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Exhibit 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of May 14,
2001, by and among National Scientific Corporation, a corporation incorporated
under the laws of Texas (the "Company"), Coriander Enterprises Limited
("Purchaser"), and Xxxxxxx Xxxxxx & Green, P.C., having an address at 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000 (the "Escrow Agent"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Common Stock Purchase
Agreement referred to in the first recital.
WHEREAS, the Purchaser will from time to time as requested by
the Company, purchase shares of the Company's Common Stock from the Company as
set forth in that certain Common Stock Purchase Agreement (the "Purchase
Agreement") dated the date hereof between the Purchaser and the Company, which
shares shall be issued pursuant to the terms and conditions contained herein and
in the Purchase Agreement; and
WHEREAS, the Company and the Purchaser have requested that the
Escrow Agent hold in escrow and then distribute the initial documents and
certain funds which are conditions precedent to the effectiveness of the
Purchase Agreement, and have further requested that upon each exercise of a Draw
Down, the Escrow Agent hold the relevant documents and the applicable purchase
price pending receipt by Purchaser of the securities issuable upon such Draw
Down;
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow
account with the Escrow Agent whereby the Escrow Agent shall hold the funds and
documents which are referenced in Section 4.2 of the Purchase Agreement.
1.2. At the Initial Closing, the Company shall deliver to
the Escrow Agent:
(i) the original executed Registration Rights
Agreement in the form of Exhibit A to the
Purchase Agreement;
(ii) the original executed opinion of Squire,
Xxxxxxx & Xxxxxxx L.L.P. in the form of
Exhibit C to the Purchase Agreement;
(iii) the original executed Company counterpart of
this Escrow Agreement;
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(iv) the original executed Company counterpart of
the Purchase Agreement; and
(v) the original executed Warrant;
(vi) a warrant issued to Ladenburg to purchase a
number of shares, with an exercise price and
term identical to the Purchaser otherwise in
the form agreed to pursuant to that certain
agreement between Ladenburg and the Company
(the "LT Warrant").
1.3. Upon receipt of the foregoing, and receipt of
executed counterparts from Purchaser of the Purchase Agreement, the Registration
Rights Agreement and this Escrow Agreement, the Escrow Agent shall calculate and
enter the exercise price, issuance date and termination date on the face of the
Warrant and the LT Warrant and shall then arrange to have the Purchase
Agreement, this Escrow Agreement, the Registration Rights Agreement, the Warrant
the LT Warrant and the opinion of counsel delivered to the appropriate parties.
1.4 WIRE TRANSFERS to the Escrow Agent (NOT address for
notice or delivery of documents) shall be made as follows:
Xxxxxxx Xxxxxx & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
0000 Xxxxxxxx - Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA No. 000000000
Account No. 035 1 346036
Attention: L. Borneo
ARTICLE II
TERMS OF THE ESCROW FOR EACH DRAW DOWN
2.1. Each time the Company shall send a Draw Down Notice
to the Purchaser as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.
2.2. Each time the Purchaser shall purchase Shares
pursuant to a Draw Down, the Purchaser shall send the applicable Purchase Price
of the Draw Down Shares to the Escrow Agent. Upon receipt of such funds, the
Escrow Agent shall advise the Company that it has received the funds for such
Draw Down Shares. The Company shall promptly, but no later than one (1) Trading
Day after receipt of such funding notice from the Escrow Agent:
(i) cause its transfer agent to issue the Draw
Down Shares to the Purchaser via DTC's DWAC
system to the account specified by the
Purchaser from time to time;
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(ii) deliver the original executed attorney's
opinion in the form of Exhibit C to the
Purchase Agreement to the Purchaser; and
(iii) deliver a Form 424(b)(3) supplemental
prospectus to the Purchaser.
2.3. Upon receipt of written confirmation from the
transfer agent or from the Purchaser that such Draw Down Shares have been so
deposited and the opinion and the supplemental prospectus have been so
delivered, the Escrow Agent shall, within one (1) Trading Day of receipt of the
foregoing, wire 94% of the applicable Investment Amount per the written
instructions of the Company, net of one thousand dollars ($1,000) as escrow
expenses to the Escrow Agent, and the remaining 6% to Ladenburg Xxxxxxxx & Co.
Inc.
2.4. The Escrow Agent shall remit Ladenburg Xxxxxxxx & Co.
Inc.'s fee in accordance with wire instructions that it will send to the Escrow
Agent.
2.5. In the event that such Draw Down Shares are not in
the Purchaser's DTC account and the opinion and supplemental prospectus are not
delivered to the Purchaser within three (3) Trading Days of the date of the
Escrow Agent's notice, then Purchaser shall have the right to demand, by notice,
the return of the Purchase Price, and the applicable Draw Down Notice shall be
deemed cancelled.
ARTICLE III
MISCELLANEOUS
3.1. No waiver of any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
3.2. All notices or other communications required or
permitted hereunder shall be in writing, and shall be sent by fax, overnight
courier, registered or certified mail, postage prepaid, return receipt
requested, and shall be deemed received upon receipt thereof, as set forth in
the Purchase Agreement.
3.3. This Escrow Agreement shall be binding upon and shall
inure to the benefit of the permitted successors and permitted assigns of the
parties hereto.
3.4. This Escrow Agreement is the final expression of, and
contains the entire agreement between, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto. This
Escrow Agreement may not be modified, changed, supplemented or terminated, nor
may any obligations hereunder be waived, except by written instrument signed by
the parties to be charged or by their respective agents duly authorized in
writing or as otherwise expressly permitted herein.
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3.5. Whenever required by the context of this Escrow
Agreement, the singular shall include the plural and masculine shall include the
feminine. This Escrow Agreement shall not be construed as if it had been
prepared by one of the parties, but rather as if both parties had prepared the
same. Unless otherwise indicated, all references to Articles are to this Escrow
Agreement.
3.6. The parties hereto expressly agree that this Escrow
Agreement shall be governed by, interpreted under and construed and enforced in
accordance with the laws of the State of New York. Except as expressly set forth
herein, any action to enforce, arising out of, or relating in any way to, any
provisions of this Escrow Agreement shall be brought as is more fully set forth
in the Purchase Agreement.
3.7. The Escrow Agent's duties hereunder may be altered,
amended, modified or revoked only by a writing signed by the Company, Purchaser
and the Escrow Agent.
3.8. 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, excepting only its own gross
negligence or willful misconduct, and any act done or omitted by the Escrow
Agent pursuant to the advice of the Escrow Agent's attorneys-at-law (other than
Escrow Agent itself) shall be conclusive evidence of such good faith.
3.9. 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.
3.10. The Escrow Agent shall not be liable in any respect
on account of the identity, authorization 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 thereunder or hereunder.
3.11. The Escrow Agent shall be entitled to employ such
legal counsel and other experts as the Escrow Agent may deem necessary properly
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 therefor. THE ESCROW AGENT HAS ACTED AS LEGAL COUNSEL
FOR THE PURCHASER, AND MAY CONTINUE TO ACT AS LEGAL COUNSEL FOR THE PURCHASER,
FROM TIME TO TIME, NOTWITHSTANDING ITS DUTIES AS THE ESCROW AGENT HEREUNDER. THE
COMPANY CONSENTS TO THE ESCROW AGENT IN SUCH CAPACITY AS LEGAL COUNSEL FOR THE
PURCHASER AND WAIVES ANY CLAIM THAT SUCH REPRESENTATION REPRESENTS A CONFLICT OF
INTEREST ON THE PART
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OF THE ESCROW AGENT. THE COMPANY UNDERSTANDS THAT THE PURCHASER AND THE ESCROW
AGENT ARE RELYING EXPLICITLY ON THE FOREGOING PROVISION IN ENTERING INTO THIS
ESCROW AGREEMENT.
3.12. 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 Purchaser. In the event of any such resignation, the
Purchaser and the Company shall appoint a successor Escrow Agent.
3.13. If the Escrow Agent reasonably requires other or
further instruments in connection with this Escrow Agreement or obligations in
respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
3.14. 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 or the escrow funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (i) to
retain in the Escrow Agent's possession without liability to anyone all or any
part of said documents or the escrow funds until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a final
order, decree or judgment of a board of arbitration or 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 (ii) to deliver 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
State and City of New York in accordance with the applicable procedure therefor.
3.15. The Company and the Purchaser agree jointly and
severally to indemnify and hold harmless the Escrow Agent and its partners,
employees, agents and representatives from any and all claims, liabilities,
costs or expenses (including reasonable attorneys' fees) in any way arising from
or relating to the duties or performance of the Escrow Agent hereunder or the
transactions contemplated hereby or by the Purchase Agreement other than any
such claim, liability, cost or expense to the extent the same shall 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.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO EQUITY LINE ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
this 14th day of May, 2001.
NATIONAL SCIENTIFIC CORPORATION,
A TEXAS CORPORATION
By: /s/ L.L. Xxxx
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L.L. Xxxx, Chairman, President & CEO
CORIANDER ENTERPRISES LIMITED
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: Director
ESCROW AGENT:
XXXXXXX XXXXXX & GREEN, P.C.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Authorized Signatory
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