1
EXHIBIT 6.7
ESCROW AGREEMENT
AGREEMENT made this 31st day of March, 1992 by and among Vital Living
Products, Inc., a Delaware corporation (the "Company"), with its offices at 0000
Xxxxxx Xxxx Xxxxx, Xxxxx X, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Xxxxx X. Xxxxxx, of
000 Xxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000, Xxxxx X. Xxxx, of 0000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Xxxxxx X. Xxxxxx, of 000 Xxxxxx
Xxxxx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000, Xxxxx X. Xxxxx, of 0000 Xxxxxxxxxx
Xxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000, CTF, Inc., a Minnesota corporation, with
its offices at 00000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, X.X.
Xxxx & Associates, Inc., an Illinois Corporation ("Xxxx" or the
"Representative") with its offices at 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx 00000, and First Union National Bank of North Carolina, with its
offices at Two First Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 as escrow
agent (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Company has filed a registration statement, as amended
from time to time, on Form S-18 (the "Registration Statement"), with the
Securities and Exchange Commission (the "Commission") in connection with the
Company's proposed public offering of Units, each Unit consisting of three
shares of Common Stock, $0.01 par value per share, and one warrant to purchase
one share of Common Stock;
WHEREAS, the Company has agreed to sell the Units pursuant to its
Registration Statement to the underwriters, for whom Xxxx will serve as the
representative, subject to the terms and conditions set forth in the
Underwriting Agreement of even date herewith (the "Underwriting Agreement");
WHEREAS, the Representative has requested, and the Underwriting
Agreement will provide as one of the conditions thereof, that Xxxxx X. Xxxxxx,
Xxxxx X. Xxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx and CTF, Inc. (collectively, the
"Stockholders") as principal stockholders of the Company, deposit into escrow in
accordance with the terms and conditions hereof an aggregate of 3,303,375 shares
of Class A Preferred Stock, par value $.01 per share, (the "Class A Preferred
Stock") of the Company beneficially owned by them;
WHEREAS, the parties hereto desire to have the Class A Preferred Stock
owned by the Stockholders, together with any Distributions (as hereinafter
defined) (collectively, the "Escrowed Items") held in escrow and then released
by the Escrow Agent in accordance with the terms set forth herein;
NOW THEREFORE, in consideration of the premises and mutual covenants,
conditions and promises contained herein and as an inducement for the
Representative to execute a certain Underwriting Agreement by and between the
Company and the Representative, the parties hereby agree as follows:
2
1. Appointment of the Escrow Agent. The parties hereto appoint and
designate First Union National Bank of North Carolina as the Escrow Agent to
serve as escrow agent with respect to the Escrowed Items subject to the terms
and conditions of this Escrow Agreement, and the Escrow Agent hereby accepts
that appointment.
2. Delivery of Escrowed Items to the Escrow Agent.
(a) The Stockholders hereby assign to the Escrow Agent the number of
shares of Class A Preferred Stock of the Company owned by them set forth below:
Xxxxx X. Xxxxxx 660,675 shares
Xxxxx X. Xxxx 660,675 shares
Xxxxxx X. Xxxxxx 660,675 shares
Xxxxx X. Xxxxx 165,169 shares
CTF, Inc. 1,156,181 shares
A certificate or certificates representing such Class A Preferred Stock shall be
delivered to the Escrow Agent concurrent with the execution hereof and shall be
accompanied by blank stock powers duly signed and with signature guarantees.
(b) The Escrow Agent will hold the Escrowed Items in escrow for the
benefit of the Representative, the Company and the holders of record of all of
the Company's outstanding securities at the date hereof and during the Escrow
Period according to the terms and subject to the conditions contained in this
Escrow Agreement.
(c) During the Escrow Period, the Escrow Agent shall receive all of the
money, stock dividends, additional shares and distributions of stock or noncash
property of every kind, hereafter distributed on or in respect of the Class A
Preferred Stock ("Distributions"), whether in addition to or in substitution for
the Class A Preferred Stock, in connection with any merger, consolidation, sale
of assets, exchange of shares, reclassification or otherwise, and such
Distributions are hereby deemed assigned, transferred and delivered to the
Escrow Agent to be held pursuant to this Escrow Agreement.
(d) For so long as the Escrowed Items are held by the Escrow Agent, the
respective Stockholders shall each be entitled to all of the rights and
privileges accorded record and beneficial owners of the securities of the
Company with respect to the Class A Preferred Stock deposited by each
Stockholder as set forth above and any additional shares or securities pursuant
to any Distribution, provided, however, the Stockholders each agree that during
the Escrow Period, such shares of Class A Preferred Stock shall not be
converted, in whole or in part, into shares of Common Stock of the Company.
3. Representations and Warranties of Stockholders. The Stockholders
each represent and warrant, but only as to himself or itself, that:
2
3
(a) Such Stockholder has all right, title and interest in and to his or
its shares of the Class A Preferred Stock deposited into escrow hereby free and
clear of any liens, claims, security interests and other encumbrances.
(b) The shares of Class A Preferred Stock owned by such Stockholder are
duly authorized and issued, validly outstanding, and fully paid and
nonassessable and are not subject to any unfulfilled contract, agreement or
commitment made by such Stockholder or to which such Stockholder is a party.
(c) The Escrowed Items deposited by or on behalf of such Stockholder
shall not be assigned, sold, hypothecated, pledged, transferred or otherwise
disposed of (except by will, descent, or operation of law) until released from
escrow.
4. Term. This Escrow Agreement shall become effective upon the closing
of the initial public offering of the Company's securities pursuant to the
Company's Registration Statement and shall continue in effect until the earlier
of: (i) the disbursement by the Escrow Agent of all of the Escrowed Items in
accordance with the terms hereof, or (ii) completion by the Company of its
audited financial statements for the fiscal year ended April 30, 1997 (the
"Escrow Period").
5. Escrow Terms.
(a) The Escrow Agent shall be instructed to release the Escrowed Items,
or the appropriate portion thereof, to the respective Stockholders in accordance
with joint written instructions executed by the Company and Xxxx
("Instructions"), upon the occurrence of the following:
(i) In the event that the Company's audited financial
statements for any two of its first five full fiscal years hereafter
(ending on April 30 of any such year which fiscal year may not be
changed hereafter without the consent of Xxxx) reflect net income,
determined in accordance with generally accepted accounting principles
applied on a consistent basis, of at least $1,250,000 per annum, one
third (1/3) of the Escrowed Items deposited by or on behalf of each
Stockholder shall be released from escrow and returned to the
Stockholder who originally deposited the Class A Preferred Stock in
escrow hereunder.
(ii) In the event that the Company's audited financial
statements for any two of its first five full fiscal years beginning
with the fiscal year ending April 30, 1993 (ending on April 30 of any
such year which fiscal year may not be changed hereafter without the
consent of Xxxx) reflect net income, determined in accordance with
generally accepted accounting principles applied on a consistent basis,
of at least $2,500,000 per annum, all of the remaining Escrowed Items
deposited by or on behalf of each Stockholder shall be released from
escrow and returned to the Stockholder who originally deposited the
Class A Preferred Stock in escrow hereunder.
3
4
(iii) The Escrow Agent shall be instructed to release any
Escrowed Items, including any Distributions, remaining in escrow at the
expiration of the Escrow Period to the Company. Any shares released to
the Company in accordance with this Section 5 shall be redeemed by the
Company at par value ($.01 per share) and any other moneys or property
comprising a portion of the Distributions shall be and become the sole
property of the Company.
(b) In the event the Escrow Agent receives Instructions for the
disposition of any or all of the Escrowed Items, the Escrow Agent shall give
written notice of the receipt of such Instructions to the Stockholders (the
"Disposition Notice"). If a written notification objecting to the Disposition
Notice is not received by the Escrow Agent within ten (10) business days after
the giving of the Disposition Notice by the Escrow Agent, time being of the
essence, the Escrow Agent is hereby authorized and empowered to deliver the
Escrowed Items in accordance with the Instructions. In the event that the Escrow
Agent receives written notice objecting to the Disposition Notice within the
aforementioned ten (10) day period, then the Escrow Agent shall continue to hold
such Escrowed Items until the Escrow Agent receives written notice from the
objecting party withdrawing such objection or the Escrow Agent receives a
writing signed by all of the parties directing the disposition of the disputed
Escrowed Items. Alternatively, the Escrow Agent shall be entitled, at its
option, to refuse to take any action unless and until a court of competent
jurisdiction ultimately settles the dispute among the parties. In such event,
the Escrow Agent shall be entitled to refrain from acting, or refuse to act,
until the matter shall have been finally determined by a court of competent
jurisdiction or shall have been settled by agreement of the parties to such
controversy, in which case the Escrow Agent shall be notified thereof by such
parties. The Escrow Agent is expressly authorized at its option to interplead
all interested parties in any such proceeding in a court of competent
jurisdiction, and to deposit the Escrowed Items with the clerk of such court.
(c) Upon delivery of all of the Escrowed Items as provided herein, or
the deposit of the Escrowed Items with the clerk of the court, all obligations
of the Escrow Agent shall thereupon cease, and the Escrow Agent shall be
released from any and all liability directly or indirectly relating to this
Escrow Agreement or the administration of the escrow without any further action
on behalf of any party hereto.
(d) In the event any term or condition of this Escrow Agreement
conflicts or is inconsistent with any other term or condition of any other
agreement, then in such event, the terms or conditions of this Escrow Agreement
shall be controlling.
6. Further Assurances. The Company and each Stockholder agrees to do
such further acts and things and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Escrow Agent
from time to time reasonably may request in connection with the administration,
maintenance, enforcement or adjudication of this Escrow Agreement.
7. Invalidation of Releases from Escrow. Etc. In the event the release
of any of the Escrowed Items to the Stockholders under this Escrow Agreement is
invalidated, declared to be fraudulent or preferential or must for any reason be
restored or returned to the Escrow Agent
4
5
whether by agreement, order of or settlement before any court or other authority
or otherwise, then in such event, each such Stockholder shall contribute back to
the Escrow Agent such Escrowed Item so affected, together with any related
assignment, release or other instrument or document the Escrow Agent may request
to restore the status quo ante.
8. Reliance on Documents and Experts. The Escrow Agent shall be
entitled to rely upon any Instruction, notice, consent, certificate, affidavit,
statement, paper, document, writing or communication (which unless otherwise
provided herein, may be by telegram, cable, telex, telecopier, or telephone)
reasonably believed by it to be genuine and to have been signed, sent or made by
the proper person or persons, and upon opinions and advice of legal counsel
(including counsel for any party hereto), independent public accountants and
other experts selected by the Escrow Agent.
9. Status of the Escrow Agent, Etc. The Escrow Agent is acting under
this Escrow Agreement as a stakeholder only and shall be considered an
independent contractor with respect to each Stockholder. No term or provision of
this Escrow Agreement is intended to create, nor shall any such term or
provision be deemed to have created, any principal-agent, trust, joint venture,
partnership, debtor-creditor or attorney-client relationship between or among
the Escrow Agent and any of the Stockholders. This Escrow Agreement shall not be
deemed to prohibit or in any way restrict the Escrow Agent's representation of
any of the Company or the Representative who may be advised by the Escrow Agent
on any and all matters pertaining to this Escrow Agreement and the Escrowed
Items. To the extent one or more of the Stockholders are or have been
represented by the Escrow Agent, each such Stockholder hereby waives any
conflict of interest and irrevocably authorizes and directs the Escrow Agent to
carry out the terms and provisions of this Escrow Agreement fairly as to all
parties, without regard to any such representation and irrespective of the
impact upon any such Stockholder. The Escrow Agent's only duties are those
expressly set forth in this Escrow Agreement, and each Stockholder authorizes
the Escrow Agent to perform those duties in accordance with its usual practices
in holding documents of its own or those of other escrows. The Escrow Agent may
exercise or otherwise enforce any of its rights, powers, privileges, remedies
and interests under this Escrow Agreement and applicable law or perform any of
its duties under this Escrow Agreement by or through its partners, employees,
attorneys, agents or designees.
10. Consent to Jurisdiction Etc. Each Stockholder hereby covenants and
agrees that the Superior Court of the State of North Carolina or the United
States District Court for North Carolina, at the election of the Escrow Agent,
shall have personal jurisdiction and proper venue over any dispute with the
Escrow Agent; provided that the foregoing consent to jurisdiction and venue by
the other parties shall not deprive the Escrow Agent of the right in its
discretion voluntarily to commence or participate in any action, suit or
proceeding in any other court having jurisdiction and venue over the
Stockholders. Each Stockholder hereby waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted
for notices under Section 16 hereof. Within thirty (30) days after service of
process, the Stockholders agree to appear or answer and if no appearance or
answer is made within such period, that party shall be deemed in default and
judgment may be entered by the Escrow Agent against that party for the relief
demanded in any complaint so served. In any action or proceeding involving the
Escrow Agent in any jurisdiction, Stockholders each waive trial by jury.
5
6
11. Exculpation. The Escrow Agent and its partners, employees,
attorneys and agents, shall not incur any liability whatsoever for the holding
or delivery of documents or the taking of any other action in accordance with
the terms and provisions of this Escrow Agreement, for any mistake or error in
judgment, for compliance with any applicable law or any attachment, order or
other directive of any court or other authority (irrespective of any conflicting
term or provision of this Escrow Agreement), or for any act or omission of any
other person engaged by the Escrow Agent in connection with this Escrow
Agreement; and each Stockholder hereby waives any and all claims and actions
whatsoever against the Escrow Agent and its designees, and their respective
directors, officers, partners, employees, attorneys and agents, arising out of
or related directly or indirectly to any and all of the foregoing acts,
omissions and circumstances. Furthermore, the Escrow Agent and its designees,
and their respective directors, officers, partners, employees, attorneys and
agents, shall not incur any liability (other than for a person's own acts or
omissions amounting to gross negligence or willful misconduct as finally
determined pursuant to applicable law by a governmental authority having
jurisdiction) for other acts and omissions arising out of or related directly or
indirectly to this Escrow Agreement or the Escrowed Items; and each Stockholder
hereby expressly waives and releases any and all claims and actions (other than
those attributable to a person's own acts or omissions amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction) against the Escrow Agent
and its designees, and their respective directors, officers, partners,
employees, attorneys and agents, arising out of or related directly or
indirectly to any and all of the foregoing acts, omissions and circumstances.
12. Indemnification. The Escrow Agent and its partners, employees,
attorneys and agents, shall be indemnified, reimbursed, held harmless and, at
the request of the Escrow Agent, defended by the Company and the Stockholders,
jointly and severally, from and against any and all claims, liabilities, losses
and expenses (including, without limitation, the disbursements, expenses and
fees of their respective attorneys) that may be imposed upon, incurred by, or
asserted against any of them, or any of their respective directors, officers,
partners, employees, attorneys or agents, arising out of or related directly or
indirectly to this Escrow Agreement or the Escrowed Items, except such as are
occasioned by the indemnified person's own gross negligence or willful
misconduct as finally determined pursuant to applicable law by a governmental
authority or court having jurisdiction.
13. Successor to the Escrow Agent.
(a) The Escrow Agent shall have the right to resign upon notice to the
remaining parties; and the remaining parties shall jointly appoint a successor
escrow agent by notice to the Escrow Agent.
(b) Upon the resignation of the Escrow Agent and the designation of a
successor escrow agent, the Escrow Agent (or its legal representative) shall
deliver to the successor escrow agent a copy of this Escrow Agreement and the
Escrowed Items. Any successor escrow agent shall have all the rights and shall
be subject to all of the obligations of the Escrow Agent.
6
7
(c) Upon the dissolution, disqualification or refusal of the Escrow
Agent (or any successor escrow agent) to serve, or continue to serve under this
Escrow Agreement, and should the parties hereto fail to agree upon a successor
escrow agent, the parties hereto or the Escrow Agent shall have the right to
make application for the appointment of such successor escrow agent in a court
of equity.
14. Expenses of the Escrow Agent. The Company shall promptly pay all
reasonable fees, expenses (including attorneys' fees of itself or other
attorneys it may retain), disbursements and advances charged, incurred or made
by the Escrow Agent in the performance of its duties hereunder. The charges so
payable shall be paid to the Escrow Agent from time to time upon the Escrow
Agent's written request to the Company.
15. Expenses of the Company and the Stockholders. The Company and the
respective Stockholders shall pay his, her or its respective fees and expenses,
including any counsel or accounting fees incurred by him, her or it in
connection with this Escrow Agreement, it being specifically agreed that each
shall have no obligation to any other in such regard.
16. Notices. Any notice and other communication hereunder shall be in
writing and shall be deemed to be given on the date the same is deposited in the
United States mail, certified or registered mail, postage prepaid, as follows:
(i) If to the Company, addressed to:
Xxxxx X. Xxxxxx, President
Vital Living Products, Inc.
0000 Xxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
With copies contemporaneously by like means to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(ii) If to the Escrow Agent, addressed to:
First Union National Bank of North Carolina
Two First Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
7
8
(iii) If to Xxxx, addressed to:
Xxx Xxxx, Xx. Vice President
X.X. Xxxx & Associates, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
With copies contemporaneously by like means to:
Xxxxx X. Xx Xxxxxxx, Esq.
De Xxxxxxx Xxxxxxxxxxx Xxxxx & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(iv) If to any Stockholder at the respective addresses set forth above
or to any other address or addresses which shall hereafter be filed from time to
time by the respective parties with the Escrow Agent for such purposes.
17. Cumulative Rights. The rights and remedies granted in this Escrow
Agreement are cumulative and not exclusive, and are in addition to any and all
other rights and remedies granted and permitted under and pursuant to law.
18. Assignment and Delegation of Duties. This Escrow Agreement may not
be assigned by the parties hereto, and any attempted assignment hereof shall be
void and of no effect, and the duties imposed hereby are non-delegable.
19. Section Headings. The section headings herein have been inserted
for convenience of reference only, and shall in no way modify or restrict any of
the terms or provisions hereof.
20. Gender and Number. The masculine, feminine or neuter gender and the
singular or plural number shall each be deemed to include the others whenever
the context so indicates.
21. Binding Effect. This Escrow Agreement shall bind and inure to the
benefit of the parties, their successors and assigns.
22. General. This Escrow Agreement shall be governed by, and construed
and enforced in accordance with the laws of the State of Delaware. This Escrow
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
This Escrow Agreement contains the entire agreement among the parties hereto
with respect to the transactions referred to herein or contemplated hereby. This
Escrow Agreement cannot be amended, modified, or supplemented, nor can any
provision hereof be waived, except by a written instrument signed by the parties
hereto.
8
9
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement the day and year first above written.
VITAL LIVING PRODUCTS, INC.
By:/s/ Xxxxx X. Xxxxxx
(Authorized Officer)
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
CTF, INC.
By: /s/ C. Xxxxxx Xxxxxx
(Authorized Officer)
X.X. XXXX & ASSOCIATES, INC.
By: /s/ Xxxxxx Xxxx
(Authorized Officer)
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/Xxxxxxx X. Xxxxx
(Authorized Officer)
9
