FORM OF CLOSING ESCROW AGREEMENT
Exhibit 8.1
FORM OF CLOSING ESCROW AGREEMENT
This
CLOSING ESCROW AGREEMENT (this
“Agreement”)
dated as of this ___ day of ________, 2017 by and among
Level Brands, Inc., a North
Carolina corporation (the “Company”),
having an address at 0000 Xxxxxx Xxxx., Xxxxx 000 Xxxxxxxxx,
XX 00000; Xxxxxx Xxxxxx & Co. LLC a _________
limited liability company having an address at 00 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000 (“Lead Selling
Agent”), and WILMINGTON TRUST, N.A. (the
“Escrow
Agent”), with its principal corporate trust office at
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
All
capitalized terms not herein defined shall have the meaning
ascribed to them in that certain Final Offering Statement, dated
__, 2017, as amended or supplemented from time-to-time, including
all attachments, schedules and exhibits thereto (the
“Offering
Statement”).
W I T N E S S E T
H:
WHEREAS, the Company proposes to sell
pursuant to the Offering Statement (the “Offering
Statement”) up to a maximum of 2,000,000 shares of its
common stock, par value $0.001 (“Common
Stock”), at an offering price of $6.00 per share (the
“Shares”)
for a maximum offering amount of $12,000,000 on a “best
efforts” basis without any minimum offering amount pursuant
to Regulation A of Section 3(6) of the Securities Act of 1933, as
amended (the “Securities
Act”), for Tier 2 offerings (the “Offering”)
to investors (each, an “Investor”);
and
WHEREAS, Investors will subscribe for
the Shares in the Offering through the delivery of a Subscription
Agreement in the form filed as an exhibit to the Offering Statement
(the “Subscription
Agreement”); and
WHEREAS, subject to all conditions to
closing being satisfied or waived, the closing(s) of the Offering
shall take place from time to time until the earlier of (a) the
date which is _______________ after the Offering Statement was
qualified by the U.S. Securities and Exchange Commission (the
“SEC”
or the “Commission”),
or (b) the date on which the Offering is earlier terminated by the
Company in its sole discretion (the “Termination
Date”) (the earlier of (a) or (b), the
“Final Termination
Date”); and
WHEREAS, there is no minimum offering
amount and all funds shall only be returned to the potential
Investors in the event the Offering is not consummated or if the
Company, in its sole discretion, rejects all or a part of a
particular potential Investor’s subscription;
and
WHEREAS, in connection with the Offering contemplated by
the Offering Statement, the Company entered into a Selling Agency
Agreement between the Company and the Lead Selling Agent, and
certain other agreements, documents, instruments and certificates
necessary to carry out the purposes thereof as described in the
Offering Statement, including without limitation the Subscription
Agreement (collectively, the “Transaction
Documents”);
and
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WHEREAS, the Company and Lead Selling
Agent desire to establish an escrow account with the Escrow Agent
into which the Company and Lead Selling Agent shall instruct the
Investors to deposit checks and other instruments for the payment
of money made payable to the order of “WILMINGTON TRUST, N.A.
as Escrow Agent for Level Brands, Inc. Escrow,” and the
Escrow Agent is willing to accept said checks and other instruments
for the payment of money in accordance with the terms hereinafter
set forth; and
WHEREAS, the Company and Lead Selling
Agent represent and warrant to the Escrow Agent that they have not
stated to any individual or entity that the Escrow Agent’s
duties will include anything other than those duties stated in this
Agreement; and
WHEREAS, the Company and Lead Selling Agent represent
and warrant to the Escrow Agent that a copy of each document that
has been delivered to the Investor and third parties that include
Escrow Agent’s name and duties, has been attached hereto as
Schedule
I.
NOW, THEREFORE, IT IS AGREED as
follows:
1.
Delivery of Escrow
Funds.
