Exhibit 2.3
EXHIBIT D
FORM OF ESCROW AGREEMENT
-76-
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ___________, 1999, (the "AGREEMENT") by
and among Zuellig Group N.A., Inc., a Delaware corporation (the "ZGNA"), Xxxxxx,
Inc., a Colorado corporation (the "COMPANY"), Zuellig Botanicals, Inc., a
Delaware Corporation ("ZBI") and American Securities Transfer & Trust, Inc., as
Escrow Agent (the "ESCROW AGENT").
R E C I T A L S
WHEREAS, ZGNA, ZBI, the Company and certain other parties are parties
to an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of
December 8, 1998, pursuant to which, among other things, the Company acquired
three subsidiaries from ZGNA and ZBI in exchange for shares of Common Stock, par
value $0.001 per share, of the Company (the "COMMON STOCK");
WHEREAS, pursuant to the Merger Agreement, the Company and
ZGNA have agreed to have the Escrow Agent hold ___________ shares of
Common Stock registered in the name of ZGNA, and ____________ shares of
Common Stock registered in the name of ZBI (the ratio of ____ to _____
being the "ZGNA-ZBI Ratio"), on the terms and subject to the conditions
set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby
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(1) This amount in total will equal the lesser of 7% of the Common
Stock after giving effect to the transactions and such number of shares
of Common Stock as will result in ZGNA and ZBI owning (excluding the
Escrow Shares) 40% of the shares of Common Stock outstanding on a fully
diluted basis after giving effect to the transaction. The shares of
Common Stock for each of ZGNA and ZBI to be deposited in escrow will be
in proportion to the shares of Common Stock received in the merger. For
purposes of this calculation, the shares of Common Stock outstanding on
a fully diluted basis shall equal the number of shares of Common Stock
issued and outstanding on the Closing Date, plus all shares of Common
Stock issuable (i) upon the exercise of all outstanding options or
warrants to acquire shares of Common Stock (whether or not then
exercisable) other than the ZGNA Option or (ii) upon conversion or
exchange of any securities convertible into or exchangeable for shares
of Common Stock.
acknowledged, the parties to this Agreement hereby agree as
follows:
1. APPOINTMENT OF ESCROW AGENT; ESCROW DEPOSIT. The Company
and ZGNA hereby appoint the Escrow Agent as the escrow agent under this
Agreement, and the Escrow Agent accepts such appointment according to
the terms and conditions set forth herein. On the date hereof, the
Company, ZGNA and ZBI have deposited with the Escrow Agent, and the
Escrow Agent hereby acknowledges receipt of, certificates
("Certificates") registered in the name of ZGNA and ZBI evidencing
_________ shares and _________ shares of Common Stock, respectively (the
"ESCROW SHARES"). The Escrow Agent shall hold, manage, administer,
distribute and dispose of the Escrow Shares in accordance with the terms
and conditions of this Agreement.
2. PAYMENTS FROM ESCROW. The Escrow Agent shall hold the Escrow
Shares in escrow in accordance with this Agreement and shall make payments from
the Escrow Shares only as follows or as provided in Section 3 below:
(a) On [DATE WHICH IS 95 DAYS FROM CLOSING OF MERGERS] (the "CLAIM
EXPIRATION DATE"), the Escrow Agent shall deliver the respective Escrow Shares
to ZGNA and ZBI unless, on or prior to the Claim Expiration Date, the Escrow
Agent shall have received a Sale Notice (as defined below) from the Company.
(b) Any delivery required to be made hereunder by the Escrow Agent
shall be delivered in accordance with written instructions given to the Escrow
Agent by the party entitled under this Agreement to receive such delivery.
3. CLAIMS. The procedure for the delivery of Escrow Shares shall be
as follows:
(a) From time to time prior to the Claim Expiration Date, the Company
may provide written notice (a "SALE NOTICE") to the Escrow Agent and ZGNA to the
effect that a Paclitaxel Transaction (as defined below) has occurred. Any Sale
Notice shall set forth (i) the date on which the Paclitaxel Transaction
occurred, (ii) the gross proceeds, (iii) the amount of the Transaction Expenses
(as defined below), and (iv) the Net Proceeds (as defined below) from the
Paclitaxel Transaction, and shall be executed in good faith by the Company's
chief financial officer.
(b) For purposes hereof, (i) a "PACLITAXEL TRANSACTION" shall mean a
sale of the Company's Paclitaxel business or any substantial part thereof, (ii)
"NET PROCEEDS" shall mean the gross cash proceeds received by the Company on or
within 90 days after the Closing of the Mergers (as defined in the Merger
Agreement) in connection with the Paclitaxel Transaction, less the Transaction
Expenses related to such transaction, and less $3,000,000 (iii) "TRANSACTION
EXPENSES"
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shall mean all professional fees and expenses incurred by the Company
in connection with the Paclitaxel Transaction and all other out-of-pocket costs
or expenses incurred by the Company in connection with the Paclitaxel
Transaction.
