ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of November 27, 1997,
by and among Eurotech, Ltd. (the "Company"), JNC Opportunity Fund Ltd. ("JNC"),
Diversified Strategies Fund, L.P. ("DSF") (each of JNC and DSF, a "Purchaser"
and collectively the "Purchasers"), and Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP (the "Escrow Agent").
Recitals
A. Simultaneously with the execution of this Agreement, the Company
and the Purchasers have entered into a Convertible Debenture Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement"), pursuant to which the
Company is selling to the Purchasers certain 8% Convertible Debentures Due
November 27, 2000 (the "Debentures") and certain of the Company's common stock
purchase warrants (the "Warrants"). Capitalized terms that are used and not
otherwise defined in this Agreement that are defined in the Purchase Agreement
shall have the meaning set forth in the Purchase Agreement.
B. The Escrow Agent is willing to act as escrow agent pursuant to
the terms of this Agreement with respect to the receipt and then delivery of the
Purchase Price (as described in Section 1.1 of the Purchase Agreement) to be
paid for the Debentures pursuant to Section 1.1 of the Purchase Agreement less
any amounts the Purchasers are to be reimbursed by the Company under the
Purchase Agreement (the "Purchase Price") and the delivery of the Debentures and
the Warrants, together with the Ancillary Closing Documents (as defined below)
and the Purchase Price, the "Consideration").
C. Upon the closing of the transaction contemplated by the Purchase
Agreement (the "Closing") and the occurrence of an event described in Section 2
below, the Escrow Agent shall cause the distribution of the Consideration in
accordance with the terms of this Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Deposit of Consideration.
a. Concurrently with the execution of this Agreement, each
Purchaser shall deposit with the Escrow Agent the portion of the Purchase Price
due for the Debentures and the Warrant to be purchased by it at the Closing in
accordance with Section 1.1(a)(ii) of the Purchase Agreement and the Company
shall deliver to the Escrow Agent the Debentures and the Warrants, registered in
the name of the appropriate Purchaser, in accordance with Section 1.1(a)(ii) of
the Purchase Agreement and
wiring instructions for transfer of the Purchase Price by the Escrow Agent into
an account specified by the Company for such purpose. In addition, the
Purchasers and the Company shall deposit with the Escrow Agent all other
certificates and other documents required under the Purchase Agreement to be
delivered by them at the Closing (such certificates and other documents being
hereinafter referred to as the "Ancillary Closing Documents").
(i) The Purchase Price shall be delivered by the
Purchasers to the Escrow Agent by wire transfer to the following account:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ABA No.: 000-000-000
For the Account of
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
Attorney Trust Account
Account No.: 00-000-000
Attention: Xxxxxx Xxxxxxxxxx
Reference: Eurotech, Ltd. (10849-6)
(ii) The Debentures, Warrants and the Ancillary
Documents shall be delivered to the Escrow Agent at its address for notice
indicated in Section 5(a).
b. Until termination of this Agreement as set forth in Section
2, all additional Consideration paid by or which becomes payable between the
Company and the Purchasers shall be deposited with the Escrow Agent.
c. The Purchasers and the Company understand that all
Consideration delivered to the Escrow Agent pursuant to Section 1(a) shall be
held in escrow in the Escrow Agent's interest bearing business account until the
Closing. After the Purchase Price has been received by the Escrow Agent and all
other conditions of Closing are met, the parties hereto hereby authorize and
instruct the Escrow Agent to promptly effect the Closing.
d. At the Closing, Escrow Agent is authorized and directed to
deduct from the Purchase Price (i) $300,000 which will be paid to CDC
Consulting, Inc. ("CDC") in accordance with the engagement letter between the
Company and CDC relating to the transactions contemplated by the Purchase
Agreement (the "Engagement Letter"), for remittance to CDC in accordance with
its instructions, (ii) $15,000 which will be retained by the Escrow Agent in
accordance with the Purchase Agreement and (iii)
$7,000, which will be remitted to or as directed by the Purchasers pursuant to
the Purchase Agreement. In addition, the portion of the Purchase Price released
to the Company hereunder shall be reduced by all wire transfer fees incurred
thereupon.
2. Terms of Escrow.
a. The Escrow Agent shall hold the Consideration in escrow
until the earlier to occur of (i) the receipt by the Escrow Agent of the
Purchase Price, the Debentures, the Warrants and the Ancillary Closing Documents
and a writing instructing the Closing and (ii) the receipt by the Escrow Agent
of a written notice, executed by the Company or the Purchasers, stating that the
Purchase Agreement has been terminated in accordance with its terms and
instructing the Escrow Agent with respect to the Purchase Price, the Debentures,
the Warrants and the Ancillary Closing Documents.
b. If the Escrow Agent receives the items referenced in clause
(i) of Section 2(a) prior to its receipt of the notice referenced in clause (ii)
of Section 2(a), then, promptly thereafter, the Escrow Agent shall deliver (i)
the Debentures, the Warrants, any interest earned on account of the Purchase
Price through the Closing and the amounts payable to the Purchasers pursuant to
Section 1(d) on the Consideration to the Purchasers entitled to the same, (ii)
the Purchase Price (net of amounts described under Section 1(d)) to the Company,
(iii) the amounts payable to CDC under the Engagement Letter to CDC or in
accordance with its instructions and (iv) the Ancillary Closing Documents to the
party entitled to receive the same. In addition, the Escrow Agent shall retain
$15,000 of the Purchase Price on account of its fees pursuant to the Purchase
Agreement.
