ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") is entered into this ____ day
of March, 1998, among U.S. Trust Company of Texas, N.A. (the Escrow Agent),
Trans World Gaming Corp. (TWG), TWG Finance Corp. ("TWG Finance") and TWG
International U.S. Corporation (TWG International and together with TWG and
TWG Finance, collectively the Obligors).
In connection with the closing (the Closing) under the Subscription
Agreements (the Subscription Agreements), each dated as of March 17, 1998,
among the Obligors and the purchasers of $15,000,000 to $17,000,000 aggregate
principal amount of the Obligors' 12% Senior Secured Notes Due March, 2005
(the Notes) and Warrants to purchase shares of Common Stock of TWG in such
number as set forth in the Subscription Agreement (the "Warrants", which with
the Notes are referred to as the "Units") listed on the Schedule of
Purchasers attached hereto as Exhibit "A" and by this reference incorporated
herein (the Purchasers), scheduled to occur on March 31, 1998, it has been
requested that by no later than March 17, 1998, the Purchasers deposit in an
escrow account with the Escrow Agent an amount equal to the principal amount
of such Notes (the Deposited Amount).
The Deposited Amount, together with all interest thereon (collectively,
the Escrow Property) will be held by the Escrow Agent for the benefit of the
Purchasers until distributed as provided in this Escrow Agreement.
The Obligors desire to enter into this Escrow Agreement in order to
induce the Purchasers to deposit the Deposited Amount and to memorialize
their understanding with the Escrow Agent, as set forth in the Escrow
Agreements, as to the terms on which the Escrow Property will be disbursed.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Escrow Agreement agree as follows:
1. Pursuant to the terms of the Subscription Agreements, the
Purchasers will deliver to the Escrow Agent the Deposited Amount and the
Escrow Property will be held in accordance with the terms and conditions of
this Escrow Agreement. In order to induce the Purchasers to make such
deposits, the Obligors, jointly and severally, and the Escrow Agent agree:
(a) In the event that the Closing has not occurred in accordance
with the terms and conditions contained in the Subscription Agreements on or
before March 31, 1998 (unless extended in writing with the consent of ▇▇.
▇▇▇▇ ▇. ▇▇▇▇, Esq. which written consent shall state that ▇▇. ▇▇▇▇ is acting
with the written direction of the Subscribers of 75% in dollar face amount of
the Units), absolutely and unconditionally (i) to cause a sum equal to the
Escrow Amount released pursuant to Section 2 herein to be promptly repaid to
the Escrow Agent on behalf of the Purchasers,
1
and (ii) that all of the Deposited Amount shall be paid (including through
the release of the Deposited Amount in accordance with Section 4(a)) to each
Purchaser in immediately available funds as soon as reasonably possible, but
no later than, prior to 10:00 a.m. (New York City Time) on April 15, 1998, or
as soon as possible thereafter, an amount equal to (x) the amount deposited
by such Purchaser with the Escrow Agent, plus interest earned on such amount
while held in escrow pursuant to this Escrow Agreement, if any, less (y) any
amounts previously returned to such Purchaser by the Escrow Agent out of such
escrow account; and
(b) That, in the event that the Closing occurs under and pursuant
to the terms and conditions of the Subscription Agreements, (i) the Units
received by each Purchaser shall be dated March 17, 1998, and (ii) deposits
with the Escrow Agent of amounts specified opposite each Purchaser's name
shall constitute payment in full of the purchase price of the Units to be
purchased by each Purchaser at the Closing; and
(c) In the event that ▇▇. ▇▇▇▇ notifies the Escrow Agent in
writing on or before March 30, 1998 that the $4,800,000 12% Secured
Convertible Senior Bonds due 1999 have not been amended on terms acceptable
to the Subscribers of 75% in dollar face amount of the Units, such Deposited
Amount shall be paid (including through the release of the Deposited Amount
in accordance with Section 4(a)) to each Purchaser in immediately available
funds, as soon as is reasonably possible following March 30, 1998, in an
amount equal to (x) the amount deposited by such Purchaser with the Escrow
Agent, plus interest earned on such amount while held in escrow pursuant to
this Escrow Agreement, if any, less (y) any amounts previously returned to
such Purchaser by the Escrow Agent out of such escrow account
2. The Escrow Agent shall hold the Escrow Property until such time as
it receives (a) notice in writing from ▇▇▇▇ ▇▇▇▇, Esq. with the firm of
Bergman, Yonks, ▇▇▇▇▇ & Bird, L.L.P., counsel to the Purchasers, authorizing
the Escrow Agent to deliver the sum as directed in such letter of the Escrow
Property to the account of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Solicitors pursuant to the wiring
instructions set forth in Exhibit "B" hereto and by this reference
incorporated herein, and (b) notice in writing from ▇▇. ▇▇▇▇ and an officer
of TWG to deliver the remaining Escrow Property as directed in that joint
letter.
3. The Escrow Fund need not be segregated from other funds of the
Escrow Agent, except to the extent required by law. The Escrow Agent shall
invest money hereinafter as follows: (i) funds received prior to ▇▇ ▇'▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ time on March 16, 1998 in Excelsior Funds, Inc. Government
Money Funds, (ii) funds received after 12 o'clock noon, New York time, and
before 3:00 p.m. New York time, on March 16, 1998, in an overnight time
deposit with United States Trust Company, ▇▇▇▇▇▇ Guaranty Trust Company of
New York, The Chase Manhattan Bank or Banker's Trust Company, and (iii) funds
received after 3:00 p.m., New York time on March 16, 1998, shall remain
uninvested, unless the Escrow Agent, without any obligation to do so, is able
to invest such funds in the ordinary course of its business in investments of
the type permitted in clause (i) or (ii) above. Any losses on any such
investments shall be for the account of the Purchasers.
2
Funds referred to in (ii) and (iii) above shall be invested as provided in
(i) above on the Business Day following the original investments thereof.
4. (a) The Escrow Agent shall not be liable for any loss from said
investments. Income earned on such investments shall become a part of the
Escrow Property. The Escrow Agent is authorized to sell or redeem any such
investments as necessary to make payments or disbursements required hereunder
and shall be held harmless by each of the Obligors and Purchasers with
respect to any losses or penalties incurred thereby. (b) Any portion of the
Escrow Property which remains undisbursed at the close of business in New
York, New York on April 10, 1998 shall, upon receipt by the Escrow Agent of
written instructions from ▇▇▇▇ ▇. ▇▇▇▇, be returned to the Purchasers at the
opening of business in New York, New York on April 15, 1998, pro rata in
accordance with the amounts of their respective deposits under this Escrow
Agreement, unless such instructions delay such return in ▇▇. ▇▇▇▇'▇ sole
discretion.
5. The Obligors, jointly and severally, shall be responsible for and
shall reimburse the Escrow Agent upon demand for all reasonable expenses,
disbursements and advances incurred or made by the Escrow Agent in connection
with its administration of this Escrow Agreement.
6. The duties, responsibilities and obligations of the Escrow Agent
shall be limited to those expressly set forth herein and no duties,
responsibilities or obligations shall be inferred or implied. The Escrow
Agent shall not be subject to, nor required to comply with, any other
agreement between or among any or all of the Obligors and the Purchasers or
to which any Obligor or Purchaser is a party, even though reference thereto
may be made herein or therein, or to comply with any direction or instruction
(other than those contained herein or delivered in accordance with this
Escrow Agreement) from any Obligor or Purchaser or any entity acting on its
behalf. The Escrow Agent shall not be required to, and shall not, expend or
risk any of its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
7. The parties hereto acknowledge that the Purchasers are third-party
beneficiaries of this Agreement. This Escrow Agreement is for the exclusive
benefit of the parties hereto and the Purchasers and their respective
successors hereunder, and shall not be deemed to give, either express or
implied, any legal or equitable right, remedy, or claim to any other entity
or person whatsoever.
8. If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way effects the Escrow Property
(including but not limited to orders of attachment or garnishment or other
forms of levies or injunctions or stays relating to the transfer of the
Escrow Property), the Escrow Agent is authorized to comply therewith in any
manner as it or its legal counsel of its own choosing deems appropriate;
provided that the Escrow Agent shall give prompt notice thereof to the
parties hereto and the Purchasers. If the Escrow Agent complies with any
such judicial or administrative order, judgment, decree, writ or other form
of judicial or administrative process, the Escrow Agent shall not be liable
to any of the parties hereto or any Purchaser or to any other person or
entity even
3
though such order, judgment, decree, writ or process may be subsequently
modified or vacated or otherwise determined to have been without legal force
or effect.
