Exhibit 10(i)
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of October 31, 2001, by and
among Enviro-Clean of America, Inc., a Nevada corporation, the principal place
of business of which is located at 0000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx 00000
("Company"), Xxxxxxx X. Xxxxx, an individual, who has been appointed Agent and
Attorney-In-Fact for certain purchasers of the Company's promissory notes and
whose principal place of business is located at 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxx 00000 ("Agent") and Xxxxxxx X. Xxxxx as the escrow agent (the
"Escrow Agent"):
Recitals
WHEREAS, the Company holds title to certain shares of common stock, par
value $0.01 (the "Common Stock"), of IVAX Diagnostics, Inc., a Delaware
Corporation ("Diagnostics");
WHEREAS, from time to time before, on and after the effective date of this
Agreement, the Company will issue promissory notes to private investors
(all such notes, whenever created or issued being referred to herein as the
"Notes") in a private offering (the "Offering") pursuant to that certain
private placement memorandum dated August 23, 2001 (the "Memorandum");
WHEREAS, the Company has agreed to grant a security interest in certain
shares of Common Stock of Diagnostics (the "Diagnostics Shares") in favor
of the private investors in order to secure the payment of all Notes
whenever issued pursuant to that certain security agreement of even date
with this Agreement among the Agent and the Company (the "Security
Agreement") and Agent has been appointed by the private investors to act as
their sole Agent and Attorney-in-Fact in all matters pertaining to the
security interest in the Collateral pursuant to that certain agency
agreement among the holders of the Investor Notes, Secured Party as agent
for the holders of the Notes, and Debtor (the "Agency Agreement"); and
WHEREAS, the Company has agreed to deliver the Diagnostics Shares to the
holders of the Notes (the "Holders") to ensure perfection of the security
interest by delivering the Diagnostics Shares and appropriate stock powers
(the "Stock Powers") to an escrow agent to hold for the benefit of the
Holders. This Agreement, the Agency Agreement, the Notes, the Security
Agreement and all other documents and instruments executed in connection
herewith or therewith, are collectively referred to as the "Offering
Documents."
NOW, THEREFORE, in consideration of the purchase of the Notes by the
private investors, the premises and the agreements herein contained, and other
good and valuable
1
consideration, the receipt and sufficiency of which is hereby acknowledged,
Company, Agent and Escrow Agent hereby agree as follows:
1. Delivery of Diagnostics Shares.
Upon the Final Closing of the Offering (as defined in the Memorandum), the
Company shall deliver to the Escrow Agent a number of Diagnostics Shares with an
aggregate Fair Market Value (as defined below) equal to 125% of the total
aggregate face value of the Notes purchased pursuant to the Offering. In
addition, the Company shall deliver to the Escrow Agent appropriate Stock Powers
in favor of the Holders. The delivery of the Diagnostics Shares and Stock Power
to the Escrow Agent is intended by the Parties to be a delivery of the
Diagnostics Shares to the Holders and is intended to give the Holders full
control of the delivered Diagnostics Shares, in order to perfect a security
interest as described in the Texas Business and Commerce Code.
The "Fair Market Value" per share of Common Stock of the Diagnostics Shares
shall be equal to the average of the closing price per share of Common Stock of
Diagnostics as reported by The American Stock Exchange or such other securities
exchange, market or quotation system on which Common Stock of Diagnostics is
then listed for trading or quoted on each of the ten (10) trading days prior to
the date hereof or each Value Review Date (herein defined) as the case may be.
2. Terms of Escrow.
(a) The Escrow Agent shall hold the delivered Diagnostics Shares in
escrow pending notice from the Agent directing the Escrow Agent to release the
Diagnostics Shares and Stock Power to the Company, subject to the adjustments
described below. The Company shall deliver written notice of the total amount of
Notes outstanding (the "Outstanding Note Amount") to the Agent, at least five
(5) days prior to each of the Value Review Dates, as defined in this Section 2.
On January 1, April 1, July 1, and October 1 of every year during the term of
the Notes, so long as any Notes remain outstanding (the "Value Review Dates"),
the Escrow Agent shall calculate the number of Diagnostics Shares which Fair
Market Value would equal 125% of the Outstanding Note Amount on such dates. The
Agent shall then give notice on that day, by phone, electronic mail, facsimile
or any other delivery method, to the Escrow Agent and the Company (each such
notice being referred to herein as an "Agent Notice"). Each Agent Notice shall
specify (1) the Fair Market Value per share of the Diagnostics Shares and (2)
the number of Diagnostics Shares with a Fair Market Value that is 125% of the
Outstanding Note Amount, (3) the number and Fair Market Value of Diagnostics
Shares currently held by the Escrow Agent for purposes of this Agreement, (4) if
the Fair Market Value of the Diagnostics Shares held by the Escrow Agent exceeds
125% of the Outstanding Note Amount (the "Excess Amount"), the total Excess
Amount and the number of Diagnostics Shares with a Fair Market Value equal to
the Excess Amount (the "Excess Shares"), and (5) if the Fair Market Value of the
Diagnostics Shares held by the Escrow Agent is less than the Outstanding Note
Amount ("Deficit Amount"), then the total Deficit Amount and the number of
Diagnostics Shares with a Fair Market Value equal to the Deficit Amount (the
"Deficit Shares"). The Escrow Agent shall
2
be entitled to rely completely on the Agent Notice and shall be under no duty
whatsoever to make any calculations regarding any of the calculations made
therein.
