Exhibit 10.33
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered
into as of March 30, 2005 by and among ACCESS
PHARMACEUTICALS, INC., a Delaware corporation (the "Company");
the Buyer(s) listed in the Securities Purchase Agreement, dated the date
hereof (also referred to as the "Investor(s)"), and XXXXX XXXXXXXX,
ESQ., as Escrow Agent hereunder (the "Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor(s) have entered into a Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated as of the
date hereof, pursuant to which the Company proposes to sell secured
convertible debentures (the "Convertible Debentures") which shall be
convertible into the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), for a total purchase price of up to Two
Million Six Hundred Thirty Three Thousand Dollars ($2,633,000). The
Securities Purchase Agreement provides that the Investor(s) shall deposit the
purchase amount in a segregated escrow account to be held by Escrow
Agent in order to effectuate a disbursement to the Company at a closing to
be held as set forth in the Securities Purchase Agreement (the "Closing").
WHEREAS, the Company intends to sell Convertible Securities (the
"Offering").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the
funds deposited with it in accordance with the terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and to effect the
provisions of the Securities Purchase Agreement, the parties hereto have
entered into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:
1. Definitions. The following terms shall have the following meanings
when used herein:
a. "Escrow Funds" shall mean the funds deposited with Escrow Agent
pursuant to this Agreement.
b. "Joint Written Direction" shall mean a written direction executed by the
Investor(s) and the Company directing Escrow Agent to disburse all or a
portion of the Escrow Funds or to take or refrain from taking any action
pursuant to this Agreement.
c. "Escrow Period" shall begin with the commencement of the Offering and
shall terminate upon the earlier to occur of the following dates:
(i) The date upon which Escrow Agent confirms that it has received in the
Escrow Account all of the proceeds of the sale of the Convertible
Debentures;
(ii) The expiration of twenty (20) days from the date of commencement of
the Offering (unless extended by mutual written agreement between the
Company and the Investor(s) with a copy of such extension to Escrow
Agent); or
(iii) The date upon which a determination is made by the Company and the
Investor(s) to terminate the Offering prior to the sale of all the Convertible
Debentures.
During the Escrow Period, the Company and the Investor(s) are aware that
they are not entitled to any funds received into escrow and no amounts
deposited in the Escrow Account shall become the property of the Company
or the Investor(s) or any other entity, or be subject to the debts of the
Company or the Investor(s) or any other entity.
2. Appointment of and Acceptance by Escrow Agent. The Investor(s) and
the Company hereby appoint Escrow Agent to serve as Escrow Agent
hereunder. Escrow Agent hereby accepts such appointment and, upon
receipt by wire transfer of the Escrow Funds in accordance with Section 3
below, agrees to hold, invest and disburse the Escrow Funds in accordance
with this Agreement.
a. The Company hereby acknowledges that the Escrow Agent is general
counsel to the Investor(s), a partner in the general partner of the
Investor(s), and counsel to the Investor(s) in connection with the
transactions contemplated and referred herein. The Company agrees that
in the event of any dispute arising in connection with this Escrow
Agreement or otherwise in connection with any transaction or agreement
contemplated and referred herein, the Escrow Agent shall be permitted to
continue to represent the Investor(s) and the Company will not seek to
disqualify such counsel.
3. Creation of Escrow Funds. On or prior to the date of the
commencement of the Offering, the parties shall establish an escrow
account with the Escrow Agent, which escrow account shall be entitled as
follows: Access Pharmaceuticals, Inc./Cornell Capital Partners, LP Escrow
Account for the deposit of the Escrow Funds. The Investor(s) will instruct
subscribers to wire funds to the account of the Escrow Agent as follows:
Bank: Wachovia, N.A. of New Jersey
Routing #: 000000000
Account #: 2000014931134
Name on Account: Xxxxx Xxxxxxxx Attorney Trust Account
Name on Sub-Account: Access Pharmaceuticals, Inc./Cornell Capital
Partners, LP Escrow account
4. Deposits into the Escrow Account. The Investor(s) agrees that they shall
promptly deliver funds for the payment of the Convertible Debentures to
Escrow Agent for deposit in the Escrow Account.
