API ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of May 24, 2001 (this "Agreement"), among
Pharmacia & Upjohn Company, a Delaware corporation ("Buyer"), Miravant Medical
Technologies, a Delaware corporation ("Seller") and Sanwa Bank California, as
the Escrow Agent (the "Escrow Agent").
WHEREAS, Buyer and Seller have entered into an Asset Purchase Agreement,
dated as of May 24, 2001 (the "Asset Purchase Agreement") pursuant to which,
among other things, Buyer shall purchase certain assets of Seller (the
"Purchase");
WHEREAS, contemporaneously with the execution and delivery of the Asset
Purchase Agreement, Buyer has tendered and Seller has accepted one or more
purchase orders providing for the purchase of Seller's current inventory of API
(as defined below), which consists of approximately 1.6 kilograms of API, for
$2,245,509, which is Seller's cost of manufacturing, and the purchase of at
least 3.5 kilograms of API at a cost of $800 per gram; and
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, Buyer
Indemnified Parties (as defined below) are to be indemnified by Seller for
certain events or occurrences specified in the Asset Purchase Agreement,
including breaches of representations, warranties, covenants and agreements
made, entered into or to be performed pursuant to the terms of the Asset
Purchase Agreement.
NOW THEREFORE, in consideration of mutual promises and good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1. Definitions. The following terms, as used herein, have the following
meaning:
"API" means the active ingredient utilized in the formulation of tin
ethyl-etiopurpurin.
"business day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Los Angeles, California, are authorized by law to
close.
"Buyer Indemnified Party" means Buyer and any of its affiliates entitled to
indemnification pursuant to Section 13 of the Asset Purchase Agreement.
"Closing" means the meaning specified in Section 5.2 of the Asset Purchase
Agreement. "Closing Date" means the meaning specified in Section 5.2 of the
Asset Purchase Agreement.
"Escrow Account" means a separate account established by the
Escrow Agent for the purpose of holding the funds constituting the Escrow
Amounts.
"Escrow Amounts" means the Initial Escrow Amount together with
any Subsequent Escrow Amounts.
"Initial Escrow Amount" means $2,245,509, the purchase price
paid by Buyer for Seller's current inventory of API.
"Officer's Certificate" means a certificate signed by any Vice
President of Buyer substantially in the form attached hereto as Exhibit A
stating that a Buyer Indemnified Party has incurred or suffered any damages,
losses, liabilities and expenses (including reasonable attorney fees and
expenses) as a result of certain events or occurrences specified in Article X of
the Asset Purchase Agreement, including a breach of any representation,
warranty, covenant or agreement set forth in the Asset Purchase Agreement, for
which indemnification is available pursuant to the Asset Purchase Agreement in
the aggregate amount set forth in such Officer's Certificate (the "Indemnity
Amount") that is delivered by Buyer to the Escrow Agent and Seller.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Subsequent Escrow Amount" means the purchase price paid by
Buyer upon receipt of API delivered to Buyer from Seller pursuant to one or more
purchase orders tendered by Buyer and accepted by Seller providing for the
purchase of at least 3.2 kilos of API of $800 per gram made prior to December
31, 2001.
"Subsidiary" means, at any time and with respect to any
Person, any other Person the shares of stock or other ownership interests of
which having ordinary voting power to elect a majority of the board of directors
or other matters of such Person are at the time owned, or the management or
policies of which is otherwise at the time controlled, directly or indirectly
through one or more intermediaries (including other Subsidiaries) or both, by
such first Person.
2. Appointment of the Escrow Agent. Buyer and Seller hereby appoint the
Escrow Agent on the terms and conditions set forth herein and the Escrow Agent
hereby accepts such appointment on such terms and conditions.
3. Deposit of Proceeds. Buyer shall deposit the Initial Escrow Amount with
the Escrow Agent upon execution and delivery of this Agreement and shall deposit
the appropriate Subsequent Escrow Amount upon a purchase of API by Buyer from
Seller made by Buyer in one or more purchases prior to December 31, 2001.