(c) The Escrow Agent shall furnish ZGNA with a copy of any Sale
Notice received by it. If, within twenty (20) days after actual receipt by the
Escrow Agent of a Sale Notice in accordance with Section 3(a), the Escrow Agent
has not actually received written objection to such claim from ZGNA, the Net
Proceeds stated in such notice shall be conclusively deemed to be approved by
ZGNA and ZBI and the Escrow Agent shall promptly thereafter notify the Company
and the Company's transfer agent (currently American Securities Transfer &
Trust, Inc., the "TRANSFER AGENT") to cancel the Escrow Shares in an amount
equal to the number (the "CANCELED SHARES") derived by dividing the Net
Proceeds, as set forth in the Sale Notice, by $3.50 and as between ZGNA and ZBI
in the ZGNA-ZBI Ratio. The Canceled Shares shall be specified in such notice
and in the event of a fractional share the number of shares to be canceled shall
be rounded down to the next whole share. The Company shall promptly deliver
stock certificates for the balance of the Escrow Shares to the Escrow Agent,
registered in the name of ZGNA and ZBI, respectively, and bearing all legends on
the Certificates.
(d) If within said twenty (20) days the Escrow Agent shall have
actually received from ZGNA a written objection to the information set forth in
the Sale Notice, certifying the nature of and grounds for such objection (a copy
of which objection shall in each case be sent to the Company in accordance with
the provisions of Section 8 below), then the number of Escrow Shares obtained by
dividing the portion of the Net Proceeds (as set forth in the disputed Sale
Notice) which ZGNA disputes (which may be all or a portion of the Net Proceeds)
by $3.50 shall be deemed to be "Disputed Escrow Shares".
(e) If no Sale Notice is delivered by the Company, all Escrow Shares
shall be delivered to ZGNA and ZBI on the third business day following the Claim
Expiration Date. If a Sale Notice is delivered, any Escrow Shares in excess of
the Disputed Escrow Shares and the Canceled Shares shall be delivered to ZGNA
and ZBI, respectively, on the third business day following the Claim Expiration
Date. The Escrow Agent and the Company shall take all steps necessary to issue
certificates to ZGNA and ZBI in respect of such shares, and to cause residual
certificates representing the Disputed Escrow Shares to be delivered to the
Escrow Agent.
Certificates representing the Disputed Escrow Shares shall be released
by the Escrow Agent from the escrow only either (i) in accordance with a joint
written instruction by ZGNA and the Company or (ii) if and to the extent
consistent with a copy of a final judgment by or order of a court of competent
jurisdiction with respect to which any period of time to appeal
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such judgment or order shall have lapsed pertaining to the Disputed
Escrow Shares, sent to the Escrow Agent by ZGNA or the Company, in any
case accompanied by a certification that any period of time to file an
appeal of such judgment or order has lapsed and no such appeal has been
filed or is otherwise pending (a "FINAL DETERMINATION").
4. CONDITIONS TO ESCROW. The Escrow Agent agrees to hold the Escrow
Shares and to perform in accordance with the terms and provisions of this
Agreement. The Company, ZBI and ZGNA agree that the Escrow Agent does not
assume any responsibility for the failure of the Company or ZGNA to perform in
accordance with the Merger Agreement or this Agreement. The acceptance by the
Escrow Agent of its responsibilities hereunder is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to the Escrow Agent's rights, duties, liabilities and immunities:
(a) The Escrow Agent may conclusively rely, and shall be protected in
acting or refraining from acting upon, any written notice, certification,
request, waiver, consent, receipt or other paper or document furnished to it,
not only as to its due execution and validity and effectiveness of its
provisions but also as to the truth and accuracy of any information therein
contained which the Escrow Agent reasonably believes to be genuine and to have
been signed and presented by the proper party or parties. Should it be
necessary for the Escrow Agent to act upon any instructions, directions,
documents or instruments issued or signed by or on behalf of any corporation,
fiduciary, or individual acting on behalf of another party hereto, it shall not
be necessary for the Escrow Agent to inquire into such corporation's,
fiduciary's or individual's authority, capacity, existence or identity. The
Escrow Agent is also relieved from the necessity of satisfying itself as to the
authority of the persons executing this Agreement in a representative capacity.
It is understood that any references herein to joint instructions or joint
written instructions or words of similar import include any instructions signed
in counterpart.
