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EXHIBIT 1.1
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of March __, 1997, by and between
Shaman Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and U.S.
Trust Company of California, N.A., a national banking institution incorporated
under the laws of the United States of America (the "Escrow Agent").
WHEREAS, the Company proposes to sell an aggregate of
2,000,000 shares of its common stock, par value $0.001 per share (the "Shares"),
as described in the Company's registration statement on Form S-3 (Registration
No. 333-23211) (which, together with all amendments or supplements thereto is
referred to herein as the "Registration Statement");
WHEREAS, the Shares are being offered directly by the Company
to various subscribers, principally institutions, whom the Company has contacted
directly, pursuant to registration under the Securities Act of 1933, as amended,
and pursuant to registration or exemptions from registration under state
securities laws;
WHEREAS, the offering of the Shares will terminate on _______,
1997 (the "Final Closing Date") and, in the event the offering of Shares is not
consummated, all payments made by subscribers will be refunded by the Escrow
Agent with interest earned thereon, if any; and
WHEREAS, with respect to all subscription payments received
from subscribers, the Company proposes to establish an escrow account with the
Escrow Agent at the office of its Escrow Administration, U.S. Trust Company of
California, N.A., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000.
NOW, THEREFORE, it is agreed as follows:
1. Establishment of Escrow. The Escrow Agent hereby agrees to
receive and disburse the proceeds from the offering of the Shares and any
interest earned thereon in accordance herewith.
2. Deposit and Investment of Escrowed Property. The Company,
on behalf of the subscribers for the Shares, shall from time to time, but in no
event later than 12:00 noon on the date following the date of receipt by the
Company, cause to be wired to or deposited with, or cause the subscribers for
the Shares to wire or deposit with, the Escrow Agent funds or checks of the
subscribers (the "Escrowed Property") delivered in payment for Shares. Any
checks delivered to the Escrow Agent pursuant to the terms hereof shall be made
payable to the order of the Escrow Agent. Such checks must be (a) delivered to
the Escrow Agent so as to be received not later than two business days before
the Closing; (b) certified; and (c) payable in same or next day funds. The
Escrow Agent upon receipt of such checks shall present such checks for payment
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by the drawee-bank under such checks. Any checks not honored by the drawee-bank
thereunder after the first presentment for payment shall be returned to the
Company, on behalf of such subscriber, in the same manner notices are delivered
pursuant to Section 5. Upon receipt of funds or checks from the Company, the
Escrow Agent shall credit such funds and the amount of such checks to Trust #
75570747 (the "Escrow Account") pursuant to Rule 15c2-4 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Funds in the Escrow Account shall be invested in Federated Investors
U.S. Treasury Cash Reserves. The Escrow Agent shall in no event be liable for
any loss resulting from any change in interest rates applicable to proceeds
invested pursuant to this Section 2. Interest on proceeds invested pursuant to
this Section shall accrue from the date of investment of such proceeds or, in
the case of checks, from the date on which such check amounts are paid by the
drawee bank, until the termination of such investment pursuant to the terms
hereof and shall be paid as set forth in Section 4.
3. List of Subscribers. The Company shall furnish or cause to
be furnished to the Escrow Agent, at the time of each deposit of funds or checks
pursuant to Section 2, a list, containing the name of, the address of, the
number of Shares subscribed for by, the subscription amount delivered to the
Escrow Agent on behalf of, and the social security or taxpayer identification
number, if applicable, of each subscriber whose funds are being deposited, and
to which is attached a completed W-9 form (or, in the case of any subscriber who
is not a United States citizen or resident, a W-8 form) for each listed
subscriber. The Escrow Agent shall notify the Company of any discrepancy between
the subscription amounts set forth on any list delivered pursuant to this
Section 3 and the subscription amounts received by the Escrow Agent. The Escrow
Agent is authorized to revise such list to reflect the actual subscription
amounts received and the release of any subscription amounts pursuant to Section
4; provided, however, that the Escrow Agent must notify the Company in writing
prior to making any such revisions.
4. Withdrawal of Subscription Amounts. (a) If the Escrow Agent
shall receive a notice, substantially in the form of Exhibit A hereto (an
"Offering Termination Notice"), from the Company, the Escrow Agent shall (i)
promptly after receipt of such Offering Termination Notice and the clearance of
all checks received by the Escrow Agent as Escrowed Property, liquidate any
investments that shall have been made pursuant to Section 2 and send to each
subscriber listed on the list held by the Escrow Agent pursuant to Section 3
whose total subscription amount shall not have been released pursuant to
paragraph (b) or (c) of this Section 4, in the manner set forth in paragraph (e)
of this Section 4, a check to the order of such subscriber in the amount of the
remaining subscription amount held by the Escrow Agent as set forth on such list
held by the Escrow Agent, and (ii) promptly after the fourth business day of the
month, or upon receipt, if later, immediately following the month in which the
investments made pursuant to Section 2 were terminated pursuant to this
paragraph, send, in the manner set forth in paragraph (e) of this Section 4, a
check to the order of each such subscriber in the amount of interest and other
income earned and not yet paid with respect to any investment of such
subscriber's funds. The Escrow Agent shall notify the Company in writing of the
distribution of
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such funds to the subscribers.
(b) In the event that (i) the Shares have been subscribed
for and funds in respect thereof shall have been deposited with the Escrow Agent
on or before the Final Closing Date and (ii) no Offering Termination Notice
shall have been delivered to the Escrow Agent. The Company shall deliver to the
Escrow Agent a notice, substantially in the form of Exhibit B hereto (a "Closing
Notice"), designating the date on which Shares are to be sold and delivered to
the subscribers thereof (the "Closing Date"), which date shall not be earlier
than the clearance of any checks received by the Escrow Agent as Escrowed
Property, the proceeds of which are to be distributed on such Closing Date, and
identifying the subscribers and the number of Shares to be sold to each thereon
on such Closing Date, not less than one nor more than three business days prior
to such Closing Date. The Escrow Agent, after receipt of such Closing Notice,
and the Escrowed Property:
(i) on or prior to the Closing Date identified
in such Closing Notice, shall liquidate any investments that shall have been
made pursuant to Section 2 to the extent of the subscription amount to be
distributed pursuant to the immediately succeeding clause (ii);
(ii) on such Closing Date, pay to the Company, in
federal or other immediately available funds and otherwise in the manner and
amounts specified by the Company in such Closing Notice, an amount equal to the
aggregate of the subscription amounts paid by the subscribers identified in such
Closing Notice for the Shares to be sold on such Closing Date as set forth on
the list held by the Escrow Agent pursuant to Section 3; and
(iii) promptly after the fourth business day of
the month immediately following the month in which the investments made pursuant
to Section 2 were terminated pursuant to such Closing Notice, shall send, in the
manner set forth in paragraph (e) of this Section 4, a check to the order of the
Company in the amount of interest and other income earned and not yet paid with
respect to any investment of the Escrowed Property distributed on such Closing
Date.
(c) If at any time and from time to time prior to the
release of any subscriber's total subscription amount pursuant to paragraph (a)
or (b) of this Section 4 from escrow, the Company shall deliver to the Escrow
Agent a notice, substantially in the form of Exhibit C hereto (a "Subscription
Termination Notice"), to the effect that any or all of the subscription of such
subscriber or subscribers have been rejected by the Company (a "Rejected
Subscription"), the Escrow Agent (i) promptly after receipt of such Subscription
Termination Notice and, if such subscriber delivered a check in payment of its
Rejected Subscription, after the clearance of such check, shall liquidate, to
the extent of the sum of such subscriber's Rejected Subscription amount as set
forth in the Subscription Termination Notice, any investments that shall have
been made pursuant to Section 2 and send to such subscriber, in the manner set
forth
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in paragraph (e) of this Section 4, a check to the order of such subscriber in
the amount of such Rejected Subscription amount, and (ii) promptly after the
fourth business day of the month, or upon receipt, if later, immediately
following the month in which the investments made pursuant to Section 2 were
terminated pursuant to this paragraph, shall send to such subscriber, in the
manner set forth in paragraph (e) of this Section 4, a check to the order of
such subscriber in the amount of interest and other income earned and not yet
paid with respect to any investment of such subscriber's Rejected Subscription
amount. At the time of such transfer, the Escrow Agent shall identify in
writing to the Company the amount of the interest earned for the account of
each subscriber and the date such subscription was received.
(d) On a date following the transfer of any interest
earned for the account of each subscriber pursuant to Section 4(a) or (c), but
not later than January 31, 1998, the Escrow Agent shall provide each subscriber
with tax form 1099 setting forth the amount of such interest.
(e) For the purpose of this Section 4, any check that the
Escrow Agent shall be required to send to any subscriber shall be sent to such
subscriber by first class mail, postage prepaid, at such subscriber's address
furnished to the Escrow Agent pursuant to Section 3.
5. Notices. Except for any Offering Termination Notice or any
Closing Notice, which may be delivered by facsimile transmission, any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be (a) delivered by hand or (b) sent by mail, registered or
certified, with proper postage prepaid, and addressed as follows:
If to the Company, to:
Shaman Pharmaceuticals, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
With a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxxxx, Esq.
If to the Escrow Agent, to:
U.S. Trust Company of California, N.A.
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000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Corporate Trust Department
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall be effective when deposited in the
mails, except that notices and communications to the Escrow Agent and notices of
changes of address shall not be effective until received.
6. Concerning the Escrow Agent. To induce the Escrow
Agent to act hereunder, it is further agreed by the Company that:
(a) The Escrow Agent shall not be under any duty
to give the Escrowed Property 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 Escrow Agreement. Uninvested
funds held hereunder shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth
all the duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the
provisions of any agreement of the Company except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except
for its own negligence or willful misconduct, and, except with respect to claims
based upon such negligence or willful misconduct that are successfully asserted
against the Escrow Agent, and the Company shall indemnify and hold harmless the
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
Escrow Agreement other than as a result of the Escrow Agent's negligence or
willful misconduct. Without limiting the foregoing, the 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
gross negligence or willful misconduct) in the investment or reinvestment of the
Escrowed Property, or any loss of interest incident to any such delays.
(d) The 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. The Escrow Agent may act in reliance upon an
instrument or signature believed by it in good faith to be genuine and may
assume, if in good faith, that any person purporting to give notice or receipt
or advice or make any statement or
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execute any document in connection with the provisions hereof has been duly
authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in good faith and in accordance with such
advice.
(f) The Escrow Agent does not have any interest in the
Escrowed Property deposited hereunder but is serving as escrow holder only. Any
payments of income from the Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The Company will
provide the Escrow Agent with appropriate W-9 forms for tax identification
number certification or nonresident alien certifications.
This paragraph (f) and paragraph (c) of this Section 6 shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of
the Escrow Agent.
(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or other
document or instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any
party as to the wisdom of selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor escrow agent) at any
time may be discharged from its duties and obligations hereunder by the delivery
to it of notice of termination signed by the Company or at any time may resign
by giving written notice to such effect to the Company.
Upon any such termination or resignation, the Escrow Agent shall deliver the
Escrowed Property to any successor escrow agent designated by the Company in
writing, or to any court of competent jurisdiction if no such successor escrow
agent is designated, whereupon the Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Escrow
Agreement. The termination or resignation of the Escrow Agent shall take effect
on the earlier of (i) the appointment of a successor (including a court of
competent jurisdiction) or (ii) the day that is 30 days after the date of
delivery (A) to the Escrow Agent of the Company's notice of termination or (B)
to the Company of the Escrow Agent's written notice of resignation. If at that
time the Escrow Agent has not received a designation of a successor escrow
agent, the Escrow Agent's sole responsibility after that time shall be to keep
the Escrowed Property safe until receipt of a designation of successor escrow
agent or a written disposition instruction by the Company or any enforceable
order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents
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of any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
(k) In the event of any disagreement among or between the
Company and the subscribers of the Shares resulting in adverse claims or demands
being made in connection with the Escrowed Property, or in the event that the
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrowed Property
until the Escrow Agent shall have received (i) a final and nonappealable order
of a court of competent jurisdiction directing delivery of the Escrowed Property
or (ii) a written agreement executed by the other parties hereto and consented
to by the subscribers directing delivery of the Escrowed Property, in which
event the Escrow Agent shall disburse the Escrowed Property in accordance with
such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and
nonappealable. The Escrow Agent shall act on such court order and legal opinion
without further question.
(l) As consideration for its agreement to act as Escrow Agent
as herein described, the Company agrees to pay the Escrow Agent fees determined
in accordance with the terms set forth on Exhibit D hereto (made a part of this
Escrow Agreement as if herein set forth). In addition, the Company agrees to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel).
(m) The Company irrevocably (i) submits to the jurisdiction of
any California or federal court sitting in California in any action or
proceeding arising out of or relating to this Escrow Agreement, (ii) agrees that
all claims with respect to such action or proceeding shall be heard and
determined in California or federal court, and (iii) waives, to the fullest
extent possible, the defense of an inconvenient forum. The Company hereby
consents to and grants any such court jurisdiction over the persons of such
party and over the subject matter of any such dispute and agrees that delivery
or mailing of process or other papers in connection with any such action or
proceeding in the manner provided hereinabove, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
(n) Except for this Escrow Agreement, no printed or other
matter in any language (including, without limitation, the Registration
Statement, notices, reports and promotional material) which mentions the Escrow
Agent's name or the rights, powers or duties of the Escrow Agent shall be issued
by the Company or on such party's behalf unless the Escrow Agent shall first
have given its specific written consent thereto. The Escrow Agent hereby
consents to the use of its name and the reference to the escrow arrangement in
the Registration Statement and Prospectus.
7. Miscellaneous.
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(a) This Escrow Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors and
assigns, heirs, administrators and representatives, and the subscribers of the
Shares and shall not be enforceable by or inure to the benefit of any other
third party except as provided in paragraph (i) of Section 6 with respect to the
termination of, or resignation by, the Escrow Agent. No party may assign any of
its rights or obligations under this Escrow Agreement without the prior written
consent of the other party.
(b) This Escrow Agreement shall be construed in accordance
with and governed by the internal law of the State of California (without
reference to its rules as to conflicts of law).
(c) This Escrow Agreement may only be modified by a writing
signed by all of the parties hereto and consented to by the subscribers of the
Shares adversely affected by such modifications. No waiver hereunder shall be
effective unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the payment
pursuant to Section 4 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience only and
shall not affect the construction thereof. Unless otherwise indicated,
references to Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and the
same instrument; provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a single copy of this
Agreement which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
U.S TRUST COMPANY OF SHAMAN PHARMACEUTICALS, INC.
CALIFORNIA, N.A.
By __________________________________ By _________________________________
Name: Name: Xxxx X. Xxxxx
Title: Title: President, Chief Executive
Officer and Chief Financial
Officer
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EXHIBIT A
[Form of Offering Termination Notice]
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: ________________
Dear Mr. ________:
Pursuant to Section 4(a) of the Escrow Agreement dated as of
March __, 1997 (the "Escrow Agreement") among Shaman Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and you, the Company hereby notifies you
of the termination of the offering of the Shares (as that term is defined in the
Escrow Agreement) and directs you to make payments to subscribers as provided
for in Section 4(a) of the Escrow Agreement.
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By: __________________________________
Name:
Title:
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EXHIBIT B
[Form of Closing Notice]
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: ________________
Dear Mr. ________:
Pursuant to Section 4(b) of the Escrow Agreement dated as of
March __, 1997 (the "Escrow Agreement"), among Shaman Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and you, the Company hereby certifies that
it has received subscriptions for the Shares (as that term is defined in the
Escrow Agreement) and the Company will sell and deliver Shares to the
subscribers thereof at a closing to be held on ________________________, 1997
(the "Closing Date").
Please accept these instructions as standing instructions for
the closing to be held on the Closing Date. The parties hereto certify that they
do not wish a call back regarding these instructions.
We hereby request that the aggregate subscription amount of
$_______________ plus interest earned thereon be paid to us via wire transfer in
accordance with the attached wire instructions.
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By: _______________________________
Name:
Title:
B-1
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EXHIBIT C
[Form of Subscription Termination Notice]
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: ________________
Dear Mr. ________:
Pursuant to Section 4(c) of the Escrow Agreement dated as of
March __, 1997 (the "Escrow Agreement") among Shaman Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and you, the Company hereby notifies you
that the following subscription(s) have been rejected:
Amount of Dollar
Subscribed Amount of
Name of Shares Rejected
Subscriber Rejected Subscription
---------- -------- ------------
Very truly yours,
SHAMAN PHARMACEUTICALS, INC.
By: _______________________________
Name:
Title:
C-1
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EXHIBIT D
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
IMPOUND AGENT FOR
Shaman Pharmaceuticals, Inc.
TRUST # ___________
FEE SCHEDULE
$ ______.__ IMPOUND AGENT FEE
$ ______.__ PER CLOSING DATE EXTENSION
$ ______.__ PER RETURNED SUBSCRIPTION FUNDS
CHECK IF IMPOUND NOT COMPLETED