(a)
Lead Selling Agent and the Company shall instruct the Investor to
deliver to Escrow Agent checks made payable to the order of
“WILMINGTON TRUST, N.A. as Escrow Agent for Level Brands,
Inc. Escrow,” or wire transfer to:
Wilmington Trust
Company
ABA #:
000000000
A/C #:
[]
A/C
Name: Level Brands - Xxxxxx Xxxxxx
Escrow
Attn:
Xxxxx Xxxxxxx
International
Wires:
M&T
Buffalo, New
York
ABA:
000000000
SWIFT:
XXXXXX00
Beneficiary Bank:
Wilmington Trust
Beneficiary ABA:
000000000
A/C #:
[]
A/C
Name: Level Brands - Xxxxxx Xxxxxx
Escrow
All
such checks and wire transfers remitted to the Escrow Agent shall
be accompanied by information identifying each Investor,
subscription, the Investor’s social security or taxpayer
identification number and address. In the event the
Investor’s address and/or social security number or taxpayer
identification number are not provided to Escrow Agent by the
Investor, then Lead Selling Agent and/or the Company agree to
promptly upon request provide Escrow Agent with such information in
writing. The checks or wire transfers shall be deposited into a non
interest-bearing account at the Escrow Agent entitled
“WILMINGTON TRUST, N.A. as Escrow Agent for Level Brands,
Inc. Escrow” (the “Escrow
Account”).
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(b) The
collected funds deposited into the Escrow Account are referred to
as the “Escrow
Funds.”
(c) The
Escrow Agent shall have no duty or responsibility to enforce the
collection or demand payment of any funds deposited into the Escrow
Account. If, for any reason, any check deposited into the Escrow
Account shall be returned unpaid to the Escrow Agent, the sole duty
of the Escrow Agent shall be to return the check to the Investor
and advise the Company and Lead Selling Agent promptly
thereof.
2.
Release of Escrow
Funds. The Escrow Funds shall be paid by the Escrow Agent in
accordance with the following:
(a) In
the event that the Company advises the Escrow Agent in writing that
the Offering has been terminated (the “Termination
Notice”), the Escrow Agent shall promptly return the
funds paid by each Investor to such Investor without interest or
offset.
(b) [Intentionally
left blank]
(c) At
each Closing, the Company and the Lead Selling Agent shall provide
the Escrow Agent with written instructions regarding the
disbursement of the Escrow Funds in accordance with Exhibit A
attached hereto and made a part hereof and signed by the Company
and the Lead Selling Agent (the “Disbursement
Instructions”).
(d) [Intentionally
left blank]
(e) If
by 5:00 P.M. Eastern time on the Final Termination Date, the Escrow
Agent has not received written Disbursement Instructions from the
Company and Lead Selling Agent regarding the disbursement of the
Escrow Funds in the Escrow Account, if any, then the Escrow Agent
shall promptly return such Escrow Funds, if any, to the Investors
without interest or offset. The Escrow Funds returned to the
Investors shall be free and clear of any and all claims of the
Escrow Agent.
(f) The
Escrow Agent shall not be required to pay any uncollected funds or
any funds that are not available for withdrawal.
(g) [Intentionally
left blank]
(h) The
Lead Selling Agent will provide the Escrow Agent with the payment
instructions for each Investor, to whom the funds should be
returned in accordance with this section.
3.
Acceptance by
Escrow Agent. The Escrow Agent hereby accepts and agrees to
perform its obligations hereunder, provided that:
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(a) The
Escrow Agent may act in reliance upon any signature reasonably
believed by it to be genuine, and may assume that any person who
has been designated by Lead Selling Agent or the Company to give
any written instructions, notice or receipt, or make any statements
in connection with the provisions hereof has been duly authorized
to do so. Escrow Agent shall have no duty to make inquiry as to the
genuineness, accuracy or validity of any statements or instructions
or any signatures on statements or instructions. The names and true
signatures of each individual authorized to act singly on behalf of
the Company and Lead Selling Agent are stated in Schedule II, which is attached
hereto and made a part hereof. The Company and Lead Selling Agent
may each remove or add one or more of its authorized signers stated
on Schedule II by
notifying the Escrow Agent in writing of such change in accordance
with this Agreement, which notice shall include the true signature
for any new authorized signatories. The Escrow Agent shall be
entitled to rely upon any order, judgment, opinion, or other
writing delivered to it in compliance with the provisions of this
Agreement without being required to determine the authenticity or
the correctness of any fact stated therein or the propriety or
validity of service thereof.
(b) The
Escrow Agent may act relative hereto in reliance upon advice of
counsel in reference to any matter connected herewith. The Escrow
Agent shall not be liable for any mistake of fact or error of
judgment or law, or for any acts or omissions of any kind, unless
caused by its willful misconduct or gross negligence.
