1
EXHIBIT 10.8
SHARE PLEDGE AND ESCROW AGREEMENT
THIS SHARE PLEDGE AND ESCROW AGREEMENT (this "Agreement"), dated as of July
22, 1997, is made by and among XXXX X. XXXXX ("Xx. Xxxxx"), XXXXXXX X. XXXXXXXXX
("Xx. Xxxxxxxxx"), XXXXXX X. XXXXXXX ("Xx. Xxxxxxx" and together with Xx. Xxxxx
and Xx. Xxxxxxxxx, the "Pledgors"), ROCKWELL MEDICAL SUPPLIES, LLC, a Michigan
limited liability company ("Creditor"), ROCKWELL MEDICAL TECHNOLOGIES, INC., a
Michigan corporation (the "Company") and XXXXXXXX XXXXXX XXXXXXXX AND XXXX
("Escrow Agent").
RECITALS:
A. Pledgors are the legal and beneficial owners of an aggregate of
2,000,000 shares of the issued and outstanding common stock ("Common Stock") of
the Company.
B. Pursuant to an Asset Purchase Agreement dated as of November 1, 1996,
as amended (the "Asset Purchase Agreement"), by and among Creditor,
Transportation Company (as defined therein), the Family Partnerships (as defined
therein), the Members (as defined therein) and the Company, the Company has
purchased substantially all of Creditor's and the Transportation Company's
assets (the "Purchase Transaction").
C. In connection with the Purchase Transaction and pursuant to the terms
of a Letter Agreement, dated as of April 4, 1997 among the parties to the Asset
Purchase Agreement, the Company has issued to Creditor 1,416,664 Series A
Preferred Shares, $1.00 par value per share (the "Preferred Shares"). Under the
terms of the Company's Articles of Incorporation, the Company has an obligation
to redeem the outstanding Preferred Shares, at a redemption price of $1.00 per
share plus accumulated and unpaid dividends, on January 31, 1998 (the "Mandatory
Redemption Date").
D. Pursuant to the terms of a Non-Recourse Guaranty (the "Guaranty"),
dated as of the date hereof, made by the Pledgers in favor of Creditor, the
Pledgors have guaranteed, on a non-recourse basis, the obligation of the Company
to redeem the Series A Preferred Shares on or before the Mandatory Redemption
Date. The Pledgors desire to pledge 1,478,260 shares (the "Shares") of Common
Stock owned by them (554,348 of which Shares are owned by Xx. Xxxxx, 554,347 of
which Shares are owned by Xx. Xxxxxxxxx, and 369,565 of which Shares are owned
by Xx. Xxxxxxx).
E. The Pledgors and Creditor desire to have Escrow Agent hold the Shares
as escrow agent, to receive Redemption Payments (as defined in Section 8) as
agent for Creditor, and to release the Shares in accordance with the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
2
1. Definitions. In addition to the terms defined above or elsewhere in
this Agreement, the following terms shall have the following meanings, unless
the context otherwise requires:
"Collateral" shall have the meaning assigned to it in Section 2(c).
"Proceeds" shall have the meaning assigned to it under the UCC and, in
any event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Pledgors from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to the Pledgors from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, including, without
limitation, any and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of, or in
exchange for, any of the Shares.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of Michigan.
2. Pledgor's Pledge. As security for the obligations of the Pledgors
under the Guaranty (the "Obligations"), the Pledgors hereby pledge and grant to
Creditor, for its benefit, a continuing security interest in the following:
(a) the Shares, as evidenced by the stock certificates
concurrently delivered to Escrow Agent (the "Certificates"), including all other
types or items of property arising in respect of the Shares which are to be
pledged to Creditor and held as Collateral under this Agreement;
(b) stock powers ("Powers") duly executed in blank; and
(c) the Proceeds of each of the foregoing (the Shares, the
Powers and the Proceeds are collectively referred to as the "Collateral").