4. Escrow Account. The Escrow Agent shall deposit the Escrow Amounts, upon
receipt, into the Escrow Account and shall hold, safeguard and distribute such
Escrow Amounts in accordance with and subject to the terms of this Agreement.
5. Purpose. It is understood and agreed that (i) the Escrow Account and the
Escrow Amounts are for the purpose of satisfying the indemnification obligations
owed to Buyer by Seller and no assets shall be used for any other purpose except
as explicitly set forth in this Agreement and (ii) interest or other earnings on
the assets, if any shall be added to the Escrow Account.
6. Rights to the Escrow Account. In accordance with and subject to the
terms of this Agreement, Buyer Indemnified Parties shall be entitled to recover
from the Escrow Account the Indemnity Amount or the Final Indemnity Amount (as
defined below), as the case may be.
7. Indemnity Payments by the Escrow Agent. (a) Subject to Section 7(b), on
the tenth business day after receipt by the Escrow Agent of an Officer's
Certificate, the Escrow Agent shall deliver to Buyer from the Escrow Account in
a manner specified in writing by Buyer the Indemnity Amount or (ii) to the
extent that the Indemnity Amount exceeds the amount held in the Escrow Account
(the amount of such excess being the "Shortfall Amount"), an amount in cash
equal to the lesser of the cash in the Escrow Account or the Shortfall Amount.
(b) If Seller shall, within ten business days after the Escrow Agent's and
Seller's receipt of the Officer's Certificate, notify the Escrow Agent and Buyer
in writing that Seller objects to the Indemnity Amount, (i) the Indemnity Amount
shall not be delivered to Buyer, (ii) Buyer and Seller shall (A) endeavor in
good faith to agree on the amount the Buyer Indemnified Party shall be entitled
to recover from the Escrow Account or have such amount determined by a court of
competent jurisdiction pursuant to the Asset Purchase Agreement (such amount
being the "Final Indemnity Amount") and (B) either deliver to the Escrow Agent a
certificate signed by any Vice President of Buyer and Seller setting forth the
Final Indemnity Amount (the "Joint Certificate") or deliver to the Escrow Agent
the court order or judgment by a court of competent jurisdiction, certified by
either Seller or Buyer as an original (or as a true and complete copy thereof)
(a "Final Judgment") and (iii) the Escrow Agent shall deliver to Buyer the Final
Indemnity Amount from the Escrow Account in the manner set forth in Section
7(a). If Seller fails so to notify Buyer and the Escrow Agent of Seller's
objection to the Indemnity Amount within such ten business day period, the
Indemnity Amount shall be deemed conclusive and binding on all the parties
hereto, whereupon the Escrow Agent shall make distributions from the Escrow
Account in the manner set forth in Section 7(a).
8. Termination of the Escrow Account. Within five days after January 2,
2002 (the "Termination Date"), Seller shall notify the Escrow Agent in writing
to deliver all assets then remaining, together with all interest accruing
thereon (except a sufficient amount of assets to satisfy any unsatisfied claim
specified in any Officer's Certificate, Joint Certificate or Final Judgment
theretofore delivered to the Escrow Agent) to Seller; provided, however, that if
the Escrow Agent shall receive a certificate signed by any Vice President of
Buyer instructing the Escrow Agent not to distribute such assets until any
unsatisfied indemnification claim hereunder has been resolved, the Escrow Agent
shall hold such assets until such time as it receives a certificate signed by
any Vice President of Buyer and Seller and dispose of such assets in accordance
with the instructions set forth therein.
