Exhibit 7c
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of April 9, 2000, by and
among Dauphin Technology, Inc., a corporation incorporated under the laws of
Illinois, (the "Company"), Techrich International Limited ("Purchaser"), and
Xxxxxxx Xxxxxx & Green, P.C., having an address at 000 Xxxx Xxxxxx, Xxx Xxxx,
XX 00000 (the "Escrow Agent"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Common Stock Purchase Agreement
referred to in the first recital.
WHEREAS, the Purchaser will from time to time as requested by the Company,
purchase shares of the Company's Common Stock from the Company as set forth
in that certain Common Stock Purchase Agreement (the "Purchase Agreement")
dated the date hereof between the Purchaser and the Company, which will be
issued as per the terms and conditions contained herein and in the Purchase
Agreement; and
WHEREAS, the Company and the Purchaser have requested that the Escrow Agent
hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase
Agreement, and have further requested that upon each exercise of a Draw Down,
the Escrow Agent hold the relevant documents and the applicable purchase
price pending receipt by Purchaser of certificates representing the
securities issuable upon such Draw Down;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow account with the Escrow
Agent whereby the Escrow Agent shall hold the funds and documents which are
referenced in Section 5.2 of the Purchase Agreement.
1.2. At the Closing, the Company shall deliver to the Escrow Agent:
(i) the original executed Registration Rights Agreement in the form of
Exhibit A to the Purchase Agreement;
(ii) the original executed opinion of Xxxxx and Xxxxxx, P.C., in the form of
Exhibit C to the Purchase Agreement;
(iii) the sum of $20,000 for the non-accountable expenses of Ladenburg
Xxxxxxxx & Co. Inc.;
(iv) the original executed Company counterpart of this Escrow Agreement;
(v) the original executed Company counterpart of the Purchase Agreement;
and
(vi) a warrant certificate to purchase up to 250,000 shares of the Company's
Common Stock with a three (3) year term from their date of issuance at
an exercise price equal to the average of the five (5) lowest closing
bid prices of the Company's Common Stock during the 22 Trading Days
most recently preceding the initial closing date on which the trading
volume exceeds one million (1,000,000) shares, issued to Ladenburg
Xxxxxxxx & Co. Inc. (the "LT Warrants").
1.3. Upon receipt of the foregoing, and receipt of executed counterparts
from Purchaser of the Purchase Agreement, the Registration Rights Agreement
and this Escrow Agreement, the Escrow Agent shall calculate and enter the
exercise price, the issuance date and termination date on the face of the LT
Warrant and immediately transfer the sum of Twenty Thousand Dollars
($20,000), as a non-accountable expense allowance and the LT Warrant to
Ladenburg Xxxxxxxx & Co. Inc. and the Escrow Agent shall then arrange to have
the Purchase Agreement, this Escrow Agreement, the Registration Rights
Agreement and the opinion of counsel delivered to the appropriate parties.
Such calculation of the Warrant exercise price shall be provided to the
Company for its concurrence at the Closing.
ARTICLE 2
TERMS OF THE ESCROW FOR EACH DRAW DOWN
2.1. Each time the Company shall send a Draw Down Notice to the Purchaser as
provided in the Purchase Agreement, it shall send a copy, by facsimile, to
the Escrow Agent.
2.2. Each time the Purchaser shall purchase Shares pursuant to a Draw Down,
the Purchaser shall send the applicable purchase price of the Draw Down
Shares to the Escrow Agent, which shall advise the Company in writing that it
has received the purchase price for such Draw Down Shares. The Company shall
promptly, but no later than three (3) Trading Days after receipt of such
funding notice from the Escrow Agent, cause its transfer agent to issue the
Draw Down Shares to the Purchaser via DTC deposit to the account specified by
the Purchaser from time to time and deliver to the Escrow Agent the Warrants.
Upon receipt of written confirmation from the transfer agent or from the
Purchaser that such Draw Down Shares have been so deposited and the Warrants
have been so delivered, the Escrow Agent shall enter the calculate and enter
the number, the exercise price, the Issuance Date and the Termination Date on
the face of the Warrant and shall within one (1) Trading Day wire 97% of the
purchase price per the written instructions of the Company, net of One
Thousand Five Hundred Dollars ($1,500) as escrow expenses to the Escrow
Agent, and the remaining 3% of the purchase price as directed by Ladenburg
Xxxxxxxx & Co. Inc. Such calculation of the Warrant exercise price shall be
provided to the Company for its concurrence at the applicable Closing.
ARTICLE 3
MISCELLANEOUS
3.1. No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
3.2. All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent by fax, overnight courier, registered
or certified mail, postage prepaid, return receipt requested, and shall be
deemed received upon receipt thereof, as set forth in the Purchase Agreement.
3.3. This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties
hereto.
3.4. This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Escrow Agreement may not be modified, changed, supplemented or terminated,
nor may any obligations hereunder be waived, except by written instrument
signed by the parties to be charged or by their respective agents duly
authorized in writing or as otherwise expressly permitted herein.
3.5. Whenever required by the context of this Escrow Agreement, the singular
shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of
the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Escrow Agreement.
3.6. The parties hereto expressly agree that this Escrow Agreement shall be
governed by, interpreted under and construed and enforced in accordance with
the laws of the State of New York. Except as expressly set forth herein, any
action to enforce, arising out of, or relating in any way to, any provisions
of this Escrow Agreement shall brought in the Federal or state courts of New
York, New York as is more fully set forth in the Purchase Agreement.
3.7. The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the Company, Purchaser and the Escrow
Agent.
3.8. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder
as the Escrow Agent while acting in good faith, excepting only its own gross
negligence or willful misconduct, and any act done or omitted by the Escrow
Agent pursuant to the advice of the Escrow Agent's attorneys-at-law (other
than Escrow Agent itself) shall be conclusive evidence of such good faith.
3.9. The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
3.10. The Escrow Agent shall not be liable in any respect on account of the
identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.
3.11. The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Purchaser, and may continue to act as legal counsel for the Purchaser, from
time to time, notwithstanding its duties as the Escrow Agent hereunder. The
Company consents to the Escrow Agent in such capacity as legal counsel for
the Purchaser and waives any claim that such representation represents a
conflict of interest on the part of the Escrow Agent. The Company
understands that the Purchaser and the Escrow Agent are relying explicitly on
the foregoing provision in entering into this Escrow Agreement.
3.12. The Escrow Agent's responsibilities as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by written notice to the Company
and the Purchaser. In the event of any such resignation, the Purchaser and
the Company shall appoint a successor Escrow Agent.
3.13. If the Escrow Agent reasonably requires other or further instruments
in connection with this Escrow Agreement or obligations in respect hereto,
the necessary parties hereto shall join in furnishing such instruments.
3.14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the documents or
the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain
in the Escrow Agent's possession without liability to anyone all or any part
of said documents or the escrow funds until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a
final order, decree or judgment or a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but the
Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings or (2) to deliver the escrow funds and any other property
and documents held by the Escrow Agent hereunder to a state or Federal court
having competent subject matter jurisdiction and located in the State and
City of New York in accordance with the applicable procedure therefor.
3.15. The Company and the Purchaser agree jointly and severally to indemnify
and hold harmless the Escrow Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as
of the date set forth above.
DAUPHIN TECHNOLOGY, INC.
By: s/Xxxxxx Xxxxxxxxxx/
Xxxxxx Xxxxxxxxxx, President & CEO
PURCHASER:
Techrich International Limited
By: s/Xxxx Xxxxxxx/
Name: Xxxx Xxxxxxx
Title: Authorized Signatory
ESCROW AGENT:
Xxxxxxx Xxxxxx & Green, P.C.
By: s//
Authorized Signatory
