EXHIBIT 10.2
ESCROW AGREEMENT
This Agreement is dated as of the 11th day of January, 2002 among Tech
Laboratories, Inc., a New Jersey corporation (the "Company"), the parties
identified on Schedule A hereto ("Holder" or "Holders"), and Grushko & Xxxxxxx,
P.C. (the "Escrow Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Holder have entered into a Redemption and
Conversion Agreement as of January 11th, 2002 ("Redemption Agreement") calling
for the redemption and conversion of Notes and the payment to the Holders of the
Redemption Funds and delivery of Conversion Shares; and
WHEREAS, the parties hereto wish to arrange for the Company to deliver
to the Escrow Agent the Redemption Funds and Conversion Shares; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. DEFINITIONS. Whenever used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Agreement" means this Agreement and all amendments made
hereto and thereto by written agreement between the parties;
(b) Capitalized terms employed in this Agreement shall have
the same definitions employed in the Redemption Agreement, unless modified
herein.
1.2. ENTIRE AGREEMENT. This Agreement and the Redemption Agreement
constitute the entire agreement between the parties hereto pertaining to the
Escrow Agent's duties hereunder and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations and other agreements made by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement and Redemption Agreement.
1.3. EXTENDED MEANINGS. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.
1.5. HEADINGS. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Subject to Section 4.2, any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. All parties and
the individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
1.7. FEES. The Company shall pay the Escrow Agent a fee of $3,000 in
connection with each Date of Redemption. This fee shall be paid by the Company
together with or prior to the Company's deposit with the Escrow Agent of the
Redemption Funds for the January 25, 2002, Date of Redemption.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. DELIVERY OF CONVERSION SHARES TO ESCROW AGENT. Prior to each Date
of Redemption, the Company shall deliver to the Escrow Agent the Conversion
Shares (if applicable) relative to such Date of Redemption as set forth on
Schedule B to the Redemption Agreement. The amount of Conversion Shares, if any,
which may be issued in connection with the April 25, 2002 Date of Redemption
will be determined jointly by the Company and Escrow Agent consistant with the
Redemption Agreement.
2.2 DELIVERY OF REDEMPTION FUNDS AND ESCROW AGENT FEES TO ESCROW AGENT.
Prior to each respective Date of Redemption, the Company shall deliver to the
bank account of Escrow Agent identified below the appropriate Redemption Funds
as set forth on Schedule B to the Redemption Agreement.
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Citibank, N.A.
ABA Number: 0210-00089
For Credit to: Grushko & Xxxxxxx
XXXX Trust Account
Account Number: 00000000
The Company will deliver the Escrow Agent's fee described in
Section 1.7 above, by wire transfer to the account identified below:
Citibank, N.A.
ABA Number: 0210-00089
For Credit to: Grushko & Xxxxxxx, Operating Account
Account Number: 00000000
2.3. INTENTION TO CREATE ESCROW OVER CONVERSION SHARES AND REDEMPTION
FUNDS. The Holders and Company intend that any Redemption Funds and any
Conversion Shares shall be held in escrow by the Escrow Agent pursuant to this
Agreement for their benefit as set forth herein.
2.4. ESCROW AGENT TO DELIVER CONVERSION SHARES AND REDEMPTION FUNDS.
The Escrow Agent shall hold and release any Redemption Funds and any Conversion
Shares only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF REDEMPTION FUNDS AND CONVERSION SHARES
3.1. RELEASE OF ESCROW. Subject to the provisions of Section 4.2, in
connection with any Date of Redemption, the Escrow Agent shall release the
Redemption Funds and Conversion Shares relating to such Date of Redemption as
follows:
(a) Upon receipt by the Escrow Agent of the Redemption Funds
and the Conversion Shares, if applicable, the Escrow Agent will release the
Redemption Funds and Conversion Shares to the Holders to such accounts and
addresses as the Holders shall inform the Escrow Agent in writing. In the event
the Escrow Agent does not receive contrary instructions from the Holders, the
Redemption Funds and Conversion Shares will be delivered to the addresses set
forth on Schedule A hereto.
The Escrow Agent is instructed to deduct actual bank wire
transfer fees from funds to be delivered to each recipient.
(b) In the event the Escrow Agent does not timely receive the
Redemption Funds or Conversion Shares, then the Escrow Agent will promptly
return to the Company such of the Redemption Funds or Conversion Shares that
have been delivered.
(c) Upon receipt by the Escrow Agent of joint written
instructions ("Joint Instructions") signed by the Company and the Holder, the
Escrow Agent shall deliver the Redemption Funds and the Conversion Shares in
accordance with the terms of the Joint Instructions.
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(d) Upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Redemption
Funds and the Conversion Shares in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order has competent
jurisdiction and that the Court Order is final and non-appealable.
(e) THE ESCROW AGENT IS AUTHORIZED TO RELY ON ANY
UNCONTRADICTED CALCULATION, NOTICE OR INFORMATION PROVIDED BY THE COMPANY OR
HOLDER OR FROM ANY SOURCE WHEN DETERMINING THE AMOUNT OF CONVERSION SHARES TO BE
RELEASED IN CONNECTION WITH THE APRIL 25, 2002 DATE OF REDEMPTION.
3.2. ACKNOWLEDGEMENT OF COMPANY AND HOLDER; DISPUTES. The Company and
the Holder acknowledge that the only terms and conditions upon which any
Redemption Funds and any Conversion Shares are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Holder reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect to
the release of any Redemption Funds and any Conversion Shares. Any dispute with
respect to the release of any Redemption Funds and any Conversion Shares shall
be resolved pursuant to Section 4.2 or by agreement between the Company and the
Holder.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow
Agent's duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Holder and Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Holder or Company is entitled to
receipt of the Redemption Funds and Conversion Shares pursuant to any other
agreement or otherwise; (ii) shall be obligated only for the performance of such
duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person purporting to give notice or make any statement
or execute any document in connection with the provisions hereof has been duly
authorized to do so; (v) shall not be under any duty to give the property held
by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its
own similar property; and (vi) may consult counsel satisfactory to Escrow Agent,
the opinion of such counsel to be full and complete authorization and protection
in respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.
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(b) The Holder and Company acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and that the Escrow Agent
shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement, except in the case of gross
negligence or willful misconduct. The Holder and Company, jointly and severally,
agree to indemnify and hold harmless the Escrow Agent and any of Escrow Agent's
partners, employees, agents and representatives for any action taken or omitted
to be taken by Escrow Agent or any of them hereunder, including the fees of
outside counsel and other costs and expenses of defending itself against any
claim or liability under this Agreement, except in the case of gross negligence
or willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the Holder
and Company under this Agreement and to no other person.
(c) The Holder and Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
outside counsel fees, to the extent authorized hereunder) incurred in connection
with the performance of its duties and responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Holder and the Company. Prior to the effective date of the resignation as
specified in such notice, the Holder and Company will issue to the Escrow Agent
a Joint Instruction authorizing delivery of the Redemption Funds and Conversion
Shares to a substitute Escrow Agent selected by the Holder and Company. If no
successor Escrow Agent is named by the Holder and Company, the Escrow Agent may
apply to a court of competent jurisdiction in the State of New York for
appointment of a successor Escrow Agent, and to deposit any Redemption Funds and
any Conversion Shares with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any
interest in the Redemption Funds and Conversion Shares, but is serving only as
escrow agent, having only possession thereof.
(f) This Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.
(g) The Escrow Agent shall be permitted to act as counsel for
the Holders or any of them, in any dispute as to the disposition of the
Redemption Funds and or the Conversion Shares and in any other dispute between
the Holder and Company, whether or not the Escrow Agent is then holding any
Redemption Funds or Conversion Shares and continues to act as the Escrow Agent
hereunder.
(h) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2. DISPUTE RESOLUTION: JUDGMENTS. Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:
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(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of any Redemption Funds or any
Conversion Shares, or if the Escrow Agent shall in good faith be uncertain as to
its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold all Redemption Funds and Conversion Shares pending receipt of a
Joint Instruction from the Holder and Company, or (ii) deposit all Redemption
Funds and Conversion Shares with any court of competent jurisdiction in the
State of New York, in which event the Escrow Agent shall give written notice
thereof to the Holder and the Company and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement. The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to Redemption Funds or Conversion Shares. The Escrow
Agent shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to comply
with and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Holder and Company or
to any other person, firm, corporation or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. TERMINATION. This escrow shall terminate (i) upon the release of
all Redemption Funds and Conversion Shares deposited in escrow with the Escrow
Agent, (ii) at any time upon the agreement in writing of the Holder and Company,
or (iii) on April 26, 2002 in the event Redemption Funds and Conversion Shares
(if applicable) have not been deposited by the Company with the Escrow Agent.
5.2. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be sent by
telecopy (with the sender's facsimile machine confirming transmission and a copy
of the notice delivered by overnight courier, regular or certified mail) and
shall be deemed to have been duly given (a) one (1) day after being sent, if
sent by 5:00 P.M., New York time on a business day, or (b) the next business day
if sent at any other time
(a) If to the Company, to:
Tech Laboratories, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
With a copy to (which communication shall not constitute notice):
Stursberg & Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to the Holders, to the addresses and telecopier numbers on Schedule
A hereto.
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(c) If to the Escrow Agent, to:
Grushko & Xxxxxxx, P.C.
Attorneys at Law
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2. The Escrow Agent will not be chargable with
knowledge of any notice or communication unless written notice has been given to
the Escrow Agent in the manner described herein.
5.3. INTEREST. The Redemption Funds shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
5.4. ASSIGNMENT; BINDING AGREEMENT. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. RESALE/ISSUANCE. Each Holder hereby notifies the Company that
unless the Company is otherwise advised prior to the Date of Redemption, each
Holder will have sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer all Conversion Shares in a BONA FIDE transaction to
a third party that is not an affiliate of the Holder, and that the Holder will
or will have caused the prospectus delivery requirements to have been satisfied.
Accordingly, the Company agrees to deliver all Conversion Shares to the Escrow
Agent without restrictive legend.
5.6. INVALIDITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.7. COUNTERPARTS/EXECUTION. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by telecopier
transmission.
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5.8. AGREEMENT. Each of the undersigned states that he has read the
foregoing Escrow Agreement and understands and agrees to it.
TECH LABORATORIES, INC. - the "Company"
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
/s/
---------------------------------------
XXXXXXX TRUST REG.
"Holder"
/s/
---------------------------------------
ESQUIRE TRADE & FINANCE, INC.
"Holder"
/s/
---------------------------------------
THE ENDEAVOUR CAPITAL INVESTMENT
FUND, S.A. - "Holder"
ESCROW AGENT:
/s/ Grushko & Xxxxxxx
---------------------------------------
GRUSHKO & XXXXXXX, P.C.
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SCHEDULE A TO ESCROW AGREEMENT
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HOLDER
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XXXXXXX TRUST REG.
X/x Xxxxxxx-Xxxxxxxx-Xxxxxxx
Xxxxxxxxxxx 0
Furstentums 9496
Balzers, Liechtenstein
Fax: 000-000-000-000000
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ESQUIRE TRADE & FINANCE, INC.
Trident Xxxxxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx, B.V.I.
Fax: 000-00-00-000-0000
--------------------------------------------------------------------------------
THE ENDEAVOUR CAPITAL INVESTMENT FUND, S.A. - Subscriber
Cumberland House
27 Cumberland Street, Nassau
New Providence, The Bahamas
Fax: 0-000-000-0000
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