9. Notices. Any communication, demand or notice to be given hereunder will
be duly given when delivered in writing or by telecopy to a party at its address
as indicated below or such other address as such party may specify in a notice
to each other party hereto. A communication, demand or notice given pursuant to
this Agreement shall be addressed:
If to Buyer:
Pharmacia Corporation
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Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which, in and of itself, shall not
constitute notice) to:
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If to Seller:
Miravant Medical Technologies
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which, in and of itself, shall not
constitute notice) to:
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▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
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If to the Escrow Agent:
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Vice President and Manager
Sanwa Bank California
Wealth Management Division
Santa ▇▇▇▇▇▇▇ Trust Office
Post Office Box 1539
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or, as to any party, to such other address as shall be designated by such party
in a prior written notice to each other party similarly given.
10. The Escrow Agent. (a) This Agreement sets forth the exclusive duties of
the Escrow Agent with respect to any and all matters pertinent hereto, and no
implied duties whatsoever on the part of the Escrow Agent shall be read into
this Agreement. Upon the complete disbursement of the Escrow Account in
accordance with the terms and conditions of this Agreement, the Escrow Agent
shall be fully released from all further duties and obligations hereunder. The
Escrow Agent shall have no duty or obligation hereunder other than to take such
specific actions as are required of it from time to time under the provisions
hereof, and it shall incur no liability hereunder or in connection herewith for
anything whatsoever other than as a result of its own gross negligence or
willful misconduct. The party primarily responsible for causing any and all
losses, claims, liabilities and expenses, including the reasonable fees of
counsel, to the Escrow Agent shall indemnify, hold harmless and defend the
Escrow Agent from and against any and all losses, claims, liabilities and
expenses, including the reasonable fees of counsel, which it may suffer or incur
hereunder, or in connection herewith, except such as shall result solely and
directly from the Escrow Agent's own gross negligence or willful misconduct;
provided, however, that if no party is primarily responsible for causing such
losses, claims, liabilities and expenses, including the reasonable fees of
counsel, Buyer and Seller shall jointly and severally indemnify the Escrow Agent
in accordance with this Section 10. The Escrow Agent shall not be bound in any
way by any agreement or contract among Buyer and Seller (whether or not the
Escrow Agent has knowledge thereof) and the only duties and responsibilities of
the Escrow Agent shall be to hold the assets in accordance with the terms of
this Escrow Agreement. All reasonable fees and expenses of the Escrow Agent
shall be paid by Seller.
(b) Notwithstanding any provision contained herein to the contrary, the
Escrow Agent, including its officers, directors, employees and agents, shall:
(i) have no responsibility to inquire into or determine
the genuineness, authenticity, or sufficiency of any securities,
checks, or other documents or instruments submitted to it in connection
with its duties hereunder;
(ii) be entitled to deem the signatories of any
documents or instruments submitted to it hereunder as being those
purported to be authorized to sign such documents or instruments on
behalf of the parties hereto, and shall be entitled to rely upon the
genuineness of the signature of such signatories without inquiry and
without requiring substantiating evidence of any kind;
(iii) have no responsibility or liability for any
diminution in value of any assets held hereunder which may result from
any investments or reinvestments made in accordance with any provision
which may be contained herein;
(iv) be entitled to compensation for its services
hereunder and for reimbursement of its out-of-pocket expenses
including, but not by way of limitation, the fees and costs of
attorneys or agents which it may find necessary to engage in
performance of its duties hereunder, and the Escrow Agent shall have,
and is hereby granted, a prior lien upon the Escrow Account with
respect to its unpaid fees and non reimbursed expenses, superior to the
interests of any other persons or entities; and
(v) invest the deposited funds or the income generated
thereby in [money market mutual funds] unless Seller and Buyer shall
have jointly instructed the Escrow Agent in writing to invest such
funds in some other specified investment or investments. If Seller and
Buyer jointly instruct the Escrow Agent in writing to invest such funds
in some other specified investment or investments, then the Escrow
Agent shall invest such funds as instructed. Earnings on the Escrow
Account shall be for the account of Seller (Federal Tax I.D. No.
