EXHIBIT 99.2
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Escrow Agreement") is made and
entered into as of June 30, 2003 by PARAMOUNT CAPITAL, INC., a New York
corporation with an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the
"Placement Agent"), DOR BIOPHARMA INC., a Delaware corporation having a place of
business at 00000 X. Xxxxxxx Xxxxx X, Xxxx Xxxxxx, XX 00000 (the "Company") and
US BANK TRUST NATIONAL ASSOCIATION with a branch at 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000 (the "Escrow Agent"), as escrow agent.
WHEREAS the Placement Agent is acting as agent for the Company
in the placement of units ("Units") (a) a number of shares (the "Share Number")
of Common Stock, determined by dividing $100,000 by the Average Trading Price
(as defined below) and (b) warrants to purchase, at any time prior to the fifth
anniversary of the date of issuance, a number of shares of Common Stock equal to
100% of the Share Number, at an initial exercise price equal to 10% of the
Average Trading Price (as defined below) on the trading day immediately
preceding the Closing Date ("Warrants"). In the event that the Company's Common
Stock trades at 300% of the Average Trading Price for a period of 20 consecutive
trading days, the Company shall have the option to call the Warrants. For the
first 12 months following the closing of the Offering, the Warrants will have
weighted-average anti-dilution protection in connection with the issuance of
securities below the Average Closing Price. The "Average Trading Price" shall
mean the average Closing Price for the lower of five or thirty consecutive
trading days immediately preceding the Closing Date of this Offering. The
"Closing Price" shall be the reported per share closing price of the Common
Stock on the American Stock Exchange ("AMEX") at 4PM New York Time on the
applicable trading day;
WHEREAS, the Company will offer a minimum of 30 Units (the
"Minimum Offering") and a maximum of 80 Units (the "Maximum Offering Amount");
and
WHEREAS, the Company is seeking approval from its stockholders
of (i) an amendment to its Amended and Restated Certificate of Incorporation,
whereby the Company will increase the number of shares of Common Stock it is
authorized to issue from 50,000,000 shares to 100,000,000 shares (the "Charter
Approval") and (ii) the approval of this Offering (such approval, the "Offering
Approval").
NOW, THEREFORE, in consideration of the terms and conditions
contained in the Confidential Private Placement Memorandum dated April 24, 2003,
as amended (the "Memorandum"), the Subscription Agreement and this Escrow
Agreement, it is agreed as follows:
1. DEFINITIONS. Any capitalized terms used herein that are not
otherwise defined herein shall have the meanings ascribed to such terms in the
Memorandum, the definitions from which are hereby incorporated as if set out in
full herein.
2. ESCROW AGENT. The Placement Agent and the Company hereby
appoint the Escrow Agent for the purpose herein set forth, and the Escrow Agent
hereby accepts such designation and appointment.
3. TERMS. (a) The Placement Agent and the Company hereby
authorize the Escrow Agent to accept checks and wire transfers from Purchasers
and reinvest such amounts in the First American Tax Free Obligation Class Y
Fund. Following receipt by the Company of the Charter Approval and the
Stockholder Approval, the Company and the Placement Agent shall notify the
Escrow Agent in writing of their desire to release the funds from escrow (the
"Escrow
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Release Date"). Following receipt of notice from both the Company and the
Placement Agent, the Escrow Agent shall transfer to the Company the amount then
held in the Escrow Account or such other amount as is indicated in writing to
the Escrow Agent (less the 7% commission due to the Placement Agent, which the
Escrow Agent shall transfer directly to the Placement Agent unless otherwise
notified in advance by the Placement Agent), together with any additional
cleared funds, if any, contained in the Escrow Account not to exceed the Maximum
Offering Amount (as defined below), as the case may be, with interest, if any,
without having received any further instructions or document (such initial
transfer shall be referred to herein as the "Initial Transfer").
(b) Expiration Date. If (i) the Escrow Agent has not
received written instructions from both the Company and the Placement Agent with
regard to 3(a) above on or before September 30, 2003, or (ii) the Company shall
not receive the Charter Approval and/or the Stockholder Approval, then the
Company shall return to each investor the funds wired, with interest.
(c) Reporting. The Escrow Agent shall provide the
Placement Agent with a facsimile statement on a daily basis showing the amount
of checks and wire transfers received, as well as any transfers made by the
Escrow Agent. Prior to directing any Purchaser to make a wire transfer to the
Escrow Account, the Placement Agent shall use best efforts to notify the Escrow
Agent by facsimile in advance of such wire transfer. After receiving a wire
transfer into the Escrow Account, the Escrow Agent shall use its best efforts to
notify the Placement Agent by facsimile of its receipt of such wire transfer.
The Placement Agent shall be entitled to inquire by telephone as to the balance
of the Escrow Account from time to time.
4. DUTIES AND RESPONSIBILITIES OF ESCROW AGENT. The Escrow
Agent shall be under no responsibility in respect of any of the items deposited
with it other than to faithfully follow the instructions herein contained. The
duties of the Escrow Agent are only such as are herein specifically provided,
being purely ministerial in nature, and the Escrow Agent shall incur no
liability whatsoever except for gross negligence, willful misconduct or fraud.
5. ESCROW AGENT'S RIGHT OF RESIGNATION. The Escrow Agent may
resign upon 20 days' written notice to the parties in this Escrow Agreement. If
a successor Escrow Agent is not appointed within the 20-day period, the Escrow
Agent may petition a court of competent jurisdiction to name a successor.
6. TERMINATION OF THE ESCROW AGREEMENT. This Escrow Agreement
shall terminate upon the occurrence of each and any of the following events: (i)
the transfer of the Maximum Offering Amount, as the case may be, to the Company
pursuant to the terms herein; (ii) the satisfaction of the terms of resignation
in Paragraph 5 herein; or (iii) on the Expiration Date, whichever occurs first.
7. NOTICES. All notices and communications hereunder shall be
in writing and shall be deemed to be duly given if sent by registered or
certified mail, return receipt requested, to the respective addresses set forth
at the end of this Paragraph 7. Notwithstanding the preceding sentence, any
notice actually delivered to a party, by hand delivery or otherwise, shall be
deemed validly given for purposes of this Escrow Agreement.
If to Escrow Agent:
US Bank Trust National Association New York
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
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If to the Company:
DOR BioPharma Inc.
00000 X. Xxxxxxx
Xxxxx X
Xxxx Xxxxxx, XX 00000
Attn: President
Fax: (000)000-0000
If to Placement Agent:
Paramount Capital, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
8. ESCROW AGENT'S FEE. The Escrow Agent's fee of Five Thousand
Dollars (US $5,000) for the Escrow Agent's services pursuant to this Escrow
Agreement shall be borne by and be the obligation of the Company.
9. COUNTERPARTS. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
when taken together shall constitute one and the same instrument.
10. EXCULPATION. The Escrow Agent may act in reliance upon any
writing or instrument or signature which it, in good faith, believes to be
genuine, may assume the validity and accuracy of any statement or assertion
contained in such a writing or instrument, and may assume that any persons
purporting to give any writing, notice, advice or instruction in connection with
provisions hereof have been duly authorized to do so. The Escrow Agent shall not
be liable in any manner for the sufficiency or correctness as to form, manner
and execution, or the validity of any instrument deposited in this escrow, or as
to the identity, authority or right of any person executing same; and its duties
hereunder shall be limited to the safekeeping of such Agreements, monies,
instruments or other documents received by it as such escrow holder, for the
disposition of the same in accordance with the written instruments received by
it.
In the event that the Escrow Agent shall be uncertain as
to its duties or rights hereunder or shall receive instructions from any of the
parties hereto which, in its opinion, are in conflict with any of the provisions
of this Escrow Agreement, it shall be entitled to refrain from taking any action
other than to (i) accept, hold and invest any cleared funds received as set
forth in paragraphs 3(a) and 3(b) hereof and (ii) keep such cleared funds safe
until it shall be directed otherwise in writing signed by the Company and the
Placement Agent or by an order or judgement of a court of competent
jurisdiction, which order or judgement shall be subject to no further review.
11. NO IMPLIED DUTIES. The Escrow Agent undertakes to perform
only such duties as are expressly set forth herein and no implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Agent.
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12. INDEMNIFICATION. The parties hereto hereby agree to
indemnify the Escrow Agent and hold it harmless from any and all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any
other expense, fees or charges of any character or nature, which it may incur or
with which it may be threatened by reason of its acting as Escrow Agent under
this Escrow Agreement other than claims, liabilities, losses, actions, suits,
proceedings or expenses, charges or fees arising out of breaches of Escrow
Agent's obligations hereunder, gross negligence, wilful misconduct or fraud.
13. INTERPLEADER ACTIONS. If the parties shall be in
disagreement about the interpretation of the Escrow Agreement, or about their
rights and obligations, or the propriety of any action contemplated by the
Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, file an
action in interpleader to resolve the said disagreement. The Escrow Agent shall
be indemnified by the parties, for all costs, including reasonable attorneys'
fees, in connection with the aforesaid interpleader action, and shall be fully
protected in suspending all or a part of its activities under this Escrow
Agreement until a final judgment in the interpleader action is received.
14. WAIVERS AND MODIFICATIONS. This Escrow Agreement may be
changed, extended, superseded or canceled, only by written instrument executed
by each party hereto, and no waiver of compliance with any term or condition
hereof shall be effective unless evidenced by an instrument in writing duly
executed by the proper party.
15. FURTHER ASSURANCES. If at any time the Escrow Agent shall
consider or be advised that any further agreements, assurances or other
documents are reasonably necessary or desirable to carry out the provisions
hereof and the transactions contemplated hereby, the parties hereto shall
execute and deliver any and all such agreements, assurances or documents which
are appropriate to carry out the provisions hereof.
16. SUCCESSORS AND ASSIGNS. The rights under this Escrow
Agreement shall inure to the benefit of, and obligations created hereby shall be
binding upon the parties hereto, and their respective successors and permitted
assigns. No assignment of any rights or delegation of any obligations provided
for herein may be made by any party hereto without the express written consent
of all other parties hereto, except for the provisions hereof respecting
successor Escrow Agents.
17. SECTION HEADINGS. The Section headings contained in this
Escrow Agreement are inserted for purposes of convenience for reference only and
shall not affect the meaning or interpretation hereof.
18. ENTIRE AGREEMENT. This Escrow Agreement and the other
agreements, instruments and documents referred to herein or specifically
contemplated hereby contain the entire agreement among the parties hereto with
respect to the subject matter hereof, and there are no representations,
warranties, understandings or agreements other than those expressly set forth or
referred to herein or therein. Further, this Escrow Agreement supercedes all
prior agreements and understandings among the parties relating to the subject
mater herein.
19. INTERPRETATION. This Escrow Agreement shall be construed
and enforced according to the laws of the State of New York without regard to
principles of conflict of laws.
IN WITNESS WHEREOF, Paramount Capital, Inc., DOR BioPharma Inc. and US
Bank Trust National Association., as Escrow Agent, have hereunto subscribed
their names by their respective officers and partners hereunto duly authorized.
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PARAMOUNT CAPITAL, INC.
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: Chairman
DOR BIOPHARMA INC.
By:
------------------------------
Name: Dr. Xxxxx Xxxxxxx
Title: Chief Executive Officer
US BANK TRUST NATIONAL
ASSOCIATION, NEW YORK
By:
------------------------------
(As Escrow Agent)
Name:
Title:
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AMENDMENT NO. 1 TO THE
ESCROW AGREEMENT
The Escrow Agreement between PARAMOUNT CAPITAL, INC., a New
York corporation with an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the
"Placement Agent"), DOR BIOPHARMA, INC., a Delaware corporation having a place
of business at 00000 Xxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000 (the "Company"),
and US BANK TRUST NATIONAL ASSOCIATION with a branch at 000 Xxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000 as escrow agent (the "Escrow Agent"), dated July
1, 2003 (the "Escrow Agreement"), is hereby amended to provide that the
Subscription Expiration Date shall be extended to July 18, 2003.
IN WITNESS WHEREOF, Paramount Capital, Inc., DOR BioPharma
Inc. and US Bank Trust National Association, as Escrow Agent, have hereunto
subscribed their names by their respective officers and partners hereunto duly
authorized.
PARAMOUNT CAPITAL, INC.
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: Chairman
DOR BIOPHARMA INC.
By:
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
US BANK TRUST NATIONAL
ASSOCIATION, NEW YORK
By:
------------------------------
(As Escrow Agent)
Name:
Title:
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