EXHIBIT 2.1
ARRANGEMENT AGREEMENT
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THIS AGREEMENT made as of September 27, 1999
BETWEEN:
ALLELIX BIOPHARMACEUTICALS INC., a corporation subsisting pursuant to
the laws of Canada ("Allelix")
OF THE FIRST PART
AND
NPS PHARMACEUTICALS, INC., a corporation subsisting pursuant to the
laws of Delaware ("NPS")
OF THE SECOND PART
WHEREAS Allelix and NPS wish to propose an arrangement involving
Allelix, the Allelix Shareholders (as hereinafter defined) and NPS;
AND WHEREAS the parties hereto intend to carry out the transaction
contemplated herein by way of an arrangement under the provisions of the Canada
Business Corporations Act and the Business Corporations Act (Ontario);
AND WHEREAS the parties hereto have entered into this Agreement to
provide for the matters referred to in the foregoing recitals and for other
matters relating to such arrangement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the
covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto do hereby covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless the context otherwise requires:
"Agreement" means this Arrangement Agreement;
"Allelix Common Shares" means the common shares of Allelix as constituted
on the date hereof;
"Allelix Counsel" means Stikeman, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
LLP, or such other counsel as may be appointed by Allelix;
"Allelix Financial Statements" means the comparative consolidated financial
statements (including consolidated balance sheets and consolidated
statements of loss and deficit and consolidated statements of changes in
financial position, together with notes thereto) for Allelix's fiscal year
ended August 31, 1998 (audited) and the nine month period ended May 31,
1999 (unaudited);
"Allelix Meeting" means the special meeting of Allelix Shareholders, as
ordered by the Interim Order and all adjournments and postponements
thereof, to consider and, if determined advisable, approve the repricing of
certain Allelix Options as approved by the Allelix board of directors on
April 15, 1999 and consider and, if determined advisable, approve a special
resolution (the "Continuance Resolution") approving the continuance of
Allelix as an Ontario corporation under the OBCA and the Arrangement
Resolution;
"Allelix Options" means the options to purchase Allelix Common Shares
issued from time to time prior to the date hereof pursuant to the Allelix
Stock Option Plan;
"Allelix Preferred Shares" means the preferred share, series 1 shares of
Allelix as constituted on the date hereof;
"Allelix Shareholders" means the registered holders of Allelix Common
Shares;
"Allelix Stock Option Plan" means the employee stock option plan dated
December 19, 1999 of Allelix;
"Allelix Subsidiaries" means Allelix Neuroscience Inc., Allelix Pharm-Eco
LP and Allelix Pharm-Eco Inc.;
"Allelix Warrants" means the warrants to purchase Allelix Common Shares
issued from time to time prior to the date hereof;
"Applicable Law" means, in relation to any Person, transaction or event,
all applicable provisions (or mandatory applicable provisions, if so
specified) of laws, statutes, regulations, rules, official directives and
orders of all stock exchanges and governmental bodies (whether
administrative, legislative, executive or otherwise) and judgments, orders,
rulings and decrees of all courts, arbitrators, commissions or bodies
exercising similar functions in actions or proceedings in which the Person
in question is a party or by which it is bound or having application to the
transaction or event;
"Arrangement" means the arrangement under the provisions of Section 182 of
the OBCA, on the terms and conditions set forth in the Plan of Arrangement
as such Plan
may be amended in the Final Order with the consent of Allelix and NPS, both
acting reasonably;
"Arrangement Resolution" mean the special resolution of the Allelix
Shareholders concerning the Arrangement;
"Articles of Arrangement" means the articles of arrangement in respect of
the Arrangement required by the OBCA to be filed with the OBCA Director
after the Final Order is made;
"business day" means any day, other than Saturday, Sunday and a statutory
holiday in Toronto, Ontario or Salt Lake City, Utah;
"CBCA" means the Canada Business Corporations Act, as now in effect and as
it may be amended from time to time prior to the Effective Date, including
the regulations made thereunder;
"Confidential Information" means all interpretations, technical, data,
reports, notes, know how, computer printouts, information and documents (in
each case whether in written or electronic form) pertaining in any way
whatsoever to the business, operations or capital of a party hereto or its
affiliates (as such term is defined in the Securities Act (Ontario)),
disclosed or to be disclosed pursuant to the terms and conditions of this
Agreement, and includes but is not limited to information relating to
engineering, research and development, corporate operations, business
opportunities, products, formulas, services, designs, drawings, marketing
and financial and taxation matters;
"Court" means the Superior Court of Justice (Ontario);
"Delaware Act" means the Delaware Business Corporations Act, as amended;
"Dissent Rights" has the meaning ascribed thereto in the Plan of
Arrangement;
"Effective Date" means the date shown on the certificate of arrangement to
be issued by the Director;
"Effective Time" has the meaning ascribed thereto in the Plan of
Arrangement;
"Encumbrance" includes, without limitation, any mortgage, pledge,
assignment, charge, lien, or other security interest, or any trust or any
preferential right of purchase or other third party interest and any
agreement, option, right or privilege (whether by law, contract or
otherwise) capable of becoming any of the foregoing;
"Environmental Laws" means any applicable Canadian or foreign federal,
provincial, state, municipal or local laws, regulations, orders, government
decrees or ordinances with respect to environmental, health or safety
matters;
"Exchangeable Shares" means the exchangeable shares of NPS - Allelix Inc.
created pursuant to the Plan of Arrangement with the share attributes set
forth in Appendix I to the Plan of Arrangement;
"Final Order" means the order of the Court approving the Arrangement, as
such order may be amended or modified by the highest court to which an
appeal may be applied for at any time prior to the Effective Date or, if
appealed, then, unless such appeal is withdrawn or denied, as granted or
affirmed;
"Information Circular" means the notice of meeting and management
information circular of Allelix prepared in connection with the Allelix
Meeting provided by Allelix to Allelix Shareholders in connection with the
transactions contemplated by this Agreement;
"Interim Order" means an order of the Court providing for, among other
things, the calling and holding of the Allelix Meeting and certain other
procedural matters, as well as for the issuance of the notice of
application for the Final Order, as the same may be amended or supplemented
from time to time;
"Material Adverse Effect" and "Material Adverse Change" means, in relation
to a party hereto, a condition affecting or a change in the business,
assets, properties, condition (financial or otherwise), results of
operations or prospects of such party (and its Subsidiaries on a
consolidated basis) which when taken as a whole have or represent or could
reasonably be expected to have a material adverse effect on the party or on
the market price or value of its securities, other than any matter or
action relating to (i) the Canadian economy or securities markets in
general or (ii) relating to the Canadian or U.S. biotechnology industry in
general, but not specifically relating to the party;
"ME" means The Montreal Exchange;
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"NPS - Allelix Inc." means a corporation incorporated under the British
Columbia Companies Act as a wholly-owned subsidiary of NPS Holdings;
"NPS Common Shares" means the common shares of NPS, par value $0.001 as
constituted on the date hereof;
"NPS Counsel" means Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and/or such other counsel as
may be appointed by NPS and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.;
"NPS Holdings" means a corporation incorporated under the British Columbia
Companies Act as a wholly-owned subsidiary of NPS;
"NPS Information Circular" means the notice of meeting and management
information circular of NPS prepared in connection with the NPS Meeting
provided by
NPS to NPS Securityholders in connection with the transactions contemplated
by this Agreement;
"NPS Meeting" means the special meeting of the holders of NPS Common Shares
and all adjournments and postponements thereof to consider and, if
determined advisable, approve, among other things, (i) an amendment to
NPS' Articles of Incorporation to increase the number of NPS Common Shares
authorized for issuance thereunder; and (ii) the issuance of up to
7,534,000 NPS Common Shares as contemplated by the Arrangement;
"NPS Preferred Shares" means the NPS Preferred Stock, $0.001 par value, as
constituted on the date hereof;
"NPS Shareholder Rights Plan" means the Shareholder Rights Plan adopted by
the NPS Board of Directors in December 1996;
"NPS Stock Option Plans" means the 1987 Stock Option Plan, the 1994 Equity
Incentive Plan, the 1994 Non-Employee Directors' Stock Option Plan, the
1994 Non-Employee Director Stock Bonus Program, the Employee Stock Purchase
Plan and the 1998 Stock Option Plan;
"NPS Warrants" means the warrants to purchase NPS Common Shares issued from
time to time prior to the date hereof;
"OBCA" means the Business Corporations Act (Ontario), as now in effect and
as it may be amended from time to time prior to the Effective Date,
including the regulations made thereunder;
"OBCA Director" means the Director appointed under Section 278 of the OBCA;
"Person" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a union, a government or any department or
agency thereof and the heirs, executors, administrators or other legal
representatives of an individual;
"Plan of Arrangement" means the plan of arrangement which is annexed as
Schedule A hereto and any amendment or variation thereto made in accordance
with Section 9.1 of this Agreement;
"Preferred Stock Purchase Rights" means the purchase rights issued pursuant
to the NPS Shareholder Rights Plan;
"Public Documents" means all documents filed, in the case of Allelix, by
Allelix with the applicable securities regulatory authorities in all
provinces in Canada in which Allelix is a reporting issuer, and in the case
of NPS, by NPS with the United States Securities and Exchange Commission
and Nasdaq, during the three years preceding the date of this Agreement,
and includes all documents so filed to and including the Effective Date by
a Person with respect to its business and affairs;
"Subsidiary" means, with respect to (i) a specified body corporate, any
body corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or
not shares of any other class or classes shall or might be entitled to vote
upon the happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate and shall include
any body corporate in like relation to a Subsidiary, and (ii) any Person
other than a corporation in which the first-mentioned Person or one or more
of its subsidiaries, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof;
"Support Agreement" means the agreement between NPS, NPS Holdings and NPS -
Allelix Inc., substantially in the form of Schedule B hereto;
"Tax" and "Taxes" means, with respect to any entity, all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings
or profits) and all capital taxes, paid-up capital taxes, gross receipts
taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value
added taxes, transfer taxes, franchise taxes, licence taxes, withholding
taxes, payroll taxes, employment taxes, Canada or Quebec Pension Plan
premiums, excise, severance, social security premiums, workers'
compensation premiums, unemployment insurance or compensation premiums,
stamp taxes, occupation taxes, premium taxes, property taxes, windfall
profits taxes, alternative or add-on minimum taxes, goods and services
tax, customs duties or other taxes, fees, imports, assessments or charges
of any kind whatsoever and any instalments in respect thereof, together
with any interest and any penalties or additional amounts imposed by any
taxing authority (domestic or foreign) on such entity and any interest,
penalties, additional taxes and additions to tax imposed with respect to
the foregoing.
"Tax Return" and "Tax Returns" means all returns, declarations, reports,
information returns and statements required to be filed with any taxing
authority relating to Taxes;
"TSE" means The Toronto Stock Exchange;
"U.S. Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended;
"Voting and Exchange Trust Agreement" means the agreement between NPS,
NPS - Allelix Inc. and a trust company, substantially in the form of
Schedule C hereto.
1.2 Interpretation Not Affected by Headings
The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this Agreement.
1.3 Article References
Unless the contrary intention appears, references in this Agreement to an
Article, Section, subsection, paragraph or schedule by number or letter or both
refer to the Article, Section, subsection, paragraph or schedule, respectively,
bearing that designation in this Agreement.
1.4 Number and Gender
In this Agreement, unless the contrary intention appears, words importing
the singular include the plural and vice versa; words importing gender shall
include all genders; and words importing persons shall include a natural person,
firm, trust, partnership, association, corporation, joint venture or government
(including any governmental board, agency or instrumentality thereof).
1.5 Date for Any Action
If the date on which any action is required to be taken hereunder by any of
the parties is not a business day in the place where the action is required to
be taken, such action shall be required to be taken on the next succeeding day
which is a business day in such place.
1.6 Currency
Unless otherwise stated, all references in this Agreement to sums of money
are expressed in lawful money of the United States of America.
1.7 Knowledge
The use in this Agreement of the phrases "Allelix knowledge", "knowledge of
Allelix" and "known to Allelix", and similar phrases referring to "it" or "its"
in reference to the knowledge of Allelix with respect to any matter or thing,
shall be interpreted to mean the actual knowledge of the directors and senior
officers of Allelix after enquiry of the management or employees of Allelix who
have management responsibility over the area of Allelix's business to which the
subject matter of Allelix's actual knowledge relates, and the phrases "NPS
knowledge", "knowledge of NPS", and similar phrases referring to "it" or "its"
in reference to the knowledge of NPS or "known to NPS" with respect to any
matter or thing, have a corresponding meaning.
1.8 Disclosure
The use in this Agreement of the phrase "except as disclosed" and similar
phrases, shall mean except as disclosed in writing by the disclosing party to
the receiving party (which shall include, without limitation, delivery of
documents for the purpose of disclosure of the contents thereof) and such
disclosure having been acknowledged in writing by the receiving party.
1.9 Schedules
The following schedules are incorporated by reference into this Agreement
and form part hereof:
Schedule A - Plan of Arrangement
Schedule B - Support Agreement
Schedule C - Voting and Exchange Trust Agreement
ARTICLE 2
THE ARRANGEMENT
2.1 Arrangement
As soon as reasonably practicable, Allelix and NPS shall apply to the Court
pursuant to Section 192 of the CBCA and Section 182 of the OBCA for an order
approving the Arrangement and in connection with such application shall:
(a) as soon as practicable and, in any event, by not later than October
31, 1999, file, proceed with and diligently prosecute an application
for an Interim Order under Section 192(4) of the CBCA and Section
182(5) of the OBCA providing for, among other things, the calling and
holding of the Allelix Meeting for the purpose of Allelix Shareholders
considering and, if deemed advisable, approving the Arrangement
Resolution; and
(b) subject to obtaining the approval of the Allelix Shareholders as
contemplated in the Interim Order and as may be directed by the Court
in the Interim Order, take the steps necessary to submit the
Arrangement to the Court and apply for the Final Order;
and, subject to the fulfilment or waiver of the conditions set forth in Article
7, shall deliver to the Director the Articles of Arrangement and such other
documents as may be required to give effect to the Arrangement.
2.2 Interim Order
The Interim Order sought by Allelix and NPS shall provide that, for the
purpose of the Allelix Meeting, the requisite majority for the approval of the
Arrangement Resolution by the holders of the Allelix Common Shares shall be two-
thirds of the votes cast by such shares present in person or by proxy at the
Allelix Meeting with holders of Allelix Preferred Shares entitled to vote as
holders of Allelix Common Shares in respect of that number of Allelix Common
Shares equal to the number of Allelix Common Shares such holders would be
entitled to receive if such shares were converted into Allelix Common Shares on
the record date for the Allelix Meeting unless the Court otherwise orders.
2.3 Effective Date
The Arrangement shall become effective on the Effective Date.
ARTICLE 3
MUTUAL REPRESENTATIONS AND WARRANTIES
Each party to this Agreement represents and warrants to the other party and
acknowledges that such other party is relying upon such representations and
warranties in connection with the matters contemplated by this Agreement that:
3.1 Organization and Qualification
It and each of its Subsidiaries is a corporation duly incorporated,
continued or amalgamated or a partnership formed, as the case may be, and
organized and validly existing under the laws of the jurisdiction of its
incorporation, continuance, amalgamation or formation and has the power and
authority to own or lease its property and assets and to carry on its business
as now being conducted and is duly registered to carry on business, and is in
good standing in each jurisdiction in which the character of its properties or
assets, owned or leased, or the nature of its business makes such registration
necessary, except where failure to be so registered or in good standing would
not have a Material Adverse Effect on it and its Subsidiaries, taken as a whole.
3.2 Subsidiaries
It has no Subsidiaries or agreements of any nature to acquire any
Subsidiary, or to acquire any other business operations out of the ordinary
course of business except for, in the case of Allelix, the Allelix Subsidiaries.
3.3 Authority Relative to this Agreement
It has the requisite corporate power and authority to enter into this
Agreement and, subject to obtaining the requisite approvals contemplated hereby,
to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and in
the Plan of Arrangement have been duly authorized by its board of directors and,
except as contemplated hereby, no other corporate proceedings on behalf of it
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of it enforceable against it
in accordance with its terms, subject to enforceability being limited by
applicable bankruptcy, insolvency, reorganization and other laws affecting the
enforcement of creditors' rights generally and the discretionary nature of
certain remedies (including specific performance and injunctive relief) and
subject to the effectiveness of clauses providing rights of indemnity or
exculpating a party or persons from a liability or a duty otherwise owed which
may be limited by law.
3.4 No Violations Caused by Agreement or Arrangement
(a) Except as disclosed previously in writing to the other party making
reference to this paragraph, the execution and delivery of this
Agreement by it and the consummation of the transactions contemplated
hereby and by the Plan of Arrangement and performance or compliance
with the terms and provisions hereof and thereof, will not:
(i) subject to completion of the corporate proceedings contemplated
hereby, violate, conflict with, or result in breach of any
provision or, require any consent, approval or notice under, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) or result in a right
of termination, cancellation, purchase or acceleration under, or
result in the creation of any Encumbrance upon any of the
properties or assets of it or of any of its Subsidiaries under
any of the terms, conditions or provisions of, its or its
Subsidiaries, articles, bylaws or other constating documents,
any agreement, contract, deed, indenture, debenture, note, bond,
Encumbrance, license, permit, approval or other instrument,
authority or obligation to which it or any of its Subsidiaries
is a party, or to which any of them or any of their respective
properties or assets may be subject, or by which it or any of
its Subsidiaries is bound;
(ii) subject to compliance with the statutes and regulations referred
to in Article 7, violate any Applicable Law, judicial or
administrative judgment, ruling, order, writ, injunction,
determination, award, decree, statute, ordinance, rule or
regulation applicable and known to it or any of its Subsidiaries
or any of their respective properties or assets; or
(iii) cause the suspension or revocation of any authorization,
consent, approval or license currently in effect,
except for such violations, conflicts, breaches, defaults, rights or
Encumbrances, suspensions, or revocations which, or any consents,
approvals or notices which if not given or received, would not have
any Material Adverse Effect; and
(b) no filing or registration with, or authorization, consent or approval
of, any domestic or foreign public body or authority is necessary by
it in connection with this Agreement, the Plan of Arrangement or the
consummation of the transactions contemplated hereby or thereby,
except as contemplated hereby and except for such filings or
registrations which, if not made, or for such authorizations, consents
or approvals, which, if not received, would not have any Material
Adverse Effect.
3.5 No Outstanding Actions, Suits, Proceedings or Investigations
Except as disclosed previously in writing to the other party making
reference to this paragraph, there are no actions, suits, proceedings or
investigations commenced or, to its knowledge, contemplated or threatened
against or affecting it or any of its Subsidiaries, at law or in equity, before
or by any governmental department, commission, board, bureau, court, agency,
arbitrator, stock exchange, market system or instrumentality, domestic or
foreign, of any kind, nor to the best of its knowledge are there any existing
facts or conditions which may reasonably be expected to be a proper basis for
any actions, suits, proceedings or investigations, which in any case could
prevent or hinder the consummation of the transactions contemplated hereby or
which could reasonably be expected to have a Material Adverse Effect.
3.6 Financial Statements
The audited financial statements prepared in respect of its most recently
completed financial year for which such statements have been prepared and the
unaudited financial statements prepared in respect of the periods subsequent
thereto were prepared in accordance with applicable generally accepted
accounting principles consistently applied and fairly present the consolidated
financial position, consolidated profits and loss (in the case of Allelix),
results of operations and changes in the financial position of the corporations
to which they relate on a consolidated basis as of the dates and for the periods
indicated therein.
3.7 Minute Books and Unanimous Shareholder Agreement
Its and its Subsidiaries' minute books are true and correct and contain the
minutes of all meetings and all resolutions of the shareholders and directors
thereof up to September 12, 1999 and, to its knowledge, there are no agreements
among its securityholders in relation to or concerning the voting, holding or
acquisition of its securities.
3.8 Public Disclosure
Its Public Documents:
(a) did not, as of the respective dates thereof, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein not misleading in light of the circumstances
under which they were made; and
(b) complied in all material respects with all applicable requirements of
Applicable Law, as of the respective dates thereof, and no fact exists
on the date hereof which has not been disclosed in its Public
Documents and which, if publicly disclosed, would reflect a Material
Adverse Change (or an event, condition or state of facts which might
reasonably have been expected to give rise to a Material Adverse
Effect).
3.9 No Outstanding Defaults and Violations
Neither it nor any of its Subsidiaries is:
(a) in breach or violation of any term or provision of its articles, by-
laws or other constating documents; or
(b) in breach or violation of any of the terms or provisions of, or in
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement (written or oral) or instrument or agreement,
contract, deed, indenture, debenture, note, bond, Encumbrance,
research agreement, license, license agreement, permit, joint venture
agreement, collaboration agreement, approval or other instrument,
obligation or authority to which it or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound or to which
any of the properties or assets of it or any of its Subsidiaries is
subject or, any statute or any Applicable Law order, rule or
regulation of any court or government or governmental agency or
authority having jurisdiction over it or any of its Subsidiaries or
any of their respective properties or assets, where such breach,
violation or default has or could reasonably be expected to have a
Material Adverse Effect.
3.10 No Unusual Transactions or Events
Except as previously disclosed in writing to the other party making
reference to this paragraph or as otherwise contemplated hereby, since, in the
case of Allelix, August 31, 1998 and, in the case of NPS, December 31, 1998, it
and each of its Subsidiaries has:
(a) not amended its articles, by-laws or other constating documents;
(b) conducted their respective businesses in all material respects in the
ordinary course of business consistent with normal industry practice;
(c) maintained or obtained all licences, permits, orders or approvals of,
and has made all required registrations with, any governmental or
regulatory body that is material to the conduct of its business;
(d) not suffered any Material Adverse Change except as has been disclosed
in its Public Documents;
(e) not made any change in its accounting principles and practices as
theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained;
(f) not suffered any damage, destruction or loss whether covered by
insurance or not that could reasonably be expected to have a Material
Adverse Effect;
(g) not sold or otherwise disposed of property or assets aggregating to
10% or more of its total consolidated property and assets other than
in the ordinary and regular course of business consistent with past
practice;
(h) not entered into, amended, relinquished, terminated or not renewed any
material contract, agreement, license, franchise, transaction,
commitment or other right or obligation, other than in the ordinary
and regular course of business consistent with past practice;
(i) maintained in effect salary and other compensation levels and benefits
and employee rights on termination, in accordance with its then
existing salary administration program;
(j) not declared, paid or set aside for payment any dividend or
distribution of any kind in respect of any of its outstanding
securities nor made any repayments of share capital; and
(k) not entered into or committed to enter into any agreement with an
officer or director of the corporation or the beneficial owner of
securities carrying more than 10% of the voting rights attached to all
of its outstanding securities.
3.11 Tax and other Returns
Except as previously disclosed in writing to the other party making
reference to this paragraph, it and each of its Subsidiaries has:
(a) duly and timely filed, in proper form, all Tax Returns required to be
filed by them (all of which Tax Returns were correct and complete in
all material respects) for all periods in respect of which such Tax
Returns were due prior to the date hereof, and have paid in full all
Taxes shown thereon, and there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to
any return referred to above. There are no assessments or
reassessments of Taxes that have been issued and are outstanding and
there are no outstanding issues which have been raised and
communicated to it by any taxing authority including any discussions
in respect of potential assessments or reassessments; and
(b) withheld from each payment made to any of its officers, directors and
employees and former officers, directors and employees and, where the
party or its Subsidiary is resident or deemed to be resident in Canada
for purposes of the Income Tax Act (Canada), to all persons who are
non-residents of Canada, all amounts required to be withheld in
respect of Taxes (including, without limitation, income tax) and
remitted the same to the proper tax or other authority within the time
required under any applicable legislation. All Taxes required under
applicable legislation to be charged, collected and remitted on any
sale, supply or delivery whatsoever, have been so charged, collected
and remitted on a timely basis.
3.12 Tax Provisions
Provision has been made, in accordance with applicable generally accepted
accounting principles, in its Financial Statements for all Taxes, payable in
respect of the business or assets of
it and its Subsidiaries or otherwise. Provision has also been made, in
accordance with generally accepted accounting principles, in their books and
records for all Taxes in respect of any accounting period which has ended
subsequent to the period covered by the Financial Statements.
3.13 Historical Assessments, Audits and Returns
In respect of each taxation year of it and each of its Subsidiaries, and
the predecessors of such corporations, it has provided to the other party making
reference to this paragraph:
(a) full and complete disclosure with respect to the status of any audits;
(b) copies of all objections or waivers with respect to such years
pursuant to applicable tax legislation, tax rulings and opinions from
applicable taxing authorities pursuant to which it, its affiliates and
any predecessors of such corporations operated or now operate; and
(c) copies of all Tax Returns which comprise all of the information
necessary to form a reasonably accurate understanding of the current
tax position of it and its Subsidiaries.
3.14 Assistance Filings
All filings made by it and its Subsidiaries under which it or its
Subsidiaries has received or is entitled to government assistance or incentives
have been made in accordance, in all material respects, with all applicable
legislation and contain no misrepresentations of a material fact or omit to
state any material fact which could cause any amount previously paid or
previously accrued on its accounts to be recovered or disallowed.
3.15 Insurance
It and its Subsidiaries maintain business and property insurance in
connection with their assets and business and liability insurance with respect
to claims for personal injury, death or property damage in relation to the
operation of their businesses, all with responsible and reputable insurance
companies in such amounts and with such deductibles as are customary in the case
of businesses of established reputation engaged in their industry.
3.16 Environmental Matters
To its knowledge, except as disclosed in writing to the other party making
reference to this paragraph or except to the extent that such violation does not
have a Material Adverse Effect on it:
(a) it and each of its Subsidiaries is not in violation of any
Environmental Laws;
(b) it and each of its Subsidiaries has operated its business at all times
and has received, handled, used, stored, treated, shipped and disposed
of all contaminants without violation of any Environmental Laws;
(c) there have been no unrectified spills, releases, deposits or
discharges of hazardous or toxic substances, contaminants or wastes on
any of the real property owned or leased by it or any of its
Subsidiaries or under their respective control, nor has any such real
property been used at any time by any person as a landfill or waste
disposal site;
(d) there have been no releases, deposits or discharges, in violation of
Environmental Laws, of any hazardous or toxic substances, contaminants
or wastes to the earth, air or into any body of water or any municipal
or other sewer or drain water system by it or any of its Subsidiaries;
(e) no orders, directions or notices have been issued and remain
outstanding pursuant to Environmental Laws relating to its or any of
its Subsidiaries, business or assets;
(f) neither it nor any of its Subsidiaries has failed to report to the
proper governmental authority the occurrence of any event which is
required to be so reported by any Environmental Laws; and
(g) it and each of its Subsidiaries, holds all licenses, permits and
approvals required under Environmental Laws in connection with the
operation of its business and the ownership and use of its assets, all
such licenses, permits and approvals are in full force and effect, and
neither it nor any of its Subsidiaries has received any notification
pursuant to any Environmental Laws that any work, repairs,
construction or capital expenditures are required to be made by it as
a condition of continued compliance with any Environmental Laws, or
any license, permit or approval issued pursuant thereto, or that any
license, permit or approval referred to above is about to be reviewed,
made subject to limitations or conditions, revoked, withdrawn or
terminated.
3.17 Employment Agreements
Except as previously disclosed in writing to the other party making
reference to this paragraph:
(a) neither it nor any of its Subsidiaries is a party to any written
employment, service or pension agreement, whether written or oral,
which cannot be terminated without cause by it or such Subsidiary, as
the case may be, upon giving such notice as may be required by law (or
paying to such Person such amount in lieu of notice) and without the
payment of any damages or penalty;
(b) neither it nor any of its Subsidiaries is a party to or bound by any
union or collective agreements nor currently engaged in labour
negotiations. No grievance, application, complaint or other proceeding
has been filed by or against it which is unresolved or outstanding.
Neither it nor any of its Subsidiaries has engaged in any unfair
labour practice;
(c) neither it nor any of its Subsidiaries is party to an employee benefit
or pension plan or other benefit plan;
(d) no vacation pay, bonus, deferred compensation, profit sharing, pension
or other similar obligation is owed to any employee.
3.18 Consents and Approvals
No consent or approval is required to be obtained from, or notice required
to be delivered to, any government authority, other party to a contract or any
other person whose consent or approval is required to be obtained, or to which
notice is required to be delivered, in connection with the execution and
delivery of this Agreement and the completion of the transactions contemplated
hereby except:
(a) the approval of matters relating to the transactions contemplated
hereby at the Allelix Meeting and the NPS Meeting;
(b) the approval of the Court of the transactions contemplated hereby;
(c) exemptions from the provincial securities regulators from the
registration and prospectus requirements with respect to the
exchangeable share structure;
(d) approval of the relevant Canadian stock exchange(s) regarding the
conditional listing of the Exchangeable Shares;
(e) effectiveness of the registration statements filed with the U.S.
Securities and Exchange Commission regarding the NPS Common Shares;
(f) approval of Nasdaq regarding the trading of the NPS Common Shares
subject to notice of issuance;
(g) filing notice of the Arrangement pursuant to the Investment Canada
Act;
except where failure to obtain such consent or approval would not constitute a
Material Adverse Effect.
3.19 Brokers and Finders' Fees
Except for the previously disclosed arrangements of Allelix with BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and of NPS with Prudential Vector, neither the execution of
this Agreement nor the consummation of the Plan of Arrangement will result in it
or any of its Subsidiaries having to pay any brokerage or finder's fee to any
person.
3.20 Intellectual Property Rights
To the best of its knowledge, all intellectual property rights (including
patents, trade-marks, know how and trade secrets) (such rights being defined as
"Intellectual Property Rights")
owned by it or its Subsidiaries are valid, subsisting, unexpired, enforceable
and have not been abandoned and no claim has been made that the use of the
Intellectual Property Rights violates the rights of any third party. Except as
disclosed in writing to the other party making reference to this paragraph, none
of such Intellectual Property Rights have been licensed or franchised by the
Corporation to any party other than in the normal course of business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ALLELIX
Allelix represents and warrants to NPS as follows, and acknowledges that
NPS is relying upon such representations and warranties in connection with the
matters contemplated by this Agreement:
4.1 Allelix Authorized Capital
The authorized capital of Allelix consists of an unlimited number of common
shares and preferred shares issuable in series.
4.2 Allelix Issued Capital
The issued and outstanding share capital of Allelix consists of 20,126,140
Allelix Common Shares and 1,000 Allelix Preferred Shares and, except for the
Allelix Options of which there are 1,596,321 outstanding and the Allelix
Warrants of which there are 829,108 outstanding, no other securities of Allelix
are issued and outstanding. All outstanding Allelix Common Shares have been
duly authorized and validly issued, are fully paid and non-assessable and are
not subject to, nor were they issued in violation of, any preemptive rights.
4.3 Allelix Subsidiaries
Allelix owns, except as disclosed in the notes to the Allelix Financial
Statements, directly or indirectly, all of the issued and outstanding shares of
all of its Subsidiaries, and all of the issued and outstanding shares in the
capital of each such Subsidiary as owned by Allelix are fully paid and non-
assessable and are legally and beneficially owned by Allelix free and clear of
any Encumbrances, voting trusts, proxies and other interests, claims or demands
of every kind or nature whatsoever other than the general security interest in
such shares granted by Allelix to a Canadian chartered bank pursuant to a
general security agreement, a copy of which has been provided to NPS by Allelix
and no person has any agreement, option, right or privilege (including, without
limitation, by law, pre-emptive right, contract or otherwise) to purchase,
convert into, exchange for or otherwise acquire, or any agreement, option, right
or privilege capable of becoming any such agreement, right, option or privilege,
any of the issued or unissued shares in the capital of the Subsidiary.
4.4 Allelix Options and Rights
No person has any agreement, option, warrant or any right or privilege
(whether by law, preemptive right, contract or otherwise) capable of becoming an
agreement, option or right for
the purchase, subscription, allotment or issuance of any unissued securities of
Allelix or any Allelix Subsidiary, other than:
(a) 1,596,321 Allelix Common Shares issuable on the exercise of the
Allelix Options;
(b) 829,108 Allelix Common Shares issuable on the exercise of the Allelix
Warrants;
(c) not more than up to 875,773 Allelix Common Shares issuable upon the
conversion of the Allelix Preferred Shares (assuming a floor price of
Cdn.$3.36 and an exchange rate of U.S.$1.00 = Cdn.$1.4713, being the
noon buying rate quoted in New York for cable transfers payable in
Canadian dollars on September 27, 1999, certified by the Federal
Reserve Bank of New York for customs purposes, as required by Section
522 of the amended Tariff Act of 1930); and
(d) not more than up to 744,962 Allelix Common Shares issuable to ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ Development Corporation under a stock purchase agreement
between dated October 30, 1998 (assuming a floor price of Cdn.$3.95
and an exchange rate of U.S.$1.00 = Cdn.$1.4713, being the noon buying
rate quoted in New York for cable transfers payable in Canadian
dollars on September 27, 1999, certified by the Federal Reserve Bank
of New York for customs purposes, as required by Section 522 of the
amended Tariff Act of 1930).
4.5 Allelix Status Under Securities Laws
Allelix is a reporting issuer under the securities laws of each province of
Canada and the issued and outstanding Allelix Common Shares and all issuable
Allelix Common Shares referred to in Section 4.4 are listed or listed subject to
issuance, as the case may be, on the TSE. To its knowledge, Allelix is not in
default of any requirements of such securities laws, and, to its knowledge,
Allelix is in compliance with the by-laws, rules and regulations of the TSE.
4.6 Allelix Board Approval and Recommendation
The Board of Directors of Allelix has unanimously determined that the
Arrangement is fair to the Allelix Shareholders and that the Arrangement is in
the best interests of Allelix and the Allelix Shareholders, approved the
Arrangement and the entering into and execution of this Agreement and resolved
to recommend that the Allelix Shareholders vote in favour of the Arrangement.
4.7 Information Circular
The information contained in the Information Circular (other than
information solely relating to NPS which is to be provided by NPS to Allelix for
inclusion in the Information Circular) will contain no untrue statement of a
material fact and will not omit to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in light of the
circumstances in which it is made.
4.8 Allelix Information in NPS Information Circular
The information contained in the NPS Information Circular provided by
Allelix for inclusion in the NPS Information Circular will contain no untrue
statement of a material fact and will not omit to state a material fact that is
required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it is made.
4.9 1999 Audited Statements
Allelix represents and warrants that (i) the audited financial statements
to be prepared in respect of the financial year ended August 31, 1999 will be
prepared in accordance with generally accepted accounting principles
consistently applied and that such statements will fairly present the financial
position and results of operations and changes in the financial position of
Allelix on a consolidated basis as of the date of such statements and (ii) it
will not make any change in its accounting principles and practices previously
applied including, without limitation, the basis on which its assets and
liabilities are recorded on its books and its earnings and profits and losses
are ascertained.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NPS
NPS represents and warrants to Allelix as follows, and acknowledges that
Allelix is relying upon such representations and warranties in connection with
the matters contemplated by this Agreement:
5.1 NPS Authorized Capital
The authorized capital of NPS consists of 20,000,000 NPS Common Shares and
5,000,000 NPS Preferred Shares.
5.2 NPS Issued Capital
The issued and outstanding share capital of NPS consists of 12,710,724 NPS
Common Shares and, except for (a) the NPS Options, (b) the NPS Warrants, (c) the
NPS Preferred Share to be issued in connection with the transactions
contemplated hereby, and (d) the NPS Common Shares to be issued in connection
with the transactions contemplated hereby, no other securities of NPS are issued
and outstanding. All outstanding NPS Common Shares have been duly authorized
and validly issued, are fully paid and non-assessable and are not subject to,
nor were they issued in violation of any preemptive rights.
5.3 NPS Options and Rights
No person has any agreement or option or any right or privilege (whether by
law, preemptive right, contract or otherwise) capable of becoming an agreement,
option or right for the purchase, subscription, allotment or issuance of any
unissued securities of NPS other than
(a) 2,161,954 Common Shares issuable on the exercise of the NPS Options;
(b) 32,542 NPS Common Shares issuable on the exercise of the NPS Warrants;
(c) up to 7,500,000 NPS Common Shares and the NPS Preferred Share, in each
case, issuable under obligations to arise under the Exchangeable Shares
or under the Plan of Arrangement; and
(d) the securities issuable subsequent to the occurance of certain stated
events pursuant to the terms of the Preferred Stock Purchase Rights.
5.4 NPS Status Under Securities Laws
NPS is a reporting company under the U.S. Securities Exchange Act and the
issued and outstanding NPS Common Shares and the issuable NPS Common Shares
referred to in Section 5.3(a) are listed or listed subject to issuance,
respectively, on Nasdaq. To its knowledge, NPS is not in default of any
requirements of such securities laws, and, to the best of its knowledge, NPS is
in compliance with the by-laws, rules and regulations of Nasdaq.
5.5 NPS Information in Information Circular
The information contained in the Information Circular relating to NPS which
is provided by NPS to Allelix for inclusion in the Information Circular will
contain no untrue statement of a material fact and will not omit to state a
material fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it is made.
5.6 NPS Information Circular
The information contained in the NPS Information Circular (other than the
information solely relating to Allelix which is to be provided by Allelix to NPS
for inclusion in the NPS Information Circular) will contain no untrue statement
of a material fact and will not omit to state a material fact that is required
to be stated or that is necessary to make a statement not misleading in light of
the circumstances in which it is made.
5.7 NPS Board Approval
The NPS Board of Directors has unanimously approved the Arrangement
Agreement and determined to recommend that the holders of NPS Common Shares vote
in favour of the matters contemplated in this Agreement to be voted on at the
NPS Meeting.
ARTICLE 6
COVENANTS
6.1 Mutual Covenants
Each of the parties to this Agreement covenants to the other party that,
until the Effective Date or the day upon which this Agreement is terminated,
whichever is earlier, unless the other party shall otherwise agree in writing or
as otherwise expressly permitted or specifically contemplated by this Agreement,
it:
(a) will use all reasonable commercial efforts to satisfy (or to cause the
satisfaction of) the conditions precedent to its obligations hereunder
set forth in Article 7 to the extent the same is within its control
and to take, or to cause to be taken, all other action and to do, or
cause to be done, all other things necessary, proper or advisable
under Applicable Laws to complete the Arrangement, including using all
reasonable commercial efforts:
(i) to obtain all necessary waivers, consents and approvals required
to be obtained by it from other parties to loan agreements,
leases and other contracts;
(ii) to obtain all necessary consents, approvals and authorizations
as are required to be obtained by it under Applicable Law; and
(iii) to effect all necessary registrations and filings and
submissions of information requested by governmental authorities
required to be effected by it in connection with the
Arrangement;
and it will use its reasonable commercial efforts to cooperate with
the other party to this Agreement in connection with the performance
by it of its obligations hereunder including, without limitation,
continuing to provide reasonable access to information and to maintain
ongoing communications as between officers of Allelix and NPS;
(b) will make available and cause to be made available to the other party
to this Agreement, its agents and advisors, all documents and
agreements in any way relating to or affecting its business, financial
condition, operations, prospects, properties, assets or affairs
(including, without limitation, any such other documents or agreements
as may be necessary or desirable to enable such other party to verify
the truth of its representations and warranties and compliance by it
with the terms and conditions hereof, except where it is contractually
precluded from making such document or agreement available in which
case it shall cooperate with the other party in securing access to any
such documentation not in its possession or under its control;
(c) will not take any action, refrain from taking any action, or permit
any action to be taken or not taken, inconsistent with this Agreement
or which might, directly or indirectly, interfere with or adversely
affect the consummation of the Arrangement; and
(d) will not, during the period commencing on the date of this Agreement
and ending on the earlier of (i) the Effective Date and (ii) the
second anniversary of the termination of this Agreement, directly or
indirectly solicit, induce, recruit or encourage any of the other
party's employees to terminate their employment with the other party
or attempt to solicit, induce or recruit employees of the other party.
The publication of advertisements in newspapers and/or other
publication of general circulation (including trade publications and
company websites) shall not in any event be deemed a violation of any
provision of this Subsection.
6.2 Covenants of Allelix
Allelix covenants and agrees that, until the Effective Date or the day upon
which this Agreement is terminated, whichever is earlier, it:
(a) will in a timely and expeditious manner and as soon as reasonably
practicable, but in any event not later than October 31, 1999, file,
proceed with and diligently prosecute an application to the Court
under the CBCA and/or OBCA, as required, for an Interim Order with
respect to the Arrangement;
(b) will, in a timely and expeditious manner and as soon as reasonably
practicable:
(i) carry out the terms of the Interim Order;
(ii) prepare and file the Information Circular with the applicable
securities regulatory authorities in all jurisdictions where the
same is required to be filed and mail the same as ordered by the
Interim Order and in accordance with Applicable Law, in all
jurisdictions where the same is required, complying in all
material respects with all applicable legal requirements on the
date of mailing thereof;
(iii) allow NPS and NPS Counsel to participate fully in preparation of
the Information Circular and any amendments or supplements
thereto;
(iv) convene the Allelix Meeting to be held on or before January 20,
2000 and distribute copies of this Agreement (or a written
summary thereof prepared by Allelix in form and substance
reasonably satisfactory to NPS), in each case as ordered by the
Interim Order;
(v) solicit proxies to be voted at the Allelix Meeting in favour of
the Arrangement;
(vi) provide notice to NPS of the Allelix Meeting and allow NPS's
representatives to attend the Allelix Meeting; and
(vii) conduct the Allelix Meeting in accordance with the Interim Order,
the by-laws of Allelix and any instrument governing such meeting,
as applicable, and as otherwise required by law;
(c) will, in a timely and expeditious manner and, in any event not later
than October 20, 1999 deliver to NPS the audited financial statements
prepared in respect of its fiscal year ended August 31, 1999 in
accordance with Section 4.9;
(d) will, in a timely and expeditious manner, prepare (and allow NPS and
NPS Counsel to participate fully in such preparation) and file any
amendments or supplements to the Information Circular with respect to
the Allelix Meeting and mail the same as required by the Interim Order
and in accordance with Applicable Law, in all jurisdictions where the
same is required, complying in all material respects with all
applicable disclosure and other legal requirements on the date of
mailing thereof;
(e) will, subject to the approval of the Arrangement at the Allelix Meeting
in accordance with the provisions of the Interim Order, forthwith, but
in any event not later than January 31, 2000, file, proceed with and
diligently prosecute an application for the Final Order;
(f) will forthwith carry out the terms of the Final Order and, subject to
the receipt of the Final Order, will file Articles of Arrangement and
the Final Order with the OBCA Director in order for the Arrangement to
become effective on or before January 31, 2000;
(g) will, subject to approval of the Continuance Resolution at the Allelix
Meeting, file articles of continuance with the OBCA Director;
(h) will, except for proxies and non-substantive communications with
Securityholders, furnish promptly to NPS a copy of each notice, report,
schedule or other document or communication delivered, filed or
received by Allelix in connection with the Arrangement, the Allelix
Meeting or any other meeting of Allelix Shareholders or class of
security holders which all such holders, as the case may be, are
entitled to attend, any filings under Applicable Law and any dealings
with regulatory agencies in connection with, or in any way affecting,
the transactions contemplated herein;
(i) will make other necessary filings and applications under Applicable Law
required on the part of Allelix in connection with the transactions
contemplated herein and take all reasonable action necessary to be in
compliance with such Applicable Law;
(j) will make such filings and applications under Applicable Law as are
required on the part of Allelix to exempt Allelix from the obligation
to translate into the French language the materials delivered to
Allelix Shareholders in connection with the Allelix Meeting;
(k) will apply for the delisting of the Allelix Common Shares from the ME
and allow NPS and NPS Counsel to participate in the preparation of the
documentation required in this regard;
(l) will conduct its affairs, and cause its Subsidiaries' affairs to be
conducted, so that all of its representations and warranties contained
herein shall be true and correct on and as of the Effective Date as if
made thereon;
(m) will use reasonable efforts, and cause its Subsidiaries to use
reasonable efforts to preserve intact its business organization and
goodwill, and to maintain satisfactory relationships with suppliers,
distributors, customers, partners and others which have business
relationships with it or its Subsidiaries;
(n) shall conduct its business, and cause its Subsidiaries' businesses to
be conducted, only in, not take any action except in, and maintain its
respective properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(o) except as may be necessary to give effect to the transactions
contemplated hereby or with the prior written consent of NPS, shall
not, nor will it permit its Subsidiaries to, directly or indirectly, do
or permit to occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or agree to
issue, sell, pledge, lease, dispose of or encumber, any
additional shares of, or any options, warrants, calls, conversion
privileges or rights of any kind to acquire any shares of any
capital stock of Allelix (other than pursuant to the exercise of
Allelix Options, Allelix Warrants or the conversion of the
Allelix Preferred Shares in accordance with their terms);
(ii) enter into or assume any transaction or obligation or incur any
capital expenditures, or enter into any series of related
transactions or obligations or incur related capital
expenditures, which, in the aggregate, exceed Cdn. $250,000,
other than transactions, obligations and reasonable expenditures
relating to:
A. the negotiation and preparation of this Agreement, including
the fulfilment by Allelix of the covenants contained in
Sections 6.2(a) through (j), inclusive;
B. responding to any unsolicited submission or proposal in
accordance with Section 6.3 or otherwise incurring expenses
at the direction of the Board of Directors of Allelix in
respect of matters for which such Board has received an
opinion of Allelix Counsel that such expenses are required to
be incurred to enable such directors to fulfil their
fiduciary duties as board members;
C. actions taken to preserve property or to safeguard
individuals from harm where such property or individuals are
in imminent danger of material damage or injury,
provided that Allelix shall consult fully with NPS before taking any
steps under this Section 6.2(o)(ii)(C) or, in the event of an
emergency, as soon as practicable thereafter;
(iii) amend or propose to amend its articles or by-laws;
(iv) split, combine or reclassify any outstanding Allelix Common Shares,
or declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to the
Allelix Common Shares;
(v) redeem, purchase or offer to purchase any Allelix Common Shares or
other securities of Allelix;
(vi) reorganize, amalgamate or merge Allelix with any other person,
corporation, partnership or other business organization whatsoever;
(vii) reduce the stated capital of Allelix;
(viii) acquire or agree to acquire (by merger, amalgamation, acquisition of
securities or assets or otherwise) any corporation, partnership or
other business organization or division or, except in the ordinary
course of business, any assets or properties;
(ix) except as previously disclosed in writing to the other party making
reference to this paragraph, incur or commit to incur any
indebtedness for borrowed money or issue any debt securities except
for the borrowing of working capital in the ordinary course of
business and consistent with past practice; or
(x) enter into or agree to enter into any licence agreement,
collaboration and/or development agreement or any other agreement to
sell, convey, transfer, assign or encumber any of its right, title
or interest in any of its research, pre-clinical or clinical
development programs;
(p) except for annual salary adjustments consistent with historic practice for
Persons, other officers or management, shall not adopt or amend, nor will
it permit its Subsidiaries to adopt or amend, any compensation
arrangements, perquisites, profit sharing, incentive, compensation, stock
option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee;
(q) except with the prior written consent of NPS, will not permit any payments
to be made under any profit sharing plan;
(r) shall not take any action that would render any representation or warranty
made by it in this agreement untrue at any time prior to the proposed
transaction being consummated if then made;
(s) shall promptly notify NPS orally and in writing of any governmental or
third party complaints, investigations or hearings (or communications
indicating that the same may be contemplated);
(t) shall not enter into, modify or terminate any material contract, agreement,
commitment or arrangement to which Allelix or a Subsidiary thereof is a
party or by which its assets are bound;
(u) will cause the auditors of Allelix to provide a comfort letter to NPS in
respect of the Allelix financial statements and the information derived
therefrom which is disclosed in the Information Circular and the NPS
Information Circular;
(v) will not, nor will it permit its Subsidiaries to, except for transactions
in the ordinary course of business and as required in the course of prudent
operations or with the prior written consent of NPS thereto, sell, dispose
of, transfer, convey, surrender, release or abandon, or create or assume
any Encumbrance on or in respect of, the whole or any part of its assets
other than chattels that are replaced by equivalent property or consumed in
operations and other than any liens arising as a result of operations under
agreements affecting the assets;
(w) will and will cause its Subsidiaries to use all reasonable commercial
efforts to cause its current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies underwritten by insurance and re-insurance companies of nationally
recognized standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
(x) will, in all material respects, conduct itself so as to keep NPS reasonably
informed as to its business and affairs and as to the decisions required
with respect to the most advantageous methods of operating its business;
(y) except with the prior written consent of NPS, will not, and will not permit
its Subsidiaries to enter into any transaction out of the ordinary course
of its business as hereinbefore conducted and will and will cause its
Subsidiaries to use all reasonable efforts to preserve intact its present
business, licenses and permits;
(z) will not, and will not permit its Subsidiaries to, declare any dividends or
make any other distribution or repay, other than the ordinary course of
business, any outstanding indebtedness; and
(aa) will use all commercially reasonable efforts to obtain the written
agreement of the holders of all of the Preferred Shares to vote in favour
of the Arrangement
Resolution and the Continuance Resolution in a form
acceptable to NPS, acting reasonably, as soon as reasonably practicable.
6.3 No Soliciting Other Offers
(a) Without the prior written consent of NPS, from and after the date
hereof, Allelix and its Subsidiaries will not, and will not authorize
or permit any of their officers, directors, employees, financial
advisors, representatives and agents ("Representatives") to, directly
or indirectly, solicit, initiate or encourage (including by way of
furnishing information) or take any other action to facilitate any
enquiries or the making of any proposal which constitutes or may
reasonably be expected to lead to an Acquisition Proposal (as defined
herein) from any Person, or engage in any discussions or negotiations
relating thereto or accept any Acquisition Proposal; provided,
however, that notwithstanding any other provisions hereof, Allelix may
at any time prior to the time the Allelix Shareholders shall have
voted to approve the Arrangement and the other transactions
contemplated thereby, engage in discussions or negotiations with a
third party who (without any solicitation, initiation, or
encouragement, directly or indirectly, by Allelix, any of its
Subsidiaries or the Representatives after the date hereof) seeks to
initiate such discussions or negotiations and may furnish such third
party information concerning Allelix and its business, properties and
assets if, and only to the extent that, (A) the third party has (x)
first made an Acquisition Proposal that is financially superior to the
transaction contemplated by this Agreement which, in any event, shall
mean that such proposal shall offer a value per Allelix Common Share
greater than the per share value attributable thereto under the
transaction contemplated by this Agreement and (y) demonstrated that
the funds or other consideration necessary for the Acquisition
Proposal are reasonably likely to be available (as determined in good
faith, in each case by Allelix's board of directors after receiving
the advice of its financial advisors to this effect in writing or
recorded in the minutes) (a "Superior Proposal") and Allelix's board
of directors shall conclude in good faith, after considering
Applicable Law and receiving the advice of outside counsel to this
effect in writing or recorded in the minutes, that such action is
necessary for the board of directors to act in a manner consistent
with its fiduciary duties under Applicable Law, and (B) prior to
furnishing such information to or entering into discussions or
negotiations with such person or entity, Allelix provides prompt
notice to NPS to the effect that it is furnishing information to or
entering into discussions or negotiations with such person or entity
and receives from such person or entity an executed confidentiality
and restricted use agreement in reasonably customary form.
(b) Allelix shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation (including, without limitation, the closing of its present
data room (if any)).
(c) Allelix shall notify NPS orally and in writing of any enquiries,
offers or proposals with respect to an Acquisition Proposal (including
without limitation terms and conditions of any such proposal, the
identity of the person making it and all other information reasonably
requested by NPS) within 12 hours of the receipt thereof, shall answer
NPS' questions with respect to such enquiries, offers or proposals and
shall give NPS five days advance notice of any agreement to be entered
into with, or information to be supplied to, any person making such
enquiry, offer or proposal.
(d) Allelix covenants that it will not enter into any agreement regarding
a Superior Proposal (the "Proposed Agreement") without providing NPS
with an opportunity to amend this Agreement to provide for a value per
Allelix Common Share at least equal to that included in the Proposed
Agreement (as determined in good faith by Allelix's Board of Directors
after receiving the advice of its financial advisors to this effect in
writing or recorded in the minutes). In particular, Allelix covenants
to provide NPS with a copy of any Proposed Agreement as executed by
the party making the proposal at least 72 hours prior to its proposed
execution by Allelix. In the event that NPS agrees to amend this
Agreement as provided above, Allelix covenants that it will not enter
into the Proposed Agreement.
(e) As used herein, "Acquisition Proposal" shall mean a written proposal
or offer by any person to acquire beneficial ownership of all or a
material portion of the assets of Allelix (including shares of
Subsidiaries) or one or more of its Subsidiaries or not less than 10%
of the Allelix Common Shares or of one or more of its Subsidiaries
pursuant to an amalgamation, plan of arrangement, consolidation or
other business combination, sale of shares or other securities, sale
of assets, take-over bid or tender offer or exchange offer or similar
transaction involving Allelix or one or more of its Subsidiaries
including, without limitation, any single or multi-step transaction or
series of related transactions which is structured to permit such
third party to acquire beneficial ownership or any material portion of
the assets of, or such percentage of the Allelix Common Shares or one
or more of its Subsidiaries (other than transactions contemplated by
this Agreement).
6.4 Access
NPS shall be entitled, on reasonable notice to Allelix during normal
business hours and without undue interference to Allelix's operations, to access
to Allelix's premises and will be entitled to meet with Allelix's shareholders,
creditors, licensors, licensees and employees. Allelix will conduct itself, and
will cause its Subsidiaries to conduct themselves, so as to keep NPS fully
informed as to its and its Subsidiaries' business and affairs and as to the
decisions required with respect to the most advantageous methods of operating
and producing from its and its Subsidiaries' assets.
6.5 Covenants of NPS
NPS covenants and agrees that, until the Effective Date or the day
upon which Agreement is terminated, whichever is earlier, it:
(a) will not issue NPS Common Shares at a price which is less than the
then current market price on their date of issue less 10% except upon
the exercise of the NPS Options;
(b) will allow Allelix and Allelix Counsel to participate fully in
preparation of the NPS Information Circular and any amendments or
supplements thereto;
(c) will, in a timely and expeditious manner and as soon as practicable
but in any event not later than January 15, 2000, convene the NPS
Meeting;
(d) solicit proxies to be voted at the NPS Meeting in favour of the
matters to be considered thereat;
(e) provide notice to Allelix of the NPS Meeting and allow Allelix's
representatives to attend the NPS Meeting;
(f) will, except for proxies and other non-substantive communications with
Securityholders, furnish promptly to Allelix a copy of each notice,
report, schedule or other document or communication delivered, filed
or received by NPS in connection with the NPS Meeting and any dealings
with regulatory agencies in connection therewith or in any way
affecting the transaction contemplated hereby;
(g) file a registration statement registering the issuance of the NPS
Common Shares pursuant to the Arrangement and on the exchange of the
Exchangeable Shares;
(h) will, in a timely and expeditious manner provide to Allelix all
information as may be reasonably requested by Allelix or as required
by the Interim Order or as may be required or desirable under
Applicable Law with respect to NPS and its businesses and properties
for inclusion in the Information Circular or in any amendments or
supplements to the Information Circular complying in all material
respects with all applicable legal requirements on the date of mailing
thereof and not containing any misrepresentation (as defined under
applicable securities laws) with respect thereto;
(i) will, to the extent within its power, forthwith carry out the terms of
the Interim Order and the Final Order;
(j) will, to the extent within its power and subject to Applicable Laws,
assist Allelix in the solicitation of proxies to be voted at the
Allelix Meeting in favour of the Arrangement;
(k) will prepare and file with all applicable provincial securities
commissions or similar securities regulatory authorities all necessary
applications to seek exemptions, if required, from the prospectus,
registration and other requirements
of the applicable securities laws of such provinces for the issue by
NPS of NPS Common Shares on exercise of the Exchangeable Shares and to
permit resale of such shares in such provinces without the requirement
to file a prospectus (other than by control persons and subject to
general requirements other than a "hold period");
(l) will make all other necessary filings and applications under
Applicable Laws required in connection with the transactions
contemplated herein and take all reasonable action necessary to be in
compliance with Applicable Laws and regulations;
(m) will use reasonable commercial efforts to conduct its affairs so that
all of its representations and warranties contained herein shall be
true and correct on and as of the Effective Date as if made thereon;
(n) will appoint on the Effective Date three Allelix directors to the
Board of Directors of NPS mutually acceptable to Allelix and NPS,
acting reasonably;
(o) will appoint, on the Effective Date, the individuals holding the
positions of Senior Vice President and Chief Financial Officer and
Senior Vice President, Operations of Allelix as officers of NPS with
titles and duties commensurate with such positions acceptable to such
individuals, Allelix and NPS, acting reasonably, upon terms and
subject to conditions set out in employment agreements to be entered
into between NPS and each such individual on the Effective Date;
(p) will conduct its affairs and cause its Subsidiaries' affairs to be
conducted so that all of its representations and warranties contained
herein shall be true and correct on and as of the Effective Date as if
made thereon;
(q) shall not take any action that will render any representation or
warranty made by it in this Agreement untrue at any time prior to the
proposed transaction being consummated if then made;
(r) shall promptly notify Allelix orally and in writing of any government
or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated);
(s) shall, to the extent not then arranged by Allelix, as soon as
reasonably practicable after the Effective Date, cause Allelix to
provide an ongoing indemnity to the Persons serving as Allelix
directors and officers immediately before the Effective Time in
accordance with the OBCA and the Allelix by-laws and obtain a
directors and officers insurance policy on substantially the same
terms as to coverage, deductibles and other terms as Allelix' existing
directors and officers insurance, for a period of 7 years after the
Effective Date covering acts and omissions occurring before the
Effective Date, provided that the insured has provided to NPS such
information as NPS shall require acting reasonably and such
information is not inconsistent with the representations given by
Allelix pursuant hereto. Allelix shall hold this covenant in trust for
Persons who are its directors and officers immediately before the
Effective Time;
(t) shall, on the Effective Date, arrange for the listing of the NPS
Common Shares on Nasdaq referred to in Section 5.3(c), which may be a
standby listing for such Shares not issued immediately;
(u) will, in a timely and expeditious manner and as soon as reasonably
practicable:
(i) prepare and file the NPS Information Circular with the
applicable securities regulatory authorities in all
jurisdictions where it is required to be filed and mailed in
accordance with Applicable Law in all jurisdictions where it is
required to be mailed complying in all material respects with
all applicable legal requirements on the date of mailing; and
(ii) conduct the NPS Meeting in accordance with the NPS by-laws and
any instrument governing the Meeting and otherwise in accordance
with Applicable Law;
(v) will use reasonable efforts, and cause its Subsidiaries to use
reasonable efforts, to preserve intact its business organization and
goodwill and to maintain satisfactory relationships with suppliers,
distributors, customers, partners and others which have business
relationships with it or its Subsidiaries;
(w) shall conduct its business, and cause its Subsidiaries' businesses to
be conducted, only in, not take any action except in, and maintain its
respective properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(x) except as may be necessary to give effect to the transactions
contemplated herein or with the prior written consent of Allelix,
shall not, nor will it permit its Subsidiaries to, directly or
indirectly, do or permit to occur any of the following:
(i) amend or propose to amend its charter documents;
(ii) split, combine or reclassify any outstanding NPS Common Shares
or declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to
the NPS Common Shares;
(iii) redeem, purchase or offer to purchase any NPS Common Shares or
other NPS securities;
(iv) reorganize, amalgamate or merge NPS with any other person,
corporation, partnership or other business organization;
(v) reduce the stated capital of NPS;
(vi) acquire or agree to acquire (by acquisition of securities or
assets or otherwise) any corporation, partnership or other
business organization or division or any assets or properties
for consideration of more than $4,000,000 in total;
(vii) incur or commit to incur any indebtedness for borrowed money or
issue any debt securities except for the borrowing of working
capital in the ordinary course of business and consistent with
past practice; or
(viii) enter into any agreement to sell, convey, transfer, assign or
encumber any of its right, title or interest in any of its
research, pre-clinical or clinical development programs having
a cost equal to more than 30% of the cost of all such programs;
(y) will cause the auditors of NPS to provide a comfort letter to Allelix
in respect of the NPS financial statements and the information derived
therefrom which is disclosed in the Information Circular and the NPS
Information Circular;
(z) will and will cause its Subsidiaries to use all reasonable commercial
efforts to cause its current insurance (or re-insurance) policies not
to be cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination, cancellation or
lapse, replacement policies underwritten by insurance and re-insurance
companies of national recognized standing providing coverage equal to
or greater than the coverage under the cancelled, terminated or lapsed
policies for substantially similar premiums are in full force and
effect;
(aa) will not, and will not permit its Subsidiaries to, declare any
dividends or make any other distribution or repay, other than in the
ordinary course of business, any outstanding indebtedness; and
(bb) except with the prior written consent of Allelix, will and will cause
its Subsidiaries to use all reasonable efforts to preserve intact
their present business, licenses and permits and will not, nor will it
permit its Subsidiaries, to enter into any transaction out of the
ordinary course of business as hereinbefore conducted if the total
obligations and commitments of NPS and its Subsidiaries thereunder
exceeds $4,000,000.
6.6 NPS No Shop
Without the prior written consent of Allelix, from and after the date
hereof, NPS and its Subsidiaries will not, and will not authorize or permit any
of their officers, directors, employees, financial advisors, representatives and
agents ("Agents") to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate any enquiries or the making of any proposal which constitutes or may
reasonably be expected to lead to an NPS Acquisition Proposal (as defined
herein) from any Person engaged in any discussions or negotiations relating
thereto or accept any Acquisition Proposal; provided,
however, that, notwithstanding any other provisions hereof, NPS may at any time
engage in discussions or negotiations with a third party who (without any
solicitation, initiation or encouragement, directly or indirectly, by NPS, any
of its Subsidiaries or any Agents after the date hereof) seeks to initiate such
discussions or negotiations and may furnish such third party information
concerning NPS and its business, properties and assets if the NPS board of
directors shall have concluded in good faith after considering Applicable Law
and receiving the advice of counsel in writing or as recorded in the NPS board
minutes to this effect, that such action is necessary for the board to act in a
manner consistent with its fiduciary duties. "NPS Acquisition Proposal" means a
written proposal or offer by any person to acquire not less than 20% of the NPS
Common Shares (excluding NPS Common Shares referred to in Section 5.3(a) and (b)
but including NPS Common Shares referred to in Section 5.3(c)) by business
combination, sale of issued or treasury shares or tender or exchange offer or
similar transaction including, without limitation, any single multi-step
transaction or series of related transactions which is structured to permit the
Person to acquire such NPS Common Shares. For certainty, NPS's obligations under
this Section 6.6 shall terminate on the earlier of the Effective Date and the
termination of this Agreement for any reason whatsoever.
ARTICLE 7
CONDITIONS
7.1 Mutual Conditions
The obligations of Allelix and NPS to complete the transactions
contemplated hereby are subject to fulfilment of the following conditions on or
before the Effective Date or such other time as is specified below:
(a) the Interim Order shall have been granted in form and substance
satisfactory to Allelix and NPS, acting reasonably, on or before
October 31, 1999 and shall not have been set aside or modified in a
manner unacceptable to such parties on appeal or otherwise;
(b) the Arrangement Resolution shall have been duly approved by the
required majority, with or without amendment, in accordance with the
Interim Order, on or before January 20, 2000;
(c) each of the resolutions considered at the NPS Meeting shall have been
duly approved by the required majority without amendment on or before
January 20, 2000;
(d) Allelix shall have obtained articles of continuance from the OBCA
Director in form and substance satisfactory to Allelix and NPS, acting
reasonably;
(e) the Final Order shall have been granted in form and substance
satisfactory to Allelix and NPS, acting reasonably, on or before
January 31, 2000, and shall not have been set aside or modified in a
manner unacceptable to such parties on appeal or otherwise;
(f) the Articles of Arrangement relating to the Arrangement shall be in
form and substance satisfactory to Allelix and NPS, acting reasonably;
(g) the Effective Date shall be on or before January 31, 2000;
(h) (i) no act, action, suit or proceeding shall have been taken or be
outstanding before or by any domestic or foreign court or tribunal or
governmental agency or other regulatory authority or administrative
agency or commission by any elected or appointed public official or
private person (including, without limitation, any individual,
corporation, firm, group or other entity) in Canada or elsewhere,
whether or not having the force of law; and (ii) no law, regulation or
policy shall have been proposed, enacted, promulgated or applied
which, in either case, has effect, or may have effect, to cease trade,
enjoin, or prohibit the acquisition by NPS of the Allelix Common
Shares, or the right of NPS to own or exercise full rights of
ownership of the Allelix Common Shares, or the issuance, pursuant to
the Arrangement, of NPS Common Shares and Exchangeable Shares to the
Allelix Shareholders;
(i) there shall not exist any prohibition at law against NPS or Allelix
and Allelix Shareholders consummating the Arrangement;
(j) Allelix and NPS shall have obtained the consents, approvals and
authorizations referred to in Section 3.18 and such other material
consents, approvals and authorizations (if any), regulatory or
otherwise, required or necessary in connection with the transactions
contemplated herein on terms and conditions satisfactory to each of
them, acting reasonably:
(k) the Exchangeable Shares issuable pursuant to the Arrangement shall
have been conditionally approved for listing on the TSE subject to the
filing of the usual and customary documentation;
(l) any required orders from applicable securities authorities authorizing
the issue of the Exchangeable Shares shall have been obtained on terms
satisfactory to NPS and Allelix, both acting reasonably;
(m) there shall not have occurred any actual or threatened change
(including a proposal by the Minister of Finance of Canada to amend
the Income Tax Act (Canada) or any announcement, governmental or
regulatory initiative, condition, event or development involving a
change or a prospective change) that, in the judgment of NPS, acting
reasonably, directly or indirectly, has or may have a Material Adverse
Effect with respect to consummating the proposed transaction; and
(n) holders of not more than 10% of Allelix's Common Shares shall have
exercised Dissent Rights.
(o) The foregoing conditions are for the mutual benefit of Allelix and NPS
and may be waived, in whole or in part, by each of Allelix and NPS
acting individually for its own interest at any time. If any of the
said conditions precedent shall not be complied with or waived as
aforesaid on or before the date required for the performance thereof,
either Allelix or NPS may, in addition to the other remedies it may
have at law or in equity, rescind and terminate this Agreement by
written notice to the other party.
7.2 Allelix Conditions
The obligation of Allelix to complete the transactions contemplated herein
is subject to the fulfilment of the following conditions on or before the
Effective Date or such other time as is specified below:
(a) the representations and warranties made by NPS in this Agreement shall
be true as of the Effective Date as if made on and as of such date and
NPS shall have provided to Allelix the certificate of one senior
officer of NPS certifying such accuracy on the Effective Date (and
Allelix shall have no knowledge to the contrary);
(b) NPS shall have provided Allelix with opinions of NPS Counsel (which,
except for the opinion referred to in Section 7.2(b)(viii), may be the
opinion of NPS' Vice President, Corporate Development and Legal
Affairs) in form and substance satisfactory to Allelix, acting
reasonably, dated the Effective Date (or such other date as Allelix
and NPS may agree) and addressed to Allelix and Allelix Counsel to the
effect that:
(i) NPS is duly incorporated and validly existing under the laws of
the jurisdiction of its incorporation and has the corporate
power and authority to carry on any business now conducted by
it;
(ii) NPS has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder;
(iii) all necessary proceedings, corporate, regulatory or otherwise,
of NPS have been taken to fully, validly and effectively
authorize this Agreement and the transactions contemplated
herein including the Arrangement, the performance by NPS of its
obligations hereunder, and the execution and delivery by NPS of
this Agreement and all documents delivered pursuant hereto;
(iv) each NPS Common Share to be issued under the Arrangement will be
authorized and reserved for issuance and, when so issued, will
be validly issued and outstanding as a fully paid and non-
assessable share in the capital of NPS;
(v) the NPS Common Shares to be issued on exchange of an
Exchangeable Share shall be immediately tradable upon Nasdaq;
(vi) the execution and delivery by NPS of this Agreement and all
documents delivered pursuant hereto, the performance by NPS of
its obligations hereunder and thereunder and the consummation
of the transactions contemplated herein and therein will not
result in the breach of or violate any term or provision of the
articles or by-laws of NPS;
(vii) this Agreement has been duly executed and delivered by NPS and
this Agreement and all agreements delivered pursuant to the
terms hereof are valid and binding obligations of NPS
enforceable against it in accordance with their respective
terms, subject to enforceability being limited by applicable
bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally and the discretionary nature of
certain remedies (including specific performance and injunctive
relief) and subject to the effectiveness of clauses providing
rights of indemnity or exculpating a party or persons from a
liability or a duty otherwise owed which may be limited by law;
and
(viii) the issuance of NPS Common Shares on exchange of an
Exchangeable Share is exempt from the prospectus and
registration requirements of the applicable securities laws in
each applicable province and no filing, proceeding, consent or
approval is required under such applicable law in connection
with the issuance of such NPS Common Shares; and that the NPS
Common Shares acquired on exchange of an Exchangeable Share
will not be subject to restrictions on their resale in such
provinces, other than trades from a control block and excluding
any outstanding escrow agreements,
and in giving such opinion, NPS Counsel may rely in respect of matters
of fact, upon certificates of senior officers of NPS or any other
appropriate persons; and in respect of matters governed by the laws of
any jurisdiction other than Delaware and Utah, NPS Counsel may deliver
the opinion of local counsel in such other jurisdiction;
(c) the appointment of three Allelix directors, to be jointly designated
by NPS and Allelix, acting reasonably, to the board of directors of
NPS;
(d) NPS shall have complied with its covenants herein and shall have
provided to Allelix the certificate of a senior officer of NPS
certifying that NPS has complied with its respective covenants herein
and Allelix shall have no knowledge to the contrary;
(e) between the date of the most recent public disclosure by NPS and the
Effective Date, there shall not have occurred any Material Adverse
Change with respect to NPS that is not attributable to a Material
Adverse Change with respect to Allelix;
(f) NPS, NPS Holdings and NPS - Allelix Inc. shall have entered into the
Support Agreement; and
(g) NPS, NPS Allelix Inc. and a trust company acceptable to NPS and
Allelix, acting reasonably, shall have entered into the Voting and
Exchange Trust Agreement.
The foregoing conditions precedent are for the benefit of Allelix and may
be waived, in whole or in part, by Allelix in writing at any time. If any of
the conditions shall not be complied with or waived by Allelix on or before the
date required for their performance then Allelix may, in addition to the other
remedies it may have at law or equity, rescind and terminate this Agreement by
written notice to NPS.
7.3 NPS Conditions
The obligation of NPS to complete the transactions contemplated herein is
subject to fulfilment of the following conditions on or before the Effective
Date or such other time as specified below:
(a) the representations and warranties made by Allelix in this Agreement
shall be true as of the Effective Date as if made on and as of such
date and Allelix shall have provided to NPS a certificate of the
Chairman of the Board of Allelix and the Chief Executive Officer (or
such other officer of Allelix that may be acceptable to NPS, acting
reasonably) certifying such accuracy on the Effective Date (and NPS
shall have no knowledge to the contrary);
(b) Allelix shall have provided NPS with an opinion of Allelix Counsel in
form and substance satisfactory to NPS, acting reasonably dated the
Effective Date (or such other date as Allelix and NPS may agree) and
addressed to NPS and NPS Counsel to the effect that:
(i) Allelix and each of its material Subsidiaries are duly
incorporated, amalgamated, continued or formed and existing
under the laws of the jurisdiction of their respective
incorporation or formation, as the case may be, and each has the
power and authority to carry on any business now conducted by
it;
(ii) Allelix has full corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(iii) all necessary proceedings, corporate, regulatory or otherwise,
of Allelix have been taken to fully, validly and effectively
authorize this Agreement and the transactions contemplated
herein including the Arrangement, the performance by Allelix of
its obligations hereunder, and the execution and delivery by
Allelix of this Agreement and all documents delivered pursuant
hereto;
(iv) the execution and delivery by Allelix of this Agreement and all
agreements delivered pursuant hereto, the performance by Allelix
of its obligations hereunder and thereunder and the consummation
of the transactions contemplated herein and therein will not
result in the breach of or violate any term or provision of the
articles or by-laws of Allelix; and
(v) this Agreement has been duly executed and delivered by Allelix
and this Agreement and all agreements delivered pursuant to the
terms hereof are valid and binding obligations of Allelix
enforceable against it in accordance with their respective
terms, subject to enforceability being limited by applicable
bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally and the discretionary nature of
certain remedies (including specific performance and injunctive
relief) and subject to the effectiveness of clauses providing
rights of indemnity or exculpating a party or persons from a
liability or a duty otherwise owed which may be limited by law,
and in giving such opinion, Allelix Counsel may rely, in respect of
matters of fact, upon certificates of senior officers of Allelix or
any other appropriate persons; and in respect of matters governed by
the laws of any jurisdiction other than ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or the laws of Canada applicable therein, Allelix
Counsel may deliver the opinion of local counsel in such other
jurisdiction;
(c) Allelix shall have complied, in all material respects, with its
covenants herein and Allelix shall have provided to NPS a certificate
of the Chairman of the Board of Allelix and the Chief Executive
Officer (or such other officer of Allelix that may be acceptable to
NPS, acting reasonably) certifying that Allelix has complied with its
covenants herein and NPS shall have no knowledge to the contrary;
(d) the Interim Order, the Final Order and any required orders from the
applicable Securities Commissions authorizing the issuance of the
Exchangeable Shares shall have been obtained on terms satisfactory to
NPS, acting reasonably;
(e) between the date of the most recent public disclosure by Allelix, and
the Effective Date, there shall not have occurred any Material Adverse
Change with respect to Allelix;
(f) the directors of Allelix and its Subsidiaries shall have tendered
their resignations to be effective on the Effective Date.
The foregoing conditions precedent are for the benefit of NPS and may be
waived in whole or in part by NPS in writing at any time. If any of the said
conditions shall not be complied with or waived by NPS on or before the date
required for the performance thereof, NPS may, in addition to the other remedies
it may have at law or equity, rescind and terminate this Agreement by written
notice to Allelix.
ARTICLE 8
FEES AND EXPENSES
8.1 Topping Fee
In the event that:
(a) Allelix breaches its covenants or agreements in this Agreement in any
material respect;
(b) NPS terminates this Agreement pursuant to Section 11.2(b); unless (i)
the Board of Directors of Allelix shall have withdrawn or varied in a
manner determined by NPS to be adverse to NPS its approval of this
Agreement or the Arrangement or its unanimous recommendation to the
Allelix Shareholders because of a Material Adverse Change affecting
NPS and (ii) that such change is not attributable to a Material
Adverse Change affecting Allelix;
(c) Allelix terminates this Agreement pursuant to Section 11.2(d);
(d) (i) an Acquisition Proposal (provided that for the purposes of this
Section 8.1(d), the reference to 10% of the Allelix Common Shares in
the definition of "Acquisition Proposal" in Section 6.3(c) shall be
deemed to be a reference to 20% of the Allelix Common Shares) is
announced or made and is not withdrawn more than two business days
prior to the date of the Allelix Meeting , (ii) the Allelix
Shareholders do not approve the Arrangement at the Allelix Meeting;
and (iii) a transaction involving the acquisition of a material
portion of the assets of Allelix or one or more of its Subsidiaries or
Allelix Common Shares so as to hold not less than 20% or more of the
Allelix Common Shares outstanding shall be completed with the Person
that made or announced the Acquisition Proposal or an affiliate of
such Person within the 12 months following the date of the Allelix
Meeting;
Allellix will pay NPS a fee of $2,000,000 in immediately available funds to an
account designated by NPS within one business day following receipt of notice
from NPS of particulars concerning such account.
8.2 Payment of Expenses
If the Allelix Shareholders shall fail to approve the Arrangement at the
Allelix Meeting except following a Material Adverse Change affecting NPS, then
on the first business day following the Allelix Meeting subject to receipt of
the documentation described below, Allelix shall reimburse NPS for out-of-pocket
cost and expenses in connection with the transaction contemplated by this
Agreement (against a copy of such documentation therefor as Allelix, acting
reasonably, may request) to a maximum of $500,000.
8.3 NPS Break Fee
In the event that:
(a) NPS breaches a covenant or agreement on its part in this
Agreement in any material respect; or
(b) the holders of the NPS Common Shares do not approve the matters
relating to the Arrangement considered at the NPS Meeting except
following a Material Adverse Change affecting Allelix;
NPS will pay to Allelix a fee of $1,000,000 in immediately available funds to an
account designated by Allelix within one business day following receipt of
notice from Allelix of particulars concerning such account, provided that the
amount of such fee shall be increased to $2,000,000 in the event that the NPS
Board of Directors shall have withdrawn or varied in a manner determined by
Allelix to be adverse to Allelix their unanimous recommendation to holders of
NPS Common Shares, otherwise than because of a Material Adverse Change affecting
Allelix.
ARTICLE 9
AMENDMENT
9.1 Amendment
This Agreement may, at any time and from time to time before or after the
holding of the Allelix Meeting, be amended by written agreement of the parties
hereto without further notice to or authorization on the part of their
respective shareholders, and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties hereto;
(b) waive any inaccuracies or modify any representation contained herein
or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify performance of any of the obligations of the
parties hereto; and
(d) waive compliance with or modify any conditions precedent herein
contained;
provided that, notwithstanding the foregoing, the number of Exchangeable Share
which the holders of Allelix Common Shares shall have the right to receive on
the Arrangement may not be reduced without the approval of the Allelix
Shareholders given in the same manner as required for the approval of the
Arrangement or as may be ordered by the Court.
9.2 Mutual Understanding Regarding Amendments
(a) The parties will continue, from and after the date hereof and
through and including the Effective Date, to use their respective
reasonable efforts to maximize present and future financial and tax
planning opportunities for the holders of Allelix securities, and
for NPS and for Allelix as and to the extent that the same shall not
prejudice any party or its security holders. The parties will ensure
that such planning activities do not impede the progress of the
Arrangement in any material way.
(b) The parties agree that if either party shall propose any amendment
or amendments to this Agreement or to the Plan of Arrangement, the
other will act reasonably in considering such amendment and if the
other and its shareholders are not prejudiced by reason of any such
amendment the other will co-operate in a reasonable fashion with the
other party, so that such amendment can be effected subject to
Applicable Law and the rights of the security holders.
ARTICLE 10
CONFIDENTIALITY AND STANDSTILL
10.1 Confidentiality
Each of NPS and Allelix acknowledges and agrees that it will not use
Confidential Information for any purpose whatsoever other than for purposes
specifically relating to evaluation of the proposed transaction, and that any
Confidential Information provided to a party hereto (the "receiving party") in
written form shall be returned to the party supplying the same (the "supplier")
forthwith upon this Agreement being terminated and for greater certainty, it is
understood and agreed by each of the receiving parties that no written
materials, reproductions, extracts, typed or hand written notes or memorandums
made from, or relating in any way to, the Confidential Information shall be
retained by such parties after the termination of this Agreement and forthwith
upon any such occurrence, all such materials, extracts, notes and memorandums
shall be destroyed unless returned to the supplier as aforesaid, and the
receiving party shall, forthwith upon the request of the supplier, provide a
statutory declaration as to that fact, from an officer.
The receiving party hereby undertakes and agrees with the supplier that
such receiving party shall keep such Confidential Information in strict
confidence, and shall not disclose any such Confidential Information to any
third party or parties whatsoever except in strict accordance herewith.
Disclosure of the Confidential Information may be made by or on behalf of the
receiving party to its employees and professional advisors who have a need to
know such Confidential Information for purposes of considering the making of a
bona fide evaluation of the proposed transaction, provided that all such persons
agree to keep such information confidential and to be bound by this Agreement to
the same extent as if they were parties hereto. Disclosure of the Confidential
Information may be made by or on behalf of the receiving party, or any other
party to whom disclosure has been made in accordance herewith, if required by
law, provided however, that forthwith upon receipt of any such request or order
for such disclosure, the
receiving party or such other party to whom the request for disclosure is made,
shall forthwith notify the supplier that a request has been made for disclosure
in order that the supplier may seek any appropriate protective order or waive
compliance by the receiving party with the provision of this Agreement. The
receiving party further agrees that, if in the absence of a protective order or
the receipt of a waiver from the supplier, the receiving party is nonetheless,
in the reasonable opinion of its counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the receiving party may disclose only that portion of the
Confidential Information that it is legally required to so disclose to such
tribunal without liability hereunder.
The restrictions on the use and disclosure of the Confidential
Information set forth in this Agreement shall not apply if:
(a) the Confidential Information is or becomes publicly available other
than through a breach of this Agreement by either party to whom
disclosure is made in accordance herewith;
(b) the Confidential Information is subsequently lawfully obtained
without secrecy obligation from a third party or parties not in a
contractual or fiduciary relationship with any member of the
receiving party, other than through a breach of this Agreement,
provided that written supporting documentation confirming the lawful
authority of such third party or parties to disclose the
Confidential Information is provided to the supplier;
(c) the Confidential Information was known by the receiving party or
other parties prior to the time at which disclosure of such
Confidential Information was made to the receiving party or such
other parties in accordance herewith, provided that written
supporting documentation confirming that fact is provided to the
supplier; or
(d) the written consent of the supplier is given prior to any such use
or disclosure being made.
Each party agrees that it would be difficult to measure the damage to the
other party from the breach of such party's obligations under this Section 10.1,
that injury to the other party from any such breach would be impossible to
calculate, and that monetary damages would therefore be an inadequate remedy;
accordingly, each party agrees that the other party shall be entitled, in
addition to all other remedies it might have, to injunctions or other
appropriate orders to restrain any such breach without showing or providing any
actual damage or posting any bond or other security in connection with such
remedy.
10.2 Standstill
Each of NPS and Allelix hereby agrees that, unless an offer to acquire
beneficial ownership of all or a material portion of the assets of the other
party (including shares of Subsidiaries) or one or more of its Subsidiaries or
not less than 20% of the common shares of the
other party pursuant to a transaction to be considered at a meeting of security
holders requisitioned by a security holder of such other party or pursuant to a
take over bid, tender offer, exchange offer or similar transaction involving the
other party, is made and not withdrawn at the time the conduct otherwise
prohibited by this Section 10.2 has commenced (whether during the term of this
Agreement or thereafter), neither it nor any affiliate of it (regardless of
whether an affiliate on the date hereof) will, prior to June 27, 2000, without
the prior written consent of the other party:
(a) acquire, offer to acquire or agree to acquire, directly or
indirectly, by purchase or otherwise, individually or jointly or in
concert with any other person (as that expression is used in the
Securities Act (Ontario) any voting securities, or securities
convertible into or exchangeable for voting securities, of the other
party; or
(b) directly or indirectly make, or in any way participate in, any
solicitation of proxies to vote, or seek to advise or influence any
other person with respect to the voting of any voting securities of
the other party; or
(c) form, join or in any way participate in a "group" within the meaning
of Section 13(d)(3) of the United States Securities Exchange Act of
1934, as amended, with respect to any voting securities of the other
party; or
(d) otherwise act alone or in concert with others to seek to control the
management, directors or corporate policies of the other party; or
(e) engage in any discussions or negotiations, enter into any agreement
or submit a proposal for, or offer (with or without condition) any
business combination or extraordinary transaction involving the
other party or any affiliate of the other party or any of their
respective securities or assets; or
(f) make any public announcement of any intention to do or take any of
the foregoing.
ARTICLE 11
GENERAL
11.1 Expenses
Except as provided for in Article 8 hereof, each party hereto covenants
and agrees to bear its own costs and expenses in connection with the
transactions contemplated hereby.
11.2 Termination
This Agreement may be terminated by:
(a) the delivery by one party to another of a written notice stating
that a condition precedent for the benefit of the party initiating
such notice has not been fulfilled
or satisfied within the time contemplated by this Agreement and that
this Agreement is accordingly terminated;
(b) NPS if the Board of Directors of Allelix shall have withdrawn or
varied in a manner determined by NPS to be adverse to NPS, its
approval of this Agreement or the Arrangement or its unanimous
recommendation to the Allelix Shareholders;
(c) Allelix if the NPS board of directors shall have withdrawn their
unanimous recommendation to the holders of the NPS Common Shares to
vote in favour of the resolutions contemplated in this Agreement to
be considered at the NPS Meeting;
(d) Allelix in order to enter into a definitive written agreement with
respect to a Superior Proposal, subject to compliance with Section
6.3 and the payment of any fee required to be paid to NPS pursuant
to Section 8.1.
(e) by the mutual agreement of NPS and Allelix (without further action
on the part of the Allelix Shareholders if terminated after the
holding of the Allelix Meeting);
(f) by either NPS or Allelix, if there shall be passed any law or
regulation that makes consummation of the transactions contemplated
by the Arrangement Agreement illegal or otherwise prohibited or if
any injunction, order or decree enjoining NPS or Allelix from
consummation of the transactions contemplated by the Arrangement
Agreement is entered and such injunction, order or decree shall
become final and non-applicable;
provided, however, nothing in this clause shall relieve a party from any
obligations that accrue prior to the date of termination nor shall it relieve a
party from any obligation under Article 10. Further, the obligations of Allelix
to NPS contained in Article 10 hereof shall survive termination of this
Agreement.
11.3 Notices
Any notice, request, consent, waiver, direction or other communication
required or permitted to be given under this Agreement by a party to any other
party shall be deemed to have been duly given and made, if in writing and if
served by personal delivery upon the party for whom it is intended or delivered,
by registered or certified mail, return receipt requested, or if sent by
telecopier, upon receipt to the person at the address set forth below, or such
other address as may be designated in writing hereafter, in the same manner, by
such person.
The address for service of each of the parties hereto shall be as
follows:
(a) if to Allelix:
Allelix Biopharmaceuticals Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇/▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇/▇▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Stikeman, ▇▇▇▇▇▇▇
Commerce Court West
Suite 5300
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ W.A. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to NPS:
NPS Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Commerce Court West
2800 - ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: J. ▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
11.4 Time of Essence
Time shall be of the essence in this Agreement.
11.5 Entire Agreement
This Agreement constitutes the entire agreement and supersedes all other
prior agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
11.6 Severability
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties shall negotiate in good faith to modify this
Agreement to preserve each party's anticipated benefits under this Agreement.
11.7 Announcements
Except as otherwise provided in this Agreement, unless required by
Applicable Law, no party to this Agreement shall make any public or private
announcement or communications in respect of the Arrangement (including, without
limitation, the existence of this Agreement or that any investigation,
discussions or negotiations are taking place concerning the evaluation of the
parties hereto or the proposed transaction) unless the prior consent of the
announcement is obtained from both parties, such consent not to be unreasonably
withheld.
11.8 Further Assurances
Subject to the conditions herein provided, each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as is practicable the proposed
transaction, including the execution and delivery of such documents as the other
party hereto may reasonably require, and use of best efforts to obtain all
necessary waivers, consents and approvals and the effecting of all necessary
registrations and filings, including, but not limited to, filings under
applicable laws and submissions of information requested by governmental
authorities. Each of the parties hereto, where appropriate, shall reasonably
cooperate with the other party in taking such actions. Without limiting the
generality of the foregoing, in the event any provision of the Arrangement is
not capable of being carried out under the CBCA or the OBCA as provided hereby,
the parties agree to take all such commercially reasonable action as may be
necessary to have such provision carried out under whichever statute will
facilitate implementation of the provision.
11.19 Governing Law
This Agreement shall be governed by, and be construed in accordance with,
the laws of the Province of Ontario and the laws of Canada applicable therein
but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other than the
Province of Ontario. Each party hereto hereby irrevocably attorns to the
jurisdiction of the Courts of the Province of Ontario in respect of all matters
arising under or in relation to this Agreement.
11.10 Execution in Counterparts
This Agreement may be executed in identical counterparts, each of which
is and is hereby conclusively deemed to be an original and the counterparts
collectively are to be conclusively deemed to be one instrument.
11.11 Waiver
No waiver by any party hereto shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or occurrence.
11.12 Enurement and Assignment
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and is not intended
to confer upon any other person any rights or remedies hereunder. This
Agreement may not be assigned by operation of law or otherwise, except that NPS
may assign all or any portion of its rights under this Agreement to any direct
or indirect wholly-owned subsidiary of NPS, but no such assignment shall relieve
NPS of its obligations hereunder.
11.13 Subsidiary Covenants
To the extent any representations, warranties, covenants or agreements
contained herein relate, directly or indirectly, to a Subsidiary of any party,
each such provision shall be construed as a covenant by such party to cause (to
the fullest extent to which it is legally capable) such Subsidiary to perform
the required action.
To the extent any representations, warranties, covenants or agreements
contained herein relate, directly or indirectly, to a Subsidiary of any party,
each such provision shall be construed as a covenant by such party to cause (to
the fullest extent to which it is legally capable) such Subsidiary to perform
the required action.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
ALLELIX BIOPHARMACEUTICALS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
Title: Senior Vice President and CFO
I/We have authority to bind the Corporation
NPS PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman and CEO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, Corporate Development
and Legal Affairs
I/We have authority to bind the Corporation
SCHEDULE A
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
AND
UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
INTERPRETATION
Definitions
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"Allelix" means Allelix Biopharmaceuticals Inc.;
"Allelix Common Shares" means the common shares of Allelix;
"Allelix Meeting" means the special meeting of the holders of the Allelix
Common Shares, as ordered by the Interim Order, to consider and, if
determined advisable, approve the repricing of certain Allelix Options as
approved by the Allelix board of directors on April 15, 1999 to consider
and, if determined advisable, approve the continuance of Allelix under the
OBCA and to consider and, if determined advisable, approve the Arrangement;
"Allelix Options" means the options to purchase Allelix Common Shares
issued from time to time prior to the date hereof pursuant to the Allelix
Stock Option Plan;
"Allelix Preferred Shares" means the preferred share, series 1 shares of
Allelix;
"Allelix Warrants" means the warrants to purchase Allelix Common Shares
issued from time to time;
"Arrangement" means an arrangement under Section 192 of the CBCA and
Section 182 of the OBCA on the terms and subject to the conditions set out
in this Plan of Arrangement, subject to any amendments or variations
thereto made in accordance with the Arrangement Agreement or Article 6 of
this Plan of Arrangement or made at the direction of the Court in the Final
Order;
"Arrangement Agreement" means the agreement made as of the 27th day of
September, 1999, as amended, between NPS and Allelix providing for, among
other things, the Arrangement;
"Arrangement Resolution" means the special resolution in respect of the
Arrangement to be considered by the holders of Allelix Common Shares at the
Allelix Meeting;
"Articles of Arrangement" means the articles of arrangement of Allelix in
respect of the Arrangement that are required by the OBCA to be sent to the
Director after the Final Order is made;
"Business Day" means any day on which commercial banks are generally open
for business in Toronto, Canada and Salt Lake City, Utah, other than a
Saturday, a Sunday or a day observed as a holiday in Salt Lake City, Utah
under the laws of the State of Utah or the federal laws of the United
States of America or in Toronto, Canada under the laws of the Province of
Ontario or the federal laws of Canada;
"Canadian Resident" means a resident of Canada for purposes of the ITA;
"CBCA" means the Canada Business Corporations Act, as amended;
"Certificate" means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to subsection 183(2) of the OBCA after the
Articles of Arrangement have been filed;
"Circular" means the notice of the Allelix Meeting and accompanying
management information circular, including all appendices thereto, to be
sent to holders of Allelix Common Shares in connection with the Allelix
Meeting;
"Continuance" means the continuance of Allelix under the OBCA, pursuant to
Section 188 of the CBCA, if authorized by the passing of the Continuance
Resolution by the holders of Allelix Common Shares at the Allelix Meeting;
"Continuance Resolution" means the special resolution in respect of the
Continuance to be considered by the holders of Allelix Common Shares at the
Allelix Meeting;
"Court" means the Ontario Superior Court of Justice;
"Current Market Price" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"Depositary" means the depositary selected by NPS and Allelix, acting
reasonably;
"Director" mean the Director appointed pursuant to Section 278 of the OBCA;
"Dissent Rights" has the meaning ascribed thereto in Section 3.1;
"Dissenting Shareholder" means a holder of Allelix Common Shares who
dissents in respect of the Arrangement in strict compliance with the
Dissent Rights;
"Dividend Amount" means the amount of all declared and unpaid dividends on
an Exchangeable Share held by a holder on any dividend record date which
occurred prior to the date of purchase or redemption of such share by NPS
Allelix Inc. or NPS Holdings from such holder;
"Effective Date" means the date shown on the Certificate;
"Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date;
"Election Deadline" means 5:00 p.m. (local time) at the place of deposit on
the date which is two Business Days prior to the date of the Allelix
Meeting;
"Exchange Ratio" means 0.3238, subject to adjustment, if any, as provided
in Section 2.4;
"Exchangeable Elected Share" means any Allelix Common Share held by a
Canadian Resident that the holder thereof shall have elected, in a duly
completed Letter of Transmittal and Election Form deposited with the
Depositary no later than the Election Deadline, to transfer to NPS -
Allelix Inc. under the Arrangement for a fraction of an Exchangeable Share
equal to the Exchange Ratio or that is deemed to be an Exchangeable Elected
Share pursuant to Section 2.2(c);
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of NPS - Allelix Inc., having substantially the rights, privileges,
restrictions and conditions set out in the Exchangeable Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares, which rights,
privileges, restrictions and conditions shall be substantially as set out
in Appendix 1 hereto;
"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed;
"Government Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"holders" means, when used with reference to the Allelix Common Shares, the
holders of Allelix Common Shares shown from time to time in the register
maintained by or on behalf of Allelix in respect of the Allelix Common
Shares and, when used with reference to the Exchangeable Shares, means the
holders of Exchangeable Shares shown from time to time in the register
maintained by or on behalf of NPS - Allelix Inc. in respect of the
Exchangeable Shares;
"Interim Order" means the interim order of the Court, as the same may be
amended, in respect of the Arrangement, as contemplated by Section 2.2 of
the Arrangement Agreement;
"ITA" means the Income Tax Act (Canada), as amended;
"Letter of Transmittal and Election Form" means the letter of transmittal
and election form for use by holders of Allelix Common Shares, in the form
accompanying the Circular;
"Liquidation Amount" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"Liquidation Call Purchase Price" has the meaning ascribed thereto in
Section 5.1(a);
"Liquidation Call Right" has the meaning ascribed thereto in Section
5.1(a);
"Liquidation Date" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"Meeting Date" means the date of the Allelix Meeting;
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"NPS" means NPS Pharmaceuticals, Inc.;
"NPS - Allelix Inc." means NPS - Allelix Inc. to be incorporated under the
British Columbia Companies Act as a wholly-owned subsidiary of NPS
Holdings;
"NPS Common Shares" means the shares of common stock in the capital of NPS;
"NPS Control Transaction" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
"NPS Elected Share" means any Allelix Common Share (other than an Allelix
Common Share held by NPS or an affiliate thereof) held by a Canadian
Resident that the holder thereof shall have elected, in a duly completed
Letter of Transmittal and Election Form
deposited with the Depositary no later than the Election Deadline, to
transfer to NPS - Allelix Inc. under the Arrangement for a fraction of a
NPS Common Share equal to the Exchange Ratio, or that is deemed to be an
NPS Elected Share pursuant to Sections 2.2(c) or 2.3(a);
"NPS Holdings" means NPS Holdings Limited, a company to be incorporated
under the British Columbia Companies Act as a wholly-owned subsidiary of
NPS;
"NPS Trading Price" means the average of the bid and ask prices of NPS
Common Shares on Nasdaq during a period of twenty consecutive trading days
ending on the Business Day immediately preceding the Effective Date;
"OBCA" means the Business Corporations Act (Ontario), as amended;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Government Entity, syndicate or other entity,
whether or not having legal status;
"Preference Shares" means the 100 preference shares in the capital of NPS -
Allelix Inc. having substantially the rights, privileges, restrictions and
conditions set forth in Appendix 2 hereto;
"Redemption Call Purchase Price" has the meaning ascribed thereto in
Section 5.2(a);
"Redemption Call Right" has the meaning ascribed thereto in Section 5.2(a);
"Redemption Date" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"Replacement Option" has the meaning ascribed thereto in Section 2.2(e);
"Replacement Warrant" has the meaning ascribed thereto in Section 2.2(d);
"Special Voting Share" means the share of NPS Special Voting Preferred
Stock having substantially the rights, privileges, restrictions and
conditions described in the Voting and Exchange Trust Agreement;
"Transfer Agent" means the transfer agent to be chosen by NPS and Allelix
to act as transfer agent of the Exchangeable Shares;
"Trustee" means the trustee to be chosen by NPS and Allelix to act as
trustee under the Voting and Exchange Trust Agreement, being a corporation
organized and existing under the laws of Canada and authorized to carry on
the business of a trust company in all the
provinces of Canada, and any successor trustee appointed under the Voting
and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means an agreement to be made among
NPS, NPS - Allelix Inc. and the Trustee in connection with the Plan of
Arrangement.
Sections and Headings
The division of this Plan of Arrangement into sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless otherwise indicated, any
reference in this Plan of Arrangement to a section or an appendix refers to the
specified section of or appendix to this Plan of Arrangement.
Number, Gender and Persons
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa and words
importing any gender include all genders.
ARRANGEMENT
Binding Effect
This Plan of Arrangement will become effective at, and be binding at
and after, the Effective Time on (i) Allelix, (ii) NPS, NPS Holdings and NPS -
Allelix Inc., (iii) all holders of Allelix Common Shares, (iv) all holders of
Exchangeable Shares, and (v) all holders of Allelix Options and Allelix
Warrants.
Arrangement
Commencing at the Effective Time, the following shall occur and shall
be deemed to occur in the following order without any further act or formality:
each NPS Elected Share will be transferred by the holder thereof,
without any act or formality on its part, to NPS - Allelix Inc. in
exchange for a fraction of a fully-paid and non-assessable NPS Common
Share equal to the Exchange Ratio, and the name of each such holder
will be removed from the register of holders of Allelix Common Shares
and added to the register of holders of NPS Common Shares and NPS -
Allelix Inc. will be recorded as the registered holder of such Allelix
Common Shares so exchanged and will be deemed to be the legal and
beneficial owner thereof;
each Exchangeable Elected Share will be transferred by the holder
thereof, without any act or formality on its part, to NPS - Allelix
Inc. in exchange for a
fraction of a fully-paid and non-assessable Exchangeable Share equal
to the Exchange Ratio, and the name of each such holder will be
removed from the register of holders of Allelix Common Shares and
added to the register of holders of Exchangeable Shares and NPS -
Allelix Inc. will be recorded as the registered holder of such Allelix
Common Shares so exchanged and will be deemed to be the legal and
beneficial owner thereof;
each Allelix Common Share in respect of which a duly completed Letter
of Transmittal and Election Form has not been deposited with the
Depositary on or prior to the Election Deadline (other than (i)
Allelix Common Shares held by Dissenting Shareholders who are
ultimately entitled to be paid the fair value of the Allelix Common
Shares held by them and (ii) Allelix Common Shares held by NPS or any
affiliate thereof which shall not be exchanged under this Arrangement
and shall remain outstanding as Allelix Common Shares held by NPS or
any affiliate thereof), (A) in the case of a holder of Allelix Common
Shares whose address as shown in the register of Allelix Common Shares
as of the close of business (Toronto time) on the day preceding the
Effective Date is in Canada will be deemed to be an Exchangeable
Elected Share and will be transferred by the holder thereof, without
any act or formality on its part, to NPS - Allelix Inc. in exchange
for that number of fully paid and non-assessable Exchangeable Shares
equal to the Exchange Ratio, and the name of each such holder of
Allelix Common Shares will be removed from the register of holders of
Allelix Common Shares and added to the register of holders of
Exchangeable Shares and NPS - Allelix Inc. will be recorded as the
registered holder of such Allelix Common Shares so exchanged and will
be deemed to be the legal and beneficial owner thereof, and (B) in the
case of a holder of Allelix Common Shares whose address as shown in
the register of Allelix Common Shares as of the close of business
(Toronto time) on the day preceding the Effective Date is not in
Canada will be deemed to be a NPS Elected Share and will be
transferred by the holder thereof, without any act or formality on its
part, to NPS - Allelix Inc. in exchange for a fraction of a fully-paid
and non-assessable NPS Common Share equal to the Exchange Ratio, and
the name of each such holder will be removed from the register of
holders of Allelix Common Shares and added to the register of holders
of NPS Common Shares and NPS - Allelix Inc. will be recorded as the
registered holder of such Allelix Common Shares so exchanged and will
be deemed to be the legal and beneficial owner thereof;
in accordance with the terms of the Allelix Warrants, after the
Effective Time, a holder of Allelix Warrants shall be entitled, upon
the exercise of such warrants, to receive in lieu of the number of
Allelix Common Shares to which such holder was theretofore entitled to
receive upon such exercise, that aggregate number of Exchangeable
Shares or NPS Common Shares, as applicable, that such holder would
have been entitled to receive under the Plan of Arrangement if such
holder had been the registered holder of that number of Allelix Common
Shares that such
holder was theretofore entitled to receive if all such holder's
Allelix Warrants had been exercised immediately prior to the Effective
Time;
in accordance with the terms of the Allelix Options, after the
Effective Time, a holder of Allelix Options shall be entitled, upon
the exercise of such options, to receive in lieu of the number of
Allelix Common Shares to which such holder was theretofore entitled to
receive upon such exercise, that aggregate number of Exchangeable
Shares or NPS Common Shares, as applicable, that such holder would
have been entitled to receive under the Plan of Arrangement if such
holder had been the registered holder of that number of Allelix Common
Shares that such holder was theretofore entitled to receive if all
such holder's Allelix Options had been exercised immediately prior to
the Effective Time; and
NPS shall issue to and deposit with the Trustee the Special Voting
Share, in consideration of the payment to NPS of U.S. $1, to be
thereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the holders of the Exchangeable
Shares in accordance with the Voting and Exchange Trust Agreement.
Elections
Each Person who, at or prior to the Election Deadline, is a holder of
record of Allelix Common Shares will be entitled, with respect to all
or a portion of such shares, to make an election at or prior to the
Election Deadline to receive Exchangeable Shares or NPS Common Shares,
or a combination thereof, in exchange for such holder's Allelix Common
Shares on the basis set forth herein and in the Letter of Transmittal
and Election Form; provided that, notwithstanding anything to the
contrary herein, a holder of Allelix Common Shares who is not a
Canadian Resident will not be entitled to elect to receive
Exchangeable Shares and any such election otherwise made by any such
holder shall be and be deemed to be an election to receive a NPS
Elected Share.
Each Person who, at or prior to the Election Deadline, is a holder of
record of Allelix Common Shares and who is Canadian Resident, other
than a holder who is exempt from tax under the ITA, who has elected
(or is deemed to have elected) to receive Exchangeable Shares shall be
entitled to make an income tax election pursuant to subsection 85(l)
of the ITA or, if the holder is a partnership, subsection 85(2) of the
ITA (and in each case, where applicable, the analogous provisions of
provincial income tax law) with respect to the transfer of its Allelix
Common Shares to NPS - Allelix Inc. by providing two signed copies of
the necessary prescribed election forms to the Depositary within 90
days following the Effective Date, duly completed with the details of
the number of Allelix Common Shares transferred and the applicable
agreed amounts for the purposes of such elections. Thereafter, subject
to the election forms being correct and
complete and complying with the provisions of the ITA (and applicable
provincial income tax law), the forms will be signed by NPS - Allelix
Inc. and returned to such holder within 30 days after the receipt
thereof by the Depositary for filing with Revenue Canada (or the
applicable provincial taxing authority). NPS - Allelix Inc. will not
be responsible for the proper completion of any election form and,
except for NPS - Allelix Inc.'s obligation to return duly completed
election forms which are received by the Depositary within 90 days of
the Effective Date, within 30 days after the receipt thereof by the
Depositary, NPS - Allelix Inc. will not be responsible for any taxes,
interest or penalties resulting from the failure by a holder of
Allelix Common Shares to properly complete or file the election forms
in the form and manner and within the time prescribed by the ITA (or
any applicable provincial legislation). In its sole discretion, NPS -
Allelix Inc. may choose to sign and return an election form received
more than 90 days following the Effective Date, but NPS - Allelix Inc.
will have no obligation to do so.
2.4 Adjustments to Exchange Ratio
The Exchange Ratio shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into NPS Common Shares or Allelix Common
Shares other than stock dividends paid in lieu of ordinary course dividends),
reorganization, recapitalization or other like change with respect to NPS Common
Shares or Allelix Common Shares occurring after the date of the Arrangement
Agreement and prior to the Effective Time.
RIGHTS OF DISSENT
General
Notwithstanding Article 2, each holder of Allelix Common Shares is
entitled to dissent from the Arrangement Resolution and to be paid by Allelix
the fair value of the Allelix Common Shares held by such holder in respect of
which such holder dissents, determined as of the day before the date on which
the Arrangement Resolution is passed (the "Dissent Right"), provided that (i)
such holder gives written notice of his, her or its dissent ("Notice of
Dissent") to Allelix by depositing such notice of dissent with Allelix, or
mailing it to Allelix by registered mail, at its head office at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, marked to the attention of the Corporate
Secretary in all cases not later than 48 hours before the Allelix Meeting and
which otherwise complies with Section 185 of the OBCA as modified by the
Interim Order, and (ii) such holder shall not have voted any of its Allelix
Common Shares in favour of the Arrangement Resolution at the Allelix Meeting in
person or by proxy.
Treatment of Dissenting Shareholders
A holder of Allelix Common Shares who:
properly exercises the Dissent Right by complying with all of the
procedures (the "Dissent Procedures") required to be complied with by
a Dissenting Shareholder, will:
(i) be bound by the provisions of this Article 3,
(ii) be deemed not to have participated in the Arrangement, and
(iii) cease to have any rights as a holder of Allelix Common Shares
other than the right to be paid the fair value of the Allelix
Common Shares by Allelix in accordance with the Dissent
Procedures, or
seeks to exercise the Dissent Right, but:
(i) who for any reason does not properly fulfil each of the Dissent
Procedures required to be completed by a Dissenting
Shareholder, or
(ii) subsequent to giving its Notice of Dissent, acts inconsistently
with such dissent,
will be deemed to have participated in the Arrangement on the same
basis as each holder of Allelix Common Shares and shall receive such
number of NPS Common Shares or Exchangeable Shares as it is entitled
to on the basis determined in accordance with Section 2;
validly exercises the rights of dissent provided for under Section 190
of the CBCA in respect of the Continuance Resolution will:
(i) be deemed not to have participated in the Continuance or the
Arrangement, and
(ii) cease to have any rights as a holder of Allelix Common Shares
other than the right to be paid the fair value of the Allelix
Common Shares by Allelix in accordance with Section 190 of the
CBCA, or
seeks to exercise the rights of the dissent provided for under Section
190 of the CBCA in respect of the Continuance Resolution, but:
(i) who for any reason does not properly fulfil each of the dissent
procedures required to be completed by a dissenting
shareholder; or
(ii) subsequent to giving its notice of dissent as provided for
under Section 190 of the CBCA, acts inconsistently with such
dissent,
will be deemed to have participated in the Continuance and the
Arrangement on the same basis as each holder of Common Shares and
shall receive such number of NPS Common Shares or Exchangeable Shares
as they are entitled to on the basis determined in accordance with
Section 2.
CERTIFICATES AND FRACTIONAL SHARES
Issuance of Certificates Representing Exchangeable Shares
At or promptly after the Effective Time, NPS - Allelix Inc. shall
deposit with the Depositary, for the benefit of the holders of Allelix Common
Shares who will receive Exchangeable Shares in connection with the Arrangement,
certificates representing that number of whole Exchangeable Shares to be
delivered pursuant to Section 2.2 upon the exchange of Allelix Common Shares.
Upon surrender to the Depositary for cancellation of a certificate which
immediately prior to the Effective Time represented Allelix Common Shares that
were exchanged for Exchangeable Shares under the Arrangement, together with such
other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the OBCA
and the articles and by-laws of Allelix and such additional documents and
instruments as the Depositary may reasonably require, the holder of such
surrendered certificate shall be entitled to receive in exchange therefor, and
the Depositary shall deliver to such holder, a certificate representing that
number (rounded down to the nearest whole number) of Exchangeable Shares which
such holder has the right to receive (together with any dividends or
distributions with respect thereto pursuant to Section 4.3 and any cash in lieu
of fractional Exchangeable Shares pursuant to Section 4.4), and the certificate
so surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Allelix Common Shares that is not registered in the transfer
records of Allelix, a certificate representing the proper number of Exchangeable
Shares may be issued to the transferee if the certificate representing such
Allelix Common Shares is presented to the Depositary, accompanied by all
documents required to evidence and effect such transfer. Until surrendered as
contemplated by this Section 4.1, each certificate which immediately prior to
the Effective Time represented Allelix Common Shares that were exchanged for
Exchangeable Shares shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender (i) the certificate
representing Exchangeable Shares as contemplated by this Section 4.1, (ii) a
cash payment in lieu of any fractional Exchangeable Shares as contemplated by
Section 4.4 and (iii) any dividends or distributions with a record date after
the Effective Time theretofore paid or payable with respect to Exchangeable
Shares as contemplated by Section 4.3.
Issuance of Certificates representing NPS Common Shares
At or promptly after the Effective Time, NPS - Allelix Inc. shall
deposit with the Depositary, for the benefit of the holders of Allelix Common
Shares who will receive NPS Common Shares in connection with the Arrangement,
certificates representing that whole
number of NPS Common Shares to be delivered pursuant to Section 2.2 upon the
exchange of Allelix Common Shares. Upon surrender to the Depositary for
cancellation of a certificate which immediately prior to the Effective Time
represented outstanding Allelix Common Shares that were exchanged for NPS Common
Shares under the Arrangement, together with such other documents and instruments
as would have been required to effect the transfer of the shares formerly
represented by such certificate under the OBCA, the articles and by-laws of
Allelix and such additional documents and instruments as the Depositary may
reasonably require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor, and the Depositary shall deliver to such
holder, a certificate representing that number (rounded down to the nearest
whole number) of NPS Common Shares which such holder has the right to receive
(together with any dividends or distributions with respect thereto pursuant to
Section 4.3 and any cash in lieu of fractional NPS Common Shares pursuant to
Section 4.4), and the certificate so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of Allelix Common Shares which is not
registered in the transfer records of Allelix, a certificate representing the
proper number of NPS Common Shares may be issued to the transferee if the
certificate representing such Allelix Common Shares is presented to the
Depositary, accompanied by all documents required to evidence and effect such
transfer. Until surrendered as contemplated by this Section 4.2, each
certificate which immediately prior to the Effective Time represented one or
more outstanding Allelix Common Shares that were exchanged for NPS Common Shares
shall be deemed at all times after the Effective Time to represent only the
right to receive upon such surrender (i) the certificate representing NPS Common
Shares as contemplated by this Section 4.2, (ii) a cash payment in lieu of any
fractional NPS Common Shares as contemplated by Section 4.4 and (iii) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to NPS Common Shares as contemplated by
Section 4.3.
Distributions with Respect to Unsurrendered Certificates
No dividends or other distributions declared or made after the
Effective Time with respect to Exchangeable Shares or NPS Common Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate which immediately prior to the Effective Time
represented outstanding Allelix Common Shares that were exchanged pursuant to
Section 2.2, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 4.4 and no interest shall be earned or
payable on these proceeds, unless and until the holder of such certificate shall
surrender such certificate in accordance with Section 4.1 or 4.2. Subject to
applicable law and to Section 4.6, at the time of such surrender of any such
certificate (or, in the case of clause (iii) below, at the appropriate payment
date), there shall be paid to the holder of the certificates representing
Allelix Common Shares, as the case may be, without interest, (i) the amount of
any cash payable in lieu of a fractional Exchangeable Share or NPS Common Share
to which such holder is entitled pursuant to Section 4.4, (ii) the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to the Exchangeable Shares or NPS Common Shares,
as the case may be, to which such holder is entitled pursuant hereto and (iii)
on the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such
Exchangeable Shares or NPS Common Shares, as the case may be.
No Fractional Shares
No certificates representing fractional Exchangeable Shares or
fractional NPS Common Shares shall be issued upon the surrender for exchange of
certificates pursuant to Section 4.1 or 4.2 and no dividend, stock split or
other change in the capital structure of NPS - Allelix Inc. shall relate to any
such fractional security and such fractional interests shall not entitle the
owner thereof to exercise any rights as a security holder of NPS - Allelix Inc..
In lieu of any such fractional securities, each Person otherwise entitled to a
fractional interest in an Exchangeable Share or to a fractional interest in a
NPS Common Share will receive a cash payment from the Depositary equal to the
product of such fractional interest and the NPS Trading Price. NPS - Allelix
Inc. shall from time to time as necessary provide the Depositary with funds
sufficient to satisfy these obligations. On the date of the notice referred to
in Section 7.2 of the Exchangeable Share Provisions, the aggregate number of
Exchangeable Shares and the aggregate number of NPS Common Shares for which no
certificates were issued as a result of the foregoing provisions of this Section
4.4 shall be deemed to have been surrendered by the Depositary for no
consideration to NPS - Allelix Inc. or NPS, as the case may be.
Lost Certificates
In the event that any certificate which immediately prior to the
Effective Time represented one or more outstanding Allelix Common Shares that
were exchanged pursuant to Section 2.2 shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such certificate to be lost, stolen or destroyed, the Depositary will issue in
exchange for such lost, stolen or destroyed certificate, any cash pursuant to
Section 4.4 and/or one or more certificates representing one or more
Exchangeable Shares or NPS Common Shares (and any dividends or distributions
with respect thereto) deliverable in accordance with such holder's Letter of
Transmittal and Election Form. When authorizing such payment in exchange for any
lost, stolen or destroyed certificate, the Person to whom certificates
representing Exchangeable Shares or NPS Common Shares are to be issued shall, as
a condition precedent to the issuance thereof, give a bond satisfactory to NPS -
Allelix Inc., NPS and their respective transfer agents in such sum as NPS -
Allelix Inc. or NPS may direct or otherwise indemnify NPS - Allelix Inc. and NPS
in a manner satisfactory to NPS - Allelix Inc. and NPS against any claim that
may be made against NPS - Allelix Inc. or NPS with respect to the certificate
alleged to have been lost, stolen or destroyed.
Extinction of Rights
Any certificate which immediately prior to the Effective Time
represented outstanding Allelix Common Shares that were exchanged pursuant to
Section 2.2 that is not deposited with all other instruments required by Section
4.1 or 4.2 on or prior to the date of the notice referred to in Section 7.2 of
the Exchangeable Share Provisions shall cease to represent a
claim or interest of any kind or nature as a shareholder of NPS - Allelix Inc.
or NPS. On such date, the Exchangeable Shares or NPS Common Shares (or cash in
lieu of fractional interests therein, as provided in Section 4.4) to which the
former holder of the certificate referred to in the preceding sentence was
ultimately entitled shall be deemed to have been surrendered for no
consideration to NPS -Allelix Inc. or NPS, as the case may be, together with all
entitlements to dividends, distributions and interest in respect thereof held
for such former holder. None of NPS, NPS - Allelix Inc., NPS Holdings or the
Depositary shall be liable to any person in respect of any NPS Common Shares or
Exchangeable Shares (or dividends, distributions and interest in respect
thereof) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Withholding Rights
NPS - Allelix Inc., NPS Holdings, NPS and the Depositary shall be
entitled to deduct and withhold from any dividend or consideration otherwise
payable pursuant to transactions contemplated by this Agreement to any holder of
Allelix Common Shares, NPS Common Shares or Exchangeable Shares such amounts as
NPS - Allelix Inc., NPS Holdings, NPS or the Depositary is required or permitted
to deduct and withhold with respect to such payment under the ITA, the United
States Internal Revenue Code of 1986 or any provision of provincial, state,
local or foreign tax law, in each case, as amended. To the extent that amounts
are so withheld, such withheld amounts shall be treated for all purposes hereof
as having been paid to the holder of the shares in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. To the extent that the
amount so required or permitted to be deducted or withheld from any payment to a
holder exceeds the cash portion of the consideration otherwise payable to the
holder, NPS - Allelix Inc., NPS Holdings, NPS and the Depositary are hereby
authorized to sell or otherwise dispose of such portion of the consideration as
is necessary to provide sufficient funds to NPS - Allelix Inc., NPS Holdings,
NPS or the Depositary, as the case may be, to enable it to comply with such
deduction or withholding requirement and NPS - Allelix Inc., NPS Holdings, NPS
or the Depositary shall notify the holder thereof and remit any unapplied
balance of the net proceeds of such sale.
CERTAIN RIGHTS OF NPS - ALLELIX INC. TO ACQUIRE EXCHANGEABLE SHARES
NPS Holdings Liquidation Call Right
NPS Holdings shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of NPS - Allelix Inc. pursuant to Article 5
of the Exchangeable Share Provisions, to purchase from all but not
less than all of the holders of Exchangeable Shares (other than any
holder of Exchangeable Shares which is an affiliate of NPS) on the
Liquidation Date all but not less than all of the Exchangeable Shares
held by each such holder on payment by NPS Holdings of
an amount per share (the "Liquidation Call Purchase Price") equal to
the Current Market Price of a NPS Common Share on the last Business
Day prior to the Liquidation Date, which shall be satisfied in full by
NPS Holdings causing to be delivered to such holder one NPS Common
Share, plus any Dividend Amount for each Exchangeable Share held by
such holder. In the event of the exercise of the Liquidation Call
Right by NPS Holdings, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to NPS Holdings on the
Liquidation Date on payment by NPS Holdings to the holder of the
Liquidation Call Purchase Price for each such share, and NPS - Allelix
Inc. shall have no obligation to pay any Liquidation Amount to the
holders of such shares so purchased by NPS Holdings.
To exercise the Liquidation Call Right, NPS Holdings must notify the
Trustee, as agent for the holders of Exchangeable Shares, and NPS -
Allelix Inc. of NPS Holdings's intention to exercise such right at
least 45 days before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding-up of NPS - Allelix Inc. and at
least five Business Days before the Liquidation Date in the case of an
involuntary liquidation, dissolution or winding-up of NPS - Allelix
Inc.. The Trustee will notify the holders of Exchangeable Shares as to
whether or not NPS Holdings has exercised the Liquidation Call Right
forthwith after the expiry of the period during which the same may be
exercised by NPS Holdings. If NPS Holdings exercises the Liquidation
Call Right, then on the Liquidation Date, NPS Holdings will purchase
and the holders will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Liquidation Call
Purchase Price.
For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, NPS Holdings shall deposit
with the Transfer Agent, on or before the Liquidation Date,
certificates representing the aggregate number of NPS Common Shares
deliverable by NPS Holdings and a cheque or cheques of NPS Holdings
payable at par at any branch of the bankers of NPS Holdings
representing the aggregate Dividend Amount in payment of the total
Liquidation Call Purchase Price, less any amounts withheld pursuant to
Section 4.7 hereof. Provided that NPS Holdings has complied with the
immediately preceding sentence, on and after the Liquidation Date the
rights of each holder of Exchangeable Shares will be limited to
receiving such holder's proportionate part of the total Liquidation
Call Purchase Price payable by NPS Holdings upon presentation and
surrender by the holder of certificates representing the Exchangeable
Shares held by such holder and the holder shall on and after the
Liquidation Date be considered and deemed for all purposes to be the
holder of the NPS Common Shares to which it is entitled. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the governing corporate statute and the by-
laws of NPS - Allelix Inc. and such additional documents and
instruments as the Transfer
Agent may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of NPS Holdings shall
deliver to such holder, certificates representing the NPS Common
Shares to which the holder is entitled and a cheque or cheques of NPS
Holdings payable at par at any branch of the bankers of NPS Holdings
in payment of the remaining portion, if any, of the total Liquidation
Call Purchase Price, less any amounts withheld pursuant to Section 4.7
hereof. If NPS Holdings does not exercise the Liquidation Call Right
in the manner described above, on the Liquidation Date the holders of
the Exchangeable Shares will be entitled to receive in exchange
therefor the Liquidation Amount otherwise payable by NPS -Allelix Inc.
in connection with the liquidation, dissolution or winding-up of NPS -
Allelix Inc. pursuant to Article 5 of the Exchangeable Share
Provisions.
NPS Holdings Redemption Call Right
In addition to NPS Holdings's rights contained in the Exchangeable
Share Provisions, including, without limitation, the Retraction Call Right (as
defined in the Exchangeable Share Provisions), NPS Holdings shall have the
following rights in respect of the Exchangeable Shares:
NPS Holdings shall have the overriding right (the "Redemption Call
Right"), notwithstanding the proposed redemption of the Exchangeable
Shares by NPS - Allelix Inc. pursuant to Article 7 of the Exchangeable
Share Provisions, to purchase from all but not less than all of the
holders of Exchangeable Shares (other than any holder of Exchangeable
Shares which is an affiliate of NPS) on the Redemption Date all but
not less than all of the Exchangeable Shares held by each such holder
on payment by NPS to each holder of an amount per Exchangeable Share
(the "Redemption Call Purchase Price") equal to the Current Market
Price of a NPS Common Share on the last Business Day prior to the
Redemption Date, which shall be satisfied in full by NPS Holdings
causing to be delivered to such holder one NPS Common Share, plus any
Dividend Amount for each Exchangeable Share held by such holder. In
the event of the exercise of the Redemption Call Right by NPS
Holdings, each holder shall be obligated to sell all the Exchangeable
Shares held by the holder to NPS Holdings on the Redemption Date on
payment by NPS Holdings to the holder of the Redemption Call Purchase
Price for each such share, and NPS - Allelix Inc. shall have no
obligation to redeem, or to pay any Dividend Amount in respect of,
such shares so purchased by NPS Holdings.
To exercise the Redemption Call Right, NPS Holdings must notify the
Trustee, as agent for the holders of Exchangeable Shares, and NPS -
Allelix Inc. of NPS Holdings's intention to exercise such right at
least 60 days before the Redemption Date, except in the case of a
redemption occurring as a result of a NPS Control
Transaction, an Exchangeable Share Voting Event or an Exempt
Exchangeable Share Voting Event (each as defined in the Exchangeable
Share Provisions), in which case NPS Holdings shall so notify the
Trustee and NPS - Allelix Inc. on or before the Redemption Date. The
Trustee will notify the holders of the Exchangeable Shares as to
whether or not NPS Holdings has exercised the Redemption Call Right
forthwith after the expiry of the period during which the same may be
exercised by NPS Holdings. If NPS Holdings exercises the Redemption
Call Right, on the Redemption Date NPS Holdings will purchase and the
holders will sell all of the Exchangeable Shares then outstanding for
a price per share equal to the Redemption Call Purchase Price.
For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Redemption Call Right, NPS Holdings shall deposit with
the Trustee, on or before the Redemption Date, certificates
representing the aggregate number of NPS Common Shares deliverable by
NPS Holdings and a cheque or cheques of NPS Holdings payable at par at
any branch of the bankers of NPS Holdings representing the aggregate
Dividend Amount in payment of the total Redemption Call Purchase
Price, less any amounts withheld pursuant to Section 4.7 hereof.
Provided that NPS Holdings has complied with the immediately preceding
sentence, on and after the Redemption Date the rights of each holder
of Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price payable
by NPS Holdings upon presentation and surrender by the holder of
certificates representing the Exchangeable Shares held by such holder
and the holder shall on and after the Redemption Date be considered
and deemed for all purposes to be the holder of the NPS Common Shares
to which it is entitled. Upon surrender to the Trustee of a
certificate or certificates representing Exchangeable Shares, together
with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the governing corporate
statute and the by-laws of NPS - Allelix Inc. and such additional
documents and instruments as the Trustee may reasonably require, the
holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Trustee on behalf of
NPS Holdings shall deliver to such holder, certificates representing
the NPS Common Shares to which the holder is entitled and a cheque or
cheques of NPS Holdings payable at par at any branch of the bankers of
NPS Holdings in payment of the remaining portion, if any, of the total
Redemption Call Purchase Price, less any amounts withheld pursuant to
Section 4.7 hereof. If NPS Holdings does not exercise the Redemption
Call Right in the manner described above, on the Redemption Date the
holders of the Exchangeable Shares will be entitled to receive in
exchange therefor the redemption price otherwise payable by NPS -
Allelix Inc. in connection with the redemption of the Exchangeable
Shares pursuant to Article 7 of the Exchangeable Share Provisions.
AMENDMENTS
Amendments to Plan of Arrangement
Allelix reserves the right to amend, modify and/or supplement this
Plan of Arrangement at any time and from time to time prior to the Effective
Date, provided that each such amendment, modification and/or supplement must be
(i) set out in writing, (ii) consented to by NPS, (iii) filed with the Court
and, if made following the Allelix Meeting, approved by the Court and (iv)
communicated to holders of Allelix Common Shares, Allelix Options, Allelix
Warrants and Allelix Preferred Shares, if and as required by the Court.
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Allelix at any time prior to the Allelix Meeting (provided
that NPS shall have consented thereto) with or without any other prior notice or
communication, and if so proposed and accepted by the Persons voting at the
Allelix Meeting (other than as may be required under the Interim Order), shall
become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Allelix Meeting shall be effective
only if (i) it is consented to by each of Allelix and NPS and (ii) if required
by the Court, it is consented to by holders of the Allelix Common Shares,
Allelix Options, Allelix Warrants or Allelix Preferred Shares voting in the
manner directed by the Court.
Any amendment, modification or supplement to this Plan of Arrangement
may be made following the Effective Date unilaterally by NPS, provided that it
concerns a matter which, in the reasonable opinion of NPS, is of an
administrative nature required to better give effect to the implementation of
this Plan of Arrangement and is not adverse to the financial or economic
interests of any holder of Allelix Common Shares, Allelix Options, Allelix
Warrants, or Allelix Preferred Shares.
FURTHER ASSURANCES
Notwithstanding that the transactions and events set out herein shall
occur and be deemed to occur in the order set out in this Plan of Arrangement
without any further act or formality, each of the parties to the Arrangement
Agreement shall make, do and execute, or cause to be made, done and executed,
all such further acts, deeds, agreements, transfers, assurances, instruments or
documents as may reasonably be required by any of them in order further to
document or evidence any of the transactions or events set out herein.
APPENDIX I
TO THE PLAN OF ARRANGEMENT
PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES OF
NPS ALLELIX INC.
The Exchangeable Shares shall have the following rights, privileges,
restrictions and conditions:
INTERPRETATION
For the purposes of these share provisions:
"affiliate" has the meaning ascribed thereto in the Securities Act;
"Allelix" means Allelix Biopharmaceuticals Inc.;
"Allelix Common Shares" means the common shares of Allelix as constituted
on the date hereof;
"Allelix Meeting" means the special meeting of Allelix Shareholders, as
ordered by the Interim Order to consider and, if determined advisable,
approve the repricing of certain Allelix Options as approved by the Allelix
board of directors on April 15, 1999; to consider, and if determined
advisable, approve the continuance of Allelix under the OBCA and to
consider, and if determined advisable, approve the Arrangement;
"Allelix Options" means the options to purchase Allelix Common Shares
issued from time to time prior to the date hereof pursuant to the Allelix
Stock Option Plan;
"Allelix Preferred Shares" means the preferred shares, series 1 of Allelix
as constituted on the date hereof;
"Allelix Warrants" means the warrants to purchase Allelix Common Shares
issued from time to time prior to the date hereof;
"Arrangement" means an arrangement under Section 192 of the CBCA and
Section 182 of the OBCA on the terms and subject to the conditions set out
in the Plan of Arrangement, to which plan these share provisions are
attached as Appendix 1, subject to any amendments or variations thereto
made in accordance with Article 6 of the Plan of Arrangement or made at the
direction of the Court in the Final Order;
"Arrangement Agreement" means the agreement made as of the 27th day of
September, 1999 between NPS and Allelix, as amended, supplemented and/or
restated in accordance therewith prior to the Effective Date, providing
for, among other things, the Arrangement;
"Board of Directors" means the Board of Directors of the Company;
"Business Day" means any day on which commercial banks are generally
open for business in Salt Lake City, Utah and Toronto, Ontario, other than
a Saturday, a Sunday or a day observed as a holiday in Salt Lake City, Utah
under the laws of the State of Utah or the federal laws of the United
States of America or in Toronto, Ontario under the laws of the Province of
Ontario or the federal laws of Canada;
"CBCA" means the Canada Business Corporations Act, as amended;
"Canadian Dollar Equivalent" means in respect of an amount expressed
in a currency other than Canadian dollars (the "Foreign Currency Amount")
at any date the product obtained by multiplying:
(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or, in
the event such spot exchange rate is not available, such spot exchange
rate on such date for such foreign currency expressed in Canadian
dollars as may be deemed by the Board of Directors to be appropriate
for such purpose;
"Common Shares" means the common shares in the capital of the Company;
"Company" means NPS - Allelix Inc., a company to be incorporated under
the British Columbia Companies Act-as a wholly-owned subsidiary of NPS
Holdings;
"Current Market Price" means, in respect of a NPS Common Share on any
date, the Canadian Dollar Equivalent of the average of the closing bid and
asked prices of NPS Common Shares during a period of 20 consecutive trading
days ending not more than three trading days before such date on Nasdaq,
or, if the NPS Common Shares are not then quoted on Nasdaq, on such other
stock exchange or automated quotation system on which the NPS Common Shares
are listed or quoted, as the case may be, as may be selected by the Board
of Directors for such purpose; provided, however, that if in the opinion of
the Board of Directors the public distribution or trading activity of NPS
Common Shares during such period does not create a market which reflects
the fair market value of an NPS Common Share, then the Current Market Price
of a NPS Common Share shall be determined by the Board of Directors, in
good faith and in its sole discretion, and provided further that any such
selection, opinion or determination by the Board of Directors shall be
conclusive and binding;
"Director" means the Director appointed pursuant to Section 273 of the
OBCA;
"Dividend Amount" means the amount of all declared and unpaid
dividends on an Exchangeable Share held by a holder on any dividend record
date which occurred prior to the date of purchase or redemption of such
shares by the Company or NPS Holdings from such holder;
"Effective Date" means the date shown on the certificate of arrangement to
be issued by the Director under the OBCA giving effect to the Arrangement;
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of the Company, having the rights, privileges, restrictions and
conditions set forth herein;
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"holder" means, when used with reference to the Exchangeable Shares, the
holders of Exchangeable Shares shown from time to time in the register
maintained by or on behalf of the Company in respect of the Exchangeable
Shares;
"Liquidation Amount" has the meaning ascribed thereto in Section 5.1 of
these share provisions;
"Liquidation Call Right" has the meaning ascribed thereto in the Plan of
Arrangement;
"Liquidation Date" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"NPS" means NPS Pharmaceuticals, Inc.;
"NPS Common Shares" mean the shares of common stock in the capital of NPS
and any other securities into which such shares may be changed;
"NPS Control Transaction" means any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or
similar transactions involving NPS, or any proposal to do so;
"NPS Dividend Declaration Date" means the date on which the Board of
Directors of NPS declares any dividend on the NPS Common Shares;
"NPS Holdings" means NPS Holdings Limited, a company to be incorporated
under the British Columbia Companies Act as a wholly-owned subsidiary of
NPS;
"NPS Holdings Call Notice" has the meaning ascribed thereto in Section 6.3
of these share provisions;
"OBCA" means the Business Corporations Act (Ontario), as amended;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other
entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in the
form and content of Schedule A annexed to the Arrangement Agreement and any
amendments or variations thereto made in accordance with Section 9.1 of the
Arrangement Agreement or Article 6 of the Plan of Arrangement or made at
the direction of the Court in the Final Order;
"Preference Shares" means the 100 preference shares in the capital of the
Company;
"Purchase Price" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
"Redemption Call Purchase Price" has the meaning ascribed thereto in the
Plan of Arrangement;
"Redemption Call Right" has the meaning ascribed thereto in the Plan of
Arrangement;
"Redemption Date" means the date, if any, established by the Board of
Directors for the redemption by the Company of all but not less than all of
the outstanding Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be no earlier than December 31, 2004, unless:
there are fewer than 1,000,000 Exchangeable Shares outstanding (other
than Exchangeable Shares held by NPS and its affiliates, and as such
number of shares may be adjusted as deemed appropriate by the Board of
Directors to give effect to any subdivision or consolidation of or
stock dividend on the Exchangeable Shares, any issue or distribution
of rights to acquire Exchangeable Shares or securities exchangeable
for or convertible into Exchangeable Shares, any issue or distribution
of other securities or rights or evidences of indebtedness or assets,
or
any other capital reorganization or other transaction affecting the
Exchangeable Shares), in which case the Board of Directors may
accelerate such redemption date to such date prior to December 31,
2004 as it may determine, upon at least 60 days' prior written notice
to the registered holders of the Exchangeable Shares and the Trustee;
a NPS Control Transaction occurs, in which case, provided that the
Board of Directors determines, in good faith and in its sole
discretion, that it is not reasonably practicable to substantially
replicate the terms and conditions of the Exchangeable Shares in
connection with such NPS Control Transaction and that the redemption
of all but not less than all of the outstanding Exchangeable Shares is
necessary to enable the completion of such NPS Control Transaction in
accordance with its terms, the Board of Directors may accelerate such
redemption date to such date prior to December 31, 2004 as it may
determine, upon such number of days' prior written notice to the
registered holders of the Exchangeable Shares and the Trustee as the
Board of Directors may determine to be reasonably practicable in such
circumstances;
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (a) or (b) above to less than 10% of
such holders of Exchangeable Shares shall not affect the validity of any
such redemption;
"Redemption Price" has the meaning ascribed thereto in Section 7.1 of
these share provisions;
"Retracted Shares" has the meaning ascribed thereto in Section 6.1(a)
of these share provisions;
"Retraction Call Right" has the meaning ascribed thereto in Section
6.1(c) of these share provisions;
"Retraction Date" has the meaning ascribed thereto in Section 6.1(b)
of these share provisions;
"Retraction Price" has the meaning ascribed thereto in Section 6.1 of
these share provisions;
"Retraction Request" has the meaning ascribed thereto in Section 6.1
of these share provisions;
"Securities Act" means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they may
be amended from time to time prior to the Effective Date;
"Support Agreement" means the agreement made among NPS, NPS Holdings
and the Company in connection with the Plan of Arrangement;
"Transfer Agent" means the transfer agent for the Exchangeable Shares;
"Trustee" means the trustee chosen by NPS and Allelix, acting
reasonably, to act as trustee under the Voting and Exchange Trust
Agreement, being a corporation organized and existing under the laws of
Canada and authorized to carry on the business of a trust company in all
the provinces of Canada, and any successor trustee appointed under the
Voting and Exchange Trust Agreement;
"Voting and Exchange Trust Agreement" means the agreement made between
NPS, the Company and the Trustee in connection with the Plan of
Arrangement.
RANKING OF EXCHANGEABLE SHARES
The Exchangeable Shares shall be entitled to a preference over the
Common Shares and any other shares ranking junior to the Exchangeable Shares,
but shall rank junior to the Preference Shares, with respect to the payment of
dividends and the distribution of assets in the event of the liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary, or
any other distribution of the assets of the Company, among its shareholders for
the purpose of winding up its affairs.
DIVIDENDS
A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each NPS Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
in the case of a cash dividend declared on the NPS Common Shares, in
an amount in cash for each Exchangeable Share in U.S. dollars, or the
Canadian Dollar Equivalent thereof on the NPS Dividend Declaration
Date, in each case, corresponding to the cash dividend declared on
each NPS Common Share;
in the case of a stock dividend declared on the NPS Common Shares to
be paid in NPS Common Shares by the issue or transfer by the Company
of such number of Exchangeable Shares for each Exchangeable Share as
is equal to the number of NPS Common Shares to be paid on each NPS
Common Share; or
in the case of a dividend declared on the NPS Common Shares in
property other than cash or NPS Common Shares, in such type and amount
of property for each Exchangeable Share as is the same as or
economically equivalent to (to be
determined by the Board of Directors as contemplated by Section 3.5
hereof) the type and amount of property declared as a dividend on each
NPS Common Share.
Such dividends shall be paid out of money, assets or property of the
Company properly applicable to the payment of dividends, or out of authorized
but unissued shares of the Company, as applicable.
Cheques of the Company payable at par at any branch of the bankers of
the Company shall be issued in respect of any cash dividends contemplated by
Section 3.1 (a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby unless
the cheque is not paid on presentation. Certificates registered in the name of
the registered holder of Exchangeable Shares shall be issued or transferred in
respect of any stock dividends contemplated by Section 3.1 (b) hereof and the
sending of such a certificate to each holder of an Exchangeable Share shall
satisfy the stock dividend represented thereby. Such other type and amount of
property in respect of any dividends contemplated by Section 3.1 (c) hereof
shall be issued, distributed or transferred by the Company in such manner as it
shall determine and the issuance, distribution or transfer thereof by the
Company to each holder of an Exchangeable Share shall satisfy the dividend
represented thereby. No holder of an Exchangeable Share shall be entitled to
recover by action or other legal process against the Company any dividend that
is represented by a cheque that has not been duly presented to the Company's
bankers for payment or that otherwise remains unclaimed for a period of six
years from the date on which such dividend was payable.
The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any dividend
declared on the Exchangeable Shares under Section 3.1 hereof shall be the same
dates as the record date and payment date, respectively, for the corresponding
dividend declared on the NPS Common Shares.
If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Company shall have sufficient money, assets or property properly
applicable to the payment of such dividends.
The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Section 3.1 hereof, and
each such determination shall be conclusive and binding on the Company and its
shareholders. In making each such determination, the following factors shall,
without excluding other factors determined by the Board of Directors to be
relevant, be considered by the Board of Directors:
in the case of any stock dividend or other distribution payable in NPS
Common Shares, the number of such shares issued in proportion to the
number of NPS Common Shares previously outstanding;
in the case of the issuance or distribution of any rights, options or
warrants to subscribe for or purchase NPS Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire NPS
Common Shares), the relationship between the exercise price of each
such right, option or warrant and the Current Market Price;
in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of NPS
of any class other than NPS Common Shares, any rights, options or
warrants other than those referred to in Section 3.5(b) above, any
evidences of indebtedness of NPS or any assets of NPS) the
relationship between the fair market value (as determined by the Board
of Directors in the manner above contemplated) of such property to be
issued or distributed with respect to each outstanding NPS Common
Share and the Current Market Price; and
in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Shares to the extent that such
consequences may differ from the taxation consequences to holders of
NPS Common Shares as a result of differences between taxation laws of
Canada and the United States (except for any differing consequences
arising as a result of differing marginal taxation rates and without
regard to the individual circumstances of holders of Exchangeable
Shares).
CERTAIN RESTRICTIONS
So long as any of the Exchangeable Shares are outstanding, the Company
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Section 10.2 of these
share provisions:
pay any dividends on the Common Shares or any other shares ranking
junior to the Exchangeable Shares, other than stock dividends payable
in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
redeem or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Exchangeable
Shares;
redeem or purchase any other shares of the Company ranking equally
with the Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution; or
except pursuant to and in accordance with the terms of the Allelix
Options, the Allelix Warrants and the Allelix Preferred Shares, issue
any Exchangeable Shares or any other shares of the Company ranking
equally with, or superior to, the
Exchangeable Shares other than by way of stock dividends to the
holders of such Exchangeable Shares.
The restrictions in Sections 4.1(a), (b), (c) and (d) above shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared and paid to date on the NPS Common Shares shall have been
declared and paid on the Exchangeable Shares.
DISTRIBUTION ON LIQUIDATION
In the event of the liquidation, dissolution or winding-up of the
Company or any other distribution of the assets of the Company among its
shareholders for the purpose of winding up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Company in respect of each Exchangeable Share held by such holder on the
effective date (the "Liquidation Date") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Company
among the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share (the "Liquidation Amount") equal to the
Current Market Price of a NPS Common Share on the last Business Day prior to the
Liquidation Date, which shall be satisfied in full by the Company causing to be
delivered to such holder one NPS Common Share, plus the Dividend Amount.
On or promptly after the Liquidation Date, and subject to the exercise
by NPS Holdings of the Liquidation Call Right, the Company shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the Articles of the Company and such additional documents and
instruments as the Transfer Agent and the Company may reasonably require, at the
registered office of the Company or at any office of the Transfer Agent as may
be specified by the Company by notice to the holders of the Exchangeable Shares.
Payment of the total Liquidation Amount for such Exchangeable Shares shall be
made by delivery to each holder, at the address of the holder recorded in the
register of members of the Company for the Exchangeable Shares or by holding for
pick-up by the holder at the registered office of the Company or at any office
of the Transfer Agent as may be specified by the Company by notice to the
holders of Exchangeable Shares, on behalf of the Company of certificates
representing NPS Common Shares (which shares shall be duly issued as fully paid
and non-assessable and shall be free and clear of any lien, claim or
encumbrance) and a cheque of the Company payable at par at any branch of the
bankers of the Company in respect of the remaining portion, if any, of the total
Liquidation Amount (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom). On and after the Liquidation
Date, the holders of the Exchangeable Shares shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than the right to receive
their proportionate part of the total Liquidation Amount, unless payment of the
total Liquidation Amount for such Exchangeable Shares shall not be made upon
presentation and surrender of share certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount has been paid in the manner
hereinbefore provided. The Company shall have the right at any time after the
Liquidation Date to deposit or cause to be deposited the total Liquidation
Amount in respect of the Exchangeable Shares represented by certificates that
have not at the Liquidation Date been surrendered by the holders thereof in a
custodial account with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the total
Liquidation Amount (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom) for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be holders of the NPS Common Shares delivered to them or the custodian on
their behalf.
After the Company has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Company.
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
A holder of Exchangeable Shares shall be entitled at any time, subject
to the exercise by NPS Holdings of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Company to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for an amount per share equal to the Current Market Price of a NPS Common
Share on the last Business Day prior to the Retraction Date (the "Retraction
Price"), which shall be satisfied in full by the Company causing to be delivered
to such holder one NPS Common Share for each Exchangeable Share presented and
surrendered by the holder. To effect such redemption, the holder shall present
and surrender at the registered office of the Company or at any office of the
Transfer Agent as may be specified by the Company by notice to the holders of
Exchangeable Shares the certificate or certificates representing the
Exchangeable Shares which the holder desires to have the Company redeem,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the OBCA and the Articles of the Company
and such additional documents and instruments as the Transfer Agent and the
Company may reasonably require, and together with a duly executed statement (the
"Retraction Request") in the form of Schedule A hereto or in such other form as
may be acceptable to the Company:
specifying that the holder desires to have all or any number specified
therein of the Exchangeable Shares represented by such certificate or
certificates (the "Retracted Shares") redeemed by the Company;
stating the Business Day on which the holder desires to have the
Company redeem the Retracted Shares (the "Retraction Date"), provided
that the Retraction Date shall be not less than 10 Business Days nor
more than 15 Business Days after the date on which the Retraction
Request is received by the Company and further provided that, in the
event that no such Business Day is specified by the holder in the
Retraction Request, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which the Retraction Request is
received by the Company; and
acknowledging the overriding right (the "Retraction Call Right") of
NPS Holdings to purchase all but not less than all the Retracted
Shares directly from the holder and that the Retraction Request shall
be deemed to be a revocable offer by the holder to sell the Retracted
Shares to NPS Holdings in accordance with the Retraction Call Right on
the terms and conditions set out in Section 6.3 below.
Subject to the exercise by NPS Holdings of the Retraction Call Right,
upon receipt by the Company or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Retracted Shares, together with a Retraction Request, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the Company shall redeem the Retracted Shares effective at the
close of business on the Retraction Date and shall cause to be delivered to such
holder the total Retraction Price. If only a part of the Exchangeable Shares
represented by any certificate is redeemed (or purchased by NPS Holdings
pursuant to the Retraction Call Right), a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the expense of the
Company.
Upon receipt by the Company of a Retraction Request, the Company shall
immediately notify NPS Holdings thereof and shall provide to NPS Holdings a copy
of the Retraction Request. In order to exercise the Retraction Call Right, NPS
Holdings must notify the Company of its determination to do so (the "NPS
Holdings Call Notice") within five Business Days of notification to NPS Holdings
by the Company of the receipt by the Company of the Retraction Request. If NPS
Holdings does not so notify the Company within such five Business Day period,
the Company will notify the holder as soon as possible thereafter that NPS
Holdings will not exercise the Retraction Call Right. If NPS Holdings delivers
the NPS Holdings Call Notice within such five Business Day period, and provided
that the Retraction Request is not revoked by the holder in the manner specified
in Section 6.7, the Retraction Request shall thereupon be considered only to be
an offer by the holder to sell the Retracted Shares to NPS Holdings in
accordance with the Retraction Call Right. In such event, the Company shall not
redeem the Retracted Shares and NPS Holdings shall purchase from such holder and
such holder shall sell to NPS Holdings on the Retraction Date the Retracted
Shares for a purchase price (the
"Purchase Price") per share equal to the Retraction Price per share, plus on the
designated payment date therefor, to the extent not paid by the Company on the
designated payment date therefor, any Dividend Amount. To the extent that NPS
Holdings pays the Dividend Amount in respect of the Retracted Shares, the
Company shall no longer be obligated to pay any declared and unpaid dividends on
such Retracted Shares. Provided that NPS Holdings has complied with Section 6.4,
the closing of the purchase and sale of the Retracted Shares pursuant to the
Retraction Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by the
Company of such Retracted Shares shall take place on the Retraction Date. In the
event that NPS Holdings does not deliver a NPS Holdings Call Notice within such
five Business Day period, and provided that the Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Company shall
redeem the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.
The Company or NPS Holdings, as the case may be, shall deliver or
cause the Trustee to deliver to the relevant holder, at the address of the
holder recorded in the register of members of the Company for the Exchangeable
Shares or at the address specified in the holder's Retraction Request or by
holding for pick-up by the holder at the registered office of the Company or at
any office of the Transfer Agent as may be specified by the Company by notice to
the holders of Exchangeable Shares, certificates representing the NPS Common
Shares (which shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance) registered in the
name of the holder or in such other name as the holder may request, and, if
applicable and on or before the payment date therefor, a cheque payable at par
at any branch of the bankers of the Company or NPS Holdings, as applicable,
representing the aggregate Dividend Amount, in payment of the total Retraction
Price or the total Purchase Price, as the case may be, in each case, less any
amounts withheld on account of tax required to be deducted and withheld
therefrom, and such delivery of such certificates and cheques on behalf of the
Company or by NPS Holdings, as the case may be, or by the Transfer Agent shall
be deemed to be payment of and shall satisfy and discharge all liability for the
total Retraction Price or total Purchase Price, as the case may be, to the
extent that the same is represented by such share certificates and cheques (plus
any tax deducted and withheld therefrom and remitted to the proper tax
authority).
On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive his proportionate part of the total
Retraction Price or total Purchase Price, as the case may be, unless upon
presentation and surrender of certificates in accordance with the foregoing
provisions, payment of the total Retraction Price or the total Purchase Price,
as the case may be, shall not be made as provided in Section 6.4, in which case
the rights of such holder shall remain unaffected until the total Retraction
Price or the total Purchase Price, as the case may be, has been paid in the
manner hereinbefore provided. On and after the close of business on the
Retraction Date, provided that presentation and surrender of certificates and
payment of the total Retraction Price or the total Purchase Price, as the case
may be, has been made in accordance with the foregoing
provisions, the holder of the Retracted Shares so redeemed by the Company or
purchased by NPS Holdings shall thereafter be considered and deemed for all
purposes to be a holder of the NPS Common Shares delivered to it.
Notwithstanding any other provision of this Article 6, the Company
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to solvency requirements or other provisions of applicable law. If
the Company believes that on any Retraction Date it would not be permitted by
any of such provisions to redeem the Retracted Shares tendered for redemption on
such date, and provided that NPS Holdings shall not have exercised the
Retraction Call Right with respect to the Retracted Shares, the Company shall
only be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent of the maximum number that may be so redeemed
(rounded down to a whole number of shares) as would not be contrary to such
provisions and shall notify the holder at least two Business Days prior to the
Retraction Date as to the number of Retracted Shares which will not be redeemed
by the Company. In any case in which the redemption by the Company of Retracted
Shares would be contrary to solvency requirements or other provisions of
applicable law, the Company shall redeem Retracted Shares in accordance with
Section 6.2 of these share provisions on a pro rata basis and shall issue to
each holder of Retracted Shares a new certificate, at the expense of the
Company, representing the Retracted Shares not redeemed by the Company pursuant
to Section 6.2 hereof. Provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 6.7, the holder of any such
Retracted Shares not redeemed by the Company pursuant to Section 6.2 of these
share provisions as a result of solvency requirements or other provisions of
applicable law shall be deemed by giving the Retraction Request to require NPS
to purchase such Retracted Shares from such holder on the Retraction Date or as
soon as practicable thereafter on payment by NPS to such holder of the Purchase
Price for each such Retracted Share, all as more specifically provided in the
Voting and Exchange Trust Agreement.
A holder of Retracted Shares may, by notice in writing given by the
holder to the Company before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request, in
which event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to sell the
Retracted Shares to NPS Holdings shall be deemed to have been revoked.
REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY
Subject to applicable law, and provided NPS Holdings has not exercised
the Redemption Call Right, the Company shall on the Redemption Date redeem all
but not less than all of the then outstanding Exchangeable Shares for an amount
per share equal to the Current Market Price of a NPS Common Share on the last
Business Day prior to the Redemption Date (the "Redemption Price"), which shall
be satisfied in full by the Company causing to be delivered to each holder of
Exchangeable Shares one NPS Common Share for each Exchangeable Share held by
such holder, together with the Dividend Amount.
In any case of a redemption of Exchangeable Shares under this Article
7, the Company shall, at least 60 days before the Redemption Date (other than a
Redemption Date established in connection with a NPS Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event),
send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Company or the purchase by NPS Holdings under
the Redemption Call Right, as the case may be, of the Exchangeable Shares held
by such holder. In the case of a Redemption Date established in connection with
a NPS Control Transaction, an Exchangeable Share Voting Event or an Exempt
Exchangeable Share Voting Event, the written notice of redemption by the Company
or the purchase by NPS Holdings under the Redemption Call Right will be sent on
or before the Redemption Date, on as many days prior written notice as may be
determined by the Board of Directors of the Company to be reasonably practicable
in the circumstances. In any such case, such notice shall set out the formula
for determining the Redemption Price or the Redemption Call Purchase Price, as
the case may be, the Redemption Date and, if applicable, particulars of the
Redemption Call Right.
On or after the Redemption Date and subject to the exercise by NPS
Holdings of the Redemption Call Right, the Company shall cause to be delivered
to the holders of the Exchangeable Shares to be redeemed the Redemption Price
for each such Exchangeable Share, together with the Dividend Amount upon
presentation and surrender at the registered office of the Company or at any
office of the Trustee as may be specified by the Company in such notice of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the Articles of the Company and such
additional documents and instruments as the Transfer Agent and the Company may
reasonably require. Payment of the total Redemption Price for such Exchangeable
Shares, together with payment of the Dividend Amount, shall be made by delivery
to each holder, at the address of the holder recorded in the register of members
of the Company or by holding for pick-up by the holder at the registered office
of the Company or at any office of the Transfer Agent as may be specified by the
Company in such notice, on behalf of the Company of certificates representing
NPS Common Shares (which shares shall be duly issued as fully paid and non-
assessable and shall be free and clear of any lien, claim or encumbrance) and,
if applicable, a cheque of the Company payable at par at any branch of the
bankers of the Company in payment of any Dividend Amounts, in each case, less
any amounts withheld on account of tax required to be deducted and withheld
therefrom. On and after the Redemption Date, the holders of the Exchangeable
Shares called for redemption shall cease to be holders of such Exchangeable
Shares and shall not be entitled to exercise any of the rights of holders in
respect thereof, other than the right to receive their proportionate part of the
total Redemption Price and any Dividend Amount, unless payment of the total
Redemption Price and any Dividend Amount for such Exchangeable Shares shall not
be made upon presentation and surrender of certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Redemption Price and any Dividend Amount shall have
been paid in the manner hereinbefore provided. The Company shall have the right
at any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited the total
Redemption Price for and the full amount of the Dividend Amount on (except as
otherwise provided in this Section 7.3) the Exchangeable Shares
so called for redemption, or of such of the said Exchangeable Shares represented
by certificates that have not at the date of such deposit been surrendered by
the holders thereof in connection with such redemption, in a custodial account
with any chartered bank or trust company in Canada named in such notice, less
any amounts withheld on account of tax required to be deducted and withheld
therefrom. Upon the later of such deposit being made and the Redemption Date,
the Exchangeable Shares in respect whereof such deposit shall have been made
shall be redeemed and the rights of the holders thereof after such deposit or
Redemption Date, as the case may be, shall be limited to receiving their
proportionate part of the total Redemption Price and the Dividend Amount for
such Exchangeable Shares so deposited, against presentation and surrender of the
said certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of the total Redemption Price and the
full Dividend Amount, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the NPS Common Shares
delivered to them or the custodian on their behalf.
PURCHASE FOR CANCELLATION
Subject to applicable law, the Company may at any time and from time
to time purchase for cancellation all or any part of the outstanding
Exchangeable Shares at any price by tender to all the holders of record of
Exchangeable Shares then outstanding or through the facilities of any stock
exchange on which the Exchangeable Shares are listed or quoted at any price per
share. If in response to an invitation for tenders under the provisions of this
Section 8.1, more Exchangeable Shares are tendered at a price or prices
acceptable to the Company than the Company is prepared to purchase, the
Exchangeable Shares to be purchased by the Company shall be purchased as nearly
as may be pro rata according to the number of shares tendered by each holder who
submits a tender to the Company, provided that when shares are tendered at
different prices, the pro rating shall be effected (disregarding fractions) only
with respect to the shares tendered at the price at which more shares were
tendered than the Company is prepared to purchase after the Company has
purchased all the shares tendered at lower prices. If part only of the
Exchangeable Shares represented by any certificate shall be purchased, a new
certificate for the balance of such shares shall be issued at the expense of the
Company.
VOTING RIGHTS
Except as required by applicable law and by Article 10 hereof, the
holders of the Exchangeable Shares shall not be entitled as such to receive
notice of or to attend any meeting of the Shareholders of the Company or to vote
at any such meeting.
AMENDMENT AND APPROVAL
The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
Any approval given by the holders of the Exchangeable Shares to add
to, change or remove any right, privilege, restriction or condition attaching to
the Exchangeable Shares or any other matter requiring the approval or consent of
the holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 10% of the outstanding Exchangeable Shares at that time are present or
represented by proxy; provided that if at any such meeting the holders of at
least 10% of the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date not less than five
days thereafter and to such time and place as may be designated by the Chairman
of such meeting. At such adjourned meeting the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the affirmative
vote of not less than two-thirds of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.
RECIPROCAL CHANGES, ETC. IN RESPECT OF NPS COMMON SHARES
Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that NPS will not without the prior approval of the
Company and the prior approval of the holders of the Exchangeable Shares given
in accordance with Section 10.2 of these share provisions:
issue or distribute NPS Common Shares (or securities exchangeable for
or convertible into or carrying rights to acquire NPS Common Shares)
to the holders of all or substantially all of the then outstanding NPS
Common Shares by way of stock dividend or other distribution, other
than an issue of NPS Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire NPS Common Shares) to
holders of NPS Common Shares who exercise an option to receive
dividends in NPS Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire NPS Common Shares) in
lieu of receiving cash dividends;
issue or distribute rights, options or warrants to the holders of all
or substantially all of the then outstanding NPS Common Shares
entitling them to subscribe for or to purchase NPS Common Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire NPS Common Shares); or
issue or distribute to the holders of all or substantially all of the
then outstanding NPS Common Shares:
shares or securities of NPS of any class other than NPS Common
Shares (other than shares convertible into or exchangeable for or
carrying rights to acquire NPS Common Shares);
rights, options or warrants other than those referred to in
Section 11.1(b) above;
evidences of indebtedness of NPS; or
assets of NPS,
unless the economic equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets is issued or
distributed simultaneously to holders of the Exchangeable Shares.
Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that NPS will not without the prior
approval of the Company and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 10.2 of these share
provisions:
subdivide, redivide or change the then outstanding NPS Common Shares
into a greater number of NPS Common Shares;
reduce, combine, consolidate or change the then outstanding NPS Common
Shares into a lesser number of NPS Common Shares; or
reclassify or otherwise change the NPS Common Shares or effect an
amalgamation, merger, reorganization or other transaction affecting
the NPS Common Shares,
unless the same or an economically equivalent change shall simultaneously be
made to, or in, the rights of the holders of the Exchangeable Shares. The
Support Agreement further provides, in part, that the aforesaid provisions of
the Support Agreement shall not be changed without the approval of the holders
of the Exchangeable Shares given in accordance with Section 10.2 of these share
provisions.
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT
The Company will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by NPS, NPS Holdings and the Company with all provisions of the
Support Agreement applicable
to NPS, NPS Holdings and the Company, respectively, in accordance with the terms
thereof including, without limitation, taking all such actions and doing all
such things as shall be necessary or advisable to enforce to the fullest extent
possible for the direct benefit of the Company all rights and benefits in favour
of the Company under or pursuant to such agreement.
The Company shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement without the approval of the holders of the Exchangeable
Shares given in accordance with Section 10.2 of these share provisions other
than such amendments, waivers and/or forgiveness as may be necessary or
advisable for the purposes of:
adding to the covenants of the other parties to such agreement for the
protection of the Company or the holders of the Exchangeable Shares
thereunder;
making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the good faith opinion of the
Board of Directors, it may be expedient to make, provided that the
Board of Directors shall be of the good faith opinion, after
consultation with counsel, that such provisions and modifications will
not be prejudicial to the interests of the holders of the Exchangeable
Shares; or
making such changes in or corrections to such agreement which, on the
advice of counsel to the Company, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the good faith
opinion, after consultation with counsel, that such changes or
corrections will not be prejudicial to the interests of the holders of
the Exchangeable Shares.
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Liquidation Call Right and the Redemption Call
Right, and the Voting and Exchange Trust Agreement (including the provisions
with respect to the voting rights, exchange right and automatic exchange
thereunder).
Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to acknowledge
each of the Liquidation Call Right, the Retraction Call Right and the Redemption
Call Right, in each case, in favour of NPS Holdings, and the overriding nature
thereof in connection with the liquidation, dissolution
or winding-up of the Company or the retraction or redemption of Exchangeable
Shares, as the case may be, and to be bound thereby in favour of NPS Holdings as
therein provided.
The Company, NPS Holdings, NPS and the Trustee shall be entitled to
deduct and withhold from any dividend or consideration otherwise payable to any
holder of Exchangeable Shares such amounts as the Company, NPS Holdings, NPS or
the Trustee is required or permitted to deduct and withhold with respect to such
payment under the Income Tax Act (Canada), the United States Internal Revenue
Code of 1986 or any provision of provincial, state, local or foreign tax law, in
each case, as amended. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes hereof as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds the
cash portion of the consideration otherwise payable to the holder, the Company,
NPS Holdings, NPS and the Trustee are hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to the Company, NPS Holdings, NPS or the Trustee, as the case
may be, to enable it to comply with such deduction or withholding requirement
and the Company, NPS Holdings, NPS or the Trustee shall notify the holder
thereof and remit any unapplied balance of the net proceeds of such sale.
NOTICES
Any notice, request or other communication to be given to the Company
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Company and addressed to the attention of the
President of the Company. Any such notice, request or other communication, if
given by mail, telecopy or delivery, shall only be deemed to have been given and
received upon actual receipt thereof by the Company.
Any presentation and surrender by a holder of Exchangeable Shares to
the Company or the Trustee of certificates representing Exchangeable Shares in
connection with the liquidation, dissolution or winding-up of the Company or the
retraction or redemption of Exchangeable Shares shall be made by registered mail
(postage prepaid) or by delivery to the registered office of the Company or to
such office of the Trustee as may be specified by the Company, in each case,
addressed to the attention of the President of the Company. Any such
presentation and surrender of certificates shall only be deemed to have been
made and to be effective upon actual receipt thereof by the Company or the
Trustee, as the case may be. Any such presentation and surrender of certificates
made by registered mail shall be at the sole risk of the holder mailing the
same.
Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Company shall be in writing and shall
be valid and
effective if given by mail (postage prepaid) or by delivery to the address of
the holder recorded in the register of members of the Company or, in the event
of the address of any such holder not being so recorded, then at the last known
address of such holder. Any such notice, request or other communication, if
given by mail, shall be deemed to have been given and received on the third
Business Day following the date of mailing and, if given by delivery, shall be
deemed to have been given and received on the date of delivery. Accidental
failure or omission to give any notice, request or other communication to one or
more holders of Exchangeable Shares shall not invalidate or otherwise alter or
affect any action or proceeding to be taken by the Company pursuant thereto.
SCHEDULE A
RETRACTION REQUEST
[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]
To NPS - Allelix Inc. ("NPS - Allelix Inc.") and NPS Holdings Limited ("NPS
Holdings")
This notice is given pursuant to Article 6 of the provisions (the
"Share Provisions") attaching to the Exchangeable Shares of NPS -
Allelix Inc. represented by this certificate and all capitalized words
and expressions used in this notice that are defined in the Share
Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies NPS - Allelix Inc. that, subject to
the Retraction Call Right referred to below, the undersigned desires
to have NPS - Allelix Inc. redeem in accordance with Article 6 of the
Share Provisions:
all share(s) represented by this certificate; or
_________________ share(s) only represented by this certificate.
The undersigned hereby notifies NPS - Allelix Inc. that the Retraction Date
shall be ____________________.
NOTE: The Retraction Date must be a Business Day and must not be less than 10
Business Days nor more than 15 Business Days after the date upon which
this notice is received by NPS - Allelix Inc.. If no such Business Day is
specified above, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which this notice is received by NPS -
Allelix Inc..
The undersigned acknowledges the overriding Retraction Call Right of NPS
Holdings to purchase all but not less than all the Retracted Shares from the
undersigned and that this notice is and shall be deemed to be a revocable offer
by the undersigned to sell the Retracted Shares to NPS Holdings in accordance
with the Retraction Call Right on the Retraction Date for the Purchase Price and
on the other terms and conditions set out in Section 6.3 of the Share
Provisions. This Retraction Request, and this offer to sell the Retracted
Shares to NPS Holdings, may be revoked and withdrawn by the undersigned only by
notice in writing given to NPS - Allelix Inc. at any time before the close of
business on the Business Day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency
provisions of applicable law, NPS - Allelix Inc. is unable to redeem
all Retracted Shares, the
undersigned will be deemed to have exercised the Exchange Right (as
defined in the Voting and Exchange Trust Agreement) so as to require
NPS to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to NPS Holdings and NPS
- Allelix Inc. that the undersigned:
is
(select one)
is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
The undersigned hereby represents and warrants to NPS Holdings and NPS
- Allelix Inc. that the undersigned has good title to, and owns, the
share(s) represented by this certificate to be acquired by NPS
Holdings or NPS - Allelix Inc., as the case may be, free and clear of
all liens, claims and encumbrances.
------ ------------------------- -----------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by
the shareholder from the transfer agent acting in its capacity as trustee
under the Voting and Exchange Trust Agreement (the "Transfer Agent"), failing
which the securities and any cheque(s) will be mailed to the last address of
the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be deposited
with the Transfer Agent. The securities and any cheque(s) resulting from
the retraction or purchase of the Retracted Shares will be issued and
registered in, and made payable to, respectively, the name of the
shareholder as it appears on the register of NPS - Allelix Inc. and the
securities and any cheque(s) resulting from such retraction or purchase
will be delivered to such shareholder as indicated above, unless the form
appearing immediately below is duly completed.
Date:____________________
Name of Person in Whose Name Securities or Cheque(s)Are to be Registered,
Issued or Delivered (please print):_____________________________________________
Street Address or P.O. Box:______________________________________________
Signature of Shareholder:________________________________________________
City, Province and Postal Code:__________________________________________
Signature Guaranteed by:_________________________________________________
NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of
NPS - Allelix Inc. represented by this certificate will be issued and
registered in the name of the shareholder as it appears on the register
of NPS - Allelix Inc., unless the Share Transfer Power on the share
certificate is duly completed in respect of such share(s).
SCHEDULE B
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the day of , .
AMONG:
NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware
(hereinafter referred to as "NPS"),
OF THE FIRST PART,
- and -
NPS HOLDINGS LIMITED,
a company existing under the laws of the Province of British Columbia
(hereinafter referred to as "NPS Holdings"),
OF THE SECOND PART,
- and -
NPS ALLELIX INC.
a company existing under the laws of the Province of British Columbia
(hereinafter referred to as "NPS - Allelix Inc."),
OF THE THIRD PART.
WHEREAS in connection with an arrangement agreement (the "Arrangement
Agreement") made as of between NPS and Allelix Biopharmaceuticals Inc.
("Allelix"), NPS - Allelix Inc. is to issue exchangeable shares (the
"Exchangeable Shares") to certain holders of securities of Allelix pursuant to
the plan of arrangement (the "Arrangement") contemplated by the Arrangement
Agreement;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning ascribed thereto in the rights,
privileges, restrictions and conditions (collectively, the "Share Provisions")
attaching to the Exchangeable Shares attached as Appendix 1 to the Plan of
Arrangement as set out in the Articles of Arrangement of Allelix, unless the
context requires otherwise.
1.2 Interpretation Not Affected by Headings
The division of this agreement into Articles, sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this agreement. Unless
otherwise indicated, all references to an "Article" or "section" followed by a
number and/or a letter refer to the specified Article or section of this
agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and
similar expressions refer to this agreement and not to any particular Article,
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto.
1.3 Number, Gender
Words importing the singular number only shall include the plural and
vice versa. Words importing any gender shall include all genders.
1.4 Date for any Action
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day. For the purposes of this agreement, a
"Business Day" means any day on which commercial banks are open for business in
Salt Lake City, Utah and Toronto, Ontario other than a Saturday, a Sunday or a
day observed as a holiday in Salt Lake City, Utah under the laws of the State of
Utah or the federal laws of the United States of America or in Toronto, Ontario
under the laws of the Province of Ontario or the federal laws of Canada.
ARTICLE 2
COVENANTS OF NPS AND NPS HOLDINGS
2.1 Covenants Regarding Exchangeable Shares
So long as any Exchangeable Shares not owned by NPS or its Affiliates
are outstanding, NPS will:
(a) not declare or pay any dividend on the NPS Common Shares unless (i) NPS -
Allelix Inc. shall simultaneously declare or pay, as the case may be, an
equivalent dividend (as provided for in the Share Provisions) on the
Exchangeable Shares and (ii) NPS - Allelix Inc. shall have sufficient money
or other assets or authorized but unissued securities available to enable
the due declaration and the due and punctual payment, in accordance with
applicable law, of any such dividend on the Exchangeable Shares;
(b) advise NPS - Allelix Inc. sufficiently in advance of the declaration by NPS
of any dividend on NPS Common Shares and take all such other actions as are
reasonably necessary, in co-operation with NPS - Allelix Inc., to ensure
that the respective declaration date, record date and payment date for a
dividend on the Exchangeable Shares shall be the same as the declaration
date, record date and payment date for the corresponding dividend on the
NPS Common Shares;
(c) ensure that the record date for any dividend declared on NPS Common Shares
is not less than 10 Business Days after the declaration date of such
dividend;
(d) take all such actions and do all such things as are reasonably necessary or
desirable to enable and permit NPS - Allelix Inc., in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Liquidation Amount, the Retraction Price or the
Redemption Price in respect of each issued and outstanding Exchangeable
Share (other than Exchangeable Shares owned by NPS or its Affiliates) upon
the liquidation, dissolution or winding-up of NPS - Allelix Inc., the
delivery of a Retraction Request by a holder of Exchangeable Shares or a
redemption of Exchangeable Shares by NPS - Allelix Inc., as the case may
be, including without limitation all such actions and all such things as
are necessary or desirable to enable and permit NPS - Allelix Inc. to cause
to be delivered NPS Common Shares to the holders of Exchangeable Shares in
accordance with the provisions of Article 5, 6 or 7, as the case may be, of
the Share Provisions; and
(e) take all such actions and do all such things as are reasonably necessary or
desirable to enable and permit NPS Holdings, in accordance with applicable
law, to perform its obligations arising upon the exercise by it of the
Liquidation Call Right, the Retraction Call Right or the Redemption Call
Right, including without limitation all such actions and all such things as
are necessary or desirable to enable and permit NPS Holdings to cause to be
delivered NPS Common Shares to the holders of Exchangeable Shares in
accordance with the provisions of the Liquidation Call Right, the
Retraction Call Right or the Redemption Call Right, as the case may be.
2.2 Segregation of Funds
NPS will cause NPS - Allelix Inc. to deposit a sufficient amount of funds
in a separate account of NPS - Allelix Inc. and segregate a sufficient
amount of such other assets and property as is necessary to enable NPS -
Allelix Inc. to pay dividends when due and to pay or otherwise satisfy its
respective obligations under Article 5, 6 or 7 of the Share Provisions, as
applicable.
2.3 Reservation of NPS Common Shares
NPS hereby represents, warrants and covenants in favour of NPS -Allelix
Inc. and NPS Holdings that NPS has reserved for issuance and will, at all times
while any Exchangeable Shares (other than Exchangeable Shares held by NPS or its
Affiliates) are outstanding, keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock such number of NPS
Common Shares (or other shares or securities into which NPS Common Shares may be
reclassified or changed as contemplated by section 2.7 hereof) (a) as is equal
to the sum of (i) the number of Exchangeable Shares issued and outstanding from
time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required to enable and permit NPS
to meet its obligations under the Voting and Exchange Trust Agreement and under
any other security or commitment pursuant to which NPS may now or hereafter be
required to issue NPS Common Shares, to enable and permit NPS Holdings to meet
its obligations under each of the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right and to enable and permit NPS - Allelix Inc.
to meet its respective obligations hereunder and under the Share Provisions.
2.4 Notification of Certain Events
In order to assist NPS to comply with its obligations hereunder and to
permit NPS Holdings to exercise the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, NPS - Allelix Inc. will notify NPS and NPS
Holdings of each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of NPS -
Allelix Inc. to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to NPS - Allelix Inc. or to effect any other
distribution of the assets of NPS - Allelix Inc. among its shareholders for
the purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution, winding-up or
other distribution;
(b) promptly, upon the earlier of receipt by NPS - Allelix Inc. of notice of
and NPS - Allelix Inc. otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding-up of NPS - Allelix Inc. or
to effect any other distribution
of the assets of NPS - Allelix Inc. among its shareholders for the purpose
of winding up its affairs;
(c) immediately, upon receipt by NPS - Allelix Inc. of a Retraction Request;
(d) on the same date on which notice of redemption is given to holders of
Exchangeable Shares, upon the determination of a Redemption Date in
accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by NPS - Allelix Inc. of any
Exchangeable Shares or rights to acquire Exchangeable Shares (other than
the issuance of Exchangeable Shares and rights to acquire Exchangeable
Shares in exchange for outstanding Allelix common shares pursuant to the
Arrangement).
2.5 Delivery of Common Shares to NPS - Allelix Inc. and NPS Holdings
In furtherance of its obligations under sections 2.1(d) and (e) hereof,
upon notice from NPS - Allelix Inc. or NPS Holdings of any event that requires
NPS - Allelix Inc. or NPS Holdings, to cause to be delivered NPS Common Shares
to any holder of Exchangeable Shares, NPS shall forthwith issue and deliver or
cause to be delivered to NPS - Allelix Inc. or NPS Holdings the requisite number
of NPS Common Shares to be received by, and issued to or to the order of, the
former holder of the surrendered Exchangeable Shares, as NPS -Allelix Inc. or
NPS Holdings shall direct. All such NPS Common Shares shall be duly authorized
and validly issued as fully paid and non-assessable and shall be free and clear
of any lien, claim or encumbrance. In consideration of the issuance and delivery
of each such NPS Common Share, NPS - Allelix Inc. or NPS Holdings, as the case
may be, shall pay a cash purchase price equal to the fair market value of such
NPS Common Shares.
2.6 Qualification of NPS Common Shares
If any NPS Common Shares (or other shares or securities into which NPS
Common Shares may be reclassified or changed as contemplated by section 2.7
hereof) to be issued and delivered hereunder require registration or
qualification with or approval of or the filing of any document, including any
prospectus or similar document or the taking of any proceeding with or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian or United States federal, provincial or state
securities or other law or regulation or pursuant to the rules and regulations
of any securities or other regulatory authority or the fulfillment of any other
United States or Canadian legal requirement before such shares (or such other
shares or securities) may be issued by NPS and delivered by NPS at the direction
of NPS Holdings or NPS - Allelix Inc., if applicable, to the holder of
surrendered Exchangeable Shares or in order that such shares (or such other
shares or securities) may be freely traded thereafter (other than any
restrictions of general application on transfer by reason of a holder being a
"control person" for purposes of Canadian provincial securities law or an
"affiliate" of NPS for purposes of United States federal or state securities
law), NPS will in
good faith expeditiously take all such actions and do all such things as are
necessary or desirable to cause such NPS Common Shares (or such other shares or
securities) to be and remain duly registered, qualified or approved under United
States and/or Canadian law, as the case may be. NPS will in good faith
expeditiously take all such actions and do all such things as are reasonably
necessary or desirable to cause all NPS Common Shares (or such other shares or
securities) to be delivered hereunder to be listed, quoted or posted for trading
on all stock exchanges and quotation systems on which outstanding NPS Common
Shares (or such other shares or securities) have been listed by NPS and remain
listed and are quoted or posted for trading at such time.
2.7 Economic Equivalence
So long as any Exchangeable Shares not owned by NPS or its Affiliates
are outstanding:
(a) NPS will not without prior approval of NPS - Allelix Inc. and the prior
approval of the holders of the Exchangeable Shares given in accordance with
section 10.2 of the Share Provisions:
(i) issue or distribute NPS Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire NPS Common Shares) to the holders of all or
substantially all of the then outstanding NPS Common Shares by
way of stock dividend or other distribution, other than an issue
of NPS Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire NPS Common
Shares) to holders of NPS Common Shares who exercise an option
to receive dividends in NPS Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire NPS Common Shares) in lieu of receiving cash dividends;
or
(ii) issue or distribute rights, options or warrants to the holders
of all or substantially all of the then outstanding NPS Common
Shares entitling them to subscribe for or to purchase NPS Common
Shares (or securities exchangeable for or convertible into or
carrying rights to acquire NPS Common Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding NPS Common Shares (A) shares or
securities of NPS of any class other than NPS Common Shares
(other than shares convertible into or exchangeable for or
carrying rights to acquire NPS Common Shares), (B) rights,
options or warrants other than those referred to in section
2.7(a)(ii) above, (C) evidences of indebtedness of NPS or (D)
assets of NPS,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets is
issued or distributed simultaneously to holders of the Exchangeable
Shares; provided that, for greater certainty, the above restrictions shall
not apply to any securities issued or distributed by NPS in order to give
effect to and to consummate the transactions contemplated by, and in
accordance with, the Arrangement Agreement. ( i)
(b) NPS will not without the prior approval of NPS - Allelix Inc. and the prior
approval of the holders of the Exchangeable Shares given in accordance with
section 10.2 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding NPS Common
Shares into a greater number of NPS Common Shares; or
(ii) reduce, combine, consolidate or change the then outstanding NPS
Common Shares into a lesser number of NPS Common Shares; or
(iii) reclassify or otherwise change NPS Common Shares or effect an
amalgamation, merger, reorganization or other transaction
affecting NPS Common Shares, unless the same or an economically
equivalent change shall simultaneously be made to, or in the
rights of the holders of, the Exchangeable Shares.
(c) NPS will ensure that the record date for any event referred to in section
2.7(a) or 2.7(b) above, or (if no record date is applicable for such event)
the effective date for any such event, is not less than five Business Days
after the date on which such event is declared or announced by NPS (with
contemporaneous notification thereof by NPS to NPS - Allelix Inc.).
(d) The Board of Directors of NPS - Allelix Inc. shall determine, in good faith
and in its sole discretion, economic equivalence for the purposes of any
event referred to in section 2.7(a) or 2.7(b) above and each such
determination shall be conclusive and binding on NPS. In making each such
determination, the following factors shall, without excluding other factors
determined by the Board of Directors of NPS -Allelix Inc. to be relevant,
be considered by the Board of Directors of NPS - Allelix Inc.:
(i) in the case of any stock dividend or other distribution payable
in NPS Common Shares, the number of such shares issued in proportion to the
number of NPS Common Shares previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase NPS Common Shares (or
securities
exchangeable for or convertible into or carrying rights to
acquire NPS Common Shares), the relationship between the
exercise price of each such right, option or warrant and the
Current Market Price;
(iii) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities
of NPS of any class other than NPS Common Shares, any rights,
options or warrants other than those referred to in section 2.7
(d) (ii) above, any evidences of indebtedness of NPS or any
assets of NPS), the relationship between the fair market value
(as determined by the Board of Directors of NPS - Allelix Inc.
in the manner above contemplated) of such property to be issued
or distributed with respect to each outstanding NPS Common Share
and the Current Market Price;
(iv) in the case of any subdivision, redivision or change of the then
outstanding NPS Common Shares into a greater number of NPS
Common Shares or the reduction, combination, consolidation or
change of the then outstanding NPS Common Shares into a lesser
number of NPS Common Shares or any amalgamation, merger,
reorganization or other transaction affecting NPS Common Shares,
the effect thereof upon the then outstanding NPS Common Shares;
and
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of NPS Common Shares as a result of differences
between taxation laws of Canada and the United States (except
for any differing consequences arising as a result of differing
marginal taxation rates and without regard to the individual
circumstances of holders of Exchangeable Shares).
(c) NPS - Allelix Inc. agrees that, to the extent required, upon due notice
from NPS, NPS - Allelix Inc. will use its best efforts to take or cause to
be taken such steps as may be necessary for the purposes of ensuring that
appropriate dividends are paid or other distributions are made by NPS -
Allelix Inc., or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required economic equivalent
with respect to the NPS Common Shares and Exchangeable Shares as provided
for in this section 2.7.
2.8 Tender Offers
In the event that a tender offer, share exchange offer, issuer bid, take-
over bid or similar transaction with respect to NPS Common Shares (an "Offer")
is proposed by NPS or is proposed to NPS or its shareholders and is recommended
by the Board of Directors of
NPS, or is otherwise effected or to be effected with the consent or approval of
the Board of Directors of NPS, and the Exchangeable Shares are not redeemed by
NPS - Allelix Inc. or purchased by NPS Holdings pursuant to the Redemption Call
Right, NPS will use its reasonable efforts expeditiously and in good faith to
take all such actions and do all such things as are necessary or desirable to
enable and permit holders of Exchangeable Shares (other than NPS and its
Affiliates) to participate in such Offer to the same extent and on an
economically equivalent basis as the holders of NPS Common Shares, without
discrimination. Without limiting the generality of the foregoing, NPS will use
its reasonable efforts expeditiously and in good faith to ensure that holders of
Exchangeable Shares may participate in each such Offer without being required to
retract Exchangeable Shares as against NPS - Allelix Inc. (or, if so required,
to ensure that any such retraction, shall be effective only upon, and shall be
conditional upon, the closing of such Offer and only to the extent necessary to
tender or deposit to the Offer). Nothing herein shall affect the rights of NPS -
Allelix Inc. to redeem (or NPS Holdings to purchase pursuant to the Redemption
Call Right) Exchangeable Shares, as applicable, in the event of a NPS Control
Transaction.
2.9 Ownership of Outstanding Shares
Without the prior approval of NPS - Allelix Inc. and the prior approval of
the holders of the Exchangeable Shares given in accordance with section 10.2 of
the Share Provisions, NPS covenants and agrees in favour of NPS- Allelix Inc.
that, as long as any outstanding Exchangeable Shares are owned by any Person
other than NPS or any of its Affiliates, NPS will be and remain the direct or
indirect beneficial owner of all issued and outstanding voting shares in the
capital of NPS - Allelix Inc. and NPS Holdings.
2.10 NPS and Affiliates Not to Vote Exchangeable Shares
NPS covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by it and its
Affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. NPS further covenants and agrees that it will not, and will cause its
Affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the Act (or any successor or other
corporate statute by which NPS - Allelix Inc. may in the future be governed)
with respect to any Exchangeable Shares held by it or by its Affiliates in
respect of any matter considered at any meeting of holders of Exchangeable
Shares.
2.11 Rule 10b-18 Purchases
For certainty, nothing contained in this Agreement, including without
limitation the obligations of NPS contained in section 2.8 hereof, shall limit
the ability of NPS or NPS - Allelix Inc. to make a "Rule ▇▇▇-▇▇ ▇▇▇▇▇▇▇▇" of NPS
Common Shares pursuant to Rule 10b-18 of the United States Securities Exchange
Act of 1934, as amended.
2.12 Stock Exchange Listing
NPS covenants and agrees in favour of NPS - Allelix Inc. that, as long as
any outstanding Exchangeable Shares are owned by any Person other than NPS or
any of its Affiliates, NPS will use its reasonable efforts to maintain a listing
for such Exchangeable Shares on a Canadian stock exchange.
ARTICLE 3
NPS SUCCESSORS
3.1 Certain Requirements in Respect of Combination, etc.
NPS shall not consummate any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or other-wise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom unless, but may do so if:
(a) such other Person or continuing corporation (the "NPS Successor") by
operation of law, becomes, without more, bound by the terms and
provisions of this Agreement or, if not so bound, executes, prior to
or contemporaneously with the consummation of such transaction, an
agreement supplemental hereto and such other instruments (if any) as
are reasonably necessary or advisable to evidence the assumption by
the NPS Successor of liability for all moneys payable and property
deliverable hereunder and the covenant of such NPS Successor to pay
and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of NPS under
this Agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the other parties
hereunder.
3.2 Vesting of Powers in Successor
Whenever the conditions of section 3.1 have been duly observed and
performed, the parties, if required by section 3.1, shall execute and deliver
the supplemental agreement provided for in section 3.1(a) and thereupon the NPS
Successor shall possess and from time to time may exercise each and every right
and power of NPS under this Agreement in the name of NPS or otherwise and any
act or proceeding by any provision of this Agreement required to be done or
performed by the Board of Directors of NPS or any officers of NPS may be done
and performed with like force and effect by the directors or officers of such
NPS Successor.
3.3 Wholly-Owned Subsidiaries
Subject to section 6.5(w) of the Arrangement Agreement, nothing herein
shall be construed as preventing the amalgamation or merger of any wholly-owned
direct or indirect subsidiary of NPS with or into NPS or the winding-up,
liquidation or dissolution of any wholly-owned subsidiary of NPS provided that
all of the assets of such subsidiary are transferred to NPS or another wholly-
owned direct or indirect subsidiary of NPS and any such transactions are
expressly permitted by this Article 3.
ARTICLE 4
GENERAL
4.1 Term
This Agreement shall come into force and be effective as of the date hereof
and shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any Person
other than NPS and any of its Affiliates.
4.2 Changes in Capital of NPS and NPS - Allelix Inc.
At all times after the occurrence of any event contemplated pursuant to
sections 2.7 and 2.8 hereof or otherwise, as a result of which either NPS Common
Shares or the Exchangeable Shares or both are in any way changed, this agreement
shall forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, mutatis mutandis, to all new securities into
which NPS Common Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
4.3 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
4.4 Amendments, Modifications
This Agreement may not be amended or modified except by an agreement in
writing executed by NPS - Allelix Inc., NPS Holdings and NPS and approved by the
holders of the Exchangeable Shares in accordance with section 10.2 of the Share
Provisions.
4.5 Ministerial Amendments
Notwithstanding the provisions of section 4.4, the parties to this
Agreement may in writing at any time and from time to time, without the approval
of the holders of the Exchangeable Shares, amend or modify this Agreement for
the purposes of:
(a) adding to the covenants of any or all parties provided that the Board
of Directors of each of NPS - Allelix Inc., NPS Holdings and NPS shall
be of the good faith opinion that such additions will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the Board of Directors
of each of NPS - Allelix Inc., NPS Holdings and NPS, it may be
expedient to make, provided that each such Board of Directors shall be
of the good faith opinion that such amendments or modifications will
not be prejudicial to the rights or interests of the holders of the
Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of counsel to
NPS - Allelix Inc., NPS Holdings and NPS, are required for the purpose
of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided
that the Boards of Directors of each of NPS - Allelix Inc., NPS
Holdings and NPS shall be of the good faith opinion that such changes
or corrections will not be prejudicial to the rights or interests of
the holders of the Exchangeable Shares.
4.6 Meeting to Consider Amendments
NPS - Allelix Inc., at the request of NPS, shall call a meeting or meetings
of the holders of the Exchangeable Shares for the purpose of considering any
proposed amendment or modification requiring approval pursuant to section 4.4
hereof. Any such meeting or meetings shall be called and held in accordance with
the bylaws of NPS - Allelix Inc., the Share Provisions and all applicable laws.
4.7 Amendments Only in Writing
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
4.8 Enurement
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns.
4.9 Notices to Parties
All notices and other communications between the parties to this Agreement
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for any such party as shall be specified in like
notice):
NPS Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Box 25, Commerce Court West
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Mr. J. ▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
4.10 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and the
same instrument.
4.11 Jurisdiction
This Agreement shall be construed and enforced in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
4.12 Attornment
Each of the parties hereto agrees that any action or proceeding arising out
of or relating to this Agreement may be instituted in the courts of the Province
of Ontario, waives any objection which it may have now or hereafter to the venue
of any such action or proceeding, irrevocably submits to the jurisdiction of the
said courts in any such action or proceeding, agrees to be bound by any judgment
of the said courts and not to seek, and hereby waives, any review of the merits
of any such judgment by the courts of any other jurisdiction and NPS hereby
appoints NPS - Allelix Inc. at its registered office in the Province of Ontario
as attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NPS PHARMACEUTICALS, INC.
By:________________________________
Name:
Title:
NPS HOLDINGS LIMITED
By:________________________________
Name:
Title:
NPS - ALLELIX INC.
By:________________________________
Name:
Title:
SCHEDULE C
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the day of , .
A M O N G:
NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware
hereinafter referred to as "NPS"),
OF THE FIRST PART,
- and -
NPS - ALLELIX INC.,
a company existing under the laws of the Province of British Columbia
(hereinafter referred to as "NPS Allelix Inc."),
OF THE SECOND PART,
- and -
.TRUST COMPANY
a trust company incorporated under the laws of Canada (hereinafter
referred to as "Trustee"),
OF THE THIRD PART.
WHEREAS in connection with an arrangement agreement (the "Arrangement
Agreement") made as of , between NPS and Allelix Biopharmaceuticals Inc.
("Allelix"), NPS - Allelix Inc. is to issue exchangeable shares (the
"Exchangeable Shares") to certain holders of securities of Allelix pursuant to
the plan of arrangement (the "Arrangement") contemplated in the Arrangement
Agreement;
AND WHEREAS pursuant to the Arrangement Agreement, NPS and NPS -
Allelix Inc. have agreed to execute a voting and exchange trust agreement
substantially in the form of this Agreement;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
ARTICLE 5
DEFINITIONS AND INTERPRETATION
5.1 Definitions
In this Agreement, the following terms shall have the following meanings:
"Affiliate" of any person means any other person directly or indirectly
controlled by, or under control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person,
means the possession by another person, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
that first mentioned person, whether through the ownership of voting
securities, by contract or otherwise.
"Arrangement" means the arrangement under section 192 of the CBCA and
section 182 of the OBCA on the terms and subject to the conditions set out
in the Plan of Arrangement, subject to any amendments or variations thereto
made in accordance with Article 6 of the Plan of Arrangement or made at the
direction of the Court.
"Arrangement Agreement" means the agreement made , 1999 between NPS and
Allelix, as amended, supplemented and/or restated in accordance therewith
prior to the Effective Date, providing for, among other things, the
Arrangement.
"Automatic Exchange Rights" means the benefit of the obligation of NPS to
effect the automatic exchange of Exchangeable Shares for NPS Common Shares
pursuant to section 5.12.
"Beneficiaries" means the registered holders from time to time of
Exchangeable Shares, other than NPS and its Affiliates.
"Beneficiary Votes" has the meaning ascribed thereto in section 4.2.
"Board of Directors" means the Board of Directors of NPS - Allelix Inc..
"Business Day" means any day on which commercial banks are generally open
for business in Salt Lake City, Utah and Toronto, Ontario, other than a
Saturday, a Sunday or a day observed as a holiday in Salt Lake City, Utah
under the laws of the State of Utah or the federal laws of the United
States of America or in Toronto, Ontario under the laws of the Province of
Ontario or the federal laws of Canada.
"Canadian Dollar Equivalent" means, in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any
date, the product obtained by multiplying (a) the Foreign Currency Amount
by (b) the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or, in the
event such spot exchange rate is not available, such exchange rate on such
date for such foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such purpose.
"Current Market Price" means, in respect of a NPS Common Share on any date,
the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of NPS Common Shares during a period of 20 consecutive trading days
ending not more than three trading days before such date on Nasdaq, or, if
the NPS Common Shares are not then quoted on Nasdaq, on such other stock
exchange or automated quotation system on which the NPS Common Shares are
listed or quoted, as the case may be, as may be selected by the Board of
Directors for such purpose; provided however, that if in the opinion of the
Board of Directors the public distribution or trading activity of NPS
Common Shares during such period does not create a market which reflects
the fair market value of a NPS Common Share, then the Current Market Price
of a NPS Common Share shall be determined by the Board of Directors, in
good faith and in its sole discretion, and provided further that any such
selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
"Exchange Right" has the meaning ascribed thereto in section 5.1.
"Exchangeable Shares" means the non-voting exchangeable shares in the
capital of NPS - Allelix Inc., having substantially the rights, privileges,
restrictions and conditions set out in Appendix 1 to the Plan of
Arrangement.
"Indemnified Parties" has the meaning ascribed thereto in section 9.1.
"Insolvency Event" means the institution by NPS - Allelix Inc. of any
proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or
the consent of NPS - Allelix Inc. to the institution of bankruptcy,
insolvency or winding-up proceedings against it, or the filing of a
petition, answer or consent seeking dissolution or winding-up under any
bankruptcy, insolvency or analogous laws, including without limitation the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and
Insolvency Act (Canada), and the failure by NPS - Allelix Inc. to contest
in good faith any such proceedings commenced in respect of NPS - Allelix
Inc. within 30 days of becoming aware thereof, or the consent by NPS -
Allelix Inc. to the filing of any such petition or to the appointment of a
receiver, or the making by NPS - Allelix Inc. of a general assignment for
the benefit of creditors, or the admission in writing by NPS - Allelix Inc.
of its inability to pay its debts generally as they become due, or NPS -
Allelix Inc. not being permitted, pursuant to solvency requirements of
applicable law, to redeem any Retracted Shares pursuant to section 6.6 of
the Share Provisions.
"Liquidation Call Right" has the meaning ascribed thereto in the Plan of
Arrangement.
"Liquidation Event" has the meaning ascribed thereto in section 5.12(b).
"Liquidation Event Effective Date" has the meaning ascribed thereto in
section 5.12(c).
"List" has the meaning ascribed thereto in section 4.6.
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"NPS Affiliates" means Affiliates of NPS.
"NPS Common Share" means a share of common stock in the capital of NPS.
"NPS Consent" has the meaning ascribed thereto in section 4.2.
"NPS Holdings" means NPS Holdings Limited, a company existing under the
laws of the Province of British Columbia and being a direct or indirect
wholly-owned subsidiary of NPS.
"NPS Meeting" has the meaning ascribed thereto in section 4.2.
"NPS Special Voting Share" means the one share of Special Voting Preferred
Stock of NPS issued in its own series which entitles the holder of record
to a number of votes at meetings of holders of NPS Common Shares equal to
the number of Exchangeable Shares outstanding from time to time (other than
Exchangeable Shares held by NPS and NPS Affiliates), which share is to be
issued to, deposited with, and voted by, the Trustee as described herein.
"NPS Successor" has the meaning ascribed thereto in section 11.1(a).
"OBCA" means the Business Corporations Act (Ontario), as amended.
"Officer's Certificate" means, with respect to NPS or NPS - Allelix Inc.,
as the case may be, a certificate signed by any officer or director of NPS
or NPS - Allelix Inc., as the case may be.
"person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, government body, syndicate or other entity,
whether or not having legal status.
"Plan of Arrangement" means the plan of arrangement substantially in the
form and content of Schedule D to the Arrangement Agreement and any
amendments or variations thereto.
"Redemption Call Right" has the meaning ascribed thereto in the Plan of
Arrangement.
"Retracted Shares" has the meaning ascribed thereto in section 5.7.
"Retraction Call Right" has the meaning ascribed thereto in the Share
Provisions.
"Share Provisions" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares.
"Support Agreement" means that certain support agreement made as of even
date herewith among NPS - Allelix Inc., NPS Holdings and NPS substantially
in the form and content of Schedule to the Arrangement Agreement, with
such changes thereto as the parties to the Arrangement Agreement, acting
reasonably, may agree.
"Trust" means the trust created by this Agreement.
"Trust Estate" means the NPS Special Voting Share, any other securities,
the Exchange Right, the Automatic Exchange Rights and any money or other
property which may be held by the Trustee from time to time pursuant to
this Agreement.
"Trustee" means CIBC Mellon Trust Company and, subject to the provisions of
Article 10, includes any successor trustee.
"Voting Rights" means the voting rights attached to the NPS Special Voting
Share.
5.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, sections and other portions
and the insertion of headings are for convenience of reference only and should
not affect the construction or interpretation of this Agreement. Unless
otherwise indicated, all references to an "Article" or "section" followed by a
number and/or a letter refer to the specified Article or section of this
Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and
similar expressions refer to this Agreement and not to any particular Article,
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto.
5.3 Number, Gender, etc.
Words importing the singular number only shall include the plural and vice
versa. Words importing any gender shall include all genders.
5.4 Date for any Action
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE 6
PURPOSE OF AGREEMENT
6.1 Establishment of Trust
The purpose of this Agreement is to create the Trust for the benefit of the
Beneficiaries, as herein provided. The Trustee will hold the NPS Special Voting
Share in order to enable the Trustee to exercise the Voting Rights and will hold
the Exchange Right and the Automatic Exchange Rights in order to enable the
Trustee to exercise such rights, in each case as trustee for and on behalf of
the Beneficiaries as provided in this Agreement.
ARTICLE 7
NPS SPECIAL VOTING SHARE
7.1 Issue and Ownership of the NPS Special Voting Share
NPS hereby issues to and deposits with the Trustee, the NPS Special Voting
Share to be hereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Beneficiaries and in accordance with the
provisions of this Agreement. NPS hereby acknowledges receipt from the Trustee
as trustee for and on behalf of the Beneficiaries of good and valuable
consideration (and the adequacy thereof) for the issuance of the NPS Special
Voting Share by NPS to the Trustee. During the term of the Trust and subject to
the terms and conditions of this Agreement, the Trustee shall possess and be
vested with full legal ownership of the NPS Special Voting Share and shall be
entitled to exercise all of the rights and powers of an owner with respect to
the NPS Special Voting Share provided that the Trustee shall:
(a) hold the NPS Special Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Beneficiaries in accordance with
the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with the NPS
Special Voting Share and the NPS Special Voting Share shall not be used
or disposed of by the Trustee for any purpose other than the purposes
for which this Trust is created pursuant to this Agreement.
7.2 Legended Share Certificates
NPS - Allelix Inc. will cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Beneficiaries of their right
to instruct the Trustee with respect to the exercise of the Voting Rights in
respect of the Exchangeable Shares of the Beneficiaries.
7.3 Keeping of Certificate
The certificate representing the NPS Special Voting Share shall at all
times be held in safe keeping by the Trustee.
ARTICLE 8
EXERCISE OF VOTING RIGHTS
8.1 Voting Rights
The Trustee, as the holder of record of the NPS Special Voting Share, shall
be entitled to all of the Voting Rights, including the right to vote in person
or by proxy the NPS Special Voting Share on any matters, questions, proposals or
propositions whatsoever that may properly come before the shareholders of NPS at
a NPS Meeting or in connection with a NPS Consent. The Voting Rights shall be
and remain vested in and exercised by the Trustee. Subject to section 7.15:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Beneficiaries
entitled to instruct the Trustee as to the voting thereof at the time at
which the NPS Meeting is held or a NPS Consent is sought; and
(b) to the extent that no instructions are received from a Beneficiary with
respect to the Voting Rights to which such Beneficiary is entitled, the
Trustee shall not exercise or permit the exercise of such Voting Rights.
8.2 Number of Votes
With respect to all meetings of shareholders of NPS at which holders of NPS
Common Shares are entitled to vote (each, a "NPS Meeting") and with respect to
all written consents sought by NPS from its shareholders including the holders
of NPS Common Shares (each, a "NPS Consent"), each Beneficiary shall be entitled
to instruct the Trustee to cast and exercise one of the votes comprised in the
Voting Rights for each Exchangeable Share owned of record by such Beneficiary on
the record date established by NPS or by applicable law for such NPS Meeting or
NPS Consent, as the case may be (the "Beneficiary Votes"), in respect of each
matter, question, proposal or proposition to be voted on at such NPS Meeting or
in connection with such NPS Consent.
8.3 Mailings to Shareholders
With respect to each NPS Meeting and NPS Consent, the Trustee will use
its reasonable efforts promptly to mail or cause to be mailed (or otherwise
communicate in the same manner as NPS utilizes in communications to holders of
NPS Common Shares subject to applicable regulatory requirements and provided
such manner of communications is reasonably available to the Trustee) to each of
the Beneficiaries named in the List referred to in section 4.6, such mailing or
communication to commence on the same day as the mailing or notice (or other
communication) with respect thereto is commenced by NPS to its shareholders:
(a) a copy of such notice, together with any related materials,
including, without limitation, any proxy or information statement, to be
provided to shareholders of NPS;
(b) a statement that such Beneficiary is entitled to instruct the Trustee
as to the exercise of the Beneficiary Votes with respect to such NPS
Meeting or NPS Consent or, pursuant to section 4.7, to attend such NPS
Meeting and to exercise personally the Beneficiary Votes thereat;
(c) a statement as to the manner in which such instructions may be given
to the Trustee, including an express indication that instructions may
be given to the Trustee to give:
(i) a proxy to such Beneficiary or his designee to exercise
personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of the
management of NPS to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is
entitled will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct and instruct
the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which in the
case of a NPS Meeting shall not be earlier than the close of business
on the second Business Day prior to such meeting, and of the method
for revoking or amending such instructions.
The materials referred to in this section 4.3 are to be provided to
the Trustee by NPS and the materials referred to in section 4.3(c), (e) and (f)
shall be subject to reasonable
comment by the Trustee in a timely manner. NPS shall ensure that the materials
to be provided to the Trustee are provided in sufficient time to permit the
Trustee to comment as aforesaid and to send all materials to each Beneficiary at
the same time as such materials are first sent to holders of NPS Common Shares.
For the purpose of determining Beneficiary Votes to which a
Beneficiary is entitled in respect of any NPS Meeting or NPS Consent, the number
of Exchangeable Shares owned of record by the Beneficiary shall be determined at
the close of business on the record date established by NPS or by applicable law
for purposes of determining shareholders entitled to vote at such NPS Meeting.
NPS will notify the Trustee of any decision of the Board of Directors of NPS
with respect to the calling of any NPS Meeting and shall provide all necessary
information and materials to the Trustee in each case promptly and in any event
in sufficient time to enable the Trustee to perform its obligations contemplated
by this section 4.3.
8.4 Copies of Shareholder Information
NPS will deliver to the Trustee copies of all proxy materials
(including notices of NPS Meetings but excluding proxies to vote NPS Common
Shares), information statements, reports (including without limitation, all
interim and annual financial statements) and other written communications that,
in each case, are to be distributed from time to time to holders of NPS Common
Shares in sufficient quantities and in sufficient time so as to enable the
Trustee to send those materials to each Beneficiary at the same time as such
materials are first sent to holders of NPS Common Shares. The Trustee will mail
or otherwise send to each Beneficiary, at the expense of NPS, copies of all such
materials (and all materials specifically directed to the Beneficiaries or to
the Trustee for the benefit of the Beneficiaries by NPS) received by the Trustee
from NPS contemporaneously with the sending of such materials to holders of NPS
Common Shares. The Trustee will also make available for inspection by any
Beneficiary at the Trustee's principal office in Toronto all proxy materials,
information statements, reports and other written communications that are:
(a) received by the Trustee as the registered holder of the NPS Special
Voting Share and made available by NPS generally to the holders of NPS
Common Shares; or
(b) specifically directed to the Beneficiaries or to the Trustee for the
benefit of the Beneficiaries by NPS.
8.5 Other Materials
As soon as reasonably practicable after receipt by NPS or shareholders
of NPS (if such receipt is known by NPS) of any material sent or given by or on
behalf of a third party to holders of NPS Common Shares generally, including
without limitation, dissident proxy and information circulars (and related
information and material) and tender and exchange offer circulars (and related
information and material), NPS shall use its reasonable efforts to obtain and
deliver to the Trustee copies thereof in sufficient quantities so as to enable
the Trustee to
forward such material (unless the same has been provided directly to
Beneficiaries by such third party) to each Beneficiary as soon as possible
thereafter. As soon as reasonably practicable after receipt thereof, the Trustee
will mail or otherwise send to each Beneficiary, at the expense of NPS, copies
of all such materials received by the Trustee from NPS. The Trustee will also
make available for inspection by any Beneficiary at the Trustee's principal
office in Toronto copies of all such materials.
8.6 List of Persons Entitled to Vote
NPS - Allelix Inc. shall, (a) prior to each annual, general and
special NPS Meeting or the seeking of any NPS Consent and (b) forthwith upon
each request made at any time by the Trustee in writing, prepare or cause to be
prepared a list (a "List") of the names and addresses of the Beneficiaries
arranged in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Beneficiary, in each case at the close of business
on the date specified by the Trustee in such request or, in the case of a List
prepared in connection with a NPS Meeting or a NPS Consent, at the close of
business on the record date established by NPS or pursuant to applicable law for
determining the holders of NPS Common Shares entitled to receive notice of
and/or to vote at such NPS Meeting or to give consent in connection with such
NPS Consent. Each such List shall be delivered to the Trustee promptly after
receipt by NPS - Allelix Inc. of such request or the record date for such
meeting or seeking of consent, as the case may be, and in any event within
sufficient time as to permit the Trustee to perform its obligations under this
Agreement. NPS agrees to give NPS - Allelix Inc. notice (with a copy to the
Trustee) of the calling of any NPS Meeting or the seeking of any NPS Consent,
together with the record dates therefor, sufficiently prior to the date of the
calling of such meeting or seeking of such consent so as to enable NPS - Allelix
Inc. to perform its obligations under this section 4.6.
8.7 Entitlement to Direct Votes
Any Beneficiary named in a List prepared in connection with any NPS
Meeting or NPS Consent will be entitled (a) to instruct the Trustee in the
manner described in section 4.3 with respect to the exercise of the Beneficiary
Votes to which such Beneficiary is entitled or (b) to attend such meeting and
personally exercise thereat, as the proxy of the Trustee, the Beneficiary Votes
to which such Beneficiary is entitled.
8.8 Voting by Trustee and Attendance of Trustee Representative at Meeting
(a) In connection with each NPS Meeting and NPS Consent, the Trustee shall
exercise, either in person or by proxy, in accordance with the instructions
received from a Beneficiary pursuant to section 4.3, the Beneficiary Votes as to
which such Beneficiary is entitled to direct the vote (or any lesser number
thereof as may be set forth in the instructions); provided, however, that such
written instructions are received by the Trustee from the Beneficiary prior to
the time and date fixed by the Trustee for receipt of such instruction in the
notice given by the Trustee to the Beneficiary pursuant to section 4.3.
(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights
to attend each NPS Meeting. Upon submission by a Beneficiary (or its
designee) of identification satisfactory to the Trustee's
representative, and at the Beneficiary's request, such representative
shall sign and deliver to such Beneficiary (or its designee) a proxy
to exercise personally the Beneficiary Votes as to which such
Beneficiary is otherwise entitled hereunder to direct the vote, if
such Beneficiary either (i) has not previously given the Trustee
instructions pursuant to section 4.3 in respect of such meeting or
(ii) submits to such representative written revocation of any such
previous instructions. At such meeting, the Beneficiary exercising
such Beneficiary Votes shall have the same rights as the Trustee to
speak at the meeting in favour of any matter, question, proposal or
proposition, to vote by way of ballot at the meeting in respect of any
matter, question, proposal or proposition, and to vote at such meeting
by way of a show of hands in respect of any matter, question or
proposition.
8.9 Distribution of Written Materials
Any written materials distributed by the Trustee pursuant to this
Agreement shall be sent by mail (or otherwise communicated in the same manner as
NPS utilizes in communications to holders of NPS Common Shares subject to
applicable regulatory requirements and provided such manner of communications is
reasonably available to the Trustee) to each Beneficiary at its address as shown
on the books of NPS - Allelix Inc.. NPS - Allelix Inc. shall provide or cause to
be provided to the Trustee for this purpose, on a timely basis and without
charge or other expense:
(a) a current List; and
(b) upon the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this Agreement.
8.10 Termination of Voting Rights
All of the rights of a Beneficiary with respect to the Beneficiary
Votes exercisable in respect of the Exchangeable Shares held by such
Beneficiary, including the right to instruct the Trustee as to the voting of or
to vote personally such Beneficiary Votes, shall be deemed to be surrendered by
the Beneficiary to NPS or NPS Holdings, as the case may be, and such Beneficiary
Votes and the Voting Rights represented thereby shall cease immediately upon the
delivery by such holder to the Trustee of the certificates representing such
Exchangeable Shares in connection with the exercise by the Beneficiary of the
Exchange Right or the occurrence of the automatic exchange of Exchangeable
Shares for NPS Common Shares, as specified in Article 5 (unless, in either case,
NPS shall not have delivered the requisite NPS Common Shares issuable in
exchange therefor to the Trustee for delivery to the Beneficiaries), or upon the
redemption of Exchangeable Shares pursuant to Article 6 or 7 of the Share
Provisions, or upon the effective
date of the liquidation, dissolution or winding-up of NPS - Allelix Inc.
pursuant to Article 5 of the Share Provisions, or upon the purchase of
Exchangeable Shares from the holder thereof by NPS Holdings pursuant to the
exercise by NPS Holdings of the Retraction Call Right, the Redemption Call Right
or the Liquidation Call Right.
8.11 Communications with Shareholders
NPS agrees not to communicate with holders of NPS Common Shares
otherwise than by mail unless such method of communication is also reasonably
available to the Trustee for communication with the Beneficiaries.
ARTICLE 9
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
9.1 Grant and Ownership of the Exchange Right
NPS hereby grants to the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Beneficiaries the right (the "Exchange Right"),
upon the occurrence and during the continuance of an Insolvency Event, to
require NPS to purchase from each or any Beneficiary all or any part of the
Exchangeable Shares held by the Beneficiary and the Automatic Exchange Rights,
all in accordance with the provisions of this Agreement. NPS hereby acknowledges
receipt from the Trustee as trustee for and on behalf of the Beneficiaries of
good and valuable consideration (and the adequacy thereof) for the grant of the
Exchange Right and the Automatic Exchange Rights by NPS to the Trustee. During
the term of the Trust and subject to the terms and conditions of this Agreement,
the Trustee shall possess and be vested with full legal ownership of the
Exchange Right and the Automatic Exchange Rights and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Exchange
Right and the Automatic Exchange Rights, provided that the Trustee shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of the
Beneficiaries in accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to exercise or otherwise deal in or with the Exchange Right
or the Automatic Exchange Rights, and the Trustee shall not exercise
any such rights for any purpose other than the purposes for which the
Trust is created pursuant to this Agreement.
9.2 Legended Share Certificates
NPS - Allelix Inc. will cause each certificate representing
Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries
of:
(a) their right to instruct the Trustee with respect to the exercise of
the Exchange Right in respect of the Exchangeable Shares held by a
Beneficiary; and
(b) the Automatic Exchange Rights.
9.3 General Exercise of Exchange Right
The Exchange Right shall be and remain vested in and exercisable by
the Trustee. Subject to section 7.15, the Trustee shall exercise the Exchange
Right only on the basis of instructions received pursuant to this Article 5 from
Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To
the extent that no instructions are received from a Beneficiary with respect to
the Exchange Right, the Trustee shall not exercise or permit the exercise of the
Exchange Right.
9.4 Purchase Price
The purchase price payable by NPS for each Exchangeable Share to be
purchased by NPS under the Exchange Right shall be an amount per share equal to
(a) the Current Market Price of a NPS Common Share on the last Business Day
prior to the day of closing of the purchase and sale of such Exchangeable Share
under the Exchange Right, which shall be satisfied in full by NPS causing to be
sent to such holder one NPS Common Share, plus (b) to the extent not paid by
NPS - Allelix Inc. on the designated payment date therefor, an additional amount
equivalent to the full amount of all declared and unpaid dividends on each such
Exchangeable Share held by such holder on any dividend record date which
occurred prior to the closing of the purchase and sale. In connection with each
exercise of the Exchange Right, NPS shall provide to the Trustee an Officer's
Certificate setting forth the calculation of the purchase price for each
Exchangeable Share. The purchase price for each such Exchangeable Share so
purchased may be satisfied only by NPS issuing and delivering or causing to be
delivered to the Trustee, on behalf of the relevant Beneficiary, one NPS Common
Share and on the applicable payment date a cheque for the balance, if any, of
the purchase price without interest (but less any amounts withheld pursuant to
section 5.13). Upon payment by NPS of such purchase price, the relevant
Beneficiary shall cease to have any right to be paid any amount in respect of
declared and unpaid dividends on each such Exchangeable Share by NPS - Allelix
Inc..
9.5 Exercise Instructions
Subject to the terms and conditions herein set forth, a Beneficiary
shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event, to instruct the Trustee to exercise the Exchange Right with
respect to all or any part of the Exchangeable Shares registered in the name of
such Beneficiary on the books of NPS - Allelix Inc.. To cause the exercise of
the
Exchange Right by the Trustee, the Beneficiary shall deliver to the Trustee,
in person or by certified or registered mail, as its principal office in Toronto
or at such other places in Canada as the Trustee may from time to time designate
by written notice to the Beneficiaries, the certificates representing the
Exchangeable Shares which such Beneficiary desires NPS to purchase, duly
endorsed in blank for transfer, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the articles and by-laws of NPS - Allelix Inc. and such additional
documents and instruments as the Trustee, NPS - Allelix Inc. and NPS may
reasonably require together with (a) a duly completed form of notice of exercise
of the Exchange Right, contained on the reverse of or attached to the
Exchangeable Share certificates, stating (i) that the Beneficiary thereby
instructs the Trustee to exercise the Exchange Right so as to require NPS to
purchase from the Beneficiary the number of Exchangeable Shares specified
therein, (ii) that such Beneficiary has good title to and owns all such
Exchangeable Shares to be acquired by NPS free and clear of all liens, claims
and encumbrances, (iii) the names in which the certificates representing NPS
Common Shares issuable in connection with the exercise of the Exchange Right are
to be issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence satisfactory to
the Trustee, NPS - Allelix Inc. and NPS of payment) of the taxes (if any)
payable as contemplated by section 5.8 of this Agreement. If only a part of the
Exchangeable Shares represented by any certificate or certificates delivered to
the Trustee are to be purchased by NPS under the Exchange Right, a new
certificate for the balance of such Exchangeable Shares shall be issued to the
holder at the expense of NPS - Allelix Inc..
9.6 Delivery of NPS Common Shares; Effect of Exercise
Promptly after the receipt of the certificates representing the
Exchangeable Shares which the Beneficiary desires NPS to purchase under the
Exchange Right, together with such documents and instruments of transfer and a
duly completed form of notice of exercise of the Exchange Right (and payment of
taxes, if any payable as contemplated by section 5.8 or evidence thereof), duly
endorsed for transfer to NPS, the Trustee shall notify NPS and NPS - Allelix
Inc. of its receipt of the same, which notice to NPS and NPS - Allelix Inc.
shall constitute exercise of the Exchange Right by the Trustee on behalf of the
holder of such Exchangeable Shares, and NPS shall promptly thereafter deliver or
cause to be delivered to the Trustee, for delivery to the Beneficiary of such
Exchangeable Shares (or to such other persons, if any, properly designated by
such Beneficiary) the number of NPS Common Shares issuable in connection with
the exercise of the Exchange Right, and on the applicable payment date cheques
for the balance, if any, of the total purchase price therefor without interest
(but less any amounts withheld pursuant to section 5.13); provided, however,
that no such delivery shall be made unless and until the Beneficiary requesting
the same shall have paid (or provided evidence satisfactory to the Trustee,
NPS - Allelix Inc. and NPS of the payment of) the taxes (if any) payable as
contemplated by section 5.8 of this Agreement. Immediately upon the giving of
notice by the Trustee to NPS and NPS - Allelix Inc. of the exercise of the
Exchange Right as provided in this section 5.6, the closing of the transaction
of purchase and sale contemplated by the Exchange Right shall be deemed to have
occurred and the holder of such Exchangeable Shares shall be deemed to have
transferred to NPS all of such holder's right, title and interest in and to such
Exchangeable Shares and the
related interest in the Trust Estate and shall cease to be a holder of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive his proportionate
part of the total purchase price therefor, unless the requisite number of NPS
Common Shares is not allotted, issued and delivered by NPS to the Trustee within
five Business Days of the date of the giving of such notice by the Trustee or
the balance of the purchase price, if any, is not paid by NPS on the applicable
payment date therefor, in which case the rights of the Beneficiary shall remain
unaffected until such NPS Common Shares are so allotted, issued and delivered,
and the balance of the purchase price, if any, has been paid, by NPS. Upon
delivery by NPS to the Trustee of such NPS Common Shares, and the balance of the
purchase price, if any, the Trustee shall deliver such NPS Common Shares to such
Beneficiary (or to such other persons, if any, properly designated by such
Beneficiary). Concurrently with such Beneficiary ceasing to be a holder of
Exchangeable Shares, the Beneficiary shall be considered and deemed for all
purposes to be the holder of the NPS Common Shares delivered to it pursuant to
the Exchange Right.
9.7 Exercise of Exchange Right Subsequent to Retraction
In the event that a Beneficiary has exercised its right under Article
6 of the Share Provisions to require NPS - Allelix Inc. to redeem any or all of
the Exchangeable Shares held by the Beneficiary (the "Retracted Shares") and is
notified by NPS - Allelix Inc. pursuant to section 6.6 of the Share Provisions
that NPS - Allelix Inc. will not be permitted as a result of solvency
requirements of applicable law to redeem all such Retracted Shares, and provided
that NPS Holdings shall not have exercised the Retraction Call Right with
respect to the Retracted Shares and that the Beneficiary has not revoked the
retraction request delivered by the Beneficiary to NPS - Allelix Inc. pursuant
to section 6.1 of the Share Provisions and provided further that the Trustee has
received written notice of same from NPS - Allelix Inc. or NPS, the retraction
request will constitute and will be deemed to constitute notice from the
Beneficiary to the Trustee instructing the Trustee to exercise the Exchange
Right with respect to those Retracted Shares that NPS - Allelix Inc. is unable
to redeem. In any such event, NPS - Allelix Inc. hereby agrees with the Trustee
and in favour of the Beneficiary promptly to forward or cause to be forwarded to
the Trustee all relevant materials delivered by the Beneficiary to NPS - Allelix
Inc. or to the transfer agent of the Exchangeable Shares (including without
limitation, a copy of the retraction request delivered pursuant to section 6.1
of the Share Provisions) in connection with such proposed redemption of the
Retracted Shares and the Trustee will thereupon exercise the Exchange Right with
respect to the Retracted Shares that NPS - Allelix Inc. is not permitted to
redeem and will require NPS to purchase such shares in accordance with the
provisions of this Article 5.
9.8 Stamp or Other Transfer Taxes
Upon any sale of Exchangeable Shares to NPS pursuant to the Exchange
Right or the Automatic Exchange Rights, the share certificate or certificates
representing NPS Common Shares to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the name of the Beneficiary
of the Exchangeable Shares so sold or in such names as such Beneficiary may
otherwise direct in writing without charge to the holder of the Exchangeable
Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none
of NPS, NPS - Allelix Inc. or the Trustee shall be required to pay) any
documentary, stamp, transfer or other taxes that may be payable in respect of
any transfer involved in the issuance or delivery of such shares to a person
other than such Beneficiary or (b) shall have evidenced to the satisfaction of
the Trustee, NPS and NPS - Allelix Inc. that such taxes, if any, have been paid.
9.9 Notice of Insolvency Event
As soon as practicable following the occurrence of an Insolvency Event
or any event that with the giving of notice or the passage of time or both would
be an Insolvency Event, NPS - Allelix Inc. and NPS shall give written notice
thereof to the Trustee. As soon as practicable following the receipt of notice
from NPS - Allelix Inc. and NPS of the occurrence of an Insolvency Event, or
upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail to
each Beneficiary, at the expense of NPS (such funds to be received in advance),
a notice of such Insolvency Event in the form provided by NPS, which notice
shall contain a brief statement of the rights of the Beneficiaries with respect
to the Exchange Right.
9.10 Qualification of NPS Common Shares
NPS covenants that if any NPS Common Shares to be issued and delivered
pursuant to the Exchange Right or the Automatic Exchange Rights require
registration or qualification with or approval of or the filing of any document,
including any prospectus or similar document, or the taking of any proceeding
with or the obtaining of any order, ruling or consent from any governmental or
regulatory authority under any Canadian or United States federal, provincial or
state law or regulation or pursuant to the rules and regulations of any
regulatory authority or the fulfillment of any other Canadian or United States
federal, provincial or state legal requirement before such shares may be issued
and delivered by NPS to the initial holder thereof or in order that such shares
may be freely traded thereafter (other than any restrictions of general
application on transfer by reason of a holder being a "control person" of NPS
for purposes of Canadian provincial securities law or an "affiliate" of NPS for
purposes of United States federal or state securities law), NPS will in good
faith expeditiously take all such actions and do all such things as are
necessary or desirable to cause such NPS Common Shares to be and remain duly
registered, qualified or approved. NPS will in good faith expeditiously take all
such actions and do all such things as are reasonably necessary or desirable to
cause all NPS Common Shares to be delivered pursuant to the Exchange Right or
the Automatic Exchange Rights to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which outstanding NPS Common Shares
have been listed by NPS and remain listed and are quoted or posted for trading
at such time.
9.11 NPS Common Shares
NPS hereby represents, warrants and covenants that the NPS Common
Shares issuable as described herein will be duly authorized and validly issued
as fully paid and non-assessable and shall be free and clear of any lien, claim
or encumbrance.
9.12 Automatic Exchange on Liquidation of NPS
(a) NPS will give the Trustee written notice of each of the following
events at the time set forth below:
(i) in the event of any determination by the Board of Directors of
NPS to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to NPS or to effect any other
distribution of assets of NPS among its shareholders for the
purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) as soon as practicable following the earlier of (A) receipt by
NPS of notice of, and (B) NPS otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of NPS or to effect any other
distribution of assets of NPS among its shareholders for the
purpose of winding up its affairs, in each case where NPS has
failed to contest in good faith any such proceeding commenced in
respect of NPS within 30 days of becoming aware thereof.
(b) As soon as practicable following receipt by the Trustee from NPS of
notice of any event (a "Liquidation Event") contemplated by section
5.12 (a) (i) or 5.12 (a) (ii) above, the Trustee will give notice
thereof to the Beneficiaries. Such notice shall be provided to the
Trustee by NPS and shall include a brief description of the automatic
exchange of Exchangeable Shares for NPS Common Shares provided for in
section 5.12(c).
(c) In order that the Beneficiaries will be able to participate on a pro
rata basis with the holders of NPS Common Shares in the distribution
of assets of NPS in connection with a Liquidation Event, on the fifth
Business Day prior to the effective date (the "Liquidation Event
Effective Date") of a Liquidation Event all of the then outstanding
Exchangeable Shares shall be automatically exchanged for NPS Common
Shares. To effect such automatic exchange, NPS shall purchase on the
fifth Business Day prior to the Liquidation Event Effective Date each
Exchangeable Share then outstanding and held by Beneficiaries, and
each Beneficiary shall sell the Exchangeable Shares held by it at such
time, for a purchase price per share equal to (a) the Current Market
Price of a NPS Common
Share on the fifth Business Day prior to the Liquidation Event
Effective Date, which shall be satisfied in full by NPS issuing to the
Beneficiary one NPS Common Share, and (b) to the extent not paid by
NPS - Allelix Inc., an additional amount equivalent to the full amount
of all declared and unpaid dividends on each such Exchangeable Share
held by such holder on any dividend record date which occurred prior
to the date of the exchange. NPS shall provide the Trustee with an
Officer's Certificate in connection with each automatic exchange
setting forth the calculation of the purchase price for each
Exchangeable Share.
(d) On the fifth Business Day prior to the Liquidation Event Effective
Date, the closing of the transaction of purchase and sale contemplated
by the automatic exchange of Exchangeable Shares for NPS Common Shares
shall be deemed to have occurred, and each Beneficiary shall be deemed
to have transferred to NPS all of the Beneficiary's right, title and
interest in and to such Beneficiary's Exchangeable Shares and any
right to receive declared and unpaid dividends from NPS - Allelix Inc.
and the related interest in the Trust Estate and shall cease to be a
holder of such Exchangeable Shares and NPS shall issue to the
Beneficiary the NPS Common Shares issuable upon the automatic exchange
of Exchangeable Shares for NPS Common Shares and on the applicable
payment date shall deliver to the Trustee for delivery to the
Beneficiary a cheque for the balance, if any, of the total purchase
price for such Exchangeable Shares without interest but less any
amounts withheld pursuant to section 5.13. Concurrently with such
Beneficiary ceasing to be a holder of Exchangeable Shares, the
Beneficiary shall be considered and deemed for all purposes to be the
holder of the NPS Common Shares issued pursuant to the automatic
exchange of Exchangeable Shares for NPS Common Shares and the
certificates held by the Beneficiary previously representing the
Exchangeable Shares exchanged by the Beneficiary with NPS pursuant to
such automatic exchange shall thereafter be deemed to represent NPS
Common Shares issued to the Beneficiary by NPS pursuant to such
automatic exchange. Upon the request of a Beneficiary and the
surrender by the Beneficiary of Exchangeable Share certificates deemed
to represent NPS Common Shares, duly endorsed in blank and accompanied
by such instruments of transfer as NPS may reasonably require, NPS
shall deliver or cause to be delivered to the Beneficiary certificates
representing NPS Common Shares of which the Beneficiary is the holder.
9.13 Withholding Rights
NPS, NPS - Allelix Inc. and the Trustee shall be entitled to deduct
and withhold from any consideration otherwise payable under this Agreement to
any holder of Exchangeable Shares or NPS Common Shares such amounts as NPS, NPS
- Allelix Inc. or the Trustee is required or permitted to deduct and withhold
with respect to such payment under the Income Tax Act (Canada), the United
States Internal Revenue Code of 1986 or any provision of provincial, state,
local or foreign tax law, in each case as amended or succeeded. The Trustee may
act on the advice of counsel with respect to such matters. To the extent that
amounts are so withheld, such
withheld amounts shall be treated for all purposes as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds the
cash portion of the consideration otherwise payable to the holder, NPS, NPS -
Allelix Inc. and the Trustee are hereby authorized to sell or otherwise dispose
of such portion of the consideration as is necessary to provide sufficient funds
to NPS, NPS - Allelix Inc. or the Trustee, as the case may be, to enable it to
comply with such deduction or withholding requirement and NPS, NPS - Allelix
Inc. or the Trustee shall notify the holder thereof and remit to such holder any
unapplied balance of the net proceeds of such sale. NPS represents and warrants
that, based upon facts currently known to it, it has no current intention, as at
the date of this Agreement, to deduct or withhold from any dividend paid to
holders of Exchangeable Shares any amounts under the United States Internal
Revenue Code of 1986.
ARTICLE 10
RESTRICTIONS ON ISSUE OF NPS SPECIAL VOTING STOCK
10.1 Issue of Additional Shares
During the term of this Agreement, NPS will not, without the consent
of the holders at the relevant time of Exchangeable Shares, given in accordance
with section 10.2 of the Share Provisions, issue any shares of its Special
Voting Preferred Stock in the same series as NPS Special Voting Share.
ARTICLE 11
CONCERNING THE TRUSTEE
11.1 Powers and Duties of the Trustee
The rights, powers, duties and authorities of the Trustee under this
Agreement, in its capacity as Trustee of the Trust, shall include:
(a) receipt and deposit of the NPS Special Voting Share from NPS as
Trustee for and on behalf of the Beneficiaries in accordance with the
provisions of this Agreement;
(b) granting proxies and distributing materials to Beneficiaries as
provided in this Agreement;
(c) voting the Beneficiary Votes in accordance with the provisions of this
Agreement;
(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from NPS as Trustee for and on behalf of the Beneficiaries in
accordance with the provisions of this Agreement;
(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the
provisions of this Agreement, and in connection therewith receiving
from Beneficiaries Exchangeable Shares and other requisite documents
and distributing to such Beneficiaries NPS Common Shares and cheques,
if any, to which such Beneficiaries are entitled upon the exercise of
the Exchange Right or pursuant to the Automatic Exchange Rights, as
the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the Trust
Estate as provided in this Agreement;
(h) taking action on its own initiative or at the direction of a
Beneficiary or Beneficiaries to enforce the obligations of NPS and
NPS - Allelix Inc. under this Agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers, duties and authorities the
Trustee shall have (and is granted) such incidental and additional rights,
powers, duties and authority not in conflict with any of the provisions of this
Agreement as the Trustee, acting in good faith and in the reasonable exercise of
its discretion, may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary rights, powers, duties
and authorities by the Trustee shall be final, conclusive and binding upon all
persons.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and with a view to the best
interests of the Beneficiaries and shall exercise the care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances.
The Trustee shall not be bound to give notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall be specifically required to do so under the terms hereof; nor
shall the Trustee be required to take any notice of, or to do, or to take any
act, action or proceeding as a result of any default or breach of any provision
hereunder, unless and until notified in writing of such default or breach, which
notices shall distinctly specify the default or breach desired to be brought to
the attention of the Trustee, and in the absence of such notice the Trustee may
for all purposes of this Agreement conclusively assume that no default or breach
has been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
11.2 No Conflict of Interest
The Trustee represents to NPS and NPS - Allelix Inc. that at the date
of execution and delivery of this Agreement there exists no material conflict of
interest in the role of the Trustee as a fiduciary hereunder and the role of the
Trustee in any other capacity. The Trustee shall, within 90 days after it
becomes aware that such material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Article 10. If, notwithstanding the foregoing provisions of this
section 7.2, the Trustee has such a material conflict of interest, the validity
and enforceability of this Agreement shall not be affected in any manner
whatsoever by reason only of the existence of such material conflict of
interest. If the Trustee contravenes the foregoing provisions of this section
7.2, any interested party may apply to the Ontario Superior Court of Justice for
an order that the Trustee be replaced as Trustee hereunder.
11.3 Dealings with Transfer Agents, Registrars, etc.
NPS and NPS - Allelix Inc. irrevocably authorize the Trustee, from
time to time, to:
(a) consult, communicate and otherwise deal with the respective registrars
and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and NPS Common Shares; and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under this Agreement and
(ii) from the transfer agent of NPS Common Shares, and any subsequent
transfer agent of such shares, the share certificates issuable upon
the exercise from time to time of the Exchange Right and pursuant to
the Automatic Exchange Rights.
NPS and NPS - Allelix Inc. irrevocably authorize their respective
registrars and transfer agents to comply with all such requests. NPS covenants
that it will supply its transfer agent with duly executed share certificates for
the purpose of completing the exercise from time to time of the Exchange Right
and the Automatic Exchange Rights.
11.4 Books and Records
The Trustee shall keep available for inspection by NPS and NPS -
Allelix Inc. at the Trustee's principal office in Toronto correct and complete
books and records of account relating to the Trust created by this Agreement,
including without limitation, all relevant data relating to mailings and
instructions to and from Beneficiaries and all transactions pursuant to the
Exchange Right and the Automatic Exchange Rights. On or before January 15, 2000,
and on or before January 15th in every year thereafter, so long as the NPS
Special Voting Share is on deposit with the Trustee, the Trustee shall transmit
to NPS and NPS - Allelix Inc. a brief report, dated as of the preceding December
31/st/, with respect to:
(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on
behalf of Beneficiaries in consideration of the issuance by NPS of NPS
Common Shares in connection with the Exchange Right, during the
calendar year ended on such December 31st; and
(c) any action taken by the Trustee in the performance of its duties under
this Agreement which it had not previously reported and which, in the
Trustee's opinion, materially affects the Trust Estate.
11.5 Income Tax Returns and Reports
The Trustee shall, to the extent necessary, prepare and file on behalf
of the Trust appropriate United States and Canadian income tax returns and any
other returns or reports as may be required by applicable law or pursuant to the
rules and regulations of any securities exchange or other trading system through
which the Exchangeable Shares are traded. In connection therewith, the Trustee
may obtain the advice and assistance of such experts or advisors as the Trustee
considers necessary or advisable (who may be experts or advisors to NPS or NPS -
Allelix Inc.). If requested by the Trustee, NPS or NPS - Allelix Inc. shall
retain qualified experts or advisors for the purpose of providing such tax
advice or assistance.
11.6 Indemnification Prior to Certain Actions by Trustee
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this Agreement at the request, order or direction of
any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable
funding, security or indemnity against the costs, expenses and liabilities which
may be incurred by the Trustee therein or thereby, provided that no Beneficiary
shall be obligated to furnish to the Trustee any such security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the NPS Special Voting Share pursuant to Article
4, subject to section 7.15, and with respect to the Exchange Right pursuant to
Article 5, subject to section 7.15, and with respect to the Automatic Exchange
Rights pursuant to Article 5.
None of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties, or authorities unless
funded, given security and indemnified as aforesaid.
11.7 Action of Beneficiaries
No Beneficiary shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this Agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Beneficiary has requested the Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with the
funding, security or indemnity referred to in section 7.6 and the Trustee shall
have failed to act
within a reasonable time thereafter. In such case, but not otherwise, the
Beneficiary shall be entitled to take proceedings in any court of competent
jurisdiction such as the Trustee might have taken; it being understood and
intended that no one or more Beneficiaries shall have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby created by any such
action, or to enforce any right hereunder or the Voting Rights, the Exchange
Rights or the Automatic Exchange Rights except subject to the conditions and in
the manner herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and maintained by
the Trustee, except only as herein provided, and in any event for the equal
benefit of all Beneficiaries.
11.8 Reliance Upon Declarations
The Trustee shall not be considered to be in contravention of any of
its rights, powers, duties and authorities hereunder if, when required, it acts
and relies in good faith upon statutory declarations, certificates, opinions or
reports furnished pursuant to the provisions hereof or required by the Trustee
to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such statutory declarations, certificates, opinions or
reports comply with the provisions of section 7.9, if applicable, and with any
other applicable provisions of this Agreement.
11.9 Evidence and Authority to Trustee
NPS and/or NPS - Allelix Inc. shall furnish to the Trustee evidence of
compliance with the conditions provided for in this Agreement relating to any
action or step required or permitted to be taken by NPS and/or NPS - Allelix
Inc. or the Trustee under this Agreement or as a result of any obligation
imposed under this Agreement, including, without limitation, in respect of the
Voting Rights or the Exchange Right or the Automatic Exchange Rights and the
taking of any other action to be taken by the Trustee at the request of or on
the application of NPS and/or NPS - Allelix Inc. promptly if and when:
(a) such evidence is required by any other section of this Agreement to be
furnished to the Trustee in accordance with the terms of this section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives NPS and/or NPS - Allelix Inc. written
notice requiring it to furnish such evidence in relation to any particular
action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of NPS and/or
NPS - Allelix Inc. or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this Agreement.
Whenever such evidence relates to a matter other than the Voting
Rights or the Exchange Right or the Automatic Exchange Rights or the taking of
any other action to be taken
by the Trustee at the request or on the application of NPS and/or NPS - Allelix
Inc., and except as otherwise specifically provided herein, such evidence may
consist of a report or opinion of any solicitor, attorney, auditor, accountant,
appraiser, valuer, engineer or other expert or any other person whose
qualifications give authority to a statement made by him, provided that if such
report or opinion is furnished by a director, officer or employee of NPS and/or
NPS - Allelix Inc. it shall be in the form of an Officer's Certificate or a
statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition provided for
in this Agreement shall include a statement by the person giving the evidence:
(c) declaring that he has read and understands the provisions of this
Agreement relating to the condition in question;
(d) describing the nature and scope of the examination or investigation
upon which he based the statutory declaration, certificate, statement
or opinion; and
(e) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give the
opinions contained or expressed therein.
11.10 Experts, Advisers and Agents
The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice of
or information obtained from any solicitor, attorney, auditor,
accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by NPS and/or NPS - Allelix Inc. or
otherwise, and may retain or employ such assistants as may be
necessary to the proper discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services
performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge of the
trusts hereof and compensation for all disbursements, costs and
expenses made or incurred by it in the discharge of its duties
hereunder and in the management of the Trust.
11.11 Investment of Moneys Held by Trustee
Unless otherwise provided in this Agreement, any moneys held by or on
behalf of the Trustee which under the terms of this Agreement may or ought to be
invested or which may
be on deposit with the Trustee or which may be in the hands of the Trustee may
be invested and reinvested in the name or under the control of the Trustee, in
trust for NPS - Allelix Inc., in securities in which, under the laws of the
Province of Ontario, trustees are authorized to invest trust moneys, provided
that such securities are stated to mature within two years after their purchase
by the Trustee, and the Trustee shall so invest such moneys on the written
direction of NPS - Allelix Inc.. Pending the investment of any moneys as
hereinbefore provided, such moneys may be deposited in the name of the Trustee
in any chartered bank in Canada or, with the consent of NPS -Allelix Inc., in
the deposit department of the Trustee or any other loan or trust company
authorized to accept deposits under the laws of Canada or any province thereof
at the rate of interest then current on similar deposits.
11.12 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts, rights, duties, powers and authorities
of this Agreement or otherwise in respect of the premises.
11.13 Trustee Not Bound to Act on Request
Except as in this Agreement otherwise specifically provided, the
Trustee shall not be bound to act in accordance with any direction or request of
NPS and/or NPS - Allelix Inc. or of the directors thereof until a duly
authenticated copy of the instrument or resolution containing such direction or
request shall have been delivered to the Trustee, and the Trustee shall be
empowered to act upon any such copy purporting to be authenticated and believed
by the Trustee to be genuine.
11.14 Authority to Carry on Business
The Trustee represents to NPS and NPS - Allelix Inc. that at the date
of execution and delivery by it of this Agreement it is authorized to carry on
the business of a trust company in each of the Provinces of Canada but if,
notwithstanding the provisions of this section 7.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this
Agreement and the Voting Rights, the Exchange Right and the Automatic Exchange
Rights shall not be affected in any manner whatsoever by reason only of such
event but the Trustee shall, within 90 days after ceasing to be authorized to
carry on the business of a trust company in any Province of Canada, either
become so authorized or resign in the manner and with the effect specified in
Article 10.
11.15 Conflicting Claims
If conflicting claims or demands are made or asserted with respect to
any interest of any Beneficiary in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficiary in any
Exchangeable Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse
to recognize or to comply with any such claims or demands. In so refusing, the
Trustee may elect not to exercise any Voting Rights, Exchange Rights or
Automatic Exchange Rights subject to such conflicting claims or demands and, in
so doing, the Trustee shall not be or become liable to any person on account of
such election or its failure or refusal to comply with any such conflicting
claims or demands. The Trustee shall be entitled to continue to refrain from
acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting Rights,
Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands have been adjudicated by a final
judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right or
Automatic Exchange Rights subject to such conflicting claims or
demands have been conclusively settled by a valid written agreement
binding on all such adverse claimants, and the Trustee shall have been
furnished with an executed copy of such agreement certified to be in
full force and effect.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate to fully indemnify it as between all
conflicting claims or demands.
11.16 Acceptance of Trust
The Trustee hereby accepts the Trust created and provided for by and
in this Agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Beneficiaries, subject to all the terms and conditions herein set forth.
ARTICLE 12
COMPENSATION
12.1 Fees and Expenses of the Trustee
NPS and NPS - Allelix Inc. jointly and severally agree to pay the
Trustee reasonable compensation for all of the services rendered by it under
this Agreement and will reimburse the Trustee for all reasonable expenses
(including, but not limited to, taxes other than taxes based on the net income
of the Trustee, fees paid to legal counsel and other experts and advisors and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency reasonably incurred by the Trustee in connection with its duties under
this Agreement; provided that NPS
and NPS - Allelix Inc. shall have no obligation to reimburse the Trustee for any
expenses or disbursements paid, incurred or suffered by the Trustee in any suit
or litigation in which the Trustee is determined to have acted in bad faith or
with negligence, recklessness or wilful misconduct.
ARTICLE 13
INDEMNIFICATION AND LIMITATION OF LIABILITY
13.1 Indemnification of the Trustee
NPS and NPS - Allelix Inc. jointly and severally agree to indemnify
and hold harmless the Trustee and each of its directors, officers, employees and
agents appointed and acting in accordance with this Agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, reasonable costs,
penalties, fines and reasonable expenses (including reasonable expenses of the
Trustee's legal counsel) which, without fraud, negligence, recklessness, wilful
misconduct or bad faith on the part of such Indemnified Party, may be paid,
incurred or suffered by the Indemnified Party by reason or as a result of the
Trustee's acceptance or administration of the Trust, its compliance with its
duties set forth in this Agreement, or any written or oral instruction delivered
to the Trustee by NPS or NPS - Allelix Inc. pursuant hereto.
In no case shall NPS or NPS - Allelix Inc. be liable under this
indemnity for any claim against any of the Indemnified Parties unless NPS and
NPS - Allelix Inc. shall be notified by the Trustee of the written assertion of
a claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other first
legal process giving information as to the nature and basis of the claim.
Subject to (ii) below, NPS and NPS - Allelix Inc. shall be entitled to
participate at their own expense in the defence and, if NPS and NPS - Allelix
Inc. so elect at any time after receipt of such notice, either of them may
assume the defence of any suit brought to enforce any such claim. The Trustee
shall have the right to employ separate counsel in any such suit and participate
in the defence thereof, but the fees and expenses of such counsel shall be at
the expense of the Trustee unless: (i) the employment of such counsel has been
authorized by NPS or NPS - Allelix Inc.; or (ii) the named parties to any such
suit include both the Trustee and NPS or NPS - Allelix Inc. and the Trustee
shall have been advised by counsel acceptable to NPS or NPS - Allelix Inc. that
there may be one or more legal defences available to the Trustee that are
different from or in addition to those available to NPS or NPS - Allelix Inc.
and that, in the judgment of such counsel, would present a conflict of interest
were a joint representation to be undertaken (in which case NPS and NPS -
Allelix Inc. shall not have the right to assume the defence of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee). This indemnity shall survive the
termination of this Agreement and the resignation or removal of the Trustee.
13.2 Limitation of Liability
The Trustee shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this Agreement, except to the
extent that such loss is attributable to the fraud, negligence, recklessness,
wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 14
CHANGE OF TRUSTEE
14.1 Resignation
The Trustee, or any trustee hereafter appointed, may at any time
resign by giving written notice of such resignation to NPS and NPS - Allelix
Inc. specifying the date on which it desires to resign, provided that such
notice shall not be given less than thirty (30) days before such desired
resignation date unless NPS and NPS - Allelix Inc. otherwise agree and provided
further that such resignation shall not take effect until the date of the
appointment of a successor trustee and the acceptance of such appointment by the
successor trustee. Upon receiving such notice of resignation, NPS and NPS -
Allelix Inc. shall promptly appoint a successor trustee, which shall be a
corporation organized and existing under the laws of Canada and authorized to
carry on the business of a trust company in all provinces of Canada, by written
instrument in duplicate, one copy of which shall be delivered to the resigning
trustee and one copy to the successor trustee. Failing the appointment and
acceptance of a successor trustee, a successor trustee may be appointed by order
of a court of competent jurisdiction upon application of one or more of the
parties to this Agreement. If the retiring trustee is the party initiating an
application for the appointment of a successor trustee by order of a court of
competent jurisdiction, NPS and NPS - Allelix Inc. shall be jointly and
severally liable to reimburse the retiring trustee for its legal costs and
expenses in connection with same.
14.2 Removal
The Trustee, or any trustee hereafter appointed, may (provided a
successor trustee is appointed) be removed at any time on not less than 30 days'
prior notice by written instrument executed by NPS and NPS - Allelix Inc., in
duplicate, one copy of which shall be delivered to the trustee so removed and
one copy to the successor trustee.
14.3 Successor Trustee
Any successor trustee appointed as provided under this Agreement shall
execute, acknowledge and deliver to NPS and NPS - Allelix Inc. and to its
predecessor trustee an instrument accepting such appointment. Thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with the like effect as if originally named as
trustee in this Agreement. However, on the written request of NPS and NPS -
Allelix Inc. or of the successor trustee, the trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of this Agreement,
execute and deliver an instrument transferring to such successor trustee all the
rights and powers of the trustee so ceasing to act. Upon the request of any such
successor trustee, NPS, NPS - Allelix Inc. and such predecessor trustee shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights and powers.
14.4 Notice of Successor Trustee
Upon acceptance of appointment by a successor trustee as provided
herein, NPS and NPS - Allelix Inc. shall cause to be mailed notice of the
succession of such trustee hereunder to each Beneficiary specified in a List. If
NPS or NPS - Allelix Inc. shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of NPS and NPS -
Allelix Inc..
ARTICLE 15
NPS SUCCESSORS
15.1 Certain Requirements in Respect of Combination, etc.
NPS shall not consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of a
merger, of the continuing corporation resulting therefrom unless, but may do so
if:
(a) such other person or continuing corporation (herein called the "NPS
Successor"), by operation of law, becomes, without more, bound by the
terms and provisions of this Agreement or, if not so bound, executes,
prior to or contemporaneously with the consummation of such
transaction, a trust agreement supplemental hereto and such other
instruments (if any) as are satisfactory to the Trustee, acting
reasonably, and in the opinion of legal counsel to the Trustee are
reasonably necessary or advisable to evidence the assumption by the
NPS Successor of liability for all moneys payable and property
deliverable hereunder and the covenant of such NPS Successor to pay
and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of NPS under
this Agreement; and
(b) such transaction shall, to the satisfaction of the Trustee, acting
reasonably, and in the opinion of legal counsel to the Trustee, be
upon such terms and conditions as
substantially to preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the Trustee or of
the Beneficiaries hereunder.
15.2 Vesting of Powers in Successor
Whenever the conditions of section 11.1 have been duly observed and
performed, the Trustee, NPS Successor and NPS - Allelix Inc. shall, if required
by section 11.1, execute and deliver the supplemental trust agreement provided
for in Article 12 and thereupon NPS Successor shall possess and from time to
time may exercise each and every right and power of NPS under this Agreement in
the name of NPS or otherwise and any act or proceeding by any provision of this
Agreement required to be done or performed by the Board of Directors of NPS or
any officers of NPS may be done and performed with like force and effect by the
directors or officers of such NPS Successor.
15.3 Wholly-Owned Subsidiaries
Subject to section 4.12 of the Arrangement Agreement, nothing herein
shall be construed as preventing the amalgamation or merger of any wholly-owned
direct or indirect subsidiary of NPS with or into NPS or the winding-up,
liquidation or dissolution of any wholly-owned subsidiary of NPS provided that
all of the assets of such subsidiary are transferred to NPS or another wholly-
owned direct or indirect subsidiary of NPS and any such transactions are
expressly permitted by this Article 11.
ARTICLE 16
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
16.1 Amendments, Modifications, etc.
This Agreement may not be amended or modified except by an agreement
in writing executed by NPS, NPS - Allelix Inc. and the Trustee and approved by
the Beneficiaries in accordance with section 10.2 of the Share Provisions.
16.2 Ministerial Amendments
Notwithstanding the provisions of section 12.1, the parties to this
Agreement may in writing, at any time and from time to time, without the
approval of the Beneficiaries, amend or modify this Agreement for the purposes
of:
(a) adding to the covenants of any or all parties hereto for the
protection of the Beneficiaries hereunder provided that the Board of
Directors of each of NPS - Allelix Inc. and NPS shall be of the good
faith opinion that such additions will not be prejudicial to the
rights or interests of the Beneficiaries;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the
good faith opinion of the Board of Directors of each of NPS and NPS -
Allelix Inc. and in the opinion of the Trustee, having in mind the
best interests of the Beneficiaries it may be expedient to make,
provided that such Boards of Directors and the Trustee, acting on the
advice of counsel, shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the
Beneficiaries; or
(c) making such changes or corrections which, on the advice of counsel to
NPS, NPS - Allelix Inc. and the Trustee, are required for the purpose
of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided
that the Trustee, acting on the advice of counsel, and the Board of
Directors of each of NPS and NPS - Allelix Inc. shall be of the
opinion that such changes or corrections will not be prejudicial to
the rights and interests of the Beneficiaries.
16.3 Meeting to Consider Amendments
NPS - Allelix Inc., at the request of NPS, shall call a meeting or
meetings of the Beneficiaries for the purpose of considering any proposed
amendment or modification requiring approval pursuant hereto. Any such meeting
or meetings shall be called and held in accordance with the by-laws of NPS -
Allelix Inc., the Share Provisions and all applicable laws.
16.4 Changes in Capital of NPS and NPS - Allelix Inc.
At all times after the occurrence of any event contemplated pursuant
to section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of
which either NPS Common Shares or the Exchangeable Shares or both are in any way
changed, this Agreement shall forthwith be amended and modified as necessary in
order that it shall apply with full force and effect, mutatis mutandis, to all
new securities into which NPS Common Shares or the Exchangeable Shares or both
are so changed and the parties hereto shall execute and deliver a supplemental
trust agreement giving effect to and evidencing such necessary amendments and
modifications.
16.5 Execution of Supplemental Trust Agreements
No amendment to or modification or waiver of any of the provisions of
this Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time NPS - Allelix
Inc. (when authorized by a resolution of its Board of Directors), NPS (when
authorized by a resolution of its Board of Directors) and the Trustee may,
subject to the provisions of these presents, and they shall, when so directed by
these presents, execute and deliver by their proper officers, trust agreements
or other instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more of the following purposes:
(a) evidencing the succession of NPS Successors and the covenants of and
obligations assumed by each such NPS Successor in accordance with the
provisions of Article 11 and the successors of any successor trustee
in accordance with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange Right
or the Automatic Exchange Rights which, in the opinion of the Trustee,
will not be prejudicial to the interests of the Beneficiaries or are,
in the opinion of counsel to the Trustee, necessary or advisable in
order to incorporate, reflect or comply with any legislation the
provisions of which apply to NPS, NPS -Allelix Inc., the Trustee or
this Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including without limitation, to make or evidence any
amendment or modification to this Agreement as contemplated hereby,
provided that, in the opinion of the Trustee, the rights of the
Trustee and Beneficiaries will not be prejudiced thereby.
ARTICLE 17
TERMINATION
17.1 Term
The Trust created by this Agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of NPS and NPS - Allelix Inc. elects in writing to terminate the
Trust and such termination is approved by the Beneficiaries in
accordance with section 10.2 of the Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King ▇▇▇▇▇▇ VI of Canada and the United Kingdom of Great
Britain and Northern Ireland living on the date of the creation of the
Trust.
17. Survival of Agreement
This Agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a
Beneficiary; provided, however, that the provisions of Articles 8 and 9 shall
survive any such termination of this Agreement.
ARTICLE 18
GENERAL
18.1 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and the agreement
shall be carried out as nearly as possible in accordance with its original terms
and conditions.
18.2 Enurement
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns and to the
benefit of the Beneficiaries.
18.3 Notices to Parties
All notices and other communications between the parties hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for such party as shall be specified in like notice):
(a) if to NPS or NPS - Allelix Inc., at:
NPS Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: .
Telecopier No.: .
if to the Trustee, at:
. Trust Company
.
Attention: Vice President, Client Services
Telecopier No.:
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
18.4 Notice to Beneficiaries
Any and all notices to be given and any documents to be sent to any
Beneficiaries may be given or sent to the address of such Beneficiary shown on
the register of holders of Exchangeable Shares in any manner permitted by the
by-laws of NPS - Allelix Inc. from time to time in force in respect of notices
to shareholders and shall be deemed to be received (if given or sent in such
manner) at the time specified in such by-laws, the provisions of which by-laws
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
Beneficiaries.
18.5 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
18.6 Jurisdiction
This Agreement shall be construed and enforced in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
18.7 Attornment
Each of the Trustee, NPS and NPS - Allelix Inc. agrees that any action
or proceeding arising out of or relating to this Agreement may be instituted in
the courts of the Province of Ontario, waives any objection which it may have
now or hereafter to the venue of any such action or proceeding, irrevocably
submits to the jurisdiction of the said courts in any such action or proceeding,
agrees to be bound by any judgment of the said courts and not to seek, and
hereby waives, any review of the merits of any such judgment by the courts of
any other jurisdiction and NPS hereby appoints NPS - Allelix Inc. at its
registered office in the Province of Ontario as attorney for service of process.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NPS PHARMACEUTICALS, INC.
By:___________________________
Name:
Title:
NPS - ALLELIX INC.
By:___________________________
Name:
Title:
. TRUST COMPANY
By:___________________________
Name:
Title:
By:___________________________
Name:
Title: