AMENDED AND RESTATED ESCROW AGREEMENT
THIS AMENDED AND RESTATED ESCROW AGREEMENT is entered into as of the 30th
day of December, 1998, by and among Mannatech, Incorporated, a Texas
corporation ("Issuer"), the selling shareholders set forth on Schedule A
hereto (the "Selling Shareholders"), J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.,
("Placement Agent") and Bank One, Kentucky, NA ("Escrow Agent"), and amends,
restates and supersedes in its entirety that certain Escrow Agreement entered
into as of the 19th day of November, 1998, by and among Issuer, the Selling
Shareholders, Placement Agent and Escrow Agent in order to make the
modifications contained herein.
R E C I T A L S:
A. Issuer and the Selling Shareholders propose to offer for sale to
subscribers an aggregate of 5,295,015 shares of the capital stock of Issuer,
having a per share par value of $0.0001 per share (the "Shares") at a price
of $8.00 per Share, payable at the time of subscribing for a Share.
2,500,000 shares and the proceeds therefrom shall be subject to this
Agreement. The payment of $20,000,000 for at least 2,500,000 Shares will be
paid into the escrow created by this Agreement.
B. Issuer and the Selling Shareholders intend to sell the Shares on a
best-efforts "minimum or none" basis in a public offering (the "Offering") by
delivering to each subscriber a Prospectus (the "Prospectus") describing the
Offering.
C. Issuer and the Selling Shareholders desire to establish an escrow
account in which funds received by Placement Agent from subscribers would be
deposited pending completion of the period during which the Escrow Account
shall be open (the "Escrow Period"). Bank One, Kentucky, NA, agrees to serve
as Escrow Agent in accordance with the terms and conditions set forth herein.
D. The Selling Shareholders have authorized Issuer to take all necessary
action on their behalf to sell the Shares.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Issuer, for itself and on behalf of the Selling Shareholders, hereby
appoints Bank One, Kentucky, NA, as Escrow Agent and Escrow Agent shall
establish an escrow account (the "Escrow Account") on its books styled
"Mannatech, Incorporated Subscription Escrow Account." Commencing upon the
execution of this Agreement, Escrow Agent shall act as Escrow Agent and
hereby agrees to receive and disburse the proceeds from the offering of the
Shares in accordance with the terms hereof. Issuer agrees to notify the
Escrow Agent promptly of the closing of the offering and sale of the Shares.
2. After the commencement of the Offering, Placement Agent shall cause
all checks received from subscribers for Shares to be promptly deposited into
a segregated account established by Placement Agent for that purpose.
Placement Agent shall then deliver to the Escrow Agent its own check
representing such funds ("Subscription Funds") to the Escrow Agent no later
than 12:00 p.m. on the business day following the receipt of such
Subscription Funds for deposit in the Escrow Account. Any of such checks not
made payable or endorsed to the Mannatech, Incorporated Subscription Escrow
Account shall be returned to Placement Agent. Issuer or Placement Agent
shall furnish to the Escrow Agent at the time of each deposit of Subscription
Funds a list containing the name of each subscriber, the subscriber's
address, the number of Shares subscribed for, and the portion of the
Subscription Funds being delivered to the Escrow Agent attributable to each
such subscriber. Prior to the receipt of the Minimum (as described below),
the Issuer is aware and understands that it is not entitled to any
Subscription Funds deposited into the Escrow Account and no amounts deposited
in the Escrow Account during the Escrow Period shall become the property of
the Issuer or any other entity, or be subject to the debts of the Issuer or
any other entity.
3. The Escrow Period shall commence on the date hereof and shall
terminate ten (10) Business Days (as defined below) following the earlier to
occur of the following dates:
(a) The date upon which Escrow Agent confirms upon written request of the
Issuer that it has received into the Escrow Account and collected gross
subscription proceeds from the sale of 2,500,000 Shares aggregating
$20,000,000 in deposited funds (the "Minimum") assuming that, prior to
such date, the S-1 Registration Statement as amended, File Number
333-63133 has been declared effective by the Securities and Exchange
Commission, and Issuer has received notice that the Shares have been
approved for listing on the NASDAQ NMS subject only to meeting the
public float and market maker requirements for such listing; or
(b) The "Cessation Date," which for the purposes of this Agreement shall be
February 12, 1999, except as extended in writing by the agreement of
parties.
(c) The date upon which a determination is made by the Issuer to terminate
the Offering prior to the sale of the Minimum, as communicated to Escrow
Agent in writing.
Upon the occurrence of any of the events described in (a), (b) or (c)
above, the Escrow Period shall continue for such ten (10) Business-Day period
solely for the limited purposes of collecting Subscription Funds that have
been deposited prior to such event and disbursing funds from the Escrow
Account as provided herein. Escrow Agent will not accept deposits of
Subscription Funds after notice that any of the events described in
subparagraphs (a), (b) and (c) has occurred.
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"Business Day" shall mean a day on which commercial banks in Louisville,
Kentucky, are open for the general transaction of business. If any action or
time for performance pursuant to this Agreement is to occur on any Saturday,
Sunday or holiday, such time for action or performance shall be extended to
the next Business Day.
4. The Escrow Agent will deposit Subscription Funds received in check
form for collection and credit the proceeds to the Escrow Account to be held
by it under the terms of this Agreement. Notwithstanding anything to the
contrary contained herein, Escrow Agent is under no duty or responsibility to
enforce collection of any checks delivered to Escrow Agent hereunder. The
Escrow Agent hereby is authorized to forward any such check for collection
and deposit the proceeds in the Escrow Account. As an alternative, the
Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid. Additionally, to insure that such funds have
cleared normal banking channels for collection, Escrow Agent is authorized to
hold for ten (10) Business Days funds to be released. Issuer shall
immediately reimburse Escrow Agent any monies paid to it if thereafter such
check is returned unpaid. Any item returned unpaid to the Escrow Agent on
its first presentation for payment shall be returned to Issuer and need not
be again presented by the Escrow Agent for collection. Issuer agrees to
reimburse Escrow Agent for the cost incurred with any returned check. The
Escrow Agent shall not be required to invest any Subscription Funds deposited
in the Escrow Account and shall in no event be liable for any investment
loss. For purposes of this Agreement, the term "collected funds" or the term
"collected" when referring to the proceeds of checks deposited with the
Escrow Agent shall mean all funds received by Escrow Agent that have cleared
normal banking channels and are in the form of cash
5. If prior to the Cessation Date, Subscription Funds in an amount of at
least the Minimum have been deposited in the Escrow Account, upon request
from Issuer, Escrow Agent will confirm the amounts collected by it. If such
amount is at least equal to the Minimum, the Issuer may send Escrow Agent a
written notice providing a list of all accepted subscribers, specifying the
total amount of their subscription to be remitted to Issuer, and containing a
request to terminate the Escrow Period and remit such amount, less any fees
or other amounts then owing from Issuer to Escrow Agent hereunder, to the
Issuer as promptly as possible, but in no event later than ten (10) Business
Days after such termination, by issuing its bank check payable to the Issuer
or by depositing such amount directly into the account of Issuer maintained
with Bank One, Kentucky, NA, as designated in writing by Issuer to Escrow
Agent. The Escrow Period shall not terminate upon receipt by Escrow Agent of
such notice, but shall continue for such (10) Business-Day period solely for
the limited purposes of collecting any checks that have been deposited prior
to Escrow Agent's receipt of such notice and disbursing funds from the Escrow
Account as provided herein. Escrow Agent will not accept deposits of
Subscription Funds after receipt of such notice.
If, on the Cessation Date, the Minimum Amount has not been deposited with
the Escrow Agent and collected, or if Issuer notifies the Escrow Agent in
writing that Issuer elects to terminate the Offering as provided in paragraph
3(c) above, the Escrow Agent shall then issue and mail its bank checks to the
subscribers in the amount of the portion of Subscription Funds attributable
to each such subscriber, without deduction, penalty or expense to the
subscriber, and
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shall, for this purpose, be authorized to rely upon the names and addresses
of subscribers furnished it as contemplated above. No subscriber shall be
paid interest with respect to such deposited funds. The purchase money
returned to each subscriber shall be free and clear of any and all claims of
the Issuer and any of its creditors.
At such time as Escrow Agent shall have made the payments and remittances
provided in the Agreement, the Escrow Agent shall be completely discharged
and released of any and all further liabilities and responsibilities
hereunder.
6. As consideration for its agreement to act as Escrow Agent as herein
described, Issuer agrees to pay the Escrow Agent an acceptance
fee/establishment fee of $250.00 and an administration fee of $2,500.00 upon
execution of this Agreement, plus the fees described on the attached fee
schedule. Further, Issuer agrees to pay all disbursements and advances
incurred or made by the Escrow Agent in performance of its duties hereunder,
including reasonable fees, expenses and disbursements of its counsel, all in
accordance with the attached fee schedule or the other provisions of this
Agreement. No such fees or reimbursements shall be paid out of or chargeable
to the funds on deposit in the Escrow Account until such time as the Minimum
has been collected.
If the Issuer rejects any subscription for which Escrow Agent has already
collected funds, upon notification of such rejection, the Escrow Agent shall
promptly issue a refund check to the rejected subscriber in the amount of the
portion of Subscription Funds attributable to such subscriber.
7. This Agreement shall automatically terminate upon the earlier of (i)
twenty (20) days after the Cessation Date or (ii) twenty (20) days after the
date upon which the Escrow Agent has delivered the final portion of Escrow
Account funds pursuant to the terms of this Agreement.
8. It is understood that the Escrow Agent reserves the right to resign
as Escrow Agent at any time by giving written notice of its resignation,
specifying the effective date thereof, to each other party hereto. Within
thirty (30) days after receiving the aforesaid notice, the other party or
parties hereto shall appoint a successor Escrow Agent to which the Escrow
Agent may distribute the property then held hereunder, less its fees, costs
and expenses (including counsel fees and expenses) which may remain unpaid at
that time. If a successor Escrow Agent has not been appointed and has not
accepted such appointment by the end of such thirty (30) day period, the
Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent and the fees, costs and expenses
(including reasonable counsel fees and expenses) which it incurs in
connection with such a proceeding shall be paid by the Company.
9. The parties hereto agree that the following provisions shall control
with respect to the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
a. Escrow Agent shall have no obligation to invest the Escrow Account.
b. The Escrow Agent shall have no responsibility except for the
safekeeping and
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delivery of the amounts deposited in the Escrow Account in accordance
with this Agreement. The Escrow Agent shall not be liable for any act
done or omitted to be done under this Agreement or in connection with
the amounts deposited in the Escrow Account, except as a result of the
Escrow Agent's gross negligence or willful misconduct. The Escrow
Agent is not a party to nor is it bound by, nor need it give
consideration to the terms of provisions of, even though it may have
knowledge of, (i) any agreement or undertaking by, between or among the
Issuer and any other party, except this Agreement, (ii) any agreement
or undertaking that may be evidenced by this Agreement, (iii) any
other agreements that may now or in the future be deposited with the
Escrow Agent in connection with this Agreement. The Escrow Agent is
not a party to, is not responsible for, and makes no representation
with respect to the offer, sale or distribution of the Shares
including, but not limited to, matters set forth in any offering
documents prepared and distributed in connection with the offer, sale
and distribution of the Shares. The Issuer covenants that it will not
commence any action against the Escrow Agent at law, in equity, or
otherwise as a result of any action taken or thing done by the Escrow
Agent pursuant to this Agreement, or for any disbursement made as
authorized herein upon failure of the Issuer to give the notice within
the times herein prescribed. The Escrow Agent has no duty to determine
or inquire into any happening or occurrence of or of any performance or
failure of performance of the Issuer or of any other party with respect
to agreements or arrangements with any other party. If any question,
dispute or disagreement arises among the parties hereto and/or any
other party with respect to the funds deposited in the Escrow Account
or the proper interpretation of this Agreement, the Escrow Agent shall
not be required to act and shall not be held liable for refusal to act
until the question or dispute is settled, and the Escrow Agent has the
absolute right at its discretion to do either or both of the following:
(i) withhold and/or stop all further performance under this Agreement
until the Escrow Agent is satisfied, by receipt of a written
document in form and substance satisfactory to the Escrow Agent
and executed and binding upon all interested parties hereto (who
may include the subscribers), that the question, dispute, or
disagreement had been resolved; or
(ii) file a suit in interpleader and obtain by final judgment, rendered
by a court of competent jurisdiction, an order binding all parties
interested in the matter. In any such suit, or should the Escrow
Agent become involved in litigation in any manner whatsoever on
account of this Agreement or the Escrow Account, the Escrow Agent
shall be entitled to recover from the Issuer its attorneys' fees
and costs.