770-222 872). The Escrow Agent shall report such earnings to the
appropriate tax authorities on Form 1099 or such other substitute form
as applicable. The Escrow Agent shall have no liability or
responsibility whatsoever for any loss resulting from any investment
made in compliance with the terms and provisions of this Agreement.
11. Further Assurances. Subject to the terms and conditions of this
Agreement, the parties hereto shall use their reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable to perform their obligations hereunder including, without
limitation, determining the amount a Buyer Indemnified Party shall be entitled
to recover from the Escrow Account and delivering to the Escrow Agent a Joint
Certificate or a Final Judgment upon such determination.
12. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement without
the written consent of each other party hereto. Notwithstanding the foregoing
sentence, Buyer may, at its option, upon notice to Seller at least two days
prior to the Closing Date, designate one or more direct or indirect subsidiaries
or Affiliates of the Buyer (the "Substituted Subsidiaries") to be substituted as
Buyer hereunder in such Buyer's place. Upon such designation, and the execution
and delivery by the Substituted Subsidiaries to Seller of an instrument pursuant
to which the Substituted Subsidiaries shall assume all of such Buyer's
obligations hereunder, the Substituted Subsidiaries shall succeed to all of
Buyer's rights hereunder, and, for the purposes of this Agreement, all
references to the "Buyer" shall, as applied on or after the date of such
designation, apply to the Substituted Subsidiaries; provided, however, that the
original "Buyer" shall be liable for the Substituted Subsidiaries' performance
of the Buyer's obligations hereunder. Except as set forth above, this Agreement
may not be assigned by the parties hereto prior to Closing. Any such purported
assignment, delegation or transfer made in contravention of the foregoing shall
be null and void.
13. Governing Law. The validity, performance and enforcement of this
Agreement shall be governed by the laws of the State of California (regardless
of the laws that might otherwise govern under California principles of conflicts
of laws).
14. Arbitration. (a) Any dispute among any of the parties hereto arising
out of or in connection with this Agreement, including any question regarding
the existence, validity or termination thereof, or any claim of fraud or
intentional misrepresentation, shall be exclusively referred to and finally
resolved by arbitration in accordance with the Commercial Arbitration Rules (the
"Rules") of the American Arbitration Association (the "AAA"), which Rules are
deemed to be incorporated by reference into this Section. Any such arbitration
shall be (i) brought in the City and County of San Francisco, California, (ii)
conducted in English, and (iii) to the maximum extent permitted by applicable
law, final, binding and conclusive upon the parties thereto. If the arbitrators
deem it necessary or appropriate, the parties to any dispute may be permitted
limited discovery based on the United States Federal Rules of Civil Procedure
then in effect, subject to such limitations as the arbitrators may impose
consistent with the objective of expediting the resolution of the dispute;
provided, however, that in any dispute submitted to arbitration hereunder that
relates to whether any person or entity is required to furnish indemnity under
this Agreement discovery rights in accordance with the United States Federal
Rules of Civil Procedure then in effect shall be applicable and available in all
events. The parties agree that service of any notice in the course of any such
arbitration at their respective addresses for notice and in the manner provided
herein shall be valid and sufficient notice for purposes of such arbitration.
Each of the parties agrees to be bound by such arbitration.
(b) In any arbitration pursuant hereto, the award shall be rendered by a
majority of the members of an arbitral tribunal consisting of three arbitrators.
One arbitrator shall be appointed by Buyer and one arbitrator shall be appointed
by Seller each within 30 days after the commencement of the arbitration. The
third arbitrator shall be appointed by mutual agreement of the two arbitrators
selected by Buyer, on the one hand, and Seller, on the other hand, and shall be
experienced in corporate contractual matters relating to transactions of the
nature contemplated by this Agreement. The third arbitrator shall act as Chair
of the arbitral tribunal. In the event of the failure of said two arbitrators to
agree as to the third arbitrator within 20 days after the appointment of the
last of the two arbitrators, the third arbitrator shall be appointed by the AAA
as administrator under the Rules within 15 days thereafter in accordance with
its then existing Rules upon application by any of the parties to the
arbitration. Notwithstanding the foregoing, if either Buyer or Seller fail to
appoint the arbitrators they are respectively required to appoint within the
specified time period, such arbitrator and the third arbitrator shall be
appointed by the AAA in accordance with the Rules. The AAA shall not appoint all
three arbitrators unless both Buyer, on the one hand, and Seller, on the other
hand, fail to appoint an arbitrator within the specified time.
(c) Awards, decisions and rulings of the arbitral tribunal shall be in
writing, and shall set forth the reasons therefor and, to the extent applicable,
the manner in which the amount of any damages or other monetary recovery was
calculated. Any monetary award shall be in U.S. dollars. Judgment upon any
award, decision or ruling may be entered in any court having jurisdiction
thereof.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
16. Resignation or Removal of the Escrow Agent. (a) The Escrow Agent may
resign as such upon 30 days' prior written notice to the other parties hereto.
The Escrow Agent may be removed and replaced upon 30 days' prior written notice
to the Escrow Agent from Buyer and Seller. If the Escrow Agent resigns or is
removed, the duties of the Escrow Agent shall terminate 30 days after receipt of
such notice (or as of such earlier date as may be agreed by the parties hereto)
and the Escrow Agent shall then deliver the balance of the Escrow Account then
in its possession to a successor escrow agent as shall be appointed by the other
parties hereto as evidenced by a written notice filed with the Escrow Agent.
(b) If the other parties hereto are unable to agree upon a successor to the
Escrow Agent or shall have failed to appoint such successor prior to the
expiration of 30 days following receipt of the notice of resignation or removal,
the Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent or for other appropriate relief, and any
such resulting appointment shall be binding upon all of the parties hereto.
Costs incurred by the Escrow Agent in petitioning any court to appoint a
successor pursuant to the foregoing sentence shall be borne by the Escrow
Account. Upon acknowledgment by any successor escrow agent of the receipt of the
balance of the assets in escrow, the Escrow Agent shall be fully released and
relieved of all duties, responsibilities, and obligations under this Agreement.
17. Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings, oral
or written, with respect to such transactions. This Agreement may not be
modified or amended except by a written instrument signed by all parties hereto.
18. Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
20. Specific Performance. Each party acknowledges that one party will have
no adequate remedy at law if the other party fails to perform any of its
obligations under this Agreement. In such event, each party agrees that the
other party shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement and agrees to take no action to oppose
the other party's seeking such remedy.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
PHARMACIA & UPJOHN COMPANY
By: ______________________________
Name:
Title:
MIRAVANT MEDICAL TECHNOLOGIES
By: ______________________________
Name:
Title:
SANWA BANK CALIFORNIA
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
Form of Officer's Certificate
Miravant Medical Technologies
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Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sanwa Bank California
Wealth Management Division
Santa ▇▇▇▇▇▇▇ Trust Office
Post Office Box 1539
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Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Dear Ladies and Gentlemen:
Please be advised that there [has occurred an event] / [exists a
condition or circumstance] entitling [insert name], a Buyer Indemnified Party
(as defined in the Escrow Agreement, dated as of May 24, 2001 among [BUYER], a
Delaware corporation (the "Buyer"), Miravant Medical Technologies, a Delaware
corporation ("Seller") and Sanwa Bank California, as the Escrow Agent (the
"Escrow Agent")) to indemnification pursuant to the Asset Purchase Agreement,
dated as of May 24, 2001, among Buyer and Seller. [Describe the event, condition
or circumstance giving rise to the indemnity claim]. The aggregate amount of
damages, losses, liabilities and expenses (including reasonable attorney fees
and expenses) incurred or suffered by the Buyer Indemnified Party as a result of
such [event]/[condition or circumstance] is $_________.
Sincerely,
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Name:
Title: