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Exhibit 99e
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into this
16th day of February, 2001 by and among "), by and between Periodontix, Inc., a
Delaware corporation ("Periodontix") and Demegen, Inc., a Colorado corporation
("Demegen') and Xxxxxx Xxxxxx, in his capacity as escrow agent ("Escrow Agent").
PREAMBLE
A. Pursuant to the terms of that certain Agreement between
Demegen and Periodontix dated as of February 16, 2001 (the
"Option Agreement") , Demegen was granted, among other things,
an option to purchase certain assets of Periodontix and a
license of certain of the technology of Periodontix;
B. In order to induce Demegen to enter into the Option Agreement
and consummate the transactions contemplated therein,
Periodontix has agreed to escrow a portion of the
consideration it has received pursuant to the terms of the
Option Agreement (i) as security for the prompt payment of its
indemnification obligations under Article IX of the Option
Agreement (the "Payment Obligations") and (ii) in accordance
with the provisions of Sections 3.1 and 3.2 of the Option
Agreement.
C. Demegen and Periodontix desire to appoint Escrow Agent to act
as Escrow Agent pursuant to and in accordance with this
Agreement; and
D. The execution of this Agreement by the parties is a condition
precedent to the consummation of the transactions contemplated
by the Option Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the promises
and agreements herein contained, and intending to be legally bound, do covenant
and agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined in
this Agreement shall have the meaning ascribed to them in the Option Agreement.
Section 2. Concurrent Events. Concurrently with the execution and
delivery of this Agreement, Demegen has caused the Escrowed Securities, to be
deposited with Escrow Agent and to be held and delivered in accordance with the
terms of this Agreement, the receipt of which is acknowledged by Escrow Agent.
Each of the parties acknowledge and agree that additional shares of Demegen
Common Stock may be delivered to the Escrow Agent from time to time in
accordance with the terms of the Option Agreement.
Section 3. Exercise of the Right to Terminate. In the event that
Demegen shall have exercised the Right to Terminate prior to the Second Payment
Date, Demegen shall:
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(a) Send written notice (a "Termination Notice") to Escrow Agent that
it has exercised the Right to Terminate; and
(b) Send a copy of such Termination Notice simultaneously to
Periodontix.
(c) If Periodontix shall notify Escrow Agent in writing within twenty
(20) calendar days after receipt of a Termination Notice that it disputes that
Demegen has validly exercised the Right to Terminate in accordance with the
provisions of the Option Agreement (such notice a "Termination Dispute Notice"),
Escrow Agent shall take no action with respect to such claim until such time as
it receives instructions relating thereto in accordance with Section 6 hereof.
If no Termination Dispute Notice is received by Escrow Agent from
Periodontix within twenty (20) calendar days after Escrow Agent's receipt of
such Termination Notice, Escrow Agent shall deliver the Escrowed Securities to
Demegen. If no Termination Notice is received by Escrow Agent on or prior to the
Second Payment Date, Escrow Agent shall deliver the Escrowed Securities (other
than the certificate for 230,000 shares of Demegen Common Stock originally
delivered to the Escrow Agent) to Periodontix.
Section 4. Indemnification Claims. In the event Demegen shall assert a
claim for indemnification against Periodontix in accordance with the provisions
of the Option Agreement, Demegen shall
(a) Send written notice (a "Claim Notice") to Escrow Agent of the
amount of the indemnification claim which has not been paid (a "Claim"), and
setting forth the number of Indemnification Escrow Shares having a value based
on the Closing Share Price equal to the amount of the Claim; and
(b) Send a copy of such Claim Notice simultaneously to Periodontix.
If Periodontix shall notify Escrow Agent in writing within twenty (20)
business days after receipt of a Claim Notice that it has paid or disputes the
Claim specified in the Claim Notice (such notice a "Dispute Notice"), Escrow
Agent shall take no action with respect to such Claim until such time as it
receives instructions relating thereto in accordance with Section 6 hereof.
If no Dispute Notice is received by Escrow Agent from Periodontix
within thirty (30) business days after Escrow Agent's receipt of such Claim
Notice, Escrow Agent shall deliver the Indemnification Escrow Shares specified
in the Claim Notice to Demegen.
Section 5. Release of Remaining Shares. Within five business days
following the earlier of the Anniversary Date or the Termination Date, the
Escrow Agent shall deliver to Periodontix the certificate representing the
Indemnification Escrow Shares remaining in the Escrow Account, less any
Indemnification Escrow Shares that constitute Claim Shares (as
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determined in accordance with Section 1.3 of the Option Agreement) pursuant to
any pending Claim Notices or disputes.
Section 6. Dispute Resolution. In the event Escrow Agent receives a
notice of dispute under Section 3 or 4 hereof, Escrow Agent shall retain custody
of the disputed Escrow Securities then in its possession until the first to
occur of the following:
(a) Receipt by Escrow Agent of a notice signed by the Periodontix and
Demegen containing instructions to the Escrow Agent as to the release of the
Escrowed Securities; or
(b) Receipt by Escrow Agent of an order of a court of competent
jurisdiction as to the release of the Escrowed Securities.
Upon receipt of either of the foregoing, Escrow Agent shall release the
Shares in accordance with the terms set forth in said notice or order.
Section 7. Termination. If at any time the Escrow Agent shall receive a
notice signed by Periodontix and by Demegen that this Agreement has been
terminated, Escrow Agent will release the Escrowed Securities in accordance with
the instructions contained in such notice, and upon such release, this Agreement
shall be terminated, and Escrow Agent shall be released and discharged from all
further obligations hereunder. Unless earlier terminated pursuant to the
foregoing, the arrangements provided for in this Agreement shall terminate when
the Shares have been disposed of in accordance with the provisions of this
Agreement.
Section 8. Concerning the Escrow Agent.
(a) Escrow Agent shall be entitled to fees in accordance with the fee
schedule attached hereto as Exhibit A. In addition, Escrow Agent shall be
entitled to reimbursement for all reasonable expenses, disbursements and
advances incurred or made by him in the performance of his duties hereunder,
including reasonable fees, expenses and disbursements of counsel. All such fees
and disbursements shall be paid by Demegen.
(b) Escrow Agent shall not be liable for any damages or have any
obligations other than the duties prescribed herein in carrying out or executing
the purposes and intent of this Agreement; provided, however, that nothing
herein contained shall relieve Escrow Agent from liability arising out of its
willful misconduct, gross negligence or bad faith. Escrow Agent shall have no
liability under, or duty to inquire into the terms of, the Option Agreement.
Each party hereto (other than Escrow Agent) covenants with each other party
(including Escrow Agent) that all instructions, directions and notices given by
such party hereunder will be in accordance with the provisions of the Option
Agreement. Escrow Agent's duties and obligations under this Agreement shall he
entirely administrative and not discretionary. Escrow Agent shall not be liable
to any party hereto or to any third party as a result of any action or omission
taken or made by Escrow Agent in good faith. Periodontix and Demegen covenant
and agree to indemnify and hold harmless Escrow Agent, and to reimburse Escrow
Agent from, against and for, any and all
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liabilities, costs, fees and expenses (including reasonable attorney's fees)
Escrow Agent may suffer or incur by reason of its execution and performance of
this Agreement, except in the case of willful misconduct or gross negligence. In
the event any legal questions arise concerning Escrow Agent's duties and
obligations hereunder, Escrow Agent may consult its counsel and rely without
liability upon written opinions given to it by such counsel. The reasonable
costs of such counsel and the indemnity provided to Escrow Agent shall be paid
one-half by Periodontix and one-half by Demegen. Escrow Agent shall be protected
in acting upon any written notice, request, waiver, consent, authorization, or
other paper or document which Escrow Agent in good faith believes to be genuine
and what it purports to be.
(c) In the event that there shall be any disagreement among any of the
parties to this Agreement resulting in adverse claims or demands being made in
connection with this Agreement, or in the event that Escrow Agent, in good
faith, shall be in doubt as to what action it should take hereunder, Escrow
Agent may, at its option, (i) refuse to comply with any claims or demands on it
or refuse to take any other action hereunder, so long as such disagreement
continues or such doubt exists; and in any such event, Escrow Agent shall not be
or become liable in any way or to any person for its failure or refusal to act,
and Escrow Agent shall be entitled to continue to so refrain from acting until
the dispute is resolved by the parties involved; or (ii) deposit any or all of
the Escrowed Securities with any court of competent jurisdiction for further
disposition of such court, and after making any such deposit, it shall have no
further responsibility to any party with respect to the disposition of such
disputed amounts; or (iii) hold the Escrowed Securities that are subject to
dispute until Escrow Agent has received a final binding order of a court of
competent jurisdiction, from which order no appeal has been taken and with
respect to which order the time for filing any appeal has expired; or (iv) hold
the Escrowed Securities until it has received a further agreement satisfactory
to Escrow Agent and signed by all persons whom Escrow Agent reasonably deems
necessary for the disposition of such Escrowed Securities.
(d) Escrow Agent at any time may resign hereunder by giving written
notice of its resignation to the other parties hereto at least sixty (60) days
prior to the date specified for such resignation to take effect, and upon the
effective date of such resignation the Shares held hereunder shall be delivered
by Escrow Agent to such person as may be designated in writing by the other
parties executing this Agreement, whereupon all of Escrow Agent's obligations
hereunder shall cease and terminate. If no such person shall have been
designated by such date, all obligations of Escrow Agent hereunder shall,
nevertheless, cease and terminate. Escrow Agent's sole responsibility thereafter
shall be to keep safely all Escrowed Securities then held by it hereunder and to
deliver the same to a person designated by all the other parties executing this
Agreement or by the judgment of a court of competent jurisdiction.
(e) In any case where any notice or other communication is to be given
or made pursuant to any provision of this Agreement, such notice or
communication shall be sent by certified or registered mail, postage prepaid, or
by overnight delivery service, and will be deemed to have been delivered when
actually received on the date specified in the return or delivery receipt, If
addressed as follows:
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If to Periodontix,:
00 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxx
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
If to Demegen:
Demegen, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, President
with a copy to:
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
If to Escrow Agent:
Xxxxxx Xxxxxx
32 Main Entry Road
P. O. Xxx 000
Xxxxx Xxxxxxxx, XX 00000
Fax: (000) 000-0000
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section.
Section 9. Binding Effect This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns; provided however, that this Agreement may not be
assigned by any party hereto without the other parties' prior written consent
thereto.
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Section 10. Amendments. This Agreement may riot be amended or modified
except by an instrument in writing executed by the parties hereto.
Section 11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same- instrument.
Section 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Agreement as of the day and year first above
written.
PERIODONTIX:
By: Xxxxxx X. Xxxxx
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Title: President
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DEMEGEN
By: Xxxxxxx X. Xxxxxxx
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President
ESCROW AGENT:
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Xxxxxx Xxxxxx
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EXHIBIT A
Escrow Agent's fees at $200.00 per hour plus reimbursement of any out-of-pocket
expenses.
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