EXHIBIT 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of December 15,
2005, by and among Corgentech, Inc., a Delaware corporation ("CORGENTECH"),
Mellon Investor Services, as Escrow Agent ("ESCROW AGENT") and Xxxxxx Xxxx, as
Stockholder Representative ("REPRESENTATIVE") of the Participating Stockholders.
RECITALS
A. Corgentech, AlgoRx Pharmaceuticals, Inc., a Delaware corporation
("ALGORX") and Element Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Corgentech ("MERGER SUB"), have entered into an
Agreement and Plan of Merger dated as of September 23, 2005 (the "MERGER
AGREEMENT") pursuant to which Merger Sub will merge (the "MERGER") with and into
AlgoRx, with AlgoRx to be the surviving corporation of the Merger. Capitalized
terms used in this Agreement and not otherwise defined shall have the meanings
given them in the Merger Agreement.
B. Section 1.7 of the Merger Agreement provides that at the Closing Date,
Corgentech will deposit in escrow (such deposit constituting the "ESCROW FUND")
that certain number of shares of Corgentech Common Stock equal to five percent
(5%) of the Total Merger Consideration (the "ESCROW SHARES"). Each Participating
Stockholder's Pro Rata Share of the Escrow Fund shall be withheld from the
Participating Stockholder.
C. The parties to this Agreement desire to establish the terms and
conditions pursuant to which the Escrow Shares will be deposited, held in, and
disbursed from the Escrow Fund.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Escrow Fund. The Escrow Agent agrees to: (a) accept delivery of the
Escrow Shares; and (b) hold such Escrow Shares in escrow as part of the Escrow
Fund, all subject to the terms and conditions of this Agreement and Article VIII
of the Merger Agreement (which Article VIII is attached to this Agreement as
Appendix I and incorporated by reference into this Agreement) (collectively, the
"ESCROW PROVISIONS").
2. Deposit of Escrow Shares: Release from Escrow.
(a) Delivery of Escrow Shares. On the Closing Date, the Escrow Shares
will be deposited by Corgentech on behalf of the Participating Stockholders with
the Escrow Agent.
(b) Participating Stockholders' Accounts. The Escrow Agent will
maintain for each Participating Stockholder an accounting record (each
Participating Stockholder's "ACCOUNT") specifying the portion of the Escrow
Shares held for the record of each Participating Stockholder pursuant to Section
1.7 of the Merger Agreement. All Escrow Shares received under Section 2(a) of
this Agreement will be allocated to each Participating Stockholder's Account in
accordance with such Participating Stockholder's Pro Rata Share of the Escrow
Fund as set forth on Appendix II.
(c) Dividends; Voting; Rights of Ownership. The Escrow Agent will
promptly distribute to the Participating Stockholders any cash dividends or
other distributions of any kind made in respect of the Escrow Shares. Each
Participating Stockholder will have voting rights with respect to his, her or
its Pro Rata Share of the Escrow Shares so long as such Escrow Shares are held
in escrow, and Corgentech will take all reasonable steps necessary to allow the
exercise of such rights. While the Escrow Shares remain in the Escrow Agent's
possession pursuant to this Agreement and the Merger Agreement, the
Participating Stockholders will retain and will be able to exercise all other
incidents of ownership of said Escrow Shares which are not inconsistent with the
terms and conditions of this Agreement and the Merger Agreement. The beneficial
owners of the Escrow Shares shall be wholly responsible for any and all taxes
incurred and payable on the Escrow Shares.
(d) Release. The Escrow Shares will be held by the Escrow Agent until
required to be released to the Participating Stockholders pursuant to Section
8.1 of the Merger Agreement, unless previously released to Corgentech pursuant
to Sections 8.2 and 8.3 of the Merger Agreement. Within ten (10) business days
after the applicable release condition is met, Corgentech and the Representative
will deliver to the Escrow Agent a written notice identifying the portion of the
Escrow Shares to be released and cash to be paid in lieu of fractional shares
with respect to each Participating Stockholder. As soon as practicable after
receipt of this written notice, the Escrow Agent will deliver to each
Participating Stockholder the Escrow Shares to be released. Escrow Shares will
be in the form of stock certificate(s) issued in the name of such Participating
Stockholder. Escrow Shares will be released and cash in lieu of fraction shares
will be paid to the respective Participating Stockholders in accordance with
their respective Accounts. Corgentech will take such action as may be necessary
to cause such certificates to be issued in the names of the appropriate
Participating Stockholders. Cash will be paid in lieu of fractions of Escrow
Shares. Within ten (10) business days after the written notice described above,
Corgentech will deposit with the Escrow Agent sufficient funds to pay such cash
amounts for fractional shares.
(e) No Encumbrance. No Escrow Shares or any beneficial interest in the
Escrow Shares may be pledged, sold, assigned or transferred, including by
operation of law, by a Participating Stockholder or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of a
Participating Stockholder, prior to the delivery to such Participating
Stockholder of such Participating Stockholder's portion of the Escrow Shares by
the Escrow Agent.
(f) Tax Reporting. The parties hereto agree that the Participating
Stockholders shall be treated for all tax purposes as the owners of their Pro
Rata Share of the Escrow Fund as indicated on Appendix II hereto. Within thirty
(30) days of the date hereof, the Representative shall furnish to the Escrow
Agent Internal Revenue Service Forms W-9 or Forms W-8BEN for the Participating
Stockholders. The parties agree that the interest and other earnings
attributable to the Escrow Shares shall be treated for U.S. tax purposes as
income of the Participating Stockholders in the respective proportions indicated
on Appendix II hereto.
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3. Limitation of the Escrow Agent's Liability.
(a) The Escrow Agent will incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it to be genuine
and duly authorized, nor for any other action or inaction, except its own
willful misconduct, bad faith or gross negligence. The Escrow Agent will not be
responsible for the validity or sufficiency of the Escrow Provisions. In all
questions arising under the Escrow Provisions, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone. The Escrow Agent will not be required to take any action under the
Escrow Provisions involving any expense unless the payment of such expense is
made or provided for in a manner satisfactory to it.
(b) In the event conflicting demands are made or notices are served
upon the Escrow Agent with respect to the Escrow Fund, the Escrow Agent will
have the absolute right, at the Escrow Agent's election, to do either or both of
the following: resign so a successor can be appointed pursuant to Section 5 of
this Agreement or file a suit in interpleader and obtain an order from a court
of competent jurisdiction requiring the parties to interplead and litigate in
such court their several claims and rights among themselves. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully released
and discharged from all further obligations imposed upon it under the Escrow
Provisions, and Corgentech will pay the Escrow Agent (subject to reimbursement
from the Participating Stockholders pursuant to Section 4) all costs, expenses
and reasonable attorney's fees expended or incurred by the Escrow Agent pursuant
to the exercise of the Escrow Agent's rights under this Section 3 (such costs,
fees and expenses will be treated as extraordinary fees and expenses for the
purposes of Section 4 of this Agreement).
(c) Corgentech and the Participating Stockholders and their successors
and assigns agree jointly and severally to indemnify and hold Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, including allocated
costs of in-house counsel and disbursements that may be imposed on Escrow Agent
or incurred by Escrow Agent in connection with the performance of its duties
under this Agreement, including but not limited to any litigation arising from
this Agreement or involving its subject matter. Notwithstanding the foregoing,
no indemnity need be paid in the event of the Escrow Agent's gross negligence,
bad faith or willful misconduct.
4. Expenses.
(a) Escrow Agent. All fees and expenses of the Escrow Agent incurred
in performing its responsibilities hereunder will be paid by Corgentech upon
receipt of a written invoice by the Escrow Agent.
(b) Representative. The Representative will not be entitled to receive
any compensation from Corgentech or the Participating Stockholders in connection
with this Agreement. Any expenses incurred by the Representative will be paid by
Corgentech.
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5. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity as such, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
written notice to the parties to this Agreement, specifying not less than thirty
(30) days' prior notice of the date when such resignation will take effect.
Corgentech will designate a successor Escrow Agent (with the consent of the
Representative, which will not be unreasonably withheld) prior to the expiration
of such 30-day period by giving written notice to the Escrow Agent and the
Representative. Corgentech may appoint a successor Escrow Agent with the consent
of the Representative, which will not be unreasonably withheld, provided such
proposed Escrow Agent is an independent third party that as part of its ordinary
course of business provides similar escrow services to other parties. The Escrow
Agent will promptly transfer the Escrow Shares to such designated successor. In
the event no successor Escrow Agent is appointed as described in this Section 5,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent.
6. Limitation of Responsibility. The Escrow Agent's duties are limited to
those set forth in the Escrow Provisions and the Escrow Agent may rely upon the
written notices delivered to the Escrow Agent under the Escrow Provisions.
7. Incorporation by Reference of Article VIII. The parties agree that the
terms of Article VIII of the Merger Agreement shall be deemed to be incorporated
by reference in this Agreement as if such Article had been set forth in its
entirety herein. The parties acknowledge that the administration of the Escrow
Fund by the Escrow Agent will require reference to both the terms of this
Agreement as well as the terms of such Article VIII.
8. Notices. Any notices or other communications required or permitted
under, or otherwise in connection with this Agreement, shall be in writing and
shall be deemed to have been duly given when delivered in person or upon
confirmation of receipt when transmitted by facsimile transmission (but only if
followed by transmittal by national overnight courier or hand for delivery on
the next business day) or on receipt after dispatch by registered or certified
mail, postage prepaid, addressed, or on the next business day if transmitted by
national overnight courier, in each case as follows:
Corgentech: Corgentech, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Fax: 000-000-0000
With copy to: Xxxxxx Godward LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxxxx
Fax: 000-000-0000
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Escrow Agent: Mellon Investor Services
Attention:
Fax:
Representative: Xxxxxx Xxxx
c/o Pacific Rim Ventures Co, Ltd.
Xxxxx Xxxxx 0X
0-0-00
Xxxxxxxx, Xxxxxxxx-xx Xxxxx
XXXXX
phone: 00-0-0000-0000
Fax: 00-0-0000-0000
9. Dispute Resolution.
(a) Escalation. In the event a dispute arises under this Agreement or
the escrow provisions, and prior to taking action as provided in Section 9(b) of
this Agreement, Corgentech's General Counsel and the Representative (the
"Heads") shall attempt to resolve the dispute through good faith negotiations
over a reasonable period, not to exceed thirty (30) days following one party's
receipt of a notice of dispute from the other party, unless otherwise agreed by
the Heads. Such thirty (30) day period shall be deemed to commence on the date
the dispute was submitted to the "HEADS". All negotiations pursuant to this
Section 9(a) shall be confidential, and shall be treated as compromise and
settlement negotiations for purposes of applicable rules of evidence.
(b) Arbitration. Any dispute that is not resolved by negotiation
and/or escalation pursuant to Section 9(a) shall, upon the submission of a
written request by Corgentech or the Representative to the other, be resolved
exclusively by binding arbitration in San Francisco, California, before one (1)
neutral arbitrator, free of any subject matter conflict and conflict with a
party. Any arbitration proceedings shall be conducted in accordance with the
Rules of the American Arbitration Association, except to the extent that such
rules are inconsistent with this Agreement. The arbitrator shall resolve the
dispute in accordance with this Agreement and the substantive laws (without
regard to conflict-of-law and choice-of-law principles thereof, and excluding
the rules of procedure) of the State of Delaware. The decision of the arbitrator
shall be final and shall be fully and irrevocably accepted by the parties. The
arbitrator is empowered to award interim and final injunction and equitable
relief but, except as
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expressly set forth in this Agreement, the arbitrator is not empowered to award
treble, punitive, exemplary or any other damages in excess of compensatory
damages, and each party irrevocably waives any claim to recover such damages.
The final award of the arbitrator shall be the sole and exclusive remedy of the
parties, and shall be enforceable in any court of competent jurisdiction. The
parties agree that they shall share equally the cost of the arbitration filing
and hearing fees, and the cost of the arbitrator. Each party shall bear its own
attorneys' fees and expert fees and all associated costs and expenses, provided
that the arbitrator may award attorneys' fees to the party deemed by the
arbitrator to be the party substantially prevailing in the proceeding.
10. General.
(a) Governing Laws. It is the intention of the parties hereto that the
Laws of the State of Delaware (irrespective of its choice of law principles)
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation and enforcement of the rights and duties of the parties to
this Agreement.
(b) Binding upon Successors and Assigns. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained in this Agreement shall be binding upon,
and inure to the benefit of, the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties to this Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears on such counterpart and all of which together shall constitute
one and the same instrument. This Agreement shall become binding when one or
more counterparts of this Agreement, individually or taken together, shall bear
the signatures of all of the parties reflected in this Agreement as signatories.
(d) Entire Agreement. Except as set forth in the Merger Agreement,
this Agreement, the documents referenced in this Agreement and the exhibits to
such documents, constitute the entire understanding and agreement of the parties
to this Agreement with respect to the subject matter of this Agreement and of
such documents and exhibits and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect to such subject matter. The
express terms of this Agreement control and supersede any course of performance
or usage of the trade inconsistent with any of the terms of this Agreement.
(e) Waivers. No waiver by any party to this Agreement of any condition
or of any breach of any provision of this Agreement will be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, will be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained in this Agreement.
(f) Amendment. This Agreement may be amended with the written consent
of Corgentech, the Escrow Agent and the Representative, provided, however, that
if the Escrow Agent does not agree to an amendment agreed upon by Corgentech and
the Representative, a successor Escrow Agent may be appointed in accordance with
Section 5 of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written and this Agreement will be effective as to all
of the Participating Stockholders when executed by Corgentech, the Escrow Agent
and the Representative.
CORGENTECH INC.
By: /s/ Xxxx X. XxXxxxxxxx
------------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Chief Executive Officer
ESCROW AGENT:
MELLON INVESTOR SERVICES
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Event Manager - Corporate Action
REPRESENTATIVE:
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
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APPENDIX I
ARTICLE VIII OF MERGER AGREEMENT
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APPENDIX II
PARTICIPATING STOCKHOLDERS' INTEREST IN THE ESCROW FUND
ESCROW PERCENTAGE
STOCKHOLDER NAME SHARES INTEREST
---------------- ------- ----------
InterWest Partners VIII, LP 116,150 17.80%
InterWest Investors VIII, LP 309 0.05%
InterWest Investors Q VIII, LP 1,107 0.17%
XX Xxxxxx Partners (SBIC), LLC 104,517 16.02%
XX Xxxxxx Partners Global Investors, LLC 6,364 0.98%
XX Xxxxxx Partners Global Investors A, LP 977 0.15%
XX Xxxxxx Partners Global Investors (Selldown), L.P. 2,154 0.33%
XX Xxxxxx Partners Global Investors (Cayman), LP 3,195 0.49%
XX Xxxxxx Partners Global Investors (Cayman) II, LP 357 0.05%
Sofinnova Venture Partners V, LP 54,720 8.39%
Sofinnova Venture Affiliates V, LP 1,800 0.28%
Sofinnova Venture Principals V, LP 839 0.13%
Xxxxxx Godward (CG&H Investments) 220 0.03%
Advent Healthcare and Life Sciences III Limited Partnership 18,569 2.85%
Advent Healthcare and Life Sciences III-A Limited Partnership 34,822 5.34%
Advent Partners HLS III Limited Partnership 658 0.10%
Advent Partners II Limited Partnership 154 0.02%
S.R. One, Limited 42,589 6.53%
Pacific Rim Aqua Life Science No. 1 Investment Partnership 7,408 1.14%
Pacific Rim Aqua Life Science No. 2 Investment Partnership 8,747 1.34%
Pacific Rim Aqua Life Science No. 3 Investment Partnership 5,013 0.77%
Pacific Rim Aqua Life Science No. 4 Investment Partnership 9,804 1.50%
Pacific Rim Aqua Life Science No. 5 Investment Partnership 11,615 1.78%
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ESCROW PERCENTAGE
STOCKHOLDER NAME SHARES INTEREST
---------------- ------- ----------
Xxxxxx Brothers HealthCare Venture Capital, LP 7,743 1.19%
Xxxxxx Brothers PA, LLC 14,821 2.27%
Xxxxxx Brothers Partnership Account 2002/2001, LP 6,677 1.02%
Xxxxxx Brothers Offshore Partnership Account 2000/2001, LP 1,731 0.27%
Cogene Biotech Ventures, LP 11,615 1.78%
EGS Private Healthcare Partnership II, LP 14,668 2.25%
EGS Private Healthcare Investors II, LP 2,313 0.35%
EGS Private Healthcare Canadian Partners, LP 2,207 0.34%
EGS Private Healthcare Presidents Fund, LP 169 0.03%
Xxxx Ventures, LP 23,230 3.56%
Xxxxx Xxxxxxx Healthcare Fund IV, LP 18,584 2.85%
NIF Ventures Co. Ltd 3,097 0.47%
Investment Enterprise Partnership "NIF 21-One(1)" 12,389 1.90%
Axiom Venture Partners III, LP 13,164 2.02%
Index Ventures II (Jersey) LP 13,033 2.00%
Index Ventures II (Delaware) LP 23,963 3.67%
Index Ventures II GmbH & Co. KG 3,831 0.59%
Index Ventures II Parallel Entrepreneur Fund (Jersey - A) LP 437 0.07%
Index Ventures II Parallel Entrepreneur Fund (Jersey - B) LP 685 0.10%
Index Venture Management SA on behalf of Index Employee Invst. Plan 638 0.10%
WHI Morula Fund, LLC (Xxxxxxx Xxxxxx Investors) 2,052 0.31%
HEWM / VLG Investments, LLC (Xxxxxx Xxxxxx) 387 0.06%
Xx. Xxxxxxx X. Xxxxxxx 193 0.03%
Xxxxx X. Xxxxx 774 0.12%
Xxxxx, Xxxxxx X., M.D., Ph..D 441 0.07%
Xxxxxx Xxxxx 15076 2.31%
Xxxxxxx Xxxx 11845 1.82%
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ESCROW PERCENTAGE
STOCKHOLDER NAME SHARES INTEREST
---------------- ------- ----------
Xxxx Xxxx 1507 0.23%
Davidson & Xxxxxx Xxxxxxxx 646 0.10%
Xxxxx Xxxxx 2153 0.33%
Xxxxxxxx Xxxxxxxx 2153 0.33%
Xxxxx Xxxxxxx 861 0.13%
Xxxxxxx Xxxxxx 646 0.10%
Xxxx Xxxxxxx 861 0.13%
X. Xxxxxx 574 0.09%
Xxxxxxx Xxxxx-Xxxxxxx 258 0.04%
Xxxxxxxx Stones 430 0.07%
Xxxx Xxxxx 861 0.13%
Xxxx Xxxx 287 0.04%
Xxxxx Xxxxxx 430 0.07%
Xxxxx Xxxxxxxxx 430 0.07%
Xxxxxx Xxxxxxx 287 0.04%
Xxxxxxx X'Xxxxx 287 0.04%
Xxxxxx Xxxxxxxx 287 0.04%
Xxxxxxx Xxxxx 143 0.02%
Xxxxxxx Xxxxxxx 000 0.02%
Xxxxxx Xxxxxx 1076 0.16%
Xxxxxxxx Xxx 287 0.04%
------- ------
652,458 100.00%
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