(b) The Escrow Agent shall 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 of fact or law, or for anything which it may do or refrain from doing in
connection herewith, except for its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, legal
counsel in the event of any question as to any of the provisions hereof or the
duties hereunder, and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the opinion and instructions of such
counsel. The reasonable costs of such counsel's services shall be paid to the
Escrow Agent in accordance with Section 7 below.
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(d) The Escrow Agent shall have no duties except those which are
expressly set forth herein and it shall not be bound by (i) the Merger Agreement
or any agreement of the other parties hereto (whether or not it has any
knowledge thereof) or by any notice of a claim, or demand with respect thereto,
or (ii) any waiver, modification, amendment, termination or rescission of this
Agreement unless the Escrow Agent agrees thereto in writing.
(e) The Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving notice in writing of such resignation specifying
a date (no earlier than 30 days following the date of such notice) when such
resignation will take effect, provided, however, that until a successor escrow
agent is appointed by ZGNA and the Company and such successor accepts such
appointment, the Escrow Agent shall continue to hold the Escrow Shares and
otherwise comply with the terms of this Agreement; provided further that the
parties to this Escrow Agreement agree to use their best efforts to mutually
agree on a successor escrow agent within 30 days after the giving of Escrow
Agent's notice and if no such successor escrow agent shall be appointed within
30 days of the Escrow Agent providing its notice, the Escrow Agent may, at the
expense of the Company and ZGNA, (i) appoint a successor escrow agent which
shall be a national or state-chartered banking, trust or savings association,
(ii) petition any court of competent jurisdiction for the appointment of a
successor escrow agent or (iii) may deposit the Escrow Deposit with the Clerk of
the United States District Court for the District of Colorado, or with the
office of the clerk of registry of any other court of competent jurisdiction, at
which time the Escrow Agent's duties hereunder shall terminate. Any successor
escrow agent shall execute and deliver an instrument accepting such appointment
and it shall, 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 resigning Escrow Agent shall thereupon be discharged from
any further obligations under this Escrow Agreement.
(f) Upon delivery of all of the entire Escrow Shares to ZGNA, to the
Transfer Agent for cancellation in full, or to ZGNA after prior delivery to the
Transfer Agent, as the case may be, pursuant to the terms of Section 3 above, or
to a successor escrow agent, the Escrow Agent shall thereafter be discharged
from any further obligations hereunder. The Escrow Agent is hereby authorized,
in any and all events, to comply with and obey any and all final judgments,
orders and decrees (not subject to appeal) of any court of competent
jurisdiction which may be filed, entered or issued, and, if it shall so comply
or obey, it shall not be liable to any other person by reason of such compliance
or obedience.
(g) The Escrow Agent shall not have any responsibility or liability
for the completeness, correctness or accuracy of
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any transactions between ZGNA and ZBI, on the one hand, and the Company,
on the other hand.
(h) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Shares which, in its sole opinion, are in conflict with either other
instructions received by it or any provision of this Agreement, it shall without
liability of any kind, be entitled to hold the Escrow Shares pending the
resolution of such uncertainty to the Escrow Agent's sole satisfaction, by final
judgment of a court or courts of competent jurisdiction or otherwise, or the
Escrow Agent, at its option, may, in final satisfaction of its duties hereunder,
deposit the Escrow Shares with the Clerk of the United States District Court for
the District of Colorado or with the office of the clerk of registry of any
other court of competent jurisdiction.
