EXHIBIT A
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of January __, 1997, by and among Shaman
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), Xxxxxxxxx & Xxxxx
LLC (the "Placement Agent") and First Trust of California, a national banking
institution incorporated under the laws of the United States of America (the
"Escrow Agent").
WHEREAS, the Company proposes to sell an aggregate of 2,000,000 shares of
its common stock, par value $0.001 per share (the "Shares"), for an aggregate of
$___________, all as described in the Company's registration statement on Form
S-3 (Registration No. 333-_____) (which, together with all amendments thereto is
referred to herein as the "Registration Statement");
WHEREAS, the Shares are being offered by the Company to investors whom the
Placement Agent has introduced to the Company, pursuant to registration under
the Securities Act of 1933, as amended, and pursuant to registration or
exemptions from registration under state securities laws;
WHEREAS, the offering of the Shares will terminate on ___________, 1997
(the "Final Closing Date") and, if subscriptions for the total number of Shares
being offered pursuant to the Registration Statement have not been received by
the Company on or before the Final Closing Date, no Shares will be sold and all
payments made by subscribers will be refunded by the Escrow Agent with interest
earned thereon, if any; and
WHEREAS, with respect to all subscription payments received from
subscribers, the Company proposes to establish an escrow account with the Escrow
Agent at First Trust of California, 0 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxxxxxxx, XX 00000.
NOW, THEREFORE, it is agreed as follows:
1. ESTABLISHMENT OF ESCROW. The Escrow Agent hereby agrees to receive
and disburse the proceeds from the offering of the Shares and any interest
earned thereon in accordance herewith.
2. DEPOSIT AND INVESTMENT OF ESCROWED PROPERTY. The Placement Agent, on
behalf of the subscribers for the Shares, shall from time to time, but in no
event later than 12:00 noon on the date following the date of receipt by the
Placement Agent, cause to be wired to or deposited with, or, cause the
subscribers for the Shares to wire or deposit with, the Escrow Agent funds or
checks of the subscribers (the "Escrowed Property") delivered in payment for
Shares. Any checks delivered to the Escrow Agent pursuant to the terms hereof
shall be made payable to or endorsed to the order of the Escrow Agent. Such
checks must be (a) delivered to the Escrow Agent so as to be received not later
than one (1) business day before the Closing; (b) cashiers checks; and (c)
payable in same or next day funds. The Escrow Agent upon receipt of such checks
shall present such checks for payment by the drawee-bank under such checks. Any
checks not honored by the drawee-bank thereunder after the first
presentment for payment shall be returned to the Placement Agent, on behalf of
such subscriber, in the same manner notices are delivered pursuant to Section 5.
Upon receipt of funds or checks from the Placement Agent, the Escrow Agent shall
credit such funds and the amount of such checks to Account Number ________, a
First Trust of California U.S. treasury account. The Escrow Agent shall in no
event be liable for any loss resulting from any change in interest rates
applicable to proceeds invested pursuant to this Section 2. Interest on
proceeds invested pursuant to this Section shall accrue from the date of
investment of such proceeds or, in the case of checks, from the date on which
such check amounts are paid by the drawee bank, until the termination of such
investment pursuant to the terms hereof and shall be paid as set forth in
Section 4.
3. LIST OF SUBSCRIBERS. The Placement Agent shall furnish or cause to be
furnished to the Escrow Agent, at the time of each deposit of funds or checks
pursuant to Section 2, a list, substantially in the form of Exhibit B hereto,
containing the name of, the address of, the number of Shares subscribed for by,
the subscription amount delivered to the Escrow Agent on behalf of, and the
social security or taxpayer identification number, if applicable, of each
subscriber whose funds are being deposited, and to which is attached a
completed W-9 form (or, in the case of any subscriber who is not a United States
citizen or resident, a W-8 form) for each listed subscriber. The Escrow Agent
shall notify the Placement Agent and the Company of any discrepancy between the
subscription amounts set forth on any list delivered pursuant to this Section 3
and the subscription amounts received by the Escrow Agent. The Escrow Agent is
authorized to revise such list to reflect the actual subscription amounts
received and the release of any subscription amounts pursuant to Section 4;
provided, however, that the Escrow Agent must notify the Placement Agent and the
Company prior to making any such revisions.
