EXHIBIT E
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
BY AND AMONG
POWER TECHNOLOGY INVESTMENT CORPORATION,
FMRC FAMILY TRUST,
PICCHIO PHARMA INC.
AND
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(INTERVENANT)
DATED NOVEMBER 9, 2006
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS AND INTERPRETATION................................. 3
1.1 Definitions..................................................... 3
ARTICLE 2 TERM OF AGREEMENT.............................................. 7
2.1 Term............................................................ 7
2.2 Review.......................................................... 7
ARTICLE 3 IMPLEMENTATION OF AGREEMENT.................................... 8
3.1 Shareholder Covenants........................................... 8
3.2 Conflict........................................................ 8
3.3 Covenants by the Corporation.................................... 8
3.4 One Party....................................................... 8
ARTICLE 4 INVESTMENT PROCESS............................................. 9
4.1 Sourcing of Opportunities....................................... 9
4.2 Assessment and Evaluation....................................... 9
4.3 Board Submission................................................ 9
ARTICLE 5 SALE AND ISSUANCE OF SHARES.................................... 10
5.1 Sale and Issue Restrictions..................................... 10
5.2 Right of First Opportunity...................................... 11
5.3 Tag-Along Right................................................. 12
5.4 Drag Along Right................................................ 13
5.5 Rights of Purchaser............................................. 14
5.6 Transfer to an Affiliate........................................ 14
5.7 Pre-emptive Rights.............................................. 14
ARTICLE 6 BOARD OF DIRECTORS, MANAGEMENT AND ORGANIZATION................ 16
6.1 Board of Directors.............................................. 16
6.2 Terms of Office................................................. 17
6.3 Powers and Duties of Directors.................................. 17
6.4 Casting Vote.................................................... 17
6.5 Exercise of Authority........................................... 17
6.6 Extraordinary Matters........................................... 17
6.7 Meetings of Shareholders........................................ 19
6.8 Committees...................................................... 20
6.9 Management...................................................... 20
6.10 Insurance....................................................... 21
ARTICLE 7 TRACKING SHARES................................................ 21
7.1 Holdings of Neurochem Inc....................................... 21
7.2 Dividends....................................................... 22
7.3 Repayment of Other Obligations.................................. 23
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ARTICLE 8 FINANCIAL AND ACCOUNTING PRACTICES............................. 23
8.1 Maintain Books.................................................. 23
8.2 Fiscal Year End................................................. 24
8.3 Additional Reporting............................................ 24
ARTICLE 9 RIGHT OF FIRST BUSINESS OPPORTUNITY AND NON-COMPETITION........ 25
9.1 Right of First Business Opportunity............................. 25
9.2 Non-Competition................................................. 26
9.3 Limitation...................................................... 26
9.4 Injunction...................................................... 26
ARTICLE 10 REPRESENTATIONS, WARRANTIES, COVENANTS AND SHAREHOLDER
RELATIONS................................................................ 27
10.1 General......................................................... 27
10.2 The Corporation................................................. 27
10.3 Covenants of FMRC............................................... 27
10.4 Relations among Shareholders.................................... 28
ARTICLE 11 CONFIDENTIALITY............................................... 28
11.1 Confidentiality................................................. 28
11.2 Survival........................................................ 29
ARTICLE 12 MEDIATION AND ARBITRATION..................................... 29
12.1 Dispute Resolution Procedures................................... 29
12.2 First Level..................................................... 29
12.3 Mediation....................................................... 29
12.4 Arbitration..................................................... 30
ARTICLE 13 GENERAL MATTERS............................................... 30
13.1 No Agency or Partnership........................................ 30
13.2 Notice.......................................................... 31
13.3 Endorsement of Share Certificates............................... 31
13.4 Employee Stock Ownership Plan................................... 32
13.5 Quantity and Gender............................................. 32
13.6 Table of Contents and Section Headings.......................... 32
13.7 Generally Accepted Accounting Principles........................ 32
13.8 Statutes........................................................ 32
13.9 Severability.................................................... 33
13.10 Currency........................................................ 33
13.11 Entire Agreement................................................ 33
13.12 Governing Law................................................... 33
13.13 Expiry of Delay................................................. 33
13.14 Recitals........................................................ 33
13.15 Including....................................................... 33
13.16 Binding Contract................................................ 33
13.17 Reclassification of Shares...................................... 34
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13.18 Assignment...................................................... 34
13.19 Further Assurances.............................................. 34
13.20 Counterparts.................................................... 34
13.21 Consents and Waivers............................................ 34
13.22 Amendment....................................................... 35
13.23 Language of Agreement........................................... 35
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT made as of the 9th day of November,
2006.
BY AND AMONG: POWER TECHNOLOGY INVESTMENT CORPORATION, a corporation duly
constituted under the laws of Canada, having its head office at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, herein acting and
represented by ▇▇▇▇▇ ▇▇▇▇▇, duly authorized as he so declares;
(hereinafter referred to as "PTIC")
AND: ▇▇▇▇ ▇▇▇▇▇▇ ES QUALITE, TRUSTEE OF THE FMRC FAMILY TRUST, a trust
duly constituted in accordance with the laws of the Province of
Alberta, having its registered office at ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
(hereinafter referred to as "FMRC")
(PTIC and FMRC are hereinafter referred to as the "SHAREHOLDERS")
AND: PICCHIO PHARMA INC., duly constituted under the laws of Canada,
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, herein acting and
represented by ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, duly authorized as he so
declares;
(hereinafter referred to as the "CORPORATION"; the Shareholders
and the Corporation sometimes collectively referred to as the
"PARTIES", or individually as a "PARTY")
WHEREAS the Shareholders intend that the Corporation function as an investment
vehicle to identify and acquire companies in the biotechnology, pharmaceutical
and health science fields worldwide (the "BUSINESS");
WHEREAS the Shareholders recognize the importance of the expertise of ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the Business mission of the Corporation and the key role he
will be called upon to play in directing the strategic development of the
Corporation and its Investee Entities and the importance of the Business of
ensuring an orderly succession in this regard;
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WHEREAS the Shareholders also recognize that the identification, assessment,
evaluation and execution of the Corporation's investments in the Business will
require a dynamic and transparent process to which ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will
ensure that management is committed under distinct and customized procedures in
each case;
WHEREAS the Shareholders recognize the importance of maintaining their
flexibility in respect of the investments to be made by the Corporation as part
of the Business and will endeavour, as much as possible, to ensure the
flexibility and liquidity of the investments of the Corporation and its
Subsidiaries in Investee Entities;
WHEREAS the authorized capital of the Corporation consists solely of an
unlimited number of class A common shares, an unlimited number of class F
special shares, an unlimited number of class P special shares and 15,000,000
non-voting redeemable, non-cumulative preferred shares.
WHEREAS the issued and outstanding shares in the share capital of the
Corporation are held beneficially and of record as follows:
NAME OF SHAREHOLDER NUMBER AND CLASS OF SHARES
------------------- --------------------------
PTIC 36,066,667 Class A Common Shares
36,066,667 Class P Special Shares
11,300,000 Preferred Shares
FMRC 36,066,667 Class A Common Shares
36,066,667 Class F Special Shares
WHEREAS the Shareholders and the Corporation entered into a shareholders
agreement made as of the 13th day of November, 2001, which Agreement has since
been amended on several occasions (collectively the "ORIGINAL AGREEMENT") and
desire to restate and consolidate the original agreement and all previous
amendments thereto together with certain new amendments in this amended and
restated shareholders agreement which hereby replaces the Original Agreement;
WHEREAS the Shareholders wish to enter into this Shareholders Agreement in order
to establish their respective rights and obligations with respect to the issued
and unissued shares in the share capital of the Corporation, the management and
conduct of the Business of the Corporation, its Subsidiaries and various other
matters hereinafter set forth; and
WHEREAS ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is intervening hereto to covenant to be bound by
the specific obligations, undertakings and agreements incumbent upon him
personally as herein set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective
covenants and agreements hereinafter contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the Parties hereto), the Parties hereto covenant and agree with each
other as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
The Parties hereto agree that, within the context of this Agreement, the
schedules hereto and all documents ancillary thereto, the words and
expressions set forth hereinafter has the meaning attributed thereto in
this Article 1, unless otherwise indicated or unless the context is
incompatible therewith:
"ACT" means the Canada Business Corporations Act, as amended from time to
time;
"AFFILIATE" means, with respect to any Person, any other Person which,
directly or indirectly, is Controlled by such first Person, and, with
respect to any individual, any member of the immediate family of such
individual or any other Person over whom or over whose activities or
conduct, in any manner and whether by contract, agreement, understanding or
otherwise, that individual exercises control and direction;
"AGREEMENT" means this Amended and Restated Shareholders Agreement, as
amended, modified, replaced, restated or supplemented from time to time;
"ARM'S LENGTH" means "arm's length" for the purposes of the Income Tax Act
(Canada), as amended from time to time;
"ARTICLES" means the articles of incorporation of the Corporation, as
amended or restated from time to time;
"ASSOCIATE" has the meaning ascribed thereto in the Act;
"BUDGET" has the meaning ascribed thereto in Section 8.3.5 hereof;
"BUSINESS" has the meaning ascribed thereto in the recitals hereof;
"BUSINESS DAY" means any day, other than a Saturday, Sunday or a day which
is a legal holiday in Montreal, Quebec;
"BUSINESS PLAN" has the meaning ascribed thereto in Section 6.6.3 hereof;
"BY-LAWS" means the by-laws of the Corporation, as amended or restated from
time to time;
"CLASS A COMMON SHARES" means the class A common shares in the share
capital of the Corporation;
"CLASS F NEUROCHEM SHARES" has the meaning ascribed thereto in the
Articles;
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"CLASS F SPECIAL SHARES" means the Class F Special Shares in the share
capital of the Corporation;
"CLASS P NEUROCHEM SHARES" has the meaning ascribed thereto in the
Articles;
"CLASS P SPECIAL SHARES" means the Class P Special Shares in the share
capital of the Corporation;
"CONTROL" means (i) in relation to a Person that is a corporation, the
ownership, directly or indirectly, of voting securities of such Person
carrying more than fifty percent (50%) of the voting rights attaching to
all voting securities of such Person and which are sufficient, if
exercised, to elect a majority of its board of directors; and (ii) in
relation to a Person that is a partnership, limited partnership, business
trust or other similar entity, the ownership, directly or indirectly, of
voting securities of such Person carrying more than fifty percent (50%) of
the voting rights attaching to all voting securities of the Person or the
ownership of other interests entitling the holder to exercise control and
direction over the activities of such Person; "CONTROLS" and "CONTROLLED"
shall have similar meanings;
"CORPORATE GROUP" means the Corporation and its Subsidiaries;
"CORPORATION" has the meaning ascribed thereto in the recitals hereof;
"DIRECTORS", "BOARD OF DIRECTORS" and "BOARD" means the individuals who
are, from time to time, duly elected or appointed as directors of the
Corporation;
"DISAGREEMENT" has the meaning ascribed thereto in Section 7.3 hereof;
"DISPUTE" has the meaning ascribed thereto in Section 12.1.2 hereof;
"DRAG ALONG SHAREHOLDER" has the meaning ascribed thereto in Section 5.4.1
hereof;
"ESOP" has the meaning ascribed thereto in Section 13.4 hereof;
"EVENT OF DEFAULT" has the meaning ascribed thereto in Section 13.4 hereof;
"EXCESS CASH FLOW" means, for the Corporation, with respect to any quarter,
and without duplication, (i) cash, (ii) cash equivalents, (iii) any undrawn
but available line of credit plus (iv) any working capital excluding cash
and cash equivalents if such working capital is a liability in accordance
with GAAP (for greater certainty, if the working capital excluding cash and
cash equivalents is an asset in accordance with GAAP then no amount shall
be added to "Excess Cash Flow" for the purposes hereof) less: (a) any
proceeds realized from share issuances of the Corporation or any Subsidiary
that are designated by the investor(s) or by the Board of Directors for
investment, operating or capital expenses, as shall be conclusively
determined by the Board; (b) any other funds designated by the Board for
investment, operating or capital expenses pursuant to any Budget or the
Business Plan; (c) any amount required to pay any contingent management
fees/remuneration as a result of any redemption/retraction of the Preferred
Shares which
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are to be redeemed/retracted out of the Excess Cash Flow in that quarter;
and (d) normal and prudent reserves for contingencies as determined by the
Board, the whole calculated in accordance with GAAP on a consolidated
basis;
"EXECUTIVE COMMITTEE" has the meaning ascribed thereto in Section 6.8.1
hereof;
"FMRC" has the meaning ascribed thereto in the recitals hereof;
"FREE AND CLEAR" means free and clear of any pledge, mortgage, lien,
hypothec, encumbrance, debt or right of a third party;
"GAAP" means, at any time, generally accepted accounting principles
approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applied on a consistent basis;
"GLOBAL OFFER" has the meaning ascribed thereto in Section 5.4.2;
"INFORMATION" has the meaning ascribed thereto in Section 11.1 hereof;
"INITIATOR" has the meaning ascribed thereto in Section 5.2 hereof;
"INTEREST" means any investment in the shares of any class in the capital
stock of a Person, any investment in the ownership interests, however
designated, into which an unincorporated Person is divided, any secured or
unsecured creditor position (including, without limitation, any
subordinated or convertible creditor position) vis-a-vis a Person; any
business relationship with a Person outside the ordinary course of
day-to-day operating trade relationships with that Person, whether as
partner, supplier or purchaser of goods or services (including, without
limitation, management or administration services), licensor, licensee or
otherwise, or the provision of funds to a Person in any manner in support
of the research and development or other activities of such Person in
connection with the Business; the whole whether directly or indirectly;
"INTERNAL OFFER" has the meaning ascribed thereto in Section 5.2.2 hereof;
"INVESTEE ENTITY" means any direct or indirect Subsidiary of the
Corporation, any Person in which the Corporation has, directly or
indirectly, invested in the course of the Business and any Person in the
business activities or undertaking of which the Corporation or a Subsidiary
has acquired, in the course of the Business, any other Interest;
"LUXCO II" means P.P. Luxco Holdings II s.a.r.l., a Luxembourg company;
"MANAGEMENT AGREEMENT" has the meaning ascribed thereto in Section 5.7.3
hereof;
"NOTICE" has the meaning ascribed thereto in Section 13.2 hereof;
"OFFEREE" has the meaning ascribed thereto in Section 5.4.1 hereof;
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"OPPORTUNITY" has the meaning ascribed thereto in Section 9.1.1 hereof;
"ORIGINAL AGREEMENT" has the meaning ascribed thereto in the recitals
hereof;
"PARTIES" has the meaning ascribed thereto in the recitals hereof;
"PARTY" has the meaning ascribed thereto in the recitals hereof;
"PERMITTED TRANSFEREE" has the meaning ascribed thereto in Section 5.6
hereof;
"PERSON" means an individual, a corporation, limited partnership, general
partnership, joint stock company or association, joint venture,
association, company, trust, bank, trust company, land trust, investment
trust, society or other entity, organization and syndicate whether
incorporated or not, a trustee, executor, or other legal personal
representative, and any government or agency thereof;
"PREFERRED SHARES" means the CDN$1,000 non-voting redeemable, retractable,
non-cumulative preferred shares in the share capital of the Corporation;
"PTIC" has the meaning ascribed thereto in the recitals hereof;
"RECIPIENT" has the meaning ascribed thereto in Section 5.2.1 hereof;
"REQUESTING SHAREHOLDER" has the meaning ascribed thereto in Section 7.2
hereof;
"RESTRICTED AREA" means the United States, Canada and any other country in
which the Corporation, Subsidiary or any other Investee Entity conducts,
has conducted, or has declared, at its board or management level or
otherwise, its intention to conduct, at the relevant time, any business or
undertaking falling within the scope of activities contemplated in the
definition of "Business" in the recitals hereof or which business or
undertaking is contemplated in a current budget of the Corporation,
Subsidiary or any other Investee Entity;
"SHAREHOLDERS" has the meaning ascribed thereto in the recitals hereof;
"SHARES" means the Class A Common Shares, the Class F Special Shares, the
Class P Special Shares and the Preferred Shares, as well as any other
shares in the share capital of the Corporation that are authorized pursuant
to the terms hereof;
"SUBSIDIARY" means a corporation, partnership, business trust or other
similar entity Controlled, directly or indirectly, by the Corporation;
"TAG-ALONG RIGHT" has the meaning ascribed thereto in Section 5.3 hereof;
"TECHNOLOGY" has the meaning ascribed thereto in Section 6.9.3 hereof;
"TRANSFER" of a Share includes any sale, exchange, transfer, assignment,
gift, granting of an option, mortgage, pledge, encumbrance, charge,
hypothecation, alienation, disposition
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or other transaction, whether voluntary, involuntary or by operation of
law, by which the legal or beneficial ownership of, or any security
interest or other right, title or interest in, such Share passes from one
Person to another or to the same Person in a different capacity, whether or
not for value, and any change of Control of the legal or beneficial owner
of the Share or of any Person that Controls, directly or indirectly, in any
manner whatsoever, such legal or beneficial owner of the Share.
ARTICLE 2
TERM OF AGREEMENT
2.1 Term
This Agreement shall terminate on the earlier of:
2.1.1 immediately prior to or concurrently with the closing of an initial
public offering of any class of shares of the Corporation;
2.1.2 the date this Agreement is terminated by written agreement of FMRC
and PTIC; and
2.1.3 the bankruptcy, receivership, liquidation or dissolution of the
Corporation or any other similar proceeding or action.
2.2 Review
2.2.1 So long as this Agreement has not terminated, following November
9, 2008 and every two years thereafter, either PTIC or FMRC shall
be entitled to convene a meeting of the Shareholders to review and
discuss the terms and conditions of this Agreement and of any then
current related agreement which they may have entered into in relation
to this Agreement (such as the Management Agreement), by sending a
notice to that effect to the other Shareholders within thirty (30)
days of such date in each case, which notice shall specify in
reasonable detail the issues to be canvassed and the sending
Shareholder's proposal to resolve the issues. In the event both such
Shareholders give notice, the earlier shall pre-empt the later.
2.2.2 Unless otherwise agreed, the meeting shall be held within a further
thirty (30) days at the office of the Corporation in the City of
Montreal and each such Shareholder shall be entitled to be accompanied
by such professional or other advisors as it shall wish.
2.2.3 If such Shareholders come to an agreement on the issues canvassed,
they shall take such steps as shall be appropriate to document and/or
implement their agreement. If they are unable to agree within a
reasonable period not to exceed a further thirty days, then the review
and discussion shall be adjourned sine die and this Agreement and the
related agreement, if any, shall continue unamended.
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2.2.4 No matter which is or would constitute a Dispute under Article 12
shall be subject to review and discussion under this Section 2.2 and
failure of the Shareholders to agree on any or all issues in the
course of such review and discussion shall not be subject to the
Dispute resolution provisions of Article 12.
ARTICLE 3
IMPLEMENTATION OF AGREEMENT
3.1 Shareholder Covenants
Each of the Shareholders covenants and agrees that, subject to any
applicable law and regulation, it shall vote or cause to be voted the
Shares held by it to accomplish and give effect to the terms and conditions
of this Agreement and that it shall otherwise act in accordance with the
provisions and intent of this Agreement.
3.2 Conflict
Subject to the provisions of the Act, in the event of any conflict between
the provisions of this Agreement and the Articles or By-Laws, each of the
Shareholders agrees to vote the Shares held by it so as to give effect to
the provisions of this Agreement.
3.3 Covenants by the Corporation
The Corporation consents to the terms of this Agreement and hereby
covenants with each of the other Parties hereto that it will at all times
during the term of this Agreement be governed by the terms and provisions
hereof in carrying on its Business and affairs, and each of the
Shareholders shall vote or cause to be voted its respective Shares to cause
the Corporation to fulfill its foregoing covenants.
3.4 One Party
For all purposes under this Agreement, each Shareholder and its Permitted
Transferees shall be considered as one Party enjoying all the rights and
assuming all of the obligations pursuant to the terms of this Agreement. In
a situation where a Shareholder has one or more Permitted Transferees, the
Shareholder in question, so long as it remains a Shareholder, shall be
deemed, for all legal purposes, to have an irrevocable power of attorney
from its Permitted Transferees with respect to all matters arising out of
this Agreement. Any decision by such Shareholder shall be binding upon its
Permitted Transferees. The liability of such Shareholder and its Permitted
Transferees shall be solidary. In the event that the Shareholder in
question ceases to be a Shareholder and more than one of its Permitted
Transferees remain Shareholders, then the Permitted Transferee with the
greatest number of Shares shall become the agent and attorney of the other
Permitted Transferees.
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ARTICLE 4
INVESTMENT PROCESS
4.1 Sourcing of Opportunities
The Shareholders agree that, in keeping with the provisions of Section 9.1,
Opportunities are to be sourced from and identified by both of them and ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, it being understood that by reason of his expertise and
experience and the broad base of his contacts in and knowledge of the
fields identified in the first recital hereof, ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will
be the principal source of Opportunities.
4.2 Assessment and Evaluation
4.2.1 When an Opportunity is identified pursuant to Section 9.1, it will
undergo preliminary assessment and evaluation by the Chief Executive
Officer of the Corporation and its management.
4.2.2 If the results of the preliminary assessment and evaluation are, in
the opinion of the Chief Executive Officer and management, positive,
the Chief Executive Officer will meet with the representatives
involved in the Opportunity and will invite PTIC's management and/or
nominees on the Board to accompany him to such meetings, although it
is recognized that in most cases, PTIC will be relying on the Chief
Executive Officer and management of the Corporation to perform this
second stage.
4.2.3 If the results of the second stage assessment and evaluation are
positive, the Chief Executive Officer and management will perform or
commission a detailed preliminary due diligence review of the
Opportunity at the scientific, intellectual property, financial and
market positioning levels including, without limitation and if
relevant given the circumstances, an analysis of the competitive
environment, existing and potential distribution channels for the
target product or process, the steps and timing required to obtain any
FDA/Health Canada or other relevant approvals of any product or
process involved, the total projected funding requirements of the
Opportunity and sources thereof with investment by the Corporation or
third parties and details of the Interest (including the method by
which such Interest will be controlled) that the Corporation or any
Subsidiary shall take in the Opportunity.
4.3 Board Submission
4.3.1 If the Chief Executive Officer and management believe following the
due diligence analysis referred to in Section 4.2.3 that the
Opportunity should be pursued, it will be submitted to the Board in
accordance with Section 9.1.1, accompanied as therein contemplated by
all necessary relevant data and information.
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4.3.2 The Shareholders recognize that depending on the technology involved,
the nature of the Opportunity and actual or potential competing bids,
the entire assessment and evaluation process, including due diligence,
Board submission and the decision as to whether or not the Corporation
should invest in the Opportunity, may have to be compressed and
completed within a very short time frame and that accordingly, a high
degree of flexibility in the process may be advisable in the
particular circumstances of a given Opportunity at the same time while
respecting the necessity of thorough review and reporting at the
management and Board levels in the interests of the Corporation.
4.3.3 Management shall, in as much as possible, use previously developed
templates for all submissions in respect of Opportunities in order to
permit the Board to evaluate subsequent Opportunities on a consistent
basis.
ARTICLE 5
SALE AND ISSUANCE OF SHARES
5.1 Sale and Issue Restrictions
5.1.1 Except as otherwise set forth in this Agreement, neither of the
Shareholders may Transfer any of their Shares, without first obtaining
the written consent of the other Shareholder, which may be arbitrarily
withheld. Notwithstanding the foregoing, in circumstances of extreme
economic or financial hardship which justify a sale, FMRC may sell up
to twenty percent (20%) of the Shares that it holds at such time but
subject to, inter alia, Sections 5.2 and 5.3 hereof and provided that
any transferee other than PTIC shall be considered a Permitted
Transferee of FMRC for the purposes hereof.
5.1.2 No proposed dealing with any Shares (including the issuance thereof)
in violation of this Agreement shall be valid, and the Corporation
shall not record the issue or the Transfer of any Shares in violation
of this Agreement in the records of the Corporation nor shall any
voting rights attached to such Shares be exercised, nor shall any
dividends be paid on such Shares during the period of such violation.
Such disqualification shall be in addition to and not in lieu of any
other remedies to enforce the provisions of this Agreement.
5.1.3 Notwithstanding anything else herein contained, every Transfer of all
or a portion of the Shares held by a Shareholder, in addition to the
requirements of the Articles, shall first be subject to the approval
of the Board and be further subject to the condition that the proposed
transferee, if not already bound by this Agreement, shall first enter
into, execute and deliver such documents and instruments necessary or
desirable to evidence such agreement of such transferee to be bound
hereby.
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5.2 Right of First Opportunity
If a Shareholder (the "INITIATOR") desires to sell its Shares (or, in the
case of a sale of Shares by FMRC pursuant to the last sentence of Section
5.1.1, any of its Shares) to a third party, it shall first submit to the
other Shareholder (the "RECIPIENT") an internal offer (the "INTERNAL
OFFER") to sell all of the Initiator's Shares (or, in the case of a sale of
Shares by FMRC pursuant to the last sentence of Section 5.1.1, any of its
Initiator's Shares), which shall set forth the terms and conditions of such
sale (including the price per Share) in strict compliance with the terms
hereof:
5.2.1 The Recipient shall be entitled by notice in writing to the Initiator
within thirty (30) days from the date of receipt of a copy of the
Internal Offer, to:
(i) acquire the Shares from the Initiator in accordance with the
terms and conditions of the Internal Offer;
(ii) exercise its tag-along right pursuant to Section 5.3 hereof, in
which case the Initiator and the Recipient may sell all of their
Shares (or, in the case of a sale of Shares by FMRC pursuant to
the last sentence of Section 5.1.1 the number of Initiator's
Shares desired to be sold by FMRC (and permitted to be sold
pursuant to Section 5.1.1) and the same number and class of
Shares of PTIC) to a third party in accordance with this Section
5.2 and with Section 5.3 hereof; or
(iii) decline the Internal Offer, in which case the Initiator may sell
all of its Shares (or, in the case of a sale of Shares by FMRC
pursuant to the last sentence of Section 5.1.1, any of its
Shares) on the terms and conditions of (or at a price per Share
that is higher than that specified in) the Internal Offer to any
third party (save and except that the third party shall enjoy
reasonable rights of due diligence) within one hundred and twenty
(120) days of receipt or deemed receipt of a written notice that
the Recipient has declined the Initial Offer, failing which each
of the provisions of this Section 5.2 shall again apply to any
proposed sale of Shares.
In the event that the Recipient fails to notify the Initiator within the
aforesaid thirty (30) days delay, it shall be deemed to have elected to
decline the Internal Offer and to have elected not to exercise its
tag-along right pursuant to Section 5.3.
5.2.2 For the purposes hereof, an Internal Offer shall not be valid for
purposes of this Section 5.2 unless:
(i) it is irrevocable and the consideration for the purchase of the
Shares shall be exclusively cash;
(ii) all Shares sold must be sold Free and Clear;
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(iii) the purchaser of the Shares shall assume all of the rights and
obligations in respect of the Corporation, the Subsidiaries and
under this Agreement, of the Shareholder(s) who are selling its
(their) Shares and shall also ensure that any guaranties or other
security granted by such Shareholders is (are) released upon
closing;
(iv) it requires that the purchaser of the Shares obtain on or prior
to closing all requisite statutory and regulatory approvals in
respect of its acquisition of the Shares to be sold;
(v) provide for a closing date no later than one hundred and eighty
(180) days from the date that the Internal Offer is received by
the Recipient;
(vi) it shall not provide for the provision of management, consulting
or other fees, a payment for any non-competition covenant, the
payment of salary which is reasonably attributable to the
purchase price as opposed to the fair consideration for future
services to be rendered by the Shareholders or any of their
Associates, or any other Person with whom the Shareholder does
not deal at Arm's Length, but shall include the purchase of any
indebtedness owed by the Corporation to each of the Shareholders
who are selling their Shares; and
(vii) it shall provide that the liability under the purchase agreement
of each of the Shareholders who are selling their Shares
including, without limitation, liability for breach of
representation or warranty or for a claim under an indemnity
shall not be solidary and shall not, under any circumstances,
exceed the lesser of its pro rata proportion of any claim and the
purchase price payable to such Shareholder.
5.3 Tag-Along Right
Upon receipt of an Internal Offer, the Recipient shall have the right to
elect (the "TAG-ALONG RIGHT"), by notice in writing to the Initiator within
thirty (30) days from the date of receipt of a copy of the Internal Offer,
as a condition precedent to any sale of Shares by the Initiator to any
third party, to require the third party to purchase all of the Recipient's
Shares (or, in the case of a sale of Shares by FMRC pursuant to the last
sentence of Section 5.1.1, the same number and class of Recipient's Shares
as the Initiator desires (and is permitted by Section 5.1.1) to sell) for a
price per Share which is the same as that which is equal to or higher than
that which is stipulated in the Internal Offer, and otherwise upon the same
terms and conditions as contained in the Internal Offer. Should the
Recipient not have notified the Initiator of its intention to exercise its
right to require the third party to purchase all of its Shares, (or, in the
case of a sale of Shares by FMRC pursuant to the last sentence of Section
5.1.1, the same number and class of Recipient's Shares as the Initiator
desires (and is permitted by Section 5.1.1) to sell) within the thirty
(30)-day delay mentioned hereinabove, it shall irrevocably be deemed to
have elected not to exercise such right. In the event that the Recipient
exercises the Tag-Along Right and
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the transaction does not close as a result of a fault of the Initiator or
Recipient (including, without limitation, the Initiator or Recipient
deciding not to sell its Shares after indicating that it would do so), the
Initiator or Recipient, as the case may be, shall indemnify the other
Shareholder in respect of any damage or prejudice suffered by such
Shareholder as a result of the transaction not concluding.
5.4 Drag Along Right
5.4.1 If a Shareholder or Shareholders (for the purposes of this Section
5.4, an "OFFEREE") receive(s) a "GLOBAL OFFER" (as hereinafter
defined) for all the Shares held by all of the Shareholders, which the
Offeree wishes to accept, the Offeree shall forthwith provide a copy
of the Global Offer to the other Shareholders and if such Global Offer
is accepted by holders of more than 95% of the Shares (other than the
Preferred Shares), then the Offeree shall have the right to require
the other Shareholders (herein called the "DRAG ALONG SHAREHOLDERS"),
on twenty (20) days notice in writing to the Drag Along Shareholders,
to sell all of the Shares held by them to the third party pursuant to
the terms of the Global Offer for a price per Share which is the same
as that which is to be received by the Offeree, and otherwise upon the
same terms and conditions as contained in the Global Offer. The
Corporation is hereby irrevocably appointed the agent and attorney of
the Drag Along Shareholders for the purposes of effecting registration
of the third party as a shareholder in completing the sale of the
Shares of the Drag Along Shareholders to the third party in accordance
with this Section 5.4. In the event that the transaction does not
close as a result of a fault of any of the Drag Along Shareholders or
the Offeree, as the case may be, (provided that the Global Offer is
accepted), the Drag Along Shareholder or the Offeree, as the case may
be, who has committed a fault shall indemnify the other parties
hereto, as the case may be, who has not committed a fault, in respect
of any damage or prejudice suffered by it as a result of the
transaction not concluding.
5.4.2 For purposes hereof, "GLOBAL OFFER" shall mean an offer for all of
the Shares made by a third party dealing at Arm's Length with the
Shareholders and the Corporation, which shall not be valid for
purposes of this Section unless:
(i) it is irrevocable and the consideration for the purchase of the
Shares shall be exclusively cash;
(ii) all Shares sold must be sold Free and Clear;
(iii) the purchaser of the Shares shall assume all of the rights and
obligations in respect of the Corporation, the Subsidiaries and
under this Agreement of the Shareholders and shall also ensure
that any guarantees or other security granted by the Shareholders
are released upon closing;
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(iv) it requires that the purchaser of the Shares obtain on or prior
to closing all requisite statutory and regulatory approvals in
respect of its acquisition of all of the Shares;
(v) it shall not provide for the provision of management, consulting
or other fees, the payment for any non-competition covenant, or
the payment of salary which is reasonably attributable to the
purchase price as opposed to the fair consideration for future
services to be rendered by the Shareholders or any of their
Associates, or any other Person with whom the Offeree does not
deal at Arm's Length, but shall include the purchase of any
indebtedness owed by the Corporation to the Shareholders who are
selling their Shares; and
(vi) it shall provide that the Shares of the Drag Along Shareholders
shall be sold on an "As Is" basis except for a representation and
warranty of the Drag Along Shareholders that their Shares are
Free and Clear.
5.5 Rights of Purchaser
Any purchaser of all of the Shares held by either Shareholder in accordance
with the provisions of this Agreement shall be entitled to all of the
rights and benefits accruing to such Shareholder hereunder and shall be
subject to all obligations binding upon such Shareholder in respect
thereof.
5.6 Transfer to an Affiliate
Notwithstanding anything to the contrary herein, the Shareholders may
Transfer or otherwise dispose of all of their Shares to a Person which, (i)
in the case of PTIC is an Affiliate of PTIC and, (ii) in the case of FMRC
is a wholly-owned subsidiary of FMRC, another trust for the benefit of ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the members of his immediate family (being his wife
and children of the first degree (through blood or adoption)), a
wholly-owned subsidiary of such other trust, a company wholly owned by ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or the wife or children of the first degree (through
blood or adoption) of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (in each case a "PERMITTED
TRANSFEREE"), provided, in all cases, that (a) as a condition precedent to
such Transfer, and without releasing the transferor hereunder, the
transferee shall agree in writing to be bound by the terms and conditions
of this Agreement as if it were an additional original party thereto and
(b) such transferee remains at all times a Permitted Transferee of such
Shareholder, failing which the Shares Transferred must be forthwith
re-transferred to the original Shareholder or its Permitted Transferee.
5.7 Pre-emptive Rights
5.7.1 If the Corporation requires additional capital by way of equity, the
Corporation shall provide written notice to the Shareholders
specifying the terms and conditions of the proposed equity issue
including the amount of financing to be raised, the type of security
to be issued, the price per security to be issued and the
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target completion date. Each Shareholder shall have an irrevocable
right, exercisable by written notice given to the Corporation within
fifteen (15) days after the giving of above notice by the Corporation,
to participate in the equity financing on a pro rata basis based on
the number of Shares held by such Shareholder on the terms and
conditions set forth by the Corporation and indicating how many
additional securities each Shareholder will purchase if the other
Shareholder does not elect to exercise the right of first refusal
herein granted. In the event that a Shareholder elects to subscribe
for its pro rata proportion of the proposed equity issue and the other
Shareholder declines to so subscribe, the Shareholder electing to so
subscribe shall have the further right and option to subscribe for all
or part of the remaining equity on the same terms and conditions as
set forth by the Corporation. If there remains equity which no
Shareholder has elected to subscribe for, the Corporation may elect to
proceed with the equity financing less the amount subscribed for under
this Section 5.7.1 or decline to proceed and to pursue its equity
capital requirements through other sources on terms and conditions no
more favourable than the terms and conditions specified to the
Shareholders. Nothing contained in this Section 5.7.1 nor Section
5.7.2 shall affect the requirement that the Board provide approval to
the proposed equity financing in accordance with Section 6.6.
5.7.2 Notwithstanding Section 5.7.1 hereof, no Shareholder shall have any
rights under Section 5.7.1 in respect of:
(i) the issue of any options or Shares of the Corporation pursuant to
any ESOP;
(ii) any Preferred Shares issued to PTIC up to an aggregate
redemption/retraction value of fifteen million dollars
($15,000,000).
5.7.3 The Shareholders recognize that PTIC has funded the operating
expenses of the Corporation, since its inception and, in consideration
therefore, as at the date hereof, has issued Preferred Shares having
an aggregate redemption value of $11,300,000 in conformity with the
provisions of this Agreement, the Business Plan and the Budgets. The
Shareholders and the Corporation hereby agree, covenant and undertake
that, subject to solvency tests pursuant to the Act and any covenants
made to lenders to the Corporation, as many Preferred Shares as
possible shall be redeemed by the Corporation at the end of any
quarter from the Excess Cash Flow at the full redemption price
thereof, the whole subject to the Act and notwithstanding Section
6.6.19, provided that the Preferred Shares shall be so redeemed out of
such funds pro rata with the payment of any contingent management
fees/remuneration, which shall be payable pursuant to the Management
Agreement (the "MANAGEMENT AGREEMENT"). Management shall present a
determination of Excess Cash Flow to the Board on a quarterly basis
along with the interim financial statements of the Corporation and the
Subsidiaries. At any time, PTIC may request that the auditors of the
Corporation certify the Excess Cash Flow within thirty (30) Business
Days of such request.
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The Corporation shall cause such auditors' certification to be sent to
the Shareholders forthwith. Any redemption required in respect of the
foregoing, shall be effected within thirty-five (35) Business Days of
a request from PTIC. Should the Corporation fail to redeem the
Preferred Shares in accordance with the foregoing, PTIC shall have the
right to cause the Corporation to repurchase such Preferred Shares
from any Excess Cash Flow at the full retraction price thereof and the
Preferred Shares shall be repurchased on a pro rata basis with the
payment of any contingent management fees/remuneration which shall be
payable pursuant to the Management Agreement. In the event that the
Corporation is prohibited by the Act from redeeming the Preferred
Shares in accordance with the foregoing, the Shareholders hereby agree
to reduce the stated capital accounts maintained for any class of
Shares in order for the Corporation to fulfill its obligation
hereunder.
5.7.4 The Shareholders have expressed an agreement in principle to each
equally contribute an additional twelve million five hundred thousand
dollars ($12,500,000) to the Corporation through subscription for
Class A Common Shares (or such other class of shares) if the
circumstances, in their unanimous view, justifies such investment.
5.7.5 PTIC shall have no further obligation to subscribe for Preferred
Shares.
ARTICLE 6
BOARD OF DIRECTORS, MANAGEMENT AND ORGANIZATION
6.1 Board of Directors
6.1.1 Each of the Shareholders agrees that the Board shall consist of ten
(10) Directors, namely five (5) nominees of PTIC and five (5) nominees
of FMRC.
6.1.2 The Party entitled under Section 6.1.1 to nominate a Director may
replace any Director nominated by it at any time and from time to
time. Any such Party who wishes to replace a Director may have such
Director replaced at any duly constituted meeting of the Shareholders
or shall forward a written resolution to that effect, signed by that
Shareholder, to the other Shareholder not less than forty-eight (48)
hours before a meeting of Directors at which such replacement director
is expected to attend. Upon receipt of such written resolution, the
other Shareholder shall execute the resolution and promptly return it
to the Party initiating the same, who, upon receipt thereof, shall
forward the signed resolution to the Corporation for filing in the
corporate minute book. However, the holders of Shares entitled to
nominate directors may waive in writing the right to replace any named
Director under Section 6.1.1.
6.1.3 In the event that any Shareholder sells all of its Shares in
accordance with this Agreement, the nominated Directors of such
Shareholder shall resign and shall provide a release to the
Corporation and the purchaser of such Shares shall be entitled to the
same rights, if any, to nominate Directors as such Shareholder had.
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6.2 Terms of Office
The term of office of a Director shall commence on the date of that
individual's election to the Board and shall terminate at the close of the
next following annual meeting of the Shareholders, provided that his
successor is elected at such meeting, or at any time prior thereto if the
Shareholder nominating a Director replaces such Director in accordance with
Section 6.1.2.
6.3 Powers and Duties of Directors
Subject to the Act and the provisions hereof, the Directors shall manage or
supervise the business and affairs of the Corporation, except as such
authority may be delegated by the Directors from time to time.
6.4 Casting Vote
The Chairman of any meeting of the Board of Directors of the Corporation
shall have no additional or casting ballot.
6.5 Exercise of Authority
6.5.1 Unless otherwise agreed to in writing by all of the Directors, but
always subject to the Act, a quorum of any meeting of the Board shall
consist of a majority of Directors then in office, provided in all
cases, such majority includes two (2) Directors nominated by each of
FMRC and PTIC.
6.5.2 Unless all of the Directors are present (except where a Director
attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not
lawfully called) or those absent waive notice, no meeting of Directors
shall be validly convened unless not less than forty-eight (48) hours'
written notice thereof is given in accordance with the provisions of
the By-Laws. For the purposes hereof, email notice shall constitute
written notice.
6.5.3 No resolution with respect to any matter may be put to any meeting of
the Board unless the notice of the meeting sets forth such matter as
an item on the agenda for the meeting or unless all of the Directors
either are present and do not object to the matter being put to the
meeting or otherwise waive the provisions of this Section 6.5.3.
6.5.4 Except as otherwise herein provided, decisions of the Board shall be
effective only if approved by a majority of the votes cast at a
meeting of the Directors or by written resolution signed by all of the
Directors.
6.6 Extraordinary Matters
Notwithstanding any provision to the contrary in the Articles, the By-Laws
or this Agreement, the following matters shall (in addition to all other
matters which by law
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require board approval) require the approval of all of the Directors
nominated by PTIC participating at the meeting and all of the Directors
nominated by FMRC participating at the meeting:
6.6.1 the appointment and terms of employment of any individual to the
office of chairman, deputy chairman, chief executive officer, chief
operating officer, chief financial officer and all other senior
officers and executives of the Corporation and any Subsidiary;
6.6.2 any material change in the terms of employment or compensation of any
officer or consultant of the Corporation or any Subsidiary other than
as contemplated in the Budget;
6.6.3 approval of the business plan of the Corporation and any Subsidiary
and any material modifications thereto (the "BUSINESS PLAN"). It being
accepted and agreed that the Business Plan shall be updated by the
Corporation and any Subsidiary annually and approved by the Board of
Directors at least once a year. Should the Business Plan be changed
during the year, such changes must be adopted by the Board of
Directors as hereinabove provided;
6.6.4 approval of the Budget of the Corporation and any Subsidiary and
changes to or deviations from it resulting in a material and
substantial variance;
6.6.5 any material change in the Corporation's (or any Subsidiary's)
Business (other than a material change beyond the control of the
Corporation or any Subsidiary) or the taking of any action which may
lead to or result in such material change;
6.6.6 acquisitions, investments, dispositions, reorganizations,
extraordinary matters (including anything giving rise to a special
meeting of shareholders of the Corporation, Subsidiary or any Investee
Entity) or other transactions that (a) involve the Corporation or the
Subsidiary in any way; (b) involve an Interest of the Corporation or
any Subsidiary in an Investee Entity; or (c) deviate from the Business
Plan;
6.6.7 the entering into or amendment of any agreement with any Person who
is not dealing at Arm's Length with the Corporation or any Subsidiary;
6.6.8 the taking or institution of any proceedings for the winding up,
liquidation, reorganization or dissolution of the Corporation or any
of its Subsidiaries;
6.6.9 the making of an assignment for the benefit of any creditors of the
Corporation or of any of its Subsidiaries;
6.6.10 the amalgamation, consolidation, merger of, or the entering into of
any agreement to amalgamate, consolidate or merge, the Corporation or
any of its Subsidiaries with any Person, or the continuance or
corporate reorganization of any kind of the Corporation or any of its
Subsidiaries;
-19-
6.6.11 the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Corporation or any of its
Subsidiaries or any sale, lease, exchange, or other disposition of any
material asset of the Corporation or any of its Subsidiaries out of
the ordinary course of business;
6.6.12 subject to Sections 5.7.3 and 7.2 hereof, the establishment or
adoption of a dividend policy, the declaration, payment or setting
aside for payment of any dividend, the distribution of any surplus or
earnings, the return of any capital or any other payment or
distribution of assets of the Corporation to any Shareholder;
6.6.13 the amendment of the Articles or By-Laws;
6.6.14 any change in the number of Directors;
6.6.15 the borrowing of money on behalf of the Corporation or any
Subsidiary or the approval of the terms of any government assistance
of any kind to the extent such governmental assistance is not included
in the current Budget;
6.6.16 any change to the auditors, lawyers or bankers of the Corporation.
The Shareholders hereby agree that initially the auditors of the
Corporation shall be Deloitte & Touche and Davies ▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Vineberg LLP shall be legal counsel to the Corporation.
6.6.17 the guarantee or indemnification by the Corporation or any of its
Subsidiaries of, or the grant of security by the Corporation or any of
its Subsidiaries for, the debts or obligations of any Person;
6.6.18 the making of any loans or the granting of any other financial
assistance to any Shareholder or Associate of any Shareholder;
6.6.19 the issuance or allotment of Shares or the granting of any right,
option or privilege to acquire any Shares or the redemption or
repurchase by the Corporation of Shares, other than as contemplated in
this Agreement; and
6.6.20 any public offering of Shares.
6.7 Meetings of Shareholders
6.7.1 The quorum for the transaction of business at any meeting of the
Shareholders shall be two (2) or more persons present in person or by
proxy provided that all Shares held by FMRC and PTIC are represented
at the meeting. No meeting shall continue with the transaction of
business in the absence of a quorum.
6.7.2 In the case quorum is not reached at any Shareholders meeting, that
meeting may be adjourned by the Shareholders attending such meeting to
a later date not earlier than three (3) Business Days after such
original meeting date and no later than fifteen (15) Business Days
after such original meeting date, in which case the
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quorum required for such Shareholders meeting shall be the number of
Shares present (in person or by proxy) at such meeting. A notice of
the date, time and place of such meeting must be sent to all
Shareholders at least three (3) Business Days prior to such meeting by
facsimile and overnight courier.
6.7.3 Subject to Section 6.6, all questions before the Shareholders shall
be decided by a majority of sixty percent (60%) of the Shares of each
class. The chairman of the meeting of the Shareholders shall be
decided by a majority of the Shares voting, and shall have no
additional or casting ballot.
6.8 Committees
6.8.1 In the spirit of accomplishing the objectives set forth in the second
and third recitals hereof, the Board may establish an executive
committee to which the Board shall, subject to the Act, delegate
certain responsibilities (the "EXECUTIVE COMMITTEE"). The Shareholders
hereby agree that the Executive Committee shall consist of four (4)
members, namely two (2) nominees of PTIC and two (2) nominees of FMRC.
The provisions of Sections 6.2, 6.4 and 6.5 hereof shall apply to the
meetings of the Executive Committee, mutatis mutandis, except that any
decisions of the Executive Committee shall be made by a unanimous
decision of all members of such Executive Committee.
6.8.2 The Board of Directors may establish and provide for other committees
of the Board. All such committees shall have equal representation as
between the Shareholders.
6.9 Management
6.9.1 Subject to the foregoing, the day to day management, responsibility
and supervision of the Business of the Corporation shall be entrusted
to the Chief Executive Officer of the Corporation.
6.9.2 Subject to (i) Section 6.6.12 hereof, (ii) normal and prudent
reserves and compliance with solvency tests provided for pursuant to
the Act or any covenants in favour of lenders to the Corporation,
(iii) the redemption/retraction of the Preferred Shares pursuant to
Section 5.7.3; (iv) the payment of any deferred management fees
pursuant to Section 5.7.3 and (v) the provision for investments
pursuant to the Business Plan and Budget, the Corporation and all
Subsidiaries (and to the extent the Corporation or any Subsidiary is
able to do so, any Investee Entity) shall operate under the principle
of maximum distribution of cash flow to the Shareholders. The
Shareholders hereby agree that following the redemption/retraction of
the Preferred Shares and payment of the management fees/remuneration
which shall be payable pursuant to the Management Agreement in
accordance with Section 5.7.3 hereof, any Excess Cash Flow shall be
available for distribution to the Shareholders in accordance with the
foregoing. A determination as to the nature and amount of such
distribution to the Shareholders
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shall be made by the Board of Directors on a quarterly basis. Should
any Directors or Shareholders so request, the Corporation shall obtain
an auditor's certification of the Excess Cash Flow in respect of any
quarter.
6.9.3 Subject to Section 9.2, all technology (including intellectual as
well as intangible or tangible property, hardware, software, patents,
trademarks, know-how etc. without exception or reserve (herein
"TECHNOLOGY")) developed or identified by either Shareholder and
relating to the Business will be transferred to the Corporation or the
relevant Investee Entity. Any technology developed by employees of the
Corporation or, subject to Section 9.2, any other relevant entity will
belong to the Corporation and the Corporation shall ensure that terms
of employment of all its employees and the employees of its
Subsidiaries so provide in the broadest sense, including moral and
other unregisterable or unassignable rights.
6.10 Insurance
6.10.1 The Corporation shall procure and maintain directors and officers
liability insurance in an amount not less than five million dollars
($5,000,000) per occurrence. No Person other than the Parties may take
or claim any benefit under this clause.
6.10.2 ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby recognizes and acknowledges that PTIC
has the right to obtain and maintain a key man insurance on the life
and capacity of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ given the importance of the
expertise of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to the Business mission of the
Corporation and the key role that he plays in directing the strategic
development of the Corporation and its Investee Entities. ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby agrees to provide his full cooperation in
respect of the foregoing.
ARTICLE 7
TRACKING SHARES
7.1 Holdings of Neurochem Inc.
As of the date hereof, the Corporation is the sole shareholder of Luxco II.
Luxco II holds 11,068,368 Common Shares of Neurochem Inc. It is the
intention of FMRC and PTIC as shareholders of the Corporation that
henceforth they shall each, independently the one from the other, be able
to dispose of their attributable portion of Common Shares of Neurochem Inc.
which are designated and segregated for them respectively as "Class F
Neurochem Shares" and "Class P Neurochem Shares" and be able to receive
their attributable portions of the proceeds thereof subject to Section 7.3
hereof. The holders of the Class F Special Shares are, subject to certain
limitations provided herein and under the Act, entitled to the proceeds of
disposition and dividends received by Luxco II on 5,534,184 common shares
of Neurochem Inc. held by Luxco II (subject to fluctuation as provided in
the Articles) which are designated as "Class F Neurochem Shares" by the
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board of managers of Luxco II and the holders of the Class P Special Shares
are, subject to certain limitations provided herein and under the Act,
entitled to the proceeds of disposition and dividends received by Luxco II
on 5,534,184 common shares of Neurochem Inc. held by Luxco II (subject to
fluctuation as provided in the Articles) which are designated as "Class P
Neurochem Shares" by the board managers of Luxco II. It is contemplated
that as a result of the implementation of Section 7.2 hereof that the
number of Class F Neurochem Shares and Class P Neurochem Shares may not be
equal in the future.
7.2 Dividends
Subject to Section 7.3, in the event that either (or both) of FMRC, as a
holder of the Class F Special Shares (such shares the "CFS"), and PTIC, as
a holder of the Class P Special Shares (such shares the "CPS") (each of
FMRC or PTIC the "REQUESTING SHAREHOLDER"), desires that Luxco II sell some
or all of the Class F Neurochem Shares or Class P Neurochem Shares,
respectively, and realize the proceeds thereof it shall send written notice
to the other Shareholder and the Corporation to such effect specifying the
number of Class F Neurochem Shares (in the event that FMRC is the
Requesting Shareholder) or Class P Neurochem Shares (in the event that PTIC
is the Requesting Shareholder) to be sold (the "SALE NOTICE"). Upon receipt
of the Sale Notice, the Shareholders shall immediately use all commercially
reasonable efforts to, subject to applicable law and regulation (including
without limitation any securities laws and any policies and regulations of
any applicable stock exchange) as well as any lock-up agreements or
securities lending arrangements which may have been entered into by Luxco
II, cause the Corporation to take all steps necessary to effect such sale
and distribute the proceeds thereof in accordance with the terms hereof.
Once the Corporation receives the proceeds from such sale, it shall
immediately, subject to Section 7.3 but notwithstanding Section 6.6.12,
distribute the net after-tax proceeds (being the proceeds of such sale
received by the Corporation exclusive of Canadian, Luxembourg and any other
applicable tax, duty or levy and recognizing the principle that each of
FMRC and PTIC initially is entitled to the benefit of, indirectly, 50% of
the Corporation's tax losses) to the holders of CFS (in the event that FMRC
is the Requesting Shareholder) or the holders of CPS (in the event that
PTIC is the Requesting Shareholder) by way of dividend. Without in any way
limiting or precluding any other recourses of a Requesting Shareholder, in
the event a Shareholder, other than the Requesting Shareholder, does not
use commercially reasonable efforts to, subject to applicable law and
regulation (including without limitation any securities laws and any
policies and regulations of any applicable stock exchange) as well as any
lock-up agreements or securities lending arrangements which may have been
entered into by Luxco II, cause the Corporation to take all steps necessary
to effect such sale and distribute the proceeds thereof in accordance with
the terms hereof, such Shareholder shall be liable to the Requesting
Shareholder, as liquidated damages, for an amount equal to 125% of the
value of the Class F Neurochem Shares (in the event that FMRC is the
Requesting Shareholder) or Class P Neurochem Shares (in the event that PTIC
is the Requesting Shareholder) which are the subject of the Sale Notice,
such value to be equal to the value of such shares being, for the purposes
hereof, the closing market price of the shares of Neurochem Inc.
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on the TSX on the date of the sending of the Sale Notice by the Requesting
Shareholder. Such liquidated damages shall be payable within five (5) days
of written request of such Requesting Shareholder. For greater certainty,
and without limiting or in any way otherwise qualifying the scope of a
Shareholder's obligation to use "commercially reasonable efforts", it is
agreed and understood by the Parties that "COMMERCIALLY REASONABLE EFFORTS"
as used in this Section 7.2 shall exclude any consideration of the share
price of the Class F Neurochem Shares or Class P Neurochem Shares as a
result of such proposed sale and neither FMRC nor PTIC shall fail to comply
with a request of a Requesting Shareholder on the grounds that such sale
will or may result in the reduction of the share price of the remaining
Class F Neurochem Shares or Class P Neurochem Shares.
7.3 Repayment of Other Obligations
Notwithstanding Section 7.2, in the event that the Shareholders exercise
their rights pursuant to Section 7.2 hereof and the Board is unable to
agree on the quantum of the dividend to be declared and paid to
shareholders of the CFS or CPS, as the case may be, (a "DISAGREEMENT") any
dividend on the CFS or CPS pursuant to Section 7.2 shall reflect the fact
that each of FMRC and PTIC is ultimately responsible for one half (1/2) of
each of the following amounts and all such dividend payments shall be net
of such amounts as are necessary to reflect such Shareholder's
responsibility for: (i) any debt of the Corporation, and (ii) the
redemption amount of the Preferred Shares and the payment of any contingent
management fees/remuneration pursuant to the Management Agreement in
accordance with the intention set forth at Section 5.7.3. For greater
certainty, this Section 7.3 shall be binding on the Corporation, the Board
and the Shareholders only in the case of a Disagreement.
ARTICLE 8
FINANCIAL AND ACCOUNTING PRACTICES
8.1 Maintain Books
The Corporation shall keep or cause to be kept at its principal office
appropriate books and records with respect to the Business of the
Corporation. Any books and records maintained by or on behalf of the
Corporation in the regular course of its business, including, without
limitation, books of account and records of the proceedings of the
Corporation, may be kept on, or be in the form of, computer disks, hard
disks, magnetic tape or any other information storage device, provided that
the books and records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the
Corporation shall be maintained for financial purposes, on an accrual basis
in accordance with GAAP, consistently applied. The Shareholders (and their
agents and representatives) shall have access, and may take copies from all
such books and records at all reasonable times during regular business
hours. All such books and records shall be maintained in the English or
French language.
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8.2 Fiscal Year End
The first fiscal period of the Corporation shall end on December 31, 2001
and thereafter each fiscal year shall end on December 31. In this
Agreement, reference to a fiscal year of the Corporation shall, where the
context so permits, include reference to the first fiscal period of the
Corporation.
8.3 Additional Reporting
The Corporation shall, at the expense of the Corporation, distribute to the
Shareholders, the following for so long as they continue to hold Shares:
8.3.1 within ninety (90) days after the end of each fiscal year, the
audited consolidated and non-consolidated financial statements of the
Corporation and the audited financial statements of each Subsidiary;
8.3.2 within forty-five (45) days after the end of each fiscal year, the
unaudited consolidated and non-consolidated financial statements of
the Corporation and the unaudited financial statements of each
Subsidiary;
8.3.3 as soon as possible and in any event within thirty (30) days of the
end of each fiscal quarter, the interim consolidated and
non-consolidated financial statements of the Corporation as at the end
of such quarter and the interim financial statements of each
Subsidiary, including a comparison to the then current Budget;
8.3.4 on the last meeting of the Board for each quarter of the fiscal year,
a certificate or a detailed report executed by the Chief Executive
Officer of the Corporation, stating that (i) vacation pay, wages,
source deductions and taxes required to be remitted by the Corporation
have been so remitted and are in good standing since the date of the
last certificate, and (ii) the property of the Corporation and the
operations of the Corporation's Business are in compliance in all
material respects with all laws. Notwithstanding the foregoing, the
Chief Executive Officer of the Corporation shall report verbally to
the Board as the above-mentioned items at each meeting of the Board;
8.3.5 as soon as practicable and in any event not later than thirty (30)
days prior to the commencement of each fiscal year, the annual
operating budget, broken down on a monthly basis, of the Corporation
for the forthcoming fiscal year and the annual operating budget for
each Subsidiary which budget shall include: annual revenue and
operating expenses, capital expenditures, any increase or decrease of
(a) the investment of the Corporation in any Subsidiary or (b) in the
Interest of the Corporation or Subsidiary in any existing Investee
Entity, the taking of future Interests in other Investee Entities,
research and development expense budget relating to scientific
development expenses as well as a forecasted balance sheet and a
statement of changes in financial position, on a consolidated and
unconsolidated basis, and a forecasted statement of Excess Cash Flow,
the whole for the upcoming fiscal year (the "BUDGET");
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8.3.6 any notice, letter or other document informing the Corporation or any
Subsidiary of the occurrence of a default or occurrence of an event of
default under or pursuant to any material contract to which the
Corporation or any Subsidiary is party, the effect of which may or
would result in a material adverse change in the financial position,
business operations or assets of the Corporation or any Subsidiary,
together with comments on proposed solutions of senior management of
the Corporation in order to solve such situation, within two (2)
Business Days of receipt of said notice, letter or document;
8.3.7 any notice, letter or document notifying the Corporation of the
violation of or default under, or potential violation of or default
under any law to which the Corporation or any Subsidiary is or may be
subject, the effect of which may or would result in a material adverse
change in the financial position, business operations or assets of the
Corporation or any Subsidiary, together with comments on proposed
solutions of senior management of the Corporation in order to solve
such situation, within two (2) Business Days of receipt of such
notice, letter or document;
8.3.8 such other information respecting the financial position, business
operations and assets of the Corporation or any Subsidiary as may
reasonably be requested from time to time by the Shareholders;
8.3.9 as requested by the Shareholders, access, during normal business
hours, to inspect, examine and copy all books of accounts, registers,
etc., of the Corporation or any Subsidiary.
ARTICLE 9
RIGHT OF FIRST BUSINESS OPPORTUNITY AND NON-COMPETITION
9.1 Right of First Business Opportunity
9.1.1 The Corporate Group shall be the exclusive vehicle of the
Shareholders and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for investments in the nature
of the Business worldwide. Each Shareholder and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
agrees that during the term of this Agreement, it/he and its/his
Affiliates shall promptly submit any investment, business or
technology opportunity falling within the scope of the Business or
relating thereto which becomes known to it/him, which is reasonably
available and which it/he is interested in pursuing, to the other
Shareholders and to the Corporate Group for consideration by the
Corporate Group together with all relevant detailed data and
information, including (without limitation) that derived from the due
diligence process referred to in Section 4.2.3, as shall be necessary
to enable the Board of Directors to arrive at an informed opinion on
the matter (an "OPPORTUNITY"). In the event that the Corporate Group,
after due consideration by the Board of Directors (or such other
applicable board of directors) over a reasonable period of time in the
circumstances (i) determines to invest in a portion
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(but not all) of any Opportunity or (ii) declines to pursue to pursue
such Opportunity altogether, the Shareholder (or ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇) that presented the Opportunity shall be entitled to pursue
such Opportunity (or remaining portion thereof) either alone or in
association with other parties provided that any investment made
pursuant to such Opportunity is pursued in good faith and
substantially in accordance with the parameters proposed to the
Corporation.
9.1.2 The process of identification and submission of Opportunities will be
as set out in Article 4 hereof.
9.2 Non-Competition
Other than as permitted pursuant to Section 9.1.1 hereof, each Shareholder
and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agrees that it/he shall not, until November ____,
2008, in the Restricted Area, on its/his own behalf or on behalf of any
Person, whether directly or indirectly, in any capacity whatsoever
including, without limitation, as an employer, employee, mandator,
mandatory, principal, agent, joint venturer, partner, shareholder or other
equity holder, independent contractor, licensor, licensee, franchisor,
franchisee, distributor, consultant, supplier, trustee or through any
Person, carry on or be engaged in or have any financial or other interest
in or be otherwise commercially involved in any endeavour, activity or
business in such countries which is the same as, is substantially similar
to or is in competition with the Business of the Corporation or any
Subsidiary or with the business or undertaking of an Investee Entity or any
business or undertaking which is contemplated in a current budget of the
Corporation, Subsidiary or any other Investee Entity.
9.3 Limitation
The restrictions set forth in this Article 9 shall not extend to or apply
to (a) any of: Power Corporation of Canada, Power Financial Corporation,
Great-West Life Co. Ltd., London Insurance Group Inc., Investors Group
Inc., Mackenzie Financial Corporation or Parjointco N.V. or to any of their
respective Subsidiaries, Affiliates, Associates or investee companies,
present or future (other than PTIC and its Affiliates) all of which are
recognized by the Parties to operate independently and (b) normal course
portfolio investments by each Shareholder and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in
public companies, up to but not exceeding five percent (5%) of the total
issued and outstanding shares of all classes of any such company.
9.4 Injunction
Notwithstanding Article 12 hereof, each Shareholder and ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ hereby agree that, in the event of any actual or threatened breach
by either Shareholder or ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of any of the covenants or
agreements contained in this Article 9, without prejudice to any and all
other rights and recourses of the Corporation, the Shareholders and/or ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Corporation, any Shareholder or
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▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Corporation, any Shareholder or ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ shall have the right to enforce the terms and provisions thereof by
means of compelling specific performance and/or by means of injunction.
ARTICLE 10
REPRESENTATIONS, WARRANTIES, COVENANTS
AND SHAREHOLDER RELATIONS
10.1 General
Each Shareholder and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (in respect of Section 10.1.1)
hereby represents and warrants to the other Shareholder and to the
Corporation that such Shareholder and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (in respect of
Section 10.1.1):
10.1.1 is not a party to, bound by or subject to any indenture, mortgage,
lease, agreement, instrument, charter or bylaw provision, statute,
regulation, order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would occur as
a result of the execution and delivery by such Shareholder or ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of this Agreement or the performance by such
Shareholder or ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of any of the terms hereof;
10.1.2 has duly taken all actions necessary for the authorization,
execution, delivery and performance by it of this Agreement and that
this Agreement constitutes the legal, valid and binding obligation of
it, enforceable against it in accordance with its terms; and
10.1.3 shall own its Shares beneficially and as of record with good and
marketable title thereto, Free and Clear.
10.2 The Corporation
The Corporation hereby represents and warrants to each Shareholder that the
recitals to this Agreement shall be true and correct and that it is not a
party to, bound by or subject to any indenture, mortgage, lease, agreement,
instrument, charter or bylaw provision, statute, regulation, order,
judgment, decree or law which would be violated, contravened or breached
by, or under which any default would occur as a result of the execution and
delivery by the Corporation of this Agreement or the performance by the
Corporation of any of the terms hereof.
10.3 Covenants of FMRC
FMRC hereby covenants and agrees, on behalf of those persons who are
beneficiaries under the Trust Indenture of May 21, 1999 by which the FMRC
Family Trust was settled (the "INDENTURE"), that the Shares registered to
it shall be held in trust exclusively for the benefit ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and the members of his immediate family (being his wife and children of the
first degree (through blood and adoption)) and the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Foundation, a charitable foundation (collectively, the "BELLINI
BENEFICIARIES"), that no
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other Persons, whether or not they are beneficiaries under the Indenture,
shall have any right, either absolute or contingent, present or future,
legal or beneficial, to the Shares or any interest in the Shares, that,
notwithstanding the powers of trustees under the Indenture, no Shares shall
be appointed, allocated, transferred or delivered to any Persons other than
the Bellini Beneficiaries and that any purported appointment, allocation,
transfer or delivery shall be null and void and of no effect.
10.4 Relations among Shareholders
In their dealings with each other as shareholders in all matters
contemplated in this Agreement, the Shareholders shall deal with each other
and with the Corporation in the utmost good faith and shall owe to each
other the same duty of loyalty and fair dealing as would partners to each
other if the Corporation were a partnership.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidentiality
Except in furtherance of the Corporation's Business, the Parties hereto
agree to treat all information, data, reports and other records
("INFORMATION") relating to the Corporation's Business as confidential and
will not disclose such Information to any other person other than their
legal advisors or auditors without the prior written consent of the other
Parties; provided, however, no Party shall be liable for any such
disclosure if such Information:
11.1.1 becomes generally available to the public other than as a result of
a disclosure by a Shareholder or its representatives in violation of
this Agreement or a similar agreement to which the Corporation is a
party and of which the Shareholder is aware;
11.1.2 was available to a Shareholder on a non-confidential basis without
violation of this Agreement prior to its disclosure by the Corporation
or its representatives;
11.1.3 becomes available to a Shareholder on a non-confidential basis
without violation of this Agreement from a source other than the
Corporation or its representatives provided that such source is not
bound by a confidentiality agreement with the Corporation or a duty of
confidentiality to or in respect of the Corporation to the knowledge
of the Shareholder; or
11.1.4 a Shareholder is required by law to disclose, provided that a
Shareholder first notifies the Corporation that it believes it is
required to disclose such Information and it allows the Corporation a
reasonable period of time to contest the disclosure of such
Information.
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11.2 Survival
The terms of this Article 11 shall survive any termination of this
Agreement without limit as to time.
ARTICLE 12
MEDIATION AND ARBITRATION
12.1 Dispute Resolution Procedures
12.1.1 The Parties shall, in good faith, use their reasonable efforts to
cooperate and work together to preserve the intentions and mutual
benefits contemplated by this Agreement, and to ensure the effective
and efficient performance of its terms and conditions.
12.1.2 Any dispute, controversy or claim between the Shareholders relating
to the construction and/or interpretation of this Agreement (a
"DISPUTE") shall be resolved in accordance with the provisions of this
Article 12.
12.2 First Level
All Disputes shall be referred to each of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the
President of PTIC for review, consideration and resolution. If such
individuals are unable to resolve the Dispute within ten (10) Business Days
after referral of the matter to them, the Parties shall submit the Dispute
for resolution pursuant to Section 12.3.
12.3 Mediation
12.3.1 If any Dispute is not resolved pursuant to Section 12.2, either
Party may, within ten (10) Business Day after completion of the
procedures set forth in Section 12.2, refer such Dispute to mediation
by serving written notice of its intention to mediate the Dispute to
the other Party.
12.3.2 The mediator of such Dispute shall be chosen by the common agreement
of the Shareholders. If the Shareholders cannot agree within five (5)
Business Days following the notice referred to above, the mediator
shall be appointed by a judge of the Superior Court of Quebec upon
application of either Shareholder or such other person who is
designated for that purpose by the Shareholders.
12.3.3 The mediator shall be an attorney or a retired judge with reasonable
expertise and experience in mediating business and commercial
disputes. The decision of the mediator shall not be binding on the
Parties.
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12.4 Arbitration
12.4.1 If any Dispute is not resolved pursuant to Section 12.3, either
Party may, within fifteen (15) Business Days after the completion of
the procedures set forth in Section 12.3, refer such Dispute to
arbitration by serving written notice of its intention to arbitrate
the Dispute to the other Party.
12.4.2 Arbitration of any Dispute shall be conducted in accordance with the
Code of Civil Procedure (Quebec), except that such arbitration shall
be conducted by a single arbitrator to be mutually agreed to by the
Parties within three (3) Business Days following the date of the
referral of the Dispute to arbitration. The arbitrator shall have
reasonable expertise and experience in arbitrating business and
commercial disputes.
12.4.3 All arbitrations shall take place in Montreal, Quebec.
12.4.4 Any decision of the arbitrator shall be final and binding on the
Parties. The costs and expenses of the arbitration shall be paid as
the arbitrator determines. The Party to whom any amount is owed as a
result of an award of the arbitrator shall be entitled to payment
within ten (10) Business Days of the date of award.
12.4.5 Each of the Parties agrees to cooperate promptly and fully with the
other Party with respect to all aspects of arbitration, including the
appointment of the arbitrator and compliance with any requests or
orders of the arbitrator.
12.4.6 Notwithstanding the foregoing, the arbitrator shall have no power to
decide any matter which requires the consent pursuant to Section 6.6
hereof nor shall the arbitrator be entitled to change any permanent
right of a Shareholder or Director pursuant to this Agreement.
12.4.7 During the arbitration proceeding, the business of the Corporation
and any Subsidiaries shall be carried on in the ordinary course.
ARTICLE 13
GENERAL MATTERS
13.1 No Agency or Partnership
Nothing contained in this Agreement shall make or constitute any Party the
representative, agent, principal or partner of any other Party and it is
understood that no Party has the capacity to make commitments of any kind
whatsoever or incur obligations or liabilities binding upon any other
Party.
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13.2 Notice
Any notice, approval, consent, request or other communication (hereinafter
referred to as a "NOTICE") to be given under or in connection with this
Agreement shall be in writing and shall be given by personal delivery or by
telecopier or other electronic communication which results in a written or
printed Notice being given, addressed or sent as set out below or to such
other address or electronic number or address as may from time to time be
the subject of a Notice:
If to PTIC: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to FMRC: ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Corporation: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Notice, if personally delivered, shall be deemed to have been validly
and effectively given and received on the date of such delivery and if sent
by telecopier or other electronic communication with confirmation of
transmission, shall be deemed to have been validly and effectively been
given and received on the Business Day next following the day it was
transmitted.
13.3 Endorsement of Share Certificates
Any and all certificates representing Shares now or hereafter beneficially
owned by the Shareholders during the term of this Agreement shall have
endorsed thereon, in bold type, a legend in the following form:
"The securities evidenced by this certificate are subject to the terms
of, and disposition and transfer of such securities is restricted in
accordance with the provisions of, an agreement dated as of
November 9, 2006 made by and among the Corporation, Power Technology
Investment Corporation, ▇▇▇▇
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▇▇▇▇▇▇ ▇▇ qualite, trustee of the FMRC Family Trust and ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (Intervenant). A copy of the said agreement, together with all
amendments and supplements thereto, is available for inspection from
the Secretary of the Corporation on request and without charge at its
registered office."
13.4 Employee Stock Ownership Plan
The Shareholders agree that the Board has established a stock ownership
plan which shall allocate not more than ten percent (10%) of the
outstanding Class A Common Shares and five percent (5%) of each of the
Class F Special Shares and Class P Special Shares in the form of options
for key employees, directors, officers and consultants of the Corporation
(the "ESOP"). No key employee, director, officer or consultant of the
Corporation shall be entitled to receive options to acquire more than five
percent (5%) of the outstanding Class A Common Shares, and two and a half
percent (2.5%) of each of the Class F Special Shares and Class P Special
Shares pursuant to the ESOP. Each Optionee shall agree to execute an option
agreement including a drag along and a right of first opportunity
substantially similar to the terms hereof.
13.5 Quantity and Gender
In this Agreement whenever the singular form is used, the same shall
include the plural as and when required by the context. Words denoting
gender include all other genders, unless a contrary intention is to be
inferred from or required by the subject matter or context.
13.6 Table of Contents and Section Headings
The Table of Contents and the Article and Section headings have been
inserted for convenience only and are not a part of this Agreement.
13.7 Generally Accepted Accounting Principles
All accounting and financial terms used herein, unless specifically
provided to the contrary, shall be interpreted and applied in accordance
with GAAP.
13.8 Statutes
Any reference in this Agreement to a statute or regulations thereunder
shall be deemed to be a reference to such statute or regulation as amended,
re-enacted or replaced from time to time, and reference to specific parts,
paragraphs or sections thereof shall include all amendments, re-enactments
or replacements' unless the express provisions hereof otherwise require.
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13.9 Severability
Each provision of this Agreement is intended to be severable. If any
provision hereof is illegal or invalid, such provision shall be deemed to
be severed and deleted herefrom and such illegality and invalidity shall
not affect the validity or enforceability of the remainder hereof.
13.10 Currency
Unless otherwise indicated, all references to currency in this Agreement
shall be to Canadian dollars.
13.11 Entire Agreement
This Agreement and the other agreements executed concurrently herewith by
the Shareholders (or Associates, as the case may be) constitute the entire
agreement among the Parties hereto with regard to the subject matter hereof
and supersede all prior agreements (including the Original Agreement),
understandings, representations, warranties, negotiations and discussions,
whether oral or written, among the Parties hereto with respect thereto.
13.12 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the federal laws of Canada applicable
therein. Subject to the provisions of Article 12 hereof, the courts of the
Province of Quebec shall have the exclusive jurisdiction to hear all
disputes arising in connection with this Agreement.
13.13 Expiry of Delay
If the expiry of any delay provided for in this Agreement falls on a
non-Business Day, the delay shall be extended to the next following
Business Day.
13.14 Recitals
The recitals hereof shall form an integral part of this Agreement as if
incorporated herein.
13.15 Including
Including and any other formulation of the verb include means including or
include(s), without limitation.
13.16 Binding Contract
This Agreement binds the parties as well as their heirs, legal
representatives, successors, and permitted assigns. The Transfer of all of
the Shares held by any Shareholder effected in accordance with the
provisions of this Agreement shall automatically result in the
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transfer of all of the rights and obligations of the transferor pursuant to
the terms of this Agreement unless otherwise provided herein.
13.17 Reclassification of Shares
The provisions of this Agreement shall apply, mutatis mutandis, to any
shares or securities of any nature into which the Shares may be converted,
exchanged, reclassified, redivided, redesignated, divided or consolidated,
to any shares or securities of any nature that are received by a
Shareholder as a stock dividend or distribution payable in shares,
securities, warrants, rights or options of any nature of the Corporation,
to any shares, securities, warrants, rights or options of any nature of the
Corporation or any successor, continuing company or corporation of the
Corporation that may be received by a Shareholder on a reorganization,
amalgamation, arrangement, consolidation or merger, statutory or otherwise,
and to any shares, securities, warrants, rights or options hereafter issued
or allotted by the Corporation to a Shareholder, all of which shares,
securities, warrants, rights or options shall be deemed to be Shares for
all purposes of this Agreement including the definition of Shares at
Section 1.1 hereof.
13.18 Assignment
Neither this Agreement nor any rights or obligations hereunder are
assignable by the Parties hereto without the prior written consent of the
other Parties hereto, subject to the rights of Shareholders to Transfer
their Shares pursuant to the terms of this Agreement, including, without
limitation, the requirement that the purchaser of such Shares agrees to be
bound hereby.
13.19 Further Assurances
The parties hereto agree to sign such further and other papers, cause such
meetings to be held and resolutions passed, exercise their vote and
influence, do and perform and cause to be done and performed such further
and other acts and things as may be necessary or desirable in order to give
full effect to this Agreement and every part thereof.
13.20 Counterparts
This Agreement may be simultaneously executed in several counterparts, each
of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
13.21 Consents and Waivers
No consent or waiver, expressed or implied, by any Party to or of any
breach or default by any other Party in the performance of any obligations
hereunder shall be deemed or construed to be a consent or waiver to or of
any other breach or default in the performance by such other Party of the
same or any other obligation of such Party hereunder. Failure on the part
of any Party to complain of any act or failure to act of any
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other Party or to declare any other Party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Party of
its rights hereunder.
13.22 Amendment
This Agreement may only be amended by written instruments signed by all
Shareholders and the Corporation.
13.23 Language of Agreement.
The parties acknowledge that they have requested that this Agreement and
all documents, notices, correspondence and legal proceedings arising from
this Agreement or relating hereto be drawn up in English. Les parties
reconnaissent qu'elles ont exige que cette convention ainsi que tout
document, avis, correspondance et procedure legale decoulant de cette
convention soient rediges en anglais.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day first above written.
POWER TECHNOLOGY INVESTMENT CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, ES QUALITE,
TRUSTEE OF FMRC FAMILY TRUST
PICCHIO PHARMA INC.
Per: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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INTERVENING FOR THE PURPOSES SET FORTH IN THE LAST RECITAL HEREOF EXCLUSIVELY IN
HIS CAPACITY AS A BENEFICIARY OF FMRC AND A PROVIDER OF SERVICES TO THE
CORPORATION PURSUANT TO THE MANAGEMENT AGREEMENT:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