EXHIBIT 10.37
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") dated as of September 13,2005,
is made by and among Xxxxxx and Xxxx LLP, as escrow agent (the "Escrow Agent"),
North Sound Capital LLC (the "Lead Investor"), and Advanced Aesthetics, Inc., a
Delaware corporation ("AAI") with respect to the following:
RECITALS
WHEREAS, AAI is currently seeking to identify an appropriate entity
that is subject to the public reporting requirements of the Securities Exchange
Act of 1934, as amended, for the purpose of merging with, or entering into a
similar transaction with, such entity or a wholly- owned subsidiary of such
entity with the former AAI shareholders holding in excess of 50% of the
outstanding post-transaction capital stock of such entity (such entity the
"Company" and such transaction, the "Public Company Merge");
WHEREAS, the Lead Investor and the other persons listed in Schedule 1
hereto (the "Purchasers") desire to invest in a privately placed equity
financing of the Company following the consummation of the Public Company Merger
upon such terms and subject to such conditions as are further set forth herein
(the "Proposed Financing").
WHEREAS, MI and the Lead Investor desire to establish an escrow account
(the "Escrow Account") with the Escrow Agent into which $15,000,000 will be
deposited and held in escrow in connection with the Proposed Financing; and
WHEREAS, the Escrow Agent has agreed to act as escrow agent on behalf
of AAI and the Lead Investor on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises the parties agree as
follows:
1. APPOINTMENT OF ESCROW AGENT
AAI and the Lead Investor each appoint the Escrow Agent to act as the
escrow agent pursuant to the terms of this Agreement. The Escrow Agent agrees to
act as escrow agent and perform the functions set forth in this Agreement
subject to all its terms.
2. DEPOSITS
The Lead Investor will direct that each Purchaser present to and
deposit with the Escrow Agent funds (in U.S. dollars) for payment of such
Purchaser's subscription amount for the Proposed Financing as set forth in
Schedule 1 hereto, to be paid into the Escrow Account by wire transfer in
immediately available funds (the "Subscription Payments").
3. INVESTMENT OF FUNDS
AU Subscription Payments shall be wired by the Purchasers or deposited
by the Escrow Agent into the Escrow Agent's' interest bearing Agent Account as
follows:
JPMorgan Chase
000 Xxxx Xxxxxx
Xxx Xxxx 00000
For Credit to: Xxxxxx & Xxxx Agent Account
ABA Routing #: 000000000
Account#: 0000000.111
Reference: AAI/[Purchaser Name]
4. PROPOSED FINANCING
(a) ENTRY INTO DEFINITIVE AGREEMENTS. Following (i) a Public Company
Merger (A) with such person and (B) on such terms and conditions as are, in each
case, satisfactory to the Purchasers in their sole discretion and (ii) the
timely filing by the Company with the Securities and Exchange Commission of the
their statements and pro forma financial information required under Item 9.01 of
Form 8-K with respect to AAI, the Company or AAI, as applicable, and the
Purchasers shall work together in good faith to negotiate and enter into
definitive transaction documents (the "Definitive Agreements") and consummate
the Proposed Financing upon terms and conditions satisfactory to them, which
shall, unless otherwise agreed by the parties, include the. following:
(i) A Common Stock and Warrant Purchase Agreement,
substantially in the form attached hereto as Exhibit A with such
changes as the parties shall determine in their sole discretion prior
to the execution thereof (the `Purchase Agreement");
(ii) An Investor Rights Agreement, substantially in the form
attached hereto as Exhibit B with such changes as the parties shall
determine in their sole discretion prior to the execution thereof (the
"Investor Rights Agreement");
(iii) A Common Stock Purchase Warrant, substantially in the
form attached hereto as Exhibit C with such changes as the parties
shall determine in their sole discretion prior to the execution thereof
(the "Warrant");
(iv) A Closing Escrow Agreement, substantially in the form
attached hereto as Exhibit D with such changes as the parties shall
determine in their sole discretion prior to the execution thereof (the
"Closing Escrow Agreement"); and
(v) Such other agreements and documents as the parties shall
deem necessary or appropriate.
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5. DISBURSEMENT
(a) RELEASE OF ESCROWED FUNDS. Upon receipt of a written joint
direction from (i) AAI or the Company and (ii) the Lead Investor (the "Joint
Direction"), the Escrow Agent shall thereupon:
(i) deposit all of the Subscription Payments into an escrow
account to beheld and paid pursuant to the Closing Escrow Agreement and
(ii) disburse all interest accrued on the Subscription
Payments to the applicable Purchasers either by wire transfer or by
check, at the election of the Escrow Agent.
(b) TERMINATION OF THE ESCROW: If the Escrow Agent has not received the
Joint Direction by the close of business on October 31, 2005 (or such later date
as is agreed in writing by AAI and the Lead Investor) or AAI and the Lead
Investor Jointly so instruct the Escrow Agent in writing, then the Escrow Agent
shall promptly return all Subscription Payments to the respective Purchasers
together with any interest accrued thereon.
6. COLLECTED FUND: No portion of the Subscription Payments or the interest
thereon shall be disbursed pursuant to Section 5 unless such funds have been
received by the Escrow Agent in immediately available funds, or such funds have
cleared.
7. LIABILITY OF ESCROW AGENT: In performing any duties under this Agreement the
Escrow Agent shall not be liable to AAI, the Lead investor or any other person
for damages, losses, or expenses, except for gross negligence or willful
misconduct on the part of the Escrow Agent or its employees. The Escrow Agent
shall not incur any such liability for (i) any act or failure to act or for any
act omitted in good faith, or (ii) any action taken or omitted in reliance upon
any instrument including without limitation, any written statement or affidavit
(including, without limitation, a facsimile or an e-mail) that the Escrow Agent
shall in good faith believe to be genuine, nor will the Escrow Agent be liable
or responsible for forgeries, fraud, impersonations, or determining the scope of
any representative authority.
8. FEES AND EXPENSES: It is understood that the Escrow Agent is also acting as
counsel to the Lead Investor and will be paid fees and usual charges agreed upon
for services as counsel, but that the Escrow Agent shall not receive additional
compensation for services as. Escrow Agent pursuant to the terms of this
Agreement. However, in the event that the conditions of this Agreement &e not
properly fulfilled by a person other than the Escrow Agent or 11 AM or the Lead
Investor requests a substantial modification of its terms, or if any controversy
arises, or if the Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this Agreement or its subject matter, AAI or its
successors and assigns (including the Company) shall compensate the Escrow Agent
for such extraordinary services and reimburse the Escrow Agent for all costs,
attorneys' fees and expenses occasioned by such default, delay, controversy or
litigation and the Escrow Agent shall have the tight to retain all documents or
other things of value at any time held by the Escrow Agent pursuant to this
Agreement until such compensation. fees, costs and expenses are paid. AAI agrees
to pay these sums upon demand.
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9. CONTROVERSIES: If any controversy arises between the parties to this
Agreement, or with any other person, concerning the subject matter of this
Agreement, or its terms or conditions, the Escrow Agent shall not determine the
controversy or be required to take any action regarding such controversy. In
such event, in accordance with the provisions of Sections 7 and 10, the Escrow
Agent shall not be liable for interest or damages, except in the case of gross
negligence or willful misconduct on the part of the Escrow Agent or its
employees. Furthermore, the Escrow Agent may at its option file an action of
interpleader requiring the parties to any such controversy to answer and
litigate any claims and rights among themselves. The Escrow Agent is authorized
to deposit with the clerk of the court all documents and fund held in escrow,
except that the Escrow Agent may retain an amount representing all costs,
expenses, charges and attorneys' fees incurred by the Escrow Agent due to the
interpleader action. Upon initiating such action, the Escrow Agent shall be
fully released and discharged of and from all obligation and liability imposed
by the terms of this Agreement.
10. INDEMNIFICATION OF ESCROW AGENT: AAI and its successors and assigns agree to
indemnify and hold the Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including costs of investigation, counsel
fees. and distribution amounts that may be imposed on the Escrow Agent or
incurred by the Escrow Agent in connection with the performance of its duties
under this Agreement, including but not limited to any litigation arising from
this Agreement or involving its subject matter, except for those incurred by
virtue of the Escrow Agent's or its employees' gross negligence or willful
misconduct. The Escrow Agent shall have a first lien on the property and papers
held under this Agreement for such compensation and expenses.