4. WITHDRAWAL OF SUBSCRIPTION AMOUNTS. (a) If the Escrow Agent shall
receive a notice, substantially in the form of Exhibit C hereto (an "Offering
Termination Notice"), from the Company or the Placement Agent, the Escrow Agent
shall (i) promptly after receipt of such Offering Termination Notice and the
clearance of all checks received by the Escrow Agent as Escrowed Property,
liquidate any investments that shall have been made pursuant to Section 2 and
send to each subscriber listed on the list held by the Escrow Agent pursuant to
Section 3 whose total subscription amount shall not have been released pursuant
to paragraph (b) or (c) of this Section 4, in the manner set forth in
paragraph (e) of this Section 4, a check to the order of such subscriber in the
remaining subscription amount held by the Escrow Agent as set forth on such list
held by the Escrow Agent, and (ii) promptly after the fourth business day of the
month immediately following the month in which the investments made pursuant to
Section 2 were terminated pursuant to this paragraph, send, in the manner set
forth in paragraph (e) of this Section 4, a check to the order of each such
subscriber for the interest and other income earned and not yet paid with
respect to any investment of such subscriber's funds. The Escrow Agent shall
notify the Company and the Placement Agent of the distribution of such funds to
the subscribers.
(b) In the event that (i) the Shares have been subscribed for on or
before the Final Closing Date and (ii) no Offering Termination Notice shall have
been delivered to the Escrow Agent, the Company and the Placement Agent shall
deliver to the Escrow Agent a joint notice, substantially in the form of
Exhibit D hereto (a "Closing Notice"), designating the date on which Shares are
to be sold and delivered to the subscribers thereof (the "Closing Date"), which
date shall not be earlier than the receipt of any checks received by the Escrow
Agent as Escrowed Property, the proceeds of which are to be
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distributed on such Closing Date, and identifying the subscribers and the number
of Shares to be sold to each thereon on such Closing Date, not less than one (1)
nor more than three (3) business days prior to such Closing Date. The Escrow
Agent, after receipt of such Closing Notice, and the Escrowed Property:
(i) on or prior to the Closing Date identified in such
Closing Notice, shall liquidate any investments that shall have been made
pursuant to Section 2 to the extent of the subscription amount to be
distributed pursuant to the immediately succeeding clause (ii);
(ii) on such Closing Date, pay to the Company and the
Placement Agent, in federal or other immediately available funds and
otherwise in the manner and amounts specified by the Company in such
Closing Notice, an amount equal to the aggregate of the subscription
amounts paid by the subscribers identified in such Closing Notice for the
Shares to be sold on such Closing Date as set forth on the list held by the
Escrow Agent pursuant to Section 3; and
(iii) promptly after the fourth business day of the month
immediately following the month in which the investments made pursuant to
Section 2 were terminated pursuant to such Closing Notice, shall send, in
the manner set forth in paragraph (e) of this Section 4, a check to the
order of the Company in the amount of interest and other income earned and
not yet paid with respect to any investment of the Escrowed Property
distributed on such Closing Date.
(c) If at any time and from time to time prior to the release of any
subscriber's total subscription amount pursuant to paragraph (a) or (b) of this
Section 4 from escrow, the Company shall deliver to the Escrow Agent a notice,
substantially in the form of Exhibit E hereto (a "Subscription Termination
Notice"), to the effect that any or all of the subscription of such subscribers
have been rejected by the Company (a "Rejected Subscription"), the Escrow Agent
(i) promptly after receipt of such Subscription Termination Notice and, if such
subscriber delivered a check in payment of its Rejected Subscription, after the
clearance of such check, shall liquidate, to the extent of the sum of such
subscriber's Rejected Subscription amount as set forth in the Subscription
Termination Notice, any investments that shall have been made pursuant to
Section 2 and send to such subscriber, in the manner set forth in paragraph (e)
of this Section 4, a check to the order of such subscriber in the amount of such
Rejected Subscription amount, and (ii) promptly after the fourth business day of
the month immediately following the month in which the investments made pursuant
to Section 2 were terminated pursuant to this paragraph shall send to such
subscriber, in the manner set forth in paragraph (e) of this Section 4, a check
to the order of such subscriber in the amount of interest and other income
earned and not yet paid with respect to any investment of such subscriber's
Rejected Subscription amount. At the time of such transfer, the Escrow Agent
shall identify in writing to the Company and the Placement Agent the amount of
the interest earned for the account of each subscriber and the date such
subscription was received.
(d) On a date following the transfer of any interest earned for the
account of each subscriber pursuant to Section 4(a) or (c), but not later than
January 31, 1997, the Escrow Agent shall provide each subscriber with tax form
1099 setting forth the amount of such interest.
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(e) For the purpose of this Section 4, any check that the Escrow
Agent shall be required to send to any subscriber shall be sent to such
subscriber by first class mail, postage prepaid, at such subscriber's address
furnished to the Escrow Agent pursuant to Section 3.
5. NOTICES. Except for any Offering Termination Notice or any Closing
Notice, which may be delivered by facsimile transmission, any notice or other
communication required or permitted to be given hereunder shall be in writing
and shall be (a) delivered by hand or (b) sent by mail, registered or certified,
with proper postage prepaid, and addressed as follows:
If to the Company, to:
Shaman Pharmaceuticals, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxx Xxxx
Two Embarcadero Place
Palo Alto, California 94303
Attention: Xxxxxxx Xxxxxxxxx
if to the Placement Agent, to:
Xxxxxxxxx & Xxxxx LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxxx Xxxxxxx
with a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
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If to the Escrow Agent, to:
First Trust of California
0 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Gatsby
(000) 000-0000 (facsimile)
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall be effective when deposited in the
mails, except that notices and communications to the Escrow Agent and notices of
changes of address shall not be effective until received. Originals of any
Offering Termination Notice or any Closing Notice sent via facsimile
transmission must also be sent to the Escrow Agent by first class mail, postage
prepaid.
6. CONCERNING THE ESCROW AGENT. To induce the Escrow Agent to act
hereunder, it is further agreed by the Company and the Placement Agent that:
(a) The Escrow Agent shall not be under any duty to give the Escrowed
Property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own
negligence or willful misconduct, and, except with respect to claims based upon
such negligence or wilful misconduct that are successfully asserted against the
Escrow Agent, and the other parties hereto shall jointly and severally indemnify
and hold harmless the Escrow Agent (and any successor Escrow Agent) from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Escrow Agreement. Without limiting the foregoing, the
Escrow Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including without limitation any liability for any delays (not
resulting from gross negligence or willful misconduct) in the investment or
reinvestment of the Escrowed Property, or any loss of interest incident to any
such delays.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the proprietary or validity of the
service thereof. The Escrow Agent may act in reliance upon an instrument or
signature believed by it in good
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faith to be genuine and may assume, if in good faith, that any person purporting
to give notice or receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.
(e) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in good faith and in accordance with such
advice.
(f) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only. Any payments
of income from the Escrow Account shall be subject to withholding regulations
then in force with respect to United States taxes. The parties hereto will
provide the Escrow Agent with appropriate W-9 forms for tax I.D., number
certification, or non-resident alien certifications.
This paragraph (f) and paragraph (c) of this Section 6 shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of
the Escrow Agent.
(g) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectibility of any security or other document or
instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any party as
to the wisdom of selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor escrow agent) at any time may
be discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by both the Company and the Placement Agent or at
anytime may resign by giving written notice to such effect to the Company and
the Placement Agent. Upon any such termination or resignation, the Escrow Agent
shall deliver the Escrowed Property to any successor escrow agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction if no such successor escrow agent is agreed upon, whereupon the
Escrow Agent shall be discharged of and from any and all further obligations
arising in connection with this Escrow Agreement. The termination or
resignation of the Escrow Agent shall take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or
(ii) the day that is 30 days after the date of delivery (A) to the Escrow Agent
of the other parties' notice of termination or (B) to the other parties hereto
of the Escrow Agent's written notice of resignation. If at that time the Escrow
Agent has not received a designation of a successor escrow agent, the Escrow
Agent's sole responsibility after that time shall be to keep the Escrowed
Property safe until receipt of a designation of successor escrow agent or a
joint written disposition instruction by the other parties hereto or any
enforceable order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
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(k) In the event of any disagreement among or between the other
parties hereto and/or the subscribers of the Shares resulting in adverse claims
or demands being made in connection with the Escrowed Property, or in the event
that the Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrowed Property
until the Escrow Agent shall have received (i) a final and non-appealable order
of a court of competent jurisdiction directing delivery of the Escrowed Property
or (ii) a written agreement executed by the other parties hereto and consented
to by the subscribers directing delivery of the Escrowed Property, in which
event the Escrow Agent shall disburse the Escrowed Property in accordance with
such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and
non-appealable. The Escrow Agent shall act on such court order and legal
opinion without further question.
(l) As consideration for its agreement to act as Escrow Agent as
herein described, the Company agrees to pay the Escrow Agent fees determined in
accordance with the terms set forth on Exhibit A hereto (made a part of this
Escrow Agreement as if herein set forth). In addition, the Company agrees to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel).
(m) The other parties hereto irrevocably (i) submit to the
jurisdiction of any California or federal court sitting in California in any
action or proceeding arising out of or relating to this Escrow Agreement,
(ii) agree that all claims with respect to such action or proceeding shall be
heard and determined in California or federal court and (iii) waive, to the
fullest extent possible, the defense of an inconvenient forum. The other
parties hereby consent to and grant any such court jurisdiction over the persons
of such parties and over the subject matter of any such dispute and agree that
delivery or mailing of process or other papers in connection with any such
action or proceeding in the manner provided hereinabove, or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.
(n) Except for this Escrow Agreement, no printed or other matter in
any language (including, without limitation, the Registration Statement,
notices, reports and promotional material) which mentions the Escrow Agent's
name or the rights, powers, or duties of the Escrow Agent shall be issued by the
other parties hereto or on such parties' behalf unless the Escrow Agent shall
first have given its specific written consent thereto. The Escrow Agent hereby
consents to the use of its name and the reference to the escrow arrangement in
the Registration Statement and Prospectus.
7. MISCELLANEOUS.
(a) This Escrow Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and assigns,
heirs, administrators and representatives, and the subscribers of the Shares and
shall not be enforceable by or inure to the benefit of any other third party
except as provided in paragraph (i) of Section 6 with respect to the termination
of, or resignation by, the Escrow Agent. No party may assign any of its rights
or obligations under this Escrow Agreement without the prior written consent of
the other parties.
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(b) This Escrow Agreement shall be construed in accordance with and
governed by the internal law of the State of California (without reference to
its rules as to conflicts of law).
(c) This Escrow Agreement may only be modified by a writing signed by
all of the parties hereto and consented to by the subscribers of the Shares
adversely affected by such modifications. No waiver hereunder shall be
effective unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the payment pursuant
to Section 4 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience only and shall
not affect the construction thereof. Unless otherwise indicated, references to
Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or more counterparts
but all such separate counterparts shall constitute but one and the same
instrument; provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a single copy of this
Agreement which shall constitute an original.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the day and year first above written.
FIRST TRUST OF CALIFORNIA SHAMAN PHARMACEUTICALS, INC.
By: By:
-------------------------------- ------------------------------------
Name: Name: Xxxx X. Xxxxx
Title: Title: President and Chief
Executive Officer
XXXXXXXXX & XXXXX LLC
By:
------------------------------------
Name:
Title:
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EXHIBIT A
FIRST TRUST OF CALIFORNIA
ESCROW AGENT FOR
SHAMAN PHARMACEUTICALS, INC.
TRUST #_______________
FEE SCHEDULE
EXHIBIT B
SUMMARY OF CASH RECEIVED
NEW PARTICIPANT DEPOSIT
Deposit Date: Date:
Investment Date: ------------------------
Batch Number: List Number:
-----------------
Page of
---- ----------------
Approved By:
-----------------
For Bank use only JOB#:
------------------------
TITLE:
-----------------------------
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AMOUNT OF TAX ID NO./ SOC. FOR BANK USE
NAME DEPOSIT SHARES ADDRESS SEC. NO. ONLY
--------------------------------------------------------------------------------
TAX CODE
EXEMPT (Y/N)
W-91
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B-1
EXHIBIT C
[FORM OF OFFERING TERMINATION NOTICE]
First Trust of California
---------------------
---------------------
Attention: Xxxx Gatsby
Dear Xx. Xxxxxxxx:
Pursuant to Section 4(a) of the Escrow Agreement dated as of January __,
1997 (the "Escrow Agreement") among Shaman Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), Xxxxxxxxx & Xxxxx LLC and you, the Company hereby
notifies you of the termination of the offering of the Shares (as that term is
defined in the Escrow Agreement) and directs you to make payments to subscribers
as provided for in Section 4(a) of the Escrow Agreement.
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By:
-----------------------------------------
Name:
Title:
XXXXXXXXX & XXXXX
By:
-----------------------------------------
Name:
Title:
C-1
EXHIBIT D
[FORM OF CLOSING NOTICE]
First Trust of California
-------------------------
-------------------------
Attention: Xxxx Gatsby
Dear Ms. Gatsby:
Pursuant to Section 4(b) of the Escrow Agreement dated as of January __,
1997 (the "Escrow Agreement"), among Shaman Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), Xxxxxxxxx & Xxxxx LLC and you, the Company hereby
certifies that it has received subscriptions for the Shares (as that term is
defined in the Escrow Agreement) and the Company will sell and deliver Shares to
the subscribers thereof at a closing to be held on January __, 1997 (the
"Closing Date").
Please accept these instructions as standing instructions for the closing
to be held on the Closing Date. The parties hereto certify that they do not
wish to have a call back regarding these instructions.
We hereby request that the aggregate subscription amount be paid to the
Placement Agent and us as follows:
1. To the Company, $__________; and
2. To Xxxxxxxxx & Xxxxx LLC, $__________.
D-1
These instructions may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By:
-----------------------------------------
Name:
Title:
XXXXXXXXX & XXXXX LLC
By:
-----------------------------------------
Name:
Title:
D-2
EXHIBIT E
[FORM OF SUBSCRIPTION TERMINATION NOTICE]
First Trust of California
-------------------------
-------------------------
Attention: Xxxx Gatsby
Dear Ms. Gatsby:
Pursuant to Section 4(c) of the Escrow Agreement dated as of
January __1997(the "Escrow Agreement") among Shaman Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), Xxxxxxxxx & Xxxxx LLC and you, the Company
hereby notifies you that the following subscription(s) have been rejected:
Amount of Dollar
Subscribed Amount of
Name of Shares Rejected
Subscriber Rejected Subscription
---------- ------------ ------------
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By:
-----------------------------------------
Name:
Title:
E-1