3. Appointment of Escrow Agent. Escrow Agent hereby agrees to act as
escrow agent pursuant to this Agreement and acknowledges receipt of the
Certificates and the Powers from the Pledgors. In addition, any additional
Collateral which Escrow Agent shall receive shall be held by Escrow Agent
pursuant to the terms of this Agreement. The parties acknowledge that Escrow
Agent is acting as escrow agent under this Agreement as an accommodation to the
parties and that Escrow Agent is legal counsel to the Company and Xx. Xxxxx (and
not to any of the other parties to this Agreement) in connection with the Asset
Purchase Agreement and the related transactions and represents Xx. Xxxxx and the
Company in various other matters from time to time and may continue to act as
legal counsel to Mr.
2
3
Xxxxx and the Company. The parties consent (i) to Escrow Agent acting as
escrow agent under this Agreement and as legal counsel to Xx. Xxxxx and the
Company and (ii) to Escrow Agent also representing the Pledgors and the Company
and not any of the other parties to this Agreement, including, without
limitation, in connection with any dispute or litigation between any of the
parties to the Asset Purchase Agreement, this Agreement and any related
agreement.
4. Preservation of Collateral. Except as provided in Section 10
below, Creditor shall not be required to insure or take any steps to collect or
realize upon the Collateral or any dividends or other distributions on or in
respect of the Shares. The Pledgors shall keep the Collateral free from all
liens, claims and encumbrances other than those created by this Agreement
(collectively, "Liens"), and pay and discharge, when due, all taxes, levies and
other charges upon the Collateral.
5. Voting Rights; Dividends; Etc. During the term of this Agreement:
(a) So long as the Shares are held by Escrow Agent under this
Agreement, the Pledgors shall be entitled to exercise any and all voting and
other consensual rights pertaining to their respective Shares or any part
thereof and Creditor shall execute and deliver (or cause to be executed and
delivered) to the applicable Pledgor all such proxies and other instruments as
such Pledgor may request for the purpose of enabling such Pledgor to exercise
those voting and other rights which he is entitled to exercise pursuant to the
foregoing.
(b) If the Pledgors shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection with
any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Shares, or otherwise, the applicable
Pledgor agrees to accept the same as agent for Creditor and to deliver the same
forthwith to Escrow Agent in the exact form received, with the endorsement of
such Pledgor when necessary or appropriate and undated stock powers duly
executed in blank, to be held by Escrow Agent as additional Collateral for the
Obligations.
(c) So long as the Shares are held by Escrow Agent under this
Agreement, the Pledgors shall not be entitled to receive or retain any dividends
or distributions paid in respect of such Shares whether paid or payable in cash
or other property, whether in redemption of, or in exchange for such Shares,
whether in connection with a partial or total liquidation or dissolution of the
Company, or whether in connection with a reduction of capital, capital surplus
or paid-in surplus of the Company or otherwise, and any and all such dividends
or distributions shall be forthwith delivered to Escrow Agent to hold as
Collateral and shall, if received by a Pledgor, be received in trust for
delivery to Escrow Agent, be segregated from the other property or funds of such
Pledgor, and be forthwith delivered to Escrow Agent as Collateral in the same
form as so received (with any necessary endorsement).
3
4
6. Pledgor Representations. Each of the Pledgors represents, warrants
and agrees severally, and not jointly, that:
(a) Such Pledgor is the legal and beneficial owner of such
Pledgor's Shares and there are no outstanding options, warrants, convertible
securities or other rights to acquire such Pledgor's Shares or any other capital
stock of the Company.
(b) There are no restrictions upon the transfer of any of such
Pledgor's Shares and such Pledgor has the right to pledge and grant a security
interest in or otherwise transfer such Shares free of any Liens.
(c) This Agreement, and the transfer to Creditor of such
Pledgor's Shares, creates a valid and perfected first priority security interest
in such Shares in favor of Creditor, and all actions necessary or desirable to
such perfection have been duly taken.
