ESCROW AGREEMENT
EXECUTION VERSION
Dated as of October 2, 2023
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of October 2, 2023 (the "Agreement Date"), by and among:
(1) PENTERRA PHARMACEUTICALS CORP., a corporation organized and existing under the laws of the State of Delaware, with its principal offices and headquarters located at 400 Pharma Drive, Suite 800, Princeton, New Jersey 08540 (hereinafter referred to as "Depositary" or "Licensor");
(2) MERIDIAN BIO THERAPEUTICS LIMITED, a limited company organized and existing under the laws of the Hong Kong Special Administrative Region, Company Registration No. 2847631, with its principal offices and headquarters located at 18/F, Blossom Tower, 88 Queen's Road Central, Hong Kong SAR (hereinafter referred to as "Depositor" or "Licensee"); and
(3) VELTHORN NATIONAL BANK, N.A., a national banking association organized and existing under the laws of the United States, with offices located at 383 Madison Avenue, New York, New York 10179 (hereinafter referred to as "Escrow Agent").
Depositary, Depositor, and Escrow Agent are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Licensor and Licensee have entered into that certain Exclusive License Agreement, dated as of October 2, 2023 (the "License Agreement"), pursuant to which Licensor has granted Licensee an exclusive license to develop, manufacture, and commercialize the proprietary small-molecule compound designated PPC-4187 (Penteracitinib), a selective Janus kinase 1 (JAK1) inhibitor for the treatment of moderate-to-severe atopic dermatitis, in the Asia-Pacific Territory (as such term is defined in the License Agreement);
WHEREAS, the License Agreement provides for an upfront payment of Eighteen Million Dollars ($18,000,000) (the "Escrow Amount") by Licensee to Licensor, which amount is to be deposited into escrow pending the satisfaction or waiver of certain closing conditions set forth in the License Agreement;
WHEREAS, the total aggregate deal value under the License Agreement is up to One Hundred Twenty Million Dollars ($120,000,000), comprising (i) the upfront payment of $18,000,000, (ii) development milestone payments aggregating up to $32,000,000, (iii) regulatory milestone payments aggregating up to $25,000,000, and (iv) commercial milestone payments aggregating up to $45,000,000, in addition to tiered royalties on annual net sales of the licensed product in the Asia-Pacific Territory;
WHEREAS, the Parties desire to appoint Velthorn National Bank, N.A. as Escrow Agent to hold, invest, and disburse the Escrow Amount in accordance with the terms and conditions set forth herein;
WHEREAS, Licensor is represented in connection with the License Agreement and this Agreement by Calderwood & Harkness LLP, with offices at 600 Lexington Avenue, 30th Floor, New York, New York 10022; and
WHEREAS, Licensee is represented in connection with the License Agreement and this Agreement by Lam, Cheung & Firth LLP, with offices at 25/F, Jardine House, 1 Connaught Place, Central, Hong Kong SAR, and with a New York office at 1345 Avenue of the Americas, 22nd Floor, New York, New York 10105.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 "Closing" shall mean the closing of the transactions contemplated by the License Agreement, which is scheduled to occur on October 9, 2023, or such later date as Depositary and Depositor may mutually agree in writing (such scheduled date, the "Scheduled Closing Date"). The Closing shall be deemed to have occurred upon the satisfaction or waiver of all Closing Conditions in accordance with the License Agreement.
Section 1.2 "Closing Conditions" shall mean the conditions precedent to the Closing as set forth in the License Agreement, including, without limitation: (a) the delivery of duly executed officer's certificates by authorized officers of each of Depositary and Depositor (being Anita M. Fremont, Esq., General Counsel of Penterra Pharmaceuticals Corp., and David R. Cheung, Esq., General Counsel of Meridian Bio Therapeutics Limited, respectively, or such other officers as may be designated by the respective Party); (b) the delivery of duly executed secretary's certificates by the corporate secretary of each Party, certifying as to the resolutions of the board of directors (or equivalent governing body) authorizing the transactions contemplated by the License Agreement and this Agreement; (c) the delivery of legal opinions of counsel, including an opinion from Calderwood & Harkness LLP on behalf of Licensor and an opinion from Lam, Cheung & Firth LLP on behalf of Licensee, each in form and substance reasonably satisfactory to the receiving Party; (d) confirmation that no filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), is required in connection with the transactions contemplated by the License Agreement, or, if such filing is required, that any applicable waiting period has expired or been terminated; (e) completion of, or the filing of applications for, intellectual property assignment recordation in the jurisdictions within the Licensed Territory, as contemplated by the License Agreement; and (f) the delivery of good standing certificates (or equivalent certificates of status) from the jurisdictions of organization of each of Depositary and Depositor.
Section 1.3 "Effective Date" shall mean the date on which all Closing Conditions have been satisfied or waived, being the actual closing date of the License Agreement. The Parties acknowledge that, as of the date of this Agreement, the anticipated Effective Date is October 20, 2023.
Section 1.4 "Escrow Account" shall mean the segregated, interest-bearing trust account established and maintained by Escrow Agent at Velthorn National Bank, N.A. for the sole purpose of holding, investing, and disbursing the Escrow Amount and any interest or earnings thereon, in accordance with the terms and conditions of this Agreement.
Section 1.5 "Escrow Amount" shall mean Eighteen Million Dollars ($18,000,000) in immediately available funds, to be deposited by Depositor into the Escrow Account as provided in Article III hereof.
Section 1.6 "Escrow Funding Date" shall mean the date on which Depositor deposits, or causes to be deposited, the Escrow Amount into the Escrow Account, which date shall be no later than October 6, 2023.
Section 1.7 "Joint Written Instructions" shall mean written instructions substantially in the form attached hereto as Exhibit C, signed by authorized representatives of both Depositary and Depositor (as designated in Section 2.2 hereof, or their successors designated in accordance with this Agreement), directing Escrow Agent to release, distribute, or otherwise dispose of all or any portion of the Escrow Funds.
Section 1.8 "License Agreement" shall mean that certain Exclusive License Agreement, dated as of October 2, 2023, by and between Penterra Pharmaceuticals Corp. and Meridian Bio Therapeutics Limited, as may be amended, modified, or supplemented from time to time in accordance with its terms.
Section 1.9 "Escrow Funds" shall mean the Escrow Amount, together with any and all interest, earnings, income, and other amounts accrued or earned thereon while held in the Escrow Account.
Section 1.10 Cross-References. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the License Agreement.
ARTICLE II — APPOINTMENT OF ESCROW AGENT
Section 2.1 Appointment. Depositary and Depositor hereby appoint Velthorn National Bank, N.A. as Escrow Agent to receive, hold, invest, and disburse the Escrow Funds in accordance with and subject to the terms and conditions of this Agreement. Escrow Agent hereby accepts such appointment and agrees to act as Escrow Agent in accordance with the terms and conditions set forth herein. Escrow Agent shall hold the Escrow Funds as a depository only and shall have no beneficial or equitable interest therein.
Section 2.2 Authorized Representatives. The following individuals are hereby designated as the authorized representatives of each Party for purposes of delivering and receiving notices, instructions, certificates, and other communications under this Agreement:
(a) Escrow Agent: Teresa M. D'Angelo, Escrow Officer, Velthorn National Bank, N.A., is designated as the primary contact and authorized representative of Escrow Agent for all purposes under this Agreement. Ms. D'Angelo shall be the sole individual authorized to act on behalf of Escrow Agent in connection with the receipt and execution of instructions relating to the Escrow Funds, unless Escrow Agent provides written notice to the other Parties of an alternative or additional authorized representative.
(b) Depositary: Depositary designates the following individuals as its authorized representatives for purposes of this Agreement: (i) Anita M. Fremont, Esq., General Counsel, Penterra Pharmaceuticals Corp.; and (ii) Garrett T. Holloway, Chief Financial Officer, Penterra Pharmaceuticals Corp. Either such individual, acting alone, shall have authority to execute and deliver Joint Written Instructions, certificates, and other documents on behalf of Depositary. Depositary may change its authorized representatives by written notice to Escrow Agent and Depositor, signed by a then-current authorized representative or by an officer of Depositary of equal or senior rank.
(c) Depositor: Depositor designates the following individuals as its authorized representatives for purposes of this Agreement: (i) David R. Cheung, Esq., General Counsel, Meridian Bio Therapeutics Limited; and (ii) Patrick S.H. Kwok, Chief Financial Officer, Meridian Bio Therapeutics Limited. Either such individual, acting alone, shall have authority to execute and deliver Joint Written Instructions, certificates, and other documents on behalf of Depositor. Depositor may change its authorized representatives by written notice to Escrow Agent and Depositary, signed by a then-current authorized representative or by an officer of Depositor of equal or senior rank.
ARTICLE III — ESTABLISHMENT OF ESCROW ACCOUNT; DEPOSIT
Section 3.1 Establishment of Escrow Account. Within two (2) business days following the execution and delivery of this Agreement by all Parties, Escrow Agent shall establish the Escrow Account as a segregated, interest-bearing trust account at Velthorn National Bank, N.A. The Escrow Account shall be titled "Velthorn National Bank, N.A., as Escrow Agent — Penterra/Meridian PPC-4187 License Escrow" or such similar designation as Escrow Agent may deem appropriate. The Escrow Account shall be separate and apart from the general assets of Escrow Agent and from any other accounts or funds held by Escrow Agent for its own account or for the account of other customers. Escrow Agent shall promptly provide the account number and related details of the Escrow Account to each of Depositary and Depositor.
Section 3.2 Deposit of Escrow Amount. Depositor shall deposit, or cause to be deposited, the Escrow Amount of Eighteen Million Dollars ($18,000,000) into the Escrow Account by wire transfer of immediately available funds no later than October 6, 2023 (the "Escrow Funding Date"). Wire transfer instructions for the Escrow Account shall be provided by Escrow Agent to Depositor in a separate letter to be delivered promptly following the establishment of the Escrow Account pursuant to Section 3.1. Depositor shall notify Escrow Agent by telephone and email promptly upon initiating the wire transfer and shall provide the wire reference number and other identifying information as Escrow Agent may reasonably request.
Section 3.3 Confirmation of Deposit. Escrow Agent shall, within one (1) business day following receipt of the Escrow Amount into the Escrow Account, provide written confirmation of such receipt (including the date and amount received) to each of the following:
(a) Depositary: Penterra Pharmaceuticals Corp., 400 Pharma Drive, Suite 800, Princeton, New Jersey 08540, Attention: Anita M. Fremont, Esq., General Counsel;
(b) Depositor: Meridian Bio Therapeutics Limited, 18/F, Blossom Tower, 88 Queen's Road Central, Hong Kong SAR, Attention: David R. Cheung, Esq., General Counsel;
(c) Depositary's Counsel: Calderwood & Harkness LLP, 600 Lexington Avenue, 30th Floor, New York, New York 10022, Attention: Marcus Delgado; and
(d) Depositor's Counsel: Lam, Cheung & Firth LLP, 1345 Avenue of the Americas, 22nd Floor, New York, New York 10105, Attention: Jonathan M. Firth.
