ESCROW AGREEMENT
RELATED TO SHARES OF XXXXXXX MEDICAL PRODUCTS
THIS ESCROW AGREEMENT is entered into in triplicate
effective the 25th day of February, 1998, by and among
XXXXXXX MEDICAL PRODUCTS, a Utah corporation ("Xxxxxxx");
ZIONS FIRST NATIONAL BANK ("Escrow Agent"); XXXXX X. XXX
("Dye"), C. XXXXXXX XXXXXXXX ("Xxxxxxxx"); XXXXX X. XXXXXXXX
("Xxxxxxxx"); and XXXXXXX X. XXX ("Xxx"). (Dye, Xxxxxxxx,
Xxxxxxxx and Fry are referred to herein individually as
"Seller" and collectively as "Sellers").
WITNESSETH:
WHEREAS, simultaneously with the execution hereof,
Xxxxxxx and Sellers have entered into an Agreement
Concerning the Exchange of Common Stock of Xxxxxxx Medical
Products for All Outstanding Stock of Tri-Med Specialties,
Inc. (the "Exchange Agreement"), pursuant to which Xxxxxxx
has acquired from Sellers all of the outstanding stock of
Tri-Med Specialties, Inc., a Kansas corporation (the
"Company"), in exchange for 1,067,733 shares of the common
stock, par value $.10 per share, of Xxxxxxx (the "Xxxxxxx
Shares");
WHEREAS, in the Exchange Agreement, Sellers have made
numerous representations, warranties, and covenants to
Xxxxxxx, and the Exchange Agreement provides that certain of
the Xxxxxxx Shares are to be held in escrow; and
WHEREAS, the parties hereto desire to transfer and
assign to Escrow Agent 53,386 shares of the Xxxxxxx Shares
(the "Escrowed Shares"), to be held and disposed of by
Escrow Agent according to the terms and conditions provided
herein.
NOW, THEREFORE, in consideration of the mutual
covenants, conditions and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For all purposes of this Agreement,
the terms set forth below shall have the meanings indicated:
(a) "Xxxxxxx" shall mean Xxxxxxx Medical
Products, a Utah corporation.
(b) "Xxxxxxx Common Stock" shall mean fully paid,
nonassessable Xxxxxxx common shares, par value $.10 per
share.
(c) "Xxxxxxx Shares" shall mean the shares of
Xxxxxxx Common Stock being issued to or for the benefit of
Sellers pursuant to the Exchange Agreement.
(d) "Claim" shall mean a written claim of loss or
damages to Xxxxxxx or the Company, alleged to arise from a
breach of warranty, representation, or covenant by Sellers
under the Exchange Agreement, and with respect to which
Xxxxxxx has given Sellers a notice of breach or default
followed by the requisite 30-day or longer period in which
Sellers failed to cure said default or breach, as provided
in Section 10.2(a) of the Exchange Agreement.
(e) "Claim Notice" shall mean a written notice of
a Claim given by Xxxxxxx to Escrow Agent, with a copy
thereof to Sellers.
(f) "Company" shall mean Tri-Med Specialties,
Inc, a Kansas corporation.
(g) "Determined Market Value" shall mean the
average of the closing prices for the Xxxxxxx Common Stock
(as reported in the NYSE Net or the Wall Street Journal) for
the fifty consecutive trading days ending on and including
the day preceding a given date. Whenever Determined Market
Value is to be calculated hereunder, Xxxxxxx will provide a
draft of the calculation to Escrow Agent for Escrow Agent's
review and confirmation.
(h) "Escrow Agent" shall mean Zions First
National Bank.
(i) "Escrowed Shares" shall mean those of the
Xxxxxxx Shares being transferred hereunder to Escrow Agent,
to be held and disposed of by Escrow Agent according to the
terms and conditions provided herein.
(j) "Final Determination" shall mean: (i) a
final order of a court not subject to further right of
appeal, disposing of a Claim and authorizing the
distribution of the Escrowed Shares in some manner; or (ii)
a settlement agreement signed by all of Sellers and Xxxxxxx
by which the applicable Claim is withdrawn, superseded, or
otherwise resolved by the parties.
(k) "Sellers" shall mean Xxxxx X. Xxx, C. Xxxxxxx
Xxxxxxxx, Xxxxx X. Xxxxxxxx, and Xxxxxxx X. Xxx who are all
of the shareholders of the Company.
(l) "Termination Date" shall mean the first to
occur of the following: (a) the date of issuance of the
first audited financial statements for Xxxxxxx and the
Company following the date of this Escrow Agreement; or (b)
that date which is one (1) year following the date of this
Escrow Agreement.
(m) "Unresolved Claim" shall mean a Claim for
which a Claim Notice has been given to Escrow Agent but with
respect to which there has been no Final Determination.
2. Escrowed Shares.
(a) Upon execution of the Exchange Agreement and
this Agreement by all of the parties thereto and hereto,
Xxxxxxx shall properly issue and deliver to Escrow Agent the
Escrowed Shares, in one certificate, receipt of which is
hereby acknowledged by Escrow Agent. The certificate bears
the following restrictive legend:
"The shares of common stock evidenced by this
certificate have not been registered under
the Securities Act of 1933, as amended, nor
have they been registered with any state
securities commission. They have been issued
in reliance upon an exemption from the
requirements for such registration for non-
public offerings. Accordingly, the sale,
transfer, pledge, hypothecation or other
disposition of the shares evidenced hereby or
any portion thereof or interest therein may
not be accomplished in the absence of an
effective registration statement under that
act, or an opinion of counsel satisfactory in
form and substance to the Company to the
effect that such a registration is not
required."
Notwithstanding the foregoing, the parties all
acknowledge and agree that any transfer of the Escrowed
Shares under the provisions of this Agreement shall not
require an opinion of counsel or the filing of a
registration statement.
(b) Beneficial ownership and voting rights in the
Escrowed Shares, during the time that the Escrowed Shares
are held hereunder by Escrow Agent, are allocated among
Sellers in proportion to their relative interests set forth
in Exhibit A, attached to and made a part of this Agreement
by reference.
3. Disposition of Escrowed Shares.
(a) At any time prior to the Termination Date,
Xxxxxxx may give notice of a Claim to Escrow Agent (the
"Claim Notice"), with a copy thereof to Sellers. The Claim
Notice shall set forth:
(i) the dollar amount of the Claim;
(ii) a description of the alleged breach of
covenant, warranty, or representation under the Exchange
Agreement; and
(iii) a statement to the effect that Xxxxxxx
properly gave the written notice of default, followed by the
requisite 30-day or longer period in which Sellers failed to
cure said default or breach, as provided in Section 10.2(a)
of the Exchange Agreement.
(b) If Escrow Agent receives, within sixty (60)
days following the date the Claim Notice is given under
paragraph (a) above, a copy of a complaint and summons which
have been filed in a federal or state court located in Salt
Lake County, Utah, together with proof that said summons and
complaint have been served on Xxxxxxx, which complaint seeks
judicial determination of the Claim filed with Escrow Agent
by Xxxxxxx, then Escrow Agent shall not issue or deliver to
Xxxxxxx any Escrowed Shares on account of the Claim, until a
Final Determination occurs with respect to the Claim.
When a Final Determination occurs, if the Final
Determination provides that a sum is owed to Xxxxxxx on
account of the Claim, Escrow Agent shall, upon receipt of a
copy of the Final Determination (certified by Xxxxxxx or any
one or more of Sellers to be a true and complete copy of the
original, or certified by the clerk of the applicable court)
and without further notice or consent being required,
immediately distribute and transfer to Xxxxxxx a number of
the Escrowed Shares in Determined Market Value (as of the
date of Escrow Agent's receipt of said certified copy of the
Final Determination) equal to the total dollar amount of
said sum owed.
If the Final Determination provides that no sum is owed
to Xxxxxxx on account of the Claim, no Escrowed Shares shall
be distributed to Xxxxxxx with respect to the Claim. For
this purpose, Escrow Agent may rely upon a copy of the Final
Determination as certified by Xxxxxxx or any one or more of
Sellers to be a true and complete copy of the original, or
certified by the clerk of the applicable court.
(c) If Escrow Agent does not receive, within the
60-day period following the date the Claim Notice is given,
a copy of a complaint and summons and proof of service
strictly as provided in paragraph (b) above, Escrow Agent
will promptly, without any further notice or consent being
required, disburse and transfer to Xxxxxxx a number of the
Escrowed Shares in Determined Market Value as of the date of
distribution equal to the dollar amount of the Claim as set
forth in the Claim Notice.
(d) At the Termination Date, Escrow Agent shall
retain in escrow a sufficient number of the Escrowed Shares
in Determined Market Value as of the Termination Date equal
to one and one-quarter times the total dollar amount of all
Unresolved Claims. The remaining Escrowed Shares will,
without further notice or consent being required, be
promptly disbursed, transferred, and delivered in the
respective names of Sellers, in the proportions indicated in
Exhibit A.
(e) Xxxxxxx shall deliver to Escrow Agent a copy
of the first audited financial statements for the Company
issued following the date of this Escrow Agreement, as soon
as they are issued.
4. Cancellation of Shares. Sellers consent to the
cancellation by Xxxxxxx on its records and on the records of
the Division of Corporations of the State of Utah of any and
all Escrowed Shares transferred and delivered hereunder to
Xxxxxxx.
5. Certificate. All certificates to be issued to
Sellers hereunder shall bear the same restrictive legend set
forth in Section 2 above, until the Escrowed Shares have
been registered with the Securities and Exchange Commission.
Escrow Agent shall cooperate with Xxxxxxx and Sellers in
effecting the registration of the Escrowed Shares held by
Escrow Agent, pursuant to Article IX of the Exchange
Agreement.
6. Fees and Expenses.
(a) The basic fees of Escrow Agent (items 1 and 2
in Exhibit B, attached to and made a part of this Agreement
by reference) and related out-of-pocket expenses of Escrow
Agent, together with any cost or expense of Escrow Agent
relating to the registration of the Escrowed Shares with the
Securities and Exchange Commission and under state blue sky
laws, shall be paid by Xxxxxxx. Fees for unusual or
extraordinary services and related out-of-pocket expenses of
Escrow Agent shall be paid one-half by Sellers and one-half
by Xxxxxxx, except that Sellers and Xxxxxxx shall have joint
and several liability to Escrow Agent for such unusual or
extraordinary charges.
(b) Additional compensation shall be paid to
Escrow Agent for any additional or extraordinary service it
may be requested to render hereunder; and Escrow Agent shall
be reimbursed for any out-of-pocket expenses (including,
without limitation, fees of counsel) reasonably incurred in
connection with such additional or extraordinary services.
(c) Escrow Agent shall have a first lien on the
Escrowed Shares held by it hereunder for its compensation
hereunder and for any expenses or counsel fees owed to
Escrow Agent hereunder.
7. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder
shall be deemed to have been duly given if in writing and
delivered personally, mailed, first class, postage prepaid,
registered or certified mail, or delivered to a reputable
overnight courier, charges prepaid, as follows:
If to Xxxxxxx: Xxxxxxx Medical Products
00000 Xxxx Xxxx Xxxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxx,
General Counsel
If to Escrow Agent: Zions First National Bank, N.A.
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to Sellers: Xxxxx X. Xxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
C. Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxx 0000, Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxx
00000 Xxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
Any party may change the address to which such
communications are to be directed to it by giving written
notice to the other parties in the manner provided in this
Section.
8. Modification. No change or modification of this
Agreement, nor of any right, title, interest, or liability
hereunder, shall be binding on Escrow Agent, without Escrow
Agent's written consent.
9. Disagreement. In the event of any disagreement
between Xxxxxxx and Sellers resulting in adverse claims and
demands being made, Escrow Agent shall be entitled at its
option to refuse to comply with any such claim or demand so
long as such disagreement shall continue, and Escrow Agent
shall not be or become liable to Xxxxxxx or Sellers for its
reasonable failure or refusal to comply with such
conflicting or adverse demands; and Escrow Agent shall be
entitled to continue so to refrain and refuse so to act
until:
(a) The rights of the adverse claimants shall
have been finally adjudicated in a court assuming
jurisdiction of the parties and the Escrowed Shares involved
herein or affected hereby; or
(b) All differences shall have been adjusted by
agreement, and Escrow Agent shall have been notified thereof
in a writing signed by both Xxxxxxx and Sellers.
Escrow Agent may confer with legal counsel in the event
of any dispute or question as to its duties hereunder and
shall not be held to any liability for acting in accordance
with advice so received.
10. Escrow Agent Liability. Xxxxxxx and Sellers
further agree that:
(a) Escrow Agent acts hereunder as a depository
only and is not responsible or liable in any manner whatever
for any act to be performed hereunder on the part of either
Xxxxxxx or Sellers, or for any failure to perform by either,
or for the sufficiency, correctness, genuineness or validity
of any instrument deposited with Escrow Agent hereunder, or
with respect to the form of execution of the same, or the
identity, authority or rights of any person executing or
depositing the same;
(b) Except as herein otherwise expressly
provided, Escrow Agent shall be under no obligation
whatsoever to give any notice concerning any payment or any
default hereunder, or any other notice;
(c) Escrow Agent shall not be liable for acting
upon any notice (including a Claim Notice), certification,
request, waiver, consent, receipt or other paper or document
believed by Escrow Agent to be genuine and signed by the
proper party or parties;
(d) Escrow Agent is hereby expressly authorized
to comply with and obey any and all orders, judgments and
decrees of any court, made, filed, entered or issued, with
proper jurisdiction; and in case Escrow Agent shall obey or
comply with any such order, judgment, or decree, Escrow
Agent shall not be liable to any of the parties hereto, or
to anyone else or otherwise by reason of any such
compliance, notwithstanding the fact that any such order,
judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
(e) Escrow Agent shall not be liable, except for
the negligence or willful misconduct of its agents or
employees, and except with respect to claims based upon such
negligence or willful misconduct that are successfully
asserted against Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless
Escrow Agent from and against any and all losses,
liabilities, claims, actions, damages, and expenses,
including reasonable attorneys' fees, arising out of and in
connection with this Escrow Agreement.
11. Voting Rights. For so long as any of the Escrowed
Shares are being held by Escrow Agent pursuant to the terms
of this Agreement, Sellers shall have the right to vote the
Escrowed Shares in proportion to their relative beneficial
ownership of the Escrowed Shares, as set forth in Exhibit A.
Voting shall be by omnibus proxies executed and delivered by
Sellers to Escrow Agent who shall then vote as the record
holder of the Escrowed Shares in behalf of Sellers.
12. Dividend Rights. Any cash dividends paid to
Escrow Agent during the term of this Agreement with respect
to the Escrowed Shares will be promptly disbursed to Sellers
in proportion to their beneficial ownership of the Escrowed
Shares, as shown in Exhibit A. Any shares received by
Escrow Agent as a result of a stock dividend or stock split
up shall be added to and become part of the Escrowed Shares.
13. Miscellaneous.
(a) Titles and Captions. All section titles or
captions to this Agreement are for convenience only and
shall not be deemed part of this Agreement and in no way
define, limit, augment, extend or describe the scope,
content or intent of any part of this Agreement.
(b) Litigation Expenses. If any action, suit or
proceeding is brought by a party with respect to a matter or
matters governed by this Agreement, all costs and expenses
of the prevailing party incident to such proceeding,
including reasonable attorney's fees, shall be paid by the
nonprevailing party.
(c) Authorization. Each individual
executing this Agreement does thereby represent and warrant
to each other person so signing that he or she has been duly
authorized to execute and deliver this Agreement in the
capacity and for the entity set forth where he or she
signs.
(d) Governing Law/Forum Selection This Agreement
shall be governed by and construed in accordance with the
laws of the State of Utah applicable to agreements made and
to be performed entirely within such jurisdiction except to
the extent federal law may be applicable. Any action under
this Agreement may be filed and maintained only as follows:
(i) If filed by any Seller, only in state or
federal courts located within Salt Lake County, State of
Utah, and all parties hereby submit to the jurisdiction of
such courts; or
(ii) If filed by Xxxxxxx or the Company, only
in state or federal courts located within Xxxxxxx County,
State of Kansas, and all parties submit themselves to the
jurisdiction of such courts.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the date first shown above.
XXXXXXX MEDICAL PRODUCTS
Date: 2/25/98 By: Xxxxxx X. ("Xxxxx") Xxxxxxx
Title: Executive Vice President
ZIONS FIRST NATIONAL BANK
Date: 3/4/98 By: Xxxx X. Xxxxxxxxx
Title: Second Vice President
and Trust Officer
SELLERS:
Date: 2/25/98 Xxxxx X. Xxx
Date: 2/25/98 C. Xxxxxxx Xxxxxxxx
Date: 2/25/98 Xxxxx X. Xxxxxxxx
Date: 2/25/98 Xxxxxxx X. Xxx
Exhibit A
Attached to and forming part of Escrow Agreement
Schedule of Sellers
(1) (2) (3)
Escrowed Shares Percentage of
Being Delivered Total Escrowed
Name and Address Herewith Shares
Xxxxx X. Xxx 16,015 30%
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
C. Xxxxxxx Xxxxxxxx 16,015 30%
000 Xxxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx 5,341 10%
00 Xxxxxxxx Xxxx
Xxxxxxxx 0000,
Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxx 16,015 30%
00000 Xxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
TOTAL 53,386 100%
Exhibit B
Attached to and forming part of Escrow Agreement
Escrow Agent Fees
1. Initial Charge: $500
2. Annual Account Administration Charge one year: $1,000,
to be prorated (over 12 months) for the actual
period of time the escrow hereunder is in
existence, with a minimum $500 fee.
3. Extraordinary Charges:
(a) Billable at $75.00 per officer hour
for services substantially expanding
the duties or responsibilities of
the Escrow Agent and not generally
associated (in the experience of
this Bank as Escrow Agent, either as
to type, or frequency, or both) with
the routine administration of
similar Escrow Agreements; or
(b) Services rendered in connection with
a direction by a party entitled to
make such direction.
4. Out-of-Pocket Charges: (will be billed as
they occur)
(a) Publication costs;
(b) Postage;
(c) Counsel fees;
(d) Printing and reproduction of
documents, notices and other
instruments;
(e) Airfreight; telecopy;
(f) Such other out-of-pocket expenses as
may reasonably be incurred.
