EXHIBIT 2.2
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is entered into as of May 25,
2005, by and among QuatRx Pharmaceuticals Company, a Delaware corporation
("QuatRx"), Hormos Medical Corporation, a Finnish corporation ("Hormos"), Bio
Fund Ventures I LP, a Finnish company, Bio Fund Ventures II LP, a Finish
company, Bio Fund Ventures II Follow-on Fund LP, a Finnish company, The Finnish
National Fund for Research and Development, a Finnish entity, BI Biomedical
Venture III Ltd. (P/S), a Danish corporation, H&B Capital LP, a Swedish
corporation, Xx. Xxx Xxxxx, as representative and on behalf of certain
institutional selling shareholders of Hormos (the "Institutional Securityholder
Representative"), Xx. Xxxxx Xxxxxxx, as representative and on behalf of certain
individual selling shareholders of Hormos who are natural persons (the
"Individual Securityholder Representative", and, together with the Institutional
Securityholder Representative, the "Securityholder Representatives") and U.S.
Bank, National Association (the "Escrow Agent").
RECITALS
QuatRx, Hormos and certain of the holders of the outstanding shares of
Hormos (the "Sellers") have entered into an Exchange Agreement dated as of May
13, 2005 (the "Exchange Agreement"), pursuant to which QuatRx will acquire all
of the outstanding shares of Hormos held by the Sellers in consideration of
newly issued shares of Series D Preferred Stock, par value $0.01 per share
("QuatRx Series D Preferred Stock") and Series D-1 Preferred Stock, par value
$0.01 per share, of QuatRx ("QuatRx Series D-1 Preferred Stock") and newly
issued shares of common stock, par value $0.01 per share, of QuatRx ("QuatRx
Common Stock" and, together with the QuatRx Series D Preferred Stock and QuatRx
Series D-1 Preferred Stock, "QuatRx Stock"). The Exchange Agreement provides
that QuatRx will deposit a portion of the shares of QuatRx Stock to which
Sellers are entitled into escrow hereunder to (i) secure the indemnification
obligations of Sellers to QuatRx and its affiliates, officers, directors,
employees, representatives and agents under the Exchange Agreement and (ii)
serve as an "earn out" under certain circumstances described herein. The parties
desire to establish the terms and conditions pursuant to which such escrow fund
will be established and maintained.
AGREEMENT
The parties agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given them in the Exchange Agreement.
2. CONSENT OF SELLERS.
(a) Sellers have consented to:
(i) the establishment of the Escrow Fund (as defined below) to
secure the indemnification obligations of Sellers and provide an "earn out"
under Section 3.1 of the Exchange Agreement and
(ii) all of the other terms, conditions and limitations set
forth in this Agreement.
(b) Certain Sellers ("Accredited Sellers"), namely Bio Fund Ventures
I LP and II LP, Bio Fund Ventures II Follow-on Fund LP, The Finnish National
Fund for Research and Development, BI Biomedical Venture III Ltd. (P/S) and H&B
Capital LP shall represent themselves in connection with the transactions
contemplated by this Agreement.
(c) Each Seller, excluding the Accredited Sellers, (each a
"Represented Seller") has consented to the appointment of either the
Institutional Securityholder Representative or the Individual Securityholder
Representative, as applicable, as its representative for purposes of this
Agreement and as attorney-in-fact and agent for and on behalf of such
Represented Seller with respect to the subject matter of this Agreement.
3. ESCROW; INDEMNIFICATION AND EARN OUT.
(a) ESCROW FUND. As soon as practicable after the Closing Date,
QuatRx shall deposit with the Escrow Agent: 321,415 shares of QuatRx Series D
Preferred Stock, 1,277,995 shares of QuatRx Series D-1 Preferred Stock and
3,570,046 shares of QuatRx Common Stock registered in the name of U.S. Bank,
National Association as Escrow Agent, which is equal to thirty percent (30%) of
the shares of QuatRx Series D Preferred Stock, thirty percent (30%) of the
shares of QuatRx Series D-1 Preferred Stock and thirty percent (30%) of the
shares of QuatRx Common Stock that each Seller is entitled to receive in the
Exchange, pursuant to Section 2.1 of the Exchange Agreement (the "Initial Escrow
Shares"). In addition, from time to time thereafter, QuatRx shall deposit with
Escrow Agent additional shares of QuatRx Stock or other equity securities or
dividends issued or distributed by QuatRx (including shares issued upon a stock
split) in respect of the Initial Escrow Shares (the "New Shares" and, together
with the Initial Escrow Shares, the "Escrow Fund"). Exhibit A hereto sets forth
the name of each Seller and the number of Escrow Shares contributed to the
Escrow Fund on behalf of each such Seller pursuant to Section 3.1 of the
Exchange Agreement. One-third of the Escrow Fund shall be allocable to
indemnification claims under Section 3(b) below (the "Indemnification Fund"),
and two-thirds of the Escrow Fund shall be allocable to an "earn out" under
Section 3(c) below (the "Earn Out Fund"). The value of the Escrow Fund, as
determined in accordance with Section 4(a)(iii) below, contributed by each
Seller divided by the aggregate value of the Escrow Fund, as determined in
accordance with Section 4(a)(iii) below, contributed by all Sellers to the
Escrow Fund shall be each such Seller's "proportionate interest" in the Escrow
Fund. The Escrow Fund shall be held as a trust fund and shall not be subject to
any lien, attachment, trustee process or any other judicial process of any
creditor of any party hereto. Escrow Agent agrees to accept delivery of the
Escrow Fund and to hold such Escrow Fund in escrow subject to the terms and
conditions of this Agreement and Section 3 of the Exchange Agreement.
