ESCROW AGREEMENT
Exhibit 2.4
THIS ESCROW AGREEMENT (this “Agreement”) is entered into as of December 15, 2005, by and among
Corgentech, Inc., a Delaware corporation (“Corgentech”), Mellon Investor Services, as Escrow Agent
(“Escrow Agent”) and Xxxxxx Xxxx, as Stockholder Representative (“Representative”) of the
Participating Stockholders.
RECITALS
A. Corgentech, AlgoRx Pharmaceuticals, Inc., a Delaware corporation (“AlgoRx”) and Element
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Corgentech (“Merger
Sub”), have entered into an Agreement and Plan of Merger dated as of September 23, 2005 (the
"Merger Agreement”) pursuant to which Merger Sub will merge (the “Merger”) with and into AlgoRx,
with AlgoRx to be the surviving corporation of the Merger. Capitalized terms used in this
Agreement and not otherwise defined shall have the meanings given them in the Merger Agreement.
B. Section 1.7 of the Merger Agreement provides that at the Closing Date, Corgentech will
deposit in escrow (such deposit constituting the “Escrow Fund”) that certain number of shares of
Corgentech Common Stock equal to five percent (5%) of the Total Merger Consideration (the “Escrow
Shares”). Each Participating Stockholder’s Pro Rata Share of the Escrow Fund shall be withheld
from the Participating Stockholder.
C. The parties to this Agreement desire to establish the terms and conditions pursuant to
which the Escrow Shares will be deposited, held in, and disbursed from the Escrow Fund.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Escrow Fund. The Escrow Agent agrees to: (a) accept delivery of the Escrow Shares;
and (b) hold such Escrow Shares in escrow as part of the Escrow Fund, all subject to the terms and
conditions of this Agreement and Article VIII of the Merger Agreement (which Article VIII is
attached to this Agreement as Appendix I and incorporated by reference into this Agreement)
(collectively, the “Escrow Provisions”).
2. Deposit of Escrow Shares: Release from Escrow.
(a) Delivery of Escrow Shares. On the Closing Date, the Escrow Shares will be
deposited by Corgentech on behalf of the Participating Stockholders with the Escrow Agent.
(b) Participating Stockholders’ Accounts. The Escrow Agent will maintain for each
Participating Stockholder an accounting record (each Participating Stockholder’s “Account”)
specifying the portion of the Escrow Shares held for the record of each Participating Stockholder
pursuant to Section 1.7 of the Merger Agreement. All Escrow Shares received under Section 2(a) of
this Agreement will be allocated to each Participating Stockholder’s Account in
accordance with such Participating Stockholder’s Pro Rata Share of the Escrow Fund as set
forth on Appendix II.
(c) Dividends; Voting; Rights of Ownership. The Escrow Agent will promptly distribute
to the Participating Stockholders any cash dividends or other distributions of any kind made in
respect of the Escrow Shares. Each Participating Stockholder will have voting rights with respect
to his, her or its Pro Rata Share of the Escrow Shares so long as such Escrow Shares are held in
escrow, and Corgentech will take all reasonable steps necessary to allow the exercise of such
rights. While the Escrow Shares remain in the Escrow Agent’s possession pursuant to this Agreement
and the Merger Agreement, the Participating Stockholders will retain and will be able to exercise
all other incidents of ownership of said Escrow Shares which are not inconsistent with the terms
and conditions of this Agreement and the Merger Agreement. The beneficial owners of the Escrow
Shares shall be wholly responsible for any and all taxes incurred and payable on the Escrow Shares.
(d) Release. The Escrow Shares will be held by the Escrow Agent until required to be
released to the Participating Stockholders pursuant to Section 8.1 of the Merger Agreement, unless
previously released to Corgentech pursuant to Sections 8.2 and 8.3 of the Merger Agreement. Within
ten (10) business days after the applicable release condition is met, Corgentech and the
Representative will deliver to the Escrow Agent a written notice identifying the portion of the
Escrow Shares to be released and cash to be paid in lieu of fractional shares with respect to each
Participating Stockholder. As soon as practicable after receipt of this written notice, the Escrow
Agent will deliver to each Participating Stockholder the Escrow Shares to be released. Escrow
Shares will be in the form of stock certificate(s) issued in the name of such Participating
Stockholder. Escrow Shares will be released and cash in lieu of fraction shares will be paid to
the respective Participating Stockholders in accordance with their respective Accounts. Corgentech
will take such action as may be necessary to cause such certificates to be issued in the names of
the appropriate Participating Stockholders. Cash will be paid in lieu of fractions of Escrow
Shares. Within ten (10) business days after the written notice described above, Corgentech will
deposit with the Escrow Agent sufficient funds to pay such cash amounts for fractional shares.
