ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement") dated February ___, 1996 among NOVATEK
INTERNATIONAL, INC., a Colorado corporation ("NII"), NOVATEK INTERNATIONAL
HOLDINGS, INC., a Florida corporation ("NIH"), NEW ENGLAND DIAGNOSTICS
CORPORATION, a Cayman Islands corporation ("XXX"), and Xxxxxx Xxxxxxx & Co.,
Inc. ("Escrow Agent").
PRELIMINARY STATEMENT
NII and, among other parties, Medical Products, Inc., a Florida corporation
("MPI"), entered into a certain Agreement and Plan of Merger dated as of
December 29, 1995 (the "Plan of Merger"). Capitalized terms used in this
Agreement without definition shall have the meanings given to such terms in the
Plan of Merger.
The parties to the Plan of Merger agreed that, at closing, MPI would be
merged with and into Novatek International Holdings, Inc., a Florida corporation
("NIH"), a wholly-owned subsidiary of NII (the "Merger"). A portion of the
Merger Consideration is in the form of a $36,000,000 9% Convertible Debenture
due January 1, 2001 (the "Debenture"), issued by NII in favor of XXX in
satisfaction of the XXX Contingent Obligations. As provided in the Plan of
Merger, if the Brazil Agreement is not executed and delivered by the Closing,
the Debenture will be delivered into an escrow and held in such escrow for the
benefit of XXX pending completion and full execution and delivery of the Brazil
Agreement. As of the date hereof, which is the Closing Date under the Plan of
Merger, the Brazil Contract has not been finally executed and delivered, and
XXX, XXX and Escrow Agent have therefor agreed to establish an escrow for
the purpose of holding the Debenture as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which is hereby mutually
acknowledged, the parties agree as follows:
1. An escrow is hereby established pursuant to the terms hereof and Escrow
Agent is hereby appointed as escrow agent to administer such escrow and
consummate the transactions described herein. Escrow Agent accepts such
appointment and agrees to perform in accordance with the terms hereof.
2. On the date hereof ("Escrow Commencement Date"), NII shall deliver to
Escrow Agent, and Escrow Agent shall receive and hold pursuant to this
Agreement, the original Debenture executed by NII. A specimen of the Debenture
is attached as Exhibit "A" hereto.
3. Escrow Agent shall hold the Debenture in escrow until the "Escrow
Termination Date", which shall mean the earlier of (a) 5:00
p.m., eastern time, on September 30, 1996 or (b) the date on which the
"Condition" is satisfied.
4. As used herein, the "Condition" shall mean receipt by Escrow Agent,
prior to the Escrow Termination Date, of the following: (a) an fully executed
copy of the Brazil Agreement, in the form substantially similar to the specimen
attached as Exhibit "B", and certified as being true and correct by XXX and NIH;
and (b) written authorization from NII to release the Debenture to XXX.
5. (a) If the Condition is not satisfied by 5:00 p.m. eastern time on
September 30, 1996, Escrow Agent shall terminate this escrow by delivering the
original Debenture to NII by overnight courier for delivery on the following
business day, with written notice of such delivery being provided to NIH and
XXX. In such instance, the original Debenture shall be cancelled and
destroyed by NII, and shall be a nullity; and the Merger Consideration shall be
deemed to exclude the Debenture and the value and rights evidenced therein.
Once such delivery to NII is consummated as provided herein, this Agreement
shall be terminated.
(b) If the Condition is satisfied prior to 5:00 p.m. eastern time on
September 30, 1996, Escrow Agent shall consummate this escrow by delivering the
Debenture to XXX by overnight courier for delivery the next business day, with
written notice of such delivery being provided to NII and NIH. XXX agrees to
provide NII, NIH and Escrow Agent with an acknowledgement of delivery and
receipt with respect to he Debenture so delivered. Once such delivery and
receipt is consummated as provided herein, this Agreement shall be terminated.
6. Notwithstanding the Closing of the Merger, and the creation of the
escrow provided for in this Agreement, and the execution and delivery of the
Debenture into escrow as provided herein, XXX acknowledges and agrees that
the Debenture is not, and shall not be deemed to be, executed and delivered in
favor of XXX or owned or held by XXX, unless and until the Condition is timely
satisfied and the Debenture is released from escrow and delivered to XXX as
provided in Section 5 (b) above.
7. Escrow Agent shall promptly notify NII, NIH and XXX, and promptly
forward to such parties copies, of all inquiries, demands or other
communications, if any, which Escrow Agent may receive during the term of this
Agreement concerning the Debenture or in respect of the duties and obligations
of Escrow Agent.
8. Each of NII, NIH, XXX and Escrow Agent, respectively, represents and
warrants that the execution, delivery and performance of this Agreement has
been duly authorized and does not violate or conflict with any agreement,
statute, regulation, order, judgment or writ that is binding upon the
representing party or its assets.
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9. Escrow Agent shall not in any way be bound by or affected by any notice
or modification or cancellation of this Agreement unless in writing, signed by
all parties hereto, nor shall it be bound by any modification thereof unless the
same shall be satisfactory to it. Escrow Agent shall be entitled to rely upon
any judgment, certification, demand or other writing without being required to
determine the authenticity or correctness of any facts stated therein or the
propriety or validity of the service thereof, or the jurisdiction of the court
issuing judgment and order.
10. Escrow Agent may act in reliance upon any document, instrument or
signature believed by it to be genuine and may assume that any person purporting
to give any notice or instructions in accordance with the provisions hereof has
been duly authorized to do so. In performance of its duties hereunder, Escrow
Agent will exercise the same degree of care and will give the same attention to
the performance of its obligations hereunder as if the services were being
performed for Escrow Agent itself. Escrow Agent may act relative to its duties
hereunder in reliance upon advice of counsel and shall not be liable for any
mistake of fact or error of judgment or for any acts or admissions unless caused
by its willful misconduct or negligence.
11. This Agreement sets forth exclusively Escrow Agent's duties with
respect to the Debenture and any and all matters pertinent hereto.
Notwithstanding references in this Agreement to the Plan of Merger in connection
with defined terms or otherwise, Escrow Agent shall not refer to and shall not
be bound by the provisions of any other agreement, including the Plan of Merger,
other than this Agreement.
12. Escrow Agent may at any time resign by giving written notice of its
resignation to all parties. The effective date of such resignation shall be
specified in the notice delivered by Escrow Agent. At the option of NII, NIH or
XXX, the effective date of resignation may be postponed to a date not more than
sixty (60) days from the date of delivery of Escrow Agent's notice of
resignation.
(a) Prior to the effective date of resignation, the Debenture and any
other property then held by Escrow Agent hereunder shall be delivered by Escrow
Agent to a successor escrow agent as may be designated in writing by both NII
and XXX whereupon the obligations of Escrow Agent hereunder shall cease and
terminate.
(b) Failing NII's and NED's written designation of a successor escrow
agent, Escrow Agent's sole responsibility shall be to retain and keep safely the
Debenture and follow the directions of the final order or judgment of a court of
competent jurisdiction, or Escrow Agent may file an interpleader action and
deliver the Debenture to a court of competent jurisdiction in Broward County,
Florida, in which case Escrow Agent shall be
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discharged of its duties and obligations hereunder. Escrow Agent is authorized
to file such a interpleader action at any time when conflicting or inconsistent
claims or positions are asserted against Escrow Agent or with respect to the
Debenture or any property held by Escrow Agent hereunder.
(c) Upon Escrow Agent's resignation or termination of this Agreement
for any reason other than the occurrence of the Condition prior to the end of
the Escrow Termination Date, Escrow Agent will reasonably cooperate with the
parties and will provide to the parties such services as may be necessary for an
orderly takeover of Escrow Agent's responsibilities hereunder and for an orderly
transfer of the Debenture as provided herein.
13. Nothing contained in this Agreement shall be deemed to obligate Escrow
Agent to deliver the Debenture or any other property unless the same shall at
first been received by Escrow Agent pursuant to this Agreement.
14. Escrow Agent's duties with respect to the delivery of the Debenture or
any property shall be fully performed by mailing the Debenture or such property,
uninsured, by nationally recognized overnight delivery service, to the
respective addresses identified herein for notice purposes.
15. Any notices, certifications or other communications required or
permitted to be given, made or sent under this Agreement shall be in writing,
signed by the party giving or making such notice, and such notices and any
deliveries shall be delivered by nationally recognized overnight delivery
service to the applicable parties at their respective addresses set forth as
follows:
Novatek International, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Novatek International Holdings, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
New England Diagnostics Notice to: Xxxxxx Xxxxxxx & Co. Inc.
----------------------- 0000 XX Xxxxxxxxx Xxxx.
0 Xxxxxxxxx Xx. Xxxxx 000
----------------------- Boca Raton, Fla.
Hingham, MA Attn: Xxxxxx XxXxxxx
-----------------------
Attn: Xxxxx Xxxxxxx
-----------------------
-----------------------
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Any party shall have the right to change an address for notice or delivery
purposes by giving notice of such change sent in accordance with the notice
provisions hereof.
16. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
17. This Agreement shall be governed by and construed according to the laws
of the State of Florida, exclusive of its choice of laws principles.
18. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and no other party shall have any rights to enforce or require
performance of the any of the provisions of this Agreement. This Agreement
shall not be assignable by XXX without the prior written consent of NII and NIH.
19. This Agreement may no be modified or amended, and no term or provision
hereof may be waived, except by written instrument signed by the parties hereto.
20. This Agreement may be signed in counterparts, each of which shall be
deemed an original document, but all of which shall constitute a single
document. This Agreement shall be effective and binding when signed on behalf
of NED, NII, NIH and Escrow Agent and transmitted to each party by telecopy.
21. In the event of litigation in connection with this Agreement between
Agent and Lender, all attorneys' and paralegals' fees and disbursements, court
costs and related charges shall be borne by the non-prevailing party.
22. This Agreement has been duly authorized, executed and delivered by
Escrow Agent, NII, NIH and XXX and constitutes a legal, valid and binding
obligation of each party in accordance with its terms.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
authorized, executed and delivered as of the date first written above.
NOVATEK INTERNATIONAL, INC.,
a Colorado corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
--------------------------
Title: President
-------------------------
NOVATEK INTERNATIONAL HOLDINGS,
INC., a Florida corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
--------------------------
Title: President
-------------------------
NEW ENGLAND DIAGNOSTICS
CORPORATION, a Cayman Islands
corporation
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
--------------------------
Title: President
-------------------------
Xxxxxx Xxxxxxx & Co., Inc.
("Escrow Agent"),
00 X. Xxxxx Xx.
Xxxxx #0000
Xxxxxxx, XX 00000
-------------------------------
By: /s/ Xxxxxx X. XxXxxxx
----------------------------
Name: Xxxxxx X. XxXxxxx
--------------------------
Title: C.O.O.
-------------------------
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