(c) Lead
Selling Agent and the Company agree, jointly and severally, to
indemnify and hold the Escrow Agent and its employees, officers,
directors and agents harmless from and against any and all claims,
losses, costs, liabilities, damages, suits, demands, judgments or
expenses (including but not limited to reasonable attorney’s
fees) claimed against or incurred by Escrow Agent arising out of or
related, directly or indirectly, to this Escrow Agreement unless
caused by the Escrow Agent’s gross negligence or willful
misconduct. Lead Selling Agent and the Company agree, jointly and
severally, to pay or reimburse the Escrow Agent upon request for
any transfer taxes or other taxes relating to the Escrow Funds
incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent with respect to any amounts that it is
obligated to pay in the way of such taxes. Escrow Agent shall not
incur any liability for performing or not performing any act or
fulfilling any duty, obligation or responsibility hereunder by
reason of any occurrence beyond the control of Escrow Agent,
including, without limitation, war (whether declared or existing),
revolution, insurrection, riot, civil commotion, accident, fire,
explosion, stoppage of labor, strikes and other differences with
employees; the act, failure or neglect of the parties hereto (other
than Escrow Agent) or any of their agents; any delay, error,
omission or default of any mail, courier, facsimile or wireless
agency or operator; or the acts or edicts of any government or
governmental agency or other group or entity exercising
governmental powers. The terms of this paragraph shall survive
termination of this Agreement.
(d) In
the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder, the Escrow Agent shall be entitled to (i)
refrain from taking any action other than to keep safely the Escrow
Funds until it shall be directed otherwise by a court of competent
jurisdiction, or (ii) deliver the Escrow Funds to a court of
competent jurisdiction.
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(e) The
Escrow Agent shall have no duty, responsibility or obligation to
interpret or enforce the terms of any agreement other than Escrow
Agent’s obligations hereunder, and the Escrow Agent shall not
be required to make a request that any monies be delivered to the
Escrow Account, it being agreed that the sole duties and
responsibilities of the Escrow Agent shall be to the extent not
prohibited by applicable law (i) to accept checks or other
instruments for the payment of money and wire transfers delivered
to the Escrow Agent for the Escrow Account and deposit said checks
and wire transfers into the non-interest bearing Escrow Account,
and (ii) to disburse or refrain from disbursing the Escrow Funds as
stated above, provided that the checks received by the Escrow Agent
have been collected and are available for withdrawal. The Escrow
Agent makes no representation as to the validity, value,
genuineness or collectability of any security or other document or
instrument held by or delivered to it.
(f) The
Escrow Agent shall be obligated to perform only such duties as are
expressly set forth in this Agreement. No implied covenants or
obligations shall be inferred from this Agreement against the
Escrow Agent, nor shall the Escrow Agent be bound by the provisions
of any agreement by the Company beyond the specific terms hereof.
Without limiting the foregoing, the Escrow Agent shall dispose of
the Escrow Funds in accordance with the express provisions of this
Agreement, and has not reviewed and shall not make, be required to
make or be liable in any manner for its failure to make, any
determination under the Transaction Documents, or any other
agreement, including, without limitation, any determination of
whether (i) the Company has complied with the terms of the
Transaction Documents, (ii) an investment in the Shares is suitable
for the proposed Investors, or (iii) the Transaction Documents
complies with applicable securities laws.
(g) No provision of
this Agreement shall require the Escrow Agent to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. The Escrow Agent is
acting under this Agreement as a stakeholder only and shall be
considered an independent contractor with respect to each party. No
term or provision of this Agreement is intended to create, nor
shall any such term or provision be deemed to have created, any
trust, joint venture, partnership, or debtor/creditor relationship
between or among the Escrow Agent and any of the
parties.
(h) In no event shall
the Escrow Agent be liable for any lost profits, lost savings or
other special, exemplary, consequential or incidental damages even
if the Escrow Agent has been advised of the likelihood of such loss
or damage.
4. Resignation
and Termination of the Escrow Agent. The Escrow Agent may
resign at any time by giving 30 days’ prior written notice of
such resignation to Lead Selling Agent and the Company. Upon
providing such notice, the Escrow Agent shall have no further
obligation hereunder except to hold as depositary the Escrow Funds
that it receives until the end of such 30-day period. In such
event, the Escrow Agent shall not take any action, other than
receiving and depositing the Investor’s checks and wire
transfers in accordance with this Agreement, until the Company has
designated a banking corporation, trust company, attorney or other
person as successor. Upon receipt of such written designation
signed by Lead Selling Agent and the Company, the Escrow Agent
shall promptly deliver the Escrow Funds to such successor and shall
thereafter have no further obligations hereunder. If such
instructions are not received within 30 days following the
effective date of such resignation, then the Escrow Agent may
deposit the Escrow Funds held by it pursuant to this Agreement with
a clerk of a court of competent jurisdiction pending the
appointment of a successor. In either case provided for in this
paragraph, the Escrow Agent shall be relieved of all further
obligations and released from all liability thereafter arising with
respect to the Escrow Funds.