11. TERMINATION: This Agreement shall terminate upon the earlier of the
disbursement of all funds held in the Escrow Account pursuant to the terms of
Section 5 or October 31, 2005 (or such later date as is agreed in writing by AAI
and the Lead Investor), without any notices to any person, unless earlier
terminated pursuant to the terms hereof. Sections 7, 8, 9 and 10 shall survive
expiration or any earlier termination of this Agreement.
12. RESIGNATION OF ESCROW AGENT: The Escrow Agent may resign at any time upon
giving at least ten (10) days prior written notice to AAI and the Lead Investor
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as follows:
the parties shall use their best effort to obtain a successor escrow agent
within ten (10) days after receiving such notice. The successor escrow agent
shall execute and deliver an instrument accepting such appointment and
confirming its agreement with all of the terms of this Agreement, and it shall
thereafter, without further acts, be vested with all the estates, properties,
rights, powers, and duties of the predecessor escrow agent as if originally
named as escrow agent The Escrow Agent shall thereupon be discharged from any
further duties and liabilities under this Agreement, but shall still be entitled
to benefit from the provisions of Sections 7, 8, 9 and 10.
13. TIHRD PARTY BENEFICIARIES: The Purchasers are expressly made third party
beneficiaries of this Agreement.
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14. MISCELLANEOUS:
(a) GOVERNING LAWS JURISDICTION: This Agreement is created by and shall
be construed. under the applicable laws of the State of Connecticut, without
giving effect to its conflicts of laws principles Any proceeding seeking to
enforce any provision of; or based on any right arising out of; this Agreement
shall be brought g any of the parties in the cowls of the State of Connecticut,
County of Fairfield, or, if it has or can acquire jurisdiction, in the United
States District Court for the District of Connecticut, and each party consents
to the jurisdiction of such courts (and of the appropriate appeal to courts) in
any such action or proceeding and waives any objection to venue laid therein.
(b) COUNTERPARTS: This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
(c) NOTICES:
AS TO AAI:
Advanced Aesthetics, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attn: President
AS TO THE ESCROW AGENT:
Xxxxxx and Xxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
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AS TO THE LEAD INVESTOR:
North Sound Capital LLC
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, CF 06831)
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxx, Managing Director and General Counsel
(d) ENTIRE AGREEMENT: This Agreement represents the entire agreement of
the parties with respect to the Escrow Account with the Escrow Agent and the
Escrow Agent is not bound by any other agreements that may exist among the
Purchasers the Lead Investor and/or AAI.
(e) AUTHORIZATION FOR AMENDMENTS: This Agreement shall not be amended
except pursuant to instructions in writing signed by all parties hereto, and
with the written consent of a majority in interest of the Purchasers.
(f) FACSIMILE COPIES: A facsimile or electronic copy of any signed
document(s), amendment, instruction or waiver referred to herein shall be
sufficient for all purposes throughout this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement
as of the date first written above.
ESCROW AGENT:
XXXXXX AND XXXX LLP
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Partner
LEAD INVESTOR:
NORTH SOUND CAPITAL LJ
By:
----------------------------------------------
Name:
Title:
AAI:
ADVANCED AESTHETICS, INC.
By:
----------------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement
as of the date first written above.
ESCROW AGENT:
XXXXXX AND XXXX LLP
By:
---------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Partner
LEAD INVESTOR:
NORTH SOUND CAPITAL LJ
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: General Counsel
AAI:
ADVANCED AESTHETICS, INC.
By:
----------------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement
as of the date first written above.
ESCROW AGENT:
XXXXXX AND XXXX LLP
By:
---------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Partner
LEAD INVESTOR:
NORTH SOUND CAPITAL LJ
By:
----------------------------------------------
Name:
Title:
AAI:
ADVANCED AESTHETICS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxx Xxxxxx
Title: VP
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