(b) INDEMNIFICATION. Sellers have agreed in Section 11.2 of the
Exchange Agreement to indemnify and hold harmless QuatRx and each of its
affiliates, officers, directors, employees, representatives and agents (each of
which is an "Indemnified Person" and collectively "Indemnified Persons") from
and against Losses, as defined in Section 11.2 of the Exchange Agreement. The
Indemnification Fund shall be security for this indemnity obligation of Sellers,
subject to the limitations, and in the manner provided, in this Agreement and
the Exchange Agreement.
(c) EARN OUT. Sellers have agreed in Section 3.1(b) of the Exchange
Agreement that the Earn Out Fund shall be released to Sellers if any of the
following events shall occur, within ten (10) Business Days of the earliest to
occur of such events (each an "Earn Out Event"):
(i) the closing of a Qualified Public Offering of QuatRx (as
defined in the Amended and Restated Certificate of
Incorporation of QuatRx) occurring prior to an Ospemifene
Discontinuance, as defined below,
(ii) in the absence of a Regulatory Delay, as defined below, upon
the earlier of (a) dosing of the first patient in the second
Phase III clinical trial of ospemifene conducted by QuatRx or
its licensee, (b) submission by QuatRx or its licensee and
acceptance for filing by the FDA of a New Drug Approval
seeking marketing approval of ospemifene or, (c) twelve (12)
months after the receipt by QuatRx of the final report for the
first phase III clinical study of ospemifene conducted by
QuatRx or its licensee, unless the Ospemifene Discontinuance
occurs prior to such dosing and before the end of such twelve
(12) month period, and
(iii) in the event of a Regulatory Delay, upon the earlier of (a)
dosing of the first patient in the second Phase III clinical
trial of ospemifene by QuatRx or its licensee or (b)
twenty-four (24) months after the receipt by QuatRx of the
final report for the first phase III clinical study of
ospemifene conducted by QuatRx or its licensee, unless the
Ospemifene Discontinuance occurs prior to such dosing and
before the end of such twenty-four (24) month period.
If the Ospemifene Discontinuance occurs at any time prior to the occurrence of
an Earn Out Event, then the Earn Out Shares shall be released to QuatRx and the
shares of capital stock of QuatRx so released shall be cancelled. The term
"Ospemifene Discontinuance" shall mean the termination of development of
ospemifene by QuatRx and/or its licensee, as evidenced by a resolution of the
Board of Directors of QuatRx to completely discontinue all further development
and commercialization work on ospemifene by QuatRx and/or its licensee provided
that such decision to discontinue is approved pursuant to the standards set
forth in section 5(c) below. The term "Regulatory Delay" shall mean an action by
the FDA which (i) prevents QuatRx from commencing the second Phase III clinical
trial of ospemifene, and (iii) lasts beyond the twelve (12) month anniversary of
QuatRx' receipt of such final report.
4. INDEMNIFICATION FUND.
(a) DELIVERIES OUT OF INDEMNIFICATION FUND. Upon receipt by Escrow
Agent at any time on or before the last day of the Indemnity Escrow Period (as
defined in Section 4(d)) of a certificate signed by any officer of QuatRx (an
"Officer's Certificate"):
(i) stating that QuatRx or any other Indemnified Person has
paid or reasonably anticipates that it will have to pay or incur Losses which on
a cumulative basis with all prior Damages exceed US $150,000.00;
(ii) specifying in reasonable detail the individual items of
Losses included in the amount so stated, the date each such item was paid or
incurred, or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or claim to which such item is related,
and
(iii) stating the proposed number and type of Delivered Shares
(as defined below) determined in accordance with the next two sentences of this
Section 4(a) and the value thereof determined in accordance with Section
4(a)(iv).
Escrow Agent shall, subject to the provisions of Section 4(b) below, deliver to
QuatRx out of the Indemnification Fund, as promptly as practicable, Escrow
Shares or other assets held in the Indemnification Fund (the "Delivered Shares")
in an amount equal to such Losses. The number of shares of QuatRx Series D
Preferred Stock, QuatRx Series D-1 Preferred Stock and QuatRx Common Stock
comprising the Delivered Shares shall be proportionate to the total number of
shares of QuatRx Series D Preferred Stock, QuatRx Series D-1 Preferred Stock and
QuatRx Common Stock, respectively, then held in the Indemnification Fund.