9. The Escrow Agent shall safe keep the Deposited Amount and exercise
such care thereover as it does over its own assets, as a prudent person would
exercise under the circumstances. The Escrow Agent shall not be liable for
any action taken or omitted or for any loss or injury resulting from its
actions or its performance or lack of performance of its duties hereunder in
the absence of gross negligence, violation of law or regulation or willful
misconduct on its part. In no event shall the Escrow Agent be liable (i) for
acting in accordance with or relying upon any instruction, notice, demand,
certificate or document from the parties hereto, the Purchasers or any person
or entity acting on behalf of the Purchasers as set forth herein, (ii) for
any consequential, punitive or special damages, (iii) for the acts or
omissions of its nominees, correspondents, designees, subagents or
subcustodians reasonably chosen in good faith, or (iv) for an amount in
excess of the value of the Escrow Property, valued as of the date of deposit.
The Escrow Agent may consult with legal counsel at the expense of the
Obligors as to any matter relating to this Escrow Agreement, and the Escrow
Agent shall not incur any liability in acting in good faith in accordance
with any advice from such counsel. The Escrow Agent shall not incur any
liability for not performing any act or fulfilling any duty, obligation or
responsibility hereunder by reason of any occurrence beyond the control of
the Escrow Agent (including but not limited to any act or provision of any
present or future law or regulation or government authority, any act of God
or war, or the unavailability of the Federal Reserve Bank wire or, facsimile,
Internet, telex or other wire or communication facility).
10. Unless otherwise specifically set forth herein, the Escrow Agent
shall proceed as soon as practicable to collect any collection items at any
time deposited hereunder. All such collections shall be subject to the
Escrow Agent's usual collection practices or terms regarding items received
by the Escrow Agent for deposit or collection. The Escrow Agent shall not be
required, or have any duty, to notify anyone of any payment or maturity under
the terms of any instrument deposited hereunder, nor to take any legal action
to enforce payment of any check, note or security deposited hereunder or to
exercise any right or privilege which may be afforded to the holder of any
such security.
11. The Escrow Agent shall not be responsible in any respect for the
form, execution, validity, value or genuineness of documents or securities
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or delivering or purporting to
execute or deliver any such document, security or endorsement.
12. Notices, instructions or other communications shall be in writing
and shall be given to the address set forth below the signature of a party on
the signature page hereto or, in the case of the Purchasers, as specified in
the Schedule of Purchasers attached hereto as Exhibit "A". Notices to the
Escrow Agent shall be deemed to be given when actually received by the Escrow
Agent's Corporate Trust Department. The Escrow Agent is authorized to comply
with and rely upon any notices, instructions or other communications believed
by it to have been sent or given by a person
4
or persons authorized hereunder. Whenever under the terms hereof the time
for giving a notice or performing an act falls upon a Saturday, Sunday, or
banking holiday in New York, such time shall be extended to the next day on
which the Escrow Agent is open for business.
13. The Obligors, jointly and severally, shall be liable for and shall
reimburse and indemnify the Escrow Agent and hold the Escrow Agent harmless
from and against any and all claims, losses, liabilities, costs, damages or
expenses (including reasonable attorneys fees and expenses) (collectively,
Losses) arising from or in connection with or related to this Escrow
Agreement or being the Escrow Agent hereunder (including, but not limited to,
Losses incurred by the Escrow Agent in connection with its successful
defense, in whole or in part, of any claim of gross negligence, violation of
law or regulation or willful misconduct on its part), PROVIDED that nothing
contained herein shall require the Escrow Agent to be indemnified for Losses
caused by its gross negligence, violation of law or regulation or willful
misconduct.
14. In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking
any action other than retaining possession of the Escrow Property, unless the
Escrow Agent receives written instructions, signed by all the parties hereto
and ▇▇. ▇▇▇▇ on behalf of the Purchasers, which eliminates such ambiguity or
uncertainty. In the event of any dispute between or conflicting claims by
the Obligors and the Purchasers the determination of a mutually selected
arbitrator shall be dispositive.
