Security Escrow Agreement (Page 3 of 4) in pdf

10.

ADDITIONAL SHARES. Upon the exercise by any Security Holder of his or her conversion

rights, warrants or options to acquire additional shares of the Issuer pursuant to the documents listed on

Exhibit A, the additional shares received from the exercise of such warrants or options shall forthwith be

deposited in escrow with the Escrow Agent and shall be subject to the terms and conditions of this

Agreement.

11.

DISSOLUTION PREFERENCE. The Security Holders agree that in the event of dissolution,

liquidation, merger, consolidation, reorganization, sale or exchange of the issuer’s assets or securities

(including by way of tender offer), or any transaction or proceeding with a person who is not a promoter

which results in the distribution of the assets or securities, the Security Holders will initially share on a pro

rata, per share basis in the distribution, in proportion to the amount of cash or other consideration they

paid per share of equity securities, until the public shareholders have received, or have irrevocably set

aside for them, an amount that is equal to one hundred (100%) percent of the public offering price per

share times the number of shares of equity securities that they purchased pursuant to the public offering

and which they still hold at the time of the distribution, adjusted for stock splits, stock dividends,

recapitalizations and the like. Security Holders shall thereafter participate on an equal, per share basis

times the number of shares of equity securities they hold at the time of the distribution, adjusted for stock

splits, stock dividends, recapitalizations and the like. A distribution may proceed on lesser terms and

conditions than the terms and conditions stated above, if a majority of the equity securities that are not

held by promoters, or their associates or affiliates vote, or consent by consent procedure to approve the

lesser terms and conditions at a special meeting called for that specific purpose.

In the event of a dissolution, liquidation, merger, consolidation reorganization, sale or exchange of the

issuer’s assets or securities (including by way of tender offer), or any other transaction or proceeding with

a person who is a promoter, which results in a distribution while this Agreement remains in effect, the

Security Holders’ promotional shares shall remain in escrow subject to the terms of this Agreement.

In the event securities in the Escrow become “Covered Securities”, as defined in the National Securities

Markets Improvement Act of 1996, all securities in the Escrow shall be released.

12.

RELIANCE BY ESCROW AGENT. The Escrow Agent may conclusively rely on, and shall be

protected, when it acts in good faith upon, any statement, certificate, notice, request, consent, order or

other document which it believes to be genuine and signed by the proper party. The Escrow Agent shall

have no duty or liability to verify any such statement, certificate, notice, request, consent, order or other

document and its sole responsibility shall be to act only as expressly set forth in this Agreement. The

Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in

connection with this Agreement unless it is indemnified to its satisfaction. The Escrow Agent may consult

counsel with respect to any question arising under this Agreement and the Escrow Agent shall not be

liable for any action taken, or omitted, in good faith upon advice of counsel. In performing any of its

duties hereunder, the Escrow Agent shall not incur any liability to anyone for any damages, losses or

expenses except for willful default or negligence, and it shall accordingly not incur any such liability with

respect to: (i) any action taken or omitted in good faith upon advice of its counsel or counsel for the Issuer

given with respect to any questions relating to the duties and responsibility of the Escrow Agent under this

Agreement; or, (ii) any action taken or omitted in reliance upon any instrument, including written advice

provided for herein, not only as to its due execution and the validity and effectiveness of its provisions, but

also as to the truth and accuracy of any information contained therein, which the Escrow Agent shall in

good faith believe to be genuine, to have been signed or presented by a proper person or persons, and to

conform with the provisions of the Agreement. All Shares and funds held pursuant to this Agreement

shall constitute trust property. The Escrow Agent shall not be liable for any interest on the Shares.

13.

COMPENSATION TO ESCROW AGENT. The Escrow Agent shall be entitled to receive from the

Issuer reasonable compensation for its services as set forth in Exhibit B attached hereto. In the event

that the Escrow Agent renders any additional services not provided for herein, or if any controversy arises

hereunder, or if the Escrow Agent is made a party to, or intervenes in any action, suit or proceeding

pertaining to this Agreement, it shall be entitled to receive from the Security Holders, or at the option of

Security Escrow Agreement Page 3

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