Section 3.4 Title to Escrow Funds. Title to the Escrow Funds shall remain vested in Depositor until disbursement of such Escrow Funds in accordance with the provisions of this Agreement, at which time title to the disbursed portion of the Escrow Funds shall pass to the Party receiving such disbursement. Notwithstanding the foregoing, Depositor shall not have any right to direct the investment, transfer, or withdrawal of the Escrow Funds except in accordance with the express terms of this Agreement. The Escrow Funds shall not be subject to any lien, attachment, garnishment, levy, trustee process, or similar proceeding by any creditor of any Party, except pursuant to a final, non-appealable order of a court of competent jurisdiction.
ARTICLE IV — INVESTMENT OF ESCROW FUNDS
Section 4.1 Permitted Investments. Escrow Agent shall invest and reinvest the Escrow Funds, including all interest and earnings thereon, in one or more of the following permitted investments:
(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (including United States Treasury bills, notes, and bonds), in each case having maturities of ninety (90) days or less from the date of acquisition;
(b) money market funds that invest exclusively in direct obligations of the United States of America, which funds are rated in the highest rating category by at least one nationally recognized statistical rating organization; or
(c) such other investments as may be mutually agreed upon in writing by Depositary and Depositor, with notice to Escrow Agent, provided that such investments are consistent with the investment policies of Escrow Agent and are commercially reasonable.
In the absence of written investment instructions from Depositary and Depositor, Escrow Agent shall invest the Escrow Funds in the investment described in clause (b) above. Escrow Agent shall have no obligation to maximize the return on the Escrow Funds and shall not be responsible for any selection of investments beyond the exercise of reasonable care.
Section 4.2 Interest and Earnings. All interest, dividends, and other earnings on the Escrow Funds shall be retained in the Escrow Account, shall constitute part of the Escrow Funds for all purposes under this Agreement, and shall be disbursed together with the principal in accordance with Article V hereof. Escrow Agent shall provide quarterly statements to Depositary and Depositor reflecting the balance of the Escrow Account, including accrued interest and earnings.
Section 4.3 Tax Reporting. For United States federal income tax purposes, all interest, earnings, and other income accrued on the Escrow Funds shall be reported as income of Depositor (Meridian Bio Therapeutics Limited) until such time as the Escrow Funds are released to Depositary in accordance with Article V hereof. Depositor shall provide Escrow Agent with a completed IRS Form W-8BEN-E (or such other applicable tax form) within ten (10) business days following the date of this Agreement, together with its tax identification number or equivalent foreign identification. Escrow Agent shall issue applicable IRS Forms 1099 (or equivalent) to Depositor with respect to any reportable income earned on the Escrow Funds during each calendar year that the Escrow Account remains open. For reference, the Employer Identification Number (EIN) of Penterra Pharmaceuticals Corp. is 22-3948175, and such information shall be used by Escrow Agent upon the release of Escrow Funds to Depositary for tax reporting purposes as and to the extent required by applicable law.
Section 4.4 Losses on Investment. Escrow Agent shall not be liable for any diminution in the value of the Escrow Funds, or for any losses, damages, or costs arising from or relating to any investment or reinvestment of the Escrow Funds, made in accordance with the terms of this Article IV, including, without limitation, any losses resulting from market fluctuations, changes in interest rates, or the default or insolvency of any issuer of permitted investments. Each of Depositary and Depositor acknowledges that the investments described in this Article IV are not guaranteed by Escrow Agent and that Escrow Agent shall bear no responsibility for the performance of such investments.
ARTICLE V — RELEASE OF ESCROW FUNDS
Section 5.1 Release upon Closing. Upon the Closing (i.e., the Effective Date of the License Agreement), Escrow Agent shall release the entire Escrow Funds, comprising the principal Escrow Amount together with all accrued and unpaid interest and earnings thereon, to Depositary by wire transfer of immediately available funds to the account designated in Exhibit A hereto, upon receipt by Escrow Agent of either:
(a) Joint Written Instructions, substantially in the form attached hereto as Exhibit C, signed by authorized representatives of both Depositary and Depositor, directing Escrow Agent to release the Escrow Funds to Depositary; or
(b) a certificate substantially in the form attached hereto as Exhibit D, signed by an authorized representative of Depositary, certifying that all Closing Conditions have been satisfied or waived in accordance with the License Agreement and directing Escrow Agent to release the Escrow Funds to Depositary, together with either (i) a countersignature or written acknowledgment from an authorized representative of Depositor confirming the satisfaction or waiver of such Closing Conditions, or (ii) evidence that Escrow Agent has provided written notice of such certificate to Depositor and Depositor has failed to deliver a written objection to Escrow Agent within two (2) business days following Depositor's receipt of such notice.
Escrow Agent shall process the wire transfer of the Escrow Funds within one (1) business day following its receipt of valid Joint Written Instructions or a valid certificate (together with any required countersignature or following the expiration of the two (2) business day objection period without objection), as applicable.
Section 5.2 Specific Closing Conditions for Release. The Joint Written Instructions or certificate delivered pursuant to Section 5.1 shall confirm the satisfaction or waiver of the following Closing Conditions, among others:
(i) the execution and delivery of all closing deliverables required under the License Agreement, including, without limitation, duly executed officer's certificates, secretary's certificates, legal opinions from Calderwood & Harkness LLP and Lam, Cheung & Firth LLP, and good standing certificates (or equivalent certificates of status) from the respective jurisdictions of organization of Depositary and Depositor;
(ii) confirmation that no filing under the HSR Act was required in connection with the transactions contemplated by the License Agreement (which confirmation was obtained on October 5, 2023);
(iii) the completion of, or the filing of applications for, intellectual property assignment recordation in the jurisdictions within the Licensed Territory, as contemplated by the License Agreement; and
(iv) confirmation that no material breach of the representations and warranties set forth in the License Agreement has occurred and is continuing as of the Closing Date, and that no event or condition exists that would give rise to a termination right under the License Agreement.
Section 5.3 Release upon Termination. In the event that the License Agreement is terminated prior to the Closing in accordance with its terms, the Escrow Funds shall be released to Depositor by wire transfer of immediately available funds to the account designated in Exhibit B hereto, upon receipt by Escrow Agent of either:
(a) Joint Written Instructions, substantially in the form attached hereto as Exhibit C, signed by authorized representatives of both Depositary and Depositor, directing Escrow Agent to return the Escrow Funds to Depositor; or
(b) a certificate signed by an authorized representative of Depositor certifying that the License Agreement has been terminated in accordance with its terms, together with a copy of the termination notice delivered under the License Agreement, provided that Escrow Agent has provided written notice of such certificate to Depositary and Depositary has failed to deliver a written objection to Escrow Agent within five (5) business days following Depositary's receipt of such notice.
Escrow Agent shall process the wire transfer of the Escrow Funds within one (1) business day following its receipt of valid Joint Written Instructions or a valid certificate (following the expiration of the five (5) business day objection period without objection), as applicable.
Section 5.4 Partial Releases. No partial release or distribution of the Escrow Funds shall be permitted except pursuant to Joint Written Instructions signed by authorized representatives of both Depositary and Depositor. In the event that Joint Written Instructions direct a partial release, Escrow Agent shall release the specified amount and shall continue to hold the remaining Escrow Funds in the Escrow Account in accordance with the terms of this Agreement.
Section 5.5 Delayed Closing. In the event that the Closing does not occur on or before the Scheduled Closing Date of October 9, 2023, the Escrow Funds shall remain in escrow in the Escrow Account and shall continue to accrue interest and earnings in accordance with Article IV until the earlier to occur of:
(a) the actual Closing Date, at which time the Escrow Funds shall be released to Depositary in accordance with Section 5.1;
(b) the termination of the License Agreement, at which time the Escrow Funds shall be returned to Depositor in accordance with Section 5.3; or
(c) the receipt by Escrow Agent of Joint Written Instructions directing the release or other disposition of the Escrow Funds.
Section 5.6 Wire Transfer Instructions for Release to Depositary. Upon the release of Escrow Funds to Depositary pursuant to this Article V, Escrow Agent shall wire transfer the applicable portion of the Escrow Funds (including all accrued and unpaid interest) to Penterra Pharmaceuticals Corp. at the bank account designated in the wire transfer instructions set forth in Exhibit A attached hereto and incorporated herein by reference. Depositary may update its wire transfer instructions by providing written notice to Escrow Agent, signed by an authorized representative of Depositary, no later than two (2) business days prior to the anticipated release date, with a copy to Depositor.
Section 5.7 Wire Transfer Instructions for Release to Depositor. In the event that the Escrow Funds are to be returned to Depositor pursuant to this Article V, Escrow Agent shall wire transfer the applicable portion of the Escrow Funds (including all accrued and unpaid interest) to Meridian Bio Therapeutics Limited at the bank account designated in the wire transfer instructions set forth in Exhibit B attached hereto and incorporated herein by reference. Depositor may update its wire transfer instructions by providing written notice to Escrow Agent, signed by an authorized representative of Depositor, no later than two (2) business days prior to the anticipated release date, with a copy to Depositary.
ARTICLE VI — DISPUTE RESOLUTION REGARDING ESCROW FUNDS
Section 6.1 Conflicting Instructions. In the event that Escrow Agent receives conflicting instructions, claims, or demands from Depositary and Depositor with respect to the Escrow Funds, or if Escrow Agent is uncertain as to its duties or obligations hereunder, or if Escrow Agent receives an objection from either Depositary or Depositor in response to a certificate delivered under Section 5.1(b) or Section 5.3(b), Escrow Agent may, in its sole and absolute discretion:
(a) refrain from taking any action with respect to the Escrow Funds (other than to continue to hold and invest the same in accordance with Article IV) until Escrow Agent receives Joint Written Instructions from Depositary and Depositor or a final, non-appealable order of a court of competent jurisdiction directing the disposition of the Escrow Funds;
(b) deposit or deliver the Escrow Funds (less any amounts owed to Escrow Agent for fees and expenses) with or to the clerk of a court of competent jurisdiction in the State of New York, County of New York, by way of interpleader or any comparable proceeding, in which event Escrow Agent shall have no further obligation or liability with respect to the Escrow Funds (except as provided in Section 6.2); or
(c) take such other action as Escrow Agent, in consultation with its legal counsel, deems appropriate under the circumstances, including, without limitation, requesting written clarification from the Parties or their respective legal counsel.
Section 6.2 Interpleader. Escrow Agent shall be entitled, at its option and at the expense of Depositary and Depositor (as provided in Section 6.3), to file an interpleader action in any federal or state court of competent jurisdiction sitting in the State of New York, County of New York, and, upon the filing and deposit of the Escrow Funds with such court, Escrow Agent shall be fully and finally relieved and discharged of and from all liability and obligations with respect to the Escrow Funds, except for Escrow Agent's obligation to deliver the Escrow Funds to the court and its obligation to account for the Escrow Funds while held in its custody. The Parties hereby consent to the jurisdiction of such courts for purposes of any interpleader proceeding.
Section 6.3 Costs of Dispute. All costs and expenses (including reasonable attorneys' fees and disbursements) incurred by Escrow Agent in connection with any interpleader action, dispute resolution proceeding, or any other claim or controversy relating to the Escrow Funds or Escrow Agent's duties hereunder, shall be borne equally by Depositary and Depositor (fifty percent (50%) by each), or as otherwise allocated by the court of competent jurisdiction adjudicating such matter. The obligations of Depositary and Depositor under this Section 6.3 shall be in addition to, and not in limitation of, their respective indemnification obligations under Article IX hereof.
ARTICLE VII — DUTIES AND OBLIGATIONS OF ESCROW AGENT
Section 7.1 Scope of Duties. Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no additional duties or obligations shall be implied from the terms hereof or from any course of dealing or usage of trade. Escrow Agent shall not be required to take any action that, in its reasonable judgment, would violate any applicable law, regulation, or governmental order, or that would subject Escrow Agent to liability unless Escrow Agent has been provided with indemnification satisfactory to it in its sole discretion. Escrow Agent shall not be deemed to have knowledge of any event or condition (including the satisfaction or failure of any Closing Condition) unless and until it has received written notice thereof from a Party to this Agreement.
Section 7.2 Reliance on Documents. Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, request, certificate, direction, consent, or other document or instrument that Escrow Agent in good faith believes to be genuine and to have been signed, executed, or presented by the proper person or persons. Escrow Agent shall not be required to make any independent investigation as to the due execution, validity, accuracy, or sufficiency of any such document or instrument.
Section 7.3 No Duty to Verify. Escrow Agent shall have no duty or obligation to verify the accuracy, completeness, or sufficiency of any certificate, notice, instruction, or other document delivered to it in connection with this Agreement, or to determine whether any Closing Condition has been satisfied or waived, or to monitor the performance of Depositary or Depositor under the License Agreement or this Agreement. Escrow Agent shall be entitled to assume that all representations made in any certificate or instruction delivered to it are true and correct and that all conditions specified therein have been satisfied in full.
Section 7.4 No Implied Duties. No implied covenants, obligations, fiduciary duties, or responsibilities shall be read into this Agreement against Escrow Agent. Escrow Agent shall not be bound by any agreement between Depositary and Depositor (whether or not Escrow Agent has knowledge thereof), including the License Agreement, except as expressly set forth in this Agreement. Escrow Agent shall not be required to ascertain or inquire as to the performance or observance of any of the terms or conditions of the License Agreement.
Section 7.5 Resignation. Escrow Agent may resign from its duties and obligations under this Agreement at any time upon not less than thirty (30) days' prior written notice to Depositary and Depositor. Such resignation shall become effective on the date specified in such notice (the "Resignation Date"), provided that if Depositary and Depositor have not appointed a successor escrow agent that has accepted such appointment prior to the Resignation Date, Escrow Agent may, in its sole discretion, (a) deposit the Escrow Funds (less any amounts owed to Escrow Agent for fees and expenses) with a court of competent jurisdiction in the State of New York, County of New York, and thereupon be relieved of all further obligations hereunder, or (b) continue to hold the Escrow Funds until a successor escrow agent is appointed or until a court of competent jurisdiction directs the disposition of the Escrow Funds. The resignation of Escrow Agent shall not affect the obligations of Depositary and Depositor under Articles VIII and IX hereof.
Section 7.6 Removal. Depositary and Depositor may jointly remove Escrow Agent at any time upon not less than thirty (30) days' prior written notice to Escrow Agent and may appoint a successor escrow agent. Such removal shall become effective upon the appointment and acceptance of a successor escrow agent that assumes all of the duties and obligations of Escrow Agent hereunder. Upon the effective date of such removal, Escrow Agent shall deliver the Escrow Funds to the successor escrow agent and shall thereupon be relieved of all further obligations under this Agreement (except for any accrued obligations under Articles VIII and IX hereof). In the event that Depositary and Depositor fail to appoint a successor escrow agent within such thirty (30) day period, the provisions of Section 7.5 regarding the deposit of the Escrow Funds with a court of competent jurisdiction shall apply, mutatis mutandis.
ARTICLE VIII — ESCROW AGENT FEES AND EXPENSES
Section 8.1 Escrow Agent Fee. Depositor shall pay to Escrow Agent the following fees in consideration of Escrow Agent's services hereunder:
(a) a one-time flat acceptance fee of Fifteen Thousand Dollars ($15,000), payable upon the execution of this Agreement; and
(b) a quarterly maintenance fee of Two Thousand Five Hundred Dollars ($2,500) per calendar quarter (or any portion thereof) during which the Escrow Account remains open and the Escrow Funds (or any portion thereof) remain on deposit with Escrow Agent, payable in arrears within fifteen (15) days following the end of each calendar quarter.
Section 8.2 Extraordinary Expenses. In addition to the fees set forth in Section 8.1, Depositor shall reimburse Escrow Agent for all reasonable and documented out-of-pocket expenses incurred by Escrow Agent in connection with the performance of its duties under this Agreement, including, without limitation, wire transfer fees, account maintenance charges, postage and courier charges, costs of reproducing and transmitting documents, and legal fees and expenses incurred by Escrow Agent in connection with any interpleader action, dispute, or other legal proceeding relating to the Escrow Funds or Escrow Agent's duties hereunder.
Section 8.3 Payment of Fees. All fees and expenses payable to Escrow Agent under this Article VIII shall be paid by Depositor directly to Escrow Agent and shall not be deducted from the Escrow Funds. In the event that Depositor fails to pay any fee or expense within thirty (30) days after written demand therefor by Escrow Agent, Escrow Agent shall be entitled, upon prior written notice to both Depositary and Depositor, to deduct such unpaid amounts from the Escrow Funds. Any such deduction shall reduce the Escrow Funds available for distribution under Article V on a dollar-for-dollar basis, and Escrow Agent shall provide a written accounting of any such deduction to both Depositary and Depositor promptly thereafter.
ARTICLE IX — INDEMNIFICATION OF ESCROW AGENT
Section 9.1 Indemnification by Depositary and Depositor. Depositary and Depositor, jointly and severally, shall indemnify, defend, and hold harmless Escrow Agent and its directors, officers, employees, agents, and affiliates (collectively, the "Escrow Agent Indemnified Parties") from and against any and all claims, actions, suits, proceedings, losses, liabilities, damages, costs, and expenses (including, without limitation, reasonable attorneys' fees, court costs, and disbursements) of every kind and nature whatsoever arising out of or in connection with the performance by Escrow Agent of its duties and obligations under this Agreement or otherwise relating to the Escrow Funds, except to the extent that such claims, losses, liabilities, damages, costs, or expenses are finally determined by a court of competent jurisdiction in a non-appealable judgment to have been caused by the gross negligence or willful misconduct of Escrow Agent.
Section 9.2 Survival. The indemnification obligations of Depositary and Depositor under this Article IX shall survive the release or disbursement of the Escrow Funds, the termination of this Agreement, and the resignation or removal of Escrow Agent, and shall continue in full force and effect until the expiration of the applicable statute of limitations with respect to any claim that may be asserted against any Escrow Agent Indemnified Party.
ARTICLE X — LIMITATION OF LIABILITY OF ESCROW AGENT
Section 10.1 Standard of Care. Escrow Agent shall not be liable for any act taken, suffered, or omitted to be taken by Escrow Agent in good faith and believed by Escrow Agent to be authorized or within the rights or powers conferred upon it by this Agreement, except for Escrow Agent's own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction in a non-appealable judgment. In no event shall Escrow Agent be liable for acting in accordance with instructions or directions received from the Parties or their authorized representatives that Escrow Agent believed in good faith to be genuine and authorized.
Section 10.2 Force Majeure. Escrow Agent shall not be liable for any failure or delay in the performance of any of its obligations under this Agreement to the extent that such failure or delay is caused by or results from circumstances beyond the reasonable control of Escrow Agent, including, without limitation, acts of God, floods, earthquakes, fires, epidemics, pandemics, war (whether declared or undeclared), terrorism, civil unrest, sabotage, embargoes, governmental actions or restrictions, failure or interruption of communication systems, power failures, equipment malfunctions, or labor disputes. In the event of any such force majeure event, Escrow Agent shall use commercially reasonable efforts to resume performance as promptly as practicable and shall notify the other Parties of the occurrence and expected duration of such event.
Section 10.3 No Consequential Damages. In no event shall Escrow Agent be liable to Depositary, Depositor, or any other person for any indirect, incidental, special, consequential, exemplary, or punitive damages of any kind or nature whatsoever (including, without limitation, lost profits, lost revenue, lost business opportunities, or diminution in value), regardless of the form of action, whether in contract, tort (including negligence), strict liability, or otherwise, and regardless of whether Escrow Agent has been advised of the possibility of such damages.
ARTICLE XI — REPRESENTATIONS AND WARRANTIES
Section 11.1 Representations and Warranties of Depositary. Penterra Pharmaceuticals Corp. hereby represents and warrants to each other Party as follows:
(a) Organization and Good Standing. Depositary is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has full corporate power and authority to own its properties, carry on its business as presently conducted, and execute, deliver, and perform its obligations under this Agreement.
(b) Authorization. The execution, delivery, and performance of this Agreement by Depositary have been duly authorized by all necessary corporate action on the part of Depositary, including approval by its board of directors, and no further corporate action or approval is required.
(c) Binding Obligation. This Agreement has been duly executed and delivered by Depositary and constitutes the legal, valid, and binding obligation of Depositary, enforceable against Depositary in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws affecting creditors' rights generally, and to general principles of equity.
(d) No Conflict. The execution, delivery, and performance of this Agreement by Depositary does not and will not (i) conflict with, result in a breach of, or constitute a default under the certificate of incorporation, bylaws, or other organizational documents of Depositary, (ii) conflict with or violate any applicable law, rule, regulation, judgment, order, or decree of any governmental authority applicable to Depositary, or (iii) require any consent, approval, or authorization of, or filing with, any governmental authority or other person, except as have been obtained or made.
Section 11.2 Representations and Warranties of Depositor. Meridian Bio Therapeutics Limited hereby represents and warrants to each other Party as follows:
(a) Organization. Depositor is a limited company duly organized and validly existing under the laws of the Hong Kong Special Administrative Region, Company Registration No. 2847631, and has full corporate power and authority to own its properties, carry on its business as presently conducted, and execute, deliver, and perform its obligations under this Agreement.
(b) Authorization. The execution, delivery, and performance of this Agreement by Depositor have been duly authorized by all necessary corporate action on the part of Depositor, including approval by its board of directors, and no further corporate action or approval is required.
(c) Binding Obligation. This Agreement has been duly executed and delivered by Depositor and constitutes the legal, valid, and binding obligation of Depositor, enforceable against Depositor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws affecting creditors' rights generally, and to general principles of equity.
(d) Power and Authority. Depositor has full power and authority to deposit the Escrow Amount into the Escrow Account in accordance with the terms of this Agreement.
(e) Lawful Source of Funds. The source of the Escrow Amount to be deposited by Depositor is lawful and does not and will not violate any applicable anti-money laundering laws, rules, or regulations, including, without limitation, the Bank Secrecy Act, the USA PATRIOT Act, and any applicable regulations of the Financial Action Task Force.
Section 11.3 Representations and Warranties of Escrow Agent. Velthorn National Bank, N.A. hereby represents and warrants to each other Party as follows:
(a) Organization. Escrow Agent is a national banking association duly organized and validly existing under the laws of the United States, with full power and authority to conduct its banking business as presently conducted.
(b) Power and Authority. Escrow Agent has full power and authority to execute, deliver, and perform this Agreement and to act as escrow agent hereunder, and the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on the part of Escrow Agent.
(c) FDIC Insurance and Fidelity Bond. Escrow Agent maintains insurance with the Federal Deposit Insurance Corporation ("FDIC") and maintains adequate fidelity bond coverage in accordance with applicable banking regulations and industry standards.
ARTICLE XII — NOTICES
Section 12.1 Form of Notice. All notices, instructions, requests, consents, demands, and other communications required or permitted under this Agreement (collectively, "Notices") shall be in writing and shall be deemed to have been duly given: (i) when delivered personally to the addressee; (ii) one (1) business day after deposit with a nationally recognized overnight courier service (with proof of delivery or tracking receipt), postage or shipping charges prepaid; or (iii) upon confirmed receipt by electronic mail (provided that such email transmission is followed within one (1) business day by delivery of a copy by nationally recognized overnight courier), in each case addressed as follows:
If to Depositary (Penterra Pharmaceuticals Corp.):
Penterra Pharmaceuticals Corp. 400 Pharma Drive, Suite 800 Princeton, New Jersey 08540
Attention: Anita M. Fremont, Esq., General Counsel
Email: a.fremont@penterrapharma.com
With a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022
Attention: Marcus Delgado
Email: mdelgado@calderwoodharkness.com
If to Depositor (Meridian Bio Therapeutics Limited):
Meridian Bio Therapeutics Limited 18/F, Blossom Tower 88 Queen's Road Central Hong Kong SAR
Attention: David R. Cheung, Esq., General Counsel
Email: d.cheung@meridianbio.com.hk
With a copy to (which shall not constitute notice):
Lam, Cheung & Firth LLP 1345 Avenue of the Americas, 22nd Floor New York, New York 10105
Attention: Jonathan M. Firth
Email: jfirth@lcflaw.com
If to Escrow Agent (Velthorn National Bank, N.A.):
Velthorn National Bank, N.A. 383 Madison Avenue New York, New York 10179
Attention: Teresa M. D'Angelo, Escrow Officer
Email: tdangelo@greylockbank.com
Section 12.2 Change of Address. Any Party may change its address, email address, or designated contact person for receipt of Notices by providing written notice of such change to each of the other Parties in accordance with this Article XII. Such change shall be effective upon receipt of such notice by the other Parties.
ARTICLE XIII — GOVERNING LAW; JURISDICTION
Section 13.1 Governing Law. This Agreement, and all claims, controversies, and disputes arising out of or relating to this Agreement (whether in contract, tort, or otherwise), shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
Section 13.2 Jurisdiction and Venue. Any action, suit, or proceeding arising out of or relating to this Agreement (other than disputes subject to arbitration under the License Agreement, as described in Section 13.3 below) may be brought exclusively in the United States District Court for the Southern District of New York, or, if such court lacks subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. Each of the Parties hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of such courts for purposes of any such action, suit, or proceeding, (b) waives any objection it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in any such court, (c) waives any claim that any such action, suit, or proceeding has been brought in an inconvenient forum, and (d) agrees not to commence any such action, suit, or proceeding other than in such courts.
Section 13.3 Relationship to License Agreement Dispute Resolution. The Parties acknowledge and agree that disputes arising under the License Agreement between Depositary and Depositor are subject to binding arbitration administered by the International Court of Arbitration of the International Chamber of Commerce (the "ICC"), seated in New York, New York, before a panel of three (3) arbitrators appointed in accordance with the ICC Rules of Arbitration. Notwithstanding the foregoing, disputes arising solely under this Escrow Agreement — including, without limitation, disputes concerning the duties, rights, obligations, or liability of Escrow Agent, or the interpretation or application of the provisions of this Agreement governing the deposit, holding, investment, or release of the Escrow Funds — shall be resolved exclusively in the courts specified in Section 13.2 and shall not be subject to the arbitration provisions of the License Agreement.
ARTICLE XIV — GENERAL PROVISIONS
Section 14.1 Entire Agreement. This Agreement, together with the License Agreement and the exhibits attached hereto (Exhibits A, B, C, and D), constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, proposals, representations, understandings, and agreements, whether written or oral, relating to the escrow arrangements contemplated hereby. Each Party acknowledges that it has not relied on any representation, warranty, promise, or inducement not expressly set forth in this Agreement.
Section 14.2 Amendments. This Agreement may not be amended, modified, supplemented, or otherwise changed except by a written instrument duly executed by all three Parties. No oral modification or waiver of any provision of this Agreement shall be effective for any purpose.
Section 14.3 Waiver. No waiver of any provision of this Agreement, or of any right or remedy hereunder, shall be effective unless set forth in a written instrument signed by the Party against whom enforcement of such waiver is sought. No failure or delay by any Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
Section 14.4 Assignment. No Party may assign, delegate, or otherwise transfer its rights, interests, or obligations under this Agreement to any other person without the prior written consent of each of the other Parties, and any attempted assignment without such consent shall be void and of no force or effect. Notwithstanding the foregoing, Escrow Agent may assign its obligations and rights under this Agreement to a successor entity resulting from a merger, consolidation, reorganization, or sale of all or substantially all of its assets, provided that such successor entity assumes in writing all of the duties and obligations of Escrow Agent hereunder and is a national banking association or a trust company organized under the laws of the United States or any state thereof.
Section 14.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors, heirs, legal representatives, and permitted assigns.
Section 14.6 Severability. If any provision of this Agreement (or any portion thereof) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement (or the remaining portion thereof), and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision (or portion thereof) had never been contained herein; provided, however, that the Parties shall negotiate in good faith to replace such invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that as nearly as possible achieves the economic, legal, and commercial objectives of the invalid, illegal, or unenforceable provision.
Section 14.7 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile, portable document format (.pdf), or other electronic means shall be as effective as delivery of a manually executed original counterpart, and electronic and PDF signatures shall be deemed original signatures for all purposes.
Section 14.8 Third-Party Beneficiaries. Nothing in this Agreement, whether express or implied, is intended to or shall confer upon any person (other than the Parties and their respective successors and permitted assigns) any legal or equitable right, benefit, interest, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 14.9 Headings. The article and section headings contained in this Agreement are included for convenience of reference only and shall not be given any substantive effect and shall not affect in any way the meaning, construction, or interpretation of this Agreement.
Section 14.10 Relationship to License Agreement. In the event of any conflict or inconsistency between the terms and provisions of this Agreement and the terms and provisions of the License Agreement with respect to the deposit, holding, investment, or release of the Escrow Funds, the terms and provisions of this Agreement shall control and prevail. With respect to all other matters not addressed in this Agreement, the terms and provisions of the License Agreement shall govern the relationship between Depositary and Depositor.
ARTICLE XV — TERMINATION
Section 15.1 Termination. This Agreement shall terminate automatically upon the earliest to occur of:
(a) the release and disbursement of all Escrow Funds (including all accrued interest and earnings) in accordance with Article V hereof, and the payment of all fees and expenses owed to Escrow Agent under Article VIII;
(b) the deposit of the Escrow Funds with a court of competent jurisdiction pursuant to an interpleader action filed by Escrow Agent in accordance with Section 6.2, or the deposit of the Escrow Funds with a court of competent jurisdiction pursuant to Section 7.5; or
(c) the mutual written agreement of all three Parties to terminate this Agreement.
Upon termination of this Agreement, Escrow Agent shall be discharged of all further duties and obligations hereunder, except as provided in Section 15.2.
Section 15.2 Survival. The provisions of Article VIII (Escrow Agent Fees and Expenses), Article IX (Indemnification of Escrow Agent), Article X (Limitation of Liability of Escrow Agent), Article XII (Notices), and Article XIII (Governing Law; Jurisdiction) shall survive the termination of this Agreement and shall continue in full force and effect in accordance with their terms.
[Remainder of page intentionally left blank; signature pages follow.]
IN WITNESS WHEREOF, each of the Parties hereto has caused this Escrow Agreement to be executed and delivered by its duly authorized representative as of the date first written above.
PENTERRA PHARMACEUTICALS CORP. (Depositary / Licensor)
By: ________
Name: Anita M. Fremont, Esq.
Title: General Counsel
Date: October 2, 2023
MERIDIAN BIO THERAPEUTICS LIMITED (Depositor / Licensee)
By: ________
Name: David R. Cheung, Esq.
Title: General Counsel
Date: October 2, 2023
VELTHORN NATIONAL BANK, N.A. (Escrow Agent)
By: ________
Name: Teresa M. D'Angelo
Title: Escrow Officer
Date: October 2, 2023
EXHIBIT A
WIRE TRANSFER INSTRUCTIONS FOR DEPOSITARY (PENTERRA)
The following wire transfer instructions shall be used by Escrow Agent for the release of Escrow Funds to Depositary pursuant to Article V of the Agreement:
Note: These wire transfer instructions are subject to verification by Escrow Agent prior to release of funds. Depositary may update these instructions by written notice to Escrow Agent in accordance with Section 5.6 of the Agreement.
EXHIBIT B
WIRE TRANSFER INSTRUCTIONS FOR DEPOSITOR (MERIDIAN)
The following wire transfer instructions shall be used by Escrow Agent for the return of Escrow Funds to Depositor pursuant to Article V of the Agreement:
Note: These wire transfer instructions are subject to verification by Escrow Agent prior to release of funds. Depositor may update these instructions by written notice to Escrow Agent in accordance with Section 5.7 of the Agreement.
EXHIBIT C
FORM OF JOINT WRITTEN INSTRUCTIONS
[Date]
Velthorn National Bank, N.A. 383 Madison Avenue New York, New York 10179
Attention: Teresa M. D'Angelo, Escrow Officer
Re: Joint Written Instructions — Escrow Agreement dated October 2, 2023, by and among Penterra Pharmaceuticals Corp., Meridian Bio Therapeutics Limited, and Velthorn National Bank, N.A. (the "Escrow Agreement")
Dear Ms. D'Angelo:
Reference is made to the Escrow Agreement dated as of October 2, 2023 (the "Escrow Agreement"), by and among Penterra Pharmaceuticals Corp. ("Depositary"), Meridian Bio Therapeutics Limited ("Depositor"), and Velthorn National Bank, N.A. ("Escrow Agent"). Capitalized terms used but not defined herein shall have the meanings assigned to them in the Escrow Agreement.
Pursuant to Section 5.1 [/ Section 5.3 / Section 5.4] of the Escrow Agreement, the undersigned authorized representatives of Depositary and Depositor hereby jointly instruct Escrow Agent to release the Escrow Funds in the amount of $__ (representing principal of $__ and accrued interest and earnings of $__) to [Depositary / Depositor] by wire transfer of immediately available funds to the account designated in Exhibit [A / B] of the Escrow Agreement.
The undersigned hereby certify that:
[Select and complete as applicable:]
All Closing Conditions set forth in the License Agreement dated October 2, 2023, have been satisfied or waived, and the Closing has occurred as of [date].
The License Agreement dated October 2, 2023 has been terminated in accordance with its terms, effective as of [date], and the Escrow Funds are to be returned to Depositor.
Other: [Specify basis for release instruction].
Please process the wire transfer of the Escrow Funds as instructed above within one (1) business day of receipt of these Joint Written Instructions.