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APPENDIX D
UNDERWRITING AGREEMENT
This Agreement dated for reference the 24th day of July, 2000
BETWEEN:
HIPPOCAMPE S.A., 00, xxxxxx Xxxxxxxx Xxxxxxxxxx, X-00000 Xxxxx-
Xxxxx-Xxxxx, Xxxxxx, a soci,t, anonyme organized under the laws
of France
AND:
MFC MERCHANT BANK S.A., 53, route de Malagnou, X.X. Xxx 000,
XX-0000 Xxxxxx 00, Xxxxxxxxxxx, a bank organized under the laws
of Switzerland
WHEREAS:
A. The Corporation owns certain Patents;
B. The Corporation proposes to go public and MFC has expertise in
assisting companies to go public on securities markets;
C. The Corporation wishes to engage MFC to assist it with the
Reorganization and to use its best efforts to obtain subscriptions
for shares with the objective of raising at least U.S.$10 million
and up to U.S.$20 million, plus over-allotments, from the public;
D. It is intended that prior to a public offering, the Corporation
will effect the Reorganization to directly or indirectly transfer
and/or assign to a new company or shell company, among other
things, the Patents, the Corporation's rights and obligations under
this Agreement and certain outsourcing contracts; and
E. The Corporation has and may in the future have certain cash flow
requirements and MFC proposes to provide the Corporation a
revolving line of credit in the amount of up to Euro 1,300,000.
NOW THEREFORE THIS AGREEMENT WITNESSETH that the parties hereby agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement, including the recitals, and any
amendments hereto, unless the context otherwise requires, the following
words and phrases shall have the following meanings, respectively:
1.1 "Additional Financing" means any financing and capital raising
activities required by the Corporation other than the sale of the Offered
Shares contemplated by Sections 2.1 and 2.2 hereof and any amounts advanced
under the Credit Facility;
1.2 "Closing Date" means such date as determined by MFC after
consultation with the Corporation but in no event later than nine months
after the date of this Agreement;
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1.3 "Common Shares" means the common or voting shares in the capital of
the Corporation or NewCo, as applicable;
1.4 "Consent Letter" means a letter from Aralis Services S.A. consenting
to the transfer and/or assignment of certain outsourcing contracts between
the Corporation and Aralis Services S.A. from the Corporation to NewCo,
which letter is attached hereto as Schedule B;
1.5 "Conversion Price" means the price equal to Euro 1,170,000/0.10n,
where "n" equals the number of Common Shares outstanding on the applicable
calculation date, calculated on a post-Reorganization and fully diluted
basis;
1.6 "Corporation" means Hippocampe S.A. and any successors and assigns
hereof;
1.7 "Credit Facility" means a secured line of credit to be arranged by
MFC in favour of the Corporation in an amount of up to Euro 1.3 million;
1.8 "Issue Price" means the price per Offered Share at which MFC will
solicit purchasers for the Offered Shares;
1.9 "Major Transaction" means, other than the Reorganization, the
occurrence, in one or a series of related transactions, of any of the
following: (i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the Corporation's assets; (ii)
the sale, assignment or transfer, in one or a series of related
transactions, of all or substantially all of the Patents or the
Corporation's other intellectual property rights; or (iii) the acquisition
by any person or group of direct or indirect majority in interest (more
than 50%) in the Common Shares of the Corporation by way of merger,
amalgamation, consolidation, wind up or otherwise;
1.10 "Material change" means a material change for the purposes of the
Securities Legislation;
1.11 "Material fact" means a material fact for the purposes of the
Securities Legislation;
1.12 "MFC" means MFC Merchant Bank S.A.;
1.13 "Misrepresentation " includes, but is not limited to, a
misrepresentation for the purposes of the Securities Legislation;
1.14 "NewCo" means a company mutually agreeable to the Corporation and
MFC, being either a new company or an existing, financially sound, "shell"
company listed or quoted in the United States;
1.15 "Offered Shares" means the aggregate number of Common Shares to be
issued and sold by NewCo pursuant to Sections 2.1 and 2.2 hereof following
the completion of the Reorganization;
1.16 "Offering Documents" means the final offering documents of the
Corporation approved, signed and certified in accordance with the
Securities Legislation relating to the offering and distribution of the
Offered Shares through MFC;
1.17 "Option" means the option to sell additional Common Shares pursuant
to Section 2.2 hereof;
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1.18 "Patents" means the patents set forth in Schedule C hereto and any
existing or future related applications, interests, intellectual property
rights, research, studies and technology deriving therefrom or from the
AIDS related research of the Corporation;
1.19 "Preliminary Offering Documents" means the preliminary offering
documents of the Corporation relating to the offering and distribution of
the Offered Shares through MFC;
1.20 "Reorganization" means the direct or indirect transfer and/or
assignment by the Corporation to NewCo, in one or a series of related
transactions, of, among other things, the following: (i) the Corporation's
rights and obligations under this Agreement; (ii) the Patents; and (iii)
the outsourcing contracts referenced in the Consent Letter which are still
outstanding at the time of the transfer;
1.21 "Scientific Advisory Board" means a scientific advisory board to be
constituted prior to the completion of the Offering Documents for the
purpose of overseeing the scientific research conducted by the Corporation,
consisting of a minimum of three qualified representatives;
1.22 "Securities Commissions" means, collectively, any securities
regulatory bodies having jurisdiction over the parties hereto or the
transactions contemplated by this Agreement;
1.23 "Securities Legislation" means, collectively, all applicable
securities laws and the respective regulations, rulings and orders made
thereunder and the applicable policy statements issued by the Securities
Commissions thereunder;
1.24 "Supplementary Material" means, collectively, an amendment to the
Offering Documents, any amended or supplemental offering documents or any
ancillary material, information, evidence, return, report, application,
statement or document which may be filed by or on behalf of the Corporation
under the Securities Legislation; and
1.25 "Time of Closing" means 2:00 p.m. (Geneva time) on the Closing Date,
or such other time on the Closing Date as the Corporation and MFC may agree
upon.
2. SALE OF OFFERED SHARES
2.1 Subject to the terms and conditions hereof, the Corporation hereby
appoints MFC as, and MFC hereby agrees to act as, the exclusive agent of
the Corporation to solicit purchasers for up to U.S.$20 million in Common
Shares at the Issue Price on the terms set forth in the Offering Documents
and in accordance with the terms and conditions of this Agreement.
2.2 MFC shall have the Option to sell on behalf of the Corporation, for
the sole purpose of covering over-allotments, additional Common Shares in
an amount equal to 30% of the value of the Common Shares sold pursuant to
Section 2.1 hereof, which Option can be exercised by notice in writing
given to the Corporation by MFC at any time up to 60 days after the Closing
Date. Such notice shall specify the number of Common Shares to be sold
pursuant to the Option.
2.3 The Issue Price shall be a price at which MFC in good faith believes
that the Offered Shares can be sold, as determined by it after its review
of the Corporation and the capital markets and as approved by the
Corporation. The number of Common Shares to be offered for sale by MFC
pursuant to Section 2.1 hereof will be adjusted and set by MFC after the
determination of the Issue Price.
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2.4 MFC shall be entitled in connection with the sale of the Offered
Shares to retain as sub-agents a selling group consisting of other
registered investment dealers. If MFC retains such sub-agents, MFC may pay
them commissions in amounts reasonably determined by MFC, provided that any
such commissions do not exceed the commissions payable to MFC hereunder.
MFC may direct, in writing, that commissions payable to its sub-agents
shall be paid directly by the Corporation; in the event that MFC does not
so direct the Corporation, all commissions shall be paid by the Corporation
to MFC who shall be responsible for the payment of commissions to the
members of its selling group. In addition, if MFC retains such sub-agents,
MFC agrees that it, and not the Corporation, shall be responsible for the
proper selection of the sub-agents, the proper provision of instructions to
the sub-agents and the proper monitoring of the sub-agents.
MFC agrees that it shall give reasonable consideration to adding such sub-
agents as it and the Corporation may reasonably believe will add value to
and contribute to the success of the sale of the Offered Shares, provided
that the appointment of any such sub-agents shall be made in accordance
with the terms otherwise set forth in this Section 2.4.
2.5 Commissions shall be payable to MFC and its sub-agents hereunder if
subscriptions for U.S.$10 million in Offered Shares are deposited with MFC
on the day prior to the Closing Date. In the event that subscriptions for
U.S.$10 million in Offered Shares are not deposited with MFC on the day
prior to the Closing Date:
(a) all subscriptions will be returned promptly by MFC to the
subscribers without interest or deductions; and
(b) the Corporation and MFC shall bear all expenses incurred in
the manner provided in Section 9.1 hereof.
2.6 It is understood that MFC intends to make an offering of the Offered
Shares on the terms to be set forth in the Offering Documents and in
accordance with the terms and conditions of this Agreement.
2.7 Subject to the terms of this Agreement and overall market
conditions, MFC shall use all reasonable efforts to conclude the
distribution of the Offered Shares as soon as practicable and shall notify
the Corporation when such distribution has concluded.
2.8 In connection with the sale of the Offered Shares contemplated in
Sections 2.1 and 2.2 hereof, MFC agrees to:
(a) advise the Corporation as to the steps and formalities
which are needed or recommended in order to make a
successful public offering;
(b) assist the Corporation to prepare the Preliminary Offering
Documents and the Offering Documents;
(c) assist the Corporation to comply with the provisions of the
Securities Legislation and all other applicable laws; and
(d) recommend and market the Offered Shares to MFC's clients
and to portfolio managers and securities dealers, both in
Europe and North America, as applicable.
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2.9 MFC agrees not to sell the Offered Shares in any jurisdiction, other
than Switzerland, unless the Corporation is satisfied, acting reasonably,
that the sale will comply with or be exempt from the requirements of the
Securities Legislation in such jurisdiction. In this respect, MFC agrees
to provide, at the request of the Corporation, mutually satisfactory
evidence of compliance or exemption from third parties, at the expense of
the Corporation.
3. ANCILLARY OBLIGATIONS OF MFC
3.1 In connection with being appointed as the exclusive agent of the
Corporation pursuant to Section 2.1 hereof, MFC agrees to use its
reasonable best efforts for a period commencing on the date of this
Agreement and expiring 24 months after the completion of the Reorganization
(or if the Reorganization is not completed, expiring 24 months after the
date of this Agreement) to do the following if and to the extent requested
by the Corporation:
(a) arrange and make available the Credit Facility;
(b) if the Reorganization and the sale of the Offered Shares
contemplated in Sections 2.1 and 2.2 hereof are completed,
and in accordance with Section 5.4 hereof, arrange for the
listing of NewCo on a European stock exchange; and
(c) if the Reorganization and the sale of the Offered Shares
contemplated in Sections 2.1 and 2.2 hereof are completed,
and in accordance with Section 5.4 hereof, arrange
Additional Financing, as requested by the Corporation.
In connection therewith, MFC agrees to:
(i) on terms mutually satisfactory to the Corporation and MFC,
incorporate or identify NewCo, transfer the assets of the
Corporation to NewCo and otherwise assist the Corporation
to complete the Reorganization;
(ii) advise generally with respect to investor relations of
NewCo and arrange publicity on NewCo's operations and
potential;
(iii) prepare a written research report with respect to NewCo
and partner with a North American associate to cover
NewCo's stock; and
(iv) publish earnings estimates with respect to NewCo on a
regular basis to the investing and brokerage community.
In addition, MFC will advise the Corporation generally on fiscal matters as
to such matters as may be requested and on such terms as may be mutually
agreed upon by the Corporation and MFC.
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4. FULFILMENT MODALITIES
4.1 All subscribers for Offered Shares shall make payments in respect
thereof to MFC at its principal office in the City of Geneva. MFC shall
retain custody of all subscription payments so received by it and shall
deal with the same upon the following terms:
(a) at the Time of Closing, it shall pay to the Corporation all
subscription payments (less commissions) so received by it
and shall advise the Corporation as to the number of
Offered Shares subscribed for by each subscriber and the
amount of the commission payable in respect of each
subscriber; in the event of an over-subscription, MFC may,
in agreement with the Corporation, direct which
subscriptions for Offered Shares are to be delivered to the
Corporation;
(b) in the event of termination of this Agreement pursuant to
Article 10 hereof, if subscriptions for at least U.S.$10
million in Offered Shares are not received by the day prior
to the Closing Date or if the closing of the sale of the
Offered Shares is not consummated on or before the Closing
Date, MFC shall mail to each subscriber within three days
of receipt of such notice, advice or occurrence or
following the Closing Date, as the case may be, a cheque in
the amount of the subscription payment (including
commissions) paid by each subscriber, without interest or
deduction, together with the subscription form signed by
him, if such subscription payment (less commissions) has
not been paid to the Corporation as required under the
foregoing provisions of this Section 4.1; and
(c) interest accrued on the subscription payments from the time
of payment until the Time of Closing shall be credited and
applied by MFC towards the expenses of the sale of Common
Shares.
Payment to the Corporation of the subscription payments (less commissions)
shall be made against delivery to MFC at the Time of Closing of
subscription agreements accepted by the Corporation representing the
Offered Shares (which subscription agreements will have been submitted to
the Corporation for approval).
At the Time of Closing, the Corporation shall deliver to MFC the requisite
certificates, opinions, comfort letters and other such documents provided
for in this Agreement or as may reasonably be requested by MFC and a bank
draft or certified check made payable to MFC for expenses, fees, etc.
Upon delivery of the accepted subscription agreements, the Corporation
shall cause its transfer agent, in exchange therefor, to issue and deliver
forthwith definitive share certificates for the Offered Shares at such
principal offices, in such numbers and condition as to registration as MFC
shall have requested not less than 24 hours prior to the Time of Closing.
4.2 The obligation of MFC hereunder to complete the sale of the Offered
Shares contemplated in Sections 2.1 and 2.2 hereof shall be subject to the
accuracy of the representations and warranties of the Corporation herein
contained as of the date hereof and to the due fulfilment of and compliance
with the covenants of the Corporation herein contained and to the following
additional conditions:
(a) on or before the date seven days prior to the Closing Date
(or such later date or dates as MFC may approve in
writing), the Corporation shall, with MFC's advice, take or
cause to
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be taken all steps and proceedings (including the filing
of, and the issuance of receipts for, the Offering
Documents) that may be requisite under the applicable
Securities Legislation to qualify the Offered Shares for
sale to the public in all such jurisdictions through
registrants who have complied with the relevant provisions
of the applicable Securities Legislation;
(b) at all times until the distribution of the Offered Shares
shall have been completed, the Corporation shall, with
MFC's advice and to the satisfaction of counsel for MFC,
promptly take or cause to be taken all additional steps and
proceedings that from time to time may be requisite under
the Securities Legislation to continue so to qualify the
Offered Shares or, in the event that the Offered Shares
have, for any reason, ceased so to qualify, to re-qualify
the Offered Shares; and
(c) the Corporation shall complete the Reorganization on terms
and by such time satisfactory to MFC and provide such
evidence of such completion as MFC may require.
4.3 The Corporation shall deliver to MFC at the Time of Closing a
certificate signed by the Chief Executive Officer and by the Chief
Financial Officer of the Corporation under its corporate seal, dated the
Closing Date, addressed to MFC, to the effect that:
(a) the representations and warranties set forth in Section 4.2
hereof and in any certificate of the Corporation delivered
to MFC pursuant hereto or in connection herewith, are true
and correct as of the Time of Closing with the same force
and effect as if made at and as of the Time of Closing
after giving effect to the transactions contemplated
hereby;
(b) the Corporation has duly complied with all the covenants
and satisfied all the conditions herein contained to be
performed or satisfied by it at or prior to the Time of
Closing;
(c) no order, ruling or determination having the effect of
suspending the sale or ceasing the trading of the Common
Shares has been issued and no proceedings for that purpose
have been instituted or are pending or are, to their
knowledge, contemplated or threatened under any of the
Securities Legislation or any securities commission or
regulatory authority having jurisdiction elsewhere; and
(d) each such officer has carefully examined the Offering
Documents and, since the respective dates as of which
information is given in the Offering Documents, the
Corporation has not incurred any material liabilities or
obligations (absolute, accrued, contingent or otherwise) or
entered into any transaction not in the ordinary course of
business; there has been no material change in the assets,
financial position, business or results of operations of
the Corporation and, to the best of its knowledge and
information, there has occurred no event and exists no
state of facts that, under the Securities Legislation, is
required to be set forth in an amendment to the Offering
Documents that has not been so set forth.
4.4 At the Time of Closing, MFC shall receive favourable legal opinions
from counsel for the Corporation, dated the Closing Date, with respect to
such relevant matters as MFC may require.
4.5 At the Time of Closing, MFC shall receive a letter from the auditors
of the Corporation, dated the Closing Date, addressed to MFC, commenting on
the financial statements of the Corporation and certain
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other information of a financial nature contained in the Offering
Documents, which letter shall be in substantially the same form and on
substantially the same terms as the letter of such auditors addressed to
MFC and delivered at the time of the execution of the Offering Documents.
5. OBLIGATIONS AND COVENANTS OF THE CORPORATION
5.1 The Corporation shall provide, at MFC's request and on a timely
basis, accurate and complete factual information. The Corporation shall
thereafter provide MFC with accurate and complete updates, if any, of such
factual information.
5.2 The Corporation agrees with MFC to execute or procure the execution
of all documents and to use its best efforts to take or cause to be taken
all such steps as may be reasonably necessary or desirable to fulfil to the
satisfaction of counsel for MFC and counsel for the Corporation, all legal
requirements to enable MFC to offer the Offered Shares for sale.
5.3 The Corporation agrees to pay to MFC at the Time of Closing, upon
due completion of the sale of the Offered Shares, a fee equal to 10% of the
Issue Price for each Offered Share sold by MFC under Sections 2.1 and 2.2
hereof, such fee to be deducted by MFC from the gross proceeds of the
Offered Shares sold.
5.4 In addition to appointing MFC as the exclusive agent of the
Corporation pursuant to Section 2.1 hereof, the Corporation hereby grants
to MFC for a period commencing on the date of this Agreement and expiring
24 months after the completion of the Reorganization (or if the
Reorganization is cancelled, terminated or otherwise not completed,
expiring 24 months after the cancellation, termination or non-completion of
the Reorganization) the exclusive right, but not the obligation, to provide
the services contemplated by this Agreement, including arranging the Credit
Facility, facilitating the Reorganization, arranging for a listing on a
German stock exchange and arranging for any Additional Financing. The
Corporation agrees to pay to MFC a fee equal to 10% of the gross proceeds
of any Additional Financing arranged by MFC, provided that MFC shall not be
entitled to receive such fees in respect of gross proceeds of subscriptions
for Common Shares accepted by MFC and the Corporation and solicited
exclusively by shareholders of the Corporation from existing friends,
relatives, associates and affiliates, and not by the Corporation or MFC.
If the Corporation obtains Additional Financing from a party or parties
other than MFC, without the prior written consent of MFC, which consent
shall not be unreasonably withheld, the Corporation shall forthwith pay to
MFC, in cash or Common Shares at the option of MFC, 10% of all
consideration and capital received or receivable by the Corporation from
such Additional Financing.
5.5 In consideration of the financial, advisory and other services
rendered and to be rendered by MFC in connection with the transactions
contemplated by this Agreement, including, without limiting the generality
of the foregoing, acting as financial adviser to the Corporation in
connection with such transactions, arranging the Credit Facility,
facilitating the Reorganization, arranging for a listing on a German stock
exchange, assisting in the preparation of the Preliminary Offering
Documents and the Offering Documents and related documentation, using its
best efforts to effect the distribution and sale of the Offered Shares
including distributing the Offered Shares both directly and through other
dealers and brokers, performing administrative work in connection with the
proposed distribution and sale of the Offered Shares and preparing research
reports and earnings estimates, the Corporation agrees to pay to MFC:
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(a) a monthly retainer fee of Euro 10,000 for a period of nine
months, commencing on the date hereof, with the first
payment to be made at the time of the first advance to the
Corporation under the Credit Facility (the "Retainer Fee");
(b) upon completion of the Reorganization, a success fee equal
to 4% of the issued and outstanding Common Shares following
the completion of the Reorganization, calculated on a fully
diluted basis; and
(c) upon the successful listing of NewCo on a German stock
exchange, a fee of Euro 150,000 for such listing and for
arranging associated market making activities to be paid
either in cash or Common Shares at the option of MFC.
5.6 Any amounts which are payable by the Corporation to MFC hereunder
shall be paid by bank drafts or certified cheques payable at par in Euros
in immediately available funds.
5.7 As part of MFC's compensation for the services to be performed by it
under this Agreement, the Corporation agrees to issue and deliver to MFC
the following share purchase warrants and to execute and deliver warrant
certificate(s) setting forth the terms and conditions of the share purchase
warrants, which shall be substantially in the form of the warrant
certificate attached hereto as Schedule A:
(a) warrants to be issued on the date of the first advance of
funds under the Credit Facility (the "Advance Date")
entitling MFC to convert an amount equal to the maximum
principal amount of the Credit Facility of Euro 1,300,000
into 10% of the Common Shares, calculated on a post-
Reorganization and fully diluted basis and determined on
the date of the completion of the Reorganization (the
"Conversion Rate"), exercisable at any time up to and
including the date three years after the Advance Date at a
price equal to the Conversion Price calculated on the date
of the completion of the Reorganization;
(b) warrants to be issued on the Advance Date entitling MFC to
convert an amount equal to the Retainer Fee of Euro 90,000
under the Agreement and the arrangement fee of Euro 130,000
and interest under the Credit Facility into Common Shares
at the Conversion Rate, exercisable at any time up to and
including the date three years after the Advance Date at a
price equal to the Conversion Price calculated on the date
of the completion of the Reorganization; and
(c) warrants to be issued at the Time of Closing in an amount
equal to 2% of the Common Shares issued and outstanding
after the sale of the Offered Shares contemplated by
Sections 2.1 and 2.2 hereof, calculated on a fully diluted
basis, exercisable at any time up to and including the date
three years after the Closing Date at a price equal to 115%
of the Issue Price.
5.8 The Corporation covenants and agrees, as hereinafter set out, with
MFC, now and at all times subsequent hereto during the distribution of the
Offered Shares, that:
(a) the Offering Documents will fully comply with the
requirements of the Securities Legislation;
(b) the Offering Documents will during such period provide
full, true and plain disclosure of all material facts
relating to the Corporation and to the Offered Shares; and
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(c) the Offering Documents will not during such period contain
any misrepresentation or any untrue, false or misleading
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make any
statement therein, in the light of the circumstances in
which it is made, not false or misleading,
provided, however, that the foregoing covenants of the Corporation shall
not apply with respect to information and statements contained in the
Offering Documents or omissions from the Offering Documents which, in
either case, relate solely to MFC, and provided further, that the foregoing
covenants shall not be considered to be contravened as a consequence of any
material change occurring after the date hereof or the occurrence of any
event or state of facts after the date hereof which is of such a nature as
to render the Offering Documents as then amended untrue, false or
misleading or result in a misrepresentation in the Offering Documents or
result in the Offering Documents containing an untrue statement of a
material fact or omitting to state a material fact required to be stated
therein or necessary to make any statement therein in the light of the
circumstances in which it was made not false or misleading if, in each such
case, the Corporation complies with the provisions of Section 5.10 hereof.
5.9 The Corporation shall promptly inform MFC in writing during the
period of the distribution of the Offered Shares of the full particulars of
any material change (actual, anticipated or threatened) in the assets,
liabilities (contingent or otherwise), business operations or capital of
the Corporation considered as a whole or of any change in any material fact
contained or referred to in the Offering Documents or any Supplementary
Material, which is, or may be, of such a nature as to make any statement of
such fact a misrepresentation or untrue, false or misleading or result in a
misrepresentation in the Offering Documents or any Supplementary Material.
If the Corporation is uncertain as to whether a material change (actual,
anticipated or threatened) as aforesaid has occurred, the Corporation shall
promptly inform MFC of the full particulars of the event giving rise to the
uncertainty and shall consult with MFC as to whether such event constitutes
a material change as aforesaid. In the event that, in the opinion of MFC,
such a material change has occurred, MFC may terminate its obligations
under this Agreement in the manner contemplated by Section 10.5 hereof.
5.10 The Corporation also agrees, during the period from the date hereof
and prior to the completion of the distribution of the Offered Shares,
promptly to advise MFC of any change in any material fact contained in the
Offering Documents or any Supplementary Material or whether any event or
state of facts has occurred after the date hereof which, in any case, is of
such a nature as to render the Offering Documents or any Supplementary
Material untrue or misleading in a material respect or to result in a
misrepresentation in the Offering Documents or any Supplementary Material,
including as a result of the Offering Documents or any Supplementary
Material containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein or necessary to make
any statement therein, in the light of the circumstances in which it was
made, not false or misleading.
5.11 During the course of the distribution of the Offered Shares by or
through MFC, the Corporation shall advise MFC promptly of any request of
any Securities Commission or other securities commission or regulatory
authority for amendment of or supplement to the Offering Documents or any
Supplementary Material or for any additional information, of the issuance
by any Securities Commission or other securities commission or regulatory
authority of any cease trading or stop order relating to the Common Shares
(including the Offered Shares), or of the institution or threat of
institution of any proceeding for that purpose, or of the receipt by the
Corporation of any communication from any Securities Commission or other
securities commission or regulatory authority relating to the Offering
Documents, any Supplementary Material or the offering of the Offered Shares
referred to herein. The
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Corporation shall use its best efforts to prevent the issuance of any such
cease trading or stop order and, if issued, to obtain the withdrawal
thereof as soon as possible.
5.12 During the period commencing on the date hereof and ending on the
180th day following the Closing Date, without the prior written consent of
MFC, the Corporation shall not issue or announce the issuance of any Common
Shares or any other securities which are convertible into or exchangeable
for Common Shares; provided, however, that this covenant shall not apply to
the Offered Shares or any other securities to be distributed by, through or
to MFC as contemplated herein.
5.13 The net proceeds to the Corporation from the issuance and sale of
the Offered Shares shall be applied as indicated under "Use of Proceeds" in
the Offering Documents.
5.14 The Corporation shall, with MFC's advice, take all necessary steps
and promptly file or cause to be filed with any stock exchanges designated
by MFC all necessary documents to ensure that all the issued Common Shares
(including the Offered Shares) are listed and posted for trading on the
said exchange(s) as soon as practicable after the Closing Date.
5.15 The Corporation shall allow MFC, from the date of this Agreement
until not earlier than 24 months after the completion of the Reorganization
(or if the Reorganization is cancelled, terminated or otherwise not
completed, until not earlier than 24 months after the cancellation,
termination or non-completion of the Reorganization), to elect or appoint
one non-executive director to the board of directors of the Corporation.
The Corporation shall also allow MFC, from the date of this Agreement until
not earlier than 24 months after the completion of the Reorganization (or
if the Reorganization is cancelled, terminated or otherwise not completed,
until not earlier than 24 months after the cancellation, termination or
non-completion of the Reorganization), to propose nominees to the
Scientific Advisory Board for consideration by the Corporation and to
approve nominees to the Scientific Advisory Board proposed by the
Corporation.
5.16 The Corporation shall arrange for its own registrar and transfer
agent required in connection with any of the transactions contemplated by
this Agreement.
5.17 The Corporation shall at all times allow MFC and its representatives
to conduct all due diligence investigations and examinations which MFC may
reasonably require in order to fulfil its obligations as agent, in order to
avail itself of a defense to any claim for misrepresentation in the
Offering Documents and in order to enable MFC to responsibly execute any
certificate in the Offering Documents which may be required to be executed
by MFC.
6. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants, and acknowledges that MFC
is relying on such representations and warranties in entering into this
Agreement, that:
6.1 The Corporation has been duly incorporated and organized and is
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite corporate power and
authority to carry on its business as now conducted and as presently
proposed to be conducted, to own, lease and operate its properties and
assets and to carry out the provisions hereof;
6.2 The Corporation has conducted and is conducting its business in
compliance in all material respects with all applicable laws, rules and
regulations of its jurisdiction in which its business is carried
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on and is duly licensed, registered or qualified in all jurisdictions in
which it owns, leases or operates its property or carries on business to
enable its business to be carried on as now conducted and its property and
assets to be owned, leased and operated, and all such licenses,
registrations and qualifications are valid and subsisting and in good
standing and none of the same contains any burdensome term, provision,
condition or limitation which has an adverse effect on the operation of its
business as now carried on;
6.3 The descriptions of the assets and the liabilities of the
Corporation set out in the balance sheets of the Corporation as at December
31, 1998 and December 31, 1999, including the notes thereto, are true and
correct, accurately and fairly present the financial position and condition
of the Corporation as at the respective dates thereof, reflect all
liabilities (absolute, accrued, contingent or otherwise, as applicable) of
the Corporation as at the respective dates thereof, and have been prepared
in accordance with French generally accepted accounting principles applied
on a consistent basis;
6.4 The Corporation has no subsidiaries;
6.5 The authorized capital of the Corporation is in the amount of FF
782,000 divided into 7,820 Common Shares of FF 100 each of which, as at the
date hereof, 7,820 Common Shares (and no more) are issued and outstanding
as fully paid and non-assessable and, other than MFC, no person, firm or
corporation now has (except pursuant hereto) any agreement or option, or
right or privilege (whether pre-emptive or contractual) capable of becoming
an agreement (including convertible securities or warrants) for the
purchase, subscription or issuance of any unissued shares, securities or
warrants of the Corporation, as applicable;
6.6 The statements of earnings, retained earnings and changes in
financial position of the Corporation, as applicable, for the five most
recent fiscal periods, including the notes thereto, in each case accurately
and fairly present the results of the operations of the Corporation for the
respective periods covered thereby and have been prepared in accordance
with French generally accepted accounting principles applied on a
consistent basis throughout such period;
6.7 There is no action, proceeding or investigation pending or, to the
knowledge of the Corporation and its directors and officers, threatened,
against or affecting the Corporation, at law or in equity or before or by
any federal, provincial, municipal or other governmental department,
commission, board or agency, domestic or foreign, which could in any way
materially adversely affect the Corporation or the condition (financial or
otherwise) of the Corporation or which questions the validity of the sale
of the Offered Shares or any action taken or to be taken by the Corporation
pursuant to or in connection with this Agreement;
6.8 The Corporation has not, directly or indirectly, declared or paid
any dividend or declared or made any other distribution on any of its
shares or securities of any class, or, directly or indirectly, redeemed,
purchased or otherwise acquired any of its shares or securities, and has
not agreed to do any of the foregoing during the last five completed fiscal
years;
6.9 There is not, in the constating documents or by-laws of the
Corporation, any restriction upon or impediment to the declaration or
payment of dividends by the directors of the Corporation or the payment of
dividends by the Corporation to the holders of the Common Shares;
6.10 There is no person, firm or corporation acting or purporting to act
for the Corporation entitled to any brokerage or finder's fee in connection
with this Agreement or any of the transactions contemplated hereunder,
except as provided herein, and in the event any person, firm or corporation
acting or
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purporting to act for the Corporation establishes a claim for any such fee
from MFC, the Corporation covenants to indemnify and hold harmless MFC with
respect thereto and with respect to all costs reasonably incurred in the
defence thereof, other than as disclosed in writing by the Corporation to
MFC on or before the date hereof;
6.11 This Agreement has been duly authorized, executed and delivered on
behalf of the Corporation and is a legal, valid and binding obligation of
the Corporation enforceable in accordance with its terms;
6.12 The Corporation is conducting its respective businesses in
compliance in all material respects with all applicable licensing and anti-
pollution legislation, regulations or by-laws, environmental protection
legislation, regulations or by-laws or other similar legislation,
regulations or by-laws or other lawful requirements of any governmental or
regulatory bodies which are applicable to the Corporation. The Corporation
is not aware of any such legislation, regulation, by-law or lawful
requirement currently in force or proposed to be brought into force by any
governmental authority which the Corporation anticipates it will be unable
to comply with without materially adversely affecting its business;
6.13 The Corporation is not in default or breach of, and the execution
and delivery of this Agreement, the performance and compliance with the
terms of this Agreement and the issuance and sale of the Offered Shares by
the Corporation will not result in any breach of, or be in conflict with or
constitute a default under, or create a state of facts which after notice
or lapse of time, or both, would constitute a default under, any term or
provision of the constating documents or by-laws of the Corporation, any
resolutions passed or consented to by the directors or shareholders of the
Corporation or any mortgage, note, indenture, contract, agreement (written
or oral), instrument, lease or other document to which the Corporation is a
party or any judgement, decree, order, statute, rule or regulation
applicable to the Corporation, and no terms or provision thereof materially
adversely affects the business, operations or condition (financial or
otherwise) of the Corporation or its properties or assets;
6.14 None of the directors or senior officers of the Corporation, any
holder of more than 10% of the outstanding Common Shares or any associate
or affiliate of any of the foregoing persons or companies has had any
material interest, direct or indirect, by way of beneficial ownership in
the Common Shares or otherwise, in any transaction or in any proposed
transaction which has materially affected or will materially affect the
Corporation, other than as disclosed by the Corporation to MFC on or before
the date hereof;
6.15 The Corporation has duly and on a timely basis filed all tax returns
to be filed by it, has paid all taxes due and payable by it and has paid
all assessments and re-assessments and all other taxes, governmental
charges, penalties, interest and other fines due and payable by it and
which are claimed by any governmental authority to be due and owing and
adequate provision has been made for taxes payable for any fiscal period
ended for which tax returns are not yet required to be filed, if required;
there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the filing of any tax return or payment
of any tax, governmental charge or deficiency by the Corporation; there are
no actions, suits, proceedings, investigations or claims threatened or
pending against the Corporation in respect of taxes, governmental charges
or assessments or any matters under discussion with any governmental
authority relating to taxes, governmental charges or assessments asserted
by any such authority;
6.16 All of the material agreements of the Corporation have been duly
authorized, executed and delivered by each of the parties thereto and are
legal, valid and binding obligations of the parties thereto enforceable in
accordance with their respective terms against each of the parties thereto;
and
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6.17 To the best of the Corporation's knowledge, all necessary patent
applications in respect of the Patents have been duly filed and the
Corporation has good and valid title to the Patents, and the Corporation
did not disclose to the public the existence of the subject matter of any
of the Patents prior to the date of filing of each of the Patents.
7. REPRESENTATIONS AND WARRANTIES OF MFC
MFC hereby represents and warrants, and acknowledges that the Corporation
is relying on such representations and warranties in entering into this
Agreement, that:
7.1 MFC has been duly incorporated and organized and is validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite corporate power and authority to carry
its business;
7.2 There is no action, proceeding or investigation pending or, to the
knowledge of MFC and its directors and officers, threatened, against or
affecting MFC, at law or in equity or before or by any federal, provincial,
municipal or other governmental department, commission, board or agency,
domestic or foreign, which could in any way materially adversely affect MFC
or the condition (financial or otherwise) of MFC or which could adversely
affect the offering of Common Shares under this Agreement; and
7.3 This Agreement has been duly authorized, executed and delivered on
behalf of MFC and is a legal, valid and binding obligation of MFC
enforceable in accordance with its terms.
8. INDEMNIFICATION, CONTRIBUTION, ETC.
8.1 The Corporation covenants and agrees to protect, indemnify and hold
harmless MFC and its sub-agents and each director, officer and employee or
agent of MFC and its sub-agents, from and against any and all losses,
claims, damages, liabilities (whether arising under the Securities
Legislation or otherwise), costs or expenses caused or incurred:
(a) by reason of or arising out of any information or statement
contained in the Preliminary Offering Documents, in the
Offering Documents, in any Supplementary Material or
otherwise which is or is alleged to be untrue or by reason
of or arising out of the omission or alleged omission to
provide any information or state any fact the omission of
which makes or is alleged to make any such information or
statement untrue or misleading in the light of the
circumstances in which it was made; and/or
(b) by reason of or arising out of the omission or alleged
omission to state in the Preliminary Offering Documents, in
the Offering Documents, in any Supplementary Material or
otherwise, any material fact; and/or
(c) by reason of or arising out of any misrepresentation or
alleged misrepresentation contained in the Preliminary
Offering Documents, in the Offering Documents, in any
Supplementary Material or otherwise; and/or
(d) by reason of or arising directly or indirectly out of any
order, inquiry or investigation of the type referred to in
Section 10.2(c) or (d) hereof; and/or
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(e) by reason of or arising from a breach of any representation
or warranty contained in this Agreement or any non-
compliance with the Securities Legislation.
8.2 Notwithstanding Section 8.1 hereof, the indemnification contained in
Section 8.1 does not and shall not apply in respect of any losses, claims,
damages, liabilities, costs or expenses caused or incurred by reason of or
arising out of any statement, omission, misrepresentation, order, inquiry,
investigation or other matter or thing referred to in Section 8.1 which is
based upon or results from any information relating solely to MFC and which
is furnished in writing to the Corporation by MFC expressly for use in the
Preliminary Offering Documents or in the Offering Documents, or in any
Supplementary Material.
8.3 In the event that any claim, action, suit or proceeding, including,
without limiting the generality of the foregoing, any inquiry or
investigation (whether formal or informal) is brought or instituted against
any of the persons or corporations in respect of which indemnification is
or might reasonably be considered to be provided for in Section 8.1 hereof,
such person or corporation (the "Indemnified Party") shall promptly notify
the Corporation and the Corporation shall promptly retain counsel who shall
be reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party in such claim, action, suit or proceeding and the
Corporation shall pay all of the reasonable fees and disbursements of such
counsel relating to such claim, action, suit or proceeding.
8.4 In any such claim, action, suit or proceeding, the Indemnified Party
shall have the right to retain other counsel to act on his or its behalf;
provided that the fees and disbursements of such other counsel shall be
paid by the Indemnified Party unless:
(a) the Corporation and the Indemnified Party shall have
mutually agreed to the retention of such other counsel; or
(b) the named parties to any such claim, action, suit or
proceeding (including any added, third or impleaded
parties) include both the Corporation and the Indemnified
Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them (such as the availability
of different defences).
8.5 Notwithstanding anything contained in this Article 8, neither the
Corporation nor MFC shall agree to any settlement of any such claim,
action, suit or proceeding unless the other has consented in writing
thereto, and the Corporation shall not be liable for any settlement of any
such claim, action, suit or proceeding unless it has consented in writing
thereto.
8.6 To the extent that the indemnification provided for in Section 8.1
hereof (as qualified by Section 8.2 hereof) is unavailable, in whole or in
part, for any reason to an Indemnified Party in respect of any losses,
claims, damages, liabilities, costs or expenses (or claims, actions, suits
or proceedings in respect thereof) referred to therein, the Corporation
shall contribute to the amount paid or payable (or, if such indemnity is
unavailable only in respect of a portion of the amount so paid or payable,
such portion of the amount so paid or payable) by such Indemnified Party as
a result of such losses, claims, damages, liabilities, costs or expenses
(or claims, actions, suits or proceedings in respect thereof):
(a) in such proportion as is appropriate to reflect the
relative benefits received by the Corporation on the one
hand and MFC on the other hand from the offering of the
Offered Shares; or
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(b) if the allocation provided by subsection (a) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits
referred to in subsection (a) above but also the relative
fault of the Corporation on the one hand and MFC on the
other hand in connection with the information, statement,
omission, misrepresentation, order, inquiry, investigation
or other matter or thing referred to in Section 8.1 hereof
which resulted in such losses, claims, damages,
liabilities, costs or expenses (or claims, actions, suits
or proceedings in respect thereof), as well as any other
relevant equitable considerations.
The parties hereto agree that the relative benefits received by the
Corporation on the one hand and MFC on the other shall be deemed to be in
the same proportion as the total proceeds from the offering (net of the fee
payable to MFC but before deducting expenses) received by the Corporation
is to the fee received by MFC, as set forth in the Offering Documents. The
relative fault of the Corporation on the one hand and of MFC on the other
shall be determined by reference to, among other things, whether the
information, statement, omission, misrepresentation, order, inquiry,
investigation or other matter or thing referred to in Section 8.1 hereof
which resulted in such losses, claims, damages, liabilities, costs or
expenses (or claims, actions, suits or proceedings in respect thereof)
relates to information supplied by or steps or actions taken or done by or
on behalf of the Corporation or to information supplied by or steps or
actions taken or done by or on behalf of MFC and the relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission, misrepresentation, order, inquiry, investigation or
other matter or thing referred to in Section 8.1 hereof. The amount paid
or payable by an Indemnified Party as a result of the losses, claims,
damages, liabilities, costs or expenses (or claims, actions, suits or
proceedings in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such losses,
claims, damages, liabilities, costs or expenses (or claims, actions, suits
or proceedings in respect thereof), whether or not resulting in any such
action, suit, proceeding or claim.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 8.6 were determined by any method of allocation
which does not take into account the equitable considerations referred to
above in this Section 8.6.
8.7 The rights and remedies of MFC set forth in Sections 8.1, 8.2, 8.3,
8.4, 8.5 and 8.6 hereof are, to the fullest extent possible in law,
mutually exclusively and are cumulative and not alternative and the
election by MFC to exercise any such right or remedy shall not be, and
shall not be deemed to be, a waiver of the other such rights and remedies.
8.8 If any provision of Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.6 or 8.7
hereof is determined to be void, voidable or unenforceable, in whole or in
part, such determination shall not affect or impair or be deemed to affect
or impair the validity of any other provision of this Agreement and such
void, voidable or unenforceable provision shall be severable from this
Agreement.
9. GENERAL
9.1 All costs and expenses of or incidental to the transactions herein
contemplated and the issuance and sale of the Offered Shares hereunder are
to be assumed and paid by the Corporation, including, without limiting the
generality of the foregoing, the fees, disbursements and other costs
associated with the arranging of the Credit Facility, the completion of the
Reorganization and the arranging for a listing on a German stock exchange,
the engraving or lithographing of the definitive share certificates for the
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Common Shares, the fees, charges and expenses of the transfer agent and
registrar of the Common Shares, fees and disbursements of counsel to MFC,
the fees and expenses payable, if any, to stock exchanges, the fees and
disbursements of qualifying the offering of the Offered Shares for sale to
the public under the Securities Legislation, the preparation and printing
of the Preliminary Offering Documents, the Offering Documents and any
amendments or supplements thereto and the said definitive certificates, the
fees, charges and expenses of counsel and auditors of the Corporation and
all facsimile, telex, telephone and other correspondence charges, legal
fees and travelling and entertainment expenses. Unless otherwise specified
herein, all costs and expenses shall be payable by the Corporation within
25 days from the date of billing by MFC. MFC agrees to provide to the
Corporation for approval (which shall not be unreasonably withheld)
estimates of any such costs and expenses to exceed $3,000 per item.
9.2 Unless otherwise specified, all monetary amounts referred to in this
Agreement are in Euros.
9.3 The Corporation shall take all necessary steps to secure a written
agreement to ensure the continuing involvement of Xx. Xxxxxx FranOois
Serres as a leading researcher for the Corporation, to be effective as of
the date of this Agreement and to expire not earlier than the later of
three years from the date of this Agreement or the completion of the last
milestone of the Business Plan with respect to NewCo as existing at the
date of this Agreement. The Corporation shall also enter into a non-
competition agreement with Xx. Xxxxxx extending at least two years beyond
the end of Xx. Xxxxxx' contractual involvement with the Corporation.
10. TERMINATION OF AGREEMENT
10.1 The Corporation agrees that the conditions contained in Sections
4.2, 4.3, 4.4 and 4.5 hereof will be complied with so far as the same
relate to acts to be performed or caused to be performed by the
Corporation, that it will use its best efforts to cause such conditions to
be complied with and that if any of the said conditions are not complied
with, MFC may give notice to the Corporation as hereinafter provided
terminating its obligations hereunder and in such event the obligations of
MFC hereunder shall be at an end. It is understood that MFC may waive in
whole or in part non-compliance with any of the conditions contained herein
or extend the time for compliance therewith without prejudice to its rights
in respect of any other condition or conditions or any other or subsequent
breach or non-compliance, provided that any such waiver or extension shall
be binding upon MFC only if the same is in writing.
10.2 The obligations of MFC contained in this Agreement may also be
terminated by MFC in the event that prior to the Time of Closing:
(a) there should develop, occur or come into effect any
catastrophe of national or international consequence or any
accident, governmental law or regulation or other
occurrence of any nature whatsoever which, in the opinion
of MFC, seriously affects or will seriously affect the
financial markets or the business of the Corporation;
(b) the state of the financial markets becomes such that the
Offered Shares cannot, in the sole opinion of MFC, be
profitably marketed;
(c) any order is made suspending trading in the Common Shares
or any order to cease or suspend trading in Common Shares
is made pursuant to any of the Securities Legislation or is
made by any other regulatory authority, and has not been
rescinded, revoked or withdrawn;
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(d) any inquiry or investigation (whether formal or informal)
in relation to the Corporation or the Corporation's
directors or officers, is commenced or threatened by any
officer or official of any of the Securities Commissions or
by any officer or official of any other regulatory
authority which operates to prevent or restrict trading in
or distribution of the Common Shares or the Offered Shares
or which impacts the marketability of the Offered Shares;
(e) there shall have occurred any adverse material change in
relation to the Corporation or a development that could
reasonably result in an adverse material change in relation
to the Corporation; or
(f) MFC determines, in its sole discretion, that the results of
any due diligence investigation are not satisfactory.
10.3 Each Party which is not in default of its obligations under this
Agreement shall be authorized to terminate this Agreement if the other
party does not fulfill or properly fulfill all or part of its obligations
under this Agreement. In such a case, a reasonable and appropriate
deadline shall be fixed in writing by the obliging party to the non-
obliging party. Failing fulfilment of the relevant obligation(s) by the
non-obliging party within the set deadline, the obliging party shall be
entitled to give notice in writing of immediate termination of this
Agreement without prejudice of any damages. If the obliging party elects
not to terminate the Agreement, it shall nevertheless retain all its rights
to claim fulfilment of the Agreement or damages for non-fulfilment.
10.4 The obligations, but not the rights, of any party under this
agreement shall terminate in the event of bankruptcy, winding up or similar
proceedings involving such party.
10.5 Any termination pursuant to the provisions of this Agreement shall
be effected by notice given in accordance with Section 11.1 hereof;
provided always that notwithstanding the giving of any notice of
termination hereunder, the Corporation shall pay the expenses referred to
in Section 9.1 hereof incurred up to the time of giving such notice.
10.6 The right of MFC to terminate this Agreement pursuant to the
provisions of this Article 10 is in addition to such other remedies as it
may have in respect of any default, misrepresentation, act or failure to
act of the Corporation in respect of any of the matters contemplated by
this Agreement.
10.7 It is understood and agreed that MFC may exercise any or all of its
rights provided for in this Article 10 notwithstanding the occurrence of
any of the matters referred to in Sections 5.9 or 5.10 hereof and
notwithstanding any act or thing done or taken by MFC or any inaction of
MFC, whether before or after the occurrence of any such matter, including,
without limiting the generality of the foregoing, any act of MFC related to
the offering or to the continued offering of the Offered Shares for sale to
the public and any act taken by MFC in connection with the Offering
Documents or any amendment or supplement thereto relating to any such
matter, including the execution of an amendment to the Offering Documents,
and MFC shall only be considered to have waived or to be estopped from
exercising or relying upon any of its rights under any Section of this
Article 10 if such waiver or estoppel is in writing and specifically waives
such exercise or reliance.
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10.8 In the event of a termination by MFC of its obligations under this
Agreement, as herein provided, the Corporation shall continue to be liable
to MFC under this Agreement and, in particular, without limitation, under
Section 9.1 and Article 8 hereof.
10.9 If the Corporation effects a Major Transaction and fails to proceed
with the offering of Common Shares contemplated in Sections 2.1 and 2.2,
the Corporation shall pay to MFC in cash or Common Shares at the option of
MFC an amount equivalent to, as applicable, 10% of the aggregate sale,
lease or transfer price of the assets sold, leased or transferred in the
Major Transaction, 10% of the aggregate sale, assignment or transfer price
of the Patents or other intellectual property rights sold, assigned or
transferred in the Major Transaction, or 10% of the aggregate sale price of
the Common Shares, calculated on a fully diluted basis, in the Major
Transaction. Notwithstanding the foregoing, the parties shall retain all
other rights and obligations of the parties under this Agreement.
10.10 If MFC arranges for a bona fide lender willing to provide a secured
line of credit of up to Euro 1.3 million under the Credit Facility with
terms of repayment and interest rates that are reasonably on "market terms"
offered by other Swiss, French or U.S. banks to other similar creditworthy
clients and the Corporation refuses such facility, the Corporation shall
immediately pay a fee of Euro 130,000 to MFC.
10.11 If the Reorganization is cancelled, terminated or otherwise not
completed by the Corporation, other than solely as a direct result of the
actions or fault of MFC, the outstanding balance of the Credit Facility
shall become immediately due and payable on the terms and conditions
applicable under the Credit Facility and the Corporation shall immediately
issue to MFC, Common Shares equivalent to 10% of the issued and outstanding
Common Shares, calculated on a fully diluted basis. The Corporation shall
remain obligated to pay to MFC any other costs, expenses, fees or other
compensation contemplated by this Agreement for any other services
performed under this Agreement.
11. NOTICES
11.1 Any notice required or permitted to be given hereunder by either
party shall be given by notice in writing addressed to the President of the
notified party hand delivered or sent by registered mail to the respective
address mentioned on the first page of this Agreement, or to any new
address previously notified to the other party. Any such notice shall be
deemed to have been given and received at the time of hand delivery or
delivery by the relevant postal service, as the case may be.
12. SUCCESSORS AND ASSIGNS
12.1 All the terms and provisions of this Agreement shall be binding upon
and enure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns but shall not be assignable by the
parties hereto prior to the Time of Closing without the written consent of
the other parties.
12.2 The parties hereby acknowledge and agree that: (i) as part of and
upon the Reorganization being completed, the Corporation may transfer and
assign (the "Assignment") its rights and obligations under this Agreement
to NewCo, upon terms satisfactory to the Corporation and MFC; (ii) from and
after the date of the Reorganization and such Assignment the rights and
obligations of the Corporation under this Agreement (including the
representations and warranties) will be assumed by NewCo; and (iii) the
Corporation after the Reorganization and Assignment shall be released from
its obligations except as may be otherwise agreed upon by the Corporation
in the Assignment.
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13. CANCELLATION OF PREVIOUS AGREEMENTS
13.1 This Agreement supersedes all prior understandings and agreements,
whether written or oral, between the parties relating to the transactions
provided for herein, including the letter agreement between the parties
dated May 4, 2000.
14. SURVIVAL
14.1 It is understood and agreed that all warranties, representations,
covenants, indemnities and agreements of the Corporation herein contained
or contained in any certificates or documents submitted pursuant to or in
connection with the transactions herein referred to shall survive the sale
of the Offered Shares and the termination of this Agreement and shall
continue in full force and effect for the benefit of MFC regardless of any
investigation by or on behalf of MFC with respect thereto for a period of
two years following the Closing Date.
15. AMENDMENTS
15.1 This Agreement may be amended or modified by an agreement in writing
executed by the parties hereto. Except as aforesaid, no amendment, waiver
or modification of this Agreement shall be effective.
16. SEVERABILITY
16.1 Should a provision of this Agreement be or become invalid, the
validity of the remaining provisions of this Agreement shall not be
affected. The parties hereto undertake to replace any such invalid
provision without delay with a valid provision which as nearly as possible
duplicates the economic intent of the invalid provision.
17. ENGLISH VERSION
17.1 The parties hereby represent, warrant, acknowledge and agree that:
(i) they have agreed that this Agreement be drawn up in the English
language; and (ii) the English version of this Agreement shall govern for
all purposes.
18. GOVERNING LAW
18.1 This Agreement shall be construed and enforced in accordance with,
and the rights and obligations of the parties shall be governed by, the
laws of Switzerland.
19. JURISDICTION
19.1 Each of the parties irrevocably attorns to the exclusive
jurisdiction of the Swiss courts in Geneva (Switzerland).
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20. COUNTERPARTS
20.1 This Agreement may be executed in any number of counterparts, each
of which when delivered, either in original or facsimile form, shall be
deemed to be an original and all of which together shall constitute one and
the same document.
IN WITNESS WHEREOF the parties have executed this Agreement in two
counterparts, one for each party.
HIPPOCAMPE S.A.
Per:
---------------------
Authorized Signatory
MFC MERCHANT BANK S.A.
Per:
---------------------
Authorized Signatory
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SCHEDULE A
SHARE PURCHASE WARRANTS
THE SHARE PURCHASE WARRANTS REPRESENTED BY THIS
CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED ON OR BEFORE 2:00 P.M. (GENEVA TIME)
ON
---
[INSERT NAME OF THE CORPORATION]
WARRANT SHARE PURCHASE WARRANTS
CERTIFICATE ---
NO. TO PURCHASE COMMON SHARES
--- ---
This is to certify that for value received (the "Holder") is the
---
registered holder of a warrant evidencing a right issued by (the
---
"Corporation") to the Holder to subscribe for and purchase up to and
including fully paid and non-assessable common shares in the capital
---
of the Corporation (the "Common Shares") upon the terms and conditions as
hereinafter set forth.
Exercise Date
-------------
The right granted hereunder to purchase Common Shares shall be exercised on
or before 2:00 p.m. (Geneva time) on (the "Expiry Date"), after which
---
all rights conferred hereunder shall be void and of no further value.
Exercise Price
--------------
The exercise price shall be the sum of per Common Share (the "Exercise
---
Price").
Exercise of Warrant
-------------------
The rights granted hereunder may be exercised, in whole or in part, at any
time prior to the Expiry Date by the Holder hereof completing the
subscription form attached hereto and made a part hereof and delivering
same to the Corporation, located at Attention: together
---, ---
with this certificate and the appropriate sum payable to the order of the
Corporation, at par in the amount of the Exercise Price of the Common
Shares subscribed for, which may not exceed the number shown on the face
hereof.
Payment
-------
The Common Shares subscribed for must be paid in full at the time of
subscription, by certified cheque or bank draft payable to or to the order
of the Corporation.
Share Certificate
-----------------
Upon compliance with the conditions as aforesaid, the Corporation will
cause to be issued to the person or persons in whose name or names the
Common Shares so subscribed for are to be issued the number of Common
Shares subscribed for and such person or persons shall be deemed upon
presentation and payment as aforesaid, to be the holder or holders of
record of such Common Shares. Within fourteen days
23
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of compliance of the conditions aforesaid, the Corporation will cause to be
mailed or delivered to the Holder at the address or addresses specified in
the subscription form a certificate or certificates evidencing the number
of Common Shares subscribed for.
Exchange of Warrant Certificates
--------------------------------
Each warrant certificate may be exchanged for another certificate or
certificates entitling the Holder thereof to purchase a like aggregate
number of Common Shares as the certificate or certificates surrendered then
entitle such Holder to purchase. Any Holder desiring to exchange a warrant
certificate or certificates shall make such request in writing delivered to
the Corporation, and shall surrender, properly endorsed, the certificate or
certificates to be so exchanged. Thereupon, the Corporation shall execute
and deliver to the person entitled thereto a new warrant certificate or
certificates, as the case may be, as so requested.
Mutilated or Missing Warrant
----------------------------
In case any warrant shall be mutilated, lost, stolen or destroyed, the
Corporation may issue and deliver in exchange and substitution for and upon
cancellation of the mutilated warrant, or in lieu of and in substitution
for the warrant lost, stolen or destroyed, a new warrant of like tenor and
representing an equivalent right or interest.
Transfer of Warrant
-------------------
This warrant shall be transferable upon delivery thereof duly endorsed by
the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any transfer, the Corporation shall deliver a new warrant
or warrants to the persons entitled thereto.
Exercise in Whole or in Part
----------------------------
This warrant may be exercised in whole or in part, and if exercised in
part, the Corporation shall issue another certificate, in a form evidencing
the remaining rights to purchase Common Shares, provided that any such
right shall terminate on the Expiry Date.
No Fractional Common Shares
---------------------------
No fractional Common Shares will be issued on exercise of this warrant, nor
shall any compensation be made for such fractional Common Shares, if any.
Representations
---------------
The Corporation represents, warrants and covenants that any and all Common
Shares transferred and sold to a Holder upon each warrant exercise shall
be: (i) duly and validly created and issued by the Corporation; (ii) fully
paid and non-assessable; (iii) validly outstanding; and (iv) free and clear
of all liens, charges or encumbrances whatsoever.
24
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Dilution
--------
In the event of any reclassification, subdivision or redivision of the
issued Common Shares at any time prior to the Expiry Date into a greater
number of Common Shares (including the declaration of payment of any stock
dividend), the Corporation shall deliver at the time of any exercise
thereafter of the right hereby granted, at no additional cost to the Holder
hereof, all Common Shares which represent the Common Shares over which the
right would have been exercised if such exercise of the right hereby
granted had been prior to the date of reclassification, subdivision or
redivision.
In the event of any consolidation or change in the Common Shares at any
time prior to the Expiry Date to a lesser number of Common Shares, the
Corporation shall deliver at the time of any exercise thereafter of the
rights only such lesser number of Common Shares as represented by the
Common Shares over which the rights would have been exercised if such
exercise of the right hereby granted had been prior to the date of such
consolidation or change. The Holder hereof shall pay for such Common
Shares an amount calculated by multiplying the Exercise Price by the number
of Common Shares over which the right would have been exercised if such
exercise had been prior to the date of such consolidation or change.
In the event that the Corporation shall at any time prior to the Expiry
Date, amalgamate, consolidate with or merge into another corporation, the
Holder hereof shall thereafter receive, upon the exercise of his rights,
the securities or property to which a Holder of the number of Common Shares
then delivered upon the exercise of the within rights would have been
entitled to upon such amalgamation, consolidation or merger, and the
Corporation will take steps in connection with such amalgamation,
consolidation or merger as may be necessary to ensure that the provisions
hereof shall thereafter be applicable, as near as reasonably may be in
relation to any securities or properties thereafter delivered upon the
exercise of the rights hereby granted. A sale of all or substantially all
of the assets of the Corporation for a consideration (apart from the
assumption of obligations), consisting primarily of securities, shall be
deemed a consolidation, amalgamation or merger for the foregoing purposes.
Upon any adjustment of the number of Common Shares which may be purchased
by this warrant, and/or the purchase price per Common Share, the
Corporation shall give written notice to the Holder of this warrant,
determined as of the date of notice, giving particulars of such adjustment.
In the event the Corporation agrees to sell all or substantially all of the
assets of the Corporation for cash, it shall give the Holder hereof at
least thirty days notice prior to the date of finalization of such proposed
sale, determined as of the date of notice.
Successors
----------
All of the covenants and provisions of this warrant by or for the benefit
of the Corporation or the Holders shall bind and enure to the benefit of
their respective successors and assigns hereunder.
IN WITNESS WHEREOF the Corporation has caused its corporate seal to be
affixed hereto and this certificate to be signed by the signature of a duly
authorized officer effective this day of .
--- ---
[INSERT THE NAME OF THE CORPORTION]
Per:
----------------------
(Authorized Signatory)
25
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SUBSCRIPTION FORM
-----------------
(To be executed upon exercise of Share Purchase Warrant)
The undersigned hereby subscribes for the undernoted Common Shares
of at the Exercise Price of per Common Share.
--- ---
Number of Common Shares:
---------------------------
Total Exercise Price:
---------------------------
Subscriber's Signature:
---------------------------
Subscriber's Address:
---------------------------
Dated:
---------------------------
Note: payment of the Total Exercise Price must be included.
26
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TRANSFER FORM
-------------
For value received, hereby sells,
----------------------------------
assigns and transfers unto Share
----------------------------------
Purchase Warrants represented by this Warrant Certificate, and do hereby
irrevocably constitute and appoint as Attorney to
-------------------------
transfer the said Share Purchase Warrants on the books of the Corporation
with full power of substitution in the premises.
Dated:
----------------, ---------
In the presence of:
------------------------------ -----------------------------
27
SCHEDULE B
CONSENT OF ARALIS SERVICES S.A.
TO: HIPPOCAMPE S.A.
We confirm that we have received and reviewed a copy of the underwriting
agreement between Hippocampe S.A. and MFC Merchant Bank S.A. dated for
reference July 24, 2000 (the "Underwriting Agreement").
We hereby consent to the assignment of our existing outsourcing contracts
with Hippocampe S.A. from Hippocampe S.A. to NewCo (as defined in the
Underwriting Agreement) pursuant to the proposed Reorganization (as defined
in the Underwriting Agreement).
Dated for reference this 24th day of July, 2000.
ARALIS SERVICES S.A.
Per:
---------------------
Authorized Signatory
28
SCHEDULE C
LIST OF PATENTS OF THE CORPORATION
Application No. Application Date Publication No.
--------------- ---------------- ---------------
97/14387 November 17, 0000 0000000
PCT/FR98/02447 November 17, 1998 W099/25377
99/06528 May 21, 1999 N/A
PCT/FR00/01399 May 22, 2000 N/A
