Exhibit 1.4
IPL ACQUIRECO 2000 LTD.
and
BIOVAIL LABORATORIES INC.
and
BIOVAIL CORPORATION
and
INTELLIGENT POLYMERS LIMITED
and
IPL HOLDCO 2000 LTD.
and
THE INVESTOR GROUP
(as herein defined)
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MASTER AGREEMENT
September 28, 2000
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STIKEMAN ELLIOTT
TABLE OF CONTENTS
Page
ARTICLE 1
INTERPRETATION
Section 1.1. Defined Terms........................................... 5
Section 1.2. Gender and Number....................................... 10
Section 1.3. Headings, etc........................................... 10
Section 1.4. Currency................................................ 10
Section 1.5. Certain Phrases, etc.................................... 10
Section 1.6. Accounting Terms........................................ 10
Section 1.7. Incorporation of Schedules.............................. 10
Section 1.8. Effective Date.......................................... 11
ARTICLE 2
SUBSCRIPTIONS
Section 2.1. Subscription for Purchased Voting Common Shares......... 11
Section 2.2. Subscription for Purchased Class A Shares............... 11
ARTICLE 3
TRANSFER OF IPL SPECIAL SHARES
Section 3.1. Transfer................................................ 11
Section 3.2. Authorization........................................... 12
ARTICLE 4
THE HOLDCO OPTION
Section 4.1. Grant of Holdco Option.................................. 12
Section 4.2. Exercise of Holdco Option............................... 12
Section 4.3. Option Closing.......................................... 13
Section 4.4. Indemnification......................................... 13
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of Biovail............... 13
Section 5.2. Representations and Warranties of Holdco and the
Investor Group........................................ 19
Section 5.3. Representations and Warranties of Investors............. 20
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Section 5.4. Consequences of Breach.................................. 20
Section 5.5. Non-Waiver.............................................. 20
ARTICLE 6
CLOSING
Section 6.1. Effect of Closing....................................... 21
Section 6.2. Date, Time and Place of Closing......................... 21
Section 6.3. Closing Procedures...................................... 21
ARTICLE 7
INDEMNIFICATION
Section 7.1. Indemnification in Favour of Holdco..................... 23
Section 7.2. Indemnification Procedures for Third Party Claims....... 24
ARTICLE 8
POST-CLOSING COVENANTS
Section 8.1. IPL Purchase Option..................................... 25
Section 8.2. Other Covenants......................................... 25
Section 8.3. Board Covenant.......................................... 26
Section 8.4. Further Assurances...................................... 26
ARTICLE 9
MISCELLANEOUS
Section 9.1. Notices................................................. 27
Section 9.2. Time of the Essence..................................... 30
Section 9.3. Announcements........................................... 30
Section 9.4. Third Party Beneficiaries............................... 31
Section 9.5. Joint and Several Liability............................. 31
Section 9.6. Expenses................................................ 31
Section 9.7. Amendments.............................................. 31
Section 9.8. Waiver.................................................. 31
Section 9.9. Non-Merger.............................................. 32
Section 9.10. Entire Agreement........................................ 32
Section 9.11. Successors and Assigns.................................. 32
Section 9.12. Severability............................................ 33
Section 9.13. Governing Law........................................... 33
Section 9.14. Counterparts............................................ 33
Section 9.15. Fees. ......................................................33
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SCHEDULES
Schedule 1.1 .........Acquireco Share Terms
Schedule 5.1(13) Authorized and Issued Share Capital of Acquireco and IPL
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MASTER AGREEMENT
Master Agreement dated September 28, 2000 by and among IPL ACQUIRECO 2000
LTD., a corporation incorporated under the laws of the British Virgin Islands
("Acquireco"), BIOVAIL LABORATORIES INC., a corporation incorporated under the
laws of Barbados ("Laboratories"), BIOVAIL CORPORATION, a corporation
incorporated under the laws of the Province of Ontario ("Biovail"), INTELLIGENT
POLYMERS LIMITED, a corporation incorporated under the laws of Bermuda ("IPL"),
IPL HOLDCO 2000 LTD., a corporation incorporated under the laws of the Province
of Ontario ("Holdco") and XXXXXX XXXXXXX, XXXXXX XXXXX, XXXXXX XXXXXX and 495414
ONTARIO LIMITED, a corporation incorporated under the laws of the Province of
Ontario (each an "Investor" and, collectively, the "Investor Group").
WHEREAS:
1. Laboratories is at the date hereof the holder of the IPL Special Shares
which it intends hereby to transfer to Acquireco in consideration of the
issuance by Acquireco to Laboratories of the Purchased Non-Voting Common
Shares.
2. Laboratories has given the Exercise Notice, and the board of directors of
IPL has given the Directors' Notice, each as provided to be given under the
IPL Bye-Laws for the purpose of effecting the exercise of the IPL Purchase
Option.
3. Laboratories is hereby subscribing for the Purchased Class A Shares.
4. Holdco is hereby subscribing for the Purchased Voting Common Shares and
granting to Laboratories the Holdco Option.
5. The parties hereto wish to provide herein for the aforementioned
transactions and to provide for certain other terms and conditions to
govern their relationship in respect of their direct and indirect
shareholdings in Acquireco and IPL, as the case may be.
NOW THEREFORE in consideration of the premises and the covenants and agreements
contained herein and in the Ancillary Agreements (the receipt and sufficiency of
which is hereby acknowledged) the parties hereto, intending to be legally bound,
hereby agree as follows:
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ARTICLE 1
INTERPRETATION
Section 1.1. Defined Terms.
As used in this Agreement (including in the recitals hereto), the following
terms have the following meanings:
"Acquireco Share Conditions" means the share conditions contained in the
Memorandum and Articles of Association of Acquireco attached as Schedule 1.1
hereto.
"Affiliate" has the meaning set forth in the Business Corporations Act
(Ontario).
"Agreement" means this master agreement and all schedules and instruments
in amendment or confirmation of it and the expressions "Article" and "Section"
followed by a number mean and refer to the specified Article or Section of this
Agreement.
"Ancillary Agreements" means all agreements and other instruments delivered
or given pursuant to this Agreement including the Shareholder Agreement.
"Biovail Commitment" means U.S.$141,500,000.
"Biovail Group" has the meaning specified in Section 5.1(6)(a)
"Business Day" means any day of the year, other than a Saturday, Sunday or
any day on which banks are required or authorized to close in Xxxxxxx, Xxxxxxx.
"Change of Control" means in respect of a corporation the occurrence of an
event as a result of which any Person (or any successor to it continuing from
any amalgamation, merger or other reorganization) becomes the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate voting power of all classes of capital of the corporation entitled
to vote generally in the election of directors.
"Claim" means any claim, demand, action, cause of action, damage, loss,
costs, liability or expense, including reasonable professional fees and all
costs incurred in investigating or pursuing any of the foregoing or any
proceeding relating to the foregoing.
"Closing" means the completion of the transactions contemplated in Articles
2 and 3 in this Agreement.
"Closing Date" means September 29, 2000.
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"Closing Time" means 9:00 a.m. (Toronto time) on the Closing Date, which
time shall be coincident with the execution and delivery of this Agreement.
"Development and Licence Agreement" means that certain development and
licence agreement between Biovail, Laboratories and IPL dated September 30,
1997, as amended from time to time.
"Encumbrance" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, lien (statutory or otherwise), title retention agreement
or arrangement, restrictive covenant or other encumbrance of any nature or any
other arrangement or condition which, in substance, secures payment or
performance of an obligation, but excluding Permitted Encumbrances.
"Engagement Letter" means that certain letter agreement dated September 25,
2000 between Xxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxx and
Biovail.
"Equity Commitment" means U.S.$6,500,000.
"Exercise Notice" has the meaning specified in ARTICLE 4.2(2).
"Financial Statements" has the meaning specified in Section 5.1(6)(c).
"GAAP" means, at any time, accounting principles generally accepted in the
United States, at the relevant time applied on a consistent basis.
"Governmental Entity" means (i) any multinational, federal, provincial,
state, municipal, local or other governmental or public department, central
bank, court, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) any subdivision or authority of any of the foregoing, or (iii) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the above.
"Holdco Option" has the meaning specified in ARTICLE 4.1.
"Indemnified Party" has the meaning specified in ARTICLE 4.4.