(iv) For the purposes of determining the number of Escrow
Shares to be delivered to QuatRx out of the Indemnification Fund pursuant to
Section 4(a), the shares of QuatRx Stock shall be valued at US $1.40 per share,
provided that, if shares of QuatRx Stock are then traded on a securities
exchange or through the Nasdaq National Market, the shares of QuatRx Stock shall
be valued at the greater of US $1.40 per share and the average of the closing
prices of the shares of QuatRx Stock on such quotation system over the ten (10)
trading days ending three (3) days prior to the delivery of the Officer's
Certificate. It is acknowledged and understood that $1.40 per share of QuatRx
Stock is not reflective of the fair market value of the Common Stock and the
valuation thereof for the purposes of this Agreement has been determined solely
for purposes of convenience. In no event shall the number of Escrow Shares
released to QuatRx pursuant to this Section 4(a) exceed the amount of Escrow
Shares then allocable to the Indemnification Fund.
(b) OBJECTIONS TO CLAIMS. At the time of delivery of any Officer's
Certificate to Escrow Agent, QuatRx shall deliver a duplicate copy of such
certificate to the Accredited Sellers and Securityholder Representatives and for
a period of 30 days after receipt of the Officer's Certificate, Escrow Agent
shall make no delivery to QuatRx from the Indemnification Fund pursuant to
Section 4(a) hereof unless Escrow Agent shall have received written
authorization from the Accredited Sellers and/or the Securityholder
Representatives, together
representing at least thirty (30) percent of the shares of QuatRx Stock in the
Indemnification Fund and including at least one (1) Accredited Seller, as set
forth in such written authorization and upon which the Escrow Agent may rely, to
make such delivery. After the expiration of such 30 day period, Escrow Agent
shall make delivery from the Indemnification Fund in accordance with Section
4(a) hereof, provided that no such payment or delivery may be made if the Escrow
Agent and QuatRx shall receive, prior to the expiration of such 30 day period, a
jointly executed written statement of the Accredited Sellers and/or the
Securityholder Representative(s), together representing at least thirty (30)
percent of the shares of QuatRx Stock in the Indemnification Fund and including
at least one (1) Accredited Seller, as set forth in such written statement and
upon which the Escrow Agent may rely, objecting to the claim made in the
Officer's Certificate.
(c) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case the Accredited Sellers and/or the Securityholder
Representative(s), together representing at least thirty (30) percent of the
shares of QuatRx Stock in the Indemnification Fund and including at least one
(1) Accredited Seller, shall object in writing pursuant to Section 4(b) above,
to any claim or claims made in any Officer's Certificate, such Accredited
Sellers, Securityholder Representatives and QuatRx shall attempt in good faith
to agree upon the rights of the respective parties with respect to each of such
claims within 45 days after Escrow Agent's receipt of the Accredited Sellers'
and/or Securityholder Representatives' written objection to the claim pursuant
to Section 4(b) (the "Negotiation Period"). If Accredited Sellers,
Securityholder Representatives and QuatRx should so agree during the Negotiation
Period, a memorandum setting forth such agreement shall be prepared and jointly
signed by such parties and shall be furnished to Escrow Agent. Escrow Agent
shall be entitled to rely on any such memorandum and distribute the Escrow
Shares and/or other property from the Indemnification Fund in accordance with
the terms thereof.
(ii) If no such agreement has been reached by the end of the
Negotiation Period, QuatRx, any Accredited Sellers or any Securityholder
Representative may demand arbitration of the matter unless the amount of the
Losses is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained by
settlement or a non-appealable decision of a court of competent jurisdiction or
the respective parties agree to arbitration; and in either such event the matter
shall be settled by arbitration conducted in accordance with Section 12.8 of the
Exchange Agreement.
(d) RELEASE OF INDEMNIFICATION FUND. Subject to the following
requirements, the Indemnification Fund shall remain in existence from the
Closing Date until the twelve month anniversary of the Closing Date (the
"Indemnity Escrow Period"). Upon the expiration of the Indemnity Escrow Period,
the Escrow Fund shall terminate with respect to all Escrow Shares then remaining
in the Indemnification Fund, and all such Escrow Shares shall be delivered to
Sellers; provided, however, that a number of Escrow Shares, which, in the good
faith judgment of QuatRx, is necessary to satisfy any unsatisfied claims
specified in any Officer's Certificate (setting forth the basis of such
liability, the nature of the misrepresentation, breach of warranty and/or claim
to which such item is related) delivered to Escrow Agent prior to the expiration
of such Indemnity Escrow Period with respect to facts and circumstances existing
on or prior to the end of the Indemnity Escrow Period shall remain in the
Indemnification Fund (and
the Indemnification Fund shall remain in existence) until such claims have been
resolved; provided further, that QuatRx agrees to notify Escrow Agent in writing
of the expiration of the Indemnity Escrow Period (which notification shall be
made immediately after the expiration of the Indemnity Escrow Period, and, in
case of non-receipt of such notification by the Escrow Agent within five (5)
days from the end of the Indemnity Escrow Period, it shall then be deemed to
have been received by the Escrow Agent). As soon as all such claims have been
resolved, Escrow Agent shall deliver to Sellers all Escrow Shares and other
property then remaining in the Indemnification Fund and not required to satisfy
such claims. Deliveries of Escrow Shares and other property to Sellers pursuant
to this Section 4(d) shall be made in accordance with each Seller's
proportionate interest in the Indemnification Fund.