5. INDEMNIFICATION. From and at all times after the date of this Escrow
Agreement, the Company, ZBI and ZGNA (the "Indemnifying Parties") shall, except
as otherwise hereinafter provided, to the fullest extent permitted by law,
indemnify and hold harmless Escrow Agent and each partner, employee, attorney,
agent and affiliate of Escrow Agent, (collectively, the "Indemnified Parties")
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorneys' fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action or proceeding
(including any inquiry or investigation) by any person, including without
limitation the Indemnifying Parties, whether threatened or initiated, asserting
a claim for any legal or equitable remedy against any person under any statute
or regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from or
in connection with the negotiation, preparation, execution, performance or
failure of performance of this Escrow Agreement or any transactions contemplated
herein, whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; provided,
however, that no Indemnified Party shall have the right to be indemnified
hereunder for any liability finally determined by a court of competent
jurisdiction, subject to no further appeal, to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Party. If any such
action or claim shall be brought or asserted against any Indemnified Party, such
Indemnified Party shall promptly notify the Indemnifying Parties in writing, and
the Indemnifying Parties shall assume the defense thereof, including the
employment of counsel and the payment of all expenses. Such Indemnified Party
shall, in its sole discretion, have the right to employ separate
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counsel, (who may be selected by such Indemnified Party in its sole
discretion) in any such action and to participate in the defense
thereof, and the fees and expenses of such counsel shall be paid by such
Indemnified Party, except that the Indemnifying Parties shall be
required to pay such fees and expenses if (i) the Indemnifying Parties
agree to pay such fees and expenses (ii) the Indemnifying Parties shall
fail, in the reasonable discretion of such Indemnified Party, to employ
counsel satisfactory to the Indemnified Party in any such action of
proceeding, (iii) the Indemnifying Parties are the plaintiff in any such
action or proceeding, or (iv)the named parties to any such action or
proceeding (including any impleaded parties) include both Indemnified
Party and the Indemnifying Parties, and the Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Indemnifying Parties, the Indemnifying Parties shall be
liable to pay fees and expenses of counsel pursuant to the preceding
sentence. All such fees and expenses payable by the Indemnifying
Parties pursuant to the foregoing sentence shall be paid from time to
time as incurred, both in advance of and after the final disposition of
such action or claim. The obligations of the Indemnifying Parties under
this SECTION 5 shall survive any termination of this Escrow Agreement
and the resignation or renewal of Escrow Agent.
6. BANKING DAYS. If any date on which the Escrow Agent is required
to make a delivery pursuant to the provisions hereof is not a banking day, then
the Escrow Agent shall make such investment or delivery on the next succeeding
banking day.
7. ESCROW COSTS; NO RIGHT OF SET-OFF. The Escrow Agent shall be
entitled to be paid a fee for its services pursuant to the attached FEE SCHEDULE
and to be reimbursed for its reasonable costs and expenses hereunder (including
reasonable counsel fees), which fees, costs and expenses shall be paid from time
to time by the Company. Nothing in this Section 7 limits the Escrow Agent's
rights against the Company and ZGNA for the payment of amounts due to the Escrow
Agent under Section 5 above or the Escrow Agent's fees, costs and expenses
hereunder.
The Escrow Agent acknowledges and agrees that it is holding the Escrow
Shares in its capacity as escrow agent and that it has no right to apply amounts
in the Escrow Deposit against any obligations of (a) the other parties to this
Agreement that do not arise under this Agreement or (b) the Company.
8. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of
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Colorado applicable to contracts made and to be performed entirely
within such State.
(b) PARAGRAPH AND SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
(c) NOTICES.
(i) All communications under this Agreement shall be in writing and shall
be delivered by hand, by facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to ZGNA or ZBI, at 0000 Xx Xxxxxxxx Xxxxxx, Xxxx Xxxxx,
Xxxxxxxxxx 00000-0000 (facsimile: (000) 000-0000), marked for the
attention of President, or at such other address as ZGNA may have
furnished the Company in writing (with a copy to Xxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention:
Xxxxxx X. Xxxxxx, Esq. (facsimile: 212-728-8111), or at such other
address it may have furnished the Company and the Escrow Agent in
writing), or
(2) if to the Company, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx
00000 (facsimile: (000) 000-0000), marked for the attention of Xxxx
Xxxxx, or at such other address as the Company may have furnished ZGNA
in writing (with a copy to Xxxxxxxx, Xxxxx & Xxxxxxx, P.C., 0000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx
Xxxxxxxxx, Esq. (facsimile: 303-449-5426) or at such other address as
it may have furnished in writing to ZGNA and the Escrow Agent), or
(4) if to the Escrow Agent and Transfer Agent, at American Securities
Transfer & Trust, Inc., 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000 (facsimile: (000) 000-0000), marked for the attention
of Xxxxx Xxxxxxx, or at such other address as it may have furnished in
writing to ZGNA, the Company and the Escrow Agent).
(ii) Any notice so addressed shall be deemed to be given: if delivered by
hand or by facsimile, on the date of such delivery; if delivered by
courier, on the first business day following the date of the delivery to
the courier; and if mailed by registered or certified mail, on the third
business day after the date of such mailing.
(d) EXPENSES AND TAXES. Each party shall pay its own fees and
expenses incurred in connection with the transactions contemplated hereby.
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(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(f) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement
constitutes the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and ZGNA. No course of dealing between the Company and ZGNA nor
any delay in exercising any rights hereunder shall operate as a waiver of any
rights of either party hereto.
(g) SEVERABILITY. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(h) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
XXXXXX, INC.
By:
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Name:
Title:
ZUELLIG GROUP N.A., INC.
By:
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Name:
Title:
ZUELLIG BOTANICALS, INC.
By:
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Name:
Title:
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By:
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Name:
Title:
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