5. Disbursements from the Escrow Account.
a. The Escrow Agent will continue to hold such funds until Cornell Capital
Partners, LP on behalf of the Investor(s) and Company execute a Joint
Written Direction directing the Escrow Agent to disburse the Escrow Funds
pursuant to Joint Written Direction signed by the Company and the
Investor(s). In disbursing such funds, Escrow Agent is authorized to rely
upon such Joint Written Direction from the Company and the Investor(s)
and may accept any signatory from the Company listed on the signature
page to this Agreement and any signature from the Investor(s) that the
Escrow Agent already has on file.
b. In the event Escrow Agent does not receive the amount of the Escrow
Funds from the Investor(s), Escrow Agent shall notify the Company and the
Investor(s). Upon receipt of payment instructions from the Company,
Escrow Agent shall refund to each subscriber without interest the amount
received from each Investor(s), without deduction, penalty, or expense to
the subscriber. The purchase money returned to each subscriber shall be
free and clear of any and all claims of the Company, the Investor(s) or any
of their creditors.
c. In the event Escrow Agent does receive the amount of the Escrow Funds
prior to expiration of the Escrow Period, in no event will the Escrow Funds
be released to the Company until such amount is received by Escrow Agent
in collected funds. For purposes of this Agreement, the term "collected
funds" shall mean all funds received by Escrow Agent which have cleared
normal banking channels and are in the form of cash.
6. Collection Procedure. Escrow Agent is hereby authorized to deposit the
proceeds of each wire in the Escrow Account.
7. Suspension of Performance: Disbursement Into Court. If at any time,
there shall exist any dispute between the Company and the Investor(s) with
respect to holding or disposition of any portion of the Escrow Funds or any
other obligations of Escrow Agent hereunder, or if at any time Escrow
Agent is unable to determine, to Escrow Agent's sole satisfaction, the
proper disposition of any portion of the Escrow Funds or Escrow Agent's
proper actions with respect to its obligations hereunder, or if the parties
have not within thirty (30) days of the furnishing by Escrow Agent of a
notice of resignation pursuant to Section 9 hereof, appointed a successor
Escrow Agent to act hereunder, then Escrow Agent may, in its sole
discretion, take either or both of the following actions:
a. suspend the performance of any of its obligations (including without
limitation any disbursement obligations) under this Escrow Agreement until
such dispute or uncertainty shall be resolved to the sole satisfaction of
Escrow Agent or until a successor Escrow Agent shall be appointed (as the
case may be); provided however, Escrow Agent shall continue to invest the
Escrow Funds in accordance with Section 8 hereof; and/or
b. petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to
Escrow Agent, for instructions with respect to such dispute or uncertainty,
and to the extent required by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all funds held
by it in the Escrow Funds, after deduction and payment to Escrow Agent
of all fees and expenses (including court costs and attorneys' fees) payable
to, incurred by, or expected to be incurred by Escrow Agent in connection
with performance of its duties and the exercise of its rights hereunder.
c. Escrow Agent shall have no liability to the Company, the Investor(s), or
any person with respect to any such suspension of performance or
disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result
of any delay in the disbursement of funds held in the Escrow Funds or any
delay in with respect to any other action required or requested of Escrow
Agent.
8. Investment of Escrow Funds. Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing account.
If Escrow Agent has not received a Joint Written Direction at any time that
an investment decision must be made, Escrow Agent shall maintain the
Escrow Funds, or such portion thereof, as to which no Joint Written
Direction has been received, in a non-interest bearing account.
9. Resignation and Removal of Escrow Agent. Escrow Agent may resign
from the performance of its duties hereunder at any time by giving thirty
(30) days' prior written notice to the parties or may be removed, with or
without cause, by the parties, acting jointly, by furnishing a Joint Written
Direction to Escrow Agent, at any time by the giving of ten (10) days'
prior written notice to Escrow Agent as provided herein below. Upon any
such notice of resignation or removal, the representatives of the Investor(s)
and the Company identified in Sections 13a.(iv) and 13b.(iv), below, jointly
shall appoint a successor Escrow Agent hereunder, which shall be a
commercial bank, trust company or other financial institution with a
combined capital and surplus in excess of $10,000,000.00. Upon the
acceptance in writing of any appointment of Escrow Agent hereunder by a
successor Escrow Agent, such successor Escrow Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be
discharged from its duties and obligations under this Escrow Agreement,
but shall not be discharged from any liability for actions taken as Escrow
Agent hereunder prior to such succession. After any retiring Escrow
Agent's resignation or removal, the provisions of this Escrow Agreement
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Escrow Agent under this Escrow Agreement. The retiring
Escrow Agent shall transmit all records pertaining to the Escrow Funds and
shall pay all funds held by it in the Escrow Funds to the successor Escrow
Agent, after making copies of such records as the retiring Escrow Agent
deems advisable and after deduction and payment to the retiring Escrow
Agent of all fees and expenses (including court costs and attorneys' fees)
payable to, incurred by, or expected to be incurred by the retiring Escrow
Agent in connection with the performance of its duties and the exercise of
its rights hereunder.
10. Liability of Escrow Agent.
a. Escrow Agent shall have no liability or obligation with respect to the
Escrow Funds except for Escrow Agent's willful misconduct or gross
negligence. Escrow Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the
terms of this Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice or any fact
or circumstance not specifically set forth herein. Escrow Agent may rely
upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained herein, which Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by the person or parties
purporting to sign the same and conform to the provisions of this
Agreement. In no event shall Escrow Agent be liable for incidental,
indirect, special, and consequential or punitive damages. Escrow Agent
shall not be obligated to take any legal action or commence any proceeding
in connection with the Escrow Funds, any account in which Escrow Funds
are deposited, this Agreement or the Purchase Agreement, or to appear in,
prosecute or defend any such legal action or proceeding. Escrow Agent
may consult legal counsel selected by it in any event of any dispute or
question as to construction of any of the provisions hereof or of any other
agreement or its duties hereunder, or relating to any dispute involving any
party hereto, and shall incur no liability and shall be fully indemnified from
any liability whatsoever in acting in accordance with the opinion or
instructions of such counsel. The Company and the Investor(s) jointly and
severally shall promptly pay, upon demand, the reasonable fees and
expenses of any such counsel.
b. Escrow Agent is hereby authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow
Funds, without determination by Escrow Agent of such court's jurisdiction
in the matter. If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in any case any order judgment
or decree shall be made or entered by any court affecting such property or
any part thereof, then and in any such event, Escrow Agent is authorized,
in its sole discretion, to rely upon and comply with any such order, writ
judgment or decree which it is advised by legal counsel selected by it,
binding upon it, without the need for appeal or other action; and if Escrow
Agent complies with any such order, writ, judgment or decree, it shall not
be liable to any of the parties hereto or to any other person or entity by
reason of such compliance even though such order, writ judgment or decree
may be subsequently reversed, modified, annulled, set aside or vacated.
11. Indemnification of Escrow Agent. From and at all times after the date
of this Agreement, the parties jointly and severally, shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and
hold harmless Escrow Agent and each director, officer, employee, attorney,
agent and affiliate of Escrow Agent (collectively, the "Indemnified Parties")
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorney's fees, costs and expenses) incurred
by or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action, or
proceeding (including any inquiry or investigation) by any person, including
without limitation the parties to this Agreement, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable
cause or otherwise, arising from or in connection with the negotiation,
preparation, execution, performance or failure of performance of this
Agreement or any transaction contemplated herein, whether or not any such
Indemnified Party is a party to any such action or proceeding, suit or the
target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for
liability finally determined by a court of competent jurisdiction, subject to
no further appeal, to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. If any such action or claim shall be
brought or asserted against any Indemnified Party, such Indemnified Party
shall promptly notify the Company and the Investor(s) hereunder in writing,
and the Investor(s) and the Company shall assume the defense thereof,
including the employment of counsel and the payment of all expenses.
Such Indemnified Party shall, in its sole discretion, have the right to
employ separate counsel (who may be selected by such Indemnified Party
in its sole discretion) in any such action and to participate and to participate
in the defense thereof, and the fees and expenses of such counsel shall be
paid by such Indemnified Party, except that the Investor(s) and/or the
Company shall be required to pay such fees and expense if (a) the
Investor(s) or the Company agree to pay such fees and expenses, or (b) the
Investor(s) and/or the Company shall fail to assume the defense of such
action or proceeding or shall fail, in the sole discretion of such Indemnified
Party, to employ counsel reasonably satisfactory to the Indemnified Party
in any such action or proceeding, (c) the Investor(s) and the Company are
the plaintiff in any such action or proceeding or (d) the named or potential
parties to any such action or proceeding (including any potentially
impleaded parties) include both the Indemnified Party, the Company and/or
the Investor(s) and the Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Company or the
Investor(s). The Investor(s) and the Company shall be jointly and severally
liable to pay fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only
to the party so agreeing. All such fees and expenses payable by the
Company and/or the Investor(s) pursuant to the foregoing sentence shall be
paid from time to time as incurred, both in advance of and after the final
disposition of such action or claim. The obligations of the parties under
this section shall survive any termination of this Agreement, and resignation
or removal of the Escrow Agent shall be independent of any obligation of
Escrow Agent.
The parties agree that neither payment by the Company or the Investor(s)
of any claim by Escrow Agent for indemnification hereunder shall impair,
limit, modify, or affect, as between the Investor(s) and the Company, the
respective rights and obligations of Investor(s), on the one hand, and the
Company, on the other hand.
12. Expenses of Escrow Agent. Except as set forth in Section 11 the
Company shall reimburse Escrow Agent for all of its reasonable out-of-
pocket expenses related to its performance of this Agreement, including
attorneys' fees, travel expenses, telephone and facsimile transmission costs,
postage (including express mail and overnight delivery charges), copying
charges and the like. All of the compensation and reimbursement
obligations set forth in this Section shall be payable by the Company, upon
demand by Escrow Agent. The obligations of the Company under this
Section shall survive any termination of this Agreement and the resignation
or removal of Escrow Agent.
13. Warranties.
a. The Investor(s) makes the following representations and warranties to
Escrow Agent:
(i) The Investor(s) has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
(ii) This Agreement has been duly approved by all necessary action of the
Investor(s), including any necessary approval of the limited partner of the
Investor(s) or necessary corporate approval, as applicable, has been
executed by duly authorized officers of the Investor(s), enforceable in
accordance with its terms.
(iii) The execution, delivery, and performance of the Investor(s) of this
Agreement will not violate, conflict with, or cause a default under any
agreement of limited partnership of Investor(s) or the articles of
incorporation or bylaws of the Investor(s) (as applicable), any applicable
law or regulation, any court order or administrative ruling or degree to
which the Investor(s) is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement.
(iv) Xxxx Xxxxxx has been duly appointed to act as the representative of the
Investor(s) hereunder and has full power and authority to execute, deliver,
and perform this Escrow Agreement, to execute and deliver any Joint
Written Direction, to amend, modify, or waive any provision of this
Agreement, and to take any and all other actions as the Investor(s)'s
representative under this Agreement, all without further consent or direction
form, or notice to, the Investor(s) or any other party.
(v) No party other than the parties hereto and the Investor(s)s have, or shall
have, any lien, claim or security interest in the Escrow Funds or any part
thereof. No financing statement under the Uniform Commercial Code is
on file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Funds or any part thereof.
(vi) All of the representations and warranties of the Investor(s) contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any disbursement from the Escrow Funds.
b. The Company makes the following representations and warranties to the
Escrow Agent:
(i) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
(ii) This Agreement has been duly approved by all necessary corporate
action of the Company, including any necessary shareholder approval, has
been executed by duly authorized officers of the Company, enforceable in
accordance with its terms.
(iii) The execution, delivery, and performance by the Company of this
Agreement is in accordance with the Securities Purchase Agreement and
will not violate, conflict with, or cause a default under the certificate of
incorporation or bylaws of the Company, any applicable law or regulation,
any court order or administrative ruling or decree to which the Company
is a party or any of its property is subject, or any agreement, contract,
indenture, or other binding arrangement, including without limitation to the
Securities Purchase Agreement, to which the Company is a party.
(iv) Xxxxx X. Xxxx has been duly appointed to act as the representative of
the Company hereunder and has full power and authority to execute,
deliver, and perform this Agreement, to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this
Agreement and to take all other actions as the Company's Representative
under this Agreement, all without further consent or direction from, or
notice to, the Company or any other party.
(v) No party other than the parties hereto and the Investor(s)s have, or shall
have, any lien, claim or security interest in the Escrow Funds or any part
thereof. No financing statement under the Uniform Commercial Code is
on file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Funds or any part thereof.
(vi) All of the representations and warranties of the Company contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any disbursement from the Escrow Funds.
14. Consent to Jurisdiction and Venue. In the event that any party hereto
commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the District of New Jersey shall have the sole and exclusive jurisdiction
over any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of New
Jersey, Chancery Division of Xxxxxx County shall have sole and exclusive
jurisdiction. Any of these courts shall be proper venue for any such lawsuit
or judicial proceeding and the parties hereto waive any objection to such
venue. The parties hereto consent to and agree to submit to the jurisdiction
of any of the courts specified herein and agree to accept the service of
process to vest personal jurisdiction over them in any of these courts.
15. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered
five (5) days after deposit in the United States mails, by certified mail with
return receipt requested and postage prepaid, when delivered personally,
one (1) day delivered to any overnight courier, or when transmitted by
facsimile transmission and upon confirmation of receipt and addressed to
the party to be notified as follows:
If to Investor(s), to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent, to: Xxxx Xxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: Access Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or to such other address as each party may designate for itself by like
notice.
16. Amendments or Waiver. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties hereto. No
delay or omission by any party in exercising any right with respect hereto
shall operate as waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future
occasion.
17. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
18. Governing Law. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof.
19. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement
of the Escrow Funds and sets forth in their entirety the obligations and
duties of the Escrow Agent with respect to the Escrow Funds.
20. Binding Effect. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective heirs, successors and assigns of the
Investor(s), the Company, or the Escrow Agent.
21. Execution of Counterparts. This Agreement and any Joint Written
Direction may be executed in counter parts, which when so executed shall
constitute one and same agreement or direction.
22. Termination. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Joint Written Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to
Section 7 hereof, this Agreement shall terminate and Escrow Agent shall
have no further obligation or liability whatsoever with respect to this
Agreement or the Escrow Funds.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties have hereunto set their hands and
seals the day and year above set forth.
ACCESS PHARMACEUTICALS, INC.
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Chief Executive Officer
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Its: Portfolio Manager
HIGHGATE HOUSE FUNDS, LTD.
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Portfolio Manager
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx, Esq.
