THIS AMALGAMATION AGREEMENT made as of December 2, 1999, as amended and
restated on February 15 2000.
AMONG:
BIOSYNTECH, INC (formerly Dream Team International Inc) a body
corporate incorporated under the laws of the State of Nevada
("Dream Team")
- and -
BIO SYNTECH LTD., a body corporate incorporated under the laws
of the Province of Quebec with an office in the City of Laval,
in the Province of Quebec ("Bio Syntech")
- and -
0000-0000 XXXXXX INC, a body corporate incorporated under the
laws of the Province of Quebec with an office in the City of
Montreal, in the Province of Quebec ("Newco")
RECITALS:
1. Newco and Bio Syntech wish to merge their businesses so as to continue
as one corporation in accordance with the terms and subject to the conditions
herein set forth;
2. Newco is a wholly-owned subsidiary of Dream Team; and
3. The Parties wish to effect the foregoing merger through the
amalgamation of Newco with Bio Syntech, in accordance with the terms and
conditions herein set forth;
NOW THEREFORE IN CONSIDERATION of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which is hereby acknowledged), the parties hereto covenant and agree as
follows:
ARTICLE 2
DEFINITIONS
2.1 In this Agreement, unless the context otherwise requires:
"Agreement" means this agreement, including the recitals and all
Schedules to this agreement as amended or supplemented from time to
time, and "hereby", "hereof", "herein", "hereunder", "herewith" and
similar terms refer to this Agreement and not to any particular
provision of this Agreement;
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"Amalgamated Corporation" means the continuing corporation constituted
upon the Amalgamation under the name of Bio Syntech Canada inc.;
"Amalgamation" means the amalgamation of Bio Syntech and Newco to form
Bio Syntech Canada Inc., as provided for herein;
"Articles of Amalgamation" means the articles of amalgamation in
respect of the Amalgamation in the form set forth in Schedule "A";
"Bio Syntech Assets" means all of the assets and properties of Bio
Syntech;
"Bio Syntech Counsel" means Xx Xxxxxxxx Chaurette Xxxxxxxx , or such
other legal counsel as may be designated by Bio Syntech;
"Bio Syntech Financial Statements" means the audited financial
statements of Bio Syntech for the year ended March 31, 1999 and the
unaudited financial statements of Bio Syntech for the six month period
ended September 30, 1999;
"Bio Syntech Material Adverse Effect" means any action, occurrence or
omission which has or will have a material adverse effect on the
business, assets, properties, condition (financial or otherwise),
results of operations or prospects of Bio Syntech;
"Bio Syntech Meeting" means the special meeting of the holders of Bio
Syntech Shares called for the Meeting Date to consider and, if thought
fit, approve and adopt the Amalgamation, and any adjournments thereof;
"Bio Syntech Options" means options to acquire Bio Syntech Shares
granted to employees or officers of Bio Syntech under its stock option
plan.
"Bio Syntech Warrants" means the outstanding warrants entitling the
holder to acquire common shares of Bio Syntech;
"Bio Syntech Shares" means the common shares without nominal or par
value in the capital of Bio Syntech as constituted on the date hereof;
"Bio Syntech Shareholders" means the holders of Bio Syntech Shares;
"Business day" means a day, other than a Saturday, Sunday or statutory
holiday, when banks in the City of Montreal are generally open for the
transaction of banking business;
"Closing" means the delivery of the documents contemplated by this
Agreement to be delivered by or on behalf of one party hereunder to
another party hereunder in order to effect the completion of the
Amalgamation and the other transactions contemplated herein, which
delivery of documents shall take place at the Closing Time at the
offices of De Grandpre Chaurette Xxxxxxxx Counsel in Montreal, Quebec,
unless otherwise agreed by Dream Team and Bio Syntech;
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"Closing Time" shall be the time on the Effective Date at which the
Closing shall occur, which time shall be 2:00 p.m. (Montreal time)
unless otherwise agreed by Dream Team and Bio Syntech;
"Control" means, with respect to control of a body corporate by a
person, the holding (other than by way of security) by or for the
benefit of that person of securities of that body corporate to which
are attached more than 50% of the votes that may be cast to elect
directors of the body corporate (whether or not securities of any other
class or classes shall or might be entitled to vote upon the happening
of any event or contingency) provided that such votes, if exercised,
are sufficient to elect a majority of the board of directors of the
body corporate;
"Effective Date" means the date the Amalgamation becomes effective
under the Quebec Companies Act;
"Effective Time" means 12:01 a.m. (Montreal time) on the Effective
Date;
"Governmental Authority" includes any federal, provincial, municipal or
other political subdivision, government, department, commission, board,
bureau, agency or instrumentality, domestic or foreign;
"Dream Team Assets" means all of the assets and properties of Dream
Team;
"Dream Team Common Shares" means common shares in the capital of Dream
Team as constituted on the date hereof;
"Dream Team Counsel" means Xxxxxxx X. Xxxxxx, Esq. or such other legal
counsel as may be designated by Dream Team;
"Dream Team Financial Statements" means the audited financial
statements of Dream Team for the 12 months ended December 31, 1998 and
the unaudited consolidated financial statements of Dream Team for the
nine month period ended September 30, 1999;
"Dream Team Material Adverse Effect" means any action, occurrence or
omission which has or will have a material adverse effect on the
business, assets, properties, condition (financial or otherwise),
results of operations or prospects of Dream Team;
"Dream Team Shares" means the common shares without nominal or par
value in the capital of Dream Team as constituted on the date hereof;
"Dream Team Shareholders" means the holders of Dream Team Shares;
"Information Circular" means the information circular to be used in
connection with the holding of the Bio Syntech Meeting;
"Misrepresentation" includes any untrue statement of a material fact,
any omission to state a material fact that is required to be stated and
any omission to state a material fact that is necessary to be stated in
order for a statement not to be misleading;
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"Non-Voting Exchangeable Share" means the non-voting exchangeable
shares of Bio Syntech Canada Inc;
"Person" includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association;
ARTICLE 2
INTERPRETATION
2.1 The division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
2.2 Unless the contrary intention appears, references in this Agreement to
an article, section, subsection, paragraph, clause, subclause or
schedule by number or letter or both refer to the article, section,
subsection, paragraph, clause, subclause or schedule, respectively,
bearing that designation in this Agreement.
2.3 In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa and words
importing gender shall include all genders.
2.4 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a business day in the place
where the action is required to be taken, such action shall be required
to be taken on the next succeeding day which is a business day in such
place.
2.5 References in this Agreement to any statute or sections thereof shall
include such statute as amended or substituted and any regulations
promulgated thereunder from time to time in effect.
2.6 Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
2.7 All representations, warranties, covenants and opinions in or
contemplated by this Agreement as to the enforceability of any
covenant, agreement or document are subject to enforceability being
limited by applicable bankruptcy, insolvency, reorganization and other
laws affecting creditors' rights generally and by the discretionary
nature of certain remedies (including specific performance and
injunctive relief).
ARTICLE 3
AMALGAMATION
3.1 Amalgamation. Bio Syntech and Newco agree to amalgamate pursuant to the
provisions of the Quebec Companies Act and to continue as one
corporation effective on the Effective Date, on the terms and subject
to the conditions set out herein.
3.2 Name. The name of the Amalgamated Corporation shall be Bio Syntech
Canada Inc.
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3.3 Registered Office. The registered office of the Amalgamated Corporation
shall be situate at the registered office of BioSyntech.
3.4 Authorized Capital and Restrictions on Share Transfers. The Amalgamated
Corporation shall be authorized to issue an unlimited number of common
shares and an unlimited number of NonVoting Exchangeable Shares, which
shall have the rights, privileges, restrictions and conditions set
forth in the Articles of Amalgamation and the Quebec Companies Act.
3.5 Number of Directors. The minimum number of directors of the Amalgamated
Corporation shall be one (1) and the maximum number of directors of the
Amalgamated Corporation shall be nine (9).
3.6 First Directors. The number of first directors of the Amalgamated
Corporation shall be five. The first directors of the Amalgamated
Corporation shall be the persons who are directors of BioSyntech
immediately before the effective date of the Amalgamation
The first directors shall hold office until the first annual or general
meeting of the shareholders of the Amalgamated Corporation or until
their successors are duly appointed or elected. The subsequent
directors shall be elected each year thereafter as provided for in the
Quebec Companies Act and the by-laws of the Amalgamated Corporation.
The management and operation of the business and affairs of the
Amalgamated Corporation shall be under the control of the Board of
Directors thereof as it is constituted from time to time.
3.7 Effect of Certificate of Amalgamation. On the Effective Date, the
Amalgamation of Bio Syntech and Newco and their continuance as one
corporation shall become effective; the property of each of Bio Syntech
and Newco shall continue to be the property of the Amalgamated
Corporation; the Amalgamated Corporation shall continue to be liable
for the obligations of each of Bio Syntech and Newco; any existing
cause of action, claim or liability to prosecution of either of Bio
Syntech or Newco shall be unaffected; any civil, criminal or
administrative action or proceeding pending by or against either Bio
Syntech or Newco may be continued to be prosecuted by or against the
Amalgamated Corporation; any conviction against, or ruling, order or
judgment in favour of or against, either Bio Syntech or Newco may be
enforced by or against the Amalgamated Corporation; and the Articles of
Amalgamation shall be deemed to be the Articles of Incorporation for
the Amalgamated Corporation and the certificate of amalgamation to be
issued evidencing the Amalgamation shall be deemed to be in the
certificate of incorporation of the Amalgamated Corporation.
3.8 First Auditors. The first auditors of the Amalgamated Corporation shall
be Ernst & Young Chartered Accountants, of Montreal, Quebec. The first
auditors of the Amalgamated Corporation shall hold office until the
first annual meeting of the Amalgamated Corporation following the
Amalgamation or until their successors are duly elected or appointed.
3.9 Restrictions on Business. There shall be no restrictions on the
business that the Amalgamated Corporation may carry on.
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3.10 Articles of Amalgamation and By-laws. The Articles of Amalgamation of
the Amalgamated Corporation shall be in the form set forth in Schedule
"A". The by-laws of the Amalgamated Corporation shall be the existing
by-laws of Newco.
3.11 Effect of the Amalgamation on Shares. On the Effective Date:
(a) subject to paragraph 3.11(c) below, each holder of Bio Syntech
Shares shall receive, for each Bio Syntech Share held, one
Non-Voting Exchangeable Share following which all Bio Syntech
Shares shall be canceled;
(b) Dream Team shall receive one fully-paid and non-assessable
common share of the Amalgamated Corporation for each one Newco
common share held by Dream Team, following which all Newco
common shares shall be canceled;
(c) if a holder of Bio Syntech Shares is entitled to receive a
fraction of a Non-Voting Exchangeable Share, then in respect
of such fraction the holder shall be entitled to receive one
whole Non-Voting Exchangeable Share, as the case may be,
rounded up. In calculating such fraction, all Bio Syntech
Shares held by a beneficial holder shall in each case be
aggregated;
(d) each holder of a Bio Syntech Option shall receive for each Bio
Syntech Option held, an equivalent option to acquire one
Non-Voting Exchangeable Share for each Bio Syntech Share which
he is entitled to acquire under his option, on the same terms
and conditions;
.
(e) the stated capital account of the common share shall
correspond to the stated capital for the Newco common shares
and the stated capital for the on Voting Exchangeable Shares
shall correspond to the stated capital of the Bio Syntech
Shares.
3.12 Share Certificates, etc. On the Effective Date:
(a) the registers and transfers of Bio Syntech Shares shall be
closed;
(b) Dream Team, as the registered holder of Newco common shares,
shall cease to be the holder of Newco common shares and shall
be deemed to be the registered holder of common shares of the
Amalgamated Corporation to which it is entitled calculated in
accordance with the provisions hereof;
(c) the holders of Bio Syntech Shares shall cease to be the
holders of Bio Syntech Shares and shall be deemed to be
registered holders of the number of Non-Voting Exchangeable
Shares to which they are entitled calculated in accordance
with the provisions hereof; and
(d) certificates representing the number of Non-Voting
Exchangeable Shares issuable to holders of Bio Syntech Shares
shall be made available at the Depositary for pick-up by or
delivery to the holder upon deposit with the Depositary of
certificates formerly representing Bio Syntech Shares.
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ARTICLE 4
BIO SYNTECH'S CLOSING CONDITIONS
4.1 The obligation of Bio Syntech to complete the transactions contemplated
herein is subject to the fulfilment of the following conditions
precedent on or before the Closing Time or such other time as is
specified below:
(a) the representations and warranties made by Dream Team in this
Agreement shall be true as of the Effective Date as if made on
and as of such date and Dream Team shall have provided to Bio
Syntech at the Closing Time a certificate of the Chief
Executive Officer of Dream Team to that effect dated the
Effective Date and Bio Syntech shall have no knowledge to the
contrary;
(b) Dream Team shall have provided Bio Syntech with an opinion of
Dream Team Counsel satisfactory in form and substance in all
material respects to Bio Syntech dated the Effective Date (or
such other date as Dream Team and Bio Syntech may agree) and
addressed to Bio Syntech and Bio Syntech Counsel;
(c) at the Effective Date there shall not be more than 12,000,000
Dream Team Shares outstanding, without taking into account
shares to be issued under the private placement contemplated
under paragraph (g) below, which shall not exceed 500,000
shares and 500,000 warrants to acquire additional shares;
(d) Dream Team shall have no employees, and all Dream Team
consultants shall have been terminated by Dream Team and the
aggregate amount of termination fees, bonuses or other similar
amounts paid to such persons shall not exceed $1,000
collectively;
(e) there shall not have occurred any Dream Team Material Adverse
Effect or any material adverse effect on the value of the
Non-Voting Exchangeable Shares to be received by the holders
of Bio Syntech Shares;
(f) all directors and officers of Dream Team shall have resigned
and Bio Syntech shall be satisfied that Dream Team has no
further obligations or liabilities to such persons other than
typical directors' indemnities; and
(g) Dream Team shall have completed a private placement of
US$2,000,000.
The foregoing conditions precedent are for the benefit of Bio Syntech
and may be waived, in whole or in part, by Bio Syntech in writing at
any time. If any of the said conditions precedent shall not be complied
with or waived by Bio Syntech on or before the date required for the
performance thereof, Bio Syntech may, in addition to the other remedies
it may have at law or equity, rescind and terminate this Agreement by
written notice to Dream Team.
ARTICLE 5
DREAM TEAM'S CLOSING CONDITIONS
8
5.1 The obligation of Dream Team to complete the transactions contemplated
herein are subject to fulfilment of the following conditions precedent
on or before the Effective Date or such other time as is specified
below:
(a) the representations and warranties made by Bio Syntech in this
Agreement shall be true as of the Effective Date as if made on
and as of such date and Bio Syntech shall have provided to
Dream Team at the Closing Time a certificate of the Chief
Executive Officer of Bio Syntech, dated the Effective Date, to
that effect and Dream Team shall have no knowledge to the
contrary;
(b) Bio Syntech shall have provided Dream Team with an opinion of
Bio Syntech Counsel satisfactory in form and substance in all
material respects to Dream Team dated the Effective Date (or
such other date as Dream Team and Bio Syntech may agree) and
addressed to Dream Team and Dream Team Counsel;
(c) Bio Syntech shall have complied with its covenants herein and
shall have provided to Dream Team at the Closing Time a
certificate of the Chief Executive Officer of Bio Syntech
dated the Effective Date certifying that Bio Syntech has
complied with its covenants herein and Dream Team shall have
no knowledge to the contrary;
(d) prior to the Closing Time all of the outstanding Bio Syntech
Warrants shall have been exercised or canceled;
(e) Dream Team being satisfied that, at the Effective Time, no
person, firm or corporation has any agreement, option, right
or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement, option or privilege to
acquire any unissued securities of Bio Syntech or any interest
therein, with the exception of a maximum of 2,000,000 shares
issuable under the Bio Syntech Options;
(f) no act, action, suit or proceeding shall have been threatened,
taken or be outstanding before or by any domestic or foreign
court or tribunal or governmental agency or other regulatory
authority or administrative agency or commission by any
elected or appointed public official or private person
(including, without limitation, any individual, corporation,
firm, group or other entity) in Canada or elsewhere, whether
or not having the force of law; and no law, regulation or
policy shall have been proposed, enacted, promulgated or
applied:
(i) which has the effect or may have effect, to cease
trade, enjoin, prohibit or impose material
limitations or conditions on the amalgamation of Bio
Syntech and Newco, or the right of Dream Team to own
or exercise full rights of ownership of the
Amalgamated Corporation; or
(ii) which, if the proposed transaction were consummated
would, in the judgement of Dream Team, acting
reasonably, materially and adversely affect Dream
Team and Bio Syntech considered on a consolidated
basis;
9
(g) at the Effective Time there shall not be more than 15,196,440
Bio Syntech Shares outstanding, together with any Bio Syntech
Shares which may be issued prior to the Closing Time upon the
due exercise of outstanding Bio Syntech Options and Warrants;
(h) there shall not have occurred any Bio Syntech Material Adverse
Effect or any material adverse effect on the value of the Bio
Syntech Shares to Dream Team; and
The foregoing conditions precedent are for the benefit of Dream Team
and may be waived, in whole or in part, by Dream Team in writing at any
time. If any of the said conditions precedent shall not be complied
with or waived by Dream Team on or before the date required for the
performance thereof, Dream Team may, in addition to the other remedies
it may have at law or equity, rescind and terminate this Agreement by
written notice to Bio Syntech.
ARTICLE 6
MUTUAL CLOSING CONDITIONS
6.1 The obligations of Dream Team and Bio Syntech to complete the
transactions contemplated herein are subject to fulfilment of the
following conditions precedent on or before the Effective Date or such
other time as is specified below:
(a) special resolutions shall have been passed at the Bio Syntech
Meeting by the holders of Bio Syntech Shares duly approving
the Amalgamation in accordance with the applicable corporate
legislation; and the Bio Syntech Meeting shall have been held
in accordance with the applicable corporate legislation;
(b) all requisite regulatory approvals (including, without
limitation, of any stock exchanges or other regulatory
authorities) shall have been obtained on terms satisfactory to
Bio Syntech and Dream Team, acting reasonably;
(c) there shall not exist any prohibition at law against Dream
Team or Bio Syntech consummating the proposed transaction;
(d) the Articles of Amalgamation shall have been executed, as
required, by Newco and Bio Syntech and filed with the
Registrar under the Quebec Companies Act in a diligent manner
as soon as possible following the Meeting Date; and
(e) other than as a result of the actions of a party to this
Agreement, the Effective Date shall be no later than February
28, 2000.
The foregoing conditions are for the mutual benefit of Dream Team and
Bio Syntech and may be waived, in whole or in part, by Dream Team and
Bio Syntech at any time. If any of the said conditions precedent shall
not be complied with or waived as aforesaid on or before the date
required for the performance thereof, Dream Team or Bio Syntech may, in
addition to the other remedies it may have at law or in equity, rescind
and terminate this Agreement by written notice to the other party.
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ARTICLE 7
BIO SYNTECH'S REPRESENTATIONS AND WARRANTIES
7.1 Bio Syntech represents and warrants to and in favour of Dream Team the
following, and acknowledges that Dream Team is relying upon such
representations and warranties:
(a) as of the date hereof there are not more than 13,283,579 Bio
Syntech Shares and no other shares issued and outstanding and
other than pursuant to this Agreement or as has been disclosed
by Bio Syntech to Dream Team, no person, firm or corporation
has any agreement, option, right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement,
option or privilege to acquire any unissued securities of Bio
Syntech or any interest therein;
(b) Bio Syntech has been duly incorporated and organized, and is
validly existing as a corporation, under the Quebec Companies
Act and has full corporate power and authority to own its
assets and conduct its businesses as now owned and conducted.
Bio Syntech is duly qualified to carry on business, and is in
good standing, in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its
activities makes such qualification necessary, except where
the failure to be so qualified will not have an Bio Syntech
Material Adverse Effect;
(c) Bio Syntech has complied with and is in compliance with all
laws and regulations applicable to the operation of its
business except where failure to so comply will not have an
Bio Syntech Material Adverse Effect and has all licences,
permits, orders or approvals of, and has made all required
registrations with, any governmental or regulatory body that
is material to the conduct of its business;
(d) Bio Syntech has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Bio
Syntech and the consummation by Bio Syntech of the
transactions contemplated by this Agreement have been duly
authorized by the board of directors of Bio Syntech and,
except as contemplated hereby, no other corporate proceedings
on the part of Bio Syntech are necessary to authorize this
Agreement and the completion of the Amalgamation. This
Agreement has been duly executed and delivered by Bio Syntech
and constitutes a valid and binding obligation of Bio Syntech,
enforceable by Dream Team against Bio Syntech in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other laws
relating to or affecting creditors' rights generally and to
general principles of equity. The execution and delivery by
Bio Syntech of this Agreement and performance by it of its
obligations hereunder will not;
(i) result in a violation or breach of any term or
provision of:
(1) its articles or by-laws; or
(2) any law, regulation, order, judgement or decree;
(ii) give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity,
in any case, or give rise to any rights of first
refusal or any restriction or limitation under any
agreement,
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contract, licence, franchise or permit of Bio Syntech
which in any case would have an Bio Syntech Material
Adverse Effect and Bio Syntech is not currently in
breach of any such contract where such breach would
have an Bio Syntech Material Adverse Effect; or
(iii) result in the imposition of any encumbrance, charge
or lien upon any of its assets;
(e) except as disclosed to Dream Team:
(i) Bio Syntech has conducted its business only in the
usual, ordinary and regular course and consistent
with past practice;
(ii) no liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) that has
had or is reasonably likely to have an Bio Syntech
Material Adverse Effect has been incurred;
(iii) there is no claim, action, proceeding or
investigation pending or, to the knowledge of Bio
Syntech, threatened against or relating to Bio
Syntech or any of its properties or assets before any
court or governmental or regulatory authority or body
that, if adversely determined, is likely to have an
Bio Syntech Material Adverse Effect or prevent or
materially delay consummation of the proposed
transaction, nor is Bio Syntech aware of any basis
for any such claim, action, proceeding or
investigation. Bio Syntech is not subject to any
outstanding order, writ, injunction or decree that
has had or is reasonably likely to have an Bio
Syntech Material Adverse Effect or prevent or
materially delay consummation of the proposed
transaction; and
(iv) there has not been any event prior to the date hereof
that has had or is reasonably likely to have an Bio
Syntech Material Adverse Effect;
(f) the Bio Syntech Financial Statements were prepared in
accordance with generally accepted accounting principles in
Canada consistently applied and fairly represent the financial
condition of Bio Syntech for the period indicated and the
results of operations of Bio Syntech for such applicable
period;
(g) Bio Syntech has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees,
agent's commission or other similar forms of compensation with
respect to the transactions contemplated herein;
(h) Bio Syntech has no Subsidiaries or securities investments in
any other persons and has no obligations of any nature to
acquire any Subsidiary or securities investments in any other
person or to acquire or lease any other business operations
out of the ordinary course;
(i) the minute books of Bio Syntech are complete and correct in
all material respects and contain the minutes of all meetings
and all resolutions of the directors and shareholders thereof;
(j) Bio Syntech:
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(i) has duly and in a timely manner filed all returns,
elections, filings and reports required pursuant to
the Income Tax Act, the Quebec Tax Act, the income
tax legislation of any other province of Canada or
any foreign jurisdictions having jurisdiction over
the affairs of Bio Syntech, the Excise Tax Act
(Canada) as it relates to the goods and services tax
("GST"), the Mines and Minerals Act (Quebec), the
Freehold Mineral Rights Tax Act (Quebec), and any
similar legislation of provinces or foreign
jurisdictions having jurisdiction over the affairs of
Bio Syntech for all prior periods in respect of which
such filings have heretofore been required, and such
filings are substantially true, complete and correct;
the tax liability of Bio Syntech is as indicated by
the above returns and filings, and Bio Syntech has
made timely payment of, or has duly and properly
accrued on the books thereof, the taxes (including
interest and penalties thereon) shown in these
returns and filings, with respect to periods ending
on or prior to the date hereof, and any subsequent
assessments, reassessments or determinations thereof;
(ii) has made adequate provision for taxes or other
amounts payable pursuant to any legislation referred
to in (i) above for the current period for which
returns, reports, elections or other filings are not
yet required to be filed, and Bio Syntech has paid
all required instalments of income, capital, property
and business taxes payable on account of the current
period;
(iii) is not aware, without having made special
investigation, of any contingent tax liabilities or
any grounds that could prompt an assessment or
reassessment and has not received any indication from
any taxation authorities that an assessment or
reassessment, regardless of its merits, is proposed
or is under consideration;
(iv) is not a party to any agreements or waivers extending
the statutory period of limitations applicable to any
federal, provincial or other tax return for any
period;
(v) has withheld, and will continue to withhold until the
Effective Date, from each payment made to any of its
officers, directors, former directors and employees
and to all non-residents of Canada and other persons
with respect to whom it is required by law to
withhold any amounts, the amount of all taxes
(including, without limitation, income tax) and other
deductions required to be withheld therefrom and has
paid the same to the proper tax or other authority
within the time required under any applicable
legislation; and
(vi) has not to the best of its knowledge, without having
made a special investigation, undergone an
acquisition of control, for the purposes of the
Income Tax Act or any relevant provincial statute,
that would affect any taxation years of Bio Syntech
ending before the Effective Date;
(k) all filings made by Bio Syntech under which Bio Syntech has
received or is entitled to government incentives, have been
made in accordance, in all material respects, with all
applicable legislation and contain no misrepresentations of
material fact or omit to state
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any material fact which could cause any amount previously paid
to Bio Syntech or previously accrued on the accounts thereof
to be recovered or disallowed;
(l) Bio Syntech has performed, observed and satisfied all of its
material duties, liabilities, obligations and covenants
required to be satisfied, performed and observed by it under,
and is not in material default under or in material breach of,
the terms of any material leases or agreements pertaining to
Bio Syntech or the Bio Syntech Assets;
(m) there is no material circumstance, matter or thing known to
Bio Syntech which would cause it to believe that it may not
hold good and marketable title to any material portion of the
Bio Syntech Assets;
(n) all material documents and agreements of whatsoever nature and
kind affecting the title to the Bio Syntech Assets which are
in the possession of Bio Syntech or of which Bio Syntech is
otherwise aware have been made available for review by Dream
Team;
(o) Bio Syntech has done no act or thing, nor has Bio Syntech
suffered or permitted any act or omission, whereby its title
to any of the Bio Syntech Assets may be canceled or
terminated;
(p) there are reasonable grounds for believing that Bio Syntech
is, and immediately prior to the Effective Date will be, able
to pay its liabilities as they become due; and
(q) there are reasonable grounds for believing that no creditor of
Bio Syntech will be prejudiced by the Amalgamation.
ARTICLE 8
DREAM TEAM'S REPRESENTATIONS AND WARRANTIES
8.1 Dream Team represents and warrants to and in favour of Bio Syntech the
following, and acknowledges that Bio Syntech is relying upon such
representations and warranties:
(a) As of the date hereof there are not more than (i) 12,000,000
Dream Team Common Shares and no other shares issued and
outstanding, and (ii) other than pursuant to this Agreement or
as has been disclosed by Dream Team to Bio Syntech, no person,
firm or corporation has any agreement, option, right or
privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement, option or privilege to acquire any
unissued securities of Dream Team or any interest therein;
(b) Dream Team has been duly incorporated and organized, and is
validly existing as a corporation, and has full corporate
power and authority to own its assets and conduct its business
as now owned and conducted. Dream Team has no Subsidiaries
other than Newco. Dream Team is duly qualified to carry on
business, and is in good standing, in each jurisdiction in
which the character of its properties, owned or leased, or the
nature
14
of its activities makes such qualification necessary, except
where the failure to be so qualified will not have a Dream
Team Material Adverse Effect;
(c) Dream Team has complied with and is in compliance with all
laws and regulations applicable to the operation of its
business except where failure to so comply will not have a
Dream Team Material Adverse Effect and each of them has all
licences, permits, orders or approvals of, and has made all
required registrations with, any governmental or regulatory
body that is material to the conduct of its business;
(d) Dream Team has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by
Dream Team and the consummation by Dream Team of the
transactions contemplated by this Agreement have been duly
authorized by the board of directors of Dream Team and, except
as contemplated hereby, no other corporate proceedings on the
part of Dream Team are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Dream Team and constitutes
a valid and binding obligation of Dream Team, enforceable by
Bio Syntech against Dream Team in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of
equity. The execution and delivery by Dream Team of this
Agreement and performance by it of its obligations hereunder
will not;
(i) result in a violation or breach of any term or
provision of:
(1) its articles or by-laws or those of Newco; or
(2) any law, regulation, order, judgement or decree;
(ii) give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity,
in any case, or give rise to any rights of first
refusal or any restriction or limitation under any
agreement, contract, licence, franchise or permit of
Dream Team which in any case would have a Dream Team
Material Adverse Effect and Dream Team is not
currently in breach of any such contract where such
breach would have a Dream Team Material Adverse
Effect; or
(iii) result in the imposition of any encumbrance, charge
or lien upon any of its assets or the assets of
Newco;
(e) Dream Team:
(i) has made adequate provision for taxes or other
amounts payable pursuant to any legislation referred
to in (i) above for the current period for which
returns, reports, elections or other filings are not
yet required to be filed, and Dream Team has paid all
required instalments of income, capital, property and
business taxes payable on account of the current
period;
(ii) is not aware, without having made special
investigation, of any contingent tax liabilities or
any grounds that could prompt an assessment or
reassessment and has not received any indication from
any taxation authorities that an assessment or
reassessment, regardless of its merits, is proposed
or is under consideration;
15
(iii) is not a party to any agreements or waivers extending
the statutory period of limitations applicable to any
federal, provincial or other tax return for any
period;
(f) except as disclosed to Bio Syntech;
(i) Dream Team has conducted its business only in the
usual, ordinary and regular course and consistent
with past practice;
(ii) no liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) that has
had or is reasonably likely to have a Dream Team
Material Adverse Effect has been incurred; and
(iii) there has not been any event prior to the date hereof
that has had or is reasonably likely to have a Dream
Team Material Adverse Effect;
(g) the Dream Team Financial Statements were prepared in
accordance with generally accepted accounting principles
consistently applied and fairly present the financial
condition of Dream Team for the period indicated and the
results of operations of Dream Team for such applicable
period;
(h) there is no claim, action, proceeding or investigation pending
or, to the knowledge of Dream Team, threatened against or
relating to Dream Team or any of its properties or assets
before any court or governmental or regulatory authority or
body that, if adversely determined, is likely to have a Dream
Team Material Adverse Effect or prevent or materially delay
consummation of the proposed transaction, nor is Dream Team
aware of any basis for any such claim, action, proceeding or
investigation. Dream Team is not subject to any outstanding
order, writ, injunction or decree that has had or is
reasonably likely to have a Dream Team Material Adverse Effect
or prevent or materially delay consummation of the proposed
transaction;
(i) except for Newco, Dream Team has no Subsidiaries or securities
investments in any other persons and has no obligations of any
nature to acquire any Subsidiary or securities investments in
any other person or to acquire or lease any other business
operations out of the ordinary course;
(j) the minute books of Dream Team are complete and correct in all
material respects and contain the minutes of all meetings and
all resolutions of the directors and shareholders thereof;
(k) there has not been any material adverse change in the assets,
liabilities or obligations (absolute, accrued, contingent or
otherwise) of Dream Team from the position set forth in the
Dream Team Financial Statements and there has not been any
material adverse change in the business, operations or
condition (financial or otherwise) or results of operations of
Dream Team since September 30, 1999 and since that date there
have been
16
no material facts, transactions, events or occurrences which
could have a Dream Team Material Adverse Effect which have not
been disclosed in writing to Bio Syntech;
(l) no securities commission or similar regulatory authority has
issued any order preventing or suspending trading in any
securities of Dream Team;
(m) Dream Team has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees,
agent's commission or other similar forms of compensation with
respect to the transactions contemplated herein;
(n) Dream Team has performed, observed and satisfied all of its
material duties, liabilities, obligations and covenants
required to be satisfied, performed and observed by it under,
and is not in material default under or in material breach of,
the terms of any material leases or agreements pertaining to
Dream Team or the Dream Team Assets;
(o) Dream Team has not carried on any business to the date hereof
and has no assets or liabilities other than pursuant to this
Agreement;
ARTICLE 9
BIO SYNTECH'S COVENANTS
9.1 Until the earlier of: (i) the Effective Date and (ii) termination of
this Agreement in accordance with its terms, except with the prior
written consent of Dream Team, which shall not be unreasonably
withheld, and except for the Permitted Transactions:
(a) Bio Syntech will use all reasonable efforts to fulfil the
conditions set forth in Sections 5.1 and 6.1 to the extent the
fulfilment of the same is within the control of Bio Syntech:
(b) Bio Syntech shall not take any action except in, and maintain
its properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(c) Bio Syntech shall not directly or indirectly do or permit to
occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, lease, dispose of or
encumber:
(1) any additional shares of, or any options,
warrants, calls, conversion privileges or
rights of any kind to acquire any Bio
Syntech Shares except pursuant to
outstanding Bio Syntech Options and
Warrants; or
(2) except in the ordinary course of business
for a consideration not in excess of
$100,000, any assets of Bio Syntech;
(ii) amend or propose to amend its articles or by-laws;
17
(iii) split, combine or reclassify any outstanding shares,
or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or
otherwise with respect to any outstanding shares;
(iv) redeem, purchase or offer to purchase (or permit any
of its subsidiaries to redeem, purchase or offer to
purchase) any shares or other securities of Bio
Syntech except as contemplated in this Agreement;
(v) reorganize, amalgamate or merge Bio Syntech with any
other person, corporation, partnership or other
business organization whatsoever;
(vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of securities or assets or otherwise) any
person, corporation, partnership or other business
organization or division or, except in the ordinary
course of business, any assets or properties;
(vii) incur or commit to incur any indebtedness for
borrowed money or issue any debt securities except
for borrowing in the ordinary course of business and
consistent with past practice;
(viii) expend any amounts, incur any liabilities, enter into
any agreements, arrangements or make any commitments
(whether absolute, contingent or otherwise), or make
any offers that could result in any agreements or
commitments, whether or not in the ordinary course of
business, in an amount in excess of $100,000 (without
prior written consent of Dream Team, which consent
shall not be unreasonably withheld) in respect of
each such event; or
(ix) declare or pay any dividends or make any other
distribution to its shareholders or repay, other than
in the ordinary course of business, any outstanding
indebtedness;
(d) Bio Syntech shall not adopt or amend any bonus, profit
sharing, incentive, compensation, stock option, pension,
retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee;
(e) Bio Syntech shall:
(i) use its best efforts to preserve intact its business
organization and goodwill, and to maintain
satisfactory relationships with suppliers,
distributors, customers and others having business
relationships with it or its subsidiaries;
(ii) not take any action that would render, any
representation or warranty made by it in this
agreement untrue at any time prior to the proposed
transaction being consummated if then made; and
18
(iii) promptly notify Dream Team orally and in writing of
any governmental or third party complaints,
investigations or hearings (or communications
indicating that the same may be contemplated);
(f) Bio Syntech shall not enter into or modify any contract,
agreement, commitment or arrangement with respect to any of
the matters set forth in this Section 9.1;
(g) Bio Syntech will:
(i) convene the Bio Syntech Meeting and distribute copies
of the Information Circular in accordance with
applicable law;
(ii) solicit proxies to be voted in favour of the
Amalgamation at the Bio Syntech Meeting;
(iii) provide notice to Dream Team of the Bio Syntech
Meeting and allow Dream Team's representatives to
attend the Bio Syntech Meetings; and
(iv) conduct the Bio Syntech Meeting in accordance with
the by-laws of Bio Syntech and as otherwise required
by law;
(h) Bio Syntech will immediately advise Dream Team of the
occurrence of any material fact or material change with
respect to Bio Syntech which does or may effect the disclosure
with respect to Bio Syntech in the Information Circular;
(i) Bio Syntech will prepare (in consultation with Dream Team),
provided that Dream Team supplies all information as
reasonably requested, file and distribute to the holders of
Bio Syntech Shares in a timely and expeditious manner, any
amendments or supplements to the Information Circular as
required by applicable law, in all jurisdictions where the
same is required;
(j) Bio Syntech will subject to the approval of the Bio Syntech
Shareholders being obtained and subject to the satisfaction or
waiver of the conditions set forth for the benefit of Bio
Syntech, jointly with Newco file Articles of Amalgamation and
any other required documents with the Registrar under the
Quebec Companies Act, in order for the Amalgamation to become
effective;
(k) except for proxies and other non-substantive communications
with security holders, Bio Syntech will furnish promptly to
Dream Team a copy of each notice, report, schedule or other
document delivered, filed or received by Bio Syntech in
connection with (i) the Amalgamation, (ii) the Bio Syntech
Meeting, (iii) any filings under applicable laws and (iv) any
dealings with regulatory agencies in connection with the
transactions contemplated herein;
(l) Bio Syntech will make other necessary filings and applications
under applicable federal and provincial laws and regulations
required on the part of Bio Syntech in connection with the
transactions contemplated herein and take all reasonable
action necessary to be in compliance with such laws and
regulations;
19
(m) Bio Syntech will use all reasonable efforts to conduct its
affairs so that all of Bio Syntech's representations and
warranties contained herein shall be true and correct on and
as of the Effective Date as if made thereon;
(n) Bio Syntech will terminate its stock option plan and negotiate
and effect either the cancellation and termination or the
exercise of all Bio Syntech Warrants by the Effective Date as
contemplated by paragraph 5.1(d);
(o) Bio Syntech shall not, directly or indirectly, solicit or
cause or facilitate anyone else to solicit any offer
(confidential or otherwise) or expression of interest to
acquire any of its assets outside the ordinary course of
business or any of its securities, whether directly or
indirectly, provide information (except for Bio Syntech Public
Documents) concerning its securities, assets or business to
anyone for or in furtherance of anything mentioned in this
subsection, pursue any other material corporate acquisition or
disposition, amalgamation, merger, arrangement or purchase or
sale of assets; provided that the foregoing shall not prevent
the board of directors of Bio Syntech from responding to any
unsolicited bona fide submission or proposal regarding any
acquisition or disposition of assets or any unsolicited bona
fide proposal to amalgamate, merge or effect an arrangement or
any unsolicited bona fide acquisition proposal generally or to
a bona fide offer to acquire Bio Syntech Shares (a "Competing
Offer") or make any disclosure to its shareholders with
respect thereto which in the opinion of counsel is required
for the directors of Bio Syntech to discharge their respective
fiduciary duties to Bio Syntech and its shareholders. If Bio
Syntech receives or becomes aware of an unsolicited offer, or
that an unsolicited offer is pending, it will promptly provide
all particulars known to Bio Syntech to Dream Team; and
(p) notwithstanding the foregoing, in the event that, prior to the
proposed transaction becoming effective, a bona fide Competing
Offer is made which, in the opinion of the board of directors
of Bio Syntech, acting in good faith, would result, directly
or indirectly, in such holders receiving consideration in
excess of the consideration to be received under the proposed
transaction (a "Superior Competing Offer"), then prior to Bio
Syntech recommending to holders of Bio Syntech Shares that
they accept or vote in favour of or otherwise support the
Superior Competing Offer, Bio Syntech shall give Dream Team
three (3) business days to elect to match or better such
Superior Competing Offer. If Dream Team elects not to match or
better the Superior Competing Offer, then the board of
directors of Bio Syntech may withdraw, modify or change any
recommendation regarding the Offer if in the opinion of the
board of directors of Bio Syntech, acting reasonably and upon
advice of counsel, failure to do so would be inconsistent with
applicable laws, including directors' fiduciary duties
thereunder.
20
ARTICLE 10
DREAM TEAM'S COVENANTS
10.1 Until the earlier of: (i) the Effective Date; and (ii) termination of this
Agreement in accordance with its terms, except with the prior written consent of
Bio Syntech, which shall not be unreasonably withheld:
(a) Dream Team shall conduct its business in the ordinary course,
and shall not directly or indirectly do or permit to occur any
of the following:
(i) amend or propose to amend its articles or by-laws;
(ii) split, combine or reclassify any outstanding shares,
or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or
otherwise with respect to any outstanding shares;
(iii) reorganize, amalgamate or merge Dream Team with any
other person, corporation, partnership or other
business organization whatsoever;
(iv) acquire or agree to acquire (by merger, amalgamation,
acquisition of securities or assets or otherwise) any
person, corporation, partnership or other business
organization or division or, except in the ordinary
course of business, any assets or properties; or
(v) declare or pay any dividends or make any other
distribution to its shareholders or repay, other than
in the ordinary course of business, any outstanding
indebtedness;
(b) Dream Team shall not take any action except in, and maintain
its properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(c) Newco will not, and Dream Team will not permit Newco to, carry
on any business or take any actions except as is necessary to
give effect to the Amalgamation and all other transactions
contemplated by this Agreement;
(d) Dream Team will use all reasonable efforts to fulfil the
conditions set forth in Sections 4.1 and 6.1 to the extent the
fulfilment of the same is within the control of Dream Team;
(e) Dream Team will make all other necessary filings and
applications under applicable laws and regulations required in
connection with the transactions contemplated herein and will
take all reasonable action necessary to be in compliance with
such laws and regulations;
(f) except for non-substantive communications with security
holders, Dream Team will furnish promptly to Bio Syntech a
copy of each notice, report, schedule or other document
delivered, filed or received by Dream Team in connection with
(i) the Amalgamation, (ii)
21
any filings under applicable laws and (iii) any dealings with
regulatory agencies in connection with the transactions
contemplated herein;
(g) Dream Team will take appropriate steps to appoint the
directors of Bio Syntech to its Board of Directors effective
at the Effective Date and to obtain the resignation of and
full and complete releases from its current directors and
officers;
(h) Dream Team will use all reasonable efforts to conduct its
affairs so that all of Dream Team's representations and
warranties contained herein shall be true and correct on and
as of the Effective Date as if made thereon.
ARTICLE 11
TERMINATION
11.1 This Agreement may, prior to the issuance of a Certificate of
Amalgamation, be terminated by the mutual agreement of the respective
boards of directors of the parties hereto, without further action on
the part of the shareholders of Bio Syntech or Newco.
11.2 Notwithstanding any other rights contained herein, Dream Team may
terminate this Agreement upon notice to Bio Syntech in the event the
Amalgamation has not become effective on or before February 28, 2000.
11.3 Notwithstanding any other rights contained herein, Bio Syntech may
terminate this Agreement upon notice to Dream Team in the event the
Amalgamation has not become effective on or before February 28, 2000.
ARTICLE 12
AMENDMENT
12.1 This Agreement may, at any time and from time to time before or after
the holding of the Bio Syntech Meeting be amended by written agreement
of the parties hereto without further notice to or authorization on the
part of their respective shareholders, and any such amendment may,
without limitation:
(a) change the time for performance of any of the obligations or
acts of the parties hereto;
(b) waive any inaccuracies or modify any representation contained
herein or in any document delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the
obligations of the parties hereto;
provided that, notwithstanding the foregoing, the number of Dream Team
Common Shares which the holders of Bio Syntech Shares shall have the
right to receive on the Amalgamation may not be
22
reduced without the approval of the shareholders of Bio Syntech given
in the same manner as required for the approval of the Amalgamation.
12.2 This Agreement may only be amended by a written instruction signed by
the parties hereto.
ARTICLE 13
FEES AND EXPENSES
13.1 Each party hereto covenants and agrees to bear its own costs and
expenses in connection with the transactions contemplated hereby.
ARTICLE 14
DISCLOSURE
14.1 Without the prior written consent of the other party hereto, no party
hereto may disclose to any person either the fact that discussions or
negotiations are taking place concerning the proposed transaction or
any of the terms, conditions or other facts with respect to the
proposed transaction, including the status thereof, except where the
receiving party or its affiliates are required to do so by law,
including but not limited to the requirements of securities and other
regulatory agencies.
14.2 Except as otherwise provided in this Agreement, unless required by law
(including, without limitation, securities regulation), no party to
this Agreement shall make any public or private announcement or
communications in respect of the proposed transaction (including,
without limitation, the existence of this Agreement or that any
investigation, discussions or negotiations are taking place concerning
the evaluation of either of the parties hereto or the Amalgamation)
unless the prior approval of the announcement is obtained from the
other party.
ARTICLE 15
NOTICES
15.1 All notices, requests, demands and other communications hereunder shall
be deemed to have been duly given and made, if in writing and if served
by personal delivery upon the party for whom it is intended or
delivered, or if sent by telecopier, upon receipt of confirmation that
such transmission has been received, to the person at the address set
forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
if to Dream Team:
(a) Xxxxxx & Associates
00 Xxxx Xxxx, Xxxx X
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Telecopier: 000-000-0000
23
if to Bio Syntech
(b) 000, Xxxxxx Xxxxxxxx
Xxxxx, Xxxxxx
Telecopier: 000-000-0000
Attention: Amine Selmani, President
ARTICLE 16
TIME
16.1 Time shall be of the essence in this Agreement.
ARTICLE 17
ENTIRE AGREEMENT
17.1 This Agreement constitutes the entire agreement between the parties
hereto and cancels and supersedes all prior agreements and
understandings between the parties with respect to the subject matter
hereof.
ARTICLE 18
FURTHER ASSURANCES
18.1 Each party hereto shall, from time to time, and at all times hereafter,
at the request of the other party hereto, but without further
consideration, take all such further acts and execute and deliver all
such further documents and instruments as shall be reasonably required
in order to fully perform and carry out the terms and intent hereof.
ARTICLE 19
GOVERNING LAW
19.1 This Agreement shall be governed by, and be construed in accordance
with, the laws of the Province of Quebec and applicable laws of Canada
but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other
than the Province of Quebec.
19.2 Each party hereto irrevocably attorns to the exclusive jurisdiction of
the Courts of the Province of Quebec in respect of all matters arising
under or in relation to this Agreement.
24
ARTICLE 20
EXECUTION IN COUNTERPARTS AND BY FACSIMILE
20.1 This Agreement may be executed in identical counterparts and by
facsimile, and each such counterpart be and is hereby conclusively
deemed to be an original and counterparts collectively are to be
conclusively deemed one instrument.
ARTICLE 21
WAIVER
21.1 No waiver by any party hereto shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or
occurrence.
ARTICLE 22
ENUREMENT AND ASSIGNMENT
22.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This
Agreement may not be assigned by any party hereto without the prior
consent of the other parties hereto.
ARTICLE 23
NEWCO COVENANTS
23.1 Newco agrees to take all steps necessary on its behalf to implement the
terms hereof and the transactions contemplated hereby.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
Biosyntech , Inc
Per: /s/
--------------------------------
Bio Syntech Ltee.
Per: /s/
--------------------------------
0000-0000 XXXXXX INC
Per: /s/
--------------------------------
SCHEDULE A
The Company shall be authorized to issue an unlimited number of Common
and Exchangeable shares, without par value, having the following rights,
privileges, restrictions and conditions:
3.1 COMMON SHARES
3.1.1 The Common shares shall confer the following rights upon holders
thereof, namely:
a) the right to vote at all meetings of shareholders, each
shareholder being entitled to one vote for each Common share
held by him;
b) the right to receive all dividends declared by the board of
directors on the Common shares;
c) the right to share in the remaining assets of the Company upon
its voluntary or forced winding-up or liquidation.
3.1.2 The board of directors shall be entitled to declare a dividend in
respect of the Common shares, without in any manner whatsoever being
required to declare or pay a dividend to holders of other classes of
shares.
3.2 EXCHANGEABLE SHARES
3.2.1 The Exchangeable shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
For the purposes of these share provisions:
"Act" means the Quebec Companies Act, as amended;
"Affiliate" has the meaning ascribed thereto in the Securities Act;
2
"Bio Syntech" means Bio Syntech Ltd., a company incorporated under the laws of
the Province of Quebec, which was a predecessor to the Company;
"Bio Syntech Common Shares" means the common shares of Bio Syntech as
constituted immediately prior to the Effective Date;
"Bio Syntech Options" means the options to purchase Bio Syntech Common Shares
issued from time to time prior to the date hereof pursuant to the Bio Syntech
Stock Option Plan;
"Board of Directors" means the Board of Directors of the Company;
"Business Day" means any day on which commercial banks are generally open for
business in Montreal, Quebec, other than a Saturday, a Sunday or a day observed
as a holiday in Montreal, Quebec under the laws of the Province of Quebec or the
federal laws of Canada;
"Call Right" has the meaning ascribed thereto in the Exchange and Voting
Agreement;
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any date
the product obtained by multiplying:
(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank
of Canada or, in the event such spot exchange rate is not
available, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such
purpose;
"Common Shares" means the common shares in the capital of the Company;
"Company" means Bio Syntech Canada Inc., the company resulting from the
amalgamation of Bio Syntech and 0000-0000 Xxxxxx Inc;
"Current Market Price" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Parent Common Shares during a period of 10 consecutive trading days
ending not more than
3
three trading days before such date on Nasdaq, or, if the Parent Common Shares
are not then quoted on Nasdaq, on such other stock exchange or automated
quotation system on which the Parent Common Shares are listed or quoted, as the
case may be, as may be selected by the Board of Directors for such purpose;
provided, however, that if in the opinion of the Board of Directors the public
distribution or trading activity of Parent Common Shares during such period does
not create a market which reflects the fair market value of a Parent Common
Share, then the Current Market Price of a Parent Common Share shall be
determined by the Board of Directors, in good faith and in its sole discretion,
and provided further that any such selection, opinion or determination by the
Board of Directors shall be conclusive and binding;
"Dividend Amount" means the amount of all declared and unpaid dividends on an
Exchangeable Share held by a holder on any dividend record date which occurred
prior to the date of purchase or redemption of such shares by the Company or
Parent from such holder;
"Effective Date" means the date shown on the certificate of amalgamation to be
issued under the Act giving effect to the Amalgamation;
"Exchange and Voting Agreement" means the agreement between Parent, the Holders
of Exchangeable Shares and the Trustee in connection with the Amalgamation.
"Exchangeable Shares" means the non-voting exchangeable shares in the capital of
the Company, having the rights, privileges, restrictions and conditions set
forth herein;
"Governmental Entity" means any (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign, (b) any subdivision, agent, commission,
board, or authority of any of the foregoing, or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"Holder" means, when used with reference to the Exchangeable Shares, the holders
of Exchangeable Shares shown from time to time in the register maintained by or
on behalf of the Company in respect of the Exchangeable Shares;
"Liquidation Amount" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
4
"Liquidation Date" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"Parent" means Bio Syntech, Inc. (formerly Dream Team International Inc.), a
Nevada Corporation;
"Parent Common Shares" mean the shares of common stock in the capital of Parent
and any other securities into which such shares may be changed;
"Parent Control Transaction" means any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or similar
transactions involving Parent, or any proposal to do so;
"Parent Dividend Declaration Date" means the date on which the Board of
Directors of Parent declares any dividend on the Parent Common Shares;
"Parent Call Notice" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;
"Purchase Price" has the meaning ascribed thereto in Section 6.3 of these share
provisions;
"Redemption Date" means the date, if any, established by the Board of Directors
for the redemption by the Company of all but not less than all of the
outstanding Exchangeable Shares pursuant to Article 7 of these share provisions,
which date shall be no earlier than December 31, 2004, unless:
(a) there are fewer than 1,000,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Parent and its
affiliates, and as such
5
number of shares may be adjusted as deemed appropriate by the Board of Directors
to give effect to any subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable
Shares or securities exchangeable for or convertible into Exchangeable Shares,
any issue or distribution of other securities or rights or evidences of
indebtedness or assets; or
(b) any other capital reorganization or other transaction
affecting the Exchangeable Shares), in which case the Board of
Directors may accelerate such redemption date to such date
prior to December 31, 2004 as it may determine, upon at least
60 days' prior written notice to the registered holders of the
Exchangeable Shares and the Trustee;
(c) a Parent Control Transaction occurs, in which case, provided
that the Board of Directors determines, in good faith and in
its sole discretion, that it is not reasonably practicable to
substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such Parent Control
Transaction and that the redemption of all but not less than
all of the outstanding Exchangeable Shares is necessary to
enable the completion of such Parent Control Transaction in
accordance with its terms, the Board of Directors may
accelerate such redemption date to such date prior to December
31, 2004 as it may determine, upon such number of days' prior
written notice to the registered holders of the Exchangeable
Shares and the Trustee as the Board of Directors may determine
to be reasonably practicable in such circumstances;
provided, however, that the accidental failure or omission to give any notice of
redemption under clauses (a) or (b) above to less than 10% of such holders of
Exchangeable Shares shall not affect the validity of any such redemption;
"Redemption Price" has the meaning ascribed thereto in Section 7.1 of these
share provisions;
"Retracted Shares" has the meaning ascribed thereto in Section 6.1(a) of these
share provisions;
"Retraction Date" has the meaning ascribed thereto in Section 6.1(b) of these
share provisions;
6
"Retraction Price" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"Retraction Request" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"Securities Act" means the Securities Act (Quebec) and the rules, regulations
and policies made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date;
"Support Agreement" means the agreement made among Parent, Bio Syntech and 9083-
5661 Quebec Inc in connection with the Amalgamation;
"Transfer Agent" means the transfer agent for the Exchangeable Shares;
"Trustee" means the trustee under the Exchange and Voting Agreement;
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other shares ranking junior to the Exchangeable Shares, but shall
rank junior to the Preference Shares, with respect to the payment of dividends
and the distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company, among its shareholders for the
purpose of winding up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each Parent Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Parent Common
Shares, in an amount in cash for each Exchangeable Share in
U.S. dollars, or the Canadian Dollar Equivalent thereof on the
Parent Dividend Declaration
7
Date, in each case, corresponding to the cash dividend
declared on each Parent Common Share;
(b) in the case of a stock dividend declared on the Parent Common
Shares to be paid in Parent Common Shares by the issue or
transfer by the Company of such number of Exchangeable Shares
for each Exchangeable Share as is equal to the number of
Parent Common Shares to be paid on each Parent Common Share;
or
(c) in the case of a dividend declared on the Parent Common Shares
in property other than cash or Parent Common Shares, in such
type and amount of property for each Exchangeable Share as is
the same as or economically equivalent to (to be determined by
the Board of Directors as contemplated by Section 3.5 hereof)
the type and amount of property declared as a dividend on each
Parent Common Share.
3.2 Such dividends shall be paid out of money, assets or property of the Company
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Company, as applicable.
3.3 Cheques of the Company payable at par at any branch of the bankers of the
Company shall be issued in respect of any cash dividends contemplated by Section
3.1 (a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby unless
the cheque is not paid on presentation. Certificates registered in the name of
the registered holder of Exchangeable Shares shall be issued or transferred in
respect of any stock dividends contemplated by Section 3.1 (b) hereof and the
sending of such a certificate to each holder of an Exchangeable Share shall
satisfy the stock dividend represented thereby. Such other type and amount of
property in respect of any dividends contemplated by Section 3.1 (c) hereof
shall be issued, distributed or transferred by the Company in such manner as it
shall determine and the issuance, distribution or transfer thereof by the
Company to each holder of an Exchangeable Share shall satisfy the dividend
represented thereby. No holder of an Exchangeable Share shall be entitled to
recover by action or other legal process against the Company any dividend that
is represented by a cheque that has not been duly presented to the Company's
bankers for payment or that otherwise remains unclaimed for a period of six
years from the date on which such dividend was payable.
8
3.4 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as
the record date and payment date, respectively, for the corresponding dividend
declared on the Parent Common Shares.
3.5 If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Company shall have sufficient money, assets or property properly
applicable to the payment of such dividends.
3.6 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Section 3.1 hereof, and
each such determination shall be conclusive and binding on the Company and its
shareholders. In making each such determination, the following factors shall,
without excluding other factors determined by the Board of Directors to be
relevant, be considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution
payable in Parent Common Shares, the number of such shares
issued in proportion to the number of Parent Common Shares
previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Parent Common
Shares (or securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares), the
relationship between the exercise price of each such right,
option or warrant and the Current Market Price;
(c) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of Parent of any class other than Parent Common
Shares, any rights, options or warrants other than those
referred to in Section 3.5(b) above, any evidences of
indebtedness of or any assets of Parent) the relationship
between the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such property
to be issued or distributed with respect to each outstanding
Parent Common Share and the Current Market Price; and
9
o in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation
consequences to holders of Parent Common Shares as a result of
differences between taxation laws of Canada and the United
States (except for any differing consequences arising as a
result of differing marginal taxation rates and without regard
to the individual circumstances of holders of Exchangeable
Shares).
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Company shall
not at any time without, but may at any time with, the approval of the holders
of the Exchangeable Shares given as specified in Section 10.2 of these share
provisions:
(a) pay any dividends on the Common Shares or any other shares
ranking junior to the Exchangeable Shares, other than stock
dividends payable in Common Shares or any such other shares
ranking junior to the Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect
of Common Shares or any other shares ranking junior to the
Exchangeable Shares;
(c) redeem or purchase any other shares of the Company ranking
equally with the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution; or
(d) except pursuant to and in accordance with the terms of Bio
Syntech Options, issue any Exchangeable Shares or any other
shares of the Company ranking equally with, or superior to,
the Exchangeable Shares other than by way of stock dividends
to the holders of such Exchangeable Shares.
4.2 The restrictions in Sections 4.1(a), (b), (c) and (d) above shall not apply
if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared and paid to date on the Parent Common Shares shall have been
declared and paid on the Exchangeable Shares.
10
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the Company or
any other distribution of the assets of the Company among its shareholders for
the purpose of winding up its affairs, a holder of Exchangeable Shares shall be
entitled, subject to applicable law, to receive from the assets of the Company
in respect of each Exchangeable Share held by such holder on the effective date
(the "Liquidation Date") of such liquidation, dissolution or winding-up, before
any distribution of any part of the assets of the Company among the holders of
the Common Shares or any other shares ranking junior to the Exchangeable Shares,
an amount per share (the "Liquidation Amount") equal to the Current Market Price
of a Parent Common Share on the last Business Day prior to the Liquidation Date,
which shall be satisfied in full by the Company causing to be delivered to such
holder one Parent Common Share, plus the Dividend Amount.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Parent of the Call Right, the Company shall cause to be delivered to the holders
of the Exchangeable Shares the Liquidation Amount for each such Exchangeable
Share upon presentation and surrender of the certificates representing such
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act and the
Articles of the Company and such additional documents and instruments as the
Transfer Agent and the Company may reasonably require, at the registered office
of the Company or at any office of the Transfer Agent as may be specified by the
Company by notice to the holders of the Exchangeable Shares. Payment of the
total Liquidation Amount for such Exchangeable Shares shall be made by delivery
to each holder, at the address of the holder recorded in the register of members
of the Company for the Exchangeable Shares or by holding for pick-up by the
holder at the registered office of the Company or at any office of the Transfer
Agent as may be specified by the Company by notice to the holders of
Exchangeable Shares, on behalf of the Company of certificates representing
Parent Common Shares (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance)
and a cheque of the Company payable at par at any branch of the bankers of the
Company in respect of the remaining portion, if any, of the total Liquidation
Amount (in each case less any amounts withheld on account of tax required to be
deducted and withheld therefrom). On and after the
11
Liquidation Date, the holders of the Exchangeable Shares shall cease to be
holders of such Exchangeable Shares and shall not be entitled to exercise any of
the rights of holders in respect thereof, other than the right to receive their
proportionate part of the total Liquidation Amount, unless payment of the total
Liquidation Amount for such Exchangeable Shares shall not be made upon
presentation and surrender of share certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount has been paid in the manner
hereinbefore provided. The Company shall have the right at any time after the
Liquidation Date to deposit or cause to be deposited the total Liquidation
Amount in respect of the Exchangeable Shares represented by certificates that
have not at the Liquidation Date been surrendered by the holders thereof in a
custodial account with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the total
Liquidation Amount (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom) for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be holders of the Parent Common Shares delivered to them or the custodian on
their behalf.
5.3 After the Company has satisfied its obligations to pay the holders of the
Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to
Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Company.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Parent of the Call Right and otherwise upon compliance with the
provisions of this Article 6, to require the Company to redeem any or all of the
Exchangeable Shares registered in the name of such holder for an amount per
share equal to the Current Market Price of a Parent Common Share on the last
Business Day prior to the Retraction Date (the "Retraction Price"), which shall
be satisfied in full by the Company causing to be delivered to such holder one
Parent Common Share for each Exchangeable Share presented and surrendered by the
holder. To effect such redemption, the holder shall
12
present and surrender at the registered office of the Company or at any office
of the Transfer Agent as may be specified by the Company by notice to the
holders of Exchangeable Shares the certificate or certificates representing the
Exchangeable Shares which the holder desires to have the Company redeem,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the Act and the Articles of the Company
and such additional documents and instruments as the Transfer Agent and the
Company may reasonably require, and together with a duly executed statement (the
"Retraction Request") in the form of Schedule A hereto or in such other form as
may be acceptable to the Company:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by
such certificate or certificates (the "Retracted Shares")
redeemed by the Company;
(b) stating the Business Day on which the holder desires to have
the Company redeem the Retracted Shares (the "Retraction
Date"), provided that the Retraction Date shall be not less
than 10 Business Days nor more than 15 Business Days after the
date on which the Retraction Request is received by the
Company and further provided that, in the event that no such
Business Day is specified by the holder in the Retraction
Request, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which the Retraction Request is
received by the Company; and
(c) acknowledging, as the case may be, the overriding right (the
"Call Right") of Parent to purchase all but not less than all
the Retracted Shares directly from the holder and that the
Retraction Request shall be deemed to be a revocable offer by
the holder to sell the Retracted Shares to Parent in
accordance with the Call Right on the terms and conditions set
out in Section 6.3 below.
6.2 Subject to the exercise by Parent of the Call Right, upon receipt by the
Company or the Transfer Agent in the manner specified in Section 6.1 hereof of a
certificate or certificates representing the number of Retracted Shares,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the Company
shall redeem the Retracted Shares effective at the close of business on the
Retraction Date and shall cause to be delivered to such holder the total
Retraction Price. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Parent pursuant to the Call Right), a
new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Company.
13
6.3 Upon receipt by the Company of a Retraction Request, the Company shall
immediately notify Parent thereof and shall provide to Parent a copy of the
Retraction Request. In order to exercise the Call Right, Parent must notify the
Company of its determination to do so (the "Parent Call Notice") within five
Business Days of notification to Parent by the Company of the receipt by the
Company of the Retraction Request. If Parent does not so notify the Company
within such five Business Day period, the Company will notify the holder as soon
as possible thereafter that Parent will not exercise the Call Right. If Parent
delivers the Parent Call Notice within such five Business Day period, and
provided that the Retraction Request is not revoked by the holder in the manner
specified in Section 6.7, the Retraction Request shall thereupon be considered
only to be an offer by the holder to sell the Retracted Shares to Parent in
accordance with the Call Right. In such event, the Company shall not redeem the
Retracted Shares and Parent shall purchase from such holder and such holder
shall sell to Parent on the Retraction Date the Retracted Shares for a purchase
price (the "Purchase Price") per share equal to the Retraction Price per share,
plus on the designated payment date therefor, to the extent not paid by the
Company on the designated payment date therefor, any Dividend Amount. To the
extent that Parent pays the Dividend Amount in respect of the Retracted Shares,
the Company shall no longer be obligated to pay any declared and unpaid
dividends on such Retracted Shares. Provided that Parent has complied with
Section 6.4, the closing of the purchase and sale of the Retracted Shares
pursuant to the Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by the
Company of such Retracted Shares shall take place on the Retraction Date. In the
event that Parent does not deliver a Parent Call Notice within such five
Business Day period, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 6.7, the Company shall redeem the
Retracted Shares on the Retraction Date and in the manner otherwise contemplated
in this Article 6.
6.4 The Company or Parent, as the case may be, shall deliver or cause the
Trustee to deliver to the relevant holder, at the address of the holder recorded
in the register of members of the Company for the Exchangeable Shares or at the
address specified in the holder's Retraction Request or by holding for pick-up
by the holder at the registered office of the Company or at any office of the
Transfer Agent as may be specified by the Company by notice to the holders of
Exchangeable Shares, certificates representing the Parent Common Shares (which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim or encumbrance) registered in the name of the
holder or in such other name as the holder may request, and, if applicable and
on or before the payment date therefor, a cheque payable at par at any branch of
the
14
bankers of the Company or Parent, as applicable, representing the aggregate
Dividend Amount, in payment of the total Retraction Price or the total Purchase
Price, as the case may be, in each case, less any amounts withheld on account of
tax required to be deducted and withheld therefrom, and such delivery of such
certificates and cheques on behalf of the Company or by Parent, as the case may
be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy
and discharge all liability for the total Retraction Price or total Purchase
Price, as the case may be, to the extent that the same is represented by such
share certificates and cheques (plus any tax deducted and withheld therefrom and
remitted to the proper tax authority).
6.5 On and after the close of business on the Retraction Date, the holder of the
Retracted Shares shall cease to be a holder of such Retracted Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive his proportionate part of the total Retraction
Price or total Purchase Price, as the case may be, unless upon presentation and
surrender of certificates in accordance with the foregoing provisions, payment
of the total Retraction Price or the total Purchase Price, as the case may be,
shall not be made as provided in Section 6.4, in which case the rights of such
holder shall remain unaffected until the total Retraction Price or the total
Purchase Price, as the case may be, has been paid in the manner hereinbefore
provided. On and after the close of business on the Retraction Date, provided
that presentation and surrender of certificates and payment of the total
Retraction Price or the total Purchase Price, as the case may be, has been made
in accordance with the foregoing provisions, the holder of the Retracted Shares
so redeemed by the Company or purchased by Parent shall thereafter be considered
and deemed for all purposes to be a holder of the Parent Common Shares delivered
to it.
6.6 Notwithstanding any other provision of this Article 6, the Company shall not
be obligated to redeem Retracted Shares specified by a holder in a Retraction
Request to the extent that such redemption of Retracted Shares would be contrary
to solvency requirements or other provisions of applicable law. If the Company
believes that on any Retraction Date it would not be permitted by any of such
provisions to redeem the Retracted Shares tendered for redemption on such date,
and provided that Parent shall not have exercised the Call Right with respect to
the Retracted Shares, the Company shall only be obligated to redeem Retracted
Shares specified by a holder in a Retraction Request to the extent of the
maximum number that may be so redeemed (rounded down to a whole number of
shares) as would not be contrary to such provisions and shall notify the holder
at least two Business Days prior to the Retraction Date as to the number of
Retracted Shares which will not be redeemed by the Company. In any case in which
the
15
redemption by the Company of Retracted Shares would be contrary to solvency
requirements or other provisions of applicable law, the Company shall redeem
Retracted Shares in accordance with Section 6.2 of these share provisions on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Company, representing the Retracted Shares
not redeemed by the Company pursuant to Section 6.2 hereof. Provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the holder of any such Retracted Shares not redeemed by the Company
pursuant to Section 6.2 of these share provisions as a result of solvency
requirements or other provisions of applicable law shall be deemed by giving the
Retraction Request to require Parent to purchase such Retracted Shares from such
holder on the Retraction Date or as soon as practicable thereafter on payment by
Parent to such holder of the Purchase Price for each such Retracted Share, all
as more specifically provided in the Exchange and Voting Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Company before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request, in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to Parent shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY
7.1 Subject to applicable law, and provided Parent has not exercised the Call
Right, the Company shall on the Redemption Date redeem all but not less than all
of the then outstanding Exchangeable Shares for an amount per share equal to the
Current Market Price of a Parent Common Share on the last Business Day prior to
the Redemption Date (the "Redemption Price"), which shall be satisfied in full
by the Company causing to be delivered to each holder of Exchangeable Shares one
Parent Common Share for each Exchangeable Share held by such holder, together
with the Dividend Amount.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the
Company shall, at least 60 days before the Redemption Date (other than a
Redemption Date established in connection with a Parent Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event),
send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Company or the purchase by Parent under the
Call Right, as the case may be, of the Exchangeable Shares held by such holder.
In the case of a Redemption Date established in connection with a Parent Control
Transaction, an Exchangeable Share Voting Event or an
16
Exempt Exchangeable Share Voting Event, the written notice of redemption by the
Company or the purchase by Parent under the Call Right will be sent on or before
the Redemption Date, on as many days prior written notice as may be determined
by the Board of Directors of the Company to be reasonably practicable in the
circumstances. In any such case, such notice shall set out the formula for
determining the Redemption Price or the Call Purchase Price, as the case may be,
the Redemption Date and, if applicable, particulars of the Call Right.
7.3 On or after the Redemption Date and subject to the exercise by Parent of the
Call Right, the Company shall cause to be delivered to the holders of the
Exchangeable Shares to be redeemed the Redemption Price for each such
Exchangeable Share, together with the Dividend Amount upon presentation and
surrender at the registered office of the Company or at any office of the
Trustee as may be specified by the Company in such notice of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the Act and the Articles of the Company and such additional documents and
instruments as the Transfer Agent and the Company may reasonably require.
Payment of the total Redemption Price for such Exchangeable Shares, together
with payment of the Dividend Amount, shall be made by delivery to each holder,
at the address of the holder recorded in the register of members of the Company
or by holding for pick-up by the holder at the registered office of the Company
or at any office of the Transfer Agent as may be specified by the Company in
such notice, on behalf of the Company of certificates representing Parent Common
Shares (which shares shall be duly issued as fully paid and non- assessable and
shall be free and clear of any lien, claim or encumbrance) and, if applicable, a
cheque of the Company payable at par at any branch of the bankers of the Company
in payment of any Dividend Amounts, in each case, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. On and after the
Redemption Date, the holders of the Exchangeable Shares called for redemption
shall cease to be holders of such Exchangeable Shares and shall not be entitled
to exercise any of the rights of holders in respect thereof, other than the
right to receive their proportionate part of the total Redemption Price and any
Dividend Amount, unless payment of the total Redemption Price and any Dividend
Amount for such Exchangeable Shares shall not be made upon presentation and
surrender of certificates in accordance with the foregoing provisions, in which
case the rights of the holders shall remain unaffected until the total
Redemption Price and any Dividend Amount shall have been paid in the manner
hereinbefore provided. The Company shall have the right at any time after the
sending of notice of its intention to redeem the Exchangeable Shares as
aforesaid to deposit or cause to be deposited the total Redemption Price for and
the full amount of the Dividend Amount on (except as otherwise provided in this
Section 7.3) the Exchangeable Shares so called for redemption, or of such of the
said Exchangeable
17
Shares represented by certificates that have not at the date of such deposit
been surrendered by the holders thereof in connection with such redemption, in a
custodial account with any chartered bank or trust company in Canada named in
such notice, less any amounts withheld on account of tax required to be deducted
and withheld therefrom. Upon the later of such deposit being made and the
Redemption Date, the Exchangeable Shares in respect whereof such deposit shall
have been made shall be redeemed and the rights of the holders thereof after
such deposit or Redemption Date, as the case may be, shall be limited to
receiving their proportionate part of the total Redemption Price and the
Dividend Amount for such Exchangeable Shares so deposited, against presentation
and surrender of the said certificates held by them, respectively, in accordance
with the foregoing provisions. Upon such payment or deposit of the total
Redemption Price and the full Dividend Amount, the holders of the Exchangeable
Shares shall thereafter be considered and deemed for all purposes to be holders
of the Parent Common Shares delivered to them or the custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law, the Company may at any time and from time to time
purchase for cancellation all or any part of the outstanding Exchangeable Shares
at any price by tender to all the holders of record of Exchangeable Shares then
outstanding or through the facilities of any stock exchange on which the
Exchangeable Shares are listed or quoted at any price per share. If in response
to an invitation for tenders under the provisions of this Section 8.1, more
Exchangeable Shares are tendered at a price or prices acceptable to the Company
than the Company is prepared to purchase, the Exchangeable Shares to be
purchased by the Company shall be purchased as nearly as may be pro rata
according to the number of shares tendered by each holder who submits a tender
to the Company, provided that when shares are tendered at different prices, the
pro rating shall be effected (disregarding fractions) only with respect to the
shares tendered at the price at which more shares were tendered than the Company
is prepared to purchase after the Company has purchased all the shares tendered
at lower prices. If part only of the Exchangeable Shares represented by any
certificate shall be purchased, a new certificate for the balance of such shares
shall be issued at the expense of the Company.
18
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 hereof, the holders
of the Exchangeable Shares shall not be entitled as such to receive notice of or
to attend any meeting of the Shareholders of the Company or to vote at any such
meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 10% of the outstanding Exchangeable Shares at that time are present or
represented by proxy; provided that if at any such meeting the holders of at
least 10% of the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date not less than five
days thereafter and to such time and place as may be designated by the Chairman
of such meeting. At such adjourned meeting the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the affirmative
vote of not less than two-thirds of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.
ARTICLE 11
INTENTIONALY DELETED
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ARTICLE 12
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT
12.1 The Company will take all such actions and do all such things as shall be
necessary or advisable to perform and comply with and to ensure performance and
compliance by Parent and the Company with all provisions of the Support
Agreement applicable to Parent and the Company, respectively, in accordance with
the terms thereof including, without limitation, taking all such actions and
doing all such things as shall be necessary or advisable to enforce to the
fullest extent possible for the direct benefit of the Company all rights and
benefits in favour of the Company under or pursuant to such agreement.
12.2 The Company shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement without the approval of the holders of the Exchangeable Shares
given in accordance with Section 10.2 of these share provisions other than such
amendments, waivers and/or forgiveness as may be necessary or advisable for the
purposes of:
(a) adding to the covenants of the other parties to such agreement
for the protection of the Company or the holders of the
Exchangeable Shares thereunder;
(b) making such provisions or modifications not inconsistent with
such agreement as may be necessary or desirable with respect
to matters or questions arising thereunder which, in the good
faith opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the
good faith opinion, after consultation with counsel, that such
provisions and modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which,
on the advice of counsel to the Company, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after
consultation with counsel, that such changes or corrections
will not be prejudicial to the interests of the holders of the
Exchangeable Shares.
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ARTICLE 13
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
13.1 The certificates evidencing the Exchangeable Shares held by Shareholders
who have intervened to the Exchange and Voting Agreement shall contain or have
affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the Call Rights and the
Exchange and Voting Agreement (including the provisions with respect to the
voting rights, exchange right and automatic exchange thereunder).
13.2 The Company, Parent and the Trustee shall be entitled to deduct and
withhold from any dividend or consideration otherwise payable to any holder of
Exchangeable Shares such amounts as the Company, Parent or the Trustee is
required or permitted to deduct and withhold with respect to such payment under
the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or
any provision of provincial, state, local or foreign tax law, in each case, as
amended. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder of the
shares in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required or permitted to be deducted
or withheld from any payment to a holder exceeds the cash portion of the
consideration otherwise payable to the holder, the Company, Parent and the
Trustee are hereby authorized to sell or otherwise dispose of such portion of
the consideration as is necessary to provide sufficient funds to the Company,
Parent or the Trustee, as the case may be, to enable it to comply with such
deduction or withholding requirement and the Company, Parent or the Trustee
shall notify the holder thereof and remit any unapplied balance of the net
proceeds of such sale.
ARTICLE 14
NOTICES
14.1 Any notice, request or other communication to be given to the Company by a
holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Company and addressed to the attention of the
President of the Company. Any such notice, request or other communication, if
given by mail, telecopy or delivery, shall only be deemed to have been given and
received upon actual receipt thereof by the Company.
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14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Company or the Trustee of certificates representing Exchangeable Shares in
connection with the liquidation, dissolution or winding-up of the Company or the
retraction or redemption of Exchangeable Shares shall be made by registered mail
(postage prepaid) or by delivery to the registered office of the Company or to
such office of the Trustee as may be specified by the Company, in each case,
addressed to the attention of the President of the Company. Any such
presentation and surrender of certificates shall only be deemed to have been
made and to be effective upon actual receipt thereof by the Company or the
Trustee, as the case may be. Any such presentation and surrender of certificates
made by registered mail shall be at the sole risk of the holder mailing the
same.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Company shall be in writing and shall
be valid and effective if given by mail (postage prepaid) or by delivery to the
address of the holder recorded in the register of members of the Company or, in
the event of the address of any such holder not being so recorded, then at the
last known address of such holder. Any such notice, request or other
communication, if given by mail, shall be deemed to have been given and received
on the third Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more holders of Exchangeable Shares shall not invalidate
or otherwise alter or affect any action or proceeding to be taken by the Company
pursuant thereto.
SCHEDULE A
TO PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES
RETRACTION REQUEST
To Bio Syntech Canada Inc. (the "Company") and Bio Syntech, Inc. ("Bio Syntech")
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the Exchangeable Shares of the Company represented by
this certificate and all capitalized words and expressions used in this notice
that are defined in the Share Provisions have the meanings ascribed to such
words and expressions in such Share Provisions.
22
The undersigned hereby notifies the Company that, subject to the Call Right
referred to below, the undersigned desires to have the Company redeem in
accordance with Article 6 of the Share Provisions:
all share(s) represented by this certificate; or
_____________________ share(s) only represented by this certificate.
The undersigned hereby notifies Bio Syntech that the Retraction Date shall be
_________________
NOTE: The Retraction Date must be a Business Day and must not be less than 10
Business Days nor more than 15 Business Days after the date upon which this
notice is received by the Company. If no such Business Day is specified above,
the Retraction Date shall be deemed to be the 15th Business Day after the date
on which this notice is received by the Company.
The undersigned, provided he has intervened to the Exchange and Voting
Agreement, acknowledges the overriding Call Right of Bio Syntech, Inc to
purchase all but not less than all the Retracted Shares from the undersigned and
that this notice is and shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Bio Syntech, Inc in accordance with
the Call Right on the Retraction Date for the Purchase Price and on the other
terms and conditions set out in Section 6.3 of the Share Provisions. This
Retraction Request, and this offer to sell the Retracted Shares to Bio Syntech,
may be revoked and withdrawn by the undersigned only by notice in writing given
to the Company at any time before the close of business on the Business Day
immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Company is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Insolvency Exchange Right (as
defined in the Exchange and Voting Agreement) so as to require the Company to
purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Company and Bio Syntech,
Inc that the undersigned:
o is
(select one)
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o is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
The undersigned hereby represents and warrants to the Company and Bio Syntech
that the undersigned has good title to, and owns, the share(s) represented by
this certificate to be acquired by the Company or Bio Syntech, as the case may
be, free and clear of all liens, claims and encumbrances.
------ ------------------------- -----------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the trustee under the Exchange and Voting Agreement (the
"Trustee"), failing which the securities and any cheque(s) will be mailed to the
last address of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Trustee may require, must be deposited with the
Trustee. The securities and any cheque(s) resulting from the retraction or
purchase of the Retracted Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder as it appears on the
register of the Company and the securities and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as indicated above,
unless the form appearing immediately below is duly completed.
The shares of common stock of Bio Syntech Inc., a Nevada corporation, to be
issued in exchange for the Exchangeable Shares represented by this certificate
have not been registered under the U.S. Securities Act of 1933, as amended, and
may not be sold or otherwise transferred unless a compliance with the
registration provisions of such Act has been made or unless availability of an
exemption from such registration provisions has been established, or unless sold
pursuant to rule 144 under the Securities Act of 1933.
Date:____________________
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Name of Person in Whose Name Securities or Cheque(s)Are to be Registered, Issued
or Delivered:
_________________________________
Street Address or P.O. Box: ____________________________________________________
Signature of Shareholder: ____________________________________________________
City, Province and Postal Code: ________________________________________________
Signature Guaranteed by: _______________________________________________________
NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of the
Company represented by this certificate will be issued and registered in the
name of the shareholder as it appears on the register of the Company, unless the
Share Transfer Power on the share certificate is duly completed in respect of
such share(s).
