Exhibit 10.3
EXECUTION VERSION
THE
BANK OF
NEW
YORK
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ESCROW AGREEMENT
between
GENTIUM S.P.A.,
and
THE BANK OF NEW YORK
Dated as of October 14, 2005
ACCOUNT NUMBER: 131479
SHORT TITLE OF ACCOUNT: GENTIUM ESCROW ACCOUNT
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ESCROW AGREEMENT made this 14th day of October, 2005, by and between THE BANK OF
NEW YORK ("Escrow Agent") and the undersigned (collectively the "Depositors" and
each individually a "Depositor").
Preliminary Statement
WHEREAS, the Gentium S.p.A., a joint stock company organized under the laws
of the Republic of Italy ("Gentium"), intends to issue warrants (collectively,
the "Warrants") pursuant to a securities subscription agreement (the
"Subscription Agreement") to be entered into among Gentium, and each of other
investors whose names appear on the signature page of the Subscription Agreement
(collectively, the "Investors") and under such Subscription Agreement to sell to
the Investors certain warrants (the "Warrants") convertible into American
Depository Shares (the "Warrant Shares") representing Gentium's ordinary shares
of common stock;
WHEREAS, in connection with the payment by the Investors for the Warrants,
the Investors intend to cause funds to be deposited with the Escrow Agent and
Gentium intends to deposit the Warrants with the Escrow Agent;
WHEREAS, the Warrants shall not be effective until Gentium's shareholders
vote to approve Gentium's issuance of the Warrants and/or the Warrant Shares, as
applicable, free of the statutory preemptive rights that would otherwise attach
to the issuance of those securities under Italian law or the Company's
organizational documents ("Shareholder Approval"); and
WHEREAS, it is a condition precedent to the Subscription Agreement that
Gentium, the Investors and the Escrow Agent enter into this Agreement.
NOW, THEREFORE, Depositors and Escrow Agent hereby agree that, in
consideration of the mutual promises and covenants contained herein, Escrow
Agent shall hold in escrow and shall distribute Escrow Property (as defined
herein) in accordance with and subject to the following Instructions and Terms
and Conditions:
I. INSTRUCTIONS:
1. Escrow Property
The property and/or funds deposited or to be deposited with Escrow Agent by
Depositors shall be as follows:
Prior to any deposit, Gentium will notify Escrow Agent in writing 24 hours
prior to such deposit, including by facsimile, that the Escrow Property and
Escrow Funds are ready to be deposited.
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Gentium will deliver to the Escrow Agent Warrants for an aggregate of
620,450 Warrant Shares, each executed by Gentium and inscribed with name of
one of the Investors and indicating the amount of Warrant Shares for which
such Investor subscribed pursuant to the Subscription Agreement, which
shall only become effective upon Shareholder Approval (the "Escrow
Warrants"), for prompt deposit into the escrow account at The Bank of New
York. (Account No. 131479) (the "Escrow Account") as "Escrow Property". The
Escrow Property shall be held, administered and disposed of by the Escrow
Agent in accordance with the terms and conditions hereinafter set forth.
Investors will deliver to the Escrow Agent $2,187,086.25 in immediately
available funds (as increased or decreased from time to time in accordance
with the provisions hereof, the "Escrow Funds") for prompt deposit into the
Escrow Account as the "Escrow Property". The Escrow Property shall be held,
administered and disposed of by the Escrow Agent in accordance with the
terms and conditions hereinafter set forth.
The foregoing property and/or funds, plus all interest, dividends and other
distributions and payments thereon (collectively the "Distributions")
received by Escrow Agent, less any property and/or funds distributed or
paid in accordance with this Escrow Agreement, are collectively referred to
herein as "Escrow Property."
2. Investment of Escrow Funds Depositors are to select one of the following
options:
______ (a) Escrow Agent shall have no obligation to pay interest
on or to invest or reinvest any Escrow Property
deposited or received hereunder.
__X___ (b) Upon written directions from Gentium the Escrow Agent
shall invest or reinvest Escrow Funds without
distinction between principal and income, in the
following:
One or more short-term market instruments including but
not limited to marketable obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, bank instruments or corporate debt
securities rated AA or higher by S&P that are issued by
U.S. or foreign companies , invested in any one or more
of the aforementioned types of instruments.
