Exhibit 10.02
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of July 29, 2004, by and
between Human BioSystems, a California corporation with its principal
place of business at 0000 Xxxxxx Xxxxxx, Xxxx Xxxx, XX 00000 (the
"Target Company"); Gottbetter & Partners, LLP with its principal place
of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Escrow
Agent"); and Xxxxxxx Park Investments Plc, a corporation organized under
the laws of England and Wales with its offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX ("Xxxxxxx").
Recitals
A. Simultaneously with the execution of this Agreement,
Xxxxxxx and the Target Company entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of the date
hereof and incorporated herein by reference, pursuant to which
the Target Company has agreed that the Consideration Stock, and
Xxxxxxx has agreed that the Xxxxxxx Consideration Shares, shall
be deposited into escrow pursuant to this Agreement, including
fifty percent (50%) of the Xxxxxxx Consideration Shares to be
deposited into escrow as Downside Price Protection (the "Xxxxxxx
Escrow Shares").
B. The Escrow Agent is willing to act as escrow agent
pursuant to the terms of this Agreement with respect to the
purchase of the shares of Consideration Stock.
C. All capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Stock Purchase
Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Deposit into Escrow. At Closing, the Target Company
shall (i) deposit the Xxxxxxx Consideration Shares with the
Escrow Agent, (ii) deliver blank stock powers (the "Stock
Powers") for the Xxxxxxx Escrow Shares to the Escrow Agent and
(iii) deposit the Consideration Stock with the Escrow Agent.
The Escrow Agent shall hold the Xxxxxxx Consideration Shares,
the Consideration Stock and the Stock Powers in escrow when
delivered.
2. Terms of Escrow. (a) If the Market Value of the Common Stock
two years after Closing is less than the Closing Price, the Target
Company shall sell to Xxxxxxx the number of Xxxxxxx Escrow Shares (the
"Xxxxxxx Protection Shares") equal to (a) the Xxxxxxx Consideration
Shares multiplied by (b) the Percentage Decrease, at a purchase price of
1p per Xxxxxxx Consideration Share (the "Escrow Purchase Price"). The
"Percentage Decrease" shall be equal to 1 - Market Value/the Closing
Price. "Market Value" shall be the average of the ten (10) closing bid
prices per share of the Common Stock during the ten (10) trading days
immediately preceding the two year anniversary of the Closing.
Within three (3) Business Days of the two year anniversary of the Closing,
Xxxxxxx shall (i) send a notice ("Sale Notice") to the Target Company and the
Escrow Agent of the Xxxxxxx Protection Shares to be sold by the Target Company
to Xxxxxxx, if any, and (ii) deposit the Escrow Purchase Price with the Escrow
Agent, if necessary. Within fourteen (14) Business Days of the Target
Company's and the Escrow Agent's receipt of the Sale Notice and Escrow Agent's
receipt of the Escrow Purchase Price, the Escrow Agent is authorized and
directed (i) to pay the Escrow Purchase Price to the Target Company, if any,
(ii) to deliver the Xxxxxxx Protection Shares, if any, and the Stock Powers to
Xxxxxxx, (iii) to deliver the remaining Xxxxxxx Escrow Shares, if any, to the
Target Company, and (iv) to deliver the Stock Powers to the Target Company if
the total number of Xxxxxxx Protection Shares is zero.
(b) If at any time before September 30, 2004, the Xxxxxxx Consideration
Shares are admitted for trading on the London Stock Exchange plc (the "London
Exchange"), the Escrow Agent is authorized and directed to distribute, within
fourteen (14) Business Days of such admittance, (i) the Consideration Stock to
Xxxxxxx and (ii) fifty percent (50%) of the Xxxxxxx Consideration Shares to the
Target Company. If the Xxxxxxx Consideration Shares are not admitted for
trading on the London Exchange by September 30, 2004, the Escrow Agent is
authorized and directed to distribute, no later than October 5, 2004, (i) the
Consideration Stock to the Target Company and (ii) the Xxxxxxx Consideration
Shares to Xxxxxxx.
3. Duties and Obligations of the Escrow Agent.
(a) The parties hereto agree that the duties and obligations
of the Escrow Agent shall be only those obligations herein
specifically provided and no other. The Escrow Agent's duties
are those of a depositary only, and the Escrow Agent shall incur
no liability whatsoever, except as a direct result of its
willful misconduct or gross negligence in the performance of its
duties hereunder;
(b) The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or
omitted to be taken 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 Xxxxxxx and the Target
Company are parties, whether or not the Escrow Agent 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 Xxxxxxx and the Target 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 jointly by Xxxxxxx and the Target Company and
agreed to in writing by the Escrow Agent;
(d) If 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, the Escrow Agent shall be entitled
to refrain from taking any action other than keeping safely the
Consideration (as defined below) or taking certain action until
the Escrow Agent is directed otherwise in writing jointly by
Xxxxxxx and the Target 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
the Escrow Agent, 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 any of
the Securities (to the extent delivered to the Escrow Agent
pursuant hereto, the "Consideration"), it may do so by
delivering the same to another Person that agrees to act as
escrow agent hereunder and whose substitution for the Escrow
Agent is agreed upon in writing by Xxxxxxx and the Target
Company; provided, however, that such successor Escrow Agent
must be resident in the United States. If no such escrow agent
is selected within three (3) days after the Escrow Agent gives
notice to Xxxxxxx and the Target Company of the Escrow Agent's
desire to so relinquish custody of the Consideration and resign
as Escrow Agent, then the Escrow Agent may do so by delivering
the Consideration to the clerk or other proper officer of a
state or federal court of competent jurisdiction situate in the
state and county of New York. The fee of any court officer
shall be borne by the Target Company. Upon such delivery, the
Escrow Agent shall be discharged from any and all responsibility
or liability with respect to the Consideration and this
Agreement and each of the Target Company and Xxxxxxx shall
promptly pay all monies it may owe to the Escrow Agent 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 Xxxxxxx or the Target Company, nor
disqualify the Escrow Agent from representing either party
hereto in any dispute with the other, including any dispute with
respect to the Purchase Agreement or Debenture; provided,
however, that in the event of such dispute, the Escrow Agent
shall have the right to commence an interpleader action in any
court of competent jurisdiction of the state of New York or of
the United States located in the county and state of New York,
deposit the Consideration with such court;
(i) The parties acknowledge and agree that the Escrow Agent
is counsel to Xxxxxxx. The parties agree to, and agree not to
object to, the Escrow Agent's engagement as Escrow Agent
hereunder;
(j) Upon the full performance of this Agreement, the Escrow
Agent shall be deemed released and discharged of any further
obligations hereunder.
4. Indemnification.
(a) Xxxxxxx hereby indemnifies and holds free and harmless
the Escrow Agent from any and all losses, expenses, liabilities
and damages (including but not limited to reasonable attorney's
fees, and amounts paid in settlement) resulting from claims
asserted by the Target Company against the Escrow Agent with
respect to the performance of any of the provisions of this
Agreement;
(b) The Target Company hereby indemnifies and holds free and
harmless the Escrow Agent from any and all losses, expenses,
liabilities and damages (including but not limited to reasonable
attorney's fees, and amount paid in settlement) resulting from
claims asserted by Xxxxxxx against the Escrow Agent with respect
to the performance of any of the provisions of this Agreement;
(c) Xxxxxxx and the Target Company, jointly and severally,
hereby indemnify and hold the Escrow Agent harmless from and
against any and all losses, damages, taxes, liabilities and
expenses that may be incurred by the Escrow Agent, 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, the Purchase Agreement and the
Securities, including, but not limited to, all legal costs and
expenses of the Escrow Agent incurred defending itself against
any claim or liability in connection with its performance
hereunder, provided that the Escrow Agent shall not be entitled
to any indemnity for any losses, damages, taxes, liabilities or
expenses that directly result from its willful misconduct or
gross negligence in its performance as Escrow Agent hereunder
(d) In the event of any legal action or proceeding involving
any of the parties to this Agreement which is brought to enforce
or otherwise adjudicate any of the rights or obligations of the
parties hereunder, the non-prevailing party or parties shall pay
the legal fees of the prevailing party or parties and the legal
fees, if any, of the Escrow Agent.
5. Miscellaneous.
(a) All notices, including Notices of Conversion and Notices
of Exercise, objections, requests, demands and other
communications sent to any party hereunder shall be deemed duly
given if (x) in writing and sent by facsimile transmission to
the Person for whom intended if addressed to such Person at its
facsimile number set forth below or such other facsimile number
as such Person may designate by notice given pursuant to the
terms of this Section 5 and (y) the sender has confirmation of
transmission:
(i) If to the Target Company: Human BioSystems
Attn: Xxxxx Xxxxxx
President and CEO
0000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Xxxxxxx: Xxxxxxx Park Investments PLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attn: Xxxxx Xxxxx
Tel: 00.000.000.0000
Fax: 00.000.000.0000
(iii) If to the Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) This Agreement has been prepared, negotiated and
delivered in the state of New York and shall be governed by and
construed and enforced in accordance with the laws of the state
of New York applicable to contracts entered into and performed
entirely within New York, without giving effect to the
principles of New York law relating to the conflict of laws.
(c) This Agreement may be executed in two or more
counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered
to the other party, it being understood that both parties need
not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile signature page were
an original thereof.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns. The assignment by a party of this Agreement or any
rights hereunder shall not affect the obligations of such party
under this Agreement.
6. Termination of Escrow. The term of this Escrow Agreement shall
begin upon the date hereof and shall continue until terminated upon the
earlier to occur of (i) the Xxxxxxx Escrow Shares are fully distributed
or (ii) the written agreement of the parties to terminate this
Agreement. Upon the termination of this Escrow Agreement pursuant to
subsection (ii), the Escrow Agent shall distribute any of the Xxxxxxx
Escrow Shares then held by it pursuant to the terms of the written
agreement of the parties.
[ SIGNATURE PAGE FOLLOWS ]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
The Target Company:
Human BioSystems
By: /s/ Xxxxx Xxxxxx
____________________
Name:Xxxxx Xxxxxx
Title:President and CEO
Xxxxxxx:
Dungarvon Associates, Inc. on behalf of
Xxxxxxx Park Investments Plc.
By: /s/ Xxxxx Xxxxx
______________________
Name: Xxxxx Xxxxx
Title:Administrative Director
Escrow Agent:
Gottbetter & Partners, LLP
By:/s/Xxxx X. Xxxxxxxxxx
____________________________
Name: Xxxx X Xxxxxxxxxx
Title: Managing Partner
EXHIBIT B
Human BioSystems
OFFICER'S CERTIFICATE
I, Xxxxx Xxxxxx, being the President ofHuman BioSystems, a California
corporation (the "Target Company"), pursuant to Section 2.2(a)(ii) of
that certain Stock Purchase Agreement (the "Purchase Agreement"), dated
as of July 29, 2004, by and between the Target Company and Xxxxxxx Park
Investments PLC, do hereby certify on behalf of the Target Company that
attached hereto is a copy of the resolutions duly adopted by the Board
of Directors of the Target Company authorizing the Target Company to
execute and deliver the Transaction Documents, as such term is defined
in the Purchase Agreement and to enter into the transactions
contemplated thereby.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on behalf
of the Target Company this 29th day of July, 2004.
Human BioSystems
/s/Xxxxx Xxxxxx
___________________
By: Xxxxx Xxxxxx, President