(e) No Encumbrance. No Escrow Shares or any beneficial interest in the Escrow Shares
may be pledged, sold, assigned or transferred, including by operation of law, by a Participating
Stockholder or be taken or reached by any legal or equitable process in satisfaction of any debt or
other liability of a Participating Stockholder, prior to the delivery to such Participating
Stockholder of such Participating Stockholder’s portion of the Escrow Shares by the Escrow Agent.
(f) Tax Reporting. The parties hereto agree that the Participating Stockholders shall
be treated for all tax purposes as the owners of their Pro Rata Share of the Escrow Fund as
indicated on Appendix II hereto. Within thirty (30) days of the date hereof, the Representative
shall furnish to the Escrow Agent Internal Revenue Service Forms W-9 or Forms W-8BEN for the
Participating Stockholders. The parties agree that the interest and other earnings attributable to
the Escrow Shares shall be treated for U.S. tax purposes as income of the Participating
Stockholders in the respective proportions indicated on Appendix II hereto.
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3. Limitation of the Escrow Agent’s Liability.
(a) The Escrow Agent will incur no liability with respect to any action taken or suffered by
it in reliance upon any notice, direction, instruction, consent, statement or other document
believed by it to be genuine and duly authorized, nor for any other action or inaction, except its
own willful misconduct, bad faith or gross negligence. The Escrow Agent will not be responsible
for the validity or sufficiency of the Escrow Provisions. In all questions arising under the
Escrow Provisions, the Escrow Agent may rely on the advice of counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based on such advice, the Escrow Agent will
not be liable to anyone. The Escrow Agent will not be required to take any action under the Escrow
Provisions involving any expense unless the payment of such expense is made or provided for in a
manner satisfactory to it.
(b) In the event conflicting demands are made or notices are served upon the Escrow Agent with
respect to the Escrow Fund, the Escrow Agent will have the absolute right, at the Escrow Agent’s
election, to do either or both of the following: resign so a successor can be appointed pursuant
to Section 5 of this Agreement or file a suit in interpleader and obtain an order from a court of
competent jurisdiction requiring the parties to interplead and litigate in such court their several
claims and rights among themselves. In the event such interpleader suit is brought, the Escrow
Agent will thereby be fully released and discharged from all further obligations imposed upon it
under the Escrow Provisions, and Corgentech will pay the Escrow Agent (subject to reimbursement
from the Participating Stockholders pursuant to Section 4) all costs, expenses and reasonable
attorney’s fees expended or incurred by the Escrow Agent pursuant to the exercise of the Escrow
Agent’s rights under this Section 3 (such costs, fees and expenses will be treated as extraordinary
fees and expenses for the purposes of Section 4 of this Agreement).
(c) Corgentech and the Participating Stockholders and their successors and assigns agree
jointly and severally to indemnify and hold Escrow Agent harmless against any and all losses,
claims, damages, liabilities, and expenses, including reasonable costs of investigation, counsel
fees, including allocated costs of in-house counsel and disbursements that may be imposed on Escrow
Agent or incurred by Escrow Agent in connection with the performance of its duties under this
Agreement, including but not limited to any litigation arising from this Agreement or involving its
subject matter. Notwithstanding the foregoing, no indemnity need be paid in the event of the
Escrow Agent’s gross negligence, bad faith or willful misconduct.
4. Expenses.
(a) Escrow Agent. All fees and expenses of the Escrow Agent incurred in performing
its responsibilities hereunder will be paid by Corgentech upon receipt of a written invoice by the
Escrow Agent.
(b) Representative. The Representative will not be entitled to receive any
compensation from Corgentech or the Participating Stockholders in connection with this Agreement.
Any expenses incurred by the Representative will be paid by Corgentech.
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5. Successor Escrow Agent. In the event the Escrow Agent becomes unavailable or
unwilling to continue in its capacity as such, the Escrow Agent may resign and be discharged from
its duties or obligations hereunder by giving written notice to the parties to this Agreement,
specifying not less than thirty (30) days’ prior notice of the date when such resignation will take
effect. Corgentech will designate a successor Escrow Agent (with the consent of the
Representative, which will not be unreasonably withheld) prior to the expiration of such 30-day
period by giving written notice to the Escrow Agent and the Representative. Corgentech may appoint
a successor Escrow Agent with the consent of the Representative, which will not be unreasonably
withheld, provided such proposed Escrow Agent is an independent third party that as part of its
ordinary course of business provides similar escrow services to other parties. The Escrow Agent
will promptly transfer the Escrow Shares to such designated successor. In the event no successor
Escrow Agent is appointed as described in this Section 5, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor Escrow Agent.
6. Limitation of Responsibility. The Escrow Agent’s duties are limited to those set
forth in the Escrow Provisions and the Escrow Agent may rely upon the written notices delivered to
the Escrow Agent under the Escrow Provisions.
7. Incorporation by Reference of Article VIII. The parties agree that the terms of
Article VIII of the Merger Agreement shall be deemed to be incorporated by reference in this
Agreement as if such Article had been set forth in its entirety herein. The parties acknowledge
that the administration of the Escrow Fund by the Escrow Agent will require reference to both the
terms of this Agreement as well as the terms of such Article VIII.
8. Notices. Any notices or other communications required or permitted under, or
otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been
duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile
transmission (but only if followed by transmittal by national overnight courier or hand for
delivery on the next business day) or on receipt after dispatch by registered or certified mail,
postage prepaid, addressed, or on the next business day if transmitted by national overnight
courier, in each case as follows:
Corgentech:
|
Corgentech, Inc. | |
| 000 Xxxxxxx Xxxxxxxxx | ||
| Xxxxx Xxx Xxxxxxxxx, XX 00000 | ||
| Attention: Xxxxxxx Xxxxxxxxx | ||
| Fax: 000-000-0000 | ||
With copy to:
|
Cooley Godward LLP | |
| 0000 Xxxxxxx Xxxxxx | ||
| Xxxx Xxxx, XX 00000-0000 | ||
| Attention: Xxxxxxx Xxxxxxxxx | ||
| Fax: 000-000-0000 |
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Escrow Agent:
|
Mellon Investor Services | |
| Attention: | ||
| Fax: | ||
Representative:
|
Xxxxxx Xxxx | |
| c/o Pacific Rim Ventures Co, Ltd. | ||
| Xxxxx Xxxxx 0X | ||
| 0-0-00 | ||
| Xxxxxxxx, Xxxxxxxx-xx Xxxxx | ||
| XXXXX | ||
| phone: 00-0-0000-0000 | ||
| Fax: 00-0-0000-0000 |
9. Dispute Resolution.
(a) Escalation. In the event a dispute arises under this Agreement or the Escrow
Provisions, and prior to taking action as provided in Section 9(b) of this Agreement, Corgentech’s
General Counsel and the Representative (the “Heads”) shall attempt to resolve the dispute through
good faith negotiations over a reasonable period, not to exceed thirty (30) days following one
party’s receipt of a notice of dispute from the other party, unless otherwise agreed by the Heads.
Such thirty (30) day period shall be deemed to commence on the date the dispute was submitted to
the Heads. All negotiations pursuant to this Section 9(a) shall be confidential, and shall be
treated as compromise and settlement negotiations for purposes of applicable rules of evidence.
(b) Arbitration. Any dispute that is not resolved by negotiation and/or escalation
pursuant to Section 9(a) shall, upon the submission of a written request by Corgentech or the
Representative to the other, be resolved exclusively by binding arbitration in San Francisco,
California, before one (1) neutral arbitrator, free of any subject matter conflict and conflict
with a party. Any arbitration proceedings shall be conducted in accordance with the Rules of the
American Arbitration Association, except to the extent that such rules are inconsistent with this
Agreement. The arbitrator shall resolve the dispute in accordance with this Agreement and the
substantive laws (without regard to conflict-of-law and choice-of-law principles thereof, and
excluding the rules of procedure) of the State of Delaware. The decision of the arbitrator shall
be final and shall be fully and irrevocably accepted by the parties. The arbitrator is empowered
to award interim and final injunction and equitable relief but, except as expressly set forth in
this Agreement, the arbitrator is not empowered to award treble, punitive, exemplary or any other
damages in excess of compensatory damages, and each party irrevocably waives any claim to recover
such damages. The final award of the arbitrator shall be the sole and exclusive remedy of the
parties, and shall be enforceable in any court of competent jurisdiction. The parties agree that
they shall share equally the cost of the arbitration filing and hearing fees, and the cost of the
arbitrator. Each party shall bear its own attorneys’ fees and expert fees and all associated costs
and expenses, provided that the arbitrator may award attorneys’ fees to the party deemed by the
arbitrator to be the party substantially prevailing in the proceeding.
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10. General.
(a) Governing Laws. It is the intention of the parties hereto that the Laws of the
State of Delaware (irrespective of its choice of law principles) shall govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement of the rights and
duties of the parties to this Agreement.
(b) Binding upon Successors and Assigns. Subject to, and unless otherwise provided
in, this Agreement, each and all of the covenants, terms, provisions, and agreements contained in
this Agreement shall be binding upon, and inure to the benefit of, the permitted successors,
executors, heirs, representatives, administrators and assigns of the parties to this Agreement.
(c) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original as against any party whose signature appears on such counterpart and
all of which together shall constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts of this Agreement, individually or taken together, shall bear
the signatures of all of the parties reflected in this Agreement as signatories.
(d) Entire Agreement. Except as set forth in the Merger Agreement, this Agreement,
the documents referenced in this Agreement and the exhibits to such documents, constitute the
entire understanding and agreement of the parties to this Agreement with respect to the subject
matter of this Agreement and of such documents and exhibits and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect to such subject matter. The express terms of
this Agreement control and supersede any course of performance or usage of the trade inconsistent
with any of the terms of this Agreement.
(e) Waivers. No waiver by any party to this Agreement of any condition or of any
breach of any provision of this Agreement will be effective unless in writing. No waiver by any
party of any such condition or breach, in any one instance, will be deemed to be a further or
continuing waiver of any such condition or breach or a waiver of any other condition or breach of
any other provision contained in this Agreement.
(f) Amendment. This Agreement may be amended with the written consent of Corgentech,
the Escrow Agent and the Representative, provided, however, that if the Escrow
Agent does not agree to an amendment agreed upon by Corgentech and the Representative, a successor
Escrow Agent may be appointed in accordance with Section 5 of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first
above written and this Agreement will be effective as to all of the Participating Stockholders when
executed by Corgentech, the Escrow Agent and the Representative.
| CORGENTECH INC. | ||||
| By: | /s/ Xxxx X. XxXxxxxxxx | |||
| Name: Xxxx X. XxXxxxxxxx Title: Chief Executive Officer |
||||
| ESCROW AGENT: | ||||
| MELLON INVESTOR SERVICES | ||||
| By: | /s/ Xxxxxx Xxxxxxx | |||
| Name: Xxxxxx Xxxxxxx | ||||
| Title: Event Manager — Corporate Action | ||||
| REPRESENTATIVE: | ||||
| By: | /s/ Xxxxxx Xxxx | |||
| Name: Xxxxxx Xxxx | ||||
APPENDIX VIII
Article VIII of Merger Agreement
APPENDIX II
Participating Stockholders’ Interest in the Escrow Fund
| Escrow | Percentage | |||||||
| Stockholder Name | Shares | Interest | ||||||
InterWest Partners VIII, LP |
116,150 | 17.80 | % | |||||
InterWest Investors VIII, LP |
309 | 0.05 | % | |||||
InterWest Investors Q VIII, LP |
1,107 | 0.17 | % | |||||
XX Xxxxxx Partners (SBIC), LLC |
104,517 | 16.02 | % | |||||
XX Xxxxxx Partners Global Investors, LLC |
6,364 | 0.98 | % | |||||
XX Xxxxxx Partners Global Investors A, LP |
977 | 0.15 | % | |||||
XX Xxxxxx Partners Global Investors (Selldown) , L.P. |
2,154 | 0.33 | % | |||||
XX Xxxxxx Partners Global Investors (Cayman), LP |
3,195 | 0.49 | % | |||||
XX Xxxxxx Partners Global Investors (Cayman) II, LP |
357 | 0.05 | % | |||||
Sofinnova Venture Partners V, LP |
54,720 | 8.39 | % | |||||
Sofinnova Venture Affiliates V, LP |
1,800 | 0.28 | % | |||||
Sofinnova Venture Principals V, LP |
839 | 0.13 | % | |||||
Cooley Godward (CG&H Investments) |
220 | 0.03 | % | |||||
Advent Healthcare and Life Sciences III Limited
Partnership |
18,569 | 2.85 | % | |||||
Advent Healthcare and Life Sciences III-A Limited
Partnership |
34,822 | 5.34 | % | |||||
Advent Partners HLS III Limited Partnership |
658 | 0.10 | % | |||||
Advent Partners II Limited Partnership |
154 | 0.02 | % | |||||
S.R. One, Limited |
42,589 | 6.53 | % | |||||
Pacific Rim Aqua Life Science No. 1 Investment
Partnership |
7,408 | 1.14 | % | |||||
Pacific Rim Aqua Life Science No. 2 Investment
Partnership |
8,747 | 1.34 | % | |||||
Pacific Rim Aqua Life Science No. 3 Investment
Partnership |
5,013 | 0.77 | % | |||||
Pacific Rim Aqua Life Science No. 4 Investment
Partnership |
9,804 | 1.50 | % | |||||
Pacific Rim Aqua Life Science No. 5 Investment
Partnership |
11,615 | 1.78 | % | |||||
Xxxxxx Brothers HealthCare Venture Capital, LP |
7,743 | 1.19 | % | |||||
Xxxxxx Brothers PA, LLC |
14,821 | 2.27 | % | |||||
Xxxxxx Brothers Partnership Account 2002/2001, LP |
6,677 | 1.02 | % | |||||
Xxxxxx Brothers Offshore Partnership Account
2000/2001, LP |
1,731 | 0.27 | % | |||||
Cogene Biotech Ventures, LP |
11,615 | 1.78 | % | |||||
EGS Private Healthcare Partnership II, LP |
14,668 | 2.25 | % | |||||
EGS Private Healthcare Investors II, LP |
2,313 | 0.35 | % | |||||
| Escrow | Percentage | |||||||
| Stockholder Name | Shares | Interest | ||||||
EGS Private Healthcare Canadian Partners, LP |
2,207 | 0.34 | % | |||||
EGS Private Healthcare Presidents Fund, LP |
169 | 0.03 | % | |||||
Xxxx Ventures, LP |
23,230 | 3.56 | % | |||||
Xxxxx Xxxxxxx Healthcare Fund IV, LP |
18,584 | 2.85 | % | |||||
NIF Ventures Co. Ltd |
3,097 | 0.47 | % | |||||
Investment Enterprise Partnership “NIF 21-One(1)” |
12,389 | 1.90 | % | |||||
Axiom Venture Partners III, LP |
13,164 | 2.02 | % | |||||
Index Ventures II (Jersey) LP |
13,033 | 2.00 | % | |||||
Index Ventures II (Delaware) LP |
23,963 | 3.67 | % | |||||
Index Ventures II GmbH & Co. KG |
3,831 | 0.59 | % | |||||
Index Ventures II Parallel Entrepreneur Fund (Jersey -
A) LP |
437 | 0.07 | % | |||||
Index Ventures II Parallel Entrepreneur Fund (Jersey -
B) LP |
685 | 0.10 | % | |||||
Index Venture Management SA on behalf of Index
Employee Invst. Plan |
638 | 0.10 | % | |||||
WHI Morula Fund, LLC (Xxxxxxx Xxxxxx Investors) |
2,052 | 0.31 | % | |||||
HEWM / VLG Investments, LLC (Xxxxxx Xxxxxx) |
387 | 0.06 | % | |||||
Xx. Xxxxxxx X. Xxxxxxx |
193 | 0.03 | % | |||||
Xxxxx X. Xxxxx |
774 | 0.12 | % | |||||
Xxxxx, Xxxxxx X., M.D., Ph.D. |
441 | 0.07 | % | |||||
Xxxxxx Xxxxx |
15076 | 2.31 | % | |||||
Xxxxxxx Xxxx |
11845 | 1.82 | % | |||||
Xxxx Xxxx |
1507 | 0.23 | % | |||||
Davidson & Xxxxxx Xxxxxxxx |
646 | 0.10 | % | |||||
Xxxxx Xxxxx |
2153 | 0.33 | % | |||||
Xxxxxxxx Xxxxxxxx |
2153 | 0.33 | % | |||||
Xxxxx Xxxxxxx |
861 | 0.13 | % | |||||
Xxxxxxx Xxxxxx |
646 | 0.10 | % | |||||
Xxxx Xxxxxxx |
861 | 0.13 | % | |||||
X. Xxxxxx |
574 | 0.09 | % | |||||
Xxxxxxx Xxxxx-Xxxxxxx |
258 | 0.04 | % | |||||
Xxxxxxxx Stones |
430 | 0.07 | % | |||||
Xxxx Xxxxx |
861 | 0.13 | % | |||||
Xxxx Xxxx |
287 | 0.04 | % | |||||
Xxxxx Xxxxxx |
430 | 0.07 | % | |||||
Xxxxx Xxxxxxxxx |
430 | 0.07 | % | |||||
Xxxxxx Xxxxxxx |
287 | 0.04 | % | |||||
Xxxxxxx X’Xxxxx |
287 | 0.04 | % | |||||
Xxxxxx Xxxxxxxx |
287 | 0.04 | % | |||||
Xxxxxxx Xxxxx |
143 | 0.02 | % | |||||
| Escrow | Percentage | |||||||
| Stockholder Name | Shares | Interest | ||||||
Xxxxxxx Xxxxxxx |
143 | 0.02 | % | |||||
Xxxxxx Xxxxxx |
1076 | 0.16 | % | |||||
Xxxxxxxx Xxx |
287 | 0.04 | % | |||||
| 652,458 | 100.00 | % | ||||||