The Escrow Agent shall never be required to post a bond in connection
with any services hereunder. The Escrow Agent may consult with counsel
of its own choice and shall have full and complete authorization and
protection for and shall not be liable for any action taken or suffered
by it hereunder in good faith and believed
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by it to be authorized hereby, nor for action taken or omitted by it
in accordance with the advice of such counsel (who shall not be counsel
for the Issuer).
c. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement and may rely and
shall be protected in acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and believed
by it to be genuine and to have been signed or presented by the proper
party or parties and to take statements made therein as authorized and
correct without any affirmative duty of investigation.
d. The Issuer hereby agrees to indemnify the Escrow Agent for, and to hold
it harmless against, any loss, liability, or expense (including, without
limitation, all legal expenses incurred in enforcing any of the
provisions of this Agreement or otherwise in connection herewith)
incurred without gross negligence or willful misconduct on the part of
the Escrow Agent, arising out of or in connection with its entering
into this Agreement and carrying out its duties hereunder, including
the costs and expenses of defending itself against any claim of
liability hereunder or arising out of or in connection with the sale of
the Shares. This covenant shall survive the termination of this
Agreement.
e. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Agreement
unless the same shall be in writing and signed by all of the other
parties hereto and, if its duties as Escrow Agent hereunder are
affected thereby, unless it shall have given prior written consent
thereto.
f. Escrow Agent shall not be liable for any damage, loss, liability, or
delay caused by accidents, strikes, fire, flood, war, riot, equipment
breakdown, electrical or mechanical failure, acts of God or any cause
which is reasonably unavoidable or beyond its reasonable control.
10. Notices required to be sent hereunder shall be delivered by hand,
sent by an express mail service or sent via United States mail, postage
prepaid, certified, return receipt requested, to the following address:
If to Placement Agent: J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Corporate Finance Division
000 X. 0xx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
If to Issuer: Mannatech, Incorporated
000 X. Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
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If to Escrow Agent: Bank One, Kentucky, NA
Corporate Trust Department
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
No notice to the Escrow Agent shall be deemed to be delivered until
actually received by the Escrow Agent. From time to time any party hereto
may designate an address other than the address listed above by giving the
other parties hereto not less than five (5) days advance notice of such
change in address in accordance with the provisions hereof.
11. This Agreement shall be construed, enforced and administered in
accordance with the laws of the Commonwealth of Kentucky.
12. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature page were an original thereof.
[remainder of page left intentionally blank]
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EXECUTED on the date first written above.
SELLING SHAREHOLDERS: ISSUER:
(Named in Schedule A Hereto) Mannatech, Incorporated
By: By:
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Attorney-in-Fact Title: Chief Executive Officer
Tax I.D. #00-0000000
By: ESCROW AGENT:
Name: Xxxxxx X. Xxxxxx Bank One, Kentucky, NA
Title: Attorney-in-Fact
By:
Name:
Title:
PLACEMENT AGENT:
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
By:
Name:
Title:
Tax I.D. #
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SCHEDULE A
Selling Shareholders
--------------------
Name Number of Shares
---- ----------------
Minimum Offering Maximum Offering
---------------- ----------------
Xxxxxx X. Xxxxxx 105,980 360,000
Xxxxxxx X. Xxxxxxxx 300,620 760,000
Xxxxxxx X. Xxxxxxxx 105,980 360,000
Xxxxx X. Xxxxxxxx 38,928 105,000
Xxxxxxx X. Xxxx 48,660 150,000
H. Xxxxxxxx XxXxxxxx 37,031 55,000
Xxxxxxxxxxx X. Xxxxxxx 17,031 475,015
Xxxx Xxxxxxx, Xx. 97,320 300,000
Xxx Xxxxxxx 29,196 60,000
Xxxx Xxxxxx 48,660 200,000
Xxxx X. XxXxxxxxx 29,196 60,000
Xxxxx X. Xxxxxx 19,500 65,000
Xxx Xxxxxx 12,165 25,000
Xxxxx Xxxxxxxx 9,733 20,000
Xxxxxxx X. Xxxxx 100,000 100,000
