UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2016
Commission File Number: 001-36596
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TRILLIUM THERAPEUTICS INC.
(Translation of registrant's name into English)
96 Skyway Avenue
Toronto, Ontario M9W 4Y9
Canada
(Address of principal executive offices)
___________________
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ ] Form
40-F [X]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1)[ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7)[ ]
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
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Trillium Therapeutics Inc. |
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Date: February 5, 2016 |
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By: /s/ James
Parsons
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Name: James Parsons |
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Title: Chief Financial Officer
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EXHIBIT INDEX
Confidential
SHARE PURCHASE AGREEMENT
among:
TRILLIUM THERAPEUTICS
INC.,
an Ontario corporation
FLUORINOV PHARMA
INC.,
an Ontario corporation
and
the SHAREHOLDERS
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Dated as of January 26, 2016 |
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TABLE OF CONTENTS
1. |
DESCRIPTION OF TRANSACTION AND PAYMENT MECHANICS |
2 |
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1.1 |
Closing; Closing Date |
2 |
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1.2 |
The Purchase and
Sale |
2 |
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1.3 |
Pre-Closing Statement. |
2 |
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1.4 |
Purchase Price and
other Payments Payable Hereunder |
3 |
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1.5 |
Working Capital Adjustment |
4 |
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1.6 |
Purchase Price
Adjustment |
6 |
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1.7 |
Secondary Payment |
6 |
2. |
FUTURE
MILESTONE PAYMENT |
7 |
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2.1 |
Milestone Payment |
7 |
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2.2 |
Obligations to
Continue |
7 |
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2.3 |
CNS Assets |
7 |
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2.4 |
Purchaser's
Determination |
8 |
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2.5 |
Withholding |
8 |
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2.6 |
Further Action |
9 |
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2.7 |
Payments in Securities |
9 |
3. |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
9 |
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3.1 |
Due Organization; Subsidiaries; Etc.
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9 |
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3.2 |
Charter Documents;
Records |
10 |
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3.3 |
Capitalization |
10 |
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3.4 |
Financial Statements
and Related Information |
11 |
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3.5 |
Liabilities |
11 |
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3.6 |
Absence of Changes
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12 |
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3.7 |
Title to Assets |
13 |
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3.8 |
Bank Accounts |
13 |
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3.9 |
Intellectual Property |
14 |
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3.10 |
Contracts |
17 |
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3.11 |
Compliance with Legal Requirements
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20 |
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3.12 |
Governmental
Authorizations; No Subsidies |
20 |
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3.13 |
Tax Matters |
20 |
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3.14 |
Employee and Labour
Matters; Benefit Plans |
22 |
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3.16 |
Insurance |
23 |
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3.17 |
Related Party
Transactions |
23 |
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3.18 |
Legal Proceedings; Orders |
24 |
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3.19 |
Authority; Binding
Nature of Agreement |
24
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TABLE OF CONTENTS
(Continued)
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3.20 |
Non-Contravention; Consents |
25 |
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3.21 |
Brokers |
25 |
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3.22 |
Full Disclosure |
26 |
4. |
REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDERS |
26 |
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4.1 |
Ownership of Shares |
26 |
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4.2 |
Absence of Claims by the
Shareholders |
26 |
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4.3 |
Legal Proceedings |
27 |
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4.4 |
Authority |
27 |
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4.5 |
No Conflict |
27 |
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4.6 |
Canadian Resident |
28 |
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4.7 |
Bankruptcy |
28 |
5. |
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER |
28 |
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5.1 |
Due Organization |
28 |
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5.2 |
Non-Contravention; Consents |
28 |
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5.3 |
Authority; Binding Nature of Agreement |
29 |
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5.4 |
Legal Proceedings |
29 |
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5.5 |
Reporting Issuer |
29 |
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5.6 |
Canadian Residency |
29 |
6. |
CERTAIN COVENANTS OF THE PARTIES |
29 |
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6.1 |
Filings and Consents |
29 |
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6.2 |
Confidentiality |
32 |
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6.3 |
Public Announcements |
32 |
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6.4 |
Termination of Shareholders Agreement |
32 |
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6.5 |
Tax Allocation and Elections
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33 |
7. |
INDEMNIFICATION, ETC. |
33 |
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7.1 |
Survival of Representations,
Etc. |
33 |
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7.2 |
Indemnification |
35 |
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7.3 |
Limitations |
36 |
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7.4 |
No Contribution |
37 |
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7.5 |
Claim Procedures |
37 |
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7.6 |
Defense of Third Party Claims |
38 |
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7.7 |
Setoff |
39 |
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7.8 |
Exclusive Remedy |
39 |
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7.9 |
Tax Effect of Indemnification
Payment |
39 |
(ii)
TABLE OF CONTENTS
(Continued)
8. |
MISCELLANEOUS PROVISIONS |
39 |
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8.1 |
Further Assurances |
40 |
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8.2 |
Fees and Expenses |
40 |
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8.3 |
Attorneys' Fees |
40 |
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8.4 |
Notices |
40 |
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8.5 |
Headings |
41 |
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8.6 |
Counterparts and Exchanges by Electronic
Transmission or Facsimile |
41 |
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8.7 |
Governing Law; Dispute
Resolution |
41 |
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8.8 |
Successors and Assigns |
42 |
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8.9 |
Remedies Cumulative; Specific
Performance |
43 |
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8.10 |
Waiver |
43 |
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8.11 |
Amendments |
43 |
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8.12 |
Severability |
43 |
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8.13 |
Parties in Interest |
43 |
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8.14 |
Entire Agreement |
44 |
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8.15 |
Disclosure Schedule |
44 |
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8.16 |
Construction |
44 |
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8.17 |
Advice of Counsel. |
45 |
(iii)
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of January 26, 2016, by
and among: TRILLIUM THERAPEUTICS INC., an Ontario corporation
("Purchaser"); FLUORINOV PHARMA INC., an Ontario
corporation (the "Company"); and each of the shareholders of the Company
listed on the signature pages hereto (the "Shareholders"). Certain other
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. The Shareholders
beneficially own and control all of the issued and outstanding shares in the
capital of the Company.
B. Immediately
prior to the execution and delivery of this Agreement, all holders of options to
acquire shares in the capital of the Company have exercised their options and
have acquired Shares.
C. Prior to the
execution and delivery of this Agreement, all other convertible securities of
the Company have converted such securities into Shares.
D. The Shareholders have
agreed to sell to Purchaser and Purchaser has agreed to purchase from the
Shareholders all of the issued and outstanding shares in the capital of the
Company, on the terms and subject to the conditions set out in this Agreement.
E. Upon completion of the
transactions contemplated herein, Purchaser will be the sole owner of all of the
issued and outstanding securities of the Company.
F. Concurrently with the
execution and delivery of this Agreement and as a condition to Purchaser's
willingness to enter into and complete the transactions contemplated by this
Agreement:
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a) |
Abdelmalik Slassi (being one of the Shareholders) is
entering into: |
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(i) |
a general release agreement; |
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(ii) |
a non-competition, non-solicitation and confidentiality
agreement in favour of the Company and Purchaser; |
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(iii) |
an employment, non-competition, non-solicitation and
confidentiality agreement with Purchaser; and |
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(iv) |
a lock-up agreement with the Purchaser relating to the
shares of Purchaser being received by such Shareholder pursuant to this
Agreement and the Royalty Agreement; |
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b) |
each of the other Shareholders is executing and
delivering to the Company and Purchaser: |
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(i) |
a general release agreement; and |
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(ii) |
a non-solicitation and confidentiality agreement in
favour of the Company and Purchaser; and |
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c) |
the Parties hereto are entering into a royalty agreement
(the "Royalty Agreement"). |
AGREEMENT
The Parties to this Agreement agree as
follows:
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1. |
DESCRIPTION OF TRANSACTION AND PAYMENT
MECHANICS |
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1.1 |
Closing; Closing Date. |
The consummation of the purchase by the Purchaser and the sale
by the Shareholders of all of the Shares of the Company contemplated by this
Agreement and the other transactions contemplated herein (the "Closing")
shall be deemed to have taken place on the date of this Agreement (the
"Closing Date").
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1.2 |
The Purchase and Sale. |
Upon and subject to the terms and conditions of this Agreement,
each of the Shareholders hereby severally sells, assigns and transfers (or
causes to be sold, assigned and transferred) to the Purchaser all of the Shares
owned by each of them, respectively, free and clear of all Encumbrances, and the
Purchaser hereby purchases and takes ownership of such Shares from each of the
Shareholders, for the consideration set forth herein, and paid or to be paid in
accordance with, Section 1.4 (such sale, assignment, transfer, delivery,
purchase, and payments the "Share Purchase"). Each of the Shareholders
has concurrently with the execution of this Agreement transferred and delivered
to Purchaser share certificates representing the Shares held by such
Shareholders, duly endorsed in blank for transfer or with an executed stock
transfer power of attorney, and shall take any other steps as may be necessary
to cause the Company to enter the Purchaser or its nominee(s) upon the share
register of the Company as the sole holder of all of the Shares and to issue one
or more share certificates to Purchaser or its nominee(s) representing the
Shares.
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1.3 |
Pre-Closing Statement. |
(a) Attached hereto as Exhibit 1.3 is
an unaudited statement (the Pre-Closing Statement), which sets forth
(a) the Shareholders good faith calculation of the Working Capital at the
Closing Date (the Estimated Working Capital) and (b) the amount of the
Companys debts outstanding as of the Closing Date (immediately prior to the
Closing), prepared in accordance with the applicable terms and provisions of
this Agreement.
(b) For greater certainty, for the
purposes of calculating the Working Capital herein:
(i) any Liabilities denominated in
other than Canadian dollars shall be converted into Canadian dollars based upon
the closing Bank of Canada exchange rate on the Closing Date to purchase such
foreign currency;
(ii) there shall be an accrual for amounts
not yet paid but owing or accrued as of the Closing Date for:
(A) vacation pay for all employees of
the Company;
(B) withholding Taxes payable;
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(C) interest and penalties related to
any Tax filings which were required to have been made; and
(D) Liabilities of the Company for
employee health tax and to the Workplace Safety and Insurance Board.
(c) In the event that there are any
other Liabilities of the Company at the date hereof which are not provided for
in the Pre-Closing Statement attached as Exhibit 1.3 which the Company agrees in
writing are Liabilities of the Company at the date hereof, then such additional
Liabilities will be deemed to be on the Pre-Closing Statement and shall be
included in the calculation of the Estimated Working Capital.
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1.4 |
Purchase Price and other Payments Payable
Hereunder. |
(a) Subject to Sections 1.6 and 2.5,
upon and subject to the terms and conditions of this Agreement, the aggregate
consideration payable by or on behalf of Purchaser to the Shareholders in
respect of the purchase of all of the Shares (the "Purchase Price") is
the fair market value of the Shares, which the Parties agree is the amount
resulting from:
(i) $9,750,000;
(ii) minus, the amount, if any,
by which the Closing Working Capital is less than zero or plus, the
amount, if any, by which the Closing Working Capital is greater than zero;
(iii) plus, the Secondary Payment;
(iv) plus, the Milestone Payment;
it
being understood that the Milestone Payment relates to the underlying goodwill
of the Company, the value of which cannot reasonably be ascertained at the date
hereof.
(b) For greater certainty, if the
Milestone Payment does not become payable in accordance with the terms and
conditions of this Agreement prior the end of the fifth (5th) year
after the end of the taxation year of the Company triggered as a result of
Closing, Purchaser's obligations to make such payment shall cease and Purchaser
shall be relieved of its obligations hereunder in respect of such payment.
(c) Subject to the specific provisions
of Section 1.7 and Section 6.1(g) with respect to the Secondary Payment and
Article 2 with respect to the Milestone Payment, the Purchaser shall satisfy
payment of the Purchase Price to the Shareholders as follows:
(i) In the case of the Closing
Transaction Consideration, concurrently with the execution of this Agreement, by
wire transfer or automated clearing house direct payment to each of the
Shareholders bank accounts located in Canada or the United States designated in
writing, of their share of the Closing Transaction Consideration, in accordance
with the relative weighting and account instructions and set forth in the
consideration allocation spreadsheet attached as Exhibit 1.4(c) (the
"Consideration Allocation Spreadsheet"), provided that, any payment
required to be made by the Purchaser to a Shareholder that is less than $200,000
may be made by the Purchaser by delivery of a certified cheque to such
Shareholder.
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(ii) In the case of Section
1.4(a)(iii), but subject to Section 6.1(g), within ten (10) Business Days of
receipt by the Company of the R&D Credits, automated clearing house direct
payment to each of the Shareholders bank accounts located in Canada or the
United States designated in writing, of their share of the Secondary Payment, in
accordance with the Consideration Allocation Spreadsheet, provided that, any
payment required to be made by the Purchaser to a Shareholder that is less than
$200,000 may be made by the Purchaser by delivery of a certified cheque to such
Shareholder.
(iii) In the case of Section 1.4(a)(iv)
(but subject to the provisions of Section 1.4(b)), (A) automated clearing house
direct payment to each of the Shareholders bank accounts located in Canada or
the United States designated in writing, of their share of the Milestone
Payment, in accordance with the Consideration Allocation Spreadsheet, and (B)
delivery to each of the Shareholders their proportionate number of common shares
of the Purchaser, certificated in the name of the relevant Shareholder or
nominee, duly issued and authorized, in accordance with the respective
entitlements and instructions set out in the Consideration Allocation
Spreadsheet.
(d) Notwithstanding the provisions of
Section 1.4(c) or any other provision of this Agreement, to the extent that the
Consideration Allocation Spreadsheet provides that certain amounts are to be
paid or distributed prior to any distribution being made to the Shareholders,
the Shareholders shall only be entitled to receive their share of any such
payment after provision for such payments being made (including after provision
for reducing the amount by any amount of Taxes required to be withheld from the
recipient either in the recipients capacity as a shareholder or employee (or
former employee) of the Company).
(e) The amount of cash and/or shares of
the Purchaser, and any combination thereof, that each Shareholder is entitled to
receive hereunder (based upon the aggregate amount payable to the Shareholders),
whether under Sections 1.4, 1.7 or 2.1 for the Shares held by such Shareholder
shall be rounded down to the nearest whole number based upon the Shareholder's
respective entitlement as set out in the Consideration Allocation Spreadsheet,
and any remaining value shall be paid in cash.
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1.5 |
Working Capital
Adjustment. |
(a) As soon as possible, but not later
than ninety (90) days, following the Closing Date, Purchaser shall prepare and
deliver to the Shareholders the following (collectively, the "Closing
Statements"):
(i) unaudited financial statements for
the Company for the year ended December 31, 2015 and for the period from January
1, 2016 to the Closing Date and as at the Closing Date prepared in accordance
with GAAP (the "Closing Financial Statements") (which Closing Financial
Statements shall, for greater certainty, accrue for all Company Transaction
Expenses and Change of Control Payments, if any (whether or not payable) and all
Taxes of the Company up to the date of the Closing; (i) a calculation of the
Working Capital as determined by reference to the balance sheet contained in the
Closing Financial Statements and the Pre-Closing Statement (the "Closing
Working Capital");
(ii) a calculation of:
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(A) the amount by which the Closing
Working Capital exceeds or is less than, as the case may be, zero; and
(B) the Purchase Price, as adjusted in
accordance with Section 1.6.
(b) The Shareholders and the Purchaser
shall co-operate fully with each other in the calculation of the Closing Working
Capital and the preparation of the Closing Statements.
(c) The Shareholders shall have thirty
(30) days from receipt of the Closing Statements within which to review the
Closing Financial Statements. For the purposes of this review, the Purchaser
shall permit and shall cause the Company to permit the Shareholders to examine
all working papers, schedules, accounting books and records and other documents
and information used or prepared by the Purchaser or the Company in connection
with the preparation of the Closing Statements and to have reasonable access to
appropriate personnel of the Company and the Purchaser for the Shareholders to
verify the accuracy and presentation and other matters relating to the
preparation of the Closing Statements. Any group of Shareholders that
collectively held at least two thirds (2/3) of the Shares of the Company
immediately prior to the Closing ("Majority Shareholders") may dispute
any of the items in the Closing Statements by written notice (an "Objection
Notice") to Purchaser within the same thirty (30) days. Such Majority
Shareholder(s) shall notify the other Shareholders as set out in Section 8.4(b)
. If the Majority Shareholders have not delivered an Objection Notice to
Purchaser within this thirty (30) day period, the Shareholders shall be deemed
to have accepted the Closing Statements. If the Majority Shareholders deliver an
Objection Notice, the Majority Shareholders and Purchaser shall work
expeditiously and in good faith in an attempt to resolve all of the items in
dispute within fifteen (15) days of receipt of the Objection Notice. If all
items in dispute are not resolved within this fifteen (15) day period or such
additional time as is agreed between the Majority Shareholders and the Purchaser
in writing, the Shareholders and Purchaser shall engage KPMG LLP (the
"Independent Auditor") to resolve the remaining items in dispute.
(d) The Shareholders and the Purchaser
shall furnish to the Independent Auditor those working papers, schedules and
other documents, accounting books and records and information relating to the
items in dispute, that are available to that Party or its auditors as the
Independent Auditor may require. The Shareholders and the Purchaser shall
instruct the Independent Auditor that time is of the essence in proceeding with
its determination of any dispute, and the decision of the Independent Auditor
with respect to any item in dispute is to be in writing and, absent any manifest
error, is final and binding on the Shareholders and Purchaser with no rights of
challenge, review or appeal to the courts in any manner. The Independent
Auditor, in making its determination of any dispute, is acting as an expert and
not as an arbitrator and is not required to engage in a judicial inquiry worked
out in a judicial manner.
(e) On agreement or decision, as the
case may be, with respect to all items in dispute, the Closing Statements are
deemed to be amended as may be necessary to reflect the agreement or the
decision, as the case may be. In this event, references in this Agreement to the
Closing Statements will be references to the Closing Statements, as so amended.
(f) The Shareholders collectively shall
be responsible for one-half of the fees and expenses of the Independent Auditor
and Purchaser shall be responsible for one-half of the fees and expenses of the
Independent Auditor but each of the Purchaser and Shareholders shall otherwise
be responsible for its own costs and expenses.
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1.6 |
Purchase Price Adjustment. |
(a) The Purchase Price is to be
adjusted by the amount by which the Closing Working Capital is greater than, or
is less than, as the case may be, zero. If the Closing Working Capital, as
determined pursuant to the foregoing provisions of this Agreement, is greater
than zero, the amount of such excess is herein referred to as the "Working
Capital Surplus". If the Closing Working Capital, as determined pursuant to
the foregoing provisions of this Agreement, is less than zero, the amount of
such deficiency is herein referred to as is the "Working Capital
Deficit".
(b) The determination and adjustment of
the Purchase Price in accordance with the provisions of Section 1.5(c) and this
Section 1.6 will not limit or affect any other rights or causes of action which
the Parties may have with respect to the representations, warranties, covenants
and indemnities in its favour contained in this Agreement but shall not
duplicate any other entitlement hereunder. For greater certainty, the amount of
any fees and expenses in respect of which the Shareholders are responsible
pursuant to the provisions of Section 1.5(f) shall be considered to be a
Purchase Price adjustment hereunder and shall constitute a reduction of the
amount, if any which Purchaser is required to pay the Shareholders hereunder
(whether under Section 1.7 or otherwise).
The Purchaser shall pay the Shareholders the amount (the
"Secondary Payment"), greater than zero, on or before the date which is nine (9)
months following the date hereof, subject to the terms and conditions of this
Agreement (including, without limitation, the provisions of Sections 7.1, 7.2
and 7.7 hereof), which is equal to:
(a) the Holdback plus an amount
equal to the R&D Credits, if any, plus an amount equal to the HST
Refund with respect to periods prior to the Closing Date, plus the amount
of the Working Capital Surplus, if any; and
(b) minus the amount of the
Working Capital Deficit, if any.
For greater certainty, the amount of the R&D Credits and
the HST Refund shall be payable to the Shareholders only when realized by the
Company in the form of cash rather than based upon the amount claimed.
Notwithstanding the foregoing or any other provision herein, if the R&D
Credits that would otherwise be payable to the Company become non-refundable or
cannot be realized in cash due to an action of the Purchaser or the Company
after the Closing Date, the Purchaser shall include in the Secondary Payment the
amount of such R&D Credit.
If the Working Capital Deficit exceeds the total amount in
Section 1.7(a), such difference shall constitute a credit for the Purchaser
which it shall be entitled to deduct dollar for dollar from all future payments
otherwise owing by the Purchaser to the Shareholders hereunder or pursuant to
the Royalty Agreement. If on the date which is nine (9) months following the
date hereof the Company has not received any R&D Credits but subsequently
receives such R&D Credits, Purchaser shall pay to the Shareholders the
amount of such R&D Credits (subject to Purchasers rights to deduct any
amounts of the Working Capital Deficit that remain (after the prior payments)
and subject further to Purchasers rights under the provisions of this Agreement
including, without limitation, Sections 7.1, 7.2 and 7.7) . Any payment made
pursuant to this paragraph shall be considered to be a Secondary Payment for the
purposes of this Agreement notwithstanding that it is made subsequent to the
payment contemplated in the prior paragraphs of this Section 1.7.
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2. |
FUTURE MILESTONE
PAYMENT |
(a) Subject to the terms and conditions
of this Agreement, Purchaser shall, within sixty (60) days of dosing the first
patient in a Clinical Trial with a Fluorinov Compound (the "Milestone
Payment"), give written notice to the Shareholders and shall pay the
Shareholders five ($5,000,000) million dollars, in accordance with the
Consideration Allocation Spreadsheet.
For greater certainty, the Milestone Payment to be made
pursuant to this Section 2.1 only to the extent that the Fluorinov Compound is the
subject matter of a Fluorinov Royalty Patent (being other than compounds relating
to CNS Assets, it being understood that the only payments to be made in terms of
the monetization of the CNS Assets are as set out in Section 2.3 below). For
greater certainty, the Milestone Payment to be made pursuant to this Section
2.1(a) will be made by the Purchaser regardless of what Person conducts the
Clinical Trial referred to above or what Person owns the relevant Fluorinov
Compound the applicable time (provided that the Clinical Trial is conducted by a
Person authorized by the Company, the Purchaser, an Affiliate of the Purchaser,
a Licensee or a transferee of such Fluorinov Compound).
(b) The Milestone Payment shall be
payable only once, on the first achievement of the milestone event, regardless
of the number of Fluorinov Compounds that result in dosings in Clinical Trials.
(c) Amounts payable pursuant to this
Section 2.1 shall be made to the Shareholders in cash and/or, subject to Section
2.7, common shares of Purchaser (with the exact proportion being at the
discretion of Purchaser, provided that at least fifty percent (50%) of the
payments shall be made in the form of cash (unless otherwise agreed between
Purchaser and a particular recipient Shareholder). The issuance of common shares
to Shareholders, and the resale of such common shares to be received by the
Shareholders, are subject to applicable securities laws.
(d) The value of the common shares of
Purchaser to be delivered pursuant to this Section 2.1 shall (unless otherwise
agreed between Purchaser and a particular recipient Shareholder) be based upon
the volume weighted average trading price (defined as VWAP in the TSX Company
Manual) of the common shares of Purchaser on the Toronto Stock Exchange for the
thirty (30) trading days immediately preceding the date of issuance of such
shares to the Shareholder, calculated by dividing the total dollar value of
shares of the Purchaser traded on the Toronto Stock Exchange through the period
by the total number of shares traded on the Toronto Stock Exchange through the
relevant period.
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2.2 |
Obligations to Continue. |
For greater certainty, in the event of any sale, transfer,
assignment, license and/or sublicense of Fluorinov Royalty Patents, the obligations
of Purchaser to the Shareholders to pay the Milestone Payment shall remain in
full force and effect and shall apply to the commercial exploitation of
Fluorinov
Products by such third party, acquirer or Licensee mutatis mutandis.
Purchaser further agrees to pay the Shareholders an amount,
equal to fifty percent (50%) of the Net CNS Amounts (if any) received by the
Company, Purchaser and their respective Affiliates (the amounts payable to the
Shareholders being herein referred to as the "CNS Payments"). Amounts
payable under this Section 2.3 shall be paid in accordance with the
Consideration Allocation Spreadsheet within sixty (60) days of the end of the
calendar quarter in which any Net CNS Amounts are received by the Company, Purchaser and their respective Affiliates along with a
report in sufficient detail explaining the basis for calculating the
payment.
- 7 -
|
2.4 |
Purchaser's
Determination. |
(a) In connection with all matters
relating the business and operations of the Company (including, without
limitation, relating to the Fluorinov Patents), Purchaser shall be entitled to
apply its sole and absolute discretion as to how to deal with such business and
operations after the Closing Date. Subject to Section 2.4(b), nothing contained
in this Agreement shall be construed as to require Purchaser to, or to require
the Company or any Affiliate to expend any level or type of effort, or apply any
particular resources, components or other assets, to undertake any efforts of
any kind with respect to the business and operations of the Company (including,
without limitation relating to the assets of the Company) and, without limiting
the generality of the foregoing, shall not require any particular resources,
components or other assets to be expended towards the achievement of:
(i) the
milestone contemplated in Section 2.1;
(ii) the attainment or receipt of any Net
CNS Amounts; or
(iii) otherwise relating to the attainment of any achievements
which would entitle the Shareholders to receive any amounts beyond those
received on the Closing Date or pursuant to Section 1.6;
beyond that which
Purchaser, in its sole and absolute discretion, determines to expend. All
decisions regarding such matters shall be made by Purchaser and the Company in
their sole and absolute discretion without any express or implied duty or
obligation to the Shareholders in respect thereto.
(b) Notwithstanding the foregoing, with
respect of the CNS Assets, the Purchaser shall use Commercially Reasonable
Efforts to monetize the CNS Assets in whatever manner it sees fit including, but
not limited to, the sale, licensing or other monetization of the rights.
The Company, Purchaser or any Person making payments on their
behalf or pursuant to this Agreement to Shareholders who are non-resident in
Canada for purposes of the ITA shall be entitled to deduct and withhold from any
amounts of cash or shares payable or otherwise deliverable pursuant to this
Agreement (including, for the avoidance of doubt, any payments provided under
Sections 1.4, 1.7, 2.1 and 2.3) such amounts as may be required (or permitted
under section 116 of the ITA) to be deducted or withheld therefrom under any
provision of federal, provincial, local or foreign tax law or under any
applicable Legal Requirements. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Shareholder to whom such amounts would otherwise have
been paid. To the extent that the amount so required (or permitted under section
116 of the ITA) to be deducted and withheld from any payment to such Shareholder
exceeds the cash portion of the consideration otherwise payable to the
Shareholder, the Company, and Purchaser are hereby authorized to sell or
otherwise dispose of such portion of the non-cash consideration due to such
Shareholder as is necessary to provide sufficient funds to the Company or
Purchaser as the case may be, to enable it to comply with such deduction or
withholding requirement or entitlement, and the Company, or Purchaser shall
notify the Shareholder and remit to such Shareholder any unapplied balance of
the net proceeds of such disposition.
- 8 -
If, at any time after the Closing Date, any further action is
reasonably determined by Purchaser to be necessary or desirable to carry out the
purposes of this Agreement or to vest Purchaser with full right, title and
possession of and to all equity securities of the Company, the officers and
directors of the Company and Purchaser shall be fully authorized (in the name of
the Company and otherwise) to take such action.
|
2.7 |
Payments in Securities. |
(a) Notwithstanding anything to
the contrary in this Article 2, the Purchaser shall not be entitled to make any
payment, or portion thereof, required under this Agreement by delivering its
common shares to the Shareholders unless; at the time of such payment in
shares (i) the Purchaser is a reporting issuer in the province of Ontario not on
the list of defaulting issuers maintained by the Ontario Securities Commission
pursuant to section 83 of the Securities Act (Ontario) and (ii) such
shares would not be subject to any resale restrictions pursuant to applicable
Ontario securities laws, other than any prohibition pursuant to section 76 of
the Securities Act (Ontario) or similar legislation or restrictions which
may arise upon a person who is a member of a control block and provided that the
sale of the securities otherwise satisfies the conditions under section 2.6(3)
of National Instrument 45-102 (as amended from time to time). For greater
certainty, references to the common shares of the Purchaser herein shall include
any securities of a successor Entity to the Purchaser.
(b) Notwithstanding anything to the
contrary in this Article 2, unless shareholder approval of the shareholders of
the Purchaser has first been obtained for the issuance of a greater number of
common shares of the Purchaser, the maximum aggregate number of common shares of
the Purchaser that the Purchaser may issue and deliver under the Royalty
Agreement and this Agreement, taken together, is 1,558,447 common shares.
(c) Insofar as concerns any common
shares of Purchaser to be issued to Abdelmalik Slassi hereunder, the issuance
and treatment of such shares shall be subject to the terms and conditions of the
Lock-Up Agreement.
|
3. |
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY |
Subject to such exceptions as are disclosed in the Disclosure
Schedule, prepared in accordance with Section 8.15 delivered to the Purchaser
concurrently herewith, and subject to the provisions of Article 7, as of the
Closing Date, the Company represents and warrants, to and for the benefit of
Purchaser Indemnitees, as follows:
|
3.1 |
Due Organization; Subsidiaries;
Etc. |
(a) Organization. The Company
has been duly organized, and is validly existing and in good standing under the
laws of Ontario. The Company has full power and authority: (i) to conduct its
business in the manner in which its business is currently being conducted; (ii)
to own and use its assets in the manner in which its assets are currently owned
and used; and (iii) to perform its obligations under all Contracts to which it
is a party or by which it is bound.
(b) Qualification. The Company
is qualified to do business as an Ontario corporation, and is in good standing
(to the extent that Ontario recognizes the concept of good standing), under the
laws of Ontario. As a result of the nature of its business as previously
conducted and currently conducted, it is not required to be qualified, licensed
or admitted to do business in any other jurisdiction.
- 9 -
(c) Directors and
Officers. Section 3.1(c) of the Disclosure Schedule accurately sets forth:
(i) the names of the members of the board of directors of the Company; and (ii)
the names and titles of the officers of the Company.
(d) Subsidiaries. The Company
does not have any Subsidiaries.
(e) No Other Equity. The Company
does not hold or own (of record or beneficially), and has never held or owned,
any shares or other securities of, or any equity interest in, any Entity.
|
3.2 |
Charter Documents;
Records. |
The Company has delivered to Purchaser accurate and
complete copies of: (a) the articles of incorporation and by-laws (the
"Charter Documents") each in full force and effect on the date hereof and
a copy of the Shareholders Agreement (which agreement is no longer in force at
the date hereof); and (b) the minutes and other records of the meetings and
other proceedings of the Company's shareholders and the board of directors of
the Company since incorporation, and all actions taken by written resolution,
since incorporation. There is currently no duly constituted committee of the
board of directors of the Company, and there has never been such a committee
constituted. All actions taken and all transactions entered into by the Company
have been duly approved by all necessary action of the board of directors and
shareholders of the Company. There has been no violation of any of the
provisions of the Charter Documents of the Company, and the Company has not
taken any action that is inconsistent with (i) any resolution adopted by the
Company's shareholders or board of directors prior to the Closing Date or (ii)
any unanimous shareholders agreement in effect from time to time including,
without limitation, the Shareholders Agreement. The books of account, stock
records, minute books and other records of the Company are materially accurate,
up-to-date, complete, and in accordance with applicable Legal Requirements.
(a) Outstanding
Securities. The authorized capital of the Company consists of an
unlimited number of Shares, of which 1,610,001 Shares are issued and outstanding
as of the Closing Date. Section 3.3(a) of the Disclosure Schedule sets forth the
names of the Shareholders, the addresses of the Shareholders and the class,
series and number of Shares owned of record by each of such Shareholders. All of
the outstanding Shares have been duly authorized and validly issued, and are
fully paid and non-assessable.
(b) No Other Securities.
As of the Closing Date, there are no: (i) outstanding subscription, option,
call, convertible note, warrant or right (whether or not currently exercisable)
to acquire any Shares or other securities of the Company; (ii) outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any Shares (or cash based on the value of such shares) or other
securities of the Company; (iii) Contract under which the Company is or may
become obligated to sell or otherwise issue any Shares or any other securities,
including any promise or commitment to grant options or other securities of the
Company to an employee of or other service provider to the Company; or (iv)
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any Shares or other securities of the Company. Except for the
Shareholders Agreement, there are no voting trusts, proxies, or other agreements
to which the Company is a party relating to the registration, sale or transfer
(including agreements relating to rights of first refusal, co-sale rights or
"drag-along" rights) of any securities of the Company. Immediately following the
Closing, Purchaser will be the sole registered and beneficial holder of
all issued and outstanding Shares and there will not be any outstanding rights
to acquire or receive any Shares or other securities of the Company.
- 10 -
(c) Legal Issuance. Except as set out in the
Disclosure Schedule, all Shares and all other securities that have ever been
issued or granted by the Company have been issued and granted in compliance
with: (i) all applicable Legal Requirements; and (ii) all requirements set forth
in all applicable Contracts. None of the Shares were issued in violation of any
preemptive rights or other rights to subscribe for or purchase securities of the
Company. Section 3.3(c) of the Disclosure Schedule accurately identifies each
Contract relating to any securities of the Company that contains any information
rights, registration rights, financial statement requirements or other terms
that would survive the Closing unless terminated or amended prior to the
Closing.
|
3.4 |
Financial Statements and Related
Information. |
(a) Delivery of Financial
Statements. Prior to the Closing Date, the Company has delivered to
Purchaser the following financial statements and notes (collectively, the
"Company Financial Statements"): (A) the unaudited balance sheets of the
Company as at December 31, 2012, December 31, 2013 and December 31, 2014 and the
related unaudited statements of operations and deficit and statements of cash
flows for the years ended December 31, 2012, December 31, 2013 and
December 31, 2014; and (B) the unaudited balance sheet of the Company as at
December 31, 2015 (the "Unaudited Interim Balance Sheet"), and the
related unaudited statement of operations and deficit, statements of research
and development costs and statements of cash flows for the period ended December
31, 2015.
(b) Fair Presentation. The
Company Financial Statements present fairly in all material respects, although
not in accordance with GAAP, the financial position of the Company as of the
respective dates thereof and the results of operations and cash flows of the
Company for the periods covered thereby.
(a) No Liabilities. The
Company has no accrued, contingent or other Liabilities of any nature, either
matured or unmatured (whether or not required to be reflected in financial
statements in accordance with GAAP, and whether due or to become due), except
for: (i) Liabilities identified as such in the Unaudited Interim Balance Sheet;
(ii) accounts payable or accrued liabilities that have been incurred by the
Company since the date of the Unaudited Interim Balance Sheet in the ordinary
course of business and consistent with the Company's past practices; (iii)
Liabilities under the Contracts that are expressly set forth in and identifiable
by reference to the text of such Contracts; and (iv) the Liabilities identified
in Section 3.5(a) of the Disclosure Schedule.
(b) Accounts Payable.
Section 3.5(b) of the Disclosure Schedule provides an accurate and complete
breakdown and aging of: (i) all accounts payable of the Company as of the
Closing Date; and (ii) all notes payable of the Company and all other
indebtedness of the Company for borrowed money as of the Closing Date.
(c) Company Transaction Expenses,
etc. There are no Change of Control Payments which should be included in the
Company Transaction Expenses other than those identified on the Pre-Closing
Statement. There are no amounts owing to, or in the future payable to, (whether
or not conditional), any current or former officer, director or employee of the
Company other than salary and benefits owing in respect of the most recently
completed bi-weekly pay period.
- 11 -
Except as set forth in Section 3.6 of the Disclosure Schedule,
since the date of the Unaudited Interim Balance Sheet:
(a) there has not been any Material
Adverse Effect, and no event has occurred or circumstance has arisen that, in
combination with any other events or circumstances, will or could reasonably be
expected to have or result in a Material Adverse Effect;
(b) there has not been any material
loss, damage or destruction to, or any material interruption in the use of, any
of the Company's material assets (whether or not covered by insurance);
(c) other than as disclosed in the
Disclosure Schedule, the Company has not declared, accrued, set aside or paid
any dividend or made any other distribution in respect of any shares of its
capital or other securities, and the Company has not repurchased, redeemed or
otherwise reacquired any of its shares of capital or other securities, other
than from former employees, directors and consultants pursuant to restricted
stock purchase agreements or stock option agreements providing for the
repurchase of such securities in connection with their termination of service to
the Company;
(d) there has been no amendment to any
of the Charter Documents of the Company, and the Company has not effected or
been a party to any Acquisition Transaction, recapitalization, reclassification
of shares, share split, reverse share split or similar transaction;
(e) the Company has not made any
agreement, contract or commitment relating to capital expenditure which, when
added to all other capital expenditures made on behalf of the Company, exceeds
$5,000 other than bonuses in the aggregate amount of $170,000 payable to certain
employees and management on Closing Date, and the additional commitment of
$350,000 to the Company's President and Chief Scientific Officer, all of which
are to be satisfied as set out in the Consideration Allocation Spreadsheet and
none of which will be Liabilities of the Company after the Closing;
(f) the Company has not amended
or prematurely terminated or waived any material right or remedy under, any
Contract that is or would constitute a Material Contract;
(g) other than renewal of the Real
Property Lease, the Company has not: (i) acquired, leased or licensed any right
or other asset from any other Person; (ii) sold or otherwise disposed of, or
leased or licensed, any right or other asset to any other Person; or (iii)
waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with past practices of the Company;
(h) the Company has not written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness;
(i) the Company has not made any pledge
of any of its assets or otherwise permitted any of its assets to become subject
to any Encumbrance, except for pledges of immaterial assets made in the ordinary
course of business and consistent with the Company's past practices;
(j) the Company has not: (i) lent money
to any Person (other than pursuant to routine and reasonable travel advances
made to current employees of the Company in the ordinary course of business); or
(ii) incurred or guaranteed any indebtedness for borrowed money;
- 12 -
(k) the Company has not: (i)
established, adopted, amended or terminated any employee benefit plan, including
any Company Employee Plan; (ii) made any bonus, profit-sharing or similar
payment to, or increased the amount of wages, salary, commissions, fringe
benefits or other compensation (including equity-based compensation, whether
payable in cash or otherwise) or remuneration payable to, any of its directors,
officers or employees; or (iii) other than with respect to non-officer employees
and in the ordinary course of business and consistent with past practices: (A)
hired or terminated any new employee, consultant, independent contractor or
dependent contractor; (B) promoted, demoted or otherwise changed the employment
status or title of any officer; or (C) removed any director of the Company;
(l) apart from adopting GAAP for its
financial reporting, the Company has not changed any of its methods of
accounting or accounting practices in any respect;
(m) apart from adopting GAAP for its
financial reporting, the Company has not adopted or changed a material
accounting method in respect of Taxes, entered into a Tax allocation agreement,
Tax sharing agreement, Tax indemnity agreement or closing agreement, settled or
comprised a claim, notice, audit report or assessment in respect of Taxes, or
consented to an extension or waiver of the statutory limitation period
applicable to a claim or assessment in respect of Taxes;
(n) the Company has not commenced or
settled any Legal Proceeding;
(o) the Company has not entered into
any material transaction or taken any other material action outside the ordinary
course of business or inconsistent with its past practices; and
(p) other than as provided herein, the
Company has not agreed or legally committed to take any of the actions referred
to in clauses (c) through (o) above.
(a) Good Title. The Company
owns, and has good and valid title to, all assets purported to be owned by it,
including: (i) all assets reflected on the Unaudited Interim Balance Sheet; and
(ii) all other assets reflected in the books and records of the Company as being
owned by the Company. All of said assets are owned by the Company free and clear
of any liens or other Encumbrances, except for: (A) any lien for current Taxes
not yet due and payable; and (B) minor liens that have arisen in the ordinary
course of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of the Company.
(b) Leased Assets. Section
3.7(b) of the Disclosure Schedule identifies all assets that are being leased to
the Company for which the annual rental payment for each such asset exceeds
$5,000.
(c) Leased Premises. The Company
does not own or have an interest in (and has never owned) any real estate,
except for the leasehold created under the Real Property Lease.
Section 3.8 of the Disclosure Schedule provides the following
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution: (a) the name of the bank or
other financial institution at which such account is maintained; (b) location of
the branch, (c) the account number; (d) the type of account;
and (e) the names of all Persons who are authorized to sign checks or other
documents with respect to such account.
- 13 -
|
3.9 |
Intellectual Property. |
(a)
Fluorinov Patents. The Fluorinov
Patents are identified on Section 3.9(a) of the Disclosure Schedule.
(b) Company Owned Intellectual
Property; and Registered IP. Section 3.9(b) of the Disclosure Schedule
accurately identifies: (i) all Intellectual Property in which the Company owns
title, whether solely or jointly with another Person (and if jointly, the
identity of such Person, the percentage of such Person's ownership interest and
the scope of any right granted to, or restriction imposed on, such Person's use
of the Intellectual Property), and (ii) in respect of Registered IP, each item
of Registered IP in which the Company has or purports to own title, whether
solely or jointly with another Person (and if jointly, the identify of such
Person, the percentage of such Person's ownership interest and the scope of any
right granted to, or restriction imposed on, such Person's use of Registered
IP), and the jurisdiction in which such item of Registered IP has been
registered or filed and the applicable registration or serial number. The
Company has delivered to Purchaser complete and accurate copies of all
applications, correspondence with any Governmental Body and other material
documents related to each such item of Registered IP. Each such registration and
application for registration (i) is subsisting, in good standing and valid, (ii)
has been maintained or renewed as required, (iii) is recorded in the name of the
Company in the applicable registry or with the applicable Governmental Body, and
(iv) to the Knowledge of the Company, as of the Closing Date has not expired or
been finally rejected, withdrawn, opposed, cancelled, expunged, impeached,
revoked, rectified, invalidated or had its term reduced.
(c) Inbound Licenses. Section
3.9(c) of the Disclosure Schedule accurately identifies: (i) each Contract
pursuant to which any Intellectual Property or Intellectual Property Rights are
or have been licensed, sold, assigned or otherwise conveyed or provided to the
Company (other than agreements between the Company and its employees in the
Company's standard form thereof); and (ii) whether the licenses or rights
granted to the Company in each such Contract are exclusive or non-exclusive. The
Company has delivered to Purchaser accurate and complete copies of each Contract
identified or required to be identified on 3.9(c) of the Disclosure Schedule.
(d) Outbound Licenses. Section
3.9(d) of the Disclosure Schedule accurately identifies each Contract pursuant
to which any Person has been granted any license, assignment or conveyance, or
otherwise has received or acquired any right (whether or not currently
exercisable and including a right to receive a license) or interest in, any
Company IP. The Company has delivered to Purchaser complete and accurate copies
of each Contract identified or required to be identified on Section 3.9(d) of
the Disclosure Schedule. The Company is not bound by, or subject to, any
Contract containing any covenant or other provision that in any way limits or
restricts the ability of the Company to use, exploit, assert or enforce any
Company IP anywhere in the world.
(e) Royalty Obligations. The
Company is not obligated to pay any royalties, fees, commissions and other
amounts payable to any other Person (other than sales commissions paid to
employees according to the Company's standard commissions plan) upon or for the
use, practice or exploitation of any Company IP.
(f) IP Agreements. The
Company has delivered to Purchaser a complete and accurate copy of each Company
IP Contract used by the Company, including each form of: (i) development
agreement; (ii) employee agreement containing any assignment or license of
Intellectual Property or Intellectual Property Rights or any confidentiality
provision; (iii) consulting or independent contractor agreement containing any assignment or license of
Intellectual Property or Intellectual Property Rights or any confidentiality
provision; or (iv) confidentiality or nondisclosure agreement ( including any
agreement with a current or former employee, consultant or independent
contractor in which the employee, consultant or independent contractor expressly
reserved or retained any Intellectual Property or Intellectual Property Rights
incorporated in or used in connection with any Fluorinov Product or service or
related to the Company's business, research or development).
- 14 -
(g) Ownership Free and
Clear. The Company has, at all times, used Commercially Reasonable Efforts
to protect the Intellectual Property and the rights, titles, interests and
benefits of the Company in the Intellectual Property and the Intellectual
Property Rights. The Company exclusively owns all right, title and interest to
and in the Company IP (other than Intellectual Property Rights exclusively
licensed to the Company, as identified in Section 3.9(g)of the Disclosure
Schedule) free and clear of any Encumbrances (other than nonexclusive licenses
granted pursuant to the Contracts listed in Section 3.9(g) of the Disclosure
Schedule). Without limiting the generality of the foregoing:
(i) each Company Employee, consultant
and independent contractor who is or was involved in the creation or development
of any Intellectual Property or Intellectual Property Rights for, or in the
course or scope of work for, has signed a valid and enforceable invention
assignment agreement or such other agreement containing an irrevocable
assignment to the Company of such Intellectual Property and Intellectual
Property Rights, and waivers of any Moral Rights therein, and confidentiality
provisions protecting the Company IP;
(ii) no Company Employee or former
employer of any Company Employee has any claim, right (whether or not currently
exercisable) or interest to or in any Company IP;
(iii) to the best of the Company's
Knowledge, no Company Employee is: (A) bound by or otherwise subject to any
Contract restricting him or her from performing his or her duties for the
Company; or (B) in breach of any Contract with any former employer or other
Person concerning Company Intellectual Property Rights or confidentiality;
(iv)
the Company has taken all reasonable steps to maintain the confidentiality of
and otherwise protect and enforce its rights in all trade secrets and other
confidential or proprietary information pertaining to the Company or the
Fluorinov Patents;
(v)
except as disclosed on Section 3.9(g) of the Disclosure Schedule, no
funding, facilities or personnel of any Governmental Body or any public or
private university, college or research institution were provided to the Company
or used to develop or create or have contributed to, directly or indirectly and
in whole or in part, any Company IP and such Section describes all Contracts
with respect to such matters;
(vi) except as disclosed on Section
3.9(g) of the Disclosure Schedule, the Company has never assigned or otherwise
transferred ownership of, or agreed to assign or otherwise transfer ownership
of, any Intellectual Property Rights to any other Person;
(vii) the Company owns or otherwise has
valid rights to use, practice and exploit, and after the Closing will continue
to own or have valid rights to use, practice and exploit, all Intellectual
Property and Intellectual Property Rights needed to conduct the business of the
Company as conducted and planned by the Company to be conducted as of the
Closing Date.
- 15 -
(h) Valid and Enforceable. All
Company IP is valid, subsisting and enforceable. Without limiting the generality
of the foregoing:
(i) Section 3.9(h)(i) of the Disclosure
Schedule lists all TradeMarks and the goods and services in association with
which each Trade-Mark is used in each applicable country, whether in progress,
pending or threatened, anywhere in the world, nor is the Company aware of any
fact, matter or circumstance which might result in any such Legal Proceeding or
other proceeding. To the best of the Company's Knowledge, no trademark, service
mark or trade name owned, used or applied for by the Company conflicts or
interferes with any trademark or trade name owned, used or applied for by any
other Person;
(ii) all filings, payments, disclosures
and other actions required to be made or taken to maintain any item of
Registered IP in full force and effect as of the Closing Date have been made by
the applicable deadline, and the correct fees have been properly and timely paid
according to the entity size of the Company;
(iii) Section 3.9(h)(iii) of the
Disclosure Schedule accurately identifies and describes each action, filing, and
payment that must be taken or made on or before the date that is 120 days after
the date of this Agreement in order to maintain such item of Company IP in full
force and effect or, with respect to applications, to continue progress towards
issuance to the full extent possible under applicable law during such period;
and
(iv) no interference, opposition,
reissue, reexamination or other Legal Proceeding is or has been pending
(including any opposition, non-use, cancellation, expungement, impeachment,
revocation, rectification, invalidation, compulsory license, notice of
compliance proceeding or any proceeding analogous to any of the foregoing, or
any domain name dispute resolution proceeding, anywhere in the world) nor is the
Company aware of any fact, matter or circumstance which might result in any such
Legal Proceeding or other proceeding or, to the Knowledge of the Company,
threatened, in which the scope, validity or enforceability of any Company IP is
being, has been, or could reasonably be expected to be contested or challenged,
and, to the Knowledge of the Company, there is no basis for a claim that any
Company IP is invalid or unenforceable, other than as disclosed on Section
3.9(h)(iv) of the Disclosure Schedule.
(i) No Third Party Infringement of
Company IP. To the Knowledge of the Company, no Person has infringed,
misappropriated or otherwise violated, and no Person is currently infringing,
misappropriating or otherwise violating, any Company IP. Section 3.9(i) of the
Disclosure Schedule accurately identifies (and the Company has delivered to
Purchaser a complete and accurate copy of) each letter or other written or
electronic communication or correspondence that has been sent by or to the
Company or any Representative of the Company regarding any actual, alleged or
suspected infringement, misappropriation or other violation of any Company IP,
and provides a brief description of the current status of the matter referred to
in such letter, communication or correspondence.
(j) Effects of This Transaction.
On payment of the Closing Transaction Consideration, as of the Closing Date
neither the execution, delivery or performance of this Agreement or any other
agreements referred to in this Agreement nor the consummation of any of the
transactions contemplated by this Agreement or any such other agreement will,
with or without notice or lapse of time, result in, or give any other Person the
right or option to cause or declare: (i) an Encumbrance on, any Company IP; (ii)
a breach of or default under any Company IP Contract; (iii) the release,
disclosure or delivery of any Company IP by or to any escrow agent or other
Person; (iv) the termination or alteration of the Company's rights under any Company IP Contract; or (v)
the grant, assignment or transfer to any other Person of any license or other
right or interest under, to or in any of the Company IP.
- 16 -
(k) No Infringement of Third Party
IP Rights. The Company has never infringed (directly, contributory, by
inducement or otherwise), misappropriated or otherwise violated or made unlawful
use of any intellectual property right of any other Person. No Fluorinov Product
has ever infringed, violated or made unlawful use of any intellectual property
right of, or has ever contained any intellectual property or intellectual
property right misappropriated from, any other Person. Without limiting the
generality of the foregoing:
(i) no infringement, misappropriation,
violation or similar claim or Legal Proceeding is pending or, to the Knowledge
of the Company, threatened against the Company or against any other Person who
is or may be entitled to be indemnified, defended, held harmless or reimbursed
by the Company with respect to such claim or Legal Proceeding;
(ii) the Company has never received any
notice or other communication (in writing or otherwise) relating to any actual,
alleged or suspected infringement, misappropriation or violation by the Company,
any Company Employee or any agents of the Company of any intellectual property
rights of another Person, including any letter or other communication suggesting
or offering that the Company obtain a license to any intellectual property right
of another Person or provide indemnification to any other Person with respect to
any intellectual property; and
(iii) the Company is not bound by any
Contract to indemnify, defend, hold harmless or reimburse any other Person with
respect to, and the Company has not otherwise assumed or agreed to discharge or
otherwise take responsibility for, any existing or potential intellectual
property right infringement, misappropriation, violation or similar claim (other
than indemnification provisions in the Company's standard forms of Company IP
Contracts).
(l) Clinical Trials. The Company
has not sponsored or is otherwise engaged or involved in the conduct of any
human clinical trial anywhere in the world, whether for itself or for a third
party.
(a) List of Contracts. Section
3.10(a) of the Disclosure Schedule accurately identifies any Contract the
Company is bound by:
(i) (A) relating to the employment of,
or the performance of services by, any Company Employee; (B) pursuant to which
the Company is or may become obligated to provide notice or make any severance,
termination or similar payment to any Company Employee; and/or (C) pursuant to
which the Company is or may become obligated to make any bonus or similar
payment (other than payment in respect of salary) to any Company Employee;
(ii) which provides for indemnification
of any officer, director, employee, agent or any other Person;
(iii) relating to the voting and any
other rights or obligations of a Shareholder of the Company;
- 17 -
(iv) relating directly or indirectly to
the issuance of any securities of the Company (including any Contracts entered
into ancillary to the issuance of any such securities);
(v) relating to the acquisition,
transfer, licensing, grant of a royalty, development or sharing of any
technology, Intellectual Property or Intellectual Property Right (including any
joint development agreement, technical collaboration agreement, materials
transfer agreement, sponsored research agreement, or similar agreement entered
into by the Company and, without limiting the generality of the foregoing, all
Contracts required to be described on Section 3.9(g)(v) of the Disclosure
Schedule);
(vi) relating to matters required to be
disclosed on Section 3.12(b) of the Disclosure Schedule;
(vii) pursuant to which the Company is
required to (with or without the satisfaction of any conditions), or obtains or
grants any material rights (including any options or rights of negotiation) to,
undertake the development or commercialization of any pharmaceutical product or
technology, or any material interest therein;
(viii) under which the Company is (A) a
lessee of real property, (B) a lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by a third person
or Entity, (C) a lessor of real property, or (D) a lessor of any tangible
personal property owned by the Company, in any case referred to in clauses (B)
or (D) only which requires future annual payments in excess of $5,000;
(ix) each Contract that contains any
"non-solicitation," "no hire" or similar provision which restrict the Company
from soliciting, hiring, engaging, retaining or employing such third party's
current or former employees in a manner or to an extent that would interfere
with the business of the Company;
(x) each Contract relating to the
acquisition, sale, spin-off or outsourcing of any material asset, business unit
or operation of the Company, including any right of first offer or right of
first refusal;
(xi) each Contract creating or relating
to any partnership or joint venture or any sharing of revenues, profits, losses,
costs or liabilities;
(xii) imposing any restriction on the
Company: (A) to compete with any other Person; (B) to acquire any product or
other asset or any services from any other Person, to sell any product or other
asset to or perform any services for any other Person or to transact business or
deal in any other manner with any other Person; or (C) to develop or distribute
any technology;
(xiii) (A) granting exclusive rights to
license, market, sell or deliver any of the products or services of the Company;
or (B) otherwise contemplating an exclusive relationship between the Company and
any other Person;
(xiv) creating or involving any agency
relationship, distribution or reseller arrangement or franchise relationship;
- 18 -
(xv) regarding the acquisition,
issuance or transfer of any securities and each Contract affecting or dealing
with any securities of the Company including any restricted share agreements or
escrow agreements;
(xvi) involving any loan, Debt,
guaranty, pledge, performance or completion bond or indemnity or surety
arrangement;
(xvii) that
contains provisions which are triggered by the transactions contemplated herein;
(xviii) relating to the
purchase or sale of any asset by or to, or the performance of any services by or
for, any Related Party;
(xix) that contemplates or involves the
payment or delivery of cash or other consideration by the Company in an amount
or having a value in excess of $5,000; and
(xx) that was entered into outside the
ordinary course of business or was inconsistent with the past practices of the
Company.