(d) Such Pledgor has made his own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and voting rights)
and such Pledgor agrees that Creditor shall not have any responsibility or
liability under this Agreement for informing such Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
(e) This Agreement and the Powers executed by such Pledgor
have been duly authorized, executed and delivered by such Pledgor and each
constitutes a legal, valid and binding obligation of such Pledgor, enforceable
in accordance with its terms, except as limited by bankruptcy laws and equitable
principles.
7. Terms and Conditions of Escrow Agent Duties. Acceptance by Escrow
Agent of its duties under this Agreement is subject to the following terms and
conditions, which all parties to this Agreement hereby agree shall govern and
control the rights, duties and immunities of Escrow Agent:
(a) The duties and obligations of Escrow Agent shall be
determined solely by the express provisions of this Agreement, and Escrow Agent
shall not be required to take any actions except for the performance of such
duties and obligations as are specifically set out in this Agreement.
(b) Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of the Pledgors, Creditor or anyone else
to deliver Collateral to Escrow Agent or otherwise to honor any of the
provisions of this Agreement.
(c) Escrow Agent will be fully protected in acting on, and
relying upon, any written notice, direction, request, waiver, consent, receipt
or other paper or document which
4
5
Escrow Agent in good faith believes to have been signed or presented by the
proper party or parties, but will not act on oral instructions alone of any
party.
(d) Escrow Agent will not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith or
for any mistake in fact or law, or for anything which it may do or refrain from
doing in connection with this Agreement, except for its own gross negligence,
willful misconduct or an act of bad faith.
(e) Escrow Agent may seek the advice of legal counsel in
the event of any dispute or question as to the construction of any of the
provisions of this Agreement or its duties under this Agreement, and it will
incur no liability and will be fully protected in respect of any action taken,
omitted or suffered by it in good faith in accordance with the opinion of such
counsel.
(f) Escrow Agent will be entitled to reimbursement of its
expenses, including, without limitation, the fees and costs of attorneys or
agents which it may find necessary to engage in performing its duties under
this Agreement, all to be paid by the Pledgors and Creditor, and Escrow Agent
will have, and is hereby granted, a prior lien upon any property, cash or
assets held under this Agreement, with respect to its nonreimbursed expenses,
superior to the interests of any other persons or entities.
(g) Escrow Agent will be, and hereby is, jointly and
severally indemnified and saved harmless by the Pledgors, Creditor and the
Company from all losses, costs and expenses (including reasonable attorneys'
fees) which may be incurred by it as a result of its involvement in any
litigation arising from performance of its duties under this Agreement;
provided, that such litigation will not result from any action taken or omitted
by Escrow Agent and for which it will have been adjudged grossly negligent or
guilty of willful misconduct or bad faith; and, such indemnification will
survive termination of this Agreement until extinguished by any applicable
statute of limitations.
8. Release of Collateral Upon Receipt of Payment.
(a) Upon redemption of any portion of the outstanding
Series A Preferred Shares by the Company on or before the Mandatory Redemption
Date (any such redemption payment being referred to herein as a "Redemption
Payment"), Escrow Agent shall release and deliver the Shares to the Pledgors on
a pro rata basis based on the number of Series A Preferred Shares being
redeemed versus the number of Series A Preferred Shares originally issued to
Creditor (for example, if the Company redeems 50% of the Series A Preferred
Shares, Escrow Agent shall release 50% of the Shares to the Pledgors).
(b) The Company shall pay any Redemption Payment to
Escrow Agent and Escrow Agent shall receive such Redemption Payment and shall
remit such Redemption Payment to Creditor or its designee as soon as
practicable but in any event within three business days.
5
6
(c) Any Shares which are released to the Pledgors
pursuant to Section 8(a) above shall not be subject to the pledge created by
this Agreement or to the terms and conditions of this Agreement (including,
without limitation, Section 10 below) and, concurrently with delivery of such
Shares to the Pledgors, Creditor shall execute and deliver to each of the
Pledgors proper instruments acknowledging the release of the pledge created by
this Agreement and transferring such released Shares to the Pledgors.
9. Default. The failure of the Company to redeem the outstanding
Series A Preferred Shares by the Mandatory Redemption Date shall constitute the
"Default" hereunder.
10. Release of Collateral After Default.
(a) In the event of Default, Creditor shall have a period
of 45 days following the Redemption Date (the "Election Period") to elect
either (i) to exercise its rights under the Guaranty and retain the Collateral
then held by Escrow Agent (other than Shares required to be released to the
Pledgors pursuant to Section 8) in full satisfaction and discharge of the
Company's obligation to redeem the Series A Preferred Shares and the Pledgors'
obligations under the Guaranty, or (ii) to relinquish and terminate its rights
under the Guaranty and its security interest in the Collateral and to proceed
against the Company to enforce its rights to have the Series A Preferred Stock
redeemed by the Company. Creditor shall make such election by delivery to
Escrow Agent, the Company and the Pledgors of written notice on or prior to the
expiration of the Election Period specifying which remedy it has elected (the
"Election Notice"). If Creditor fails to deliver such Election Notice as
provided in the preceding sentence on or prior to the expiration of the
Election Period, Creditor shall be deemed to have elected the remedy provided
in clause (ii) above. During the Election Period and prior to the date on
which the applicable parties receive the Election Notice, the Company shall
have the right to cure the Default by redeeming the outstanding Series A
Preferred Shares. In the event the Company cures such Default, Escrow Agent
shall release the Shares to the Pledgors and remit the Redemption Payment to
Creditor in accordance with Section 8 above.
(b) If the Default remains uncured, upon receipt of the
Election Notice, Escrow Agent shall (1) deliver the Collateral to Creditor if
Creditor shall have elected the remedy provided in clause (i) of subsection
10(a) above, or (2) deliver the Collateral to the respective Pledgors if
Creditor shall have elected the remedy provided in clause (ii) of subsection
10(a) above (or if Creditor shall have been deemed to elect such remedy by
failing to deliver an Election Notice on or prior to the expiration of the
Election Period). In the event Collateral is released to the Pledgors pursuant
to clause (2) of this subsection 10(b), Creditor concurrently shall execute and
deliver to each of the Pledgors proper instruments acknowledging the release of
the pledge created by this Agreement and transferring such released Collateral
to the Pledgors.
6
7
11. Termination Date. This Agreement shall terminate on such date
as (a) all of the Obligations shall have been paid or performed in full, or (b)
Escrow Agent shall have released all of the Collateral pursuant to Section 10
above (the "Termination Date").
12. Controversies. If a controversy arises between one or more of
the parties to this Agreement, or between any of the parties to this Agreement
and any person or entity not a party to this Agreement, as to whether or not or
to whom Escrow Agent shall distribute any of the Collateral, or as to any other
matter arising out of or relating to this Agreement or the Collateral, Escrow
Agent shall not be required to determine the controversy and need not make any
distribution of any of such Collateral but may retain the same until the rights
of the parties to the dispute shall have finally been determined by agreement
or by final order of a court of competent jurisdiction; provided, however, that
the time for appeal of any such final order has expired without an appeal
having been made. Escrow Agent shall distribute such Collateral within 15 days
after Escrow Agent has received written notice of any such agreement or final
order (accompanied by an affidavit that the time for appeal has expired without
an appeal having been made). If a controversy of the type referred to in this
Section 12 arises, Escrow Agent may, in its sole discretion, but shall not be
obligated to, commence interpleader or similar actions or proceedings for
determination of the controversy in a circuit court of, or federal district
court in, the State of Michigan.
13. Resignation of Escrow Agent.
(a) Escrow Agent may resign as such following the giving
of 30 days' prior written notice to the other parties to this Agreement.
Similarly, Escrow Agent may be removed and replaced following the giving of 30
days' prior written notice to Escrow Agent by all of the other parties to this
Agreement. In either event, the duties of Escrow Agent shall terminate 30 days
after the date of such notice (or as of such earlier date as may be mutually
agreeable), and Escrow Agent shall then deliver the balance of the Collateral
then in its possession to a successor escrow agent as shall be appointed by all
of the other parties to this Agreement, as evidenced by a written notice filed
with Escrow Agent.
(b) If the other parties to this Agreement are unable to
agree upon a successor escrow agent or shall have failed to appoint a successor
escrow agent prior to the expiration of 30 days following the date of the
notice of resignation or removal, the then acting escrow agent may petition any
court of competent jurisdiction for the appointment of a successor escrow agent
or other appropriate relief, and any such resulting appointment shall be
binding upon all of the parties to this Agreement.
(c) Upon acknowledgment by any successor escrow agent of
the receipt of the then remaining balance of the Collateral, the then acting
escrow agent shall be fully relieved of all duties, responsibilities, and
obligations under this Agreement, except with respect to actions previously
taken or omitted by such escrow agent.
7
8
14. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Entire Agreement; Amendment; Waiver; Headings; Counterparts.
This Agreement and the Guaranty embody the entire agreement and understanding
of the parties with respect to the subject matter of this Agreement. This
Agreement may be amended, modified, superseded, cancelled, renewed or extended
only by a writing signed by all of the parties hereto. No waiver of any
provision of this Agreement shall be valid unless in writing and signed by the
party against whom enforcement of the waiver is sought. The waiver by any party
of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach. The headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may be executed by facsimile
signatures.
16. Successors; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement, their heirs,
personal representatives, successors and assigns. Notwithstanding the
preceding sentence, no party may assign or transfer any of its rights or
delegate any of its obligations under this Agreement without the prior written
consent of each of the other parties hereto.
17. Notices, Etc. All notices, requests and other communications
that are required or may be given under this Agreement shall be made by first
class, certified or registered mail or similarly prompt means at the following
addresses:
If to the Pledgors: Xx. Xxxx X. Xxxxx
c/o Honigman Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Xx. Xxxxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxx Xxxx 00000
Xx. Xxxxxx X. Xxxxxxx
38864 Equestrian South, #49205
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
8
9
With copies to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
If to Creditor: Rockwell Medical Supplies, LLC
c/o Schwartz Law Firm
Suite A
00000 X. Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: President
With copies to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx Law Firm
Suite A
00000 X. Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
If to the Company: Rockwell Medical Technologies, Inc.
00000 Xxxxxxx Xxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx
If to Escrow Agent: Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
18. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. This Agreement may be executed by delivery via facsimile
of a copy of an executed signature page.
19. Governing Law. This Agreement is a contract made under, and shall
be governed by and construed in accordance with, the laws of the State of
Michigan applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State. Each
of the parties consents to be subject to the personal jurisdiction of the courts
of Michigan, including the federal courts in Michigan, which shall be the sole
and exclusive forum for the resolution of all disputes under this Agreement.
9
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
ROCKWELL MEDICAL SUPPLIES, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, Member
By: T. K. INVESTMENT COMPANY, Member
By: XXXXXXXXXXX FAMILY LIMITED
PARTNERSHIP
By:/s/ Xxxxx Xxxxx Xxxxxxxxxxx
-----------------------------
Its: General Partner
------------------------
By: XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP
By:/s/ Krishnapallai Xxxxxxxxxx
-----------------------------
Its: General Partner
------------------------
(Signatures continued on next page.)
10
11
(Signatures continued from previous page.)
ROCKWELL TRANSPORTATION, LLC
By: XXXXXXXXXXX FAMILY LIMITED
PARTNERSHIP, Member
By: /s/ Xxxxx Xxxxx Xxxxxxxxxxx
---------------------------
Its: General Partner
-----------------
By: XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP, Member
By:/s/ Krishnapallai Xxxxxxxxxx
----------------------------
Its:General Partner
-----------------
ROCKWELL MEDICAL TECHNOLOGIES, INC.,
a Michigan corporation
By:/s/ Xxxxxx X. Xxxxxxx
------------------------------
Its:President
-------------------------
XXXXXXXX XXXXXX XXXXXXXX AND XXXX
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Its: Partner
-------------------------
11