5. EARN OUT FUND.
(a) DELIVERIES OUT OF EARN OUT FUND. Upon receipt by Escrow Agent at
any time of an Officer's Certificate, which shall be delivered by QuatRx
forthwith after the occurrence of an Earn Out Event and shall not, in any case,
be unreasonably withheld or delayed, stating that an Earn Out Event has
occurred, Escrow Agent shall release to the Sellers, as promptly as practicable,
all Escrow Shares or other assets held in the Earn Out Fund. Deliveries of
Escrow Shares and other property to Sellers pursuant to this Section 5(a) shall
be made in accordance with each Seller's proportionate interest in the Earn Out
Fund.
(b) RELEASE OF EARN OUT FUND TO QUATRX. Upon receipt by Escrow Agent
at any time of an Officer's Certificate stating that the Ospemifene
Discontinuance has occurred, Escrow Agent shall release to QuatRx, as promptly
as practicable, all Escrow Shares or other assets then held in the Earn Out Fund
for cancellation.
(c) DECISION MAKING RELATING TO OSPEMIFENE DISCONTINUANCE. The
resolution of the Board of Directors of QuatRx on the Ospemifene Discontinuance
shall be based on objective facts and results of the (first) Phase III Clinical
Study and the regulatory and commercial implications of such results, all as
determined in the sole and complete discretion of the Board of Directors of
QuatRx. A decision of Ospemifene Discontinuance shall be supported by at least
two thirds (2/3) of all members of QuatRx Board of Directors.
6. SECURITYHOLDER REPRESENTATIVES. A Securityholder Representative may be
changed by the Represented Sellers that designated such Securityholder
Representative from time to time upon not less than 10 days' prior written
notice to QuatRx (with a copy of such notice of change immediately provided to
the Escrow Agent); provided that a Securityholder Representative may not be
removed unless a majority of Represented Sellers that designated such
Securityholder Representative agree to such removal and to the identity of the
substituted agent. No bond shall be required of Securityholder Representatives,
and Securityholder Representatives shall not receive compensation for their
services. Notices or communications to or from the applicable Securityholder
Representative shall constitute notice to or from each of the Represented
Sellers that designated such Securityholder Representative.
7. ESCROW AGENT'S DUTIES.
(a) Escrow Agent shall hold and safeguard the Escrow Fund until it
is released in its entirety in accordance with the terms of this Agreement,
shall treat such fund as a trust fund in accordance with the terms of this
Agreement and the Exchange Agreement and not as the property of QuatRx and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
QuatRx, Accredited Sellers and Securityholder Representatives acknowledge and
agree that Escrow Agent (i) shall not be responsible for any of the agreements
referred to herein but shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement and as set forth in any
additional written escrow instructions which Escrow Agent may receive after the
date of this Agreement that are jointly signed by an officer of QuatRx, all of
the Accredited Sellers and all of the Securityholder Representatives; (ii) shall
not be obligated to take any legal or other action hereunder which might in its
reasonable judgment involve expense or liability unless it shall have been
furnished with indemnity reasonably acceptable to it; and (iii) may rely on and
shall be protected in acting or refraining from acting upon any written notice,
instruction, instrument, statement, request or document furnished to it
hereunder and reasonably believed by it to be genuine and to have been signed or
presented by the proper person, and shall have no responsibility for determining
the accuracy thereof.
(b) Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person,
excepting only orders or process of courts of competent jurisdiction or written
decision of arbitrators pursuant to Section 4(c), and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court of
competent jurisdiction or written decision of arbitrators. In case Escrow Agent
obeys or complies with any such order, judgment or decree of any court or
written decision of arbitrators, Escrow Agent shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(c) Escrow Agent shall not be liable in any respect on account of
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
(d) Escrow Agent shall not be liable for the expiration of any
rights under any statute of limitations with respect to this Agreement or any
documents deposited with Escrow Agent.
