EXHIBIT 4.7(B)
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST
IN ACCORDANCE WITH RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED. REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
SHARE PURCHASE AGREEMENT
(FOR THE PURCHASE OF SHARES OR OPTIONS
FROM COMMON SHAREHOLDERS)
THIS AGREEMENT is made as of the 18th day of November, 2005,
BETWEEN:
PARTEQ RESEARCH AND DEVELOPMENT INNOVATIONS, a non-share capital
company incorporated under the laws of Ontario ("PARTEQ")
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XXXXX X. XXXXXXXX, of the City of Kingston ("XXXXXXXX")
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XXXXX X. XXXXXXX, of the City of Xxxxxxxx ("XXXXXXX")
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XXXXXX X. XXXXXXX, of the City of Xxxxxxxx ("XXXXXXX")
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XXXX XXXXXXXXX, of the City of Kingston ("JHAMANDAS")
-and-
XXXXXXX X. XXXXXXXX, of the City of Chicago, Illinois
("XXXXXXXX")
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XXXX XXXXXXX, of the City of Xxxxx, Pennsylvania ("XXXXXXX")
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XXX XXXXXXXX, of the City of Woodbridge ("XXXXXXXX")
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XXXXXX XXXXXXXX, of the City of Etobicoke ("XXXXXXXX")
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XXXX-XXXX ST. PIERRE, of the City of Mont-Royal, Quebec ("ST.
PIERRE")
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XXXX XXXXXX, of the City of Beverly Hills, California ("XXXXXX")
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XXXX XXXXXX, of the City of Irvine, California ("XXXXXX")
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XXXXXX XXXXXXX, of the City of Etobicoke ("XXXXXXX")
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XXXXX XXXXXXXXX, of the City of Oakville ("MEOGROSSI")
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XXX XXXXXXX, of the City of Burlington ("XXXXXXX")
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XXXXX XXXXXXXX, of the City of Philadelphia, Pennsylvania
("MOLINOFF")
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XXXXX XXXXXX, of the City of Markham ("XXXXXX")
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XXXXX XXX, of the City of Markham ("RAE")
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XXXX XXXXXX, of the City of Boston, Massachusetts ("XXXXXX")
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XXXXXXX XXXXX, of the City of Brampton ("SINGH")
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XXXX ST. XXXXXXX, of the Town of Caledon ("HILAIRE")
(the above parties, being collectively referred to as the
"VENDORS" and individually as a "VENDOR")
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VERNALIS PLC, a corporation incorporated under the laws of
England and Wales, with company number 2304992
("VERNALIS")
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VERNALIS (CANADA) INC., a corporation incorporated under the laws
of New Brunswick
(the "PURCHASER")
RECITALS:
A. Certain holders of warrants, conversion rights and options to acquire Class
A Preference Shares, Class D Preference Shares and common shares (the
"PRINCIPAL SHAREHOLDERS") in the capital of Cita Neuropharmaceuticals Inc.
(the "CORPORATION"), the Purchaser, Vernalis and the Corporation have
entered into a share purchase agreement (the "PRINCIPAL PURCHASE
AGREEMENT") dated the date hereof whereby the Principal Shareholders have
agreed to sell to the Purchaser all of their shares in the capital of the
Corporation, including those issuable upon exercise of warrants, conversion
rights, options and other rights to acquire shares in the capital of the
Corporation, or to exchange certain options and other rights to acquire
shares in the capital of the Corporation (both the shares and options
being, collectively, the "PRINCIPAL SHAREHOLDERS' SECURITIES").
B. Parteq, Reynolds, Bennett, Boegman, Jhamandas and Xxxxxxxx (collectively,
the "SHAREHOLDERS") wish to sell all of their common shares in the capital
of the Corporation and the Purchaser wishes to purchase such shares, on and
subject to the terms and conditions of this Agreement.
X. Xxxxxxx, Anderson, Strachan, St. Pierre, Cutler, Cotman, Burgess,
Meogrossi, Newsome, Xxxxxxxx, Xxxxxx, Rae, Sekhri, Singh and St. Hilaire
(collectively, the "OPTIONHOLDERS") wish to exchange their options to
acquire common shares in the capital of the Corporation for options to
acquire Class 4 Preferred Shares in the Purchaser, on and subject to the
terms of this Agreement.
D. The Vendors wish to appoint The VenGrowth Advanced Life Sciences Fund Inc.
to act as their representative with respect to certain matters with respect
to this Agreement and related documents.
E. The Purchaser is also entering into separate agreements with other holders
of shares in the capital of the Corporation and holders of warrants,
conversion rights, options or rights to acquire shares in the capital of
the Corporation to acquire all such shares and/or rights.
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NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement,
1.1.1 "AFFILIATE" has the meaning ascribed to such term under the Business
Corporations Act (Ontario);
1.1.2 "AGREED PAIN PROJECT BUDGET" means the budget for the Pain Project
agreed between the Corporation and the Purchaser;
1.1.3 "AGREED XXXXXXXXX'X PROJECT BUDGET" means the budget for the
Xxxxxxxxx'x Project agreed between the Corporation and the Purchaser;
1.1.4 "AGREEMENT" means this agreement and all schedules attached to this
agreement, in each case as they may be amended or supplemented from time to
time, and the expressions "HEREOF", "HEREIN", "HERETO", "HEREUNDER",
"HEREBY" and similar expressions refer to this agreement; and unless
otherwise indicated, references to Articles and sections are to Articles
and sections in this agreement;
1.1.5 "ALZHEIMER'S PROJECT" means the Business which relates to CNP1061 for
the indication of Alzheimer's disease;
1.1.6 "API INVENTORY AMOUNT" means the aggregate purchase price of
specified inventory acquired in respect of the Pain Project and the
Xxxxxxxxx'x Project, as set out in the Principal Purchase Agreement;
1.1.7 "BUSINESS" means the business of the Corporation of researching,
developing and testing drug candidates related to the Pain Project, the
Xxxxxxxxx'x Project and the Alzheimer's Project;
1.1.8 "BUSINESS DAY" means any day, other than Saturday, Sunday or any
statutory holiday in the Province of Ontario or London, England;
1.1.9 "CANADIAN DOLLARS", "CDN. DOLLARS" or "CDN.$" means lawful currency
of Canada;
1.1.10 "CHARGE" means any security interest, lien, charge, pledge,
encumbrance, mortgage, adverse claim or title retention agreement of any
nature or kind;
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1.1.11 "CLASS 4 PREFERRED SHARE OPTIONS" means the options to acquire Class
4 Preferred Shares to be granted at the Time of Closing to the
Optionholders as set forth opposite each Optionholder's name in the Final
Proceeds Schedule, pursuant to Purchaser Option Agreements, in exchange for
options to acquire common shares in the capital of the Corporation, each
Class 4 Preferred Share Option being exercisable for one Class 4 Preferred
Share;
1.1.12 "CLASS 2 PREFERRED SHARES" means the Class 2 non-voting,
retractable, redeemable, preferred shares, in registered form, of the
Purchaser having the share provisions set out in Schedule D and subject to
the prior redemption right of the Class 1 non-voting, retractable,
redeemable, preferred shares in registered form, of the Purchaser, with a
stated redemption price of U.S. $1.00 per share;
1.1.13 "CLASS 3 PREFERRED SHARES" means the Class 3 non-voting,
retractable, redeemable, preferred shares, in registered form, of the
Purchaser, having the share provisions set out in Schedule D and subject to
the prior redemption right of the Class 1 non-voting, retractable,
redeemable, preferred shares, in registered form, of the Purchaser and the
Class 2 non-voting, retractable, redeemable, preferred shares, in
registered form, of the Purchaser, with a stated redemption price of
U.S.$1.00 per share and with an aggregate Redemption Price as set out in
the Final Proceeds Schedule, plus the aggregate Redemption Price of any
additional Class 3 Preferred Shares issued in accordance with section 2.7
and to other Persons in respect of Net Cash, and subject to further
reduction and set-off in accordance with section 2.3.7 and the share
provisions attached to the Purchaser Shares;
1.1.14 "CLASS 4 PREFERRED SHARES" means the Class 4 non-voting,
retractable, redeemable, preferred shares, in registered form, of the
Purchaser, having the share provisions set out in Schedule D and subject to
the prior redemption right of the Class 1 non-voting, retractable,
redeemable, preferred shares, in registered form, of the Purchaser and the
Class 2 Preferred Shares, with a stated redemption price of U.S.$1.00 per
share and with an aggregate Redemption Price as set out in the Final
Proceeds Schedule, plus the aggregate Redemption Price of any additional
Class 4 Preferred Shares issued in accordance with section 2.7 and to other
Persons in respect of Net Cash, and subject to further reduction and
set-off in accordance with section 2.3.7 and the share provisions attached
to the Purchaser Shares;
1.1.15 "CLOSING" means the completion of the sale and purchase and exchange
of the Purchased Securities pursuant to this Agreement at the Time of
Closing;
1.1.16 "CLOSING DATE" means such date for completion of the purchase of the
Principal Shareholders' Securities pursuant to the Principal Purchase
Agreement as determined pursuant to the Principal Purchase Agreement;
1.1.17 "CONVERSION RATE" means, in relation to the conversion of one
Currency to another on a particular day, the rate of exchange quoted by the
Bank of Canada as its spot rate of exchange for the conversion of the one
Currency to the other at approximately noon (Toronto time) on such day;
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1.1.18 "CORPORATION SHAREHOLDERS AGREEMENT" means the Amended and Restated
Shareholders Agreement dated May 4, 2004 among the shareholders of the
Corporation and the Corporation;
1.1.19 "CORPORATION SHARES" means the common shares in the capital of the
Corporation;
1.1.20 "CREST" means the relevant system, as defined in the UK
Uncertificated Securities Regulations 1995 (SI 1995 No. 93/3272), as
amended (in respect of which CRESTCo Limited is operator);
1.1.21 "CURRENCY" means Canadian Dollars, Pounds Sterling or United States
Dollars;
1.1.22 "ESTIMATED SIGNING BALANCE SHEET" means the consolidated balance
sheet of the Corporation and the Subsidiaries as at the date of this
Agreement, and the calculation of Vernalis Liabilities, prepared pursuant
to the Principal Purchase Agreement;
1.1.23 "EXCHANGED OPTIONS" means the options to acquire common shares in
the capital of the Corporation, as set forth opposite each Optionholder's
name in Schedule E, to be exchanged by the Optionholders for Class 4
Preferred Share Options pursuant to this Agreement;
1.1.24 "FDA" means the Food and Drug Administration of the United States of
America;
1.1.25 "FINAL CLOSING BALANCE SHEET" means the consolidated balance sheet
of the Corporation and the Subsidiaries as at the Closing Date, and the
calculation of the Net Cash as at the Closing Date, prepared pursuant to
the Principal Purchase Agreement;
1.1.26 "FINAL PROCEEDS SCHEDULE" means the schedule setting out, as at the
Closing Date, the allocation of Purchaser Shares, Class 4 Preferred Share
Options, each class of shares in the capital of the Purchaser, options to
acquire such shares, Redemption Amounts based on the occurrence of
Milestones and other amounts set forth therein (prior to reduction and
set-off in accordance with section 2.3.7 and excluding the allocation of
the Redemption Amounts in respect of any additional Class 2 Preferred
Shares, Class 3 Preferred Shares and Class 4 Preferred Shares issued
pursuant to section 2.7 or to other Persons in respect of Net Cash), a pro
forma of which is set out in Schedule A (the "PRO FORMA PROCEEDS
SCHEDULE"), such schedule in final form to be agreed between Vernalis and
the Corporation pursuant to the Principal Purchase Agreement;
1.1.27 "FINAL SIGNING BALANCE SHEET" means the consolidated balance sheet
of the Corporation and the Subsidiaries as at the date of this Agreement,
and the calculation of Vernalis Liabilities, prepared pursuant to the
Principal Purchase Agreement;
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1.1.28 "INTERIM EXPENDITURE" means such portion of the Interim Funding
amount advanced by the Purchaser or Vernalis to the Corporation where the
proposed use of such funds indicated by the Corporation pursuant to the
Principal Purchase Agreement was to fund Permitted Costs;
1.1.29 "INTERIM FUNDING AMOUNT" means the aggregate amount advanced by the
Purchaser or Vernalis to the Corporation pursuant to the Principal Purchase
Agreement to fund the Corporation's operations;
1.1.30 "MILESTONE", in respect of the Purchaser Shares, has the meaning
attributed to such term in section 2.3.2;
1.1.31 "MILESTONE CONSIDERATION" means the issue of Class 3 Preferred
Shares and Class 4 Preferred Share Options to the Vendors as set out in the
Final Proceeds Schedule and in accordance with section 2.3.1;
1.1.32 "MILESTONE SHARE PRICE" means, in respect of any Vernalis Shares to
be issued on a Redemption Date, the average of the closing middle market
prices of a Vernalis Share as shown in the Daily Official List of the
London Stock Exchange plc on the 30 trading days up to and including the
trading day (the "FINAL TRADING DAY") immediately prior to the occurrence
of the relevant Milestone and converted to the relevant Currency at the
Conversion Rate on the Final Trading Day;
1.1.33 "MILESTONE SHARES" means, in respect of any Redemption Amount, such
number of Vernalis Shares, if any, to be allotted and issued to satisfy
such Redemption Amount in accordance with section 2.3.5;
1.1.34 "NET CASH" means an amount equal to:
(i) the aggregate amount of cash, receivables and deposits (but not
prepaid expenses) of the Corporation and the Subsidiaries as at
the Closing Date plus the API Inventory Amount,
less
(ii) the aggregate amount of all liabilities, including any
liabilities arising in connection with the entering into of this
Agreement, the completion of the transactions contemplated
hereby, any withholding tax remittances, interest and penalties
remaining unpaid in respect of payments to Chiesi Farmaceutica
S.p.A pursuant to the Chiesi Licence Agreements (as defined in
the Principal Purchase Agreement)(other than U.S.$ *** to be
withheld in connection with its right to acquire Class C
Preference shares in the capital of the Corporation), of the
Corporation and the Subsidiaries as at the Closing Date,
plus
(iii) the Vernalis Liabilities less such portion of the Interim
Funding Amount advanced by the Purchaser or Vernalis to the
Corporation where the proposed use of such funds indicated by the
Corporation pursuant to the Principal Purchase Agreement was to
fund Vernalis Liabilities,
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to be set out in the Final Closing Balance Sheet and calculated in the
manner provided in Schedule 1.1.34;
1.1.35 "PAIN PROJECT" means the Business which relates to CNP3381 for the
indication of diabetic neuropathic pain;
1.1.36 "XXXXXXXXX'X PROJECT" means the Business which relates to CNP1512
for the indication of Xxxxxxxxx'x disease;
1.1.37 "PERMITTED COSTS" means any expenditure or commitment incurred or
committed to by the Corporation and the Subsidiaries in accordance with the
Agreed Pain Project Budget or the Agreed Xxxxxxxxx'x Project Budget or to
pay salaries of employees of the Corporation and overhead costs at the same
level as at the date of this Agreement, and approved pursuant to the
Principal Purchase Agreement;
1.1.38 "PERSON" means any individual, partnership, limited partnership,
joint venture, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee,
executor, administrator or other legal personal representative, regulatory
body or agency, government or governmental agency, authority or entity
however designated or constituted;
1.1.39 "POUNDS STERLING" or "L" means lawful currency of the United
Kingdom;
1.1.40 "PRIME RATE" means the annual rate of interest which the Royal Bank
of Canada establishes at its principal office in Toronto as the reference
rate of interest to determine interest rates it will charge at such time
for demand loans in Canadian dollars made to its customers in Canada and
which it refers to as its "prime rate of interest";
1.1.41 "PRO FORMA PROCEEDS SCHEDULE" has the meaning attributed to such
term in section 1.1.26;
1.1.42 "PURCHASE PRICE" has the meaning attributed to such term in section
2.2;
1.1.43 "PURCHASED SECURITIES" means, collectively, the Purchased Shares and
the Exchanged Options;
1.1.44 "PURCHASED SHARES" means the common shares in the capital of the
Corporation to be sold by Parteq, Reynolds, Bennett, Boegman, Jhamandas and
Xxxxxxxx to the Purchaser pursuant to this Agreement, as set forth opposite
each Vendor's name in Schedule E;
1.1.45 "PURCHASER OPTION AGREEMENTS" means the agreements in the form
appended to the Purchaser Option Plan to be entered into among the
Purchaser, the Shareholder's Representative and each Optionholder in
respect of the grant of Class 4 Preferred Share Options;
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1.1.46 "PURCHASER OPTION PLAN" means the option plan to be adopted by the
Purchaser, substantially in the form attached as Schedule B;
1.1.47 "PURCHASER SHAREHOLDERS AGREEMENT" means the unanimous shareholders
agreement to be entered into pursuant to the Business Corporations Act (New
Brunswick) among all of the shareholders of the Purchaser, the Purchaser
and Vernalis, substantially in the form attached as Schedule C;
1.1.48 "PURCHASER SHARES" means, collectively, the Class 3 Preferred Shares
to be issued to the Vendors and to other holders of common shares and
rights to acquire common shares in the capital of the Corporation and the
Class 4 Preferred Shares to be issued to the Vendors and other holders of
rights to acquire common shares in the capital of the Corporation upon
exercise of their Class 4 Preferred Share Options, all with rights,
privileges, restrictions and conditions set out in the share provisions,
substantially in the form attached as Schedule D;
1.1.49 "REDEMPTION AMOUNT" means, in respect of any Redemption Date, the
aggregate Redemption Price payable in cash and/or Vernalis Shares owing to
the Vendors by the Purchaser upon the retraction or redemption of their
Purchaser Shares (including Purchaser Shares issued upon exercise of Class
4 Preferred Share Options) in accordance with the share provisions attached
to such Purchaser Shares, or by Vernalis (or its designee or assignee) upon
exercise of its call right in accordance with section 2.3.4, and, subject,
in either case, to reduction or set-off of any Vendor's entitlement thereto
in accordance with section 2.3.7 and the share provisions attached to the
Purchaser Shares;
1.1.50 "REDEMPTION DATE" means (i) in respect of any Milestone, the 45th
day after the occurrence of that Milestone, or such other date as may be
agreed between the Purchaser and the Vendors' Representative, and (ii) the
Special Redemption Date;
1.1.51 "REDEMPTION PRICE" means the stated redemption price of each
Purchaser Share in respect of a Redemption Date of U.S.$ *** each;
1.1.52 "REPORT" means the customary report produced for filing with the
FDA;
1.1.53 "SPECIAL REDEMPTION DATE" has the meaning attributed to such term in
section 0;
1.1.54 "SUBSIDIARIES" means 2037137 Ontario Inc. and 2060347 Ontario Inc.,
each incorporated under the laws of the Province of Ontario and each a
wholly-owned subsidiary of the Corporation;
1.1.55 "TIME OF CLOSING" means such time for completion of the purchase of
the Principal Shareholders' Securities pursuant to the Principal Purchase
Agreement on the Closing Date;
1.1.56 "UNITED STATES DOLLARS", "U.S. DOLLARS" or "U.S.$" means lawful
currency of the United States of America;
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1.1.57 "VENDORS' REPRESENTATIVE" has the meaning attributed to such term in
section 2.4;
1.1.58 "VENDORS' REPRESENTATIVE AGREEMENT" has the meaning attributed to
such term in section 2.4;
1.1.59 "VERNALIS LIABILITIES" means the aggregate liabilities as at the
date of this Agreement incurred or committed to by the Corporation and the
Subsidiaries in respect of the Pain Project and the Xxxxxxxxx'x Project
which are not outstanding for more than 60 days past their invoice date and
appended to the Estimated Signing Balance Sheet, subject to adjustment in
accordance with the Final Signing Balance Sheet; and
1.1.60 "VERNALIS SHARES" means the ordinary shares of L*** each in
the capital of Vernalis, adjusted for any stock split or consolidation
effected after the date of this Agreement.
1.2 HEADINGS
The inclusion of headings in this Agreement is for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.3 GENDER AND NUMBER
In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa, words importing gender
include all genders or the neuter, and words importing the neuter include all
genders.
1.4 CURRENCY CONVERSION AND INDEMNITY
If, in connection with any action or proceeding brought in connection
with this Agreement or any judgment or order obtained as a result thereof, it
becomes necessary to convert any amount due hereunder in one Currency (the
"OTHER CURRENCY") into Canadian Dollars, then the conversion shall be made at
the Conversion Rate on the first Business Day prior to the day on which payment
is received.
If the conversion is not able to be made in the manner contemplated by
the preceding paragraph in the jurisdiction in which the action or proceeding is
brought, then the conversion shall be made at the Conversion Rate on the date
fixed by the court for such conversion.
If the Conversion Rate on the date of payment is different from the
Conversion Rate on such first Business Day or on the date fixed for conversion
by the court, as the case may be, the party liable to make the payment (the
"PAYOR") shall pay such additional amount (if any) in Canadian Dollars as may be
necessary to ensure that the amount paid on such payment date is the aggregate
amount in Canadian Dollars which, when converted at the Conversion Rate on the
date of payment, is the amount due in the Other Currency, together with all
costs, charges and expenses of conversion. Any additional amount owing by the
payor to the party or parties
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entitled to payment thereof pursuant to the provisions of this section 1.4 shall
be due as a separate debt and shall give rise to a separate cause of action and
shall not be affected by or merge into any judgment obtained for any other
amounts due under or in respect of this Agreement.
1.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the purchase or exchange of the common shares in the capital of
the Corporation. This Agreement supersedes all prior arrangements and
understandings, whether written or oral, relating to such subject matter in any
way. There are no warranties, conditions, or representations (including any that
may be implied by statute) and there are no agreements in connection with such
subject matter except as specifically set forth or referred to in this
Agreement. No reliance is placed on any warranty, representation, opinion,
advice or assertion of fact made either prior to, contemporaneous with, or after
entering into this Agreement, or any amendment or supplement thereto, by any
party to this Agreement or its directors, officers, employees or agents, to any
other party to this Agreement or its directors, officers, employees or agents,
except to the extent that the same has been reduced to writing and included as a
term of this Agreement, and none of the parties to this Agreement has been
induced to enter into this Agreement or any amendment or supplement by reason of
any such warranty, representation, opinion, advice or assertion of fact.
Accordingly, there shall be no liability, either in tort or in contract,
assessed in relation to any such warranty, representation, opinion, advice or
assertion of fact, except to the extent contemplated above. To the extent that
there is any inconsistency between the share provisions attached to the
Purchaser Shares and the terms of this Agreement, the terms of this Agreement
shall prevail.
1.6 WAIVER, AMENDMENT
Except as expressly provided in this Agreement, no amendment or waiver
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision nor shall any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly provided.
1.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
1.8 ATTORNMENT
The Vendors, Vernalis, and the Purchaser (collectively, the "ATTORNING
PARTIES" and, individually, an "ATTORNING PARTY") each agrees that any suit,
action or proceeding arising out of or relating to this Agreement against an
attorning party or any of an attorning party's assets may be brought in any
court in the Province of Ontario, and the attorning parties hereby irrevocably
and unconditionally attorn and submit to the jurisdiction of such courts. The
attorning parties irrevocably waive and agree not to raise any objection any of
them might now or hereafter have to the bringing of any such suit, action or
proceeding in any such court
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including, without limitation, any objection that the place where such court is
located is an inconvenient forum or that there is any other suit, action or
proceeding in any other place relating in whole or in part to the same subject
matter. Each attorning party agrees that any judgment or order against that
attorning party in any such suit, action or proceeding brought in such a court
shall be conclusive and binding upon that attorning party and consents to any
such judgment or order being recognized and enforced in the courts of its
jurisdiction of incorporation.
ARTICLE 2
PURCHASE AND SALE
2.1 AGREEMENT TO PURCHASE AND SELL
Simultaneously with the completion of the purchase from the Principal
Shareholders of the Principal Shareholders' Securities pursuant to the Principal
Purchase Agreement and subject to the terms of this Agreement, at the Time of
Closing:
2.1.1 the Shareholders shall sell and the Purchaser shall purchase all of
the Purchased Shares set forth opposite their names in Schedule E for
Milestone Consideration as set forth opposite their names in the Final
Proceeds Schedule; and
2.1.2 the Optionholders shall exchange the Exchanged Options set forth
opposite their names in Schedule E for Class 4 Preferred Share Options as
set forth opposite their names in the Final Proceeds Schedule.
The Purchaser shall not be obligated to purchase or exchange any of the
Purchased Securities in accordance with this Agreement unless the purchase or
exchange of all of the Principal Shareholders' Securities is completed
simultaneously in accordance with the Principal Purchase Agreement.
2.2 PURCHASE PRICE
The aggregate purchase price (the "PURCHASE PRICE") to be paid by the
Purchaser to the Vendors for the Purchased Shares and the Exchanged Options
shall be equal to the Milestone Consideration, subject to adjustment on the
Special Redemption Date in accordance with section 2.7.
2.3 SATISFACTION OF MILESTONE CONSIDERATION
2.3.1 The Milestone Consideration shall be satisfied at the Time of Closing
by:
2.3.1.1 the issue of such number of Class 3 Preferred Shares to each
Shareholder as is set out opposite that Shareholder's name in the
Final Proceeds Schedule, credited as paid in full, and delivered by
the Purchaser to each Shareholder in certificated form; and
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2.3.1.2 the grant of such number of Class 4 Preferred Share Options to
each Optionholder as is set out opposite that Optionholder's name in
the Final Proceeds Schedule.
The Purchaser Shares (including Purchaser Shares issued upon exercise of
Class 4 Preferred Shares Options) shall be redeemed by the Purchaser (and
delivered by the relevant Vendor to the Purchaser for redemption) on each
Redemption Date for the applicable Redemption Amount in accordance with the
share provisions attached to the Purchaser Shares and the provisions of
this Agreement or, if Vernalis exercises its call right in accordance with
section 2.3.4, purchased by Vernalis (and delivered by the relevant Vendor
to Vernalis for purchase) on such Redemption Date for the applicable
Redemption Amount in accordance with the share provisions attached to the
Purchaser Shares and the provisions of this Agreement. Each of the Vendors,
the Purchaser and Vernalis agrees to be bound by the share provisions
attached to the Purchaser Shares, subject to the terms of this Agreement.
2.3.2 The occurrence of each of the following events (each a "MILESTONE")
shall give rise to a retraction, redemption or call right in respect of the
Purchaser Shares up to the amounts specified below (each a "MILESTONE
PAYMENT"), in accordance with the share provisions attached to the
Purchaser Shares and the provisions of this Agreement, and Vernalis shall
notify the Vendors' Representative of the occurrence of each Milestone
within 10 Business Days of its occurrence and shall indicate the Redemption
Date with respect to such Milestone:
2.3.2.1 in respect of the Pain Project:
2.3.2.1.1 U.S.$5,833,334, upon the completion of a report by
Vernalis or its affiliates to be produced in a timely manner
following completion of a clinical study which generates data
sufficient to support the requirements of 21 CFR 312.21(b)
sufficient to justify Vernalis progressing with a Phase IIb or
a Phase III study programme, as the case may be;
2.3.2.1.2 U.S.$5,833,333, upon the completion of a Report by
Vernalis or its affiliates to be provided in a timely manner
following completion of a clinical study which generates data
sufficient tos upport the requirements of 21 CFR 312.21(c) for
a submission for regulatory approval to the FDA to market and
sell in the USA a product comprising CNP3381 for the treatment
of diabetic neuropathic pain; and
2.3.2.1.3 U.S.$5,833,333, upon the issuance by the FDA of a
written notification to Vernalis or its affiliates pursuant to
21 CFR3 14.105(a) that the FDA approves CNP3381 for the treatment
of diabetic neuropathic pain, Alzheimer's disease, post-operative
pain or mixed pain related to palliative care. For greater
certainty, if CNP3381 is developed for more than one of the
above-noted indications, only the first FDA approval for one of
the indications noted above shall be a Milestone. If the
Milestone referred to in section 2.3.2.1.2 has not occurred prior
to the FDA approval
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contemplated by this section 2.3.2.1.3, that Milestone shall be
deemed to occur concurrently with the occurrence of the Milestone
contemplated in this section 2.3.2.1.3; and
2.3.2.2 in respect of the Xxxxxxxxx'x Project:
2.3.2.2.1 U.S.$ 5,833,334, upon the enrollment by Vernalis or its
affiliates of the first patient into a Phase III study for the
purpose of generating data to support the requirements of 21 CFR
312.21(b);
2.3.2.2.2 U.S.$ 5,833,333, upon the completion of a Report by
Vernalis or its affiliates to be produced in a timely manner
following completion of a trial which generates data sufficient
to support the requirements of 21 CFR 312.21(c) for a submission
for regulatory approval to the FDA to market and sell in the USA
a product comprising CNP1512 for the treatment of Xxxxxxxxx'x
disease;
2.3.2.2.3 U.S.$ 5,833,333, upon the issuance by the FDA of a
written notification to Vernalis or its affiliates pursuant to 21
CFR 314.105(a) that the FDA approves CNP1512 for the treatment of
Xxxxxxxxx'x disease; and
provided that the Milestone Payment in respect of each of the first two
Milestones to occur shall be reduced by an amount equal to one-half of the
amount of the Interim Expenditure.
2.3.3 Subject to section 2.3.4, the Redemption Amount in respect of a
Redemption Date shall be satisfied by the allotment and issue of Vernalis
Shares or, at the option of the Purchaser, by payment in cash or by a
combination of cash and Vernalis Shares (such combination of cash and
Milestone Shares to be at the discretion of the Purchaser) on the
Redemption Date. Notwithstanding the foregoing, the Redemption Amount in
respect of the Special Redemption Date, if applicable, may only be
satisfied in cash.
2.3.4 Vernalis (or its designee or assignee) may, at its option, elect, by
notice to the Vendors' Representative at any time after the occurrence of a
Milestone and on or before the relevant Redemption Date, to purchase, on
the relevant Redemption Date, such Purchaser Shares which may be redeemed
on such Redemption Date for the applicable Redemption Amount,
notwithstanding that any Vendor or the Purchaser has exercised its
retraction or redemption right, respectively, pursuant to the share
provisions attached to the Purchaser Shares. If Vernalis exercises its call
right in accordance with this section 2.3.4 and the share provisions
attached to the Purchaser Shares in respect of a Redemption Date, the
Redemption Amount payable on that Redemption Date shall be satisfied by the
allotment and issue of Vernalis Shares or, at the option of Vernalis, by
payment in cash or by a combination of cash and Vernalis Shares (such
combination of cash and Vernalis Shares to be at the discretion of
Vernalis) on that Redemption Date and in accordance with the share
provisions attached to the Purchaser Shares. Upon exercise by Vernalis of
its call right in
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accordance with this section 2.3.4, the retraction and redemption right of
the Vendor or the Purchaser, respectively, pursuant to the share provisions
attached to the Purchaser Shares in respect of the Redemption Date shall be
cancelled. Notwithstanding the foregoing, the Redemption Amount in respect
of the Special Redemption Date, if applicable, may only be satisfied in
cash.
2.3.5 To the extent the Purchaser or Vernalis, as applicable, elects not to
satisfy any Redemption Amount in cash, Vernalis shall allot and issue
Vernalis Shares, credited as paid in full, and deliver on the relevant
Redemption Date to each Vendor (or its nominee), in uncertificated form to
an account in CREST designated by that Vendor, such number of Vernalis
Shares as at the Milestone Share Price shall be equal to that Vendor's
entitlement to a Redemption Amount divided by the Milestone Share Price
(rounded up to the nearest whole share), subject to any reduction as
provided in section 2.3.7.
2.3.6 Any Redemption Amount to be satisfied in cash, subject to any further
reduction as provided in section 2.3.7, shall be paid on the relevant
Redemption Date to the Vendors' Representative, on behalf of the Vendors,
and the Vendors' Representative shall pay such Redemption Amount to the
Vendors in accordance with their entitlement on the Redemption Date and
neither the Purchaser nor Vernalis, as applicable, shall have any
responsibility for such distribution. The Vendors' Representative may, not
less than five Business Days prior to the relevant Redemption Date, direct
the Purchaser or Vernalis, as applicable, to pay to any Vendor directly any
amounts contemplated by this section 2.3.6.
2.3.7 A Vendor's entitlement to a Redemption Amount on a Redemption Date
may be further reduced and set-off by the Purchaser or Vernalis by and
against the amount of any claim against that Vendor in respect of any loss,
damages or deficiencies suffered by the Purchaser or Vernalis as a result
of any breach by that Vendor of a representation or covenant contained in
this Agreement, being either the approximate and reasonable estimate of the
likely amount of any such claim as determined by the Purchaser or Vernalis,
as applicable, or, if such claim has been settled or finally determined,
the amount of such claim, to the extent not satisfied in full on the fifth
Business Day preceding the Redemption Date (using the Milestone Share Price
as the value of the Milestone Shares when calculating the number of
Milestone Shares to be reduced).
2.3.8 In the event any Vendor's entitlement to a Redemption Amount is
reduced by the amount of an estimated claim (the "ESTIMATED CLAIM") as
provided in section 2.3.7, upon such claim becoming settled or finally
determined (the "DETERMINED CLAIM") the Purchaser or Vernalis, as
applicable, shall, if and to the extent the amount of the Determined Claim
for which such Vendor is responsible, is less than the Estimated Claim for
which such Vendor is responsible, satisfy the difference (up to the amount
of the reduction made pursuant to section 2.3.7) in cash or Vernalis Shares
or a combination of the two (depending upon and proportionately to whether
the relevant Redemption Amount was satisfied in cash or Vernalis Shares or
a combination of the two) and the provisions of this section 2.3 shall
apply mutatis
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mutandis, with the Milestone Share Price, when calculating the number of
Vernalis Shares to be issued pursuant to this section 2.3.8, being that
used in respect of the relevant Redemption Date.
2.3.9 Notwithstanding that the Purchaser or Vernalis, as applicable, elects
to pay a Redemption Amount, in whole or in part, in Vernalis Shares, the
Purchaser or Vernalis, as applicable, may elect to pay to any Vendor who is
located or resident in a jurisdiction on the Redemption Date or date for
payment pursuant to section 2.3.8 where the issuance of such shares would
be in contravention of applicable securities laws (with no obligation to
qualify or register the shares or rely upon an exemption from such
requirement), its entitlement to a Redemption Amount in cash only.
2.3.10 Each of Molinoff, Sekhri, Thatcher, Lehmann, Xxxxxx and Xxxxxx
severally, and not jointly, covenants in respect of itself only to deliver
to the Purchaser, at the Time of Closing, a certificate issued pursuant to
section 116 of the Income Tax Act (Canada) of such Vendor's disposition of
its Purchased Shares. In the event that a Vendor is a non-resident of
Canada under the Income Tax Act (Canada) on any Redemption Date or date for
payment pursuant to section 2.3.8, it shall deliver to the Purchaser or
Vernalis, as applicable, a certificate issued pursuant to section 116 of
the Income Tax Act (Canada) on account of the Vendor's entitlement to a
Redemption Amount on such Redemption Date or date for payment pursuant to
section 2.3.8. Notwithstanding the foregoing, neither the Purchaser nor
Vernalis, as applicable, shall be required to issue any Purchaser Shares or
Vernalis Shares to any Vendor until the delivery of such certificate, as
applicable. The Purchaser or Vernalis, as applicable, shall be entitled to
deduct or withhold from any Redemption Amount payable in cash to a Vendor
any amount required to be deducted or withheld under applicable law.
2.3.11 Vernalis (or its designee or assignee) may, at its option, elect by
notice to the Vendors' Representative at any time after the earlier of (i)
the tenth anniversary of the Closing or (ii) the Redemption Date in respect
of the last Milestone to occur, provided that any Redemption Amount owing
in respect of such Redemption Date has been satisfied in full, to purchase,
on the date specified in such notice, all of the outstanding Purchaser
Shares for a purchase price of U.S.$ *** per share, payable in cash to the
Vendors' Representative on behalf of the Vendors.
2.4 APPOINTMENT OF VENDORS' REPRESENTATIVE
Each of the Vendors hereby appoints The VenGrowth Advanced Life
Sciences Fund Inc. to act as its representative (the "VENDORS' REPRESENTATIVE")
to carry out such duties and responsibilities and to exercise such rights and
powers on its behalf as are provided in this Agreement and in related documents
in accordance with an agreement (the "VENDORS' REPRESENTATIVE AGREEMENT") to be
entered into among the Vendors' Representative, the Vendors, and certain other
Persons to become shareholders or optionholders of the Purchaser (other than
Vernalis).
In the event of any disagreement between any Vendor and/or the
Vendors' Representative resulting in adverse claims or demands with respect to
the amounts delivered
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under this Agreement to the Vendors' Representative on behalf of the Vendors,
the Vendors' Representative shall be entitled, at its option, to refuse to
comply with any claims or demands on it with respect thereto so long as such
disagreement shall continue, and in so refusing, the Vendors' Representative may
elect to make no delivery of such amounts. In doing so, the Vendors'
Representative shall not be or become liable in any way to the Vendors, Vernalis
or the Purchaser for its failure or refusal to comply with such claims or
demands.
The Vendors' Representative may resign from such position at any time
by written notice to the parties to the Vendors' Representative Agreement, the
Purchaser and Vernalis provided that the Vendors' Representative shall have
appointed a successor to the Vendors' Representative satisfactory to the
Purchaser, acting reasonably, which appointment will be binding on the parties
to the Vendors' Representative Agreement, and provided that such successor shall
have consented to act in such capacity.
2.5 DELIVERY OF SHARE CERTIFICATES
At the Time of Closing, the Shareholders shall deliver to the
Purchaser share certificates representing the Purchased Shares duly endorsed in
blank for transfer or accompanied by duly signed powers of attorney for transfer
in blank.
2.6 DELIVERY OF OPTION AGREEMENTS
At the Time of Closing, the Optionholders, the Purchaser and the
Vendors' Representative shall enter into Purchaser Option Agreements in respect
of the grant of the Class 4 Preferred Share Options, as provided in this
Agreement.
2.7 NET CASH PAYMENT
On the 15th Business Day after the final determination of the Final
Closing Balance Sheet in accordance with the Principal Purchase Agreement, if
the Net Cash as set out in the Final Closing Balance Sheet is a positive number,
the Purchaser shall issue to the Vendors on such date (the "SPECIAL REDEMPTION
DATE") such number of Class 3 Preferred Shares (in the case of Shareholders) and
Class 4 Preferred Shares (in the case of Optionholders) with an aggregate
Redemption Price equal to the amount of such Net Cash, converted to U.S. Dollars
at the Conversion Rate as at the Closing Date, multiplied by a fraction, (i) the
numerator of which is the aggregate of the number of Class 3 Preferred Shares
owned by the Vendors on the Special Redemption Date and the number of Class 4
Preferred Share Options held by the Vendors on the Special Redemption Date and
(ii) the denominator of which is the aggregate number of all Class 3 Preferred
Shares outstanding on the Special Redemption Date and the number of all Class 4
Preferred Share Options outstanding on the Special Redemption Date. Such Class 3
Preferred Shares and Class 4 Preferred Shares issuable to such Vendors shall be
credited as paid in full, and delivered by the Purchaser to the Vendors'
Representative, on behalf of the Vendors, in certificated form, each Vendor
being entitled to such number of such Class 3 Preferred Shares or Class 4
Preferred Shares, as the case may be (rounded upwards to the nearest whole
share), based on its pro rata holding of Class 3 Preferred Shares or Class 4
Preferred Share Options, relative to all Shareholders or Optionholders,
respectively.
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2.8 FINAL PROCEEDS SCHEDULE
The Final Proceeds Schedule shall be based on the Pro Forma Proceeds
Schedule and calculated in accordance with, and in a manner consistent with, the
spreadsheet contained within the CD-Rom delivered by the Corporation to Vernalis
on the date of this Agreement, updated to reflect the final resolution as at the
Closing Date of the variable factors noted in the Pro Forma Proceeds Schedule
(other than those variables to be reflected in the Final Closing Balance Sheet).
The Final Proceeds Schedule as agreed between Vernalis and the Corporation shall
be binding upon the parties to this Agreement, and neither the Purchaser nor
Vernalis shall have any responsibility or liability for any dispute or claim
arising as to the allocation, in accordance with the Final Proceeds Schedule, of
Purchaser Shares, Class 4 Preferred Share Options, each class of shares in the
capital of the Purchaser, options to acquire such shares, Redemption Amounts and
the other amounts set forth therein. The Vendors acknowledge and agree that the
Pro Forma Proceeds Schedule and the Final Proceeds Schedule are intended only to
set out the allocation of Purchaser Shares, Class 4 Preferred Share Options,
each class of shares in the capital of the Purchaser, options to acquire such
shares, Redemption Amounts and the other amounts set forth therein (prior to
reduction and set-off in accordance with section 2.3.7 and excluding the issue
of any additional Class 2 Preferred Shares, Class 3 Preferred Shares and Class 4
Preferred Shares pursuant to section 2.7 or to other Persons in respect of Net
Cash), and, subject to section 2.7, nothing in this section 2.8 shall oblige the
Purchaser or Vernalis to pay, issue or allot (or procure the payment, issue or
allotment of) additional consideration to the Vendors. In the event that
additional Class 2 Preferred Shares, Class 3 Preferred Shares or Class 4
Preferred Shares are issued in accordance with section 2.7 or to other Persons
in respect of Net Cash, the Final Proceeds Schedule shall be updated by the
Purchaser and the Vendors' Representative accordingly.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 VENDORS' REPRESENTATIONS AND WARRANTIES
Each Vendor hereby severally, and not jointly, represents and warrants
to each of the Purchaser and Vernalis as follows with respect to itself only and
each Vendor acknowledges that each of the Purchaser and Vernalis is relying upon
the following representations and warranties in connection with the purchase of
the Purchased Securities (and such representations and warranties shall be
deemed to be repeated on the Closing Date and, in the case of the representation
and warranty contained in section 3.1.10, unless the Purchaser and Vernalis have
been notified otherwise in writing at least 10 Business Days prior thereto, on
each Redemption Date or date of payment under section 2.3.8):
3.1.1 INCORPORATION. In the case of Parteq, it is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation.
3.1.2 CAPACITY AND DUE AUTHORIZATION. In the case of Parteq, it has the
corporate power and capacity to enter into, and to perform its obligations
under, this Agreement.
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In the case of the Vendors other than Parteq, it has the capacity to enter
into, and to perform its obligations under, this Agreement.
3.1.3 ENFORCEABILITY. This Agreement has been duly authorized (in the case
of Parteq), executed and delivered by it and is its valid and binding
obligation, enforceable against it in accordance with its terms, subject to
the usual exceptions as to bankruptcy and the availability of equitable
remedies.
3.1.4 TITLE TO, AND RIGHT TO, SELL PURCHASED SECURITIES. It is the sole
registered and beneficial owner of the Purchased Securities set forth in
Schedule E with good and marketable title thereto, free of all Charges. Set
forth opposite its name in Schedule E are all of the agreements, options,
warrants, conversion rights or other rights to acquire Corporation Shares
or other shares or securities of the Corporation. Except for the
Corporation Shareholders Agreement, there are no agreements or restrictions
which in any way limit or restrict the transfer to the Purchaser of its
Purchased Securities nor are there any shareholders agreements, pooling
agreements, voting trusts or other agreements or understandings with
respect to the voting of its Purchased Shares or shares issuable upon
exercise of its Exchanged Options or any of them. It waives all of its
rights under the Corporation Shareholders Agreement in respect of the
transactions contemplated in this Agreement and, at the Time of Closing,
the Corporation Shareholders Agreement shall be deemed to be terminated by
it without further action. At the Time of Closing it will have full legal
right, power and authority to sell the Purchased Shares to the Purchaser,
or exchange the Exchanged Options with the Purchaser, free of all Charges.
A correct and complete copy of the Corporation Shareholders Agreement has
been provided to Vernalis.
3.1.5 NO CONTRAVENTION. None of the entering into of this Agreement nor the
performance by it of any of its obligations under this Agreement will
contravene, breach or result in any default under its articles, by-laws,
constating documents or other organizational documents, if applicable, or
under any mortgage, lease, agreement, other legally binding instrument,
licence, permit, statute, regulation, order, judgment, decree or law to
which it is a party or by which it may be bound.
3.1.6 CONSENTS AND APPROVALS. No authorization, consent or approval of, or
filing with or notice to, any governmental agency, regulatory body, court
or other Person is required in connection with the execution, delivery or
performance by it of this Agreement or the sale or exchange by it of any of
the Purchased Securities hereunder.
3.1.7 COMPLIANCE WITH CONFIDENTIALITY OBLIGATIONS. It has complied with all
applicable confidentiality or proprietary obligations in favour of the
Corporation and has not, directly of indirectly, used for its own purposes
or disclosed to any Person any confidential or proprietary information of
the Corporation or the Subsidiaries, including know-how and data, technical
or non-technical, relating to the Business.
3.1.8 PRINCIPAL PURCHASE AGREEMENT. It acknowledges that it is aware of the
terms of the Principal Purchase Agreement and that, if requested, it
received a copy of the Principal Purchase Agreement.
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3.1.9 TAX RESIDENCY. Except for Molinoff, Sekhri, Thatcher, Lehmann, Xxxxxx
and Xxxxxx, it is not a non-resident of Canada under the Income Tax Act
(Canada).
3.1.10 U.S. SECURITIES LAWS. Except for Molinoff, Sekhri, Thatcher,
Lehmann, Xxxxxx and Xxxxxx, it is not located or resident in the United
States of America for securities laws purposes. In the case of Molinoff,
Sekhri, Thatcher, Lehmann, Xxxxxx and Xxxxxx:
3.1.10.1 except for Xxxxxxx, Cutlter and Xxxxxx, it is an "Accredited
Investor" within the meaning of paragraphs (4), (5) or (6) of Rule
501(a) of Regulation D under the U.S. Securities Act of 1933, as
amended;
3.1.10.2 it has, either alone or together with its investment
advisors, if any, such knowledge and experience in financial and
business matters to be capable of evaluation the merits and risks
involved in entering into this Agreement;
3.1.10.3 it acknowledges that the information provided by the
Purchaser and Vernalis in connection with the Agreement is solely for
its own use in deciding whether to enter into this Agreement and does
not constitute an offer to any third party or to the public generally
to purchase any securities of the Purchaser or Vernalis;
3.1.10.4 it has received a copy of Vernalis' Annual Report on Form
20-F for the fiscal year ended December 31, 2004, has had an
opportunity to ask questions of, and receive answers from, appropriate
representatives of the Purchaser or Vernalis concerning the terms and
conditions of the Agreement and has had access to such financial and
other information concerning the Purchaser or Vernalis as it has
deemed necessary in connection with making its decision to enter into
this Agreement. It acknowledges that neither the Purchaser nor
Vernalis, nor any person representing the Purchaser or Vernalis, has
made any representation to it with respect to the Purchaser or
Vernalis or their respective securities;
3.1.10.5 it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of entering into this Agreement;
3.1.10.6 it acknowledges and agrees that any Redemption Amounts which
may be payable to it may be paid to it in the form of cash only;
3.1.10.7 it understands that the representations and undertakings
herein are required in connection with securities laws of the United
States of America and that the Purchaser and Vernalis will rely
thereon and it irrevocably authorizes the Purchaser and Vernalis to
produce this Agreement to any interested party in any administrative
or legal proceedings or official enquiry with respect to the matters
covered herein;
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3.1.10.8 it is entering into this Agreement to acquire the Purchaser
Shares (and any Vernalis Shares that may be received in redemption or
retraction thereof) for its own account, as principal, for investment
and not with a view to resale or distribution and that it will not
sell or otherwise transfer the Purchaser Shares; and
3.1.10.9 it understands that no federal or state agency has approved
or disapproved the issuance of the Purchaser Shares, passed upon the
merits of this Agreement or made any finding or determination
regarding the fairness of the terms of this Agreement.
3.2 PURCHASER'S AND VERNALIS' REPRESENTATIONS AND WARRANTIES
The Purchaser and Vernalis each jointly and severally represents and
warrants to the Vendors as follows and acknowledges that the Vendors are relying
upon the following representations and warranties in connection with their sale
or exchange of the Purchased Securities (and such representations and warranties
shall be deemed to be repeated on the Closing Date:
3.2.1 INCORPORATION. The Purchaser is duly incorporated and validly
existing under the laws of New Brunswick. Vernalis is duly incorporated and
validly existing under the laws of England and Wales.
3.2.2 CORPORATE POWER AND DUE AUTHORIZATION. The Purchaser and Vernalis
each have the corporate power and capacity to enter into, and to perform
its obligations under, this Agreement, subject to shareholder and
regulatory approvals and requirements and filings in connection with the
issue of securities of the Purchaser and Vernalis as contemplated herein.
This Agreement has been duly authorized by the board of directors of each
of the Purchaser and Vernalis. This Agreement has been duly executed and
delivered by the Purchaser and Vernalis.
3.2.3 ENFORCEABILITY. This Agreement is a valid and binding obligation of
each of the Purchaser and Vernalis, enforceable in accordance with its
terms, subject to the usual exceptions as to bankruptcy and the
availability of equitable remedies.
3.2.4 NO CONTRAVENTION. None of the entering into of this Agreement nor the
performance by the Purchaser nor Vernalis of any of its obligations under
this Agreement will contravene, breach or result in any default under its
articles, by-laws, constating documents or other organizational documents
or under any mortgage, lease, agreement, other legally binding instrument,
licence, permit, statute, regulation, order, judgment, decree or law to
which it is a party or by which it may be bound.
3.2.5 CONSENTS AND APPROVALS. No authorization, consent or approval of, or
filing with or notice to, any governmental agency, regulatory body, court
or other Person is required in connection with the execution, delivery or
performance by the Purchaser nor Vernalis of this Agreement nor the
performance by it of any of its obligations, subject to shareholder and
regulatory approvals and requirements and filings in connection with the
issue of securities of the Purchaser and Vernalis as contemplated herein.
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3.2.6 ISSUE OF PURCHASER SHARES AND VERNALIS SHARES. At the time of issue
of the Purchaser Shares or Vernalis Shares in accordance with the share
provisions attached to the Purchaser Shares and the provisions of this
Agreement and the Purchaser Option Agreements, as applicable, such
Purchaser Shares and Vernalis Shares, as the case may be, shall be validly
issued and fully paid.
ARTICLE 4
COVENANTS
4.1 VENDORS' COVENANTS
Each Vendor severally, and not jointly, covenants in respect of itself
only in favour of the Purchaser and Vernalis as follows:
4.1.1 EXERCISE OF RIGHTS. To exercise, prior to the Time of Closing, all
warrants, conversion rights, options and other rights to acquire, directly
or indirectly, Corporation Shares prior to the Time of Closing.
4.1.2 PURCHASER SHAREHOLDERS AGREEMENT. To enter into, at the Time of
Closing, the Purchaser Shareholders Agreement and hereby authorizes the
Vendors' Representative to execute the Purchaser Shareholders Agreement on
its behalf.
4.1.3 PURCHASER OPTION AGREEMENTS. To enter into, in the case of the
Optionholders, along with the Purchaser and the Vendors' Representative, at
the Time of Closing, the Purchaser Option Agreements.
4.1.4 VENDORS' REPRESENTATIVE AGREEMENT. To enter into, at the Time of
Closing, the Vendors' Representative Agreement.
4.1.5 WITHDRAWAL RIGHT. To not exercise, or attempt to exercise, any right
or entitlement which may be applicable to, or enforceable by, it under
section 87(Q) of the Financial Services and Markets Act 2000 (United
Kingdom) (as amended). Each of the Vendors acknowledges that the issue of
Vernalis Shares to it under this Agreement will be by way of a bilateral
contract and as such section 87(Q) will not entitle it to withdraw in the
event that Vernalis publishes a supplementary prospectus. Each Vendor
further severally, and not jointly, covenants in respect of itself only, in
favour of Vernalis that, in the event it is so entitled to withdraw, by
signing this Agreement, it is confirming its acceptance of the offer of
Vernalis Shares contained in this Agreement on the same terms immediately
after such withdrawal.
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ARTICLE 5
GENERAL MATTERS
5.1 CONFIDENTIALITY
5.1.1 No Vendor shall directly or indirectly use for its own purposes or
disclose to any other Person any confidential or proprietary information,
including know-how and data, technical or non-technical, relating to the
business of Vernalis which becomes known to the Vendor or its accountants,
legal advisers or representatives as a result of Vernalis making the same
available in connection with the transaction contemplated hereby.
5.1.2 No Vendor shall directly or indirectly use for its own purposes or
disclose to any Person any confidential or proprietary information of the
Corporation or the Subsidiaries, including know-how and data, technical or
non-technical, relating to the Business.
5.2 PUBLIC NOTICES
No press release or other public announcement concerning the
transaction contemplated by this Agreement shall be made by the Vendors without
the prior written consent of Vernalis.
5.3 EXPENSES
Each of the Vendors, the Purchaser and Vernalis shall be responsible
for the expenses (including fees and expenses of legal advisers, accountants and
other professional advisers) incurred by it in connection with the negotiation
and settlement of this Agreement and the completion of the transaction
contemplated hereby.
5.4 TERMINATION
This Agreement shall terminate and the obligations and covenants of
the parties hereunder, other than those set out in sections 5.1 and 5.2, shall
terminate upon the termination of the Principal Purchase Agreement but shall not
terminate prior thereto in any circumstances.
5.5 ASSIGNMENT
Except as provided in this section, no party may assign its rights or
benefits under this Agreement, nor may a Vendor transfer its Purchaser Shares
except (i) to Vernalis or an affiliate of Vernalis, or (ii) by will or the laws
of descent and distribution. The Purchaser or Vernalis may, at any time after
the Time of Closing and from time to time, assign its rights and benefits under
this Agreement, in whole or in part, to any affiliate or to any Person who
acquires all or substantially all of the assets or shares of the Corporation.
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5.6 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid mail, by facsimile
or other means of electronic communication or by hand-delivery as hereinafter
provided. Any such notice or other communication, if mailed by prepaid mail at
any time other than during a general discontinuance of postal service due to
strike, lockout or otherwise, shall be deemed to have been received on the
seventh Business Day after the post-marked date thereof, or if sent by facsimile
or other means of electronic communication, shall be deemed to have been
received on the Business Day following the sending, or if delivered by hand
shall be deemed to have been received at the time it is delivered to the
applicable address noted below either to the individual designated below or to
an individual at such address having apparent authority to accept deliveries on
behalf of the addressee. Notice of change of address shall also be governed by
this section 5.6. In the event of a general discontinuance of postal service due
to strike, lock-out or otherwise, notices or other communications shall be
delivered by hand or sent by facsimile or other means of electronic
communication and shall be deemed to have been received in accordance with this
section 5.6. Notices and other communications shall be addressed as follows:
(a) if to the Vendors:
c/o The VenGrowth Advanced Life Sciences Fund Inc. (as Vendors'
Representative)
000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxxxx/Xxxx Xxxxx
Telecopier number: 000-000-0000
with a copy to the Vendors' counsel at:
Xxxxxx Xxxxxx Gervais LLP
00 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx,
X0X 0X0
Attention: Xxxxxxx Xxxxxx
Telecopier number: 000-000-0000
-24-
(b) if to the Purchaser or Vernalis:
Vernalis plc
Xxxxxxx Xxxxx
000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx
RG 41 5UA
Attention: Xxxx Xxxxxx
Telecopier number: + 44 118 989 9300
with a copy to the Purchaser's counsel at:
Xxxxx XXX
Xxxxx 0000, 00 Xxxxxxxxxx Xxxxxx West
Box 270, TD Centre
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxxx X. Xxxxxx-Xxxxxx
Telecopier number: (000) 000-0000
and to:
Xxxxx & Xxxxx LLP
Xxx Xxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xxxx Xxxxxxx
Telecopier number: + 44 20 7330 9999
The failure to send or deliver a copy of a notice to the Purchaser's
Counsel or the Vendors' Counsel, as the case may be, shall not invalidate any
notice given under this section 5.6.
5.7 TIME OF ESSENCE
Time is of the essence of this Agreement.
5.8 FURTHER ASSURANCES
Each of the parties shall promptly do, make, execute, deliver, or
cause to be done, made, executed or delivered, all such further acts, documents
and things as the other party hereto may reasonably require from time to time
for the purpose of giving effect to this Agreement and shall use reasonable
efforts and take all such steps as may be reasonably within its power to
implement to their full extent the provisions of this Agreement.
-25-
5.9 COUNTERPARTS
This Agreement may be signed in counterparts and each such counterpart
shall constitute an original document and such counterparts, taken together,
shall constitute one and the same instrument.
-26-
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
PARTEQ RESEARCH AND DEVELOPMENT
INNOVATIONS
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------------------------------------
XXXX XXXXXX on behalf of the following
parties pursuant to powers of attorney
executed on the date set forth opposite
each party's name:
Xxxxx X. Xxxxxxxx Oct 24, 2005
Xxxxx X. Xxxxxxx Oct 24, 2005
Xxxxxx X. Xxxxxxx Nov 1, 2005
Xxxx Xxxxxxxxx Nov 3, 2005
Xxxxxxx X. Xxxxxxxx Oct 26, 2005
Xxxx Xxxxxxx Nov 10, 2005
Xxxxxx Xxxxxxxx Nov 3, 2005
Xxxx-Xxxx St. Pierre Oct 24, 2005
Xxxx Xxxxxx Nov 8, 2005
Xxxx Xxxxxx Oct 28, 2005
Xxxxxx Xxxxxxx Nov 3, 2005
Xxxxx Xxxxxxxxx Nov 3, 2005
Xxx Xxxxxxx Nov 3, 2005
Xxxxx Xxxxxxxx Oct 31, 2005
Xxxxx Xxx Nov 2, 2005
Xxxx Xxxxxx Nov 3, 2005
Xxxxxxx Xxxxx Nov 3, 0000
Xxxx Xx. Hilaire Nov 3, 2005
Xxxxx Xxxxxx Nov 3, 2005
----------------------------------------
XXX XXXXXXXX
Signature Page for Common Share Purchase Agreement
VERNALIS PLC
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
VERNALIS (CANADA) INC.
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The undersigned hereby agrees to act as the Vendors' Representative
and to carry out such duties and responsibilities on behalf of the Vendors as
provided in this Agreement.
THE VENGROWTH ADVANCED LIFE SCIENCES
FUND INC., as Vendors' Representative
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
by:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Signature Page for Common Share Purchase Agreement
