EXHIBIT 4.3
MEDICAL INDUSTRIES OF AMERICA, INC.
ESCROW AGREEMENT AND INSTRUCTIONS
This Escrow Agreement (the "Agreement") dated as of July 21, 1999 is made
by and among MEDICAL INDUSTRIES, INC., a Florida corporation ("Company"), Xxxxxx
Private Equity, LLC ("Investor") and FIRST UNION NATIONAL BANK as escrow agent
("Escrow Agent").
RECITALS:
WHEREAS, the Company wishes, subject to certain conditions and
limitations, to sell to Investor common stock issued by Company (the "Common
Stock") at an aggregate purchase price of up to Twenty Five Million Dollars
($25,000,000), excluding Warrants;
WHEREAS, as contemplated by that certain Investment Agreement, of even
date herewith, by and between the Company and the Investor (the "Investment
Agreement") the Company may sell Common Stock to Investor upon an exercise of a
Put during the thirty six (36) months following date of the Investment
Agreement;
WHEREAS, the Company and Investor desire to establish an escrow account
(the "Escrow Account") with the Escrow Agent into which certain monies and
Common Stock will be deposited and held in escrow in connection with a proposed
offering of the Common Stock; and
WHEREAS, the Escrow Agent has agreed to act as escrow agent on behalf of
the Company and Investor on the terms and conditions set forth in this
Agreement.
TERMS:
NOW, THEREFORE, in consideration of the premises the parties agree as
follows:
1. DEFINED TERMS. Unless otherwise indicated herein, capitalized terms shall
have the meanings ascribed to them in the Investment Agreement.
2. INVESTMENT AGREEMENT. Pursuant to the terms of the Investment Agreement, in
order to initiate a Put, the Company delivers a Put Notice to the Investor.
During the 20 Business Day Purchase Period following each Put Notice, the
Investor delivers one or more Purchase Notices to the Company indicating the
number of Put Shares that are being purchased that day. The Put Shares set forth
in each Put Notice are priced at the Put Share Price in effect on the date of
the Purchase Notice.
3. APPOINTMENT OF ESCROW AGENT. The Company and Investor each appoint the Escrow
Agent to act as the escrow agent for the sale and purchase of the Common Stock
contemplated by the Investment Agreement, on the terms and conditions
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of this Agreement. Escrow Agent agrees to act as escrow agent and perform the
functions set forth in this Agreement, subject to all its terms.
4. ESCROW AGREEMENT. The Company hereby agrees to pay the Escrow Agent for the
opening and administration of the Escrow Account plus incidental expenses for
all ordinary services rendered hereunder (the "Escrow Fee") according to the fee
schedule attached hereto as SCHEDULE A. The Escrow Agent shall be entitled to
withhold the Escrow Fee from any funds paid to the Company pursuant to this
Escrow Agreement, or Escrow Agent may demand payment of the Escrow Fee from the
Company.
5. DEPOSITS.
5.1 COMPANY DEPOSITS. Prior to each Put Date, at the times and amounts
specified in the Investment Agreement, the Company shall deposit unlegended and
freely tradable shares of Common Stock, in electronic form and in the name of
the Investor (or in such street name as the Escrow Agent directs), under the
Escrow Agent's DTC participation number, representing the Put Shares for that
Put with the Escrow Agent. The Put Shares shall be delivered to the Escrow Agent
in electronic form through the DTC system. The Company shall notify the Escrow
Agent of the number of Put Shares being delivered, by facsimile, not later than
5:00 PM, New York City time, on the day that such shares are delivered.
5.2 INVESTOR DEPOSITS. Under the terms of the Investment Agreement, from
time to time, the Company will deliver Put Notices to the Investor to effect the
sale of a number of Put Shares. The Company shall deliver a copy of each Put
Notice to the Escrow Agent by facsimile or as soon as practicable after it
delivers such Put Notice to the Investor. Under the terms of the Investment
Agreement, the Investor shall deliver the Put Share Price for each Put Share to
the Escrow Agent within four (4) Business Days of the end of the applicable
Pricing Period.
6. DISBURSEMENT OF FUNDS.
Each Put Closing shall occur as set forth below.
(a) INSTRUCTIONS FOR EXCHANGE OF MONEY AND COMMON STOCK. Escrow
Agent shall hold each of the Put Shares deposited by the Company against
delivery of the corresponding Put Share Price by the Investor and shall hold the
corresponding Put Share Price by such Investors against delivery of the Put
Shares, all in compliance with Section 6(b) below.
(b) CONDITIONS FOR RELEASE OF MONEY AND COMMON STOCK. During the
term of this Escrow Agreement and upon the occurrence of both:
(i) receipt by the Escrow Agent of a Put Notice, and
(ii) either
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(a) receipt by the Escrow Agent of the Put Share Price, by certified
or bank check, or wire transfer, for all or any portion of the Put
Shares specified in the Put Notice (each a "Payment") from the
Investor, or
(b) upon a tender (a "DVP Tender") by a broker or other
representative of the Investor of the Put Share Price of all or any
portion of the Put Shares specified in the Purchase Notice in a
Delivery Versus Payment ("DVP") cross-exchange conditioned upon
delivery of the Put Shares,
the Escrow Agent shall promptly execute a DVP cross-exchange (if applicable) and
release the applicable Put Shares to the Investor by placing such shares in the
DVP electronic delivery system under the Investor's name or such other street
name as the Investor so directs, in exchange for the funds representing the Put
Share Price for such Put Shares. Payment for Put Shares shall be deemed to have
been timely made if a DVP Tender as described above is made on or prior to the
Payment Due Date.
At or prior to the close of business of each day that the Escrow Agent receives
any Payment, DVP Tender or Put Shares, the Escrow Agent shall notify the Company
and the Investor of such receipt.
(c) RELEASE OF PAYMENTS TO THE COMPANY. Each time that Put Shares
are delivered to the Investor, the Escrow Agent shall release the corresponding
Payments, less any Escrow Fees then due, as soon as practicable but no later
than the close of business on the same Business Day. No Put Shares shall be
released until Payment or a DVP Tender is made for such Put Shares (in an amount
per share equal to the applicable Put Share Price), and no funds shall be
released to the Company until all of the corresponding Put Shares have been
delivered to Investor.
At the end of each business day in which any shares or Payment are
received, Escrow Agent shall provide to the Company and each Investor a
spreadsheet or similar schedule reflecting the Payments, Common Stock received,
and a schedule listing any moneys wired out by Escrow Agent, if applicable.
Wiring instructions for wiring funds to the Company will be provided to the
Escrow Agent by the Company. Escrow Agent shall call Xxxx X. Xxxxxxx or other
Company designee to confirm receipt of Company's wiring instructions at the
telephone numbers set forth in Section 14.3 below.
(d) RELEASE OF FUNDS TO THE INVESTOR. The Escrow Agent shall release
any excess amounts received from or on account of the Investor in a DVP
cross-exchange or otherwise, net of the amount of any Payments to which the
Company is entitled, to the Investor by wire transfer of immediately available
funds or as otherwise directed by the Investor as soon as possible but no later
than the close of business on the business day following the day that the
corresponding Payments are due to the Company.
The Escrow Agent shall calculate the interest accrued on the total amount of
Payments made by the Investor. The Escrow Agent shall release the interest that
has accrued on each of the Payments to the Investor by wire transfer of
immediately available funds as provided above in the normal course of business,
but no later than five (5) days after the last day of the month in which the
Payment was received.
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(e) TERMINATION OF CALL CLOSING. If the Escrow Agent has not
received Payments totaling the Put Share Price for all Put Shares held by the
Escrow Agent by the close of business on the date that is five (5) Business Days
after the applicable Payment Due Date, then the Escrow Agent shall, upon written
instructions from the Company, return all Put Shares for which payment pursuant
to Section 6(b) has not been received by the Escrow Agent to the Company.
7. INVESTMENT OF FUNDS. All funds received before 2:00 p.m., Atlanta, Georgia
time, on a given day and not disbursed on the same day received shall be
deposited by Escrow Agent into a separate First Union National Bank Money Market
account established for the purpose of this escrow and shall upon clearance earn
per diem interest at a rate provided by the Escrow Agent for such account.
8. OFFERING DATE, ESCROW TERM AND EARLY TERMINATION DATE. For the purpose of
this Escrow Agreement, the Escrow Account's term (the "Escrow Term") shall
commence on the date hereof and shall end on the Termination Date of the
Investment Agreement, or such earlier date that the Company and the Investor
both agree, subject to the resignation of the Escrow Agent pursuant to Section
13 hereof.
9. LIABILITY OF ESCROW AGENT.
(a) Escrow Agent shall have no liability or obligation with respect
to the Escrow Funds except for Escrow Agent's willful or wanton misconduct or
gross negligence. Escrow Agent's sole responsibility shall be for the
safekeeping, investment, and disbursement of the Escrow Funds in accordance with
the terms of this Escrow Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained therein, which
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and to conform to
the provisions of this Escrow Agreement. In no event shall Escrow Agent be
liable for incidental, indirect, special, consequential or punitive damages.
Escrow Agent shall not be obligated to take any legal action or commence any
proceeding in connection with the Escrow Funds, any account in which Escrow
Funds are deposited, this Escrow Agreement or the Underlying Agreement, or to
appear in, prosecute or defend any such legal action or proceeding. Escrow Agent
may consult legal counsel selected by it in the event of any dispute or question
as to the construction of any of the provisions hereof or of any other agreement
or of its duties hereunder, or relating to any dispute involving any party
hereto, and shall incur no liability and shall be fully indemnified from any
liability whatsoever in acting in accordance with the opinion or instruction of
such counsel. Company and Investor, jointly and severally, shall promptly pay,
upon demand, the reasonable fees and expenses of any such counsel.
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(b) The Escrow Agent is authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrow Funds, without determination by the Escrow Agent of such court's
jurisdiction in the matter. If any portion of the Escrow Funds is at any time
attached, garnished or levied upon under any court order, or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order, or in case any order, judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel selected by it is binding upon it
without the need for appeal or other action; and if the Escrow Agent complies
with any such order, writ, judgment or decree, it shall not be liable to any of
the parties hereto or to any other person or entity by reason of such compliance
even though such order, writ, judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
10. FEES AND EXPENSES. It is understood that the fees and usual charges agreed
upon for services of the Escrow Agent shall be considered compensation for
ordinary services as contemplated by this Agreement. In the event that the
conditions of this Agreement are not properly fulfilled by a party other than
the Escrow Agent, or if the Company 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, the Escrow Agent shall be reasonably compensated for such extraordinary
services and reimbursed for all reasonable costs, attorneys' fees, including
allocating costs of in-house counsel, and expenses occasioned by such default,
delay, controversy or litigation. The Company promises to pay these sums upon
demand.
11. INDEMNIFICATION OF ESCROW AGENT. From and at all times after the date of
this Escrow Agreement, the Company and the Investor, jointly and severally (the
"Indemnifying Parties") shall, to the fullest extent permitted by law and to the
extent provided herein, indemnify and hold harmless Escrow Agent and each
director, officer, 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 Company or the
Investor, 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
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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 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 (a) the Indemnifying Parties
agrees to pay such fees and expenses, or (b) the Indemnifying Parties shall fail
to assume the defense of such action or proceeding or shall fail, in the sole
discretion of such Indemnified Party, to employ counsel satisfactory to the
Indemnified Party in any such action or proceeding, (c) the Indemnifying Parties
are the plaintiff in any such action or proceeding or (d) the named or potential
parties to any such action or proceeding (including any potentially impleaded
parties) include both Indemnified Party and the Indemnifying Parties, and
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,
except that any obligation to pay under clause (a) shall apply only to the party
so agreeing. 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. All
of the foregoing losses, damages, costs and expenses of the Indemnified Parties
shall be payable by the Indemnifying Parties, to the extent of the Escrow Funds
upon demand by such Indemnified Party. Upon exhaustion of the Escrow Funds, the
indemnification obligations of Indemnifying Parties hereunder shall be by the
Indemnifying Parties, jointly and severally. The obligations of the Indemnifying
Parties under this SECTION 11 shall survive any termination of this Escrow
Agreement, and the resignation or removal of Escrow Agent shall be independent
of any obligation of the Escrow Agent.
The parties agree that neither the payment by the Indemnifying
Parties of any claim by Escrow Agent for indemnification hereunder nor the
disbursement of any amounts to Escrow Agent from the Escrow Funds in respect of
a claim by Escrow Agent for indemnification shall impair, limit, modify, or
affect, as between the Company and the Investor, the respective rights and
obligations of Company, on the one hand, and the Investor, on the other hand,
under the Investment Agreement.
12. TERMINATION. This Agreement shall terminate upon the expiration of the
Escrow Term, without any notices to any person, unless earlier terminated
pursuant to terms hereof.
13. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign at any time upon
giving at least ten (10) days prior written notice to the parties provided,
however, that no such resignation shall become effective until the appointment
of a successor escrow agent that agrees to the terms of this Agreement which
shall be accomplished as follows: the parties shall use their best effort to
obtain a successor
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escrow agent within ten (10) days after receiving such notice. The 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 Escrow Agent shall thereupon be discharged from any
further duties and liability under this Agreement.
14. MISCELLANEOUS.
14.1 GOVERNING LAWS. This Agreement is created by and shall be construed
under the applicable laws of the State of Georgia except for matters arising
under the United States Securities Act of 1933, as amended (the "Act"), which
matters shall be construed and interpreted in accordance with such laws.
14.2 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 shall constitute one and the same instrument.
14.3 NOTICES.
As to the Company:
Attention: Xxxx X. Xxxxxxx, President
0000 Xxxxx Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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As to the Escrow Agent:
Attn: Xxxxxxx Xxxxxx/Xxxxx Xxxxxxx
First Union National Bank, Corporate Trust Dept.
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
As to the Investor:
Attn: Xxxx Xxxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
14.4 ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties with respect to the Escrow Account with Escrow Agent and Escrow
Agent is not bound by any other agreements that may exist between each Investor
and the Company.
14.5 AUTHORIZATION FOR AMENDMENTS. This Agreement shall not be amended
except pursuant to instructions in writing signed by all parties hereto. Escrow
Agent shall be authorized to act on instructions or amendments to this Agreement
that are signed by the individual indicated below on the signature page in the
case of the Investor and Xxxx X. Xxxxxxx, President, in the case of the Company,
or (b) signed by a representative of Company or Investor who has been duly
authorized and notice of such authorization has been provided to Escrow Agent,
signed by the signatories specified in (a) above, as applicable. Such written
authorization and notice, signed by the appropriate officer, shall constitute
sufficient authorization and notice for Escrow Agent to act upon, and Escrow
Agent shall be authorized to honor instructions or amendments signed by such
authorized representatives.
IN WITNESS WHEREOF, the undersigned have executed this Escrow
Agreement as of the date first written above.
COMPANY:
MEDICAL INDUSTRIES OF AMERICA, INC.
By:_____________________________
Xxxx X. Xxxxxxx, President
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ESCROW AGENT:
FIRST UNION NATIONAL BANK
By:___________________________
Print Name:___________________
Title:________________________
INVESTOR: XXXXXX PRIVATE EQUITY, LLC
By: _________________________________
Xxxx X. Xxxxxx, Manager
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SCHEDULE A
FEES PAYABLE TO ESCROW AGENT
Acceptance Fee: $ 500.00
Annual Escrow Agent Fee: $2,500.00
Attorney's Escrow Fee: $ 500.00 (approximate)
Transaction charges:
PUTS $100
Disbursement of funds $25 per outgoing wire transfer
Acceptance of the Appointment is subject to terms of the transaction and
document provisions being satisfactory to First Union National Bank.
The Acceptance Fee is payable upon execution of the escrow documents. The first
Annual Escrow Fee is payable upon effectiveness of a Registration Statement, as
defined in the Registration Rights Agreement. In the event the escrow is not
funded, the Acceptance Fee and all related expenses will not be refunded. Annual
fees cover a full year in advance, or any part thereof, and thus are not
pro-rated in the year of termination.
All out-of-pocket expenses, including, but not limited to, attorney fees and
expenses, accountant fees and expenses, legal notice publication, environmental
surveys, travel expenses, postage, registered mail and insurance costs, courier
charges, will be billed separately.
The fees quoted in this schedule apply to services ordinarily rendered in the
administration of an Escrow Account and are subject to reasonable adjustment
based on final review of documents, or when the Agent is called upon to
undertake unusual duties or responsibilities, or as changes in law, procedures,
or the cost of doing business demand. Services in addition to and not
contemplated in this Agreement, including, but not limited to, document
amendments and revisions, non-standard cash and/or investment transactions,
calculations, notices and reports, and legal fees, will be billed as
extraordinary expenses.
Unless otherwise indicated, the above fees provide for the establishment of one
account. Additional sub-accounts governed by the same Escrow Agreement may incur
an additional charge.
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