ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement")
dated as of November 7, 2008 by and among AMERICAN
SCIENTIFIC RESOURCES, INC., a Nevada corporation
("Company") and
Blaydon Capital,
LLC, a Wisconsin limited liability company ("Purchaser"), and
Xxxxxx X. Xxxxxxxxx ("Escrow
Agent").
WHEREAS, the Company has caused
certificate(s) representing27,270,000 shares of the Company's common stock (the
“Initial Escrow
Shares”) to be delivered to the Escrow Agent as provided below to be held
in escrow under this Escrow Agreement in order to be made available for
conversion by Purchaser under the Company's Series A 8% Convertible Redeemable
Debenture due September 29, 2010, the Company’s Series A 8% Convertible
Redeemable Debenture due October 10, 2010 and the Company’s Series A 8%
Convertible Redeemable Debenture due October 24, 2010 (the “Initial
Debentures”);
WHEREAS, the Company is issuing to
the Purchaser on the date hereof its Series A 8% Convertible Redeemable
Debenture due November 7, 2010 (the “Additional
Debenture”
and, together with the Initial Debentures, the “Debentures”);
WHEREAS, the Company has agreed to
cause its transfer agent to deliver to the Escrow Agent or reserve for issuance
to the Escrow Agent such number of additional shares of its authorized common
stock, in order that the aggregate number of shares of the Company’s common
stock held by the Escrow Agent as provided below and reserved for issuance to
the Escrow Agent by its transfer agent shall equal the outstanding amount of the
Debentures from time to time, divided by the best bid price for the common stock
shown on the pink sheets, times four (together with the shares of the Company’s
common stock then held by the Escrow Agent);
WHEREAS, in
order to induce the Purchaser to purchase the Additional Debenture, the Company
has agreed to execute this Escrow Agreement and to deliver such additional
shares of its common stock as its transfer agent will deliver to the Escrow
Agent from time to time (the “Escrow Shares”) as
security for its performance under the Debentures and the Securities Sale
Agreement between
Purchaser and the Company dated as of September 29, 2008 (the “Sale
Agreement”); and
WHEREAS, in the event that
Purchaser exercises its rights of conversion under the Debentures,
the Escrow Shares shall be made available for such purpose under this Escrow
Agreement.
NOW THEREFORE, in
consideration of the respective premises, mutual covenants and agreements of the
parties hereto, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Appointment of Escrow
Agent. Escrow Agent is hereby appointed as escrow agent and
the Escrow Agent hereby accepts such appointment. The Escrow Agent
shall act in accordance with the instructions set forth in this Escrow Agreement
and any further instructions given to it by written instrument signed by Company
and Purchaser.
2. Escrow Shares Delivery and
Application
(a) The
Company shall deposit the Escrow Shares, which shall not contain any restrictive
legend of any nature, in an account which the Escrow Agent maintains at a
registered brokerage firm ("Brokerage Firm") issued in the name of Escrow
Agent.
(b) The
Escrow Agent shall act solely as a stakeholder with respect to the Escrow
Shares. Accordingly, the Escrow Agent shall not have the power to
vote the Escrow Shares, nor shall the Escrow Agent have any beneficial interest
in the Escrow Shares.
(c) Each
notice of conversion of a Debenture (a “Notice of Conversion”) shall be
simultaneously sent to the Company, as required by the terms of the Debenture
and/or the Sale Agreement, and to the Escrow Agent. In the event
there are any errors or discrepancies in the Notice of Conversion, the Company
and the Purchaser will cooperate fully in resolving such errors. Upon
Escrow Agent’s receipt of a copy of a Notice of Conversion and, provided that
Escrow Agent has not received a notice from the Company indicating any errors or
discrepancies in the Notice of Conversion, and, provided that Escrow Agent has
not received a notice from the Company indicating any errors or discrepancies in
the Notice of Conversion (in which event the Escrow Agent will promptly notify
Purchaser of such notice and will use reasonable efforts assist the Company and
Purchaser in resolving the issue), (i) the number of Escrow Shares set forth in
the Notice of Conversion shall become the property of the Purchaser, and (ii)
the Escrow Agent shall permit the Brokerage Firm to journal such shares over to
the Purchaser's account at the Brokerage Firm or to such other account as the
Purchaser shall direct. Until such Notice of Conversion is received, Purchaser
shall have absolutely no right, title or interest in any of the Escrow Shares
unless there is a Default or Event of Default (as defined in the
Debentures).