Contracts in the respective categories described above and all
Contracts identified, or required to be identified, in Section 3.10(a) of the
Disclosure Schedule are referred to in this Agreement as "Material
Contracts".
(b) Delivery of Contracts.
The Company has delivered to Purchaser accurate and complete copies of all
written Material Contracts identified (or required to be identified) in Section
3.10(a) of the Disclosure Schedule, including all amendments thereto. Section
3.10(b) of the Disclosure Schedule provides an accurate and complete description
of the material terms of each Material Contract that is not in written form.
Each Contract identified in Section 3.10(a) of the Disclosure Schedule is valid
and in full force and effect except to the extent that it has expired in
accordance with its terms.
(c) No Breach. As of the Closing
Date, (i) the Company has not violated or breached, and the Company has not
committed any default under, any Material Contract, which remains uncured, and,
to the Knowledge of the Company, no other Person has violated or breached, or
committed any default under, any Material Contract which remains uncured; (ii)
to the Knowledge of the Company, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or could
reasonably be expected to: (A) result in a violation or breach of any of the
provisions of any Contract; (B) give any Person the right to declare a default
or exercise any remedy under any Material Contract; (C) give any Person the
right to accelerate the maturity or performance of any Material Contract; or (D)
give any Person the right to cancel, terminate or modify any Material Contract;
(iii) since the date of the Company's incorporation, the Company has not
received any notice or other written communication (or oral communication, if
such oral communication is clear and unequivocal) regarding any actual or
possible violation or breach of, or default under, any Material Contract; and
(iv) the Company has not waived any of its respective material rights under any
Material Contract.
(d) OICR. The Company has no
Liabilities of any nature to OICR. Without limiting the generality of the
foregoing:
(i) All Contracts between OICR and the Company have been assigned by
OICR to FACIT;
- 19 -
(ii) All Shares and securities of the
Company registered in the name of OICR have been transferred to FACIT; and
(iii) The IPDC Investment Agreement
between the Company and OICR dated as of March 16, 2012 is no longer in effect
and there are no rights of OICR (or FACIT as assignee thereof) against the
Company.
|
3.11 |
Compliance with Legal
Requirements. |
The Company is, and has at all times been, in compliance in all
material respects with each Legal Requirement that is applicable to it or to the
conduct of its business or the ownership of its assets. No event has occurred,
and no condition or circumstance exists, that will (with or without notice or
lapse of time) constitute or result in a violation by the Company of, or a
failure on the part of the Company to comply with, any Legal Requirement. Except
as set forth in Section 3.11 of the Disclosure Schedule, the Company has not
received any notice or other communication from any Person regarding any actual
or possible violation of, or failure to comply with, any Legal Requirement.
(a) Governmental Authorizations.
Section 3.12 of the Disclosure Schedule identifies each Governmental
Authorization held by the Company, and the Company has delivered to Purchaser
accurate and complete copies of all Governmental Authorizations identified in
Section 3.12 of the Disclosure Schedule. The Governmental Authorizations
identified in Section 3.12 of the Disclosure Schedule are valid and in full
force and effect, and collectively constitute all Governmental Authorizations
necessary to enable the Company to conduct its business in the manner in which
its business is currently being conducted. The Company is in compliance with the
terms and requirements of the respective Governmental Authorizations identified
in Section 3.12(a)(i) of the Disclosure Schedule. Except as set out in Section
3.12(a)(ii) of the Disclosure Schedule, the Company has not received any notice
or other communication from any Governmental Body regarding: (i) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization; or (ii) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
(b) Except as disclosed on Section
3.12(b) of the Disclosure Schedule, the Company does not possess, and has never
possessed, or have any rights or interests with respect to any grants,
incentives or subsidies from any Governmental Body and such Section describes
all Contracts in respect thereto.
(a) Tax Returns and
Payments. All Tax Returns that were filed or required to be filed by or on
behalf of the Company have been filed and to the Knowledge of the Company are
true, accurate and complete. All Taxes of the Company that were required to be
paid on or before the Closing Date have been timely and properly paid. All Taxes
required to be withheld by the Company have been properly and timely withheld
and remitted. The Company has delivered to Purchaser accurate and complete
copies of all Tax Returns filed by the Company.
(b) Audits; Claims. Except as
set forth in Section 3.13(b) of the Disclosure Schedule, the Company has not
received from any Governmental Body any: (i) notice indicating an intent to open
an audit or other review; (ii) request for information related to Tax matters;
or (iii) reassessment, notice of deficiency or proposed Tax adjustment. No claim
or Legal Proceeding is pending or threatened against the Company in respect of any Tax. There
are no liens for Taxes upon any of the assets of the Company except liens for
current Taxes not yet due and payable (and for which there are adequate
accruals, in accordance with GAAP).
- 20 -
(c) Closing Agreements; Etc. The
Company is not a party to or bound by any Tax allocation, sharing, indemnity or
similar agreement.
(d) Tax Holidays. There are no
(and there have never been any) Tax exemptions, Tax holidays or other Tax
reduction agreements or arrangements applicable to the Company.
(e) Adjustment in Taxable
Income. The income tax liability of the Company has been assessed by the
relevant Governmental Bodies or taxation authorities in respect of all Tax years
of the Company ending before January 1, 2015.
(f) Liabilities. Other than
Taxes provided for in the Unaudited Interim Balance Sheet or incurred in the
usual and ordinary course of business since the date of the Unaudited Interim
Financial Statements, the Company has no Liability in respect of any taxes for
any Tax periods as of the Closing Date.
(g) Withholdings. Other than as
has been disclosed to the Purchaser, the Company: (i) has properly and timely
withheld any Taxes (including Taxes under Part XIII of the ITA and Taxes and
other amounts in respect of any amount paid or credited or deemed to be paid or
credited by it to or for the account or benefit of any Person, including any
Company Employee, officer or director and any non-resident Person) that are
required by Legal Requirement to be withheld and has timely paid or remitted on
a timely basis, the full amount of any Taxes that have been withheld, to the
applicable Governmental Body or taxation authority; and (ii) will have so
properly and timely withheld, paid and remitted all such Taxes prior to the
Closing.
(h) Permanent Establishment. The
Company does not have (and the Company has never had) a permanent establishment
in any country other than the country of its organization, and has never been
subject to Tax in a jurisdiction outside the country of its organization.
(i) CRA. The Company is duly
registered with the CRA under the Excise Tax Act (Canada) for purposes of
the goods and services tax ("GST") or the harmonized sales tax
("HST"), and its registration numbers are 845695097RT0001. To the
Knowledge of the Company, all input tax credits claimed by the Company for GST
or HST purposes were correctly calculated in accordance with the Excise Tax
Act (Canada). The Company has complied with all registration, reporting,
payment, collection and remittance requirements in respect of HST and provincial
sales tax or harmonized tax legislation.
(j) Canadian Residency. The
Company is a resident of Canada and is not a non-resident of Canada for purposes
of the ITA.
(k) Scientific Research and
Experimental Development Deductions. All deductions in respect of scientific
research and experimental development claimed by the Company were correctly
claimed and calculated in accordance with Legal Requirements and accepted
practices of the applicable Governmental Body.
(l) Credits and Refunds.
To the Knowledge of the Company, all tax credits and refunds, including
refundable and non-refundable investment tax credits in respect of scientific
research and experimental development, claimed by the Company
were claimed and calculated in accordance with Legal Requirements and accepted
practices of the applicable Governmental Body.
- 21 -
|
3.14 |
Employee and Labour Matters; Benefit
Plans. |
(a) Employee List. Section
3.14(a) of the Disclosure Schedule contains a list of all current Company
Employees as of the date of this Agreement, and correctly reflects: (i) their
dates of employment; (ii) their positions and location of employment; (iii)
their salaries; (iv) any other compensation payable to them (including housing
and car allowances, vacation entitlement and accrual, compensation payable
pursuant to bonus, deferred compensation or commission arrangements or other
compensation); (vi) each Company Employee Plan in which they participate or are
eligible to participate; and (vii) any promises made to them with respect to
changes or additions to their compensation or benefits. The Pre-Closing
Statement contains an accrual for all Liabilities of the Company in respect of
rights of all current and former employees of the Company.
(b) Termination of Company Employees
and Delivery of Materials. Except as set forth in Section 3.14(b) of the
Disclosure Schedule, the employment of each of the current Company Employees is
terminable only upon reasonable notice at common law. The Company has delivered
to Purchaser accurate and complete copies of Contracts and other materials
relating to the employment of the Company Employees.
(c) Employee Plans and
Agreements. Section 3.14(c) of the Disclosure Schedule contains an accurate
and complete list of each Company Employee Plan, including the salary or other
remuneration payable by the Company. No Company Employee is entitled to any
payment, including any change of control payment, by reason of the change of
control of the Company as contemplated by this Agreement.
(d) Delivery of Documents. Other
than the Stock Option Plan, the Contracts with Company Employees and
remuneration agreements with directors, copies of which have been provided to
the Purchaser, the Company has no Company Employee Plans.
(e) Compliance. To the Knowledge
of the Company, the Company is in compliance in all material respects with all
applicable Legal Requirements, Contracts and orders, rulings, decrees, judgments
or arbitration awards of any arbitrator or any court or other Governmental Body
respecting employment, employment practices, Statutory Plans, terms and
conditions of employment, wages, hours or other labour-related matters.
(f) Independent Contractors.
Section 3.14(f) of the Disclosure Schedule accurately sets forth, with respect
to each Person who is or was, at any time in the last three (3) years, an
independent contractor of the Company (provided that if such independent
contractor has not been involved in the creation or development of any
Intellectual Property or Intellectual Property Rights on behalf of the Company,
such Section of the Disclosure Schedule only identifies the independent
contractors who have received or may be entitled to receive in excess of $10,000
from the Company):
(i) the name of such independent
contractor, and the date as of which such independent contractor was originally
engaged by the Company;
(ii) a description of such independent
contractor's performance objectives, services, duties and responsibilities;
- 22 -
(iii) the aggregate dollar amount of
the compensation (including all payments or benefits of any type) received by
such independent contractor from the Company with respect to services performed
in the fiscal year ended December 31, 2015;
(iv) the terms of compensation of such
independent contractor; and
(v) any Governmental Authorization that
is held by such independent contractor and that relates to or is useful in
connection with the business of the Company.
(g) Employment-Related Claims.
Except as set forth in Section 3.14(g) of the Disclosure Schedule, there is no
Legal Proceeding, claim, labour dispute or grievance pending or, to the
Knowledge of the Company, threatened or reasonably anticipated relating to any
employment Contract, compensation, wages and hours, leave of absence, plant
closing notification, employment statute or regulation, human rights or pay
equity statute or regulation, accessibility statute or regulation, privacy
right, labour dispute, workers' compensation policy, long-term disability
policy, safety, retaliation, immigration or discrimination matter involving any
Company Employee, including charges of unfair labour practices or harassment
complaints.
|
3.15 |
Environmental Matters. |
The Company is and has at all times been in compliance with all
applicable Environmental Laws. Each real property that is owned by, leased to or
controlled by the Company, and all surface water, groundwater, soil and air
associated with or adjacent to such real property: (i) is free of any Materials
of Environmental Concern and any harmful chemical or physical conditions; and
(ii) is free of any environmental contamination of any nature. To the Knowledge
of the Company, it has never sent or transported, or arranged to send or
transport, any Materials of Environmental Concern to a site that, pursuant to
any applicable Environmental Law: (A) has been placed on any list of hazardous
waste sites (B) is otherwise designated or identified as a contaminated site or
a potential site for remediation, cleanup, closure or other environmental
remedial activity; or (C) is subject to a Legal Requirement to take
"preventative", "removal" or "remedial" action as detailed in any applicable
Environmental Law or to make payment for the cost of cleaning up any site.
Section 3.16 of the Disclosure Schedule identifies each
insurance policy maintained by, at the expense of or for the benefit of the
Company as of the date of this Agreement and identifies any material claims made
thereunder as of the date of this Agreement. The Company has delivered to
Purchaser accurate and complete copies of the insurance policies identified on
Section 3.16 of the Disclosure Schedule. Each of the insurance policies
identified in Section 3.16 of the Disclosure Schedule is in full force and
effect. Since the date of the Company's date of incorporation, the Company has
not received any notice or other communication regarding any actual or possible:
(i) cancellation or invalidation of any insurance policy; (ii) refusal of any
coverage or rejection of any claim under any insurance policy; or (iii) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.
|
3.17 |
Related Party
Transactions. |
Except as set forth in Section 3.17 of the Disclosure
Schedule: (a) no Related Party has, and no Related Party has had, any interest
in any material asset used in or otherwise relating to the business of the
Company; (b) no Related Party is, or has been, indebted to the Company (other
than for ordinary travel advances); (c) no Related Party has entered
into, or has had any financial interest in, any material Contract, transaction
or business dealing or involving any the Company; (d) to the Knowledge of the
Company, no Related Party is competing, or has at any time competed, with the
Company; and (e) no Related Party has any claim or right against the Company
(other than rights to receive compensation for services performed as an employee
of the Company or other rights arising in the ordinary course of
employment).
- 23 -
|
3.18 |
Legal Proceedings; Orders. |
(a) Legal Proceedings. There is
no pending Legal Proceeding and, to the Knowledge of the Company, no Person has
threatened to commence any Legal Proceeding: (i) that involves the Company or
any of the assets owned or used by the Company or any Person whose Liability the
Company has or may have retained or assumed, either contractually or by
operation of law; (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Share
Purchase or any of the other transactions contemplated by this Agreement; or
(iii) that relates to the ownership of any shares of the Company, or any option
or other right to the shares of the Company, or right to receive consideration
as a result of this Agreement. To the Knowledge of the Company, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will or could reasonably be expected to, give rise to or serve as a basis for
the commencement of any such Legal Proceeding. No Legal Proceeding has ever been
commenced by, and no Legal Proceeding has ever been pending against, the
Company.
(b) Orders. There is no order,
writ, injunction, judgment or decree to which the Company, or any of the assets
owned or used by the Company, is subject. To the Knowledge of the Company, no
officer or other employee of the Company is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to the
Company's business.
|
3.19 |
Authority; Binding Nature of
Agreement. |
(a) Authority; Binding Nature.
The Company has the right, power and authority to enter into and to perform its
obligations under this Agreement and of each such other agreement, document and
instrument referred to in or contemplated by this Agreement to which the Company
is or contemplates becoming a party and the execution, delivery and performance
by the Company of this Agreement and of each such other agreement, document and
instrument have been duly authorized by all necessary action on the part of the
Company and, as applicable, its board of directors. This Agreement and each
other agreement, document and instrument referred to in or contemplated by this
Agreement to which the Company is a party constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to: (i) laws of general application relating to
bankruptcy, insolvency, moratorium, and the relief of debtors; and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
(b) Board and Shareholder
Approval. The Company's board of directors and Shareholders have each: (i)
determined that the Share Purchase is advisable and fair and in the best
interests of the Company and its Shareholders; and (ii) authorized the transfer
of Shares to the Purchaser and the Company to enter and perform its obligations
under this Agreement.
(c) Bankruptcy. The Company is
not an insolvent Person within the meaning of the Bankruptcy and Insolvency
Act (Canada) or has not made an assignment in favour of its creditors or a
proposal in bankruptcy to its creditors or any class thereof, and no petition
for a receiving order has been presented in respect of it. The Company has not
initiated proceedings with respect to a compromise or arrangement with its creditors or for its winding
up, liquidation or dissolution. No receiver or interim receiver has been
appointed in respect of the Company or any of its assets and no execution or
distress has been levied on any of its assets, nor have proceedings been
commenced in connection with any of the foregoing.
- 24 -
|
3.20 |
Non-Contravention;
Consents. |
Except as set forth in Section 3.20 of the Disclosure Schedule,
neither: (1) the execution, delivery or performance of this Agreement or any of
the other agreements, documents or instruments referred to in this Agreement;
nor (2) the consummation of the Share Purchase or any of the other transactions
contemplated by this Agreement or any such other agreement, document or
instrument, will (with or without notice or lapse of time):
(a) contravene, conflict with or result
in a violation of: (i) any of the provisions of any Charter Documents of the
Company; or (ii) any resolution adopted by the shareholders, board of directors
of the Company;
(b) contravene, conflict with or result
in a violation of, or give any Governmental Body or other Person the right to
challenge any of the transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which the Company or any of the assets owned
or used by the Company, is subject;
(c) contravene, conflict with or result
in a violation of any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by the Company or that otherwise relates
to the Company's business or to any of the assets owned or used by the Company;
(d) contravene, conflict with or result
in a violation or breach of, or result in a default under, any provision of any
Material Contract, or give any Person the right to: (i) declare a default or
exercise any remedy under any such Contract; (ii) accelerate the maturity or
performance of any such Contract; or (iii) cancel, terminate or modify any such
Contract except to the extent that the breaches of such Material Contracts would
not, in the aggregate, result in Liability of the Company of not more than
$50,000; or
(e) result in the imposition or
creation of any lien or other Encumbrance upon or with respect to any asset
owned or used by the Company (except for minor liens that will not, in any case
or in the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of the Company).
Upon payment of the Company Transaction Consideration, the
Company is not, and the Company will not be, required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection
with: (x) the execution, delivery or performance of this Agreement or any of the
other agreements referred to in this Agreement; or (y) the consummation of the
Share Purchase or any of the other transactions contemplated by this Agreement.
No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Share
Purchase or any of the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company. No such Person is or may become entitled to receive any fee or other amount from the
Company for such services performed or to be performed in connection with the
Share Purchase or any of the other transactions contemplated by this Agreement.
- 25 -
This Agreement and its exhibits and schedules (including the
Disclosure Schedule) does not and will not: (i) contain any representation,
warranty or information that is false or misleading with respect to any material
fact; or (ii) omit to state any material fact necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein (in the light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading.
|
4. |
REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS |
Each of the Shareholders, severally but not jointly, hereby
represents and warrants to the Purchaser as of the Closing Date, subject to such
exceptions as are specifically disclosed in the Disclosure Schedule, as
follows:
Each Shareholder is the sole registered and beneficial owner of
the Shares designated as being owned by such Shareholder opposite such
Shareholder's name in Section 4.1 of the Disclosure Schedule and the
Consideration Allocation Spreadsheet. Such Shares owned by such Shareholder are
not subject to any Encumbrance or to any rights of first refusal of any kind,
and such Shareholder has not granted any rights to purchase such Shares to any
other Person. Such Shareholder has the sole right to transfer such Shares to
Purchaser. Such Shares constitute all of the Shares owned, beneficially or of
record, by such Shareholder, and such Shareholder has no additional options,
warrants or other rights to acquire Shares. At the Closing, in exchange for the
consideration paid pursuant to Section 1.4, Purchaser will receive good title to
such Shares, free and clear of all Encumbrances. For greater certainty, the
foregoing representation in respect of such Shares shall mean that such
Shareholders are the sole registered owners of the Shares designated as being
owned by such Shareholders opposite such Shareholders names in Section 4.1 of
the Disclosure Schedule and the Consideration Allocation Spreadsheet and, in the
case of the Shares which are registered in the name of FACIT, the trustees of
FACIT are the legal owners of the Shares registered in the name of FACIT and
such Shares are held by such Persons pursuant to the terms of the Agreement of
Trust made September 27, 2012 between Ontario Institute for Cancer Research, as
Settlor and [names of individuals redacted for privacy reasons], as Original
Trustees establishing FACIT; at all times since that date and as of the date
hereof, such persons were and remain as the trustees of FACIT and the execution
and delivery of any instrument by any one trustee of FACIT or any person
designated by the trustees of FACIT is a binding action on behalf of the
trustees of FACIT and is thereupon binding upon FACIT. FACIT was properly
settled and subsists at the date of this Agreement.
|
4.2 |
Absence of Claims by the
Shareholders. |
Other than the payments set out in Section 3.6(e), no
Shareholder has any claim against the Company whether present or future,
contingent or unconditional, fixed or variable under any Contract or on any
other basis whatsoever, whether in equity or at law. FACIT expressly reiterates
the representations and warranties of the Company contained in Section 3.10(d) .
- 26 -
There is no Legal Proceeding of any nature pending, or to the
Knowledge of such Shareholder, threatened, against such Shareholder, arising out
of or relating to: (a) such Shareholder's beneficial ownership of Shares or
rights to acquire Shares; (b) such Shareholder's capacity as a Shareholder; (c)
the Share Purchase; (d) any contribution of assets (tangible and intangible) by
such Shareholder (or any of its Affiliates) to the Company (or any of its
Affiliates); or (e) any other agreement between such Shareholder (or any of its
Affiliates) and the Company (or any of its Affiliates), nor to the Knowledge of
such Shareholder is there any reasonable basis therefor. There is no
investigation or other Legal Proceeding pending or, to the Knowledge of such
Shareholder, threatened, against such Shareholder arising out of or relating to
the matters noted in clauses "(a)" through "(e)" of the preceding sentence by or
before any Governmental Body, nor to the Knowledge of such Shareholder is there
any reasonable basis therefor. There is no Legal Proceeding pending or, to the
Knowledge of such Shareholder, threatened, against such Shareholder with respect
to which such Shareholder has a contractual right or a right to indemnification
from the Company related to facts and circumstances existing prior to the
Closing, nor are there any facts or circumstances that would give rise to such a
Legal Proceeding.
Such Shareholder, if it is an Entity, has the absolute and
unrestricted right, power and authority or, if such Shareholder is an individual
(and/or is designated as a trustee of the Trust), has capacity to enter into
this Agreement and under each other agreement, document or instrument referred
to in or contemplated by this Agreement to which the Shareholder is or will be a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and of each such other agreement,
document and instrument to such Shareholder is a party and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of such Shareholder (including, in the case of
the Shareholders who are designated as trustees of FACIT, all necessary action
on the part of FACIT) and no further action is required on the part of such
Shareholder (including FACIT) to authorize this Agreement or any other
agreement, document and instrument to which such Shareholder is a party and the
transactions contemplated hereby and thereby. This Agreement and each such other
agreement, document and instrument to which such Shareholder is a party has been
duly executed and delivered by such Shareholder, and assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligations of such Shareholder, enforceable
against each such party in accordance with their respective terms, subject to:
(a) laws of general application relating to bankruptcy, insolvency, moratorium,
the relief of debtors and enforcement of creditors' rights in general; and (b)
rules of law governing specific performance, injunctive relief, other equitable
remedies and other general principles of equity.
The execution and delivery by such Shareholder of this
Agreement, the Shares held by such Shareholder on the date hereof and any other
agreement, document or instrument referred to in or contemplated by this
Agreement to which such Shareholder is a party and the consummation of the
transactions contemplated hereby and thereby will not: (a) conflict with: (i)
any provision of the articles of incorporation, bylaws, trust agreement or other
charter or organizational documents of such Shareholder if such Shareholder is
an Entity; (ii) any Material Contract to which such Shareholder or any of such
Shareholder's properties or assets is subject; or (iii) any judgment, order,
decree, statute, law, ordinance, rule, regulation or other Legal Requirement
applicable to such Shareholder or such Shareholder' properties or assets; or (b)
require any further Consent from or on behalf of any Person.
- 27 -
(a) Except as set forth on
Section 4.6 of the Disclosure Schedule, the Shareholder is not a non-resident of
Canada, within the meaning of the ITA.
(b) Each Shareholder that is a
non-resident of Canada as defined in the ITA represents and warrants that the
Shares held by such Shareholder are not "taxable Canadian property" within the
meaning of the ITA.
The Shareholder is not an insolvent Person within the
meaning of the Bankruptcy and Insolvency Act (Canada) and has not made an
assignment in favour of its creditors or a proposal in bankruptcy to its
creditors or any class thereof, and no petition for a receiving order has been
presented in respect of it. It has not initiated proceedings with respect to a
compromise or arrangement with its creditors or for its winding up, liquidation
or dissolution. No receiver or interim receiver has been appointed in respect of
it or any of its undertakings, property or assets (including any of its Shares)
and no execution or distress has been levied on any of its undertakings,
property or assets (including any of its Shares), nor have any proceedings been
commenced in connection with any of the foregoing.
|
5. |
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER |
Purchaser represents and warrants to
the Company and each Shareholder as follows:
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of Ontario and has full power and authority to
conduct its business in the manner in which its business is currently being
conducted and to own and use its assets in the manner in which its assets are
currently owned and used.
|
5.2 |
Non-Contravention;
Consents. |
(a) Consents. Except for any
applicable filings required to be made by Purchaser with, and Consents required
to be obtained by Purchaser from, NASDAQ Stock Market and the Toronto Stock
Exchange and any relevant securities regulatory authority, Purchaser will not be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with: (i) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement;
or (ii) the consummation of the Share Purchase or any of the other transactions
contemplated by this Agreement.
(b) Non-Contravention.
Neither: (i) the execution, delivery or performance of this Agreement or any of
the other agreements, documents or instruments referred to in this Agreement;
nor (ii) the consummation of the Share Purchase or any of the other transactions
contemplated by this Agreement or any of such other agreements, documents or
instruments, will (with or without notice or lapse of time) contravene, conflict
with or result in a violation of: (A) any of the provisions of the articles of
incorporation or bylaws (or similar documents) of Purchaser; (B) any resolution
adopted by the shareholders, the board of directors of Purchaser; or (C) any
provision of any material contract to which Purchaser is bound.
- 28 -
|
5.3 |
Authority; Binding Nature of
Agreement. |
Purchaser has the absolute and unrestricted right, power and
authority to enter into and perform their obligations under this Agreement and
under each other agreement, document and instrument referred to in this
Agreement to which Purchaser is a party; and the execution, delivery and
performance by Purchaser of this Agreement and any of each such other agreement,
document and instrument have been duly authorized by all necessary action on the
part of Purchaser and its board of directors. This Agreement and each other
agreement, document or instrument referred to in this Agreement to which
Purchaser is a party constitutes the legal, valid and binding obligation of
Purchaser, as the case may be, enforceable against them in accordance with its
terms, subject to: (a) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (b) rules of law governing specific
performance, injunctive relief and other equitable remedies.
There is no pending Legal Proceeding and, to the Knowledge of
Purchaser, no Person has threatened to commence any Legal Proceeding, that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Share Purchase or any of the other
transactions contemplated by this Agreement.
The Purchaser is a reporting issuer in each of the provinces of
British Columbia, Alberta, Manitoba, Ontario and Nova Scotia and is in
compliance with its obligations under the applicable securities laws of those
provinces in all material respects. The public disclosure record of the
Purchaser is true, correct and complete on the date hereof in all material
respects and the Purchaser is in material compliance with all of its obligations
under National Instrument 51-102 - Continuous Disclosure Obligations and
the applicable rules and policies of the Toronto Stock Exchange and the NASDAQ
Stock Market.
The Purchaser is a taxable Canadian corporation for purposes of
the ITA and is not a nonresident of Canada for purposes of the ITA.
|
6. |
CERTAIN COVENANTS OF THE
PARTIES |
|
6.1 |
Filings and Consents. |
(a) Filings. Each Party shall use Commercially
Reasonable Efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed by such
Party with any Governmental Body with respect to the Share Purchase and the
other transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body. Subject to the
confidentiality provisions in Section 6.2, the Shareholders and the Company each
shall promptly supply each other with any information which may be required in
order to effectuate any filings pursuant to (and to otherwise comply with its
obligations set forth in) this Section 6.1(a) . Except where prohibited by
applicable Legal Requirements or any Governmental Body, and subject to the
confidentiality provisions in Section 6.2, the Shareholders and the Company
shall, after the Closing Date: (i) cooperate with Purchaser with respect to any
filings required to be made by Purchaser in connection with the Share Purchase;
(ii) permit Purchaser to review (and consider in good faith the views of
Purchaser in connection with) any documents before submitting such documents to any Governmental Body in connection with the Share
Purchase; and (iii) promptly provide Purchaser with copies of all filings,
notices and other documents (and a summary of any oral presentations) made or
submitted by the Shareholders or the Company with or to any Governmental Body in
connection with the Share Purchase, other than personal tax returns of the
Shareholders.
- 29 -
(b) Tax Periods Ending on or Before
the Closing Date. As soon as reasonably practicable after the preparation
and finalization of the Closing Statements as contemplated in Section 1.5(a),
the Shareholders shall prepare or cause to be prepared, and file or cause to be
filed, all Tax Returns of the Company for all periods ending on or prior to the
Closing Date which have not been filed by the Closing Date. Such Tax Returns
shall be prepared in a manner consistent with applicable Legal Requirement and,
subject to compliance with such Legal Requirements, the Shareholders shall use
Commercially Reasonable Efforts to claim the maximum of all discretionary and
other available deductions, credits, losses and attributes which arose in
respect of a period (or portion thereof) ending on or prior to the Closing Date.
The Shareholders shall provide to Purchaser for its review a draft of each such
Tax Return no later than twenty (20) days in the case of an income Tax Return,
and ten (10) days in the case of any other Tax Return, prior to the due date for
filing such Tax Return with the appropriate Governmental Entity. Purchaser shall
notify the Shareholders in writing within ten (10) days in the case of an income
Tax Return, and five (5) days in the case of any other Tax Return, after
delivery of the relevant Tax Return if it has any reasonable comments with
respect to items set forth in such Tax Return and the Shareholders shall
incorporate all such comments into the Tax Return unless such comments are
contrary to applicable Legal Requirement. All such Tax Returns prepared pursuant
to the provisions of this paragraph shall be prepared at the expense of the
Shareholders.
(c) Calculation of Straddle Period
Tax. The parties agree that the Taxes allocable in respect of a Straddle
Period shall be calculated as follows: (i) in the case of any Taxes other than
gross receipts, sales or use taxes, and Taxes related to employment source
deductions, the Taxes shall be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction, the numerator of which is the
number of days in the taxable period ending on the day prior to the Closing Date
and the denominator of which is the number of days in the entire taxable period,
and (ii) in the case of any Tax based upon or related to, sales or use taxes,
and Taxes related to employment source deductions be deemed equal to the amount
which would be payable if the relevant taxable period ended on the day prior to
the Closing Date.
(d) Cooperation. Purchaser and
the Shareholders shall cooperate, as and to the extent reasonably requested by
the other parties, in connection with all Tax matters of the Company related to
Pre-Closing Periods and a Straddle Period. Such cooperation shall include
obtaining and providing appropriate forms, retaining (until the expiration of
the statute of limitations, and any extensions thereof, and in accordance with
any record retention agreements entered into with a Governmental Body) and
providing records and information that are reasonably relevant to any such Tax
Return.
(e) Straddle Period Tax Returns.
The Purchaser shall prepare, or cause to be prepared, all Tax Returns for a
Straddle Period and the Shareholders shall prepare, or cause to be prepared, any
Tax Returns for periods up until the Closing that have not already been
filed.
(f) Pre-Closing Period Financial
Statements and Tax Returns. Any costs incurred by Purchaser in preparing
Closing Statements and the Tax Returns for the period ended on or prior to the
Closing Date as a result of the Shareholders failure to do so in accordance
with the provisions hereof (including, without limitation, personnel costs using
appropriate cost accounting principles) shall constitute a reduction against any
amounts owing by Purchaser to the Shareholders hereunder.
- 30 -
(g) R&D Credits and HST
Refund.
(i) With respect to the R&D Credits
and the HST Refund, the Shareholders shall have sole responsibility to file, as
soon as reasonably practicable after the completion of the Closing Statements,
for all R&D Credits and any HST Refund reasonably available to the Company
(and, if considered appropriate by the Majority Shareholders, to settle,
compromise or not pursue any claims against the applicable Governmental
Bodies).
(ii) In the case that the R&D
Credits are not obtained by the Company by nine (9) months subsequent to the
Closing Date, then at the option of the Majority Shareholders, (A) the date of
the Secondary Payment shall be delayed until such R&D Credits are obtained
or (B) the Secondary Payment shall be partly made on the date required based on
any Working Capital Surplus and thereafter when the R&D Credit is received
by the Company, residual amounts of the Secondary Payments shall be distributed
to the Shareholders (subject to Purchasers rights to deduct any amounts of the
Working Capital Deficit that remain (after the prior payments) as contemplated
in Section 1.7 and subject further to the provisions of Sections 7.1, 7.2 and
7.7) .
(iii) Each of the Purchaser and the
Company agree that any and all amounts of R&D Credits less any portion of
such R&D Credits that has been applied on a Tax Return to reduce the Taxes
otherwise payable by the Company or the Purchaser for a Pre-Closing Period,
shall be paid in full to the Shareholders as part of the Secondary Payment.
Purchaser shall have the right to set-off any amounts payable pursuant to this
Section 6.1(g)(i) against any amounts owing from the Shareholders to Purchaser
on account of Taxes in addition to any other remedies provided for in this
Agreement or in law or equity.
(ii) For greater certainty, the amount
of the R&D Credits and the HST Refund shall be payable to the Shareholders
only when realized by the Company in cash and not based upon the amount claimed.
Notwithstanding the foregoing or any other provision herein, if the R&D
Credits that would otherwise be payable to the Company become non-refundable or
cannot be realized in cash due to an action of the Purchaser or the Company
after the Closing Date, the Purchaser shall include in the Secondary Payment the
amount of such R&D Credit.
(iv) Purchaser shall keep the
Shareholders informed of any notice, document or other communication received by
Purchaser from a Governmental Body regarding or affecting the R&D Credits
and the HST Refund. Copy of any such notice or documents shall be sent to the
Shareholders within ten (10) days of its receipt by Purchaser.
(h) Directors and Officers
Insurance. The Purchaser shall not, and shall ensure the Company does not,
terminate any run-off directors and officers liability insurance policy that was
effective on Closing and shall allow any such policy to continue for its full
duration pursuant to its terms. Neither the Purchaser nor the Company shall
prevent any person who was a director or officer prior to closing from realizing
the benefit of any such insurance coverage. For greater certainty, neither the
Purchaser nor the Company shall have any duties or obligations to keep such
insurance in force and effect and, without limiting the generality of the
foregoing, shall have no obligation to make any payment in respect thereto.
- 31 -
(a) Each Party shall (and shall cause
each of its Representatives to) hold in strictest confidence and not use in any
manner, other than as expressly contemplated by this Agreement, all Confidential
Information of the other Parties.
(b) Subject to Section 6.3, Section
6.2(a) shall not apply to the disclosure of any Confidential Information where
and to the extent that disclosure is required by Legal Requirement.
Notwithstanding the foregoing, in the case of FACIT, FACIT shall be entitled to
disclose such Confidential Information to its advisors (including lawyers and
accountants) or funding agencies (including the Government of Ontario) on a need
to know basis, in each case, to the extent permissible under applicable Law,
under appropriate confidentiality provisions or professional standards of
confidentiality substantially equivalent to those of this Agreement. In that
case, the Party required to disclose (or whose Representative is required to
disclose) shall, as soon as possible in the circumstances, notify the other
Parties of the requirement of the disclosure including the nature and extent of
the disclosure and the provision of the Legal Requirement pursuant to which the
disclosure is required. To the extent possible, the Party required to make the
disclosure shall, before doing so, provide to the other Parties the text of any
disclosure. On receiving the notification, the other Parties may take any
reasonable action to challenge the requirement, and the Party required to
disclose shall (or shall cause the applicable Representative to), at the expense
of the other Parties, assist the other Parties in taking that reasonable action
to challenge the requirement to disclose.
(c) For greater certainty, other than
the Confidential Information of each Shareholder which constitutes personal
information of such Shareholder within the meaning of the Personal
Information Protection and Electronic Documents Act (Canada), which
Confidential Information shall be kept confidential unless required to be
disclosed pursuant to a Legal Requirement, nothing contained herein shall
prevent Purchaser from disclosing any Confidential Information relating to the
Company, or otherwise disclosing the terms and conditions of this Agreement, in
such manner, and to such extent, as Purchaser may determine.
|
6.3 |
Public Announcements. |
From and after the date of this Agreement, except as expressly
contemplated by this Agreement, none of the Shareholders shall issue any press
release or make any public statement regarding (or otherwise disclose to any
Person the existence or terms of) this Agreement or the Share Purchase or any of
the other transactions or documents contemplated by this Agreement, without
Purchaser's prior written consent.
|
6.4 |
Termination of Shareholders
Agreement. |
The Parties hereto other than the Purchaser and the Company
constitute all of the Shareholders of the Company. Pursuant to Section 12.1(b)
of the Shareholders Agreement, the Shareholders and the Company agree and
acknowledge that the Shareholders Agreement is hereby terminated effective the
Business Day prior to the date of this Agreement. Without limiting the
generality of the foregoing, each of the Shareholders and the Company waive and
agree that the provisions of Article VI of the Shareholders Agreement need not
have been complied with insofar as concerns the transactions contemplated
herein. Each Shareholder agrees and acknowledges that the Company has not taken
any action inconsistent with the Shareholders Agreement.
- 32 -
|
6.5 |
Tax Allocation and
Elections. |
(a) The Parties hereto agree and
acknowledge that the Purchase Price is the only consideration for the sale of
Shares by the Shareholders to the Purchaser pursuant to this Agreement. No
portion of any consideration received or receivable pursuant to the Royalty
Agreement or any employment or non-compete agreement shall be allocable to
Transaction Consideration.
(b) At the request of any Shareholder
that is a party to an employment or non-competition agreement, the Purchaser
agrees to execute a joint election with such Shareholder under section 56.4 of
the ITA so that section 68 of the ITA does not apply to deem consideration to be
received or receivable by the Shareholder for the restrictive covenants
contained in any such agreement.
(c) The Purchaser agrees to make within
the prescribed time limits a joint tax election under section 85 of the ITA with
each Shareholder, which election shall be completed and filed by such
Shareholder. The amount elected under any such election shall be determined in
the sole discretion of such Shareholder provided such amount is within the
limits prescribed by the ITA.
|
7.1 |
Survival of Representations,
Etc. |
(a) General Survival. Subject to
Sections 7.1(c), 7.1(d) and 7.1(h), the representations and warranties made by
the Company in this Agreement shall survive the Closing Date and shall expire on
the date that is four (4) years from the Closing Date (the "Termination
Date"); provided, however, that if, at any time prior
to the Termination Date, any Purchaser Indemnitee delivers to the Shareholders a
written notice alleging the existence of an inaccuracy in or a breach of any of
such representations and warranties and asserting a claim for recovery under
Section 7.2 based on such alleged inaccuracy or breach, then the claim asserted
in such notice shall survive the Termination Date until such time as such claim
is fully and finally resolved.
(b) Notwithstanding the foregoing but
subject to Section 7.1(h), the liability of each Shareholder under Section 7.2
is limited in amount to that Shareholders allocation of any payments due under
this Agreement or the Royalty Agreement in accordance with the Consideration
Allocation Spreadsheet.
(i) in the event that any such claim is
made by a Purchaser Indemnitee on or prior to the Secondary Payment, the claim
may only be credited against any amount otherwise payable (or subsequently
payable) to the Shareholders pursuant to Section 1.7, the Milestone Payment, the
CNS Payments or the Royalty Agreement;
(ii) in the event that any such claim
is made by a Purchaser Indemnitee after the Secondary Payment has been made but
before the Milestone Payment, the Purchaser Indemnitee's claim may only be
credited against the Milestone Payment, any CNS Payments or any payments to be
made pursuant to the Royalty Agreement which have not yet been paid to the
Shareholders; and
(iii) in the event that any such claim is
made by a Purchaser Indemnitee after the Secondary Payment and Milestone Payment
have been made, the Purchaser Indemnitee's claim may only be credited against
future payments pursuant to the Royalty Agreement and CNS Payments which have
not yet been paid to the Shareholders.
- 33 -
For greater certainty, once a payment is made hereunder, or a
payment is made pursuant to the Royalty Agreement, such amounts will no longer
be available to the Purchaser Indemnitees for satisfaction of claims pursuant to
this Article 7 unless such claims are in connection with Sections 7.1(h) .
(c) Company Specified
Representations; Shareholder Representations. Notwithstanding anything to
the contrary contained in Section 7.1(a), the Company Specified Representations
and the representations and warranties of the Shareholders set forth in this
Agreement shall survive indefinitely.
(d) Intellectual Property, Tax, and
Title Matters. Notwithstanding anything to the contrary contained in Section
7.1(a) or Section 7.1(c), but subject to Section 7.1(h): (i) the representations
and warranties set forth in Section 3.9 shall survive for a period of five (5)
years from the Closing Date (so that the reference to "the date that is four (4)
years from the Closing Date" in Section 7.1(a) shall be read as being a
reference to "five (5) years from the Closing Date"); and (ii) the
representations and warranties set forth in Section 3.13 and Section 3.6
(collectively, the "Tax Representations") shall survive until six
months following the expiration of the statute of limitations thereto (the
"Tax Limitation Period") (so that the reference to "the date that is two
(2) years from the Closing Date" shall be read as a reference to the Tax
Limitation Period; provided, however, that if, at any time prior to the
expiration dates referred to in this sentence, any Purchaser Indemnitee delivers
to the Shareholders a written notice alleging the existence of an inaccuracy in
or a breach of any of such representations and asserting a claim for recovery
under Section 7.2 based on such alleged inaccuracy or breach, then the claim
asserted in such notice shall survive the applicable expiration date referred to
in this sentence.
(e) Purchaser General
Representations. Subject to Sections 7.1(f) and 7.1(h), all representations
and warranties made by Purchaser in this Agreement shall survive the Closing
Date and shall expire on the Termination Date; provided,
however, that if, at any time prior to the Termination Date, a
Shareholder delivers to Purchaser a written notice alleging the existence of an
inaccuracy in or a breach of any of such representations and warranties and
asserting a claim for recovery under Section 7.2 based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive the
Termination Date until such time as such claim is fully and finally resolved.
(f) Purchaser Specified
Representations. Notwithstanding anything to the contrary contained in
Section 7.1(e), but subject to Section 7.1(h), Purchaser Specified
Representations shall survive indefinitely.
(g) Covenants. The covenants and
agreements of the Parties contained herein shall survive indefinitely.
(h) Fraud, Intentional
Misrepresentation and Willful Misconduct. Notwithstanding anything to the
contrary contained in Sections 7.1(a) through 7.1(g), inclusive, all limitations
of any nature set forth in Sections 7.1(a) through 7.1(g), inclusive, shall not
apply in the case of claims based upon fraud, intentional misrepresentation
and/or willful misconduct.
(i) Representations Not
Limited. The representations, warranties, covenants and obligations of the
Company and the Shareholders, and the rights and remedies that may be exercised
by Purchaser Indemnitees, shall not be limited or otherwise affected by or as a
result of any information furnished to, or any investigation made by or
Knowledge of, any of Purchaser Indemnitees or any of their Representatives
unless disclosed in the Disclosure Schedule in accordance with Section 8.15.
Subject to the foregoing, the Purchaser Indemnitees expressly reserve the right
to seek indemnity or other remedy for any Damages arising out of or relating to
any breach of any representation, warranty or covenant contained herein, notwithstanding any investigation by,
disclosure to, Knowledge or imputed Knowledge of the Purchaser Indemnitees in
respect of any fact or circumstance that reveals the occurrence of any such
breach. In furtherance of the foregoing, the Shareholders agree that as
Knowledge or lack of reliance shall not be a defense in law or equity to any
claim of breach of representation, warranty or covenant by the Company or the
Shareholders herein, the Shareholders shall not in any proceeding concerning a
breach or alleged breach of any representation, warranty or covenant herein, or
any indemnity thereof, seek information concerning Knowledge or reliance of the
Purchaser Indemnitees, through deposition, discovery or otherwise or seek to
introduce evidence or argument in any proceeding regarding the Knowledge or lack
of reliance of the Purchaser Indemnitees prior to the Closing on or with respect
to any such representations, warranties or covenants.
- 34 -
(a) Indemnification by the
Shareholders. Each Shareholder (collectively, the "Shareholder
Indemnitors"), severally and in accordance with such Shareholder
Indemnitor's Indemnification Percentage, as set out in the Consideration
Allocation Spreadsheet, shall indemnify each of the Purchaser Indemnitees from
and against, and shall compensate and reimburse each of the Purchaser
Indemnitees for, any Damages which are directly or indirectly suffered or
incurred by any of the Purchaser Indemnitees or to which any of the Purchaser
Indemnitees may otherwise directly or indirectly become subject (regardless of
whether or not such Damages relate to any third party claim) and which arise
directly or indirectly from or as a result of, or are directly or indirectly
connected with:
(i) any inaccuracy in or breach of any
representation or warranty made by the Company and/or any Shareholder in this
Agreement or any other instrument delivered in connection with the completion of
the transactions contemplated herein;
(ii) any inaccuracy in the
Consideration Allocation Spreadsheet;
(iii) any breach of any covenant or
obligation in this Agreement by such Shareholder. For clarity, each Shareholder
shall be personally liable for any breach of any covenant or obligation made by
such Shareholder, and no Shareholder shall be liable for the breach of any
covenant, obligation or representation of any other Shareholder;
(iv) any inaccuracy in the Pre-Closing
Statement (including, without limitation, any undisclosed Change of Control
Payment or Company Transaction Expense).
(b) Damage to Purchaser. The
Parties acknowledge and agree that, if the Company suffers, incurs or otherwise
becomes subject to any Damages as a result of or in connection with any
inaccuracy in or breach of any representation, warranty, covenant or obligation,
then (without limiting any of the rights of the Company as a Purchaser
Indemnitee) Purchaser shall also be deemed, by virtue of its ownership of the
shares of the Company, to have incurred Damages as a result of and in connection
with such inaccuracy or breach. For greater certainty, such Damages shall be
counted only once as against any Shareholder and shall not be duplicated.
(c) Indemnification by
Purchaser. From and after the Closing Date (but subject to Section 7.1),
Purchaser shall indemnify each of the Shareholders (the "Shareholder
Indemnitees") from and against, and shall compensate and reimburse each
of the Shareholder Indemnitees for, any Damages which are directly or indirectly
suffered or incurred by any of the Shareholder Indemnitees or to which any of
the Shareholder Indemnitees may otherwise directly or indirectly become subject
(regardless of whether or not such Damages relate to any third party claim) and
which arise directly or indirectly from or as a result of, or are directly or
indirectly connected with:
- 35 -
(i) any inaccuracy in or breach of any
representation or warranty made by the Purchaser in this Agreement;
(ii) any breach of any covenant or
obligation of Purchaser;
(iii) any action or omission by any Licensee
of the Purchaser or the Company after the Closing Date;
(iv) any product liabilities related to the
Fluorinov Products;
(v) development, distribution,
marketing or sale of the Fluorinov Products or any other products related thereto
of the Company, the Purchaser or their Affiliates;
(vi) any violation by the Company, the
Purchaser or their Affiliates of any Legal Requirements applicable to them or
their activities; and
(vii) the Company's, the Purchaser's or any
of their Affiliates gross negligence or willful misconduct in performing any of
their obligations under this Agreement.
(d) An "Indemnitor" means
Purchaser Indemnitor or a Shareholder Indemnitor, as applicable. An
"Indemnitee" means a Purchaser Indemnitee or a Shareholder Indemnitee, as
applicable.
(e) For the sole purpose of determining
Damages (and not for determining whether or not any breaches of representations
or warranties have occurred), the representations and warranties of the Company
and Purchaser shall be read without giving effect to any materiality or similar
qualification limiting the scope of such representation or warranty.
(a) Deductible. Subject to
Section 7.3(b), the applicable Indemnitor(s) shall not be required to make any
indemnification payment pursuant to Section 7.2(a)(i), Section 7.2(c)(i) or
Section 7.2(c)(i) for any inaccuracy in or breach of any representation or
warranty in this Agreement) until such time as the total amount of all Damages
arising from all inaccuracies and breaches applicable to such Indemnitor(s)
exceeds $50,000 in the aggregate (the "Deductible"). If the total amount of such
Damages exceeds the Deductible, then the applicable Indemnitees shall be
entitled to be indemnified against and compensated and reimbursed for the amount
of all Damages, including the amount of the Deductible.
(b) Applicability of
Deductible. The limitations set forth in Section 7.3(a) shall not apply in
the case of fraud, intentional misrepresentation and/or willful misconduct.
(c) Recourse to Secondary
Payment. Recourse by Purchaser Indemnitees to the portion of Secondary
Payment shall be Purchaser Indemnitees' initial remedy for monetary Damages
resulting from the matters referred to in Section 7.2 for the period commencing
on the Closing Date and expiring on the date the Secondary Payment is made.
Thereafter, Purchaser's sole and exclusive remedy for monetary Damages resulting
from the matters referred to in Section 7.2 shall be as set forth in Section 7.1
herein.
- 36 -
Each Shareholder Indemnitor waives, and acknowledges and agrees
that such Indemnitor shall not have and shall not exercise or assert (or attempt
to exercise or assert), any right of contribution, right of indemnity or other
right or remedy against the Company in connection with any indemnification
obligation or any other Liability to which such Indemnitor may become subject
under or in connection with this Agreement or any other agreement or document
delivered to Purchaser in connection with this Agreement other than pursuant to
the terms of this Agreement. For greater certainty, and without limiting the
generality of the foregoing, after the Closing, the Company shall have no
Liability hereunder to any party (and, for greater certainty, Purchaser shall
not be able to seek any recourse against the Company, it being understood that
Purchaser may only seek recourse against the Shareholders hereunder in respect
of any breaches by the Company of the terms and conditions hereof).
Any claim for indemnification, compensation or reimbursement
pursuant to this Article 7 (and, at the option of any Indemnitee, any claim
based upon fraud, intentional misrepresentation or willful misconduct) shall be
brought and resolved exclusively as follows:
(a) If any Indemnitee has or claims in
good faith to have incurred or suffered, or believes in good faith that it may
incur or suffer, Damages for which it is or may be entitled to indemnification,
compensation or reimbursement under this Article 7 or for which it is or may
otherwise be entitled to a monetary remedy relating to this Agreement or the
Share Purchase, such Indemnitee may deliver a claim notice (a "Claim
Notice") to the Shareholders or Purchaser, as applicable. Each Claim Notice
shall: (i) contain a brief description of the facts and circumstances supporting
the Indemnitee's claim; and (ii) if practicable, contain a non-binding,
preliminary, good faith estimate of the amount to which the Indemnitee might be
entitled (the aggregate amount of such estimate, as it may be modified by the
Indemnitee in good faith from time to time, being referred to as the "Claimed
Amount").
(b) During the twenty (20) Business Day
period commencing upon receipt by the Shareholders or Purchaser of a Claim
Notice from an Indemnitee (the "Dispute Period"), each Shareholder or
Purchaser, as applicable, may deliver to the Indemnitee a written response (the
"Response Notice") in which the Shareholder or Purchaser, as
applicable: (i) agrees that the full Claimed Amount is owed to the Indemnitee;
(ii) agrees that part, but not all, of the Claimed Amount is owed to the
Indemnitee; or (iii) indicates that no part of the Claimed Amount is owed to the
Indemnitee. If the Response Notice is delivered in accordance with clause "(ii)"
or clause "(iii)" of the preceding sentence, the Response Notice shall also
contain a brief description of the facts and circumstances supporting the
Shareholder's or Purchaser's, as applicable, claim that only a portion or no
part of the Claimed Amount is owed to the Indemnitee, as the case may be. Any
part of the Claimed Amount that is not agreed to be owed to the Indemnitee
pursuant to the Response Notice (or the entire Claimed Amount, if the
Shareholder or Purchaser, as applicable, asserts in the Response Notice that no
part of the Claimed Amount is owed to the Indemnitee) is referred to herein as
the "Contested Amount" (it being understood that the Contested Amount
shall be modified from time to time to reflect any good faith modifications by
the Indemnitee to the Claimed Amount). If a Response Notice is not received by
the Indemnitee from the Shareholder or Purchaser, as applicable, prior to the
expiration of the Dispute Period, then such Shareholder or the Purchaser, as
applicable, shall be conclusively deemed to have agreed that an amount equal to
the full Claimed Amount is owed to the Indemnitee.
(c) If the Shareholder or Purchaser, as
applicable, in its Response Notice agrees that the full Claimed Amount is owed
to the Indemnitee, or if no Response Notice is received by the Indemnitee from
the Shareholder or the Purchaser, as applicable, prior to the expiration of the
Dispute Period, then: (x) in the case of a claim by a Shareholder
Indemnitee, Purchaser shall pay the Claimed Amount to the Shareholders within
ten (10) Business Days following the earlier of the delivery of such Response
Notice or the expiration of the Dispute Period; and (y) in the case of a claim
by a Purchaser Indemnitee: (i) within three (3) Business Days following the
earlier of the delivery of such Response Notice or the expiration of the Dispute
Period, Purchaser and the Shareholder shall agree to release the Claimed Amount
to Purchaser Indemnitee from the applicable future payments to the Shareholders
otherwise owing pursuant to this Agreement or the Royalty Agreement.
- 37 -
(d) If the Shareholder or Purchaser, as
applicable, delivers a Response Notice to the Indemnitee during the Dispute
Period agreeing that part, but not all, of the Claimed Amount is owed to the
Indemnitee (the "Agreed Amount"), then if accepted by the Indemnitee in
writing: (x) in the case of a claim by a Shareholder Indemnitee, Purchaser shall
pay the Agreed Amount to the Shareholders within three (3) Business Days
following the delivery of such Response Notice; and (y) in the case of a claim
by a Purchaser Indemnitee without further act or formality, the Purchaser may
release the Agreed Amount to the Purchaser Indemnitee from the applicable future
payments to the Shareholders otherwise owing pursuant to this Agreement or the
Royalty Agreement.
(e) If the Shareholder or Purchaser, as
applicable, delivers a Response Notice to the Indemnitee during the Dispute
Period indicating that there is a Contested Amount, the Shareholder or
Purchaser, as applicable, and the Indemnitee shall attempt in good faith to
resolve the dispute related to the Contested Amount. If the Shareholder or
Purchaser, as applicable, and the Indemnitee resolve such dispute, such
resolution shall be binding on the Shareholder or Purchaser, as applicable, the
Indemnitor(s) and such Indemnitee and a settlement agreement stipulating the
amount owed to such Indemnitee (the "Stipulated Amount") shall be signed
by such Indemnitee and the Shareholder or Purchaser, as applicable. In the case
of a claim by a Shareholder Indemnitee, Purchaser shall pay the Stipulated
Amount to the Shareholder within three (3) Business Days following the execution
of such settlement agreement, or such shorter period of time as may be set forth
in the settlement agreement; and (y) in the case of a claim by a Purchaser
Indemnitee, within three (3) Business Days following the execution of such
settlement agreement, or such shorter period of time as may be set forth in the
settlement agreement, Purchaser release the Stipulated Amount to Purchaser
Indemnitee from the Secondary Payment (to the extent available). If the
Secondary Payment is insufficient to cover the full Stipulated Amount, Purchaser
may set off the amount of such deficiency against the applicable future payments
to the Shareholders otherwise owing pursuant to this Agreement or the Royalty
Agreement.
(f) In the event that there is a
dispute relating to any Claim Notice or Contested Amount (whether it is a matter
between the Indemnitee, on the one hand, and a Shareholder or the Purchaser, as
applicable, on the other hand, or it is a matter that is subject to a claim or
Legal Proceeding asserted or commenced by a third party brought against the
Indemnitee or any of the Company or its direct or indirect Subsidiaries), such
dispute shall be settled by the Ontario Superior Court of Justice.
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7.6 |
Defense of Third Party
Claims. |
In the event of the assertion or commencement by any Person of
any claim or Legal Proceeding (whether against Purchaser, the Company or any
other Person) with respect to which any Shareholder Indemnitor may become
obligated to indemnify, compensate or reimburse any Purchaser Indemnitee
pursuant to Article 7, Purchaser shall have the right, at its election, to
proceed with the defense of such claim or Legal Proceeding on its own with
counsel reasonably satisfactory to the Majority Shareholders. If Purchaser so
proceeds with the defense of any such claim or Legal Proceeding:
- 38 -
(a) subject to the other provisions of
Article 7, all reasonable expenses relating to the defence of such claim or
Legal Proceeding shall be borne and paid exclusively by the Shareholder
Indemnitors;
(b) each Shareholder Indemnitor shall
make available to Purchaser any documents and materials in his possession or
control that may be necessary to the defence of such claim or Legal Proceeding;
and
(c) Purchaser shall have the right to
settle, adjust or compromise such claim or Legal Proceeding; provided,
however, that if Purchaser settles, adjusts or compromises any such claim or
Legal Proceeding without the Consent of Majority Shareholders, such settlement,
adjustment or compromise shall not be conclusive evidence of the amount of
Damages incurred by Purchaser Indemnitee in connection with such claim or Legal
Proceeding (it being understood that if Purchaser requests that the Shareholders
consent to a settlement, adjustment or compromise, the Shareholders shall not
unreasonably withhold or delay such Consent).
Purchaser shall give the Shareholders prompt notice of the
commencement of any such Legal Proceeding against Purchaser or the Company;
provided, however, that any failure on the part of Purchaser to so
notify the Shareholders shall not limit any of the obligations of the
Shareholder Indemnitors under Article 7 (except to the extent such failure
materially prejudices the defence of such Legal Proceeding). If the Purchaser
does not elect to proceed with the defence of any such claim or Legal
Proceeding, the any Shareholder may proceed with the defence of such claim or
Legal Proceeding with counsel reasonably satisfactory to Purchaser; provided,
however, that the Shareholder may not settle, adjust or compromise any such
claim or Legal Proceeding without the prior written Consent of Purchaser (which
Consent may not be unreasonably withheld or delayed).
Subject to the other provisions of this Article 7, in
addition to any rights of setoff or other similar rights that the Purchaser or
any of the other Purchaser Indemnitees may have at common law or otherwise, the
Purchaser shall have the right to withhold and deduct any sum that may be owed
to any Purchaser Indemnitee by any Shareholder Indemnitor under this Article 7
from any amount otherwise payable by any Purchaser Indemnitee to such
Shareholder Indemnitor, including pursuant to Sections 1.4, 1.7, 2.1 or 2.3 of
this Agreement or payments pursuant to the Royalty Agreement.
Except (a) in the event of fraud, intentional
misrepresentation and/or willful misconduct, and (b) for equitable remedies,
from and after the Closing Date, the rights to indemnification, compensation and
reimbursement set forth in this Article 7 shall be the sole and exclusive remedy
of the Indemnitees with respect to any breach of this Agreement.
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7.9 |
Tax Effect of Indemnification
Payment. |
The satisfaction by the Shareholder Indemnitors of any
indemnification amount shall be deemed to constitute a reduction in the
Transaction Consideration. The satisfaction by Purchaser Indemnitors of any
indemnification amount shall be deemed to constitute an increase in the
Transaction Consideration.
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8. |
MISCELLANEOUS PROVISIONS |
- 39 -
Each Party hereto shall execute and cause to be delivered to
each other Party hereto such instruments and other documents, and shall take
such other actions, as such other Party may reasonably request (prior to, at or
after the Closing) for the purpose of carrying out or evidencing any of the
transactions contemplated by this Agreement.
Subject to Sections 1.4 and Article 7, each Party to this
Agreement shall bear and pay all fees, costs and expenses that have been
incurred or that are incurred in the future by such Party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such Party in connection with or by virtue of: (a) the
negotiation, preparation and review of this Agreement (including the Disclosure
Schedule) and all agreements, certificates, opinions and other instruments and
documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement; (b) the preparation and submission of any filing
or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement, and the obtaining of any Consent
required to be obtained in connection with any of such transactions; and (c) the
consummation of the Share Purchase.
If any Legal Proceeding relating to this Agreement or the
enforcement of any provision of this Agreement is brought against any Party
hereto, the prevailing Party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing Party may be entitled).
(a) Any notice or other communication
required or permitted to be delivered to any Party under this Agreement shall be
in writing and shall be deemed properly delivered, given and received: (a) if
delivered by hand, when delivered; (b) if sent via facsimile with confirmation
of receipt, when transmitted and receipt is confirmed; (c) if sent by electronic
mail, or other electronic transmission, upon receipt or confirmation of receipt;
(d) if sent by registered, certified or first class mail, the seventh
(7th) Business Day after being sent; and (e) if sent by overnight
delivery via a national courier service, upon confirmation of receipt, in each
case to the address or facsimile telephone number referred to below with respect
to each Party (or to such other address or facsimile telephone number as such
Party shall have specified in a written notice given to the other Parties
hereto):
If to Purchaser or the Company:
TRILLIUM THERAPEUTICS INC.
96 Skyway Avenue
Toronto, Ontario,
Canada M9W 4Y9
|
Attention: |
Dr. Niclas Stiernholm, Chief Executive Officer
|
|
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James Parsons, Chief Financial Officer
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Fax: (416) 595-5835
- 40 -
with a copy (which shall not
constitute notice) to:
Borden Ladner Gervais LLP
Suite
4400
40 King Street West
Toronto, Ontario, Canada M5H 3Y4
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Attention: |
Jay A. Lefton |
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Fax: |
416-361-7328 |
If to any Shareholder:
To the address and contact information
set out in Exhibit 8.4.
(b) If the
Majority Shareholders provide any notice pursuant to Section 1.5(c), Section
6.1(g), Section 7.6 or Section 8.11 to the Purchaser, the Majority Shareholders
shall notify each other Shareholder within ten (10) Business Days in writing
providing the details of any such communication, and if available, a copy of
such correspondence. Additionally, the Majority Shareholders shall notify each
other Shareholder of any action to be taken by the Majority Shareholders
pursuant to this Agreement in his capacity as Majority Shareholders and shall,
if reasonably practicable, solicit comments from the other Shareholders prior to
taking such action or providing any notice to the Purchaser hereunder.
The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
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8.6 |
Counterparts and Exchanges by Electronic Transmission
or Facsimile. |
This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement. The exchange of a fully executed
Agreement (in counterparts or otherwise) by electronic transmission in portable
document format (PDF) or by facsimile shall be sufficient to bind the Parties to
the terms and conditions of this Agreement.
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8.7 |
Governing Law; Dispute
Resolution. |
(a) Governing Law. This
Agreement shall be construed in accordance with, and governed in all respects by
the laws of the Province of Ontario and the laws of Canada applicable therein.
(b) Venue. Any Legal Proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
(including a Legal Proceeding based upon willful breach or fraud or intentional
misrepresentation) shall be brought or otherwise commenced in the Ontario
Superior Court of Justice sitting in the City of Toronto. Each Party to this
Agreement: (i) expressly and irrevocably consents and submits to the exclusive
jurisdiction of Ontario Superior Court of Justice (and each appellate court
located in the Province of Ontario) in connection with any such Legal
Proceeding; (ii) agrees that the Ontario Superior Court of Justice sitting in
the City of Toronto shall be deemed to be a convenient forum; and (iii) agrees not to assert (by way of
motion, as a defence or otherwise), in any such Legal Proceeding commenced in
the Ontario Superior Court of Justice, any claim that such Party is not subject
personally to the jurisdiction of such court, that such Legal Proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
- 41 -
(c) Indemnification
Claims. Any claim for indemnification, compensation or reimbursement
pursuant to Article 7 (and, at the option of any Indemnitee, any other claim for
a monetary remedy, such as in the case of a claim based upon willful breach or
fraud, relating to this Agreement or the Share Purchase after the Closing) shall
be brought and resolved exclusively in accordance with Section 8.7(b) .
8.8 Successors and Assigns and Parties.
(a) This Agreement shall be
binding upon: (a) the Company; (b) Purchaser; (c) the Shareholders and (d) the
respective heirs, executors, successors and permitted assigns (if any) of the
foregoing. This Agreement shall inure to the benefit of: (i) the Company; (ii)
Purchaser; (iii) the Shareholders; (iv) with respect to Article 7, the
Indemnitees; and (v) the respective heirs, executors, successors and permitted
assigns (if any) of the foregoing.
(b) After the Closing Date,
Purchaser may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Article 7), in whole or in part, to
any Affiliate of Purchaser without obtaining the Consent or approval of any
other Party hereto or of any other Person. For greater certainty, no rights or
interests hereunder of any Shareholder may be assigned, transferred or otherwise
disposed of, in whole or in part, other than to a trust or corporation (the
beneficiaries or shareholders of which are limited to the Shareholder and
members of the Shareholders family), or pursuant to the laws of descent and
distribution or by will except with the written consent of the Purchaser, which
consent may be denied for any reason. If the transfer is to such a trust or
corporation, such transfer shall be conditional upon the transferor and
transferee covenanting and agreeing, on terms and conditions acceptable to the
Purchaser, acting reasonably, that the trust or corporation will continue to
only have beneficiaries or shareholders comprised of the Shareholder and/or
members of the Shareholders family.
(c) Notwithstanding the
foregoing, FACIT may assign its rights and obligations under this Agreement to
any corporation or entity in connection with a bona fide reorganization of FACIT
or OICR or any successor entity of either of them provided that both FACIT and
the assignee are jointly and severally liable for any obligations hereunder.
(d) Obligations of FACIT.
Each of the parties hereto acknowledges that the Trustees of FACIT are entering
into this Agreement solely in their capacity as Trustees of FACIT, and that the
obligations and liabilities (including those arising hereunder or arising in
connection herewith or from the matters to which this Agreement relates, if any,
including without limitation, claims based on negligence or any other tort) of
the trustees, managers, officers, consultants, agents or employees of FACIT
hereunder (the FACIT Personnel) will not be binding upon the
beneficiaries of FACIT (nor will resort be had to the personal property of the
FACIT Personnel or of the beneficiaries of FACIT) (other than the assets of
FACIT from time to time). The obligations or liabilities, if any, of the FACIT
Personnel hereunder shall be satisfied only out of the property of FACIT
(including FACITs rights hereunder and under the Royalty Agreement) and no
resort may be had to the personal property of any of the FACIT Personnel. The
provisions of this paragraph shall enure to the benefit of the heirs,
successors, assigns and personal representatives of the FACIT Personnel and of
the beneficiary of FACIT.
- 42 -
8.9 Remedies Cumulative; Specific
Performance.
The rights and remedies of the
Parties hereto shall be cumulative (and not alternative). The Parties to this
Agreement agree that, in the event of any breach or threatened breach by any
Party to this Agreement of any covenant, obligation or other provision set forth
in this Agreement, for the benefit of any other Party to this Agreement: (a)
such other Party shall be entitled (in addition to any other remedy that may be
available to it) to: (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision; and (ii) an injunction restraining such breach or threatened breach;
and (b) such other Party shall not be required to provide any bond or other
security in connection with any such decree, order or injunction or in
connection with any related action or Legal Proceeding.
8.10 Waiver.
No failure on the part of any
Person to exercise any power, right, privilege or remedy under this Agreement,
and no delay on the part of any Person in exercising any power, right, privilege
or remedy under this Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. No Person shall be deemed to have
waived any claim arising out of this Agreement, or any power, right, privilege
or remedy under this Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of such Person; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
8.11 Amendments.
This Agreement may not be
amended, modified, altered or supplemented other than by means of a written
instrument duly executed and delivered by or on behalf of Purchaser, the Company
and the Majority Shareholders. Any such amendment shall be binding upon all
Shareholders upon receipt of notice by such Shareholders, provided that such
amendment treats all Shareholders equally in proportion to their shareholdings
and no such amendment will prejudice one or more Shareholders disproportionally
with respect to their rights and interest with respect to this Agreement and/or
the Royalty Agreement to any other Party hereto.
8.12 Severability.
In the event that any provision
of this Agreement, or the application of any such provision to any Person or set
of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
8.13 Parties in Interest.
Except for the provisions of
Article 7, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the Parties hereto and their
respective successors and assigns (if any).
- 43 -
8.14 Entire Agreement.
This Agreement, its Exhibits and
Schedules and the other agreements referred to herein set forth the entire
understanding of the Parties hereto relating to the subject matter hereof and
thereof and supersede all prior agreements and understandings among or between
any of the Parties relating to the subject matter hereof and thereof.
8.15 Disclosure Schedule.
The Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained herein permitting such disclosure, and the information disclosed in
any numbered or lettered part shall be deemed to relate to and to qualify only
the particular representation or warranty set forth in the corresponding
numbered or lettered section herein permitting such disclosure.
8.16 Construction.
(a) Company. Any reference
in this Agreement to the "Company" (including references contained in Section
1.5 and in Article 3) shall be deemed to be a reference to the Company and,
after Closing each of its Subsidiaries if applicable (separately and in the
aggregate), except to the extent otherwise specified herein or required by the
context of the use of the word "Company" herein.
(b) Gender; Etc. For
purposes of this Agreement, whenever the context requires: the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(c) Ambiguities. The
Parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
(d) Including. As used in
this Agreement, the words "include" and "including and variations thereof, shall
not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words "without limitation." (e) References. Except as
otherwise indicated, all references in this Agreement to "Sections," "Schedules"
and "Exhibits" are intended to refer to Sections of this Agreement and Schedules
and Exhibits to this Agreement.
(f) References to Pay,
Etc. For purposes of this Agreement, whenever the context requires (for
example, when referring to the payment from the Secondary Payment), all
references to "pay," "payment," "paid" and other similar terms shall include
references to "deliver" and other similar terms.
(g) Currency. As used in
this Agreement, "$" means Canadian dollars. All references to currency herein
are to lawful money of Canada unless otherwise indicated.
- 44 -
8.17 Advice of Counsel.
(a) EACH PARTY TO THIS AGREEMENT
ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE
OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL (AND HAS SOUGHT SUCH
ADVICE OR DETERMINED THAT SUCH ADVICE IS NOT NECESSARY), AND HAS READ AND
UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
(b) Each Party to this Agreement
acknowledges that the negotiation and drafting of this Agreement has been
primarily undertaken by (i) Borden Ladner Gervais LLP, counsel to the Purchaser,
(ii) Eve R. Wahn, counsel to the Company (iii) Bennett Jones LLP, special
counsel to the Company. In such negotiations, Eve R. Wahn and Bennett Jones LLP
have represented the interests of the Company and not the interests of any one
or more of the Shareholders.
[Remainder of page intentionally left blank]
- 45 -
The Parties hereto have caused
this Agreement to be executed and delivered as of the date first written above.
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TRILLIUM THERAPEUTICS INC.
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By: |
Niclas Stiernholm |
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Name: |
Niclas Stiernholm |
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Title: |
President and CEO |
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Authorized Signing Officer
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SHARE PURCHASE AGREEMENT SIGNATURE PAGE
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FLUORINOV PHARMA INC. |
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By: Abdelmalik Slassi |
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Name: |
Abdelmalik Slassi |
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Title: |
President and CSO |
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Authorized Signing Officer
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SHARE PURCHASE AGREEMENT SIGNATURE PAGE
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[name of entity redacted for privacy reasons]
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[name of signatory redacted for privacy |
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By:
reasons] |
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Name: [name
of signatory redacted for |
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privacy
reasons] |
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Title: |
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Authorized
Signing Officer |
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FIGHT AGAINST CANCER INNOVATION |
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TRUST |
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Jeff Courtney |
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Name: Jeff Courtney |
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I have authority to bind the Trust and the
Trustees |
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of the Trust |
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) |
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Abdelmalik Slassi |
Witness: |
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ABDELMALIK SLASSI |
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) |
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) |
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) |
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) |
[name
of signatory redacted for privacy reasons] |
Witness: |
) |
[name of signatory redacted for privacy
reasons] |
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) |
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) |
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) |
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) |
[name
of signatory redacted for privacy reasons] |
Witness: |
) |
[name of signatory redacted for privacy
reasons] |
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) |
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) |
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SHARE PURCHASE AGREEMENT SIGNATURE PAGE
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) |
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) |
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[name
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SHARE PURCHASE AGREEMENT SIGNATURE PAGE
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit
A):
"Act" shall mean the Business Corporations Act (Ontario).
Acquisition Transaction"
means any transaction or series of transactions involving:
(a) the sale, license
or disposition of all or a material portion of the Company's business or assets;
(b) the issuance, disposition or acquisition of: (i) any shares or other equity
security of the Company (other than Shares issued upon exercise of options
outstanding as of the date of the Agreement); (ii) any option, call, warrant or
right (whether or not immediately exercisable) to acquire any shares, unit or
other equity security of the Company; or (iii) any security, instrument or
obligation that is or may become convertible into or exchangeable for any
shares, unit or other equity security of the Company; or
(c) any merger,
amalgamation, consolidation, business combination, reorganization or similar
transaction involving any the Company.
Affiliate" has the meaning ascribed thereto in the Act.
Agreed Amount" shall have the meaning set forth in
Section 7.5(d) of this Agreement.
"Agreement" shall have the meaning set
forth in the preamble.
"Biological Data" means
all information and data used by the Company in respect of the Fluorinov Products
that are protectable or protected by biological data protection laws.
"Business Day" shall mean
any day, except Saturdays and Sundays, on which banks are generally open for
non-automated business in Toronto, Ontario.
"Change of Control
Payments" means: (a) any payment or Liability in respect of severance,
change of control payments, stock option payments or other payments related to
equity or equity-based arrangements, stay bonuses, retention bonuses,
transaction bonuses, and other bonuses and similar Liabilities that is created,
accelerated, increased, accrues or becomes vested or payable by the Company,
including any Taxes of the Company (or any gross-up for Taxes of any Person)
payable or triggered in respect of any such payment, whether pursuant to an
individual agreement, an Employee Benefit Plan or otherwise; and (b) without
duplication of any other amounts included within the definition of Company
Transaction Expenses, any other payment, expense or fee that is created,
accelerated, accrues or becomes payable by the Company to any Governmental
Entity or other Person under any Law or Contract, including in connection with
the making of any filings, the giving of any notices or the obtaining of any
consents, authorizations or approvals, in the case of each of the immediately
preceding clauses (a) and (b), as a result of, or in connection with (either
alone or in combination with any other event, whether or not such event has
occurred or will occur), the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby and thereby (whether or not
payable at the Closing Date).
"Charter Documents" shall have the meaning set forth in Section 3.2 of the Agreement.
"Claim Notice" shall have the meaning set forth in Section 7.5(a) of the Agreement.
"Claimed Amount" shall have the meaning set forth in Section 7.5(a) of the Agreement.
"Clinical Trial" shall mean a human clinical trial of a
Fluorinov Product that satisfies the requirements of 21 C.F.R.
§312.21, or its Canadian, European or other foreign equivalent.
"Closing" shall have the meaning set forth in Section 1.1 of the Agreement.
"Closing Date" shall have the meaning set forth in Section 1.1 of the Agreement.
"Closing Financial Statements" shall have the meaning set forth in Section 1.1(a)(i) of this Agreement.
"Closing Statements" shall have the meaning set forth in Section 1.1(a)(i) of this Agreement.
"Closing Transaction Consideration" shall mean $9,510,554.15; being $10,000,000 after the following items are deducted and/or satisfied prior to payment,
(a) less $250,000 credit on account of
the Purchaser's payment to the Company in connection with entering into exclusive discussions to complete the Share Purchase;
(b) less the amount, if any, which is the working capital deficit indicated on the Pre-Closing Statement; and
(c) less the Holdback.
"Closing Working Capital" shall have the meaning set forth in Section 1.5(a)(i) of this Agreement.
"CNS Assets" shall mean the
Fluorinov Patents identified under the heading "CNS Assets" on Section 3.9(a) of the Disclosure Schedule.
"CNS Payments" shall have the meaning set forth in Section 2.3.
"Commercially Reasonable Efforts" shall mean the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to achieve that result, provided, however, that such Person will
not be required to (i) take actions that would result in an adverse change in the benefits to such Person of this Agreement, (ii) dispose of or make any change to its business, (iii) incur any other adverse burden out of the normal course not
consistent with the objective towards which the efforts are directed, or (iv) expend any human, financial or other resources on the matter which are in excess to those which it would otherwise expend in accordance with its ordinary course of
business.
"Company" shall have the meaning set forth in the preamble.
"Company Employee" shall mean any current or former employee, founder, independent contractor, dependent contractor, officer or director of the Company or any Affiliate of the Company.
"Company Employee Plan"
shall mean the Stock Option Plan along with any Contract or other arrangement
providing for compensation (including an employment agreement), severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, pension, management agreement, consulting agreement,
fringe benefits or other employee benefits or remuneration of any kind
(including any Contract between the Company and any Company Employee), whether
written, unwritten or otherwise, funded or unfunded, that is or has been
maintained, contributed to, or required to be contributed to, by the Company for
the benefit of any Company Employee or their respective beneficiaries or
dependents, or with respect to which the Company has or may have any Liability,
excluding any Statutory Plan.
"Company Financial
Statements" shall have the meaning set forth in Section 3.4(a) of the
Agreement.
"Company IP" shall mean
(a) all Intellectual Property and Intellectual Property Rights in which the
Company has (or purports to have) an ownership interest or an exclusive license
or similar exclusive right and (b) all other Intellectual Property and
Intellectual Property Rights incorporated or embodied in any of the Fluorinov
Products, that exist as of the Closing Date.
"Company IP Contract"
shall mean any Contract to which the Company is or was a party or by which the
Company is or was bound as of the Closing Date, that contains any assignment or
license of, or any covenant not to assert or enforce, any Intellectual Property
Right or that otherwise relates to any Company IP or any Intellectual Property
developed by, with or for the Company.
"Company Specified
Representations" shall mean the representations and warranties set forth in
Sections 3.1 through 3.3, 3.19, and 3.20 of the Agreement.
"Company Transaction
Expenses" shall mean all fees, costs, expenses, payments, expenditures or
Liabilities of the Company (including those described in Section 8.2 of the
Agreement), whether incurred prior to the date of the Agreement or at the
Closing Date, and whether or not invoiced prior to the Closing Date, that relate
to the Agreement or any of the transactions contemplated by the Agreement,
including any fees, costs or expenses payable to the Company's outside legal
counsel or to any financial advisor, accountant or other Person who performed
services for or on behalf of the Company, or who is otherwise entitled to any
compensation from the Company, in connection with the Agreement or any of the
transactions contemplated by the Agreement and, for greater certainty, Company
Transaction Expenses shall be deemed to include a deemed accrual for amounts
owing by the Company after the Closing Date (a) to (i) Bennett Jones LLP and
(ii) Eve Wahn and Eve Wahn Law, in respect of services performed by such Persons
on behalf of the Company both before and after the Closing Date (except to the
extent that such amounts have otherwise been paid by the Company prior to the
Closing Date) (b) in respect of the preparation of the Closing Financial
Statements.
"Confidential Information"
shall mean, in respect of a Party to this Agreement, at any time, all
information relating to that Party which at the time is of a confidential nature
(whether or not specifically identified as confidential), is known or should
reasonably be known by the other relevant Party or its Representatives as being
confidential, and has been or is from time to time made known to or is otherwise
learned by the relevant other Party or any of its Representatives as a result of
the matters provided for in this Agreement, and includes:
(i) the existence and the terms of this Agreement and of any
other contract, agreement, instrument, certificate or other document to be
entered into as contemplated by this Agreement;
(ii) a Party's business records
and personal information; and
(iii) all books and records and all other information and
documentation with respect to the Company, the business of the Company and the
Company's assets provided by the Shareholders and the Company to the Purchaser
and its Representatives, including all notes, analyses, compilations, studies,
summaries and other material prepared by the Purchaser and its Representatives
as a result of the books and records, information or documentation.
Notwithstanding the foregoing, Confidential Information does
not include any information if and to the extent that at the time has become
generally available to the public other than as a result of a disclosure by the
other Party or any of its Representatives in breach of its obligations hereunder
or another legal obligation, any information that was available to the other
Party or its Representatives on a non-confidential basis before the date of this
Agreement or any information that becomes available to the other Party or its
Representatives on a non-confidential basis from a Person (other than the Party
to which the information relates or any of its Representatives) who is not, to
the Knowledge of the other Party or its Representatives, otherwise bound by
confidentiality obligations to the Party to which the information relates in
respect of the information or otherwise prohibited from transmitting the
information to the other Party or its Representatives.
"Consent" shall mean any
approval, clearance, consent, ratification, permission, waiver or authorization
(including any Governmental Authorization).
"Consideration Allocation
Spreadsheet" shall have the meaning set forth in Section 1.4(c)(i) of the
Agreement.
"Contaminant" includes any
material, substance, chemical, gas, liquid, waste, effluent, pollutant or
contaminant which, whether on its own or admixed with another, is identified or
defined in or regulated by or pursuant to any Environmental Laws or which upon
release or discharge into the Environment presents a danger, or may cause an
adverse effect to the Environment or to the health or safety or welfare of any
Person.
"Contested Amount" shall
have the meaning set forth in Section 7.5(b) of the Agreement.
"Contract" shall mean any
written, oral or other agreement, contract, subcontract, lease, understanding,
arrangement, instrument, note, purchase order, warranty, insurance policy,
benefit plan: (a) to which the Company or Purchaser is a party; (b) by which the
Company or Purchaser is or may become bound or has, or may become subject to,
any obligation; or (c) under which the Company or Purchaser has or may acquire
any right or interest.
"Copyright" shall mean all
rights, titles, interests and benefits in and to (a) all copyright and
neighbouring rights in the Works, (b) all registrations for copyright and
neighbouring rights, pending applications for registrations of copyright and
neighbouring rights, and rights to file applications for registrations of
copyright and neighbouring rights for the Works, and (c) all sui generis
rights in the Databases.
"Current Assets" shall
mean all cash and cash equivalents, government agency and other grant monies
awarded whether or not received, accounts receivable, inventory and prepaid
expenses and deposits, but excluding (i) the portion of any prepaid expense of
which the Purchaser or the Company will not receive the benefit following
Closing; (ii) deferred and future Taxes; (iii) any R&D Credits; and (iv) any
HST Refund; all as would be determined in accordance with GAAP as if such
accounts were being prepared and audited as of a fiscal year end.
"CRA" shall mean the Canada Revenue Agency.
"Damages" shall include
any loss, damage, injury, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
"Databases" has the meaning set out in the definition of
Works.
"Debt" shall mean without
duplication: (A) all obligations (including the principal amount thereof or, if
applicable, the accreted amount thereof and the amount of accrued and unpaid
interest thereon) of the Company, whether or not represented by bonds,
debentures, notes or other securities (whether or not convertible into any other
security), for the repayment of money borrowed, whether owing to banks or other
financial institutions, on equipment leases or otherwise; (B) all deferred
indebtedness of the Company for the payment of the purchase price of property or
assets purchased (other than accounts payable incurred in the ordinary course of
business); (C) all obligations of the Company to pay rent or other amounts under
a lease which is required to be classified as a capital lease on the face of a
balance sheet prepared in accordance with GAAP; (D) all obligations secured by
any Encumbrance existing on property owned by the Company, whether or not
indebtedness secured thereby will have been assumed; and (E) all guaranties,
endorsements, assumptions and other contingent obligations of the Company in
respect of, or to purchase or to otherwise acquire, indebtedness of others; and
(F) all premiums, penalties, fees, expenses, breakage costs and change of
control payments required to be paid or offered in respect of any of the
foregoing on prepayment, as a result of the consummation of the transactions
contemplated by this Agreement or in connection with any lender Consent.
"Deductible" shall have the meaning set forth in Section
7.3(a) of the Agreement.
"Disclosure Schedule"
shall mean the schedule (dated as of the date of the Agreement) delivered to
Purchaser on behalf of the Company concurrently with this Agreement and prepared
in accordance with Section 8.15 of the Agreement.
"Dispute Period" shall have the meaning set forth in
Section 7.5(b) of the Agreement.
"Encumbrance" shall mean
any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim or restriction of any nature.
"Entity" shall mean any
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization or entity.
"Environment" includes:
(a) any and all buildings, structures, fixtures, fittings, appurtenances, pipes,
conduits, valves, tanks, vessels and containers whether above or below ground
level; and (b) ambient and indoor air, land surface, sub-surface strata, soil,
surface water, ground water, river sediment, marshes, wet lands, flora and
fauna.
"Environmental Law" shall
mean: (a) the common law; and (b) all Legal Requirements, by-laws, orders,
instruments, directives, decisions, injunctions and judgments of any government,
local government, international, supranational, executive, administrative,
judicial or regulatory authority or agency and all approved codes of practice
(whether voluntary or compulsory) relating to the protection of the Environment
or of human health or safety or welfare or to the manufacture, formulation,
processing, treatment, storage, containment, labeling, handling, transportation,
distribution, recycling, reuse, release, disposal, removal, remediation,
abatement or clean-up of any Contaminant and any amendment thereto and any and
all regulations, orders and notices made or served thereunder or pursuant
thereto).
"Estimated Working Capital" has the meaning set forth in
Section 1.3.
FACIT and Trust means the Fight Against Cancer
Innovation Trust, a trust established under the laws of the Province of Ontario,
being one of the Shareholders, settled pursuant to a Trust Agreement made
September 27, 2012 between OICR, as Settlor and [names of individuals redacted
for privacy reasons], as Original Trustees, andTrustees means the
trustees of the Trust.
"Fluorinov Compound" shall
mean the compounds identified on Section 3.9(a) of the Disclosure Schedule,
other than those compounds which form any part of the CNS Assets.
"Fluorinov Patents" shall
mean those patent applications for the Fluorinov patent families listed on Section
3.9(a) of the Disclosure Schedule, which shall include all related applications
and patents thereon, including any and all, international, national and regional
phase applications based on the patent applications, and other counterpart
applications in all countries, and any and all substitutes, divisionals,
continuations and continuations-in-part, and any letters patents that may be
obtained therefor, and any and all reissues, extensions, renewals and
reexaminations of such applications and patents and any other patents or patent
applications thereafter that are based on the Fluorinov patent families listed in
Section 3.10(a) of the Disclosure Schedule.
"Fluorinov Product" shall
mean any product in finished dosage form containing a Fluorinov Compound, the
development, manufacture, use or sale of which would (but for ownership rights
or a valid license from Fluorinov), infringe one or more issued or pending Valid
Claims of a Fluorinov Royalty Patent in the country in which it is sold (provided
that in the case of a patent application, if the patent (when issued) contains
claims which are lesser in scope than those contained in the patent application,
then only if the issued patent would be infringed).
"Fluorinov Royalty Patents" shall mean the
Fluorinov Patents
other than the CNS Assets.
"GAAP", when used in
respect of accounting terms or accounting determinations, means International
Financial Reporting Standards as issued by the International Accounting
Standards Board or any successor thereof. For the purposes of any Licensee,
"GAAP" shall mean the accounting standard by which such Licensee's financial
statements are prepared.
"Governmental
Authorization" shall mean any: (a) permit, license, certificate, franchise,
permission, clearance, registration, qualification or authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or (b) right under any
Contract with any Governmental Body.
"Governmental Body" shall
mean any: (a) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any court, boar, bureau,
governmental division, subdivision, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any
arbitrator, court or other tribunal).
"GST" shall have the meaning set forth in Section
3.13(i) of the Agreement.
"Holdback" shall mean $150,000.
"HST" shall have the meaning set forth in Section
3.13(i) of the Agreement.
HST Refund means the net
amount of HST which is refunded to the Company pursuant to the Excise Tax
Act (Canada) for a period ending on or before the Closing Date where the
amount of the input tax credits claimed in respect of such periods exceeded the
HST collected in respect of such periods.
"Independent
Auditor" shall have the meaning set forth in Section 1.5(c) of this
Agreement.
"Indemnification
Percentage" shall mean, with respect to a particular Shareholder Indemnitor,
the percentage corresponding to the fraction: (a) having a numerator equal to
the sum of the aggregate number of Shares held by such Shareholder Indemnitor as
of immediately prior to the Closing Date; and (b) having a denominator equal to
the sum of the aggregate number of Shares held by all Shareholder Indemnitors as
of immediately prior to the Closing Date, as set out in the Consideration
Allocation Spreadsheet. For the avoidance of doubt, the sum of the
Indemnification Percentages of all Shareholder Indemnitors shall equal 100%.
"Indemnitee" shall have the meaning set forth in Section
7.2(d) of the Agreement.
"Indemnitor" shall have the meaning set forth in
Section 7.2(d) of the Agreement.
"Intellectual Property"
means all intellectual property used by the Company, throughout the world,
whether or not registrable, patentable or otherwise formally protectable, and
whether or not registered, patented, otherwise formally protected or the subject
of a pending application for registration, patent or any other formal
protection, including in respect of the Trade-Marks, Patent Rights, Works,
Biological Data, and Know-How.
"Intellectual Property
Rights" means all rights, titles, interests and benefits in, the
Intellectual Property, as follows:
|
(a) |
all rights, titles, interests and benefits in and to the
unregistered Trade-Marks, including (i) all common law rights in the
Trade-Marks, (ii) all registrations, pending applications for registration
and rights to file applications for the Trade-Marks, (iii) all rights of
priority and all extensions of the foregoing applications and
registrations for the Trade-Marks, and (iv) the product names associated
with the Fluorinov Product(s) and the proposed product names associated with
any pipeline Fluorinov Compound; |
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(b) |
all rights, titles, interests and benefits in and to the
Patent Rights; |
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(c) |
all rights, titles, interests and benefits in and to the
Works, including the Copyright and the Moral Rights; |
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(d) |
all rights, titles, interests and benefits in and to the
Biological Data; |
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(e) |
all rights, titles, interests and benefits in and to the
Know-How; |
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(f) |
all rights, titles, interests and benefits in and to all
licences, consents, permissions, covenants not to sue and other
contractual rights in respect of, or relating to, the Intellectual
Property; |
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(g) |
all rights, titles, interests and benefits in and to
revenues and proceeds in respect of the Intellectual Property and the
rights, titles, interests and benefits set out in (a) through (f) above;
and |
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(h) |
all rights, titles, interests and benefits to enforce all
rights and to obtain all remedies, including damages, accountings of
profits, other compensation, and interim, temporary, interlocutory and
permanent injunctions, for the infringement and other violations of the
rights, titles, interests and benefits set out in (a) through (f)
above. |
"ITA" shall mean the
Income Tax Act (Canada) and regulations made thereunder, as the same may
be amended from time to time.
"Know-How" means all
know-how, trade secrets, proprietary information, Confidential Information and
information of a sensitive nature used by the Company, in whatever form
communicated, maintained or stored, including (a) all formulae, recipes,
algorithms, business methods, technical processes, specifications, manuals,
drawings, prototypes, models, corporate plans, management systems and
techniques, (b) all information relating to the research, development, clinical
trials, manufacture, product monograph, marketing, sales or post-sales
activities of any past, present or future goods, including lab journals,
laboratory notebooks, design documentation, engineering documentation,
manufacturing documentation, instruction manuals, costing information,
advertising plans, pricing information, customer names, customer lists and other
details of customers, supplier names, supplier lists and other details of
suppliers, sales targets, sales statistics, market share information, market
research and survey information, and (c) sales methodologies and processes,
training protocols and similar methods and processes, algorithms, active
pharmaceutical ingredients, apparatus, methods, protocols, schematics,
specifications, techniques, and other forms of technology (whether or not
embodied in any tangible form and including all tangible embodiments of the
foregoing).
"Knowledge" an individual
shall be deemed to have Knowledge of a particular fact or other matter if: (a)
such individual is actually aware of such fact or other matter; or (b) a prudent
individual with the same office or position should have known such fact or other
matter under the circumstances after reasonable enquiry. The Company shall be
deemed to have "Knowledge" of a particular fact or other matter if any of the
officers or directors of the Company has Knowledge of such fact or other matter.
"Legal Proceeding" shall
mean any action, suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted or
heard by or before, or otherwise involving, any court or other Governmental Body
or any arbitrator or arbitration panel.
"Legal Requirement" shall
mean, with respect to any Person, any federal, provincial, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, order, edict, decree, judgment, rule, regulation,
regulatory practice, by-law, directive, policy, guideline, ruling requirement or
any published administrative position issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of the
Toronto Stock Exchange, NASDAQ or any Governmental Body, including all privacy
and anti-spam legislation.
"Liability" shall mean any
debt, obligation, duty or liability of any nature (including any unknown,
undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation, duty or liability would
be required to be disclosed on a balance sheet prepared in accordance with GAAP
and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
"Licensee" shall mean a
third party to whom the Purchaser, the Company or any of their Affiliates has,
directly or indirectly granted an arm's length license to any of the Fluorinov
Patents (and, for greater certainty, shall include any distributor, sales agent,
and any other third party to whom any direct or indirect Licensee has granted a
further sublicense of any rights granted by the Company).
"Lock-Up Agreement" has the meaning set forth in the
Recitals hereto.
"Majority Shareholders" shall have the meaning set forth
in Section 1.5(c) .
"Material Adverse Effect"
shall mean any change, event, effect, claim, circumstance or matter (each, an
"Effect") that (considered together with all other Effects) is, or would
reasonably be expected to be or to become, materially adverse to: (a) the
business, condition (financial or otherwise) or results of operations of the
Company; (b) Purchaser's right to own, or to receive dividends or other
distributions with respect to, the Shares of the Company; or (c) the ability of
the Company to perform any of its material covenants or obligations under this
Agreement or under any other Contract or instrument executed, delivered or
entered into in connection with any of the transactions contemplated by this
Agreement; except to the extent that any such Effect results from: (i) changes
in general economic conditions (except to the extent that such changes have a
disproportionate impact on the Company as compared to other companies in the
industry in which the Company operates); (ii) changes affecting the industry
generally in which the Company operates (except to the extent that such changes
have a disproportionate impact on the Company as compared to other companies in
the industry in which the Company operates); (iii) changes in Legal Requirements
or generally accepted accounting principles (except to the extent that such
changes have a disproportionate impact on the Company as compared to other
companies in the industry in which the Company operates); (iv) acts of war or
terrorism or natural disasters (except to the extent that such changes have a
disproportionate impact on the Company as compared to other companies in the
industry in which the Company operates); or (v) losses of, or adverse changes in
relationships with employees arising directly from the announcement or pendency
of the Share Purchase;.
"Material Contracts" shall
have the meaning set forth in Section 3.10(a) of the Agreement.
"Materials of Environmental
Concern" include chemicals, pollutants, Contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is now
or hereafter regulated by, or gives rise to liability under, any Environmental
Law or that is otherwise a danger to health, reproduction or the
Environment.
"Milestone Payment" has the meaning set forth in Section
2.1.
"Moral Rights" means all
rights, titles, interests and benefits in and to the moral rights and all
waivers of moral rights in the Works.
"Net CNS Amounts" shall
mean the value of the consideration actually received by the Company, Purchaser
or their respective Affiliates from the development, commercialization, sale,
transfer and/or licensing of the CNS Assets, which amount shall be reduced by
the aggregate of:
|
(A) |
any payments made by the Company, Purchaser or their
respective Affiliates after the date of this Agreement in respect of the
CNS Assets (including, without limitation, all payments made directly or
indirectly in connection with pursuing patent protection for the CNS
Assets, including (without limitation) legal and advisory fees and fees
paid to all governmental and quasi-governmental bodies); and
|
|
(B) |
any payments made by the Company, Purchaser or their
respective Affiliates in connection with the sale, transfer, licensing or
other commercialization of the CNS Assets; |
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(C) |
any research, development and other costs incurred the
Company, Purchaser or their respective Affiliates in respect of the CNS
Assets; and |
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|
(D) |
a bona fide estimate of the Taxes to be incurred
by the Company, Purchaser and their respective Affiliates arising from the
amounts received from the sale, transfer or licensing of the CNS Assets
arising from such transaction (disregarding any tax losses which may
otherwise be available to the Company, Purchaser and their respective
Affiliates in respect of such transaction but taking into account the
effect of any payments made to the Shareholders pursuant to Section 2.3).
|
"Objection Notice" shall have the meaning set forth in
Section 1.5(c) of this Agreement.
OICR means the Ontario Institute for
Cancer Research.
"Party" or
"Parties" shall mean the Purchaser, the Company and each Shareholder
executing this Agreement, and subject to Section 8.8, their permitted heirs,
executors, successors and assigns.
"Patent Rights" shall mean
all rights, titles, interests and benefits in and to the Fluorinov Patents
including (a) all utility patents, pending utility patent applications and
rights to file utility patent applications, (b) all rights of priority and all
rights in provisionals, continuations, continuations-in-part, divisions,
re-examinations, reissues, extensions and other derivative applications and
patents of the foregoing patents and patent applications, and (c) all inventors'
certificates, utility models, applications for utility models and rights to file
utility models.
"Person" shall mean any individual, Entity or
Governmental Body.
"Pre-Closing Period"
means any Tax period ending on or before the day prior to the Closing Date.
"Pre-Closing Statement" has the meaning set forth in
Section 1.3.
"Purchaser" shall have the meaning set forth in the
preamble to this Agreement.
"Purchaser Indemnitees"
shall mean the following Persons: (a) Purchaser; (b) Purchaser's current and
future Affiliates; (c) the respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and (d) the respective successors and assigns
of the Persons referred to in clauses "(a)", "(b)" and "(c)" above; provided,
however, that the Shareholders shall not be deemed to be "Purchaser
Indemnitees".
"Purchase Price" has the meaning specified in Section
1.3 of this Agreement.
"Purchaser Specified
Representations" shall mean the representations and warranties set forth in
Sections 5.1 and 5.3 of the Agreement.
"R&D Credits" means
the "refundable investment tax credit" as defined in section 127.1 of the ITA
that are refundable, claimed or claimable by the Company for a taxation year
ending on or before the Closing Date in respect of the "SR&ED qualified
expenditure pool" (as defined in the ITA) as of the Closing Date plus any
equivalent refundable provincial tax credits applicable to any scientific
research and experimental development expenditure of the Company.
"Real Property Lease" shall mean the MaRS Incubator -
License Agreement for lab and office space at the MaRS Discovery District dated
March 9, 2011 and extended by a license extension agreements between the Company
and MaRS Discovery District.
"Registered IP" shall mean
all Intellectual Property Rights that are registered, filed or issued under the
authority of, with or by any Governmental Body, including all patents, patent
applications, registered Copyrights, registered trademarks, if any, and all
applications for any of the foregoing.
"Related Party" shall
mean: (a) each individual who is, or who has at any time since incorporation of
the Company been, an officer or director of the Company; (b) each member of the
immediate family of each of the individuals referred to in clause "(a)" above;
and (c) any trust or other Entity (other than the Company) in which any one of
the Persons referred to in clauses "(a)" and "(b)" above holds (or in which more
than one of such Persons collectively hold), beneficially or otherwise, a
material voting, proprietary or equity interest.
"Representatives" shall
mean officers, directors, employees, agents, attorneys, accountants, advisors
and representatives of a Person.
"Response Notice" shall
have the meaning set forth in Section 7.5(b) of the Agreement.
"Royalty
Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Secondary Payment" shall
have the meaning set forth in Section 1.7 of the Agreement.
"Shareholder
Indemnitees" shall have the meaning set forth in Section 7.2(c) of the
Agreement.
"Shareholder Indemnitors"
shall have the meaning set forth in Section 7.2(a) of the Agreement.
"Shareholders" shall have
the meaning set forth in the recitals and "Shareholder" shall mean any
one of them.
"Shareholders Agreement"
shall mean the amended and restated shareholders agreement between the Company
and its shareholders dated March 30, 2012.
"Share Purchase" shall have the meaning set forth in
Section 1.2.
"Shares" shall mean the common shares in the capital of
the Company.
"Statutory Plans"
shall mean benefit plans, programs, agreements or arrangements which
the Company is obligated to contribute to as of the time of Closing, comply with
or participate in, pursuant to any federal, provincial, including the Canada
Pension Plan, and plans administered pursuant to applicable federal or Ontario
health, workers' compensation and employment insurance legislation.
"Stipulated Amount" shall have the meaning set forth in Section 7.5(e) of the Agreement.
"Stock Option Plan" shall mean the stock option plan of the Company adopted on December 14, 2015.
"Straddle Period" means any Tax period beginning before or on and ending after the Closing Date.
"Subsidiary" an Entity shall be deemed to be a "Subsidiary" of another Person if such Person directly or indirectly owns or purports to own, or control other than by way of security only, beneficially or
of record: (a) an amount of voting securities of or other interests in such Entity that is sufficient to enable such Person to elect at least a majority of the members of such Entity's board of directors or other governing body; or (b) at least 50%
of the outstanding equity, voting, beneficial or financial interests in such Entity.
"Tax" shall mean all federal, state, provincial, territorial, county, municipal, local or foreign taxes, duties, imposts, levies, premiums, assessments, tariffs and other charges imposed, assessed or collected by
a Governmental Body including, (i) any gross income, net income, gross receipts, business, royalty, capital, capital gains, goods and services, value added, severance, stamp, franchise, occupation, premium, capital stock, sales and use, real
property, personal property, ad valorem, transfer, licence, profits, windfall profits, environmental, payroll, employment, employer health, Canada Pension Plan, anti-dumping, countervail, excise, severance, stamp, occupation, or premium tax, (ii)
all withholdings on amounts paid to or by the relevant Person, (iii) all federal, provincial and foreign employment insurance premiums and any other federal, provincial and foreign pension plan contributions or premiums, (iv) any fine, penalty,
interest, or addition to tax, (v) any tax imposed, assessed, or collected or payable pursuant to any tax-sharing agreement or any other contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee,
and (vi) any Liability for any of the foregoing as a transferee, successor, guarantor, or by contract or by operation of law.
"Tax Limitation Period" shall have the meaning set forth in Section 7.1(d) of this Agreement.
"Tax Representations" shall have the meaning set forth in Section 7.1(d) of the Agreement.
"Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"Termination Date" shall have the meaning set forth in Section 7.1(a) of this Agreement.
"Trade-Marks" means all registered and unregistered trade-marks owned and used by the Company.
"Transaction Consideration" shall mean the consideration that a Shareholder is entitled to receive in exchange for Shares pursuant to this Agreement.
"Unaudited Interim Balance Sheet" shall have the meaning set forth in Section 3.4(a) of the Agreement.
"Valid Claim" means a claim in an issued, unexpired or unabandoned patent or in a pending patent application included within the
Fluorinov Royalty Patents that (a) has not been finally cancelled, withdrawn,
abandoned or rejected by any administrative agency or other body of competent jurisdiction, (b) has not been revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other government agency or other body of
competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, (c) has not been rendered unenforceable through disclaimer or otherwise, and (d) is not lost through an interference proceeding. Notwithstanding the
foregoing, if a claim of a pending patent application within the Fluorinov Royalty Patents has not issued as a claim of a patent within seven (7) years after the PCT filing date (or the first national filing date if no PCT was filed), such claim shall
not be a Valid Claim for the purposes of this Agreement, unless and until such claim issues as a claim of an issued patent (from and after which time the same shall be deemed a Valid Claim subject to subsections (a) and (b) above).
"Working Capital" shall mean, in respect of the Company, the difference in the value of the Company's Current Assets and the aggregate of the Company's Debt and Liabilities (including all (i) Company Transaction
Expenses, (ii) all Change of Control Payments, whether or not payable (but only to the extent such amounts are not paid prior to the Closing), and (iii) an accrual of all Taxes up to the Closing Date, as determined in accordance with GAAP.
"Working Capital Surplus" shall have the meaning set forth in Section 1.6(a) of this Agreement.
"Working Capital Deficit" shall have the meaning set forth in Section 1.6(a) of this Agreement.
"Works" means all works and subject matter used by the Company in which copyright, neighbouring rights or Moral Rights subsist, including (a) all databases and database layouts within the Computer Systems (the
"Databases"), (b) all documents and other works relating to the Software or the Databases, and (c) all derivatives, enhancements and modifications of the foregoing.
Confidential
ROYALTY AGREEMENT
among:
TRILLIUM THERAPEUTICS
INC.,
an Ontario corporation;
FLUORINOV PHARMA
INC.,
an Ontario corporation;
and
the SHAREHOLDERS
___________________________
Dated as of January 26, 2016
___________________________
TABLE OF CONTENTS
1.
|
DESCRIPTION
OF TRANSACTION AND PAYMENT MECHANICS |
1
|
2.
|
FUTURE
PAYMENTS; ROYALTIES |
2
|
|
2.1
|
Lump
Sum Royalty Payment. |
2
|
|
2.2
|
Variable
Royalties |
3
|
|
2.3
|
Reports;
Payment of Royalty; Payment Exchange Rate and Currency Conversions.
|
4
|
|
2.4
|
Maintenance
of Records; Audits. |
5
|
|
2.5
|
Obligations
to Continue. |
6
|
|
2.6
|
Purchaser's
Determination. |
6
|
|
2.7
|
Withholding.
|
6
|
|
2.8
|
Payments
in Securities. |
7
|
3.
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY SHAREHOLDERS |
7
|
|
3.1
|
Authority
|
7
|
|
3.2
|
No
Conflict. |
8
|
|
3.3
|
Canadian
Resident. |
8
|
|
3.4
|
Bankruptcy
|
8
|
4.
|
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER |
8
|
5.
|
MISCELLANEOUS
PROVISIONS |
8
|
|
5.1
|
Confidentiality
|
9
|
|
5.2
|
Public
Announcements. |
9
|
|
5.3
|
Further
Assurances. |
9
|
|
5.4
|
Fees
and Expenses. |
9
|
|
5.5
|
Attorneys'
Fees. |
10
|
|
5.6
|
Notices.
|
10
|
|
5.7
|
Headings.
|
10
|
|
5.8
|
Counterparts
and Exchanges by Electronic Transmission or Facsimile. |
10
|
|
5.9
|
Governing
Law; Dispute Resolution. |
10
|
|
5.10
|
Successors
and Assigns. |
11
|
|
5.11
|
Remedies
Cumulative; Specific Performance |
11
|
|
5.12
|
Waiver
|
12
|
|
5.13
|
Amendments.
|
12
|
|
5.14
|
Severability.
|
12
|
|
5.15
|
Parties
in Interest. |
12
|
|
5.16
|
Entire
Agreement. |
12
|
|
5.17
|
Construction
|
12
|
TABLE OF CONTENTS
(Continued)
|
5.18
|
Advice
of Counsel. |
13
|
(ii)
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT
(the "Agreement") is made and entered into as of January 26,
2016, by and among: TRILLIUM THERAPEUTICS INC., an Ontario corporation
("Purchaser"); FLUORINOV PHARMA INC., an Ontario
corporation (the "Company"); and each of the shareholders of the Company
listed on the signature pages hereto (the "Shareholders"). Certain other
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. The
Shareholders beneficially own and control all of the issued and outstanding
shares in the capital of the Company.
B. Pursuant
to a share purchase agreement (the "Share Purchase Agreement") dated the
date hereof between the Parties hereto, Purchaser proposes to acquire from the
Shareholders all of the issued and outstanding shares of the Company.
C.
It is a condition to the execution and delivery of the Share Purchase
Agreement (and the completion of the transactions contemplated therein) that
each of the Shareholders execute and deliver to the Company and Purchaser:
a.
a general release agreement in a form agreed between the Parties; and
b. a
confidentiality and non-solicitation agreement in favour of the Company and
Purchaser.
D. It
is a condition to the execution and delivery of the Share Purchase Agreement
that Abdelmalik Slassi execute and deliver to the Company and Purchaser a
non-competition agreement and a lock-up agreement (the Lock-Up
Agreement); and
E. In consideration of the Shareholders
executing the foregoing agreements, and in consideration of the completion of
the transactions contemplated by the Share Purchase Agreement, Purchaser has
agreed to enter into this Agreement.