(e) Neither Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken or omitted to be taken
by it or any of its directors, officers or employees hereunder except in the
case of gross negligence, bad faith or willful misconduct. Subject to Section
7(g) below, QuatRx and Sellers (collectively, the "Indemnifying Parties")
covenant and agree to jointly and severally indemnify Escrow Agent and hold it
harmless from and against any fee, loss, liability or expense (including
reasonable attorney's fees and expenses of counsel selected by the Escrow Agent)
(a "Loss") incurred by Escrow Agent arising out of or in connection with the
performance of its obligations in accordance with the provisions of this
Agreement or with the administration of its duties hereunder, unless such Loss
shall arise out of or be caused by Escrow Agent's gross negligence, bad faith or
willful misconduct; provided, however, that indemnification for Escrow Agent's
standard fees and expenses set forth on the fee schedule attached hereto as
Exhibit B shall be borne exclusively by QuatRx, and provided further that the
indemnity agreement contained in this Section 7(e) shall not apply to amounts
paid in settlement of any Loss if such settlement is effected without the
consent of QuatRx, Accredited Sellers and Securityholder Representatives.
(f) To the extent that 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 to the extent
possible from the Escrow Fund. If cash is not available in the Escrow Fund to
satisfy such taxes, if any, then QuatRx shall provide sufficient funds to be
added to the Escrow Fund to satisfy such liability. Subject to Section 7(g)
below, Indemnifying Parties agree to jointly and severally 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 any payment or other activities under this Agreement unless any such
tax, addition for late payment, interest, penalty or other expense shall arise
out of or be caused by the actions of, or a failure to act by, Escrow Agent. No
distributions will be made to Sellers unless Escrow Agent is supplied with an
original, signed IRS Form W-8, W-9 or its equivalent prior to distribution.
(g) Notwithstanding the joint and several nature of the obligations
of Indemnifying Parties under Section 7(e) and 7(f), Sellers' total collective
share of the liability for indemnification of Escrow Agent under Sections 7(e)
and 7(f) hereof (the "Indemnification Liability") shall in no event exceed the
value of the Escrow Fund then available to pay such liability. Any and all
amounts to be paid by Sellers for their share of the Indemnification Liability
shall be payable only out of the Escrow Fund including up to all such
Indemnification Liability in the case of any tax liability arising from failure
to provide correct information with respect to any taxes pursuant to Section
7(f) above. Except as otherwise provided in Section 7(e), one half of the total
Indemnification Liability shall be paid out of the Escrow Fund and allocated pro
rata among each of the Sellers according to their respective percentage
ownership of the Escrow Fund, and one half of the total Indemnification
Liability shall be paid by QuatRx. In the event that payment of an
Indemnification Liability is to be paid pursuant to this Section 7(g), the
Escrow Agent shall deliver to QuatRx out of the Escrow Fund a number of shares
of QuatRx Stock equal to the value of such Indemnification Liability in
accordance with Section 4(a)(iii) hereof, and QuatRx shall pay to the Escrow
Agent an amount of cash equal to the value of such QuatRx Stock so delivered,
pursuant to written payment instructions provided by the Escrow Agent.
(h) Escrow Agent may resign at any time upon giving at least 30
days' written notice to QuatRx, Accredited Sellers and Securityholder
Representatives; provided, however, that no such resignation shall become
effective until the appointment of a successor escrow agent, which shall be
accomplished as follows: QuatRx, Accredited Sellers and Securityholder
Representatives shall use their best efforts to agree upon a successor agent
within 30 days after receiving such notice. If the respective parties fail to
agree upon a successor escrow agent within such time, Accredited Sellers and
Securityholder Representatives with the consent of QuatRx,
which shall not be unreasonably withheld, shall have the right to appoint a
successor escrow agent authorized to do business in New York. The successor
escrow agent selected in the preceding manner shall execute and deliver an
instrument accepting such appointment and it shall thereupon be deemed Escrow
Agent hereunder and it shall without further acts be vested with all the
estates, properties, rights, powers, and duties of the predecessor Escrow Agent
as if originally named as Escrow Agent. If no successor escrow agent is named,
Escrow Agent may apply to a court of competent jurisdiction for the appointment
of a successor escrow agent. Thereafter, the predecessor Escrow Agent shall be
discharged from any further duties and liabilities under this Agreement. The
provisions of paragraphs 8(e) and 8(f) shall survive the resignation or removal
of Escrow Agent or the termination of this Agreement.
8. FEES, EXPENSES AND TAXES. QuatRx agrees to pay or reimburse Escrow
Agent for its normal services hereunder in accordance with the fee schedule
attached hereto as Exhibit B. The Escrow Agent shall be entitled to
reimbursement upon 30 days' written notice for all expenses incurred in
connection with Sections 7(e) and 7(f) above, and payment of any legal fees and
expenses incurred by the Escrow Agent in connection with the resolution of any
claim by any party hereunder. Taxes incurred with respect to the earnings of the
Escrow Fund and payments made hereunder shall be borne by the party to whom such
earnings are distributed (or to be distributed) or to whom such payment is made.
9. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 9(a) shall be binding upon the parties and their respective successors
and assigns.
(b) SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(c) GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of New
York.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(e) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally and in case of international
airmail, copy to be sent by facsimile) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below, or as subsequently modified by written notice.