(b) Upon receipt of an Agent Notice by the Company in which there is
an Excess Amount, the Company may request that the Escrow Agent deliver all or
any portion of the Excess Shares to the Company by sending a written notice of
request to be delivered to the Escrow Agent ("Company Request") within three (3)
days of a Value Review Date. Upon receipt of a Company Request, the Escrow Agent
must, as soon as practicable, deliver to the Company the requested Diagnostics
Shares and any documents necessary to relinquish any rights by the Holders in
the Excess Shares and the Agent shall execute any such documents on behalf of
the Holders.
(c) Upon receipt of an Agent Notice by the Company in which there is a
Deficit Amount, the Company must, within three (3) days of a Value Review Date,
deliver to the Escrow Agent the total number of Deficit Shares, rounded up to
the nearest whole number.
(d) In the event that any dispute relates to a claim by the Company
that it (i) is entitled to receive a greater number of Excess Shares or (ii) is
required to deliver a lesser number of Deficit Shares than is set forth in the
Agent Notice, the Escrow Agent may release or receive any such undisputed number
of Diagnostics Shares as is specified in the relevant Agent Notice in reliance
upon such Agent Notice.
3. Duties and Obligations of the Escrow Agent.
(a) The parties hereto agree that the duties and obligations of the
Escrow Agent are only such as are herein specifically provided and no other. The
Escrow Agent's duties are as a depository only and the Escrow Agent shall incur
no liability whatsoever, except as a direct result of its willful misconduct or
gross negligence in performance of its duties hereunder. The Escrow Agent shall
have no liability whatsoever for the failure of the Agent or the Company to
perform any of their respective obligations hereunder, under the Offering
Documents or otherwise.
(b) The Escrow Agent may consult with counsel of its choice, if it so
chooses, and shall not be liable for any action taken, suffered or omitted by it
in accordance with the advice of such counsel.
(c) The parties acknowledge that the Escrow Agent shall not be bound
in any way by the terms of any other agreement to which the Agent and the
Company are parties, whether or not it has knowledge thereof, except as may be
required in Escrow Agent's role as a party of any such document, and the Escrow
Agent shall not in any way be required to determine whether or not any other
agreement has been complied with by the Agent or the Company, or any other party
thereto. 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 jointly by the Agent and the Company,
and agreed to in writing by the Escrow Agent.
(d) Whenever the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict
3
with any of the provisions of this Agreement, it shall be entitled to refrain
from taking any action, other than to keep safely all property held in escrow,
until it shall be directed otherwise in writing by the Agent or by a final
judgment of a court of competent jurisdiction.
(e) The Escrow Agent shall be fully protected in relying upon any
written notice, demand, certificate or document which it, in good faith,
believes to be genuine, including without limitation any Agent Notice. The
Escrow Agent shall not be responsible for the sufficiency or accuracy of the
form, execution, validity or genuineness of documents or securities now or
hereafter deposited hereunder, or of any endorsement thereon, or for any lack of
endorsement thereon, or for any description therein; nor shall the Escrow Agent
be responsible or liable in any respect on account of identity, authority or
rights of the persons executing or delivering or purporting to execute or
deliver any such document, security or endorsement.
(f) The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of any funds,
securities or documents held in escrow pursuant to this Agreement.
(g) The Escrow Agent may at any time resign and be discharged from
this escrow obligations hereby created by giving sixty (60) days prior written
notice of such resignation by mailing notice thereof to the Company and to the
Agent, and such resignation shall take effect upon the appointment of, and
acceptance of such appointment by, a successor Escrow Agent, such successor
Escrow Agent to be appointed by the Holders in the manner hereinafter provided.
The Escrow Agent may be removed after thirty (30) days' written notice by
Holders holding more than 50% of the aggregate principal amount of Notes then
outstanding by filing with the Agent and with the Company evidence of the action
in that regard taken by the Holders. If at any time the Escrow Agent (i) shall
resign or shall be removed or (ii) shall become incapable of acting, or shall be
adjudged as bankrupt or insolvent, or a receiver of the Escrow Agent or of its
property shall be appointed, or any public officer shall take charge or control
of the Escrow Agent or of this property or affairs for the purpose or
rehabilitation, conservation or liquidation, then a vacancy shall be deemed to
exist in the office of the Escrow Agent, and a successor Escrow Agent may be
appointed by Holders holding more than 50% of the aggregate principal amount of
Notes then outstanding by filing with the successor Escrow Agent, the Company
and the retiring Escrow Agent evidence of the action. If no successor Escrow
Agent shall have been appointed pursuant to the foregoing provisions of this
paragraph, and accepted appointment in accordance with this Agreement, Holders
holding more than 50% of the aggregate principal amount of Notes then
outstanding or the retiring Escrow Agent may apply to any court of competent
jurisdiction to appoint a successor Escrow Agent. Said court may thereupon after
such notice, if any, as the court may deem proper and prescribe, appoint a
successor Escrow Agent. Any resignation or removal of the Escrow Agent under
this Agreement and any appointment of a successor Escrow Agent pursuant to this
Agreement shall become effective upon acceptance of appointment by the successor
Escrow Agent. Any successor Escrow Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor Escrow Agent, and also to the Holders
and the Company an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Escrow Agent shall
become effective and such successor Escrow Agent, without any further act, deed
or
4
conveyance, shall become fully vested with all the properties, rights, powers,
trusts, duties and obligations of its predecessor hereunder, with like effect as
if originally named as Escrow Agent herein.
(h) This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to the Agent or the Company. The Company acknowledges that the
Escrow Agent also will acts as Agent in connection with the Offering. The
Company expressly consents to the Escrow Agent's role as Agent and Attorney-in-
Fact of the Holders.
(i) Upon the performance of this Agreement, the Escrow Agent shall be
deemed released and discharged of any further obligations hereunder.
4. Escrow Fees.
There shall be no fee paid to the Escrow Agent for serving under this
Escrow Agreement. However, the Company shall reimburse the Escrow Agent for any
expenses incurred by the Escrow Agent in connection with its services under this
Escrow Agreement. Reimbursement of such expenses shall be due immediately upon
receipt of the Company of an invoice from the Escrow Agent specifying the nature
and amount of such expenses.
5. Indemnification.
(a) To the extent that the Agent and the Escrow Agent are different
parties during this Agreement, the Agent hereby indemnifies and holds free and
harmless Escrow Agent from any and all losses, damages, taxes, liabilities or
expenses (including but not limited to reasonable attorney's fees, and amounts
paid in settlement) resulting from claims asserted by the Company against Escrow
Agent with respect to the performance of any of the provisions of this
Agreement; provided that the Escrow Agent shall not be entitled to any indemnity
for any losses, damages, taxes, liabilities or expenses that directly result
from its willful misconduct or gross negligence.
(b) The Company hereby indemnifies and holds free and harmless Escrow
Agent from any and all losses, damages, taxes, liabilities or expenses
(including but not limited to reasonable attorney's fees, and amount paid in
settlement) resulting from claims asserted by the Agent, if the Agent is a
different party than the Escrow Agent, against Escrow Agent with respect to the
performance of any of the provisions of this Agreement; provided that the Escrow
Agent shall not be entitled to any indemnity for any losses, damages, taxes,
liabilities or expenses that directly result from its willful misconduct or
gross negligence.
(c) The Agent and the Company, jointly and severally, hereby indemnify
and hold the Escrow Agent harmless from and against any and all losses, damages,
taxes, liabilities and expenses that may be incurred by the Escrow Agent,
arising out of or in connection with its acceptance of appointment as the Escrow
Agent hereunder and/or the performance of its duties pursuant to this Agreement
by any party other than as described in Sections 5(a) and (b), including, but
not limited to, all legal costs and expenses of the Escrow Agent incurred
defending itself against any claim or liability in connection with its
performance hereunder;
5
provided that the Escrow Agent shall not be entitled to any indemnity for any
losses, damages, taxes, liabilities or expenses that directly result from its
willful misconduct or gross negligence.
6. Miscellaneous.
(a) All notices, requests, demands and other communications hereunder
shall be in writing, unless otherwise indicated herein, and shall be deemed to
have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent
by telecopier, upon receipt of proof of sending thereof, (iii) is sent by
Express Mail, Federal Express or other express delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, upon receipt or
refusal or failure to accept receipt, in each case if delivered to the following
addresses:
(i) If to the Agent or Escrow Agent, to:
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
(ii) If to the Company, to:
Enviro-Clean of America, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
or at such other address as any of the parties to this Agreement may hereafter
designate in the manner set forth above to the others.
(b) This Agreement shall be construed and enforced in accordance with
the laws of the State of Texas. All parties hereto consent to submit any dispute
hereunder to Courts located within the State of Texas.
(c) This Agreement may be executed in two or more counterparts, all of
which when taken together shall 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 all 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.
[Signature Page to Follow]
6
[Signature Page to the Escrow Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
ENVIRO-CLEAN OF AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx, Chief Executive Officer
THE AGENT AND ESCROW AGENT:
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
7
