ESCROW AGREEMENT, dated as of December 27, 1999, among XXXXXXX XXXXXXXX
XXXXX XXXXXXXXXXX & KUH, LLP, ("Escrow Agent"), C. XXXXXXX XXXXXX ("Seller"),
and BIOFIELD CORP., a Delaware corporation ("Biofield").
RECITALS
Concurrently with the execution hereof, Biofield is issuing and selling to
Xxxxx X. Xxxx, Xx., M.D., Ph.D. ("Xx. Xxxx") and certain other persons shares of
Biofield common stock, and Seller and Xxxxxx Xxxxxx are selling to Xx. Xxxx
additional shares of Biofield common stock.
As of the date hereof, Biofield has directors and officers liability
insurance with $3,000,000 policy limits written by Zurich-American Insurance
Company, Policy No. DOC 8481372 04, for a policy period ending March 17, 2000
(the "Current Policy"). On the date of this Escrow Agreement, the sum of
$163,000 is being deposited with Escrow Agent in escrow, of which $53,700 is
being deposited by Seller and $109,300 is being deposited by Biofield.
The parties wish to set forth the terms and conditions under which Escrow
Agent shall disburse the escrow funds and interest, if any, earned thereon.
NOW, THEREFORE, it is agreed as follows:
1. Escrow Agent agrees to act as escrow agent hereunder. On the date of
this Escrow Agreement, the sum of $163,000 is being deposited with Escrow Agent
in escrow, of which $53,700 is being deposited by Seller and $109,300 is being
deposited by Biofield. All funds deposited with Escrow Agent, together with
interest income and investment proceeds thereon, are referred to herein as the
"Escrow Funds." The Escrow Funds shall be held in trust and shall not be subject
to lien or attachment by any creditor (including the Escrow Agent except as may
be contemplated by Section 12 of this Agreement) of any party hereto, and shall
be used solely for the purpose set forth in this Agreement.
2. If, no less than twenty (20) days prior to the last day of the policy
period of the Current Policy, Biofield delivers to Escrow Agent and to Seller a
notice that the Current Policy is intended to be renewed, without lapse, for an
additional year (i.e., until March 17, 2001) on terms substantially similar to
the Current Policy, which notice sets forth all material changes, if any, to
such coverage in appropriate detail (it being understood that a policy shall not
be considered "substantially similar" for purposes of this Section 2 if the
policy differs materially from the Current Policy in covering acts for which
officers and directors of Biofield prior to the date hereof are being insured by
the insurance company, or if the policy limits are less than $3,000,000), or,
alternatively, if no less than twenty (20) days prior to the last day of the
policy period of the Current Policy, Biofield delivers to Escrow Agent and to
Seller a notice that sets forth all material terms, in appropriate detail, of a
new directors and officers liability insurance policy which Biofield intends to
obtain on terms substantially similar to the Current Policy (a "Substitute
Policy") covering, without lapse, each of the persons who were officers or
directors of Biofield prior to the date hereof, then Escrow Agent shall disburse
$27,166 to Biofield upon delivery by Biofield to Escrow Agent of satisfactory
proof that the Current Policy has been so renewed or that such Substitute Policy
has been so obtained, unless Seller within such twenty (20) day period shall
have objected to such disbursement for failure to obtain substantially similar
terms or for failure otherwise to satisfy the above conditions (stating the
facts surrounding the applicable failure with particularity) by notice to Escrow
Agent.
3. If, in accordance with Section 2 above, Biofield has obtained
satisfactory officers and directors liability insurance for such additional
year, and if, no less than twenty (20) days prior to the last day of the policy
period of the then current policy (the "Renewal Policy"), Biofield delivers to
Escrow Agent and to Seller a notice that the Renewal Policy is intended to be
renewed, without lapse, for an additional year (i.e., until March 17, 2002) on
terms substantially similar to the Renewal Policy, which notice sets forth all
material changes to such coverage in appropriate detail (it being understood
that a policy shall not be considered "substantially similar" for purposes of
this Section 3 if the policy differs materially from the Renewal Policy in
covering acts for which officers and directors of Biofield prior to the date
hereof are being insured by the insurance company, or if the policy limits are
less than $3,000,000), or, alternatively, if no less than twenty (20) days prior
to the last day of the policy period of the Renewal Policy, Biofield delivers to
Escrow Agent and to Seller a notice that sets forth all material terms, in
appropriate detail, of a new directors and officers liability insurance policy
which Biofield intends to obtain on terms substantially similar to the Renewal
Policy (a "New Substitute Policy") covering, without lapse, each of the persons
who were officers or directors of Biofield prior to the date hereof, then Escrow
Agent shall disburse $27,166 to Biofield upon delivery by Biofield to Escrow
Agent of satisfactory proof that the Renewal Policy has been so renewed or that
such New Substitute Policy has been so obtained, unless Seller within such
twenty (20) day period shall have objected to such disbursement for failure to
obtain substantially similar terms or for failure otherwise to satisfy the above
conditions (stating the facts surrounding the applicable failure with
particularity) by notice to Escrow Agent.
4. If, in accordance with Section 3 above, Biofield has obtained
satisfactory officers and directors liability insurance for such additional
year, and if, no less than twenty (20) days prior to the last day of the policy
period of the then current policy (the "Then Renewal Policy"), Biofield delivers
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to Escrow Agent and to Seller a notice that the Then Renewal Policy is intended
to be renewed, without lapse, for an additional year (i.e., until March 17,
2003) on terms substantially similar to the Then Renewal Policy, which notice
sets forth all material changes to such coverage in appropriate detail (it being
understood that a policy shall not be considered "substantially similar" for
purposes of this Section 4 if the policy differs materially from the Then
Renewal Policy in covering acts for which officers and directors of Biofield
prior to the date hereof are being insured by the insurance company, or if the
policy limits are less than $3,000,000), or, alternatively, if no less than
twenty (20) days prior to the last day of the policy period of the Then Renewal
Policy, Biofield delivers to Escrow Agent and to Seller a notice that sets forth
all material terms, in appropriate detail, of a new directors and officers
liability insurance policy which Biofield intends to obtain on terms
substantially similar to the Then Renewal Policy (a "Further Substitute Policy")
covering, without lapse, each of the persons who were officers or directors of
Biofield prior to the date hereof, then Escrow Agent shall disburse all
remaining Escrow Funds to Biofield upon delivery by Biofield to Escrow Agent of
satisfactory proof that the Then Renewal Policy has been so renewed or that such
Further Substitute Policy has been so obtained, unless Seller within such twenty
(20) day period shall have objected to such disbursement for failure to obtain
substantially similar terms or failure otherwise to satisfy the above conditions
(stating the facts surrounding the applicable failure with particularity) by
notice to Escrow Agent.
5. Biofield shall deliver to Seller and Escrow Agent a notice no less than
ten (10) business days prior to the date that the directors and officers
insurance policy then in effect covering each of the persons who were officers
or directors of Biofield prior to the date hereof will lapse. If, at any time
while Escrow Agent has any Escrow Funds under its control, Escrow Agent receives
(a) notice from Seller, with evidence that such notice has been delivered to
Biofield, that the Biofield directors and officers insurance policy covering
each of the persons who were officers or directors of Biofield prior to the date
hereof (i) will lapse within ten (10) business days and will not be replaced by
Biofield (prior to lapse) with appropriate replacement insurance as contemplated
by this Agreement, or (ii) has lapsed, and (b) a request from Seller (with
evidence that a copy of such request has been delivered to Biofield) to disburse
a portion or all of the Escrow Funds to purchase "tail" officer and director
insurance covering each of such persons who were officers or directors of
Biofield prior to the date hereof for a period extending not more than six (6)
years after the date of this Agreement and for an amount of coverage which is
not more than the amount of coverage in the Current Policy, then Escrow Agent
shall disburse such requested amount of Escrow Funds to Seller, or as Seller
directs, to pay for such "tail" officer and director insurance, unless Biofield,
within such ten (10) business day period shall have objected to such
disbursement for failure to satisfy the above conditions (stating the facts
surrounding the applicable failure with particularity) by notice to Escrow
Agent.
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6. If either Biofield or Seller shall have timely objected to any
requested disbursement pursuant to Section 2, 3, 4 or 5 above, then Escrow Agent
shall have a right to make a payment from the Escrow Funds to the requesting
party only in accordance with (a) a joint written direction from Biofield and
Seller or (b) a final order of a court of competent jurisdiction promptly
following the delivery of such joint written direction or of a copy of such
court order to Escrow Agent.
