EXHIBIT 2.1
*Represents language for which confidential treatment has been requested.
ASSET PURCHASE AGREEMENT
GOVERNING THE PURCHASE
OF
CERTAIN OF THE ASSETS OF
SHIRE BIOCHEM INC.
BY
ID BIOMEDICAL CORPORATION
DATED APRIL 19, 2004
TABLE OF CONTENTS
Article 1 - INTERPRETATION.................................................... 1
1.1 Definitions........................................................1
1.2 Other Defined Terms...............................................11
1.3 Schedules.........................................................12
1.4 Interpretation....................................................13
Article 2 - PURCHASE OF ASSETS................................................14
2.1 Purchase and Sale.................................................14
2.2 Consideration.....................................................14
2.3 Payment of Consideration..........................................14
2.4 Assignment of Contracts...........................................15
2.5 Adjustments to Reflect Fluctuations in Purchaser's Stock
Price.............................................................15
2.6 Working Capital Adjustments.......................................15
2.7 Net Operating Cash Adjustments....................................16
2.8 Additional Adjustments for TPC Receivables........................17
2.9 Taxes on Sale and Transfer........................................18
2.10 Amounts Paid for Undertaking Future Obligations...................18
2.11 Sale Tax Elections................................................18
Article 3 - ASSUMPTION OF OBLIGATIONS AND LIABILITIES.........................19
3.1 Assumption of Obligations and Liabilities.........................19
3.2 Excluded Obligations and Liabilities..............................19
3.3 Product Liability and Warranty Obligations........................19
3.4 Risk of Loss and Damage Prior to Closing..........................19
Article 4 - REPRESENTATIONS AND WARRANTIES OF THE VENDOR......................20
4.1 Corporate Status and Authority....................................20
4.2 Assets............................................................21
4.3 Business Operations...............................................23
4.4 Intellectual Property.............................................23
4.5 Financial.........................................................24
4.6 Insurance.........................................................24
4.7 Environment.......................................................25
4.8 Tax Matters.......................................................26
4.9 Employee Matters..................................................26
4.10 Non-Compliance....................................................27
4.11 Contracts and Commitments.........................................28
4.12 Consents and Approvals............................................28
4.13 Finder's Fees.....................................................28
4.14 Transactions with Affiliates......................................28
4.15 All Assets........................................................28
4.16 Construction Projects.............................................28
Article 5 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................29
5.1 Corporate Status and Authority....................................29
5.2 Accuracy of Public Disclosure.....................................30
5.3 Other Matters.....................................................31
5.4 Tax Registration..................................................35
Article 6 - PRE-CLOSING MATTERS AND COVENANTS.................................35
6.1 Access............................................................35
6.2 Operations until Closing..........................................35
6.3 Rebuilding Facilities.............................................36
6.4 Required Consents.................................................37
6.5 Contracts Requiring Consent.......................................37
6.6 Novation Agreement................................................37
6.7 Government Contracts and Biologics Undertakings...................37
6.8 Loan Facility Agreement...........................................37
6.9 Guarantee Agreements..............................................37
6.10 Closing...........................................................38
6.11 Assignment and Assumption Agreement...............................38
6.12 Regulatory Approvals..............................................38
6.13 Assistance with Preparation of Business Acquisition Report and
Registration Statement............................................38
6.14 Supplementary Disclosure..........................................38
6.15 Shared Network Use Agreement......................................39
6.16 Real Estate.......................................................41
6.17 Use of Proceeds from Financings During Interim Period.............41
6.18 Concurrent Closing of Share Purchase Agreement....................42
Article 7 - CONDITIONS OF CLOSING.............................................42
7.1 Conditions of the Purchaser.......................................42
7.2 Conditions of the Vendor..........................................43
7.3 Mutual Conditions.................................................44
7.4 Termination.......................................................45
7.5 Effect on Termination.............................................45
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Article 8 - CLOSING TRANSACTIONS..............................................46
8.1 Time and Place....................................................46
8.2 Vendor's Closing Documents........................................46
8.3 Purchaser's Closing Documents.....................................46
8.4 Transfer..........................................................47
Article 9 - EMPLOYEE MATTERS..................................................47
9.1 Continuation of Employment........................................47
9.2 Unionized Employees...............................................48
9.3 Certain Obligations Respecting Employees..........................48
Article 10 - POST-CLOSING EVENTS..............................................48
10.1 TPC Receivable....................................................48
10.2 Delivery of Books and Records.....................................48
10.3 Access to Information by the Vendor...............................48
10.4 Contracts Requiring Consents......................................49
10.5 Change of Name....................................................49
10.6 Redemption of Outstanding Common Shares...........................49
10.7 Restrictive Covenant..............................................49
10.8 Confidentiality...................................................50
10.9 Remedies..........................................................51
Article 11 - SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION..................51
11.1 Indemnity in favour of Vendor.....................................51
11.2 Indemnity in favour of Purchaser..................................51
11.3 Time Limitations..................................................51
11.4 Limitations on Damages............................................52
11.5 Indemnification: Notice...........................................53
11.6 Indemnification Proceedings - Third Party Claim...................53
11.7 Indemnification Proceedings - Other Claims........................53
11.8 Indemnity After Tax...............................................54
11.9 Other Indemnification Principles..................................54
11.10 No Affect of Investigation........................................55
11.11 Sole Remedies.....................................................55
Article 12 - MISCELLANEOUS....................................................55
12.1 Notices...........................................................55
12.2 Further Assurances................................................56
12.3 Time is of the Essence............................................56
12.4 Brokers Fees......................................................56
12.5 Entire Agreement..................................................57
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12.6 Announcements.....................................................57
12.7 Amendment.........................................................57
12.8 Waiver............................................................57
12.9 Assignment........................................................57
12.10 Enurement.........................................................58
12.11 Expenses..........................................................58
12.12 Governing Law.....................................................58
12.13 Judgment Currency.................................................58
12.14 Severability......................................................58
12.15 Counterparts......................................................59
12.16 Language..........................................................59
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated April 19, 2004,
BETWEEN:
ID BIOMEDICAL CORPORATION, a British Columbia corporation having an
office at 1630 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx X0X 0X0
(the "Purchaser")
AND:
SHIRE BIOCHEM INC., a Canadian corporation having an office at 000
Xxxxxx-Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxx, Xxxxxx X0X 0X0
(the "Vendor")
WITNESSES THAT WHEREAS:
A. The Vendor owns and operates the Business, and owns or is otherwise
able to procure the sale of the Assets; and
B. The Vendor wishes to sell, and the Purchaser wishes to purchase, the
Assets on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
Parties agree as follows:
ARTICLE 1 -
INTERPRETATION
1.1 Definitions.
In this Agreement and in any schedules and amendments to this Agreement,
the following terms shall have the meanings set forth below unless the context
otherwise requires:
(a) "Accountants" means any internationally recognized accounting firm
mutually acceptable to the Parties;
(b) "Accounts Payable" means all accounts payable attributable
exclusively to the Business;
(c) "Accounts Receivable" means all accounts receivable and trade
receivables attributable exclusively to the Business. For greater
certainty, Accounts Receivable will include the Government
Receivables but will exclude the Tax Credit Recoverable;
(d) "Adjustment Promissory Note" means a promissory note substantially
in the form set out in Schedule 1.1(d) hereto;
(e) "Affiliate" means, with respect to any Person (including a Party),
any other Person which directly or indirectly controls or is
controlled by, or is under direct or indirect common control with
such first mentioned Person; and for the purposes of this
definition, "control" with respect to any Person (including a
Party) by any other Person is deemed to occur if (a) securities or
other ownership interests of the first mentioned Person to which
are attached more than 50% of the votes that may be cast to elect
members of the board of directors are held, other than by way of
security only, by or for the benefit of that other Person; and (b)
the votes attached to those securities or other ownership
interests are sufficient, if exercised, to elect a majority of the
members of the board of directors of the first mentioned Person;
(f) "Affiliate Contracts" means those Contracts to which an Affiliate
of the Vendor is a party described in Schedule 1.1(f) hereto;
(g) "Agreement" means this asset purchase agreement including the
Schedules hereto and the Disclosure Letter, as amended or
supplemented from time to time;
(h) "Assets" means the undertaking and all of the Vendor's and the
Subsidiary's right, title and interest in, to and under all
property and assets, whether real, personal, moveable, immoveable,
tangible or intangible, held for use, or used, exclusively in
connection with the Business, as a going concern, of every kind or
description and wheresoever situate (other than the Excluded
Assets) including:
(i) Owned Real Property;
(ii) Leased Real Property;
(iii) Business Intellectual Property;
(iv) Licensed Intellectual Property;
(v) Machine, Equipment and Supplies;
(vi) All outstanding shares of the Subsidiary;
(vii) Inventory;
(viii) Current Assets;
(ix) Contracts;
(x) Books and Records;
(xi) Goodwill;
(xii) Environmental Permits;
(xiii) Authorizations; and
(xiv) IT Equipment.
(i) "Assignment and Assumption Agreement" means an assignment and
assumption agreement between the Purchaser and Shire Acquisition
Inc. substantially in the form set out in Schedule 1.1(i) hereto;
(j) "Assumed Obligations" means the liabilities, debts and obligations
of the Vendor and of the Subsidiary arising out of, and relating
to: (i) the Contracts; (ii) the Authorizations; (iii) the
Environmental Permits; and (iv) all vacation pay, bonuses,
commissions, incentive payments and other like payments with
respect to the Employees, in each case which arise or accrue from
and after the Closing Date, as well as (v) the Current
Liabilities; and (vi) the Government Loan;
(k) "Authorization" means, any order, permit, approval, consent,
certificate, licence or similar authorization of any Governmental
Authority having jurisdiction over the
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Vendor or the Subsidiary which are held or used by the Vendor or
the Subsidiary exclusively in connection with the Business,
including the Product Approvals and the authorizations listed in
Schedule 1.1(k) but excluding the Environmental Permits;
(l) "Benefit Plans" means all pension, employee stock purchase or
option, bonus, incentive, retirement, profit sharing, group life,
health, dental or other employee benefit plan or arrangement;
(m) "Biologics Undertakings" has the meaning ascribed thereto in the
Assignment and Assumption Agreement;
(n) "Books and Records" means all of the Vendor's and the Subsidiary's
title documents, files, ledgers, correspondence, customer and
supplier lists, research and development records, clinical and
regulatory files and applications, manufacturing records, manuals,
books of account, business reports, accounting records, receipts,
plans, financial working papers, minute books of the Subsidiary,
share certificate books of the Subsidiary, share registers of the
Subsidiary, and all other records, documents or data of any nature
or kind whatsoever, in each case, relating exclusively to the
Business;
(o) "Business" means the entire vaccine business carried on by the
Vendor and the Subsidiary as of the date of this Agreement,
including the research and development, manufacturing, fill and
finish, packaging, sales, marketing and distribution of vaccines;
(p) "Business Day" means any day except a Saturday or Sunday or any
statutory holiday in the Province of British Columbia or the
Province of Quebec;
(q) "Business Intellectual Property" means all Patents and other
Intellectual Property that is registered or for which a
registration is pending in the name of the Vendor or the
Subsidiary and that is used exclusively in connection with the
Business, other than the Patents and other Intellectual Property
comprised in the Excluded Assets;
(r) "Canadian GAAP" means Canadian generally accepted accounting
principles from time to time approved by the Canadian Institute of
Chartered Accountants or any successor institute or board;
(s) "CCRA" means the Canada Customs and Revenue Agency and any
Governmental Authority which is a predecessor or successor to the
CCRA, as the context requires;
(t) "Charter Documents" means the constating document and by-laws of a
body corporate, including Articles, Articles of Incorporation,
Memorandum, Memorandum of Association and Articles of Association;
(u) "Closing" means the completion of the sale and purchase of the
Assets contemplated by this Agreement and the Share Purchase
Agreement and the payment to the Vendor of the Purchase Price and
the Share Purchase Price required to be paid on the Closing Date;
(v) "Closing Date" means the date which is five Business days after
the date on which the conditions of Closing set out in subsections
7.3(a), 7.3(b) and 7.3(c) are fully satisfied or such other date
as may be agreed to by the Parties, provided that such date
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shall be no later than September 30, 2004 without the express
written consent of both Parties;
(w) "Closing Date Balance Sheet" means the balance sheet of the
Business as at the Effective Time on the Closing Date which shall
be prepared using the accounting policies of the Business
consistently applied in accordance with Canadian GAAP. For greater
certainty, if the Closing Date occurs on or prior to June 30,
2004, the Working Capital Adjustment Balance Sheet shall be deemed
to be the Closing Date Balance Sheet;
(x) "Closing Promissory Note" means a promissory note substantially in
the form set out in Schedule 1.1(x).
(y) "Contaminants" means any solid, liquid, gaseous matter,
microorganism, vibration, rays, heat, odour, radiation, or a
combination of any of them likely to alter the quality of the
environment in any way, including, without limiting the generality
of the foregoing, any explosives, radioactive materials, asbestos,
asbestos-containing materials, urea formaldehyde, hydrocarbons,
lead pollutants, contaminants, deleterious substances, dangerous
substances or goods, hazardous, corrosive or toxic substances,
special waste, hazardous waste, waste, pesticides and any
substance the storage, manufacture, handling, disposal, treatment,
generation, use, transport, remediation or Release into the
environment which is prohibited, controlled, regulated or licensed
under applicable Environmental Laws;
(z) "Contracts" means the Affiliate Contracts and any agreement,
contract, indenture, lease, deed of trust, licence, option,
undertaking, promise or any other commitment or obligation,
whether oral or written, express or implied relating to the
Business to which the Vendor or the Subsidiary is a party and
including the Material Contracts and the leases for the Leased
Real Property;
(aa) "Current Assets" means the sum of the cash, Accounts Receivable,
Inventory, Prepaid Expenses and other current assets of the
Business in each case: (i) net of applicable allowances,
provisions and reserves, and (ii) calculated in accordance with
Canadian GAAP;
(bb) "Current Liabilities" means the sum of the Accounts Payable,
accrued liabilities of the Business and current portion of the
Government Loan, in each case, calculated in accordance with
Canadian GAAP;
(cc) "Damages" means any loss, liability, prosecution, claim, demand,
damage, fine or expense (including legal and professional expense)
whether or not involving a third party-claim;
(dd) "Disclosure Letter" means that certain disclosure letter dated the
date of this Agreement and delivered by the Vendor to the
Purchaser;
(ee) "Effective Time" means 12:01 a.m.;
(ff) "Employees" means all employees who at the Closing Date devote at
least 75% of their working time to the Business, including
full-time and part-time employees, temporary or seasonal
employees, employees on short term or long term disability,
workers compensation, sick leave, maternity leave or leave of
absence and individuals
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who have received and accepted an offer of employment from the
Vendor or the Subsidiary whether they effectively started to work
in the Business or not;
(gg) "Encumbrances" means, whether or not registered or recorded, any
and all:
(i) mortgages, assignments of rent, liens, licences, leases,
charges, security interests, hypothecs, and pledges whether
fixed or floating against property (whether real, personal,
moveable, immoveable, tangible or intangible), or
conditional sales contracts or title retention agreements
or equipment trusts or financing leases relating thereto,
or any subordination to any right or claim of others in
respect thereof;
(ii) claims, interests and estates against or in property
(whether real, personal, moveable, immoveable, tangible or
intangible) including easements, rights-of-way, servitudes
or other similar rights in property granted to or reserved
or taken by any Person or any Governmental Authority; and
(iii) any option or other right to acquire any interest in any
property;
(hh) "Environment" includes the air (including air inside buildings and
improvements), land (including soil, sediment, fill, land
submerged under water, buildings and improvements), and water
(including oceans, lakes, rivers, streams, groundwater and surface
water);
(ii) "Environmental Laws" means any and all statutes, laws,
regulations, orders, municipal by-laws, rules, standards, codes,
policies, guidelines, protocols, permits, decisions, directives
each to the extent having the force of law as of the Closing Date
and all other lawful requirements currently in force of any
Governmental Authority relating to the Environment, environmental
assessment, health, occupational health and safety, or
transportation of dangerous goods, including the applicable
principles of the Civil Code of Quebec, common law and equity;
(jj) "Environmental Permits" means all permits, licences, approvals,
consents, authorizations, registrations, privileges, waivers,
exemptions, orders and certificates required under applicable
Environmental Laws, which have been obtained by the Vendor or the
Subsidiary in connection with the Business, as described in
Schedule 1.1(jj) hereto;
(kk) "Escrow Agreement" means an agreement to be entered into on the
Closing Date between the Purchaser, the Vendor and the Trustee
substantially in the form of Schedule 1.1(kk) attached hereto;
(ll) "ETA" means the Excise Tax Act (Canada), as amended from time to
time;
(mm) "Excluded Assets" means the Tax Credit Recoverable, the IT Shared
Network, the assets set out in Schedule 1.1(mm) hereto and any
Assets which are disposed of by the Vendor or the Subsidiary in
the ordinary course of business prior to the Closing Date as
permitted pursuant to Section 6.2(a);
(nn) "Financial Statements" means the financial statements for the
Business for the financial year ended December 31, 2003, which
have been prepared in accordance with US GAAP and provided by the
Vendor to the Purchaser;
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(oo) "Goodwill" means the goodwill of the Vendor and the Subsidiary
relating exclusively to the Business;
(pp) "Government Contracts" means the Material Contracts listed in
Schedule 1.1(pp);
(qq) "Government Loan" means the term loan from the Quebec provincial
and Canadian federal governments which was provided to the Vendor
to assist it financing its Quebec operations under the Entente
Auxiliaire sur le Developpement Industriel (1985) among the
Government of Canada, the Government of Quebec and the Vendor
dated November 24, 1994;
(rr) "Government Receivables" means the TPC Receivables and the amounts
due to the Vendor in respect of the Contract no.
E60PV-00FLU/001/PV with Her Majesty the Queen of Right of Canada,
as represented by the Minister of Public Works and Government
Services dated September 25, 2001, as amended by contract
amendment no. 001 dated December 12, 2001 and by contract
amendment no. 002 dated February 11, 2003;
(ss) "Governmental Authority" means: (i) any international,
multi-national, national, federal, provincial, state, municipal,
local or other government or public department, central bank,
court, commission, board, bureau, agency or instrumentality,
domestic or foreign; (ii) a subdivision or authority of any of the
foregoing; or (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under
or for the account of any of the above;
(tt) "GST" means Goods and Services Tax;
(uu) "Guarantee Agreements" means, collectively: (i) a guarantee
agreement between Shire Pharmaceuticals Group plc and the
Purchaser to be dated as of the Closing Date pursuant to which
Shire Pharmaceuticals Group plc will guarantee the obligations of
the Vendor to pay any amounts payable pursuant to Section 3.2,
Section 3.3 and Article 11 of this Agreement; and (ii) a guarantee
agreement between Shire Pharmaceuticals Group plc, and the
Purchaser pursuant to which Shire Pharmaceuticals Group plc will
guarantee funding by Shire LLC under the Loan Facility Agreement,
in each case dated as of the Closing Date and substantially in the
forms attached hereto as Schedule 1.1(uu) hereto;
(vv) "Intellectual Property" means: (i) all domestic and foreign
Patents, trade-marks, copyrights and other registered intellectual
property of a similar nature and (ii) all registrations and
applications for registration of the above;
(ww) "Interim Period" means the period between the date of this
Agreement and the Closing Date;
(xx) "Inventory" means all inventories of every kind and nature and
wheresoever situate owned by the Vendor or the Subsidiary and used
or to be used exclusively in connection with the Business
including all finished goods, work in progress, raw materials and
other stock in trade and packaging;
(yy) "ITA" means the Income Tax Act (Canada), as amended from time to
time;
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(zz) "IT Equipment" means the information technology equipment
described in Schedule 1.1(zz) hereto;
(aaa) "IT Shared Network" means the information technology equipment
described in Schedule 1.1(aaa) hereto;
(bbb) "Labour Dispute" means a strike, lockout (including a lockout
declared or recommended by an employer's association), a
slow-down, picketing, a work-stoppage caused in whole or part by
picketing, whether or not lawful, by or involving a group of
Employees and a trade union representing one or more Employees of
the Vendor;
(ccc) "Laws" means all statutes, municipal by-laws, rules, regulations,
orders, ordinances, protocols, codes, guidelines, policies,
notices, directions and judgements or other lawful requirements
currently in force of any Governmental Authority, including the
applicable principles of common law and equity;
(ddd) "Leased Real Property" means all real property which is leased by
the Vendor and used in the Business, as described in Schedule
1.1(ddd) hereto;
(eee) "Licensed Intellectual Property" means all Intellectual Property
licensed to the Vendor or the Subsidiary by any third party and
used exclusively in connection with the Business;
(fff) "Loan Facility Agreement" means a loan facility agreement between
the Purchaser and Shire LLC to be dated as of the Closing Date
substantially in the form set out in Schedule 1.1(fff) hereto;
(ggg) "Machine, Equipment and Supplies" means all machinery, equipment,
tools, handling equipment, furniture, furnishings and accessories,
spare parts and supplies of all kinds, including office supplies
owned by the Vendor and the Subsidiary and used exclusively in
connection with the Business;
(hhh) "Material Contracts" means all Contracts entered into exclusively
in connection with the Business, other than Contracts which are
not material to the operation of the Business that have been
entered into in the ordinary course of the Business consistent
with past practice and:
(i) pursuant to which the Vendor or the Subsidiary is not or
would not be obligated to expend, or entitled to received:
A. more than $100,000 in any 12-month period, or
B. more than $250,000 over the full term of such
Contract; or
(ii) are subject to cancellation by the Vendor or the Subsidiary
upon less than three months notice without penalty or
increased cost in excess of $100,000;
and "Material Contracts" includes those Contracts listed in
Schedule 1.1(hhh) hereto;
(iii) "MRQ" means the Ministere du Revenu of the Province of Quebec and
any Governmental Authority which may be substituted therefor;
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(jjj) "NASDAQ" means the NASDAQ National Market or any successor
thereof;
(kkk) "Net Operating Cash" means the net operating cash inflow or
outflow, if any, with respect to the operations of the Business
for the period between June 30, 2004 and the Closing Date
consisting of:
(i) the total amount of cash used by the Vendor or the
Subsidiary to operate the Business, including ongoing
capital expenditures, but excluding any payment made in
settlement of any Current Liabilities payable as at June
30, 2004;
less:
(ii) the total cash received by the Vendor or the Subsidiary
from the operation of the Business, including the
Government Receivables earned after June 30, 2004, but
excluding any receipts in collection of any Current Assets
receivable as at June 30, 2004;
determined as at the Effective Time on the Closing Date and valued
in Canadian dollars using the accounting policies of the Business
consistently applied in accordance with Canadian GAAP;
(lll) "Net Operating Cash Statement" means the statement of Net
Operating Cash prepared in accordance with Canadian GAAP and in
accordance with Section 2.7;
(mmm) "Net Purchased Working Capital" means with respect to the
Business:
(i) the value of the Current Assets (excluding any
inter-company receivable),
less:
(ii) the value of the Current Liabilities (excluding any
inter-company payable and any deferred revenue),
determined as at the Effective Time as of the Working Capital
Adjustment Date and valued in Canadian dollars using the
accounting policies of the Business consistently applied in
accordance with Canadian GAAP;
(nnn) "Net Purchased Working Capital Statement" means the statement of
Net Purchased Working Capital prepared in accordance with Canadian
GAAP and in accordance with Section 2.6;
(ooo) "Novation Agreement" means a novation agreement substantially in
the form attached hereto as Schedule 1.1(ooo);
(ppp) "Order" means any outstanding judgment, award, decree, injunction,
ruling or order issued, made, or rendered by any court,
administrative agency or other Governmental Authority;
(qqq) "Owned Real Property" means all real property used in the Business
owned by the Vendor or the Subsidiary described in Schedule
1.1(qqq);
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(rrr) "Parties" means the Vendor and the Purchaser, and "Party" means
either one of them as the context may require;
(sss) "Patents" means (i) all domestic and foreign patents, patent
applications and provisional patent applications and any
divisions, continuations, continuations in part, re-issuances,
extensions, prolongations, re-examinations and renewals thereof;
and (ii) all patents, patent applications and provisional patent
applications claiming priority from any of the foregoing;
(ttt) "Permitted Encumbrances" means those Encumbrances listed in
Schedule 1.1(ttt) hereto and any third party's Patent rights which
overlap the activities of the Business or any Patent rights held
by the Vendor;
(uuu) "Person" means an individual, a sole proprietorship, a
corporation, a partnership, a limited partnership, a joint
venture, a limited liability company, an unincorporated
association, a trust, a body corporate, an unincorporated
organization, a Governmental Authority or any other entity and
pronouns shall have a similar extended meaning;
(vvv) "Place of Closing" means the offices of the Vendor's Solicitors in
Montreal, Quebec;
(www) "Prepaid Expenses" means, on any date, all prepaid expenses
attributable exclusively to the Business including, amounts paid
for insurance (to the extent that the policies in respect of which
such payments were made are being transferred to the Purchaser at
Closing), licensing fees relating to software, property taxes,
telephone rentals, utilities and rentals which will have a
continuing benefit for the owner of the Business after such date;
(xxx) "Prime Rate" means the annual rate of interest announced from time
to time by the Royal Bank of Canada as a reference rate then in
effect for determining the interest rate on Canadian dollar demand
commercial loans in Canada;
(yyy) "Proceedings" means any action, claim, suit, litigation,
arbitration, prosecution, investigation or proceeding including
any appeal or application for review at law or in equity or before
or by any Governmental Authority;
(zzz) "Product Approvals" means all clinical trial applications (CTAs),
notices of compliance (NOCs) and drug identification numbers
(DINs) issued by the Health Canada's Biologics and Genetic
Therapies Directorate and any corresponding or similar approvals
issued by any other Governmental Authority outside of Canada,
which are held or used (through contractual rights granted by the
holders thereof) by the Vendor or the Subsidiary and which permit
the Vendor or the Subsidiary to investigate, manufacture and sell
the products currently investigated, manufactured or sold by the
Vendor and the Subsidiary exclusively as part of the Business;
(aaaa) "Projects" means collectively, the expansion of the manufacturing
plant in the City of Quebec, the construction of the vaccine
research centre in the City of Laval and the renovation work
relating to the Leased Real Property leased from the Institut
national de recherche scientifique (INRS) in the City of Laval;
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(bbbb) "Purchaser IT Equipment" means the information technology
equipment described in Schedule 1.1(bbbb) hereto;
(cccc) "Purchaser's Solicitors" means the law firm of Xxxxxx Xxxxxx
Gervais LLP;
(dddd) "QST" means Quebec Sales Tax;
(eeee) "QSTA" means the Act respecting the Quebec sales tax (Quebec), as
amended from time to time;
(ffff) "Registration Rights Agreement" means a registration right
agreement between the Vendor and the Purchaser to be dated as of
the Closing Date substantially in the form attached hereto as
Schedule 1.1(ffff) hereto;
(gggg) "Release" and words of a similar import includes any past or
present release, spill, leak, pumping, pouring, emission,
emptying, discharge, injection, escape, leaching, disposal or
dumping (including abandonment or discarding of barrels,
containers and other closed receptacles);
(hhhh) "Required Consents" means those consents from Governmental
Authorities which are required in order to assign the Government
Contracts to the Purchaser and those consents listed in Schedule
1.1(hhhh);
(iiii) "Share Purchase Agreement" means that certain Share Purchase
Agreement entered into on the date of this Agreement between the
Vendor and the Purchaser relating to the sale of all outstanding
shares of the Subsidiary;
(jjjj) "Share Purchase Price" means the consideration payable by the
Purchaser under the Share Purchase Agreement for the outstanding
shares of the Subsidiary;
(kkkk) "Subscription Receipt" means an instrument substantially in the
form set out in Schedule 1.1(kkkk) hereto;
(llll) "Subsidiary" means Shire Biologics Inc., a Delaware company;
(mmmm) "Survey" means the survey referred to in Schedule B, Item 23 of
the Title Insurance Policy;
(nnnn) "Tax" means any tax, duty, fee, sales or value added tax, royalty,
levy, impost, assessment, deduction, charge, withholding, and all
liabilities with respect thereto, levied, imposed or assessed from
time to time upon or in respect of income, capital, wages of
employees, profits, services, property or transactions of any
nature or kind by any Government Authority or the taxing authority
of any such Governmental Authority including, GST and QST;
(oooo) "Tax Credit Recoverable" means all tax credit recoverables
attributable to the Business, including income tax credits, input
tax credits and input tax refunds;
(pppp) "Title Insurance Policy" means that certain Owner's Policy, Policy
number SV 2936057, dated September 21, 2000, issued by Old
Republic National Title Insurance Company ("Old Republic") to
BioChem Pharma, Inc., as amended by
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General Endorsement dated August 30, 2001 issued by Old Republic
and as shall be amended by an update endorsement up to the Closing
Date, a copy of which is attached as Schedule 1.1(pppp);
(qqqq) "TPC Agreement" means the Technology Partnerships Canada Project
no. 720-477045 Agreement between Her Majesty the Queen in Right of
Canada, as represented by the Minister of Industry, and the Vendor
dated March 31, 2000, as amended pursuant to the Amendment
Agreement made between such Minister and the Vendor on August 28,
2002;
(rrrr) "TPC Receivables" means the amounts due to the Vendor in respect
of the TPC Agreement;
(ssss) "Transition Period" means the period starting on the Closing Date
and ending 60 days thereafter;
(tttt) "Trustee" means Computershare Trust Company of Canada which will
be appointed trustee under the Escrow Agreement;
(uuuu) "TSX" means the Toronto Stock Exchange;
(vvvv) "US GAAP" means US generally accepted accounting principles from
time to time approved by the Financial Accounting Standards Board
or any successor board or institute;
(wwww) "Vendor's Solicitors" means the law firm of Stikeman Elliott LLP;
(xxxx) "Working Capital Adjustment Date" means the earlier of the Closing
Date and June 30, 2004; and
(yyyy) "Working Capital Adjustment Date Balance Sheet" means the balance
sheet of the Business as at the Effective Time on the Working
Capital Adjustment Date which shall be prepared using the
accounting policies of the Business consistently applied in
accordance with Canadian GAAP.
1.2 Other Defined Terms.
In addition to the defined terms in Section 1.1, each of the following
capitalized terms shall have the meaning ascribed thereto in the corresponding
Sections or subsections:
Term Section/subsection
---- ------------------
ARC 7.3(b)
Authorized Person 6.1
Cash Price 2.2
Closing Price 2.5(a)
Commissioner 7.3(b)
Competing Business 10.7
Continuous Disclosure Documents 5.2(a)
Currency of the Agreement 12.13
Excluded Employees 9.1
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Term Section/subsection
---- ------------------
ID Subsidiaries 5.1(a)
Indemnified Party 11.5
Indemnifying Party 11.5
Judgment Currency 12.13
Judgment Conversion Date 12.13
Last Claim Date 2.8
Material Adverse Effect 5.3(d)
Material Intellectual Property 5.3(j)
Notice 11.5
Permits 5.3(d)
Product Liability 3.3
Purchase Price 2.2
Purchaser Recitals
Quebec Title Documents 6.16
Rate of Exchange 12.13
Server Room 6.15(e)(ii)
Shared Network Use Agreement 6.15
Third Party Claim 11.6
Title Defects 6.16
Update Endorsement 6.16
Vendor Recitals
Working Capital Adjustment Payment Date 2.6(b)
1.3 Schedules.
The following are the schedules delivered concurrently with, and
incorporated into this Agreement:
Schedule Description
-------- -----------
Schedule 1.1(d) Form of Adjustment Promissory Note
Schedule 1.1(f) Affiliate Contracts
Schedule 1.1(i) Form of Assignment and Assumption Agreement
Schedule 1.1(k) Authorization
Schedule 1.1(x) Closing Promissory Note
Schedule 1.1(jj) Environmental Permits
Schedule 1.1(kk) Form of Escrow Agreement
Schedule 1.1(mm) Excluded Assets
Schedule 1.1(pp) Government Contracts
Schedule 1.1(uu) Form of Guarantee Agreements
Schedule 1.1(zz) IT Equipment
Schedule 1.1(aaa) IT Shared Network
Schedule 1.1(ddd) Leased Real Property
Schedule 1.1(fff) Form of Loan Facility Agreement
Schedule 1.1(hhh) Material Contracts
Schedule 1.1(nnn) Form of Novation Agreement
Schedule 1.1(ooo) Owned Real Property
Schedule 1.1(ttt) Permitted Encumbrances
Schedule 1.1(bbbb) Purchaser IT Equipment
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Schedule 1.1(ffff) Form of Registration Rights Agreement
Schedule 1.1(hhhh) Required Consents
Schedule 1.1(kkkk) Form of Subscription Receipt
Schedule 1.1(pppp) Title Insurance Policy
Schedule 1.4(f) Knowledge of the Vendor
Schedule 1.4(g) Knowledge of the Purchaser
Schedule 2.2 Purchase Price Allocation
Schedule 6.2(b) Budgets Relating to Projects
1.4 Interpretation.
In this Agreement, except as otherwise expressly provided:
(a) the division of this Agreement into Articles, Sections, subsection
and paragraphs and the insertion of headings and any index
provided are for convenience of reference only and shall not
affect the construction or interpretation hereof;
(b) words importing the singular include the plural and vice versa and
words importing gender include all genders;
(c) all monetary amounts referred to in this Agreement are stated in
United States currency;
(d) a reference to a designated Article, Section, subsection or
paragraph or to a Schedule is a reference to the designated
Article, Section, subsection or paragraph of, or Schedule to, this
Agreement;
(e) the words "herein", "hereof", "hereunder" and other similar words
refer to this Agreement as a whole and not to any particular
Section or subsection or Schedule;
(f) where any of the representations and warranties of the Vendor
contained in Article 4 of this Agreement are expressly qualified
by reference to the knowledge of the Vendor or the Subsidiary, it
shall be deemed to refer to the actual knowledge of any of the
Persons listed on Schedule 1.4(f), after usual and reasonable
inquiries;
(g) where any of the representations and warranties of the Purchaser
contained in Article 5 of this Agreement are expressly qualified
by reference to the knowledge of the Purchaser, it shall be deemed
to refer to the actual knowledge of any of the Persons listed on
Schedule 1.4(g), after usual and reasonable inquiries;
(h) the words "includes" and "including" mean "include (or including)
without limitation";
(i) any accounting term not otherwise defined in this Agreement has
the meaning assigned to it in accordance with Canadian GAAP;
(j) the Schedules attached to this Agreement shall for all purposes of
this Agreement, form an integral part of this Agreement; and
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(k) any reference to a statute includes all regulations made under
that statute, and includes all amendments made to the statute and
the regulations in force from time to time, and any statute or
regulation that supplements or replaces that statute or
regulation.
ARTICLE 2 -
PURCHASE OF ASSETS
2.1 Purchase and Sale.
In accordance with and subject to the terms and conditions set forth in
this Agreement, the Vendor agrees, or as required in relation to the Affiliate
Contracts agrees to cause its Affiliates, to sell, assign and transfer to the
Purchaser and the Purchaser agrees to purchase, the Assets (other than the
outstanding shares of the Subsidiary) for the Purchase Price, effective as of
and from the Effective Time on the Closing Date, free and clear of all
Encumbrances, other than Permitted Encumbrances. For greater certainty, it is
acknowledged that the Purchaser is acquiring the outstanding shares of the
Subsidiary (and is not directly acquiring the assets of the Subsidiary) pursuant
to the Share Purchase Agreement, effective as of and from the Effective Time on
the Closing Date, free and clear from all Encumbrances, other than Permitted
Encumbrances.
2.2 Consideration.
The Purchase Price for the Assets (other than the shares of the
Subsidiary) is: (a) an aggregate amount of $101,250,000 (subject to any
adjustments made pursuant to Sections 2.6 and 2.7, as applicable) (the "Cash
Price") and (b) the assumption as of and from the Effective Time on the Closing
Date of the Assumed Obligations (collectively, the "Purchase Price"). The
Purchase Price shall be allocated among the Assets (other than the shares of the
Subsidiary) as described in Schedule 2.2 hereto.
2.3 Payment of Consideration.
The Purchaser will pay the Cash Price as follows:
(a) at Closing, a cash amount equal to $11,250,000 by way of wire
transfer of immediately available funds in Canada to an account
designated by the Vendor;
(b) at Closing, at the sole discretion of the Purchaser but subject to
adjustment in accordance with Section 2.5 below, either:
(i) Subscription Receipts registered in the name of the Vendor
representing the right to acquire 5,425,593 common shares
in the capital of the Purchaser; or
(ii) a cash amount equal to $60,000,000 by way of wire transfer
of immediately available funds in Canada to an account
designated by the Vendor; and
(c) at Closing, the Closing Promissory Note pursuant to which the
Purchaser will agree to pay to the Vendor on the date which is one
year after the Closing Date a cash amount equal to $30,000,000.
Such cash amount of $30,000,000 shall be deposited at Closing by
the Purchaser with the Trustee by way of wire transfer of
immediately available funds in Canada to the Trustee to be held in
accordance with the terms of the Escrow Agreement.
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2.4 Assignment of Contracts.
Nothing in this Agreement shall be construed as an attempt to assign any
Asset which is not assignable without the consent, approval or waiver of the
other party or parties to it, unless such consent, approval or waiver has been
given. In accordance with Sections 6.4, 6.5, 6.6 and 6.7, the Parties will use
their commercially reasonable efforts to obtain such consents, approvals or
waivers.
2.5 Adjustments to Reflect Fluctuations in Purchaser's Stock Price.
In the event that the Purchaser elects to deliver Subscription Receipts
at Closing pursuant to Section 2.3(b) above, the following rules shall apply:
(a) in the event that the weighted average trading price of the
Purchaser's common shares on NASDAQ for the ten trading days
immediately prior to the Closing Date (the "Closing Price") is
less than $11.0587, then in addition to delivering Subscription
Receipts to the Vendor at Closing, the Purchaser shall deliver to
the Vendor the Adjustment Promissory Note pursuant to which the
Purchaser will agree to pay to the Vendor an amount calculated in
accordance with the following formula:
$X = $60,000,000 - (A x 5,425,593)
Where:
X is the amount payable by the Purchaser to the Vendor under such
Adjustment Promissory Note;
A is the greater of: (a) the Closing Price; and (b) $9.9528.
(b) in the event that the Closing Price is more than $11.0587, then
the number of Subscription Receipts deliverable by the Purchaser
to the Vendor shall be reduced such that the total number of
Subscription Receipts delivered multiplied by the Closing Price
shall equal $60,000,000. Notwithstanding the foregoing, in no
event shall the number of Subscription Receipts otherwise
deliverable prior to the adjustments contemplated by this Section
2.5(b) be reduced by more than 9.1%.
2.6 Working Capital Adjustments.
(a) Preparation of Working Capital Adjustment Balance Sheet and
Working Capital Statement:
Forthwith after the earlier of Closing Date (if such date occurs prior to
June 30, 2004) or June 30, 2004, the Vendor will prepare the Working Capital
Adjustment Date Balance Sheet and the Net Purchased Working Capital Statement
setting out the Net Purchased Working Capital as at the Effective Time on the
Closing Date or June 30, 2004, as the case may be. The Vendor will cause two
copies of the Working Capital Adjustment Date Balance Sheet and the Working
Capital Statement to be delivered to the Purchaser as soon as possible and in
any event not later than 45 days after the Closing Date or June 30, 2004, as the
case may be. Notwithstanding the preceding sentence or any other provisions
hereof, if the Closing Date would otherwise occur between June 17, 2004 and June
30, 2004, the Vendor will, in its sole discretion, either: (i) cause two copies
of the Working Capital Adjustment Date Balance Sheet and the Working Capital
Statement to be delivered to the Purchaser as soon as possible and any event not
later than 30 days after June 30, 2004; or (ii) agree to delay the Closing to
July 2, 2004. The
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Vendor will provide the Purchaser's auditors with such cooperation and
supporting working papers as they may reasonably require to enable them to
review the Working Capital Adjustment Date Balance Sheet and the Net Purchased
Working Capital Statement. Within 30 days after delivery of the Working Capital
Adjustment Date Balance Sheet and the Net Purchased Working Capital Statement,
the Purchaser will advise the Vendor in writing whether the Net Purchased
Working Capital is agreed to by the Purchaser and if not, specifying the matters
not agreed to and, in such case, the matters in dispute will be referred to the
Accountants acting as experts and not arbitrators. The Parties may make
submissions to the Accountants and shall provide the Accountants with additional
documents, materials and other presentations they might require in relation with
the disputed matters. The determination of the Accountants shall be final and
binding on the Parties. The fees of the Accountants in respect of the dispute
shall be borne as to one-half by the Vendor and as to one-half by the Purchaser.
(b) Final Adjustments:
On the later of the Closing Date or the third Business Day following: (i)
the Vendor's receipt of the Purchaser's notice of approval of the Net Purchased
Working Capital under Section 2.6(a); or (ii) final determination of the Net
Purchased Working Capital by the Accountants, as the case may be (the "Working
Capital Adjustment Payment Date"):
(i) If the Working Capital Adjustment Payment Date is the Closing
Date,
(A) the Cash Price will be increased by the amount, if any, by
which the final determination of the Net Purchased Working
Capital, exceeds $0.00 together with interest on the amount
of such excess calculated from June 30, 2004 to the date of
payment at a rate equal to the Prime Rate; or
(B) the Cash Price will be reduced by the amount, if any, by
which the final determination on the Net Purchased Working
Capital, is less than $0.00 together with the interest on
the amount of such difference calculated from June 30, 2004
to the date of payment at a rate equal to the Prime Rate.
(ii) If the Working Capital Adjustment Payment Date is not the Closing
Date,
(A) the Purchaser will pay to the Vendor by bank draft or
certified cheque the amount, if any, by which the final
determination of the Net Purchased Working Capital, exceeds
$0.00 together with interest on the amount of such excess
calculated from the earlier of the Closing Date or June 30,
2004 to the date of payment at a rate equal to the Prime
Rate; or
(B) the Vendor will pay to the Purchaser by bank draft or
certified cheque the amount, if any, by which the final
determination of the Net Purchased Working Capital, is less
than $0.00 together with the interest on the amount of such
difference calculated from the earlier of the Closing Date
or June 30, 2004 to the date of payment at a rate equal to
the Prime Rate.
2.7 Net Operating Cash Adjustments.
The Parties agree that the adjustments contemplated by this Section 2.7
will only be made if the Closing occurs after June 30, 2004.
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(a) Preparation of Closing Date Balance Sheet and Net Operating Cash
Statement:
Forthwith after the Closing Date, the Vendor will prepare the Closing
Date Balance Sheet and the Net Operating Cash Statement setting out the Net
Operating Cash as at the Effective Time on the Closing Date. The Vendor will
cause two copies of the Closing Date Balance Sheet and the Net Operating Cash
Statement to be delivered to the Purchaser as soon as possible and in any event
not later than 45 days after the Closing Date. The Vendor will provide the
Purchaser's auditors with such cooperation and supporting working papers as they
may reasonably require to enable them to review the Closing Date Balance Sheet
and the Net Operating Cash Statement. Within 30 days after delivery of the
Closing Date Balance Sheet and the Net Operating Cash Statement, the Purchaser
will advise the Vendor in writing whether the Net Operating Cash is agreed to by
the Purchaser and if not, specifying the matters not agreed to and, in such
case, the matters in dispute will be referred to the Accountants acting as
experts and not arbitrators. The Parties may make submissions to the Accountants
and shall provide the Accountants with additional documents, materials and other
presentations they might require in relation with the disputed matters. The
determination of the Accountants shall be final and binding on the Parties. The
fees of the Accountants in respect of the dispute shall be borne as to one-half
by the Vendor and as to one-half by the Purchaser.
(b) Final Adjustments:
On the third Business Day following: (i) the Vendor's receipt of the
Purchaser's notice of approval of the Net Operating Cash under Section 2.7(a);
or (ii) final determination of the Net Operating Cash by the Accountants, as the
case may be:
A. if the Net Operating Cash is less than $0.00, the Vendor
will pay to the Purchaser, by bank draft, wire transfer or
certified cheque, the amount of such deficiency, together
with interest on such amount calculated from June 30, 2004
to the date of payment at a rate equal to the Prime Rate;
or
B. if the Net Operating Cash is more than $0.00, the Purchaser
will pay to the Vendor, by bank draft, wire transfer or
certified cheque, the amount of such excess, together with
interest on such amount calculated from June 30, 2004 to
the date of payment at a rate equal to the Prime Rate.
2.8 Additional Adjustments for TPC Receivables.
If the TPC Receivables agreed to based upon the Working Capital
Adjustment Date Balance Sheet have not been collected in full by the Purchaser
within 270 days after the date of the filing of the last claim for reimbursement
of eligible costs incurred prior to the Closing Date made by the Purchaser to
Technology Partnerships Canada (the "Last Claim Date"):
(a) the Vendor shall forthwith pay to the Purchaser an amount equal to
the difference between: (i) the amount of the TPC Receivables
agreed to based upon the Working Capital Adjustment Date Balance
Sheet; and (ii) the amount actually recovered by the Purchaser in
respect of such TPC Receivables on or before the date being the
270th day after the Last Claim Date;
(b) the Purchaser shall forthwith execute and deliver all documents
necessary to assign all remaining amounts owing in respect of the
TPC Receivables to the Vendor.
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The Purchaser shall not compromise any TPC Receivables reflected
on the Working Capital Adjustment Date Balance Sheet. If amounts
owing in respect of the TPC Receivables are assigned to the Vendor
in accordance with paragraph (b) above, the Purchaser shall use
commercially reasonable efforts to assist the Vendor in the
recovery of such amounts.
If the amounts actually collected by the Purchaser in respect of
the TPC Receivables exceed the amounts of the TPC Receivables
agreed to based upon the Working Capital Adjustment Date Balance
Sheet, the Purchaser will forthwith pay to the Vendor the amount
of such excess and such payment shall be deemed to be an
adjustment to the Purchase Price. The Purchaser shall provide the
Vendor with all documents and materials reasonably necessary to
enable the Vendor to confirm the amount, if any, payable by the
Vendor pursuant to paragraph (a) above or by the Purchaser
pursuant to this paragraph.
2.9 Taxes on Sale and Transfer.
The Purchaser will be responsible for and will pay when due all transfer
taxes including any land transfer taxes, mutation rights, property purchase
taxes, sales taxes, social services taxes, GST and QST or similar taxes and any
registration fees, payable in respect of the sale and transfer of the Assets to
the Purchaser.
2.10 Amounts Paid for Undertaking Future Obligations.
The Vendor and the Purchaser shall jointly execute and file an election
under subsections 20(24) and 20(25) of the ITA and under the equivalent
provisions of any other applicable Law, in the prescribed forms and within the
time period permitted under the ITA and under any other applicable Law, as to
such amount paid by the Vendor to the Purchaser for undertaking future
obligations. In this regard, the Vendor and the Purchaser acknowledge that part
of the Assets was transferred to the Purchaser as a payment by the Vendor to the
Purchaser for the undertaking by the Purchaser of such future obligations of the
Vendor to the Purchaser.
2.11 Sale Tax Elections.
The Vendor and the Purchaser shall jointly execute an election under
section 167 of the ETA and under section 75 of the QSTA, in the prescribed form,
such that the sale and transfer of the Assets by the Vendor will take place
without payment of any GST or any QST. The Purchaser will file the election
forms referred to above with the appropriate competent Tax authorities, together
with the Purchaser's GST and QST returns for its GST and QST reporting period
during which the transaction of purchase and sale contemplated by this Agreement
occurs and, promptly thereafter, the Purchaser will provide the Vendor a copy of
such election forms and will confirm to the Vendor in writing that such election
forms have been so filed.
Notwithstanding such election, in the event that it is determined by the
CCRA or by the MRQ that there is a GST or QST liability on the sale and transfer
of the Assets, the Parties agree that such GST or QST, as the case may be,
shall, unless already collected from the Purchaser by the Vendor, be forthwith
paid by the Purchaser to the Vendor to be remitted to the CCRA or the MRQ as the
case may be, and the Purchaser shall indemnify and hold harmless the Vendor with
respect to any such GST or QST arising herein, as well as any interest and
penalties related thereto.
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ARTICLE 3 -
ASSUMPTION OF OBLIGATIONS AND LIABILITIES
3.1 Assumption of Obligations and Liabilities.
As of and from the Effective Time on the Closing Date, the Purchaser will
assume, pay, discharge when due, satisfy, perform, fulfill and be responsible
for the Assumed Obligations and the Purchaser will indemnify and hold harmless
the Vendor from and against any Damages suffered or incurred by the Vendor in
respect of the Assumed Obligations.
3.2 Excluded Obligations and Liabilities.
For greater certainty, the Purchaser is not assuming and will not be
responsible for any liabilities, debts or obligations of the Vendor or the
Subsidiary, whether present or future, absolute or contingent and whether or not
relating to the Business, other than the Assumed Obligations. The Vendor agrees
to indemnify and hold harmless the Purchaser from and against all Damages the
Purchaser may suffer in respect of any liabilities, debts or obligations of the
Vendor or the Subsidiary which are not part of the Assumed Obligations.
Notwithstanding the foregoing, the Vendor shall not be obligated to indemnify
the Purchaser for any such liabilities, debts or obligations which result
directly from actions taken by the Vendor in respect of the Business during the
Interim Period if and to the extent that such actions are undertaken at the
request of the Purchaser.
3.3 Product Liability and Warranty Obligations.
The Purchaser will not assume, and the Vendor will be solely responsible
for and will indemnify and hold harmless the Purchaser from and against all
Damages the Purchaser may suffer in respect of all product liability, product
warranty and other claims and obligations (the "Product Liability") made or
otherwise arising at any time (whether prior to or after the Closing) in
connection with products of the Business manufactured or sold prior to the
Closing Date by the Vendor or the Subsidiary. The Vendor shall have sole control
of the defense in respect of all such Product Liability and the Purchaser shall
not be permitted to compromise and settle or to cause a compromise and
settlement in respect of any such Product Liability without the prior written
consent of the Vendor. The Vendor will reimburse the Purchaser forthwith
following demand for all reasonable expenses incurred by the Purchaser where the
Purchaser is required by Law or pursuant to an Order to satisfy the Product
Liability. The Purchaser will indemnify and hold harmless the Vendor from and
against all Damages in respect of all Product Liability made or arising at any
time after the Closing otherwise than in connection with manufacturing defects
of products of the Business manufactured prior to the Closing by the Vendor.
Notwithstanding the foregoing, the Vendor shall not be obligated to indemnify
the Purchaser for any Product Liability which relates to product returns to the
extent that allowances, provisions or reserves for such product returns were
made in the Closing Date Balance Sheet.
3.4 Risk of Loss and Damage Prior to Closing.
The Vendor will bear all risk of loss or damage to the Assets until the
Closing and the Purchaser will bear all risk of loss or damage to the Assets
from and after the Closing. The Purchaser will indemnify and hold harmless the
Vendor from and against any Damages suffered or incurred by the Vendor in
connection with the Purchaser's ownership and/or use of the Assets and the
Purchaser's conduct of the Business from and after the Closing.
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ARTICLE 4 -
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor hereby makes the representations and warranties contained in
this Article 4 to the Purchaser and acknowledges that the Purchaser is relying
upon such representations and warranties in connection with its purchase of the
Assets. Notwithstanding the foregoing, the Purchaser acknowledges that the
Schedules and the Disclosure Letter sets out a number of disclosures in respect
of, exceptions to, and exclusions from, the representations and warranties of
the Vendor contained in this Agreement and such disclosures, exclusions and
exceptions are deemed to be incorporated into this Agreement.
The Purchaser also acknowledges that it shall not be entitled to claim
that any fact causes any of the representations and warranties of the Vendor
contained in this Agreement to be untrue or incorrect if it has been fully and
fairly disclosed by the Vendor in the Disclosure Letter.
4.1 Corporate Status and Authority.
(a) Status of the Vendor and the Subsidiary: Each of the Vendor and
the Subsidiary has been duly incorporated and is a validly
subsisting company in good standing under the applicable Laws of
its jurisdiction of incorporation, has all necessary corporate
power and authority to own all of the properties and assets that
it purports to own, to carry on the Business and, in the case of
the Vendor, to carry out the transactions contemplated by this
Agreement.
(b) Due Authorization: The execution and delivery of this Agreement
and the completion of the transactions contemplated by this
Agreement have been, or will prior to Closing have been, duly
authorized by all necessary corporate action on the part of the
Vendor, and this Agreement has been duly executed and delivered by
the Vendor and constitutes a legal, valid and binding obligation
of the Vendor enforceable against it in accordance with its terms,
subject to any limitation under any applicable Laws relating to
(i) bankruptcy, winding-up, insolvency, arrangement and other
similar Laws affecting the rights of creditors generally and (ii)
the discretion that a court of competent jurisdiction may exercise
in granting extraordinary remedies, such as specific performance
and injunction. Each of the contracts, agreements and instruments
required by this Agreement to be delivered by the Vendor will
prior to Closing have been duly executed and delivered by the
Vendor and will be enforceable against it in accordance with its
terms, subject to any limitation under any applicable Laws
relating to (i) bankruptcy, winding-up, insolvency, arrangement
and other similar Laws affecting the rights of creditors generally
and (ii) the discretion that a court of competent jurisdiction may
exercise in granting extraordinary remedies, such as specific
performance and injunction.
(c) Non-Contravention: The execution, delivery and performance of this
Agreement by the Vendor and the completion of the transactions
contemplated by this Agreement will not result in:
(i) a material breach or termination of any Material Contract;
(ii) a conflict with, or contravention of, any provision of the
Charter Documents or resolutions of the board of directors
(or any committee thereof) or shareholders of the Vendor or
the Subsidiary;
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(iii) a contravention to any Order to which any of the Vendor or
the Subsidiary may be subject which could reasonably be
expected to result in a material adverse change to the
financial condition of the Business or in any of the
material Assets; or
(iv) a contravention of any applicable Law which could
reasonably be expected to result in a material adverse
change to the financial condition of the Business or in any
of the material Assets.
(d) Litigation: There is no Proceeding to which either of the Vendor
or the Subsidiary is or would be a party pending or, to the
knowledge of the Vendor and the Subsidiary, threatened in writing
against:
(i) the Business or any of the Assets and which would result in
a material adverse change in the financial condition of the
Business or in any of the material Assets;
(ii) the Vendor or the Subsidiary which would prevent the
completion of the transactions contemplated by this
Agreement;
and there is not outstanding against the Vendor or the Subsidiary
any Order which materially affects the Business, any of the Assets
or the right of the Purchaser to the use or benefit thereof.
(e) Subsidiaries: No Affiliates of the Vendor, other than the
Subsidiary, are involved in the Business. The Vendor holds all of
the outstanding securities of the Subsidiary and the Subsidiary is
not a party to any shareholders or similar agreement. There are no
outstanding rights, commitments or agreements which give or could
give any Person the right to acquire any security of the
Subsidiary, except pursuant to this Agreement.
4.2 Assets.
(a) Ownership: Subject to the provisions of Section 6.16 and except
for the rights under the Affiliate Contracts, the Vendor has all
necessary right, title or interest in, to and under the Assets in
order to permit it to transfer the Assets to the Purchaser as
contemplated by this Agreement, free and clear of all Encumbrances
other than Permitted Encumbrances.
(b) Leased Assets: The Vendor has provided the Purchaser with true and
correct copies of all leases included in the Material Contracts
and there are no other material leases, agreements to lease or
other tenancy arrangements relating exclusively to the Business.
(c) Condition of Assets: All of the Assets which are tangible personal
property are, subject to normal wear and tear, in good operating
condition and repair having regard to their use and age and,
within general industry standards, are suitable for their use.
Except for the Projects, all buildings, fixtures and facilities
situated on the Owned Real Property are in good operating
condition and repair having regard to their use and age and are
suitable for the purposes for which they are used. To the
knowledge of the Vendor and the Subsidiary, the premises situated
on the Leased Real Property which are used in the Business are in
good operating condition and repair having regard to their use and
age and are suitable for the purposes for which they are used.
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(d) Real Property: Schedules 1.1(ccc) and 1.1(qqq) set out a complete
list of the Leased Real Property and the Owned Real Property and
identify all real property interests used exclusively in
connection with the Business. Either the Vendor or the Subsidiary
occupies the Owned Real Property and the Leased Real Property and
has the exclusive right to use and occupy such properties.
(e) Taxes: All property, municipal, school, general and special taxes,
rates, assessments, local improvements charges, frontage taxes,
business taxes, development cost charges, other subdivision
charges and costs and other levies which are chargeable against
the Owned Real Property and the Leased Real Property have been
paid in full unless the same are not due and payable.
(f) Zoning: All Owned Real Property and Leased Real Property is zoned
to permit the particular activity carried out on such property in
connection with the Business.
(g) Encroachments: Subject to the provisions of Section 6.16:
(i) all buildings, fixtures and facilities situated on the
Owned Real Property are wholly within the boundaries of the
Owned Real Property;
(ii) there are no buildings, fixtures, improvements or
facilities on any adjoining lands, whether public or
private, that encroach on the Owned Real Property, except
for any encroachment which does not have a material adverse
effect on the use of the Owned Real Property in connection
with the Business and except for any encroachment
identified in Schedule B of the Title Insurance Policy or
shown on the Survey; and
(iii) either the Vendor or the Subsidiary has adequate right of
ingress and egress for the operation of the Business in the
ordinary course, except for any restriction which does not
have a material adverse effect on the use of the Owned Real
Property in connection with the Business and except for any
restriction identified in Schedule B of the Title Insurance
Policy.
(h) Customers and Suppliers: The Disclosure Letter sets out a list of
the top three customers (ranked based on value of sales) of the
Business during the 12 month period ended December 31, 2003,
together with the amount billed to such customers and a list of
the top ten suppliers, excluding the suppliers for the Projects,
(ranked based on value of purchases) of goods and services to the
Business during the 12 month period ended December 31, 2003,
together with the amount earned by such suppliers.
(i) Inventory: The Disclosure Letter accurately reflects the Inventory
value as at the date of the Financial Statements. The Inventory,
subject to reasonable allowances, provisions and reserves, is of
good and usable condition, and:
(i) in the case of raw materials and work in progress is usable
in the normal manufacturing process of the finished
products manufactured by the Business; and
(ii) in the case of finished products, meet the specifications
for such finished products.
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The Inventories are not excessive in kind or amount, having regard
to seasonal variations and have been purchased for the Business in
the ordinary course and consistent with seasonal requirements and
the volumes of purchases and orders therefor have not been
materially reduced or increased in anticipation of the
transactions contemplated by this Agreement other than in the
ordinary course.
4.3 Business Operations.
(a) Operating Authorities: Schedule 1.1(k) sets out all material
Authorizations which are held or used (through contractual rights
granted by the holders thereof) by the Vendor or the Subsidiary as
of the date of this Agreement to conduct the Business or to own,
lease or operate any of the Assets as owned, leased or operated as
of the date of this Agreement. Such Authorizations constitute all
material orders, permits, approvals, consents, certificates,
licenses or similar authorizations from Governmental Authorities
which are necessary to conduct the Business or to own, lease or
operate any of the Assets as owned, leased or operated as of the
date of this Agreement. Neither the Vendor nor the Subsidiary is
in material default or in material breach of the terms of any of
the Authorizations and, to the knowledge of the Vendor and the
Subsidiary, no Proceeding is pending or threatened in writing to
revoke or limit any of the Authorizations.
(b) Compliance with Laws: The Business has been operated in compliance
in all material respects with all applicable Laws of each
jurisdiction in which the Business has been carried on.
(c) Jurisdictions in which Business is Carried On: With the exception
of distribution of products by the Vendor, the Subsidiary or
parties the Vendor or the Subsidiary have contracted with, the
Business has not been conducted nor are any of the Assets located
in any jurisdiction other than in Canada and the State of
Massachusetts.
4.4 Intellectual Property.
Notwithstanding any other provisions of this Agreement, the
representations and warranties contained in this Section 4.4 are the only and
exclusive representations and warranties of the Vendor with respect to
Intellectual Property and all other representations and warranties of the Vendor
in this Agreement shall be interpreted accordingly.
(a) List of Intellectual Property: To the knowledge of the Vendor and
the Subsidiary, the Disclosure Letter sets forth a complete list
and brief description of the Business Intellectual Property and
the Licensed Intellectual Property.
(b) Ownership: The Vendor and/or the Subsidiary are the sole and
exclusive owners of all right, title and interest in, to and under
the Business Intellectual Property.
(c) Maintenance of Business Intellectual Property: To the knowledge of
the Vendor and the Subsidiary, the Business Intellectual Property
is subsisting, all necessary registration, maintenance and renewal
fees in connection with the Business Intellectual Property have
been paid and none of the Business Intellectual Property has
irrevocably lapsed for failure to meet a deadline in connection
therewith.
(d) No Proceeding Relating to Business Intellectual Property: There is
no material adverse Proceeding pending relating to the Business
Intellectual Property and the Vendor
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or the Subsidiary has received no written notification within the
last 12 months of Proceedings threatened against the Vendor or the
Subsidiary relating to the Business Intellectual Property.
(e) No Right to Purchase Business Intellectual Property: Except
pursuant to this Agreement, there is no agreement, license, option
or other right or privilege outstanding in favour of any Person
for the purchase of, or acquisition of any interest in any of the
Business Intellectual Property.
4.5 Financial.
(a) No Material Adverse Change: Since the date of the Financial
Statements, the Business has been carried on in the ordinary
course as it had previously been carried on and in accordance with
past practice and except for changes due to the cyclical nature of
the Business and the seasonal variations, there has been no
material adverse change in the affairs, operation or financial
condition of the Business.
(b) Financial Statements: The Financial Statements fairly present and
disclose the financial position of the Business as at the dates
and for the periods indicated therein.
(c) Statements Prepared Hereunder: Each of the Closing Date Balance
Sheet, the Net Operating Cash Statement, the Net Purchased Working
Capital Statement and the Working Capital Adjustment Date Balance
Sheet will, upon completion, be true and correct in all material
respects and will be prepared in accordance with Canadian GAAP.
(d) Receivables: All Accounts Receivable are recorded in the financial
records of the Business and are bona fide due and payable and, to
the knowledge of the Vendor and the Subsidiary, collectible in the
aggregate amount recorded therein.
(e) Rebates: The Vendor has not entered into, or offered to enter
into, any agreement or arrangement under which either of the
Vendor or the Subsidiary is or will be obliged to make any
rebates, discounts, promotional allowances or similar payments or
arrangements to any customer of the Business which would have a
material adverse effect on the financial condition of the
Business.
(f) Product Warranties: Except as imposed by Law or contained in
Contracts, neither the Vendor or nor the Subsidiary has provided
any express warranties (other than warranties given in accordance
with general industry practice) to purchasers of products supplied
in connection with the Business.
(g) Books and Records. The financial and accounting books and records
of the Business have been maintained in accordance with sound
business practices and fairly, accurately and completely present
and disclose in accordance with US GAAP applied on a basis
consistent with prior periods and throughout the periods involved
(i) the financial condition of the Business and (ii) all
transactions of the Business, for the periods indicated therein.
4.6 Insurance.
The Disclosure Letter contains a complete and accurate listing of all
insurance policies of the Vendor and the Subsidiary relating to the Assets and
the Business, including all property damage,
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general liability, motor vehicle, director and officer liability and life
insurance policies. In addition, there have been no material claims filed under
any of such policies in the last two years.
4.7 Environment.
Notwithstanding any other provisions of this Agreement, the
representations and warranties contained in this Section 4.7 are the sole and
exclusive representations and warranties of the Vendor with respect to
environmental matters (including, matters relating to applicable Environmental
Laws and Environmental Permits) and all other representations and warranties of
the Vendor in this Agreement shall be interpreted accordingly.
(a) Compliance with Environmental Laws: The Assets are in compliance
and have been operated in compliance in all material respects with
all applicable Environmental Laws.
(b) Environmental Permits: The Environmental Permits constitute all
material permits, licences, approvals, consents, authorizations,
registrations, privileges, waivers, exemptions, orders and
certificates required under applicable Environmental Laws in
connection with the Business and the Assets. All such
Environmental Permits are being complied with. No Proceeding is
pending and the Vendor or the Subsidiary have received no written
notification within the last 12 months of any steps being taken by
any Governmental Authority or other Person to revoke, amend or
limit any of the Environmental Permits and to the knowledge of the
Vendor and the Subsidiary, no grounds exist for any such
Proceeding or steps.
(c) Contaminants: To the knowledge of the Vendor and the Subsidiary,
there are no Contaminants in, on, at, under or which have been or
are being Released in violation of applicable Environmental Laws
by either the Vendor or the Subsidiary in, on, at, under or to,
from or by any of the Assets including, any of the Owned Real
Property or to the knowledge of the Vendor and the Subsidiary, on
any of the Leased Real Property.
(d) Underground Storage Tanks: To the knowledge of the Vendor and the
Subsidiary, underground storage tanks are not and have not been
located on any of the Owned Real Property or to the knowledge of
the Vendor and the Subsidiary, on any of the Leased Real Property,
except in compliance in all material respects with all applicable
Environmental Laws.
(e) Agreements: There are no agreements with, or consent, orders,
decrees, judgments, permits or other orders, directives or legal
requirements of, any Governmental Authority or any other Person
relating to the Assets which require any material work, repairs,
construction, containment, clean-up, investigation, studies,
removal or other remedial action required under applicable
Environmental Laws or material capital expenditures with respect
to any environmental condition, issue or matter at or with respect
to any of the Assets including, any of the Owned Real Property or
the Leased Real Property.
(f) Claims: There are no Proceedings pending and the Vendor and the
Subsidiary have received no written notification within the last
12 months of Proceedings with respect to the environmental
condition of, or any environmental issue or matter with respect
to, the Assets or alleging any breach of, default or liability
under, applicable Environmental Laws with respect to the Business
or the Assets or relating to the presence
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of, or the exposure of any Person to, any Contaminant, or a
Release or a threat of a Release of any Contaminant, in, on, at,
under, from or to any of the Assets including any of the Owned
Real Property or the Leased Real Property which could have a
material adverse effect on the financial condition of the
Business.
(g) Disclosure: The Vendor has fully disclosed to the Purchaser all
written environmental reports, site assessments, reports, audits,
studies, evaluations, tests and records in the possession or
control of the Vendor and the Subsidiary with respect to the
Assets including the Owned Real Property or the Leased Real
Property and the Vendor has fully disclosed to the Purchaser all
material facts and circumstances of which it has knowledge
relating to the environmental condition of the Assets.
(h) Nuisance: The use of and operations relating to the Assets
conducted by the Vendor or the Subsidiary on or from any of the
Owned Real Property or the Leased Real Property do not constitute
a material nuisance of any environmental nature, nor has any
written claim for nuisance been made in respect of such use and
operations by any Person.
4.8 Tax Matters.
(a) Filings: All Tax returns or filings relating, directly or
indirectly, to the Business and the Assets which are required to
be filed with any taxation authority have been filed on a timely
basis or, if not filed on a timely basis, all fees, penalties,
interest and other amounts payable as a result thereof have been
paid. No such Tax return or filing contains any misstatement or
omit any statements that should have been included and each Tax
return or filing, including accompanying schedules and statements
is true, correct and complete.
(b) Payment: All material Taxes due and payable in connection with the
Business and the Assets have been paid in full, excluding any
Taxes due and payable in connection with the transactions
contemplated by this Agreement.
(c) Extensions: There are no agreements, waivers or other arrangements
with any taxation authority providing for an extension of time
with respect to the filing of any Tax return by, or any payment of
any Taxes by or governmental charge against the Subsidiary, nor
with respect to the issuance of any assessment or reassessment.
(d) GST and QST Registrations: The Vendor is a registrant for purposes
of Part IX of the ETA, as amended from time to time, and its
registration number is 888677176RT. The Vendor is also a
registrant for purposes of the QST and its registration number is
1020885943TQ0001.
(e) Residency: The Vendor is not a non-resident of Canada for purposes
of the ITA.
4.9 Employee Matters.
(a) List of Employees: The Disclosure Letter sets out a comprehensive
list of the Employees and includes an accurate description of the
compensation, benefits, position, date of hire and working
location of each such Employee.
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(b) Employment Contracts: None of the Employees are employed on other
than an indefinite hiring basis terminable on reasonable notice
according to applicable Law without further liability.
(c) Union Contracts: There are no collective bargaining agreements,
contracts or legally binding commitments to any trade union or
employee organization or group in respect of or affecting
Employees and there are no pending applications for certification
or decertification of any bargaining unit of Employees, notice of
which has been served upon either the Vendor or the Subsidiary and
there are no oral understandings with union negotiators or
otherwise in respect of such matters.
(d) Benefit Plans: The Disclosure Letter contains a complete and
accurate list of all Benefit Plans provided to the Employees. All
contributions required to be made to such Benefit Plans have been
properly made in accordance with their terms, and all returns and
other documents have been filed and all amounts owing to any
Governmental Authority relating to such Benefit Plans have been
paid.
(e) Pension Plans: Neither the Vendor nor the Subsidiary contribute to
or sponsor any defined benefit or defined contribution pension
plans relating to the Business.
(f) Labour Disputes: There are no pending or, to the knowledge of the
Vendor and the Subsidiary, threatened Labour Disputes, charges of
unfair labour practice, complaints or applications pursuant to any
applicable Laws, or other Proceeding whatsoever, by or involving
any present or former Employee.
(g) Employer Associations: Neither the Vendor nor the Subsidiary is a
member of any employer, management, industry or other trade,
labour relations or business association relating to the Business
under which it is obligated to contribute to any employee or
contractor employee benefit or industry enhancement fund,
including any pension plans, health benefit plans or other similar
employee entitlements.
(h) Workers Compensation Assessment: No events have occurred with
respect to the Business which, to the knowledge of the Vendor and
the Subsidiary, is likely to result in any significant increase in
any workers compensation board assessment (including the
Commission de la sante et de la securite du travail) or any
similar assessment payable by the Purchaser after the Closing and
no such amounts are outstanding and unpaid.
4.10 Non-Compliance.
(a) Compliance Directives: To the knowledge of the Vendor and the
Subsidiary, there are no material outstanding compliance
directives or work orders which require any material capital
expenditures relating to the Owned Real Property or the Leased
Real Property from any police, fire department, or from any other
federal, provincial or municipal authority, department or agency,
nor has the Vendor or the Subsidiary received written notification
that there are any matters under formal consideration by any such
authorities relating to the Business.
(b) No Seizure: There is no appropriation, expropriation or seizure of
any of the Assets that is pending, and the Vendor or the
Subsidiary has received no written notification in this respect
within the last 12 months.
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4.11 Contracts and Commitments.
(a) Material Contracts: Schedule 1.1(hhh) contains a complete and
accurate list of all Material Contracts.
(b) Breach: Neither the Vendor nor the Subsidiary is in material
breach or default of any of the terms of the Material Contracts
and to the knowledge of the Vendor and the Subsidiary, there is no
material breach or default of any terms of the Material Contracts
by any other party thereto, and each such Material Contract is in
full force and effect.
4.12 Consents and Approvals.
Except for the Required Consents, there are no approvals, waivers,
consents, orders, orders in council, legislation, regulations, or any other
action of any:
(a) Governmental Authority; or
(b) any other Person
that may be required in connection with the execution, delivery or performance
by the Vendor of this Agreement or the consummation of the transactions
contemplated by this Agreement, except where the failure to obtain such
approval, consent, order, orders in council, legislation, regulations or other
action would not, individually or collectively, have a material adverse effect
on the Business or the Assets taken as a whole.
4.13 Finder's Fees.
Neither the Vendor nor the Subsidiary has taken nor will take any action
that would cause the Purchaser to become liable pursuant to any Proceeding for a
brokerage commission, finder's fee or other similar arrangement.
4.14 Transactions with Affiliates.
The Disclosure Letter identifies each arrangement through which the
Business acquires from, or provides to, Affiliates of the Vendor or the
Subsidiary any goods, properties or services.
4.15 All Assets.
The assets transferred to the Purchaser at Closing will include all the
Assets, except Excluded Assets, and the deeds, assignments, bills of sale,
conveyances, transfers and other assurances will be in appropriate form and
sufficient to transfer the Assets to the Purchaser. The Assets constitute all
assets necessary to conduct the Business.
4.16 Construction Projects.
The Projects are being carried out by the Vendor and to the knowledge of
the Vendor, by any third party contractor, in all material respects in
compliance with all applicable Laws. The Authorizations include all material
orders, permits, approvals, consents, certificates, licenses or similar
authorizations from Governmental Authorities which, as of the date of this
Agreement, are materially required for the construction, completion or servicing
of the Projects. To the knowledge of the Vendor,
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the progress of the Projects as of the date of this Agreement is consistent with
designed and planned progress and the costs of the Projects as of the date of
this Agreement are consistent with budgeted costs.
ARTICLE 5 -
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the representations and warranties contained
in this Article 5 to the Vendor and acknowledges that the Vendor is relying upon
such representations and warranties in connection with its sale and transfer of
the Assets.
In addition, notwithstanding any other provisions of this Agreement, if
the Purchaser exercises its rights under Section 2.3(b)(ii) hereof to deliver to
the Vendor $60,000,000 in cash at Closing in lieu of delivering Subscription
Receipts, the representations and warranties contained in Sections 5.2 and 5.3
below shall be deemed not to be made at the Closing and the Vendor shall not be
entitled to make any claim against the Purchaser in respect of any breach or
inaccuracy of the representations or warranties contained therein.
5.1 Corporate Status and Authority.
(a) Status of the Purchaser and the ID Subsidiaries: Each of the
Purchaser, and ID Biomedical Corporation of Washington, ID
Biomedical Corporation of Quebec and ID Biomedical Corporation of
Maryland (collectively, the "ID Subsidiaries") has been duly
incorporated and is a validly subsisting company in good standing
under the applicable Laws of its jurisdiction of incorporation,
has all necessary corporate power and authority to own all
properties and assets that it purports to own, to carry on its
business as conducted as of the date of this Agreement and, in the
case of the Purchaser, to carry out the transactions contemplated
by this Agreement.
(b) Due Authorization: The execution and delivery of this Agreement
and the completion of the transactions contemplated by this
Agreement have been or will prior to Closing have been duly
authorized by all necessary corporate action on the part of the
Purchaser and this Agreement has been duly executed and delivered
by the Purchaser and constitutes a legal, valid and binding
obligation of the Purchaser enforceable in accordance with its
terms subject to any limitation under any applicable Laws relating
to: (i) bankruptcy, winding-up, insolvency, arrangement and other
similar Laws affecting the rights of creditors generally; and (ii)
the discretion that a court of competent jurisdiction may exercise
in granting extraordinary remedies, such as specific performance
and injunction. Each of the contracts, agreements and instruments
required by this Agreement to be delivered by the Purchaser will,
prior to Closing, have been duly executed and delivered by the
Purchaser and will be enforceable against it in accordance with
its terms, subject to any limitation under any applicable Laws
relating to: (i) bankruptcy, winding-up, insolvency, arrangement
and other similar Laws affecting the rights of creditors generally
and; (ii) the discretion that a court of competent jurisdiction
may exercise in granting extraordinary remedies, such as specific
performance and injunction.
(c) Non-Contravention: The execution, delivery and performance of this
Agreement by the Purchaser and the completion of the transactions
contemplated by this Agreement will not result in:
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(i) a conflict with, or contravention of, any provision of the
Charter Documents or resolutions of the board of directors
(or any committee thereof) or shareholders or agreements of
the Purchaser;
(ii) a contravention of any Order to which the Purchaser may be
subject which could reasonably be expected to result in a
material adverse change to the financial condition of the
Business or in any of the material Assets; and
(iii) a contravention of any applicable Law which could
reasonably be expected to result in a material adverse
change to the financial condition of the Business or in any
of the material Assets.
(d) Litigation: There is no Proceeding pending or, to the knowledge of
the Purchaser, threatened against or affecting the Purchaser which
would prevent the completion of the transactions contemplated by
this Agreement.
(e) Subsidiaries: The Purchaser does not control directly or
indirectly any entities, other than the ID Subsidiaries. All
outstanding shares of capital stock of each ID Subsidiary have
been duly authorized and validly issued and are beneficially owned
by the Purchaser, free and clear of any Encumbrances.
5.2 Accuracy of Public Disclosure.
(a) Continuous Disclosure Documents: All information and statements
contained in the following continuous disclosure documents of the
Purchaser (collectively, the "Continuous Disclosure Documents"),
which have been publicly issued and filed with the relevant
securities regulatory authorities as of the date of this
Agreement:
(i) the annual information form dated February 28, 2003 for the
year ended December 31, 2002, including the annual
management's discussion and analysis;
(ii) the annual audited consolidated financial statements for
the year ended December 31, 2002;
(iii) the interim unaudited consolidated financial statements and
the interim management's discussion and analysis for the
three, six and nine month periods ended March 31, 2003,
June 30, 2003 and September 30, 2003, respectively;
(iv) the information circular dated April 22, 2003 relating to
the Purchaser's annual meeting held on June 3, 2003; and
(v) all material change reports after December 31, 2002,
were, as of their respective dates of publication, true and
correct in all material respects. In addition, on their respective
dates of publication, each of such documents complied in all
material respects with applicable securities Laws, did not contain
any untrue statement of a material fact and did not omit to state
a material fact which was required to have been stated or was
necessary to prevent a statement that was made from being false or
misleading in the circumstances in which it was made.
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Since December 31, 2002, all material change reports required to
be filed with the relevant securities regulatory authorities under
applicable securities Laws have been filed by the Purchaser and no
material change reports or other documents have been filed by the
Purchaser on a confidential basis with the relevant securities
regulatory authorities.
Except as may occur as a result of the transactions contemplated
hereby, the Purchaser has no knowledge of any material change
which has occurred in its affairs or in the affairs of the ID
Subsidiaries, which has not been generally disclosed and reported
to the relevant securities regulatory authorities and the
Purchaser does not have any knowledge of any other material
adverse information in regard to the current and prospective
operations of the Company and the ID Subsidiaries, which have not
been generally disclosed.
(b) Status under Securities Laws: The Purchaser is a reporting issuer
(or the equivalent thereof) in good standing under the securities
Laws of the provinces of Quebec, Ontario, Manitoba, Saskatchewan,
Alberta and British Columbia.
(c) Financial Statements: The annual audited financial statements of
the Purchaser (including all notes and schedules thereto) for the
year ended December 31, 2002 and the interim unaudited
consolidated financial statements for the three, six and nine
month periods ended March 31, 2003, June 30, 2003 and September
30, 2003, respectively, present fairly the financial condition,
the results of operations, the statements of cash flows and the
statements of shareholders' equity and the other information
purported to be shown therein of the Purchaser at the respective
dates and for the respective periods to which they apply in
conformity with Canadian GAAP and consistently applied throughout
the periods involved, except as may be indicated therein.
5.3 Other Matters.
(a) Listing: The common shares of the Purchaser are listed and posted
for trading on the TSX and NASDAQ. The Purchaser has taken no
action designed to, or likely to have the effect of, delisting the
common shares from the TSX or NASDAQ, nor has the Purchaser
received any notification that the TSX or NASDAQ is contemplating
such delisting.
(b) Authorized Capital: The authorized capital of the Purchaser
consists of 200,000,000 common shares without par value,
100,000,000 Class "A" Preference shares with a par value of $10.00
each, and 100,000,000 Class "B" Preference shares with a par value
of $50.00 each. As of the date of this Agreement, a total of
41,971,744 common shares, no Class "A" Preference shares and no
Class "B" Preference shares are issued and outstanding. All of the
issued and outstanding common shares in the capital of the
Purchaser have been duly and validly issued in compliance with all
applicable Laws and are fully paid and non assessable. None of the
issued and outstanding common shares in the capital of the
Purchaser was issued in violation of any pre-emptive or other
similar rights of any shareholder of the Purchaser. There are no
statutory pre-emptive or other similar rights to subscribe for or
to purchase or acquire any shares of the Purchaser or any such
rights pursuant to its Charter Documents or any agreement or
instrument to or by which the Purchaser is a party or bound. The
description of the Purchaser's stock option and other stock plans
or arrangements, and the options or other rights granted
thereunder, as set forth in the Continuous Disclosure Documents
and other public disclosure of the Purchaser does accurately and
fairly present the information required to be disclosed with
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respect to such plans, arrangements, options and rights. There is
no outstanding option, warrant or other right calling for the
issuance of, and there is no commitment, plan or arrangement to
issue, any shares of the Purchaser or any of the ID Subsidiaries
or any security convertible into, or exercisable or exchangeable
for, such shares other than: (i) the Purchaser's existing
shareholder rights plan; (ii) options or shares issued in the
ordinary course of business under existing stock option,
directors' fee payment or similar plans; (iii) warrants to acquire
common shares of the Purchaser issued under a final prospectus of
the Purchaser dated October 22, 2003; and (iv) 91,659 warrants to
acquire common shares of the Purchaser, exercisable at a price of
$16.01 per share, which were issued to Technology Partnerships
Canada on March 17, 2004.
(c) Subscription Receipts: As of Closing, the Purchaser will have
taken all steps necessary to authorize the issuance of the
Subscription Receipts and the common shares issuable upon exercise
or deemed exercise thereof and any common shares so issued will be
duly and validly issued as fully paid and non-assessable shares in
the capital of the Purchaser. The common shares issuable upon
exercise or deemed exercise of the Subscription Receipts will,
prior to Closing, be reserved for issuance by the Purchaser. The
certificate evidencing the Subscription Receipts will comply with
the requirements of the TSX and NASDAQ, as applicable.
(d) Business Operations: The Purchaser and each ID Subsidiary is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the
business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification,
except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or
financial condition of the Purchaser and each of the ID
Subsidiaries, taken as a whole (a "Material Adverse Effect"). The
Purchaser and each of the ID Subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of
and from all Governmental Authorities (collectively, the
"Permits"), to own, lease and license its assets and properties
and conduct its business, all of which are valid and in full force
and effect, except where the lack of such Permits, individually or
in the aggregate, would not have a Material Adverse Effect. The
Purchaser and each of the ID Subsidiaries has fulfilled and
performed in all material respects all of its obligations with
respect to such Permits, and no event has occurred that could
reasonably be expected to result in revocation or termination
thereof or result in any other material impairment of the rights
of the Purchaser or any ID Subsidiaries, as the case may be,
thereunder.
(e) Compliance with Laws: The Purchaser and the ID Subsidiaries are in
compliance in all material respects and conduct their businesses
in compliance in all material respects with, all applicable Laws
and all Orders.
(f) Material Adverse Change: Except as publicly disclosed, since
December 31, 2002, (i) there has not been any material adverse
change with regard to the affairs, operation or financial
condition of the Purchaser.
(g) Tax Filings: The Purchaser and the ID Subsidiaries have duly and
timely filed all Tax returns or filings required to be filed with
any taxation authority or if not filed on a timely basis, all
fees, penalties, interest and other amounts payable as a result
thereof have been paid. No such Tax return or filing contains any
misstatement or omit any
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statements that should have been included and each Tax return or
filing, including accompanying schedules and statements is true,
correct and complete.
(h) Payment: The Purchaser and the ID Subsidiaries have paid all Taxes
payable whether or not shown on such Tax returns and all
assessments received by them to the extent that the same are
material and have become due other than those Taxes and
assessments that are currently being challenged and for which a
reserve has been taken.
(i) Extensions: There are no agreements with any taxation authority
providing for an extension of time with respect to the filing of
any Tax return by, or any payment of any Taxes or governmental
charge against the Purchaser or the ID Subsidiaries, nor with
respect to the issuance of any assessment or reassessment. There
are no Tax audits or investigations pending which, if adversely
determined, would have a Material Adverse Effect; nor are there
any material proposed additional Tax assessments against the
Purchaser or any of the ID Subsidiaries.
(j) Intellectual Property: The Purchaser and the ID Subsidiaries
either own or have the right to use all Patents and other
Intellectual Property which are material to their business, on a
consolidated basis (the "Material Intellectual Property"). To the
knowledge of the Purchaser, neither the Purchaser nor the ID
Subsidiaries has used the Material Intellectual Property in a
manner that would result in the irrevocable abandonment or
cancellation thereof and all necessary registration, maintenance
and renewal fees in respect thereof have been paid except where
the failure to do so would not have a Material Adverse Effect.
There are no material adverse Proceedings related to the Material
Intellectual Property and the Purchaser and the ID Subsidiaries
have not received notice within the last 12 months of any
threatened Proceedings in respect thereof.
(k) Assets: The Purchaser and each of the ID Subsidiaries has good and
marketable title in fee simple to all items of real property and
good and marketable title to all personal property owned by it
subject to defects that would not result in a Material Adverse
Effect. Any real property and buildings that being held under
lease by the Purchaser and each of the ID Subsidiaries is held by
it under valid, existing and enforceable leases, free and clear of
all Encumbrances, except such as would not have a Material Adverse
Effect.
(l) No Default: No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default,
in the due performance and observance of any term, covenant or
condition, by the Purchaser or any ID Subsidiary, if such ID
Subsidiary is a party thereto, and the execution, delivery and
performance of this Agreement will not result in any material
breach of any agreement or instrument to which the Purchaser or
such ID Subsidiary is a party or by which the Purchaser, any ID
Subsidiary or their respective properties or business may be bound
or affected which default, event or breach, individually or in the
aggregate, would have a Material Adverse Effect.
(m) No Conflict: Neither the Purchaser nor any of the ID Subsidiaries
is in violation of any term or provision of its Charter Documents
or of any Permit, Order or Law, where the consequences of such
violation, individually or in the aggregate, would have a Material
Adverse Effect.
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(n) Labour Dispute: Neither the Purchaser nor any of the ID
Subsidiaries are involved in any Labour Dispute nor, to the best
of the Purchaser's knowledge, is any such dispute threatened,
which dispute in either case would have a Material Adverse Effect.
The Purchaser is not aware of any existing or imminent labour
disturbance by the employees of any of its principal suppliers or
contractors which would have a Material Adverse Effect. The
Purchaser is not aware of any threatened or pending litigation
between the Purchaser or any of the ID Subsidiaries and any of its
executive officers which, if adversely determined, could have a
Material Adverse Effect and has not been informed that such
officers will not remain in the employment of the Purchaser.
(o) Books and Records: The financial and accounting books and records
of the Purchaser have been maintained in accordance with sound
business practices and fairly, accurately and completely present
and disclose, in accordance with Canadian GAAP applied on a basis
consistent with prior periods and throughout the periods involved:
(i) the financial position of the Purchaser; and (ii) all
transactions of the Purchaser, for the periods therein indicated.
(p) Insurance: The Purchaser and the ID Subsidiaries are insured by
insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the
businesses in which it is or they are engaged; all policies of
insurance and fidelity or surety bonds insuring the Purchaser or
any of the ID Subsidiaries or the Purchaser's or the ID
Subsidiaries' respective businesses, assets, employees, officers
and directors are in full force and effect; the Purchaser and each
of the ID Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and neither the
Purchaser nor any ID Subsidiary believes that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not
have a Material Adverse Effect. Except as would not have a
Material Adverse Effect, neither the Purchaser nor any ID
Subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(q) Environment: (i) Each of the Purchaser and the ID Subsidiaries is
in compliance with all applicable Environmental Laws except for
non-compliance that would not have a Material Adverse Effect; (ii)
neither the Purchaser nor any of the ID Subsidiaries has received
any notice from (A) any third party of an asserted claim under
applicable Environmental Laws, which would have a Material Adverse
Effect, or (B) any Governmental Authority of an asserted claim
under applicable Environmental Laws, which would have a Material
Adverse Effect; (iii) each of the Purchaser and the ID
Subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business, except where the failure to obtain such permit, license
or approval would not have a Material Adverse Effect, and is in
all material respects in compliance with all terms and conditions
of any such permit, license or approval; (iv) to the Purchaser's
knowledge, no facts currently exist that will require the
Purchaser or any of the ID Subsidiaries to make future material
capital expenditures to comply with applicable Environmental Laws;
and (v) to the best of the Purchaser's knowledge, no property
which is or has been owned, leased or occupied by the Purchaser or
the ID Subsidiaries has been designated as a contaminated site
under applicable Law.
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5.4 Tax Registration.
The Purchaser is a registrant for purposes of Part IX of the ETA, as
amended from time to time, whose registration number is 13229 8449 RT0001. The
Purchaser will also be a registrant under the QSTA as of the Closing Date.
ARTICLE 6 -
PRE-CLOSING MATTERS AND COVENANTS
6.1 Access.
The Vendor will and will cause the Subsidiary to provide to the
Purchaser, its employees, representatives and agents (collectively, the
"Authorized Persons"), upon prior request during the Interim Period, during
normal business hours and without affecting the conduct of the Business in the
ordinary course and the conduct of the business of the Vendor in the ordinary
course, reasonable access to the facilities, properties (excluding allowing the
Purchaser to carry out environmental audits and site investigations) and all
books, accounts, data and records (including electronically stored data and
records) relating to the Business or the Assets and copies of all material title
documents, contracts, agreements, mortgages, instruments, leases and other
documents relating to the Business or the Assets as the Purchaser may reasonably
request. Notwithstanding the generality of the foregoing, the Vendor will and
will cause the Subsidiary to provide to the Authorized Persons, in each case
upon appointment to be scheduled through the Finance Director of the Vendor, or
such other person or persons as may be appointed by the Vendor, reasonable
access to any of the Vendor's appropriate executive personnel.
At the request of the Purchaser, the Vendor will execute or cause to be
executed such consents, authorizations and directions as may be reasonably
necessary to enable the Authorized Persons to obtain full access to all files
and records relating exclusively to the Business and Assets maintained by any
Governmental Authority.
For greater certainty, to the extent that any relevant books, accounts,
data and records of the Vendor or the Subsidiary do not relate exclusively to
the Business or the Assets, the Purchaser will only be entitled to access to the
portions of such books, accounts, data and records which relate exclusively to
the Business or the Assets.
6.2 Operations until Closing.
Except as otherwise provided in this Agreement or as otherwise agreed in
writing by the Purchaser, the Vendor will, and will cause the Subsidiary to,
during the Interim Period:
(a) Conduct of Business: carry on and conduct the Business in the
ordinary course, consistent with past practice, and in particular:
(i) will use all commercially reasonable efforts to maintain
the Assets in accordance with past practice;
(ii) will not discontinue or cease to carry on any material part
of the Business as carried on as of the date of this
Agreement;
(iii) except with respect to Permitted Encumbrances, will not
subject to an Encumbrance the Assets in whole or in part;
and
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(iv) except in the ordinary course of the Business, consistent
with past practice, will not sell, transfer or dispose, or
agree to dispose, of any of the material Assets.
(b) New Capital Projects: not, without the Purchaser's prior written
consent, which consent shall not be unreasonably withheld or
delayed, or unless required by applicable Law or required to
repair or replace any loss or damage to the Assets arising
subsequent to the date of this Agreement, make, or commit to make,
any capital expenditure in excess of $500,000. For greater
certainty, capital expenditures made in connection with the
Projects shall not require the Purchaser's prior written consent,
provided such expenditures are contemplated by the budgets
prepared in respect of the Projects as of the date hereof and
listed on Schedule 6.2(b) hereto.
(c) Agreements: not, without the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld or
delayed, amend or vary any of the Material Contracts or enter into
any long term, unusual, abnormal or onerous agreement affecting a
material part of the Business.
(d) Insurance: maintain in full force and effect an insurance coverage
substantially equivalent to the insurance coverage described in
the Disclosure Letter.
(e) Exceptions: For greater certainty, this Section 6.2 shall not
operate so as to restrict or prevent:
(i) any matter reasonably undertaken in response to events
beyond the control of the Vendor or the Subsidiary, with
the intention of minimizing any adverse effect of such
events on the Assets or the Business;
(ii) any matter undertaken at the request or with the consent of
the Purchaser, including the repayment of the shareholder's
advances made to the Subsidiary;
(iii) any action or omission which the Vendor or the Subsidiary
are required to take or omit to take by any applicable Law
or by any Governmental Authority or competent jurisdiction;
(iv) any disposal of Inventory or obsolete Assets, in each case
in the ordinary course of Business; and
(v) the performance of the Vendor's obligations pursuant to
this Agreement.
6.3 Rebuilding Facilities.
In the event of any loss or destruction of any of the material Assets in
whole or in part during the Interim Period, the Vendor and the Purchaser will
negotiate with the Purchaser in good faith to agree upon the application of any
proceeds of insurance to rebuilding, repairing or replacement of the lost or
destroyed material Assets. If the Purchaser and the Vendor are unable to agree
upon the application of such proceeds, the proceeds will be applied to rebuild,
repair or replace the lost or destroyed material Assets as nearly as possible
with assets or facilities of the same nature, kind and quality as those lost or
destroyed. For greater certainty, the Vendor shall in no event be obligated to
spend monies in excess of the insurance proceeds received to rebuild, repair or
replace the lost or destroyed material Assets.
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6.4 Required Consents.
Each Party will use commercially reasonable efforts to obtain, prior to
the Closing Date, all Required Consents and the Vendor will not, except as
contemplated by the terms of this Agreement, or with the prior written consent
of the Purchaser, which consent shall not be unreasonably withheld or delayed,
agree to any amendment or variation to the terms of any Material Contract in
connection with, or as a condition of, the receipt of such Required Consents.
Each Party will cooperate with one another in exchanging such information and
supplying such assistance as may be reasonably requested by the other Party in
connection with the foregoing.
6.5 Contracts Requiring Consent.
Where a consent, approval or waiver of a third party (which is not a
Required Consent) is required to assign to the Purchaser any of the Assets, each
of the Parties will use commercially reasonable efforts to obtain, prior to the
Closing Date, the required consents, approvals or waiver (other than the
Required Consents). Each Party will cooperate with one another in exchanging
such information and supplying such assistance as may be reasonably requested by
the other Party in connection with the foregoing.
Without limiting the generality of the foregoing, the parties agree to
use commercially reasonable efforts to obtain, prior to the Closing Date, any
consents from Technology Partnerships Canada which are necessary in connection
with the granting of security by the Purchaser to Shire LLC as contemplated in
the Loan Facility Agreement.
6.6 Novation Agreement
Each Party will cooperate with one another in order to obtain the
novation of the Vendor's rights and obligations under the Material Contracts in
favour of the Purchaser pursuant to novation agreements among the Vendor,
Purchaser and third parties substantially in the form of the Novation Agreement.
6.7 Government Contracts and Biologics Undertakings
Notwithstanding anything contrary in this Agreement, during the Interim
Period, the Purchaser shall not, without the prior written consent of the
Vendor, which consent may be withheld in the Vendor's sole discretion, directly
or indirectly, through any employee, representatives, agents or otherwise,
negotiate with, accept or consider any proposal of any other Person relating to
any amendment or variation of the terms of the Government Contracts and of the
Biologics Undertakings.
6.8 Loan Facility Agreement.
The Vendor will cause Shire LLC to enter into, and the Purchaser will
enter into the Loan Facility Agreement.
6.9 Guarantee Agreements
On the Closing Date, the Vendor will cause Shire Pharmaceuticals Group
plc to execute and deliver both Guarantee Agreements.
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6.10 Closing.
Each Party shall, to the extent within its control, use commercially
reasonable efforts to ensure the fulfilment of the conditions of Closing by or
on the Closing Date.
6.11 Assignment and Assumption Agreement.
On or before the Closing Date, the Purchaser and Shire Acquisition Inc.
will enter into the Assignment and Assumption Agreement.
6.12 Regulatory Approvals
The Purchaser shall use commercially reasonable efforts to obtain all
necessary approvals or exemptions from applicable securities regulatory
authorities, the TSX and NASDAQ to complete the transactions contemplated by
this Agreement.
6.13 Assistance with Preparation of Business Acquisition Report and
Registration Statement
The Vendor acknowledges that:
(a) the Purchaser will be required to prepare and publicly file a
"business acquisition report" pursuant to Part 8 of National
Instrument 51-102 in respect of the acquisition of the Business;
and
(b) under the terms of the Registration Rights Agreement (if
applicable) the Purchaser may be required to prepare and file a
registration statement to qualify the resale of the common shares
issuable upon exercise or deemed exercise of the Subscription
Receipts.
In each of the foregoing circumstances, the Purchaser will require
assistance and information relating to the Business from the Vendor
(including historical audited annual financial statements of the Business
and unaudited interim financial statements of the Business subject to a
review engagement report by the Vendor's auditors). The Vendor shall, at
all times during the Interim Period and after the Closing Date, provide
the Purchaser will all information and assistance reasonably required by
the Purchaser in order to complete and file any such business acquisition
report or registration statement in accordance with the requirements of
applicable Laws. Without limiting the foregoing, the Vendor will deliver
to the Purchaser copies of: (i) all historical audited financial
statements of the Business required to be included in such business
acquisition report or registration statement (together with all required
auditors' reports thereon) by no later than the Closing Date; and (ii)
any interim financial statements of the Business required to be included
in such business acquisition report or registration statement as soon as
practicable after the Closing Date, but in any event by no later than 45
days after the Closing Date.
6.14 Supplementary Disclosure
(a) The Vendor shall update the representations and warranties
contained in Article 4 of this Agreement in the manner set forth
in this Section 6.14(a). The Vendor shall deliver to the Purchaser
two Business Days prior to the Closing Date, a revised Disclosure
Letter setting out any matters or events which have occurred from
and after the date of this Agreement, which, if existing on the
date of this Agreement would have resulted in disclosures in
respect of, exceptions to, or exclusions from, the representations
and warranties contained in Article 4 of this Agreement.
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(b) The Purchaser shall update the representations and warranties
contained in Sections 5.1 and, if the Purchaser is delivering
Subscription Receipts to the Vendor on the Closing Date, the
representations and warranties contained in Sections 5.2 and 5.3
of this Agreement in the manner set forth in this Section 6.14(b).
The Purchaser shall deliver to the Vendor two Business Days prior
to the Closing Date, a certificate from a senior officer of the
Purchaser setting out any matters or events which have occurred
from and after the date of this Agreement, which, if existing on
the date of this Agreement would have resulted in disclosures in
respect of, exceptions to, exclusions from, the representations
and warranties contained in Sections 5.1 and, if required,
Sections 5.2 and 5.3 of this Agreement. For greater certainty, if
the Purchaser is delivering Subscription Receipts to the Vendor on
the Closing Date, the foregoing officer's certificate shall also
update the list of Continuous Disclosure Documents to include any
such documents filed with relevant securities regulatory
authorities after the date of this Agreement but before the
Closing Date.
(c) For greater certainty, the Parties agree that, subject to Sections
7.1(d) and 7.2(d), neither the Purchaser nor the Vendor shall have
the right to terminate this Agreement or to seek indemnification
under this Agreement in respect of the representations and
warranties to be updated pursuant to this Section 6.14 and the
supplementary Disclosure Letter referred to at paragraph (a) above
or the certificate referred to at paragraph (b) above, unless the
matters disclosed therein relate to any matter or event in
existence prior to the date of this Agreement.
6.15 Shared Network Use Agreement.
During the Interim Period, the Parties will use their commercially
reasonable efforts to negotiate and agree on the form of a shared network use
agreement (the "Shared Network Use Agreement"). The Shared Network Use Agreement
shall contain provisions in respect of the sharing and the use by the Parties
during the Transition Period of the information technology equipment comprised
in the IT Shared Network in connection with their respective networks. The
Parties further agree that the following terms and conditions shall be reflected
in the Shared Network Use Agreement:
(a) each Party shall cooperate with one another in securing an
agreement with X.X. Xxxxxxx in respect of certain licenses to be
acquired for the Purchaser;
(b) the Purchaser shall be responsible for establishing a network hub
on its own property by the end of the Transition Period and shall
bear all costs associated therewith;
(c) the Purchaser shall be responsible for installing any server or
software to be used in connection with its own network and shall
bear all costs associated therewith;
(d) the Purchaser shall, at all times, be responsible of the
management of its own application and e-mail servers;
(e) during the Transition Period,
(i) the Vendor shall retain the entire and full control over
the management of the IT Shared Network;
(ii) the Purchaser shall have the right to leave, at its sole
risk and peril, information technology equipment in the
server room located in the Vendor's premises
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bearing civic address 000 Xxxxxx-Xxxxxxxx Xxxx., Xxxx xx
Xxxxx X0X 0X0 (the "Server Room");
(iii) the information technology equipment located in the Server
Room shall be clearly labelled with the owner's name;
(iv) the Vendor shall provide to the Authorized Persons, without
affecting the conduct of the business of the Vendor in the
ordinary course, reasonable access to the Server Room as
required, both during and outside normal business hours;
(f) at the expiry of the Transition Period,
(i) the Purchaser will obtain title to the Purchaser IT
Equipment and shall from that date on bear all risk of loss
or damage to the Purchaser IT Equipment;
(ii) the Parties shall decommission and disconnect, or cause to
be disconnected, all connections to the Purchaser IT
Equipment;
(iii) the Purchaser shall remove, or cause to be removed, the
Purchaser IT Equipment from the Server Room. If the
Purchaser fails to remove the Purchaser IT Equipment, the
Vendor shall have the right to remove and dispose of any
such Purchaser IT Equipment;
(g) the following costs incurred by the Parties shall be borne as to
one-half by the Vendor and as to one-half by the Purchaser:
(i) the costs of operation of the IT Shared Network incurred
during the Transition Period, including the cost of
employees directly responsible for the day-to-day operation
of the IT Shared Network but excluding any costs associated
with employees located outside Montreal and any corporate
allocations;
(ii) the costs of the licenses to be acquired for the Purchaser
from X.X. Xxxxxxx, the costs to replicate the X.X. Xxxxxxx
servers which are part of the IT Shared Network, associated
software licenses and any third party consultancy fees
incurred in connection therewith, whether incurred prior to
or after Closing;
(iii) the costs of management of the IT Shared Network incurred
during the Transition Period, including the cost of
employees directly responsible for the day-to-day operation
of the IT Shared Network but excluding any costs associated
with employees located outside Montreal and any corporate
allocations;
(h) the following costs incurred by any Party during the Transition
Period shall be borne by the Party incurring such costs:
(i) any costs associated with the IT Equipment located on the
Owned Real Property located in the City of Quebec, on the
Owned Real Property located in the City of Northborough, on
the Leased Real Property leased from Institut national de
la recherche scientifique (INRS) in the City of Laval or on
the Leased Real Property leased from Societe Immobiliere
SIDEV Inc.;
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(ii) any costs relating to support services in connection with
applications software or hardware;
(iii) any costs relating to support services in connection with
the Parties' respective networks (other than the IT Shared
Network);
(iv) any costs relating to video-conferencing and/or voice
communications;
(v) any costs relating to the establishment of any network
infrastructure for the ongoing use of such Party.
6.16 Real Estate.
During the Interim Period, the Vendor will obtain title opinions from
Vendor's Solicitors and certificates of location from reputable Quebec surveyors
(collectively the "Quebec Title Documents"), the whole in respect of the Owned
Real Property located in the Province of Quebec. During the Interim Period, the
Vendor will also obtain with respect to the Owned Real Property located in
Massachusetts, an endorsement update to the title insurance policy currently
issued by Old Republic National Title Insurance Policy (the "Update
Endorsement"). In the event the Title Documents or the Update Endorsement reveal
any defect or irregularity (the "Title Defects") which, in the Vendor's sole
judgment, acting reasonably, causes the Vendor to breach any of its
representations and warranties set forth in Sections 4.2(a) and 4.2(g) of this
Agreement, the Vendor shall disclose the Title Defects in writing to the
Purchaser and proceed, in its sole discretion, in accordance with one of the
following options:
(a) the Vendor shall remedy the Title Defect prior to the Closing Date
in order for the Vendor's representations and warranties affected
by the Title Defect to be true and accurate as of the Closing
Date; or
(b) if the Vendor is unable or unwilling to remedy the Title Defect
prior to the Closing Date as provided in paragraph (a) above, the
Vendor shall arrange, with the Purchaser's cooperation, to
subscribe for the Purchaser's benefit at the Vendor's cost a title
insurance policy or, with respect to the Title Insurance Policy an
endorsement, as the case may be, for the relevant Owned Real
Property. Such policy or endorsement shall cover the risk
resulting from the Title Defects and shall come into effect as of
the Closing Date; in consideration for this title insurance
coverage the Purchaser shall deliver to the Vendor as of the
Closing Date a waiver of any rights and recourses which it would
have against the Vendor under this Agreement resulting from the
Title Defects; or
(c) the Vendor shall have the right to terminate this Agreement in
accordance with the provisions of Sections 7.4(b) and 7.5, unless
the Purchaser agrees to deliver to the Vendor, as of the Closing
Date, a waiver of any rights and recourses which it would have
against the Vendor under this Agreement resulting from the Title
Defects.
6.17 Use of Proceeds from Financings During Interim Period
In the event that, during the Interim Period, the Purchaser completes a
Financing (as defined in the form of Subscription Receipt Certificate) pursuant
to which it raises net proceeds in excess of $60,000,000, the Purchaser agrees
that it will exercise its right under subsection 2.3(b)(ii) hereof to deliver
$60,000,000 in cash to the Vendor at Closing in lieu of issuing Subscription
Receipts. The
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Purchaser further agrees that, during the Interim Period, it will not complete
any such Financing which raises net proceeds of less than $60,000,000.
6.18 Concurrent Closing of Share Purchase Agreement.
The parties agree that, notwithstanding any provision of the Share
Purchase Agreement:
(a) they will not complete the transactions contemplated in the Share
Purchase Agreement unless such transactions are completed
concurrently with the transactions contemplated hereby; and
(b) in the event that this Agreement is terminated pursuant to Section
7.4, the Share Purchase Agreement shall also be deemed to be
terminated and, thereafter, of no further force or effect.
ARTICLE 7 -
CONDITIONS OF CLOSING
7.1 Conditions of the Purchaser.
The obligation of the Purchaser to complete the purchase of the Assets as
contemplated by this Agreement is subject to the fulfilment of the following
conditions:
(a) Performance of Covenants: All of the covenants of the Vendor
contained in this Agreement to be performed or complied with on or
before the Closing Date will have been performed and complied with
in all material respects, and the Purchaser will have received a
certificate from a senior officer of the Vendor dated the Closing
Date, confirming the foregoing, to the best of his or her
knowledge, without personal liability, in form and substance
satisfactory to the Purchaser, acting reasonably;
(b) Corporate Authorizations: All necessary corporate authorizations
of the Vendor will have been obtained in respect of this Agreement
and the transactions contemplated by this Agreement and evidence
thereof will have been provided to the Purchaser;
(c) No Legal Impediments: There will not be any applicable Law in
effect as of the Closing Date which will prevent the Purchaser
from consummating the transactions contemplated by this Agreement;
(d) No Material Adverse Change: No material adverse fact relating to
the material Assets or the affairs, operation or financial
condition of the Business shall have been disclosed to the
Purchaser during the Interim Period or no material adverse change
to any of the material Assets or the affairs, operation or
financial condition of the Business will have occurred or
otherwise been disclosed to the Purchaser during the Interim
Period and a certificate from a senior officer of the Vendor dated
the Closing Date, confirming the foregoing, to the best of his or
her knowledge, without personal liability, will have been
delivered to the Purchaser, in a form and substance satisfactory
to the Purchaser, acting reasonably;
(e) Opinion of Vendor's Solicitors: The Vendor will have delivered to
the Purchaser a legal opinion of the Vendor's Solicitors in form
and substance satisfactory to the Purchaser, acting reasonably;
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(f) No Orders or Proceedings: No injunction or restraining order of a
court or a administrative tribunal of competent jurisdiction or
Proceeding shall be pending in any jurisdiction, to enjoin,
restrict or prohibit the Purchaser from consummating the
transactions contemplated by this Agreement or the Purchaser to
conduct the Business after Closing on substantially the same basis
as previously conducted;
(g) Loan Facility Agreement: The Vendor shall have caused Shire LLC to
execute and deliver the Loan Facility Agreement;
(h) Guarantee Agreements: The Vendor shall have caused Shire
Pharmaceuticals Group plc to execute and deliver each of the
Guarantee Agreements; and
(i) Shared Network Use Agreement: The Vendor shall have executed and
delivered the Shared Network Use Agreement.
The foregoing conditions are inserted for the exclusive benefit of the
Purchaser and may be waived in whole or in part by the Purchaser at any time.
7.2 Conditions of the Vendor.
The obligation of the Vendor to complete the sale and transfer of the
Assets as contemplated by this Agreement is subject to the fulfilment of each of
the following conditions:
(a) Performance of Covenants: all of the covenants of the Purchaser
contained in this Agreement to be performed or complied with on or
before the Closing Date will have been performed and complied with
in all material respects and the Vendor will have received a
certificate from a senior officer of the Purchaser dated the
Closing Date, confirming the foregoing, to the best of his or her
knowledge, without personal liability, in form and substance
satisfactory to the Vendor, acting reasonably.
For greater certainty, in the event that the Purchaser exercises
its rights under Section 2.3(b)(ii) of this Agreement to deliver
to the Vendor $60,000,000 in cash at Closing in lieu of delivering
Subscription Receipts, the representations and warranties
contained in Sections 5.2 and 5.3 contained in this Agreement
shall be deemed not to be made by the Purchaser at the Closing
Date and any inaccuracies in such representations and warranties
at the Closing Date will not entitle the Vendor to terminate this
Agreement nor will the Vendor be entitled to seek indemnification
under this Agreement in respect of any such breach or inaccuracy.
(b) Corporate Authorizations: All necessary corporate authorizations
of the Purchaser will have been obtained in respect of this
Agreement and the transactions contemplated by this Agreement and
evidence thereof shall have been provided to the Vendor;
(c) No Legal Impediments: There will not be any applicable Law in
effect as of the Closing Date which will prevent the Vendor from
consummating the transactions contemplated by this Agreement;
(d) No Material Adverse Change: No material adverse fact relating to
the affairs, operation or financial condition of the Purchaser
shall have been disclosed to the Vendor during the Interim Period
or no material adverse change in the affairs, operation or
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financial condition in the business of the Purchaser will have
occurred or otherwise been disclosed to the Vendor during the
Interim Period and a certificate of a senior officer of the
Purchaser dated the Closing Date, confirming the foregoing, to the
best of his or her knowledge, without personal liability, will
have been delivered to the Vendor, in a form and substance
satisfactory to the Vendor, acting reasonably;
(e) Opinion of Purchaser's Solicitors: The Purchaser will have
delivered to the Vendor a legal opinion of the Purchaser's
Solicitors, in form and substance satisfactory to the Vendor,
acting reasonably;
(f) No Orders or Proceedings: No injunction or restraining order of a
court or administration tribunal of competent jurisdiction or
Proceeding shall be pending in any jurisdiction, to enjoin,
restrict or prohibit the Vendor from consummating the transactions
contemplated by this Agreement;
(g) Assignment and Assumption Agreement: The Purchaser shall have
executed and delivered to the Vendor, on or prior to the Closing
Date, the Assignment and Assumption Agreement and Her Majesty the
Queen in Right of Canada represented by the Minister of Industry
and the Minister responsible for the Investment Canada Act shall
have acknowledged the assumption effected thereby;
(h) Loan Facility Agreement: The Purchaser shall have entered into the
Loan Facility Agreement;
(i) Shared Network Use Agreement: The Purchaser shall have executed
and delivered the Shared Network Use Agreement; and
(j) Title: The Vendor shall be satisfied, acting reasonably, that the
Title Documents do not cause the Vendor to breach any of the
representations and warranties contained in this Agreement or in
the circumstances set forth in Section 6.16(b) or (c), the
necessary title insurance policy and/or Purchaser's waiver shall
have been executed or issued, as the case may be, or delivered.
The foregoing conditions are inserted for the exclusive benefit of the
Vendor and may be waived in whole or in part by the Vendor at any time.
7.3 Mutual Conditions.
The obligation of the Vendor to complete the sale and transfer of the
Assets as contemplated by this Agreement and of the Purchaser to complete the
purchase of the Assets as contemplated by this Agreement is subject to
fulfilment of the following conditions:
(a) Required Consents: All Required Consents will have been obtained
at or prior to Closing;
(b) Competition Approval: For purposes of this Section 7.3(b), all
required approvals under the Competition Act (Canada) will be
deemed to have been received if, at Closing, (i) an advance ruling
certificate ("ARC") pursuant to section 102 of the Competition Act
(Canada) has been issued by the Commissioner of Competition (the
"Commissioner") appointed under that Act; or (ii) the relevant
waiting period in section 123 of the Competition Act (Canada) has
expired and a "no action" letter indicating that
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the Commissioner has determined not to make an application for an
order under section 92 of the Competition Act (Canada) has been
received from the Commissioner, and any terms and conditions
attached to any such letter would not have a materially adverse
effect on either the Purchaser or the Vendor as determined by the
relevant Party, acting reasonably; or, in the event that no ARC or
"no action" letter is issued, there is no threatened or actual
application by the Commissioner for an order under section 92 or
100 of the Competition Act (Canada) in respect of the transactions
contemplated by this Agreement which would have a materially
adverse effect on either the Purchaser or the Vendor as determined
by the relevant Party, acting reasonably; and
(c) Other Regulatory Approvals: The Purchaser shall have received all
necessary approvals from the TSX and NASDAQ to list the common
shares underlying the Subscription Receipts.
The foregoing conditions are inserted for the mutual benefit of the
Vendor and the Purchaser and may be waived in whole or in part only if jointly
waived by the Vendor and the Purchaser.
7.4 Termination.
This Agreement may, by notice, be terminated:
(a) by the Vendor, if the covenant contained in Section 6.7 of this
Agreement is not complied with in all material respects; or
(b) by the Vendor, pursuant to Section of this Agreement; or
(c) by the Purchaser, if any of the condition in Sections 7.1 or 7.3
has not been fulfilled by the Closing Date or has become incapable
of fulfillment (other than through the failure of the Purchaser to
comply with its obligations under this Agreement) and the
Purchaser has not waived such conditions on or before the Closing
Date; or
(d) by the Vendor, if any of the conditions in Sections 7.2 or 7.3 has
not been fulfilled by the Closing Date or has become incapable of
fulfillment (other than through the failure of the Vendor to
comply with their obligations under this Agreement) and the Vendor
has not waived such conditions on or before the Closing Date; or
(e) by mutual consent of the Parties.
7.5 Effect on Termination
Each Party's right of termination under Section 7.4 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 7.4, all further obligations of the Parties under
this Agreement will terminate, except that the obligations in Section 12.10
which shall survive the termination of this Agreement. Notwithstanding anything
contrary in this Agreement, if any condition has not been satisfied, the Party
with the benefit of the condition, may in addition to any other rights which may
be available to it, waive such condition and require the other Party to proceed
with the Closing Date.
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ARTICLE 8 -
CLOSING TRANSACTIONS
8.1 Time and Place.
The Closing will take place at the Place of Closing at the time agreed
upon by the Parties on the Closing Date.
8.2 Vendor's Closing Documents.
At the Closing, the Vendor will deliver the following to the Purchaser:
(a) all deeds, assignments, bills of sale conveyances, transfers and
other assurances which are necessary to assign or transfer the
Assets or the Vendor's right, title and interest in, to and under
the Assets to the Purchaser as contemplated by this Agreement in
such form and substance satisfactory to the Purchaser acting
reasonably, including any xxxx of sale for the transfer of the
Owned Real Property and any assignment relating to the transfer of
the Business Intellectual Property;
(b) the supplementary Disclosure Letter referred to in Section
6.14(a);
(c) certified copies of resolutions of the directors of the Vendor
approving the sale and transfer of the Assets as contemplated by
this Agreement and the execution and delivery of this Agreement
and all documents required to be executed by the Vendor pursuant
to this Agreement;
(d) the certificates referred to in Section 7.1(a);
(e) the opinion of the Vendor's Solicitors referred to in Section
7.1(e);
(f) resignations of all directors and officers of the Subsidiary and
all documents necessary to effect the transfer of the outstanding
shares of the Subsidiary to the Purchaser;
(g) an executed copy of the Escrow Agreement;
(h) an executed copy of the Registration Rights Agreement, if
required;
(i) an executed copy of each of the Guarantees;
(j) an executed copy of the Shared Network Use Agreement;
(k) an executed copy of the Loan Facility Agreement; and
(l) the update endorsement to the Title Insurance Policy as
contemplated in item 11 of Schedule 1.1 (sss) and any other title
insurance policy or endorsement thereto which the Vendor has
elected to deliver to the Purchaser pursuant to Section 6.16.
8.3 Purchaser's Closing Documents.
At the Closing the Purchaser will deliver the following to the Vendor:
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(a) wire transferred immediately available funds in Canada payable to
an account designated by the Vendor, for $11,250,000;
(b) the Subscription Receipts (or funds in lieu thereof) referred to
in Section 2.3(b);
(c) the Closing Promissory Note referred in Section 2.3(c);
(d) the certificate referred to in Section 6.14(b);
(e) a certified copy of resolutions of the directors of the Purchaser
approving the purchase of the Assets as contemplated by this
Agreement and the execution and delivery of this Agreement and all
documents required to be executed by the Purchaser pursuant to
this Agreement;
(f) the certificate referred to in Section 7.2(a);
(g) an opinion of the Purchaser's Solicitors referred to in Section
7.2(e);
(h) an executed copy of the Loan Facility Agreement;
(i) an executed copy of the Registration Rights Agreement, if
required;
(j) a copy of the Assignment and Assumption Agreement executed by the
Purchaser;
(k) an executed copy of the Escrow Agreement;
(l) an executed copy of each of the Guarantee Agreements;
(m) an executed copy of the Shared Network Use Agreement; and
(n) if required, the Adjustment Promissory Note as contemplated in
Section 2.5(a).
8.4 Transfer.
Subject to compliance with the terms and conditions of this Agreement,
the transfer of possession of the Assets will be deemed to take effect as at the
Effective Time on the Closing Date.
ARTICLE 9 -
EMPLOYEE MATTERS
9.1 Continuation of Employment.
The Vendor and the Purchaser will cooperate to effect an orderly
continuation of employment of the Employees of the Vendor (except the employees
listed in the Disclosure Letter (the "Excluded Employees") and Employees whose
employment otherwise ceases prior to Closing) and in that regard the Purchaser
will offer to continue the employment (such employment to commence on the
Closing Date) of each of such salaried Employees of the Vendor, except for the
Excluded Employees and Employees whose employment otherwise ceased prior to the
Closing Date, on terms and conditions substantially similar to their then
current employment terms and conditions or, with respect to the Employees who
accepted a job offer from the Vendor but did not start to effectively work in
the Business, as of the Closing Date, the terms and conditions of employment
which were described in their offer letter, including with respect to:
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(a) job function and title, job responsibility or authority;
(b) remuneration;
(c) fringe benefits (other than participation in a stock option plan
but including a retirement benefit plan);
(d) job location and relocation conditions (if any); and
(e) that all seniority or length of service rights or benefits
previously enjoyed by such Employee as an employee of the Vendor
will be recognized by the Purchaser for purposes of determining
benefits and any notice or severance entitlements.
9.2 Unionized Employees.
The Purchaser agrees to recognize and be bound by the terms of the
applicable collective agreements for the unionized Employees.
9.3 Certain Obligations Respecting Employees.
The Vendor and the Purchaser agree that, with respect to the Employees
which are made redundant within the 18 months following the Closing, the
Purchaser will be responsible for and will pay to those Employees the
termination compensation in accordance with the most favourable of the Vendor's
or the Purchaser's redundancy policy.
ARTICLE 10 -
POST-CLOSING EVENTS
10.1 TPC Receivable.
After Closing, the Purchaser shall use commercially reasonable efforts to
collect the TPC Receivable.
10.2 Delivery of Books and Records.
Promptly following the Closing, the Vendor will deliver or make available
to the Purchaser in the respective places where such documents are now located,
the Books and Records together with the original Contracts, Authorizations and
all other documents related to the Business reasonably requested by the
Purchaser.
10.3 Access to Information by the Vendor.
(a) The Vendor may request and the Purchaser will furnish such
documents, records and information pertaining to the Business
and/or Assets as will reasonably be requested by the Vendor in
respect of governmental demands, returns, inquiries, grants, Tax
assessments, litigation and the completion of any accounting or
other record keeping in connection with the Business and/or
Assets, including preparation of the Vendor's financial
statements. The Vendor may request and the Purchaser will use
commercially reasonable efforts to ensure the prompt and
continuing cooperation of employees of the Purchaser to provide
the Vendor with such documents, records and information and to
assist in the completion of any such accounting and record keeping
in connection with the sale and transfer of the Business and/or
Assets to the extent reasonably required.
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(b) Without limiting the generality of the foregoing, the Purchaser
shall, upon the reasonable request from the Vendor, any time and
from time to time until the eighth anniversary of the Closing
Date, allow the Vendor to have access to the Books and Records
which pertain to the Business on or prior to the Closing Date in
order to allow the Vendor to prepare its Tax returns, contest Tax
assessments or reassessments, defend litigation or other claims,
prepare its financial statements and such other matters as may be
reasonably incumbent on the Vendor.
10.4 Contracts Requiring Consents
Where a consent, approval or waiver of a third party required to assign
to the Purchaser any Asset has not been obtained prior to Closing, such Asset
will be held by the Vendor following the Closing Date, in trust for the benefit
and exclusive use of the Purchaser. Each Party will continue to use all
commercially reasonable efforts and cooperate with one another to obtain the
required consent, approval or waiver and will only make use of such Assets in
accordance with the directions of the Purchaser.
10.5 Change of Name
The Purchaser agrees and undertakes to change or cause to be changed the
name of the Subsidiary to delete the reference to "Shire Biologics" and to
otherwise cease and desist all use of the name "Shire", either alone or as part
of any trade-xxxx or trade-name or corporate name in any manner whatsoever
including on stationery and on-premise sign, and further agrees and undertakes
not to, at any time, adopt or use any trade-xxxx, trade-name or corporate name
confusingly similar to, or likely to be confused with the name "Shire" either
alone or as part of any trade-xxxx, trade-name or corporate name.
10.6 Redemption of Outstanding Common Shares
If Subscription Receipts are issued to the Vendor on the Closing Date
then, beginning on the Closing Date and continuing until the earliest of:
(a) The date on which the Purchaser has repurchased all Subscription
Receipts held by the Vendor;
(b) the date on which the Vendor has disposed of all common shares
issued to it upon the exercise or deemed exercise of the
Subscription Receipts; and
(c) the date which is 24 months after the date the Vendor receives
common shares pursuant to an exercise of the Subscription
Receipts,
the Purchaser agrees and undertakes not to redeem any of the then outstanding
common shares of its share capital without offering to redeem common shares
held by the Vendor, on a pro rata basis, in order to permit the Vendor to
maintain (and not increase) its then current ownership percentage in the share
capital of the Purchaser.
10.7 Restrictive Covenant.
The Vendor agrees that, for a period of three years following the Closing
Date, neither of the Vendor nor its Affiliates will, anywhere in Canada or the
United States, engage or participate or have any interest, direct or indirect,
in any vaccine business with vaccine prophylactic products directly competing
with the products or product candidates of the Business (a "Competing Business")
provided
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that nothing herein shall prevent the Vendor or its Affiliates from entering
into any agreements with the Purchaser relating thereto and provided further
that nothing herein shall prevent the Vendor or its Affiliates from acquiring
(either by private acquisition, take-over bid, merger, plan of arrangement or
similar transaction) a business involved in a Competing Business, where the
Competing Business at the time of the acquisition represented less than a
principal part of the acquired business.
The Vendor agrees that, for a period of one year following the Closing
Date, it will not, unless acting in accordance with the written approval of the
Purchaser, directly or indirectly, solicit for employment any person who is an
Employee or who has accepted employment from, and is still employed by, the
Purchaser provided that nothing in this sentence will prohibit the Vendor from
placing advertisements in publications of general circulation and from hiring
any person who has responded to such advertisement or who was approached by an
employee search firm without prompting or other solicitation by the Vendor.
The Purchaser agrees that, for a period of one year following the Closing
Date, it will not, unless acting in accordance with the written approval of the
Vendor, directly or indirectly, solicit for employment any person who is
employed by the Vendor or any of its Affiliates provided that nothing in this
sentence will prohibit the Purchaser from placing advertisements in publications
of general circulation and from hiring any person who has responded to such
advertisement or who was approached by an employee search firm without prompting
or other solicitation by the Purchaser.
10.8 Confidentiality.
The Purchaser will not use or disclose, directly or indirectly any
information obtained by the Purchaser or on its behalf from the Vendor in
connection with this Agreement and the transactions contemplated by this
Agreement and will have all such information kept strictly confidential and not
used in any way detrimental to the Vendor, provided that:
(a) the Purchaser may use and disclose any such information which has
been publicly disclosed (other than by the Purchaser in breach of
its obligations under this Section 10.8) or has rightfully come
into the possession of the Purchaser (other than from the Vendor);
and
(b) to the extent that the Purchaser may become compelled by any
applicable Law to disclose any of such information, the Purchaser
may disclose such information if it shall have used its reasonable
efforts, and shall have afforded the Vendor the opportunity to the
extent possible, to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the
information required to be so disclosed.
The Parties acknowledge that the Purchaser will be required, under the
terms of applicable Canadian securities Laws, to file a copy of this Agreement
concurrently with the filing of a material change report no later than 10 days
after the date of this Agreement. The Purchaser agrees that it will consult, in
good faith, with the Vendor regarding which provisions of this Agreement, if
any, will be redacted prior to filing. If the Parties are unable to agree on
which portions of this Agreement should be redacted, the Purchaser shall be
entitled to file the Agreement with such redactions, if any, as it considers are
permitted under applicable Canadian securities Laws, provided such determination
is made reasonably and in good faith based upon an opinion of legal counsel.
If this Agreement is terminated, the Purchaser will deliver to the
Vendor, and will retain no copies of, all confidential information, documents,
work papers and other material obtained by the
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Purchaser or on its behalf from the Vendor before or after the execution of this
Agreement in connection with this Agreement and the transactions contemplated by
this Agreement.
10.9 Remedies.
The Purchaser acknowledges and agrees that if any of the provisions
contained in Section 10.8 are not performed in accordance with the terms set out
therein, the Vendor will be entitled to extraordinary remedies, including
injunction to ensure compliance with and prevent any breach of such provisions
and may specifically enforce such provisions in any action instituted in any
court having jurisdiction notwithstanding and without prejudice to the Vendor's
other rights and remedies under this Agreement or under applicable Laws.
ARTICLE 11 -
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
11.1 Indemnity in favour of Vendor.
Subject to Sections 11.4, 11.8 and 11.9, the Purchaser will indemnify and
hold harmless the Vendor from and against all Damages suffered or incurred by
the Vendor as a result of, arising out of, or relating to:
(a) any breach or inaccuracy of any representation and warranty of the
Purchaser contained in this Agreement or the Share Purchase
Agreement (provided that if the Purchaser exercises its rights
under Section 2.3(b)(ii) hereof to deliver to the Vendor
$60,000,000 in cash at Closing in lieu of delivering Subscription
Receipts, the representations and warranties contained in Sections
5.2 and 5.3 of this Agreement shall be deemed not to be made at
the Closing and the Vendor shall not be entitled to make any claim
against the Purchaser in respect of any breach or inaccuracy of
the representations or warranties contained therein); or
(b) any failure of the Purchaser to perform or fulfill any of its
covenants contained in this Agreement.
11.2 Indemnity in favour of Purchaser.
Subject to Sections 11.4, 11.8 and 11.9, the Vendor will indemnify and
hold harmless the Purchaser from and against all Damages suffered or incurred by
the Purchaser as a result of, or arising out of, or relating to:
(a) any breach or inaccuracy of any representation and warranty of the
Vendor contained in this Agreement or the Share Purchase
Agreement; or
(b) any failure of the Vendor to perform or fulfill any of its
covenants contained in this Agreement or the Share Purchase
Agreement.
11.3 Time Limitations.
(a) The representations and warranties of the Vendor contained this
Agreement and the Share Purchase Agreement and the representations
and warranties of the Purchaser contained this Agreement and the
Share Purchase Agreement shall survive the Closing and shall
continue for a period of 2 years after the Closing Date, except
that:
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(i) the representations and warranties of the Vendor set out in
Section 4.7 and the representations and warranties of the
Purchaser set out in Section 5.3(q) relating to
environmental matters will survive for a period of 3 years
after the Closing Date;
(ii) the representations and warranties of the Vendor set out in
Section 4.8 hereof and Sections 3.2(d) and (e) of the Share
Purchase Agreement and the representations and warranties
of the Purchaser set out in Section 5.3(g) hereof relating
to Tax matters will survive for a period ending 90 days
after the later of:
A. the last date on which an assessment or reassessment
for Taxes under applicable Law can be made in
respect of the dates or periods covered by the
representations and warranties; and
B. the date at which the period for an appeal from an
assessment, reassessment or other determination of
such Taxes, or decision of a court or other
competent tribunal in respect thereof may be filed
has expired and such appeal has not been filed.
(b) If no claim has been made under this Agreement of the Share
Purchase Agreement for any breach or inaccuracy of any
representation or warranty contained in this Agreement or the
Share Purchase Agreement prior to the expiry of the foregoing
survival periods, the Party having made such representation and
warranty will have no further liability under this Agreement with
respect to such representation or warranty.
(c) Notwithstanding any other provision of this Section 11.3, a claim
which involves fraudulent misrepresentation or fraud may be
brought at any time subject only to applicable limitation periods
imposed by applicable Law.
11.4 Limitations on Damages.
The indemnification obligations of the Purchaser and the Vendor pursuant
to Sections 11.1 and 11.2 shall:
(a) not be applicable for a single claim for Damages under this
Article 11, unless the amount of Damages claimed exceeds $20,000;
(b) not be applicable to any claim for Damages under this Article 11
unless the aggregate amount of all Damages claimed exceeds
$200,000. However, if the aggregate amount of Damages claimed
exceeds $200,000, the Party making such claim may claim for the
full amount of the Damages and will not be limited to only
claiming the amount in excess of $200,000; and
(c) the liability of each Party for Damages under this Article 11
shall not exceed an aggregate amount of $20,000,000.
For greater certainty, nothing in this Section 11.4 shall limit the
indemnification obligations of the Purchaser in respect of any Damage which
arises as a result of the non-payment of the Purchase Price or the Share
Purchase Price (including the due and valid issuance by the Purchaser to the
Vendor upon exercise of the Subscription Receipts of fully paid and
non-assessable common shares in the capital of the Purchaser) or adjustments
thereto.
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11.5 Indemnification: Notice.
Promptly upon obtaining knowledge thereof, the Party making a claim
pursuant to Sections 11.1 or 11.2 (the "Indemnified Party") against the other
Party (the "Indemnifying Party") shall give notice to the Indemnifying Party of
any facts or events which the Indemnified Party has determined has given or
could give rise to such claim (the "Notice"). The Notice shall specify the facts
or events which have given or could give rise to a claim pursuant to Sections
11.1 or 11.2, the nature of the claim and the amount claimed. The omission so to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
obligation to indemnify and hold harmless which otherwise might exist with
respect to such facts or events unless the notification occurs after the
expiration of the applicable time limit as set out in Section 11.3 or (and only
to that extent) the omission to notify prejudices the ability of the
Indemnifying Party to dispute any liability or quantum of liability, to mitigate
the claim against the Indemnified Party or to exercise its right to defend
provided in this Article 11.
11.6 Indemnification Proceedings - Third Party Claim.
(a) If any Proceeding shall be instituted or any claim or demand shall
be asserted by a third party against the Indemnified Party (each a
"Third Party Claim") and the Indemnified Party gives the Notice
under Section 11.5, then the Indemnifying Party shall have the
right, upon giving notice to the Indemnified Party within not more
than 15 days of such receipt, to defend the Third Party Claim at
its own cost and expense with counsel of its own selection,
provided that:
(i) the Indemnified Party shall at all times have the right to
fully participate in the defense at its own cost and
expense; and
(ii) the Third Party Claim seeks only monetary damages and does
not seek any injunctive or other relief against the
Indemnified Party.
(b) If the Indemnifying Party defends a Third Party Claim, then the
Indemnified Party will use its reasonable efforts to make
available to the Indemnifying Party those employees whose
assistance, testimony or presence is necessary to assist the
Indemnifying Party in evaluating and participating in the defense
of any such claim.
(c) The Indemnified Party shall, at the request of the Indemnifying
Party, make available to the Indemnifying Party or its
representatives on a timely basis all documents, records and other
materials in the possession of the Indemnified Party, at the
expense of the Indemnifying Party, reasonably required by the
Indemnifying Party for its use in defending any Third Party Claim,
the defense of which it has elected to assume, and the Indemnified
Party shall otherwise cooperate on a timely basis with the
Indemnifying Party in the defense of such claim.
(d) All amounts payable by the Indemnifying Party pursuant to a Third
Party Claim shall be paid in accordance with the terms of the
settlement or final non-appealable judgment.
11.7 Indemnification Proceedings - Other Claims.
A claim for indemnification for any other matter not involving a Third
Party Claim may be asserted by Notice to the Indemnifying Party.
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11.8 Indemnity After Tax.
For the purposes of computing any amount payable by the Indemnifying
Party to the Indemnified Party pursuant to this Article 11 as a result of, or in
connection with, a Damage, any Tax relief available to such Indemnified Party in
relation to such Damage, as well as any Taxes payable by such Indemnified Party
as a result of being so indemnified, shall be taken into account.
11.9 Other Indemnification Principles.
For the purposes of calculating Damages pursuant to this Article 11:
(a) where the Indemnifying Party is at any time entitled to recover
from an insurer under any insurance policy any sum in respect of
any matter giving rise to a claim under this Article 11, the
Indemnified Party shall make a claim against its insurers in order
to enforce such recovery and, in the event that the Indemnified
Party shall recover any amount from such insurer the Indemnifying
Party shall be entitled to benefit from any such recovery with
respect to any Damages paid by the Indemnifying Party;
(b) where the Indemnified Party is at any time entitled to recover
from some other Person any sum in respect of any matter giving
rise to a claim under this Article 11, the Indemnified Party shall
take all necessary steps to enforce such recovery and, in the
event that the Indemnified Party shall recover any amount from
such other Person, the Indemnifying Party shall be entitled to
benefit from any such recovery with respect to any Damages paid by
the Indemnifying Party;
(c) any payment made by any Party pursuant to this Article 11 shall be
treated as an adjustment of the equivalent amount, whether upward
or downward, to the Purchase Price;
(d) the Indemnifying Party shall not be liable for breach or
inaccuracy of any representation or warranty contained in this
Agreement to the extent that the subject of the claim for Damages
pursuant to this Article 11 has been or is made good or is
otherwise compensated for without cost to the Indemnified Party;
(e) no claim for Damages pursuant to this Article 11 shall lie against
the Indemnifying Party under any representation and warranty
contained in this Agreement to the extent that the claim for
Damages is wholly or partly attributable to any voluntary act,
omission, transaction, or arrangement carried out at the request
of or with the consent of the Indemnified Party prior to Closing;
(f) no matter shall be the subject of a claim for breach or inaccuracy
of any representation or warranty contained in this Agreement
pursuant to this Article 11 to the extent that allowance,
provision or reserve in respect of that matter shall have been
made in the Closing Date Balance Sheet;
(g) the Indemnified Party shall make commercially reasonable efforts
to mitigate Damages suffered by it for which it is seeking
indemnification under this Article 11; and
(h) the Indemnifying Party shall not be liable for a Damage in respect
of the aggravation of the Damages that the Indemnified Party could
have avoided.
-54-
11.10 No Affect of Investigation.
No investigation by an Indemnified Party at or prior to the Closing shall
relieve an Indemnifying Party of any liability under this Agreement.
11.11 Sole Remedies.
The provisions of this Article 11 and any other recourse specifically
referred to in this Agreement shall be the sole remedies of the Parties with
respect to the subject matter of this Agreement and with respect to the subject
matter of the Share Purchase Agreement, subject however, to the right of any
Party to seek specific performance or any extraordinary remedy in court of
competent jurisdiction for breaches or inaccuracies which would give rise to
such extraordinary remedies.
ARTICLE 12 -
MISCELLANEOUS
12.1 Notices.
Any notice, request, demand or other communication given pursuant to or
in connection with this Agreement shall be in writing in the English language
and shall be sufficiently given to the Person to whom it is addressed if
delivered by hand or transmitted by facsimile to such Person at the address of
such Person indicated below or at such other address as such Person shall have
theretofore notified to the other Party or Parties hereto in accordance
herewith.
To the Vendor:
Shire BioChem Inc.
000, xxxx. Xxxxxx-Xxxxxxxx
Xxxxx, XX X0X 0X0
Attention: Xxxxxxx Xxxxxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
Stikeman Elliott LLP
0000, Xxxx-Xxxxxxxx Xxxx. Xxxx
00xx Xxxxx
Xxxxxxxx, XX X0X 0X0
Attention: Xxxx Xxxx Xxxx and Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
-55-
To the Purchaser:
ID Biomedical Corporation
0000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Gervais LLP
1200 Waterfront Centre
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
Any such notice, request, demand or other communication so addressed,
delivered or transmitted as aforesaid shall be deemed to have been sufficiently
given, in the case of delivery by hand, on the date of such delivery, and in the
case of transmission by facsimile, on the date sent if confirmation of receipt
is received.
12.2 Further Assurances.
The Parties hereto shall, from time to time after the Closing and at the
request of the other Party, execute and deliver such additional deeds,
assignments, bills of sale conveyances, transfers and other assurances and do
all such acts or things as may be required or necessary to more effectually
implement and carry out the true intent and meaning of this Agreement, including
to more effectively transfer and record the transfer of the Assets.
12.3 Time is of the Essence.
Time will be of the essence of this Agreement. The mere lapse of time in
the performance of the terms of this Agreement by any Party shall have the
effect of putting such Party in default in accordance with articles 1594 and
1600 of the Civil Code of Quebec.
12.4 Brokers Fees.
The Parties mutually acknowledge and agree that neither is aware of any
claim for brokerage, agency, finder's fee or commission in connection with the
transaction contemplated by this Agreement (other than fees payable to each of
Bear, Xxxxxxx & Co. Inc. and UBS Securities LLC) and that if any such claim
should arise through or under by virtue of any action taken by a Party, such
Party will indemnify the other in respect thereof.
-56-
12.5 Entire Agreement.
This Agreement and the Share Purchase Agreement constitute the entire
agreement between the Parties in connection with the subject matter of this
Agreement and supersedes all prior agreements, undertakings, negotiations and
discussions, whether oral or written, of the Parties. There are no
representations or warranties, covenants, conditions or agreements, express or
implied, between the Vendor (or any Affiliate thereof) and the Purchaser (or any
Affiliate thereof) in connection with the subject matter of this Agreement
except as set forth in this Agreement and in the Share Purchase Agreement and no
Party has relied or is relying on any other information, discussion or
understanding in entering into and completing the transactions contemplated by
this Agreement.
12.6 Announcements.
Except as required by applicable Law or any regulatory authority and as
may be required in order to obtain the approvals, consents or waivers
contemplated by this Agreement, no announcements or disclosures concerning the
transactions contemplated by this Agreement may be made by either Party, its
employees, agents or representatives to the public, suppliers, customers or
Employees unless previously approved by both Parties. The Parties will consult
with each other regarding any disclosure required by applicable Law or any
regulatory authority.
12.7 Amendment.
This Agreement may only be amended, supplemented or otherwise modified by
written agreement signed by all Parties.
12.8 Waiver.
No waiver of any provisions of this Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar) or a future
waiver of the same provisions, nor shall such waiver be binding unless executed
in writing by the Party to be bound by the waiver.
No failure on the part of the Vendor or the Purchaser to exercise, and no
delay in exercising any right under the Agreement shall operate as a waiver of
such right, nor shall any single or partial exercise of any such right preclude
any other or further exercise of such right or the exercise of any other right.
12.9 Assignment.
Except with the written consent of the other Party, neither the Vendor
nor the Purchaser may assign this Agreement or any of their respective rights,
benefits, liabilities or obligations under or in respect of this Agreement,
provided that, at any time prior to the Closing, the Purchaser may, without any
such consent, assign this Agreement or any or all of its rights, benefits,
liabilities or obligations under this Agreement to any Affiliate of the
Purchaser which delivers to the Vendor an instrument in writing executed by the
Affiliate confirming that it is bound by and will perform all of the liabilities
and obligations of the Purchaser under this Agreement as if it were an original
signatory thereto, jointly and severally bound thereby with the Purchaser, and
such instrument in writing will contain an acknowledgement of the Purchaser that
it continues to be bound by the Agreement. Unless otherwise agreed in writing
with the Vendor, no such assignment will relieve the Purchaser of its
obligations and liabilities under this Agreement. In the event of an assignment
contemplated above, any reference in this Agreement to "Purchaser" will be
deemed to include the assignee.
-57-
12.10 Enurement.
This Agreement will enure to the benefit of and will be binding upon the
Parties hereto and their respective successors and any Affiliate of the
Purchaser which is an assignee of the Purchaser as contemplated in Section 12.7.
12.11 Expenses.
Each of the Parties will pay their respective legal, accounting, and
other professional advisory fees, costs and expenses incurred in connection with
the negotiation, preparation and execution of this Agreement and the
transactions and the agreements contemplated by this Agreement and any other
costs and expenses incurred.
12.12 Governing Law.
This Agreement shall in all respects be governed by, construed in
accordance with and enforced in accordance with the Laws of the Province of
Quebec and the federal Laws of Canada applicable therein, excluding rules of
private and international Law that form part of the Law of the Province of
Quebec or Canada and that lead to the application of the Laws of any other
jurisdiction. Each Party attorns irrevocably and unconditionally to the
non-exclusive jurisdiction of the courts of the Province of Quebec and the
courts sitting in the City of Montreal and courts entitled to hear appeals
therefrom, in respect of any Proceeding arising from, or relating to this
Agreement.
12.13 Judgment Currency.
If, for the purpose of obtaining judgment against any Party in any court
in any jurisdiction with respect to this Agreement, it becomes necessary to
convert into the currency of such jurisdiction (in this Section referred to as
the "Judgment Currency") any amount due hereunder in any currency other than the
Judgment Currency (in this Section referred to as the "Currency of the
Agreement"), then conversion shall be made at the Rate of Exchange prevailing on
the Business Day preceding (i) the date of actual payment of the amount due, in
the case of Proceedings in the courts of any jurisdiction that will give effect
to such conversion being made on such day, or (ii) the day on which the judgment
is given in the case of Proceedings in the courts of the Province of Quebec or
of any other jurisdiction (the applicable date as of which such conversion is
made pursuant to this Section being referred to as the "Judgment Conversion
Date"). For this purpose, "Rate of Exchange" means the rate at which the Royal
Bank of Canada would be prepared on the relevant date, to sell the Currency of
the Agreement to obtain the Judgment Currency. In the event that there is a
change in the Rate of Exchange prevailing between the Judgment Conversion Date
and the date of payment of the amount due, the Party against which judgment is
rendered shall, on the date of payment, pay such additional amounts (if any) as
may be necessary to ensure that the amount paid on such date is the amount in
the Judgment Currency which, when converted at the Rate of Exchange prevailing
on the date of payment, is the amount then due under this Agreement in the
Currency of the Agreement. Any additional amount due under this Section 12.13
will be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due or in respect of this Agreement.
12.14 Severability.
If any one or more of the provisions contained in this Agreement, or any
part thereof, should be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect under the Laws of any
jurisdiction, the validity, legality and enforceability of such provision or
part thereof shall not in any way be affected or impaired thereby under the Laws
of any other jurisdiction
-58-
and the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired thereby
and shall continue in full force and effect.
12.15 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
12.16 Language.
The Parties confirm that it is their wish that this Agreement as well as
other documents relating hereto have been and shall be drawn up in English only.
Les Parties aux presentes confirment leur volonte que cette convention de
meme que tous les documents s'y rattachant soient rediges en anglais seulement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
-59-
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of
the day and year first above written.
ID BIOMEDICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Authorized Signatory
SHIRE BIOCHEM INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Authorized Signatory
-60-
List of Schedules
Schedule Description
-------- -----------
Schedule 1.1(d)** Form of Adjustment Promissory Note
Schedule 1.1(f)** Affiliate Contracts
Schedule 1.1(i)** Form of Assignment and Assumption Agreement
Schedule 1.1(k)** Authorization
Schedule 1.1(x)** Closing Promissory Note
Schedule 1.1(jj)** Environmental Permits
Schedule 1.1(kk)** Form of Escrow Agreement
Schedule 1.1(mm)** Excluded Assets
Schedule 1.1(pp)** Government Contracts
Schedule 1.1(uu)** Form of Guarantee Agreements
Schedule 1.1(zz)** IT Equipment
Schedule 1.1(aaa)** IT Shared Network
Schedule 1.1(ddd)** Leased Real Property
Schedule 1.1(fff) Form of Loan Facility Agreement
Schedule 1.1(hhh)** Material Contracts
Schedule 1.1(nnn)** Form of Novation Agreement
Schedule 1.1(ooo)** Owned Real Property
Schedule 1.1(ttt)** Permitted Encumbrances
Schedule 1.1(bbbb)** Purchaser IT Equipment
Schedule 1.1(ffff)** Form of Registration Rights Agreement
Schedule 1.1(hhhh)** Required Consents
Schedule 1.1(kkkk)** Form of Subscription Receipt
Schedule 1.1(pppp)** Title Insurance Policy
Schedule 1.4(f)** Knowledge of the Vendor
Schedule 1.4(g)** Knowledge of the Purchaser
Schedule 2.2** Purchase Price Allocation
Schedule 6.2(b)** Budgets Relating to Projects
** These Schedules have not been filed and a copy will be furnished
supplementally to the Commission upon request.
-A1-
Schedule 1.1(fff)
LOAN FACILITY AGREEMENT
BETWEEN
ID BIOMEDICAL CORPORATION
AND
SHIRE LLC
TABLE OF CONTENTS
Page
----
PART 1 INTERPRETATION........................................................1
1.1 Definitions..................................................1
1.2 Schedules....................................................8
PART 2 TERMS OF FACILITY.....................................................8
2.1 Funding Facility.............................................8
2.2 Purpose......................................................8
2.3 Advances.....................................................9
2.4 Conditions Precedent.........................................9
2.5 Waiver......................................................10
2.6 Evidence of Advances........................................10
2.7 Existing Condition of the Business..........................10
PART 3 INTEREST, CALCULATION AND PAYMENT OF PRODUCTS PAYMENT................11
3.1 Interest on Advances........................................11
3.2 Calculation of Payments.....................................11
3.3 Reporting and Payment.......................................11
3.4 Application of Flu Principal Payments and Pipeline
Principal Payments........................................12
3.5 Flu Principal Payment Termination...........................12
3.6 Pipeline Principal Payment Termination......................13
3.7 Termination.................................................13
3.8 Pre-Payment.................................................14
3.9 Minimum Flu Payments........................................14
3.10 No Guarantee................................................14
3.11 Records.....................................................15
3.12 Currency Conversion.........................................15
3.13 GAAP........................................................15
3.14 Indemnity...................................................16
PART 4 REPRESENTATIONS AND WARRANTIES.......................................16
4.1 General.....................................................16
4.2 Status and Power............................................16
4.3 Binding Effect..............................................16
4.4 Contravention of Law........................................16
4.5 Compliance with Undertaking and TPC Agreement...............17
4.6 Financial Statements........................................17
4.7 Leases, Licences, Permits and Consents......................17
4.8 Ownership of Property; Liens................................17
4.9 Government Regulation.......................................17
4.10 Taxes.......................................................17
4.11 Full Disclosure.............................................18
PART 5 COVENANTS............................................................18
5.1 Continuing Covenant.........................................18
5.2 Corporate Existence.........................................18
5.3 Preservation of Permits and Licenses........................18
5.4 Maintenance of Assets.......................................18
5.5 Payment of Taxes and Duties.................................18
5.6 Performance of Obligations..................................19
5.7 Notice of Certain Events....................................19
5.8 Registration of Security on Intellectual Property...........19
5.9 Amalgamation, Merger........................................19
5.10 Sale of Business and Collateral.............................19
5.11 Change of Corporate Name....................................20
5.12 Subsidiary..................................................20
5.13 Forecast....................................................20
5.14 Reporting and Audit.........................................20
5.15 Misuse of Advances..........................................20
5.16 Other Encumbrances..........................................21
5.17 Expenses....................................................21
5.18 Compliance..................................................22
5.19 Product Development.........................................22
5.20 Confidentiality.............................................22
PART 6 EVENTS OF DEFAULT AND REMEDIES.......................................23
6.1 Events of Default...........................................23
6.2 Remedies Upon Default.......................................24
6.3 Remedies Upon Default - Payment of Advances.................25
6.4 Extension of Last Funding Date..............................25
6.5 Other Securities............................................26
6.6 Remedies Non-Exclusive......................................26
6.7 Assumption of Licenses......................................26
PART 7 MISCELLANEOUS........................................................26
7.1 Notices.....................................................26
7.2 Further Assurances..........................................28
7.3 Amendments..................................................28
7.4 Time of Essence.............................................28
7.5 Absence of Set-Off..........................................29
7.6 Assignment..................................................29
7.7 Entire Agreement............................................29
7.8 Payment Dates...............................................29
7.9 Counterparts................................................29
7.10 No Merger of Judgment.......................................29
7.11 Governing Law...............................................29
7.12 Relationship................................................30
7.13 Severability................................................30
7.14 Parties In Interest.........................................30
7.15 Included Words..............................................30
7.16 Headings....................................................30
7.17 Judgement Currency..........................................30
7.18 Dispute Resolution..........................................31
7.19 References..................................................32
7.20 English Language............................................32
THIS LOAN FACILITY AGREEMENT dated as of [June] __, 2004,
BETWEEN:
ID BIOMEDICAL CORPORATION, a corporation incorporated under the
laws of British Columbia, having its registered office at Suite
1630 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("IDB")
AND:
SHIRE LLC, a limited liability company formed under the laws of
Kentucky, having its registered office at c/o Corporation Service
Company, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, 00000
("Shire")
WHEREAS Shire has agreed to lend to IDB up to XXX XXXXXXX XXXXXXX
XXXXXX XXXXXX DOLLARS (US$100,000,000) and IDB has agreed to repay the
principal of such loan facility and to pay to Shire interest thereon, all
subject to the terms and conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and the mutual promises and covenants herein contained, the
parties hereto mutually covenant and agree as follows:
PART 1 INTERPRETATION
1.1 Definitions.
Where used herein or in any amendment hereto, unless the context otherwise
requires, each of the words and phrases set out below shall have the following
meanings:
(a) "Advance" means an advance of the Facility made by Shire to IDB.
(b) "Affiliate" means, with respect to any Person (including, without
limitation, a party), any other Person which directly or
indirectly controls or is controlled by, or is under direct or
indirect common control with such first mentioned Person; and for
the purposes of this definition, "control" with respect to any
Person (including, without limitation, a party) by any other
Person is deemed to occur if (a) securities or other ownership
interests of the first mentioned Person to which are attached more
than 50% of the votes that may be cast to elect members of the
board of directors are held, other than by way of security only,
by or for the benefit of that other Person; and (b) the votes
attached to those securities or other ownership interests are
sufficient, if exercised, to elect a majority of the members of
the board of directors of the first mentioned Person.
(c) "Agreement" means this Loan Facility Agreement including the
Schedules hereto together with all amendments, supplements,
modifications, extensions, renewals and restatements hereof.
1
(d) "Asset Purchase Agreement" means both the asset purchase agreement
dated [April] ___, 2004 among IDB, as purchaser, and Shire BioChem
Inc., as vendor, for the purchase of the vaccine business of the
vendor, as amended, restated, renewed, supplemented, modified or
extended from time to time and the share purchase agreement dated
[April] ___, 2004 among IDB, as purchaser, and Shire BioChem Inc.,
as vendor, for the purchase of the shares of Shire Biologics Inc.,
as amended, restated, renewed, supplemented, modified or extended
from time to time.
(e) "Audit" has the meaning provided for in Section 5.14.
(f) "Auditor" means any internationally recognized accounting firm
mutually acceptable to IDB and Shire.
(g) "Banking Day" means any day excluding Saturday, Sunday and any
other day which in Vancouver, British Columbia or New York, New
York is a legal holiday.
(h) "Business" means the business acquired by IDB pursuant to the
Asset Purchase Agreement as the same may be carried on from time
to time by IDB.
(i) "Calculation Date" means each of March 31, June 30, September 30
and December 31 of each year during the Term, commencing with the
later of June 30, 2004 and the first such date after IDB draws
down the initial Advance under this Agreement.
(j) "Canadian Dollars" means lawful currency of Canada.
(k) "Collateral" means all of the property subject to the Security
from time to time and at any time.
(l) "Conditions Precedent" means collectively the conditions precedent
set out in Section 2.4.
(m) "Default" means an Event of Default and any event that, but for
the giving of notice or passage of time or both, would constitute
an Event of Default.
(n) "Disclosure Letter" means the disclosure letter of Shire BioChem
Inc. to IDB given under the Asset Purchase Agreement.
(o) "Dispute Notice" has the meaning provided for in Section 7.18.
(p) "Disputes" has the meaning provided for in Section 7.18.
(q) "Distributor" means (a) a Person who buys bulk antigen; or (b) a
Person that is not IDB or an Affiliate of IDB, a licensee of IDB
or of an Affiliate of IDB, or a sub-licensee of IDB or of an
Affiliate of IDB, but is a Person who purchases a Product for
resale and does not materially modify or reformulate the Product
before reselling.
(r) "Drawdown Notice" has the meaning provided for in Section 2.3.
(s) "Effective Date" means [June] o, 2004.
(t) "Event of Default" means any event set forth in Section 6.1.
2
(u) "Excluded Approvals" means (i) *, (ii) prohibitions for making or
selling influenza vaccine imposed by Health Canada as a result
of the first inspection after the Effective Date in respect of
any of the Products (other than in respect of any matter arising
from the operation of the Business after the Effective Date) as
long as such prohibitions are in effect, (iii) any leases,
licences, permits, approvals, consents and authorizations
required for the conduct of the Business by Shire BioChem Inc.
or Shire Biologics Inc. on the Effective Date, to the extent
that Shire BioChem Inc. or Shire Biologics Inc. did not have
such in place on the Effective Date, (iv) any regulation
required to be complied with for the conduct of the Business by
Shire BioChem Inc. on the Effective Date, to the extent that
Shire BioChem Inc. was not complying therewith on the Effective
Date, (v) any new conditions imposed by any Governmental Body
upon the transfer, or as part of such Governmental Body's
consent to the transfer, of any licence, permit, approval,
consent or authorization which is required to be transferred to
IDB upon the purchase of the Business by IDB under the Asset
Purchase Agreement, and (vi) any leases, licences, permits,
approvals, consents, authorizations, regulations and other
matters listed in Schedule 4.7 of the Disclosure Letter.
(v) "Existing Contracts" means all the contracts transferred to IDB
pursuant to the Asset Purchase Agreement, as such contracts
existed on the Effective Date and without reference to any
amendment, restatement, supplement, extension, renewal or
modification thereof or thereto entered into after the Effective
Date.
(w) "Facility" has the meaning provided for in Section 2.1.
(x) "Fiscal Period" means the fiscal year of IDB comprising a period
of 12 months ending December 31.
(y) "Flu Advance" has the meaning provided for in Section 2.3.
(z) "Flu Interest" has the meaning provided for in Section 3.1.
(aa) "Flu Licensing Income" means the Net Licensing Income in respect
of the Injectable Flu Vaccine Products.
(bb) "Flu Net Sales" means Net Sales in respect of Injectable Flu
Vaccine Products from any country other than Canada.
(cc) "Flu Principal Payment" has the meaning provided for in Section
3.2.
(dd) "Flu Purposes" means funding the research, development, clinical
testing or regulatory approval of the Injectable Flu Vaccine
Products, including, without limitation, expenditures relevant to
the construction and maintenance of the Ste-Xxx Facility and the
Laval Upstream Processing Facility (listed in Schedule 1.1(o) of
the Asset Purchase Agreement), funding the costs of obtaining or
amending a Certificate of Authorization from the Government of
Quebec for the production of vaccines at the Ste-Xxx Facility and
the Laval Upstream Processing Facility and for acquisition and
maintenance of
*Confidential Treatment requested. Filed under separate cover with the
Securities and Exchange Commission.
3
equipment therefor and for related general administrative,
overhead and other operating expenses fairly and reasonably
associated with Injectable Flu Vaccine Products, as allocated in
accordance with IDB's standard practices.
For avoidance of doubt, funding for purposes that, at the time of
the related expenditure, are undertaken with the reasonable
expectation that such expenditures would only give rise to Net
Sales or Net Licensing Income of Injectable Flu Vaccine Products
in Canada and in no other jurisdiction, shall not constitute part
of the Flu Purposes.
(ee) "Flu Suspension Date" has the meaning provided for in Section 3.5.
(ff) "GAAP" means Canadian generally accepted accounting principles,
consistently applied.
(gg) "Governmental Body" means any nation or government, any state or
other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
(hh) "Gross Licensing Income" means (a) in the event that IDB or any of
its Affiliates license or sub-license all or any part of its
rights in or to the relevant Product, any amount received by IDB
or any of its Affiliates from any upfront fee, milestone fee,
royalty or other payment or consideration (including, but not
limited to, equity, securities and other forms of non-cash
consideration) received from any such licensee or sub-licensee in
respect of or in connection with the relevant Product; and (b) in
the event that IDB or any of its Affiliates sells, transfers,
assigns or otherwise disposes of all or any part of its rights in
or to Product, the gross amount received by IDB or any of its
Affiliates from any upfront fee, milestone fee, royalty or other
payment or consideration (including, but not limited to, equity,
securities and other forms of non-cash consideration) received
from a third party in respect of or in connection with the
relevant Product other than Net Sales of the relevant Product; and
(c) in the event that IDB or any of its Affiliates uses a
Distributor, the gross amount received by IDB or any of its
Affiliates from such Distributor in respect of or in connection
with the relevant Product, other than Net Sales of such Product,
and (d) all damages or awards, net of all reasonable litigation
costs associated therewith, in respect of or in connection with
any litigation relating to the relevant Product.
For the avoidance of doubt, any amount received by IDB after the
execution of a licensing agreement as a reimbursement for any
research or development costs actually incurred by IDB in
collaboration with such licensee in respect of work performed
after the execution of such licensing agreement associated with
the relevant Product shall not be included in Gross Licensing
Income, provided that such reimbursement is not in lieu of any
licensing income.
(ii) "Guarantor" means any Person that may become a guarantor pursuant
to Section 5.12.
(jj) "Injectable Flu Vaccine Products" means the products more
particularly described in Schedule A hereto, all other products
developed with Flu Advances and all other products agreed by the
parties or deemed to be an Injectable Flu Vaccine Product pursuant
to Section 5.19 in all cases with all improvements, derivatives,
substitutions and modifications in respect thereof.
4
(kk) "Intangibles" has the meaning provided for in the Personal
Property Security Act (British Columbia).
(ll) "Intellectual Property Rights" means the intellectual property
rights in the Pipeline Products, including without limitation
those more particularly described in Schedule B hereto, all
continuations, continuations in parts, divisionals and
re-issuances in respect thereof, all intellectual property
generated from or arising out of the Pipeline Products and all
intellectual property in all other products or Intangibles
hereafter agreed by the parties or deemed to be a Pipeline Product
pursuant to Section 5.19 in all cases with all improvements,
derivatives, substitutions and modifications in respect thereof.
(mm) "Last Funding Date" means the date that is the fourth anniversary
of the date of the closing of the purchase and sale contemplated
by the Asset Purchase Agreement as may be extended pursuant to
Section 6.4(a).
(nn) "Material Adverse Change" means a material adverse change in or
effect on the Business or which adversely affects the ability of
IDB or any Guarantor to perform any of its obligations under this
Agreement, the Security or any guarantee or security agreement by
such Guarantor contemplated hereunder in accordance with the terms
hereof or thereof, or which adversely affects the validity or
enforceability of such documents.
(oo) "Minimum Flu Payment" means, for the twelve month period ending on
December 31, 2007, US$1,000,000, for the twelve month period
ending on December 31, 2008, US$2,000,000, for the twelve month
period ending December 31, 2009, US$3,500,000, for each twelve
month period ending on December 31 of each of 2010 and 2011,
US$4,000,000, for each twelve month period ending on December 31
of each of the years from and including 2012 to and including
2016, US$5,000,000, and for the twelve month period ending on
December 31, 2017, US$2,300,000.
(pp) "Net Licensing Income" means Gross Licensing Income less
unreimbursed direct costs and expenses resulting from the exercise
or performance by IDB of any of its rights or obligations under a
license for the relevant Product including reasonable labour and
labour related expenses, audit and travel.
(qq) "Net Sales" means the gross amount invoiced by IDB or any of its
Affiliates to third parties in respect of sales (including sales
by IDB or any of its Affiliates to Distributors) of the relevant
Product and internal transfers or sales of antigen in bulk that
would otherwise be used in Injectable Flu Vaccine Products to
itself or to any of its Affiliates, less:
(i) normal trade discounts or rebates actually allowed and
taken, provided that such discounts or rebates are not
applied disproportionately to the relevant Product as
compared with similar products of the selling entity,
including without limitation, those granted for rejected,
damaged and recalled goods;
(ii) tax or customs duties (other than income tax) levied on the
sale of the relevant Product;
(iii) amounts reserved or paid to the vaccine liability insurance
fund as required under the National Childhood
Vaccine-Injury Compensation Act or other similar
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legislation that requires vaccine manufacturers to
contribute a portion of their vaccine sales revenue to a
vaccine compensation fund that protects the manufacturer
from liabilities associated with the vaccine product; and
(iv) any amount invoiced by IDB or any of its Affiliates under
an Existing Contract which was included in Net Sales as at
a prior Calculation Date but which has not been actually
received by IDB or its Affiliate within 180 days from the
invoice date;
For the avoidance of doubt, except in the case of internal
transfers or sales of antigen in bulk that would otherwise be used
in Injectable Flu Vaccine Products to itself or to any of its
Affiliates, sales or other transfers between IDB and any of its
Affiliates are not sales to third parties, but Net Sales shall
include any subsequent sales of the relevant Product by any of
such Affiliates to any third parties or Distributors. In the case
of internal transfers or sales of antigen in bulk that would
otherwise be used in Injectable Flu Vaccine Products to itself or
to any of its Affiliates, and in each case where the relevant
Product is sold otherwise than on an arms' length basis, the price
that would have been charged in an arms' length sale shall be the
invoice price for such relevant Product and where the relevant
Product is disposed of for consideration other than cash, such
consideration shall be valued at the fair market value.
(rr) "Notes" means the Adjustment Promissory Note and the Closing
Promissory Note, as such terms are defined in the Asset Purchase
Agreement, as amended, restated, supplemented, extended, renewed
or modified from time to time.
(ss) "Person" means any corporation, limited liability company,
unlimited liability company, cooperative, natural person, sole
proprietorship, firm, joint venture, partnership, trust,
unincorporated organization, government or any department, agency
or instrumentality of any government.
(tt) "Pipeline Advance" has the meaning provided for in Section 2.3.
(uu) "Pipeline Interest" has the meaning provided for in Section 3.1.
(vv) "Pipeline Licensing Income" means Net Licensing Income in respect
of the Pipeline Products.
(ww) "Pipeline Net Sales" means Net Sales in respect of the Pipeline
Products.
(xx) "Pipeline Principal Payment" has the meaning provided for in
Section 3.2.
(yy) "Pipeline Products" means the near-term and pipeline products more
particularly described in Schedule C hereto purchased by IDB from
Shire BioChem Inc. pursuant to the Asset Purchase Agreement, all
other products and Intangibles developed with Pipeline Advances
and all other products and Intangibles hereafter agreed by the
parties or deemed to be Pipeline Products pursuant to Section
5.19, and all products substituted therefore pursuant to the terms
of the TPC Agreement, in all cases with all improvements,
derivatives and modifications in respect thereof.
(zz) "Pipeline Purposes" means funding the research, development,
clinical testing, regulatory approval and manufacturing of the
Pipeline Products, including, without
6
limitation, expenditures relevant to the construction and
maintenance of the Vaccine Research Centre and the Northborough
Facility (listed in Schedule 1.1(o) of the Asset Purchase
Agreement) purchased pursuant to the Asset Purchase Agreement,
for acquisition and maintenance of equipment therefor and for
related general administrative, overhead and other operating
expenses fairly and reasonably associated with Pipeline Products
as allocated in accordance with IDB's standard practices.
(aaa) "Pipeline Suspension Date" has the meaning provided for in Section
3.6.
(bbb) "Products" means Pipeline Products and Injectable Flu Vaccine
Products.
(ccc) "Products Payment" means the aggregate of all Pipeline Principal
Payments, Flu Principal Payments and the aggregate of all payments
made in respect of Pipeline Interest and Flu Interest.
(ddd) "Products Payment Statement" has the meaning provided for in
Section 3.3(a).
(eee) "Projects" means the research, development, clinical testing,
regulatory approval or manufacturing of any of the Products.
(fff) "Security" means the security agreement granted by IDB to Shire
pursuant hereto creating a security interest in all of IDB's
right, title and interest from time to time in and to the
Intellectual Property Rights, all product registrations and
regulatory approvals in respect of the research, development,
clinical testing, manufacture, promotion and sale of any Pipeline
Products, all claims arising from and all rights, title and
interest of IDB in all contracts of sale, distribution,
manufacture, use and license of any of the Pipeline Products and
all proceeds of any of the foregoing, to secure IDB's obligations
to pay the amounts to be paid pursuant hereto and to perform its
obligations hereunder, substantially in the form attached as
Schedule D hereto. The Security shall also contain a springing
lien condition such that if IDB does not pay the amount due under
Section 5.15 prior to the Time of Attachment, at the Time of
Attachment the security interest shall attach to, and Shire will
be able to file a financing statement in relation to, the
Springing Collateral.
(ggg) "Springing Collateral" means all goods, securities, instruments,
documents of title, chattel paper, intangibles and money, as such
terms are defined in the Personal Property Security Act (British
Columbia), acquired or developed by IDB with Advances hereunder
used for purposes not permitted hereby, all as determined by an
Audit, including all such items or kinds of personal property as
IDB may from time to time agree in writing shall constitute
Springing Collateral.
(hhh) "Suspension Date" has the meaning provided for in Section 3.7.
(iii) "Term" means the time period commencing on the Effective Date and
ending upon termination of IDB's obligation to pay the Products
Payment pursuant to Section 3.7.
(jjj) "Time of Attachment" means 30 days after delivery of an Audit
referred to in Section 5.15 for any amounts not in dispute, and 10
Banking Days after the release of an arbitrator's decision finding
that IDB used all or any portion of an Advance for a purpose other
than as permitted hereby, for amounts in dispute pursuant to
Section 5.15.
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(kkk) "TPC Agreement" means the Technology Partnerships Canada Project
no. 720-477045 agreement between Her Majesty the Queen in Right of
Canada, as represented by the Minister of Industry, and Shire
BioChem Inc. dated March 31, 2000, as amended pursuant to the
amendment agreement made between such Minister and Shire BioChem
Inc. on August 28, 2002, which has been assigned to and assumed by
IDB as a result of IDB's acquisition of the Business, as has been
and may further be amended, restated, supplemented, modified,
extended or renewed from time to time.
(lll) "Undertaking" means those certain undertakings by Shire
Acquisition Inc. to Her Majesty the Queen in right of Canada as
represented by the Minister of Industry dated as of April 7, 2004
which have been assigned to and assumed by IDB, as modified or
replaced from time to time.
(mmm) "US Base Rate" means, for any day, the rate of interest, expressed
as an annual rate, quoted or announced by Citibank, N.A. as being
its reference rate of interest then in effect for determining
interest rates on its commercial loans made in the United States
of America in US$.
(nnn) "US Dollars" or "US$" means lawful currency of the United States
of America.
1.2 Schedules.
The following Schedules attached hereto shall form part of this Agreement.
Schedule Reference
-------- ---------
A. - Injectable Flu Vaccine Products Section 1.1(jj)
B. - Intellectual Property Rights Section 1.1(ll)
C. - Pipeline Products Section 1.1(yy)
D. - Security Agreement Section 1.1(fff)
E. - Drawdown Notice Section 2.3
F. - IDB's Counsel Legal Opinion Section 2.4(c)
PART 2 TERMS OF FACILITY
2.1 Funding Facility.
Subject to and on the terms and conditions contained herein, Shire agrees to
advance to IDB up to XXX XXXXXXX XXXXXXX XXXXXX XXXXXX DOLLARS (US$100,000,000)
by way of a loan facility (the "Facility") that shall be available to IDB from
the date hereof until the Last Funding Date. Except as specifically set out
herein, amounts repaid or deemed to be repaid hereunder may not be redrawn.
2.2 Purpose.
(a) IDB agrees that it shall use the Flu Advances only for Flu
Purposes and for no other purpose. IDB agrees that it shall use
the Pipeline Advances only for Pipeline Purposes and for no other
purpose.
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(b) IDB agrees it will not request any Advance and Shire shall not be
required to make any Advance in connection with a Product or any
Intellectual Property Right that is the subject of any
interlocutory, interim or permanent injunction granted by a court
of competent jurisdiction where the use of such Product or
Intellectual Property Right is held to be an infringement or
misappropriation by IDB of any intellectual property right of any
other Person, and such injunction is not stayed within 30 days of
the granting thereof, to the extent that such infringement or
misappropriation did not arise prior to the Effective Date.
2.3 Advances.
(a) Provided that no Default or Event of Default has occurred and is
continuing, and subject to the satisfaction of the Conditions
Precedent and subject to compliance with Section 2.2(b), if
applicable, IDB may draw down amounts under the Facility from time
to time on or prior to the Last Funding Date by providing to Shire
a written notice substantially in the form attached hereto as
Schedule E (a "Drawdown Notice") of its request for an Advance,
setting out the amount requested and the date on which the funds
are to be advanced. The Drawdown Notice shall be provided to Shire
at least ten (10) Banking Days prior to the date IDB wishes to
obtain an Advance. The Drawdown Notice shall also state if the
Advance is to be used for the Pipeline Products (a "Pipeline
Advance") or for the Injectable Flu Vaccine Products (a "Flu
Advance") and shall constitute a representation, warranty and
covenant by IDB that such Advance shall only be used for such
purpose. A Drawdown Notice may only indicate that the relevant
Advance is to be used for one type of the Products. Subject to the
conditions hereof, Shire agrees that it shall advance to IDB the
amount requested in the Drawdown Notice on the date set out
therein up to the maximum principal amount of the Facility.
(b) Only one Flu Advance and only one Pipeline Advance may be made in
any three calendar month period. Subject to Section 2.3(c), such
Advance shall be in an amount constituting IDB's reasonable
estimate of expected expenditures for Pipeline Purposes or Flu
Purposes in the three calendar month period immediately following
the relevant Advance provided that, if any part of a previous
Advance has not been used by IDB, then IDB shall only be permitted
to request an additional Advance in an amount that, when added to
the unused portion of such previous Advance, is necessary to meet
IDB's reasonable estimate of expected expenditures for Pipeline
Purposes or Flu Purposes to be incurred in the subsequent three
calendar month period immediately following such new Advance.
(c) From the maximum principal amount of the Facility, IDB agrees that
it will request a minimum of Thirty Million United States Dollars
(US$30,000,000) by way of Flu Advances prior to the Last Funding
Date.
2.4 Conditions Precedent.
Subject to the requirements under Sections 2.2, 2.3 and 2.4, Shire agrees to
make the initial Advance under the Facility available upon fulfillment of the
following conditions:
(a) execution by IDB and delivery to Shire of this Agreement and the
Security;
(b) delivery to Shire of certified copies of memorandum and articles
of IDB as well as a good standing certificate for the jurisdiction
of incorporation of IDB;
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(c) delivery to Shire of a legal opinion of IDB's counsel
substantially in the form set out in Schedule E hereto including
in respect of corporate matters, enforceability, creation of
security and perfection and conflict of laws; and
(d) receipt by Shire of certified copies of all documents evidencing
all corporate action taken by IDB authorizing the execution and
delivery of this Agreement and the Security.
Subject to the requirements under Section 2.3, Shire agrees to make the initial
and subsequent Advances under the Facility available upon fulfillment of the
following additional conditions:
(y) the representations and warranties set out herein shall be true
and accurate on the date of receipt by Shire of the Drawdown
Notice and upon the date of the requested Advance; and
(z) prior to any Advance, other than the initial Advance hereunder, if
reasonably requested by Shire, delivery to Shire of consent, of
third parties party to any contract forming part of or in respect
of the Collateral, to the Security on any Collateral, other than
the Springing Collateral prior to the delivery of an Audit in
respect thereof and, after delivery of such Audit, such
requirement with respect to the Springing Collateral shall only
apply until IDB has paid the required amount in respect of any
misuse identified therein.
2.5 Waiver.
Shire may waive any breach by IDB of this Agreement or the Security or of any
default by IDB in the observance or performance of any covenant or condition
required to be observed or performed by IDB hereunder or under the Security. No
failure or delay on the part of Shire to exercise any right, power or remedy
given herein or by statute or at law or otherwise shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other exercise thereof or the exercise of any other right, power or remedy, nor
shall any waiver by Shire be deemed to be a waiver of any subsequent similar or
other event.
2.6 Evidence of Advances.
The obligation of IDB to repay the Advances and all interest hereunder shall be
evidenced by this Agreement and by ledgers maintained by Shire. Such ledgers
shall constitute, in the absence of manifest error, prima facie evidence of the
whole and each constituant part of the obligations of IDB hereunder in respect
of the Advances and interest, the date of any Advance and the aggregate amounts,
from time to time, paid by IDB hereunder.
2.7 Existing Condition of the Business.
Notwithstanding any other provision or term of this Agreement to the contrary,
including, without limitation, Sections 2.4 and 6.2, Shire acknowledges and
agrees that it may not suspend Advances of the Facility or refuse to make an
Advance of the Facility due to any Event of Default, failure to meet any
Condition Precedent or for any other reason, arising solely out of:
(a) the failure of the vendor of the Business under the Asset
Purchase Agreement to transfer to IDB any of the assets or
contracts required to be transferred to IDB pursuant thereto;
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(b) the failure of the vendor of the Business under the Asset
Purchase Agreement to obtain any required approvals or
consents to the transfer to IDB of any of the assets or
contracts required to be transferred to IDB pursuant to the
Asset Purchase Agreement; or
(c) the operation of the Business by IDB in a manner substantially
consistent with the manner in which it was operated by the
vendors of the Business under the Asset Purchase Agreement
immediately prior to the Effective Date and in any event in a
manner no less compliant with all applicable laws,
undertakings, rules and agreements than the manner in which
the Business was operated by the vendor of the Business under
the Asset Purchase Agreement immediately prior to the
Effective Date.
PART 3 INTEREST, CALCULATION AND PAYMENT OF PRODUCTS PAYMENT
3.1 Interest on Advances.
The outstanding principal amount of all Pipeline Advances shall bear interest
("Pipeline Interest"), computed daily, at a rate of 20% per annum. The
outstanding principal amount of all Flu Advances shall bear interest ("Flu
Interest"), computed daily, at a rate of 10% per annum. Pipeline Interest and
Flu Interest shall be payable as set out in Section 3.2. All accrued and unpaid
interest shall be capitalized on December 31 of each calendar year and, for
purposes of calculating interest thereon, shall be treated as part of the
principal amount of the relevant Advance in respect of which such capitalized
interest initially accrued thereon.
3.2 Calculation of Payments.
Subject to Sections 3.5, 3.6 and 3.7, IDB shall pay to Shire:
(a) from and after the date of the first Pipeline Advance, the
Pipeline Interest having accrued from the immediately preceding
Calculation Date to the next Calculation Date up to a maximum of
the amount equal to the sum of (i)* of Pipeline Net Sales for
the same period and (ii)* of Pipeline Licensing Income for the
same period; and
(b) from and after the date of the first Flu Advance, the Flu Interest
having accrued from the immediately preceding Calculation Date to
the next Calculation Date up to a maximum of the amount equal to
the sum of (i) * of Flu Net Sales for the same period and (ii) *
of Flu Licensing Income for the same period.
If the sum of (i) and (ii) referred to in subsection 3.2(a) exceeds the Pipeline
Interest payable for the relevant period, such excess amount shall be payable
and applied to all accrued and unpaid but non-capitalized interest in respect of
all outstanding Pipeline Advances and, thereafter, any further remaining excess
amount (the "Pipeline Principal Payment") shall be payable and applied in
accordance with Section 3.4. If the sum of (i) and (ii) referred to in
subsection 3.2(b) exceeds the Flu Interest payable for the relevant period, such
excess amount shall be payable and applied to all accrued and unpaid but
non-capitalized interest in respect of all outstanding Flu Advances and,
thereafter, any further remaining excess amount (the "Flu Principal Payment")
shall be payable and applied in accordance with Section 3.4.
3.3 Reporting and Payment.
*Confidential Treatment requested. Filed under separate cover with the
Securities and Exchange Commission.
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No later than the end of the month following the first Calculation Date and the
end of the month following each Calculation Date thereafter, IDB shall complete
the calculation of the Products Payment as at that Calculation Date and deliver
to Shire:
(a) a statement (the "Products Payment Statement") showing detailed
calculations in respect of the aggregate of all payments in
respect of Pipeline Interest and all Flu Interest and the
aggregate of all Pipeline Principal Payments and of all Flu
Principal Payments including details, on a product-by-product
basis, by territory and in both local currency and US Dollars, in
respect of the relevant components of Net Sales, Net Licensing
Income, foreign exchange, invoiced sales value, trade discounts
and credits, sales taxes, bad debts on Net Sales arising from
Existing Contracts and other permitted deductions and setting out
the aggregate Products Payment paid by IDB up to and including
that Calculation Date and details of amounts used in calculating
amounts set out in subparagraphs 3.2(a) and (b);
(b) a certificate of the principal financial officer of IDB
certifying, on behalf of IDB, that the Products Payment Statement
is true and correct and that the Products Payment as shown therein
was calculated in accordance with this Agreement; and
(c) payment of the Pipeline Interest, Flu Interest, Pipeline Principal
Payment and Flu Principal Payment as required by Sections 3.2 and
3.4 in accordance with the Products Payment Statement.
All payments hereunder shall be in immediately available funds to
the account of Shire communicated by Shire to IDB from time to time.
3.4 Application of Flu Principal Payments and Pipeline Principal
Payments.
Each Flu Principal Payment paid in accordance herewith shall be firstly applied
as a payment of the outstanding balance of all capitalized interest in respect
of all Flu Advances in the immediately preceding Fiscal Period, secondly all
other remaining capitalized interest in respect of all Flu Advances and lastly
be applied as a repayment of the outstanding principal amount of all Flu
Advances. Each Pipeline Principal Payment paid in accordance herewith shall be
firstly applied as a payment of the outstanding balance of all capitalized
interest in respect of all Pipeline Advances in the immediately preceding Fiscal
Period, secondly all other remaining capitalized interest in respect of all
Pipeline Advances and lastly be applied as a repayment of the outstanding
principal amount of all Pipeline Advances.
3.5 Flu Principal Payment Termination.
Subject to Section 3.7, the obligation of IDB to pay the Flu Principal Payment,
Flu Interest and any payments pursuant to Section 3.9 shall terminate upon the
aggregate of all Flu Principal Payments paid by IDB to Shire equaling the sum of
all Flu Advances plus all capitalized interest thereon, provided that if this
Section 3.5 would result in the termination of the obligation of IDB to pay the
Flu Principal Payment and Flu Interest as at any date prior to the Last Funding
Date (the "Flu Suspension Date"), such termination shall not be effective until:
(a) the Last Funding Date, if between the Flu Suspension Date and the
Last Funding Date, IDB does not draw down any further Flu Advances
under this Agreement; or
(b) the date after the Last Funding Date on which the obligation of
IDB to pay the Flu Principal Payment and Flu Interest would
otherwise terminate pursuant to this
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Section 3.5, if between the Flu Suspension Date and the Last
Funding Date IDB does draw down any further Flu Advance under
this Agreement; and
from the Flu Suspension Date until such time, prior to the Last Funding Date, as
IDB draws down a further Flu Advance under this Agreement, the obligation of IDB
to pay the Flu Principal Payment and Flu Interest shall be suspended and shall
recommence at such time as IDB draws down a further Flu Advance.
3.6 Pipeline Principal Payment Termination.
Subject to Section 3.7, the obligation of IDB to pay the Pipeline Principal
Payment and Pipeline Interest shall terminate upon the aggregate of all Pipeline
Principal Payments paid by IDB to Shire equaling the sum of all Pipeline
Advances plus all capitalized interest thereon, provided that if this Section
3.6 would result in the termination of the obligation of IDB to pay the Pipeline
Principal Payment and Pipeline Interest as at any date prior to the Last Funding
Date (the "Pipeline Suspension Date"), such termination shall not be effective
until:
(a) the Last Funding Date, if between the Pipeline Suspension Date and
the Last Funding Date, IDB does not draw down any further Pipeline
Advances under this Agreement; or
(b) the date after the Last Funding Date on which the obligation of
IDB to pay the Pipeline Principal Payment and Pipeline Interest
would otherwise terminate pursuant to this Section 3.6, if between
the Pipeline Suspension Date and the Last Funding Date IDB does
draw down any further Pipeline Advance under this Agreement; and
from the Pipeline Suspension Date until such time, prior to the Last Funding
Date, as IDB draws down a further Pipeline Advance under this Agreement, the
obligation of IDB to pay the Pipeline Principal Payment and Pipeline Interest
shall be suspended and shall recommence at such time as IDB draws down a further
Pipeline Advance.
3.7 Termination.
Other than Sections 3.11, 3.14, 5.17, 5.20 and PART 7, this Agreement and the
obligation of IDB to pay the Products Payment, including any payments under
Section 3.9, shall terminate upon the happening of any one of the following
events:
(a) the aggregate Products Payment paid by IDB to Shire equaling
US$600,000,000; or
(b) the aggregate of all Flu Principal Payments and all Pipeline
Principal Payments paid by IDB to Shire equaling the sum of all
Advances plus all capitalized interest thereon, provided that if
this Section 3.7(b) would result in the termination of the
obligation of IDB to pay the Products Payment as at any date prior
to the Last Funding Date (the "Suspension Date"), such termination
shall not be effective until:
(i) the Last Funding Date, if between the Suspension Date and
the Last Funding Date, IDB does not draw down any further
Advances under this Agreement; or
(ii) the date after the Last Funding Date on which the
obligation of IDB to pay the Products Payment would
otherwise terminate pursuant to this Section 3.7(b), if
between the Suspension Date and the Last Funding Date IDB
does draw down any further Advance under this Agreement;
and
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from the Suspension Date until such time, prior to the Last
Funding Date, as IDB draws down a further Advance under
this Agreement, the obligation of IDB to pay the Products
Payment shall be suspended and shall recommence at such
time as IDB draws down a further Advance.
3.8 Pre-Payment.
Subject to compliance with any continuing funding requirements as contemplated
by the Undertaking, IDB may, at any time and from time to time, upon two Banking
Days' prior written notice, prepay the outstanding Flu Advances, in whole or in
part, in a minimum amount of US$250,000 and whole increments thereof (unless the
entire amount of outstanding Flu Advances, all accrued and unpaid interest
thereon and all capitalized interest thereon is being paid) and accrued and
capitalized interest thereon which prepayment shall be deemed to be a Flu
Principal Payment. IDB may not prepay any outstanding amount of the Pipeline
Advances without the prior written consent of Shire.
3.9 Minimum Flu Payments.
Subject to Sections 3.5, 3.7 and 3.8, on January 31st of each year from and
including 2008 to and including 2018, IDB shall pay to Shire an amount equal to
the greater of:
(a) zero, and
(b) the Minimum Flu Payment for the twelve month period ending
on December 31 of the previous year less
(1) all Flu Principal Payments and Flu Interest paid
during such period, other than:
(i) amounts paid during the twelve month period
ending on December 31 of the previous year
pursuant to this Section 3.9;
(ii) amounts repaid during the twelve month period
ending on December 31 of the previous year
pursuant to Section 6.4(a); and
(iii) amounts paid during the twelve month period
ending on December 31 of the previous year
pursuant to Section 5.15 which are not
applied to Flu Advances or Pipeline Advances;
and
(2) any Flu Principal Payments or Flu Interest paid
prior to 2007 and not previously deducted pursuant
to this Section 3.9.
All such payments shall be applied to Flu Principal Payments according to
Section 3.4.
3.10 No Guarantee.
Notwithstanding any provision of the Civil Code of Quebec that may require the
repayment of a loan, Shire hereby recognizes and agrees that there may not be
any minimum amount, or any amount at all, of Products Payment made under this
Agreement, except as set out in Section 3.9, and Shire hereby renounces any
right it may have to apply to a court in respect of any matter contemplated in
Article 1512 of the Civil Code of Quebec. IDB shall have no obligation to repay
Advances or to pay interest thereon other than:
14
(a) payment by way of the Pipeline Principal Payment or the Flu
Principal Payment (including by way of payment pursuant to
Section 3.9);
(b) payment of Pipeline Interest and Flu Interest;
(c) payments pursuant to Sections 3.11, 5.10, 5.15 and 6.4(a);
and
(d) in the circumstances set out in Section 6.3.
Shire hereby recognizes and agrees that the rights of IDB
subsequent to a default by Shire to make an Advance hereunder are not
limited to the right to claim damages, and that upon such default by
Shire, IDB may require the execution in nature of Shire's obligation to
make Advances hereunder, subject to the terms and conditions hereof.
3.11 Records.
IDB shall retain all data (including, without limitation, computerized records),
documents, agreements, formulae and information relating directly to, or
maintained in connection with, the Projects, the Products and the calculation of
the Products Payment at IDB's offices, and shall give Shire access to all such
material at all reasonable times upon reasonable notice. All material required
to be kept by IDB pursuant to the terms of this Agreement shall be kept and
preserved and made available to Shire for a period of not less than three years.
Shire shall have the right, at any time during normal business hours and upon
five Banking Days' prior notice to IDB, to inspect and audit, or cause to be
inspected and audited, the data, records and materials pertaining to the
Projects, the Products and the calculation of the Products Payment. IDB shall
fully co-operate with all representatives of Shire and any accountant hired by
Shire to conduct any inspection or audit. If any such inspection or audit
discloses that any payment in respect of any component of the Products Payment
was less than the amount which should have been paid, that an amount should have
been paid as a Pipeline Principal Payment instead of as a Flu Principal Payment
or that the calculation of any payment in respect of any component of the
Products Payment arises from Net Licensing Income instead of Net Sales, all
payments required and all adjustments necessary to eliminate such discrepancies
plus interest at the US Base Rate from time to time plus 2% per annum shall be
made by IDB promptly and, if the positive difference between the amount that
should have been paid in any year covered by such inspection or audit and the
amount actually paid prior to such inspection or audit in respect of such year
is 10% or more, IDB shall promptly reimburse Shire for the cost and expenses of
such inspection or audit. All payments due pursuant to this Section 3.11 must be
made within 15 Banking Days after IDB receives a notice thereof unless IDB
delivers a Dispute Notice to Shire with respect to such payment within such 15
Banking Day period and in such event within 3 Banking Days after such Dispute is
resolved in Shire's favour.
3.12 Currency Conversion.
Payment in respect of any component of the Products Payment shall be calculated
and shall be paid in US Dollars. If IDB receives any Net Licensing Income or Net
Sales in a currency other than US Dollars, such Net Licensing Income or Net
Sales shall be converted to US Dollars in accordance with IDB's normal
accounting practices existing on the date hereof, provided such practices are
consistent with GAAP existing as of the date hereof.
3.13 GAAP.
The calculation of any component of the Products Payment shall be made in
accordance with GAAP.
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3.14 Indemnity.
IDB will defend and indemnify Shire, its officers, directors, employees, and
agents and hold them harmless from all liability, loss, damage and cost arising
out of (i) any claims of any nature arising out of the research, development,
clinical testing, regulatory approval, promotion, sale or manufacturing of any
Products by IDB, its Affiliates, Distributors, licensees or sublicensees, or
(ii) any breach of IDB's representations or warranties under this Agreement.
This provision shall survive for three years after the Term.
PART 4 REPRESENTATIONS AND WARRANTIES
4.1 General.
IDB represents and warrants to Shire as set forth in this PART 4. All
representations and warranties made hereunder shall survive the delivery of the
Security to Shire and all Advances and no investigation at any time made by or
on behalf of Shire shall diminish in any respect whatsoever its rights to rely
thereon. The representations and warranties hereunder shall be deemed repeated
upon each Advance hereunder and on each day that IDB must provide a forecast
pursuant to Section 5.13.
4.2 Status and Power.
IDB is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and is duly qualified, in
good standing and authorized to do business in all jurisdictions wherein the
character of the properties owned by it or the nature of the business transacted
by it makes such qualifications necessary except where the failure to be so
qualified would not result in a Material Adverse Change. IDB has all requisite
corporate capacity, power and authority to own its properties and to carry on
its business as now conducted and proposed to be conducted and to enter into
this Agreement and to create and issue the Security.
4.3 Binding Effect.
The execution and delivery of, performance of the obligations under and
consummation of the transactions contemplated by, this Agreement and the
Security have been duly and validly authorized by IDB. This Agreement and the
Security have been duly executed and delivered by IDB to Shire and each of such
documents constitutes legal, valid and binding obligations of IDB and is
enforceable in accordance with its terms subject to (i) limitations under any
bankruptcy, winding-up, insolvency, arrangement and other applicable laws
affecting the rights of creditors generally and (ii) the discretion that a court
of competent jurisdiction may exercise in granting extraordinary remedies, such
as specific performance and injunction.
4.4 Contravention of Law.
Neither the execution and delivery of this Agreement or of the Security, nor the
performance of or compliance with their respective terms or consummation of the
transactions contemplated hereby or thereby, will (i) contravene any provision
of any law, regulation, order or permit applicable to IDB, other than the
Excluded Approvals, (ii) conflict with or contravene the constating documents of
IDB, (iii) result in a breach or termination, or constitute a default under or
accelerate or permit acceleration under any agreement or instrument to which IDB
is a party, or by which IDB is bound, which would result in a Material Adverse
Change, or (iv) require any registration, filing, notice, consent or approval of
any Governmental Body, other than the registration or recording of the Security,
or under the terms or
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conditions of any agreement or instrument to which IDB is a party
or by which IDB is bound, which, if not obtained or made, would result in a
Material Adverse Change.
4.5 Compliance with Undertaking and TPC Agreement.
No written notice from Her Majesty the Queen in Right of Canada, as represented
by the Minister of Industry, or any successor Governmental Body, of any default
under the Undertaking or the TPC Agreement has been received by IDB, which
default has not been cured, to the extent that such default resulted from
circumstances arising after the Effective Date.
4.6 Financial Statements.
The audited financial statements and related statements of income and cash flow
of IDB for its Fiscal Period ended December 31, 2003 fairly and accurately set
forth, in all material respects, the financial position of IDB as at December
31, 2003 and the results of its operations and cash flows for the period then
ended in accordance with GAAP.
4.7 Leases, Licences, Permits and Consents.
Other than the Excluded Approvals, IDB has all leases, licences, permits,
approvals and consents under any federal, provincial, state or municipal statute
or by-law, or otherwise, as are requisite for the due carrying on of the
business of IDB in the manner in which it is now carried on and which it is
proposed to carry on which, if not held, would result in a Material Adverse
Change and all such leases, licences, permits, approvals and consents are in
full force and effect and no proceedings relating thereto are pending or known
to be threatened which would result in a Material Adverse Change.
4.8 Ownership of Property; Liens.
IDB owns good and marketable title to the Collateral. None of the Collateral is
subject to any mortgage, pledge, charge, assignment, trust, title retention or
other security, lien or encumbrance granted by IDB or arising after the
Effective Date other than as permitted under Section 5.16.
4.9 Government Regulation.
Other than the Excluded Approvals, IDB is not subject to regulation under
federal, provincial, local, municipal or foreign law that restricts or limits
its ability to enter into the transactions contemplated hereby or to perform its
obligations hereunder or under the Security, which would result in a Material
Adverse Change.
4.10 Taxes.
All federal, provincial or state or other material tax returns, reports and
statements, other than Excluded Approvals, required by any Governmental Body to
be filed by IDB have been filed with the appropriate Governmental Body which, if
not so filed, would result in a Material Adverse Change and all such charges in
respect of taxes which could form a lien on the Collateral in priority or
ranking pari passu to the Security have been paid prior to the date on which
such lien could attach. Proper and accrued amounts have been withheld by IDB
from its respective employees for all relevant periods in full and complete
compliance with all applicable federal, provincial, state, local and foreign
laws and such withholdings have been timely paid to the respective Governmental
Body which, if not so withheld or paid, would result in a Material Adverse
Change.
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4.11 Full Disclosure.
No information contained in this Agreement, the Security or in any forecast,
report, certificate, Products Payment Statement or other written report or
information from time to time prepared by IDB and delivered hereunder contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
PART 5 COVENANTS
5.1 Continuing Covenant.
IDB covenants and agrees that, except with the prior written consent of Shire,
until all amounts due or to become due under this Agreement have been paid in
full to Shire it will duly perform and observe each and all of its covenants and
agreements herein set forth.
5.2 Corporate Existence.
IDB will at all times maintain its corporate existence. IDB will at all times
carry on and conduct its business in a proper business-like manner and in
accordance with good business practice and will keep or cause to be kept proper
books and records of account in accordance with GAAP, which, if not so conducted
or kept, would result in a Material Adverse Change.
5.3 Preservation of Permits and Licenses.
Other than the Excluded Approvals, IDB shall maintain in effect and obtain,
where necessary, all authorizations, approvals, licenses or consents of such
Governmental Bodies, whether federal, provincial or local, which may be or
become necessary or required for IDB to carry on the Business and to satisfy its
obligations hereunder and under the Security, and IDB shall comply with all the
conditions attached to its permits, authorizations, licenses, certificates and
approvals and shall comply with the Undertaking and the TPC Agreement, in each
case if the failure to do so would result in a Material Adverse Change. IDB
shall use commercially reasonable efforts to meet all milestones established
pursuant to the TPC Agreement, which, if not so achieved, would result in a
Material Adverse Change.
5.4 Maintenance of Assets.
IDB shall maintain or cause to be maintained in good operating condition all of
its material assets used or useful in the conduct of the Business as would a
prudent owner of similar property whether same are held under lease or under any
agreement and shall from time to time make or cause to be made thereto all
necessary and appropriate repairs, renewals, replacements, additions,
improvements and other works, which, if not so maintained or made, would result
in a Material Adverse Change.
5.5 Payment of Taxes and Duties.
IDB shall pay all taxes, assessments and other governmental duties which are
imposed on it or on its income or profits or its assets when due and payable if
such tax, assessment or duty could form a lien on the Collateral in priority or
ranking pari passu to the Security, provided that no such tax assessments or
duty need be paid if: (a) it is being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted, (b) such reserves or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor, and (c) the outcome of such contestation, if adversely
determined, would not result in a Material Adverse Change.
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5.6 Performance of Obligations.
IDB shall punctually pay all amounts due or to become due under this Agreement.
IDB shall not assign any right, title or interest in the Undertaking or the TPC
Agreement without the prior written consent of Shire, except in conjunction with
a sale of all or part of the Business to a subsidiary in compliance with Section
5.12.
5.7 Notice of Certain Events.
IDB shall advise Shire forthwith upon the occurrence of any of the following
events: (i) the commencement of any proceeding or investigation by or before any
Governmental Body and any action or proceeding before any court or arbitrator
against IDB or any of its property, assets or activities which, in the event a
decision is rendered which is adverse to it, would result in a Material Adverse
Change; (ii) the occurrence of any Material Adverse Change; and (iii) any
Default or Event of Default, specifying in each case the relevant details and
the action contemplated in respect of such Default or Event of Default.
5.8 Registration of Security on Intellectual Property.
IDB shall submit for registration the Security in the Canadian Intellectual
Property Office and the equivalent in all other jurisdictions where the transfer
of the Intellectual Property Rights will be registered, concurrently with the
registration of the transfer of such Intellectual Property Rights pursuant to
the Asset Purchase Agreement. IDB shall submit for registration the Security in
the Canadian Intellectual Property Office and the equivalent office in the
United States of America, Japan and the European Community in respect of
Intellectual Property Rights which arise after the Effective Date and any other
office agreed to by IDB and Shire. IDB shall make the submission within thirty
(30) days of the filing of said Intellectual Property Rights and shall provide
Shire with a copy of such submissions within thirty (30) days of submission and
resulting registrations within thirty (30) days of receipt.
5.9 Amalgamation, Merger.
IDB shall not directly or indirectly, by operation of law or otherwise,
amalgamate or merge with, or consolidate with any Person where the same would
result in a diminishing of the priority of the Security on the Collateral.
5.10 Sale of Business and Collateral.
Without Shire's prior written consent or unless permitted under this Section
5.10, IDB shall not sell all or any part of the Business other than (i) to a
subsidiary of IDB in compliance with Section 5.12, and (ii) inventory or
equipment in the ordinary course of business. IDB shall not sell any part of the
Collateral other than, subject to this Section 5.10, (i) the Springing
Collateral prior to the delivery of an Audit in respect thereof and, after
delivery of such Audit, such restriction with respect to the Springing
Collateral shall only apply until IDB has paid the required amount in respect of
any misuse identified therein, and (ii) any Product to Her Majesty the Queen in
Right of Canada, as represented by the Minister of Industry, or any successor
Governmental Body, the development of which has stopped or otherwise ceased
pursuant to Section 5.19. IDB may enter into a sale and leaseback arrangement on
fair market and arms' length terms providing for cash consideration for such
sale of any part of the assets of the Business, other than the aforesaid
Collateral, provided that IDB pays, immediately following the closing of such
transaction, ten per cent (10%) of an amount equal to (x) the proportion of the
cost of such asset funded by Advances to the total cost of such assets,
multiplied by (y) the net sale proceeds. Such proceeds shall
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be deemed to be a Flu Principal Payment if related to a Flu Advance and a
Pipeline Principal Payment if not and shall be applied as set out in Section
3.4.
5.11 Change of Corporate Name.
IDB shall not, without giving Shire 20 days' prior written notice, change its
corporate name or change its head office, chief executive office, principal
place of business or domicile (within the meaning of the Civil Code of Quebec)
to a location outside of the Province of British Columbia.
5.12 Subsidiary.
IDB shall not sell, transfer or assign all or any part of the Business or the
Collateral to any subsidiary unless such subsidiary has granted to Shire a
guarantee in form and content satisfactory to Shire as well as a security
agreement charging its interest in any Collateral acquired by it, substantially
in the same form as the Security. No Affiliate of IDB shall use any Advance or
participate in any of the Projects unless it has granted to Shire a guarantee in
form and content satisfactory to Shire as well as a security agreement charging
its interest in property corresponding to the definition of Collateral,
substantially in the same form as the Security.
5.13 Forecast.
On or before the first day of each month from the Effective Date to the earlier
of the Last Funding Date and the date on which the Facility is fully advanced,
IDB shall provide to Shire a detailed forecast of its expected operating and
capital expenditures for Flu Purposes and Pipeline Purposes for the next three
months. Such forecast shall include copies of detailed budgets for Flu Purposes
and Pipeline Purposes.
5.14 Reporting and Audit.
Within 60 days of the end of each month, IDB shall provide to Shire a detailed
accounting of its actual expenditures for Flu Purposes and Pipeline Purposes
including, without limitation, a detailed analysis and comparison of actual
expenditures to forecasted operating and capital expenditures and the use of the
proceeds of the Advances made during that time, and IDB shall permit Shire, upon
reasonable notice and at any reasonable time, within 90 days of Shire's receipt
of such report, to audit (an "Audit") such expenditures to confirm that such
expenditures were used for the purposes permitted hereby and for no other
purpose and to confirm the use of the Advances. Subject to Section 5.15, if
applicable, to the extent that an Audit indicates that an Advance indicated in
the relevant Drawdown Notice was used, in whole or in part, in connection with
the inappropriate Product, adjustments to the outstanding balances of the
Advances shall be made as well as a recalculation of interest thereon and
capitalization thereof, as the case may be, from the date of such Advance.
5.15 Misuse of Advances.
Should any Audit results delivered to IDB indicate that any portion of the
Advances made during the month covered by a monthly report were used for
purposes other than in connection with the Business, IDB shall, unless it
disputes the results of such Audit pursuant to Section 7.18(d), pay to Shire,
within 30 days of receipt of such Audit, five times the amount confirmed by such
Audit to have been spent on purposes other than in connection with the Business.
Twenty percent (20%) of such amount shall constitute a penalty for improper use
of the Advances and the remaining amount shall be applied by Shire, as it
determines in its sole discretion, in respect of any obligations of IDB
hereunder or under the Security. If such amount is not paid as contemplated
hereunder, it shall bear interest, before and after judgment, at the rate per
annum applicable to the Pipeline Advances.
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Should any Audit results delivered to IDB indicate that any portion of the
Advances made during the month covered by a monthly report were used for
purposes in connection with the Business but other than the specific Flu
Purposes or Pipeline Purposes indicated in the relevant Drawdown Notice, IDB
shall, unless it disputes the results of such Audit pursuant to Section 7.18(d),
pay to Shire, within 30 days of receipt of such Audit, one hundred and twenty
per cent (120%) of the amount confirmed by such Audit to have been spent on
purposes in connection with the Business but other than the specific Flu
Purposes or Pipeline Purposes indicated in the relevant Drawdown Notice. IDB
shall have no obligation to pay any amount pursuant to this paragraph until the
aggregate of all relevant amounts from all completed Audits indicating that
Advances were used for purposes in connection with the Business but other than
the specific Flu Purposes or Pipeline Purposes indicated in the relevant
Drawdown Notice is greater than US$1,000,000. IDB shall pay an amount, indicated
in the relevant Audit, in excess of such US$1,000,000 threshold and all other
amounts indicated in any subsequent Audit. Twenty percent (20%) of the amounts
paid under this paragraph shall constitute a penalty for improper use of the
Advances. The remaining one hundred percent (100%) of amounts paid under this
paragraph shall be deemed to be a Flu Principal Payment or a Pipeline Principal
Payment, as Shire may determine, and applied as set out in Section 3.4, and
shall, subject to the terms and conditions hereof, be available as an Advance
hereunder, and further, such repayment shall not be taken into account for
purposes of Section 3.7(a). If such amount is not paid as contemplated
hereunder, it shall bear interest, before and after judgement, at the rate per
annum applicable to the Pipeline Advances.
For the avoidance of doubt, IDB shall not be entitled to any further Advance
hereunder until it has fulfilled its obligations under this Section 5.15.
5.16 Other Encumbrances.
IDB will not create, assume or have outstanding, except to Shire or its
Affiliates, any mortgage, pledge, charge, assignment, trust, title retention or
other security, lien or encumbrance, whether fixed or floating, arising after
the Effective Date, or granted by IDB and arising on or before the Effective
Date, on the Collateral or any part thereof other than:
(a) in favour of a financial institution providing funding to
IDB, provided the same ranks after the Security;
(b) in favour of the holders of any debt instruments issued by
IDB pursuant to a public offering of debt or any private
placement of debt, provided the same ranks after the
Security;
(c) in favour of any commercial lender providing funding to IDB
for general corporate purposes, provided the same ranks
after the Security; or
(d) the Security.
5.17 Expenses.
All expenses incurred by Shire in respect of enforcing the Security or in
realizing upon the Security, including expenses of taking possession, protecting
and realizing upon the property charged by Collateral, shall immediately be
payable by IDB to Shire without demand therefor.
5.18 Compliance.
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IDB will observe and comply with all laws, regulations and provisions made by
any Governmental Body relating to the conduct of its business which, if not
observed or complied with, would result in a Material Adverse Change.
5.19 Product Development.
IDB will use commercially reasonable efforts to continue development of the
Products in accordance with the TPC Agreement and the Undertaking, provided that
IDB shall not be required to continue to develop any Product if and to the
extent that IDB determines that prudent and reasonable business considerations
dictate that development of the Product be reduced, delayed, suspended or
stopped in its entirety. Prior to IDB reducing, delaying, suspending or stopping
in its entirety or otherwise ceasing to develop any of the Products, IDB shall
send a notice to Shire, which notice shall set out in detail the reasons for
such proposed reduction, delay, suspension, stoppage or cessation and an
indication of IDB's willingness and availability to meet with Shire. IDB shall
thereafter meet with Shire in order to explain the reasons for such proposed
reduction, delay, suspension, stoppage or cessation at which time IDB shall
explain to Shire all proposed substitute products and Intangibles and the timing
of such reduction, delay, stoppage, suspension or cessation. IDB shall not
proceed with any such proposed reduction, delay, suspension, stoppage or
cessation unless, where required, authorized by the applicable Governmental Body
and, in the case of Pneumococcal Protein Vaccine or Meningococcal Protein
Vaccine, until 60 days after the date that Shire has received the aforesaid
notice. All substituted products and Intangibles shall be deemed to be included
in Pipeline Products and treated as such for all purposes hereof and of the
Security. IDB may, subject to the terms hereof, abandon any patent application
or decline to maintain any patent other than patent applications filed or
patents obtained in Canada, the United States of America, Japan, the European
Community or any other jurisdiction agreed to by IDB and Shire, and which are
required for Products being developed in accordance with this Section 5.19.
5.20 Confidentiality.
Shire acknowledges and agrees that all Products Payment Statements and the
information contained therein and all data and records provided to Shire or its
representatives or independent accountants pursuant to Section 3.11 constitute
confidential information of IDB. Shire will not use any such confidential
information for any purpose other than to ensure IDB's compliance with this
Agreement and to enforce this Agreement or the Security against IDB, and shall
not disclose such confidential information to any Person other than Shire's
representatives, independent accountants and advisors who have a need to know
such confidential information for such purpose. Notwithstanding any provision of
this Section 5.20, Shire may disclose information (a) to any assignee or
potential assignee that has agreed to comply with the covenant contained in this
Section 5.20 (and any such assignee or potential assignee may disclose such
information to persons employed or engaged by them); (b) as required or
requested by any Governmental Body, securities commission or exchange or other
regulatory body or reasonably believed by Shire to be compelled by any court
order, subpoena or legal order or process; (c) as, on the advise of counsel, is
required by law; or (d) that ceases to be confidential through no fault of
Shire. Shire shall instruct all of its representatives, independent accountants
and advisors who have access to IDB's confidential information as to the
confidential nature of that information and their obligation to maintain the
confidentiality of that information and to use it only for the permitted
purposes provided for in this Section 5.20 and Shire shall be responsible for
any breach thereof. Shire may retain IDB's confidential information for up to
three years after the Term, but thereafter shall destroy all documents, papers,
records and other materials containing any of IDB's confidential information and
delete IDB's confidential information from Shire's computer systems. Shire's
obligations pursuant to this Section 5.20 shall terminate three (3) years after
the Term.
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PART 6 EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default.
Any one or more of the following events shall constitute an Event of Default
(whether any such Event of Default shall be voluntary or involuntary or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Body):
(a) the failure by IDB to pay any of the Pipeline Interest, the
Flu Interest, the Pipeline Principal Payment or the Flu
Principal Payment as required hereby, which such failure
shall continue unremedied for a period of three (3) Banking
Days;
(b) the failure by IDB to pay any amount required by Sections
3.11, 5.10, 5.15 or 6.4(a), which such failure shall
continue unremedied for a period of three (3) Banking Days;
(c) the failure by IDB to continue to develop the Products to
the extent required by Section 5.19, which such failure
shall continue unremedied for a period of 15 days after
written notice thereof by Shire to IDB;
(d) other than as set out in Sections 6.1(a), (b) or (c), the
failure by IDB to fulfill any other covenant set out in
this Agreement, other than under Section 2.2(a) hereof, or
the Security, which such failure shall continue unremedied
for a period of 30 days after written notice thereof by
Shire to IDB;
(e) a default or breach shall occur under (x) any other
agreement, document or instrument to which IDB is a party
that is not cured within any applicable grace period
therefor and such default or breach (i) involves a failure
to make one or more payments which individually or in the
aggregate exceed US$500,000 when due in respect of any
indebtedness of IDB, or (ii) causes any holder of such
indebtedness or guarantee or an agent or a trustee therefor
to cause, indebtedness or a portion thereof in excess of
US$500,000 owing or guaranteed by IDB in the aggregate to
become due prior to its stated maturity or prior to its
regularly scheduled dates of payment, or (y) any of the
Notes and such default or breach involves a failure to make
one or more payments which individually or in the aggregate
exceed US$500,000 when due;
(f) any involuntary case or proceeding (including the filing of
any notice of intention in respect thereof) is commenced
against IDB under the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada)
or any other insolvency law, any incorporation law or other
applicable law in any jurisdiction in respect of the (i)
bankruptcy, liquidation, winding-up, dissolution or
suspension of general operations, (ii) composition,
rescheduling, reorganization, arrangement or readjustment
of, or other relief from, or stay of proceedings to
enforce, a substantial part of or all of the debts or
obligations of IDB, (iii) appointment of a trustee, interim
receiver, receiver, receiver and manager, liquidator,
administrator, custodian, sequestrator, agent or other
similar official for IDB or for all or a substantial part
of the assets of IDB, (iv) possession, foreclosure, seizure
or retention, sale or other disposition of, or other
proceedings to enforce security over, all or a substantial
part of the assets of IDB, and such case or proceeding
shall remain undismissed or unstayed for 30 days or more or
such court shall enter a decree or order granting the
relief sought in such case or proceeding;
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(g) IDB (i) commences on a voluntary basis, or fails to contest
in a timely and appropriate manner or consents to the
institution of any proceeding referred to in the preceding
paragraph or to the filing of any such petition or to the
appointment of or taking possession by a custodian,
receiver, interim receiver, receiver and manager,
liquidator, assignee, trustee or sequestrator (or similar
official) of IDB or of all or any substantial part of IDB's
assets, or (ii) take any corporate (or analogous) action in
furtherance of any of the foregoing or of any of the
proceedings referred to in the preceding paragraph, or
(iii) admits in writing its inability to, or is generally
unable to, pay its debts as such debts become due or is
otherwise insolvent;
(h) IDB has received written notice from Her Majesty the Queen
in Right of Canada, as represented by the Minister of
Industry, or any successor Governmental Body, of a default
under the Undertaking or the TPC Agreement, which default
has not been cured, to the extent that such default
resulted from circumstances arising after the Effective
Date, or the TPC Agreement is terminated and such failure
or termination continues unremedied for a period of 30 days
after written notice thereof by Shire to IDB;
(i) a final judgment or judgments from which no appeal is
pending and for which time limits for appeal have expired
for the payment of money in excess of US$500,000 in the
aggregate, at any time, is entered or rendered against IDB
and the same is or are not, no later than 30 days after the
expiry of the time limit for appeal, paid, set aside,
vacated, discharged or execution thereof stayed;
(j) if any statement, attestation, financial statement, report,
data, representation or warranty which was given by, for
the account of or in the name of IDB to Shire with respect
to this Agreement or the Security is revealed to be false,
misleading or inexact in any material respect and shall
remain so for a period of 30 days from the earlier of an
officer of IDB having actual knowledge thereof or written
notice thereof by Shire to IDB;
(k) if any party holding an encumbrance on any of the
Collateral, other than the Springing Collateral prior to
the delivery of an Audit in respect thereof and, after
delivery of such Audit, such exception with respect to the
Springing Collateral shall only apply until IDB has paid
the required amount in respect of any misuse identified
therein, to secure amounts in excess of US$500,000 enforces
its encumbrance and such enforcement proceedings are not
dismissed, stayed or withdrawn within 30 days after IDB has
notice or knowledge of the institution thereof.
6.2 Remedies Upon Default.
Upon the occurrence of any Event of Default and at any time thereafter, provided
that IDB has not prior thereto remedied all outstanding Events of Default, Shire
may, in its discretion, by notice to IDB, declare this Agreement to be in
default. At any time thereafter, while IDB shall not have remedied all
outstanding Events of Default, Shire, at its discretion and subject to
compliance with any mandatory requirements of applicable law then in effect,
may:
(a) suspend Advances of the Facility until IDB has remedied all
outstanding Events of Default; and
(b) declare all amounts then accrued and owing by IDB under
PART 3 and Section 5.15 to be immediately due and payable
and such amounts shall forthwith become due and
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payable without presentment, demand, protest or other notice of
any kind to IDB, all of which are hereby expressly waived.
6.3 Remedies Upon Default - Payment of Advances.
Upon the occurrence of any event described in Section 6.1(f) or 6.1(g), or three
Banking Days following the awarding of a final and conclusive judgment, from
which no appeal is pending and for which time limits for appeal have expired,
for an event described in Section 6.1(a) or 6.1(b), and at any time thereafter,
provided that IDB shall not have remedied all outstanding Events of Default,
Shire, at its discretion and subject to compliance with any mandatory
requirements of applicable law then in effect, may:
(a) declare all amounts then owing by IDB hereunder, including,
without limitation, under PART 3 and Section 5.15 and under
the Security, and the outstanding balance of all Advances
and capitalized interest thereon, to be immediately due and
payable and such amounts shall forthwith become due and
payable without presentment, demand, protest or other
notice of any kind to IDB, all of which are hereby
expressly waived; and
(b) if the Event of Default is capable of being cured, enforce
the Security to the extent necessary to cure the Event of
Default and return the Collateral to IDB once the Event of
Default has been cured. If the Event of Default is not
capable of being cured, enforce the Security to its full
extent. During the time Shire is enforcing the Security,
the obligation of IDB to pay any Products Payment that
would otherwise become payable after the date of
commencement of the enforcement of the Security shall be
suspended.
6.4 Extension of Last Funding Date.
Notwithstanding Sections 6.2 and 6.3:
(a) to the extent that Shire has received a Dispute Notice
wherein IDB contests the occurrence or continuance of any
one or more of the Events of Default under Sections 6.1(c),
6.1(d), 6.1(j) or Section 6.1(h) (but only, in such later
case, in respect of a written default under the Undertaking
or TPC Agreement), Shire shall not be entitled to refuse to
fund any Advance solely on the basis of the occurrence or
continuance of such one or more Events of Default and, to
the extent that the final resolution of such Dispute is in
IDB's favour, the Last Funding Date shall be extended for
the number of days equaling the number of days starting
from the date of receipt by Shire of such Dispute Notice
until the date such Dispute is resolved pursuant to Section
7.18 and, to the extent that the final resolution of such
Dispute is not in IDB's favour, IDB shall repay all
Advances funded by Shire during such period and all accrued
and unpaid interest thereon within three Banking Days of
the date of such resolution and such repaid Advances shall,
subject to the terms and conditions hereof, be available as
an Advance hereunder, and further, such repayment shall not
be taken into account for purposes of Section 3.7(a); and
(b) in respect of all other Events of Default, the occurrence
or continuance of which IDB has notified Shire by a Dispute
Notice it is contesting, Shire shall not be required to
advance any further funds until the resolution of such
Dispute and if such Dispute is resolved in IDB's favour,
then Shire shall pay within 15 Banking Days of the date of
the resolution of such Dispute the reasonable interest cost
that IDB has incurred during the period that Advances were
not available hereunder during such Dispute above the cost
that IDB would have paid if such Advances had been
available hereunder.
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6.5 Other Securities.
The rights and powers conferred under this PART 6 are in addition to and not in
substitution for the Security or any other security or securities which Shire
now or from time to time may hold or take from IDB.
6.6 Remedies Non-Exclusive.
No remedy herein or in the Security conferred on Shire is intended to be
exclusive. Each and every remedy shall be cumulative and shall be in addition
to, except as otherwise stated herein, every other remedy given hereunder or now
or hereafter existing at law or by statute or otherwise. The exercise or
commencement of exercise by Shire of any one or more of such remedies shall not,
except as otherwise stated herein, preclude the simultaneous or later exercise
by Shire of any or all other such remedies.
6.7 Assumption of Licenses.
Upon request by IDB, unless, in good faith, Shire is of the view that the
obligations to be performed by Shire under any agreement with any licensee or
potential licensee of any of the Collateral licensed or proposed to be licensed
by IDB are unreasonable, Shire will enter into a tri-party agreement with IDB
and the licensee or proposed licensee in respect of such Collateral in a form
and content reasonably acceptable to Shire.
PART 7 MISCELLANEOUS
7.1 Notices.
All notices and demands required or permitted to be given hereunder shall be in
writing and may be delivered personally, sent by facsimile or may be forwarded
by first class prepaid registered mail to the addresses set forth below. Any
notice delivered or sent by facsimile shall be deemed to have been given and
received at the time of delivery. Any notice mailed as aforesaid shall be deemed
to have been given and received on the expiration of five Banking Days after it
is posted, addressed as follows:
If to IDB:
ID Biomedical Corporation
Suite 1630 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Xxxxxx
Attention: Chief Executive Officer
Fax No.: 000-000-0000
with a copy to
Xxxxxx Xxxxxx Xxxxxxx XXX
0000 Xxxxxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
00
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Xxxxxx
Attention: Xxxxxx Xxxxxxxxx
Fax No.: 000-000-0000
If to Shire:
Shire LLC
-----------------------
-----------------------
-----------------------
Attention: Corporate Secretary
Fax No.:
-----------------------
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with a copy to
Shire Pharmaceuticals Group plc
Hampshire International Business Park
Xxxxxxxx
Xxxxxxxxxxx
Xxxxxxxxx
XX00 0XX
Xxxxxx Xxxxxxx
Attention: General Counsel
Fax No.: 00-0000-000-000
and a further copy to
Stikeman Xxxxxxx XXX
0000, Xxxx-Xxxxxxxx Blvd. West
Suite 4000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxx Xxxx Xxxx
Fax No.: 000-000-0000
or at such other address or addresses as may from time to time be notified in
writing by the parties hereto provided that if there shall be between the time
of mailing and the actual receipt of the notice a mail strike, slowdown or other
labour dispute which might affect the delivery of such notice by the mails, then
such notice shall only be effective if actually delivered.
7.2 Further Assurances.
As and so often as Shire may require, IDB shall execute and deliver to Shire,
and, as and so often as IDB shall require, Shire shall execute and deliver to
IDB, such further and other documents, deeds, assurances and conveyances and
shall undertake such further and other actions as may be necessary to properly
carry out the intention of this Agreement including, without limitation, for
registration in respect of any property constituting part of the Collateral,
obtaining third party consents to the Security as required hereby and delivering
a detailed description of the Springing Collateral.
7.3 Amendments.
Neither this Agreement nor any provision hereof may be amended, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the amendment, waiver, discharge or
termination is sought.
7.4 Time of Essence.
Time is expressly declared and stipulated to be of the essence of this Agreement
in respect of all payments to be made hereunder and all covenants and agreements
to be performed and fulfilled. Any extension of time hereunder shall not be
deemed to be or to operate in law as a waiver on the part of Shire
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that time is to be of the essence of this Agreement. Except as expressly
provided in this Agreement or the Security, IDB shall be "in default" hereunder
and under the Security by the mere lapse of time for fulfillment of the
relevant obligation without the necessity of any further action by Shire.
Except as specifically set out herein, the obligations of IDB under this
Agreement and the Security shall not be reduced, limited or cancelled pursuant
to the occurrence of an event of force majeure, IDB expressly assuming the risk
of superior force.
7.5 Absence of Set-Off.
The obligation of IDB to make payments hereunder shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms thereof
under all circumstances without any right of compensation or set-off.
Notwithstanding the foregoing, Shire acknowledges and agrees that IDB may
withhold from any payment hereunder any amounts required to be withheld by
applicable law, and that IDB may remit any such amount to a Governmental Body as
required by law.
If reasonably requested by Shire, IDB shall furnish to Shire the original or a
certified copy of receipts evidencing payment of any amount withheld by IDB in
connection herewith and remitted to the applicable Governmental Body and all
other information in respect of such withholding.
7.6 Assignment.
IDB will not, without the prior written consent of Shire, assign any of its
rights hereunder. Subject to this Section 7.6, Shire will not, without the prior
written consent of IDB, assign any of its rights hereunder. From and after the
date that the full amount of the Facility has been advanced and, in any event,
after the Last Funding Date, Shire may assign any of its rights hereunder.
7.7 Entire Agreement.
This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and undertakings whether oral
or written relative to the subject matter hereof.
7.8 Payment Dates.
If the date upon which any act or payment hereunder is required to be done or
made falls on a non-Banking Day, then such act or payment shall be performed or
made on the next Banking Day.
7.9 Counterparts.
This Agreement may be signed in any number of counterparts, each of which shall
be deemed to constitute an original, but all of the separate counterparts shall
constitute one single document.
7.10 No Merger of Judgment.
The taking of a judgment on any covenant contained herein or on any covenant set
forth in the Security does not operate as a merger of any such covenant or
indebtedness of IDB to Shire or in any way suspend payment or affect or
prejudice the rights, remedies and powers, which Shire may have in connection
with such indebtedness.
7.11 Governing Law.
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This Agreement shall in all respects be governed by and be construed in
accordance with the laws of the Province of Quebec and the federal laws of
Canada applicable therein, excluding rules of private international law that
form part of the laws of Quebec or Canada and that lead to the application of
the laws of any other jurisdiction. For any matter not otherwise subject to
arbitration pursuant to Section 7.18, each party attorns irrevocably and
unconditionally to the non-exclusive jurisdiction of the courts of the Province
of Quebec and the courts sitting in the City of Montreal and courts entitled to
hear appeals therefrom, in respect of any action, suit or proceeding arising
from, or relating to, this Agreement.
7.12 Relationship.
Shire and IDB hereby acknowledge that no provision hereof or of the Security
shall constitute a relationship of mandate or fiduciary or establish any
partnership amongst the parties.
7.13 Severability.
If any one or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect under the laws of any
jurisdiction, the validity, legality and enforceability of such provision shall
not in any way be affected or impaired thereby under the laws of any other
jurisdiction and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
7.14 Parties In Interest.
This Agreement shall enure to the benefit of and be binding on IDB and Shire and
their respective successors and permitted assigns.
7.15 Included Words.
Wherever the singular or the masculine are used herein the same shall be deemed
to include the plural or the feminine or the body politic or corporate where the
context or the parties so require.
7.16 Headings.
The headings to the parts and sections of this Agreement are inserted for
convenience only and shall not affect the construction hereof.
7.17 Judgement Currency.
All payments made under this Agreement shall be made in US Dollars. Any payment
made in Canadian Dollars, pursuant to a judgment or order of a court or tribunal
of any jurisdiction, shall constitute a discharge of the obligations of the
payor only to the extent of Canadian Dollar obligations and the Equivalent
Amount (as defined below) of US Dollar obligations thereof at the date of
payment. If such Equivalent Amount is less than the amount of the US Dollar
amount originally due, the payor shall indemnify and save the payee harmless
from and against all loss or damage arising as a result of such deficiency. This
indemnity shall constitute an obligation separate and independent from the other
obligations contained in this Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by the payee from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of any
amount due hereunder or under any judgment or order. "Equivalent Amount" means,
on any date, the amount of US Dollars into which an amount of Canadian
30
Dollars may be converted or the amount of Canadian Dollars into which an amount
of US Dollars may be converted at the Bank of Canada noon spot rate in Toronto
as at approximately 12:00 noon, Toronto time, on such date.
If for the purpose of obtaining or enforcing judgment in any court in any
jurisdiction, it becomes necessary to convert any amount payable in US Dollars
under this Agreement into Canadian Dollars, the conversion shall be made on the
basis of the Equivalent Amount prevailing on the Banking Day immediately
preceding the date on which judgment is given and in any event, the payor shall
be obliged to pay to the payee any deficiency.
7.18 Dispute Resolution
(a) Except as expressly otherwise provided in this Agreement,
all disputes, questions or controversies arising out of or
connected with this Agreement and the business relationship
arising from this Agreement (collectively, "Disputes")
shall be resolved as provided in this Section 7.18 to the
exclusion of the courts.
(b) Where a Dispute arises, each party will within two Banking
Days after receiving from or delivering to the other a
written notice of dispute (a "Dispute Notice") setting out
the matters in dispute, designate one of its senior
management as its representative for the purposes of
attempting to negotiate a resolution. The representatives
so appointed shall meet in person at a mutually acceptable
place or arrange alternate means of communication and
attempt to resolve the Dispute.
(c) Any Dispute that has not been resolved within 20 Banking
Days of the delivery of a Dispute Notice shall be referred
to and finally determined by arbitration. The date of
commencement of the arbitration shall be deemed to be the
date 20 Banking Days after the delivery of a Dispute Notice
unless the parties agree on some other date. There shall be
a single arbitrator, provided that, if the parties cannot
agree on a person to be appointed as the single arbitrator
within 10 Banking Days of the commencement of the
arbitration, then the number of arbitrators will be three,
one appointed by each of the parties within 14 Banking Days
of the commencement of the arbitration and a third
appointed by the two party appointees within 7 Banking Days
thereafter. The arbitration shall be conducted in
accordance with the Rules of Arbitration of the
International Chamber of Commerce. The place of arbitration
shall be Montreal, Quebec. Unless otherwise determined by
the arbitrator, legal costs of both parties and the other
costs of the arbitration shall follow the award.
Notwithstanding Section 7.18(b), either party shall be
entitled to apply to the court for interim measures of
protection at any time after a Dispute Notice has been
delivered, whether or not arbitration proceedings have yet
been commenced. An award or determination of the arbitrator
or arbitrators or any two of the three arbitrators shall be
final and binding upon the parties hereto, their successors
and assigns.
(d) Within 30 days after delivery of any inspection or audit
(including, without limitation, an Audit), IDB will advise
Shire in writing whether it agrees therewith and if not,
IDB will specify the matters not agreed to and, in such
case, the matters in dispute will be referred to the
Auditors acting as experts and not arbitrators. IDB and
Shire may make submissions to the Auditors and shall
provide the Auditors with additional documents, materials
and other presentations the Auditors might require in
relation with the disputed matters. The determination of
the Auditors shall be final and binding on IDB and Shire.
The fees of the Auditors in respect of the dispute shall be
borne as to one-half by Shire and as to one-half by IDB.
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7.19 References.
Unless otherwise stated a reference herein to a numbered or lettered section or
part refers to the section or part bearing that number or letter in this
Agreement. A reference to this Agreement or herein means this Agreement,
including the Schedules hereto, together with any amendments thereof.
7.20 English Language.
The parties hereto have expressly required that this Agreement and all deeds,
documents and notices relating hereto be drafted in the English language. Les
parties aux presentes ont expressement exige que la presente convention et tous
les contrats, documents et avis qui y sont afferents soient rediges en langue
anglaise.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
Executed at Vancouver, British Columbia, Canada
ID BIOMEDICAL CORPORATION
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
Executed at __________________, _____________________, United States of America.
SHIRE LLC
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
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