INVESTOR RIGHTS AGREEMENT
AMONG
BUSINESS DEVELOPMENT BANK OF CANADA
AND
BIOSYNTECH, INC.
AND
BIO SYNTECH CANADA INC.
AND
BIOSYNTECH EUROPE S.A.R.L.
AND
AMINE SELMANI
AND
0000-0000 XXXXXX INC.
JUNE 26TH, 2002
TABLE OF CONTENTS
Page 1
1. Definitions and Principles of Interpretation.........................2
1.1 Definitions..........................................................2
1.2 Certain Rules of Interpretation......................................5
1.3 Accounting Principles................................................6
1.4 Jurisdiction.........................................................6
1.5 Recitals.............................................................6
2. Term of Agreement....................................................6
2.1 Termination..........................................................6
3. Purpose and Scope....................................................6
3.1 Compliance with Agreement............................................6
3.2 Compliance by the Company............................................6
3.3 Conflict.............................................................6
3.4 Covenant by Principals...............................................7
4. Financial Participation in BioSyntech................................7
4.1 Equity Participation.................................................7
5. BioSyntech's Business and Purpose....................................7
5.1 Business and Purpose.................................................7
6. Directors and Shareholders...........................................7
6.1 Nomination and Election of BDC Director..............................7
6.2 Nomination of Independent Director...................................8
6.3 Board's Exercise of Authority........................................8
6.4 Telephone Meetings...................................................9
6.5 Directors' Expenses..................................................9
6.6 Insurance............................................................9
7. Approval of Matters.................................................10
8. Financial and Accounting Practices..................................12
8.1 Financial and Other Information.....................................12
8.2 Corporate Book......................................................13
9. COVENANTS...........................................................13
9.1 Related Party Transactions..........................................13
9.2 Transfer of Intellectual Property...................................13
10. Dealing with SECURITIES.............................................14
10.1 Issue of Additional Securities....................................14
10.2 Piggy Back Rights - Sale by Selmani or Holdco.....................14
11. General.............................................................15
11.1 Representations and Warranties....................................15
11.2 No Further Obligations............................................15
11.3 Application of this Agreement.....................................15
11.4 Benefit of the Agreement..........................................15
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11.5 Entire Agreement..................................................16
11.6 Amendments and Waivers............................................16
11.7 Assignment........................................................16
11.8 Severability......................................................16
11.9 Notices...........................................................16
11.10 Counterparts......................................................18
SIGNATURES.....................................................................1
INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of June, 2002,
AMONG: BUSINESS DEVELOPMENT BANK OF CANADA, a corporation
incorporated under the Business Development Bank of
Canada Act having an office at 0 Xxxxx Xxxxx Xxxxx,
xxxxx 0000, Xxxxxxxx, Xxxxxxxx of Xxxxxx, X0X 0X0;
(the "BDC")
AND: BIOSYNTECH, INC., a corporation incorporated under the
laws of the State of Nevada and having its head office
at 000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx
Xxxxxx, X0X 0X0;
("BioSyntech")
AND: BIO SYNTECH CANADA INC., a corporation incorporated
under the Quebec Companies Act and having its head
office at 000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx
Xxxxxx, X0X 0X0;
("BSC")
AND: BIO SYNTECH EUROPE S.A.R.L., a corporation incorporated
under the laws of the Republic of France and having its
head office at 00 Xxxxxxx xx Xxxxxxx, 00000 Xxxxxxx,
Xxxxxx;
(the "BSE")
(BioSyntech, BSC and BSE , collectively: the "Company")
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AND: AMINE SELMANI, a businessman residing at 00 Xxx
Xxxxxxx, Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0;
("Selmani")
AND: 0000-0000 XXXXXX INC., a corporation incorporated under
the Quebec Companies Act, having its head office at
0000 XxXxxx Xxxxxxx, xxxxx 0000, Xxxxxxxx X0X 0X0;
("Holdco")
PREAMBLE
--------
WHEREAS BSC has entered into a Loan Agreement with the BDC dated the date hereof;
WHEREAS BioSyntech has entered into a Subscription Agreement with the BDC dated
the date hereof;
WHEREAS as a condition of entering into the Loan Agreement and the Subscription
Agreement, the BDC requested, and the parties accepted, to set forth the manner
in which certain of the Company's affairs shall be conducted and to grant to the
BDC certain rights with respect thereto, the whole as set forth herein;
NOW, THEREFORE, in consideration of the above premises and covenants and
agreements herein contained, the Parties hereto agree as follows:
1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION
--------------------------------------------
1.1 Definitions
-----------
In this Agreement, unless something in the subject matter or context
is inconsistent therewith, all terms defined in the Act and not
otherwise defined herein shall have the meanings ascribed thereto,
and the following terms shall have the meanings set forth below:
1.1.1 "Affiliate" means, with respect to a Party to this
Agreement, any Person which, directly or indirectly,
through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such
Party;
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1.1.2 "Agreement" means this Investor Rights Agreement and all
attached schedules and all instruments supplemental to
or in amendment or confirmation of this Agreement; and
the terms "hereof", "hereto", "hereunder" and similar
expressions refer to this Agreement, and not to any
particular article, section or other portion of this
Agreement and references to articles, section or
subsection are to the specified articles, sections or
subsections of this Agreement;
1.1.3 "Articles" means the articles and/or amended and
restated articles of BioSyntech, BSC and BSE attached
hereto as Schedule 1.1.3, as they may be amended or
restated from time to time;
1.1.4 "Auditors" means the auditor of BioSyntech and its
Subsidiaries which is a firm of independent auditors,
qualified and entitled to carry on in Canada or the US
the practice of public or chartered accounting and
auditing, whom are appointed from time to time;
1.1.5 "Board" means the boards of directors of BioSyntech, BSC
and BSE;
1.1.6 "Business Day" means a day, other than a Saturday or
Sunday, on which Canadian chartered banks are open for
general banking business in Montreal, Quebec;
1.1.7 "Business Plan" shall mean the business plan of
BioSyntech attached hereto as Schedule 1.1.7;
1.1.8 "By-laws" means the by-laws and/or the amended and
restated by-laws of BioSyntech, BSC and BSE which are in
force and effect from time to time;
1.1.9 "Common Shares" shall mean the common shares in the
capital of BioSyntech, but for greater certainty, does
not include common shares into which other Securities
issued by BioSyntech may be converted unless and until
such rights of conversion have been exercised and such
common shares are issued in respect thereof;
1.1.10 "Fair Market Value" means, with respect to any
transaction, the consideration and terms and conditions
as determined in an open and unrestricted market,
between informed prudent parties, acting at arm's length
and under no compulsion to act;
1.1.11 "Immediate Family Members" means any or all of the
father, mother, spouse, son, daughter, stepson,
stepdaughter, brother or sister of a Shareholder who is
an individual;
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1.1.12 "Independent" means with respect to a member of the
Board, a Person who is not a Shareholder who holds more
than one percent (1%) of the issued and outstanding
Securities or the shares of an Affiliate of BioSyntech,
nor the professional adviser to, director, officer,
employee of or a party to any written or oral contract
with BioSyntech or any Person related thereto by blood,
adoption or marriage to any of the foregoing and such
person has relevant industry experience;
1.1.13 "Intellectual Property" means all the know-how, data,
biological materials, inventions, other proprietary
information and technology, trade secrets, copyright,
service marks, trade names, trade marks, patents, patent
applications, both domestic and foreign, whether
licensed or owned, used in whole or in part in or
required for the proper carrying on of the Business;
1.1.14 "Loan Agreement" means the loan agreement entered into
on the date hereof between the BDC and BSC;
1.1.15 "Parties" means, all of the parties to this Agreement,
and "Party" means any one of them;
1.1.16 "Person" includes any individual, natural person, sole
proprietorship, partnership, limited partnership,
unincorporated association, unincorporated syndicate,
unincorporated organisation, trust, body corporate, and
a natural person in his or her capacity as trustee,
executor, administrator, or other legal representative;
1.1.17 "Related Party" means an "associate" (as is defined in
the Canadian Business Corporations Act (the "Act")) with
respect of a Shareholder, and if he or she is a natural
Person, his or her Immediate Family Members;
1.1.18 "Securities" means, collectively, all the Common Shares,
shares, options or warrants issued from time to time and
any other rights or options granted from time to time to
acquire Common Shares or which are exchangeable or
convertible into Common Shares, as well as all shares,
options or warrants issued from time to time by BSC and
BSE and any other rights or options granted from time to
time to acquire said securities or which are
exchangeable or convertible into such shares;
1.1.19 "Shareholders" means those Persons who hold, directly or
indirectly, shares of BioSyntech, collectively and
"Shareholder" means any one of such Persons
individually;
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1.1.20 "SOP" means any stock option plan, profit sharing plan
or other incentive plan for directors, officers,
employees, shareholders and consultants of BioSyntech or
a Subsidiary;
1.1.21 "Subscription Agreement" means the warrant subscription
agreement entered into on the date hereof between the
BDC and BioSyntech;
1.1.22 "Subsidiary" has, with respect to BioSyntech, the
meaning set out in the Act;
1.1.23 "Warrants" means those warrants for the purchase of
Common Shares issued pursuant to the Subscription
Agreement.
1.2 Certain Rules of Interpretation
-------------------------------
In this Agreement:
(a) time is of the essence in the performance of the Parties'
respective obligations;
(b) unless otherwise specified, all references to money amounts
are to Canadian currency;
(c) the descriptive headings of articles and sections are
inserted solely for convenience of reference and are not
intended as complete or accurate descriptions of content and
shall not be used to interpret the provisions of this
Agreement;
(d) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such
Person or Persons or circumstances as the context otherwise
permits;
(e) whenever a provision of this Agreement requires an approval
or consent by a Party and notice of such approval or consent
is not delivered within the applicable time limit, then,
unless otherwise specified, the Party whose consent or
approval is required shall be conclusively deemed to have
withheld its consent or approval;
(f) unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall
be calculated by excluding the day on which the period
commences and including the day which ends the period and by
extending the period to the next Business Day following if
the last day of the period is not a Business Day; and
(g) whenever any payment is to be made or action to be taken
under this Agreement is required to be made or taken on a
day other than a Business Day, such payment shall be made or
action taken on the next Business Day following.
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1.3 Accounting Principles
---------------------
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the
generally accepted accounting principles from time to time approved
by the Canadian Institute of Chartered Accountants, or any successor
institute, applicable as at the date.
1.4 Jurisdiction
------------
This Agreement shall be construed in accordance with the laws of the
Province of Quebec and the laws of Canada applicable therein and
shall be treated in all respects as a Quebec contract without regard
to principles of conflicts of law.
1.5 Recitals
--------
The recitals of this Agreement are an integral part of this
Agreement.
2. TERM OF AGREEMENT
-----------------
2.1 Termination
-----------
This Agreement shall terminate upon the date on which all amounts
owed to the BDC pursuant to the Loan Agreement have been paid or
reimbursed, except for sections 6.1, 6.2, 6.4. 6.5 and 6.6(b) which
shall survive as long as the BDC holds at least five hundred
thousand (500,000) Warrants and/or Common Shares in the aggregate.
3. PURPOSE AND SCOPE
-----------------
3.1 Compliance with Agreement
-------------------------
Each Party agrees to vote and act, as a shareholder, director or
officer of the Company, as applicable, to fulfil the provisions of
this Agreement and in all other respects to comply with, and use all
reasonable efforts to cause the Company to comply with this
Agreement, and to the extent, if any, which may be permitted by law,
shall cause its respective nominee(s) as directors of the Company to
act in accordance with this Agreement.
3.2 Compliance by the Company
-------------------------
The Company consents to the terms of this Agreement and hereby
covenants with each of the other Parties hereto that it will at all
times during the term of this Agreement be governed by the terms and
provisions hereof in carrying on its business and affairs.
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3.3 Conflict
--------
In the event of any conflict between the provisions of this
Agreement and the Articles and the By-laws, the provisions of this
Agreement shall govern. The Parties hereto acknowledge and agree
that as of the date hereof conflicts may exist between this
Agreement and the Articles and the By-laws. Each of the Parties
agrees to vote or cause to be voted the Common Shares owned by it so
as to cause the Articles or the By-laws to be amended to resolve
each such conflict and any other conflicts in favour of the
provisions of this Agreement.
3.4 Covenant by Principals
----------------------
Each of the Parties hereby jointly and severally, covenants with
each of the other Parties to this Agreement to take such actions as
may be necessary to cause the Shareholder which he or she controls
at all times fully and faithfully to perform and discharge its
obligations under this Agreement and to comply with the terms and
conditions of this Agreement and the law. The foregoing covenants
and obligations of the Parties are absolute, unconditional, present
and continuing and are in no way conditional or contingent upon any
event or circumstance, action or omission which might in any way
discharge a guarantor or surety.
4. FINANCIAL PARTICIPATION IN BIOSYNTECH
-------------------------------------
4.1 Equity Participation
--------------------
Each of the Parties represents and warrants to each other and to
BioSyntech that at the date hereof, they are the legal and
beneficial owners of the Securities for which they, or the
Shareholder which he or she controls, are identified as the
registered holders.
5. BIOSYNTECH'S BUSINESS AND PURPOSE
---------------------------------
5.1 Business and Purpose
--------------------
The business and purpose of the Company consists of the business
presently and heretofore carried on by the Company including
research and development in the field of biomaterials related to
tissue engineering, therapeutic delivery and instrumentation (the
"Business"). The Business shall be conducted at all times so as to
implement to the fullest extent possible the Business Plan.
6. DIRECTORS AND SHAREHOLDERS
--------------------------
6.1 Nomination and Election of BDC Director
---------------------------------------
(a) Nomination: Upon a written request by the BDC, each Party
shall vote its Common Shares to elect one nominee of the
BDC as a member of the Board (the "BDC Director") within,
if possible, five (5) Business Days of receiving such a
-8-
request. The BDC will also have the right to appoint at any
time and from time to time an observer (the "BDC Observer")
who will be allowed to attend and speak at meetings of the
Board from the moment that he or she is appointed. The BDC
Observer shall not have the right to vote.
(b) Replacement and Removal: The BDC may, acting reasonably,
replace or remove the BDC Director who has resigned at any
time and from time to time by forwarding a written request
to that effect to the other Parties not less than two (2)
Business Days before a meeting of directors at which such
director is expected to attend. Upon receipt of such
written request, each Party shall vote its Common Shares to
elect said replacement director. The BDC may, acting
reasonably, replace or remove the BDC Observers at any time
and from time to time.
(c) Indemnity: The Company hereby agrees to indemnify the BDC
Director and the BDC Observer and their heirs and legal
personal representatives against all costs, charges and
expenses, including an amount paid to settle an action or
satisfy a judgement, reasonably incurred by him or her in
respect of any civil, criminal or administrative proceeding
to which he or she is made a party by reason of being or
having been a director of the Company provided (i) he or
she acted honestly and in good faith with a view to the
best interests of the Company; and (ii) in the case of a
criminal or administrative proceeding that is enforced by a
monetary penalty, he or she had reasonable grounds for
believing that his or her conduct was lawful.
6.2 Nomination of Independent Director
----------------------------------
(a) Nomination: The Parties agree that the majority of the
Board shall at all times consist of Independent directors
and each Party shall vote its Common Shares to elect such
Independent directors.
6.3 Board's Exercise of Authority
-----------------------------
(a) Quorum: Unless otherwise agreed to in writing by all of the
directors, and subject to subsection 6.3(b), a quorum of
any meeting of the Board shall require the presence of the
BDC Director if such a director has been named to the board
in question.
(b) Proceeding Without Quorum: Notwithstanding the provisions
of subsection 6.3(a) if proper notice of a meeting of the
Board, specifying the business to be transacted at the
meeting, is given and the BDC Director: (i) is not present
and has not informed the Board in writing of his/her
intention not to attend, then, the meeting may be adjourned
by written notice to all the Directors to a date which is
at least five (5) Business Days after the adjourned meeting
to transact the business set forth in the initial notice,
with or without the presence of the BDC Director; (ii)
informs the Board of his/her intention not to attend, then,
reasonable efforts shall be made to schedule the meeting on
a date which is acceptable to the BDC Director; should such
efforts fail, the Board can hold the meeting on a date
which is convenient to the other directors to transact the
business set forth in the initial notice, with or without
the presence of the BDC Director. The absence of the BDC
Director at a meeting of the board pursuant to a proper
notice shall not prevent the Board from holding a meeting
to address emergencies in accordance with the By-Laws.
(c) Meetings of the Board and Committees: The board of
directors of BioSyntech will meet at least four (4) times
per year and shall approve the Business Plan for the
following fiscal year no later than thirty (30) days before
the commencement thereof. The BioSyntech audit committee
and the governance committee shall each meet at least four
(4) times per year.
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(d) Notice: All notices of Board meetings shall specify the
time, date and place of the meeting and contain a brief but
complete summary of all business on the agenda of the
meeting. Unless all of the directors are present (except
where a director attends a meeting for the express purpose
of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called) or those
absent waive notice, no meeting of directors shall be
validly convened unless at least ten (10) Business Days'
written notice thereof is given or at least two (2)
Business Days' written notice in case of an emergency.
6.4 Telephone Meetings
------------------
The BDC Director and the BDC Observers may participate in meetings
of the Board by means of telephone, electronic or other
communication facilities so as to permit all Persons participating
in the meeting to hear and communicate with each other
simultaneously and a director participating in such a meeting by
such means is deemed to be present at the meeting.
6.5 Directors' Expenses
-------------------
The BDC Director and the BDC Observer shall be entitled to the
reimbursement by BioSyntech of reasonable expenses incurred in
attending meetings, upon presentation of receipts therefore.
6.6 Insurance
---------
The Company shall maintain:
(a) adequate insurance coverage for all of its assets, general,
civil, clinical and environmental liability, as needed, for
amounts corresponding to the industry standards, for which
the BDC will be identified as the loss payee; and
(b) directors' and officers' civil liability insurance coverage
of at least two million dollars ($2,000,000) which shall
also cover the BDC Director and the BDC Observer, the owner
and beneficiary of which shall be BioSyntech.
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7. APPROVAL OF MATTERS
-------------------
7.1.1 Matters requiring approval of the BDC Notwithstanding any
other provision of this Agreement, no obligation of the
Company or of a Subsidiary will be entered into, no
decision will be made, and no action taken by or with
respect to the Company or of a Subsidiary with respect to
the following matters, without the prior written approval
of the BDC:
(a) any change in the Articles or By-laws or the articles
or by-laws of a Subsidiary;
(b) any change in the capital structure;
(c) the issuance (other than pursuant to currently
existing obligations described in Schedule (c) or in
accord with the SOP attached hereto as part of
Schedule 7.1.1(c) ), redemption or purchase or
repurchase for cancellation or retirement of any
Securities, or the entering into of any agreement or
the making of any offer or the granting of any right
capable of becoming an agreement to issue, redeem or
repurchase Securities (otherwise than pursuant to the
SOP attached hereto as part of Schedule 7.1.1(c) );
the redemption, purchase for cancellation or other
retirement or paying-off of any of the outstanding
Securities;
(d) the declaration or payment of any dividend,
distribution, or repayment of capital, whether in
cash, in stock or otherwise, on any Securities;
(e) the adoption and approval of the Annual Business Plan,
and the budget prepared in connection therewith
including, without limitation, the operating budget,
the capital expenditures budget and the research and
development budget, or any amendment thereto;
(f) the making, directly or indirectly of any loans or
advances or the granting of any financial assistance
or guarantee to any Person, the forgiveness of any
debts or the settlement of any legal proceeding;
(g) the borrowing of any money, the guarantee of any
indebtedness;
(h) the repayment of any loan, advance, investment or
guarantee to any Person;
(i) the entering into of any corporate reorganization
including, but not limited to, an amalgamation,
merger, or consolidation with any other Person or the
continuance of the corporation under a different
jurisdiction;
(j) the entering into of a partnership or of any
arrangement for the sharing of profits, union of
interests, joint venture or reciprocal concession with
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any Person when, in the opinion of the BDC, these
imply substantial financial commitments for which the
Company has not arranged proper funding;
(k) the making of a general assignment for the benefit of
creditors, the filing of a notice to make a proposal
or the filing of a proposal of compromise, arrangement
or reorganization under any bankruptcy or insolvency,
or the appointment of a liquidator, receiver or
manager;
(l) the taking of any steps to dissolve, wind-up or
terminate the corporate existence or sell, lease,
exchange or dispose of all or substantially all of its
property or assets, or the giving of an option to that
effect;
(m) the creation, acquisition or sale of any Person that
would be an Affiliate;
(n) any action which may lead to or result in a material
change in the nature of the Business;
(o) appointment or change of the Auditors to a firm other
than one of the major internationally recognized
firms;
(p) appointment or change of the members of the audit and
governance committees;
(q) the establishment and/or modification of an SOP or any
other bonus or remuneration plan;
(r) the granting to Selmani or any Related Party any
remuneration, bonus or incentive, including without
limitation, participation in a SOP, or any change
thereto;
(s) the hiring or firing of the chief executive officer
and president as well as the setting or changing of
the remuneration or participation in any bonus or
incentive plan, including without limitation,
participation in a SOP by the chief executive officer,
or any change thereto;
(t) the approval, the entering into or the changing of the
terms of any agreement or transaction with a Related
Party;
(u) the approval, the entering into or the changing of the
terms of any agreement or transaction related to the
sale, transfer, assignment or licensing of
Intellectual Property or distribution rights thereof,
any of which is either (i) outside the normal course
of business, (ii) not approved by the Board, or (iii)
is not with a party at arm's length;
(v) the approval, the entering into or the execution of
any contract or transaction constituting a capital
expenditure in excess of seventy-five thousand dollars
($75,000), except as pre-approved in the annual
Business Plan or if, in the opinion of the BDC, such
expenditure has been properly financed; and
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(w) the hypothecation, mortgage, pledge, charging or other
granting of any encumbrance with regard to any assets,
including the Intellectual Property.
7.1.2 Consent Notices BioSyntech shall provide the BDC with a
written notice seeking its approval with respect to the
matters listed above and the notice will state that if the
BDC has not responded in writing within fifteen (15) days,
the BDC shall be deemed to have consented to the matter
described in such notice. If the BDC does not respond in
writing within fifteen (15) days from receiving said
notice, the BDC shall be deemed to have consented to the
matter described therein.
8. Financial and Accounting Practices
----------------------------------
8.1 Financial and Other Information
-------------------------------
(a) The Company shall deliver forthwith to the BDC: (i) within
ninety (90) days of the financial year end of BioSyntech, one
copy of the audited annual financial statements which shall be
prepared on a consolidated and non-consolidated basis by the
Auditors, including the preparation of a balance sheet and
statements of income, retained earnings and changes in
financial position, together with all supporting schedules, as
well as an auditor's report with respect to any non-arm's
length transactions (ii) within forty-five (45) days of the
end of each quarter, one copy of the internal financial
statements on a consolidated basis (including the balance
sheets, the statement of earnings and the statement of changes
in the financial position) and the president's detailed report
on the operations; (iii) thirty (30) days of the beginning of
each fiscal year, a copy of the an annual Business Plan which
will include cash flow projections, monthly detailed pro forma
balance sheets, income statements and statements of changes in
financial position for the Company prepared in accordance with
generally accepted accounting principles on a consolidated
basis and on a non consolidated basis and approved by the
Board together with such explanations, notes and information
which in the reasonable opinion of the Company explains and
supplements the information so provided, as well as a research
and development plan and budget, a capital expenditure budget
and an annual operating expenditure budgets (collectively: the
"Annual Business Plan"); and (iv) any other financial or other
information concerning the affairs of the Company or its
Subsidiaries which the BDC may reasonably request;
(b) The Company shall deliver to the directors at the beginning of
each Board Meeting, a report from an officer of BioSyntech
stating that all taxes and other source deduction have been
remitted by the Company and its Subsidiaries to the proper
authorities;
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(c) The BDC can, at its expense, request that Auditors examine any
agreement or transaction which the BDC deems to have been
approved or entered into with a Related Party in order to
certify that its terms and conditions are at Fair Market
Value. If the terms and conditions of the agreement or
transaction are determined not to be at Fair Market Value, the
expenses related to such certification shall be assumed by the
Company.
8.2 Corporate Book
--------------
The Company shall maintain accurate and complete books and records
of all transactions, receipts, expenses, assets and liabilities of
the Company in accordance with generally accepted accounting
principles, consistently applied as approved and adopted by the
Board.
9. COVENANTS
---------
9.1 Related Party Transactions
--------------------------
The Company, Selmani and Holdco undertake to ensure that any
transactions or agreements entered into with a Related Party, or any
modification of the terms of such a transaction or agreement will:
(i) be the object of a notification to the Board providing a
detailed description of the transaction or agreement and the nature
of the relationship between the parties; and (ii) shall be
carried-out at Fair Market Value.
9.2 Transfer of Intellectual Property
---------------------------------
The Company, Selmani and Holdco hereby undertake not to enter into a
non-arms' length agreement or transaction to license, sell,
transfer, assign, dispose of or encumber in any manner the
Intellectual Property, or any component thereof with any Person,
including without limitation, a Related Party.
9.3 Transfer of Intellectual Property
---------------------------------
The Company, Selmani and Holdco hereby undertake not to issue any
securities to or enter into any agreement, arrangement, association,
transaction or partnership of any sort with any person or entity who
is a "listed person", as defined in the United Nations Suppression
of Terrorism Regulations, and identified on the lists (Parts A and
B) prepared by the Department of Foreign Affairs and International
Trade.
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10. DEALING WITH SECURITIES
-----------------------
10.1 Issue of Additional Securities
------------------------------
(a) Except as provided in subsection (d), if any additional
Securities are to be issued, the Company shall first offer
such Securities to the BDC by notice given to it of the
intention to issue additional Securities, together with all
pertinent information with regard thereto, including the date,
number and price of such Securities to be so issued and the
fact that the BDC has fifteen (15) days in which to respond.
(b) The BDC shall have the right to purchase the Securities so
offered provided however that the BDC shall have fifteen (15)
days from the date the notice is received in which to give
written notice to BioSyntech of its intention to purchase all
or any portion of the Securities and shall indicate in such
notice the number of Securities which it is willing to
purchase.
(c) Any Securities not taken up by the BDC may be issued within
three (3) months of such Securities having been first offered
to the BDC, at no more favourable terms than those offered to
the BDC, to such Persons as the Board determines.
(d) BioSyntech shall be entitled to issue additional Securities,
or options to purchase Securities, without complying with the
provisions of subsection (a) of this section when such
Securities, or options to purchase Securities, are being
issued:
(i) upon the exercise or conversion of other Securities
issued by BioSyntech prior to the date hereof; or
(ii) to directors, senior officers, employees and consultants
pursuant to a SOP approved by the Board.
10.2 Piggy Back Rights - Sale by Selmani or Holdco
---------------------------------------------
(a) In the event that Selmani and/or Holdco (the "Offeror")
proposes to sell any of all of the Securities which they hold
directly or indirectly to a third party (the "Third Party"),
the Offeror shall be free to sell its Securities to the Third
Party provided that prior to the completion of such sale, the
Offeror causes the Third Party, to offer to purchase the
Securities held by the BDC at the same price and on the same
conditions as the Offeror shall sell to the Third Party.
(b) For greater certainty, the transfer of Securities hereunder is
conditional upon and must occur at the same closing.
-15-
11. GENERAL
-------
11.1 Representations and Warranties
------------------------------
Each of Selmani and Holdco hereby represent and warrant to the BDC
and to BioSyntech that:
(a) it is neither a party to nor bound by any agreement regarding
the ownership or the transfer of its Securities other than
this Agreement;
(b) it is not a party to, bound by or subject to any indenture,
hypothec, mortgage, lease agreement, instrument, charter or
by-law provision, statute, regulation, order, judgement,
decree or law which would be violated, contravened or breached
by, or under which any default would occur as a result or the
execution and delivery by Selmani or Holdco of this Agreement
or the performance by same of any terms hereof; and
(c) is the registered and beneficial owner of its Securities with
good marketable title thereto free and clear of all legal
rights, hypothecs and encumbrances.
11.2 No Further Obligations
----------------------
The Parties hereto acknowledge and agree that the BDC shall not be
required to subscribe for additional Securities, to lend additional
money to the Company or to provide any guarantees to secure any
indebtedness, liabilities or obligations of the Company.
11.3 Application of this Agreement
-----------------------------
The terms of this Agreement shall apply mutatis mutandis to any
shares:
(a) resulting from the conversion, reclassification,
redesignation, subdivision or consolidation or other change of
the Common Shares; and
(b) of the Company or any successor body corporate which may be
received by the Shareholders on a merger, amalgamation,
arrangement or other reorganization of or including the
Company;
and prior to any such action being taken the Parties shall give due
consideration to any changes which may be required to this Agreement
in order to give effect to the intent of this section.
11.4 Benefit of the Agreement
------------------------
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and
permitted assigns of the Parties hereto.
-16-
11.5 Entire Agreement
----------------
This Agreement constitutes the entire agreement between the Parties
to this Agreement with respect to the subject matter of this
Agreement and cancels and supersedes any prior understandings and
agreements between the Parties with respect to such subject matter.
There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or
statutory, between the Parties other than those expressly set forth
in this Agreement.
11.6 Amendments and Waivers
----------------------
No amendment to this Agreement shall be valid or binding unless set
forth in writing and duly executed by the BDC. No waiver of any
breach of any provision of this Agreement shall be effective or
binding unless made in writing and signed by the party purporting to
give the same and, unless otherwise provided in the written waiver,
shall be limited to the specific breach waived.
11.7 Assignment
----------
Except as may be expressly provided in this Agreement, none of the
Parties to this Agreement may assign its rights or obligations under
this Agreement without the prior written consent of all of the other
Parties. Notwithstanding the present subsection, the rights granted
to the BDC pursuant to this Agreement shall be assignable at the
BDC's sole discretion.
11.8 Severability
------------
If any provision of this Agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provision or part of such
provision and the remaining part of such provision and all other
provisions of this Agreement shall continue in full force and
effect.
11.9 Notices
-------
Any notice or other writing required or permitted to be given under
this Agreement or for the purposes of this Agreement (referred to in
this section as a "notice") to any Party shall be sufficiently given
if delivered personally, or if sent by prepaid registered mail or if
transmitted by fax or other form of recorded communication tested
prior to transmission to such Party.
-17-
In the case of a notice
to BioSyntech, Inc. at: BIOSYNTECH, INC.
000 Xxxxxx-Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxx xx Xxxxxx
X0X 0X0
Telephone number: 000 000 0000
Facsimile number: 000 000 0000
In the case of a notice
to Business
Development Bank of
Canada at: BUSINESS DEVELOPMENT BANK
OF CANDA
0 Xxxxx Xxxxx-Xxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx xx Xxxxxx
X0X 0X0
Telephone number: 000 000 0000
Facsimile number: 000 000 0000
In the case of a notice
to Bio Syntech Europe
S.A.R.L. at: BIO SYNTECH EUROPE S.A.R.L.
00 Xxxxxxx xx Xxxxxxx, 00000
Xxxxxxx, Xxxxxx
Telephone number: 000 00 0 00 00
28 60
Facsimile number: 011 33 3 20 39
03 70
In the case of a notice
to Amine Selmani at: AMINE SELMANI
00 Xxx Xxxxxxx, Xxxxx, Xxxxxxxx xx
Xxxxxx
X0X 0X0
Telephone number: 000 000 0000
Facsimile number: 000 000 0000
-18-
In the case of a notice
to 9083-1496 Canada
Inc. at: 9083-1496 CANADA INC.
0000 XxXxxx Xxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxx
X0X 0X0
Telephone number: 000 000 0000
Facsimile number: 000 000 0000
or at such other address as the Party to whom such writing is to be
given shall have last notified to the Party giving the same in the
manner provided in this section. Any notice personally delivered to
the Party to whom it is addressed as provided in this section shall
be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a
Business Day then the notice shall be deemed to have been given and
received on the Business Day next following such day. Any notice
mailed to the address and in the manner provided for in this section
shall be deemed to have been given and received on the fifth
Business Day next following the date of its mailing. Any notice
transmitted by fax or other form of recorded communication shall be
deemed given and received on the first Business Day after its
transmission.
11.10 Counterparts
------------
This Agreement may be executed by the Parties hereto in separate
counterparts at different times each of which when so executed and
delivered (including by facsimile) shall be deemed to be an original
but all such counterparts shall together constitute one and the same
instrument.
(signatures on following page)
SIGNATURES
----------
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date first above written.
(BioSyntech) BIOSYNTECH, INC.
Per:
/s/ Amine Selmani
------------------------------
Name: Amine Selmani
Title: CEO
(BDC) BUSINESS DEVELOPMENT BANK OF CANADA
Per:
/s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: DIRECTOR
(BSE) BIO SYNTECH EUROPE S.A.R.L.
Per:
/s/ Amine Selmani
------------------------------
Name: Amine Selmani
Title: Mandatee
(Selmani)
Per:
/s/ Amine Selmani
------------------------------
Amine Selmani
(Holdco) 9083-1496 CANADA INC.
Per:
/s/ Amine Selmani
--------------------------------
Name: Amine Selmani
Title: President
SCHEDULE "1.1.3"
ARTICLES
(See attached documents)
SCHEDULE "1.1.7"
BUSINESS PLAN
(See attached document)
SCHEDULE "7.1.1(C)"
OBLIGATIONS TO ISSUE SECURITIES & SOP