7. Escrow Agent shall deposit the Escrow Funds in any account it maintains
(and which shall be under its control) with any bank for third parties or escrow
funds. Escrow Agent may, but need not, deposit the Escrow Funds in an interest
bearing account or in any of the following, under Escrow Agent's control, as
directed by Biofield:
(a) obligations issued or guaranteed by the United States of America or
any agency or instrumentality thereof;
(b) certificates of deposit or interest bearing accounts with banks or
corporations endowed with trust powers having capital and surplus in excess of
Five Hundred Million Dollars ($500,000,000);
(c) commercial paper that at the time of investment is rated A-1 by
Standard & Poor's Corporation or Prime-1 by Xxxxx'x Investors Service, Inc.;
(d) repurchase agreements with any bank or corporation described in
clause (b) fully secured by obligations described in clause (a); or
(e) money market mutual funds.
8. If Escrow Agent shall receive from Biofield and Seller instructions
with respect to the Escrow Funds which, in the opinion of Escrow Agent, are in
conflict, Escrow Agent may, but shall not be required to, refrain from taking
any action with respect thereto unless it is otherwise specifically directed by
Biofield and Seller, or by a final order of a court of competent jurisdiction as
to which the time for appeal has expired without an appeal having been made. If
any dispute or difference shall arise between Biofield and Seller, or if any
conflicting demand shall be made upon Escrow Agent, which Escrow Agent
determines to recognize, then Escrow Agent shall have the right to retain the
Escrow Funds, or any part of it, and await the outcome of such dispute,
difference, demand or other controversy by final legal proceedings or otherwise,
as Escrow Agent may deem appropriate, or Escrow Agent may institute such
interpleader or other action or proceeding as it may deem proper. In the event
that Escrow Agent institutes an interpleader action, it may, after deducting all
of its costs and expenses, including, but not limited to, reasonable attorneys'
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fees and disbursements incurred in connection therewith, deposit any or all of
the Escrow Funds and interest accrued thereon which it is holding or which is
under its control in any court of appropriate jurisdiction after giving the
other parties hereto notice stating that it is taking such action; and thereupon
Escrow Agent shall be fully relieved and discharged of any further duties
hereunder.
9. Escrow Agent shall be liable only for its own willful misconduct or
gross negligence and not for any act done or omitted by it in good faith. Escrow
Agent may rely, and shall be protected in acting or refraining from acting, upon
any notice, instruction or request, furnished to it hereunder and believed in
good faith by it to be genuine. If Escrow Agent receives any notice under which
some action is to be taken by it, it shall not be required to act thereon until
it has had an opportunity, if it so desires, to investigate the authenticity of
such notice. Escrow Agent has executed this Agreement solely in order to
acknowledge receipt of the Escrow Funds and to confirm that Escrow Agent will
hold same in escrow pursuant to the provisions of this Agreement. Escrow Agent
shall not have any duties or responsibilities except those set forth in this
Agreement. Escrow Agent's obligations hereunder shall be as a depository only,
and Escrow Agent shall not be responsible or liable in any manner whatever for
the sufficiency, correctness, genuineness or validity of any notice, written
instructions or other instrument furnished to it or deposited with it, or for
the form of execution of any thereof, or for the identity, authority or rights
of any person executing, furnishing or depositing same except to the extent of
its gross negligence or willful misconduct.
10. Escrow Agent has the right to, and may, resign and be discharged from
its duties hereunder by giving at least thirty (30) days' prior notice to the
other parties hereto of such resignation, specifying a date when such
resignation shall take effect. If the other parties hereto do not make a
unanimous appointment of a substitute escrow agent prior to the effective date
of Escrow Agent's resignation, Escrow Agent may deposit the Escrow Funds then
being held by it or which is under its control with a court of appropriate
jurisdiction after giving the other parties hereto notice stating that it is
taking such action; and thereupon Escrow Agent shall be fully relieved and
discharged of any further duties hereunder.
11. Escrow Agent may consult with counsel of its own choice and shall have
full and complete authorization and protection for any action taken in
accordance with the opinion of such counsel.
12. Escrow Agent shall be reimbursed from the Escrow Fund, after notice to
Biofield and Seller for any out-of-pocket cost and expenses (including, without
limitation, reasonable attorneys fees and disbursements) incurred by it in
connection with its duties under this Escrow Agreement and shall have a first
lien on the Escrow Funds to pay any such costs and expenses. So long as Escrow
Agent is acting as counsel for Biofield, it shall not separately charge the
Escrow Funds for its escrow services.
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13. Seller and Biofield, jointly and severally, agree to indemnify Escrow
Agent against, and hold it harmless from, any loss, liability, damage, cost or
expense incurred by Escrow Agent arising out of, or in connection with, this
Escrow Agreement, including the costs and expenses of defending itself against
any claim of liability except for liability or expense resulting from the
willful misconduct or gross negligence of Escrow Agent. Any such liability of
Seller hereunder shall be limited to $53,700, unless such liability arises from
Escrow Agent defending itself against a claim instituted by Seller.
14. (a) All notices, instructions, consents, claims, designations,
directions and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given and
received if given personally with receipt acknowledged or first class registered
or certified mail, return receipt requested, postage prepaid, and mailed in New
York State, or sent via a recognized overnight courier for next day delivery,
addressed to the parties as follows:
If to the Escrow Agent:
Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
If to the Seller:
C. Xxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx & Gold
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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If to Biofield:
c/o Xxxxx X. Xxxx, Xx., M.D., Ph.D.
0000 Xxx Xxxxxx Xxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
(b) All such notices and communications shall be deemed to have been
given and received on the earlier of (i) when given personally with receipt
acknowledged, (ii) one day after being sent by overnight courier, or (iii) on
the second business day after the mailing thereof as aforesaid, and provided,
however, that notices of change of address shall not be effective until actually
received or offered to the addressee by the Postal Service, if refused.
15. Each of Biofield and Seller agrees not to commence any litigation
against Escrow Agent unless (a) three business days have elapsed beyond any and
all notice periods which either party is required to give the other pursuant to
Section 14 of this Agreement, (b) the Escrow Agent has not submitted its written
resignation as escrow agent hereunder in accordance with Section 10 of this
Agreement, and (c) the Escrow Agent has committed gross negligence or willful
misconduct; and if litigation is commenced against the Escrow Agent without
satisfying all of the conditions set forth in clauses (a), (b) and (c) above,
the party commencing such litigation shall pay all of the costs and expenses of
the Escrow Agent in connection therewith.
16. Seller acknowledges that the Escrow Agent currently is acting as
counsel to Xxxxx X. Xxxx Xx., Xxxxxxx Xxxx and certain of their associated
entities, and may in the future act as counsel to Biofield, and agrees that if
any dispute arises in any situation between Seller or any of its affiliates on
the one hand, and Biofield or any of the foregoing parties, on the other, Seller
will waive any apparent conflict of interest should Escrow Agent represent any
of such parties, and Seller will use its best efforts to have Seller's
affiliates similarly waive such conflict; PROVIDED, HOWEVER, that at the time,
if any, when a controversy arises between such parties with respect to the
Escrow Funds or the delivery thereof hereunder, and one of such parties delivers
written notice to the Escrow Agent requesting that the Escrow Agent resigns as
escrow agent hereunder, then such conflict shall be waived only if the Escrow
Agent submits its written resignation as escrow agent hereunder and thereafter
refrains from any further actions as escrow agent hereunder.
17. This Escrow Agreement constitutes the entire agreement among the
parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, among the parties hereto with respect to the
subject matter thereof.
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18. This Escrow Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors and assigns.
Nothing in this Escrow Agreement, expressed or implied, is intended to or shall
(a) confer on any person other than the parties hereto, or their respective
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Escrow Agreement, or (b) constitute the parties hereto as
participants in a joint venture. No party hereto may assign this Escrow
Agreement or its rights hereunder without the prior written consent of the other
parties hereto, and any such attempted assignment shall be null and void.
19. This Escrow Agreement may not be modified or amended except by an
instrument or instruments in writing signed by all of the parties. This Escrow
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
duly executed as of the date first above written.
XXXXXXX XXXXXXXX XXXXX
XXXXXXXXXXX & KUH, LLP
By: /s/ XXXXXX X. XXXX
-------------------------
Xxxxxx X. Xxxx, Partner
BIOFIELD CORP.
By:-------------------------
/s/ C. XXXXXXX XXXXXX
-------------------------
C. Xxxxxxx Xxxxxx
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