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5. Termination.
The Company and Lead Selling Agent may terminate the appointment of
the Escrow Agent hereunder upon written notice specifying the date
upon which such termination shall take effect, which date shall be
at least 30 days from the date of such notice. In the event of such
termination, the Company and Lead Selling Agent shall, within 30
days of such notice, appoint a successor escrow agent and the
Escrow Agent shall, upon receipt of written instructions signed by
the Company and Lead Selling Agent, turn over to such successor
escrow agent all of the Escrow Funds; provided, however, that if the Company and Lead
Selling Agent fail to appoint a successor escrow agent within such
30-day period, such termination notice shall be null and void and
the Escrow Agent shall continue to be bound by all of the
provisions hereof. Upon receipt of the Escrow Funds, the successor
escrow agent shall become the escrow agent hereunder and shall be
bound by all of the provisions hereof and the Escrow Agent shall be
relieved of all further obligations and released from all liability
thereafter arising with respect to the Escrow Funds and under this
Agreement.
6. Investment.
All funds received by the Escrow Agent shall be held only in
non-interest bearing bank accounts at WILMINGTON TRUST,
N.A.
7. Compensation.
Escrow Agent shall be entitled, for the duties to be performed by
it hereunder, to a fee of $2,500.00, which fee shall be paid by the
Company upon the signing of this Agreement. In addition,
the Company shall be obligated to
reimburse Escrow Agent for all fees, costs and expenses incurred or
that become due in connection with this Agreement or the Escrow
Account, including reasonable attorney’s fees. Neither the
modification, cancellation, termination or rescission of this
Agreement nor the resignation or termination of the Escrow Agent
shall affect the right of Escrow Agent to retain the amount of any
fee which has been paid, or to be reimbursed or paid any amount
which has been incurred or becomes due, prior to the effective date
of any such modification, cancellation, termination, resignation or
rescission. To the extent the Escrow Agent has incurred any such
expenses, or any such fee becomes due, prior to any closing, the
Escrow Agent shall advise the Company and the Company shall direct
all such amounts to be paid directly at any such Closing.
The terms of this paragraph shall survive termination of this
Agreement.
8. Notices.
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if sent by hand-delivery, by
facsimile (followed by first-class mail), by nationally recognized
overnight courier service or by prepaid registered or certified
mail, return receipt requested, to the addresses set forth
below:
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If to
Lead Selling Agent:
Xxxxxx
Xxxxxx & Co, LLC
00
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Phone:
(000) 000-0000
Email:
xxxxx@xxxxxxx.xxx
with a
copy to:
Gracin
& Xxxxxx LLP
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxx Xxxxxx, Esq.
Phone:
(000) 000-0000
Email:
xxxxxxx@xxxxxxxxxxxx.xxx
If to
the Company:
Xxxx X.
Xxxxxxx
Chief
Financial Officer and Chief Operating Officer
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX
00000
Phone:
(000) 000-0000
Email:
xxxx@xxxxxxxxxxx.xxx
with a
copy to:
Xxxxxxxx Law Group
LLP
000 X.
Xxxxxxx Xxxxxx
Xxxxx
000
Xxxx
Xxxxxxxxxx, XX 00000
Phone:
(000) 000-0000
Email:
xxxxx@xxxxxxxxxx.xxx
If to
Escrow Agent:
WILMINGTON TRUST,
N.A.
000
Xxxxxx Xxxxxx, Xxxxx 0X
Xxx
Xxxx, Xxx Xxxx
Attention: Xxxxx
Xxxxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
Email:
Xxxxxxxx@XxxxxxxxxxxXxxxx.xxx
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9.
General.
(a) This
Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to
agreements made and to be entirely performed within such State,
without regard to choice of law principles and any action brought
hereunder shall be brought in the courts of the State of Delaware,
located in the County of New Castle. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-conveniens
or any similar grounds and irrevocably consents to service of
process by mail or in any manner permitted by applicable law and
consents to the jurisdiction of said courts. Each of the parties
hereto hereby waives all right to trial by jury in any action,
proceeding or counterclaim arising out of the transactions
contemplated by this Agreement.
(b) This
Agreement sets
forth the entire
agreement and understanding of the parties with respect to the
matters contained herein and supersedes all prior agreements,
arrangements and understandings relating thereto.
(c) All
of the terms and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the
parties hereto, as well as their respective successors and
assigns.
(d) This
Agreement may be amended, modified, superseded or canceled, and any
of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a
waiver, by the party waiving compliance. The failure of any party
at any time or times to require performance of any provision hereof
shall in no manner affect its right at a later time to enforce the
same. No waiver of any party of any condition, or of the breach of
any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition
or breach or a waiver of any other condition or of the breach of
any other term of this Agreement. No party may assign any rights,
duties or obligations hereunder unless all other parties have given
their prior written consent.
(e) If
any provision included in this Agreement proves to be invalid or
unenforceable, it shall not affect the validity of the remaining
provisions.
(f) This
Agreement and any modification or amendment of this Agreement may
be executed in several counterparts or by separate instruments and
all of such counterparts and instruments shall constitute one
agreement, binding on all of the parties hereto.
10. Form
of Signature. The parties hereto agree to accept a facsimile
or email PDF transmission copy of their respective actual
signatures as evidence of their actual signatures to this Agreement
and any modification or amendment of this Agreement; provided, however, that each party who produces a
facsimile or email PDF signature agrees, by the express terms
hereof, if requested by another party hereto, to place, promptly
after transmission of his or her signature by fax, a true and
correct original copy of his or her signature in overnight mail to
the address of the other party.
11. Termination.
This Agreement will terminate upon the Final Termination
Date.
12. Automatic
Succession. Any business entity into which the Escrow
Agent may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion
or consolidation to which the Escrow Agent shall be a party, or any
entity succeeding to all or
substantially all of the corporate trust business of the Escrow
Agent, shall be the successor of the Escrow Agent hereunder,
without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
13. Anti-Terrorism/Anti-Money
Laundering Laws.
IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT - To help
the United States government fight the funding of terrorism or
money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that
identifies each person who opens a new account. What this means for
the parties to this Agreement: the Escrow Agent will ask for your
name, address, date of birth, and other information that will allow
the Escrow Agent to identify you (e.g., your social security number or tax
identification number.) The Escrow Agent may also ask to see your
driver’s license or other identifying documents (e.g., passport, evidence of formation
of corporation, limited liability company, limited partnership,
etc., certificate of good standing.)
[The balance of this page intentionally left blank –
signature page follows]
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first set forth above.
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Xxxxxx
Xxxxxx & Co, LLC
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By: ______________________________
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By: _______________________
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Name:
Xxxx X. Xxxxxxx
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Name:
_________
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Title:
CFO/COO
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Title:
______
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WILMINGTON TRUST,
N.A.
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By:
______________________________
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Name:
Xxxxx Xxxxxxx
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Title:
Vice President
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Schedule I
Final
Offering Statement
10
Schedule II
The
Escrow Agent is authorized to accept instructions signed or
believed by the Escrow Agent to be signed by any one of the
following on behalf of the Company and the Lead Selling
Agent.
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Name
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True
Signature
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Xxxx
X. Xxxxxxx
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_____________________
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Xxxxxx
X. Xxxxxxxxxx
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_____________________
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Xxxxxx
Xxxxxx & Co, LLC
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Name
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True
Signature
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Xxxxxxx
Xxxxx
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________________
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Xxxx
Xxxx
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________________
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Xxxxx
Xxxxxx
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________________
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Exhibit A
FORM OF ESCROW DISBURSEMENT INSTRUCTIONS
AND RELEASE NOTICE
Date:
___________, 2017
WILMINGTON
TRUST, N.A.
0000
Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx Xxxxxxx
Dear
Mr./Ms _______:
In
accordance with the terms of paragraph 2(c) of a Closing Escrow
Agreement dated as of [________], 2017 (the "Escrow
Agreement"), by and between Level Brands, Inc. (the
“Company”),
Xxxxxx Xxxxxx & Co, LLC (“Lead Selling
Agent”) and WILMINGTON TRUST, N.A. (the "Escrow
Agent"), the Company and Lead Selling Agent hereby direct
the Escrow Agent to distribute all of the Escrow Funds (as defined
in the Escrow Agreement) in accordance with the following wire
instructions:
________________________:
$
________________________:
$
________________________:
$
Very
truly yours,
By:__________________
Name:
Xxxx X. Xxxxxxx
Title:
CFO/COO
Xxxxxx
Xxxxxx & Co, LLC
By:_____________
Name:
_______________
Title:_______________
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