c. If the Escrow Agent receives the notice referenced in
clause (ii) of Section 2(a) prior to its receipt of the items referenced in
clause (i) of Section 2(a), then the Escrow Agent shall promptly upon receipt of
such notice return (i) the Purchase Price (together with any interest earned
thereon through such date) to the Purchasers, (ii) the Debentures and Warrants
to the Company and (iii) the Ancillary Closing Documents to the party that
delivered the same.
d. If the Escrow Agent, prior to delivering or causing to be
delivered the Consideration in accordance herewith, receives notice of
objection, dispute, or other assertion in accordance with any of the provisions
of this Agreement, the Escrow Agent shall continue to hold the Consideration
until such time as the Escrow Agent shall receive (i) written instructions
jointly executed by the Purchasers and the Company, directing distribution of
such Consideration, or (ii) a certified copy of a
judgment, order or decree of a court of competent jurisdiction, final beyond the
right of appeal, directing the Escrow Agent to distribute said Consideration to
any party hereto or as such judgment, order or decree shall otherwise specify
(including any such order directing the Escrow Agent to deposit the
Consideration into the court rendering such order, pending determination of any
dispute between any of the parties). In addition, the Escrow Agent shall have
the right to deposit any of the Consideration with a court of competent
jurisdiction pursuant to Section 1006 of the New York Civil Practice Law and
Rules without liability to any party if said dispute is not resolved within 30
days of receipt of any such notice of objection, dispute or otherwise.
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 depositary only, and the Escrow Agent shall
incur no liability whatsoever, except as a direct result of its willful
misconduct.
b. The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
c. The Escrow Agent shall not be bound in any way by the terms
of any other agreement to which the Purchasers and the Company are parties,
whether or not it has knowledge thereof, 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 Purchasers and 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 by each of the Purchasers and the Company, and agreed
to in writing by the Escrow Agent.
d. In the event that 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 with any of the provisions of this
Agreement, it shall be entitled to refrain from taking any action, other than to
keep safely, all Considerations held in escrow until it shall jointly be
directed otherwise in writing by the Purchasers and the Company 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. 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 the 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 the
Consideration.
g. If the Escrow Agent at any time, in its sole discretion,
deems it necessary or advisable to relinquish custody of the Consideration, it
may do so by giving five (5) days written notice to the parties of its intention
and thereafter delivering the consideration to any other escrow agent mutually
agreeable to the Purchasers and the Company and, if no such escrow agent shall
be selected within three days of the Escrow Agent's notification to the
Purchasers and the Company of its desire to so relinquish custody of the
Consideration, then the Escrow Agent may do so by delivering the Consideration
(a) to any bank or trust company in the Borough of Manhattan, City and State of
New York, which is willing to act as escrow agent thereunder in place and
instead of the Escrow Agent, or (b) to the clerk or other proper officer of a
court of competent jurisdiction as may be permitted by law within the State,
County and City of New York. The fee of any such bank or trust company or court
officer shall be borne one-half by the Purchasers and one-half by the Company.
Upon such delivery, the Escrow Agent shall be discharged from any and all
responsibility or liability with respect to the Consideration and the Company
and the Purchasers shall promptly pay to the Escrow Agent all monies which may
be owed it for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses pursuant to paragraph (i) below.
h. This Agreement shall not create any fiduciary duty on the
Escrow Agent's part to the Purchasers or the Company, nor disqualify the Escrow
Agent from representing either party hereto in any dispute with the other,
including any dispute with respect to the Consideration. The Company understands
that the Escrow Agent has acted and will continue to act as counsel to the
Purchasers.
i. The reasonable out-of-pocket expenses paid or incurred by
the Escrow Agent in the administration of its duties hereunder, including, but
not limited to, all counsel and advisors' and agents' fees and all taxes or
other governmental charges, if any, shall be paid by one-half by the Purchasers
and one-half by the Company.
4. Indemnification. The Purchasers and the Company, jointly and
severally, hereby indemnify and hold the Escrow Agent, its employees, partners,
members and representatives harmless from and against any and all losses,
damages, taxes, liabilities and expenses that may be incurred, directly or
indirectly, by the Escrow Agent and/or any such person, 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, including, but
not limited to, all legal costs and expenses of the Escrow Agent and any such
person incurred defending itself against any claim or liability in connection
with its performance hereunder and the costs of recovery of amounts pursuant to
this Section 4.
5. Miscellaneous.
a. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
If to the Company: Eurotech, Ltd.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
XxXxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Ruffa & Ruffa, P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
If to JNC: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxx
If to DSF: Diversified Strategies Fund, L.P.
c/o Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
With copies to (for Encore Capital Management, L.L.C.
communications to 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
either Purchaser): Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
If to the Escrow Agent Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
(the Escrow Agent shall & Xxxxxx LLP
receive copies of all 1290 Avenue of the Americas
communications under Xxx Xxxx, XX 00000
this Agreement) Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
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 law of the State of New York applicable to contracts entered
into and performed entirely within New York.
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SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written.
EUROTECH, LTD.
By:
--------------------------------------
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By:
--------------------------------------
Xxxx Xxxxx
Director
DIVERSIFIED STRATEGIES FUND, L.P.
By: Encore Capital Management, L.L.C.
By:
---------------------------------
Xxxx X. Xxxx
Director
XXXXXXXX XXXXXXXXX XXXXXX
ARONSOHN & XXXXXX LLP
By:
--------------------------------------
A Member of the Firm
