ESCROW AGREEMENT
EXHIBIT
10.2
This Escrow
Agreement (this “Agreement”), dated as of
February 3, 2009, is entered into by and among International Stem Cell
Corporation, a Delaware corporation (“Company”), Gemini Master Fund,
Ltd. (“Holder”) and
Xxxxxx Xxxxx Bank, a California banking association, as escrow agent (“Escrow Agent”).
R E C I T A L S:
WHEREAS,
the Holder holds an OID Senior Secured Convertible Note in the original
principal amount of $1,000,000 issued by the Company (the “Note”), of which $400,000 in
principal amount is outstanding as of the close of business January 30, 2009;
and
WHEREAS,
pursuant to the terms of that certain Extension Agreement dated as of January
30, 2009 between the Company and its subsidiaries and the Holder (“Extension
Agreement”), the parties thereto have agreed that (1) the Company
shall deposit $400,000 into an escrow account held by Escrow Agent in accordance
with the terms hereof, and (2) the maturity date of the Note shall be
extended until
the date (the “Extended
Maturity Date”) which is two (2) months following the date on which the
Company makes such deposit into escrow with Escrow Agent (“Deposit Date”);
A G R E E M E N
T:
NOW
THEREFORE, in consideration of the foregoing premises and the mutual covenants
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Appointment of Escrow
Agent. The Company and the Holder hereby appoint Escrow Agent
to act as escrow agent hereunder, and Escrow Agent hereby accepts such
appointment and agrees to act as escrow agent and to hold, safeguard and
disburse the Escrow Fund (as defined below) pursuant to the terms and conditions
hereof.
2. Escrow
of Funds.
(a) Deposit into
Escrow. Promptly following execution of this Agreement, the
Company shall deposit with Escrow Agent an amount equal to Four Hundred Thousand
Dollars ($400,000) in immediately available funds (“Deposited
Funds”). The “Escrow Fund” is the Deposited
Funds as increased by any interest thereon. Escrow Agent will provide
acknowledgment upon receipt of funds. Upon receipt by Escrow Agent,
Escrow Agent shall hold the Escrow Fund in escrow for the benefit of the Company
and the Holder in accordance with this Agreement. This Agreement
shall not become effective until the Escrow Agent receives the Deposited Funds,
which shall constitute the Deposit Date.
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(b) Investment of
Funds. Except as the Company and the Holder may from time to
time otherwise jointly instruct Escrow Agent in writing, the Escrow Fund shall
be invested in an interest bearing account with Escrow Agent until disbursement
of the entire Escrow Fund. The parties hereto agree that (i) all
interest accrued on the Escrow Fund shall be paid to the Company (regardless of
whether the Escrow Fund is distributed to the Company or the Holder), and (ii)
for tax reporting purposes, all interest and/or other taxable income earned on
the Escrow Fund in any tax year shall be taxable to the
Company. Escrow Agent agrees to provide to the Company the
appropriate form to report such interest and/or other taxable income earned
(i.e., 1099 Misc.,
etc.).
3. Disbursements.
(a) Escrow Fund. On
the Extended Maturity Date, Escrow Agent shall distribute the Escrow Fund in
accordance with the written instructions delivered by the Holder to Escrow
Agent. The Holder and the Company agree that from the Escrow
Fund:
(1) the
Holder shall receive $400,000 less
the aggregate principal amount of the Note converted by the Holder,
and
(2) the
Company shall receive the balance of the Escrow Fund which has not been
distributed to the Holder pursuant to Section 3(a)(1) above.
(b) Interest. The
Escrow Agent shall distribute any and all accrued interest on the Escrow Fund to
the Company.
(c) Wire
Details. Distributions to the parties hereunder shall be paid
by wire transfer as follows:
| If to the Holder, to: | |||
|
Bank
of New York
ABA#
000-000-000
F/A/X
Xxxxxxxxx & Company, Inc.
A/C#
890-000-7001
F/F/C
Gemini Master Fund, Ltd.
FFC#
662-70252
|
|||
| If to the Company, to: | |||
| Bank: | City National Bank
0000
Xxxxxxx Xxxx Xxxx
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
|
||
| ABA#: | 1220-16066 | ||
| Acct Name: | International Stem Cell Corporation | ||
| Contact: | Xxxxxxx Forget, (000) 000-0000 | ||
| A/C#: | 000-000-000 | ||
(d) Termination. Upon
disbursement of the entire Escrow Fund in accordance herewith, the escrow
hereunder shall terminate.
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4. Duties
of Escrow Agent
(a) Degree of
Care. Escrow Agent shall not be under any duty to give the
Escrow Fund 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 Agreement. Uncollected funds
held hereunder shall not earn or accrue interest.
(b) No Liability for Actions or
Omissions. Escrow Agent shall not be liable for actions or
omissions hereunder, except for its own gross negligence or willful misconduct
and, except with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against Escrow Agent, the other
parties hereto shall jointly and severally indemnify and hold harmless 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
Agreement. Without limiting the foregoing, 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
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund or any loss of interest incident to any such
delays.
(c) Reliance by Escrow
Agent. 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 propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so. Escrow Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity other than a natural
person, or any other individual designated in writing by such representative,
has full power and authority to instruct Escrow Agent on behalf of that party
unless written notice to the contrary is delivered to Escrow Agent.
(d) Advice of
Counsel. Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Agreement and shall not be
liable for any action taken or omitted by it in good faith in accordance with
such advice.
(e) No Interest in Escrow
Fund. Escrow Agent does not have any interest in the Escrow
Fund deposited hereunder but is serving as escrow holder only and has only
possession thereof. Any payments of income from the Escrow Fund shall
be subject to withholding regulations then in force with respect to United
States taxes. The Company will provide Escrow Agent with appropriate
Internal Revenue Service Forms W-9 for tax identification number certification,
or nonresident alien certification. To the extent that the Escrow
Agent becomes liable for the payment of any taxes in respect of income derived
from the investment of funds held or payments made hereunder, Escrow Agent shall
satisfy such liability from the Escrow Fund. The Company agrees to
indemnify and hold Escrow Agent harmless from and against any taxes, additions
for late payment, interest, penalties and other expenses that may be assessed
against Escrow Agent on or with respect to any payment or other activities under
this Agreement unless any such tax, addition for late payment, interest,
penalties and other expenses shall arise out of or be caused by the actions of,
or failure to act by, Escrow Agent. The provisions of this Article 4
shall survive notwithstanding any termination of this Agreement or the
resignation of Escrow Agent.
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(f) No Representation By Escrow
Agent. Escrow Agent makes no representation as to the
validity, value, genuineness or collectability of any security or other document
or instrument held by or delivered to it.
(g) No Advice. Escrow
Agent shall not be called upon to advise any party as to the wisdom in selling
or retaining or taking or refraining from any action with respect to any
securities or other property deposited hereunder.
(h) Resignation of Escrow
Agent. Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by delivering the Escrow Fund to any successor Escrow
Agent jointly designated by the other parties hereto in writing, or to any court
of competent jurisdiction, whereupon Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this
Agreement. The resignation of Escrow Agent will take effect on the
earlier of (i) the appointment of a successor (including a court of competent
jurisdiction) or (ii) the day which is thirty (30) days after the date of
delivery of its written notice of resignation to the other parties
hereto. If, at that time, Escrow Agent has not received a designation
of a successor Escrow Agent, Escrow Agent’s sole responsibility after that time
shall be to retain and safeguard the Escrow Fund until receipt of a designation
of successor Escrow Agent or a joint written disposition instruction by the
other parties hereto or a court order.
(i) Adverse Claims Against Escrow
Fund. In the event of any disagreement between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrow Fund or in the event that Escrow Agent is in doubt as to what
action it should take hereunder, Escrow Agent shall be entitled to retain the
Escrow Fund until Escrow Agent shall have received (i) a court order directing
delivery of the Escrow Fund or (ii) a written agreement executed by the Company
and the Holder directing delivery of the Escrow Fund, in which event Escrow
Agent shall disburse the Escrow Fund in accordance with such order or
agreement. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to Escrow Agent to the effect that
the order is final and nonappealable. Escrow Agent shall act on such
court order and legal opinion without further question or
delay. Escrow Agent may, in its sole and absolute discretion,
interplead the Escrow Fund or that portion of Escrow Fund it then holds with any
court of competent jurisdiction and name the Company and the Holder in such
interpleader action. Upon filing the interpleader action, the Escrow
Agent shall be relieved of all liability as to the Escrow Fund and shall be
entitled to recover from the Company its reasonable attorneys’ fees and other
costs incurred in commencing and maintaining such action. The
Company and the Holder by signing this Agreement submit themselves to the
jurisdiction of such court. In no event shall the institution of such
interpleader action impair the rights of Escrow Agent described elsewhere this
Agreement. Such interpleader action shall be filed in a court of
competent jurisdiction in accordance with Section 7 below.
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(j) Compensation of Escrow
Agent. The Company shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent hereunder in
the amount equal to $1,250 at the time of execution of this Agreement plus $100
per disbursement plus any out-of-pocket expenses incurred. The
Company further agrees to reimburse Escrow Agent for all reasonable expenses,
disbursements and advances incurred or made by Escrow Agent in performance of
its duties hereunder (including reasonable fees, expenses and disbursements of
its counsel) prior to the distribution of any property held by Escrow Agent
under this Agreement. If the property held by Escrow Agent under this
Agreement is insufficient to pay any such compensation and reimbursement to
which Escrow Agent is entitled, the Company shall be liable for such
compensation and reimbursement.
(k) Consent to Use of
Name. No printed or other matter in any language (including,
without limitation, prospectuses, notices, reports and promotional material)
that mentions Escrow Agent’s name or the rights, powers or duties of Escrow
Agent shall be issued by the other parties hereto or on such parties’ behalf
unless Escrow Agent shall first have given its specific written consent
thereto. Notwithstanding the above, Escrow Agent hereby expressly
consents to the mention of Escrow Agent’s name in any securities filings
required to be made by law.
5. Limited
Responsibility. This Agreement
expressly sets forth all the duties of Escrow Agent with respect to any and all
matters pertinent hereto. No implied duties or obligations shall be
read into this Agreement against Escrow Agent. Escrow Agent shall not
be bound by the provisions of any agreement among the other parties hereto
except this Agreement.
6. Notices. All notices,
requests, demands and other communications provided for by this Agreement shall
be in writing and shall be deemed to have been given when hand delivered, when
received if sent by facsimile or email or by same day or overnight recognized
commercial courier service or three business days after being mailed in any
general or branch office of the United States Postal Service, enclosed in a
registered or certified postpaid envelope, addressed to the address of the
parties stated below or to such changed address as such party may have fixed by
notice:
If to the
Company:
International
Stem Cell Corporation
0000
Xxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Attn: Xxxxxxx
Xxxxxxx
Facsimile: (000)
000-0000
Email:
xxxxxxxx@xxxxxxxxxxxx.xxx
If to the
Holder:
Gemini
Master Fund, Ltd.
c/o
Gemini Strategies, LLC
000
Xxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx
Fax:
(000) 000-0000
Email: xxxxx@xxxxxxxxxxxxxxxx.xxx
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With
a copy to:
Xxxxx X.
Xxxxxxx, P.C.
000 Xxxxx
Xxxxxx, 0xx
Xxxxx
Xxx Xxxx,
XX 00000
Fax: (000)
000-0000
Email: xxxxxxxx@xxxxxxxx.xxx
If to
Escrow Agent:
Xxxxxx
Xxxxx Bank
00000 Xx
Xxxxxx Xxxx, Xxx. 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Teofla
Rich, SVP
Facsimile: 000-000-0000
Email:
XXxxx@XxxxxxXxxxxXxxx.xxx
7. Jurisdiction;
Service of Process. Any action, suit,
contest, litigation or similar proceeding (a “Proceeding”) relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced only in any state or federal court located in the County
of San Diego, State of California. Each party to this
Agreement: (a) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of San Diego,
State of California (and each appellate court located in the County of San
Diego, State of California) in connection with any such Proceeding; (b) agrees
that each state and federal court located in the County of San Diego, State of
California shall be deemed to be a convenient forum; and (c) agrees not to
assert (by way of motion, as a defense or otherwise), in any such Proceeding
commenced in any state or federal court located in the County of San Diego,
State of California, any claim that such party is not subject personally to the
jurisdiction of such court, that such Proceeding has been brought in an
inconvenient forum, that the venue of such Proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.
8. Execution
of Agreement. This Agreement
may be executed in one or more counterparts, each of which will be deemed to be
an original copy of this Agreement and all of which, when taken together, will
be deemed to constitute one and the same agreement. The exchange of
copies of this Agreement and of signature pages by facsimile transmission or PDF
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or PDF
shall be deemed to be their original signatures for any purposes
whatsoever.
9. Section
Headings, Construction. The headings of
sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation.
10. Waiver. The rights and
remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law: (a) no claim or right
arising out of this Agreement or the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
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11. Entire
Agreement and Modification. This Agreement
supersedes all prior agreements among the parties with respect to its subject
matter and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be
amended except by a written agreement executed by the Company, the Holder and
Escrow Agent.
12. Governing
Law. This Agreement
shall be governed by and interpreted and enforced in accordance with the laws of
the State of California, USA, without regard to the conflict of laws rules
thereof.
13. Miscellaneous.
(a) Authority. Each
party hereto hereby represents and warrants to the other parties that the
execution and delivery by such party of this Agreement, and the performance by
such party of its obligations hereunder, have been duly and validly authorized
by such party, with no other action on the part of such party being
necessary. This Agreement has been duly and validly executed and
delivered by such party and constitutes a legal, valid and binding obligation of
such party enforceable against such party in accordance with its
terms.
(b) Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(c) Assignment;
Successors. The Holder may assign this Agreement or its
respective rights or obligations hereunder in connection with any transfer of
the Note. This Agreement shall be binding upon each party’s
respective successors.
*** Signatures Appear on the Next
Page***
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IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
COMPANY:
INTERNATIONAL
STEM CELL CORPORATION
| By: | /s/ Xxxxxxx Xxxxxxx | |
| Name: Xxxxxxx Xxxxxxx | ||
| Title: CEO |
HOLDER:
GEMINI
MASTER FUND, LTD.
By: GEMINI
STRATEGIES, LLC, as investment manager
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: Xxxxxx Xxxxxxx | ||
| Title: Managing Member |
ESCROW
AGENT:
XXXXXX
XXXXX BANK
| By: | /s/ Teofla Rich | |
| Name: Teofla Rich | ||
| Title: SVP |
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