If to QuatRx:
QuatRx Pharmaceuticals Company
000 Xxxx Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to Bio Fund Ventures I LP:
Bio Fund Ventures I LP
x/x Xxx Xxxx Xxxxxxxxxx Xxx
XX Xxx 000
XXX-00000 Xxxxxxxx, Xxxxxxx
Telephone No.: x000 0 0000 000
Telecopier No.: x000 0 0000 0000
If to Bio Fund Ventures II LP:
Bio Fund Ventures II LP
c/o Bio Fund Management Ltd
XX Xxx 000
XXX-00000 Xxxxxxxx, Xxxxxxx
Telephone No.: x000 0 0000 000
Telecopier No.: x000 0 0000 0000
If to Bio Fund Ventures II Follow-on Fund LP:
Bio Fund Ventures II Follow-on Fund LP
c/o Bio Fund Management Ltd
XX Xxx 000
XXX-00000 Xxxxxxxx, Xxxxxxx
Telephone No.: x000 0 0000 000
Telecopier No.: x000 0 0000 0000
If to the Finnish National Fund for Research and Development:
Finnish National Fund for Research and Development
XX Xxx 000
XXX-00000 Xxxxxxxx, Xxxxxxx
Telephone No.: x000 0 000 000
Telecopier No.: x000 0 000 000
If to BI Biomedical Venture III Ltd. (P/S):
XX Xxx 0000
XX-0000 Xxxxxxxxxx, Xxxxxxx
Telephone No.: 00 0000 0000
Telecopier No.: 45 3348 9188
If to H&B Capital LP:
Kleinwort Xxxxxx House, P.O. Box 76
Wests Centre, St Helier, Jersey
JE4 8PQ, Channel Islands
Telephone No.: 00.0.000.000.00
Telecopier No.: 46.8.545.680.70
If to the Institutional Securityholder Representative:
Xx. Xxx Xxxxx
Xxxxxxxxxxxxxx 00-00 X 00
XX-00000 Xxxxxxxx, Xxxxxxx
Telephone No.: x000 0 0000 0000
Telecopier No.: x000 0 0000 0000
If to the Individual Securityholder Representative
Xx. Xxxxx Xxxxxxx
Xxxxxxxx 00 X 0
XX-00000 Xxxxx, Xxxxxxx
Telephone No.: x000 0 000 0000
Telecopier No.: x000 0 000 0000
If to the Escrow Agent:
U.S. Bank, National Association
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Vice President
(g) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach an agreeable and
enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(h) ENTIRE AGREEMENT. Except as set forth in the Exchange Agreement,
this Agreement is the product of all of the parties hereto, and constitutes the
entire agreement between such parties pertaining to the subject matter hereof,
and merges all prior negotiations and drafts of the parties with regard to the
transactions contemplated herein. Any and all other written or oral agreements
existing between the parties hereto regarding such transactions are expressly
canceled.
(i) ADVICE OF LEGAL COUNSEL. Each party acknowledges and represents
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
The parties have executed this Agreement as of the date first above written.
QUATRX PHARMACEUTICALS COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
(print)
Title:CEO
ESCROW AGENT
U.S. BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SIGNATURE PAGE TO ESCROW AGREEMENT
INSTITUTIONAL SECURITYHOLDER
REPRESENTATIVE
By: /s/ Xxx Xxxxx
-----------------------
Name: Xxx Xxxxx
Title: Investment Director
INDIVIDUAL SECURITYHOLDER REPRESENTATIVE
By: /s/ Xxxxx Xxxxxxx
-----------------------
Name: Xxxxx Xxxxxxx
Title: ____________________________________
Biofund Ventures I LP
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------
Name: Xxxxxx Xxxxxxxxxx
Title: General Partner, Chairman and CEO
Biofund Ventures II LP
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------
Name: Xxxxxx Xxxxxxxxxx
Title: General Partner, Chairman and CEO
SIGNATURE PAGE TO ESCROW AGREEMENT
BIO FUND VENTURES II ANNEX FUND LP
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------
Name: Xxxxxx Xxxxxxxxxx
Title: General Partner, Chairman and CEO
THE FINNISH NATIONAL FUND FOR RESEARCH
AND DEVELOPMENT
By: /s/ Xxxxxx Xxxxxxx
--------------------
Name: Xxxxxx Xxxxxxx
Title: Director of Finance and Corporate Funding
BANKINVEST BIOMEDICAL VENTURE III
By: /s/ Boarne Xxxxxx /s/ Xxxxxx Xxxxxxxxxx
----------------- ---------------------
Name: Boarne Xxxxxx Xxxxxx Tscherning
Title: Group CIO Deputy Man. Dir.
H&B CAPITAL LP
By: /s/ Xxxx Xxxxxxxxx
----------------------
Name: Xxxx Xxxxxxxxx
Title: General Partner
SIGNATURE PAGE TO ESCROW AGREEMENT
HORMOS MEDICAL CORPORATION
By: /s/ Xxxxx Xxxxxxxxxxxx
----------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: CEO
SIGNATURE PAGE TO ESCROW AGREEMENT
EXHIBIT A
SELLERS AND ESCROW SHARES
ESCROW SHARES
--------------------------------------------------------
SERIES D PREFERRED SERIES D-1 PREFERRED
SELLERS COMMON STOCK STOCK STOCK
-------------------------------------------- ------------ ------------------ --------------------
Aboa Venture II 90,808 9,455 37,594
Aaltonen Annukka 146 15 60
Ali-Xxxxxxx Xxxx 3,112 324 1,288
Xxxxxxx Xxxxxx 292 30 121
Apteekkien Elakekassa 20,887 2,175 8,647
Besodos Oy 10,815 1,126 4,477
Bio Fund Ventures I Ky 169,582 17,657 70,206
Bio Fund Ventures II Jatkosijoitusrahasto Ky 74,883 7,798 31,001
Bio Fund Ventures II Ky 165,115 17,192 68,357
Biomedical Venture III Ltd. (P/S) 823,211 85,715 340,807
Xxxx Xxxx 165 17 68
Xxxxxxxx Xxxx 165 17 68
Xxxxxxxx Xxxxx 506 53 209
Elakevakuutusosakeyhtio Veritas 28,980 3,017 11,998
Xxxxxxxx Xxxxx 165 17 68
H&B Capital LP 484,240 50,421 200,474
Xxxxxxxxxx Xxxxx-Xxxxx 000 00 000
Xxxxxxx Xxxxx 18,260 28 112
Xxxxxxx Xxxxxxxxx 1,009 105 418
Halonen Minttu 292 30 121
Xxxxxxx Xxxxx 1,168 121 483
Xxxxxxxx Xxxxxx 165 17 68
Hellevuo Tia 165 17 68
Henkivakuutusosakeyhtio Veritas 14,486 1,508 5,997
Xxxxxxx Xxxxx 165 17 68
Huhtinen Kaisa 1,460 000 000
Xxxxxxxx Xxxxxx 50,254 40 158
Innoventure Oy 98,502 10,256 40,779
Xxxxxxxxx Xxxx 165 17 68
Xxxxxx Xxxxxx 146 15 60
Xxxxxxxxx Xxxx-Xxxxx 000 00 000
Xxxxxxxxx Xxxx 457 47 189
Xxxxxx Xxxxx 141,570 182 724
Xxxxxxxxxx Xxxxx 146 15 60
Xxxxxxxx Xxxxx 274 28 114
Xxxxxxxxxx Xxxxxx 1,652 172 684
ESCROW SHARES
--------------------------------------------------------
SERIES D PREFERRED SERIES D-1 PREFERRED
SELLERS COMMON STOCK STOCK STOCK
-------------------------------------------- ------------ ------------------ --------------------
Keskinainen Elakevakuutusyhtio Ilmarinen 58,007 6,040 24,015
Keskinainen Elakevakuutusyhtio Tapiola 78,688 8,193 32,576
Keskinainen Henkivakuutusyhtio Suomi 100,901 10,506 41,773
Keskinainen Henkivakuutusyhtio Tapiola 40,960 4,265 16,957
Keskinainen Vakuutusyhtio Tapiola 57,857 6,024 23,953
Xxxxxxxxx Xxxxx 165 17 68
Xxxxxxxx Xxxx 1,460 152 604
Komi Janne 1,652 172 684
Kouki-Xxxxxxx Xxxxx 438 46 181
Xxxxxxx Xxxxx 17,935 13 51
Kytomaa Riikka 277 29 115
Xxxxxx Xxxx 1,168 121 483
Xxxxxxxx Xxx 1,183 123 000
Xxxxxxxx Xxxxx-Xxxxx 146 15 60
Xxxxxxxxxxxx Xxxxx 141,570 182 724
Xxxxxxx Xxxx-Xxxxx 292 30 121
Xxxxx Xxxx 1,663 173 688
Xxxxxxxxx Xxxxx 1,468 153 607
Mertsola Leena 1,460 152 604
Xxxxxx Xxxx 749 78 310
Xxxxx Xxxxx 146 15 60
Ojala Tero 1,487 155 616
Oy Fausto Ab 5,912 616 2,448
Xxxxxx Xxxx 3,305 344 1,368
Xxxxxxxx Xxxxx-Xxxxx 000 00 00
Xxxxxx Xxxxx 340 35 141
Pharmavir Oy 1,747 182 723
Poussu Anssi 274 28 114
Poutiainen Kustaa 6,915 720 2,863
Rautakoski Eila 165 17 68
Xxxxxxx Xxxxx 146 15 60
Sampo Oyj 99,349 10,344 41,130
Santasalo Securities Oy 14,593 1,519 6,042
Xxxxxx Xxxxx 50,254 40 158
Suomen Itsenaisyyden Juhlarahasto 421,624 43,901 174,551
Sodervall Marja 18,260 28 112
Terila Oy 5,047 526 2,089
Xxxxxxxx Xxxxxx 165 17 68
Xxxxxxxx Xxxxx 9,914 1,032 4,104
Toivanen-Xxxxxxxx Xxxxxx 9,914 1,032 4,104
Tunnela Hannele 146 15 60
ESCROW SHARES
--------------------------------------------------------
SERIES D PREFERRED SERIES D-1 PREFERRED
SELLERS COMMON STOCK STOCK STOCK
-------------------------------------------- ------------ ------------------ --------------------
Xxxxxxxx Xxxxxxx 578 60 239
Tatila Mikko 1,537 160 636
Unkila Mikko 457 47 189
Xxxxxxxx Xxxxx 826 86 342
Vahinkovakuutusosakeyhtio Pohjola 25,225 2,626 10,443
Xxxxxxxxx-Xxxxxxxxx Kira 311 32 129
Vakuutusosakeyhtio Henki-Sampo 99,349 10,344 41,130
Vesa Xxxxx-Xxxxx 311 32 129
Xxxxxxx Xxx 292 30 121
Vaananen Kalervo 50,254 40 158
Ylamaki Mervi 165 17 68
Yritysten Henkivakuutus Oy Tapiola 27,305 2,843 11,304
Xxxxx Xxx-Xxxxx 1,537 160 636
TOTAL 3,570,046 321,415 1,277,995
EXHIBIT B
FEE SCHEDULE
[US BANK LOGO]
Corporate Trust
Services
FEE SCHEDULE FOR ESCROW
SCHEDULE OF FEES FOR SERVICES AS
ESCROW AGENT
FOR
QUATRX
Customer Name / Series
INITIAL FEES
01010 Acceptance Fee (excluding charge for legal counsel and/or legal opinion) $3,000.00
The acceptance, fee includes the administrative review of documents, initial set-up
of the account, and other reasonably required services up to and including the
closing. This is a one-time fee, payable at closing.
U.S. Bank Corporate Trust Services reserves the right to refer any or all escrow
documents for legal review before execution. Legal fees (billed on an hourly
basis) and expenses for this service will be billed to, and paid by, the customer.
If appropriate and upon request by the customer, U.S. Bank Corporate Trust
Services will provide advance estimates of these legal fees.
"IMPORTANT INFORMATION
ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT"
To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify and
record information that identifies each person who opens an account.
For a non-individual person such as a business entity, a charity, a Trust or other
legal entity we will ask for documentation to verify its formation and existence
as a legal entity. We may also ask to see financial statements, licenses,
identification and authorization documents from individuals claiming authority to
represent the entity or other relevant documentation."
ADMINISTRATION FEES BILLED ANNUALLY
04460 ESCROW AGENT $1,000.00
Annual administration fee for performance of the routine duties of the escrow
agent associated with the management of the account. Administration fees are
payable in advance.
INCIDENTAL EXPENSES
SUCE000 Indirect OOP Expenses in Advance Charge for miscellaneous expenses such as; fax,
0 messenger service, overnight mail, telephone, stationery and postage.
This charge is a percent of total Administration Fees, charged in advance. 3.0%
TRANSACTION FEES
10880 DISBURSEMENTS/DRAWS $ 20.00
Charge per item disbursed. Includes the wire or check fee.
10100 TRADES $ 100.00
Charge per trade to buy or sell investments, excluding automated sweep
transactions.*
"Automatic sweeping of cash into money market funds is not considered a "trade" for
the purposes of this fee. However, applicable fees are disclosed in the "Automatic
Money Market Investments" authorization letter or the fund prospectus provided
10101 RECEIPTS $ 20.00
Charge per receipt of funds via wire or check.
[US BANK LOGO]
Corporate Trust
Services
DIRECT OUT OF POCKET EXPENSES
Reimbursement of expenses associated with the performance of our duties, including At Cost
but not limited to publications, legal counsel after the initial close, travel
expenses and filing fees.
EXTRAORDINARY SERVICES
Extraordinary services are duties or responsibilities of an unusual nature,
including termination, but not provided for in the governing documents or
otherwise set forth in this schedule. A reasonable charge will be assessed based
on the nature of the service and the responsibility involved. At our option, these
charges will be billed at a flat fee or at our hourly rate then in effect.
Account approval is subject to review and qualification. Fees are subject to
change at our discretion and upon written notice. FEES PAID IN ADVANCE WILL NOT
BE PRORATED. The fees set forth above and any subsequent modifications thereof
are part of your agreement. Finalization of the transaction constitutes
agreement to the above fee schedule, including agreement to any subsequent
changes upon proper written notice. In the event your transaction is not
finalized, any related out-of-pocket expenses will be billed to you directly.
Absent your written instructions to sweep or otherwise invest, all sums in your
account will remain uninvested and no accrued interest or other compensation
will be credited to the account. Payment of fees constitutes acceptance of the
terms and conditions set forth.
DATED: MAY 23, 2005
