow Agent may, upon not less than sixty days prior written
notice to the company, to each of the Shareholders, and to the State
Securities Commissioner of Texas (the "Commissioner"), resign as Escrow
Agent hereunder. In such event, the Company and the Shareholders shall,
before the effective date of such resignation, enter into a new escrow
agreement, in form and substance identical to this Agreement, with a
substitute escrow agent. Any successor escrow agent must be satisfactory
to the Commissioner. If the Company and the Shareholders fail to enter
into such a new escrow agreement and appoint a successor escrow agent
within sixty days after the Escrow Agent has given notice of its
resignation, the Escrow Agent then serving under this Agreement shall be
under no obligation to turn over the
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Escrowed Securities until such new escrow agreement has been executed and a
successor escrow agent has been appointed, nor shall the Escrow Agent be
liable to the Shareholders for not so turning over the Escrowed Securities.
19. A legend in substantially the following form has been or will be
placed on any certificate or other documents evidencing the Escrowed
securities:
The securities evidenced by this certificate are subject to
restrictions on their sale, pledge or other transfer as set forth
in the Stock Escrow Agreement dated February 9, 1998, by and
among the Company, George Mason Bank Trust and Asset Management
Group (the Escrow Agent) and the Shareholders (as defined in such
Agreement) of the Company. The Company will furnish to the
record owner of this certificate a copy of said Agreement without
charge upon written request to the Company at its principal place
of business or registered office. The rights of the holder of
this certificate are subject to all of the terms and conditions
of said Agreement, by which the holder, by acceptance of this
certificate, agrees to be bound.
Stop transfer instructions to the Company's transfer agent have been or
will be placed with respect to the Escrowed Securities so as to restrict
their sale, pledge or other transfer. The foregoing legend and stop
transfer instructions will be placed with respect to any new certificate(s)
or other document(s) issued upon presentment of any original certificates
or other documents evidencing the Escrowed Securities, as well as with
respect to any other securities which may be issued and constitute Escrowed
Securities under this Agreement.
[The remainder of this page left intentionally blank.]
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20. All notices, requests, demands and other communications
required or contemplated hereunder shall be in writing and shall be deemed
to have been duly given on the earlier of (i) when delivered to the party
to whom addressed or (ii) three business days after deposit in the U.S.
mail, sent by registered or certified mail return receipt requested,
prepaid and addressed to the parties, their successors in interest or their
permitted assignees at the following address (or at such other addresses as
the parties may designate by written notice in the foregoing manner):
To Company: Heartland Communications & Management, Inc.
1320 Old Chain Bridge Road, Suite 2200
McLean, VA 22101
Attn: Michael L. Foudy, President
To Escrow Agent: George Mason Bank
Trust and Asset Management Group
7787 Leesburg Pike, Second Floor
Falls Church, VA 22043
Attn: Donald F. Yetter
Senior Trust Officer
To Commissioners: Hon. Denise Voight Crawford
State Securities Commissioner
State Securities Board
P.O. Box 13167
Austin, TX 78711-3167
To Shareholders: In accordance with the addresses set forth on the
signature pages of this Agreement, or as such
addresses may be amended pursuant to this
subparagraph.
[The remainder of this page left intentionally blank.]
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<PAGE>
21. If for any reason the offering does not become registered in
Texas or if the offering is terminated for any reason and is not
successfully completed, this Agreement shall be void and of no effect and
the Escrow Agent, upon notice from the Company of such nonregistration,
termination or unsuccessful completion, shall promptly release any Escrowed
Securities held under this Agreement to the respective Shareholders (or
their Permitted Transferees).
21. This Agreement shall be construed in accordance with and governed
by the laws of the State of Virginia.
22. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be
an original, but all such counterparts shall together constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the 9th day of February, 1998.
COMPANY:
Heartland Communications & Management, Inc.
--------------------------------------------
By: Michael L. Foudy
Title: President
ATTEST:
ESCROW AGENT:
- -------------------------- George Mason Bank
--------------------------------------------
By: Donald F. Yetter
Title: Senior Trust Officer/Trust and
Asset Management Group
SHAREHOLDERS: Address:
- -------------------------- National Record Company, 460 W. 42nd Street,
Ron A. Alexenburg New York, NY 10036
- -------------------------- 11438 Links Drive, Reston, VA 20019
Tom Burgum
- -------------------------- HCMI, 1320 Old Chain Bridge Road, Suite 200,
Michael L. Foudy McLean, VA 22101
- -------------------------- HCMI, 1320 Old Chain Bridge Road, Suite 200,
Bradley B. Niemcek McLean, VA 22101
- -------------------------- Ralston Advertising, 7630 Cass Street, Omaha,
Kirby Ralston NE 68114
- -------------------------- Telecom Towers, 1525 Wilson Blvd., Suite 500,
B. Eric Sivertsen Arlington, VA 22209
- -------------------------- 2400 Briarwest Blvd., #1907, Houston, TX
77077
Gerald Garcia
- -------------------------- 1320 Old Chain Bridge Road, Suite 220,
Michael L. Foudy, Preisdent McLean, VA22182
Heartland Capital Corporation
9
<PAGE>
ACKNOWLEDGED AND AGREED
AS TO THE SECTION 3(b) OF THIS AGREEMENT
"EARN-OUT" ESCROW AGENT
GWG Escrow Company
- --------------------------
By: Katie McGowan
Title: President and CEO
9A
<PAGE>
EXHIBIT "A"
SECURITIES TO BE ESCROWED
<TABLE>
<CAPTION>
Name of Shareholder Certificate No.(s) Number of Shares
<S> <C> <C>
Ron A. Alexenburg 469 12,500
Tom Burgum 483 12,500
Michael L. Foudy 482 258,172
467 12,500
Gerald Garcia 370 25,980
371 2,707
369 14,289
383 10,825
Bradley B. Niemcek 443 5,413
Kirby Ralston 470 12,500
B. Eric Sivertsen 468 12,500
------
Total 379,886
------
------
</TABLE>
10
<PAGE>
EXHIBIT B
CONTINGENT SHARES SUBJECT TO FUTURE ESCROW
UNDER THIS ESCROW AGREEMENT
<TABLE>
<CAPTION>
Name of Shareholder Number of Contingent Shares
<S> <C>
Ron A. Alexander --
Tom Burgum --
Michael L. Foudy 934,329
Gerald Garcia 194,706
Bradley B. Niemcek 19,588
Kirby Ralston --
B. Eric Sivertsen --
---------------
Total 1,148,623
---------------
---------------
</TABLE>
11
<PAGE>
EXHIBIT C
SHARES ISSUABLE BY THE COMPANY
UNDER WARRANTS (CONTINGENT AND NON-CONTINGENT)
UNDER THIS ESCROW AGREEMENT
<TABLE>
<CAPTION>
Shares Under Shares Under
Name of Shareholder Non-Contingent Contingent Warrants
<S> <C>
Ron A. Alexenburg -- --
Tom Burgum -- --
Michael L. Foudy 867,500 --
Heartland Capital Corporation 1,236,000 --
Gerald Garcia 165,500 --
Bradley B. Niemcek 12,500 75,000
Kirby Ralston -- --
B. Eric Sivertsen 25,000 --
------------ --------
Total 1,070,500 75,000
------------ --------
------------ --------
</TABLE>
12
<PAGE>
EXHIBIT "D"
Declaration of Transferees
WHEREAS, the undersigned has acquired _______________ shares of Common
Stock (the "Shares") of Heartland Communications & Management, Inc. (the
"Company") from __________________, a shareholder of the Company; and
WHEREAS, such shares are subject to certain transfer and other
restrictions imposed by the attached Stock Escrow Agreement by and among
the Company, George Mason Bank Trust and Asset Management Group (Escrow
Agent) and certain shareholders of the Company (the "Agreement");
NOW, THEREFORE, the undersigned acknowledges and agrees:
(1) That the undersigned has received a copy of the Agreement;
(2) That in acquiring the above-described shares the undersigned is a
party to the Agreement;
(3) That the Shares acquired will be subject to the Agreement while
it remains in force and will be held in escrow by the Escrow
Agent named therein; and
(4) That the undersigned will comply with the terms of the Agreement.
Dated this ______ day of ____________________, 199____.
------------------------------
Signature
------------------------------
Name Typed or Printed
------------------------------
Stock Certificate Number(s)
------------------------------
Address
------------------------------
Address
------------------------------
Telephone
13
<PAGE>
EXHIBIT 24.1
We hereby consent to the reference to us in the prospectus constituting
part of Pre-Effective Amendment No. 4 to this Registration Statement for
Heartland Communications & Management, Inc. under the caption "Legal Matters."
/s/ Duncan, Blum & Associates
DUNCAN, BLUM & ASSOCIATES
Bethesda, Maryland
February 11, 1998