"Indemnifying Party" has the meaning specified in ARTICLE 7.1.
"Indemnity Letter" means that certain letter dated September 27, 2000, and
delivered by Biovail to Maple Partners Financial Group Inc., Xxxxxx Xxxxxx,
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Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxxx indemnifying such
Persons in respect of certain matters.
"Information" has the meaning specified in Section 5.1(6)(d).
"Investor Group" has the meaning specified in the first paragraph of this
Agreement and further includes any Person who is an assignee of an Investor's
interest in Holdco and any such Person shall, upon such assignment, become a
member of the Investor Group.
"IPL Bye-Laws" means the bye-laws of IPL in force and effect at the date
hereof.
"IPL Common Shares" means the 3,737,500 issued and outstanding common
shares in the capital of IPL.
"IPL Purchase Option" means the option, attaching to the IPL Special Shares
under the IPL Bye-Laws, to acquire all but not less than all of the issued and
outstanding IPL Common Shares at a price of U.S. $39.06 (provided that such
option is exercised prior to October 1, 2000).
"IPL Special Shares" means the 12,000 issued and outstanding special shares
in the capital of IPL.
"Laws" means any and all applicable laws including all statutes, codes,
ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral
or administrative or ministerial or departmental or regulatory judgments,
orders, decisions, rulings or awards, policies, guidelines and general
principles of common and civil law and equity, binding on or affecting the
Person referred to in the context in which the word is used.
"Material Adverse Effect" means any condition, event or development which
is, or in the opinion of Holdco or the Investor Group acting reasonably, could
reasonably be expected to result in or represent, a material adverse effect or
material adverse change (or any condition, event or development involving a
prospective material adverse change) individually or in the aggregate on or in
the business, affairs, operations, assets, capitalization, financial condition,
rights, results of operations, or liabilities (including without limitation any
contingent liabilities that may arise through outstanding, pending or threatened
litigation or otherwise), whether contractual or otherwise, of any of the
Biovail Group or IPL.
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"Material Contracts" means the Development and Licence Agreement and the
services agreement dated September 30, 1997 between IPL, Laboratories, Biovail
and any other contract which is material to the business, affairs, operations,
assets, capitalization or financial condition of IPL.
"Option Closing" has the meaning specified in ARTICLE 4.2(2).
"Option Closing Date" has the meaning specified in ARTICLE 4.2(2).
"Option Exercise Price" means the option exercise price under the Holdco
Option which shall be equivalent to the Common Share Redemption Amount at the
Option Closing Date (on a per share basis), as defined in the Acquireco Share
Conditions.
"Option Shares" has the meaning specified in ARTICLE 4.1(2).
"Parties" means Acquireco, Laboratories, Biovail, IPL, Holdco and the
Investor Group and any other Person who may become a party to this Agreement.
"Permitted Encumbrances" means any one or more of the following:
(a) Encumbrances for taxes, assessments or governmental charges or levies
which are not delinquent;
(b) inchoate or statutory Encumbrances of contractors, subcontractors,
mechanics, brokers, suppliers, materialmen, carriers and others in
respect of the construction, maintenance, repair or operation of the
assets of the relevant Person, provided that such Encumbrances are
related to obligations not due or delinquent, are not registered
against title and in respect of which adequate holdbacks are being
maintained as required by applicable law; and
(c) the right reserved to or vested in any Governmental Entity by any
statutory provision or by the terms of any lease, licence, franchise,
grant or permit of the relevant Person to terminate any such lease,
licence, franchise, grant or permit or to require annual or other
payments as a condition of this continuance.
"Person" means a natural person, partnership, limited liability
partnership, corporation, joint stock company, trust, unincorporated
association, joint venture or other entity or Governmental Entity, and pronouns
have a similarly extended meaning.
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"Prior Transactions" has the meaning specified in Section 5.1(10).
"Products" has the meaning specified in Section 5.1(18)
"Public Statement" has the meaning specified in ARTICLE 9.3.
"Purchased Class A Shares" means the 141,500,000 Class A shares in the
capital of Acquireco subscribed for and to be purchased hereunder by
Laboratories.
"Purchased Non-Voting Common Shares" means the 12,000 non-voting common
shares in the capital of Acquireco to be issued hereunder to Laboratories.
"Purchased Voting Common Shares" means the 6,500,000 voting common shares
in the capital of Acquireco subscribed for and to be purchased hereunder by
Holdco.
"Reports" has the meaning specified in Section 5.1(6)(a).
"Rights" has the meaning specified in Section 5.1(18).
"Securities Authorities" means the securities regulatory authorities in the
provinces of Canada, the United States, Bermuda, the British Virgin Islands,
Barbados, and any other relevant jurisdiction.
"Securities Laws" means the securities laws, regulations, rules, policy
statements, notices, orders and other securities legislation of the provinces of
Canada, the United States and the states thereof, Bermuda, the British Virgin
Islands, Barbados and of any other relevant jurisdiction.
"Shareholder Agreement" means the shareholder agreement entered into
concurrently herewith by, Acquireco, Laboratories, Holdco and Biovail relating
to certain rights and obligations of the parties thereto in respect of their
holdings of shares in Acquireco.
"Subsidiary" has the meaning specified in the Business Corporations Act
(Ontario).
"Taxes" means any federal, provincial, state, municipal or local taxes or
other impositions by any Government Entity, including the following taxes and
impositions: net income, gross income, individual income, capital, value added,
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goods and services, gross receipts, sales, use, ad valorem, business rates,
transfer, profits, business, real property, gains, service, service use,
withholding, payroll, employment, social security, excise, severance,
occupation, premium, property, customs duties or other type of fiscal levy and
all other taxes, fees, assessments, deductions, withholdings or charges of any
kind whatsoever, together with any interest and penalties, additions to tax or
additional amounts imposed or assessed with respect thereto.
"Term Sheet" means that certain term sheet executed by Xxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxx and agreed and accepted by Biovail on
September 25, 2000 in respect of, among other things, the transactions
contemplated herein.
Section 1.2. Gender and Number.
Any reference in this Agreement or any Ancillary Agreement to gender
includes all genders and words importing the singular number only shall include
the plural and vice versa.
Section 1.3. Headings, etc.
The provision of a Table of Contents, the division of this Agreement into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect its interpretation.
Section 1.4. Currency.
All references in this Agreement or any Ancillary Agreement to dollars,
unless otherwise specifically indicated, are expressed in United States
currency.
Section 1.5. Certain Phrases, etc.
In this Agreement and any Ancillary Agreement, the words "including" and
"includes" mean "including (or includes) without limitation".
Section 1.6. Accounting Terms.
All accounting terms not specifically defined in this Agreement shall be
interpreted in accordance with GAAP.
Section 1.7. Incorporation of Schedules.
The schedules attached to this Agreement shall, for all purposes of this
Agreement, form an integral part of it.
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Section 1.8. Effective Date.
Nothwithstanding the date of execution and delivery hereof or the nominal
date hereof, this Agreement (and the Ancillary Agreements) shall take effect as
of September 29, 2000 and all representations herein and in the Ancillary
Agreements shall speak as of such effective date.
ARTICLE 2
subscriptionS
Section 2.1. Subscription for Purchased Voting Common Shares.
(1) Subject to the terms and conditions of this Agreement, Holdco hereby
subscribes for and agrees to take up and pay for, and Acquireco agrees
to issue and deliver to Holdco at the Closing Time, the Purchased
Voting Common Shares.
(2) The Purchased Voting Common Shares will be subscribed for, taken up
and paid for by Holdco and issued by Acquireco for an aggregate
subscription price equal to the amount of the Equity Commitment,
representing a price of U.S.$1.00 per voting common share in the
capital of Acquireco.
Section 2.2. Subscription for Purchased Class A Shares.
(1) Subject to the terms and conditions of this Agreement, Laboratories
hereby subscribes for and agrees to take up and pay for, and Acquireco
agrees to issue and deliver to Laboratories at the Closing Time, the
Purchased Class A Shares.
(2) The Purchased Class A Shares will be subscribed for, taken up and paid
for by Laboratories and issued by Acquireco for an aggregate
subscription price equal to the amount of the Biovail Commitment,
representing a price of U.S.$1.00 per Class A share in the capital of
Acquireco.
ARTICLE 3
TRANSFER OF IPL SPECIAL SHARES
Section 3.1. Transfer.
Subject to the terms and conditions of this Agreement, Laboratories hereby
sells, assigns and transfers to Acquireco, and Acquireco hereby purchases from
Laboratories, effective
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as of the Closing Time, all of Laboratories' right, title and interest in and to
the IPL Special Shares. As consideration for the transfer to it of the IPL
Special Shares, Acquireco hereby agrees to issue to Laboratories the Purchased
Non-Voting Common Shares.
Section 3.2. Authorization.
Laboratories hereby represents that it has given the Exercise Notice, and
that the board of directors of IPL has given the Directors' Notice, each as
provided to be given under the IPL Bye-Laws for the purpose of effecting the
exercise of the IPL Purchase Option. Each of the Parties agrees to take whatever
steps are within its power to authorize and enable Acquireco to complete the
exercise of the IPL Purchase Option and to acquire the IPL Common Shares
pursuant thereto.
ARTICLE 4
THE HOLDCO OPTION
Section 4.1. Grant of Holdco Option.
Subject to the terms and conditions of this Agreement, Holdco hereby grants
to Laboratories an irrevocable option (the "Holdco Option") to purchase from
Holdco all of the voting common shares in the capital of Acquireco (including
the Purchased Voting Common Shares) owned by Holdco on the Option Closing Date
(as defined below) (the "Option Shares") at a purchase price per Option Share
equal to the Option Exercise Price.
Section 4.2. Exercise of Holdco Option.
(1) The Holdco Option may be exercised by Laboratories (in whole but not
in part) at any time prior to October 1, 2002 and failing exercise on
or prior to such date shall expire and be of no further force or
effect.
(2) In the event Laboratories wishes to exercise the Holdco Option,
Laboratories shall send a written notice (an "Exercise Notice") to
Holdco (with a copy to the Investor Group) stating that it is
exercising the Holdco Option, the date (the "Option Closing Date")
which shall be a Business Day not later than the fifth Business Day
and not earlier than the second Business Day after delivery of such
notice, and the place for the closing (the "Option Closing") of such
purchase.
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Section 4.3. Option Closing.
(1) In the event of an Option Closing pursuant to Section 4.2(2), Holdco
shall deliver to Laboratories the certificate evidencing the Option
Shares, and Laboratories shall purchase each such Option Share from
Holdco at the Option Exercise Price.
(2) Payment of the Option Exercise Price shall be made by certified cheque
or bank draft payable to Holdco or as it may direct, or with the
consent of Holdco, wire transfer to an account designated by Holdco in
writing of immediately available funds.
Section 4.4. Indemnification.
In consideration of the grant of the Holdco Option and the undertakings
contained in Sections 4, 5 and 6 of the Shareholder Agreement, Laboratories
shall indemnify and save harmless, on an after-Tax basis, Xxxxxx Xxxxxx, Maple
Partners Financial Group Inc. and its Subsidiaries, Holdco and Acquireco, their
respective directors, officers, shareholders (other than Laboratories),
employees, agents, consultants and lenders (including each of the Investors and
his or its successors and assigns) (each an "Indemnified Party") effective as
and from the Closing Time, from and against all Claims which may be made or
brought against the Indemnified Party, or which it may suffer or incur, directly
or indirectly, as a result of or in connection with the holding or disposition
by Holdco of the shares of Acquireco other than any Claim arising by reason of a
decline in the value of the investment not attributable in whole or in part
directly or indirectly to any breach or misrepresentation by Biovail. The
provisions governing such indemnity shall be those set forth in Article 7
mutatis mutandis.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of Biovail.
Biovail and Laboratories hereby represent and warrant to the Investor Group
and Holdco that:
(1) Incorporation and Registration - Each of Biovail, IPL, Acquireco and
Laboratories is a corporation duly incorporated and validly existing
under the laws of the Province of Ontario, Bermuda, the British Virgin
Islands and Barbados respectively and has all necessary corporate
power, authority and capacity to own its property and assets and to
carry on its business as presently conducted.
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Neither the nature of its business nor the location or character of
the property owned or leased by Biovail, IPL, Acquireco or
Laboratories requires it to be registered, licensed or otherwise
qualified in any jurisdiction other than those in which it is
registered other than in jurisdictions where the failure to be so
registered, licensed or otherwise qualified would not have a Material
Adverse Effect.
(2) Corporate Organization - Each of IPL, Laboratories, Biovail and
Acquireco has all necessary corporate power, authority, capacity and
right to enter into this Agreement and to complete the transactions
contemplated hereby.
(3) Enforceability of Agreement - Upon due execution and delivery of this
Agreement by Holdco, this Agreement shall be a legally valid and
binding agreement enforceable by Holdco against each of Laboratories,
Biovail, Acquireco and IPL in accordance with its terms.
(4) Conflicting Provisions - None of Laboratories, Biovail, Acquireco or
IPL is a party to, bound or affected by or subject to, any agreement,
charter or by-law provision, statute, regulation, judgment, order,
decree or law which would be violated, contravened, breached by, or
under which default would occur as a result of, the execution and
delivery or performance of this Agreement and which default,
violation, contravention or breach would constitute a Material Adverse
Effect or would prevent Laboratories, Biovail, Acquireco or IPL from
consummating the transactions contemplated hereby.
(5) Consents - No consent, waiver, approval, authorization, exemption,
registration, licence or declaration of or by, or filing (other than
pursuant to the Securities Laws) with, or notification to any
governmental agency or other regulatory authority or administrative
agency or commission is required to be made or obtained by
Laboratories, Biovail, Acquireco or IPL in connection with (i) the
execution and delivery by Laboratories, Biovail, Acquireco or IPL of
this Agreement, or (ii) the consummation by Laboratories, Acquireco or
IPL of any of the transactions provided for herein, except for those
which shall have been made or obtained and except for further
amendments to the Schedule 13E-3A to be filed as a result of the
transactions contemplated herein.
(6) Disclosure
(a) Each of Laboratories and Biovail and its Affiliates
(collectively, the "Biovail Group"), Acquireco and IPL has
complied in all material respects with its obligations to file
all forms, reports, statements, sche-
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dules and documents required to be filed with the Securities
Authorities, including the Schedule 13E-3A Amendment No. 3 filed
with the U.S. Securities & Exchange Commission (collectively, the
"Reports"), each of which Reports complied in all material
respects with the applicable requirements of the Securities Laws,
as in effect on the date so filed. None of such Reports
(including any financial statements, schedules, documents or
exhibits included or incorporated by reference therein) or any
other documents filed pursuant to the Securities Laws contains
any misrepresentation (as defined or construed under applicable
Securities Laws).
(b) The prospectus filed on behalf of IPL and Biovail dated October
10, 1997 contained full, true and plain disclosure of all
material facts relating to IPL and Biovail and did not contain
any misrepresentation. All material facts relating to IPL and
Biovail disclosed therein continue to be true and correct in all
material respects except as disclosed in the Reports.
(c) The audited financial statements of IPL (including any related
notes thereto) for the fiscal year ended June 30, 1999 and the
draft unaudited statements of IPL (including any related notes
thereto) for the fiscal year ended June 30, 2000 and the audited
consolidated financial statements of Biovail (including any
related notes thereto) for the fiscal year ended December 31,
1999 (collectively, the "Financial Statements") which have
previously been furnished to the Investor Group, have been
prepared in accordance with generally accepted accounting
principles, applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and
fairly present the financial position of Biovail on a
consolidated basis and of IPL at the dates thereof and the
results of their respective operations and changes in cash flows
for the periods indicated.
(d) Information provided to the Investor Group during the period from
September 22, 2000 to the date hereof concerning the transactions
contemplated herein (the "Information") fairly presents the
prospects of and the projected expenses of IPL for fiscal 2000
and 2001. Biovail has no reason to believe that the prospects and
forecasts provided in the Information will not be achieved,
subject to the risks inherent in the pharmaceutical business
generally.
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(e) Except as and to the extent set forth on or contemplated by the
Financial Statements, neither Biovail nor IPL has any liabilities
or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected
on a balance sheet or in the notes thereto prepared in accordance
with GAAP, except for liabilities or obligations incurred in the
ordinary course of business which would not, individually or in
the aggregate, constitute a Material Adverse Effect.
(7) Absence of Changes - Since June 30, 2000, except as set forth in the
Reports there has not been any material adverse change in the
financial condition, operations or prospects of Biovail or IPL.
(8) Undisclosed Liabilities - None of Biovail Group, Acquireco or IPL has
any outstanding liabilities or obligations, including any liabilities
for Taxes, contingent liabilities that may arise through outstanding,
pending or threatened litigation or otherwise, and whether contractual
or otherwise, or breach of applicable Laws or infringement of
proprietary rights of any third party, other than those liabilities
set out in the Financial Statements, or incurred in the ordinary
course of business which would, individually or in the aggregate,
constitute a Material Adverse Effect.
(9) Change of Control Provisions - A Change of Control of IPL will not
create any liability on the part of IPL nor result in a breach of any
Material Contract or have any other adverse effect on any such
contract entered into by IPL.
(10) Prior Transactions - All liabilities and obligations of IPL or Biovail
or its Affiliates in connection with any material transaction entered
into prior to September 28, 2000 including the public financing
pursuant to the prospectus dated October 10, 1997 (the "Prior
Transactions"), including any contingent liabilities that may arise
through outstanding, pending or threatened litigation or otherwise,
and whether contractual or otherwise, are reflected on the Financial
Statements except liabilities or obligations which would not
constitute, individually or in the aggregate, a Material Adverse
Effect. Biovail has not received any notice from any party to or in
connection with a Prior Transaction expressing an intention to claim
against or otherwise rely upon any indemnification provisions in
favour of such party granted by Biovail or IPL or any of its
Affiliates in connection with a Prior Transaction.
(11) Intellectual Property and Confidentiality - Each of IPL and Biovail
either possesses, or has all necessary rights to use, all patents,
trade names, trade-marks, processes or know-how currently used by it
in connection with its busi-
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ness, and, all material patents and trademarks are subject to
application or duly registered where required. Each of IPL and Biovail
has taken all reasonable steps to preserve the confidentiality of its
trade secrets.
(12) IPL Shares - Laboratories is the sole registered owner of all of the
IPL Special Shares and upon the completion of the transactions
contemplated by this Agreement, Acquireco will be the sole registered
and beneficial owner of all shares of IPL, in both cases free and
clear of all Encumbrances. The IPL Special Shares and, to the
knowledge of Laboratories, IPL Common Shares are not subject to the
terms of any shareholders agreement.
(13) Capitalization - The authorized and issued share capital of Acquireco
and IPL is as set forth in Schedule 5.1(13). All of the shares of each
of Acquireco and IPL have been duly and validly issued and are
outstanding as fully paid and non-assessable shares of Acquireco and
IPL. No options, warrants or other rights to purchase shares or other
securities of Acquireco and IPL and no securities or obligations
convertible into or exchangeable for shares or other securities of
Acquireco and IPL have been authorized or agreed to be issued or are
outstanding except as contemplated herein.
(14) Title to the Assets - Except as identified elsewhere in this
Agreement, IPL is the sole beneficial and (where its interests are
registrable) the sole registered owner of all of its assets and
interests in assets, real and personal, with good and valid title,
free and clear of all Encumbrances other than Permitted Encumbrances
or Encumbrances granted under its banking arrangements with The Bank
of Nova Scotia of which Holdco has been provided a copy. In
particular, without limiting the generality of the foregoing, there
has been no assignment, subletting or granting of any licence (of
occupation or otherwise) of or in respect of any of the IPL's assets
or any granting of any agreement or right capable becoming an
agreement or option for the purchase of any of the assets.
(15) No Joint Venture Interests, etc. - Neither IPL or Acquireco is a
partner, beneficiary, trustee, co-tenant, joint-venturer or otherwise
a participant in any partnership, trust, joint venture, co-tenancy or
similar jointly owned business undertaking and IPL has no investment
interests in any business owned or controlled by any third party.
(16) Absence of Guarantees - Neither IPL or Acquireco has given or agreed
to give, or is a party to or bound by, any guarantee or indemnity in
respect of indebtedness, or other obligations, of any person, or any
other commitment by which it is, or is contingently, responsible for
such indebtedness or other obligations.
-15-
(17) Material Contracts - The Material Contracts are all in full force and
effect unamended and no default exists under such Material Contracts
on the part of IPL or, to the knowledge of Laboratories, on the part
of any other party to such Material Contracts. The Material Contracts
are assignable without consent or penalty.
(18) IPL Contracts - IPL has agreements with Laboratories and others in the
Biovail Group providing IPL with a perpetual, royalty-free, exclusive
and freely transferable licence and right to use the drug products
described in the Information and the products derived therefrom or
variations of such products which provide comparable benefits (the
"Products") which provide IPL with the free and unrestricted right to
fully exploit Products as contemplated in the Information in all parts
of the world other than Canada (the "Rights") and pursuant to which
Laboratories is required to manufacture such Products for IPL at
standard cost. Such right and licence is terminable only for a failure
on the part of IPL to pay for any Products ordered by IPL and
manufactured and delivered by any of the Biovail Group.
(19) Copies of Agreements, etc. - Current and complete copies of the
Material Contracts have been delivered to Holdco and there are no
current or pending negotiations with respect to the renewal,
repudiation or amendment of the Material Contracts.
(20) Litigation - Except as disclosed in the Reports, there is no suit,
action, litigation, investigation, claim, complaint, grievance or
proceeding, including appeals and applications for review, in
progress, or, to the knowledge of Laboratories, pending or threatened
against or relating to IPL, Acquireco or any of the Biovail Group
before any court, Governmental Entity, commission, board, bureau,
agency or arbitration panel which, if determined adversely to IPL,
Acquireco or any of the Biovail Group, would, (a) materially and
adversely affect the properties, business, future prospects or
financial condition of IPL, Acquireco or any of the Biovail Group, (b)
enjoin, restrict or prohibit the transactions contemplated by this
Agreement, or (c) prevent any of the Biovail Group from fulfilling all
of its obligations set out in this Agreement or arising from this
Agreement, and Biovail has no knowledge of any existing ground on
which any such action, suit, litigation or proceeding might be
commenced with any reasonable likelihood of success. Except as
disclosed in public filings of Biovail or IPL with the U.S. Securities
& Exchange Commission, there is not presently outstanding against IPL,
Acquireco or any of the Biovail Group any judgment, decree,
injunction, rule or order of any court, Governmental Entity,
commission, board, bureau, agency or arbitrator.
-16-
(21) Constating Documents and By-laws - The constating documents and
by-laws of IPL and Acquireco, including any and all amendments, have
been delivered or made available to Holdco and such constating
documents and by-laws as so amended are in full force and effect.
(22) Corporate Records and Minute Books - The minute books of IPL and
Acquireco include complete and accurate minutes of all meetings of the
directors or shareholders of IPL and Acquireco, as applicable, held to
date or resolutions passed by the directors or shareholders on
consent, since the date of its incorporation. The share certificate
book, register of shareholders, register of transfers and register of
directors of IPL and Acquireco, are complete and accurate.
(23) Full Disclosure - Laboratories has made available to Holdco all
information relating to IPL and the Biovail Group which would be
material to an investor in IPL. All information, which has been
provided to Holdco is true and correct in all material respects and no
material fact or facts have been omitted therefrom which would make
such information misleading. Without limiting the generality of the
foregoing, Laboratories has not failed to disclose to the Purchaser,
any fact or information which would be material to an investor in IPL.
Section 5.2. Representations and Warranties of Holdco and the Investor Group.
Holdco and the Investors jointly and severally represent and warrant as
follows to Biovail and acknowledge and confirm that Biovail is relying on such
representations and warranties in connection with the entering into of this
Agreement:
(a) Due Incorporation and Corporate Power. Holdco is a corporation duly
incorporated and validly existing under the laws of Ontario and has
all necessary corporate power, authority and capacity to enter into
and perform its obligations under this Agreement and each of the
Ancillary Agreements to which it is a party;
(b) Validity of Agreement. The execution, delivery and performance by
Holdco of this Agreement and each of the Ancillary Agreements to which
it is a party:
(i) have been duly authorized by all necessary corporate action on
the part of Holdco; and
(ii) do not (or would not with the giving of notice, the lapse of time
or the happening of any other event or condition) result in a
breach or a violation of, or conflict with, any of the terms or
provisions of its constating
-17-
documents or by-laws or any contracts or instruments to which it
is a party or pursuant to which any of its assets or property may
be affected.
(c) Execution and Binding Obligation. This Agreement and each of the
Ancillary Agreements to which Holdco is a party have been duly
executed and delivered by Holdco and constitute legal, valid and
binding obligations of Holdco, enforceable against it in accordance
with their respective terms.
Section 5.3. Representations and Warranties of Investors.
Each of the Investors represents and warrants as follows and acknowledges
that Biovail is relying on such representations and warranties in connection
with the entering into of this Agreement:
(a) Such Person has the capacity to enter into, and to perform such
Person's obligations under, this Agreement.
(b) This Agreement has been duly executed and delivered by such Person and
is a valid and binding obligation of such Person, enforceable against
such Person in accordance with its terms.
(c) Neither the entering into of this Agreement nor the performance by
such Person of such Person's obligations under this Agreement will
contravene, breach or result in a default under any mortgage, lease,
agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or law to which such Person is a
party or by which such Person is bound.
Section 5.4. Consequences of Breach.
Subject to ARTICLE 8.2, in the event that Biovail is in breach of any of
the foregoing representations or warranties, which breach shall have in the
reasonable opinion of Holdco a Material Adverse Effect and a material adverse
effect on any of the rights of Holdco under this Agreement or the Ancillary
Agreements, Holdco shall have (in addition to any other remedy available to it
at law, equity or otherwise) the right to exercise any of the rights which are
provided to it as of February 1, 2001 under the Shareholder Agreement,
immediately upon 15 days' notice to Biovail; provided that Laboratories shall
not have exercised the Holdco Option or caused the voting common shares of
Acquireco to be redeemed.
Section 5.5. Non-Waiver.
No investigations made by or on behalf of a Party at any time or any actual
or deemed knowledge of a breach of representation or warranty by Biovail shall
have the effect of waiv-
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ing, diminishing the scope of or otherwise affecting any representation or
warranty made by Biovail herein or pursuant hereto or preventing or restricting
the rights of indemnity of the Indemnified Parties in respect of such breach.
ARTICLE 6
CLOSING
Section 6.1. Effect of Closing.
(a) The Closing shall not constitute a waiver by Holdco or the Investor
Group of any of the representations, warranties or covenants of
Laboratories, Acquireco, IPL or Biovail which are contained in this
Agreement or in any Ancillary Agreement.
(b) The Closing shall not constitute a waiver by Laboratories, Acquireco,
IPL or Biovail of any of the representations, warranties or covenants
of Holdco or the Investor Group which are contained in this Agreement
or in any Ancillary Agreement.
Section 6.2. Date, Time and Place of Closing.
The completion of the transactions contemplated in Articles 2 and 3 of this
Agreement shall take place at the offices of Stikeman Elliott, Xxxxx 0000,
Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X 0X0 at the Closing Time on the Closing
Date which shall be coincident with the execution and delivery of this
Agreement.
Section 6.3. Closing Procedures.
(a) Deliveries by or on behalf of Laboratories. Laboratories shall deliver
or cause to be delivered at the Closing Time to Holdco the following
in form and substance satisfactory to Holdco:
(i) certified copies of (i) the charter documents of each of
Laboratories, Acquireco and IPL and extracts from the by-laws
thereof relating to the execution of documents, (ii) all
resolutions of the shareholders and the board of directors of
each of Laboratories, Acquireco and IPL approving the entering
into of, and completion of the transactions contemplated by, this
Agreement and the Ancillary Agreements, and (iii) a list of the
officers and directors of Laboratories, Acquireco and IPL
authorized to sign agreements together with their specimen
signatures;
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(ii) a certificate of status, compliance, good standing or like
certificate with respect to Acquireco and IPL issued by
appropriate government officials of their respective
jurisdictions of incorporation;
(iii) the Shareholder Agreement; and
(iv) opinions of counsel to Laboratories, Acquireco and IPL.
(b) Deliveries by or on behalf of Holdco. Holdco shall deliver or cause to
be delivered at the Closing Time to Laboratories, IPL and Acquireco,
as they may direct, the following in form and substance satisfactory
to Laboratories, IPL and Acquireco:
(i) certified copies of (i) the charter documents of Holdco and
extracts from the by-laws thereof relating to the execution of
documents, (ii) all resolutions of the shareholder and the board
of directors of Holdco approving the entering into and completion
of the transactions contemplated by this Agreement and the
Ancillary Agreements, and (iii) a list of its officers and
directors authorized to sign agreements together with their
specimen signatures;
(ii) a certificate of status, compliance, good standing or like
certificate with respect to Holdco issued by appropriate
government official of the jurisdiction of its incorporation;
(iii) the Shareholder Agreement; and
(iv) an opinion of counsel to Holdco.
(c) Other Deliveries.
(i) Laboratories shall deliver or cause to be delivered to Acquireco
(or upon its direction) at the Closing Time: (A) a share
certificate representing the IPL Special Shares accompanied by a
stock transfer power; and (B) by wire transfer, payment of the
subscription price of the Purchased Class A Shares payable in
same day United States funds at New York;
(ii) Acquireco shall deliver or cause to be delivered to Laboratories
at the Closing Time: (A) a share certificate in proper form
representing the Purchased Non-Voting Shares registered in the
name of Laboratories; and (B) a share certificate in proper form
representing the Purchased Class A Shares registered in the name
of Laboratories;
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(iii) Acquireco shall deliver or cause to be delivered to Holdco at
the Closing Time a share certificate in proper form representing
the Purchased Voting Common Shares registered in the name of
Holdco;
(iv) Holdco shall deliver or cause to be delivered to Acquireco (or
upon its direction) at the Closing Time, by wire transfer,
payment of the subscription price of the Purchased Voting Common
Shares payable in same day United States funds at New York.
ARTICLE 7
indemnification
Section 7.1. Indemnification in Favour of Holdco.
Laboratories (the "Indemnifying Party") shall indemnify and save harmless,
on an after-Tax basis, each Indemnified Party effective as and from the Closing
Time, from and against all Claims which may be made or brought against the
Indemnified Party, or which it may suffer or incur, directly or indirectly as a
result of or in connection with:
(a) any non-fulfilment of any covenant or agreement on the part of the
Indemnifying Party or Biovail under this Agreement; or
(b) any incorrectness in or breach of any representation or warranty of
the Indemnifying Party and Biovail contained in this Agreement or in
any certificate or other document furnished by the Indemnifying Party
pursuant to this Agreement;
(c) the participation by Holdco in the transactions contemplated herein;
(d) any statement made in or omitted from any publicly filed document in
connection with the transactions contemplated herein, with the
exception of any statement made or omitted solely with respect to
Xxxxxx X. Xxxxxx, Holdco or its directors, officers or shareholders or
the Investor Group;
(e) the purchase by Holdco of the shares of Acquireco other than by reason
of a decline in the value of the investment not attributed in whole or
in part directly or indirectly to any breach or misrepresentation by
Biovail; and
(f) any Taxes payable by Holdco as a result of its purchase, holding or
disposition of the shares of Acquireco, other than Taxes related to
any amount received
-21-
upon a redemption or purchase in excess of the original subscription
price or by way of a fee, dividend or similar payment.
Section 7.2. Indemnification Procedures for Third Party Claims.
(a) In the case of Claims made by a third party with respect to which
indemnification is sought, the Indemnified Party shall give prompt
written notice, and in any event within 20 days, to the Indemnifying
Party of any such Claims made upon it. In the event of a failure to
give such notice, such failure shall not preclude the Indemnified
Party from obtaining such indemnification but its right to
indemnification may be reduced to the extent that such delay
prejudiced the defence of the Claim or increased the amount of
liability or cost of defence and provided that, notwithstanding
anything else herein contained.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt of the
notice described in subsection (a) to assume the control of the
defence, compromise or settlement of the Claim, provided that such
assumption shall, by its terms, be without cost to the Indemnified
Party and provided the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party in accordance with the
terms contained in this Section in respect of that Claim.
(c) Upon the assumption of control of any Claim by the Indemnifying Party
as set out in subsection (b), the Indemnifying Party shall diligently
proceed with the defence, compromise or settlement of the Claim at its
sole expense, including if necessary, employment of counsel reasonably
satisfactory to the Indemnified Party and, in connection therewith,
the Indemnified Party shall cooperate fully, but at the expense of the
Indemnifying Party with respect to any out-of-pocket expenses
incurred, to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party's control, make
such assignments and take such other steps as in the opinion of
counsel for the Indemnifying Party are reasonably necessary to enable
the Indemnifying Party to conduct such defence. The Indemnified Party
shall also have the right to participate in the negotiation,
settlement or defence of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the parties as to the validity or invalidity, as the
case may be of such Claim against the Indemnifying Party.
(e) If the Indemnifying Party does not assume control of a Claim as
permitted in subsection (b), the Indemnified Party shall be entitled
to make such settlement
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of the Claim as in its sole discretion may appear advisable, and such
settlement or any other final determination of the Claim shall be
binding upon the Indemnifying Party.
(f) To the extent that any Indemnified Party is not a party to this
Agreement, Holdco shall obtain and hold the right and benefit of the
above-mentioned indemnity in trust for and on behalf of such
Indemnified Party.
(g) The costs of each Indemnified Party, including the reasonable legal
fees and expenses, shall be for the sole account of the Indemnifying
Party which shall provide to the Indemnified Party, upon its or his
request, a retainer for the reasonable legal fees and expenses
estimated by its or his counsel to be incurred in connection with the
Claim.
ARTICLE 8
POST-CLOSING COVENANTS
Section 8.1. IPL Purchase Option.
(1) Laboratories agrees to take all actions within its power necessary to
enable Acquireco to have exercised and completed the purchase under
the IPL Purchase Option on or before September 29, 2000.
(2) Acquireco agrees to take all actions necessary to exercise and
complete the purchase under the IPL Purchase Option on or before
September 29, 2000.
(3) In the event that Acquireco does not, for any reason, exercise and
complete the purchase under the IPL Purchase Option on or before
September 29, 2000, Acquireco shall immediately pay an amount equal to
the Equity Commitment to Holdco, failing which payment Laboratories
shall immediately pay such an amount to Holdco in full satisfaction of
Acquireco's obligation to do so together with the amount referred to
in Section 9.15(2). Upon such payment, Holdco shall deliver the
Purchased Voting Common Shares to Acquireco for cancellation.
Section 8.2. Other Covenants.
(1) Biovail shall not take and shall not permit any of the Biovail Group
to take any action under the Material Contracts to terminate any of
the Material Contracts or which would adversely affect the rights of
IPL under such contract, whether
-23-
or not IPL is in default or the member of the Biovail Group has the
right to take such action.
(2) Biovail shall be conclusively deemed not to be in default of its
representations and warranties contained in Sections 5.1(9), ARTICLE
5.1 (17) and ARTICLE 5.1 (18) in the event that (a) Laboratories shall
exercise the Holdco Option or cause the voting common shares of
Acquireco to be redeemed prior to February 1, 2001; or (b) Biovail
shall, prior to February 1, 2001, amend or cause the amendment of the
contracts referred therein to confer the Rights upon IPL as described
therein and take or cause to be taken all such other actions as may be
necessary or desireable to ensure that IPL has the Rights described
therein in a manner reasonably satisfactory to Holdco and that the
representations and warranties shall otherwise be accurate in all
material respects.
(3) Commencing February 1, 2001 and in the event that Laboratories shall
not have exercised the Holdco Option, Holdco shall be entitled to
enjoin the use or exploitation of the Products by any of the Biovail
Group and Laboratories and Biovail hereby consent to any such
injunction until such time as the amendments referred to in clause (b)
in the immediately preceding sentence shall have been completed and
the actions referred to in clause (b) in the immediately preceding
sentence shall have been taken to the reasonable satisfaction of
Holdco.
Section 8.3. Board Covenant.
Holdco will request two representatives of Codan, an associated firm of
Xxxxxxx, Xxxx & Xxxxxxx, and Xxxxxx Xxxxxx to be appointed to the board of
directors of Acquireco. Acquireco will cause Xxxxxx Xxxxxx to be appointed to
the board of directors of IPL.
Section 8.4. Further Assurances.
From time to time after the Closing Date, each Party shall at the request
of any other Party execute and deliver such additional documents, transfers and
other assurances as may be reasonably required to effectively complete the
transactions contemplated hereunder and carry out the intent of this Agreement
and any Ancillary Agreement.
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ARTICLE 9
MISCELLANEOUS
Section 9.1. Notices.
Any notice, direction or other communication given under this Agreement or
any Ancillary Agreement shall be in writing and given by delivering it or
sending it by facsimile or other similar form of recorded communication
addressed:
(a) To Acquireco at:
Romasco Place
Wickhams Cay 1, P.O. Box 3140
Road Town, Tortola
British Virgin Islands
Attention: A. Xxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxx
Romasco Place
Wickhams Cay 1, P.O. Box 3140
Road Town, Tortola
British Virgin Islands
Attention: A. Xxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(b) To Laboratories at:
Biovail Laboratories Inc.
x/x Xxxxxxxx Xxxx
Xxxxxxxx 0, Xxxxxxxxx Xxxx
Xx. Xxxxxxx BHI
Barbados, West Indies
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With a copy to:
Chancery Xxxxxxxx
Chancery House, High Street
Bridgetown, Barbados, West Indies
Attention: Xxxxxx Xxxxxxxxxx
Telephone: 246-431-0070
Facsimile: 000-000-0000
(c) To Biovail at:
Biovail Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Cancellara, Q.C.
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Stikeman Elliott
Xxxxx 0000
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mihkel Xxxxx/Xxxxxx Xxxxxxxx
Telephone: 416-869-5500
Facsimile: (000) 000-0000
(d) To IPL at:
Intelligent Polymers Limited
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00
Xxxxxxx
-00-
Xxxxxxxxx: Xxxxxxxxx X. Xxxxxxx
Telephone: 441-295-1422
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxx
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxxxx: Xxxx Xxxxxxx / Xxxxxxx Xxxxx
Telephone: 441-295-1422
Facsimile: 000-000-0000
(e) To Holdco at:
IPL Holdco 2000 Ltd.
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Osler, Xxxxxx & Xxxxxxxx
Xxx 00
1 First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(f) to any of the Investors at:
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Maple Partners Financial Group Inc.
Maritime Life Tower
Toronto Dominion Centre, Suite 3500
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Osler, Xxxxxx & Xxxxxxxx
Xxx 00
1 First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such communication shall be deemed to have been validly and effectively
given (i) if personally delivered, on the date of such delivery if such date is
a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time)
and otherwise on the next Business Day, or (ii) if transmitted by facsimile or
similar means of recorded communication on the Business Day following the date
of transmission. Any Party may change its or his address for service from time
to time by notice given in accordance with the foregoing and any subsequent
notice shall be sent to such Party at its or his changed address.
Section 9.2. Time of the Essence.
Time shall be of the essence of this Agreement.
Section 9.3. Announcements.
At all times prior to the Closing Time, any press release or public
statement or announcement (a "Public Statement") with respect to the transaction
contemplated in this Agreement shall have been made only with the prior written
consent and joint approval of Biovail unless such Public Statement is required
by Law or by any stock exchange, in which case the Party required to make the
Public Statement shall use its reasonable best efforts to
-28-
obtain the approval of the other Party as to the form, nature and extent of the
disclosure. After the Closing Time and prior to February 1, 2001, any Public
Statement by Holdco shall be made only with the prior written consent and
approval of Biovail unless the Public Statement is required by Law or by any
stock exchange, in which case Holdco shall use its reasonable best efforts to
obtain the approval of Biovail as to the form, nature and extent of the
disclosure.
Section 9.4. Third Party Beneficiaries.
Except as otherwise provided in ARTICLE 7.2, the Parties intend that this
Agreement shall not benefit or create any right or cause of action in, or on
behalf of, any Person, other than the Parties to this Agreement and Maple
Partners Financial Group Inc. and Xxxxxx Xxxxxx and no Person, other than the
Parties to this Agreement, shall be entitled to rely on the provisions of this
Agreement in any action, suit, proceeding, hearing or other forum. Holdco is and
shall be deemed to be acting as agent or trustee on behalf of and for the
benefit of each of the Indemnified Parties.
Section 9.5. Joint and Several Liability.
Biovail shall take all steps necessary to cause Laboratories to comply with
its obligations hereunder and is jointly and severally liable with Laboratories,
as principal obligor and not as a surety, with respect to all of the
representations, warranties, covenants, indemnities and agreements of
Laboratories contained in this Agreement and in each Ancillary Agreement.
Section 9.6. Expenses.
All costs and expenses incurred in connection with this Agreement, the
Ancillary Agreements and the transactions contemplated herein and therein shall
be paid by the Party incurring such expenses except that Laboratories agrees to
reimburse each of Holdco and the Investor Group for its reasonable legal fees
and expenses incurred in connection with such transactions.
Section 9.7. Amendments.
This Agreement may only be amended or otherwise modified by written
agreement executed by the Parties.
Section 9.8. Waiver.
(1) No waiver of any of the provisions of this Agreement or any Ancillary
Agreement shall be deemed to constitute a waiver of any other
provision (whether or
-29-
not similar), nor shall such waiver be binding unless executed in
writing by the Party to be bound by the waiver.
(2) No failure on the part of any of the Parties to exercise, and no delay
in exercising any right under this Agreement shall operate as a waiver
of such right, nor shall any single or partial exercise of any such
right preclude any other or further exercise of such right or the
exercise of any other right.
Section 9.9. Non-Merger.
Except as otherwise expressly provided in this Agreement, the covenants,
representations and warranties shall not merge on and shall survive the Closing
and, notwithstanding such Closing and any investigation made by or on behalf of
any Party, shall continue in full force and effect. Closing shall not prejudice
any right of one Party against any other Party in respect of anything done or
omitted under this Agreement or in respect of any right to damages or other
remedies.
Section 9.10. Entire Agreement.
This Agreement together with the Ancillary Agreements constitutes the
entire agreement between the Parties with respect to the transactions
contemplated in this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties including the Term Sheet and the Engagement Letter, but excluding the
Indemnity Letter. There are no representations, warranties, covenants,
conditions or other agreements, express or implied, collateral, statutory or
otherwise, between the Parties in connection with the subject matter of this
Agreement, except as specifically set forth herein and therein. If there is any
conflict or inconsistency between the provisions of this Agreement and the
provisions of any Ancillary Agreement, the provisions of this Agreement shall
govern.
Section 9.11. Successors and Assigns.
(1) This Agreement shall become effective when executed by the Parties and
after that time shall be binding upon and enure to the benefit of the
Parties and their respective successors and permitted assigns.
(2) Neither this Agreement nor any of the rights or obligations under this
Agreement shall be assignable or transferable by any Party without the
prior written consent of the other Parties except that any of the
Investors may assign its rights hereunder to another Person who upon
such assignment shall become a member of the Investor Group for the
purposes hereof.
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Section 9.12. Severability.
If any provision of this Agreement or part thereof shall be determined by
an arbitrator or any court of competent jurisdiction to be illegal, invalid or
unenforceable, that provision or part thereof will be severed from this
Agreement and the remaining provisions shall remain in full force and effect.
Section 9.13. Governing Law.
(1) This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
Section 9.14. Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 9.15. Fees.
(1) Upon the Closing, Acquireco hereby agrees to pay the following fees by
certified cheque or bank draft:
(a) a fee equal to US$500,000, payable to Maple Partners Financial
Group Inc. in payment for its services in arranging and
structuring the payment of the Equity Commitment and the
transactions contemplated herein; and
(b) a fee equal to US$1,275,000, payable to the Investor Group and
allocated among the Investors in such amounts as Holdco shall
direct.
(2) If prior to January 1, 2001, the voting common shares in the capital
of Acquireco are redeemed by Acquireco or purchased under the Holdco
Option, Acquireco agrees to pay to the Investor Group by certified
cheque or bank draft, allocated among the Investors in such amounts as
Holdco shall direct, an additional US$225,000 fee minus the amount
received on such redemption or purchased in excess of the initial
issue price of the Purchased Voting Common Shares, which fee shall be
payable at the time of such redemption or purchase; or, if the
redemption or purchase has not taken place prior to January 1, 2000,
Acquireco shall pay to the Investor Group by certified cheque or bank
draft, allocated among the Investors in such amounts as Holdco shall
direct, a fee of
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US$225,000 payable on January 1, 2001; in all cases, in addition to
that payable under Section 9.15(1).
-32-
IN WITNESS WHEREOF the parties have executed this Master Agreement.
IPL ACQUIRECO 2000 LTD.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Director
IPL HOLDCO 2000 LTD.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
BIOVAIL LABORATORIES INC.
By: /s/ Xxxxxx Xxxx
---------------------------------------
Name: Xxxxxx Xxxx
Title: Treasurer & Assistant Secretary
BIOVAIL CORPORATION
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
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INTELLIGENT POLYMERS LIMITED
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Director
/s/ Xxxxxx Xxxxxx
-----------------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxx Xxxxx
-----------------------------------------------
XXXXXX XXXXX
/s/ Xxxxxx Xxxxxxx
-----------------------------------------------
XXXXXX XXXXXXX
-34-
495414 ONTARIO LIMITED
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
President
SCHEDULE 1.1
ACQUIRECO - SHARE CONDITIONS
The authorized capital of the Corporation shall consist of 6,500,000 Voting
Common Shares, 12,000 Non-Voting Common Shares and 141,500,000 Class A Shares.
1. Voting Rights of All Shares
(a) Voting of Class A Shares
Except as required by the provisions of the International Business
Companies Ordinance, 1984 (the "IBCO"), and except as provided in this
clause, the holders of the Class A Shares shall not, as such, be entitled
to receive notice of any meetings of the shareholders of the Corporation
and shall not be entitled to attend or to vote at any such meetings. Where
the IBCO entitles holders of the Class A Shares to receive notice of and to
attend and vote at a meeting of the shareholders of the Corporation, the
holders of the Class A Shares shall vote and be deemed to vote the Class A
Shares in the manner directed by the holders of the Voting Common shares in
respect of any of the following matters brought before such meeting: (i)
the sale, lease or disposition of all or substantially all of the assets or
property of the Corporation; (ii) the liquidation, dissolution, winding up
or bankruptcy of the Corporation; (iii) the amalgamation or merger of the
Corporation with any other corporation; and (iv) any other action which is
in furtherance of items (i) to (iii).
(b) Voting of Non-Voting Common Shares
Except as required by the provisions of the IBCO, and except as provided in
this clause, the holders of the Non-Voting Common Shares shall not, as
such, be entitled to receive notice of any meetings of the shareholders of
the Corporation and shall not be entitled to attend or to vote at any such
meetings; provided, however, that until October 1, 2002, the holders of the
Non-Voting Common Shares shall have the sole right to vote to cause the
Corporation to redeem all outstanding Voting Common Shares. Where the IBCO
entitles holders of the Non-Voting Common Shares to receive notice of and
to attend and vote at a meeting of the shareholders of the Corporation, the
holders of the Non-Voting Common Shares shall vote and be deemed to vote
the Non-Voting Common Shares in the manner directed by the holders of the
Voting Common Shares in respect of any of the following matters brought
before such meeting: (i) the sale, lease or disposition of all or
substantially all of the assets or property of the Corporation; (ii) the
liquidation, dissolution, winding up or bankruptcy of the Corporation;
(iii) the amalgamation or merger of the Corporation with any other
corporation; and
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(iv) any other action which is in furtherance of items (i) to (iii). If
there are no Voting Common Shares outstanding, the holders of the
Non-Voting Common Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Corporation and shall be
entitled to one vote per share.
(c) Voting of Voting Common Shares
Except as required by the provisions of the IBCO, the holders of the Voting
Common Shares shall be entitled to receive notice of and to attend all
meetings of the shareholders of the Corporation and shall be entitled to
one vote per share at all such meetings, except meetings at which only
holders of another class of shares are entitled to vote; provided, however,
that the holders of the Voting Common Shares shall not be entitled to vote
to cause the Corporation to redeem the Voting Common Shares.
2. Dividends
(a) Dividend Rights of Class A Shares
The holders of the Class A Shares, in preference and priority to the rights
of the holders of the Non-Voting Common Shares and the Voting Common Shares
to receive dividends and to the rights of the holders of all other shares
ranking junior to the Class A Shares, shall be entitled to receive and the
Corporation shall pay thereon, as and when declared by the board of
directors of the Corporation, out of the moneys of the Corporation properly
applicable to the payment of dividends, cumulative annual dividends in the
amount of 8% per annum calculated and payable in arrears on the Class A
Liquidation Amount as defined herein. Such dividends shall accrue from the
date of issue of the Class A Shares. The holders of the Class A Shares
shall not be entitled to receive any dividend other than or in excess of
the cumulative annual dividends herein provided. All dividends which the
board of directors may declare on the Class A Shares shall be declared and
paid in equal amounts per share on all of the Class A Shares outstanding at
the time of declaration.
(b) Dividend Rights of Voting Common Shares
The holders of the Voting Common Shares, subject to the prior entitlement
of the holders of the Class A Shares to receive the maximum amount of
dividends specified above, shall be entitled to receive dividends, as and
when declared from time to time by the board of directors, out of moneys of
the Corporation properly applicable to the payment of dividends, and the
amount per share of each such dividend shall be determined by the board of
directors of the Corporation at the time of declaration; provided that, in
respect of any fiscal year of the Corporation, the board of directors shall
not declare and the Corporation shall not pay any dividend on the Voting
Common Shares
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until the board of directors has declared and the Corporation has paid to
the holders of the Class A Shares any accrued dividends that are payable to
the holders of the Class A Shares with respect to that fiscal year; and
provided further that the Corporation shall not pay any dividend on the
Voting Common Shares if, after such payment, the realizable value of the
assets of the Corporation, minus the amount of the Corporation's
liabilities, would be less than the aggregate of the Class A Liquidation
Amount of all of the outstanding Class A Shares and an amount equal to the
aggregate value of the consideration for which all the Non-Voting Common
Shares were issued, determined at the time of such issuance.
(c) Dividend Rights of Non-Voting Common Shares
The holders of the Non-Voting Common Shares, subject to the prior
entitlement of the holders of the Class A Shares to receive the maximum
amount of dividends specified above, shall be entitled to receive
dividends, as and when declared from time to time by the board of
directors, out of moneys of the Corporation properly applicable to the
payment of dividends, and the amount per share of each such dividend shall
be determined by the board of directors of the Corporation at the time of
declaration; provided that, in respect of any fiscal year of the
Corporation, the board of directors shall not declare and the Corporation
shall not pay dividends on the Non-Voting Common Shares in an amount,
determined on a per share basis, which exceeds the amount declared and
paid, on a per share basis, on the Voting Common Shares in respect of that
fiscal year of the Corporation; and provided further that, in respect of
any fiscal year of the Corporation, the board of directors shall not
declare and the Corporation shall not pay any dividend on the Non-Voting
Common Shares until the board of directors has declared and the Corporation
has paid to the holders of the Class A Shares any accrued dividends that
are payable to the holders of the Class A Shares with respect to that
fiscal year; and provided further that the Corporation shall not pay any
dividend on the Non-Voting Common Shares if, after such payment, the
realizable value of the assets of the Corporation, minus the amount of the
Corporation's liabilities, would be less than the aggregate of the Class A
Liquidation Amount of all of the outstanding Class A Shares.
3. Distribution Rights of all Shares on Liquidation
If the Corporation is liquidated, dissolved or wound-up or its assets are
otherwise distributed among the shareholders by way of repayment of
capital, whether voluntary or involuntary:
(a) the holders of the Class A Shares shall be entitled to receive, before
any distribution of any assets of the Corporation among the holders of
the Voting Com-
-4-
mon Shares and the Non-Voting Common Shares, an amount in respect of
each Class A Share held, equal to the sum of:
(i) all accrued but unpaid cumulative annual dividends (which for
such purpose shall be deemed to accrue up to the date of
distribution), and
(ii) the Class A Liquidation Amount as herein defined.
(b) the holders of the Voting Common Shares shall be entitled to receive,
after any distribution to the holders of the Class A Shares but before
any distribution of any assets of the Corporation among the holders of
the Non-Voting Common Shares, an amount in respect of each Voting
Common Share held, equal to the sum of:
(i) all dividends declared thereon and unpaid, and
(ii) the Common Share Redemption Amount as herein defined.
(c) the holders of the Non-Voting Common Shares shall be entitled to
receive, after any distribution referred to in paragraph (a) or (b)
above, an amount in respect of each Non-Voting Common Share held,
equal to the sum of:
(i) all dividends declared thereon and unpaid, and
(ii) the amount per share distributed on each Voting Common Share
under subparagraph (b)(ii) above.
(d) thereafter, the holders of the Voting Common Shares and the Non-Voting
Common Shares shall be entitled to share, equally share for share, in
the distribution of the remaining assets of the Corporation.
(e) Class A Liquidation Amount
The "Class A Liquidation Amount" is U.S. $1.00 per share.
4. Retraction Rights of the Class A Shares
At any time after the date on which there are no Voting Common Shares
outstanding, a holder of Class A Shares shall be entitled to require the
Corporation to redeem at any time the whole or any part of such holder's
Class A Shares. Upon such redemption the Corporation shall pay to such
holder in respect of each share to be redeemed an amount equal to the sum
of:
-5-
(a) all accrued but unpaid cumulative annual dividends (which, for such
purpose, shall be deemed to accrue up to the date of redemption); and
(b) the Class A Liquidation Amount as hereinbefore defined.
A holder of Class A Shares desiring to have shares redeemed by the
Corporation as herein provided shall deposit with the Corporation the
certificates evidencing the shares that the holder wishes to have redeemed,
together with a notice requiring the redemption of all or a specific number
of such shares. The Corporation shall redeem such number of shares and pay
such amount within ten (10) days after such deposit. Such payment shall be
made by cheque payable at par at any branch of the Corporation's bankers.
If the holder specifies in the notice requiring redemption that a part only
of the Class A Shares evidenced by any deposited share certificate is to be
redeemed, the Corporation shall issue and deliver to such holder, at the
expense of the Corporation, a new certificate evidencing the shares which
are not to be redeemed. Upon redemption and payment as aforesaid, rights to
dividends on the Class A Shares redeemed shall cease and the holder thereof
shall thereafter have no rights against the Corporation in respect thereof.
5. Redemption Rights of Common Shares
(a) General Provisions
The Corporation shall at any time up to October 1, 2002, if and only if it
receives a request of the holders of a majority of the Non-Voting Common
Shares, which request may be by vote at a meeting of all shareholders or of
the holders of the Non-Voting Common Shares or by an instrument in writing
signed by such a majority, upon giving ten (10) days' written notice to the
holders of the Voting Common Shares, redeem no later than 10 days after
delivery of such written notice all, but not less than all, of the
outstanding Voting Common Shares. Upon redemption, the Corporation shall
pay to the holders of all outstanding Voting Common Shares, in respect of
each voting common share, an amount equal to the Common Share Redemption
Amount, as herein defined.
If a notice of redemption is given by the Corporation and if amounts
sufficient to redeem the Voting Common Shares to be redeemed are deposited
on or before the date fixed for redemption with any trust company or
chartered bank in the British Virgin Islands which is acceptable to the
holders of the Voting Common Shares acting reasonably, as specified in the
notice, in trust for the holders of the Voting Common Shares to be
redeemed, the holders thereof shall thereafter have no rights against the
Corporation in respect thereof except, upon the surrender of certificates
evidencing such shares, to receive payment therefor out of the moneys so
deposited.
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(b) Common Share Redemption Amount
The "Common Share Redemption Amount" if a redemption of Voting Common
Shares occurs prior to January 1, 2001 is U.S. $1.00 per share plus 15% per
annum calculated from the date of issuance of the Voting Common Shares to
the date of redemption compounded daily, and if such a redemption occurs on
or after January 1, 2001, is U.S. $1.00 per share plus 35% per annum
calculated from January 1, 2001 to the date of redemption compounded daily.
SCHEDULE 5.1(13)
Authorized and Issued Share
Capital of Acquireco and IPL
Acquireco
Authorized: Issued (upon the closing)
141,500,000 Class A Shares 141,500,000 Class A Shares
6,500,000 Voting Common Shares 6,500,000 Voting Common Shares
12,000 Non-Voting Common Shares 12,000 Non-Voting Common Shares
IPL Issued:
US$52,000 divided into 4,000,000 Common 3,737,500 Common Shares
Shares of $0.01 per value each and 12,000 Special Shares
12,000 Special Shares of $1.00 each
