ESCROW AGREEMENT
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ESCROW AGREEMENT (this "Agreement"), dated as of March 2, 2001, by and
among Alpha Venture Capital, Inc., a corporation organized and existing under
the laws of the Xxxx Islands (the "Investor"), Science Dynamics Corporation,
a corporation organized and existing under the laws of the State of Delaware
(the "Company") and Dundee Securities Corporation, as escrow agent (the
"Escrow Agent").
W I T N E S S E T H:
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WHEREAS, pursuant to a Common Stock Purchase Agreement dated as of
March 2, 2001 between the Company and the Investor (the "Purchase
Agreement"), the Company and the Investor desire to have shares (the "Escrow
Shares") of common stock, par value $0.01 per share, of the Company (the
"Common Stock") delivered to the Escrow Agent to hold, along with immediately
available funds for the purchase of the Common Stock (the "Escrow Funds"),
and the Escrow Agent has agreed to receive, hold and redeliver the Escrow
Shares and the Escrow Funds, all upon the terms and subject to the conditions
hereinafter set forth. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings provided in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. On the eighth (8th) Trading Day following any Put Date, the Company
shall deliver to the Escrow Agent an unlegended certificate for such number
of shares of Common Stock to be purchased pursuant to the applicable Put
Purchase Notice and the Investor shall deliver to the Escrow Agent the
Purchase Price for such Put in immediately available funds.
2. The Escrow Agent shall promptly notify the Company of receipt of the
Purchase Price for the Put Shares for the applicable Put. On the Put Closing
Date (the ninth (9th) day following the Put Date), (a) the delivery of the
Purchase Price by the Investor and the unlegended certificate or certificates
for such Put Shares by the Company shall be deemed to constitute compliance
with the conditions precedent to the purchase and sale of the Common Stock
pursuant to the Purchase Agreement, unless otherwise notified in writing by
the Investor and the Company and (b) upon the joint written directions of the
Company and the Investor, the Escrow Agent shall release the relevant Escrow
Funds to or upon the order of the Company, and shall release the relevant
Escrow Shares to the Investor. If the Company and the Investor jointly
notify the Escrow Agent that on the relevant Put Closing Date that any
conditions precedent to the obligations of the Company or the Investor, as
the case may be, under the Purchase Agreement to be effected that date were
not satisfied or waived, then the Escrow Agent shall return the relevant
Escrow Funds to the Investor and the relevant Escrow Shares to the Company,
unless otherwise directed by the Investor or the Company. Prior to return of
any Escrow Funds to the Investor, the Investor shall furnish such tax
reporting or other information as shall be appropriate for the Escrow Agent
to comply with applicable United States laws. The Escrow Agent shall deposit
all funds received hereunder in the Escrow Agent's account.
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3. (a) The certificates for any Escrow Shares delivered to the Escrow
Agent pursuant hereto shall be deposited for safekeeping with the Escrow
Agent (the "Escrow Account"). During the Escrow Period (hereinafter
defined), none of such Escrow Shares deposited in the Escrow Account shall
become the property of the Investor or any other entity or be subject to the
debts of the Investor or any other entity except as expressly provided
herein, and the Escrow Agent shall neither make nor permit any disbursements
or deliveries from the Escrow Account except as expressly provided herein.
(b) The Escrow Period shall begin on the date of the Purchase
Agreement and shall continue until it expires pursuant to the Purchase
Agreement. Notwithstanding the foregoing, if any Escrow Shares remain in the
Escrow Account, all such Escrow Shares then remaining in the Escrow Account
shall be forwarded to the Company's transfer agent for the Common Stock
within five (5) business days thereafter upon written request given to the
Escrow Agent by the Company.
4. The Company shall deliver to the Escrow Agent appropriate written
notice of any extension or amendment to the Agreement.
5. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Investor
and the Escrow Agent.
6. 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, and any act done or omitted
by the Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-
at-law shall be conclusive evidence of such good
faith.
7. 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.
8. The Escrow Agent shall not be liable in any respect on account of
the identity, authorities 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 hereunder.
9. The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary 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
therefore.
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10. 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 Investor. In the event of any such resignation, the Investor and the
Company shall appoint a mutually agreeable successor Escrow Agent.
11. If the Escrow Agent reasonably requires other or further
instruments in connection with this Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such
instruments.
12. 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, the Escrow Shares or the Escrow Funds held by the Escrow Agent
hereunder, the Escrow Agent is authorized and directed in the Escrow Agent's
sole discretion (a) to retain in the Escrow Agent's possession without
liability to anyone all or any part of said documents, the Escrow Shares or
the Escrow Funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of 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 (b) to
deliver the Escrow Shares, 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 City of New
York and State of New York in accordance with the applicable procedure
therefore.
13. The Company and the Investor agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its officers, directors,
employees and agents 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 other than any such claim, liability, cost or expense
to the extent the same shall (a) have been tax obligations in connection with
Escrow Agent's fee hereunder, or (b) 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. It is
understood and agreed that this indemnification shall survive the termination
or discharge of this agreement or the resignation of the Escrow Agent.
14. Any notice to the Investor or the Company required or permitted
hereunder shall be given in the manner provided in the Section headed
"Notices" in the Purchase Agreement, the terms of which are incorporated
herein by reference. Any notice to the Escrow Agent shall be addressed to
Dundee Securities Corporation, Suite 3424 Four Bentall Centre, 0000 Xxxxxxxx
Xxxxxx, X.X. Xxx 00000, Xxxxxxxxx, XX X0X 0X0, Attention: Xxxxx Xxxxx, Fax
No.: (000) 000-0000.
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15. By signing this Agreement, the Escrow Agent becomes a party hereto
only for the purpose of this Agreement and the Escrow Agent does not become a
party to the Purchase Agreement. The Company and the Investor have become
parties hereto by their execution and delivery of the Purchase Agreement, as
provided therein.
16. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns and
shall be governed by the laws of the State of New York without giving effect
to principles governing the conflicts of laws. A facsimile transmission of
these instructions signed by the Escrow Agent shall be legal and binding on
all parties hereto.
17. The rights and obligations of any party hereto are not assignable
without the written consent of the other parties hereto. This Agreement
constitutes the entire agreement amongst the parties with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first
set forth above.
Science Dynamics Corporation
By:___________________________
Name:
Title:
Alpha Venture Capital, Inc.
By: __________________________
Name:
Title:
Dundee Securities Corporation
By: __________________________
Name:
Title:
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