AGREEMENT
The Parties to this Agreement
agree as follows:
1. DESCRIPTION
OF TRANSACTION AND PAYMENT MECHANICS
The
Purchaser hereby agrees and covenants to pay to the Shareholders the Lump Sum
Royalty Payments and Royalty Payments, from time to time, if and when required
as set out in this Agreement. In the case of any payments being made hereunder
to the Shareholders, such payments shall be made at the times required by
Article 2:
(a)
in the case of a Lump Sum Royalty Payment, (A) automated clearing house direct
payment to each of the Shareholders bank accounts located in Canada or the
United States designated in writing, of their proportionate share of the
relevant Lump Sum Royalty Payment, in accordance with the Consideration
Allocation Spreadsheet, and (B) delivery to each of the Shareholders (subject to
compliance with the Lock-Up Agreement, if applicable to such Shareholder) their
proportionate number of common shares of the Purchaser,
certificated in the name of the relevant Shareholder or nominee, duly issued and
authorized, in accordance with the respective entitlements and instructions set
out in the Consideration Allocation Spreadsheet; and
(b) in
the case of Royalty Payments automated clearing house direct payment to each of
the Shareholders bank accounts located in Canada or the United States designated
in writing, of their proportionate share of the relevant Royalty Payment, in
accordance with the Consideration Allocation Spreadsheet.
2. FUTURE
PAYMENTS; ROYALTIES
2.1
Lump Sum Royalty Payment.
(a) Subject to the terms and conditions of this Agreement, Purchaser shall, within
sixty (60) days following the date when the following events are achieved, give
written notice to the Shareholders and shall pay the Shareholders, in accordance
with the Consideration Allocation Spreadsheet, the corresponding aggregate
payments (the "Lump Sum Royalty Payments"):
Event |
Lump Sum Royalty
Payments |
Dosing of the first patient with a Fluorinov Compound in a
Phase 2b Trial (payable one time only) |
$10,000,000 |
Regulatory Approval of the first Fluorinov Product by a
Regulatory Authority (payable one time only) |
$20,000,000 |
For greater certainty, payments shall be made pursuant to this
Section 2.1 only to the extent that the Fluorinov Compound is the subject matter of
a Fluorinov Patent.
(b) Each
of the two Lump Sum Royalty Payments shall be payable only once, on the first
achievement of such milestone event, regardless of the number of Fluorinov
Compounds that result in dosings in a Phase 2b Trial or however many Regulatory
Approvals become applicable to Fluorinov Products.
(c) Amounts
payable pursuant to this Section 2.1 shall be made to the Shareholders in cash,
and/or subject to Section 2.8, common shares of Purchaser (with the exact
proportion being at the discretion of Purchaser, provided that at least fifty
percent (50%) of the payments shall be made in the form of cash (unless
otherwise agreed between Purchaser and a particular recipient Shareholder). The
issuance of common shares to Shareholders, and the resale of such common shares
to be received by the Shareholders, are subject to applicable securities
laws.
(d) The
value of the common shares of Purchaser to be delivered pursuant to this Section
2.1 shall (unless otherwise agreed between Purchaser and a particular recipient
Shareholder) be based upon the volume weighted average trading price (defined as
VWAP in the TSX Company Manual) of the common shares of Purchaser on the Toronto
Stock Exchange for the thirty (30) trading days immediately preceding the date
of issuance of such shares to the Shareholder, calculated by dividing the total
dollar value of shares of the Purchaser traded on the Toronto Stock Exchange
through the period by the total number of shares traded on the Toronto Stock
Exchange through the relevant period.
- 2 -
2.2 Variable
Royalties.
(a) Royalty
Rates. Subject to the terms and conditions of this Agreement, Purchaser
shall pay to the Shareholders royalties on Net Sales of Fluorinov Products (the
"Royalty Payments") in an amount equal to the following:
Portion of Annual Net Sales |
Royalty Rate |
For the portion of Net Sales of all Fluorinov Products in a
calendar year less than or equal to $250,000,000 |
2.0% |
For the portion of Net Sales of all Fluorinov Products in a
calendar year of in excess of $250,000,000, but less than or equal to
$750,000,000 |
4.0% |
For the portion of Net Sales of all Fluorinov Products in a
calendar year in excess of $750,000,000 |
5.0% |
For greater certainty, Royalty Payments shall be made pursuant
to this Section 2.2 and Section 2.3 only to the extent that the Fluorinov Compound
is the subject matter of a Fluorinov Patent.
(b) Term
of Royalty Obligation. Royalties on the Fluorinov Product shall commence upon
the First Commercial Sale of a Fluorinov Product and will continue on a
product-byproduct and country-by-country basis until expiration of the last to
expire Valid Claim covering such Fluorinov Product, it being understood, for
greater certainty, that no royalties shall be paid on any Net Sales in any
country where there is not a Valid Claim at the time of sale.
(c) Calendar
Basis and Incremental Percentage. For purposes of determining which royalty
rate shall apply pursuant to Section 2.2(a), Net Sales shall be calculated on a
calendar year basis, with the first calendar year running from the date of First
Commercial Sale of a Fluorinov Product until the following December 31st
and the final calendar year running from January 1 until the date of expiration
or termination of this Agreement. The royalty rates set forth in Section 2.2(a)
shall be applied incrementally; for example, if the Net Sales of Fluorinov Products
subject to Section 2.2(a) in a given calendar year is $400,000,000, the first
$250,000,000 of Net Sales will be subject to a royalty of two percent (2.0%) and
the remaining $150,000,000 of Net Sales will be subject to a royalty of four
percent (4.0%) .
(d)
Royalty Stacking. The Parties recognize and agree that, in order to
develop and commercialize Fluorinov Products, it may be necessary for the
Purchaser, Company and/or their Affiliates and/or their respective Licensees to
make use of and/or incorporate several or multiple elements of intellectual
property from several or multiple sources. Purchaser, the Company and/or their
Affiliates and/or their respective Licensees will determine, in their sole
judgment, which elements of intellectual property are necessary and/or desirable
for the development and/or commercialization of the Fluorinov Products. Royalty
payments or license fees to third parties ("Third Party Amounts") may
occur if intellectual property owned by a third party is required or desirable
for the commercialization of the Fluorinov Products. All types of Third Party
Amounts that Purchaser, the Company and/or their respective Affiliates and/or
their respective Licensees may determine are necessary or desirable to obtain
licenses or other rights to use or incorporate intellectual property or
products other than the Fluorinov Patents relating to development and
commercialization of Fluorinov Products that are paid to third parties will be
creditable against royalties owed to the Shareholders hereunder; provided
that; in no event will such Third Party Amounts be credited against more
than fifty percent (50%) of royalty payments otherwise owed to the Shareholders.
For clarity, the Shareholders shall always receive no less than fifty percent
(50%) of the total royalty payments owed to the Shareholders regardless of any
Third Party Amounts.
- 3 -
2.3 Reports;
Payment of Royalty; Payment Exchange Rate and Currency Conversions.
(a)
Within seventy-five (75) calendar days following the end of each calendar
quarter following the First Commercial Sale of a Fluorinov Product, Purchaser shall
furnish to each of the Shareholders a written report for the calendar quarter
showing the Net Sales of Fluorinov Products sold by the Company, Purchaser, their
Affiliates and their Licensees during such calendar quarter, itemizing such Net
Sales and the amount of actual payments from Net Sales received by the Company,
Purchaser and their Affiliates from Licensees during such calendar quarter, the
currencies in which such sales were made, the currencies in which such amounts
were paid to the Company, Purchaser and their Affiliates, Third Party Amounts,
as applicable and the royalties payable under this Agreement for such calendar
quarter. Such written report shall include the gross sales of Fluorinov Products,
an itemized calculation of any deductions taken from such gross sales to arrive
at Net Sales for the applicable calendar quarter and the calculation of the
amount of royalty payment due on such Net Sales. Simultaneously with the
submission of the written report, Purchaser shall pay to each Shareholder a sum
equal to the aggregate royalty due to such Shareholder for such calendar quarter
calculated in accordance with this Agreement. For greater certainty, and
notwithstanding anything contained herein:
(i) Purchaser's obligation to make
payments pursuant to Sections 2.2 and 2.3 shall be subject to receipt by the
Company, Purchaser and/or their Affiliates of the corresponding amounts payable
by Licensees thereto; and
(ii) any reports in respect of Net
Sales generated by Licensees shall not require the disclosure by Purchaser of
any information which is not otherwise provided by the Licensee(s)
notwithstanding that Company and Purchaser shall use reasonable commercial
efforts in the Contract with each Licensee with which the Company, the Purchaser
or their respective Affiliates have direct contractual relations to seek to
obtain such information to the extent practicable.
(b)
For the purposes of calculating the amounts payable by Purchaser in respect of
Net Sales generated by Licensees, such amounts shall only be payable on the
basis of the methodologies and scheduling contemplated in this Section 2.3 in
respect of the calendar quarter (and only in respect of the funds) in respect of
which the Company, Purchaser or any of their Affiliates receives payment in such
calendar quarter in respect of Net Sales generated by the Licensees.
(c)
Method of Payment. All Royalty Payments to be made by Purchaser to each
Shareholder under this Agreement shall be paid by automated clearing house (ACH)
direct payment in immediately available funds to such bank account (located in
Canada or the United States) as set out in Schedule 2.3(c) or as updated in
writing by such Shareholder from time to time on at least sixty (60) days'
notice prior to any payment being made hereunder. All dollar amounts referred to
in this Agreement are expressed in Canadian dollars and all payments to the
Shareholders under this Agreement shall be made in Canadian dollars. With
respect to amounts received by the Company, Purchaser and their respective
Affiliates in a currency other than Canadian dollars, the amounts shall be
converted into Canadian dollars at the prevailing rate for the conversion of such currency into
Canadian dollars as published by the Bank of Canada for the last Business Day of
the quarter to which the payments relate to (regardless of any conversion
calculations or methodologies in any agreement with any Licensee).
- 4 -
If by law, regulation or fiscal policy of any country,
conversion from that country's currency into Canadian dollars is restricted or
forbidden, written notice thereof shall be given to the Shareholders, and the
payments of amounts from that country shall be made through such lawful means as
determined by Purchaser.
2.4
Maintenance of Records; Audits.
(a)
Record Keeping by Purchaser. Purchaser, Company and their Affiliates
shall keep complete and accurate records in sufficient detail to enable the
royalties payable hereunder to be determined. Upon thirty (30) days prior
written notice from any Majority Shareholders, Purchaser shall permit an
independent certified public accounting firm of nationally recognized standing
selected by such Shareholder(s) and reasonably acceptable to Purchaser, at the
expense of the Majority Shareholders, to have access during normal business
hours to examine the pertinent books and records of the Company, Purchaser,
their Affiliates as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder. The examination shall be limited to the pertinent
books and records for any year ending not more than thirty-six (36) months prior
to the date of such request (so that the records need only be retained for three
(3) years from the end of the calendar year to which they pertain). An
examination under this Section 2.4 shall not occur more than once in any
calendar year. The accounting firm shall disclose to the inquiring Majority
Shareholders (who shall then be free to disclose to the other Shareholders) only
whether the royalty reports are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to the
Shareholders. All such accounting firms shall sign a confidentiality agreement
(in form and substance reasonably acceptable to Purchaser) as to any of the
Company's, Purchaser's or its Affiliate's Confidential Information that such
accounting firms are provided, or to which they have access, while conducting
any audit pursuant to this Section.
(b)
Underpayments/Overpayments. If such accounting firm correctly concludes
that additional royalties were owed during such period, Purchaser shall pay such
additional royalties within thirty (30) days of the date the Majority
Shareholders deliver to Purchaser such accounting firm's written report so
correctly concluding. If such underpayment exceeds five percent (5%) or ten
thousand dollars ($10,000) of the sums correctly due the Shareholders, then the
fees charged by such accounting firm for the work associated with the
underpayment audit shall be paid by Purchaser. Any overpayments by Purchaser
will be credited against future Royalty Payments or Lump Sum Royalty
Payments.
(c) Record
Keeping by Licensee. Purchaser shall, and shall cause the Company and
their Affiliates to, use reasonable commercial efforts to include in each
license of Fluorinov Patents a provision requiring the Licensee to make reports to
Purchaser or Company or their Affiliates as the case may be, to keep and
maintain records of sales made pursuant to such license, and to grant access to
such records by the Majority Shareholders' independent accountant to the same
extent required of Purchaser under this Agreement.
(d)
Confidentiality. The Shareholders shall treat all financial information
subject to review under this Section 2.4, or under any license agreement, in
accordance with the confidentiality provisions of Section 5.1 of this Agreement.
- 5 -
(e) Late
Payments. Any amount owed by the Purchaser to the Shareholders (other than
amounts in respect of which the Purchaser has a bona fide basis for
disputing its obligation to pay such amount, whether in connection with a setoff
under the Share Purchase Agreement or otherwise) under this Agreement that is
not paid within the applicable time period set forth herein shall accrue
interest at the rate declared as of the due date thereof by The Royal Bank of
Canada as being its prime rate for commercial loans in Canada plus three
percent (3%).
2.5 Obligations
to Continue.
For
greater certainty, in the event of any sale, transfer, assignment, license
and/or sublicense of Fluorinov Patents, the obligations of Purchaser to the
Shareholders to pay Lump Sum Royalty Payments and Royalty Payments shall remain
in full force and effect and shall apply to the commercial exploitation of such
Fluorinov Products by such third party contractor, acquirer or Licensee mutatis
mutandis.
2.6
Purchaser's Determination.
In connection with all matters relating to the business and operations
of the Company (including, without limitation, relating to the Fluorinov Patents),
Purchaser shall be entitled to apply its sole and absolute discretion as to how
to deal with such business and operations going forward. Nothing contained in
this Agreement shall be construed as to require Purchaser to, or to require the
Company or any Affiliate to expend any level or type of effort, or apply any
particular resources, components or other assets, to undertake any efforts of
any kind with respect to the business and operations of the Company (including,
without limitation relating to the assets of the Company) and, without limiting
the generality of the foregoing, shall not require any particular resources,
components or other assets to be expended towards the achievement of:
(i)
any of the milestones in respect of the Lump Sum Royalty Payments contemplated
in Section 2.1;
(ii) the generation or collection of
Net Sales;
(iii) the research, development,
commercialization, manufacture, marketing or sale of Fluorinov Products; or
(iv) otherwise relating to the
attainment of any achievements which would entitle the Shareholders to receive
any amounts;
beyond that which Purchaser, in its sole and absolute
discretion, determines to expend. All decisions regarding such matters shall be
made by Purchaser and the Company in their sole and absolute discretion without
any express or implied duty or obligation to the Shareholders in respect
thereto.
2.7 Withholding.
All payments hereunder shall be made free and clear of any taxes,
duties, levies, fees or charges, except, to the extent applicable, withholding
taxes. Each Shareholder shall, within 10 days of any request by Purchaser,
provide to Purchaser (i) a written representation in such form as may reasonably
be requested by Purchaser certifying that the Shareholder is not a non-resident
of Canada within the meaning of the ITA or (ii) a properly completed form NR301
form [currently available at
http://www.cra-arc.gc.ca/E/pbg/tf/nr301/nr301-fill-13e.pdf, as such link or form
may be amended or updated from time to time] to support the claim for a reduced
withholding tax rate on any payment pursuant to a tax-treaty between the
Shareholders jurisdiction of residence and Canada. Failure to supply either of
these completed forms on a timely basis will result in full withholding tax
rates as determined by the Purchaser and the ability of the Purchaser to presume
the Shareholder to be a nonresident of Canada for the purposes of the ITA and
not entitled to any tax-treaty protection. Purchaser shall make withholding
payments due to the Shareholders in accordance with applicable tax legislation
and shall provide the Shareholders with such written documentation regarding all
such payments as available to Purchaser.
- 6 -
2.8
Payments in Securities.
(a) Notwithstanding
anything to the contrary in this Article 2, the Purchaser shall not be entitled
to make any payment, or portion thereof, required under this Agreement by
delivering its common shares to the Shareholders unless; at the time of
such payment in shares (i) the Purchaser is a reporting issuer in the province
of Ontario not on the list of defaulting issuers maintained by the Ontario
Securities Commission pursuant to section 83 of the Securities Act
(Ontario) and (ii) such shares would not be subject to any resale restrictions
pursuant to applicable Ontario securities laws, other than any prohibition
pursuant to section 76 of the Securities Act (Ontario) or similar
legislation or restrictions which may arise upon a person who is a member of a
control block and provided that the sale of the securities otherwise satisfies
the conditions under section 2.6(3) of National Instrument 45-102 (as amended
from time to time). For greater certainty, references to the common shares of
the Purchaser herein shall include any securities of a successor Entity to the
Purchaser.
(b)
Notwithstanding anything to the contrary in this Article 2, unless shareholder
approval of the shareholders of the Purchaser has first been obtained for the
issuance of a greater number of common shares of the Purchaser, the maximum
aggregate number of common shares of the Purchaser that the Purchaser may issue
and deliver under the Share Purchase Agreement and this Agreement, taken
together, is 1,558,447 common shares. For greater certainty, if such limit is
reached the remainder of any amounts owing shall be paid in cash.
(c) Insofar
as concerns any common shares of Purchaser to be issued to Abdelmalik Slassi
hereunder, the issuance and treatment of such shares shall be subject to the
terms and conditions of the Lock-Up Agreement.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY SHAREHOLDERS
Each
of the Shareholders, severally but not jointly, hereby represents and warrants
to the Purchaser as of the Closing Date, subject to such exceptions as are
specifically disclosed in the Disclosure Schedule, as follows:
3.1 Authority.
Such
Shareholder, if it is an Entity, has the absolute and unrestricted right, power
and authority or, if such Shareholder is an individual, has capacity to enter
into this Agreement and under each other agreement, document or instrument
referred to in or contemplated by this Agreement to which the Shareholder is or
will be a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and of each such other
agreement, document and instrument to such Shareholder is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of such Shareholder, and no
further action is required on the part of such Shareholder to authorize this
Agreement or any other agreement, document and instrument to which such Shareholder is
a party and the transactions contemplated hereby and thereby. This Agreement and
each such other agreement, document and instrument to which such Shareholder is
a party has been duly executed and delivered by such Shareholder, and assuming
the due authorization, execution and delivery by the other parties hereto and
thereto, constitute the valid and binding obligations of such Shareholder,
enforceable against each such party in accordance with their respective terms,
subject to: (a) laws of general application relating to bankruptcy, insolvency,
moratorium, the relief of debtors and enforcement of creditors' rights in
general; and (b) rules of law governing specific performance, injunctive relief,
other equitable remedies and other general principles of equity.
- 7 -
3.2 No
Conflict.
The execution and delivery by such Shareholder of this Agreement, the
Shares held by the Shareholder on the date hereof and any other agreement,
document or instrument referred to in or contemplated by this Agreement to which
such Shareholder is a party and the consummation of the transactions
contemplated hereby and thereby will not: (a) conflict with: (i) any provision
of the articles of incorporation, bylaws, trusts agreement or other charter or
organizational documents of such Shareholder if such Shareholder is an Entity;
(ii) any Material Contract to which such Shareholder or any of such
Shareholder's properties or assets is subject; or (iii) any judgment, order,
decree, statute, law, ordinance, rule, regulation or other Legal Requirement
applicable to such Shareholder or such Shareholder's properties or assets; or
(b) require any further Consent from or on behalf of any Person.
3.3 Canadian
Resident.
Except as disclosed in the Disclosure Schedule, the Shareholder is not
a non-resident of Canada, within the meaning of the ITA.
3.4
Bankruptcy.
The Shareholder is not an insolvent Person within the meaning of the
Bankruptcy and Insolvency Act (Canada) and has not made an assignment in
favour of its creditors or a proposal in bankruptcy to its creditors or any
class thereof, and no petition for a receiving order has been presented in
respect of it. It has not initiated proceedings with respect to a compromise or
arrangement with its creditors or for its winding up, liquidation or
dissolution. No receiver or interim receiver has been appointed in respect of it
or any of its undertakings, property or assets (including any of its shares) and
no execution or distress has been levied on any of its undertakings, property or
assets (including any of its shares), nor have any proceedings been commenced in
connection with any of the foregoing.
4. REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to the Company and each Shareholder
that each of the representations and warranties given by the Purchaser in the
Share Purchase Agreement are true and correct as of the date hereof.
5. MISCELLANEOUS
PROVISIONS
- 8 -
5.1
Confidentiality
(a) Each Party
shall (and shall cause each of its Representatives to) hold in strictest
confidence and not use in any manner, other than as expressly contemplated by
this Agreement, all Confidential Information of the other Parties.
(b) Subject to
Section 5.2, Section 5.1(a) shall not apply to the disclosure of any
Confidential Information where and to the extent that disclosure is required by
Legal Requirement. In that case, the Party required to disclose (or whose
Representative is required to disclose) shall, as soon as possible in the
circumstances, notify the other Parties of the requirement of the disclosure
including the nature and extent of the disclosure and the provision of the Legal
Requirement pursuant to which the disclosure is required. To the extent
possible, the Party required to make the disclosure shall, before doing so,
provide to the other Parties the text of any disclosure. On receiving the
notification, the other Parties may take any reasonable action to challenge the
requirement, and the Party required to disclose shall (or shall cause the
applicable Representative to), at the expense of the other Parties, assist the
other Parties in taking that reasonable action to challenge the requirement to
disclose.
(c) For greater
certainty, other than the Confidential Information of each Shareholder which
constitutes personal information of such Shareholder within the meaning of the
Personal Information Protection and Electronic Documents Act (Canada),
which Confidential Information shall be kept confidential unless required to be
disclosed pursuant to a Legal Requirement, nothing contained herein shall
prevent Purchaser from disclosing any Confidential Information relating to the
Company, or otherwise disclosing the terms and conditions of this Agreement, in
such manner, and to such extent, as Purchaser may determine.
5.2 Public
Announcements.
From and after the date of this Agreement, except as expressly
contemplated by this Agreement, none of the Shareholders shall issue any press
release or make any public statement regarding (or otherwise disclose to any
Person the existence or terms of) this Agreement or the Share Purchase or any of
the other transactions or documents contemplated by this Agreement, without
Purchaser's prior written consent.
5.3 Further
Assurances.
Each Party hereto shall execute and cause to be delivered to each other
Party hereto such instruments and other documents, and shall take such other
actions, as such other Party may reasonably request (prior to, at or after the
Closing) for the purpose of carrying out or evidencing any of the transactions
contemplated by this Agreement.
5.4 Fees and
Expenses.
Each Party to this Agreement shall bear and pay all fees, costs and
expenses that have been incurred or that are incurred in the future by such
Party in connection with the transactions contemplated by this Agreement,
including all fees, costs and expenses incurred by such Party in connection with
or by virtue of: (a) the negotiation, preparation and review of this Agreement
and all agreements, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the transactions contemplated by
this Agreement; and (b) the preparation and submission of any filing or notice
required to be made or given in connection with any of the transactions contemplated by this Agreement, and the obtaining of any
Consent required to be obtained in connection with any of such transactions.
- 9 -
5.5 Attorneys'
Fees.
If any Legal Proceeding relating to this Agreement or the enforcement
of any provision of this Agreement is brought against any Party hereto, the
prevailing Party shall be entitled to recover reasonable attorneys' fees, costs
and disbursements (in addition to any other relief to which the prevailing Party
may be entitled).
5.6
Notices.
Any notice or other communication required or permitted to be delivered
to any Party under this Agreement shall be provided in the form and manner set
out in the Share Purchase Agreement.
5.7
Headings.
The bold-faced headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
5.8 Counterparts and
Exchanges by Electronic Transmission or Facsimile.
This Agreement may be executed in several counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement. The exchange of a fully executed Agreement (in
counterparts or otherwise) by electronic transmission in portable document
format (PDF) or by facsimile shall be sufficient to bind the Parties to the
terms and conditions of this Agreement.
5.9 Governing Law; Dispute
Resolution.
(a)
Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by the laws of the Province of Ontario and
the laws of Canada applicable therein.
(b) Venue.
Any Legal Proceeding relating to this Agreement or the enforcement of any
provision of this Agreement (including a Legal Proceeding based upon willful
breach or fraud or intentional misrepresentation) shall be brought or otherwise
commenced in the Ontario Superior Court of Justice sitting in the City of
Toronto. Each Party to this Agreement: (i) expressly and irrevocably consents
and submits to the exclusive jurisdiction of Ontario Superior Court of Justice
(and each appellate court located in the Province of Ontario) in connection with
any such Legal Proceeding; (ii) agrees that the Ontario Superior Court of
Justice sitting in the City of Toronto shall be deemed to be a convenient forum;
and (iii) agrees not to assert (by way of motion, as a defence or otherwise), in
any such Legal Proceeding commenced in the Ontario Superior Court of Justice,
any claim that such Party is not subject personally to the jurisdiction of such
court, that such Legal Proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that this Agreement or the
subject matter of this Agreement may not be enforced in or by such court.
- 10 -
5.10 Successors and Assigns
and Parties.
(a) This Agreement
shall be binding upon: (a) the Company; (b) Purchaser; (c) the Shareholders and
(d) the respective heirs, executors, successors and permitted assigns (if any)
of the foregoing. This Agreement shall inure to the benefit of: (i) the Company;
(ii) Purchaser; (iii) the Shareholders; and (iv) the respective heirs,
executors, successors and permitted assigns (if any) of the foregoing.
(b) After the
Closing Date, Purchaser may freely assign any or all of its rights under this
Agreement, in whole or in part, to any Affiliate of Purchaser without obtaining
the Consent or approval of any other Party hereto or of any other Person. For
greater certainty, no rights or interests hereunder of any Shareholder may be
assigned, transferred or otherwise disposed of, in whole or in part, other than
to a trust or corporation (the beneficiaries or shareholders of which are
limited to the Shareholder and members of the Shareholders family), or pursuant
to the laws of descent and distribution or by will except with the written
consent of the Purchaser, which consent may be denied for any reason. If the
transfer is to such a trust or corporation, such transfer shall be conditional
upon the transferor and transferee covenanting and agreeing, on terms and
conditions acceptable to the Purchaser, acting reasonably, that the trust or
corporation will continue to only have beneficiaries or shareholders comprised
of the Shareholder and/or members of the Shareholders family.
(c)
Notwithstanding the foregoing, FACIT may assign its rights and
obligations under this Agreement to any corporation or entity in connection with
a bona fide reorganization of FACIT or OICR or any successor entity of either of
them provided that both FACIT and the assignee are jointly and severally liable
for any obligations hereunder.
(d) Obligations
of FACIT. Each of the parties hereto acknowledges that the Trustees of FACIT
are entering into this Agreement solely in their capacity as Trustees of FACIT,
and that the obligations and liabilities (including those arising hereunder or
arising in connection herewith or from the matters to which this Agreement
relates, if any, including without limitation, claims based on negligence or any
other tort) of the trustees, managers, officers, consultants, agents or
employees of FACIT hereunder (the FACIT Personnel) will not be binding
upon the beneficiaries of FACIT (nor will resort be had to the personal property
of the FACIT Personnel or of the beneficiaries of FACIT) (other than the assets
of FACIT from time to time). The obligations or liabilities, if any, of the
FACIT Personnel hereunder shall be satisfied only out of the property of FACIT
(including FACITs rights hereunder and under the Royalty Agreement) and no
resort may be had to the personal property of any of the FACIT Personnel. The
provisions of this paragraph shall enure to the benefit of the heirs,
successors, assigns and personal representatives of the FACIT Personnel and of
the beneficiary of FACIT.