Escrow Agent shall have no liability for any loss arising from or related
to any such investment other than in accordance with paragraph 4 of the
Terms and Conditions.
3. Distribution of Escrow Property and Escrow Funds
Escrow Agent is directed to hold and distribute the Escrow Property in the
following manner:
Prior to any distribution of Escrow Funds, to the extent that complete
wiring instructions are not included for any Depositor who would receive
such distribution on Schedule 1 hereto, Gentium will provide Escrow Agent
with instructions specifying the account(s) into which the Escrow Funds
shall be distributed, and wiring instructions for each such account,
including the name of the bank, the ABA number (or SWIFT number for
non-U.S. accounts), the account number and the account name; prior to any
distribution of Escrow Property, to the extent that a complete address is
not specified for any Depositor who would receive such distribution on
Schedule 1 hereto, Gentium will provide Escrow Agent with addresses to
which the Escrow Property should be delivered.
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If the Shareholder Approval occurs, then, upon receipt by the Escrow Agent
of a copy of the resolutions effecting the Shareholder Approval certified
by an officer of Gentium and an opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx
LLP, or such other counsel as is mutually agreeable to the Investors and
Gentium, that such resolutions were duly adopted,(x) the Escrow Agent take
such action as may be necessary to deliver to each Investor that Warrant
addressed to such Investor, and (y) the Escrow Agent shall take such action
as may be necessary to deliver the Escrow Funds released to Gentium.
If Gentium submits a copy of the resolutions of a meeting in which the
Gentium shareholders failed to effect a Shareholder Approval when the
matter was put to a vote of Gentium's shareholders, certified by an officer
of Gentium, then the Escrow Agent shall deliver the Escrowed Funds to the
Investors according to their respective percentages as set forth on
Schedule 1 hereto and the Escrow Agent shall deliver the Escrow Warrants to
Gentium.
4. Addresses
Notices, instructions and other communications shall be sent to Escrow
Agent, Corporate Trust Administration, 000 Xxxxxxx Xxxxxx-Xxxxx 00X, Xxx
Xxxx, Xxx Xxxx 00000, Attn.: Corporate Trust Administration / Xxxxxxxxx
Xxxxxxx and to Depositors as follows:
To the Investors:
As set forth on Schedule 1 hereto.
To Gentium:
Gentium S.p.A.
ATTN: Xx. Xxxxx Xxxxx,
Chief Executive Officer
Xxxxxx XX Xxxxxxxxx, 0
00000 Xxxxx Xxxxxxx
Xxxx, Xxxxx
With a copy to (which shall not constitute notice):
Xxxx Xxxxxxxx
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
5. Distribution of Escrow Property Upon Termination
Upon termination of this Escrow Agreement, Escrow Property then held
hereunder shall be distributed as follows:
If the Shareholder Approval does not occur and Gentium does not deliver to
Escrow Agent a copy of the resolutions effecting the Shareholder Approval
certified by an officer of Gentium and an opinion of Xxxxxx, Xxxxxxxxxx &
Sutcliffe LLP, or such other counsel as is mutually agreeable to the
Investors and Gentium, that such resolutions were duly adopted by April 31,
2006, The Escrow Agent shall deliver the Escrowed Funds to the
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Investors according to their respective percentages as set forth on
Schedule 1 hereto and the Escrow Agent shall take such action as may be
necessary to deliver the Escrow Warrants to Gentium.
6. Compensation
(a) As agreed between the Escrow Agent and Gentium in the signed fee
schedule dated as of September 28, 2005.
(b) Gentium shall pay all activity charges as per Escrow Agent's current
fee schedule.
(c) Gentium shall be responsible for and shall reimburse Escrow Agent upon
demand for all expenses, disbursements and advances incurred or made
by Escrow Agent in connection with this Agreement.
7. Consent for Amendment or Waiver by Depositors
Any requirement under this Agreement for Depositors' consent to waiver or
for amendment to any part of this Agreement may be satisfied by getting the
written consent of Gentium and Investors who have made at least Fifty-one
Percent (51%) of the Investors' aggregate deposits hereunder, as reflected
on Schedule 1 hereto.
II. TERMS AND CONDITIONS:
1. The duties, responsibilities and obligations of Escrow Agent shall be
limited to those expressly set forth herein and no duties, responsibilities
or obligations shall be inferred or implied. Escrow Agent shall not be
subject to, nor required to comply with, any other agreement between or
among any or all of the Depositors or to which any Depositor is a party,
even though reference thereto may be made herein, or to comply with any
direction or instruction (other than those contained herein or delivered in
accordance with this Escrow Agreement) from any Depositor or any entity
acting on its behalf. Escrow Agent shall not be required to, and shall not,
expend or risk any of its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder.
2. This Agreement is for the exclusive benefit of the parties hereto and their
respective successors hereunder, and shall not be deemed to give, either
express or implied, any legal or equitable right, remedy, or claim to any
other entity or person whatsoever.
3. If at any time Escrow Agent is served with any judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative
process which in any way affects Escrow Property (including but not limited
to orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of Escrow Property), Escrow
Agent is authorized to comply therewith in any manner as it or its legal
counsel of its own choosing deems appropriate; and if Escrow Agent complies
with any such judicial or administrative order, judgment, decree, writ or
other form of judicial or administrative process, Escrow Agent shall not be
liable to any of the parties hereto or to any other person or entity even
though such order, judgment, decree, writ or process may be subsequently
modified or vacated or otherwise determined to have been without legal
force or effect.
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4. (a) Escrow Agent shall not be liable for any action taken or omitted or for
any loss or injury resulting from its actions or its performance or lack of
performance of its duties hereunder in the absence of gross negligence or
willful misconduct on its part. In no event shall Escrow Agent be liable
(i) for acting in accordance with or relying upon any instruction, notice,
demand, certificate or document from any Depositor or any entity acting on
behalf of any Depositor, (ii) for any consequential, punitive or special
damages, (iii) for the acts or omissions of its nominees, correspondents,
designees, subagents or subcustodians, or (iv) for an amount in excess of
the value of the Escrow Property, valued as of the date of deposit.
(b) If any fees, expenses or costs incurred by, or any obligations owed to,
Escrow Agent hereunder are not promptly paid when due, Escrow Agent may
reimburse itself therefor from the Escrow Property and may sell, convey or
otherwise dispose of any Escrow Property for such purpose.
(c) As security for the due and punctual performance of any and all of
Depositors' obligations to Escrow Agent hereunder, now or hereafter
arising, Depositors, individually and collectively, hereby pledge, assign
and grant to Escrow Agent a continuing security interest in, and a lien on,
the Escrow Property and all Distributions thereon or additions thereto
(whether such additions are the result of deposits by Depositors or the
investment of Escrow Property). The security interest of Escrow Agent shall
at all times be valid, perfected and enforceable by Escrow Agent against
Depositors and all third parties in accordance with the terms of this
Escrow Agreement.
(d) Escrow Agent may consult with legal counsel at the expense of the
Depositors as to any matter relating to this Escrow Agreement, and Escrow
Agent shall not incur any liability in acting in good faith in accordance
with any advice from such counsel.
(e) Escrow Agent shall not incur any liability for not performing any act
or fulfilling any duty, obligation or responsibility hereunder by reason of
any occurrence beyond the control of Escrow Agent (including but not
limited to any act or provision of any present or future law or regulation
or governmental authority, any act of God or war, or the unavailability of
the Federal Reserve Bank wire or telex or other wire or communication
facility).
5. Unless otherwise specifically set forth herein, Escrow Agent shall proceed
as soon as practicable to collect any checks or other collection items at
any time deposited hereunder. All such collections shall be subject to
Escrow Agent's usual collection practices or terms regarding items received
by Escrow Agent for deposit or collection. Escrow Agent shall not be
required, or have any duty, to notify anyone of any payment or maturity
under the terms of any instrument deposited hereunder, nor to take any
legal action to enforce payment of any check, note or security deposited
hereunder or to exercise any right or privilege which may be afforded to
the holder of any such security.
6. Escrow Agent shall provide to Depositors monthly statements identifying
transactions, transfers or holdings of Escrow Property and each such
statement shall be deemed to be correct and final upon receipt thereof by
the Depositors unless Escrow Agent is notified in writing to the contrary
within thirty (30) business days of the date of such statement.
7. Escrow Agent shall not be responsible in any respect for the form,
execution, validity, value or genuineness of documents or securities
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or
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delivering or purporting to execute or deliver any such document, security
or endorsement.
8. Notices, instructions or other communications shall be in writing and shall
be given to the address set forth in the "Addresses" provision herein (or
to such other address as may be substituted therefor by written
notification to Escrow Agent or Depositors). Notices to Escrow Agent shall
be deemed to be given when actually received by Escrow Agent's Insurance
Trust and Escrow Unit of the Corporate Trust Division. Escrow Agent is
authorized to comply with and rely upon any notices, instructions or other
communications believed by it to have been sent or given by Depositors or
by a person or persons authorized by Depositors. Whenever under the terms
hereof the time for giving a notice or performing an act falls upon a
Saturday, Sunday, or banking holiday, such time shall be extended to the
next day on which Escrow Agent is open for business.
9. Gentium shall be liable for and shall reimburse and indemnify Escrow Agent
and hold Escrow Agent harmless from and against any and all claims, losses,
liabilities, costs, damages or expenses (including reasonable attorneys'
fees and expenses) (collectively, "Losses") arising from or in connection
with or related to this Escrow Agreement or being Escrow Agent hereunder
(including but not limited to Losses incurred by Escrow Agent in connection
with its successful defense, in whole or in part, of any claim of gross
negligence or willful misconduct on its part), provided, however, that
nothing contained herein shall require Escrow Agent to be indemnified for
Losses caused by its gross negligence or willful misconduct.
10. (a) Depositors may remove Escrow Agent at any time by giving to Escrow
Agent thirty (30) calendar days' prior notice in writing signed by all
Depositors. Escrow Agent may resign at any time by giving to calendar days'
prior written notice thereof.
(b) Within ten (10) calendar days after giving the foregoing notice of
removal to Escrow Agent or receiving the foregoing notice of resignation
from Escrow Agent, all Depositors shall jointly agree on and appoint a
successor Escrow Agent. If a successor Escrow Agent has not accepted such
appointment by the end of such 10-day period, Escrow Agent may, in its sole
discretion, deliver the Escrow Property to any of the Depositors at the
address provided herein or may apply to a court of competent jurisdiction
for the appointment of a successor Escrow Agent or for other appropriate
relief. The costs and expenses (including reasonable attorneys' fees and
expenses) incurred by Escrow Agent in connection with such proceeding shall
be paid by, and be deemed a joint and several obligation of, the
Depositors.
(c) Upon receipt of the identity of the successor Escrow Agent, Escrow
Agent shall either deliver the Escrow Property then held hereunder to the
successor Escrow Agent, less Escrow Agent's fees, costs and expenses or
other obligations owed to Escrow Agent, or hold such Escrow Property (or
any portion thereof), pending distribution, until all such fees, costs and
expenses or other obligations are paid.
(d) Upon delivery of the Escrow Property to successor Escrow Agent, Escrow
Agent shall have no further duties, responsibilities or obligations
hereunder.
11. (a) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by Escrow Agent
hereunder, Escrow Agent may, in its sole discretion, refrain from taking
any action other than retain possession of the Escrow
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Property, unless Escrow Agent receives written instructions, signed by all
Depositors, which eliminates such ambiguity or uncertainty.
(b) In the event of any dispute between or conflicting claims by or among
the Depositors and/or any other person or entity with respect to any Escrow
Property, Escrow Agent shall be entitled, in its sole discretion, to refuse
to comply with any and all claims, demands or instructions with respect to
such Escrow Property so long as such dispute or conflict shall continue,
and Escrow Agent shall not be or become liable in any way to the Depositors
for failure or refusal to comply with such conflicting claims, demands or
instructions. Escrow Agent shall be entitled to refuse to act until, in its
sole discretion, either (i) such conflicting or adverse claims or demands
shall have been determined by a final order, judgment or decree of a court
of competent jurisdiction, which order, judgment or decree is not subject
to appeal, or settled by agreement between the conflicting parties as
evidenced in a writing satisfactory to Escrow Agent or (ii) Escrow Agent
shall have received security or an indemnity satisfactory to it sufficient
to hold it harmless from and against any and all Losses which it may incur
by reason of so acting. Escrow Agent may, in addition, elect, in its sole
discretion, to commence an interpleader action or seek other judicial
relief or orders as it may deem, in its sole discretion, necessary. The
costs and expenses (including reasonable attorneys' fees and expenses)
incurred in connection with such proceeding shall be paid by, and shall be
deemed a joint and several obligation of, the Depositors.
12. This Agreement shall be interpreted, construed, enforced and administered
in accordance with the internal substantive laws (and not the choice of law
rules) of the State of New York. Each of the Depositors hereby submits to
the personal jurisdiction of and each agrees that all proceedings relating
hereto shall be brought in courts located within the City and State of New
York or elsewhere as Escrow Agent may select. Each of the Depositors hereby
waives the right to trial by jury and to assert counterclaims in any such
proceedings. To the extent that in any jurisdiction any Depositor may be
entitled to claim, for itself or its assets, immunity from suit, execution,
attachment (whether before or after judgment) or other legal process, each
hereby irrevocably agrees not to claim, and hereby waives, such immunity.
Each Depositor waives personal service of process and consents to service
of process by certified or registered mail, return receipt requested,
directed to it at the address last specified for notices hereunder, and
such service shall be deemed completed ten (10) calendar days after the
same is so mailed.
13. Except as otherwise permitted herein, this Escrow Agreement may be modified
only by a written amendment signed by all the parties hereto, and no waiver
of any provision hereof shall be effective unless expressed in a writing
signed by the party to be charged.
14. The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall
not preclude or inhibit the exercise of any additional rights or remedies.
The waiver of any right or remedy hereunder shall not preclude the
subsequent exercise of such right or remedy.
15. Each Depositor hereby represents and warrants (a) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf
and constitutes its legal, valid and binding obligation and (b) that the
execution, delivery and performance of this Escrow Agreement by Depositor
do not and will not violate any applicable law or regulation.
16. The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way affect the validity, legality or enforceability
of any other provision; and if any
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provision is held to be enforceable as a matter of law, the other
provisions shall not be affected thereby and shall remain in full force and
effect.
17. This Agreement shall constitute the entire agreement of the parties with
respect to the subject matter and supersedes all prior oral or written
agreements in regard thereto.
18. This Agreement shall terminate upon the distribution of all Escrow Property
from the Account. The provisions of these Terms and Conditions shall
survive termination of this Escrow Agreement and/or the resignation or
removal of the Escrow Agent.
19. No printed or other material in any language, including prospectuses,
notices, reports, and promotional material which mentions "The Bank of New
York" by name or the rights, powers, or duties of the Escrow Agent under
this Agreement shall be issued by any other parties hereto, or on such
party's behalf, without the prior written consent of Escrow Agent.
20. The headings contained in this Agreement are for convenience of reference
only and shall have no effect on the interpretation or operation hereof.
21. This Escrow Agreement may be executed by each of the parties hereto in any
number of counterparts, each of which counterpart, when so executed and
delivered, shall be deemed to be an original and all such counterparts
shall together constitute one and the same agreement.
22. The Escrow Agent does not have any interest in the Escrowed Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Gentium shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the Escrowed
Property incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent any amounts that it is obligated to pay in the
way of such taxes. Any payments of income from this 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 certifications, or W-8 forms for
non-resident alien certifications. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to income
earned on investment of funds which are a part of the Escrowed Property and
is not responsible for any other reporting. This paragraph and paragraph
(9) shall survive notwithstanding any termination of this Escrow Agreement
or the resignation of the Escrow Agent.
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to
be executed by a duly authorized officer as of the day and year first written
above.
THE BANK OF NEW YORK, as Escrow Agent
By:______________________________
Name:
Title:
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Depositor:
Gentium S.p.A.
By:____________________________
Name: Xxxx Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
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Depositor:
Investor:
_______________________________
(Print Name)
By:____________________________
Name:
Title:
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