ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into on August 29, 2007 by and
between MED-X SYSTEMS, INC., a Nevada corporation ("Med-X"), EQUITABLE ASSETS,
INC., a Nevada corporation, the controlling stockholder of Med-X (the "Med-X
Controlling Stockholder"), CRANSTON, INC., a Nevada corporation (the
"Subsidiary"), CRANSTON, INC., a New York corporation ("Cranston"), the Cranston
stockholders being more fully described on the signature page hereof (the
"Cranston Stockholders"), and GLAST, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. (the "Escrow
Agent").
WHEREAS, Cranston and the Cranston Stockholders and Med-X, the Subsidiary,
and the Med-X Controlling Stockholder have executed that certain Plan and
Agreement of Triangular Merger between Med-X Systems, Inc., Cranston, Inc., a
Nevada corporation, and Cranston, Inc., a New York corporation, dated August 29,
2007 (the "Merger Agreement"); and
WHEREAS, all capitalized terms herein shall have the same meanings as
defined in the Merger Agreement, unless otherwise defined herein; and
WHEREAS, the Cranston Stockholders have delivered into escrow with the
Escrow Agent the sum of $80,000 (the "Escrowed Funds"); and
WHEREAS, 4,188,646 shares of the Med-X Common Stock owned by the Med-X
Controlling Stockholder, together with all shares issued in exchange for
converted debt, have been delivered to the Escrow Agent (the "Escrowed Shares");
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto do agree as follows:
1. Transfer into Escrow by the Cranston Stockholders. The
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Cranston Stockholders have delivered the Escrowed Funds into escrow with the
Escrow Agent, the receipt of which is hereby acknowledged by the Escrow Agent.
2. Transfer into Escrow by the Med-X Controlling Stockholder. The
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Med-X Controlling Stockholder has delivered the Escrowed Shares into escrow with
the Escrow Agent, the receipt of which is hereby acknowledged by the Escrow
Agent.
3. Release of the Escrowed Funds. Promptly following the Effective
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Date, the Med-X Controlling Stockholder will use its best efforts to do all
things necessary to qualify the shares of the Med-X Common Stock for quotation
and sale on the Over the Counter Bulletin Board maintained by the Nasdaq Stock
Market, Inc. (the "OTCBB"). The Escrowed Funds shall be held in escrow with the
Escrow Agent until such time as the shares of the Med-X Common Stock are quoted
for sale on the OTCBB. Immediately upon receiving notice from the Med-X
Controlling Stockholder and the Cranston Stockholders that the OTCBB has
notified all parties to the Merger Agreement that the shares of the Med-X Common
Stock are being quoted for sale on the OTCBB and are trading on the OTCBB, the
Escrow Agent shall deliver the Escrowed Funds to the Med-X Controlling
Stockholder. In the event that Med-X is unable to procure a trading symbol from
the NASD, due to NASD rejection, within 180 days from the date of the execution
of this agreement, either Cranston or the Med-X Controlling Shareholder shall
have the right to terminate this agreement upon ten (10) days notice to the
other party.
4. Release of the Escrowed Shares. The Med-X Controlling Stockholder
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agrees that the Escrowed Shares may not be sold for a period of 12 months
following the Effective Date. Thereafter, the Escrow Agent shall release the
Escrowed Shares to the Med-X Controlling Stockholder in such amounts which may
then be sold pursuant to the provisions of Rule 144(e) promulgated pursuant to
the Securities Act of 1933, as amended.
5. Duty of the Escrow Agent. The sole duty of the Escrow Agent, other
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than as hereinafter specified, shall be to receive the Escrowed Funds and the
Escrowed Shares and hold them subject to release, in accordance with this
Agreement, the Merger Agreement, and the Other Agreements.
6. Liability of the Escrow Agent. The duties of the Escrow Agent
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hereunder will be limited to observance of the express provisions of this
Agreement. Furthermore, the Escrow Agent is not expected or required
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to be familiar with the provisions of any other writing, understanding or
agreement, and shall not be charged with any responsibility or liability in
connection with the observance or non-observance of the provisions of such other
writing, understanding or agreement, and no implied covenant of any type
whatsoever shall be read into this Agreement.
The further provisions shall govern the Escrow Agent's liabilities
hereunder:
(a) In receiving the Escrowed Funds and the Escrowed Shares, the
Escrow Agent acts only as a depository and thereby assumes no responsibility,
except pursuant to the terms of this Agreement.
(b) The Escrow Agent may act or refrain from acting in respect of
any matter covered by this Agreement in full reliance upon and with the advice
of counsel which may be selected by it, and shall be fully protected in so
acting or in refraining from acting upon the advice of such counsel.
Furthermore, the Escrow Agent may rely and shall be protected in acting upon any
writing that may be submitted to it in connection with its duties hereunder
without determining the genuineness, authenticity or due authority from any such
writing or the person signing same and shall have no liability or responsibility
with respect to the form, content or validity thereof.
(c) The Escrow Agent shall have no responsibility or liability for
any act or omission on its part, notwithstanding any demand or notice to the
contrary by the Med-X Controlling Stockholder or the Cranston Stockholders, or
any other person or entity, all subject to the sole limitation that the Escrow
Agent exercises its best judgment. Except as herein expressly provided, none of
the provisions of this Agreement shall require the Escrow Agent to expend or
risk its own funds or otherwise incur financial liability or expense in the
performance of any of its duties hereunder.
(d) The Escrow Agent is hereby authorized to comply with and obey
all orders, judgments, decrees or writs entered or issued by any court, and in
the event the Escrow Agent obeys or complies with any such order, judgment,
decree or writ, in whole or in part, it shall not be liable to the Med-X
Controlling Stockholder, the Cranston Stockholders, or any other person or
entity, by reason or such compliance, notwithstanding that it shall be
determined that any such order, judgment, decree or writ was entered without
jurisdiction or was invalid for any reason or is subsequently reversed,
modified, annulled, satisfied or vacated.
(e) The Escrow Agent shall not be required to institute or defend
any action or legal process involving any matter referred to herein which in any
manner affects its duties or liabilities hereunder to take any other action with
reference to the Escrowed Funds and the Escrowed Shares not specifically agreed
to herein, and the Escrow Agent shall not be responsible for any act or failure
to act on its part except in the case of its own fraud or gross negligence.
(f) Should any controversy arise between the Escrow Agent, the
Med-X Controlling Stockholder, the Cranston Stockholders, or between any other
person or entity with respect to this Agreement, or with respect to the
ownership of or the right to receive the Escrowed Funds and the Escrowed Shares,
the Escrow Agent shall have the right to institute a plea of interpleader in any
court of competent jurisdiction to determine the rights of the parties. Should
a plea of interpleader be instituted, or should the Escrow Agent become involved
in litigation in any manner whatsoever connected with or pertaining to this
Agreement, the Merger Agreement, the Other Agreements, or the Escrowed Funds and
the Escrowed Shares, the Med-X Controlling Stockholder and the Cranston
Stockholders hereby agree to pay the Escrow Agent, on demand, in addition to any
charge made hereunder for acting as escrow agent, reasonable attorneys' fees
incurred by the Escrow Agent, and any other disbursements, expenses, losses,
costs, and damages in connection with or resulting from such litigation.
7. Indemnification. The Med-X Controlling Stockholder and the Cranston
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Stockholders hereby agree to indemnify and hold the Escrow Agent harmless from
and against any and all claims, loses, liabilities, costs, damages, fees,
charges, and expenses (including attorneys' fees) which the Escrow Agent may
incur or sustain by reason of its acting as the Escrow Agent under this
Agreement, unless same shall result from the fraud or gross negligence of the
Escrow Agent.
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8. Death, Incapacity, or Resignation of the Escrow Agent. In the
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event of the death, incapacity, or resignation of the Escrow Agent, the Med-X
Controlling Stockholder and the Cranston Stockholders shall appoint a successor
Escrow Agent within 10 days following such death, incapacity, or resignation. If
the Med-X Controlling Stockholder and the Cranston Stockholders shall fail to
appoint a successor Escrow Agent within such 10 day period, the Med-X
Controlling Stockholder may thereupon deposit the Escrowed Funds and the
Escrowed Shares into the registry of a court of competent jurisdiction, and seek
to have a successor Escrow Agent appointed by such court. Any substitute Escrow
Agent appointed hereunder shall possess and exercise all powers and authority
herein conferred on the original Escrow Agent, unless the court otherwise
decrees in the order of appointment. Further, any successor Escrow Agent shall
receive such compensation as such court may determine. The parties hereto intend
that a substitute Escrow Agent will be appointed to fulfill the duties of the
Escrow Agent hereunder for the remaining term of this Agreement in the event of
the Escrow Agent's death, incapacity, or resignation, and the Med-X Controlling
Stockholder and the Cranston Stockholders will use their best efforts to
promptly appoint a substitute Escrow Agent who shall be bound by the terms and
provisions of this Agreement.
9. Termination and Amendment. This Agreement shall remain in effect
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until the Escrowed Funds and the Escrowed Shares are delivered in accordance
herewith; provided that any Escrow Agent hereunder who resigns in accordance
with the terms hereof shall no longer be bound by this Agreement, but this
Agreement, including, but not limited to the indemnification provisions hereof,
shall remain in effect, notwithstanding such resignation, for purposes of
determining the rights and duties of the Med-X Controlling Stockholder, the
Cranston Stockholders, the Escrow Agent, and any successor Escrow Agent. No
amendment or modification to this Agreement shall be in force or effect unless
signed by the parties hereto.
10. No Trusteeship. The Med-X Controlling Stockholder and the Cranston
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Stockholders agree that the Escrow Agent is acting solely as an escrowee
hereunder and not as a trustee and that the Escrow Agent has no fiduciary
duties, obligations or liabilities under this Agreement.
11. Confidentiality. Except as required by applicable law, legal
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process or other legal compulsion, the Escrow Agent shall hold all information
relating to the transactions contemplated by this Agreement in strict confidence
and under no circumstance shall any of the terms and conditions or the
participants involved be disclosed, unless such disclosure is mandated by
applicable law.
12. Mediation and Arbitration. All disputes arising or related to this
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Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Houston, ▇▇▇▇▇▇
County, Texas. If such mediation fails, then any such dispute shall be resolved
by binding arbitration under the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time the arbitration proceeding
commences, except that (a) Texas law and the Federal Arbitration Act must govern
construction and effect, (b) the locale of any arbitration must be in Houston,
▇▇▇▇▇▇ County, Texas, and (c) the arbitrator must with the award provide written
findings of fact and conclusions of law. Any party may seek from a court of
competent jurisdiction any provisional remedy that may be necessary to protect
its rights or assets pending the selection of the arbitrator or the arbitrator's
determination of the merits of the controversy. The exercise of such
arbitration rights by any party will not preclude the exercise of any self-help
remedies (including without limitation, setoff rights) or the exercise of any
non-judicial foreclosure rights. An arbitration award may be entered in any
court having jurisdiction.
13. Attorneys' Fees. In the event that it should become necessary for
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any party entitled hereunder to bring suit against any other party for
enforcement of the covenants contained herein, the parties hereby covenant and
agree that the party who is found to be in violation of this Agreement shall
also be liable to the other parties for all reasonable attorneys' fees and costs
of court incurred by such other parties.
14. Benefit. The terms and provisions of this Agreement shall be
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binding upon, inure to the benefit of and be enforceable by, the parties hereto
and their respective successors and permitted assigns.
15. Notices. All notices, requests, demands, and other communications
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hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to Med-X, the Med-X Controlling Stockholder, and the
Subsidiary, addressed to
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▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇@▇-▇▇▇▇.▇▇▇;
and if to Cranston and the Cranston Stockholders, addressed to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telephone (800)
▇▇▇-▇▇▇▇, and email ▇▇▇▇@▇▇▇▇▇.▇▇▇; and if to the Escrow Agent, addressed to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇. Any party hereto may change its address upon 10 days'
written notice to any other party hereto.
16. Construction. Words of any gender used in this Agreement shall be
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held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
17. Waiver. No course of dealing on the part of any party hereto or
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its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
18. Representations, Warranties and Agreements to Survive. All
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indemnity agreements set forth in this Agreement, as well as all
representations, warranties, covenants and other agreements set forth in this
Agreement shall remain operative and in full force and effect at the termination
of this Agreement, and any successor of the parties shall be entitled to the
benefit of the respective representations, warranties and agreements made
herein.
19. Cumulative Rights. The rights and remedies contained in this
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Agreement shall be cumulative and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.
20. Invalidity. In the event any one or more of the provisions
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contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
21. Headings. The headings used in this Agreement are for convenience
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and reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and do not affect or constitute a part of this
Agreement.
22. Excusable Delay. The parties shall not be obligated to perform and
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shall not be deemed to be in default hereunder, if the performance of a
non-monetary obligation required hereunder is prevented by the occurrence of any
of the following, other than as the result of the financial inability of the
party obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, war or war-like action (whether actual,
impending or expected and whether de jure or de facto), acts of terrorists,
arrest or other restraint of government (civil or military), blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government or public authority, nuclear reaction or radiation,
radioactive contamination or other causes, whether of the kind herein enumerated
or otherwise, that are not reasonably within the control of the party claiming
the right to delay performance on account of such occurrence.
23. No Third-Party Beneficiary. Any agreement to pay an amount and any
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assumption of liability contained in this Agreement, express or implied, shall
be only for the benefit of the undersigned parties and their respective
successors and assigns (as herein expressly permitted), and such agreements and
assumptions shall not inure to the benefit of the obligees or any other party,
whomsoever, it being the intention of the parties hereto that no one shall be or
be deemed to be a third-party beneficiary of this Agreement.
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24. Law Governing; Jurisdiction. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Texas, without regard
to any conflicts of laws provisions thereof. Each party hereby irrevocably
submits to the personal jurisdiction of the United States District Court for the
Southern District of Texas, as well as of the District Courts of the State of
Texas in ▇▇▇▇▇▇ County, Texas over any suit, action or proceeding arising out of
or relating to this Agreement. Each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such mediation, arbitration, suit, action
or proceeding brought in any such county and any claim that any such mediation,
arbitration, suit, action or proceeding brought in such county has been brought
in an inconvenient forum.
25. Incorporation by Reference. Any agreement referred to or included
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herein constitutes an integral part to this Agreement and is incorporated into
this Agreement by this reference.
26. Controlling Agreement. Other than the provisions of Paragraphs 12
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and 24 hereof, in the event of any conflict between the terms of this Agreement,
the Merger Agreement, or the Other Agreements, the terms of the Merger Agreement
shall control.
27. Multiple Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
or PDF copy of this signed Agreement shall be legal and binding on all parties
hereto.
28. Entire Agreement. This instrument contains the entire
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understanding of the parties with respect to the subject matter hereof, and may
not be changed orally, but only by an instrument in writing signed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
MED-X SYSTEMS, INC.
By
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
EQUITABLE ASSETS, INC.
By
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
CRANSTON, INC. (a Nevada corporation)
By
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
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CRANSTON, INC. (a New York corporation)
By
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▇▇▇▇ ▇▇▇▇▇▇, President
GLAST, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
By
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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