5.11 Remedies Cumulative;
Specific Performance.
The rights and remedies of the Parties hereto shall be cumulative (and
not alternative). The Parties to this Agreement agree that, in the event of any
breach or threatened breach by any Party to this Agreement of any covenant,
obligation or other provision set forth in this Agreement, for the benefit of
any other Party to this Agreement: (a) such other Party shall be entitled (in
addition to any other remedy that may be available to it) to: (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision; and (ii) an
injunction restraining such breach or threatened breach; and (b) such other
Party shall not be required to provide any bond or other security in connection
with any such decree, order or injunction or in connection with any related
action or Legal Proceeding.
- 11 -
5.12
Waiver.
No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy. No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
5.13
Amendments.
This Agreement may not be amended, modified, altered or supplemented
other than by means of a written instrument duly executed and delivered by or on
behalf of Purchaser, the Company and the Majority Shareholders. Any such
amendment shall be binding upon all Shareholders upon receipt of notice by such
Shareholders, provided that such amendment treats all Shareholders equally in
proportion to their shareholdings and no such amendment will prejudice one or
more Shareholders disproportionally with respect to their rights and interest
with respect to this Agreement and/or the Royalty Agreement to any other Party
hereto.
5.14
Severability.
In
the event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
5.15 Parties in
Interest.
None of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the Parties hereto and their
respective successors and assigns (if any).
5.16 Entire
Agreement.
This Agreement, its Exhibits and Schedules and the other agreements
referred to herein set forth the entire understanding of the Parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the Parties relating to
the subject matter hereof and thereof.
5.17 Construction.
(a)
Company. Any reference in this Agreement to the "Company" shall
be deemed to be a reference to the Company and, after Closing each of its
subsidiaries if applicable (separately and in the aggregate), except to the
extent otherwise specified herein or required by the context of the use of the
word "Company" herein.
- 12 -
(b)
Gender; Etc. For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(c)
Ambiguities. The Parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement.
(d)
Including. As used in this Agreement, the words "include" and "including
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation." (e)
References. Except as otherwise indicated, all references in this
Agreement to "Sections," "Schedules" and "Exhibits" are intended to refer to
Sections of this Agreement and Schedules and Exhibits to this Agreement.
(f) References
to Pay, Etc. For purposes of this Agreement, whenever the context requires
(for example, when referring to the payment from the Royalty Payments), all
references to "pay," "payment," "paid" and other similar terms shall include
references to "deliver" and other similar terms.
(g)
Currency. As used in this Agreement, "$" means Canadian dollars. All
references to currency herein are to lawful money of Canada unless otherwise
indicated.
5.18 Advice of
Counsel.
(a)
EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL (AND HAS SOUGHT SUCH ADVICE OR DETERMINED THAT SUCH ADVICE IS NOT
NECESSARY), AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS
AGREEMENT.
(b) Each Party to
this Agreement acknowledges that the negotiation and drafting of this Agreement
has been primarily undertaken by (i) Borden Ladner Gervais LLP, counsel to the
Purchaser, (ii) Eve R. Wahn, counsel to the Company (iii) Bennett Jones LLP,
special counsel to the Company. In such negotiations, Eve Wahn and Bennett Jones
LLP have represented the interests of the Company and not the interests of any
one or more of the Shareholders.
[Remainder of page intentionally left blank]
- 13 -
The Parties hereto have caused this Agreement to be executed and
delivered as of the date first written above.
TRILLIUM THERAPEUTICS INC. |
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By: |
Niclas Stiernholm |
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Name: |
Niclas Stiernholm |
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Title: |
President and CEO |
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Authorized Signing Officer
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FLUORINOV PHARMA INC. |
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By: |
Abdelmalik Slassi |
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Name: |
Abdelmalik Slassi |
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Title: |
President and CSO |
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Authorized Signing Officer |
ROYALTY AGREEMENT SIGNATURE PAGE
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[name of entity redacted for privacy reasons]
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By: |
[name of signatory redacted for privacy
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Name: [name of signatory redacted for |
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Title: |
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Authorized Signing Officer |
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FIGHT AGAINST CANCER INNOVATION |
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TRUST |
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Jeff Courtney |
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Name: Jeff Courtney |
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I have authority to bind the Trust and the
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Trustees of the Trust |
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Abdelmalik Slassi |
Witness: |
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ABDELMALIK SLASSI |
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ROYALTY AGREEMENT SIGNATURE PAGE
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ROYALTY AGREEMENT SIGNATURE PAGE
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit
A):
"Affiliate"
has the meaning ascribed thereto in the Business Corporations Act
(Ontario).
"Agreement" shall have the meaning set forth in the preamble.
"Business
Day" shall mean any day, except Saturdays and Sundays, on which banks are
generally open for non-automated business in Toronto, Ontario.
"Closing"
shall have the meaning set forth in the Share Purchase Agreement.
"Closing
Date" shall have the meaning set forth in the Share Purchase Agreement.
"Company" shall have the meaning set forth in the preamble.
"Confidential
Information" shall mean, in respect of a Party to this Agreement, at any
time, all information relating to that Party which at the time is of a
confidential nature (whether or not specifically identified as confidential), is
known or should reasonably be known by the other relevant Party or its
Representatives as being confidential, and has been or is from time to time made
known to or is otherwise learned by the relevant other Party or any of its
Representatives as a result of the matters provided for in this Agreement, and
includes:
(i) the
existence and the terms of this Agreement and of any other contract, agreement,
instrument, certificate or other document to be entered into as contemplated by
this Agreement;
(ii) a Party's business records
and personal information; and
(iii) all books and records and
all other information and documentation with respect to the Company, the
business of the Company and the Company's assets provided by the Shareholders
and the Company to the Purchaser and its Representatives, including all notes,
analyses, compilations, studies, summaries and other material prepared by the
Purchaser and its Representatives as a result of the books and records,
information or documentation.
Notwithstanding the foregoing, Confidential Information does
not include any information if and to the extent that at the time has become
generally available to the public other than as a result of a disclosure by the
other Party or any of its Representatives in breach of its obligations hereunder
or another legal obligation, any information that was available to the other
Party or its Representatives on a non-confidential basis before the date of this
Agreement or any information that becomes available to the other Party or its
Representatives on a non-confidential basis from a Person (other than the Party
to which the information relates or any of its Representatives) who is not, to
the knowledge of the other Party or its Representatives, otherwise bound by
confidentiality obligations to the Party to which the information relates in
respect of the information or otherwise prohibited from transmitting the
information to the other Party or its Representatives.
"Consent"
shall mean any approval, clearance, consent, ratification, permission, waiver or
authorization (including any Governmental Authorization).
"Consideration
Allocation Spreadsheet" shall have the meaning set forth in the Share
Purchase Agreement.
"Contract"
shall mean any written, oral or other agreement, contract, subcontract, lease,
understanding, arrangement, instrument, note, purchase order, warranty,
insurance policy, benefit plan: (a) to which the Company or Purchaser is a
party; (b) by which the Company or Purchaser is or may become bound or has, or
may become subject to, any obligation; or (c) under which the Company or
Purchaser has or may acquire any right or interest.
"Disclosure
Schedule" means the disclosure schedule under the Share Purchase
Agreement.
"Entity"
shall mean any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization or entity.
FACIT
and Trust means the Fight Against Cancer Innovation Trust, a trust
established under the laws of the Province of Ontario, being one of the
Shareholders, settled pursuant to a Trust Agreement made September 27, 2012
between OICR, as Settlor and [names of individuals redacted for privacy
reasons], as Original Trustees, and Trustees means the trustees of the
Trust.
"First
Commercial Sale" shall mean the first sale of a Fluorinov Product to a third
party not Affiliated with the Purchaser or the Company, on arm's length terms by
Purchaser, the Company or any of their Affiliates or Licensees for use after the
receipt of a Regulatory Approval in connection therewith. Provision of a
Fluorinov
Product, whether or not by way of nominal sale, solely for the purposes of test
marketing, sampling or promotional uses prior to First Commercial Sale, post
approval clinical trial purposes or other non-commercial use shall not be
included in the definition of or constitute a First Commercial Sale.
"Fluorinov
Compound" shall mean the compounds identified on Section 3.9(a) of the
Disclosure Schedule, other than those compounds identified under the heading
"CNS Assets".
"Fluorinov
Patents" shall mean those patent applications for the Fluorinov patent families
listed on Section 3.9(a) of the Disclosure Schedule other than assets identified
as "CNS Assets" in that Section, which shall include all related applications
and patents thereon, including any and all, international, national and regional
phase applications based on the patent applications, and other counterpart
applications in all countries, and any and all substitutes, divisionals,
continuations and continuations-in-part, and any letters patents that may be
obtained therefor, and any and all reissues, extensions, renewals and
reexaminations of such applications and patents and any other patents or patent
applications thereafter that are based on the Fluorinov patent families listed in
the Disclosure Schedule.
"Fluorinov
Product" shall mean any product in finished dosage form containing a
Fluorinov
Compound, the development, manufacture, use or sale of which would (but for
ownership rights or a valid license from the Company), infringe one or more issued or
pending Valid Claims of a Fluorinov Patent in the country in which it is sold
(provided that in the case of a patent application, if the patent (when issued)
contains claims which are lesser in scope than those contained in the patent
application, then only if the issued patent would be infringed).
"GAAP",
when used in respect of accounting terms or accounting determinations, means
International Financial Reporting Standards as issued by the International
Accounting Standards Board or any successor thereof. For the purposes of any
Licensee, "GAAP" shall mean the accounting standard by which such Licensee's
financial statements are prepared.
"Governmental
Body" shall mean any: (a) nation, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any court, boar, bureau,
governmental division, subdivision, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any
arbitrator, court or other tribunal).
indication
means a separate and distinct disease, disorder or medical condition, in humans
that a Fluorinov Product is intended to treat, prevent and/or ameliorate.
"Legal
Proceeding" shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving, any court or
other Governmental Body or any arbitrator or arbitration panel.
"Legal
Requirement" shall mean, with respect to any Person, any federal,
provincial, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, order,
edict, decree, judgment, rule, regulation, regulatory practice, by-law,
directive, policy, guideline, ruling requirement or any published administrative
position issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of the Toronto Stock Exchange, NASDAQ or
any Governmental Body, including all privacy and anti-spam legislation.
"Licensee"
shall mean a third party to whom the Purchaser, the Company or any of their
Affiliates has, directly or indirectly granted an arm's length license to any of
the Fluorinov Patents (and, for greater certainty, shall include any distributor,
sales agent, and any other third party to whom any direct or indirect Licensee
has granted a further sublicense of any rights granted by the Company).
Lock-Up
Agreement shall have the meaning set forth in the Recitals hereto.
"Lump
Sum Royalty Payments" shall have the meaning set forth in Section 2.1(a) of
this Agreement.
"Majority
Shareholders" means any group of Shareholders that collectively held at
least 2/3 of the outstanding equity securities of the Company immediately prior
to the Closing Date.
Net
Sales means, with respect to a given period of time commencing after the
First Commercial Sale of any Fluorinov Products (such Fluorinov Products being in
final form intended for use by the end user) , in arms length transactions with
third parties (other than Affiliates and Licensees and distributors) during such
period, the gross invoice price of Fluorinov Products invoiced and billed in
respect of which payment is actually received (i) by Purchaser, Company or any
of their respective Affiliates from purchasers (other than Licensees or
distributors) of the Fluorinov Product (if sold by Purchaser, the Company or any of
their respective Affiliates) or (ii) by Licensees from the end user of the
Fluorinov Product, in each case where the sales are in jurisdictions where there
are Valid Claims applicable to such Fluorinov Products (and, in the case of item
(ii), in respect of which the Licensees have remitted to Purchaser, Company and
their respective Affiliates any amounts owing to them by the Licensees in
respect of net sales under such licensing arrangements), less a provision for
the following deductions from such gross amounts as allocable to such Fluorinov Products
(if not previously deducted from the gross amount invoiced) to the extent
estimated, actually incurred, allowed or taken and included in the invoiced
gross sales price; provided, however, all estimated amounts shall be reconciled
with such amounts actually incurred, allowed or taken for such items, no less
frequently than annually:
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(i) |
credits or allowances given or made for damaged Fluorinov
Products, as applicable, returns or rejections of or uncollectible amounts
on Fluorinov Products, as applicable, price adjustments, billing errors and
retroactive price reductions; governmental and other rebates (or
equivalents thereof) granted to managed health care organizations,
pharmacy benefit managers (or equivalents thereof), federal,
state/provincial, local and other governments, their agencies and
purchasers and reimbursers or to trade customers (including rebates
similar to Medicare and/or Medicaid); |
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(ii) |
normal and customary trade, cash and quantity discounts,
rebates, allowances and credits allowed or paid; |
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(iii) |
commissions relating to import or transportation of
Fluorinov Products paid to third party distributors, brokers or agents
(excluding sales personnel, sales representatives and sales agents who are
employees or consultants of Purchaser, the Company, their Affiliates or
their respective Licensees) in which such commissions are paid by
deducting such commissions from the gross sales invoiced for sales to such
third parties; |
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(iv) |
reasonable credits for allowances given or made for
wastage replacement, and for indigent patient and other similar sales
programs; |
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(v) |
transportation costs, including insurance, for outbound
freight related to delivery of the Fluorinov Product, all to the extent
included in the third party invoice; and |
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(vi) |
sales taxes, duties, value added taxes (but only to the
extent such value added tax is actually incurred by, and is not
reimbursable, refundable or creditable), tariffs and other taxes directly
linked to the sales or import of the Fluorinov Product that are non-
refundable, all to the extent included in the third party
invoice. |
The dollar value of the specific deductions taken under, and
the dollar value of the general provisions of (i) through (vii) above shall be
adjusted periodically as necessary to reflect amounts actually incurred.
Notwithstanding anything herein to the contrary, in all cases Net Sales shall be
determined in accordance with GAAP. Consideration for sales of Fluorinov Products
for other than cash shall be valued at fair market value at the time the invoice
is issued by Purchaser, the Company, their respective Affiliates or Licensees to
the purchaser of the Fluorinov Product. Retroactive price reductions, adjustments
and rebates may be deducted only so long as they are granted on a basis that
does not discriminate inequitably between Fluorinov Products and any other products
that may be sold to the same customers.
For greater certainty, Net Sales shall not include sales or
transfers between members of the group comprised of Purchaser, the Company and
their Affiliates and Licensees (unless the Licensee if an end user of such
Fluorinov Products).
For greater certainty, provision of a Fluorinov Product for the
purpose of conducting preclinical or clinical research in order to obtain
regulatory approval shall not be deemed to be a sale, so long as the Fluorinov
Product is provided at a price which does not exceed the reasonably estimated
cost of production and distribution thereof.
In the event a Fluorinov Product is sold in the form of a
combination product containing one or more active ingredients, devices or
components in addition to the Fluorinov Product (a Combination Product),
Net Sales for such Combination Product will be adjusted by multiplying actual
Net Sales of such Combination Product by the fraction A/(A + B), where A is the
weighted (by sale volume) average invoice price of the Fluorinov Product, if sold
separately, and B is the weighted (by sale volume) average invoice price of any
other active ingredient, device or component in the combination, if sold
separately. If, on a country-by-country basis, the other active ingredient,
device or component in the combination is not sold separately, Net Sales shall
be calculated by multiplying actual Net Sales of such Combination Product in
such country by the fraction A/C, where A is the invoice price of the Fluorinov
Product, if sold separately, in such country and C is the invoice price of the
Combination Product in such country. If, on a country-by-country basis, neither
the Fluorinov Product nor the other active ingredient, device or component of the
Combination Product is sold separately, Net Sales shall be determined by the
Parties in good faith.
OICR
means the Ontario Institute for Cancer Research.
"Party"
or "Parties" shall mean the Purchaser, the Company and each Shareholder
executing this Agreement, and subject to Section 5.10, their permitted heirs,
executors, successors and assigns.
"Person"
shall mean any individual, Entity or Governmental Body.
"Phase
2b Trial" shall mean a Phase 2 Trial, the results of which, alone or in
combination with the results of an earlier trial, would demonstrate the efficacy
and safety of a Fluorinov Product for a particular indication in patients with the
indication or that would otherwise satisfy the requirements of Part 312 of Title
21 of the United States Code of Federal Regulations or its Canadian, European or
foreign equivalent.
"Purchaser"
shall have the meaning set forth in the preamble to this Agreement.
"Regulatory
Approval" shall mean the approval from a Regulatory Authority for the
commercial marketing and sale of a Fluorinov Product in the jurisdiction or
jurisdictions overseen by such Regulatory Authority.
"Regulatory
Authority" shall mean the United States Food and Drug Administration and the
European Medicines Agency.
"Representatives"
shall mean officers, directors, employees, agents, attorneys, accountants,
advisors and representatives of a Person.
"Royalty Payment" shall
have the meaning set forth in Section 2.2(a) of this Agreement.
"Share
Purchase" shall have the meaning set forth in the Share Purchase Agreement.
"Share Purchase Agreement"
shall have the meaning set forth in the recitals to this Agreement.
"Shareholders"
shall have the meaning set forth in the preamble to this Agreement and
"Shareholder" shall mean any one of them.
"Third
Party Amounts" has the meaning outlined in Section 2.2(d) of this
Agreement.
"Valid
Claim" means a claim in an issued, unexpired or unabandoned patent or in a
pending patent application included within the Fluorinov Patents that (a) has not
been finally cancelled, withdrawn, abandoned or rejected by any administrative
agency or other body of competent jurisdiction, (b) has not been revoked, held
invalid, or declared unpatentable or unenforceable in a decision of a court or
other government agency or other body of competent jurisdiction that is
unappealable or unappealed within the time allowed for appeal, (c) has not been
rendered unenforceable through disclaimer or otherwise, and (d) is not lost
through an interference proceeding. Notwithstanding the foregoing, if a claim of
a pending patent application within the Fluorinov Patents has not issued as a claim
of a patent within seven (7) years after the PCT filing date (or the first
national filing date if no PCT was filed), such claim shall not be a Valid Claim
for the purposes of this Agreement, unless and until such claim issues as a
claim of an issued patent (from and after which time the same shall be deemed a
Valid Claim subject to subsections (a) and (b) above).
FORM 51-102F3
MATERIAL CHANGE REPORT
Item 1. Name and Address of Company
Trillium
Therapeutics Inc. (the Corporation or Trillium)
96 Skyway
Avenue
Toronto, Ontario M9W 4Y9
Item 2. Date of Material Change
January 27, 2016
Item 3. News Release
The news release was
disseminated through the services of Marketwired on January 27, 2016.
Item 4. Summary of Material Change
The Company
announced that it has acquired all of the outstanding shares of Fluorinov Pharma
Inc. (Fluorinov) a privately-held oncology company (the
Transaction). Fluorinov has developed a proprietary medicinal chemistry
platform using unique fluorine chemistry, which permits the creation of new
chemical entities from validated drugs and drug candidates with improved
pharmacological properties, potentially leading to increased safety and
efficacy.
The purchase price was an upfront payment of C$10 million in
cash (~US$7 million), plus up to C$35 million (~US$25 million) of additional
future payments that are contingent on Trillium achieving certain clinical and
regulatory milestones with an existing Fluorinov compound. Trillium will also
have an obligation to make low to mid single digit royalty payments on future
sales of such compounds. The upfront payment will be subject to adjustment based
on the net working capital of Fluorinov and other adjustments at the time of
closing. At Trilliums discretion, up to 50% of the future contingent payments
can be satisfied through the issuance of common shares of Trillium (Common
Shares), provided that the aggregate number of Common Shares issuable under
such payments will not exceed 1,558,447 common shares (or 19.99% of the current
outstanding Common Shares) unless shareholder approval has first been obtained.
In addition, any such future share issuance remains subject to final approval
from Trilliums board of directors and receipt of any requisite approvals under
the applicable rules of the Toronto Stock Exchange and the NASDAQ Stock
Market.
The Transaction was effected pursuant to the terms and
conditions of a share purchase agreement dated January 26, 2016 between the
Corporation, Fluorinov and shareholders of Fluorinov (the SPA) and a
royalty agreement dated January 26, 2016 between the Corporation, Fluorinov and
shareholders of Fluorinov (the Royalty Agreement). The foregoing
description is a summary only and is qualified in its entirety by the full text
of the SPA and the Royalty Agreement, copies of which are available on SEDAR
(www.sedar.com).
Item 5.1. Full Description of Material Change
See
attached press release as Schedule A.
Item 5.2. Disclosure for Restructuring Transactions
Not applicable.
Item 6. Reliance on subsection 7.1(2) of National Instrument
51-102
Not applicable.
Item 7. Omitted Information
No information has been
omitted from this material change report on the basis that it is confidential.
Item 8. Executive Officer
James Parsons
Chief
Financial Officer
Tel: (416) 595-0627
Email:
james@trilliumtherapeutics.com
Item. 9 Date of Report
February 5, 2016
Schedule A
FOR IMMEDIATE RELEASE |
NASDAQ:TRIL |
|
TSX: TR
|
TRILLIUM ACQUIRES PRIVATELY-HELD
FLUORINOV PHARMA INC.
|
|
Proprietary industry-leading fluorine-based
medicinal chemistry platform providing an internal engine to
generate future programs |
|
|
Platform validated by several advanced
preclinical oncology programs with potential for clinical
differentiation and combination therapies |
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Rich discovery pipeline of small molecules
directed at immuno-oncology targets |
|
|
Founder and industry veteran Dr. Malik
Slassi joins company as Senior Vice President, Discovery
Research |
Toronto, Ontario, January 27, 2016 Trillium Therapeutics
Inc. (Nasdaq:TRIL; TSX: TR) a clinical immuno-oncology company developing
innovative therapies for the treatment of cancer, today announced that it has
acquired all of the outstanding shares of Fluorinov Pharma Inc., a
privately-held oncology company. Fluorinov has developed a proprietary medicinal
chemistry platform using unique fluorine chemistry, which permits the creation
of new chemical entities from validated drugs and drug candidates with improved
pharmacological properties, potentially leading to increased safety and
efficacy.
The acquisition of Fluorinov is transformative and adds
several new dimensions to Trillium, including a risk-reduced internal drug
discovery engine, a series of established preclinical oncology programs, and new
business development and collaboration opportunities, commented Dr. Niclas
Stiernholm, Trilliums Chief Executive Officer. The future of cancer treatment
is most likely going to be dominated by combination therapies, and we believe
that this will often involve combining large and small molecules. This is why we
chose to acquire our own small molecule platform that can provide us with a
great variety of drug candidates. Having capabilities in both large and small
molecule drug development provides us with more flexibility, and makes us better
prepared for the future.
Fluorinovs most advanced preclinical oncology programs include
potent, orally-available, bromodomain and proteasome inhibitors, as well as
epidermal growth factor receptor antagonists with increased uptake in the brain,
all of which have been differentiated from competitors and have potential for
best-in-class status. In addition, a number of compounds directed at undisclosed
immuno-oncology targets are currently in the discovery phase. With this
acquisition Trillium is well positioned to internally investigate a variety of
combination therapies with targeted oral small molecule drugs and large molecule
immunotherapies.
Theres no question that Trilliums highest priority is to
execute on our clinical CD47 program. However, acquiring a discovery engine with
a demonstrated ability to generate high quality preclinical development
candidates will significantly enhance our oncology pipeline, commented
Trilliums Chief Scientific Officer, Dr. Bob Uger. Our current plan is to
advance one, or possibly two, of Fluorinovs existing preclinical programs
through the IND-enabling phase using our internal development group, while at
the same time focusing our new chemistry group on several of the existing
immuno-oncology discovery programs. Importantly, this strategy does not engage
or dilute the efforts of our CD47-focused clinical team, does not dramatically
impact our burn rate and future financing plans, and may provide opportunities
for future partnerships and collaborations.
Under the terms of the agreements, Trillium has agreed to
acquire all of the outstanding shares of Fluorinov for an upfront payment of
C$10 million in cash (~US$7 million), plus up to C$35 million (~US$25 million)
of additional future payments that are contingent on Trillium achieving certain
clinical and regulatory milestones with an existing Fluorinov compound. Trillium
will also have an obligation to make low to mid single digit royalty payments on
future sales of such compounds. The upfront payment will be subject to
adjustment based on the net working capital of Fluorinov and other adjustments
at the time of closing. At Trilliums discretion, up to 50% of the future
contingent payments can be satisfied through the issuance of common shares of
Trillium (Common Shares), provided that the aggregate number of Common
Shares issuable under such payments will not exceed 1,558,447 common shares (or
19.99% of the current outstanding Common Shares) unless shareholder approval has
first been obtained. In addition, any such future share issuance remains subject
to final approval from Trilliums board of directors and receipt of any
requisite approvals under the applicable rules of the Toronto Stock Exchange
(TSX) and the NASDAQ Stock Market (NASDAQ).
While we have had several third party proposals for individual
Fluorinov programs in the past, the choice to merge with Trillium and join their
leadership team was an easy one. The recent success with their lead program
targeting CD47, and their emerging reputation as Canadas leading
immuno-oncology company made this a perfect fit for Fluorinov, added Dr. Malik
Slassi, Fluorinovs founder, President and Chief Executive Officer. I look
forward to combining our proprietary chemistry expertise with Trilliums
well-established biology and immunology capabilities under one roof.
About Trillium Therapeutics:
Trillium Therapeutics
Inc. is an immuno-oncology company developing innovative therapies for the
treatment of cancer. The Companys lead program is a SIRPaFc antibody-like
fusion protein that blocks the activity of CD47, a molecule that is
overexpressed on a wide variety of tumors. CD47 binds to SIRPa on macrophages
and delivers a do not eat signal that inhibits the ability of macrophages to
phagocytose (engulf and destroy) malignant cells.
For more information visit:
www.trilliumtherapeutics.com
Caution Regarding Forward-Looking Information:
This
press release may contain forward-looking statements, which reflect Trilliums
current expectation regarding future events, including with respect to
Fluorinov, its product portfolio and general future development plans. These
forward-looking statements involve risks and uncertainties that may cause actual
results, events or developments to be materially different from any future
results, events or developments expressed or implied by such forward-looking
statements. Such risks and uncertainties include (i) Trilliums expectations
about the differentiated nature and potential for best-in-class product
development programs and discovery research capabilities of Fluorinov, (ii)
Trilliums ability to generate future product development programs with improved
pharmacological properties, (iii) whether various clinical and regulatory
milestones with an existing Fluorinov compound will be achieved; (iv) the final
quantum and form of any future contingent milestone payments, (v) the ability to
secure the requisite approvals (including TSX and NASDAQ approvals) with respect
to the issuance of any Common Shares in satisfaction of future milestone
payments, and (vi) the risks and uncertainties described in the Trilliums
ongoing quarterly and annual reporting. Except as required by applicable
securities laws, Trillium undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of the TSX) accepts responsibility for the adequacy
or accuracy of this release.
Contact:
Trillium Therapeutics Inc.
James
Parsons
Chief Financial Officer
+1 416 595 0627 x232
james@trilliumtherapeutics.com
www.trilliumtherapeutics.com
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