15. This Agreement may be enforced only by the parties hereto and shall
be interpreted, construed, enforced and administered in accordance with the
internal substantive laws (and not the choice of law rules) of the State of
New York. Each of the Escrow Agent and the Obligors hereby submits to the
personal jurisdiction of and each agrees that all proceedings relating hereto
shall be brought in courts located within the City and State of New York.
Each of the Escrow Agent and the Obligors hereby waives the right to trial by
jury and to assert counterclaims in any such proceedings. To the extent that
in any jurisdiction any party hereto may be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment (whether before or
after judgment) or other legal process, each hereby irrevocably agrees not to
claim, and hereby waives, such immunity. Each party hereto waives personal
service of process and consents to service of process by certified or
registered mail, return receipt requested, directed to it at the address last
specified for notices hereunder.
16. Except as otherwise permitted herein, this Escrow Agreement may be
modified only by a written amendment signed by all the parties hereto and
consented to by ▇▇. ▇▇▇▇, and no waiver of any provision hereof shall be
effective unless expressed in a writing signed by the party to be charged and
by ▇▇. ▇▇▇▇.
17. The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy hereunder shall not preclude the subsequent
exercise of such right or remedy.
5
18. Each party hereby represents and warrants (a) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes its legal, valid and binding obligation, enforceable against each
of them in accordance with their terms and (b) that the execution, delivery
and performance of this Escrow Agreement by such party does not and will not
violate any applicable law or regulation.
19. The invalidity, illegality or unenforceability of any provision of
this Escrow Agreement shall in no way affect the validity, legality or
enforceability of any other provision. If any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
20. This Escrow Agreement shall constitute the entire agreement of the
parties and the Purchasers with respect to the subject matter hereof and
supersedes all prior oral or written agreements in regard thereto.
21. This Escrow Agreement shall terminate upon the distribution to all
Escrow Property at Closing pursuant to Section 2, or the distribution of all
Escrow Property pursuant to Section 1(a) hereof in the event the closing has
not occurred on or before March 31, 1998 (or any extension thereof). The
provisions of Section 5 through 22 of this Escrow Agreement shall survive
termination of this Escrow Agreement and/or the resignation or removal of the
Escrow Agent.
22. This Escrow Agreement may be executed by each of the parties hereto
in any number of counterparts, each of which counterpart, when so executed
and delivered, shall be deemed to be an original and all such counterparts
shall together constitute one and the same agreement.
6
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement
to be executed by a duly authorized officer as of the day and year first
written above.
TRANS WORLD GAMING CORP. TWG INTERNATIONAL U.S. CORP.
By: __________________________ By: _____________________________
Name: ____________________ Name: _______________________
Title: ___________________ Title: ______________________
One Penn ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, New York 10119 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
TWG FINANCE CORP. U.S. TRUST COMPANY OF TEXAS, N.A.,
as Escrow Agent
By: __________________________ By: _____________________________
Name: ____________________ Name: _______________________
Title: ___________________ Title: ______________________
One Penn Plaza ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Corporate Trust
7
EXHIBIT "A"
SCHEDULE OF PURCHASERS
Number of
Subscriber Principal Amount ---------
---------- of Notes Warrants
-------- --------
Amir Development $300,000 102,644
Banco Santander $1,000,000 342,148
CS First Boston Corp. $5,000,000 1,710,741
Value Partners, Ltd. $8,000,000 2,737,186
Fort Pitt Investment Fund $750,000 256,611
Lim Investment Management $250,000 85,537
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ $250,000 85,537
▇▇▇▇▇▇, ▇▇▇▇▇ $100,000 34,215
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $1,000,000 342,148
Palestra Capital LLC $300,000 102,644
▇▇▇▇▇▇, ▇▇▇▇ $50,000 17,107
8
Exhibit "B"
Wire Instructions - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Lloyds Bank plc
Covent Garden Branch
▇▇/▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Sort Code: 30:92:32
Account No.: ▇▇▇▇▇▇▇▇
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Client Dollar Account"
9