(d) Purchaser
shall have the right under this Escrow Agreement to send Notices of Conversion
for the Debentures, and in any order selected by the Purchaser in its sole and
absolute discretion, subject to the terms of the Debentures.
3. Default
(a) If
Purchaser sends the Escrow Agent a Notice of Default under either Debenture, or
if, for any reason, the Company is unable, fails or refuses to deliver common
stock to Purchaser as required under the Debentures, the Escrow Agent shall then
release all the Escrow Shares to the Purchaser.
2
(b) Escrow
Agent is specifically authorized to rely upon the validity and effectiveness of
any Notice of Default, received by the Escrow Agent.
(c) Upon
payment in full by the Company of the Debentures, or upon conversion of the
Debentures into Conversion Shares (as such term is defined in the Debentures),
any remaining Escrow Shares shall be delivered by the Escrow Agent to the
Company, and upon such delivery, none of the parties to this Escrow Agreement
shall have any further obligations to the others. In the event that
the Escrow Shares are delivered to the Purchaser upon an Event of Default, the
Escrow Agent shall have no further obligations under this Escrow
Agreement.
4. Indemnification. The
Purchaser and the Company agree, jointly and severally, to indemnify, defend and hold harmless the
Escrow Agent from and against any and all costs (including, without limitation,
legal fees and expenses), liabilities, claims and losses arising out of or in
connection with this Escrow Agreement or any action or failure to act by the
Escrow Agent under this Escrow Agreement, except as provided in paragraph 5
below.
5. Concerning the Escrow
Agent. To induce the Escrow Agent to act hereunder, it is
further agreed by the undersigned that:
(a) This
Escrow Agreement expressly sets forth all the duties of the Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall, on the part of the Escrow Agent, be read into this Escrow
Agreement. The Escrow Agent shall not be bound by the provisions of
any agreement among the other parties hereto except this Escrow
Agreement.
(b) The
Escrow Agent shall not be liable for any action or failure to act in its
capacity as Escrow Agent hereunder unless such action or failure to act shall
constitute willful misconduct on the part of the Escrow Agent, in which case
there shall be no indemnification obligations.
(c)
The Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it to be genuine and may assume, unless he
has actual knowledge to the contrary, that any person purporting to give notice
or receipt or advice or make any statement or execute any document in connection
with the provisions hereof has been duly authorized to do so.
(d) The
Escrow Agent may act pursuant to the advice of counsel with respect to any
matter relating to this Escrow Agreement and shall not be liable for any action
taken or omitted in accordance with such advice, except as provided in paragraph
5(b) above.
3
(e) The
Escrow Agent does not have and shall not have any interest whatsoever in the
Escrow Shares or any other property deposited hereunder but is serving as escrow
holder only and having only possession thereof with no rights as a shareholder
of the Company, and is not charged with any duty or responsibility to determine
the validity or enforceability of any such documents. Furthermore,
the Escrow Agent shall have no right to vote the Escrow Shares or have any other
pecuniary rights in the Escrow Shares or have control of, direct or indirect, or
role in the Company’s corporate governance or otherwise. The Escrow
Agent may not assert any lien on the Escrow Shares for payment of any fee due
the Escrow Agent.
(f) The
Escrow Agent (and any successor Escrow Agent) may at any time resign as such by
delivering the Escrow Shares to any successor Escrow Agent, jointly designated
by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon the Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Escrow Agreement
thereafter. The resignation of the Escrow Agent will take effect on
the earlier of (a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties
hereto. If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole responsibility
after that time shall be to safekeep the Escrow Shares and not make delivery or
disposition thereof until receipt of a designation of successor Escrow Agent or
a joint written disposition instruction by the other parties hereto or a final
order of a court of competent jurisdiction.
(g) In
the event of any disagreement among the parties hereto resulting in adverse
claims or demands being made in connection with the Escrow Shares, or in the
event that the Escrow Agent otherwise determines that the Escrow Shares should
be retained, then the Escrow Agent may retain the Escrow Shares until the Escrow
Agent shall have received (i) a final nonappealable order of a court of
competent jurisdiction directing delivery of the Escrow Shares or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Shares, in which case the Escrow Agent shall promptly deliver the Escrow Shares
in accordance with such order or agreement. Any court order referred
to in (i) above shall be accompanied by a legal opinion by counsel for the
presenting party reasonably satisfactory to the Escrow Agent to the effect that
said court order is final and nonappealable. The Escrow Agent shall
act on such court order and legal opinion without further question.
(h) This
Escrow Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their respective successors (including successors by way of
merger) and assigns, heirs, administrators and representatives, and shall not be
enforceable by or inure to the benefit of any third party except as provided in
paragraph (g) with respect to a resignation by the Escrow
Agent.
4
(i) This
Escrow Agreement may be modified by a writing signed by all the parties hereto,
and no waiver hereunder shall be effective unless in a writing signed by the
party to be charged.
6. Consent to
Jurisdiction. Company, Purchaser and the Escrow Agent hereby
irrevocably consent to the jurisdiction of any federal or state court, in New
York, New York, in any action or proceeding arising out of or relating to this
Escrow Agreement. Company hereby irrevocably waives, to the fullest
extent possible, the defense of an inconvenient forum to the maintenance of such
action or proceeding. Service of process may be effectuated by
certified mail, return receipt requested, or by Federal Express with evidence of
delivery to the parties at the addresses set forth in Section 8
below.
THE COMPANY, THE ESCROW AGENT AND The
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM, ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THIS ESCROW AGREEMENT. THE COMPANY
SHALL NOT RAISE ANY COUNTERCLAIM IN ANY PROCEEDING BROUGHT BY THE PURCHASER TO
ENFORCE THE PROVISIONS OF THIS ESCROW AGREEMENT.
Nothing
herein shall affect the right of the Purchaser to serve process in any other
manner permitted by law or to affect the right of the Purchaser to bring any
action or proceeding against Purchaser in any other court or
jurisdiction.
7. Governing
Law. This Escrow Agreement shall be governed in all respects
by the laws of the State of New York. The parties agree to submit to
the jurisdiction and venue of any state or federal court in New York City having
subject matter jurisdiction over the matter. Service may be made by
certified mail, return receipt requested, to the parties at the addresses set
forth in paragraph 8 below, but the parties shall not be precluded from making
service in any other manner permitted by law.
8. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing, shall be delivered by hand or sent by U.S. Express Mail, Fedex or some
other reliable overnight courier service for next day delivery. Each
such notice or other communication shall, for all purposes of this Escrow
Agreement, be treated as effective or having been given when delivered if
delivered personally, or, if sent by overnight express mail service, 1 day after
the same has been deposited with the U.S. Postal Service, Fedex or the overnight
courier.
5
If to
Company:
American
Scientific Resources, Inc
0000
Xxxxxx Xxxx,
Xxxx
000
Xxxxxx,
XX 00000
Phone:
000-000-0000
Fax:
000-000-0000
Email:
xxxxxx@xxxxxxx.xxx
with copy
to:
Xxxxxx X.
Xxxxxxxxx
Attorney
at Law
000 XX
Xxxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxx 00000-0000
Facsimile:
(000) 000-0000
xxxxxx@xxxxxxx.xxx
If to
Purchaser:
Blaydon
Capital, LLC
000 Xxxxx
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxxxx
Facsimile:
000-000-0000
Email: xxxxxxxxxxxxxx@xxxxx.xxx
with copy
to:
Xxxxxx
Xxxxxxxx Xxxxxxx LLP
000 Xxxx
00xx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxx
Phone: 000-000-0000
Facsimile:
212-986-2907
xxxxxx@xxxxxx.xxx
6
If to
Escrow Agent:
Xxxxxx X.
Xxxxxxxxx
Attorney
at Law
000 XX
Xxxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxx 00000-0000
Facsimile:
(000) 000-0000
xxxxxx@xxxxxxx.xxx
9. Counterparts. This Escrow
Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all such counterparts shall constitute
one Agreement. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission or e-mail in pdf format shall
be effective as delivery of a manually executed counterpart. Any
party so delivering this Agreement shall promptly deliver a manually executed
counterpart, provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile or e-mail transmission.
10. Fees. The
Company shall pay all reasonable fees and expenses of the Escrow
Agent.
[signatures
appear on next page]
7
IN WITNESS WHEREOF, the parties hereto
have caused this Escrow Agreement to be duly executed and delivered, as of the
day and year first above written.
|
COMPANY:
|
|
|
AMERICAN
SCIENTIFIC RESOURCES, INC.
|
|
|
By:
|
 |
|
Name:
|
Xxxxxxxxxxx
X. Xxxxxxx, MD, MBA
|
|
Title:
CEO/Chairman of the Board
|
|
|
PURCHASER:
|
|
|
BLAYDON
CAPITAL, LLC
|
|
|
By:
|
|
|
Name:
Xxxxxx Xxxxxxxxx
|
|
|
Title:
Managing Member
|
|
|
ESCROW AGENT:
|
|
|
|
|
|
Xxxxxx
X.
Xxxxxxxxx
|
|
8
